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It may be my masochism, but I actually watched the Presidential debates. I also regularly watch the news over here in the UK. Cameron and his cronies constantly spout this argument that governments cannot create economic growth. During the Presidential debates, Mitt Romney even went a step further; he argued that governments cannot create employment. The Tory argument is a bit more sophisticated, but both arguments have their roots in the fantasies of neoliberal economics of which both the Tories and the Republicans have adopted in its most fundamental form; their arguments also tie into the perspective of reduction of the central government budgets along the lines demanded by the IMF and the introduction of austerity measures to ensure these results. Except, and this is a big exception, neither of these governments have been forced to do so by the IMF.

Given that these statements are not only historically inaccurate, but bordering on the patently absurd, it never ceases to amaze me that challenge from the mainstream media is not forthcoming. Even more so, during the debate, President Obama did not respond to the absurd statement by Romney; in fact, he also raised budget deficit reduction which essentially means cutting state employment and social services. The Labour Party does not disagree with the Tories; they only say that austerity must be done more slowly and Ed Balls (the shadow Chancellor of the Exchequer) has said at the Labour Party conference that, if elected, they had no intension of reversing the austerity measures forced upon the British populace by the Con-Dem government.  Essentially, all of the mainstream parties are singing the same tune; honestly, different tonalities of the same argument do not change the fact that the underlying tune is the same.
sheepsfightingwhowilleatthem
To someone that is living in the real world, in other words, someone that actually heard about the New Deal, that knows the role of government in ensuring economic growth during the post-war period in Europe, who knows damn well that state (or public) sector workers exist and that the government’s purchase of goods and services from the private sector and investment in the private sector help to ensure economic growth it makes me wonder if they think that we are extremely stupid.

I.    Can Government create Employment?

John Harvey, a post-Keynesian economist has written an excellent piece in, of all places, Forbes Magazine which raise some of the points that I will raise here, but I will actually go a bit beyond what he has said and try to address exactly what is underlying the arguments of mainstream politicians and what is lying beneath the bizarre arguments that we are hearing these days.

Harvey correct asserts that those who claim that government cannot create employment are re-defining the meaning of the word "jobs" to suit their own private profit margins:

“But, those who say that the government cannot create employment are adding another element to the definition. To them, a job is any routine activity for which we earn income paid by an entity required to earn a profit. There is no compelling reason for this addendum and it arbitrarily excludes people like James Galbraith, who is an economist just like me, but at the University of Texas, and Jeffrey Halstead, Chief of Police in Fort Worth, Texas. By the qualified definition, they don’t have “jobs” because their income is derived from tax revenue and not private-sector sales. Ditto every single fireman, public school teacher, Marine, sailor, airman, soldier, national park ranger, defense industry employee, NASA scientist, social worker, librarian, etc., etc. None of them has a job.

Why would someone embrace such a questionable characterization? Because their true goal isn’t to generate a scientific understanding of the manner in which the macroeconomy operates, but to make a moral statement. Specifically, their contention is that only those routine activities financed by profit are truly of value. Everything the government does is unnecessary because if people really wanted it, they would have bought it in the private sector: that which is useful is profitable. Furthermore, they say, were it not for my taxes, those in the public sector would not have a job. Firemen earn a salary only because some of mine was taken away (under threat of imprisonment) (http://www.forbes.com/...).”

John Harvey makes some excellent points. This is the reason that I have cited his article. However, I would say that he is doing those advocating this perspective quite a favour in terms of saying that the view that the government cannot creates employment is a moral one. I would demur; instead, I would argue that this is an ideological position with little, or no, link to reality, much less morality.  They are outright liars, not moralists.  I would argue that the resurgence of this argument is not based on the idea that only things produced for profits are things of value, they know that fire services are of value; but rather that these things should be produced and provided on the basis of profitability; that is, they should be produced under the control of the private sector.  In other words, why should something be produced and provided if they cannot make a profit on it?!

In fact, looking at history quite easily disproves this position; this argument is a dangerous fantasy with the lives of the majority in the advanced capitalist world at stake.  Reprivatisation arguments are central planks in the neoliberal agenda and after being forced on people in the capitalist periphery and emergent economies (see, e.g., Chile and Argentina), these are now being forced on the majority in the advanced capitalist world. For example, a cursory examination of the situation before generalised nationalised fire services existed in the UK, where insurance companies provided fire services turned out to be not only too expensive but incapable of providing provision; in fact it was the insurance companies themselves that asked for national funding and provision of fire services and this was in the height of free-market ideological arguments in the nineteenth century (London Fire Brigade).  Yet, if you look at right-wing arguments in the US and in the UK, there is an attempt to privatise fire services; already in the UK, parts of an holistic service are being forced to be contracted out to private companies to “cut costs” in the face of government cutbacks.  

Another example that I have written about previously is water privatisation, not only are costs not reduced, but access to water is limited to those that can afford to pay for it; so something that people require in order to survive is now no longer available to them due to privatisation, some forced by the IMF and World Bank, others done in the erroneous attempt to cut costs (http://www.dailykos.com/...); we are seeing resocialistion of water services in France and in other countries to regain control of water away from firms as it is an essential component of survival for human beings.
Halliburton
The problem with private provision of services is that it is your ability to pay is what is important not the quality of the service; profitability considerations means cost cutting and that does not necessarily provide quality and guaranteed service. This is why a number of things became public goods rather than be left to markets to provide. The insistence of reprivatisation of services is not based on whether historically these can provide the most effective service; it is done so that they can literally find a new area of capitalist investment which they think has a guaranteed market. However, rather than acknowledge an obvious point that not everyone can afford to get these services if they have to purchase them directly rather than paying for them through taxation and subsidising those that cannot pay, we are seeing an argument that is based on an assumption which has been proven to be erroneous, that if something is produced there will be demand to sustain it.

