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Today's economic model: Cynicism

by Jerome a Paris Sun Aug 26th, 2007 at 10:00:04 AM EST

Wheat prices have hit record highs on global commodity markets, bringing the threat of rising bread prices.

Bad weather in key grain growing areas such as Canada and parts of Europe has limited supplies as demand has risen, sparking fears of a supply shortfall.

Choking on Growth

But just as the speed and scale of China’s rise as an economic power have no clear parallel in history, so its pollution problem has shattered all precedents. Environmental degradation is now so severe, with such stark domestic and international repercussions, that pollution poses not only a major long-term burden on the Chinese public but also an acute political challenge to the ruling Communist Party. And it is not clear that China can rein in its own economic juggernaut.

While obeisant governments bail out dodgy plutocrats, it's ordinary people who foot the bill

Globalisation, it is now clear, is run in the interests of a global financial class which has Western governments in its thrall. This class does not give a fig for the interests of savers, clients or wider workforces. The rules of the game are set up solely to benefit the financiers whether in London, New York or Hong Kong.

(...)

We need a party which will speak for an interest other than self-interested, amoral plutocrats. None exists.

Coincidences? I believe not. Oscar Wilde said that a cynic knows the price of everything, and the value of nothing. Our economic system could quite properly be called cynicism, because prices rule, but have increasing less bearing with the quality of life, and with any sense of self-worth, for most people. The cult of more, as measured solely by the price of outputs, with little consideration for the value of fundamental inputs like labor and commodities, is driving us all to the wall. Some seem to be thinking that they'll be able to jmp over it while the rest of us crash into it. Will they be right?


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... theory of comparative advantage trade to describe the modern situation of absolute advantage trade. The classical model sees balanced trade between countries in finished products, with each participant self-sufficient, and only trading because a better deal in terms of goods is available through trade than through direct production.

However, balanced trade would not lead to a need for net capital inflows to finance trade deficits, which would weaken the bargaining advantage of transnational corporations. Self sufficiency would similarly weaken the bargaining advantage of transnational corporations. And trade in finished goods would reduce the advantage of transnational corporations over small business in spreading the production chain across the globe.

So if transnational corporations were to be given free reign, we would expect to see the classical vision of trade replaced by absolute advantage trade, with production dispersed around the world ... and in strategic industries, only the transnational corporation with the capability to take products through the chain from resources to finished product.


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 Aug 26th, 2007 at 10:48:01 AM EST
Comment is free: A crisis of conscience
In an impressive new book, The Social Conscience, Michel Glautier asks a simple question: can a caring society exist in a market economy? His analysis suggests a market economy and a caring society are not necessarily mutually exclusive, but that recent and continuing changes to the configuration of the market economy are putting the achievement of a caring society beyond reach.
...
Whereas since the industrial revolution the social conscience had evolved to counter the tendency of free markets to concentrate wealth in the hands of the few, of late, Glautier argues, we have forgotten that the economy must be subject to certain checks and balances if it is to provide a reasonably equitable distribution of wealth. The fundamentals of economics haven't changed, yet in the face of clear evidence of a growing gap between rich and poor, and no hope of an escape from poverty for millions of people worldwide, we have far too willingly accepted the argument that the economy is best left to market forces.
...
There was a time when the financial markets existed mainly to service the needs of the real economy. Today the real economy is a sideshow. Why invest in the production of goods and services which offer a modest return over a long period, when you can place bets on minor fluctuations in prices for all manner of financial devices invented for the sole purpose of quickly generating higher than average returns?
What? 'Caring' 'society', how quaint!
Yes, cynicism is spot on for our economic/political system. The latter seems to have become swallowed by the former, where the wise politician know to ask "what wills the market", rather than "how should we live together".
by someone (s0me1smail(a)gmail(d)com) on Sun Aug 26th, 2007 at 10:55:30 AM EST

And with Jon Stewarts words, it says something about America's standing in the world when their "greatest friends" are poisoning them with lead!

Just imagine what the rest of us want to do. :)

And isn't it great that the richest country in the world can afford to feed it people only poisonous food and give their children only toxic toys for christmas? :)

<head explodes>

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun Aug 26th, 2007 at 12:20:28 PM EST
My head also. What a crock!

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears
by Gringo (stargazing camel at aoldotcom) on Sun Aug 26th, 2007 at 01:19:47 PM EST
[ Parent ]
I was hoping to hear laughter at the end of this segment    - maybe it was a comedy skit - but no laughter came. Is this serious?!

Mikhail from SF
by Tsarrio (dj_tsar@yahoo.com) on Sun Aug 26th, 2007 at 08:47:49 PM EST
[ Parent ]
100 % serious. It's the anchor of a big MSNBC economy show.

Still, it's a pretty weird program. At times she has a billionaire(?) called Cramer on the show, and he is usually frothing at the mouth like a rabid dog.

Who knows, maybe they are just playing a huge multi decade-long joke on the US. But hey, so is the financial industry and the politicians too.

