Capitalism, green or otherwise, is ”Ecological Suicide”

July 22, 2015 2 comments

Green Capitalism: The God that Failed is essential reading for
anyone opposed to planetary suicide.”

from Truthout and David Klein

Green Capitalism: The God that Failed, by Richard Smith,
World Economics Association eBooks

The climate crisis is the greatest threat humanity has ever faced. At the current rate of global greenhouse gas Industrial pollutionemissions, warming of the planet will shoot past two degrees Celsius by mid-century and reach 4°C to 6°C beyond pre-industrial averages by 2100. The magnitude of the impending catastrophe was eloquently described by Hans Schellnhuber, director of the Potsdam Institute for Climate Impact Research, when he said, “the difference between two and four degrees is human civilization …” Adding to that, the biosphere faces massive pollution, resource depletion, species extinctions, ocean acidification, among other looming dangers.

But can we save ourselves? In his new book, Green Capitalism: The God that Failed, Richard Smith argues compellingly that “sustainable production is certainly possible but not under capitalism” and even more forcefully, “capitalism and saving the planet are fundamentally and irreconcilably at odds.” To this central question, Smith brings an impressive command of economics and an engaging conversational style of writing. He explains and illustrates with devastating clarity the key mechanisms of capitalism that force it to grow unendingly, and these explanations are supported with a broad array of examples of corporate and national economic practices from around the world.  read more

Wolfgang Schauble, the hero of the Greek austerity crisis?

July 21, 2015 17 comments

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…

Categories: Greece

Nonsense economics

July 20, 2015 Leave a comment

from Lars Syll

It is, perhaps, not uninteresting to point to some of the economic implications which are included in “perfect foresight”. It will immediately be recognized that this assumption could never lie at the basis of the theory of equilibrium, and they who attribute this to such authors as Walras and Pareto, who are included as representatives of equilibrium theory, are in error. ln the first place, strange to say, it happens that even material assertions can be made about such an economy on the basis of the assumption of perfect foresight.morgensternThey are fundamentally of the negative type. For example, no lotteries or gambling will exist, for who would play if it were well-established where the profit went? Telephone, telegraph, newspapers, bills, posters, etc. would, likewise, be superfluous, obviously; but, also, the very important industries, based on them, with all their affiliated industries, would be absent. Only packages and letters implying documentary evidence would need to be delivered by post, for to whom would letters be written? The tale need not be carried further, for it is obvious how little considered are the “fundamental assumptions” so frequently employed in theoretical economics, where really a matter of nonsense is at issue.

Oskar Morgenstern

Read more…

Between Ideals and Institutions – Armando Ochangco

July 20, 2015 Leave a comment

Between Ideals and Institutions

Armando Ochangco

Published 20 July 2015 by WEA Books

This book critiques economics in the context of ideals such as collective decisions and democracy, freedom, justice, and development. Taking off from the idea that social evaluation using the familiar metric of GDP is extremely limited and drawing inspiration and certain basic insights from the writings of Amartya K. Sen, the work also brings in, within a reconstructive methodology, ideas from various thinkers including those coming from major contemporary philosophers such as Rawls and Habermas, as well as classical thinkers such as Aristotle, Adam Smith, J.S. Mill, and Marx. Within the general reconstructive intention, the author raises questions, old and new, pursues and develops both familiar and original insights, and suggests various linkages and inter-connections, as well as integrative perspectives towards developing conceptions of certain basic social ideals that would be relevant to such a broader and more complex kind of evaluation of various social institutions. Institutional and policy realization and feasibility issues are also considered at length—especially in connection with less developed society contexts—as these relate to the major social ideals being suggested.

Read more…

Categories: WEA Books

Dominique Strauss Kahn: “to my German friends”

July 20, 2015 5 comments

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.

Read more…

Categories: Eurozone Crisis

European authorities refuse to let Greek economy recover, making eventual Grexit more likely

July 19, 2015 3 comments

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…

Categories: Greece

Who owns the public debt?

July 18, 2015 6 comments

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…

Categories: The Economy

Habermas on the EU/Greece debt deal

July 18, 2015 Leave a comment

from Lars Syll

Guardian: What is your verdict on the deal reached on Monday?

ahabHabermas: 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…

Categories: Greece

Rewriting Greek economic history – the right way (and the ‘Jan Strupczewski’ way)

July 18, 2015 1 comment

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…

Categories: Uncategorized

The marginalisation of morality

July 17, 2015 5 comments

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

Categories: Uncategorized

Why people aren’t working; can we talk about the Fed?

