Monthly Post

An Introduction to Political Economy

Last month, when I looked across the vast gray wasteland of the calendar page ahead and noted that there were five Wednesdays in November, I asked readers—in keeping with a newly minted but entertaining tradition here on Ecosophia—to suggest a theme for the fifth Wednesday post. This blog being the eccentric phenomenon that it is, it probably shouldn’t have surprised me that the result was a neck-and-neck contest between a post on nature spirits and a post on alternatives to capitalism and socialism, with a focus on democratic syndicalism. Nature spirits won by a nose, but there was enough interest in the other option that I decided to go ahead and write a post on that as well.

Nature spirits and democratic syndicalism may not seem to have much in common, but I’ve discovered one unexpected similarity: it’s very difficult to discuss either one in a single post. To make any kind of sense out of the ancient belief that the forces of nature are best understood and most truly experienced as persons rather than things, it turned out to be necessary to delve into the entire tangled mess our culture has made about the concept of personhood, and what does and doesn’t count as a person. Only when that was cleared away could we go on and talk about what it means to experience nature as composed of persons rather than things.

In the same way, if we’re going to make any kind of sense of the alternatives to capitalism and socialism, it’s going to be necessary to talk for a while about capitalism, socialism, and the third and usually unmentionable system of modern industrial economics—yes, that would be fascism. In the process, we need to pay attention to the thing that conventional economics systematically ignores—the mutual entanglement of political power and economic wealth—and that requires us to revive a science that has been dead and buried for well over a century now.

If you take an introductory course on economics, you can pretty much count on being told that the modern science of economics was launched by Adam Smith. Like so much conventional wisdom about history these days, this is false, and it’s false for at least two different reasons.

First of all, economics isn’t a science. What sets apart a science from other kinds of human knowledge is that the assertions of a science are tested against what actually happens. When a scientist makes a claim, at least in theory, other scientists run the same experiment or observe the same phenomenon and see if they get the same results. If they don’t, the claim made by the first scientist—again, at least in theory—goes into the wastebasket alongside such discarded notions as phlogiston and the luminiferous ether. Nowadays, this doesn’t always happen, and that’s one of the core reasons that the sciences these days are facing a catastrophic crisis of legitimacy, but that’s an issue for another post; when a science does what it’s supposed to do, every claim is tested to see if it can be replicated. That’s what makes it a science.

Economists don’t do this. They don’t even pretend to do it.  Mainstream economists like to make claims about what will happen when their preferred policies are put into place, mind you, but the mere fact that those claims simply aren’t true never gets considered when repeating them. Consider the way neoliberal economists to this day rehash David Ricardo’s claim that free trade will make poor countries rich. They’re wrong; history shows that when poor nations embrace free trade, they become even poorer, while poor nations that reject free trade schemes generally prosper. Yet the total disconfirmation of free trade theory in practice has yet to register on the economic mainstream.  As far as economists are concerned, Ricardo said it, they believe it, and that settles it.

So economics isn’t a science. It also wasn’t founded by Adam Smith. What Adam Smith founded, rather, was political economy. You won’t hear much about that field of study these days, and that’s not an accident. Political economy, as the name indicates, explores the relations between wealth and power in a society.  For reasons that I suspect my readers will have no trouble understanding, this is something that a great many wealthy and powerful people in today’s industrial nations don’t want to discuss—and that, my children, is why we don’t have courses on political economy in universities today. We have courses on political science, which claim to study power without taking wealth into account, and courses on economics, which claim to study wealth without taking power into account, and both of these highly praised, well-funded fields of study by and large duly churn out vast amounts of poppycock instead of offering useful insights into the societies in which we live.

We’re going to talk about political economy in this week’s post. We’re going to do that because it’s not really possible to understand why the world’s industrial nations are running themselves into the ground without understanding the self-destruct button hardwired into capitalism, and it’s impossible to understand that latter bug—or is it a feature?—without talking about the ways that wealth and power form feedback loops in an industrial society.

The most important thing to understand, if you’re trying to make sense of political economy, is who owns the means of production. Means of production? That’s a convenient bit of shorthand. Every human society produces goods and services; the means of production are the sum total of the arrangements made to do this necessary task. Now of course a category this diverse is going to include things owned by an equally dizzying array of people, but in most societies, ownership of the most important means of production tends to follow specific patterns.

Examples? Consider a feudal society—early medieval England, let’s say. It’s an agrarian society in which most people are employed in farming, and the means of production that matter most can be summed up in one word: land. Who owns the land? That’s a simple matter. The king owns all the land; he grants the right to use it to his immediate vassals, the great dukes and earls of the kingdom, in exchange for their loyalty and obedience; they pass on the same right to barons, the lesser fish of the feudal system, on the same terms; the barons then do exactly the same thing, and we proceed straight down the feudal pyramid to Higg son of Snell in his peasant hovel. Higg has his hovel and the farmland that goes with it because he’s a vassal of Sir Hubert de Ware, who is a vassal of Baron Fulk of Lewes, who is a vassal of Duke Geoffrey of Sussex, who is a vassal of the king. Understand that pattern of ownership of the means of production—that pattern of political economy—and you understand early medieval English society.

Okay, let’s consider another example: early twentieth-century America. It’s an industrial society. and factories and offices are the means of production that matter most. Who owns the factories and the offices? That’s also a simple matter. The factories and offices are owned by corporations. Who owns the corporations?  Their investors. How do you get to be an investor? By having enough capital to purchase stocks and other investment vehicles. How do the investors exercise their ownership? By electing boards of directors in elections in which each share of stock has one vote; the boards of directors then hire and fire the people who run the factories and offices. (Remember, this is early twentieth-century capitalism; things are different now.) Understand that pattern of political economy, and you understand early twentieth-century America.

Notice, before we go on, that there are two crucial differences between the political economies of feudal England and industrial America. The first has to do with the relationship between power and wealth. In feudal England, that’s totally explicit: the king is the head of state and also the landowner of last resort; the dukes and barons are political officer as well as economic magnates. In industrial America, it’s not explicit: in theory—mind you, only in theory—the government is entirely separate from the economic sphere. In practice the wealthy buy and sell political offices and voting blocs the way they buy stocks and bonds, and since there’s no explicit relationship between power and wealth, there’s nothing to keep them from doing whatever they want.

The second difference has to do with the distribution of wealth. In both societies, wealth is very unfairly distributed—the rich are very rich and the poor are very poor—but the feudal system has a counterbalance to the tendency of wealth to flow uphill. If you, dear reader, were a duke or a duchess in early medieval England, and you had the brains the gods gave geese, you would know that your influence, your security, and your survival depended on having plenty of vassals who would come running with drawn swords any time you needed them. How do you get vassals? By granting them landholdings—that is, transferring wealth down the ladder.

But your vassals are in the same situation you are.  They need vassals of their own, and their vassals need vassals, all the way down to Higg son of Snell, who will not only come running with a billhook in his hands when Sir Hubert needs him in battle, but puts in the daily labor that puts bread on everyone’s tables. Thus feudal societies constantly move wealth down the pyramid. As a direct result, they tend to be extremely stable—so much so that when complex  societies collapse, a feudal system is almost inevitably what takes shape amid the ruins.

Capitalist societies don’t do this. Quite the contrary, in a capitalist society like early twentieth century America, all the incentives keep wealth flowing up the social ladder, and nothing brings it back down. The investors who own stock in corporations have an understandable interest in maximizing the return on their investment, so they reliably vote in boards of directors who will hire management who will force down wages as far as possible.  The investors who own stock in corporations also have an understandable interest in keeping as much of their wealth as possible out of the clutches of the tax man, so they reliably pressure and bribe government to spend as little as possible for the benefit of anybody outside the investor class.

As a result, capitalist societies are anything but stable; they suffer from savage cycles of boom and bust. The process at work here is quite easy to understand, and in fact it was very widely understood three quarters of a century ago; regaining that understanding is a crucial step toward making sense of the mess we’re in today.

Here’s how it works. Since working class wages get driven down, and government expenditures aren’t allowed to rise to take up the slack, people in the working classes can’t afford to consume the value of the goods and services they produce. Sales accordingly falter, and so do profits in productive industries. Since the investor class is interested solely in maximizing the return on its investment, in turn, investment money flows out of productive industries and into financial instruments of various kinds, where it drives speculative bubbles. As the bubbles inflate, they suck even more money out of the productive side of the economy. When the bubbles pop, in turn, so does the economy, and down we go into a depression.

That’s what happened all across the industrial world in the nineteenth and early twentieth centuries, over and over again, until the Great Depression hit and the investor class realized that something had to give. What convinced them of that? The rise to power of two rival economic systems that rejected the basic presuppositions of capitalism, and—ahem—worked.

The first of these systems was socialism. Let’s stop right here for a moment and explain the meaning of the word, shall we? Plenty of people, especially but not only in the United States, have been using that moniker “socialism” to mean any number of randomly chosen things, but the word does actually mean something specific.  Socialism is the system of political economy in which the means of production are owned by the national government. That’s what it is, and that’s all it is. (Most of the things that currently get labeled “socialist” in the English-speaking world are actually social democracy, which is an entirely different system that we’ll discuss in a moment.) If it doesn’t have to do with government ownership of the means of production, it’s not socialism, full stop, end of sentence.

Socialism has its problems. In its most popular form, the version that more or less follows the recipe laid down by Karl Marx, it so consistently produces bloodthirsty dictatorships that a good case can be made for chucking it into the rubbish heap of failed ideologies. The fact remains that as an economic system, it works about as well as capitalism—that is to say, not well, but well enough to stay in power—and it does a much better job of distributing wealth to the working classes than capitalism does, which is why capitalists hate it so much. On the other hand, given a choice, the working classes favor it, for the same reasons capitalists hate it: if you’ve got a choice between two dysfunctional systems, why not choose the one that benefits you most?

Then there was the other rival system, which has been so obscured by shrill rhetoric over the last three quarters of a century or so that we’re going to have to approach it by a roundabout route. Suppose, then, that some charismatic figure in today’s American scene—somebody toward the center of our overheated political spectrum—were to propose a new system of political economy to replace the mess we’ve got now. We’re going to keep capitalism, she says, but it’s going to have its excesses curbed and its abuses prevented, not by the government, but by an organized movement of citizens under my leadership. Each year we’re going to sit management and labor down at the bargaining table, everybody in a given industry all at once, and make them bargain in good faith, with the citizen movement watching both sides to make sure a fair settlement is reached; there will be no more strikes, no more lockouts, no more labor troubles, just a new contract every year, and the citizen movement will enforce that by whatever means happen to be necessary. What’s more, she tells adoring crowds, the citizen movement will take on the same role in the political sphere, and be ready to yank the chains of officials when they get out of line. Of course the citizen movement will have to have special powers to do this, she says, and here’s the enabling act to give it those powers, just as soon as I become Chancellor…

That is to say, we’re talking about fascist economics. Yes, I’m aware that this isn’t the sort of thing that comes to most Americans’ minds when you mention the word “fascism,” but that just shows how thoroughly ignorant most Americans are about history. Fascism was never about the unrestricted rule of the capitalist investment class—that’s a falsehood originally manufactured by Stalin’s flacks back in the days of the Third International, and repeated by the misinformed ever since. Fascism attracted the masses in the 1920s and 1930s because it offered an alternative to unrestrained capitalism with its lethal boom-and-bust cycles. Did it work? Not very well, but then neither did unrestrained capitalism, and here again most people forced to choose between dysfunctional systems will choose the one that benefits them personally.

It was in response to the popularity of the socialist and fascist systems that social democracy came into being. (This, remember, is the thing that Republicans these days call “socialism.”) Social democracy was an attempt to take the best parts of fascist economics and combine them with constitutional government and the rule of law. In place of the “citizen movement” of my sketch above—that’s spelled “The Party” in its historical examples—social democracy puts the elected government of a constitutional representative democracy. In a social democracy, capitalism still exists, but at least in theory, it has to put up with legal checks that keep it from running too far off the rails: laws against monopolies, laws against insider trading, laws forcing banks to have deposit insurance, and so on.

It’s not a bad system, all things considered—which is to say it’s dysfunctional, but slightly less so than any of the three other alternatives we’ve discussed. Its great weakness was that it came into being because the investor class realized that they would end up dangling from lampposts if they tried to keep unrestrained capitalism going much longer, and it could only survive so long as the investor class stayed scared. Once the Great Depression and the age of rising fascist states faded out of historical memory, though, a new generation of capitalists convinced themselves that all this social-democracy stuff was a useless hindrance to their God-given right to engage in a kleptomaniacal orgy of profiteering at public expense.

That was when the Republican Party in the US, the Conservative Party in Britain, and their equivalents elsewhere embraced the view that the sole business of government was to make rich people richer while kicking the poor in the face, and when the Democratic Party in the US, New Labor in Britain, and their equivalents elsewhere embraced the supposedly opposite view that the sole business of government was to make rich people richer while mouthing vacuous feel-good verbiage at those of the poor who were sufficiently politically organized to be annoying. The results are predictable: in Britain, a resurgence of old-fashioned socialism under the leadership of Jeremy Corbyn, who will probably become Britain’s next prime minister if the clown car that passes for a Conservative government keeps bungling things as badly as they’ve done so far; in America, a crisis of legitimacy that’s already catapulted a populist demagogue into the White House and may well replace him with something much worse in the years ahead.

There are alternatives. Next week, in place of the usual ask-me-anything open post, we’ll talk about some of them. The following week? 2018 will have arrived, and it’ll be time for the annual round of predictions about what the new year will hold. Stay tuned!

************

As just mentioned, there will be no ask-me-anything post next week. Instead, I’m going to be trying out a version of the same thing in a different place. My Dreamwidth account at ecosophia.dreamwidth.org is active again — apologies for the long dry spell — and next Monday I’m going to post an ask-me-anything post on occultism. Call it Magic Monday; a lot of my readers seem to have questions about the theory and practice of occultism, and I’ll be fielding those and answering them there. See you then!

206 Comments

  1. Good article, as usual, but you made a conceptual mistake when talking about socialism. Socialism is defined as an economic system where the economy is planned (rather than driven by marked forces) and where the means of production are owned by the state OR by the workers themselves (worker cooperatives, etc). Libertarian socialists (left-wing anarchists) have always represented a signifcant part of the socialist movement (although state socialists overshadowed them through the 20th century, specially after the end of the Spanish Revolution) from the time of Bakunin. And yet, what they advocate doesn’t fit under your definition of socialism.

    That being said, looking forward to your next post(s) on political economy.

    Cheers from Brazil ç)

  2. Gosh, there is so much I could go on about here, this post is so central to a lot of what I do and think about. But for now I will just offer this story. Back when I was in university in UCLA, I was majoring in engineering but taking only political science for my “social sciences” classes. One course I took was an upper division course called Political Economy. My professor said he had never had an engineering major in his upper div political economy class. He also described the struggle he had to get the division to accept calling his course Political Economy, since all economists of the day believed that economics and politics were unrelated to each other, which of course he considered rubbish. Maybe that was the last course with that title at a major university? It was about 1980.

