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Reposted from Anti-Capitalist Meetup by annieli

The Greeks have said enough! Hope has defeated fear and SYRIZA has won the election and have beaten New Democracy and the fear-mongers, as expected.  This is a major victory for anti-austerity forces which could change the economic and political landscapes.

However, they did not win an outright majority (they were short 2 seats) and were forced into coalition with a right-wing, nationalist (pro-Greek Orthodox) anti-austerity party, the Independent Greeks (referred to as ANEL from now on).  

 photo 57055606-f937-4671-a7b2-1ba4704d70e6_zpsd6efb423.jpg

Irrespective of this, we do have quite a lot to celebrate! The election of SYRIZA is a shot directly across the bow of neoliberalism and its flagship of ideas, aka as the austerity project. The European ruling class (which includes mainstream political leaders) are a wee bit shaken especially Germany.  Whether or not the Troika is forced to negotiate the debt successfully, this is a victory and it is forcing the ruling class in Europe to take stock over whether austerity (and destroying the working class) is more important than the EU project. The stakes are literally that high!
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Reposted from Money and Public Purpose by annieli

In a major development that has excited progressive economists, one of their own has been named Chief Economist on the Senate Budget Committee. Dr. Stephanie Kelton, a major proponent of Modern Money Theory (MMT; Modern Monetary Theory), was hired by Senator Bernie Sanders (I-VT), as Chief Economist on the committee.

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Reposted from Anti-Capitalist Meetup by NY brit expat

Yes, comrades, we need to talk about crises again, the term recession simply does not explain what is really going on! Just in case you might not have noticed or perhaps the mainstream media where you live ignored it, the obvious has happened and the end of the so-called recession has disappeared into the fantasy novel. Once again there is a slowdown in growth and the financial markets are not particularly happy. This time, Germany and China are showing signs of slowdown. Globalisation has not ended the potential towards crises in the capitalist economic system; in fact, the greater interconnectedness of the world economy has exacerbated the situation and ensured that the contagion spreads.  

For those who believe the fantasies of neoliberal economics, the shock of these latest failures of neoliberalism must come as a surprise. But for those of us that have been warning of the stupidity of squeezing wages and destroying work conditions, rising inequality in income and wealth, the dangers of export-led growth when wage incomes are being squeezed meaning that unless governments become the sole purchasers of goods and services that are being produced (and they are not) that obviously there comes a point when working people cannot purchase goods and services as their incomes are too low, wiping out of savings  has happened and personal indebtedness leads to default and bankruptcy. Neither of these things helps to maintain capitalist growth, accumulation and profitability in the long run; forget that, it hasn’t even lasted in the short run.

I will be giving a run through on what is going on and why our lives feel as though we are living through the Shock Doctrine (which we are) and then address the proposals of dealing with persistent unemployment under capitalism from the Left on which there is significant disagreement.

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Reposted from Richard Lyon by annieli

Political labels can be very difficult to define in a manner that is clear and consistent. For most of the 20th C US politics was cast in the frame of conservatives vs liberals. However, it seems to me that the realities are becoming more complicated when you make an effort to really analyze what is happening. Neoliberalism has become an increasingly dominant position in political and economic policy in both the US and Europe. I have been doing a good bit of reading in an effort to develop a better understanding of how things have reached the present state of affairs. I am going to share some of that on Daily Kos in a digested form.  

The US political system and those of the European democracies are based on the general principles of what is referred to as classical liberalism. This is a governmental tradition that emerged out of the philosophy of the enlightenment of the 18th C, though the term liberalism didn't actually come into usage until the beginning of the 19th C. It was conceived in a broad effort to move away from the powers of a hierarchical society embodied in such institutions as an absolute monarchy and a dominant state church. The founding documents of the USA, the Declaration of Independence and the Constitution embody this tradition. In the 19th C this political philosophy began to be coupled with the economic philosophy of free markets and laissez faire government policies. The Liberal Party in the UK represented the interests of the emerging class of industrial entrepreneurs. They were frequently in opposition to the interest of the landed aristocracy who were based in the Conservative Party. The debate over free trade was the defining issue.

