“In this interregnum morbid phenomena of the most varied kind come to pass”
from David Ruccio
In his Prison Notebooks, Antonio Gramsci wrote: “The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum morbid phenomena of the most varied kind come to pass.”*
The world is once again living an interregnum. It is poised between the failed economic model of recovery from the crash of 2007-08 and the birth of a new model, one that would actually work for the majority of Americans.**
Morbid symptoms abound, including slow economic growth, persistent poverty, and obscene levels of inequality. Perhaps even more significant, especially at this point in the so-called recovery, when according to mainstream economists and policymakers full employment has been achieved, workers’ wages are actually declining.
According to the latest release from the Bureau of Labor Statistics (pdf), both real average hourly and weekly earnings for production and nonsupervisory employees decreased 0.4 percent from December to January. And, over the course of the past year (January 2016 to January 2017), real average hourly earnings for all employees failed to increase (remaining at $10.65 (in constant 1982-1984 dollars) and real weekly earnings actually decreased by 0.4 percent (from $368.66 to $366.32).
That’s what happened under the last administration, based on an economic model that is dying. And there’s nothing in the new administration’s proposed economic policies that promise any better. In fact, the likelihood is that things will stay the same or get even worse for most American workers in the next four years.
Only large corporations and wealthy individuals will likely gain from promised changes in business regulations and tax policies.
That’s a scenario that pretty much guarantees the appearance of even more morbid symptoms in this interregnum.
*The passage is from Notebook 3 (pp. 32-33), written in 1930, which appears in the second volume of the English edition of the full Prison Notebooks, edited and translated by Joseph A. Buttigieg.
**Nicholas Eberstedt [ht: bg], of the American Enterprise Institute, argues the current model failed around the turn of the century, with warning signs even earlier: “For whatever reasons, the Great American Escalator, which had lifted successive generations of Americans to ever higher standards of living and levels of social well-being, broke down around then—and broke down very badly.” David Brooks, as it turns out, concurs.
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Real-World Economics Review Blog 
Parallel to this stagnation in real wages is the drip, drip, drip of employers chipping away at non-financial remuneration terms and conditions such as holiday, pension, sick pay, even hours of work. A recent survey in the UK showed there to be over 5M workers doing unpaid overtime averaging 7.7 hours (teachers are averaging 12.1 hours).
More. Chipping away at post-employment benefits: lifetime heath care transitioning to a defined annual contribution; even pensions being washed away in Chapter 11 protected ”
Restructuring.”
Something puzzles me about some of these observations.
Our planet Earth is of pretty much finite and of non-growing dimensions. The human population is still growing on global scale and, and is still growing in the US in particular, which is the focus of this posting, but also in Canada and Mexico. Most of the living, but non-human elements of most ecosystems here on the North American continent however, are in decline, with the possible exception of certain bacteria, insects, other animals and plants, the expansion of whose presence here is probably negatively-correlated with the well-being of the human species, if not now, certainly in future generations. The undomesticated non-human elements of most ecosystems, the population sizes of which are positively correlated with human welfare, are almost certainly becoming less abundant, as a result of losing out in competition for “ecosystem-space” with a growing human population and its ever-increasing satellite populations of appallingly-oppressed food animals, and mounds and mounds of un-recyclable if not actually toxic, waste products.
The overall global ecosystem is, as a result, becoming less resilient.
Under these circumstances, where exactly might we expect more rapid “economic growth” to come from, if like David Ruccio, we feel current economic growth is “slow” ? From ever more effective dispossession of our non-human fellow-earthlings or from greater RESOURCE productivity ?
It seems obvious to me that growth in GDP obtained by more effective dispossession of non-human forms of life is not worth the candle. It will make us less well-off in future, not better. The only form of GDP growth that is worth having is that which is grounded in an a qualitatively-better utilization of a fixed (ideally, first reduced) flow of ecosystem services – one that is much more sustainable than the flow we are currently appropriating under an economic regime that is quite unaware of, and indifferent to, the ongoing depletion of the stock of natural capital. This requires benign technological progress and greater (and more successful) ongoing investment in human capital. And even then, it is unlikely that we will be able to match the GDP growth rates of the past, when, in a blissfully ignorant way, we depleted natural capital stocks rapidly, filled ecosystem-space with high-entropy wastes, posted high GDP growth rates, and foolishly declared ourselves better-off.
I certainly agree with Ruccio that high and increasing social inequality (even within our single current generation of human beings) is a big problem that needs to be seriously addressed. Unlike both the mainstream (primarily neoclassical-minded) types of economic commentators and the pro-growth element among so-called “progressive” economic thinkers, though, I am of the view that seeking higher rates of GDP growth will make things worse, not better, unless we can be remarkably more effective than have been at reducing the enormous ecological cost currently associated with each additional dollar of GDP.