    Also, when it comes to what you might call alternatives, I think the term “municipalism” needs to be considered. Maybe it doesn’t qualify as a full-fledged alternative since, well, it focuses on the municipal level. But considering the broad challenges we face, it is the movement that I think offers the most realistic offering for the future: for real employment and a practical way to get the goods and services we need to survive. And despite being widely ignored, it’s bubbling up everywhere for those who know where to look. Populism too is important, though there are important variants.

  3. JMG
    Hooray! I have barely got into this post and I read that ‘economics is not a science’. Galileo was not in a position to change the rules of gravity at Pisa. Routinely economics supplies feedback to the complex systems of trade and production that changes the game. I remember trying to discuss this in the very early days of econometrics. I foresaw that they would attempt to devise a ‘control system’.
    I will now read on!

    best
    Phil H

  4. Re: economics isn’t a science.

    Ha, very true. Max Hastings put out a wonderful book on the first year of the Great War, “Catastrophe 1914!”, and in that immense book, one of the lines that stuck out to me and continues to stick with me after all these years was his comment on how French economists were virtually all convinced that a global war would never break out due to the immense trade links, and Hastings concluding “Economists, with their accustomed paucity of judgement, assured Europe that Europe would swiftly run out of money [and prevent a protracted war].”

    I’m curious as to what the alternatives are. On a slightly related note, do you have any definite opinions on Mercantilism? I know, not a ‘modern’ economic system per se, but there are a lot of modern day monarchists I find extolling either unrestrained ‘free-market’ capitalism, libertarianism, or a return-to-the-1630s-mercantilism, and I don’t find myself liking any of them rather well.

  5. “[W]hen a science does what it’s supposed to do, every claim is tested to see if it can be replicated. That’s what makes it a science.

    Economists don’t do this. *Mainstream* economists like to make claims about what will happen when their preferred policies are put into place, mind you, but the mere fact that those claims simply aren’t true never gets considered when repeating them. ”
    So I wanted to share a fact I’d been told about the emphasized bit of this claim.
    Something I was once told is that, when you think about it, there aren’t nearly enough talking heads about the economy to justify the number of schools which offer economics degrees. This is because most economists don’t actually have much to do with the national economy.
    The academic and professional object of most economists is individual companies, industries and communities. The best comparison I can think of is to the science of managing a green-house. And within these narrow bands, economic claims are tested.
    The relationship between Economics and “Economics” is as if the science of managing green-houses was called Meteorology in addition to that fields ordinary meaning. Basically any economic talking head is a man with a certificate, and maybe even long accomplishment in the field of some kind of greenhouse, thinking that means he can predict the rain because “The climates just a big greenhouse, right?”.
    Economists as a guild possess an odd sort of toxic humility: Knowing how little they know about things outside their own greenhouses, none of them feel confident enough to call out their presumptuous co-Guilds-men for making wild predictions outside of the greenhouse.
    (As an aside: Does anyone know of a reputable program for generating charts of secular astrology?)

  6. I’m working with a small farming cooperative at the moment and am butting heads with the board over how things are being run. It might be either lack of insight or imagination but the model they are choosing to follow is crony capitalism and the results so far aren’t very inspiring to the members. What’s interesting is how comfortable everyone seems to be with that kind of model and continue to justify it with varying amounts of denial and apathy.

    To me it’s fairly obvious things are broken and the end of the line is rapidly approaching if we don’t change our internal culture. Fortunately I’ve met a few people who are willing to at least consider alternatives. Will have to see if they rise to the challenge, though.

    Anyway thank you for writing about this now. Hopefully it will also help on the micro scale.

  7. It’s great to have you writing about political economy. Do I sense a discussion about worker cooperatives coming on? If so I look forward to hearing what you have to say. I’m a big fan of them.

  8. Pedro, the political system in which the means of production are owned directly by the workers is syndicalism, not socialism. Yes, I know the word “socialism” has been used very broadly for a while now, but it’s important to keep these things clear; it was precisely the claim that “owned by the workers” is somehow the same as “owned by the government” that the Soviet Union was able to justify its totalitarian ways. The people you’re talking about are more generally called anarchosyndicalists; we’ll be talking about them in more detail next week.

    Dean, okay, what do you mean by municipalism? A system of political economy in which the means of production are owned by local municipalities, or what?

    Phil H, excellent! Yes, precisely — and the way that contemporary science ignores its own propensity to generate feedback loops, and so ends up paying more attention to the artifacts of its own manipulations than to the processes that happen in unmanipulated systems, is a major reason why so many of the sciences are in such trouble these days.

    Daniel, mercantilism pursues unbalanced trade relations with other countries, so by definition leads to trade barriers and usually to war. A more detailed analysis will probably have to wait for a later post, but you know, that would be worth considering.

    Nicholas, okay, fair enough. Would it be fair to describe what I’m criticizing as macroeconomics, as distinct from microeconomics? (As for mundane astrology, if all you need is a chart, any program ought to do; just choose the capital city of the country you have in mind for your location, and choose the time based on your favorite ephemeris — it should tell you exactly when the Sun enters Aries, or whichever other ingress chart you have in mind.)

    Aloysius, I hope it works out! Getting people to think about alternatives to a dysfunctional status quo can be hard, but it’s worth doing.

    AuntLili, why, yes — those and other forms of worker-owned businesses. Stay tuned!

  9. I’ve stopped thinking about capitalism… I’ve moved on to thinking about capitalisms… yes a plurality of articulated modes of accumulation and social regulation. Conceptually one can think of distinct forms of capital : agrarian capitalism, industrial capitalism, and finance capitalism or monopoly capitalism, corporatist capitalism, state capitalism (which most people conflate with “socialism” or “communism”, whatver those categories mean) etc. Each kind of capitalism functions in distinct (if inter-related) modes. Of course there are cultural variations too: Finance capital in the New York is related to but very VERY distinct from finance capital in say Dubai, which is distinct from Mumbai’s finance capital, which is very different from that of Shanghai. Industrial capital in Wisconsin differs in very fundamental ways from industrial capital in South Carolina. They all have common features, but are also very fundamentally different assemblages.

    To me this is what political economy in the twentieth century should be… a study that is specific and local, but has a global sense of place. So yes… we should give up the foundational myths of the Adam Smith – Karl Marx – Keynes trinity, and expand the conversation.

    I just think broad unwieldy historical juggernauts like “mercantilism” “capitalism” “socialism” rarely go any place interesting. Take “mercantilism”: Clearly the mercantile logic of trans-atlantic slave trade was distinct from the mercantile logic of the East India Company is distinct from Trump’s neo-mercantilism.

    “Get specific” is my mantra!

  10. JMG,

    Another fine essay. Who knew an Archdruid could point out the finer points of economics and history, from the working hierarchy of vassals within feudalism to the negative impact of intermediation (an earlier post on ADR) in today’s economy? Very impressive. A ton of classic quotes in today’s post.

    Yes, things are different now from early industrial America’s version of capitalism. It seems more in the realm of “fascism light”, without the torchlit parades. The trend seems to be going towards darkness.

    BTW – before I forget. Thank you very much for not only posting your weekly thoughts, but also providing the Q/A responses afterwards. To commit your time to moderate those results in a “sane place” on the Internet, and those are fewer and further between these days. Your effort is greatly appreciated.

  11. Kind Sir

    this is heresy.

    Everybody knows there is no system besides CAPITALISM and in HIS love and infinite wisdom HE sent HIS MARKET down to earth to save us and the holy TRICKLE DOWN will quench the thirst of the masses.

    Next thing you’ll try to tell us that pigs don’t fly?

    On a more serious note, it is commonplace today in the MSM to claim that capitalism is the natural and only possible state of humanity, if not all of creation, and goes back to the days when we fell off the trees (or the universe came into existence, depending on who does the screeching).
    A bit like saying being airborne is the natural state of sus scrofa domesticus.
    But i do wonder if other civilisations at a similar point in their history had similar systems?
    Or are we the first that fall into the capitalism trap?
    And i wonder if, just like in the case of our unfortunate pig on the wing, this turned out to be temporary and ended with a splat?

  12. Thanks John, it’s great to have a non-biased meta-analysis of the main schools of economic politics laid bare in a time where their core meanings are all but forgotten and the subheadings are thrown around as aspersions from left to right or vice versa. I wonder though, and I reckon you probably get this all the time, but what in the most idealistic opinion you can muster would be a long-term workable system of economic governance? If you could dream of such a thing.

    In my own opinion (or fantasy) I favour smaller communities, something like a network of townships or boroughs under their own local government council. Economically speaking I suppose I’m thinking of a kind agriculture, skills and trade based democratic tribalism. I think something like this would allow for a culpability of leadership that just doesn’t exist in mass societies where millions of disjointed citizens are spread thousands of miles apart. If your elected official is ruining the 2000 constituents into the ground by paying a pittance for whatever they produce and selling it back at an inflated rate it’s soon to be lamppost time.

  13. I suppose that definition of municipalism would work as a starting point, as applied to those things that scale at the municipal level. The most common examples are utilities, and locally and publicly-owned electricity utilities are still fairly common around where I live on the Columbia River. As such, municipalism is not really anything new since many services have long been provided publicly at that level, like schools and public transportation. But as I understand the term, it is often also used as applying to services now provided (in most places) by the corporate structure and which could shift to a more local and cooperative form of private management. If you’ve got some kind of cooperative (which might or might not be considered a worker cooperative) with wide but not universal ownership (i.e. people choose whether to be a part of it), then I think that would still fit into the system. Corporations wouldn’t completely go away, but their role and structure would be much more like what they were near the time of the founding of the US.

  14. John–

    In the historical development of the discipline, when would you say that “political economy” became “economics” as we know it today? (IIRC John Stuart Mill authored “Principles of Political Economy”, which would have been, what, mid-19th century?) If one were to develop a “political economy” reading list, who might be a good representative list of authors of past and present to include?

    Tangential to your discussion re fascism, I had the odd experience of being called a Nazi recently. (Obviously, in the context of it being an empty word-noise meaning “bad person”, as nothing I’ve advocated remotely comes close to a fascist position.) I noted at the close of your post (“in America, a crisis of legitimacy that’s already catapulted a populist demagogue into the White House and may well replace him with something much worse in the years ahead”), that one might infer your perception of the probabilistic contours of our near-to-mid-term possible trajectories. I understand that this might not be an appropriate place to elaborate on that, but please do elaborate at some point. (I have my own thoughts on the matter and I’d be interested to compare.)

    Looking forward to the next post — as always!

  15. I’ll have more to say about socialism and fascism later, but for now why is insider trading a bad thing? My knee-jerk reaction is insider trading = evil capitalists but how is it actually immoral or economically damaging? Why not just make it legal for people to use what they know in making investment decisions?

  16. On a sort of off topic note, I can’t think of any investments that don’t look like a bubble right now. Not all are as blatant as bitcoin, but still, bonds, stocks, the entire investment scene looks fairly frothy right now.

    With regards to economics, a case can be made that it can never be a “proper” science. There are too many variables, and it’s too hard to conduct a proper experiment. This doesn’t mean knowledge in the field is impossible, but if we as a culture are unwilling to consider alternative methods of knowing what is real, it presents quite the problem. Which leads me to wonder if the lack of capacity for economists to learn is more deeply rooted than the political motivations I thought explained it.

  17. Oh, also, speaking of political economy, I remember a few years back when I found an economic professor and political science professor who were chatting with each other, and made the mistake of asking what insights one field could offer the other. The rage was palpable….

  18. I often quote George Bernard Shaw’s quip: If you laid all the economists end to end; would they reach a conclusion? There are so many odd proposals these days. I followed one of your reader’s links last week (?) and found the following lecture: https://youtu.be/Q1SMjeuyF-Y Her lecture was at some sort of educational facility yet there was no critical questioning about her thesis that the government can just spend as much as it wants;that we aren’t part of a larger system. Where is critical analysis these days. I know it is here!

  19. I’ve lived in several countries with varying degrees of socialist policies present. Japan, for example, is nominally a capitalist country, but it has a lot of welfare, both for citizens and corporations. Here in Holland there’s of course a lot of big corporate money, but socialist policies such as subsidized daycare and social housing are very common. My native Canada actually has a less generous welfare system (it varies by province), but does provide social healthcare for everyone.

    These countries are all fine places to live, whether you’re rich or poor, but the fact is that these countries all have enormous national debts that realistically cannot be repaid unless hyper-inflation occurs. The cost of big government and benefits to the population are passed to future generations. It is arguably unsustainable.

    I’ve been to India, which embraced socialism for several decades after their independence, leading to stunted growth of their infrastructure and economy while their population rapidly grew beyond one billion. After they opened up their market and dropped a lot of their state planning of the economy, a great deal of wealth started to be generated, but the flip-side is HORRIFIC levels of pollution (air, soil and water). I’ve been in New Delhi when the air was so foul it caused me to heave.

    So, I am left to wondering what is feasible over the long-term. The free market has many benefits, but wealth tends to accumulate at the top. Industrial economies, be they capitalist or socialist, seldom show real restraint when it comes to the environmental costs of growth. It would be ideal if some sort of genuine eco-oriented system could be implemented, but I don’t see any political will to do that. Any thoughts?

  20. PS – A good intro to what I’m talking about is given by author Gar Alperovitz. There are videos online under the title “Principles of a Pluralist Commonwealth.” I think it’s both just and the best possibility for us to transition out of the our current situation.

    “Our time demands we meet the challenges inherent in an era of deepening despair and accelerating crises—political, ecological, and economic—that is also potentially the prehistory of transformative and fundamental systemic change. This requires a serious discussion of practical new economic efforts and organizing strategies as well as the steady development of both power and ideas that can help us move through and beyond the current emergency. The approach and model outlined here—the Pluralist Commonwealth—offers a trajectory and pattern for wide-ranging institutional change towards real democracy over the long haul, guided by a transformative vision beyond both corporate capitalism and traditional state socialism.”

  21. Interestingly enough, and apropos to this week’s discussion, my department manager swung by my office as we were wrapping up for the day today with a bunch of headlines about various large corporations who’ve announced wage increases and special bonuses to their workers (and in some cases, specifically excluding upper management) on the basis of the new tax legislation. After reflecting for a moment, I realized that (for once) these CEOs weren’t being stupid — they’ve connected the dots and realized that if they want the guy who delivered this legislation to stay in office, they’ve got to flow through material benefits to the people who elected him in the first place. (I’d be willing to bet that if a Jeb Bush had managed something similar, we’d not be seeing that kind of response.) Self-preservation is a wonderful aid for focus. Now, to be sure, whether or not these benefits will continue to flow is another question entirely. But on the whole, it was a rather fascinating moment of understanding.

  22. JMG, you wrote “Remember, this is early twentieth-century capitalism; things are different now.”

    How different? In an essay from last year concerning Trump’s rising, you discussed the fate of classes in America over the last fifty years. If I reckon correctly, you said that the investor class pretty much remained in the same place where it was, just like the welfare class; and that the salary class grew in power and wealth in detriment of the wage class, which lost both over that time period.