In fact, this is a revival of an old argument whose demonstrable failure is what I would say is what exactly led to Great Depression and to the subsequent creation of the social welfare state and public sector back in the 1930s in the US and in the post-war period in the UK. I want to stress that the only reason that I think that this earlier argument was defeated was not due to the Great Depression on its own, but arises from the existence of a strong left and powerful union movement which led the Capitalist class to try and ameliorate the crises that are a normal part of the capitalist economic system not only to protect their own interests, but also to remove some of the threats of the left and a strong union movement.

Essentially, the argument endorsed by the right-wing of the mainstreams in the US, UK and EU is based upon a perspective that refuses to acknowledge that the private sector cannot create sufficient levels of employment to ensure that their own products are capable of being sold in the market at a price which ensures that they can earn a profit upon them. In the absence of the ability to earn a profit, these goods will not be produced. Moreover, in the absence of incomes to pay for these things, production and provision will simply not exist.
humansacrifice
The laws of motion of the capitalist economic system in which profitability (or expected profitability) determine the techniques of production in use (how much labour, how much and what type of machinery are used to produce output), how much output (goods and services) are produced and what type of goods and services are produced are essentially what produce economic crises.  That is, crises derive from the system itself, and are not an aberration, but are a normal part of the system.

What Keynesian economic policies did was not to eliminate crises, but rather to ameliorate them; that is why people began talking about recessions rather than economic crises. But in the absence of coherent regulation and attempts to stimulate and cool down the economy when needed (as advocated by Keynes) what we are seeing is prolonged crises and smaller and shorter recoveries. Moreover, recoveries (if you have not noticed) make no dent in the substantial amount of structural unemployment that now characterises advanced capitalist economies.

II.    What is causing structural unemployment?

The answer is the laws of motion of the capitalist economic system itself. Competition exists between and within industries, where money capital (and technology which is privately owned, and sometimes when appropriate to production physical capital itself) is moved between industries in search of the highest profits. The introduction of machinery in the attempt to increase productivity occurs so as to ensure that workers’ wages are produced more quickly and hence that the surplus value is greater in production are what leads to several interrelated phenomena.  The reasons underlying colonialism and then imperialism was part of this process, these enabled getting hold of raw materials and cheap labour. In some cases, like the cotton textile industry, the goods could even be sold back to colonies thereby providing part of the market for the goods themselves.

Now, globalisation means that competition occurs on a world level. Lack of restrictions on capital mobility in search of profits has led to outsourcing of industries to the capitalist periphery and emergent economies where labour costs and raw materials are cheaper. The fact that you can produce something for pennies in these countries and sell them for hundreds of times more means that multinational corporations (MNCs) need to lay out far less and will make a far greater profit if the goods are sold (even if they are sold for far less than they expected, they will still be making a far greater profit than if they are produced in a country with higher costs of production). The only advantage (and this is rapidly declining) that the advanced capitalist world has is in technology (and that is the reason that the Chinese are insisting on technology transfer when they allow for foreign direct investment and MNCs into the country).

So let’s go through some of the dynamics of the system in order to understand what is happening due to the internal laws of motion of the system:

1)    Introduction of machinery means that less workers are needed relatively to produce the same level of product, that is what productivity means; but the problem is not only one of relatively less workers being needed as whole sectors of production have been destroyed leading to structural unemployment, that is an absolute increase in unemployment in these countries.

2)    Introduction of machinery or cheapening of costs of production (e.g., using cheaper raw materials obtained from overseas, or goods produced overseas that are cheaper to produce than in the advanced capitalist world due to both cheaper raw materials and labour costs) in the sectors that produce workers consumption goods, means that the production and reproduction of workers subsistence (the socially determined commodities that workers consume)  is lowered; this lowers the value of the wage goods meaning that more time will be spent on goods that go towards the surplus product.

3)    Introduction of machinery leads to increased unemployment; unemployment then weakens the bargaining power of workers. The deliberate destruction of the industrial and manufacturing sectors in the advanced capitalist world not only led to increased unemployment, it also destroyed the power of trade unions concentrated in those sectors. In fact, before the sectors themselves were weakened so badly, right to work laws led foreign automobile companies to open factories not in traditional regions but in states in the US where they did not have to deal with the demands of unions.

4)    The decrease in wages due to the decline of union power and structural unemployment has led to a break-down in job protections and conditions of work. More and more, part-time and temporary low-paid work has replaced well-paying and secure jobs for life.  To avoid, payment of benefits and social security (national insurance), employers have shifted towards sub-contracting jobs which places workers in greater precariousness as contracts are mostly temporary and you have no job protection. General attacks on the social welfare state have undermined the abilities of the poor and working poor to maintain their income. The attempt to stimulate demand by enabling access to easy but expensive credit has blown up in their face; witness the sub-prime crisis and personal bankruptcy as borrowers cannot pay back what they purchased.

5)    While increasing the amount of surplus produced, they have seemed to have forgotten an incredibly important point. That in order for profits to exist, someone must buy their product. In the absence of demand backed by income, these potential profits only remain potential and we have what is called a realisation crisis following a point of over-accumulation (the crash in 2008); guess what, Marx was correct in Volume I of Capital.

Structural unemployment is a normal part and parcel of the system and derives from its internal laws of motion. It can be combatted, but it won’t be done if wages are continually eroded in the advanced capitalist world. Not only can we no longer survive on the low wages on offer in the capitalist periphery and emergent economies (which have been deliberately kept low), but also this would eliminate the demand for goods and services that the private sector and capitalists need to enable economic growth.  The only thing that may actually keep the system going (and to increase profits in the real economy rather than the financial sectors) would be if China and other emergent economies actually increase wage incomes in their countries. In that case, essentially the workers in the advanced capitalist world become a lot more redundant to the needs of international capital.
Serwotkaonaspiration
Rather than destroy the state sector, what is needed instead as a first step is direct government jobs creation. That is, the government itself needs to hire people at all levels. It also needs to create new sectors for them to work; the creation of a green transport industry and green manufacturing would be an excellent place to start.  However, since construction is primarily a male occupation, increasing money spent on education, social services government provision of health care, nurseries (crèches) which are all traditional areas of women’s work would offer women a far better choice than the low-paid part-time and temporary work to which they are being relegated.  However, no mainstream politician is advocating the only known and proven thing to get the system out of the crisis, they are all parroting the line of reduce state expenditure, cut public sector employment and cut social services and benefits.

