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Capitalism and Good Post-Capitalism

2016 April 17
by Ian Welsh

Let us revisit the definition of capitalism.

Capitalism, everywhere, is defined by the removal of capital from most ordinary people and the concentration of capital in the hands of a few.

Capital, in this definition, is not money. It is the tools required to feed, house, and cloth oneself.

Medieval serfs, in most areas, had access to capital. They had the right to land to grow food, to take firewood, and so on. They built their own houses, spun their own clothes.

Depending on the time and place, they were healthy and relatively long-lived.

As I have pointed out before, early industrial workers, as a class, were worse off than the serfs and peasants they replaced. They worked longer, ate worse, died younger.

Capitalism is accompanied by enclosure virtually everywhere. The old rights are taken away and the peasants are forced off the land.

Force is the operative word: In both England and China, the land to which they have had rights for centuries is taken from them. If they won’t go peacefully, armed force is used to remove them. There are constant stories of peasants in China resisting the government trying to take their land so they can hand it over to other owners.

Many people get “better” ownership out of the process of moving to capitalism. They get a better bundle of rights in terms of “property.” But most people lose their rights to productive capital.

You see this in virtually every third world country. Peasants are forced off the land, whether by law, crashing crop prices caused by unfettered “free” trade (which isn’t “free,” even slightly; Europe and the US massively subsidize agriculture), or by force. They flee to the cities, forming vast rings of slums. They are worse off than when they were peasants in most cases, but there are no other options.

In most cases, this is done so that their country can concentrate on a few cash crops, plantation style, with a few owners making all the money.

Enclosure.

A citizen in a capitalist economy is distinguished by having no independent ability to feed, clothe, or house themselves. They must sell their labor on “the market” or live miserably and likely even die. (People who live long term on the street don’t, as a rule, live long term.)

The term “wage-slave” is old, used in the 19th century to talk about what was happening then.

A person who must sell their labor to another, then do their master’s bidding, is not free. Their entire working day is spent doing what someone else tells them to do. Only a very few people, under any capitalist system, have anything close to freedom. The majority of people are slaves in their daily life, free only to sell their labor.

Because most people are undistinguishable, they take the rates offered by the market, and those rates are determined primarily by how tight the labor market is, a factor that has nothing, absolutely nothing, to do with any one individual worker.

Most workers in the world have miserable lives. Those reading this may have “good jobs.” In China, they make batteries by hand because it is cheaper than using machines. Other Chinese are now hand-pollinating crops.

That’s freedom for you.

People whose lives are lived doing what other people tell them are not only not free, but because their daily life is about obeying orders, they are not used to freedom and are conditioned to expect orders.

Being a wage-slave, taking orders is ordinary to them. It’s what they expect. They don’t know what freedom is because they have never experienced it (coming from a school system which is designed to turn people into obedient drones).

Real freedom is being your own master. It’s been a long time since that described most of the world’s population.

But capitalism, meaning wage slavery, contrary to the propaganda, has not been an unambiguous move towards freedom.

In the 19th century in North America, for example, if land was unused, you could simply go work it and after a few years it was yours.

You can’t do that now.

Capitalism is about taking the ability of the many to provide for themselves and putting it into the hands of a few. The argument is that this transfer allows for the creation of more goods and services than would be possible otherwise.

But we don’t need more–let alone the vast amount of surplus we are creating. We waste a third of the food we produce. We deliberately build “planned obsolesence” into the manufacture of goods. We are vastly overproducing past our needs, and because we distribute goods through corrupt market mechanisms, many people still don’t have enough to get by, let alone enough for a good life. We could easily provide for them if what we produced were more evenly distributed and not made to break down so we can make more.

Imagine a world with no planned obsolesence, in which everyone has a small garden (indoors gardens are easy to do now, and one pilot study found 10X yields from a basement garden with LED lights), everyone has basic maker tools, and every community has a few facilities capable of creating large appliances.

We can third print buildings now (they could have been made well, prefab, long ago).

Freedom is the ability to make your own choices, daily, about what you do with your time and your abilities, without losing everything. It is the ability to support yourself.

Feudalism was no joy. But capitalism removed even more economic freedom than feudalism did. You don’t have to believe me, believe the people who lived at the time, who violently resisted the changes. They weren’t idiots, they weren’t fools; they knew their lives were being changed for the worse. That it worked out for some of their descendents means little: A century of technological improvement accounts for much of that.

Post-capitalism, if it is any good, will restore the ability to grow and make what they need to the people. Not like feudalism, but a craft-based, hunter-gatherer society. Work 20 hours a week to meet the essentials, spend the rest of the time as you wish and choose how and when to work those 20 hours.