    The thing is, didn’t the investor class lost some power and wealth, too in favor of the salary class? I’ve studied a bit of American corporate law, and I know that one of the many changes that happened these last decades were CEOs and board of directors that cannot be controlled by the shareholders, and do not answer to them in any capacity. Courts have been ruling that a given company’s management can even act against the immediate interest of the shareholders, if by doing so they intend to benefit the company as a whole…of course that’s very easy to abuse (I recall a famous Disney case in which the board basically gave away 500 million as “parachute bonus” to a guy who did a very bad job as acting president of the company, the shareholders filed a suit in court, and were ruled against).

  23. “The nationalisation of the means of production, distribution, and exchange” is the classic term used to describe socialism, and once existed in the constitutions and manifestos of many socialist or labour movements across the world (and still does in many places, however well ignored those words might be).

    That describes giving things to the state, not directly to the people as you say. Syndicalism, and cooperative movements have played a relatively minor role in comparison, but they still float around quietly, and intriguingly, remain most prominent in agriculture (conservative farmers usually aren’t silly enough to hand their most important institutions completely over to the free market). Unfortunately for the future, I can only see syndicalism working if there’s enough of a state with enough of a popular mandate left to start the process of devolution and putting things into collective ownership structures before collapsing markets eat the institutions alive in a last great resource grab.

    I’ve always been fond of the Fabian tradition of evolutionary socialism, steady incremental change to keep the markets in check and retail enough control over the things that matter, within a democratic context. Internationally, this seems to work best within parliamentary (as opposed presidential) systems of government, probably because of the inherent stability of those systems due to the nearly thousand years it took to perfect them. That’s the gift from the British to the world I think, a system of democratic governance that is resilient.

    I depart from traditional socialism when it comes to energy – no traditional theory of political economy deals with the energy issue. I’ve long thought that someone needs to write “The Energy Theory of Value”, as a critique and advance on Marx’s Labour Theory of Value concept.

  24. Socialism seems to be taking root here in Amherst. I was walking past Amherst college a few days ago and there was a bunch of protestors flying the Soviet flag, some even wore the red star and stereotypical fur Russian hat. I assure you they were serious. They were protesting The Donald. Put in context of Mueller’s Russia probe I chuckled a little inside….

    I struck up a conversation with one of them to see if they actually knew anything about Stalin, the USSR, WWII, etc. Apparently, some history has been lost along the way. The girl I spoke to said the USSR was discredited by capitalist propaganda here in the US. That our history of the Soviet Union is unfair….. I said, well yea that doesn’t mean the USSR didn’t do some terrible things to its own people and was not a dictatorship. It was strange how mechanical this bunch sounded using the word comrade. I feel like a stiff board just thinking about it.

    It’ll be interesting to see how the elites react to more groups like this springing up in the years ahead.

  25. I get a great amount of pushback when discussing the problems with the economic/political system of the U.
    S. with my middle aged or older friends. They are always unwilling to hear that alternatives to capitalism must be on the table if we are to having any hope of improving our situation. Most Americans have been brainwashed ( even left leaning ones) in to thinking all political/economic systems other than capitalism are the handiwork of Baddy Badniks, or Satan himself. They are unwilling to understand that many of the problems we have are inevitable consequences of the system we have, even if it is working as designed. They seem to think that if we just tweak tax policy, or rearrange government stimulus and priorities everything will be solved. Like thermodynamics, a proper understanding of the entire range of political economy is incredibly under-taught in all levels of education. My guess is that this is on purpose.

  26. Wow ! Perfect timing for this essay. I’ve been waiting for the last shoe to drop since October of 2008, and this essay gives a good oversight as to what is really going on. Something in my gut tells me that business as usual won’t continue for more than another 6 months or so, and it’s hard to prepare when you don’t know what will happen next?

    I’m a low level supervisor in one of those dastardly corporations, but I’d much rather be self-employed running my own small business if I could actually make any money doing it. I flirted with an attempt in the past, but I could not earn enough to make ends meet, and I know of many others who’ve been in a similar boat of failed small businesses. I’d love to self-sufficient, but I feel, not without evidence, that the deck of cards is stacked against that outcome.

    As far as your predictions go, you’re right on the money. I’ve been following your blogs for over a decade and you’re predictions are the best of anyone out there. You were the first to predict the rise of Trump, the fall of the house of Saud, and that people will still care more about the superbowl than about peak oil. I honestly can’t wait for your article next week or for your annual prediction for the year ahead!

  27. John,

    Thank you for this post. I been wishing that you would write this one for quite awhile. Although I been able to pick up much of what is in this one from your previous work, having all this summarized here is a delight. I must say that what you are writing is consistent with everything I been able to correlate. It is so depressing to have to wade through all the delusions, lies, smoke and mirrors in an effort to get a clear and consistent picture of our political and economic situation over the last century or two has been.

    I’m very much looking forward to your thoughts on alternative systems, especially since they are not supposed to exist – everyone knows that there are only two possibilities, one totally good and the other totally evil. Which is which, of course, depends on who is answering the question. Here’s to other possibilities!!

  28. JMG, can you give examples of when socialism works well enough to not produce blood baths? :”The fact remains that as an economic system, it works about as well as capitalism—that is to say, not well, but well enough to stay in power—and it does a much better job of distributing wealth to the working classes than capitalism does, which is why capitalists hate it so much”

    Also, can you say something about distributism (as advocated by Chesterton)? Why has it not been tried yet? Or is the only time it’s been tried is under the umbrella of feudalism?

  29. Dear Mr. Greer, thank you for taking up this topic.

    A couple of observations about feudalism:

    1. Higg son of Snell can’t be fired. He gets to occupy his hovel and work his allotted strips, keep a designated amount of livestock on the commons, and glean from forest and field designated amounts at specified times. He will live better if he is a good husbandman, be able to attract a better wife and keep more of his children alive than if he is a bad one, but he can’t be evicted by intrigue or because someone offered to do the work for less.

    2. He has a rightful claim on the Sir Hubert’s protection, including succor in times of flood or famine, and a claim on his justice. That may indeed have been harsh, tempered only by the fact the Sir Hubert needs husbandmen, but Higg is hardly going to get a better deal from the Vikings, the Saracens or the wolfsheads in the forest.

    3. Just as (some) wealth flowed downwards, so did some talent ascend. Higg’s brilliant and discontented son will be sent off to a monastery by the parish priest, part of whose job it is to recruit just such young men into the Church; meanwhile the obstreperous and ungovernable son of a neighbor will be seized by Sir Hubert’s factor and put into the castle guard.

    Apologists for capitalism claim that it is efficient. It seems to me that capitalism is almost criminally inefficient. In addition to the poisoning of land, air and water by its’ waste, capitalism also misuses and misallocates human talent by treating all workers as interchangeable. In every shop and office, round pegs suffering in square holes abound, because those in charge either can’t or won’t place their workers in the jobs which those workers are able to do.

  30. Here’s wishing you and your family a peaceful and prosperous Alban Arthur, JMG. Deja vu, all over again, to quote Mork. I was going to ask you about this nonsense tax bill in the next “ask anything” and I log in tonight and you had already started answering. Granted, I already knew that for reasons you have discussed, for over ten years now, that industrial society, despite ANY legislation, is headed for “history’s compost heap” to quote a certain Archdruid. These details ARE, however, very interesting and informative when I have to talk to my Fox News loving, Free Market, Capitalism addicted relatives over Christmas dinner. LOL Thank you.

  31. Thanks for starting the discussion of political economy! Now, I know that you like to provoke, but in order for me to show this post to other people you would have to at least mention that fascism has a certain propension to mass murder, just as “real existing socialism” has… You have made that abundantly clear in past posts, but not here.

    Furthermore, I think your definition of socialism as opposed to syndicalism (in the comment to Pedro) has the advantage of clearness and crispness, but is not universally agreed upon. I think Bellamy and other 19th century thinkers who considered themselves socialists would have disagreed.

    Waiting for next week!

  32. Sorry, now I see Bellamy did indeed propose nationalization… Somehow I remembered that wrongly. Point scored for you.

  33. These next few posts should be very interesting. When I studied economics it was not, of course, called political economy, but it was offered through the college of arts and sciences so some relationship to politics and other branches of human knowledge and activity couldn’t be entirely avoided. Now it is routiine for economics to be offered through the schools of business and, consequently, economics no longer rubs shoulders with the social sciences or humanities.

  34. JMG, I really appreciate your defining your terms. This way, at least, I have to pause a bit to remap my logic and think before just rushing in.

    What is the source of your definitions, if I might ask? Mine is heavily influenced by Austrian economics — which called both the NASDAQ bubble and the housing bubble (which earned it the wrath of that globalist rag “The Economist” and refused evermore to speak about it as an school of economics). Anyway, between that take on classical economics and my own thinking about this twisted world, I define socialism as any system of government which “legally” redistributes wealth from producers to non-producers. This would cover both the Dems and the Republicans in the US, as they both believe 100% in redistribution (currently redistributing from working class people to the 0.01% and the “Clintons” of the world via inflation, ZIRP, selective enforcement of laws, etc.)

    However, since it is your blog and I am here mostly to have my world-view shaken rather than merely reinforced, I am going to try and think a lot before I make too many bold statements. 🙂 It doesn’t seem to me, though, that you’ve adequately allowed room for a system of political-economy which is mainly about redistribution.

    One thing associated with that, I want to throw into the mix: there really IS a group of people who like creating more effective means of doing things and/or creating totally new goods and services. They aren’t very well represented in today’s super sick ZIRP economy where speculation trumps authentic investments, but they still exist — and they ought not to be conflated with the ersatz “businessmen” who make most of their ill-gotten gains due to milking the system (wall street and D.C).

    You could take a million “workers” in a socialist paradise and not create as much additional wealth and value as one Steve Jobs. While we might debate exactly what Steve Jobs contributed, the record is pretty clear that he did most of what he did for the joy of creation…not primarily for the money. Anyway, when you talk about how well socialist systems redistribute the “pie” it bears considering that socialist systems don’t really believe in creating new pies … they aren’t good at creating new anything (except misery and war). History shows they are really great at redistributing (mostly to their own party insiders) everything that isn’t nailed down — but abysmal at creating much in the way of new value of any sort to redistribute.


    ps, Why are you going to another forum for next week’s post on the occult?

  35. While there is a Nobel prize for “Economic Science”, I don’t think many econmists would consider it a science. They’d call it a social science, and readily acknowledge it’s theories cannot be tested the way scientific theories can be.

    I would also argue that socialism, at least today, includes societies where the means of production is owned by the workers as well, but will wait for your essay on syndicalism.

  36. One’s definition of “socialism” depends on one’s orientation to political theory or political history.

    Theoretically, socialism is an economic system in which the means of production are owned by all of the people. This form of socialism only exists in the absence of the state, such as in pre-state or non-state societies. Ownership of the means of production by the workers is correctly identified as syndicalism, which in the absence of the state is called anarchosyndicalism, as attempted in early Bolshevik Russia.

    When the state owns and manages the means of production the system is called state capitalism, in that the people do not own and manage the means of production, which are owned by the state apparatus, ostensibly in the name of the people. This was the case in the Soviet Union.

    Democratic Socialism is a reformist economic system that retains capitalism but attempts to reform it with institution of some socialistic programs.

    In reality, no form of socialist economy has survived the overwhelming domination of totalitarian global capitalism.

  37. Thank you,Mr. Greer,I found your article highly readable , and you have a great facility for cutting to the chase. I enjoy your work immensly.
    Over here in Australia, we too, are in the grip of fullblown Neo-Liberal philosophy, with the expected results of debt slavery, the highest cost of living on the Planet, massive immigration with a corresponding lack of infrastructure, and an increasingly high rate of corruption.

    On mercantilism I will make this comment;
    The flags of the British East India Company and that of the United States of America bare a striking similarity. I find it difficult to think this is other than by design.

  38. Srinath, of course there are different capitalisms, socialisms, and fascisms, and the differences can be important. The similarities are also important, though, and it’s just as unproductive to ignore the common factors as it is to overstate them. The entire logic of “it’s different this time!” — the eternal excuse for investing in speculative bubbles — is based on overemphasis on the differences, and helps people pretend to themselves — wrongly — that just because it’s a different asset class that’s soaring, it will somehow avoid ending the same way.

    Drhooves, nah, what we’ve got here in the US is an ungainly hybrid between capitalism and social democracy, which is doing a fairly good job of embracing the worst features of both. Not even our neo-Nazis are proposing actual fascism; a case could be made that they’re just in it as a dress-up game and have no idea there’s actually a system of political economy behind all those gaudy uniforms and well-shined jackboots.

    DropBear, capitalism as such only works when you’ve got an industrial economy, and that requires a cheap abundant energy source such as coal or oil, so we’re the first to stumble on that particular set of idiocies. Other civilizations launched their pigs into the air using other machinery — equally rickety, to be sure, but of different designs. As the aerodynamic qualities of pigs remain the same, to be sure, the trajectory once launched is similar — that is to say, a prolonged squeal followed by a splat. 😉

    Lore Co, we’ll be talking about potentially workable alternatives next week.

    Dean, okay, fair enough. How would you deal with enterprises that extend beyond the range of a single municipality? Or does your proposal deal with those?

    David, as I recall, political economy got dropped in favor of economics in the early part of the 20th century. I’d have to do more research to come up with a specific date.

    Darkest Yorkshire, you could ask the same question about any crime. Why is something a crime? Because a community decides that the consequences of permitting it are worse than the costs of prohibiting it.

    Will, it’s actually quite complex, and by no means limited to simple politics.

    Lars, the last place you want to look for critical thinking these days is in the education industry…

    Twin Ruler, thank you.

    Jeffrey, we’ll get to that in next week’s post.

    Dean, thanks for this.

    David, yes, I’ve been watching that with some amusement. It’ll be interesting to see if that trend continues.

    Bruno, exactly. The investors no longer have effective ownership of the company — that’s been taken away by the managerial class. That’s a huge switch.

    Nancy, yep. I’ll do a post on that down the road a bit; it could quite literally spell the end of science as a living tradition.

    Peter, that’s exactly why I favor democratic syndicalism; you have a state, a constitutional representative democracy, which uses its powers to favor syndicalism (and sole proprietorship, which is the simplest mode of syndicalist organization) over other modes of business ownership. More on this next week.

    Austin, yep. I’ve been expecting that for a while. To my mind, it’s every bit as scary as a resurgence of Nazism.

    Clay, of course it’s on purpose.

    Workdove, yes, things are stacked against independent businesses these days. The people I know who are successful running their own businesses are by and large working under the table, so they can evade the regulatory barriers that protect established oligopolies against upstart entrepreneurs.

    John, you’re welcome and thank you! Clearly there’s a lot more to say about this subject.

    Iuval, I never said it didn’t produce bloodbaths. Every system of industrial political economy produces bloodbaths.

    Nastarana, good! You’re quite right, of course.

    Mac, I haven’t yet waded through the tax bill, but I’ll see what I can do. A happy solstice to you too!

    Matthias, I figured that could be taken for granted. Maybe not, though. As for definitions, I’ll have to reread Bellamy; I thought nationalization was important in his scheme.