III.     The Role of Government and Economic Growth

It may be asked what does the above have to do with this argument advanced by politicians which denies that the government can create jobs and/or economic growth. The answer is quite a lot.

For all the babble about the importance of the private sector, the reality is that the government provides many things that help enable economic growth and profitability for the private sector. From government purchases from the private sector (think about how much the military industrial complex make from various government orders for its products and services); this alone eliminates uncertainty in terms of profitability and provides demand for their goods and hence leads to growth and rising employment in the private sector). Government spending and investment in housing, research and development, road building, etc. winds up in the pockets of the private sector. In fact, your tax dollars and government borrowing has been sustaining the private sector for quite some time and in fact in the post-war period it has enabled economic growth.

To quote John Harvey:

“That leaves investment and government spending as the real engines of growth […]. They are the forces that drive the business cycle rather than follow it. Businesses and the government together determine whether or not we are in rapid expansion or the depths of depression. This chart illustrates the point:
Harveyusgdpandmaindrivers, shrunk
[…] Note that this means that if there were no government sector, then the job of driving economic activity would be left to investment alone. This is similar to the situation we faced before WWII, when the government was tiny compared to the rest of the economy. The problem is, firms can build new capacity (i.e., invest) relatively quickly so that, ironically, at the very moment we have our greatest ability to produce goods and services, investment falls, layoffs occur, and we slip into recession. This is an absolutely critical point (http://www.forbes.com/...).”
What Harvey is demonstrating is the role of Government in creating economic growth. He argues that consumer spending follows the state of the economy, rising as the economy grows and falling as it declines. There are two things that drive economic growth, but in a recession, private investment is insufficient; it is government spending and investment that drive economic growth.

But let’s talk how government does drive economic growth. We know that this is due to government spending. But what else the government spending provides? It provides income to state workers which will buy the goods and services of the private sector.  Unemployment insurance and pensions and social services (think of food stamps, welfare payments, and disability benefits) also ensure that those that would not have income due to unemployment actually can purchase goods and services. Quite obviously, those are for the most part produced by, yes, the private sector as we live in a capitalist economy.

So, given the situation, the last thing that we want to do when we are in an economic crisis in the advanced capitalist world is to cut the state sector, cut benefits and reduce wages. All you are doing in this situation is creating more unemployment and throwing people into poverty.

“In fact, Matthew Weaver of The Guardian reported, that one in five British workers are being paid less than a living wage, that is 4.82 million workers are not earning enough to survive on. This is because the designated minimum wage (£6.19/hour) is not a living wage (£8.30 in London, £7.20 in the rest of the country) and the Tories are opposing raising the wage due to fears of affecting employment.

“The study, launched in advance of next week's Living Wage Week, found that Northern Ireland has the highest proportion of people earning below the living wage (24%), followed by Wales at 23%. The lowest proportion of sub-living wage earners are in London and the south-east, both at 16%. It found that at least 70% of cleaners, kitchen staff and waiters and waitresses were paid less than the living wage (http://www.guardian.co.uk/...).”

If you want to see what happens when these policies are implemented in earnest, take a look at Greece and Spain and you are witnessing the deliberate creation of an economic depression in these countries.
 
“Eurostat figures show that 25.75m people in the whole European Union were unemployed in September 2012 - an increase of 169,000 people on the previous month. Compared with September 2011, unemployment has risen by 2.145m.
Spain and Greece recorded the highest unemployment rates at 25.8% and 25.1% respectively (http://www.guardian.co.uk/...).”  

In terms of the general state of the economies of Spain and Greece:

“So Spain’s economy has contracted by another 0.3% for the third quarter, whilst inflation in the country continues to rise and demand continues to slump. You could be forgiven for thinking that there is no way out of this hell-hole for Spain: the contraction now means that the country has been in its ‘double-dip’ recession for five consecutive quarters, and unemployment is now running at a fresh high of 25.1%. To add insult to injury, the Spanish government thinks that the economy will shrink a total of 1.5% this year, and another 0.5% in 2013 (http://www.managementtoday.co.uk/...).”

“The [latest Greek] draft budget for 2013, which provides for measures of 9.2 billion euros, an economic contraction of 4.5 percent and a primary surplus of 0.5 percent (http://www.ekathimerini.com/..., my clarification).”

The message is on the wall for the UK irrespective of the blip provided by the Olympics; circuses without bread do not make for economic growth and they also make for very unhappy populations as we see in Greece and Spain.

The fact that these realities are being ignored by politicians is truly disconcerting.  On November 1st, it was reported that in the UK, both manufacturing and construction industries are shrinking. In fact, manufacturing has declined for the 6th month in a row; the only thing that grew is consumer spending (http://www.bbc.co.uk/...). That is proof that the small economic growth we saw in the last quarter (which the Tories are claiming is due to their economic policies) is the result of the Olympics and that we can expect the UK, once again, to fall into recession. Moreover, the stress on export-led growth (another plank of neoliberal economics) for manufacturing means that the sector is far more dependent upon conditions in the world economy and hence since world recovery is not happening, export-led sectors are simply not going to grow.

“I was discussing this situation in the UK with Karl Petrick who is an economic historian and he said the following:

“I'm pretty sure that was part of their party programme. The sad thing is that anyone who is paying attention can already see the effects of an austerity budget in the UK, but that has never even registered in the news on this side of the pond. Either that or we are in some sort of odd one-upmanship: You call that a recession? I'll show you A RECESSION!!!! The situation would be funny, if it was not so dire!”

