Zombie Marx and Modern Economics: or, how I learned to stop worrying and forget the transformation problem

There are two versions of this piece: one, here, a conference paper, and the other in the new edition of Jacobin. The Jacobin piece is shorter and stripped of its academic accessories, and much of the section on the value of money, but it’s not entirely an abridged version – I changed the tone a little, and added a Joan Robinson quote someone reminded me of. I’ve had a lot of responses to this, so a follow-up will hopefully follow.

In 2009, UC Berkeley Economics Professor and former Clinton adviser Brad DeLong took a pot shot at our David Harvey on his blog. Headlined ‘Department of “Huh?”’, and beginning “Why neoclassical economics is an absolutely wonderful thing”, the post quotes 11 straight paragraphs from a Harvey essay, which DeLong proceeds to ridicule.

For DeLong, the essay is contentless waffle. It strings together economic concepts without making an economic argument. He would call it “intellectual masturbation”, he writes, except that it “does not feel good at all”. Only in the eleventh paragraph does he find “the suggestion of a shadow of an argument”. Here Harvey argues that the US stimulus package is bound to fail because the deficit needs to be financed by foreign powers, and the amount of Treasury bonds it will be able to sell to the likes of the Chinese central bank will not fund a big enough stimulus. DeLong responds that this is a question that requires a theory of the bond market and interest rates, which Harvey does not provide: “The question is thus not can government deficit spending be financed… the question is at what interest rate will financial markets finance that deficit spending.” [DeLong, 2009]

[More: Zombie Marx and Modern Economics (pdf)]

Published in: on 17 July, 2011 at 3:29 pm  Comments (1)  

Piracy in retrospect and prospect

The Economist (now behind a paywall) had a couple of features last week claiming that music piracy was “in decline”. The claim was based partly on a survey of British internet users in which the percentage reporting usage of file-sharing networks declined from 22% in December 2007 to 17% in July this year. What it didn’t mention is that you don’t need file-sharing software to pirate music anymore since it’s all over the web in plain Googlable sight.

It also cited a Swedish survey in which 60 per cent of former file-sharers claimed to have cut down or quit, with half of them moving to the legal ad-supported Spotify. If such a free (or near-free) service is available in a country, it’s not surprising a bunch of people would quit bothering with piracy. But it’s hardly the case that the pirates lost: rather they won, cutting a lot of the commercial value out of music recordings and massively increasing the quantity people get to listen to.

A couple of good essays on the social and musical impact of piracy over the decade: Eric Harvey’s at Pitchfork is more detailed. But Jace Clayton – who as DJ /rupture is without a doubt on my list of top ten musicians of the decade – is able to be unambiguously celebratory in a way an industry advertising funded site can’t really be, and without lip service to ‘alternative business models’ blah blah blah.

Published in: on 23 November, 2009 at 8:01 pm  Comments (3)  

DeLong wrong on Kalecki


Kalecki: The mockery I can take. But this?

Brad DeLong damns Kalecki with praise:


Productivity increased 9.5 percent in the nonfarm business sector during the third quarter of 2009 as unit labor costs fell 5.2 percent (seasonally adjusted annual rates). In manufacturing, productivity increased 13.6 percent while unit labor costs fell 7.1 percent…

Back in the 1930s there was a Polish Marxist economist, Michel Kalecki, who argued that recessions were functional for the ruling class and for capitalism because they created excess supply of labor, forced workers to work harder to keep their jobs, and so produced a rise in the rate of relative surplus-value.

For thirty years, ever since I got into this business, I have been mocking Michel Kalecki. I have been pointing out that recessions see a much sharper fall in profits than in wages. I have been saying that the pace of work slows in recessions–that employers are more concerned with keeping valuable employees in their value chains than using a temporary high level of unemployment to squeeze greater work effort out of their workers.

I don’t think that I can mock Michel Kalecki any more, ever again.

Well I don’t think DeLong knows much about Kalecki.

In Kalecki’s general model of the business cycle, gross profits fall in recessions just as the pre-3Q-2009 DeLong would have expected them to, because investment and hence total demand declines. The effect on profit and wage shares depends on how much total output and employment fluctuates alongside it, and in fact, on how much labour businesses keep (under)employed – exactly the reason DeLong gives for the worldview he maintained before 3rd-quarter 2009 data came along and shattered it.