    Christopher, Adam Smith was a moral philosopher, so it makes sense that political economy would be best studied among the liberal arts!

    Gnat, I’m taking most of my definitions from pre-1945 works on political economy. I find the Austrian school’s redefinition of socialism unhelpful, as it distracts attention from the core issue of the ownership of the means of production. As for Jobs, well, let’s just say I don’t share your admiration for him.

    Why a different forum? Because the fourth Wednesday here will be taken up by political economy instead, and I wanted to give my readers a different venue for asking questions.

    Marcu, thank you for this, and a happy solstice to you and yours!

    Phil, you can use whatever definition you like, of course, but the discussions I’ll be posting will use mine.

    Michael, I’d say rather that one’s definition of socialism depends on what aspects of political economy you want to talk about. I’ve presented the one I’ll be using here. One thing, though — in the absence of a state, it’s impossible for all the people to own anything collectively in any meaningful sense, since the organizational framework that would be necessary to give all the people any kind of meaningful ownership would constitute a state if one didn’t already exist.

    Simon, you’re welcome and thank you. As for the flags, hmm — I’ll have to look up the flag of the British East India Company, which I don’t think I’ve seen before.

  39. Excellent post!!! I look forward to part 2!! I hope you will also give a nod to those customer-owned cooperatives, which also work quite well (at least in my limited experience with them). I have no idea how that would scale upwards into an entire economic system.

    It’s just my opinion, but I think as human populations explode, government inherently becomes more complex and unstable just from sheer size of both the government and the population of the governed. I would also postulate that this inherent instability causes people to resort to totalitarian control, human rights abuses, and policies that put boots on the necks of the poor. It’s much easier to vote for a good candidate when you have known the people running for a few years. I would imagine a king would have a more difficult time starving his subjects if he knew all their names.

    I think, for large populations, we have to accept that no system can “work properly” so that we can evaluate how to address the problems inherent to our system. We all need to be vigilant about our system and be able to recognize when it’s running off the rails.

    Thanks!!

    Jessi Thompson
    anotheramethyst

  40. Is “means of production” another way to say “interface with the natural [and living] world? Or perhaps it comprises two aspects, one is the living world and its resources, the other is the suite of technologies which give quicker access to its materials and the ability to transform them into products.

    The reason I ask is that the big blind spot I see in both politics and economics separately, and political economy too, is that although wealth and power [among humans] mutually interact, they interact by *using* the world while often ignoring their effects upon that world. I would like to hear more about the prospect of an “eco political economy” if this is possible.

  41. Gnat, I’ve often wondered if the Austrians are just Puritans in another guise in their visceral rejection of “redistribution”… even though what they purport to study is “economics” which is precisely about flow and distribution. In a natural economy, such as an ecosystem, “producers” produce and distribute to non-producers as a matter of routine, and it is the interactions of all these distributions and flows that gives the system life and resilience. But the Austrians would rather see the flow blocked, lest a “non-producer” receive the benefit of a flow (or in Puritan terms, might be having fun). You’d wonder why a producer wants to produce in abundance, much more than they personally need!

  42. JMG,

    You mention that social democracy is an attempt to combine the best parts of fascist economics (private ownership but goals of national interest?) with constitutional government and rule of law, and today our economy is an ungainly hybrid of capitalism and social democracy, featuring the worst of both. While I agree with some aspects of that view, I’m not seeing any aspect of democracy in play today.

    In light of the wealth gap getting greater and lack of rule of law (or, two different sets of laws), my impression is that today we have semi-fascism (probably a better term than fascism light), which is to say crony capitalism and an authoritarian government, but nothing all that represents goals in the national interest – assuming those goals are for the majority, and not just the top 1/5/10/20%.

    The U.S. may not have a Chancellor in the White House (but rather a puppet), and in theory there’s more than one political party to represent the citizens, but for all intensive purposes it’s the elites/ruling class vs. the rest of us. We didn’t have an enabling act, but over time there have been numerous laws passed (Patriot Act, TARP, etc) which have effectively taken power away from the people, and transferred it to the elites/ruling/investment class, often unelected and even unknown….IMHO.

    I’ll be interested in other political economy proposals, as certainly there’s room for improvement. But I see some obstacles for implementation, with the deeply entrenched elites not giving up easily.

  43. JMG,

    This post is strangely relevant to me at this time. As Italian elections approach in 2018, I am for the first time considering voting for a Fascist party.

    This is very unsettling for me, born and brought up an anti-fascist Italian in a family that has leaned leftward for at least 4 generations.

    Still, I feel I have very little choice left. Precisely for the reasons you mention: no one else is left to channel wealth to the lower classes.

    The fascists seem to be the only ones who speak to the lower classes, to those disillusioned with globalization, Europe, the Euro, multiculturalism, Americanism.

    They speak to the kind of people socialists used to represent, but do not anymore.

    Zizek says that behind every Fascism there is a failed revolution. I agree wholeheartedly: the republican anti-fascist establishment has failed me, the socialists did nothing for people like me, and the capitalists are simply my class enemies.

  44. Bracing stuff, as usual, JMG. But re the self-destructiveness of capitalism, depriving the lower classes of the income needed to buy its products – not all tycoons were that stupid; Henry Ford’s famous five-dollars-a-day around 1914 was, so I’m told, his attempt to pay his workers enough so that they’d be able to buy his cars. A bad man, no doubt, with his anti-Semitism; but not a complete dope.

  45. @ Phil & JMG
    I support JMG’s definitions.

    Back in the day, economists and other social scientists of my acquaintance aspired to ‘scientific study’. (See my first comment up-top.) Nascent econometricians in particular (learning on the early big computers) thought that they could model economic behavior and did not take kindly to the idea that by doing so they could alter fundamentally the rules of the system they were studying. I think their misconception failed to recognize that a ‘profit maximizing’ system is ‘reflexive’, if I have understood Soros’ term correctly.

    Climate scientists whatever other problems they face, do not have that problem when detailing our one-off fossil fuel experiment. Lop-sided smile. Caveat: I sincerely hope they do not morph into Climate Engineering.

    The Nobel Prize for Economic Science entry in Wikipedia flags up the continuing controversy. A descendant of Nobel himself, great-grandson Peter Nobel, remonstrates with the Foundation about the Prize for Economic Science, rejecting a claim of ‘science-by-acquaintance’. Adding: “Nobel despised people who cared more about profits than society’s well-being”. Nevertheless the Nobel Foundation have had no problem continuing to take the money from Sveriges Riksbank.

    BTW Phil, welcome aboard. There are two other ‘Phil’ make regular comment here, me (Phil Harris), and Phil Knight.

    best
    Phil H

  46. What you are doing in this post, explaining what certain political terms actually mean, is such a valuable public service! I sometimes despair reading american “political discourse” and noticing that most voices involved don’t even grasp the most elementary terms of politics or political economy. Even a man like Sanders, who I respect greatly because I think he is honest and really trying to do good is irritatingly calling himself a socialist while, actually, he is a social-democrat. Political terminology within the american discourse is so rotten—-and how is it possible to have a fruitful conversation if nobody even really understands the words/terms they are using?

  47. JMG

    To have anything other than anarchy you have to have some kind of collective decision making process that everyone (or at least almost everyone) respects. My guiding example of this is the internet. The only reason it works at all is an organization called the Internet Engineering Task Force, which is a voluntary organization of experts that has absolutely no legal authority to compel anyone to do anything. People implement the way the appropriate Request for Comment (note; it’s not even called a standard) says because not doing it that way would cause everything to fall apart.

    It’s an interesting example of something that simply slides under most pundit’s radar because it just works.

  48. John (et alia)–

    As the discussion of political economy involves the interrelationship of economic and political power, I believe my experience falls within bounds. Recently, i had an exchange with a Democrat of the more progressive persuasion who was arguing that the party was indeed making headway in shifting away from the establishment elements and generally encouraging me to “not abandon” the Democrats. During the conversation, we discussed resource consumption and related issues, with my conversation partner arguing (in slightly different words) that one would never get elected on a platform of anti-materialism. Now, clearly there is a distinction between material consumption and well-being, as you’ve pointed out numerous times and which many of us in this community have experienced in one way or another, but to some extent she was correct — at least in the near-term, it would be difficult for someone with a policy platform which actually addressed our predicament — pursuing alternative political, economic, and social structures, for example — to win an election. How does one navigate this? A few possible strategies come to mind:

    1) Accept the incrementalist approach. Get elected and press for as much change as one can, but moderate those proposals to conform to the boundaries of current political possibilities.

    2) Recognize that public awareness must change before the political changes being sought become feasible. Work the “ground game” first, outside of the official political structure, to build that awareness and only once sufficient momentum has developed, seek a place in the governing structure to pursue those changes.

    3) Abandon working through official channels altogether. Focus solely on the “ground game”, changing awareness (altering consciousness through an act of will, perhaps…) and developing alternative structures outside any formal governing body.

    4) Accept that the standard trajectory of decline is the standard trajectory precisely because the confluence of forces within society drive it in that direction and that no amount of work is likely to alter that trajectory. Focus your limited time and energy on adaption and mitigation within your immediate life and community, allowing the natural course of events to play out.

    None of these present a path to act in the immediate future on any scale close to what is necessary to effectively mitigate what is coming. Is it the answer here that there simply is no such path? Are there other strategic options that I’m missing here?

  49. The illusory division between politics and economics was already composted, planted, sprouted, mulched and thinned in Adam Smith, for he had already unquestionably accepted the root assumption of modernity that individual “natural rights” are precedent to the political community. In a deep way, this radical assertion is the required secular religion for the formation of complex industrial economies which can then wrangle with the various iterations of owning the means of production.

    When Aristotle speaks of economics he only means the art of managing the private wealth of the extended family. But this private world was obviously entirely subordinate to the public political world, a factor of both a smaller scale of the polis, and the constant presence of total warfare. The product of the ancient city (and to a degree the medieval community as well) was security and then the good life for its citizens. The means of producing security and well being were all in the public-political realm, so there could be no distinction between politics and our modern understanding of economics, nor for that matter could there be a reasonable way to articulate individual political rights.

    When thinkers like Machiavelli, Bacon, Hobbes, and even Smith advanced the notion that individual “natural rights” precede political power, they subordinate politics to our private interests. This idea is so fundamental to modern western developed nation states that we can barely see that it was invented whole cloth! Superbly suited to industrial production, this idea enjoys a nearly unquestionable status, for it secures in nature herself the right to own the means of production.

    As we crest and slide down the back side of modernity (roughly 1500-2100?) and enter a new dark age, this extravagant luxury of individual rights will by necessity be replaced by older more suitable notions of the relationship between our private and public lives, and so also by very different expressions of “owning the means of production” that by necessity will place more emphasis on prying out a product than on claims of ownership. If we are lucky, we will rediscover the utility of ancient and medieval political thought to this end.

  50. Do you have any book recommendations on political economy? Preferably of the sort full of unspeakable heresies against the current order of things.

  51. For enterprises that don’t scale to the community there are a number of options. If there is a good argument that it be governmental, then some form of special district might work. Or maybe something like the COGs (councils of govt) that exist in many parts of the country. Presumably there will still be some things that need state or national structures. And corporations can still play a role – we just need to get rid of the ridiculous “corporate personhood” and make them fill a more limited role like they did 200 years ago.

    Also, was happy to see your comments about trade. What the so-called “free trade” advocates call for is not really the same as what Ricardo was talking about. That was a far more limited thing and he might even have been right if something as pure as he defined existed, which it probably doesn’t.

    On sort of unrelated thing to add. I just read that for the first time in many decades, the US has suffered two straight years of mortality declines – shorter life expectancy, mostly due to opioids. This is perfectly in line with early stage decline. That we know the specific cause, have known it for a while, and that a few corporations are getting rich off it and the government is not able to stop them, is further sign of the rot at the top, a rot that has existed through a number of presidential administrations of both parties. For anybody who thinks there is a chance to stop or even slow down the decline, this is your test. We have corporations profiteering massively off of avoidable death and they have prevented the government from taking action in our defense. The question is not whether the government will somehow magically change and fix itself, it is whether we will change it and make it do this relatively straightforward fix.

  52. Capitalism and State Socialism (totalitarian varieties) ultimately fail to satisfy spiritually as their essential message is that the individual is of no innate worth, has no soul, and will be disposed of (fired, left to rot on welfare, bullet in the head, gulag, etc) if guilty of misbehaviour as judged by their superiors.

    They end up being actively supported only by cynics, who see some personal advantage in the system, or fear worse might replace it. Or the very young, who haven’t yet seen how things really shake down…

    As to feudalism, I found an amusing instance of the value which a minor feudal lord could place on ‘Hig’, in the 12th century: a peasant had been accused of a serious crime by another peasant,, and claimed his right to trial by combat, ie whacking one another with clubs in order to discover which one was favoured by God as being truthful. Peasants used clubs, nobles swords, of course.

    His lord, a knight, then stepped in and said that he was far too valuable to risk like that, being a very good ploughman (ie a master of the old ‘horse magic), and told the village blacksmith to represent him in the duel.

    The blacksmith duly hammered the challenger into the ground, God’s verdict was obvious, and the knight gave his ploughman a ride home on the back of his horse, so as not to wear him out with walking.

    Can one see Hilary Clinton or Donald Trump giving a lift to a mere commoner today, or even coming close to them in any but the most artificial and managed setting?

  53. Hi JMG, I think I’ve been waiting for this series of posts of yours for a few years 🙂 Ever since I first read some of your work hinting at alternatives to current economic models.
    A while back I tried having an economic discussion with one of the commentators on Zerohedge regarding free trade and minimal govt interference with business. I was trying to point out that free trade had been embraced by the British during the 18th and 19th centuries under Laissez-Faire policies with suitably disastrous results. The commentator was focussed on the growth of the British middle class during this time. I pointed out that the average worker in England up to 1850 saw a drastic decline in working and living standards, the growth of slums, mass disease outbreaks, huge pollution problems, etc. I also pointed out that the wealth being created was actually being driven by the benefits of empire and that the middle class had grown because of the necessity of a group of people to manage this process and the wealth that it created.
    Unfortunately, he somehow considered that to be proof of his point, rather than the proof that the process was one of wealth concentration, largely unrepeatable and had caused a massive increase in misery for the majority of people affected by it. It seems that a wilful blindness was convincing him that as long as you were part of the group that benefitted, the rest didn’t matter because something else would fix that.
    When I pointed out that the huge wealth disparities in the system led to the rise of both religiously orientated pressure groups that pushed for the creation of the first welfare state, and the rise of organised worker parties that eventually displaced the British Whig party by creating the Labour party and flirted with communism, he accused me of being a communist sympathiser. I stopped trying at that point.
    The problem is that the capitalist fundamentalists are right when they say that someone who is rewarded with the fruits of his own labour will work harder, longer and more profitably that one who works for the state. Try and have that conversation with anti-capitalists and you’re tarred with another brush. It seems that there is no room in most people’s heads for non-binary solutions about anything these days.

  54. JMG –

    What a pleasure to read your summary of political-economic systems. Particularly so on the Winter Solstice; Janus looks back and forward.