From the middle of the 19th C various people began to raise concerns about the negative impacts that the industrial revolution was creating for the lives of ordinary workers. Marx and Engles presented a particularly forceful challenge. There were other less revolutionary approaches to socialism such as the Fabian Socialists in the UK. Toward the end of the century some of the Liberals who were concerned to protect capitalism from socialists assaults began to devise some modifications to bare knuckle  laissez faire economics that attempted to uplift the less fortunate without any serious shifts in the power structure. In the UK they were referred to as social liberals. A similar movement was occurring at the same time in the US where they were referred to as progressives.  

The first half of the 20th C was a series of horrendous global upheavals that included two world wars and the great depression. The economic and political consequences were profound. The Bolshevik regime came to power in Russia resulting in the establishment of the USSR. Fascism took hold in Italy and Germany. Both communism and fascism where authoritarian systems of government which ran counter to such principles of classical liberalism as representative democracy and the rule of law. During WW II liberal democracy almost entirely disappeared from continental Europe. There was a movement in the UK among refugee intellectuals to articulate the need to restore the values of classical liberalism. Two of the leading figures were Karl Popper and Friedrich Hayek. Popper's book The Open Society and Its Enemies, published in 1945 is the best articulation of the political values that they were concerned. Hayek was an economist who founded what became known as the Austrian school of economics. This group began referring to themselves as neoliberals to reflect their objectives of restoring liberal political values. While there was always an economic component to the project, prior to the end of the 1940s political concerns were more of a primary focus. That is where the term neoliberal originated.

In 1947 the Mont Pelerin Society was founded under the leadership of Hayek. The organization is still in active existence and anybody who as been elected to its membership can be considered part of the neoliberal elite. By the time of the founding of the MPS the movement was already taking on the free market capitalist orientation that has always been one of its defining characteristics.

The group also stated that it is "difficult to imagine a society in which freedom may be effectively preserved" without the "diffused power and initiative" associated with "private property and the competitive market", and found it desirable inter alia to study the following matters:

"The analysis and exploration of the nature of the present crisis so as to bring home to others its essential moral and economic origins.

The redefinition of the functions of the state so as to distinguish more clearly between the totalitarian and the liberal order.

Methods of re-establishing the rule of law and of assuring its development in such manner that individuals and groups are not in a position to encroach upon the freedom of others and private rights are not allowed to become a basis of predatory power.

The possibility of establishing minimum standards by means not inimical to initiative and functioning of the market.

Methods of combating the misuse of history for the furtherance of creeds hostile to liberty.

The problem of the creation of an international order conducive to the safeguarding of peace and liberty and permitting the establishment of harmonious international economic relations."

The group "seeks to establish no meticulous and hampering orthodoxy", "conduct propaganda" or align with some party. It aims to facilitate "the exchange of views – to contribute to the preservation and improvement of the free society.

One of the founding members of MPS was Henry Simons who trained the US economist Milton Friedman. Friedman became a member of the society and served as its president from 1970-1972. It is not particularly difficult to trace the vast network of influence developed by this movement to links to the MPS. It membership has been drawn from people in positions of influence and academic prestige. They in term have moved out to organize a network of foundations and think tanks and take dominant positions in key departments at leading universities. Two universities that have been strongly represented in this tradition are the University of Chicago and the University of Virginia.

In the US the terms liberal and liberalism have historically been used to denote what can be described as modern or social liberalism.. While it ascribes to the issues of personal freedom that are derived from classical liberalism, its positions on economic and social policy have been associated with the legacy of the new deal and Keynesian economics. This leads to considerable confusion when the term neoliberal is used to refer to policies that have much in common with the conservative tradition.

This is a good place to stop for one diary. I plan to write more on the subject.