More on this later.


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What Should Wages, Prices, and Taxes Be?

2016 April 15
by Ian Welsh

The principle is simple.

Wages and taxes must cover the cost of maintainence and replacement of capital plus any negative externalities.

Maintainence of capital, as horrible as the phrase sounds, includes workers. They must have a wage sufficient to eat well, live in a healthy place, buy entertainment, and have children. That is maintainence of “human capital.”

Taxes must be at a level sufficient to replace society’s capital base. That includes running schools, roads, courts, and all of that.

Businesses which put particular wear on specific portions of capital should be charged extra taxes. Are you degrading “natural capital” by polluting or drawing down water or timber reserves? You need to pay the replacement cost. Are you putting more stress on roads than normal businesses? You pay for that as well.

Prices should run on the same principle. Charging less than the cost of operating plus the replacement cost of capital and the price of any externalities mean the company is underpricing its goods.

“But it’s a free market.”

Free markets work when, and only when, full costs are priced in. If you charge less than the full price, you undercut those business that are charging full cost, driving them out of business. Because they were actually paying the freight for their business and you aren’t, you are free-loading, a parasite.

Competitive markets require more than the above to exist, but these are some of the requirements. One can deliberately choose, as a society, to subsidize an important sector (perhaps renewables, perhaps education), but the actual costs still need to be known and covered by society.

If you see a business or government which isn’t covering the cost of replacing its capital, whether human, natural, or otherwise, you see a business or government which is parasitical on the past, on people, or on the environment.

You will virtually always wind up paying the price anyway. But paying on the back end is far more expensive.

Corporations and people usually get rich by offloading their capital costs…by not paying them. For an example of this, look into the history and practices of Walmart, which did not, and does not, even pay its employees enough to feed themselves, and whose business practices wiped out the downtowns of most of small-town America.

The Waltons are rich precisely because they downloaded their costs onto other people and pocketed the difference.

A good society does not allow this to be done without democratic determination, and makes it as transparent as possible. If something is being subsidized, it should be known, and those who are receiving the subsidy should not be allowed to get rich off it. Want to get rich?  Great, do it in an unsubsidized business. You’re welcome to “do well” in a subsidized one, but not to become a billionaire.

This stuff is fundamental. It was well understood by the New Deal Liberals who ran World War II (no war rich!), and the post-war economy. They didn’t always live up to it, but they did know it. We seem to have forgotten.


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The Market Fairy Will Not Solve the Problems of Uber and Lyft

2016 April 14
by Ian Welsh
Image by Admit One

Image by Admit One

Here is the thing about Uber and Lyft (and much of the “sharing economy”).

They don’t pay the cost of their capital.

The wages they pay to their drivers are less than the depreciation of the cars and the expense of keeping the drivers fed, housed, and healthy. They pay less than minimum wage in most markets, and, in most markets, that is not enough to pay the costs of a car plus a human.

These business models are ways of draining capital from the economy and putting them into the hands of a few investors and executives. They prey on desperate people who need money now, even if the money is insufficient to pay their total costs. Drivers are draining their own reserves to get cash now, but, hey, they gotta eat and pay the bills.

This sharing economy shit works in a shitty economy. In a good economy, where people have what they need, it doesn’t work.

The cab company model, with medallions and so on, was exploitative. It wound up charging customers too much, but it did cover its own costs–mostly. Uber and Lyft charge too little and siphon too much of what they charge back to themselves.

The model which made sense was the model of car-sharing, where company-owned cars could be used by those who had bought memberships in the company. This meant that the actual cost of the cars had to be covered. It was far cheaper than cabs, but not as cheap as Uber or Lyft (and you had to drive yourself). Something like that, but with drivers, could have worked.

For that matter, Uber- and Lyft-style apps could work with regulated wages sufficient to pay costs in particular markets.

The market will not miraculously produce a capital-replacing living wage. If it should do so in any particular market, that is happenstance; luck, not social physics.

This is a social action problem; a race to the bottom issue. It makes sense, individually, to race to the bottom.  Company execs and investors get rich, consumers get cheaper rides and drivers get money they need. But this isn’t win, win, win. It’s a long con. And not a very long one, either.

The cheaper wages paid to drivers, and thus the cheaper rides, also drive business with capital structures which make social sense out of business. They can’t compete with, “Drive your car into the ground, make less than minimum wage.”

Because it is a social action problem, what needs to be done is to take a game which leads to some people winning while destroying capital and people and move it to a game where everyone wins and capital and people are not destroyed. This can only be dealt with socially, by government.

