One of the main advantages of capitalism is “permission.” It gives more people permission to do things than oligarchical or state capitalism. This was, actually, a lot of what Adam Smith was complaining about in “The Wealth of Nations”: that state monopolies and controls were limiting who could effectively participate in the economy: you might have a great idea, but you couldn’t do anything with it.
Capitalism, as a Western system, also has other features, of course, including wide-scale theft of capital from the majority of the population, of which the enclosure of the commons was one part (the commons were property rights). Society becomes divided into those who have capital, and those who don’t, who are compelled by Marx’s “whip of hunger” to work for wages. (Thus wage-slavery, a term coined in the 19th century when this process was happening in America.)
Still, the explosion of businesses of all sizes is much of what drove the success of capitalism: the ability to DO things, and not be stuck in old forms.
This is also at the heart of much of the success of China. What Westerners don’t realize is that, despite all the cries of totalitarianism, the Chinese government is one of the most decentralized in the world: over 70% of spending decisions are made below the national level: this makes it the most decentralized national government in the developed world.
China’s central leaders make decisions and laws, to be sure, but much of how that is implemented in any locale is up to the local party, and definitely not micro-managed.
If China had tried to micro-manage everything, they would never have succeeded in becoming the World’s largest economy, or lifted so many people out of poverty. Instead they would have succumbed to the same diseases that did in the USSR. (Which had its own successes, but stalled out for a variety of reasons.)
Some years ago, in an old book I can’t find, I read an introduction where the author, who had lived thru WWII, noted that the idea that fascism was the superior form of government had been proved to be absolute nonsense: when the Allies turned their economy around and pointed it at war production and mobilization it produced miracles precisely because decision making wasn’t bottle-necked at the top. A dictator and his few trusted cronies can be decisive, but their unwillingness to extend trust down the chain cripples them.
This requires social consensus and trust, however. America and Britain and Canada and Australia had to be behind the war at a population level: but they were, and while guidance was needed and often correction, it is precisely that many people could make decisions which made the war effort possible and helped crush the Nazis.
The problem we have now in the West is dual-barreled; we both have improper direction from the top and bottlenecking. New enterprises can start, and do, but if they are successful they can’t run: they are bought up or sold out. This is a result of the structure of financing these days: founders generally don’t control the majority of their company’s voting stock, and are forced to sell or go public by investors (most often, sell.)
Money itself is bottle-necked: there’s tons of it pooling at the top, but there are radically fewer banks than ever before, and access to money has to go thru the already rich. The old middle and even upper (not rich, but upper classes) are relatively poorer: the famous “check from Dad” investment is available to fewer and fewer.
Regulatory hurdles are massive. Everyone knows, for example, how to make insulin, and you’d think someone would get into the business and undercut producers. Insulin costs about $4 to make, and sells for over $300. In economics this looks like the sort of situation that would automatically lead to competition.
It doesn’t. For one, getting permission to produce is hard and expensive. For the second, if you did manage to, it would be costly to setup the initial factory and supply chain, and that means the current producers would simply step in and undercut the new entrant till they went out of business (people would buy the cheapest), then push prices back up once they had driven the challenger out of business.
The second bit is also a regulatory issue. A properly functioning government wouldn’t allow undercutting: but then a properly functioning government would not allow the sort of predatory pricing and abuse of oligopoly power.
There are only three insulin producers in the US: they are obviously in collusion (which older anti-trust law would have said is clear given how their prices are all so high and uniform, and thus it did not require proof of meetings and so on to set prices.)
And this is the next problem: if there were a hundred pharma producers in the US, one of them would break ranks. But when there are so few, they don’t: collusion is easy. You don’t even have to get together, you just have to follow the price increases and be willing to commit mass murder. Since it is a requirement of membership in modern capitalist elites in the West to be so-willing, of course no one in charge of Pharma in the US isn’t willing to mass murder to get richer, as Covid has also proved.
This inability to really do new things or even old things (insulin ain’t new) unless they benefit and are controlled by incumbents is rife throughout Western societies: it is by design. Even international trade law is designed to ensure this: tariffs and subsidies are how companies that don’t already lead an industry used to develop, but we’ve made that basically illegal, leaving only “pay your workers dirt cheap wages and we’ll let you in, if you cut us in on those delicious exploitation profits.”