It does not benefit the private sector either as the loss of income all around means that there are less people now able to buy what they produce. Since the private sector does not see that the possibility for investment as a great idea now due to the fact that there is not sufficient demand for their goods, they will not create new jobs. Waiting for the private sector to invest, even with all the tax breaks that various governments are giving to the corporations and to the wealthiest, is quite simply put, like waiting for climate change to fix itself, in other words, it is just not happening. In fact, the stock markets are the investment of choice, short term speculative investment is what is happening, not investment which creates jobs.

This leaves no choice but for the state sector to once again engage in direct government jobs creation … without that there is no way to combat structural employment.  Moreover, given that we need far less labour (due to high productivity), the far more sensible option is also to decrease weekly working hours, but maintain income. That is, raise income of working people, not decrease it which is what we are seeing throughout the advanced capitalist world.
NHSambulanceservices

Conclusion

The re-privatisation of public goods (and it is reprivatisation as many of these services were provided privately before the existence of the state sector) represents a coup for capitalists. From reprivatisation of electrics, water, road services, they are now trying to get their hands on provision of health care in the UK, care homes, nurseries, fire services, education, and police services. The problem is that there was a reason for these public goods to be nationalised in the first place, private provision is always based first and foremost on profitability which means that if you cannot afford to purchase these things, then you will no longer be able to access them. With incomes falling all over the advanced capitalist world, that means that many of these things will no longer be part of workers’ consumption bundles. Moreover, since many of these things cannot be purchased, they will once again fall onto women as part of their household labour for which they receive no recompense.
Capitalismo
The erosion of workers standards of living in the advanced capitalist world is part of a wage squeeze trying to raise profits in a period of low profitability caused by the crisis. In periods of economic growth, wages can be allowed above social subsistence; that is what we saw in the post war period. High productivity and economic growth meant that the surplus product could be shared between workers and capitalists. Over time, the social subsistence level rose. What we are seeing now is the erosion of the social subsistence wage; they are pushing it down (so it is above physical subsistence and reproduction of the working class and they are pushing it downwards).  What we are seeing is the combination of normal decreases in the value of labour power (e.g., bringing cheap goods in from overseas that are consumed by the working class) combined with a deliberate lowering of social subsistence wages, the breakdown of “jobs for life” and the rising number of people employed part-time, temporarily and as sub-contracted workers.

The problem with wage squeezes is that essentially it means that fewer and fewer working people and the high number of unemployed people (facing benefit cuts) can afford to buy things and this means that capitalists have no reason to increase production, employment, that is, to create economic growth.

What this means is that cutting the deficit, continuing cuts to the public sector, job cuts, and benefit cuts are exactly the wrong policies to deal with an economic crisis. All they do is deepen the crisis and provide no basis for recovery.  Quantitative easing (increasing the money supply) has not stimulated investment which creates jobs, rather the money is being put into the financial markets for short-term speculative investment, which given the lack of regulation only increases the possibility of another financial crisis. But it is not financial crises which are the serious problem for the capitalist system at this point; rising income and wealth inequality will lead to a crisis in the real economy. With the politicians unable and unwilling to deal with the fact that capitalism is an inherently crisis-ridden system and in the absence of determination to ameliorate the problems caused by the system, the majority will be facing continued impoverisation. This represents not only a failure of capitalism which we know is incapable of providing for all, but a failure of bourgeois democracy as there is no mainstream political party that will actually stand up for the majority; all pretence that democracy applies to all is being rapidly eroded in the absence of a political party that actually speaks for and is answerable to the majority.  

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Comment Preferences

  •  Tip Jar (26+ / 0-)

    "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

    by NY brit expat on Sun Nov 04, 2012 at 03:00:12 PM PST

  •  Bullshit diary is Bullshit (0+ / 0-)

    even if there is a lot of correct stuff in the analysis.  the diary concludes with the same old bullshit "the two parties are the same" line.

    This represents not only a failure of capitalism which we know is incapable of providing for all, but a failure of bourgeois democracy as there is no mainstream political party that will actually stand up for the majority; all pretence that democracy applies to all is being rapidly eroded in the absence of a political party that actually speaks for and is answerable to the majority.  
    The two parties are not the same!  If want to learn the difference, ask a woman who wants an abortion or a lesbian or gay couple who wants to get married.

    "Empty vessels make the loudest sound, they have the least wit and are the greatest blabbers" Plato

    by Empty Vessel on Sun Nov 04, 2012 at 03:05:41 PM PST

  •  I don't think this is about the two parties being (13+ / 0-)

    the same -- I think it is about different goals in society between the capitalists organizing a society in terms of efficiency based on profit (exchange value) and those of us who like and respect each other as human beings and define efficiency in how well we create a community that helps each other lead better lives  (Use value).

    Obviously, the austerity programs are based on capitalist profitability and if we start with this definition of efficiency, people don't have a chance.

  •  Great Diary (10+ / 0-)

    Your points about structural unemployment are critical, especially because they show the connection between the class-based laws of motion of capitalism and the Keynesian fiscal argument.

    Another important point is that one of the best things the govt. in any capitalist country can do is strengthen worker rights, especially their rights to organize and act (not just bargain) collectively. That's why, to me, the biggest failure of the first term was the lack of any labor law reform.

    Not only does progressive labor law lead to higher wages and stronger social welfare programs, it opens a social space for worker self-activity, which I wrote about awhile ago.

    "Karl Marx and Frederick Engels came to the checkout at the 7-11 Marx was skint - but he had sense Engels lent him the necessary pence What have we got? Yeh-o, magnificence!!" (The Clash, 1976-1983)

    by Le Gauchiste on Sun Nov 04, 2012 at 03:48:59 PM PST

    •  Thank you! I agree completely! (5+ / 0-)

      Not only has there been no attempt to strenghten workers rights to organise and strike for wages and working conditions, this has continued to be eroded. When the opportunity came to fight in Wisconsin, people's energies and anger were bled off on a recall effort and the leadership of the unions did not support their rank and file members.