In “Distribution of National Income” (1956) Kalecki writes that the wage share excluding salaries “does not seem to show marked cyclical fluctuations”. [p. 66 in his 1971 ‘Selected Essays’ book] But once salaries are included, “the ‘real’ wage and salary bill… can be expected to fluctuate less during the course of the cycle than the ‘real’ gross income of the private sector.” [pp. 75-76] Therefore, the wage+salary share increases in a recession. He gives theoretical reasons – mainly that salaried workers’ employment and pay does not vary so much with output – and runs a regression on US data 1929-41 to back it up. This is exactly the opposite of deLong’s representation.

Kalecki does not use the Marxian value terminology, so DeLong’s use of ‘relative surplus value’ is odd.

DeLong seems to be vaguely remembering and mashing into Kalecki’s business cycle theory his infamous 1943 essay “Political aspects of full employment”, although here too Kalecki clearly argues that less-than-full employment is bad for profits: “It is true that profits would be higher under a regime of full employment than they are on average under laissez-faire; and even the rise in wage rates resulting from the stronger bargaining power of the workers is less likely to reduce profits than to increase prices…” [p. 141]

But full employment was likely to meet political opposition from ‘business leaders’ and ‘captains of industry’ (he also never says ‘capital’ or ‘the ruling class’) because of (i) ideological prejudice against Government deficit spending and (ii) any expansion of public investment “which may foreshadow the intrusion of the state into the new spheres of economic activity” [p. 142], and (iii) dislike of the social and political consequences of greater working class confidence that comes with full employment. ‘Rentiers’ would have an additional reason: the erosion of their wealth from more rapid inflation. Kalecki thus predicted a political alliance between rentiers and the intellectual representatives of big industry, “and they would probably find more than one economist to declare that the situation was manifestly unsound.” [p. 144]

DeLong’s account of Kalecki’s views is thus completely misleading. But there’s some wholesale inventories data out today that might just make him rethink everything he thought he knew about Joan Robinson.

Published in: on 6 November, 2009 at 10:57 am  Comments (3)  

Laughing last

In a review of Martin Wolf’s Fixing Global Finance Alex Callinicos takes a detour to gloat a little at Leo Panitch, who he had debated on political economy and imperialism just before this whole crisis thing broke out.

But plotting the course of a crisis that has undergone such dramatic twists and turns is a hazardous business even for those not intellectually imprisoned in the theoretical assumptions of neoclassical economics. For example, Leo Panitch and Martijn Konings, introducing a valuable collection of essays written from a broadly Marxist perspective about finance and American imperialism and published last autumn, rather unwisely expressed “some scepticism” about “strong claims concerning the disastrous outcome of the current liquidity crunch for the global system of finance and America’s position in it”. They add, “The main upshot of the current situation is that the American state finds itself with a peculiar and unanticipated problem of imperial management”. I think it’s fair to say the problem lies a bit deeper than one of “imperial management”.

It seems Panitch and Konings might have felt a little remorse of their own, since their (edited) book, American Empire and the Political Economy of Global Finance, published last year, is already getting a second edition.

But it’s unfortunate if Callinicos and others are taking the crisis as a vindication of the idea they were defending through those debates earlier in the decade, that capitalism’s still suffering from the aftereffects of the 1970s crisis and an associated decline in the profit rate. Panitch, with collaborators Sam Gindin and Martijn Konings, has had the stronger argument throughout. It’s never been simply that there would be no crisis, but only that Marxists should think twice before leaping to the ‘imminent crisis’ conclusion, that we don’t have special economic forecasting powers, and that always harping on imminent crisis and/or continual stagnation distracts from other criticisms and strategies, not to mention the continuing dynamism of capitalism.

Here’s a piece from 2002 from Panitch and Gindin on the topic, which I’ve posted before. Calling into question Monthly Review‘s familiar diagnosis of everlasting stagnation and prognosis of imminent financial crisis, it still stands up pretty well even in the midst of an actual financial crisis. (Did Monthly Review predict it? How ‘imminent’ is ‘imminent’?)

To its credit, the ISJ has followed a policy of seeking out and publishing pieces critical of its own editors’ lines, which is how the Panitch-Callinicos debate started, after all. Another critical highlight, which addresses pretty well this idea of permanent stagnation since the 1970s, is this piece from last year by the excellent Jim Kincaid.

Published in: on 6 July, 2009 at 6:26 pm  Leave a Comment  

Mitchell strikes back

Bill Mitchell has responded to my criticism at great length. I’ll try and boil down the points of disagreement, but this is still going to be pretty long in response!