    Although I am of an age that will not experience much of the future, what is probable for my grandchildren gives me pause. I would wish for democratic socialism, but am hardly optimistic. I sense that collapse will not be of a scale that would result in neofeudalism. Most likely is fascism. However, it will be a “tolerant” fascism which will combine bread and circuses with considerable space to express individuality. I recall (from the fervent of 50 years ago) Herbert Marcuse’s concept of “repressive tolerance” in which ever increasing diversions foil attention to real issues. Endless bull crap, no representative government, plenty of stuff for the rich, and the short end of stick for everybody else.

    My best wishes to all for the next year.

    Bill Carter

  55. @gnat – Yes, innovators play an important role. But they really can only do so if the society is prosperous enough – if people have disposable income – to pay for it. The fundamental economic debate as I see it, is the supply side vs demand side. Supply side says the innovators and investors are the driving force. Demand side sees a thriving middle class as the driving force which makes innovation both possible and profitable. There aren’t very many innovators in poverty stricken countries with just a few really rich people at the top, whether or not their taxes are low or high. But give me a country with a million people with a hundred extra dollars in their pocket and I assure you people will think of all manner of innovation to get at that money, irregardless of tax rates.

  56. JMG, I don’t admire Jobs without reservation; and I don’t have much knowledge of his darker side (I hear he had a temper but not a violent one); and I have a lot of concerns about where 24/7 connectedness has taken and is taking us. All that said, he did rise up from extremely humble beginnings; he apparently didn’t build Apple on government contracts, nor cheating other people but on providing value to the consumer market; and he didn’t create the underlying technologies so much as guide us through them against potentially much darker outcomes.

    Specifically , he did pull his visions of computer function and esthetics into reality and very much uphill / against consensus. Do you remember the ugly computers with green on black teletype displays and the days before desktop publishing and esthetic type faces of the Mac? Do you remember the lousy single function “smart” phones before the iphone? I’ve been pretty intimately involved with computer technology since about 1975 — he completely changed the game and esthetically and functionally, at least, much for the better IMO. And microcomputers already existed before and without him; and DARPA birthed the internet, so I can’t don’t think it fair to blame him really for the downsides of microcomputers and the internet.

    Also, by your definition of magic being “change in consciousness according to will” (both in himself and in the world as a whole) don’t we have to acknowledge him as one of the world’s most powerful and effective magicians of all time??

    Could he have made better choices? No doubt – he was human. Could he have made worse ones? Easily…and I’d say NOT stepping in with his vision of computer as “bicycle” to magnify human potential would have left humanity in an immensely darker place with ALL the loss of privacy and ecology and far less to work with on the whole. But, of course, that his just what I see….

    I’d be interested in your analysis of Jobs and why you, apparently, resent what he did. Maybe you know something I don’t (it wouldn’t be the first time).

    My other point, though, bears repeating I think. Anyone who has ever attempted social change — and building or turning a company, much less a future world is very much about social change — quickly realizes that those who can do it most effectively without corruption and brutal force are greatly skilled. Building ANY sort of happy, successful business in a (relatively) free market is not something that happens by putting a bunch of “labor” mentality together…it requires a lot of leadership and an enormous amount of hard work, courage, and artistry. The most fundamental flaw of Marx’s and apparently Adam Smith’s thinking (although it seems generous to call it actual thinking as it appears mostly devoid of clear observation, logic, and knowledge of human nature) is that most creation of more efficient and positively groundbreaking goods and services (better ways of doing things of all sorts…leaving definition of “better” aside for now) comes from INDIVIDUALS. That doesn’t mean that there can’t be multiple individuals collaborating in making something but it does mean that not all individuals contribute equally. Further, although I have observed that most people can grow in creativity and work ethic, many others are not capable (maybe because of upbringing or genetics … or simple unwillingness to take responsibility for their own choices) of contributing much more than commodity labor rather akin to what you get from farm animals.

    There is a role for creativity and entrepreneurship and a number of economists — both classical and modern — don’t seem to recognize that.

    But, then, there is another important thing to recognize about most economists: many of them have never tried to start a real business in a real economy; most of them probably couldn’t be very successful in business even if they really tried; and the vast majority proved themselves utterly incapable of forecasting either the NASDAQ or real estate bubbles…and seem utterly oblivious to the real pickle humankind is in now.

    Thanks again for the forum. I look forward to every Wednesday evening because of you!

  57. David – responding to your post about Democrats, I left them decades ago for a lot of the reason described in JMG’s post and spent a lot of time in 3rd party politics. But the US structure is almost completely blocked from viable third party participation – I was in the middle of fighting that for years and know about it firsthand. So earlier this year I decided to take a chance and rejoin the Dems. It was mostly because of local people I know and also because the corrupt party structures are and have been weakening for years. That’s why Trump could take over the Republicans. And while few of them understand the full depth of the crisis we face, I think there is a decent chunk of them who would be receptive and are at least part way there. I’m not going to say I’m optimistic this is going to work, but I’m not sure what else to try. I see the slow decline we were in shifting to freefall under current leadership. The issue isn’t so much whether there will be a decline, but how fast and violent it will be. I’ve mentioned before that I see a relatively soft landing as the goal. I have JMG’s Retrotopia high on my reading list because from the intro it seems to describe how he sees something like that coming to be. I also want to dig more into the alternative I described above. I wouldn’t try to convince others to do as I’m doing if they aren’t interested, there are lots of things to be done outside of politics too.

  58. There’s an old joke: “Capitalism is a system where people exploit other people. In socialism it’s just the reverse.” (i.e. the exploited become the new exploiters.) The problem, to me anyway, is that with both capitalism and state socialism you have an elite few who are making all the decisions, with workers having little say in how anything gets done — we need to have more democratic systems where more people have a say.

    One alternative that springs to mind is the Mondragon cooperatives in Spain. They are for-profit, but the pay for people at the top will generally be 6 to 9 times what the pay is for people at the bottom, in contrast to the 300+ times you see in today’s corporations. What I find inspiring about Mondragon is that during the last economic downturn, everyone had their hours and pay cut, but nobody lost their jobs. Perfect? Obviously not, but it definitely offered more security than what many people are facing today.

  59. JMG, I like your example of applying feudalism to modern times and seeing how it fairs compared to the system we are using now. We all know that one of the most disfunctional economic messes we have is our healthcare system. In a nutshell our current system is filled with waste, illogical incentives, costs too much and gives short shrift to preventive medicine for the young and working age and spends the most on the last few weeks of life. It seems to me that a feudal medical system would prioritize preventative care for the serfs to maximize productivity, would be provided free by the lord or the crown to keep the serf from redirecting their labor to paying for medical care, and would minimize the care provided for at end of life. A lord with poor health care would find himself with a serf base that was too sick and weak to work the fields or to fight for him ( or her).

  60. Greetings all
    JMG wrote: “Socialism is the system of political economy in which the means of production are owned by the national government.”

    whereas one definition of socialism is: ” a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.”

    Are these variants on a same theme? Do community and national government make any difference to the overall arguments?

    And what’s the difference between socialism and communism?

    Thank you

  61. Hi John

    Great post, as always.

    I note that you think that it ls likely that Corbyn will win the next general election in the UK, something I agree with. The current economic status quo isn’t working for the majority of the British population, in particular the lower and middle classes. The yearning for radical change is palpable.

    You have critiqued the corporate kleptocracy in previous posts and I assume you refer to the industrial practice of tax avoidance by corporations and the ultra-rich through the network of British Crown Dependencies including Jersey, Guernsey and Bahamas (amongst others).

    With the recent “Paradise Papers” fallout, what is your view, assuming Corbyn gets in by 2022, of the future of these offshore finance centres? How long would you give these tax dodging centres to last in the coming decades?

    Personally, I think that the twin trends of resource scarcity (aka “limits to growth”) and the growing global backlash against neo-liberalism will see these finance centres taken down by around 2030. Would be interested in your thoughts on this matter.

  62. @Dean Myerson re “Yes, innovators play an important role. But they really can only do so if the society is prosperous enough – if people have disposable income – to pay for it. The fundamental economic debate as I see it, is the supply side vs demand side….”

    The supply vs demand argument is, as are so many things in the hokum of economics, misleading at best.

    Are investments which increase productivity in, say (to make it easy), products for export part of demand or supply?

    Is getting an education, or upgrading a factory to produce washing machines, IN ANY USEFUL WAY interchangeable with government spending on bombs to blow up Iraq or make Clinton worth a quarter billion dollars?

    Is spending on food a supply or a demand? Let’s take a donut. Let’s make it with calcium acetate … the usual way to PRODUCE an American donut. When that disrupts the biome, triggering a positive feedback loop for certain bacteria and, thus, obesity and perhaps mental illness is that consumption or production? Of whom by whom? https://www.sciencedirect.com/science/article/pii/S0304394016300775

    Our GNP calculation, as with the supply vs demand argument, and lots of other things taken as bedrock in “economics” is hokum and I’d suggest you not swallow it. Nor any other baked goods.

    In brief, not all GNP is created equal. Look at the GNP formula, poke a stick at it, and see what inanities crawl out.

  63. Dear Sir,

    Thank you for allowing dissent and for being an amusing and thought-provoking agent provocateur.
    Merry Midwinter to you and your readers.

  64. Re: “the holy TRICKLE DOWN will quench the thirst of the masses…..” after Is stop laughing – there is a very common workplace cartoon which addresses the nature of that trickle-down. It involves stacked outhouses.

  65. @Dean Myerson: I want to try better to address the important question you raised about production vs. consumption.

    First of all, as I tried to convey, the question of production vs. consumption really is a slippery slope. And the GNP calculation (which purports to measure size and growth of an economy by adding up all spending…no matter by whom, nor for what, nor with what side effects or delayed paybacks) really is addled and misleading on a great many fronts.

    But a shorter answer is that the economy ISN’T a zero sum game or, at least, a healthy economy shouldn’t be and doesn’t have to be. But when it is treated as such, regarded as such, it tends to become a self-fulfilling prophesy — if only because individuals cease to make wiser choices.

    One person doesn’t HAVE to win at the expense of others. Indeed, many business people (though not enough) regard that as shameful…as evil. Not all production is someone else’s consumption; some production actually enables those who buy the product or service to become MORE productive in turn. This business of systematically producing more value than one consumes can become a virtuous circle and it really can economically lift all — or nearly all — participants.

    One of our key problems as a society, as I see things, is that people don’t understand THE ECONOMY DOESN’T HAVE TO BE A ZERO SUM GAME.

    Those who “work” at jobs which don’t increase the efficiency / productivity of the consumer of their product or service can — and, I would say, morally ought to — change jobs. If you aren’t able or willing to change jobs, you can usually STILL change your job (and yourself and your society) by deliberately and systematically trying to give value to your consumer than they are expecting.

    As with all tipping points, it can seem pretty discouraging when you feel alone in your ethical and intellectual choice. But, as with all tipping points and ethical choices, there are points of leverage and the end result when the tip finally arrives can seem more than a little bit like magic and blessedness.

    I think that is part of the message JMG is trying to spread, although maybe that is just my bias.

  66. JMG, Perhaps I have missed it, but have you defined Populism somewhere either in this article or another post? Does it count as an actual system of government? I am very confused when people mention populism: I lived in Canada for a while in the 1970s, in the middle of the Prairie provinces, and several of my friends were very strong supporters of the “prairie populists” (which by then were more of an historical phenomenon). The Canadian NDP party, which still exists, was born out of that movement, in my understanding. And an NDP candidate recently became the premiere of Alberta, to some acclaim. So when Donald Trump began to be called a Populist, that didn’t quite seem accurate, and I was also taken aback by the seeming vitriol flung at the notion of Populism. Can you shed any light? And BTW, I apologize for not continuing my discussion of classical ballet through the fifth law. I confess I hadn’t read that law carefully nor reflected on it enough to analyze it in those terms.

  67. JMG, you say that capitalism can only exist in an industrial state, but couldn’t a less vigorous, small scale capitalism still exist in some city-states through the use of the long neglected science of chemurgy, the converting farm wastes into raw materials for industrial products?

  68. JMG, what to make of the current fashion of making a depression a synonym for apocalypse? I mean, if depressions are a feature of unrestrained capitalism, and our ancestors went through plenty of them, and we are long overdue for one, that doesn’t exactly sound like apocalypse to me…

  69. Peter Wilson: You may find the work of Steve Keen, a heterodox economist in Britain, of interest regarding energy in economics. He has spent a long time creating differential equation models of money flows that actually take into account banking and debt, and more recently is working on what he calls the ‘energy-aware production function’ that takes into account the fact that, in his words, “Capital without energy is a sculpture and labor without energy is a corpse”.

  70. Lots of different definitions of Socialism here. Since I disagree with all of them I feel compelled to stick my oar in.

    The ownership of the means of production is not actually the central question of political economy. It is the division of the surplus–who decides how the newly created wealth is split between those responsible for creating it (or anyone else for that matter).

    In traditional Capitalism that is the Capitalists, on the basis that they own the MoP.

    In modern corporate Capitalism it is the C-suite employees, on the basis that the Capitalists can’t stop them.

    In Socialism the workers have some or all of the say, on the basis that they did the work. There is a Wikipedia page (which I can’t find anymore) listing seven kinds of Socialism including Trades Unionism, Syndicalism, Co-determination and Co-operatives. Not all of them deprive the Capitalists of their ownership of the MoP.

    Seen in this light Soviet style state ownership of the MoP, along with state control of the division of the surplus, is best understood as State Capitalism not a form of Socialism.

    On the matter of when Political was separated from Economy I would place it in the 1880s with the invention of Neo-classical economics by the likes of JB Clark and Alfred Marshall who also lumped land in with capital, amongst other travesties.

  71. Dear redoak, I should probably reread The Prince and The Discourses, and Livy as well. It has been a few decades since I looked into any of those books, but I have no memory of Machiavelli saying anything like natural rights “precede political power”. I seem to recall him advising Duke Valentine (Cesare Borgia) to go right ahead and ignore the natural rights of any of his enemies or subjects whenever he thought it necessary.

    Dear David by the Lake, Forgive my possibly excessive cynicism, but I strongly suspect your Democratic friend may have been detailed to sound you out and perhaps deliver a veiled warning. It sounds like you may have already ruffled some important feathers. To me, the give away in what you report her having said is the phrase about never getting elected on an anti-materialist platform. Did not you already do just that? ‘Anti-materialist’ strikes me as a rather odd choice of phrase. How about…all of us can live better for less if we work together to rearrange our daily and public lives in a more sustainable fashion? I am sure you can come up with more elegant phrasing.

    Am I right in thinking that your Democratic friend is NOT your constituent? If I may be so bold, keeping in mind my armchair QB status, maybe you might want to check with your constituents? Stand a round at their favorite watering hole and invite comments? If the breakdown between registered members of either major party and non-aligned others in your district resembles that found in the rest of the country, your constituents might be just fine with Dems not liking you.