This is what China did, at first: they cut Western and American elites in on the profits. But they also were very aggressive about obtaining the manufacturing knowledge (called “intellectual property” in the West”) for themselves. The price of the profits was that you had to give up your secrets. This was the deal, I was told this decades ago by people familiar with business in China and offshoring, but there’s a lot of pretense now that Western elites didn’t know it. They sold their countries good manufacturing jobs and middle classes down the river for Chinese gold.
I don’t blame the Chinese for this: I’d have done the same in their shoes, because industrializing by the “rules” hasn’t ever worked unless one was willing to be subordinate (Japan, Korea, Taiwan, etc…)
The Chinese sized up Western, and especially American weaknesses shrewdly and took advantage of them. American elites did get most of the profits they had been promised, they just didn’t get to own the Chinese economy, which is what they really wanted.
China is, thus, the great exception: the one who made it out. Almost everywhere else, however, what has happened is that a few companies in each industry have come to predominate. Their production facilities are scattered, but at the same time bottlenecked, with parts production in various locations final assembly in others, so that if any part of the chain is taken out the entire chain can experience shortages.
They are protected by vast “barriers to entry”. They can undercut at will, and regulators won’t stop them. The structure of starting new businesses means upstarts have to sell out, and often to their competitors, as one can see by watching internet giants gobbling up strong competitors like YouTube, Instagram, WhatsApp and so on. Law is against them, up to and including international law.
And so a few companies, controlled by a very small elite compared to the population, control most of the developed world economy. Where there might have been dozens or hundreds of viable large firms, now most sectors are controlled by a few conglomerates. These conglomerates then own national politicians, and those politicians write the laws to suit them. (A perusal of major extension of copyright law in the USA, with the original expiration dates on copyright on Mickey Mouse will be educational.)
Oligarchy is always stupid and unproductive. The great oligarchs are made out to be heroes, but almost all of them exist by making more activities impossible than they make possible: they do their best to allow nothing to succeed unless they will profit from it, as app stores, with their 30% rates, show at the most retail level.
All things human end. All oligarchical ages end, just as do all democratic ages, aristocratic ages and so on. The question is when and how? The ideal is to use what remains of the machines of effective democracy and government to end this oligarchical age. China has recently cracked down on billionaires and tech exploitation of workers (for example, they made abuse of app delivery workers illegal). They did so because the CCP understands its interests: it doesn’t want opposing power centers, and because the CCP wants the Chinese economy to work for everyone because they don’t want serious dissent.
The need for survival concentrates the CCP’s minds. Whatever one thinks of them, they can, as Matt Stoller points out, still govern.
Our elites, on the other hand, are pigs at the trough. There is nothing they will not do to become richer, and they have no eye for the longer run, only for power and money and now.
This has worked well for them for so long they do not believe it will ever end.
It will. It will either end because the populace ends it (led by a chunk of fallen elite or elite who decides to betray the other elites) or because the necessary conditions for its success crumble. This can be an end to geopolitical supremacy (which Western elites are scared of, which is why the onrushing Cold War with China) or collapse of the environmental conditions and resources necessary to continue this mode of production, which is something our elites are not scared of (no, they aren’t scared of climate change.)
Unfortunately, at this time, it seems most likely that this configuration will end because of environmental and societal collapse.
(My writing helps pay my rent and buys me food. So please consider subscribing or donating if you like my writing.)
bruce wilder
“a properly functioning government would [not] allow the sort of predatory pricing and abuse of oligopoly power.”
Your sentence is missing the bracketed not.
Otherwise, pretty much perfect essay.
Plague Species
A properly functioning government would not allow its citizens to be treated as slaves, yet this is precisely what both America and China do, but hey, at least China provides housing in the form of corporate dorms for their slaves whereas in America the slaves must provide their own housing.
Watch American Factory. Chinese workers are slaves too, but slaves with a better attitude, however, even that’s changing and China’s slaves are showing signs of being fed up just as America’s slaves have hit the wall.
