The answer depends on what we mean by capital accumulation. The common view of this process is deeply utilitarian. Capitalists, we are told, seek to maximize their so-called ‘real wealth’: they try to accumulate as many machines, structures, inventories and in- tellectual property rights as they can. And the reason, supposedly, is straightforward. Capitalists are hedonic creatures. Like every other ‘economic agent’, their ultimate goal is to maximize their utility from consumption. This hedonic quest is best served by eco- nomic growth: more output enables more consumption; the faster the expansion of the economy, the more rapid the accumulation of ‘real’ capital; and the larger the capital stock, the greater the utility from its eventual consumption. Utility-seeking capitalists should therefore love booms and hate crises.
But that is not how real capitalists operate. Read more…
From feudal barons keeping the land’s rent for themselves to modern corporate profits paid to bondholders, creditors have broken free of tax liability. Banks now receive most of the rental value of land as mortgage interest, mobilizing a populist argument against property taxes so as to leave more rent available to pay bankers. The situation is reminiscent of Babylonian lenders obtaining the land’s crop usufruct while leaving the customary holders liable for the labor duties associated with their land tenure.
Now that land ownership has been democratized – on credit – a majority of most populations (two-thirds in the United States, and over four-fifths in Scandinavia) no longer pay rent to landlords. Instead, homeowners and commercial property investors pay the rental value to bankers as mortgage interest. In the United States, bankers obtain about two-thirds of real estate cash flow, largely by reducing property taxes. The more the financial sector can reduce the government’s tax take, the more rent is available for new buyers to pay interest to banks for loans to buy property. This explains why the financial sector backs anti-tax “Tea Party” protests. Read more…
Elstat has published new population estimates for Greece. And what happened to Portugal, Ireland, Estonia, Spain Latvia, Lithuania, Romania or Bulgaria is happening to Greece, too. People are leaving in droves.and the population is declining as far as I know especially the working age population! Aside: don’t tell to me that international European job markets aren’t flexible. They are. Before 2008, a massive influx of foreign workers enabled Spain to have the second highest job growth in an absolute sense of the entire rich world, only next to the (much larger) US. Housing boom related private demand in Spain was of course fickle – but the supply side of the labour market reacted vigorously. No petrification there.
New Greek bailout increases the odds that Grexit will actually happen, despite Washington’s pressure.
from Mark Weisbrot
It is now clear that the European authorities do not intend to let the Greek economy recover any time in the foreseeable future. The primary surpluses that the government has been forced to agree to—2, 3, and 3.5 percent of GDP for the three years of the deal, 2016 through 2018—will not allow Greece to escape its depression, which is now in its sixth year. Even if they miss these targets, which is likely, just trying to do what they have committed to will keep the economy from recovering.
The Foundation for Economic and Industrial Research in Athens has projected that the Greek economy will not recover in 2016. It is worth noting that since 2010 past projections from official sources, e.g., by the IMF, have almost always projected recovery for the following year – even though it never happened until the tiny, short-lived, recovery of 2014.
One can only speculate on the motives for inflicting this harm on the people of Greece. Clearly it is not about the money – the Financial Times estimated that the primary surpluses will contribute about 4.5 billion euros out of what is now an 86 billion euro package. Punishment is probably part of the motivation for these hateful conditions, as well as a fear on the part of the tormentors that “leniency” could encourage people in other vulnerable eurozone economies to vote for left parties or demand an earlier exit from mass unemployment. Read more…
from David Ruccio
The other day, I expressed my doubts about Paul Mason’s arguments about postcapitalism. But others see his argument in a much more positive light, including some friends of mine, Jenny Cameron, Katherine Gibson, and Stephen Healy [ht: sk].
They, too, however, assert that “technology does not in and of itself guarantee a better future.” What are needed, and which they see emerging in the midst of capitalism today, are “explicit ethical commitments that are developed independent of online apps and cyber networks.”
Technology is augmenting relations of care for others. Technology does not bring these relations into being.
In our research on the diverse economic practices that exist outside the purview of mainstream economics, we find people are forging new types of economies around six ethical concerns:
- What do we need to survive well?
- What happens to surplus, or what is left over after our survival needs have been met?
- How do we act responsibly to those whose inputs help us to survive well (whether other people or the environment)?
- How much and what do we consume in order to survive well?
- How do we care for the commons – the gifts of nature and intellect that we rely on?
- How do we invest so that future generations can also live well?