    Then Senator Biden, running for VP in 2008, gave a speech in which he repeated the mantra “This isn’t your Daddy’s Republican Party”. IMHO, what we have right now is not our parents and grandparent’s Democratic Party. I speak as a person descended from men who served in the Continental Army when I say that it pains me to see that the party of Jefferson and Madison has become nothing much more than a vast patronage machine.

  72. Umm, a follow up to last week. Overheard @ work: coworker got loan to buy bitcoin & other cryptos. There you have it folks, buying on margin by the lumpen investmentariat. Can the next depression be far behind?

  73. As far as I know, the biggest move in establishing Economics and Political Science as separate, tangentially (at most) related fields was the “generous” endowment of the London School of Economics by London and New York bankers.

    In Political Economy, I think it is also important to discuss who has the power of money creation in addition to ownership of the means of production. Money creation is one of the primary powers of sovereignty, and the fact that capitalism mainly delegates this to private banks is a massive part of the inherent shift of power from government to the rich (specifically the shareholders of the banks).

  74. Jessi, excellent. Yes, exactly — but I’d suggest that small-scale governments are also dysfunctional, just in different ways. I’ve lived in big cities and small towns, and both were stunningly corrupt and relatively dysfunctional, just in different ways.

    Scotlyn, also excellent. The means of production are what I call, in my book The Wealth of Nature, the secondary economy — the processes by which natural goods get turned into goods and services used by human beings. The primary economy is nature; the tertiary economy is money and all other systems of arbitrary tokens used to manage the distribution of goods and services.

    Drhooves, I’m using the word “democracy” simply as a description of a political system in which legislative and executive offices are filled by regular elections in which several parties compete for power. That’s all I mean by it. Too many people have embraced notions of democracy drawn from Cold War propaganda, and use the term as a value judgment — i.e., “that’s not a real democracy because the will of the people isn’t being followed,” or what have you. That makes for great rhetoric but lousy political analysis, because the “real democracies” imagined by that sort of rant do not exist. All democracies are more or less corrupt and dysfunctional; their sole saving grace is that they’re still better than the other options in certain specific ways, such as permitting more freedom of expression and being a little less likely to commit genocide against their own citizens. (A little less likely, please note. That doesn’t mean they never do; cue the One Drop Fallacy here…)

    Discwrites, understood. That’s not something I’d do, but your political choices are of course your own business.

    Strda221, then by all means disagree. It seems to me that you’re so busy quibbling over definitions that you’re missing the point of what I’m trying to say, but hey, nobody’s required to take the time to understand.

    Robert, good! Ford was ahead of his time; his recognition — that capitalism can’t flourish unless the people who produce goods make enough money to buy them — was the guiding star of the New Deal in the 1930s.

    Phil H., and that’s a crucial point.

    Heinrich, you’re welcome! You’re quite right, of course — and you’ll see why our political discourse is so corrupt, right here on this blog, as a flurry of people try to disrupt he discussion by trying to bog it down in quarrels over definitions.

    David, and that’s also something that can work, when everyone has a stake in making in work. As for your options, you’ve left out the most effective one, which is to double-team the system: have one set of people seeking reforms within the acceptable space, and another going for the whole shebang. It’s a good cop/bad cop routine; you can very often push the acceptable space the way you want it to go. More on this in a future post!

    Redoak, given how few people know the least thing about ancient and medieval political thought, I wouldn’t hold my breath if I were you. Rather, the process Vico talked about will take care of it: similar conditions will generate similar forms.

    Synthase, I have no idea what’s available on the subject these days; I’ll have to take a look

    Brian, you’re welcome and thank you.

    Dean, fair enough. The next question is this: what do you propose to do to get your ideas out there into the broader conversation, so they have a chance of influencing others?

    Xabier, thank you! That’s a classic story.

    Gavin, yep. The way out of that trap starts by reminding people that there really are other alternatives.

    Bill, I really do have to do another post on the difference between fascism and despotism one of these days, don’t I?

    Gnat, where do you get the notion that I resent Steve Jobs? (That’s a rhetorical question, of course; I know it’s dogma in the Austrian scene to insist that any lack of enthusiasm for capitalists or capitalism must be grounded in resentment — it’s one of the notions they pilfered and dumbed down from Nietzsche.) I don’t resent him at all. He identified an economic niche he could exploit, exploited it, made an absurd amount of money by doing that, and manufactured a cult of personality around himself; in the process, he helped create the impressively dysfunctional culture of the high-end geek scene, but that was more a side effect than anything for which he can be blamed. I don’t find any of that worthy of resentment, but I also don’t find it at all impressive, much less worthy of the kind of fetishistic adulation that spatters the tech media so often when it talks about him. I also don’t resent pimps and drug pushers, who also identify niches, exploit them, and make money thereby — but I see no point in idolizing these latter, either.

    Steve, the Mondragon cooperatives are a good working example of syndicalism, and yes, we’ll be talking about that as we proceed.

  75. Social Democrats will be horrified by this:

    “Social democracy was an attempt to take the best parts of fascist economics and combine them with constitutional government and the rule of law.”

    Social Democracy long predates Fascism and grew out of Socialism. It is basically a preference for slowly tempering Capitalism with elements of Socialism in a democratic framework rather than overthrowing it by revolution.

    While Fascism may also combine elements of Socialism with Capitalism it has no problem with revolution and no truck with democracy.

  76. Gregory Clark at UC Davis has a brilliant full term set of lectures on YouTube called world economic history before the industrial revolution.
    Highly recommended.

  77. Nastarana – what you deplore in the Democratic party of today is nothing new. Tammany Hall, the Daley Machine …. several others of the period come to mind. They ran on patronage and vote-buying and were rather well organized. And everybody involved, from party boss to ward heeler, got their share of the goodies.They were bywords for corruption in their day.

  78. @Lydia Grey
    While I’m bogging down the discussion in quarrels over definitions I’ll have a go at Populism for you.

    Populists attack the “establishment”, either from right, left or centre. They advocate policies which are intended to be popular with “ordinary” people, but are not always actually in their interests. The policies will usually be disruptive of the ruling elite, whose attacks will convince the target audience of the righteousness of the populist.

    So populism is not an ideology so much as a route to power (which is why I don’t capitalise it). Not everyone who gets called a populist really is one of course.

  79. Clay, okay, let’s work out a feudal health care system from first principles. The foundation of feudal economics is an enduring personal relationship between two persons, each of whom grants something to the other. In the case of Higg son of Snell and his liege lord Sir Hubert, Higg grants a range of traditional services and a tenth of his grain harvest, and Sir Hubert grants a hovel and a share of the village farmland and pasturage. So if Sir Hubert wants to arrange for health care for himself, his family, and the people of the village around his walled manor house, he would grant a house, a garden, and a certain amount of grain and other foodstuffs — specified up front, right down to the last peck of barley — to a physician, who in exchange binds himself to provide health care for a list of persons specified just as exactly. If Sir Hubert can’t be bothered, Higg and his neighbors can cut a similar deal with a physician from some nearby village, who comes by to treat illnesses on alternate saint’s days (there are over 100 of these in the medieval year) in exchange for so many pecks of barley and wheat and so on and so forth, delivered on the feast day of St. Willibrord each year. There would be no price increases each year — there would be no price increases from one century to the next, in fact — and since every feudal society I’ve ever heard of also places an immense value on almsgiving, it’s quite probable that Sir Hubert and the doctor would agree that, in exchange for two specified lengths of good woolen cloth annually and a pheasant pie weighing not less than four pounds six ounces from the manor house kitchen on every St. Stephen’s day, the doctor would also treat the illnesses and wounds of any traveler, pilgrim, or beggar who happened to take sick while on Sir Hubert’s demesne.

    Karim, there are many different definitions of socialism. I’ve used the one that helps point out the specific issues I want to talk about. As for communism, it’s a fantasy — a form of political economy that does not exist and cannot exist, and plays roughly the same role in the apocalyptic dreams of Marxism that the Second Coming of Christ plays in Christian eschatology.

    Tidlosa, and a happy Giddy Bubble Mania Day to you too! 😉

    Forecastingintelligence, the tax havens are only a small part of it. Here in the US it’s routine for members of the executive class to be paid absurdly high salaries and bonuses, on a scale that amounts to asset stripping, while the firms they manage go broke. That’s self-terminating behavior in the fairly short term; the question is purely whether the corporate kleptocracy will be reined in by governments or whether the US, Britain, and other western nations will implode economically and end up under the de facto control of Chinese or other non-Western colonial governments and business interests.

    Armenio, you’re welcome and thank you.

    Patricia, yep. I recall a droll description of the trickle-down theory by John Kenneth Galbraith, who described it as the belief that if you feed a horse enough grain, enough of it will come out the other end intact for the sparrows to feed themselves by picking through the droppings…

    Gnat (if I may), in the real world, economics is always a zero-sum game, because the laws of the conservation of matter and energy can’t be dismissed by economic handwaving. That’s ultimately the thing that makes capitalist economics self-defeating: the delusion of limitlessness that lies at the heart of capitalist rhetoric. As William Catton showed once and for all in his book Overshoot, the exponential growth temporarily achieved by capitalist economies was accomplished through a process of stealing from the future, piling up benefits in the short term while pushing off the ghastly price tag onto our descendants. Now the bill is coming due, and the insistence by the publicists of corporate capitalism that economics isn’t zero-sum is perhaps the largest single factor standing in the way of a constructive response to the predicament we’re in.

    Lydia, populism isn’t an economic system, it’s simply a label used by the privileged for movements of people outside the circles of privilege who take a role in politics. That’s why it’s usually uttered in such horror! As for the ballet analogy, don’t worry about it — I appreciated your earlier contributions very much, but nobody’s required to put in extra hours reading the book, you know. 😉

    J.L.Mc12, good question. It hasn’t happened yet, so we don’t know one way or the other. The one thing we do know at this point is that the only capitalist societies that have existed have been fueled by coal and other fossil fuels.

    Shane, that’s because it’s the privileged who are doing all the yelling, and for them, it might as well be the apocalypse: there’s really very little more than bubbles propping up their lifestyles and their control of the political economy of the US, you know.

    Cuss, so? I’ve chosen a definition to point up the specific issues I want to discuss. If you want to discuss something else, using a different definition, by all means launch your own blog and get writing. If you’re trying to insist that I ought to stop talking about the issues that interest me and talk about the ones that interest you, on the other hand, don’t hold your breath.

    Shane, here we go. Folks, please listen up carefully.

    People are generating new debt to pile into a speculative bubble. Whenever that happens — whenever that happens — it’s a sign that a major boom-and-bust cycle is in process. As soon as you possibly can, get out of debt and prepare for a nasty economic downturn in the next year or two. The higher it goes, the harder it’s going to crash, so move quietly to the nearest exit and get the frack out.

    Djerek, yes, that’s also an issue, though to my mind it’s secondary to the ownership of the means of production. Still, we’ll be discussing that next week.

    Cuss, social democracy may have been proposed as a theory before fascism; as I noted, though, it was widely adopted in Europe as an attempt to prevent a resurgence of fascism.

    Tbone, thanks for this.

  80. Tony, Now that is indeed fascinating. I deeply respect Steve Keen, but obviously I’m not up to date enough to have been aware he was onto an energy production function. Keen predicted the global financial collapse of course.

  81. Ignore this if you’ve already answered – I don’t have time to read all the comments. I like the distinction between socialism and syndicalism; using different terms adds clarity. However, it’s my understanding that Marx, who coined the term, defined it as ownership “by the workers.” That’s why the Bolsheviks had to conflate worker ownership with state ownership – which is more like monopoly capitalism, in practice. Marxists seem to have envisioned ownership by ALL the workers together, which as you say is pretty equivalent with state ownership, but the definition is also compatible with enterprise-by-enterprise worker ownership – syndicalism.

    And in case it isn’t already covered, syndicalists aren’t necessarily anarchists. The concept is compatible with democratic governments and with a market economy – there are worker-owned businesses in a number of western countries, the US included. I look forward to next week’s discussion.

  82. In regard to Shane’s comment and JMG’s response. This next boom bust cycle scares me more than the dot com bubble. Everyone I know is doing the same thing they always have….

    Idk Am I right to try and convince people I know to take their retirement nest eggs and pay off their debts? A family member of mine is nearing retirement and he has a loan equal to that of the value of his house but he also has a chunk of change in the stock market equal in value to that loan. I’m just thinking ugh this isn’t going to end well. It’ll be the dot com bubble all over again. What are the odds pensions and 401ks, SS, will make it through this bubble burst? I’m fresh out of college not even thinking about my own retirement yet….. because I don’t think it’s going to be there. I’m betting my best option is holding the family house, it’s got woods, an orchard, garden and field. Am I right to be thinking in such terms?

  83. Should we add the habit of using quibble about definitions in order to prevent a discussion of something one really does not want to see discussed to the taxonomy of thought stoppers? I propose the we call it “definition paralysis”.

  84. JMG,

    I for one want to thank you for defining your terms, even if it does seem to have led to some backlash. Just goes to show how emotionally charged those terms have become, I suppose. I’m barely old enough to remember such halcyon days, but was it not at one point taken for granted that if you were using words of disputed definition or multiple meanings you’d say exactly what you were going to mean by it, and people would listen, for the sake of communication?

    I particularly like the definition you give of fascist economics– and given the partisan deadlock and neoliberal economic policies seen in much of the west, I can very much see why it might appeal. Naturally, anyone charting that course in the 21st century west would have to file the serial numbers off and call it something else, but that hardly seems an impediment. Especially since the words Nazi and facist are going to be just about worn out by the time Trump is out of office in 3 or (as seems very likely now, 7) years. Of course, if Trump manages to improve the lot of the common American by any measurable fraction, perhaps he can dry up the ecological niche for future fascists. One can hope.

    I myself am very drawn to the distributist economic model, which has it that ownership of the means of production should be spread as widely as possible, not concentrated in the hands of the state (as in socialism) or the capitalist class (as in your other examples). Very similar to syndicalism, in some ways, I think, so I am looking forward to your next essay.

    Belated solstice greetings; here it is still, just barely, the Longest Night. May you have been shielded from nightmares.

  85. On bubbles and bitcoin,

    I once worked in a shop where we had access to a tank of hydrogen gas. Some joker decided to inflate a balloon– it made a most impressive boom. So then we inflated a line of them, and set off the one at one end…

    A truely most impressive boom. And proof, perhaps, that one bubble can pop another.

    I see your bitcoin-tulips, and raise you sub-prime auto loans:
    https://www.bloomberg.com/news/articles/2017-12-21/subprime-auto-defaults-are-soaring-and-pe-firms-have-no-way-out

    Students and ex-students borrowing for bitcoin could spread the contagion to the student loan bubble (I get the general sense that young tech professionals — the sort with large student loans outstanding– tend to still be very bullish on cryptocurrencies.)

    Of course, the balloons had to be just about touching for the blast of one to ignite the others. I don’t think we’re going to find out how close our various bubbles are until the first one goes off.

  86. Thanks, JMG, that clarifies it nicely! And Tinker’s Cuss, that’s good to know that sometimes populism might not actually be in support of the people it claims to be (if I read you right). The prairie populists seemed to be so clearly on the virtuous side of the equation that I tend to view populism in a positive light, but should be alert to the possibility that it may not always be so.