Discuss
Reposted from The Amateur Left by NY brit expat

Well it seems this continuing debacle every 3 months has ceased, for now. However, I really can't get over this pathetic celebration over the really low bar involved with regard to avoiding what I call a political default on the public debt. This is the same embarrassing type of celebration that ensued in 2011. We need to get real. Despite the government being opened up again, there's nothing to celebrate. We've already lost. After all, the debt ceiling was a precious gift Obama bestowed onto John Boehner in the 2010 tax deal as he put his full faith in Speaker John Boehner hands, as he took the full faith and credit of the United States hostage.

Of course, it was a deal struck between both of them to put who they called the "extremists" of both their parties in check, for a grand bargain like in 1983 when Tip O'Neil and Ronald Reagan cut social security. President Obama and Speaker Boehner weren't fooling everyone, though. Just those involved in their hyper deluded, hyper partisan, claptrap. To some of us, this was entirely predictable and preventable. Now people are suffering because some people, blinded by their hyper-loyal partisan illusions, couldn't or didn't want to see what was there. Maybe their lack of sight reveals they don't really care? It doesn't matter though. This will continue to be what we go through when some of this crap continues again in 4 months in February, regardless.

This austerity government will reopen at sequester levels of funding; a sequester I predicted would be born out by the stupid Super Committee from the super austerity Budget Control Act of 2011, which I saw was inevitable since the 2010 tax deal led to the first, now ongoing, debt ceiling debacle; a miniature crisis to crisis government with no plans to invest in its citizens' future. Anything else is possible though, from government shutdowns over the false prospect of defunding Obamacare, to any austerian Senator or Congressman using the threat of default for whatever demands they want.

We, the so called professional left as the White House derisively called us, warned about this. Anyone who denied this can either apologize now or forever restrain from speaking about matters regarding politics, civics, political deals, and the debt ceiling. We told all of you back in 2011 around this same time when that debacle was coming to its end — until this one and the next one 4 months down the line — that this was no victory.

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Reposted from Anti-Capitalist Meetup by annieli

There have appeared in this space several thought-provoking attempts to define capitalism, including here and here. Although this might seem to some a mere academic exercise, nothing could be further from the truth: to be effective, activism to change, transform or overthrow any human construction must be rooted in a thorough and accurate understanding thereof.

This is especially important when discussing capitalism, both because its pervasive ubiquity creates a familiarity that masquerades as understanding and because the defenders of the system work tirelessly to spew lies about its virtues. Even more treacherous than the increasingly strained defenses of the system by modern conservatives are the ideological productions of modern liberals who claim a desire to reform capitalism or ameliorate those of its consequences they don’t like.

The key problem is that liberals and conservatives share the same basic understanding of capitalism, which is rooted in the neo-classical revolution in mainstream economics that occurred in the late 19th century. On this view, capitalism is a “natural” system arising from and based on market exchanges between buyers and sellers of commodities, which are assumed to maximize “efficiency” (defined in terms of allowing “supply” and “demand” to set market-clearing prices) and human happiness (defined as the total dollar value of market commodities bought and sold (GDP), regardless of what needs they meet or how they are distributed among the population).

Thus the neo-classical view (like the classical political economy of Adam Smith and David Ricardo that preceded it) is fundamentally ahistorical: capitalism is understood not as a historically specific constellation of economic relations, but rather as the result of encouraging the supposedly natural human tendency to engage in market transactions on a competitive basis with the goal of maximizing profit.

Even worse, the neo-classical assumption that the “market” is a naturally occurring phenomenon forces it to posit an Ideal Type Market—characterized by virtually unrestrained good-faith buying and selling backed up by rules to enforce the terms of transactions—against which historical social formations are measured by the degree to which they approximate the Ideal Type and can be called “capitalistic.” In this view there is of course no room for understanding how the historical economies of pre-capitalist social formations worked on their own terms, because those terms are assumed ab initio to represent flaws, deviations from the Ideal Type that maximizes happiness.