      We need to protect our unions, their weakness has enabled the shift from life-long jobs to part-time, temporary, and sub-contracting work. It has allowed a decrease in wages and incomes for working class people as they are not strong enough to fight. It is not the unions that have caused this, but the fact that their power has been significantly and deliberately weakened. This has allowed divide and rule to be used to split private sector and public sector workers, to have wages and work conditions destroyed.

      "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

      by NY brit expat on Sun Nov 04, 2012 at 03:57:31 PM PST

      [ Parent ]

      •  Just an anecdotal observation (2+ / 0-)
        Recommended by:
        NY brit expat, northsylvania

        IANAE. Interested in your comments about "bleeding off" energy in recall effort as well as the divide and conquer strategy.

        There were two differences between somewhat similar scenarios in Wisconsin and Ohio. Wisconsin allows for recalls; Ohio does not. There was much gnashing of teeth in Ohio when Kasich tried to deprive government employees of collective bargaining rights because we lacked recall capability. Instead, the energy went into petitions to place the issue on the ballot. This was done successfully and SB 5 (Ballot Issue 2) was soundly defeated at the ballot box and, at least temporarily, chastened the Governor in the process.

        Re: divisiveness. It isn't just an issue of public vs private. Walker was smart (in an evil way) in that he attempted union busting with teachers in Wisconsin but left safety forces relatively unscathed. Thus, there was division between public sector unions. Kasich, in contrast went for the brass ring and attacked all public sector unions. This fostered cohesiveness and collaboration not only among diverse public unions (safety, nurses, teachers, etc.) but with activist liberal and professional communities. Folks who normally don't even encounter each other worked together to gather the thousands of required signatures to get the issue on the ballot and then to educate the public and get them out to vote. Rather than being a draining exercise, I think it's safe to say it was energizing. It also forged a coalition that was helpful in dealing with some subsequent issues.

        BTW: nice diary. You dragged me back to Kos.

        The conventional view serves to protect us from the painful job of thinking. John Kenneth Galbraith

        by Psyche on Sun Nov 04, 2012 at 10:01:25 PM PST

        [ Parent ]

        •  Honestly, I think that working together (0+ / 0-)

          across unions is exactly what was needed, a ballot iniative to vote it down was clearly more effective; agreed on the attempt to attack some and protect others in the public sector is exactly the same as playing the public vs private off against each other. The Tories have not been that clever, they play public and private against each other. But it is all part of the same. The ballot iniative worked better than the recall effort clearly and I am glad to see, it was able to unite people across employments and that  will be a very important coalition in the future, that is excellent!

          Glad that I have dragged you back, but there are other places that we publish outside of dkos if you need a break! :)

          "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

          by NY brit expat on Mon Nov 05, 2012 at 06:03:37 AM PST

          [ Parent ]

    •  I like the way you define labor unions broadly (3+ / 0-)
      Recommended by:
      NY brit expat, Psyche, northsylvania

      as agents of democracy, not just as a mechanism for higher wages.  This broader defnition is critical to unions playing a progressive role in the shift away from a capitalist approach.  If unions truly fulfill this role, they can be one of the agents of change that we need for a deeper structural change.

  •  I need to take time to read all this (12+ / 0-)

    But my first reaction is that governments that limit themselves to neoliberal/capitalist economics indeed are incapable of "job creationism".  Today's "left" parties, both in the US and Europe, are solidly within the mainstream of Reaganist-Thatcherist orthodoxy in this regard.    That is, for example, why the Great Obama Stimulus being hailed hereabouts was almost entirely based on Reagan-style tax cuts to business and pork-barrel handouts to crony capitalists, and exactly zero direct job creation spending.  Increasingly the idea that "left" [parties exist at all is a fraud and a sham being played on the working classes, one that inewvitably results in failure and disappointment, which usually then goads frustrated workers into the arms of the far right.  (The next morning in America will be a Golden Dawn.)

    Ever get the feeling you've been cheated?

    by ActivistGuy on Sun Nov 04, 2012 at 03:50:32 PM PST

    •  Exactly ActivistGuy! (7+ / 0-)

      The neoliberal economic argument is destroying the public sector and undermining incomes (both for workers that used to work in the state sector, for those in the private sector and also for the unemployed); so on both sides public and private they cannot create jobs. That is exactly the point. That is the argument in a nutshell.

      What is needed is the exact opposite argument; creation of nationalised or socialised industry, direct government job creation and more spending, not less.

      So glad to see you! I have missed your excellent ability of getting right to the heart of a piece and just seeing you here has made my night!

      "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

      by NY brit expat on Sun Nov 04, 2012 at 04:08:54 PM PST

      [ Parent ]

    •  As I mention in tonight's Sunday Train ... (4+ / 0-)
      Opponents of the climate suicide of our industrial society who fall for this will have been well and truly suckered, as the German Greens supporting neoliberal fantasies and "responsible" fiscal policy were among the enablers of the austerity policies that are ravaging European economies as I write.
      Sunday Train: Social Dividends and Carbon Taxation

      Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

      by BruceMcF on Sun Nov 04, 2012 at 05:13:13 PM PST

      [ Parent ]

      •  I am thinking that we need to have a (5+ / 0-)

        discussion about the fallacy of green capitalism sooner rather than later. That would be a really good discussion. :)  So many parties have failed so badly, the Green Party in Brighton in the UK voted for cuts instead of resisting, a mistake that will (and has) cost them. They were the only party that wasn't supporting austerity in their general election platform, but on the local level failed to stop it.

        "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

        by NY brit expat on Sun Nov 04, 2012 at 05:19:07 PM PST

        [ Parent ]

        •  On he surface, the Market Economy ... (3+ / 0-)
          Recommended by:
          NY brit expat, Geminijen, Psyche

          ... has a lot of appeal from an ecological perspective, if one does not press too deeply. The decentralized decision making, the evolution of different market segments ...