  87. I suppose, if it’s your essay, you can use whatever definitions you want for economics and socialism. But it is much more convincing if you use commonly accepted ones.

  88. Nastarana, Machiavelli does not develop a philosophy of natural rights, or for that matter, any philosophy at all. Instead he writes from within the consequences of such a philosophy without ever entertaining its explication. For this reason he is the most consistent philosopher of power (cf. Bacon, Hobbes, Locke, Nietzsche, etc.), because he never considers philosophy (or any other endeavor) as free from the impositions of the pursuit for power. My guess is he would scoff wittingly at a guy like Hobbes who is absurdly trying to justify a philosophy of power… that is a funny thing if you think about it!

    JMG, I am in complete agreement about convergent evolution in social and political forms. I see your work, very broadly, as planting seeds that will prosper under the coming conditions. If industrial civilization is a climax sere forest, and peak everything is the mother of all disturbances, your thoughts are the wind blown birch and aspen seeds and dormant black berries. And for you, aren’t these seeds preserved from the wisdom of ancient and medieval thinkers who had to work out the details of living in an early successional site?

  89. JMG

    Some of this is clarifying. Some of it I think is highly misleading.
    I like the first bit about how the discipline of political economy was split, thereby neutering both.
    However…
    Socialism as defined in my dictionary:
    ‘1. an economic theory or system in which the means of production, distribution and exchange are owned by the community collectively, usually through the state. ‘
    I add that emphasis because so much of my reading has centred on how the dialogue of politics and economics has forgotten the question of ‘Who owns the means of exchange?’. The omission of the role and influence of banking (and money creation) in the models of nearly all modern economics is one of the key reasons why economists need to go back to the drawing board. I subscribe to the opinion that we live, in truth, not in a ‘capitalist’ society, but a usurious one, as this monetary blindspot has left a banking cartel on top of the pile. To write about the means of production without consideration of the means of exchange is to miss the crucial element of our time in my view.

    The ‘social’ part of ‘socialism’ refers to society or community, the state being just one manifestation of how a community (or collection of communities) can organise politically. There are many communitarians who rightly regard themselves as ‘socialists’, together with advocates of syndicates, soviets, co-operatives, communes etc. Even Marx’s utopian vision imagined a stateless world as its ultimate aim. I think that to say that socialism refers exclusively to state ownership of production is a poor definition.

    To label Corbyn’s program as ‘socialism’ is also problematic in that if his manifesto were fully implemented it would (on paper) take the UK back to a situation resembling the Tory era of the 80’s and 90’s in terms of state ownership of public utilities, tax bands and the like. They are proposing a return towards social democracy more in line with mainland Europe, not ‘the state ownership of the means of production’ (i.e. not all of the means of production, only a fraction). Societies are in flux and are composites of economic ideas which trend in and out of dominance. Personally, I think that the destruction of genuine communities over my lifetime leaves the notion of a revived full blown socialism as little more than magical thinking, possibly with nightmarish consequences.

    You to seem refute the notion that capitalism and the investor class have been aligned with or affiliated to fascism. I dispute this. The largest and most destructive fascist enterprise i.e. Nazi Germany was heavily entangled with Wall Street. Perhaps within Germany itself the majority of capitalists were curtailed by the Party machine of the Reich, but capital flows are international, (and even in then there is IG Farben…. )
    The history of support for fascistic regimes across the world, particularly Latin America in the latter 20th century is intimately tied up with threads that lead back to the capitalists and bankers of corporate America and the City of London. Pinochet and ITT for example. The BCCI scandal, the ‘Business Plot’ and Smedley Butler, I could go on and on with examples on every continent. To say that such history is the nothing more than propaganda of Stalinist ‘flaks’ is to basically disregard US/UK foreign policy for the past 70 years and is therefore misguided in my opinion.
    I regard fascism as a form of imperialism which is essential to the economic functioning of ‘capitalist’ societies which often in themselves display the patina of ‘liberal democracy’. Capitalist fascination with fascism is a means of cheap access to the resources less developed countries through forceful expropriation.
    The gap between the gateposts of domestic democracy on one side and covert support for foreign despotism on the other, form the gateway to parapolitics. You also have to put this in the mix if you want to assess political economy in any meaningful way.

    Saying all that, I look forward to your opinions on syndicalism.

    Happy Solstice.

  90. As a student of Twentieth Century history, I would evaluate the three alternative systems to capitalism you outlined thus: Soviet-style statist-socialism (what people generally mean when they say “communism” because the ruling parties of that bloc of nations called themselves “communist”) was a miserable failure on many different levels. I really think it only lasted as long as it did in the USSR and its satellites because of the massive resource-base the Communist Party regime inherited from Czarist Russia. The Chinese regime has survived by allowing a significant amount of free-market activity, but this has been accompanied by typical communist reckless disregard for the health of the natural environment. Fascism actually worked well enough, but the cost in terms of human freedom was too high and it was a little too fond of starting wars (and I don’t think I need to go into the other very well-known downsides of the German variety, AKA Nazism).

    So I guess that’s why I favor the social democratic model as strongly as I do. However, I really do think many of the old social-democratic regimes of the post-World-War-Two era made a mistake by nationalizing the “commanding heights” (metal prodcution, energy production, etc.) of their nations’ economies. Doing so made their economic model prone to a smaller-scale version of the problems that plagued the USSR, and as a left-libertarian on the Political Compass, I’m very ambivalent about giving the central government the amount of power that would be involved in taking over the lynch-pin industries of the economy. Nationalizing something previously privately-owned should only be a temporary, emergency-measure-of-last-resort, to my way of thinking about social-democratic political economy. That said, if I were a UK citizen, I totally would have voted Corbynite Labor in the last election!

  91. Re: Bitcoin

    I note that yesterday (the Winter Solstice) all the major cryptocurrencies suffered double-digit losses. Bitcoin was down 23.19%, and that was the second best performance of the 10 cryptocurrencies on the chart I saw. ZCash was the worst, at over 40% loss.

  92. Re feudal healthcare – just about every village had its herbwife; the local nunnery or monastery would have an infirmarian, who might treat the villagers as well; and medical treatment was part of the duties of Sir Hubert’s wife, call her Lady Adelisa. There could be a village midwife, or that could be part of the Lady’s duty. However, if an ox stepped on Higg’s foot and crushed it beyond repair, so he could no longer work, he’d lose his cottage and holdings unless his wife and sons could fill in for him. “Pensioner’s cottages” were a thousand years in the future.

    And the physicians’ guild kept prices for the doctor’s services at a level only the rich could afford, for the good of their own pocketbooks. Which was probably just as well; the herbwife at least had a practical knowledge of what worked and what didn’t, being unencumbered by book-learning. Probably not true in ancient Greece, where the physicians were in service to their gods; and the monastery infirmarian might have been just as well trained. The nunnery infirmarian would at least have the knowledge the herbwives did.

  93. @gnat – I’m not sure how your responses dealt with what I said to you. My comment to you was a response to your comments about Steve Jobs, who I certainly consider to be an innovator. So I was commenting that basically I consider the role and value of those innovators to be exaggerated, though certainly not zero. But the value of what they innovate depends on the ability of a society to make use of it. I’m not sure what that has to do with the GNP or zero-sum economics. Well designed investments in infrastructure or education can have great value for both the broad middle classes as well as innovators.

    @jmg – yes, well that is the challenge. I do not have a ready-made answer for how to spread these ideas – I’ll let you know as I work on it. I guess this year, being an election year, I’m kind of focusing on politics. But it really is a cultural question in the end. Most people are very bought into the hyper-consumerism culture and the idea that we are on a constant uphill trajectory to the stars or whatever. But I also think that most people are very malleable and respond quite strongly to incentives and disincentives. And I’m not just talking about blunt-force ones like taxes. Many important things are much more subtle, and hence probably more effective.

  94. During the final days of the Archdruid Report, you were beginning a series on philosophy starting with Schopenhauer’s The World as Will as Representation. If I recall, you plan with that series had been to tour a number of philosophers and systems before eventually winding up at Schumacher’s A Guide to the Perplexed, and if I remember right you had been planning on using that as a jumping off point for an exploration of the form of distributism outlined in Small is Beautiful. The path you laid out there was one that seemed to flow very naturally from the themes of your writings. One idea that you have explored over the years is the idea that economic and political systems as well as any other human institution takes place in a very particular “world” of human experience. You can understand a great deal about feudalism in Medieval Europe by understanding the medieval ideas surrounding the Hierarchy of Being, you can understand much about capitalism by understanding the myth of the individual that allowed it to flourish just as you can understand communism by grasping the proletariat as a myth of its own. Over the course of your writings you have been defending a very particular model for the world, one that you were beginning to flesh out on a philosophical basis just before The Archdruid Report ended, and it seemed to be leading in a particular direction. Is the current series of posts on Democratic Syndicalism a part of a larger exploration of a variety of alternative economic arrangements being presented and explored in the name of dissensus? Are you planning on coming back around to Schumacher and distributism as you had mentioned in the past? Or Is Democratic Syndicalism the point to which your current thoughts on economics have led? If the last, what theorists, philosophers, economists, and historical examples would you recommend tracing in order to gain a broader picture of the type of world democratic syndicalism functions within, and the type of worldview it embodies?

  95. One of the pieces I have been chewing on is how the basic political economy as it stands interacts with the broad question of immigration. Its been clear that immigration has been used to destroy working class standards of pay and benefits. There are arguments about importing a “overclass” of highly capable people who will move into positions of authority and “underclass” people who will work for fewer benefits and wages as well as the stress induced when large groups of people from dissimilar cultures are introduced.. I suspect that like tariffs, immigration controls are required to maintain the stability of a nation’s economy, and that would tie in with democratic socialism etc.. Obviously this was a big draw for Trump in his election campaign. I am curious what thoughts you have about this.. to me it is like linking Pollitcal and Economy .. no one wants to.. of course one doesn’t stop there.. adding in Imperial foreign policy which is driven by the political economy which generates refugees who become immigrants …

  96. @ Dean

    I have voted Democratic almost exclusively since my first ballot was cast back in 1992. (I have had occasion for vote for a Republican when presented with a candidate whose positions were more reasonable on specific issues than the opposing Democrat, but it was a rare thing.) Admittedly, my political views have shifted considerably over the last 5 years or so as I gradually can to understand the nature of our predicament and that the technotopian vision wasn’t going to be realized (that the system could not, in fact, be saved). During the 2016 campaign, I decided to take a more methodical approach, assessing the candidates based on my weights of issues and priorities, with a hard line being drawn regarding our empire and global hegemony — further investment in which will 1) be wasted and 2) reduce our ability to mitigate the storm of consequences we are facing. I have endured a significant amount of criticism (some getting quite personal and vindictive) for refusing to vote for Clinton on that basis. I will vote for any candidate of any party whose policy platform aligns sufficiently with my own priorities, I’ve decided, as well as disqualify any candidate of any party whose policy platform crosses certain thresholds. But on the whole, I have considerable doubt that *any* effective response to the problems we face will emerge from our political leadership (particularly at the national level) regardless of who’s in charge.

    @ Nastarana

    It wasn’t anything like that, no. I’m a small fish in a tiny pond — one of nine council members elected at-large in a small Midwestern city. (Technically, local politics in WI is non-partisan, so city/county politicians have no official partisan affiliation — in reality, of course, people have their views. One of the other council members, for example, is or at least has been, an officer in the county Tea Party organization.)

    The conversation I had was digital, from her handle (and I was inferring gender from the handle, but nuances of the writing seemed to support it), she was from the Northeast, a whole ‘nother part of the country. The exchange was kicked off by an earlier comment I had made in which I’d argued that the Democrats were as wrong-headed in their solutions as the Republicans re the problems we are facing. As for the anti-materialist term, it was her interpretation of the LESS approach I was arguing was needed in order for us to better navigate the future ahead of us. To some extent, as I mentioned in my comment here, I think she is right — it would be difficult for a politician to win an election on the national stage on a platform of LESS, at least right now. As the resource constraints really begin biting, perhaps more people will see it as a viable option. Unfortunately, by that time, we’ll have wasted even more time and opportunity.

    @ JMG

    Thanks, John. After I clicked submit, combinations did occur to me 🙂 The approach you pointed out, however, necessitates a significant group effectively organized. When I was framing the possibilities, I was, I realize, looking at them from an individual standpoint (i.e., what options do *I* have?). Going back to last week’s discussion of cause and effect, if I’m looking at this correctly, effects of a magnitude needed to push the national dialogue in the desired direction need causes of similar magnitude. (Accelerating a large mass requires a sufficient force applied for a sufficient amount of time.) But how does one create such organization in time to make any real impact before we’ve squandered what opportunities we have remaining?

  97. Dear Mr Greer,

    Apologies if this is a bit off topic, I was hoping to post this in the open thread this month but I hope it can slip through as tangentially related to this week’s post since the open thread is being executed a bit differently. My question is:

    Australia has recently passed same sex marriage legislation after a drawn out process. This has raised the issue of rights, religion and government in the public discourse. I found myself recently trying to articulate the Burkean Conservative political view to an acquaintance as you outlined in http://archdruidmirror.blogspot.com.au/2017/06/a-few-notes-on-burkean-conservatism.html. I was asked how, if a cake shop can refuse service to same sex couples on religious grounds (an example outlined in the essay) this is different to them refusing service to someone based on their race by also claiming protection on religious grounds? I know that this doesn’t fall within the argument of the rest of the essay but I was hoping you might be able to provide some insight into how to counter the rebuke?

  98. If I may try and resume some of the discussion above: It seems to me that some of the commentators have focused on the stated goals of certain political movements, while JMG is focussing on political-economical systems at national level. You can only fully evaluate economical success or failure when a political movement has achieved power on the national level, because local success is strongly influenced by national politics.

    For Germany I can say that social security measures were enacted in the 19th century in order to counteract the social democrats’ success; democratic coalition governments including the social democratic party enacted the 8-hour day and other partial achievements in the 1920s, but abject poverty was still widespread in urban slums and rural regions even during the “boom” of 1925-1929 and came back with a vengeance after 1930; after 1947, all political parties in Western Germany had the common goal, which they achieved, of eliminating such a degree of material deprivation.

    It is hard to tease apart exactly how much of that change after 1945 was due to petroleum and Bretton Woods, how much of it to fear of the Marxist-Leninist-Stalinist bloc, and how much to the desire to avoid a comeback of the National Socialist German Workers’ Party.

    Most Germans’ tacid or enthusiastic support for the Nazi regime in the late 1930s was certainly founded to a very large degree on that regime’s elimination of widespread unemployment and hunger. This partial economic success was founded on public spending in (unacknowledged) preparation for war and on Hjalmar Schacht’s monetary policy at the central bank and not on whatever economical ideas Hitler might have had. I agree with strda221’s assertment on his blog (linked above) that fascism is not an economic system. However, that is largely irrelevant if fascist leaders in power somehow achieve economic success by whatever means.