“Thou shalt pay at least the capital replacement cost + a living wage for the market and shall take only an additional X percent for providing your app. If thou dost not we shall toss thine ass into prison.”

That is the social solution. It is not “The Market Fairy of supply and demand will make sure that fair, sustainable solutions always occur. All praise the Market Fairy.”

Until we stop pretending the Market Fairy is going to solve social action problems, we won’t actually solve those problems.


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Climate Change and Heat

2016 April 12
by Ian Welsh

In India:

India’s pre-monsoon heat has intensified, forcing thousands of people to stay indoors as they struggled to avoid blistering conditions.

Much of the country was reeling as temperatures continued to rise. Day time highs were running up to seven degrees above the seasonal average.

These temperatures will continue to rise until the summer rains arrive on the southwesterly monsoon, but those rains are not expected to arrive until around June 1.

These sort of events will become more common and more severe. Large parts of the most populous parts of the world will become essentially uninhabitable.

When these people start to move, the current refugee dislocations around the world will be as nothing.


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Things That Should Have Been Done Yesterday, #1

2016 April 9
by Ian Welsh

Ban of all consumer goods, worldwide, that are made with non-bio-degradable or otherwise non-naturally break-downable materials. Phase in period with increasing taxes, 20 percent per year for five years, at which point ban is in place.

Companies with life-saving or critical infrastructure items may apply for temporary exemptions.

All plastic packaging. Phase in, one year. It’s not necessary, it’s killing the oceans and overflowing landfills.

If it won’t biodegrade, it shouldn’t be in widespread use.


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Slow Posting

2016 April 6
by Ian Welsh

I have a fever, not sure for what, and will likely not be posting much (perhaps at all) for the next few days.

Please feel free to use this post as an open thread.

The Panama Papers Leak

2016 April 5
by Ian Welsh

You’ve probably read about it already. A Panamian law firm had its files leaked, and they reveal how rich people store money offshore to avoid taxes. In some cases legally, in some cases illegally, and, in pretty much all cases, unethically.

This is why we can’t have nice stuff: The rich simply don’t want to pay for a decent society. They just want to be filthy rich.

There are all sorts of additions to that, but that is the essence.

There is no such thing as a good society in which to live that is not relatively egalitarian. Of course, you can all be equal in poverty, but strangely enough, unless it’s desperate poverty, those people tend to be happy. Moving to the cities to get involved with China’s “economic miracle” meant an actual decrease in happiness. When the Chinese government tries to close traditional villages, the villagers often fight, and by that I don’t mean “protest,” I mean crack skulls and even, on occasion, actually fight the army and win.

Rich people caused the financial crisis, got bailed out, then insisted that poor people had to be punished for it.

If you want a good society, you keep the rich poor.

The other rule is that no one gets to opt out of anything which matters. The rich and powerful must use the same schools, airplanes, security, health care, roads, and military service as everyone else.

An absolutely fair draft, a medical system where better care cannot be bought by money or forced by power, where the children of the rich go to the same universities and schools as the poor will be a good society. A society where everyone uses public defenders chosen by lottery is a society with a fair justice system

Why? Because this forces the rich ensure that those schools, hospitals, and so on, work.  And no, your average billionaire is not subjecting his wife to a TSA porno scan and pat down. TSA agents only get to pull aside and molest hotties who aren’t part of the .1 percent.

One of the ways we will know that governments are finally serious about inequality is when they brutally crack down on tax evasion. It isn’t that hard to do, despite what everyone says. I’ve worked in a major financial institution; money going in and out of the country is examined, data is sent to authorities, etc. This stuff can be tracked easily, structuring is easy to detect, and a few criminal sentences (not fines) in high security prisons would make the point nicely.

If you make your money in country X, you pay taxes there. Money is a public utility. If you want to take it out of the country, the government acting for the people has the right to make that difficult, and indeed, tax it again or limit it.

Cyrptocurrencies like blockchain are, in part, a way for ordinary people to move money out of countries just like rich people do. This is a corrupt solution to a real problem: Our elites are corrupt, so we want to have the same right to be as corrupt as them–instead of insisting the corruption end.

There is no war but class war. The rich understand this, they have always understood it.

You keep the rich poor and weak, or they will eat you alive. Then they’ll kill you. The death toll from the 2008 financial collapse is in the millions, by any reasonable modeling of its consequences.

This is about your life, your death, and how well you live.

You should probably make it about the rich’s life, death, and how well they live.

