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But dictatorships are stable. Until they aren't, but Who Could Have Predicted? and being unpredictable you don't have to budget for it and once it happens it is someone else's problem.
In a democracy you have to pay off a lot of groups that you could otherwise pretend to be be able to safely ignore. Of course for the long term viability of a project having to deal with objections before they trigger a revolution is a plus. Are you under the impression that our planning structure is overly concerned with long term viability?
by generic on Fri Jun 24th, 2011 at 07:12:50 AM EST
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One of the reasons corporations will only invest in Africa if the investments are projected to be massively profitable is because of the perceived geo-political risk.  

Of course if they weren't so busy extracting huge profits in the first place, the geo-political risk might be less. However that is the point at which corporate planners and financiers throw up their hands and exclaim that ensuring stability isn't their problem.  They deal with countries as they find them and assess the risks accordingly

Hence Singapore gets massive investment even though it is one of the highest cost places in the world to do business.

Complex businesses (as opposed to simple extraction processes) require a diverse skill mix and a more sophisticated regulatory environment (i.e. bribery only gets you so far). It thus requires a diverse middle class and more sophisticated political structure.  

Generals/dictators are really bad at understanding and enabling complex economies to develop. Democracies are much better at facilitating the complex trade-offs between highly differentiated interest groups and skills sets required

Hence, with few exceptions, participative democracies are better than militaristic dictatorships at developing economically.  Conversely, economically underdeveloped states also tend to be underdeveloped politically - i.e. have militaristic/authoritarian command economies.

The myth that dictatorships are more efficient is one of the great myths of the modern age - unless you measure efficiency in terms of killing and imprisoning people.  

Interestingly, one of the things most holding back US economic development at the moment is an increasingly dysfunctional political system dominated by corporates whose individual interests are inimical to the development of their competitors and the economy as a whole.

It will be interesting to see how China's polity develops in the context of an increasingly sophisticated economy. The strains are certainly there.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Jun 24th, 2011 at 07:57:48 AM EST
[ Parent ]
And that's cool for mining, or oil, or any other business with high variable and low capital costs. Because then you can loot while the looting is good, and then scoot once the shit hits the fan.

But if 90 % of your costs are capital costs, you need the project to survive until you've paid off the last loan.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jun 26th, 2011 at 04:04:16 AM EST
[ Parent ]
Yesterday there were the following two headlines in ElPais.com:

The economic crisis undermines the Egyptian transition: Tourism has collapsed and economic activity has slowed down after the January 25 revolt

Tourism in Tunisia collapses after the jasmine revolution: GDP drops, unemployment rises and foreign investment slows down

The narrative being set is delightful. But of course, for the last decade they're not bothering any more to sell capitalism with the argument that democracy needs capitalism to function. Soon they'll be arguing that capitalism needs authoritarian government. As Kalecki said in 1943:

One of the important functions of fascism, ..., was to remove capitalist objections to full employment.


Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Sun Jun 26th, 2011 at 04:48:43 AM EST
[ Parent ]
Generals/dictators are really bad at understanding and enabling complex economies to develop. Democracies are much better at facilitating the complex trade-offs between highly differentiated interest groups and skills sets required

This may be true, and I'm inclined to think that the evidence of the last few decades has supported this.  However the contemporary counterexample is China and it's adoption of the Singaporean model of capitalism.  I tend to agree with Žižek that the future of capitalism is likely to be an authoritarian one along these lines.

And then again, the political formations that prevailed during fossil fuel abundance are likely to be different to those prevailing during the era of abundance.

That's not to say that we shouldn't do our damndest to defend what remains of participatory democracy in Europe, encourage it's development in Africa, and encourage the invention more particpatory forms.  We should be under no illusions however that any of that is compatible with the present form of capitalism.

by Pope Epopt on Sun Jun 26th, 2011 at 05:49:33 AM EST
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JakeS:
And that's cool for mining, or oil, or any other business with high variable and low capital costs. Because then you can loot while the looting is good, and then scoot once the shit hits the fan

In the case of China, the almost free abundant resource is not Oil or Coal, it is labour, and once you have millions of people unemployed in a zero social welfare environment, you can throw almost any shit at them and they will still do almost anything to get a job or cash - like selling their own organs.

As you get closer to peak (available) labour, labour become a much more valuable and powerful resource and can achieve a better share out of the fruits of economic productivity.

Thus capital needs unemployment to stay high to maximise its bargaining position - cf US republicans desperate attempts to prevent economic recovery under Obama.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Jun 26th, 2011 at 08:10:38 AM EST
[ Parent ]
The present form of capitalism isn't compatible with the present form of capitalism, never mind democracy.
by Colman (colman at eurotrib.com) on Sun Jun 26th, 2011 at 11:29:17 AM EST
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Yes ~ while anticipating the form of economy over the coming century is intrinsically speculative, anticipating that the current form of capitalism won't be it is straightforward: it cannot survive in the environment it creates.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sun Jun 26th, 2011 at 01:42:21 PM EST
[ Parent ]

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