And therein lies the reason that neo-classical economics provides an unstable intellectual foundation for capitalist reformism that unavoidably undermines any case for change, because all such reforms involve straying from the Ideal Type Market. That is why, in televised “debates” about regulation between conservatives and liberals, when the former extol the virtues of the market and call for “non-interference,” the latter start off the same way (Obama does this all the time) and then suddenly pivot to an argument that some specific reform represents an exception to the free market rule. Conservatives thus always come off as more intellectually consistent while liberals seem (and in fact are) intellectually muddled and confused—even when “the facts” seem to stand in their favor.

We, however, are Anti-capitalists, and we need an understanding of capitalism that historicizes it as a system with a definite beginning and, therefore, a possible end. Jump below the squiggle to see how.

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Reposted from BruceMcF by BruceMcF

Just as the GOP Shutdown was getting underway, 2 October, Matt Levine at Bloomberg was calling on the administration to Mint the Premium Bonds!.

The creepy trick that has swept the nation* is the platinum coin option, in which Treasury mints a $1 trillion platinum coin, deposits it at the Fed, and suddenly has an extra $1 trillion of money to spend without incurring any debt (and, thus, without breaching the debt ceiling). This is a good trick as tricks go, and it's been extensively advocated by Josh Barro, Paul Krugman, Matt Yglesias, Joe Weisenthal, basically every economics blogger really. I am unaware of any good arguments that the platinum coin wouldn't work, but it does have the problem that it is really really really really obviously a trick. I mean, it's a trillion dollar coin, come on. So it's sort of sub-optimal symbolically, and would make people really mad. It's a crisis-enhancer, although with the benefit of avoiding immediate default.
So there is an alternative that Matt Levine is putting forth:
Instead of just rolling those Treasuries -- paying them off at 100 cents on the dollar by issuing new Treasuries at 100 cents on the dollar -- it should pay them off at 100 cents on the dollar by issuing new Treasuries at 275 cents on the dollar and using the extra money to pay its bills. The 10-year yield today is around 2.6 percent, so you could sell a 10-year with a 23 percent coupon for 275 cents on the dollar.** The 30-year is about 3.9 percent, so a 14 percent coupon should get you there. Etc. Math here.
Now, given my previous writing on Fixed Interest Payment Consol Bonds ... would this work too?

Yes, in a functional sense, of course it would. Its a similar, though not identical, answer, but it goes through the same loophole. Premium bonds are, by law, counted on their face value. So any bond with a face value substantially below its issue price that is used to roll over maturing long term bonds would "roll back" the debt ceiling count.

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Reposted from BruceMcF by BruceMcF

crossposted from Voices on the Square

I have talked about the broader economic/historic and political/ethical dimensions of Consol Bonds, but this diary is simply about how a certain type of Consol Bonds can be used to avoid default.

What do I mean by "Fixed Interest Payment" Consol Bonds? I mean a bond without a maturity date, that specifies the dollar amount to be paid as interest twice a year. These would be sold on the open market, just as we sell ordinary 10yr bonds. Since the dollar value of the interest payment is specified, and there is no maturity date, no Face Value is required, and so no Face Value is specified.

Consol Bonds are actually a quite old-fashioned type of bond, widely covered in elementary financial mathematics because of their simplicity.

The point of a Consol Bond was that there is no maturity date. Instead, the government just pays the interest, and if they want to retire the debt, they buy the Consol Bond back from the open market. "Consol" stands for "Consolidated", since they were originally used by the British, starting in Colonial Days before the French and Indian war to "consolidate" a number of different bonds with different maturity dates.