None of this will be rectified in any constructive, meaningful way. Because of technological development, only about 20% of humans really need to actually “work” for the system to sustain everyone and yet because of growth economies, everyone must “work” even though most everyone provides no tangible value.
Why China’s Youth Are ‘Lying Flat’ In Protest Of Their Bleak Economic Prospects
Ian Welsh
Thanks Bruce.
PS: China is improving conditions–things are getting better, not worse.
America is doing the reverse.
China is in the “middle income trap.” They got to where they are, as I say in the article, by cheap labour. Now they’re trying to move up, stories about this are common (for example they are offshoring low wage and profit manufacturing.)
The CCP doesn’t have to be Saints, they just have to operate on enlightened self-interest. They want a rich and happy population, to secure their own power and keep their own heads attached. (I think they’ve done some major stuff wrong, but that they are still able to govern seems clear.)
Bazarov
“…when the Allies turned their economy around and pointed it at war production and mobilization it produced miracles precisely because decision making wasn’t bottle-necked at the top.”
The war production decisive in WWII was Soviet. As far as I know, it was a top down affair (as in: the leadership prioritized weapons production and funneled the best resources to it). Even the pre-WWII social preparation was leadership driven. Basic stuff like teaching the backwards peasants what a car was, how to drive, how to shoot a gun–turning them into modern citizens. This essential foundation helped make it so the Soviets had soldiers capable of fighting when the time came.
Not to discount the idea that decentralization has clear advantages over centralized micromanagement. But it’s also true that decentralization can lead to chaos. What the Chinese have is an interesting synthesis: the leaderships sets the goals, philosophy, and vision. The regions then get the chance to achieve it in their way, and then once some have, the leadership chooses the “best” one as the model the rest ought to follow.
Plague Species
By what measure. Metrics can be deceiving and often if not always don’t tell the whole truth or even half the truth.
Yes, many Chinese no longer toil in the dirt per se, but they have the psychic isolating toxic sediment of consumerism as a replacement.
NR
This gets to a thought I’ve had for a while now: Corporations are inherently immoral. They create distance between the owners of a company and those who act on its behalf, and that heavily incentivizes immoral acts.
If a company is owned by a single individual and that individual is faced with a choice between doing something that hurts people but earns more profit, and doing something that helps people but earns less profit, that individual can make the moral choice to choose to help people even though it means less money in their pocket. Many won’t, of course, but some will, and the point is that it’s a choice they can make.
But with a corporation, it’s run by someone who works for the shareholders, and that someone is required (in many cases actually legally required) to make as much profit for them as possible. And so when that same choice arises, they have to choose the option that makes the most profit, no matter how many people get hurt in the process. The actual owners of the corporation–the shareholders–are insulated from the choice, and the person they have running the company for them has to do whatever will make them the most money.
Individually-owned businesses can be run by immoral people, but corporations are inherently immoral (or at the very least, heavily incentivize immoral choices).
Astrid
Another classic Ian Welsh essay. Hope many people will read it.
The interaction of Chinese or Iranian or Russian or Venezuelan governments with their own people should be none of the West’s business. That so many in the West’s chattering classes are absolutely obsessed about foreign situations that they can’t even comprehend nevermind understand, certainly said more about the West than it does the East. Reminds me of the oh so moral Georgians/Victorians decrying widow burning as justification for their colonial projects (which just happens to throw millions of Indian weavers into destitution and millions of Chinese into opium addiction, so much more civilized).
Mark Pontin
Intelligent post, Ian.
Hugh
I agree about us. I think China is more complicated. Decision-making may be decentralized to an extent, but it is still very much Xi’s show. I see it very much more in terms of Chinese millennia-old emperor presiding over an entrenched bureaucracy. You can see the top down dynamic in many areas. China’s foreign policy militancy, its Belt and Road strategy, these are very much decisions made at the top. But so is the existence of billionaires, and that there are so many of them.
The emperor-bureaucracy has both its strengths and its weaknesses. And there is the third force, the Chinese people. The Chinese people are nationalist, but their nationalism is based much less on the state and much more on their Han-ness. So their loyalty to Xi and the bureaucracy is based on what these two have done for them lately. Xi and the bureaucracy can be repressive and authoritarian, but they also have to deliver.