And it's not very funny.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Mon Aug 27th, 2007 at 06:20:55 AM EST
[ Parent ]
by Lasthorseman on Sun Aug 26th, 2007 at 01:13:35 PM EST
Add this one to the mix.

Apparently, as a result of the housing crisis, those stuck with hyperinflated adjustable rate loans have been resorting to putting it on plastic.

Now that the easy money in home mortgages is all but over, consumers may soon be caught in a financial squeeze with their credit cards.

That's the worry among some economists and credit counselors as home lending has shifted abruptly into low gear this summer. That leaves homeowners owing big sums to Visa or MasterCard without an important escape hatch -- the ability to pay down the plastic by dashing off a check from their home equity line of credit or rolling the debt into a new, bigger mortgage.

"You're not going to be able to get that mortgage loan. You'll be stuck with the higher interest credit card debt," warns Carl Steidtmann, chief economist with Deloitte Research. "We will have to live within our means. I know it's a troubling phenomenon. But we're not going to be able to spend at levels well above our income levels."

Fucking peasants, why won't you just accept your station in life.  There's no discount window for you.

Jubilee anyone?

These "captains of industry" think that they've got everything under control.  After all the market is now running the show.   They think that they are immune to the double movement, but we've created a situation in my country where millions of people are on the verge of being homeless, robbing Peter to pay Paul with credit cards, and are being trapped beneath mountains of debt from which they will never escape.  It's a slightly hipper version of sharecropping and slavery before that.

Instant karma's gonna get them though.  They must be closet Marxists, because they've exposed the unequal nature of socially disembedded markets.  And in the end, society will not committ suicide.  The subordination of the market to social needs will either come from peaceful reform, or there will be a revolution.  Social democracy or fascism lies ahead, liberalism is dead in the long run, it's a question of what brings the market back into into the realm of social reality.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sun Aug 26th, 2007 at 01:21:39 PM EST
 The subordination of the market to social needs will either come from peaceful reform, or there will be a revolution.  Social democracy or fascism lies ahead, liberalism is dead in the long run, it's a question of what brings the market back into into the realm of social reality.

Nice one MfM.

I think that the "information revolution" is what makes Fascism unenforceable, actually, even though some see it as ENABLING Fascism.

(a) there are a lot more of "us" than there are of "them", and "we" are connected in ways we never used to be (eg ET);

(b) the "cock-up" theory - ie "they" are just effing useless, since if "they" were truly competent then "they" would be with "us".....

As for Social Democracy, well yes, but not Democracy as we know it, Jim, but new forms of "participative" democracy, as opposed to the current "representative" bollocks.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun Aug 26th, 2007 at 01:48:50 PM EST
[ Parent ]
I'm supposed to be reading through a book about the hundreds of different definition of democracy right now.

As you say elections are neccesary but not sufficient, there's something deeper.

It's been an interesting week for me.  In a good way.  Sometimes I have these epiphanies at dawn where my things suddenly exist afloat in my stream of conscisiouness.

Like there's thixs distinction between negative libert, the freedom from, and positive liberty, the freedom too. And prior to 1914 you basically had positive and negative democratic systems emerging in Europe.  The UK being an example of a negative system, late Imperial Germany a positive one.

Although there was a dearth of civil liberties in the German state, as a practical matter, German democracy of the period was much more inclusive than that in Britain.  Of course the German Imperial government was also less constrained by the decisions of their parliament than Britain, but regardless the franchise was wider in Germany than Britain.  

Further, while British workers faced terrible uncertainty, German workers had a far more extensive safety net in place.  They had the right to participate, and they had a certain level of economic security, but they had nothing like the civil liberties of the British.

One wonders whether the destruction of developing system in pre war Germany is not humanities loss, in the sense that there was an organic evolution into truely social democracy, that existed no only formally, but at a substantive level.  The movement towards democratic rights in the firm being a principal example of this.  Naphtali would take this further in the interwar period, but here in the predecessors to the works council you had an institution that defused class conflict within the firm.

What might have been?

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sun Aug 26th, 2007 at 02:11:46 PM EST
[ Parent ]

"We will have to live within our means. I know it's a troubling phenomenon. But we're not going to be able to spend at levels well above our income levels."

That's been the truth for years - it's been hidden by making debt incresingly easy and cheap - a crazy double or quits on the back of average Americans, which had the advantage of hiding that revenues were not keeping up with expenses.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Aug 26th, 2007 at 02:38:31 PM EST
[ Parent ]
We will have to live within our means. I know it's a troubling phenomenon.

Seriously WTF. This is even more stupid than the lead&poison stock babe.

"Troubling" that you can't spend more than you earn? I mean. Seriously. Economy 101? Basic math?

But we're not going to be able to spend at levels well above our income levels.

You figured that out now?

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Aug 26th, 2007 at 02:44:49 PM EST
[ Parent ]
Seriously WTF. This is even more stupid than the lead&poison stock babe.

"Troubling" that you can't spend more than you earn? I mean. Seriously. Economy 101? Basic math?