July 17, 2015 2 comments

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.

prime age lfpr

Read more…

Categories: The Economy, unemployment

Teaching economic growth: notes on the current financial-led accumulation regime

July 16, 2015 2 comments

from Maria Alejandra Madi and WEA Pedagogy Blog

Deregulated finance has been associated to great transformations in the models of economic growth.  As Bello (2006) warned, in the 1980s, Reaganism and structural adjustment were not successful attempts to overcome the post-war accumulation crisis. One decade later, the Clinton administration embraced globalization as an American strategy. First, this strategy aimed to accelerate the integration of production and markets by transnational corporations. Secondly, it aimed to create a multilateral system of global governance centered on the World Trade Organization, the International Monetary Fund and the World Bank. In this scenario, global liquidity, stimulated by the evolution of the American monetary policy since the early 1990s, favored the expansion of private capital flows and deepened the interconnections between national financial systems (Chesnais, 1998).

Accordingly Stockhammer (2009), the notion of a “finance dominated” accumulation regime highlights that the current global financial set up has decisively shaped a pattern of accumulation where different growth models could be identified. While some countries have presented a consumption-driven growth model fueled by credit, generally followed by current account deficits, other countries have shown an export-driven growth model, mainly characterized by modest consumption growth and large current account surpluses.

In spite of the coexistence of different growth models, the financial-led accumulation regime has presented some distinctive features:  Read more…

Categories: teaching

Memoirs from beyond the tomb

July 16, 2015 1 comment

from Peter Radford

Right at the end of his book called “Memoirs from Beyond the Tomb” Chateaubriand gives us a remarkable insight into our current troubles. I wonder whether we will solve them or whether we will simply write an addendum to his book.

He asks, for instance:

“Is it possible for a political system to subsist, in which some individuals have so many millions a year while other individuals are dying of hunger, when religion is no longer there with its other-worldly hopes to explain the sacrifice?”

A little later, with respect to the spread of education downward in society, he goes on :

“The excessive disproportion of conditions and fortunes was endurable as long as it remained concealed; but as soon as this disproportion was generally perceived, the old order received its death-blow. Recompose the aristocratic fictions if you can; try to convince the poor man, once he has learnt to read and ceased to believe, once he has become as well informed as yourself, try to convince him that he must submit to every sort of privation, while his neighbor possesses a thousand times what he needs: as a last resource you will have to kill him.”

Chateaubriand, as we know, lived through a great transition in society.  Read more…

Categories: Economic Thought, ethics

Devil’s dung

July 15, 2015 2 comments

from David Ruccio

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Pope Francis’s recent references to money as the “dung of the devil” (or, alternatively, the “devil’s dung“) brought to mind lots of different references (from the etymology of dung in terms of different classes of workers to Freud’s tale of the devil whose gifts of money turn to excrement upon his leaving). Read more…

Categories: ethics

Stop the frenzy, please. It’s just about rolling over the debt…

July 15, 2015 2 comments

Greece did not need money to pay pensions. Greece needed money to… roll over its debts and to pay interest. Yawn. And the whole third bail out package is tailored to exactly this: swapping one kind of financial asset for another (tabel) (and oh, banks will receive another 25 billion of free money). The present situation in which the Greek bank system is closed and the creditors do all they can to destroy the Greek economy (again: tripling tourism VAT is a very, very bad idea) might however mean that Greece won’t be able to pay pensions or whatever, too. What Greece needs is, of course, a return to nominal growth ASAP. Graph 1 and 2 show that, in 2014, Greek debts actually declined a little but despite growth of the real economy, debts as a % of GDP increased because of price deflation. Mind that the largest increases of government debt in table 2 are caused by government transfers to banks – with the blessings of Brussels. Save the banks, screw the vulnerable. Last post for some weeks. somewhere in the Vosges, in France, I’ll occupy myself with family matters, cycling and sixteenth century Frisian farmers who were already lending and borrowing quite a lot – without banks (the ledgers with all these data are nowadays, transcribed, on the internet!). But aside from a pawn shop ran by an orphanage in Leeuwarden real banks in Friesland were, despite all this lending and borrowing, only a nineteenth century invention – which leads to the Coasian question: why do banks exist. Clearly not (just) to facilitate lending and borrowing…  Read more…

Categories: Uncategorized

Greece and Argentina

July 15, 2015 4 comments

from Dean Baker

With the prospect of Grexit increasing, there have been numerous news stories pronouncing this as a disaster for Greece. There have also been many accounts telling us that Greece will not have the same positive prospects as Argentina.

As Paul Krugman reminds us Argentina recovered fairly quickly after it broke the link between its currency and the dollar. As he points out, the real disaster was in the period leading up to the break.