Statement by the Office of Yanis Varoufakis, former Minister of Finance, Member of Parliament, Hellenic Republic
During the Greek government’s negotiations with the Eurogroup, Minister Varoufakis oversaw a Working Group with a remit to prepare contingency plans against the creditors’ efforts to undermine the Greek government and in view of forces at work within the Eurozone to have Greece expelled from the euro. The Working Group was convened by the Minister, at the behest of the Prime Minister, and was coordinated by Professor James K. Galbraith. (Click here for a statement on the matter by Professor Galbraith).
It is worth noting that, prior to Mr Varoufakis’ comfirmation of the existence of the said Working Group, the Minister was criticized widely for having neglected to make such contingency plans. The Bank of Greece, the ECB, treasuries of EU member-states, banks, international organisations etc. had all drawn up such plans since 2012. Greece’s Ministry of Finance would have been remiss had it made no attempt to draw up contingency plans.
Professor James K. Galbraith’s statement on the Ministry of Finance Working Group convened by former finance minister Yanis Varoufakis
I spent five months from early February through early July in close association with the Greek Finance Minister, Yanis Varoufakis, and was part of the Working Group that did contingency planning for potential attempts to asphyxiate the Greek government, including aggressive moves to force the country out of the euro. Since a great deal of public confusion has now arisen over this effort, the following should be stated:
(1) At no time was the Working Group engaged in advocating exit or any policy choice. The job was strictly to study the operational issues that would arise if Greece were forced to issue scrip or if it were forced out of the euro.
from Dean Baker and Nicholas Buffie
Last year, President Obama called for increasing the federal minimum wage to $10.10 an hour by the end of 2015. He argued that after 2015, increases in the minimum wage should be tied to inflation, with the minimum wage rising in line with the consumer price index.
The purchasing power of the minimum wage peaked in the late 1960s at $9.54 an hour in 2014 dollars. That is over two dollars above the current level of $7.25 an hour. While raising the minimum wage to $9.54 would provide a large improvement in living standards for millions of workers who are currently paid at or near the minimum wage, it is worth asking a slightly different question: what if the minimum wage had kept in step with productivity growth over the last 44 years? In other words, rather than just keeping purchasing power constant at the 1968 level, suppose that our lowest paid workers shared evenly in the economic growth over the intervening years. Read more…
from Peter Radford
Yes. I agree.
The negotiations concerning the Greek bail-out were absurd. They showed in vivid highlight just how foolish the entire Euro exercise is. Countries with economies as varied as those of Europe ought not bind themselves together without going the whole way into some sort of federal political and budgetary union. That would allow funds to move about internally so that regions falling into distress can get help ‘anonymously’ without the need for the tragic farce we have just witnessed.
This is what happens inside the United States. Funds routinely move about, Federal programs make sure that some basic services – such as Social Security – are paid from a central source so if a state like Florida gets into difficulty bills still get paid and services are still provided. Were this not so, and if Florida had been responsible for, say, those pensions back in 2009, it would have faced a crisis similar to that in Greece. Indeed the imbalances in the flow of funds into and from Washington are what allows many states in America to pretend that they are fiscally secure. Read more…
from David Ruccio
Certainly not in the United States.
from Dean Baker
Like many people following the negotiations between Greece and its creditors, I was inclined to see Wolfgang Schauble, Germany’s finance minister, as the villain of the story. After all, Mr. Schauble insisted on severely punitive measures for Greece as a condition for continuing support from the European Central Bank (ECB). He appeared to be the bad cop relative to others in the negotiations, such as German Chancellor Angela Merkel, who was willing to make at least some concessions to keep Greece in the euro. But a more careful analysis arguably leads to the opposite conclusion.
Schauble did not argue for throwing Greece out of the euro simply as a punitive measure, although he quite obviously disapproved of the way Greece had run its budget and its economy. He argued, quite possibly sincerely, that at least a temporary departure from the euro zone would be the best path forward for Greece. Read more…
from Yanis Varoufakis
Dominique Strauss Kahn: “to my German friends”
“But the demon that makes us repeat our errors of the past is never far away.”
Hollande stood his ground. Merkel faced up to those who didn’t want an agreement at any price. It’s to their credit. There is a good chance a plan will be put in place, reducing if not removing the risks of a Grexit. It’s not enough, but it’s welcome.
The conditions of the agreement, however, are positively alarming for those who still believe in the future of Europe. What happened last weekend was for me profoundly damaging, if not a deadly blow.
There are of course those who do not believe in that future, who will be rejoicing. And they are many, from two different camps.
from Mark Weisbrot
The battle over the future of Europe – currently centered in Greece – is far from over. But, with the tentative deal that has been struck between the Syriza government and European authorities, it has certainly entered a new phase.
