The horizon is not so far as we can see, but as far as we can imagine

Tag: political economy

Week-end Wrap – Political Economy – May 11, 2019

Week-end Wrap – Political Economy – May 11, 2019

This post is by Tony Wikrent

[, via Avedon’s Sideshow 4-28-19]

“The phrase is code for elites being pressured in ways they don’t like, and is often a shield against legitimate criticism of corruption or dependence on corporate power.”

Strategic Political Economy

[Ian Welsh, May 10, 2019]

You cannot have a good economy, where executives plan for the future, unless they need their companies to continue to do well. That means high progressive tax rates on income, on capital gains AND on unrealized capital and wealth, with no loops.

Taxes on unrealized capital gains and wealth are necessary because if you don’t do that rich types don’t cash out capital, instead they use loans to pay their bills. When you’re worth 500 million or even just a 100 million, banks are happy to lend, at under 2%.

And this week, the perfect example of how a republic that does not throttle the rich has its economic policy severely distorted: 

“How the Koch Brothers Are Killing Public Transit Projects Around the Country” 

[New York Times, via Naked Capitalism 5-7-19]

“At the heart of their effort is a network of activists who use a sophisticated data service built by the Kochs, called i360, that helps them identify and rally voters who are inclined to their worldview. It is a particularly powerful version of the technologies used by major political parties*. In places like Nashville, Koch-financed activists are finding tremendous success. Early polling here had suggested that the $5.4 billion transit plan would easily pass. It was backed by the city’s popular mayor and a coalition of businesses. Its supporters had outspent the opposition, and Nashville was choking on cars. But the outcome of the May 1 ballot stunned the city: a landslide victory for the anti-transit camp, which attacked the plan as a colossal waste of taxpayers’ money.”

High Speed Rail– A Much Greener Way To Travel Than Airplane Or Auto… And Some Special Interests Opposing It
[DownWithTyranny, May 11, 2019]

Yesterday CNBC carried a very interesting piece on high peed rail– and why the U.S. has fallen so woefully behind other nations. Jeniece Pettitt and Adam Isaak compared the U.S. to other countries: “China has the world’s fastest and largest high-speed rail network– more than 19,000 miles, the vast majority of which was built in the past decade. Japan’s bullet trains can reach nearly 200 miles per hour and date to the 1960s. They have moved more than 9 billion people without a single passenger casualty. France began service of the high-speed TGV train in 1981 and the rest of Europe quickly followed… When the high speed rail between Madrid and Barcelona in Spain came into operation, air traffic just plummeted between those cities and everyone switched over to high speed rail which is very convenient. People were happy to do it; they weren’t forced to switch. They did it because it was a nicer option to take high speed rail.

Week-end Wrap – Political Economy – April 20, 2019

This post is by Tony Wikrent

I have been looking at the work of Cornell University law professor Robert Hockett, who is serving as an economics adviser to Representative Alexandria Occasio-Cortez. I have been delighted to find that Hockett has been working the same angle I have: applying the classical republicanism that informed the creation of USA, to today’s issues of political economy. Hockett’s contribution is the development of the concept of what he calls “the producers’ republic“:

….the United States actually has a distinguished tradition of what I am calling “productive republican” finance. It is a tradition pursuant to which productive assets were deliberately spread broadly among diligent citizens ready to better the lives of themselves, their families, and ultimately their communities through thoughtful, hard work.

Historically, the tradition is rooted in two complementary sources: first, an implicitly opportunity-egalitarian, “productive yeoman” colonial culture and subsequent national self-image, stemming in large measure from the Civic Republican and Classical Liberal ideological origins of the American republic; and second, an attendant suspicion of large aggregations of financial capital, stemming ultimately not only from the inconsistency of such aggregations with equal opportunity and productive yeomanry themselves, but also from many of the Founders’ and their forebears’ personal experiences, as agronomists, with exploitative absentee London banking concerns across the

This past January, Hockett was a participant in a small conference Money as a Democratic Medium, sponsored by Harvard University’s Program on the Study of Capitalism, Institute for Global Law and Policy:

Money, governance, and public welfare are intimately connected in the modern world. More particularly, the way political communities make money and allocate credit is an essential element of governance. It critically shapes economic processes – channeling liquidity, fueling productivity, and influencing distribution. At the same time, those decisions about money and credit define key political structures, locating in particular hands the authority to mobilize resources, determining access to funds, and delegating power and privileges to private actors and organizations.

Recognizing money and credit as public projects exposes issues of democratic purpose and possibility. In a novel focus, this conference makes those issues central. Scholars, policy makers, and students have often assumed that money and credit emerge from private exchange and entrepreneurial activity. Recent work, by contrast, emphasizes that modern currencies depend on collective orchestration. That approach resets the frame.