1. Speculators

First, Mitchell skips right over my central criticism: that the expectations and opinions of wealth-holders matter even when they are wrong. Even if money works the way Mitchell thinks it does, if money managers expect a fall in the value of the currency, they’re going to speculate against it. Note the period after Hawke’s election when despite policymakers realising that monetary targeting was rubbish, they kept announcing targets to appease the wrong-headed markets. (See Simon Guttmann’s 2006 ‘The Rise and Fall of Monetary Targeting in Australia’.)

2. Tax and the demand for currency

Mitchell implies that the demand for domestic currency to pay domestic taxes underpins its value, such that the movements out of the currency by wealth managers would be foiled by their need to pay tax. A fixation on the fact that tax payments are denominated in national currency is common among cartalist (state) money theorists. I’m not entirely sure why – there will also be a demand for currency arising from its legal tender status, from the need to make all kinds of payments denominated in it – why single out tax payments? At any rate, if the government is running a deficit and not issuing equal amounts of bonds, it is – by definition of the word ‘deficit’ – injecting more money into the economy than it is calling back in taxation. Finally, the fact that wealth-holders are selling the local currency to buy foreign currency doesn’t destroy the local currency, which remains in someone’s hands. Even if at a lower value in terms of other currencies and goods, it still remains available to pay taxes, even if individuals have to borrow back some of the currency they’ve sold to do it. I’m sure people are aware that currencies can and do dive in the foreign exchange markets despite the government that issues the currency requiring tax payments in its own currency.

3. Banks and the supply of currency

My argument is not at all based on a money multiplier conception as Mitchell presents it. My thinking on money is also heavily influenced by post-Keynesian thought, especially the so-called ‘structuralists’ such as Hyman Minsky and Victoria Chick. I note that Mitchell includes Minsky as one of his ‘modern monetary theorists’ but Minsky is miles away from his cartalism.

To summarise very quickly a complex picture: Currency (or ‘high-powered money’) plays a special role within a country’s monetary system, mainly as bank reserves but also the paper cash we carry in wallets. But the bulk of the money supply is not currency but private bank liabilities – bank deposits, and also various other liquid financial instruments – where you draw the line between ‘money’ and just plain ‘debt’ depends on what you’re looking at.

Banks are traditionally constrained in their lending by a couple of factors. First, they need to be able to meet net withdrawals and net transfers to other banks with currency, and since their assets tend to be less liquid (i.e. readily saleable) than their liabilities, a bank needs either an adequate reserve of currency or a way to quickly get its hands on some when it needs it. Second, banks are often constrained by regulations requiring them to hold at least a certain portion of their assets in liquid form, and/or limiting their lending to some multiple of their capital.

Over the last several decades banks evolved various practices and markets to minimise reserve holdings – first ‘asset management’, involving the development of markets in which banks could quickly offload securities; then ‘liability management’, involving markets in which banks could quickly borrow to meet their reserve needs. (Finally, recent engagement in off-balance sheet activities was motivated by the capital requirement regulations, but we can leave that alone here.) Mitchell is quite right that individual banks are no longer really quantitatively constrained by their reserves, and this is why central banks are these days generally concerned instead with the interest rates on short-term borrowing in the money market, representing the cost of reserves to banks.

But for the banking system as a whole, the quantity of reserves available is limited, and the base interest rate represents supply and demand conditions in the money market. Supply is a real constraint on the system as a whole, though not a firm, clear-cut one. Of course, the central bank intervenes in this market in various ways, buying and selling short-term instruments, lending directly to banks, and entering into repurchase agreements. But the fact remains that it is intervening in a market in which it is powerful, but which it does not control. Notice that though the central bank has a good deal of power over short-term rates, its power diminishes more the further you go up the rate spectrum.

The question relevant to the discussion here is: will the central always be able to soak up extra currency that finds its way into the money market as a result of unfunded government deficits? I note that on this question Mitchell actually goes further than I would, claiming that attempts by the central bank to reduce the money supply always fail. I would say, rather, that sometimes it would be able to soak up the currency and sometimes not, depending on the state of demand for credit in the broader economy.

4. Sectoral balances

The fundamental problem here is that Mitchell is taking highly aggregated national accounting identities and trying to turn them into things of causal significance. He implies that given a structural current account deficit, it is better that the government run a deficit than the domestic private sector. Why? Because if the private sector keeps accumulating debt it will eventually have to try to pay it down, whereas the government is not constrained in such a way, and can continue to accumulate indefinitely.