But the emperor-bureaucracy paradigm has a counterproductive dynamic. The emperor wants to hear about successes and punish failures. This can make the bureaucracy very reluctant to report problems. So with covid, the first people who reported its emergence in Wuhan got jailed. And although it probably started as a wild type virus, we will never know for sure because both Xi and the bureaucracy would have reacted the same way, not to be open, whether the virus came from the wild or from a lab. More recently, we have the example of Evergrande, and the even bigger problems of the real estate and banking system behind it, and foreign investment as well. All these problems and their risks have been sitting out in plain sight for years. But there was no attempt to defuse them. It is only when they hit the wall that the possibility of action even arises, and even then it is pretty ad hoc and way too little.
And as always beyond all these is climate change. As dysfunctional as we are, I think the Chinese are institutionally even less capable with dealing with it than we are –and they have more than four times as many people.
Plague Species
I fail to see how this is better. Cosmetically, perhaps, but the cosmetics of modernity conceal the the horror of soul-sucking isolating loneliness.
The Extreme 996 Work Culture in China
I fail to see how this is better.
How China treats its people is my business, Astrid, considering the implications of American Factory.
StewartM
Bazarov
The war production decisive in WWII was Soviet. As far as I know, it was a top down affair (as in: the leadership prioritized weapons production and funneled the best resources to it).
While the Soviet government did (correctly) set priorities and moreover (correctly, and unlike Germany) *enforce* priorities to ensure that things that should be built were built, and that dead-ender projects were ended, the paradox was that a lot of the Soviet peoples later recalled WWII fondly, because the Soviet government eased up on micromanaging things.
I recall Peter Samsonov (who runs the website Tank Archives) relating a story of a Soviet factory manager who was turned in by his own engineers who rebelled against him because he was flat-out refusing to change production as ordered, and was sentenced to a penal battalion for it (so yes, the guy deserved the reprimand). Despite the Western lore about penal battalion service being a de facto death sentence, the guy survived the war.
There are also stories about not only Soviet generals (Konstantin Rokossovsky) arguing with an winning arguments with Stalin during the war, Samsonov even has one of Stalin’s orders being refused and being sent back to him by a lowly official (Samsonov says he can find no record of this guy being punished). So, yes, during the war, the heavy hand of the central state did ease up a bit.
bruce wilder
China is in the “middle income trap.” They got to where they are, as I say in the article, by cheap labour. Now they’re trying to move up
Indeed, though I think they figured out where they wanted to go back in the 1980s and they had some far-sighted ideas about what they would need to do, to get past the “middle-income trap”.
Just as one example, they recognized that the U.S. and Western Europe realized huge economic rents from globalized “brand-name” business corporations and infrastructure that penetrated the under-developed world without benefiting those commodity producers. They might well be wrong about some details of the story they told themselves what “explained” why the West was rich, but they have built globalized brands, like Haier and Huawei as well as a superior penetrating post-colonial infrastructure in the belt and road initiative.
It is going to take nerves of political steel to navigate the gear-shift from a ridiculously high rate of household savings to an economy with high domestic consumption while at the same time negotiating a rising money-standard of living. A huge number of people are going to see big rises in both money cost of living and money wages or money income, as the original gambit of “low wages” in dollar terms evaporates. It is a good problem to have, of course, but nevertheless hard to navigate without crashing household savings bloating the asset classes used as mattress stuffing. A yuan rising as forex may offset some of the pain, but again that gets tricky when crashing existing foreign investment claims.
VietnamVet
Besides the just-in-time supply disruptions, millions of workers have gone missing. The corporate state can’t acknowledge the effects of the pandemic because to fix it requires restoration of public health system and a working government. Teachers, police, garbage collectors, utility, and all essential workers are finding out that in this system they have only two choices; risk being infected with SARS2 or quitting. mRNA vaccines, mandates, and passports can not eradicate coronavirus. The government no longer serves or protects them.