Until we have micro-level policies that are succeeding in that latter respect, I think macro-level (and micro-level) policies designed to boost GDP are really not a good idea. I am not even sure they will succeed in boosting GDP very much, because (in a metaphoric way) Mother Nature is increasingly “biting back” (e.g. climate change, ocean acidification, desertification, anti-biotic resistance, rapid evolution and proliferation of human-life-threatening viruses etc). Some of the effects of Mother Nature’s metaphorical counter-attack, are so direct and powerful, that even a statistic defined in the ignorant and perverse way (from a thermodynamic and ecological perspective) that GDP is, may ultimately and quite starkly, reveal to us some of the negative impact of our collective mismanagement of our planet.
Let us address, by all means, both the allocative efficiency and the distributional inequality problems in economics and public policy generally. But concurrently, if not first-off, let’s get the macro-scale of the human economy “right-sized” to our sustainable share of planetary ecosystem space, and not keep trying to colonize and industrialize every last corner of the planet. We (or our descendants) will regret it if we do.
Michael Barkusky
Pacific Institute for Ecological Economics
(now a division of the Board of Change)
Vancouver BC
Canada
Isn’t it all about the pie? Do we need a bigger pie so that some people can keep the really big slice they already have with the idea that the enlarged part would somehow split into wedges for the currently hungry? Or do we need to split the present pie into different wedges so that the currently hungry can be fed at a subsistence level and the rest would somehow split according to economic theory?
Very interesting post here by Michael Barkusky (aka: ecolecon).
OK Michael, let’s go at it. I agree with you, and Naomi Klein and Richard Smith to take those serious writers close to your position in increasing order of alarm and more drastic remedies.
Both are two of the more sophisticated commentators on the ecological left, with some good insights into mainstream economics. We search in vain, however, for evidence that the mainstream economics profession, what William Greider called, in 2007, the modern “thought police” in the West (the term coming from Hazel Henderson, whom we should add to Klein and Smith to make a trio) are anywhere close to your views: they love the two low numbers in the American economy now – low unemployment and low inflation. Things were good – but the voters didn’t think so. And I would like to think the vote for Trump was more a measure of their pain than the ugliness in human nature when under economic distress, but under even these conditions it is very hard to separate the cultural scapegoating of the “others” from underlying conditions that make is possible – even very likely. If I am right, where are we headed when the next major crisis hits?
The mainstream profession refused to “tamper” with labor markets, where we might employ those left out of the statistics in CCC-WPA type projects especially geared to combating global warming…however, not even Bernie Sanders was willing to go for a “Right to a Job” from FDR’s Second Bill of Right. So if the reign of Neoliberalism – its ideological spell – couldn’t be broken by Sanders…and Trump is going in the opposite direction on ecological issues…then the good logical reasoning of Klein and Smith’s critique of her, carrying even further “what it would take to stop the ecological disasters” you list – are at present unthinkable, not on the minds of voters, not on the policy table at CNN – not even economically speaking, a majority in the Democratic Party. (see Richard Smith’s fine book is “Green Capitalism: The God that Failed,” reviewed here by me at Amazon.com https://www.amazon.com/gp/customer-reviews/R1KYZ6B4IWNNT1/ref=cm_cr_dp_d_rvw_ttl?ie=UTF8&ASIN=1848902050
and here in a three way dialogue in issue…http://www.paecon.net/PAEReview/issue76/Smith-et-al76.pdf
I wish, profoundly, that we were not in this political economy “place.” But we are.
In America, Blue and Red places, the level of dialogue on the political economy that I hear around me is woefully inadequate to an informed citizenry resolving our problems. And the higher levels of policy discussion are woefully fragmented in a late empire, Fin-de-Siecle Vienna way…full of postmodernism’s cultural fog and the ideological influence of the 1% and the 20 percent at the top of the meritocracy; as has been pointed out by two sociologists in a famous paper, the elite policy shapers don’t let progressive measures win very often, even if polls show that on a given issue there are large majorities in favor. Here at: https://scholar.princeton.edu/sites/default/files/mgilens/files/gilens_and_page_2014_-testing_theories_of_american_politics.doc.pdf
The decentralizing ecological left is very sophisticated on the ecological side, but many of their best have dropped out of participating in the formation of national left economic-ecological policy statement…and where are the institutions and mechanisms to give agency to their ideas? They are stuck in academic Sand-Traps, despite the many wonderful modern clubs in their bags. Sanders was headed in the correct direction but never could depart from script to let us know he could take it to the next level of coherence; you knew his heart and some of his head were there; I never heard him take flight to break his tethers to the “launch pad.”