The trouble is, though, that there is absolutely no guarantee that a government deficit run deliberately to offset the structural current account balance would have the intended effect. By increasing domestic demand it is actually likely to have precisely the opposite effect. Factor in the inevitable reactive capital flows and movements in the exchange rate, and who knows what the ultimate effect would be (well, probably an increased current account deficit).

On a side point, Mitchell is wrong to say that “the non-government sector cannot fulfil its tax obligations unless the government has spent first”. Currency also enters private sector balance sheets via central bank activity. For example, in recent years of surplus, and consequence dearth of government debt as a bank ‘position-making instrument’, the Reserve Bank of Australia has operated primarily by entering into repurchase agreements with private banks, temporarily supplying currency when necessary. There’s no reason why this couldn’t go on indefinitely. (Not, of course, that I think it ought to – as noted previously, it is not my position that the government always needs to pay off all its debt.)

5. Finance, the Jobs Guarantee, and inflation

Mitchell points out that his costing of the Jobs Guarantee plan requires a deficit much smaller than the deficit we are presently running. This is a fair point, (though remember that he also implied that the government ought to run deficits matching the structural current account deficit, implying quite a different level of structural government deficit).

As I said in my original post, it’s not the Jobs Guarantee I have a problem with, it’s Mitchell’s idea that the government is completely unconstrained by budgetary concerns. If the Jobs Guarantee policy idea was uncoupled from these monetary eccentricities it might actually find more support, instead of Mitchell’s followers continually finding themselves butting up against a crazy world that doesn’t understand how bloody brilliant – and yet how utterly commonsensical – it all is.

In the right conditions, I would support a government trying out something like the Jobs Guarantee, which is basically a large extension of government employment at the minimum wage to mop up unemployment. But while Mitchell expects it to be a stable remedy for unemployment, I would expect it to be economically destabilising. The reason is that capitalism relies on a certain level of unemployment to discipline wages. The Jobs Guarantee is designed to be non-inflationary by setting its wage at the minimum wage. But I think even then it would remove much of the sting from unemployment, make employed workers feel more secure, and embolden labour.

Great, you might say, and I would agree – which is why I would support the policy. But it would destabilise in an inflationary direction, and present the government with choices it faced at the end of the full employment period in the 1970s: extend its controls in further reforms: price and wage controls, capital controls, public investment, etc., in other words completely politicising the economy; or abandon the policy. In the right political conditions, the Jobs Guarantee could be part of the opening salvo in a much broader social change. In the wrong political conditions it could be an abortive disaster.

I think the whole Mitchell system appeals to a certain kind of person, who is rightly sickened by a permanent pool of unemployment, sees policymakers as irrational, and thinks the whole thing could be put right, with no losers and no conflict, with a single Big Idea. As such, it risks being a Douglas Credit for the 21st century. I would rather see the energy joining a broader project which realises the extent to which capital shapes capitalist political possibilities, and recognises that there is no simple policy switch that would suddenly make everything rational without a serious confrontation with that power. Mitchell says that’s ‘quasi-Marxist’ and so it is!


Newcastle economist Bill Mitchell criticises Greens economic policy from the left, which is welcome and quite apt on some points. It’s great to see this kind of discussion and it helps the left within the Greens.

He is right on about the wobbliness and incoherence of the commitment to full employment. But Mitchell’s views on money and government financing are problematic. Though he presents it as a case of “progressives who understand how the modern money system operates” versus “neo-liberal economics”, his ideas on money are a little eccentric even within the post-Keynesian or ‘heterodox’ community, hardly the obvious consensus he portrays with such confidence.

He says the federal government is a ‘monopolist’ in the issue of currency. This is not true, because the national currency is one among many. Everyone has the option of converting their money into a foreign currency. Most of us don’t do it unless we’re going on holiday or buying something on the internet, but of course managers of financial wealth are always comparing currencies, and if one national currency is expected to lose its  value, it will be sold for another. Even if Mitchell were right, and the federal government could expand its expenditure as much as needed for full employment by printing money without sparking inflation, the fact that financial managers would expect it to be inflationary would be enough for the dollar to dive.