Thomas B Golladay
This is it. Dr. Martenson lays out the oil shock that is beginning now. He saw this back in June and now its hitting. We don’t have the oil or gas period. We hit the systemic breaking point in our supply chains.
https://www.youtube.com/watch?v=03bCDEwLCTk&ab_channel=PeakProsperity
Joan
@NR, that makes a lot of sense to me! If a single person runs a small shop, their goal is still profit, but it’s the level of profit that will feed them (and any kids).
A plumber or carpenter can grow his/her business to include employees if it’s doing well, training apprentices and such, but he could also work his whole career just himself. That amount of profit is not enough to leech the community, because it’s simple honest work.
Once you start pushing for so much profit that you can pay random people who don’t do anything (shareholders), you’ve replaced the function of the business from providing good to the community to just being a leech.
This makes me think of the table maker in my neighborhood. He’s doing well enough to have a storefront with room for multiple displays of kitchen cabinetry and family-sized table-and-chair sets. He likely trains apprentices but may not hire anyone on permanently. He’s clearly making a profit, but to my eyes, that’s still honest work that benefits the community. And sure, he himself may be quite the jerk! Just his business is not default-immoral, like large corporations, as you explained.
Lex
One of the problems with Marxist-Leninist politics is that the former was dependent on an industrial economy which neither Russia nor China had when adopting ML economics. The Soviets forced industrialization and that set a certain, basic relationship between state and populace. China under Mao did this as well, but the modern economy of China was much more transactional: work hard and you’ll get a better economic life.
There’s plenty of evidence that the Chinese people see it this way. They’re not afraid to have violent protests against local leadership when that leadership screws them. Based on the news and public statements from the upper echelons of the party, it appears that it recognizes that this agreement is breaking down. So we hear Xi talk about how the gains have to flow to the people or the central government purposefully breaking real estate markets and cracking down on tech billionaires. I’d suggest that this indicates the Chinese state still has a real fear of the populace, understands the agreement with it, and is making some effort to address it. Whether it will be successful is another story.
Leadership in the west doesn’t recognize a contract with the governed. The most interesting thing about @plaguespecies link is that where freedom rings there isn’t a lay flat movement. There are some indications of something like it in the inability of service jobs to fill positions, but all that really shows is how ineffective it is relative to potential power. If large numbers of food service, grocery, Amazon and transportation workers just took two weeks off to lay flat, the whole system would come crashing down. So it reads like Chinese people are recognizing that the Chinese dream is bunk and opting out until leadership fixes things while the American people still believe in the dream even though they know it’s hollow, or they trudge along because they fear the consequences. Who’s more “free”?
Plague Species
Did it ever? If it did, which is dubious, it’s been a hell of along time since it has. But not only does the government not serve to protect, it actually serves on behalf of the wealthy elite to maim and murder its “ordinary” unwashed citizens.
Katty Kay on Morning Joe this morning told us the economy has rebounded tremendously coming out of the pandemic. The message is the pandemic is behind us and America and the world are back to normal. These f*cks are truly living in an alternate reality. I hope and pray they truly get their comeuppance. Their alternate reality is a malevolent, callous, farcical insult to all those deeply affected by this clusterf*ck of a sh*t show.
Hart Liss
Great, great piece.
A few minor points, though.
It’s actually been clear for years to those paying attention how the PRC rolled: A shakedown, access to the PRC market in exchange for giving up IP.
More genius from the PRC: Set up factories there and destroy your own nation’s economy.
Always wondered — still do — how the PRC got our number so well and clearly but they obviously did.
As for the whine about app stores’ 30% cuts: As long as the price stays the same however one buys something, why, as a rule, should one care how the price gets split? 30% looks ugly, is almost assuredly excessive, but substantively it’s a really, really minor thing.
BC Nurse Prof
Ian, please tell us more about why the ultra-rich are not afraid of climate change.
Shouldn’t they be?
Plague Species
I think I can speak for Ian on this. His point is yes, they should be afraid of climate change but because of their hubris they believe they can escape the ravages of climate change that us mere mortals cannot. Also, their thinking is short term and has been for quite some time now. For them, forty years from now is beyond the horizon and not worth fretting over. They will exploit the proles’ concerns about climate change and profit from it, but they don’t share those fears for the reasons just articulated.