They've run out of bread and circuses, now the peasants are catching on to the scheme.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sun Aug 26th, 2007 at 03:33:36 PM EST
[ Parent ]
(Have I made a convert to anarcho-cynicialism?  ;-)

From the linked article:

While [higher wheat prices] will mean higher bread prices, it could also trigger an increase in meat and dairy prices as farmers battle to pass on rising feed costs.

Who uses wheat as livestock feed?  The conversion rates are horrible, the animals have to carefully monitored to avoid bloat, and it's more expensive to purchase than feed corn (zea mays) in actual and relative pricing.

You'd have to be desperate, daft, or moronically stupid

....... er ....

Oh, yeah.  We're talking the Neo-Lib economic model: Reality Not Included.

Anyway ....

Global grain production seems to be following the projected curve (see here) and with the shift from food o to bio-fuel production we can all expect to be paying more for our three squares.  Those who don't have the money to pay more for their food (i.e., most of the planet) are expected - I guess - to starve.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Aug 26th, 2007 at 01:47:24 PM EST
I don't think it is cycnicism so much as this is precisely how capitalism ultimately works when laid out to its logical conclusion.

We can all ring campfires and sing kumbayas to how regulation and social welfare schemes can tame the beast; however, there's precious little by way of empirical evidence that would suggest that state intervention for the common zeal is a natural state of affairs in the capitalist system, and we should disabuse ourselves of the notion that capital will tolerate for more than a corrective generation (if that) such intervention. Eventually it chooses to intervene anew, buy off the political system and resume stacking the deck.

Why? Because, first it can; and second, ultimately it must - global capital is ultimately predatory, resources are scarce and externalities are of course costs to be borne by chumps. Change this significantly and the predators no longer can prey.

Unfortunately, while there is a constituency for this change, there is by no means an articulate political movement for this change, certainly not in France where the major left party is essentially dominated by liberals who naïvely believe that token  state intervention is a reasonable proposition in our globalised world to protect citizens from the nastier effects of financial capitalism. And there certainly is no credible mainstream voice for economic alternatives in the UK or the US either, though there are voices out there, both on the left and on the right.

Marie-Noëlle Lienemann, in an essay in the latest Marianne on Ségo Royal and her relationship to the crisis on the left in France, picks up on this, writing

L'existence d'un clivage transversale à la droite et à la gauche sur plusieurs sujets essentiels traduit bien le brouillage qui charetérise la vie politique actuelle. L'impression est que tout se vaut et que, au final, les clivages sont presque aussi important à droite et à gauche. On peut être à droite et relativement antilibérale parce que tout ne se résume pas au champ purement économique. Et, comme nous l'avons vu, on peut se prétendre de gauche sans jamais s'opposer à la société de marché.

On fait, seule compte la question suivante: est-on favorable, oui ou non, au capitalisme transnational tel qu'il fonctionne aujourd'hui? Est-on prêt à résister à cette hégémonie-là?...

Une simple adaptation au capitalisme mondialisé ne saurait être à l'horizon des socialistes. Ségolène Royal, comme trop de personnalités à gauche, n'a jamais pensé qu'on pouvait le changer ou l'influencer. Le capitalisme dont chacun dénonce les excès n'est pas une perversion, mais l'aboutissement naturel du <<capitalisme>>.

Nous avons tenté de mener le débat sur le protectionisme lors de la campagne pour le non...mais les militant de gauche sont habités par une méfiance spontanée à l'égard de la protection, confondant le protectionisme avec le refus de l'autre. La gauche veut symboliser l'ouverture, le brassage, la disponibilité à l'autre, l'idée d'un enrichissement mutuel, et c. Je partage ces valeurs, mais il suffit de constater comment on traite les mingongs (ouvriers migrants) chinois ou certains travailleurs clandestins en Europe pour ne pas être dupe de cet internationalisme-là, qui est en fait celui du capital.

Deuxième phenomène classique à gauche, l'anticolonialisme culpabilisé: <<Nous avons pillé le tiers-monde, nous allons réparer cette faute en achetant leurs produits.>> Mais l'idée que les pays en voie de développement vont nous rattraper grâce au libre-échange non régulé est fausse. La Chine, aujourd'hui, et le Méxique, hier, se développent, mais au détriment du pouvoir d'achat et de conditions de travail et de vie de leurs peuples...

A well-reasoned and quite accurate view of our present state of affairs, both as regards the power of global capital and as regards the ineffectual response to this by standard-bearers on the left in France and, let's be honest, virtually everywhere else in the so-called developed West.


The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Sun Aug 26th, 2007 at 04:03:28 PM EST
that was meant as common weal up there, not common zeal.

Takes some time re-adapting to azerty...

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Sun Aug 26th, 2007 at 04:04:43 PM EST
[ Parent ]
The problem of getting old is that you can't digest the sum total of information on the net.  I do remember something about the prophecies of Fatima saying something about the Chinese army invading America.  Given our current path I could see this as one plausible future alternative path, futuristically speaking of course.
by Lasthorseman on Sun Aug 26th, 2007 at 09:41:20 PM EST


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