And anyway, I don’t think Mitchell is right that it would not be inflationary, even if speculators happened to agree with him. When government expands spending with new currency, most of that currency will end up in bank reserves. This allows the banks to expand their lending and the money supply to a significantly higher degree, since they can carry deposits to a multiple of reserves. Mitchell would probably respond that if inflation developed, government could beat it by cutting back its spending again, or soak up the currency with open market operations. But this relies on some pretty heroic assumptions about the government having fine, well-timed control over its expenditure and ability to predict bank behaviour and its ultimate impact on demand.

Finally, Mitchell’s claim about the public sector deficit being the mirror-image of private sector saving (the balance of payments deficit/surplus aside): This is true by definition, but means very little. Perhaps he expects people to confuse ‘private sector saving’ with ‘household saving’. You can see why households as a group would want to have net savings over a period. But if their financial assets are to represent net claims over future real goods and services, they need to be claims on firms – shares and bonds, either directly or through banks, pension funds and other intermediaries. In other words, household savings are ultimately claims on firms, i.e. business debt.

But both firms and households combine to form Mitchell’s ‘private sector’. Why would firms and households collectively want to save over the long term in claims on the government? Except to the extent that governments are producing goods and services for sale, their income comes ultimately from taxation (or, if Mitchell ran the government, perhaps inflation) – which is a claim on the private sector! (It’s true, though, that the private sector is always going to want to hold currency and certain government securities, and to that extent the government does not need to worry about getting the deficit to zero – and in fact even when government debt was entirely paid off it still issued securities to fill certain asset needs of banks etc.)

I actually agree with Mitchell that much agonising over government deficits is bogus, and comes from the false idea that government finances work like household or firm finances. Government finance is always and everywhere a macroeconomic issue, as opposed to an accounting issue. But Mitchell’s proposals fall down on the macroeconomics.

The Greens should take full employment seriously. But they also need to realise the extent to which full employment requires a radical reorganisation of how wealth and investment is controlled. It would mean a full-on fight with wealth-owners. The fundamental problem with Mitchell’s analysis is that he makes it sound all too easy, just a technical problem that could be easily solved if only governments weren’t blinded by ideology.

Waiting for a message of some sort


What would a serious radical left reaction to the economic crisis look like? It’s a serious question, I don’t really know, and from here it doesn’t look like there is one yet. Maybe it’s the warped perspective from Australia, where the crisis remains to most people a reality only on paper: newspaper, retirement fund statements and stimulus cheques. As chief Business Spectator Alan Kohler put it on April Fool’s Day, there’s an “air of complacent unreality in Australia at present, as if this country can somehow escape the Great Recession.”

But elsewhere in the Anglosphere, where crisis has well and truly come, there are endless pronouncements and diagnoses but not much resembling a mass movement. The G20 protests in London are exciting as spectacle but I can’t help but think things look like more of the same old ‘activistism’, as Henwood et al put it. The far left comes together as a (particularly fractious) identity group, making shows of ‘resistance’ that reinforce self-identities as radicals. Police co-operate in the psychodrama by cracking down hard, giving the impression of a real battle with something at stake. But the recurring ritual ends up a sublimation of political energy, amounting to little more in the broader political culture than a colourful few seconds on the news.

Now, this view has a fair amount of currency among the people in the crowd themselves, and I don’t mean it as a moral critique of activist failings. After all, you could say something pretty similar about the lefty grad student blog international (represent!), the Communist Conference-going professoriat, the Trots and their theory of permanent paper subscription drive, soft-left NGOs and think tanks promoting ever-so-reasonable policy reforms without a show in Hell… All gears turning and turning and not catching on anything. We’re still ghettoised, the channels of communication with the public at large remain closed, and it’s not entirely certain what we would say if they opened.

It’s a time of political hope in some ways, with capitalist triumphalism taking a beating in the broader culture, but not capitalism itself, because in most people’s minds there’s either nowhere to go or no way to get there. Meanwhile the radical left is energised, ready to join up and do something, but whatever it is we join has yet to precipitate.

Am I wrong?

P.S. I started this post intending to link to the interesting post-protest discussion breaking out among the UK chapter of the lefty grad student blog international: Owen, Savanarola and see also the great pics at Infinite Thought, which despite the above make me wish I was there. Apparently k-punk’s also written something worth reading but my employer’s firewall blocks it as ‘adult/mature content’ so I’ll have to draw the curtains and have a look when I get home.