          ... except where an ecosystem elaborates and creates new information, a pure market system strips out information, so that no market can design a complex system.

          That is why the myth of the pure market system as a full fledged economy in its own right is so convenient to corporate capitalism: given the presumption that all complex systems that require designing already exist, either in practice or in some book of blueprints somewhere, the question of who designs complex systems never need be addressed, which tacitly leaves the design of complex systems to corporations, with the largest, most complex systems to be designed by the largest, wealthiest corporations.

          Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

          by BruceMcF on Sun Nov 04, 2012 at 05:28:44 PM PST

          [ Parent ]

          •  excellent point BruceMcF! (1+ / 0-)
            Recommended by:
            BruceMcF

            actually made me stop and think (which doesn't happen that often).  Maybe we can try and get a discussion on that. Will try and hit the Sunday Train before heading to bed ... I love your train pieces.

            "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

            by NY brit expat on Sun Nov 04, 2012 at 05:32:28 PM PST

            [ Parent ]

  •  Great work, X-pat (7+ / 0-)

    Structural unemployment has a few connotations such as the way you used it when technology and mechanization creates unemployment be replacing workers, but commonly it is more of a modern lie about being able to find work through more education which is false.

    Rather than destroy the state sector, what is needed instead as a first step is direct government jobs creation. That is, the government itself needs to hire people at all levels. It also needs to create new sectors for them to work; the creation of a green transport industry and green manufacturing would be an excellent place to start.  However, since construction is primarily a male occupation, increasing money spent on education, social services government provision of health care, nurseries (crèches) which are all traditional areas of women’s work would offer women a far better choice than the low-paid part-time and temporary work to which they are being relegated.  However, no mainstream politician is advocating the only known and proven thing to get the system out of the crisis, they are all parroting the line of reduce state expenditure, cut public sector employment and cut social services and benefits.
    Employer of last resort a la Minksy. You know it! NO one is talking about this and this is the only real solution that has immediate benefits. No one, the Tories or Labour or Republicans or Democrats will touch this. Perhaps because it will raise wages across the board and they want to take advantage, corporations, of not having to sell to a Domestic consumer base as the only reason Henry Ford raised wags even though eh was an anti-semitic anti union Ahole.

    I don't believe he was right about everything, but Marx was very right about demand and the first one to point out the problem, because as you and the most excellent John T. Harvey point out, spending is income, your income, my income, everyone's income. Always has been historically. Government spending doesn't go into the ether, it's also the private sector income, even running up a deficit structurally puts dollars into the private sector and always has historically as well.

    Supply doesn't create it's own demand or investment via Say's law is BS. A race to the bottom hoarding capital and finding the lowest pound of flesh to extract will eventually collapse or leads to the conditions that fuel bubbles like the Great Depression like the depression now(private debt levels are the same so it is a depression). You're right, QE will only fuel speculation and irrational behavior to increase commodity inflation because investors are stupid(Like Chris Cook says).

    Government spending, deficit spending, and being the hirer of last resort are the only solutions. Austerity and balancing sectoral balances the wrong way sucking income out of the private sector(something all of our leaders are too stupid or corrupt to get or admit). Export led growth cannot succeed by itself if the governments and central banks of the world are captured by Neolieberalism. Also inflation expectations will not amount to anything, because central banks are not magic factories like some "progressives" like Matt Ygleisas thinks.

    You and John T. Harvey outlined the only solutions, especially for countries such as ours that issue our own currency and the EU needs to just go away(it will eventually unless the ECB changes but it won't) so other countries can do the same.

    I don't negotiate grand bargains with deficit terrorists!

    by priceman on Sun Nov 04, 2012 at 03:54:43 PM PST

    •  thank you priceman! excellent comment here! (4+ / 0-)
      Recommended by:
      priceman, annieli, slatsg, Geminijen

      The post-Keynesians and the Marxists can certainly agree on part of the problem. We may differ on solutions, what for me is transitional may be fine for them, but we are certainly moving in the same direction on how to deal with the mess created by neoliberalism.

      "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

      by NY brit expat on Sun Nov 04, 2012 at 04:11:53 PM PST

      [ Parent ]

    •  Interesting analysis --my only quibble is, once (6+ / 0-)

      again, defining job creation in capitalist terms.  Why is construction or even childcare the most valuable work?  What makes a job temporary or low-paid?  Because it has no value to improve our life or because it is less efficient in terms of making a profit?

      I'll give you a simplistic and what appears to be a superficial example.  When you make a phone call and are met with a machine that takes you through a series of options (Press 1,2,3,...9)none of which relate to the reason you called and which take several minutes to negotiate, is this more efficient than when the call is answered by a human being (even a bored or relatively difficult person)who can integrate information outside the binary system --usually in less than a minute?  The only efficiency is in the cost to the company and their profitability.  This is why people are being, in many cases, replaced by "efficient" machines. this is why all those folks who could be doing perfectly good work in all kinds of jobs to make a better society are unemployed. and I'm not anti-technology -- it just means using our technology in places where it actually improves our lives, not first and formost the bottom line.

      •  I hear what you are saying and I agree (3+ / 0-)
        Recommended by:
        tardis10, priceman, Geminijen

        theoretically; the problem is that in a society in which you are forced to sell your labour to survive (especially as they are destroying the social welfare state) you need to work to survive. As such, dealing with job creation in the context of capitalist economic relations is different from what we hope to see under a socialist system. There are lots of things that need to be done, the thing is that the system does not remunerate them as they do not fulfill the needs of the system to make profit as you pointed out. We are not discussing something outside the system and in the context of capitalism, we know damn well that it is remunerated solely (or jobs exist solely) to make profit. In the context of state creation of jobs, those jobs can exist w/o making profits for anyone and that is why they want to privatise as many of them as possible. That is why we also should be demanding that they are done in a manner in which there are not profits earned on work.