Reasonable accommodations (a la Corbyn or Sanders) will be made. If they are not, unreasonable accommodations will be made. The rich will die or suffer in the same numbers as the poor.

But as a percentage, there just aren’t that many rich.

Too bad.

Update: Clinton supported the Panama free trade deal.

Here’s what Sanders said at the time:

Then, why would we be considering a stand-alone free trade agreement with this country?

Well, it turns out that Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade U.S. taxes by stashing their cash in off-shore tax havens.  And, the Panama Free Trade Agreement would make this bad situation much worse.

Each and every year, the wealthy and large corporations evade $100 billion in U.S. taxes through abusive and illegal offshore tax havens in Panama and other countries.

According to Citizens for Tax Justice, “A tax haven . . . has one of three characteristics: It has no income tax or a very low-rate income tax; it has bank secrecy laws; and it has a history of non-cooperation with other countries on exchanging information about tax matters.  Panama has all three of those. … They’re probably the worst.”

Mr. President, the trade agreement with Panama would effectively bar the U.S. from cracking down on illegal and abusive offshore tax havens in Panama.  In fact, combating tax haven abuse in Panama would be a violation of this free trade agreement, exposing the U.S. to fines from international authorities.

In 2008, the Government Accountability Office said that 17 of the 100 largest American companies were operating a total of 42 subsidiaries in Panama.  This free trade agreement would make it easier for the wealthy and large corporations to avoid paying U.S. taxes and it must be defeated.  At a time when we have a record-breaking $14.7 trillion national debt and an unsustainable federal deficit, the last thing that we should be doing is making it easier for the wealthiest people and most profitable corporations in this country to avoid paying their fair share in taxes by setting-up offshore tax havens in Panama.

Vote Clinton! She’ll make sure your job gets sent overseas and that the rich don’t pay tax.


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Will Capitalism Be Replaced By Something Better?

2016 April 2

The short answer is: “Who knows?”

The longer answer is “probably not,” simply because we have such a mess coming down the road in terms of climate change, resource exhaustion, imperial collapse, and so on.

But the answer isn’t “No.”

The answer is that it is possible. Not likely, but not so unlikely as to be a write off not worthy of consideration.

Far better systems can be thought up, I believe. I believe it’s even possible those systems would work with human nature well enough to be viable (a.k.a., are not utopian, in the impossible sense).

I also think they are our best alternative.

Wait? What?

Yeah. I think the odds are less than even that we pull it off, but I also think it is our best chance.  Sometimes the best bet you’ve got just isn’t a very good bet. We either fix the way our economic system works (how we turn resources into goods and services) and our political system works (how we make group choices) or we could go extinct. Better case scenarios involve billions of deaths and amazing amounts of suffering.

Of course, dividing the problem in two is wrong. Capitalism isn’t “just” an economic system.  The great mistake of the social sciences was changing from “political economics” to “economics.” Capitalism is a political choice, but it’s also how we make most of our group choices.

The right is right. Ideas matter, and the ideas on the ground during a crisis are important.  We’ve got a lot of crises ahead of us. That is bad, but it is also our hope. Setting up to win those crisis points is what matters. The neoliberals won the last one (the financial crisis), but no one wins them all.

It would be good if we had some radical options on the floor which would also make most of humanity better off, provide for freedom, and so on.

So figure out what you want to replace capitalism (or how it can be radically fixed); and do look seriously at the political system. Democracy is not going to be immune from the fallout (nor is the sort of one-party state China runs.)

We can create a better world, but that doesn’t mean we will. It’s up to us, to humanity, in the largest sense.


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The End of the Age of Oil

2016 March 31
by Ian Welsh

Has the last oil boom ended?

Electric cars will be cheaper to own than conventional cars by 2022, according to a new report.

The plummeting cost of batteries is key in leading to the tipping point, which would kickstart a mass market for electric vehicles, Bloomberg New Energy Finance (BNEF) analysts predict.

This is very good news for the world, and though the technology is certainly not carbon neutral, it is better than oil, the energy used to charge the battery can be kept relatively clean. Once upon a time, that energy was coal and other conventional energy sources, but coal is now more expensive than solar, and the price of solar is continuing to drop.

While this is good for the world, it’s going to be very, very bad for many countries. The oilarchies’ days are numbered. I will state right now that I doubt that Saudi Arabia’s monarchy will survive this.  Countries that are heavily reliant on oil, especially expensive oil, are going to be in trouble. The same is true of natural gas.

All resource booms end. Eventually resources are replaced. Once there was a huge rubber boom in Brazil: Then we learned how to make synthetic rubber.