BC Nurse Prof
Thanks, P.S.
Willy
I think the rich are like alcoholics who don’t worry about liver damage, brain damage, wrecked relationships, the ruining of their families… except with the added truism that their wealth and power will help sustain them better, if everything else turns to shit.
But Exxon execs claim to be currently developing carbon capture technologies with other top emitters which will save the day, provided somebody’s left who can pay for it I’d assume.
https://www.forbes.com/sites/davidblackmon/2021/09/18/exxon-led-carbon-capture-project-is-key-to-sustained-us-economic-growth/?sh=63ab44ae9232
I’m more interested in the deniers who believe that these companies have been taken over by the evil scientific-academic complex. What drives such willful ignorance?
Ian Welsh
30% is huge. What it is, is a private tax and just like any other tax, it’s a cost. As a result, it makes a lot of products/businesses not profitable, and thus not viable. Apple, Steam, etc… are rolling in more money than they know what to do with, but it is done by strangling businesses, often in the cradle. In most cases you will never know the products you didn’t see, the jobs that never existed.
NR
Joan: Scale is another issue for sure, though there are many factors driving that in addition to incorporation. But when companies operated on smaller scales, they had to be careful not to harm the communities they were based in too much because they could end up losing their customer base. Of course today, when companies are nationwide or worldwide, it doesn’t matter (to them) if they destroy the drinking water in some small town in Michigan, that isn’t even a blip on the radar to them.
Another thing I forgot to mention about corporations in my comment is the fact that they shield people from consequences. Shareholders tell the leadership of a corporation “make me as much profit as possible” and then when the leadership does immoral/unethical/illegal things to make that happen, the shareholders are immune from consequences. The whole corporate structure needs to be radically altered or just done away with altogether.
someofparts
If someone wanted to bring down the U.S. a pandemic would be the ideal tool because it strikes at the most vulnerable part of current arrangements – the love the wealthy have for their farce of a healthcare system. Rather than give up a dime of the blood money they make from profiteering off of public health, they will let lack of it destroy the country from the inside.
In all of the media yammering about covid they never mention the uninsured. If you stop to notice it, that is a huge blind spot. Somebody has to work really hard at being stupid not to notice that millions of Americans avoid healthcare because they know it is a system of extreme financial predation.
If our misleaders could look up from the trough long enough to notice the existence of the uninsured, the explanation for public reluctance to get the jab or go back to work would be obvious. American health care exists to rob you, not help you.
Z
We’re at the rubber (capitalism) meets the road (environment) point as far as reality is concerned and it’s come down to what many of us always figured it would: our rulers have the gas peddle to the floor, the car in cruise control with the steering wheel locked straight on the course we’ve been traveling on for the last 50 years as life on earth heads off of an eco-cidal cliff while they monitor their portfolios on their cellphones.
Z
different clue
@Hart Liss,
They saw how anti-American the American elites were when the American elites first began negotiating all the Free Trade Agreements and Treaties and such. When they saw the Democratic Leadership Council’s principal anti-American economic traitor Bill Clinton secure the passage of the Free Trade Agreements, they saw the American elite was inviting the outside world to help destroy the American economy and society. It was easy to see. It was transparent.
So China helped the American elites do what the American elites invited China to help them do.
Could the America majority conquer the government and reverse the Free Trade policy without first having an organized program of rounding up and shooting all the Free Trade elites in the back of their heads and burying them all in mass graves and pits? I don’t know.
Would the Free Trade elites give in to having every aspect of their Free Trade policies cancelled, reversed and taken away from them, without having to exterminate them in their hundreds of thousands to a couple of million first, to make sure they were all too dead to resist and obstruct? I don’t know.
different clue
The present Free Trade Conspiracy system will collapse if broader social collapse and ecological collapse work together to open up a sinkhole under the Free Trade Conspirators deep enough for their particular system and all its willing participants to fall into.
Our mission, should we choose to accept, is to help at least some of us survive the sinkhole proces, and to be in position to exterminate in personal detail every single Free Trade Conspirator and Free Trade Supporter which tries to climb up out of the sinkhole.
Our hope of survival depends on their comprehensive extinction.