        I would support (as did Kollantai) that women be freed from social reproduction if they wanted to and have these things provided by the state. I agree that theoretically, since they fulfill the essential purpose of social reproduction they should be remunerated, but they should not be dumped on women due to the fact that there is no child-care nor carers for the elderly and sick.  

        "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

        by NY brit expat on Sun Nov 04, 2012 at 04:57:01 PM PST

        [ Parent ]

        •  I certainly agree that low paying jobs should not (2+ / 0-)
          Recommended by:
          NY brit expat, Psyche

          be dumped on women -or, if they help make society better--on anyone.  they should be recompensated (public or private sphere) and unions should form to fight for good pay in those industries (including Starbuck's).  Point I'm trying to make is that before we can consider seriously demanding good wages for any job (teaching or starbuck's) which is not based on its profitability in the private (or obviously public)sector, we have to believe the job has value.  teachers were underpaid until recently (as childcare still is) because they were considered valueless (nonprofitable) service jobs.  It is still not clear to me whether these jobs were given to women because they were viewed as valueless or became valueless because women did them, but in either case, even though we live in a capitalist economy we can start demanding pay for any use of labor energy that ads actual value (not profit) to our society.  It worked for public school teachers who now make a decent salary, worked for organizing garbage collectors  and certainly Walmart could afford to pay their retail folks (who everyone tells me are very good workers and make one's experience in the market more pleasant) a decent salary.  We have to reconsider what kind of work we think is valuable to fight for. Not just white male jobs.

          •  I agree with you completely! I think (1+ / 0-)
            Recommended by:
            Geminijen

            that we are using different terms but I think we are saying similar things.

            I am going to stretch the discussion a bit and put it in terms of how we view things and raise the question of use value and exchange in the context of this discussion. All of the so-called valueless jobs are such in the context of a capitalist system, in that they have use-value and contribute to society, but in the current context, they have limited or no exchange value as they cannot be used to make a profit for capitalists.

            I think your point is excellent and agree that we should be fighting for a decent salary for all jobs irrespective of their profitablility to the system or whether the system views these jobs as of lower value.

            I tried to raise that in the discussion, but what can be fought for in the US (and which already exists in Europe) is pay parity and benefit guarantees for those on part-time jobs. This is not to denegrate part-time workers. In fact, I say clearly that given structural unemployment caused by the system reduction of workweeks is a possible answer, but incomes should not be reduced. That is why I said we were saying similar things. Moreover, fighting for protection of those that either choose to work part-time or are forced to work part-time because there are not full-time jobs (underemployment is a serious problem, large numbers would prefer full-time employment, but because of:

            1) there are not full-time jobs;
            2) they have carer responsibilities and;
            3) there is insufficient provision of child-care and carer support
            they are forced either to work part-time.

            "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

            by NY brit expat on Sun Nov 04, 2012 at 06:42:24 PM PST

            [ Parent ]

            •  even stay-at-home moms need to have a union (3+ / 0-)

              I'm facing the denial of my disability claim because I didn't "earn an income" for enough years out of the last ten. Of course, I became disable in 2006, so I haven't been able to work, but that's a case I can make.

              What I learned this week is that the few years I stayed at home to raise my daughter, when she was an infant and toddler, are adding to the system's perception that I did not "work" and therefore am not due the benefits of someone who did.

              So, any person who stays at home to raise children, doing one of the single most valuable jobs in a society, is left out of consideration for social benefits because she didn't "work."

              How's that for "family values?" Raise a family and you're valued at zero.

              Parents need to unionize. We need to start insisting on valuing the people who do work that we value.

            •  for an interesting POV (3+ / 0-)

              of a younger generation of radicals on this topic, you may want to read the section "The Third Circle" in The Coming Insurrection.  The first couple of paragraphs of that section are France specific and can be skipped with no loss, but begin reading at "Excuse us if we don’t give a fuck."

              Ever get the feeling you've been cheated?

              by ActivistGuy on Sun Nov 04, 2012 at 11:12:09 PM PST

              [ Parent ]

              •  excellent, I will give it a look ... (1+ / 0-)
                Recommended by:
                priceman

                need to see what the younger generation are saying. A fresh perspective is always useful even if I wind up not agreeing, it is still important to know what people are thinking especially the future.

                "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

                by NY brit expat on Mon Nov 05, 2012 at 06:05:27 AM PST

                [ Parent ]

      •  Thanks, Geminijen (1+ / 0-)
        Recommended by:
        NY brit expat

        It goes to what John T. Harvey was talking about via the public sector is useful even if not profit making and so are government jobs. Public universities paying Professors etc. What makes a job temporary or low paid is based on a standard of living whether provided by a private capitalist firm making profits or the government that collects taxes or creates its own money like ours and the UK and pays people. It's interesting you bring up child care, because those kinds of jobs are not even counted should be because it's basically raising the human producer and consumer.

        Improvements in agriculture led to the conditions where enough displaced workers were there for Bankers and brokers to exploit for the housing bubble among others from 1912-1929 when it collapsed. In some ways it is similar to what led to this bubble bust but it wasn't all technology as it was also a legal construct within trade law that allowed a high trade deficit and outsourcing to hollow out manufacturing here leading people in a place to be exploited by bankers and brokers again to float the housing bubble that busted in 2008.

        I wasn't trying to fetishize technology and I agree in many ways human labor is just as and even more useful even if arguably not efficient in the profit making sense though people like talking to people so it may fit that way as well. It depends on who owns the technology and what is produced as well via family farms vs corporate farms etc. in the private sense but we're all on the Internet now because of non profit government R&D. Technology that improves lives and connects people is just as and more important than profit in some ways.

        I view profit on what is being profited from and how it is collectively is measured though I don't think it is the end all to be all and not everything useful is going to make some company a profit. Finance capitalism as it is is not useful to society at all in a criminologic environment such as this so therefore a lot of profit in general is made criminally and the bets off of it.