Prior to the July 5 referendum, European officials had been carrying out a strategy of “regime change.” Deadlines came and went, and threats of a forced Grexit were mainly bluff, despite the fact that the most powerful leader of the eurogroup of finance ministers, Germany’s Wolfgang Schäuble, seemed to favor it. The strategy of regime change looked relatively easy: the European Central Bank (ECB), by restricting credit, together with the standoff and rumors of Grexit, had already pushed the Greek economy back into recession. It seemed only a matter of time before the economic failure, combined with anti-Syriza media coverage, would undermine support for the Greek government enough to usher in a new one.
In his first interview since his July 6 resignation from the post of Greek finance minister, Yanis Varoufakis describes “The complete lack of any democratic scruples, on behalf of the supposed defenders of Europe’s democracy,” i.e., his eurozone negotiating partners. They continuously “delayed and then came up with the kind of proposal you present to another side when you don’t want an agreement.” Read more…
from Jonathan Nitzan
While soaring public debts have been front and centre in both the popular media and academic discussion, there is surprisingly little analysis of who owns those debts. One exception is the work of Sandy Hager, a postdoctoral fellow at the Harvard Weatherhead Center for International Affairs. Hager’s PhD dissertation dissected the personal and corporate ownership of the U.S. public debt, showing a remarkable degree of concentration.
The chart below, taken from his 2013 article in New Political Economy, shows the share of the U.S. public debt held by the Top 1%. This share follows the general historical contours of the overall distribution of wealth, and is currently hovering around 45% – approximately the same level as at the turn of the twentieth century. Read more…
from Lars Syll
Guardian: What is your verdict on the deal reached on Monday?
Habermas: The Greek debt deal announced on Monday morning is damaging both in its result and the way in which it was reached. First, the outcome of the talks is ill-advised. Even if one were to consider the strangulating terms of the deal the right course of action, one cannot expect these reforms to be enacted by a government which by its own admission does not believe in the terms of the agreement.
Secondly, the outcome does not make sense in economic terms because of the toxic mixture of necessary structural reforms of state and economy with further neoliberal impositions that will completely discourage an exhausted Greek population and kill any impetus to growth. Read more…
The economic slump in Greece is even deeper than we thought and austerity played and even larger role in causing this slump. than we assumed, up to now. At least, according to two new serious studies by Elstat, one containing revised trade data and the other containing data on spending on health.
* The trade data show that the goods trade deficit (not the same thing as the current account!) was between 2006 and 2010 even larger than estimated up till now. Which means that (A) the macro economic capital inflow imbalance was even larger while (B) the spending bust after 2010 had even larger consequences than hitherto estimated (as the deficit dwindled even faster, thanks to an unprecedented decline in domestic demand).
* The health data show that health expenditures declined from about 9 to about 8% of GDP while the old data showed that the share of health expenditure was more or less stable at 9 % of GDP (mind that GDP declined with 25%). This means that (largely government financed) health expenditure declined even faster than we thought which i.e. contributed more to the slump.
Taken together, means that austerity was even more brutal than we thought. Economic history is, to quite an extent, ‘bean counting’. And counting more beans or counting them in a more precise way sometimes changes our view of the past. Which is what Elstat did. This contrary to the endeavours of mr. Jan Strupczewski, Read more…
from Asad Zaman and the WEA Pedagogical Blog
Harvard professor Julie Reuben has documented an important historical transition in the life of US universities over the period 1880-1930 in her book entitled, The Making of the Modern University: Intellectual Transformation and the Marginalization of Morality. Rueben describes a variety of intellectual and historical developments that led universities to abandon their longstanding tradition of building character as well as imparting education, and makes the argument that universities’ abandonment of morality caused great social damage to Western society.
Most colleges in the US started out as religious seminaries. The concept of the unity of knowledge led them to embrace scientific and technological teaching within their curricula. Since all knowledge illuminates the Divine, in teaching physics, astronomy etc., teachers were expected to attend to the beautiful truths to be read in the works of God. Many difficulties arose in the execution of this educational programme. One source of difficulty was the conflicts among different denominations of Protestant Christianity. read more
from Dean Baker
In her WaPo column Catherine Rampell points to the sharp decline in labor force participation rates for prime age workers (ages 25-54) in recent years and looks to the remedies proposed by Jeb Bush and Hillary Clinton. Remarkably neither Rampell nor the candidates discuss the role of the Federal Reserve Board.
There is not much about the drop in labor force participation that is very surprising. It goes along with a weak labor market. When people can’t find a job after enough months or years of looking, they stop trying. Here’s what the picture looks like over the last two decades.