While many people have emphasized ways in which Argentina has advantages in this break relative to Greece, that was not a general perception at the time. The general story back at the end of 2001 and 2002 was that Argentina faced disaster.

For example, on January 1, 2002 we got this NYT piece headlined, “Argentina drifts leaderless as economic collapse looms.”

Here are the first three paragraphs:

Read more…

Categories: Greece

On the Euro Summit’s Statement on Greece: First thoughts

July 14, 2015 8 comments

from Yanis Varoufakis

In the next hours and days, I shall be sitting in Parliament to assess the legislation that is part of the recent Euro Summit agreement on Greece. I am also looking forward to hearing in person from my comrades, Alexis Tsipras and Euclid Tsakalotos, who have been through so much over the past few days. Till then, I shall reserve judgment regarding the legislation before us. Meanwhile, here are some first, impressionistic thoughts stirred up by the Euro Summit’s Statement. Read more…

Categories: Greece, Uncategorized

Dr Schäuble’s Plan for Europe: Do Europeans approve? – Article to appear in Die Zeit on Thursday 16th July 2015

July 14, 2015 2 comments

from Yanis Varoufakis

Pre-publication summary: Five months of intense negotiations between Greece and the Eurogroup never had a chance of success. Condemned to lead to impasse, their purpose was to pave the ground for what Dr Schäuble had decided was ‘optimal’ well before our government was even elected: That Greece should be eased out of the Eurozone in order to discipline member-states resisting his very specific plan for re-structuring the Eurozone.

  • This is no theory.
  • How do I know Grexit is an important part of Dr Schäuble’s plan for Europe?
  • Because he told me so!

I wrote this article not as a Greek politician critical of the German press’ denigration of our sensible proposals, of Berlin’s refusal seriously to consider our moderate debt re-profiling plan, of the European Central Bank’s highly political decision to asphyxiate our government, of the Eurogroup’s decision to give the ECB the green light to shut down our banks.

I wrote this article as a European observing the unfolding of a particular Plan for Europe – Dr Schäuble’s Plan.

And I am asking a simple question of Die Zeit’s informed readers:

  • Is this a Plan that you approve of?
  • Do you consider this Plan good for Europe?
Categories: Greece, Uncategorized

Greece 2

July 14, 2015 5 comments

from Peter Radford

Well so much for that.

Where do I begin?

The so-called deal announced yesterday achieves none of its objectives. The written objectives that is. The unwritten ones we will get to in a moment.

There is no doubt in my mind that the Greek economy suffers from a surfeit of inefficiencies. It cannot sustain the social edifice erected on top of it without ridding itself of the multitude of privileges that various groups have accumulated for themselves through time. Greek government has been, for many years, a source of patronage and protection of a slew of inside deals that wreak havoc on those – the majority – on the outside.

I am sure this systemic problem must irk everyone living further north.

But.

Clearing out those problems now is not the priority. Saving Greece is. Saving Greek democracy. Saving those who have no access to the myriad schemes and deals that enrich the minority.  Read more…

Categories: Greece

Are official statistics one of Greece’s best friends (wonkish)?

Are dependable statistics one of Greece’s best friends? But are the Greek at the same time messing up the independence of Elstat, the Greek statistical office, as indicated by the recent ‘Diktat’? For those who care to look, statistics always convey a meta message. Recently, the German Statistisches Bundesamt published, based upon Eurostat data, a graph showing prices of hotels in the different countries of the EU. This is, of course, not a coincidence. At the same time people in Brussels were trying to quadruple Greece tourism VAT from 6,5 to 23% which, as the German graph clearly shows, would wipe out any kind of price competitiveness gained by the brutal Greek wage cuts. The Bundesamt is fully entitled to, next to their scheduled publications, publish any statistics as they see fit, according to UN treaties. And to criticize Merkel or Schauble, if they misuse official statistics (or me, of course, when I state that publication of the hotel prices is a subtle political statement). Also, official Greek and Eurozone statistics do map the unprecedented depth and length of the Greek crisis or the (for a western country) unprecedented level of unemployment and the tens of billions given away by the Greek government to the Greek banks. One of the elements in the European deal with Greece ‘Diktat’ (German, ‘Befehl‘) from Brussels is however the safeguarding independence of Elstat, the Greek statistical office. What is the matter? Among other things, the present Greek chief statistician has been prosecuted for recalculating and overstating (!) the budget deficit during the Karamanlis years…The situation is according to the European Statistical Governance Assistance Board (ESGAB), March 24 2015, not caused by the Syriza government: Read more…

Categories: Uncategorized
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