We might get one more oil boom, but that’s it.

So: Alberta oil sands oil? Done. The Alberta-dominated Conservatives damaged terribly the Canadian manufacturing sector during the last oil boom by refusing to acknowledge that the high Canadian dollar affected manufacturing sales, but the good days won’t be coming back to Alberta.  It’s possible that Alberta has a key resource which will boom in the future of which I’m not aware (entirely possible), but if it doesn’t, Alberta’s high-flying days are done.

Go down your list of major oil exporters and look at the prices they need per barrel to make a profit. A lot of them are going to have to reduce production of the most expensive wells. This process will continue for years. Saudi oil production costs per barrel are under $10, but the price they require to keep their society running is much higher.

Cheap energy is an economically good thing. But the effects of dislocation will be immense.

Unfortunately, while this is great news for the environment, it is all too late to stop runaway climate change. Methane locked into land and ocean will be released now. It is too late, we have passed the point at which the process of global warming became self-reinforcing. It is now a vicious cycle and cannot be stopped by simply reducing carbon emissions.

Whoops!

We knew this would be the case, and we decided not to do anything about it. Let no one tell you otherwise.

A large amount of the world is going to become essentially uninhabitable due to heat. Climate change will change rainfall patterns and many areas will experience a decrease in agricultural productivity. Combined with aquifer depletion, conventional agriculture will take a huge hit.

This is a fixable problem. We can grow ten times as much food as standard agriculture in small, intensely cultivated plots, even indoors. We will have cheap energy. The remaining oil can be used for fertilizer until we have better solutions.

The next problem is water. Large parts of the world will not have enough fresh water. Water reclamation, desalinization, and other technologies around water are key here.

Geopolitically, there will be water wars. Watch nations where major rivers cross borders, and the up-river nations will want to take “more.” Canada, which has most of the world’s lakes, is in great danger from America, who will want that water in amounts and at prices for which we should not settle. Meanwhile, the US may drain the Great Lakes faster than they are replenished.

The mass migrations of this period will make the current “immigration crisis” look tame. It will be worse even than it is for the countries taking the biggest groups now (none of which are European).

Sea stocks are collapsed already, and will collapse past commercial fishing viability. Essentially, all the fish you eat will be “farmed.” Ocean acidification has killed the Great Barrier Reef, but the greater risk is that the ocean’s ability to absorb carbon may effectively end.

Combined with our continued deforestation, the lack of carbon fixing capacity, along with these various vicious cycles, could lead to a runaway climate change worse than virtually all the models I’ve seen are predicting.

If we had sense, we would be transitioning from conventional to intensive agriculture NOW (well, ok, 15 years ago minimum). We have spare workers–we do not have a spare Amazon. If we had sense, we would pay Brazilians and other mass deforestors more to stop what they’re doing than they get from continuing. We must mass-reforest, and re-wild land, and do so NOW.

This is also to avoid collapse of the biosphere, an event which is within the realm of possibility. If such a collapse occurs, humanity will go with it.

Our continuing reliance on very non-competitive markets to create what we need in time may wind up dooming our race. Markets are great and useful in this situation, but market support (such as was used for decades to create the computer industry) can jumpstart industries, cutting years to decades off the time it takes for prices and costs to drop sufficiently for mass adoption.

However, in general, the way we do Capitalism is going to have to change. Capitalism may need to be replaced with something better, but even if it continues the vast waste must end. The doctrine of planned obsolesence, for example, must go.

A world where we aren’t constantly producing crap we either never needed in the first place or wouldn’t need if we allowed engineers to design products to last will be a much nicer place to live, anyway. Yes, there’s a lot of work to be done to mitigate the coming disasters, but there is so much work going on which shouldn’t be done at all that we would most likely wind up working less and living better.

Those who survive, anyway.

The Age of Oil is coming to end. Did it last 20 years too long? Is the Age of Humanity also to end?


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What Matters Is Character (Terrorism and Rights Edition)

2016 March 29
tags:
by Ian Welsh

This chart tells you not about terrorism, but about the nature of the people living in and running Western Europe today.

terrorism attacks from 70 from Quartz

So, not even close to peak.

Yet Europeans in the 70s did not get rid of their civil liberties in the way that France, for example, has. They also did not react with the frankly embarrassing pant-wetting fear we have seen. Maybe that’s because, in the 70s, there were still plenty of people around who remembered World War II.

Terrorism is a serious threat to developed nations only because of the way we react to it. We, or our leaders, or both, seem determined to give up liberties and freedom over a danger far less likely to kill any of us than walking across the street.


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