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Reposted from Voices on the Square by BruceMcF

Burning the Midnight Oil for Economic Populism

Crossposted from Voices on the Square

Well, OK, I'm summarizing. I was startled to read at Agent Orange that Summers was a progressive thinker because Summers recognizes the massive increase in economic inequality that has taken place over the past three or four decades:

It would be, however, a serious mistake to suppose that our only problems are cyclical or amenable to macroeconomic solutions. Just as evolution from an agricultural to an industrial economy had far reaching implications for society, so too will the evolution from an industrial to a knowledge economy. Witness structural trends that predate the Great Recession and will be with us long after recovery is achieved: The most important of these is the strong shift in the market reward for a small minority of persons, relative to the rewards available to everyone else. In the United States, according to a recent CBO study, the incomes of the top 1 percent of the population have, after adjusting for inflation, risen by 275 percent from 1979 to 2007. At the same time, incomes for the middle class (in the study, the middle 60 percent of the income scale) grew by only 40 percent. Even this dismal figure overstates the fortunes of typical Americans; the number unable to find work or who have abandoned the job search has risen. In 1965, only 1 in 20 men between ages 25 and 54 was not working. By the end of this decade it will likely be 1 in 6—even if a full cyclical recovery is achieved.
...

 
There is no issue that will be more important to the politics of the industrialized world over the next generation than its response to a market system that distributes rewards increasingly inequitably and generates growing disaffection in the middle class. ...

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Reposted from Anti-Capitalist Meetup by NY brit expat
Jack inspects some magic beans he is trading for his cow
“Once upon a time there was a poor mother who lived alone with her son, Jack. All they had in the world was an old cow to give them milk. One day the cow stopped giving milk so the woman had to sell her. She told Jack to take the cow to market and to get as much money as he could for her.
On his way to market Jack met a man who wanted to buy the cow. He offered Jack five beans for the cow. Jack knew that his mother would be very angry if he sold the cow for beans. "They are very special beans" said the man. "They are MAGIC ! - they will bring you good luck!" Jack thought that he and his mother needed some good luck, so he gave the cow to the man in return for the magic beans.”

     Jack’s tale begins with some economic truths: trade is grounded in the perceived fair value of an exchange of goods and services and, in times of hardship, people will accept forms of trade that they might not consider otherwise. Fortunately, the old man did not take advantage of Jack’s naive ideas of fair value, as the beans were indeed magic. (Why the man was willing to trade them for a spent cow remains open to question.)
     Most of us make less fanciful decisions, and consider carefully whether an item we are purchasing is a good value, but until recently, most of us have not questioned the inherent worth of cash in pocket, the piece of plastic that represents funds in our account, the place where this money is kept, or the balance between trust and government regulation that keeps the entire system running. Since the financial crash things have begun to change. Kos diarists have examined the role the banks play on a personal level: skimming a little off every transaction, and assessing excessive fees. Others, particularly bobswern and gjohnsit, have assessed the banks' culpability in crippling the system itself.
This trend has accelerated to the point that trust in banks is becoming increasingly difficult. Rolling Stone’s Matt Taibbi has shown the breadth and depth of manipulations meant to keep tight control of money in a few centers. He also shows exactly how national governments, their courts and regulatory authorities, have become helpless or even complicit in this process.

It's now evident that there is a ubiquitous culture among the banks to collude and cheat their customers as many times as they can in as many forms as they can conceive," he said. "And that's not just surmising. This is just based upon what they've been caught at.
    The foundation of the Capitalist system itself has been called into question, at least in its present incarnation. If governments can’t regulate their own money supply for the benefit of the majority of their own citizens, and banks abuse their position shamelessly on account of that, people will eventually turn elsewhere. I believe that the rise of virtual currencies, such as the Bitcoin, and alternative trading schemes, such as local scrip and barter exchanges, are symptoms of an economic system that is bent to the breaking point.
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Reposted from Anti-Capitalist Meetup by annieli

I have been thinking about how to introduce some of the methodologies we use in DK to augment the basic liberalism and progressivism necessary to produce more and better Democrats. This piece is intended to introduce some basic texts which for many might seem too simplistic and even heretical but are hopefully useful for those wanting to consider that many of the perspectives often refelected in DK have a sincere and authentic theoretical foundation.