        I don't negotiate grand bargains with deficit terrorists!

        by priceman on Sun Nov 04, 2012 at 06:55:51 PM PST

        [ Parent ]

    •  Yes ... (3+ / 0-)

      ... structural unemployment in the mainstream models simply means the employment you have when the economy is at the "natural rate" of growth, the existence of a natural rate and the structural nature of unemployment at that fictitious natural rate being matters of faith rather than evidence.

      Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

      by BruceMcF on Sun Nov 04, 2012 at 05:15:17 PM PST

      [ Parent ]

      •  but that is one (introduced by Friedman) (1+ / 0-)
        Recommended by:
        priceman

        that played off unemployment and inflation and as you say it is not what real structural unemployment actually is as it is based as you said upon fictions concerning the natural rate of growth and based upon nothing like reality, like most of the mainstream analysis at this point.

        "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

        by NY brit expat on Sun Nov 04, 2012 at 05:21:51 PM PST

        [ Parent ]

        •  Mainstream 'real' structural unemployment ... (3+ / 0-)
          Recommended by:
          priceman, NY brit expat, Geminijen

          can't be 'real' anything, since it exists in abstract models that are not scientific cause-and-effect explanations of events occurring in real world economies.

          So real world economists and mainstream economists talking about "structural unemployment" are doomed to be talking at cross-purposes, since "the unemployment that is due to the structure of the economic system as it exists in the real world" requires at least two and possibly more concepts that are not expressible in the sparse language of mainstream economic theory ... "structure" in a way that is meaningful in the real world, and "economic system" in a way that is meaningful in the real world.

          Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

          by BruceMcF on Sun Nov 04, 2012 at 05:32:55 PM PST

          [ Parent ]

      •  Indeed, BruceMcF (1+ / 0-)
        Recommended by:
        NY brit expat

        The natural rate hypothesis and NAIRU are garbage.

        I don't negotiate grand bargains with deficit terrorists!

        by priceman on Sun Nov 04, 2012 at 07:01:18 PM PST

        [ Parent ]

  •  Piece has been cross-posted at (6+ / 0-)

    "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

    by NY brit expat on Sun Nov 04, 2012 at 04:00:39 PM PST

  •  important to note esp. with the (1+ / 0-)
    Recommended by:
    NY brit expat

    WH's continued support of private health insurance in ACA and charter schools

    But it is not financial crises which are the serious problem for the capitalist system at this point; rising income and wealth inequality will lead to a crisis in the real economy. With the politicians unable and unwilling to deal with the fact that capitalism is an inherently crisis-ridden system and in the absence of determination to ameliorate the problems caused by the system, the majority will be facing continued impoverisation. This represents not only a failure of capitalism which we know is incapable of providing for all, but a failure of bourgeois democracy as there is no mainstream political party that will actually stand up for the majority; all pretence that democracy applies to all is being rapidly eroded in the absence of a political party that actually speaks for and is answerable to the majority.  

    yksitoista ulotteinen presidentin shakki. / tappaa kaikki natsit "Nous sommes un groupuscule" (-9.50; -7.03) 政治委员, 政委‽ Warning - some snark above ‽

    by annieli on Sun Nov 04, 2012 at 04:27:02 PM PST

    •  The fact that no mainstream party in the UK, (2+ / 0-)
      Recommended by:
      annieli, BruceMcF

      and Spain is there opposing this has allowed the ruling class to undermine public health care, public education, public services and protection for the poor, working poor and those with disabilities. The existence of an alternative voice in Greece in the form of SYRIZA gives a voice to the majority and someone at least to vote for. Who can we vote for in the US, UK, and Spain that will represent the interests and needs of the majority even in the context of bourgeois democracy.

      "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

      by NY brit expat on Sun Nov 04, 2012 at 04:34:30 PM PST

      [ Parent ]

  •  The Source of Wealth and the END of Wealth is... (2+ / 0-)
    Recommended by:
    NY brit expat, Geminijen

    THE STATE.

    Wealth cannot exist without the writ of law and governing authority to decree it into existence.  To regulate it, tax it and protect it and the common weal.  And finally, it is the state that destroys wealth.

    Any other context is pure anarchy.

    --Mr. President, you have to earn my vote every day. Not take it for granted. --

    by chipoliwog on Sun Nov 04, 2012 at 05:20:22 PM PST

    •  Agreed that the state ensures and protects (1+ / 0-)
      Recommended by:
      Geminijen

      the creation of wealth (if wealth is defined by private property); that is exactly the point that Hobbes made and which is also found in Bentham. In fact, they would probably agree with this statement. But this is a state whose purpose is defined for this role. By definition, without a state there is anarchy, but the question is do we want private ownership of the means of production and distribution? Can a state be conceived outside of serving the interest of the ruling class? I have no problem with anarchism (the absence of a state). However, others besides Hobbes have written on this question discussing the basis of the state as ensuring subsistence of the society as a whole.

      "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

      by NY brit expat on Sun Nov 04, 2012 at 05:41:35 PM PST

      [ Parent ]

      •  Indeed, the question goes beyond ... (2+ / 0-)
        Recommended by:
        NY brit expat, chipoliwog

        ... whether we want private ownership of the means of production, since if corporate ownership counts as "private ownership", then so too does cooperative ownership, and beyond whether we want public ownership of the means of production, since there is a difference between, eg, central government ownership of a farm and local government ownership of a farm.

        Indeed, some would describe corporate ownership of the means of production as private ownership in folkview only, but as a form of public ownership in fact, under institutions that are more favorable to a set of vested interests than they would be under democratically controlled public ownership.

        Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

        by BruceMcF on Sun Nov 04, 2012 at 06:17:08 PM PST

        [ Parent ]

  •  Thanks Ex Pat for writing an article that provided (2+ / 0-)
    Recommended by:
    NY brit expat, northsylvania

    such a stimulating discussion.

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