As to China, with its command and control system, it will be better positioned to mitigate and adapt to the Big Heat Rising than the Free Trade Occupation Regimes.
After all, for example, when it becomes clear just how high the ocean will rise, they can decide where to order the masses to build a Great Seawall of China, and make the masses get it built.
Does anyone think America’s anti-American Free Trade elite would bother to even try protecting physical America from Sea to Shining Seawall?
someofparts
book review by James Galbraith from links at NC –
https://democracyjournal.org/magazine/the-pandemic-and-capitalism/
last two paragraphs –
China is no democracy, and modern China was built on many epic disasters, including the famine and Cultural Revolution, none of which appeal as models. But that it is a functioning society capable of mobilizing to meet vast challenges has never been clearer than in recent days. And one can say the same of South Korea, and perhaps of Japan, while in Europe Germany is, so far, the best prepared to handle the corona crisis.
What is the source of this resilience? It is not, of course the leadership of a Communist Party, which does not exist in Korea or Japan or Germany. What these societies share is that over four neoliberal decades they maintained their large industrial corporations as going concerns in line with national strategies, along with their productive base and social organization; they did not give everything over to the market. And over those decades, put to the test against the neoliberal corporation dominated by Wall Street, there is no doubt which side won out. The Galbraithian firm fostered and protected by a vigilant state now dominates world markets in most advanced sectors and many that are more modest but no less basic. It is also capable of meeting the challenge of mobilization facing the world in this pandemic; in the production of medical masks, for instance, China ramped up capacity almost six-fold in a month. Money-market capitalism, in a vast transformation initiated in the early 1980s by Reagan and Paul Volcker, has left an industrial shell, with capacity in some areas limited by bottlenecks in others, and by the failure, so far, of clear and effective chains of command. The Anglo-American model is therefore now under enormous stress, as capital markets crumble and market-based networks begin to break down.
In the crisis now upon us, the issue before the Anglo-American side is whether the reality of our situation will now sink in. Will we recognize, in time, the need to mobilize all our resources, to socialize our health system and keep the supply chains open until the virus can be contained? Will we realize that when this is done, life will not be what it was before, and that a vast reorganization of economy and society will be necessary? Or will the neoliberal ideologues in control succeed in squelching that debate—which they are trying to do, at this writing, by focusing on bailouts and stimulus in the belief that somehow the bubbles now bursting can be reinflated in a few months? Will we remain mired in illusions of growth, with or without equity and inclusion? Or will we now and finally displace those illusions, with a new wave that understands the nature of precarity capitalism and what must be done
Z
There is some hope though because there is some fracturing amongst our rulers and other recent matters that haven’t gone their way:
1. Wall Street had a meeting with China over Evergrande with BlackRock, which is hooked straight up the Fed’s money spigot, generously offering to “help out” and probably eagerly offering offshoring more U.S. jobs as part of the deal to further “open up” China’s markets to foreign investors but China apparently told them to get stuffed.
2. The Fed had two of their members called out for trading stocks and they quickly retired.
3. The Wall Street Journal!!!!! had story about a multitude of Federal judges who didn’t recuse themselves in cases that they had a personal interest in due to stock ownership in the companies involved in the cases.
4. A U.S. diplomat to Haiti quit over the deportation of Haiti refugees and cited as a reason that the U.S. has damaged the country by manipulating their government and elections.
5. After inexplicably changing her vote over funding all-blessed Israel’s Iron Dome from No to Present, AOC fired out aggressively at Pelosi afterwards.
6. Bush II the Foolhardy Warmonger had two paid speeches interrupted by U.S. veterans who had fought in Iraq.
So, not everyone is placidly tuning the strings and the bows to their fiddles while Rome burns …
Z
Mark Pontin
Ian: ‘30% is huge. What it is, is a private tax and just like any other tax, it’s a cost. As a result, it makes a lot of products/businesses not profitable, and thus not viable.’
Yeah. Thirty percent is huge — bigger than the entire profit margin for businesses in some market sectors, like forex restaurants where Doordash demanding a 30 percent vig means the restaurant is working for nothing.