I chose a recent diary by Kos on conservative understanding of the decline in bee populations to serve as an example of how an understanding of Marx can add to the interpretive strength of an already strong argument. The "light comes on" is not enlightenment in any earth-shaking sense but it is a reflection on the need to consider that there are preexisting social analysis methodologies that have made progressives more effective in guiding action and organizing resistance to the rise of RW power.

Buried way at the bottom of this piece on the increasing death rate of honey bees:
But Mr. Adee [the South Dakota owner of the nation's largest beekeeping company), who said he had long scorned environmentalists’ hand-wringing about [pesticide use in crops], said he was starting to wonder whether they had a point.
Of the "environmentalist" label, Mr. Adee said: "I would have been insulted if you had called me that a few years ago. But what you would have called extreme — a light comes on, and you think, 'These guys really have something. Maybe they were just ahead of the bell curve.'"
I'm going to do some stereotyping and assume that a South Dakota farmer who scorns "extremist" environmentalist is a Republican. It's not much of a stretch. So like Sen. Rob Portman's conversion on marriage equality because of his gay son, or Sen. Mark Kirk's conversion on health care services to the less-wealthy because of his debilitating stroke, Adee decides that maybe the dirty fucking hippies are onto something when he, himself, is directly affected by unfettered degradation of our environment.
I emphasize the expression directly affected because it is important for acting in a way to understand Anti-Capitalism  This point of view recognizes that there are changes in consciousness, the understanding that a tension between beliefs and reality has been heightened and proven transformative. In this diary Kos discusses the contradiction of GOP ideology in confronting the complex yet revelatory incidence of bee death as a sign of impending ecological disaster. This serves as a useful way to provide a foundation to discuss the theories necessary to understand a Marxist position on the need to transform
the present relations of production.
But many beekeepers suspect the biggest culprit is the growing soup of pesticides, fungicides and herbicides that are used to control pests. While each substance has been certified, there has been less study of their combined effects. Nor, many critics say, have scientists sufficiently studied the impact of neonicotinoids, the nicotine-derived pesticide that European regulators implicate in bee deaths. The explosive growth of neonicotinoids since 2005 has roughly tracked rising bee deaths. Neonics, as farmers call them, are applied in smaller doses than older pesticides. They are systemic pesticides, often embedded in seeds so that the plant itself carries the chemical that kills insects that feed on it.
This suspicion is the simple result of an economy driven by capitalist desire to systematically maximize profit that also ignores the externalities connected to the use of technologies that also harm the environment and in the long-run destroy even the industry itself. American beekeeping and honey production is both hobby-farm, small scale cottage industry and large-scale agribusiness. In other countries it can be even barely organized gathering. Ultimately change comes from knowledge and its productive application, but a knowledge that is crucially aware of direct effects as critical practices.

I have chosen two elementary texts on Marx to give readers an introduction that is often distorted by cold-war anti-communist reactionaries that one finds in the Marx 101 search on the internet, although Brad DeLong's Understanding Marx lecture is a good one. I have chosen Peter Singer's. Marx: A Very Short Introduction (2000) and Terry Eagleton's Why Marx Was Right (2011). This is not a book review, although I would hope that these two accessible texts might appeal even to the less doctrinaire Kossack. Please come below the squiggle to contribute to the discussion of the basics.

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Reposted from The Amateur Left by NY brit expat
Cross posted at Voices on the Square and The Stars Hollow Gazette
And when one make excuses for chained CPI without doing any research because they'll blindly follow whatever a politician proposes regardless of the consequences, that is a choice of action taken. Action that actually shows how one does not care about people. It can be witnessed. It can be read and it can be judged, so I will be doing so now.

Pointing this out harshly will not hurt seniors like the action of cutting their SS income while their cost of living of has risen roughly 0.27 percentage points faster per year than the CPI-W which is what is used now for their COLA. When one is defending this action orally or in writing because of their perceived party loyalty, though it's not really party loyalty because this isn't what FDR envisioned whom defined the modern Democratic party, that shows disdain for the most vulnerable in our society and that is a fact.

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