One of the participants was Jeffrey Sklansky, professor of history at the University of Illinois at Chicago and author of Sovereign of the Market: The Money Question in Early America (University of Chicago Press, 2017). Sklansky gave a brief but excellent overview of the career of Charles Macune, the head of the Southern Farmers’ Alliance from 1886 to December 1889 and editor of its periodical, the National Economist, until 1892. Macune developed the Sub-Treasury idea to break the stranglehold the big banks and grain trading firms had on finance and credit for agriculture. There is precious little information available on Macune, and Sklansky has earned my deep respect for what he is doing.

Hockett’s presentation is also in this video, as is that of Joseph R. Blasi of the Rutgers School of Management and Labor Relations, “The Citizen’s Share: Reducing Inequality in the 21st Century”

This is only one of about a dozen YouTube videos of the Money as a Democratic Medium conference.

In Having a Stake: Evidence and Implications for Broad-based Employee Stock Ownership and Profit Sharing, Blasi writes about the federally mandated profit sharing the administration of George Washington imposed on the cod fishery to rebuild it, after the British had nearly destroyed it because it trained so many of the officers and sailors in the American navy.

….Jefferson, Washington, and the Congress chose to help the industry get back on its feet by what was essentially a tax cut (in lieu of tariffs paid for supplies coming from outside the U.S.) to the owners and workers of the cod fishery on the condition that the ship owners share the tax credits with all the workers…. they rejected outright subsidies to the wealthy owners who controlled the boats and warehouses on the basis that any government tax credits had to include workers. The law was explicit in its sharing criterion: owners had to share five-eighths of the credit with the crew, and additionally have a signed agreement with the captain and crew for broad-based profit sharing on the entire catch throughout the voyage. The tax credits were administered by the Treasury Department headed by Alexander Hamilton through the port Customs’ Houses. The arrangement helped rejuvenate the industry. Congress continued it for many decades. See The Citizen’s Share: Reducing Inequality in the 21st Century, Joseph R. Blasi, Richard B. Freeman, and Douglas L. Kruse. (New Haven: Yale University Press, 2013), 1-8. See also the Report on the American Fisheries by Secretary of State Jefferson.

[Public Banling Institute 4-20-19]

Thomas Marois, Senior Lecturer in Development Studies at the University of London and recent guest on It’s Our Money with Ellen Brown, argues that until people regain control of money and credit, we will not be able to stop economic and ecological crises.
“There’s really no option. We can’t simply relegate the question of money and finance and credit … We can’t do anything until we have control of money. And to leave that to the private sector is a strategic mistake because then they control that agenda. They control credit. They control access to credit.”

Veblen’s Idea of Business Versus Industry

I had wanted to reply to comments in the thread of Economics as Cultural Warfare: The Case of Adam Smith, where Bruce Wilder makes an important correction to my view of Smith: “Smith’s central argument rather famously is that the division of labor is the primary source of wealth!” Which of course is perfectly true, given that one of Smith’s most famous passages is that describing the impressive productivity of the machines Smith found in a pin making factory.

But my design is to utterly annihilate any respect for Adam Smith by showing that he is little more than an apologist for the imperial looting, immiseration, and devastation the British empire exacted on its colonial subject populations. In my world view, there is nothing about any apologist for the British empire that is worth salvaging. Was it possible that here was an anomaly for which I would have to bend my rules?

As I pondered this over the past week, I realized that tossing Smith’s division of labor argument into the trash bin of history is more easily accomplished by referencing the arguments made by Thorstein Veblen regarding the differences between business and industry. I was not very surprised to find that I could find nothing on the internet about Veblen’s argument worth linking to. Veblen has always been  persona non grata in the mainstream economics profession — which means he probably has gored one or more of the profession’s sacred cows. Which of course makes Veblen all the more attractive in our day, when the stench of the intellectual rot among economic academicians has reached an overpowering level. Modern Monetary Theory may have some weaknesses and faults, but I would rather have it blowing through the academy to dispel as much of the bad air as it can, than leaving the brain dead body to continue rotting and fouling the air.

Researching my attack on Smith, I had taken off my bookshelf Joseph Dorfman’s The Economic Mind in American Civilization. I now opened Dorfman’s book again to see what he had written about Veblen. I was surprised but delighted to find the best summary I had yet read of Veblen’s separating business from industry. In case readers don’t know it, Dorfman wrote a book in 1935 entitled Thorstein Veblen and His America. And what readers certainly do not know is that the descendants of Veblen loathed the book, and spent years trying to persuade, then force, Dorfman to change the book, mostly the parts in which he described Veblen’s personal traits and peccadilloes, including the controversies Veblen stirred up at every university that ever hired him. Veblen’s descendants were unsuccessful. The source for this is Jon Larson, who worked with Veblen’s descendants in the restoration of the Veblen farm.

Despite this sad history, Dorfman’s explanation of Veblen’s ideas on the differences between business and industry are extremely useful today. I hope to see in the comments someone expressing their “eureka” moment — yes, let us bury Adam Smith once and for all, and never hear of him again.

Below excerpted from Chapter XIX, “The Disturbing Voice of Thorstein Veblen,” The Economic Mind in American Civilization, Joseph Dorfman (Viking Press, 1949). 

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