Published in: on 3 April, 2009 at 1:12 pm  Comments (7)  

Trouble at home

In their ‘theses on the crisis’, which I posted a month ago, Panitch and Gindin present the ascension of bank nationalisation onto the political agenda as an opportunity for some revolutionary leverage: it “provides an opening for advancing broader strategies that begin to take up the need for systemic alternatives to capitalism”.

This doesn’t have much resonance in Australia, because the banks here are not in big trouble; in fact they’ve been strengthened by the collapsing fortunes of their finance company rivals. Bank nationalisation is not on the agenda.

I wonder if housing isn’t a better focal point here. Australia hasn’t seen a housing bust to the extent the US and UK have, and it doesn’t seem likely to, except in the top end of the market. The reason is that housing demand has been outstripping supply, due mainly to population growth. According to Treasury, the increase in demand for dwellings started taking off above the supply of new dwellings in 2005.


New housing construction has fluctuated around a fairly constant mean since at least the early 1990s. The construction slump of the mid-1990s reflected a housing stock that had grown faster than the demand for it. But demand caught up, and for most of the next decade, supply and demand circled one another. So far, so good, the economist might say, supply and demand correcting each other and tending towards balance.

But the market adjustment story has some problems. Between 2000 and 2006, the median first-home price doubled. Why, when underlying supply and demand for dwellings were reasonably matched? The answer lies in the investment demand for houses and the easy availability of finance for it.


Meanwhile the supply of new dwellings moved up and down around its long-run average. Why didn’t the rather deafening price signal motivate an equivalent expansion of supply? Presumably because the construction industry has limited capacity, and faced workforce and materials constraints on its growth.

Now, given projected population figures, a decent case can be mounted that housing demand is going to outstrip supply for the foreseeable future, which is bad news for people who don’t own houses. The real estate industry can argue that there was no bubble in Australian real estate, that investment buyers were correctly forecasting the future. But if this is true, the price mechanism has epically failed to increase the capacity of the construction industry to provide for society’s housing needs.

If Treasury’s population projections are accurate, the construction industry needs to be much bigger, in absolute terms and as a proportion of the workforce, if these needs are to be met. There are those who see that as Australia’s way out of the recession – a movement of workers out of manufacturing and mining and into construction… But that requires a (financed) boost to construction demand from somewhere, which so far exists only in government and industry prayers.

The alternative is demand-side adjustment, which is what’s taking place now. This means the burden falls predominantly on renters – a pool of renters swelled by frustrated would-be homebuyers (although house purchase affordability has increased to some extent with the fall in interest rates and the increased first-homebuyers’ grant). Renter adjustment means some combination of more crowded households and an acceptance of higher rents. Higher rents are a flexible pressure valve because rental demand is pretty inelastic since everyone has to live somewhere, so it will crowd out other items in the household budget before households exit the market (to live with relatives, in caravan parks, etc. – which, incidentally, are already trends too).

Finally, demand side adjustment could come from reduced immigration. This is the reactionary solution. While I don’t doubt that this is going to a chronic pressure point in Australia, it’s not a nice way to go. (Disclosure: author is an immigrant and renter.) It also just shunts pressure elsewhere in the system, into the pensioner quagmire, since increased immigration is Treasury’s solution to an ageing population.

It’s obvious all over the world that housing is a fragile point in post-2000s capitalism. Housing is both a human need, and a financial vehicle for savings and speculation. House prices in Australian politics are what Americans call a ‘third rail’, i.e. what governments stay clear of for fear of instant electrocution. The Labor government’s strategy on housing focuses entirely on that small subset of policies that can be portrayed as simultaneously supporting house prices and making them more affordable. Unfortunately, ‘more affordable’ means ‘cheaper’, which, you will note, is synonymous with ‘lower prices’.

For a large proportion of the populace, including much of the working class, the house is almost as important as a financial asset as it is a place to live, given the uncertainty of living standards after retirement. Therein lies a deep contradiction, which only a radical socio-political shift can resolve.

Santa is a communist


In today’s Sydney Morning Herald, Peter Saunders displays the atrophy of the anti-communist argument since it had to deal with real live communists.

Following a travesty of Raymond Williams and Marcuse, the basic argument goes like this: (1) capitalism is synonymous with material progress, (2) socialists don’t want you to have the stuff you like, (3) let’s show them by enjoying ourselves this Christmas and drinking some wine!

Let’s start with number one:

Capitalism has certainly performed better than any alternative system. In 1820, 85 per cent of the world’s population lived on less than a dollar a day. Today it is 20 per cent. This dramatic reduction in human misery owes nothing to socialist engineering, nor even to ageing rock stars demanding we make poverty history. It is due to the spread of global capitalism.