Mark Pontin
Hart Liss: ‘Always wondered — still do — how the PRC got our number so well and clearly but they obviously did.’
Nothing hard about it. Besides the basic Leninist truism, ‘the capitalists will sell us the rope to hang them with,’ one Chinese guy put it this way when he described China’s initial encounter with American businessmen in the 1980s: “We had never met people so greedy and so naive.”
‘Naive’ is being polite, of course.
someofparts: ‘Somebody has to work really hard at being stupid not to notice that millions of Americans avoid healthcare because they know it is a system of extreme financial predation.’
Again, this comes back around to what the Chinese saw about American ‘naivete.’
To understand the US ‘healthcare’ system, begin with the fact that it eats up over 17 percent of US GDP — by far the biggest slice of national GDP of any country in the world — and produces outcomes that annually come in at around 38 to 42nd in the scale of developed nations.
By comparison, countries like the UK, Norway, Denmark spend about 8.9 to 10 percent of GDP via nationalized healthcare and produce far better outcomes. In other words, the simple reality is that the US ‘healthcare-health insurance’ system is the means whereby every year some 7 percent of GDP in the US is siphoned off — looted — by asset holders invested in that system for their own personal fortunes.
Out of that 7 percent of GDP annually looted by the rich in the US, there’s of course plenty of money to buy the politicians and the media to keep the system going. As you say, even amid a pandemic, “nobody on the US media is advocating for national, public healthcare” because the wealthy who control this country will “rather than give up a dime of the blood money they make from profiteering off of public health .. let lack of it destroy the country from the inside.”
And that’s what the Chinese would have perceived immediately about the US. That the entrenched interests here — a very small minority — were incapable of giving up any of their longstanding privilege and predation. From the Chinese POV, in other words, US elites simply looked like other New World colonial kleptocracies, such as in Brazil, with the same kind of predatory, ‘naive’ mindset.
Once you see it, you can’t unsee it: the US ruling class has the mindset of a colonial kleptocracy, without any of the overlay of an ‘aristocracy’ — with the concomitant social obligations that aristocrats can bear — ever having developed.
As to why ordinary Americans are the last ones to believe it, here’s THE WIRE again —
https://www.youtube.com/watch?v=gAxVaVsM9ng
different clue
@Mark Pontin,
I suspect another, perhaps secondary reason, for health care costs being so much higher in America is because so much of the food available to mainstream majority Americans isn’t really food at all . . . . it is industrial phood produkt. It is shitfood at best.
Between obesogenic ultra-refined hi-gly carbo food and hi-fructose corn syrup, industrial vegetable oils and fats, etc on the one sid and obesogenic artificial hormone analog pollutants in the background environment on the other side, many mainstream Americans bear a burden of willfully induced chronic sickness. And of course since the 1990s, a rising burden of glyphosate and other chemopollutant traces throughout the mainstream food supply.
Some Americans try dodging the shitfood bullet by growing their own, buying organic food and hoping it really is, etc. etc.
Z
Along with the carrots that Larry Fink and Co. were dangling to China during those Wall Street-China meetings, they probably also twirled a stick by casually mentioning concerns about continuing to invest so heavily in China due to uncertainties that they’d be protected from market “instabilities” … aka backstopped by the host government … as they are in the U.S. financial casinos.
Z
Jan Wiklund
Well, Japan and South Korea didn’t industrialize “by the rules”. They were allowed to break the rules because the US needed them as a screen against the Chinese. And yet the Americans and Europeans constantly complained over the Japanese behaviour. It wasn’t exactly the market that industrialized Japan, it was state direction, sometimes as strict as Stalin’s, sometimes just by control of finance (which happened to be more efficient). If you like to know how they did it you can read Chalmers Johnson: MITI and the Japanese miracle from 1982.
And South Korea was even blunter: Ha-Joon Chang tells how the military dictator ordered the owner of Hyundai to start building ships, threatening him with jail if he refused.
According to Alice Amsden: The rise of the rest, Oxford U.P 2000, it was these examples China followed, rather than the Russians.
Actually, “the rules” have never been followed by successful industrializers. UK as well as US as well as Germany used state power to industrialize. Only those who didn’t succeed followed rules other states had made up.