Bill McKibben has said we need a World War II mobilization to get this done ecologically, and maybe we need that economically too…but the Right has had a monopoly on cornering political anger and energy, and there is a long history of that…I explore some of that terrain in an upcoming essay: “Major Miscalculations: Globalization, Economic Pain, Social Dislocation and the Rise of Trump.” Because of size limitation on that piece, I could not fully address the ecological side of our troubles, but I’m filling in some of that space here now.
I hold two narratives in my head about where we are in the US, and the West. One in the US is for the 1850’s, the irreconcilable difference between the political economy actualities which political compromise could not reconcile. And of course, a milder version of the traumas and scapegoating in Weimar Germany, 1919-1933…Karl Polanyi reminds us how close we are to the policy dilemmas in the political economy in his book “The Great Transformation.” The dynamics today are close to the 1930’s; what is missing is the economic pain levels which Germany, and then the world saw when capitalism collapsed in 1929.
In good part, the theme of the “Southernization” of the American political economy bridges the gap…and also can be seen in part as the nationalization of an American crisis of adapting to the modernity that globalization brings…the American South, and the worst of the Republican Right having taken us to a place of magical thinking on global warming and the steadfast denial that great economic and technological changes can turn traditional moral values – for better or worse – upside down.
The greatest danger for economists today – as it was in the Germany of the Weimar period, is that they fail to understand the deep forces of mass psychology at work, made possible by the “major miscalculations” on the level of economic pain in the Western working classes and middle classes…especially in our geographical “red state” America.
Maybe the AMC channel in America should be re-running “Gettysburg” …and then “Cabaret.”
Bookmarked this for the in-depth commentary.
This blockage (constipation if you will) all got started (at least the latest cycle) with the famous or infamous story told about Margaret Thatcher. At a 1975, meeting a few months after Margaret Thatcher became leader of the Conservative party, one of her colleagues was explaining what he saw as the core beliefs of conservatism. She snapped open her handbag, pulled out a dogeared copy of Friedrich Hayek’s book “The Constitution of Liberty” (1960) and slammed it on the table. “This is what we believe,” she said. Hayek’s philosophy is called neoliberalism. It saw competition as the defining characteristic of human relations. The market would discover a natural hierarchy of winners and losers, creating a more efficient system than could ever be devised through planning or by design. Anything that impeded this process, such as significant tax, regulation, trade union activity or state provision, was counter-productive. Unrestricted entrepreneurs would create the wealth that would trickle down to everyone. Sound familiar? George Monbiot labels Hayek’s philosophy a “racket.” And he’s correct. Hayek provides NO evidence to support any of his contentions. He also steps far beyond the positions of other conservative philosophers; none of whom supported his views. But the very extremism of the views drew attention to Hayek. A result that pleased him so it seems. Hayek seems to have written the book specifically to please the lobbyists and thinkers who did support him and were in turn lavishly funded by multimillionaires. The wealthy saw neoliberalism as a means of defending themselves against democracy. Hayek’s book fitted the two together. Neoliberalism and the wealthy would from that point forward be the heart and soul of a revolution that swept the UK, the US, and eventually much of the world. A swindle. a grift scheme to make plutocracy appear not just acceptable but essential for progress, growth, freedom, and enlightenment. This is “realpolitik” of the most ruthless sort. A network of super-rich ideologues killed choice and destroyed people’s faith in politics. All to ensure their wealth.
On a more technical level, Hayek makes several testable claims.
1. Order can be undesigned, spontaneous
2. Order can be unpredictable
3. Order can embody essentially decentralized information
4. Communities tend to be spontaneous orders
5. Planned orders are inferior
6. Humans have an innate propensity to “truck and barter,” with no organization
7. Laws merely provide the setting for “truck and barter”
8. Justice and politics are structures that allow entrepreneurship without restraint
9. We are rewarded for our output, not our input
10. The just is what coordinates “truck and barter” best, letting the players play
11. There is no right to distribute; we each get what we deserve
12. Price is irrelevant; only trading is relevant
When tested (historically by case study or through scientific experiments) many of his claims are plausible. Order is sometimes undesigned, spontaneous, unpredictable; humans do “truck and barter;” and sometimes trade is disorganized and unpredictable. But sometimes order and community are designed, at least partially predictable, and “truck and barter” takes a back seat to moral, religious, cultural, artistic, etc. concerns. Hayek’s claim that planned orders are inferior cannot be tested in terms of how Hayek sees inferiority. And the historical record shows clearly that laws are concerned with, and must be so more than “truck and barter” and that justice, fair price, societal distribution of resources are much more than the result of allowing players (entrepreneurs) to play without restraint. In short, per Monbiot Hayek and neoliberalism is a racket. A racket that’s near now to destroying the US, and perhaps the entire species shortly. Perhaps microbiologist Frank Fenner is correct that this is humankind’s last century.