Plus, if capitalism had stopped in 1977, we wouldn’t have the internet or cellphones. This reminds me of the stock giggle in countless pieces coming to terms with ‘the anti-globalisation movement’ (or whatever) after Seattle: They wear Nikes! Ha! They organise over the internet! Ha! Not really anti-capitalist, now, are they?!

Alas, this kind of argument could equally be applied to Soviet Russia: ‘Russia’s industrialisation and the dramatic reduction in human misery it brought owes nothing to capitalist markets, or even to self-satisfied entrepreneurs. It was due to the spread of global communism.’ And: ‘They went to tear down the Berlin Wall in public transport? Their shoes were made in state-owned factories? Not really anti-communist, now, were they?!’

Here’s the fallacy: if a society is capitalist, everything about it is capitalist in essence. Criticise the relations of production, and you are criticising production tout court.

Which brings us to point two. Saunders may be right about Clive Hamilton. Hamilton does indeed see the consumption as the primary problem of today’s capitalism. (This is perhaps why he is the favourite ‘anti-capitalist’ of the mainstream, and certainly the only one to get in the op-eds.) But this is far from the arguments of Williams or even Marcuse. The problem was never the consumption as such, but the way our lives are dominated from cradle to grave by the alienated labour necessary to produce and acquire the stuff. Technological progress is full of potential for a reorganised society to liberate us from necessity and take real democratic control of the productive machinery.

Number three, the punchline:

So enjoy the prawns and the chardonnay, and don’t feel guilty about the money you spend on the children’s presents. Download Bing Crosby from iTunes, phone the relatives in London at a couple of cents a minute and have yourself a really good Christmas!

What does a socialist say to that? Hell, enjoy the prawns and chardonnay, get your kids presents. (Fuck iTunes, though, steal the Bing Crosby – if that’s your thing – with filesharing software.) But give a thought this Xmas to why you can’t relax and enjoy yourself all year round – and for that matter, why the holidays are so bloody stressful when they only come but once a year.

As a postscript: it’s funny to read this kind of thing despite the total absence of a radical critique in the mainstream. What is Saunders so worried about? Where does he hear these people complaining? The Herald op-ed page runs a rabid reactionary almost every day of the week: Miranda Devine, Gerard Henderson, Paul Sheehan, Michael Duffy, Miranda Devine again on Sunday… These people are always lashing out at some outrage from the left. Which is where? They are haunted by ghosts (or should that be ‘spectres’?).

Published in: on 20 December, 2007 at 9:19 am  Comments (9)  

A public-private partnership

Today I got a letter on official letterhead from Penny Shakespeare, the Assistant Secretary of the Australian Government’s Department of Health and Ageing: Private Health Insurance Branch [sic].

Dear Mr M J Beggs

You have recently registered as eligible for Medicare and under Medicare you are entitled to free treatment in a public hospital as a public patient. However, many people in Australia also choose to have private health insurance.

Private health insurance gives you more choice in relation to your healthcare – for example, the doctor who treats you, what hospital you go to and whether to be treated as a public or private patient.

Now is a good time to think about private health insurance. You can take out private health insurance at any age, but as a new migrant to Australia there is a benefit in taking it out now if you are over 30 years old….

I wrote about last week about the welfare-industrial complex, but clearly that kind of thing was pioneered in health and is now an enormous business, even in Australia with a relatively decent public health system.

Private healthcare is a cancerous growth on the health system, entirely malignant. Its proponents like to portray it as an ‘extra’ – extra choice, extra resources – but it grows at the expense of the public system because it competes with it for the most scarce resource, medical staff, and makes what it poaches available only to those who can afford it. A health system that relies on private care and insurance is – at best – regressive taxation and blatantly exclusive, not to mention inefficient.

But private healthcare gives governments a solution to a chronic problem. Healthcare costs rise faster than most prices in large part because healthcare is professional labour intensive. As with education, you can’t raise productivity without decreasing quality. Just keeping the same level of care requires an increasing amount of society’s resources. But governments find it difficult or distasteful to raise taxes and expenditure. So the system is increasingly maintained on an exclusive basis by those who have more of society’s resources to command.

 Cross-posted to Australia Watch.

Published in: on 18 June, 2007 at 7:12 pm  Comments (4)