  99. I notice that you do not mention money systems. You have said elsewhere that feudalism avoided monetization. I find comparisons of the main “ism’s” to be lacking because they are so often overviews that ignore the actual methods and motivations of the players as if these are given and constant. I think that Capitalism is very misunderstood because it is linked with notions of free enterprise, competition, and markets as if these things came about due to Capitalism. I think it is more accurate to say that Capitalism is the system of dominance of society in which the financiers use the money power to their advantage. They do this by issuing money to their friends and allies, but not to their enemies. I define the “money power” as the power to create and issue legal tender money. I favor the idea that Capitalism is best understood by looking at the mechanism of money issuance and the motivations of the financiers. The money is issued by funding debt, and an increased amount of new debt is always necessary to create the money to pay the old debt and the interest. The notion of endless growth is a reflection of the need to increase debt to collect interest and compensate for losses in circulation (profits). One example on how this works: Take a 100 acre farm on the outskirts of town. A developer asks a bank for a loan to turn the farm into a suburban subdivision. Now the bank has one loan as its asset. Suppose quarter acre lots. Soon there will be loans to builders and up up 400 mortgage loans. Further suppose that automobiles are the only form of transportation. Add 400 or 800 car loans. So the bank has increased its assets from one loan to possibly over a thousand loans. The economy booms due to all the new money. But as the loans are repaid, the money supply shrinks and the boom deflates and possibly becomes a bust. However, by inflating real estate prices the “prosperity” can be continued somewhat. Now we see the motivation for real estate bubbles. The motivations are clear in this example and one can find many other examples and situations that are not so clear.

    My point is that unless the motivations and methods of the elites are described, one cannot really understand how different political economy categories will actually work in practice. Also, since what we need is a system that helps to restore the environment, I hope you will have some thoughts on how such a system might work.

    Thanks

  100. JMG, you said to Michael:

    in the absence of a state, it’s impossible for all the people to own anything collectively in any meaningful sense, since the organizational framework that would be necessary to give all the people any kind of meaningful ownership would constitute a state if one didn’t already exist.

    Perhaps it’s the last dying embers of my anarchist days (oh, the things one believes in college) but I’m not sure that this is correct. One of the defining features of a state—though not itself sufficient to constitute one—is the ability to compel allegiance and submission to its rules. If you can opt-out, then it’s not a state.

    One thing you seem to be getting at is that rules of property are among the rules that states enforce, and I agree: there are no natural rights to property, however popular that idea is on the Right just now. However, agreements about property can exist in the absence of a state to oversee them (this is the usual situation between states, after all; meta-states like the US federal government and the EU are the exception rather than the rule), so there’s no reason in principle someone can’t opt-out of the collective and still peacefully co-exist.

  101. These are the kind of wild gyrations that happened leading up to the 1929 crash, as detailed in John Kenneth Galbraith’s book…

    Bitcoin prices plunged sharply to below $11,000 on Friday, shedding a third of its value in just 24 hours, according to data from CoinDesk.com. It later rebounded slightly to around $12,000 — but that’s still a stunning 25% less valuable than bitcoin was Thursday morning.

    http://money.cnn.com/2017/12/22/investing/bitcoin-plunges-below-14k/index.html

    Followed by more “Rationalizations”…

    But some argue bitcoin is just taking a breather — albeit a big one — after a furious 2017.

    “A correction like we are witnessing today is hardly surprising,” said Dave Chapman, managing director of Hong Kong cryptocurrency trading platform Octagon Strategy.

    Uh huh, sure… Wonder how many people are now upside-down on their loans to buy Bitcoin? Margin calls, anyone?

  102. My favorite form of feudalism ,because it avoids most of the historic unpleasant imagery that is associated with european feudalism was the Tokugawa Era in Japan. It also achieved a higher level of culture and refinement than that of its european counterparts. Another worthy feature of Tokugawa era feudalism was that achieved perhaps the highest level of refinement, material success, health, population density of any civilization that had to live within its own sustainable solar based energy and land base. Nearly every other civilization to achieve anything like the same level of material well being in history relied on fossil energy, slaves, or an imperial wealth pump from surrounding countries. They had a rigid level of social stratification and lack of personal freedom that would make us cringe today. But perhaps such a rigid culture is needed to overcome the selfish and shortsighted desires of humans left to their own personal devices if we are to achieve anything like real sustainability some time in the future.

  103. @David, by the lake
    Re: massive changes

    Remember that JMG’s definition of cause and effect requires that at least part of the causes have to be the same type as the effect. This is why attempts to implement the “worker’s paradise” by top-down brute force never work: a “worker’s paradise” has to come from the workers themselves, without top-down power grabs. Likewise, you cannot establish peace with brutal power: witness the Roman Empire and the farce that was the Pax Romana.

    This is a difficult idea to get one’s head around, admittedly. What I’m seeing currently is a lot of grass-roots efforts that seem to be springing up to accomplish some goals, without a whole lot of national coordination, national goals or whatever. There are some coordination organizations, but they’re not leaders in the sense of having followers whose loyalty the can command. Most of them are left-liberal, but they’re not affiliated with the Democratic Party.

    And most of this is going to be completely invisible to people who have their heads stuck in the idea that you have to have massive organizations that can impose their will on an unwilling populace to get stuff done.

  104. John—

    Not related to the discussion, but I’d like to pass along that I may have gotten my local library to add _Retrotopia_ to its collection, as well. I made the suggestion the other day as I was putting in my most recent ILL requests (oddly enough, my library doesn’t have Butler’s _The Magician: His Training and Work_ in its stacks…) and the librarian said, “Well, we *do* have a bit of 2017 budget left. I’ll put in a request for it and see what happens.”

    So, to everyone, I’d suggest just asking your local library to consider adding a work or two. It can’t hurt and it can do a lot of good to spread some of these ideas we discuss here.

  105. Fantastic article and comments. The United States has gone absolutely mad and I am afraid that it is going to descend into chaos and authoritarianism. I look back to the days of Roosevelt, Truman, Eisenhower and Kennedy and see rational, pragmatic leaders and citizens. The social democracy from that era demonstrated virtually equal benefit for all economic classes, incentive to invest in the system and it worked quite well in my opinion. I don’t understand why that system was thrown into the dustbin and exchanged for crony capitalism.

  106. Hello Mr Greer

    A few years ago I looked into the causes of the collapse of self sufficient rural economies. My conclusion was capitalism was the primary culprit, no great surprise to the world. But in studying I found capitalism has a number of necessary conditions that have to be fulfilled for it to flourish. As these conditions occurred in several places pre the industrial revolution, and actually led to the industrial revolution, they could occur again though to a much more limited extent post the coming collapse.

    1. Concentrated mass markets for the efficient distribution of mass produced goods i.e. large cities.
    2. Cheap long distance bulk transportation of goods and raw materials i.e. canals, ships.
    3. Technology for mass production using economies of scale, which can be as simple as slave labour gangs or Adam Smith’s pin factory.
    4. Cheap heat energy for manufacturing processes.
    5. Cash based economic transactions that enable long distance trade and high levels of specialisation, which in turn create dependency on markets for the necessities of life.
    6. Financial structures for the accumulation of financial capital and the direction of its investment i.e. banks, stock markets and corporations (or in socialist systems the state)

    In the ‘Modern West’ these circumstances first occurred in northern Italy during the renaissance, using wood from the Apennines and Alps for process heat which limited expansion to the renewable crop of wood. Then conditions moved to favour the Low Countries (today’s Netherlands’s and Belgium) in the 16th/17th centuries, using the initially more plentiful peat deposits for process heat, before moving on to Britain in the 18th century with its then vast coal deposits. The invention of the steam engine to initially pump water out of the coal mines became the ‘engine’ for the industrial revolution, coal providing ‘power’ as well as process heat for mass production machinery. Industrial Capitalism took off. Absent any of the above factors and capitalism does not function.

    Four of the conditions are human inventions, but two are not, that of a cheap heat energy source for manufacturing processes, the other is extensive well watered fertile low elevation farm land to support large cities. The ideal is a large river system such as the Po river or Rhine delta enlarged by canals, or Britain’s river ports and cities and ‘sea’ coal deposits. Why did capitalism not take off elsewhere or when? China is the obvious contender, its vast flood plains though kept cheap fire wood from the mountains far away and expensive. As for Rome, I think they took their version of capitalism as far as they could limited as they were to firewood. They had the cash economy, the factory system, financial structures, bulk transport and big cities but they never reached critical mass without fossil fuels, and most of Europe’s fossil fuels were outside the empire anyway.

    At its simplest a capitalist economy could consist of slave plantations supplying bulk commodities by canal to a big city on a delta which uses wood floated down river from nearby mountains for its cheap manufacturing process heat. In an alternate future solar dish mirrors could supply process heat along with windmills to power machinery, with a canal network providing cheap bulk transport to the big city from farms and factories spread across the flood plain. Capitalism I think will be with humanity for a long time, but it will no longer be world wide because it requires specific resources i.e. Liebigs law, and may well occur only intermittently even then due to religious taboos (the ban on usury in Judaic religions) or political disorder.

    Regards Philip Hardy

  107. Simon, fascinating. Thank you for this!

    Oregoncharles, if you have all the means of production owned by all the workers collectively, the bureaucrats who administer the means of production are the de facto owners. Only if the workers in each enterprise own the business at which they work do the workers themselves have any real ownership. The former is socialism, the latter syndicalism. Of course not all syndicalism is anarchosyndicalism; there’s also democratic syndicalism, my preferred form, which combines representative constitutional democracy with a syndicalist economic system.

    Austin, you’re right. Pay off the debts now and no matter what else happens you’re in better shape.

    Sven, excellent. You get tonight’s gold star for adding to the thoughtstopper list.

    Dusk Shine, thank you. Yes, that’s exactly what I was trying to do.

    Lydia, you’re most welcome.

    Phil, there is no one universally accepted definition of socialism. The definition I’m using in this post is one of the many that have been proposed, and I’m using it because it makes it easier to get past the propaganda on all sides and talk about a crucial issue usually obscured by hot air — that is, the ownership of the means of production.

    Mog, if you really don’t want to understand the point I’m trying to make, nobody’s going to force you to understand it. Playing dictionary troll isn’t going to keep me from making it for the benefit of those who want to listen, though.

    Mister N., I find social democracy a perfectly reasonable choice, as it tries — not always successfully — to balance corporate bureaucracy and political bureaucracy against each other. I’ll be talking about some other options next week.

    John, yep. We’ll have to wait and see if the bubble’s popped or if they’re going to start zooming again.

    Patricia, of course. The thought experiment I was offering started from first principles, as I noted, rather than trying to copy the historical reality.

    Dean, excellent! By all means do what you can to get your ideas into circulation. The more diversity of opinion on political economy, the better…

    Eric, I’ll be covering those points in due time!

    Jaznights, yes, and there’s also a class issue. Unrestricted immigration benefits the privileged by driving down the costs of goods and services; it hurts the working classes by driving down wages. Since the privileged dominate the media and the realm of public discourse, you won’t hear the downsides mentioned much!

    David, issues of scale are subtle, and subject to the trim tab effect. A lot of people are highly dissatisfied with the political options currently available to them, and with good reason. That dissatisfaction is also a cause, a very large one! Your task as a catalyst of political change is to identify causes that might be directed to having productive effects, and to use your advocacy to direct them toward those effects — not to cause massive change all by yourself.

    Marcu, that sort of argument assumes that grand abstract universal principles are the only things that matter. Burkean conservatism rejects this. Here in the US — I have no idea whether this or anything like it is true in Australia — we have a well-established custom, long since written into law, of allowing religious minorities a lot of leeway to practice their faiths, even when this involves exempting them from laws binding on others. We allow the Amish to drive their horsedrawn buggies on the roads; during Prohibition, churches could still use wine for communion, and so on. That’s the basis on which I suggested that it was reasonable to allow the conservative Christian minority to post signage on businesses they own asking gay couples to go elsewhere for wedding-related services. That’s specific to religious minorities, so it doesn’t matter two farts in an EF-5 tornado if the same logic doesn’t apply elsewhere.

    Matthias, I never said that fascism was an economic system. I said that it’s a system of political economy, which is not the same thing. I would point out that historically, actual fascist systems had a specific set of economic policies associated with them, and — ahem — those are what I was talking about.

    Kev4321, that’s right. I also didn’t talk about jazz music, Ptolemaic astronomy, and the price of tea in China. Who controls the money system is a different issue from the one I intend to discuss, and that’s why I didn’t discuss it.

    James, theoretically, yes, it would be possible for an institutional arrangement to exist to allow all the workers in a society to own all the means of production collectively, without that arrangement turning into a de facto state. In the real world, by contrast, I give it about fifteen minutes before the right to opt out is effectively canceled and the people who manage the system start acting like a government.

    August, yep. Now we see whether this was the crash, or the downward lurch that so often precedes the moon launch.

    Clay, I also appreciate the Japanese version, but it had plenty of unpleasant imagery of its own! Remember that the Tokugawa era was the heyday of kirisutegomen, the legal right of any samurai to kill any commoner who, in the opinion of the samurai, displayed a lack of proper deference. My discussion of the upside of feudal economics isn’t meant to downplay the other downsides feudalism has!

    J.L.Mc12, well, we’ll see…

    Michael, thank you.

    David, delighted to hear it. Thank you!

    Ace, it got thrown into the dustbin because the rich forgot that the New Deal was the only thing that kept them from being strung up from lampposts. I hope they get a clue sometime soon…

    Philip, and yet there were plenty of civilizations that had the preconditions you list and never got into industrialism. I think there’s more involved.

  108. JMG, a belated happy Solstice and merry Christmas to you, Sara and of course the rest of the commentators.

    I’ll second Sven’s point about definition paralysis and add this excellent bit of Lewis Carroll:

    “I don’t know what you mean by ‘glory,’ ” Alice said.
    Humpty Dumpty smiled contemptuously. “Of course you don’t—till I tell you. I meant ‘there’s a nice knock-down argument for you!’ ”
    “But ‘glory’ doesn’t mean ‘a nice knock-down argument’,” Alice objected.
    “When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
    “The question is,” said Alice, “whether you can make words mean so many different things.”
    “The question is,” said Humpty Dumpty, “which is to be master—that’s all.”

    I finished my Christmas shopping today, and something interesting I’ve noticed is that even though nearly every shop employee who I interacted with was white, nearly every person who wished me a “Merry Christmas” rather than “Have a nice day” or “Happy Holidays” was a person of color. In most cases these were ethnically Indian or middle eastern people with no foreign accent, so I will assume they generally grew up in Canada but their parents didn’t. It isn’t the first year I’ve noticed this.

    Conventional wisdom among professional ‘good people’ would have it that the sort of policies which Republicans refer to as the “war on Christmas” about removing reference to Christmas in particular from our society are necessary to make people like this feel comfortable and safe, and yet I have serious doubts that the average immigrant cares about this stuff. It’s bizarre – imagine living as a white minority in China or India and having Chinese or Indians cancel or sanitize their cultural events on your group’s behalf. I couldn’t imagine many things that would make me feel more humiliated, unwelcome and fearful of a reaction from the locals.

    This all relates to political economy because nobody in Canada – even people of color who are themselves immigrants – is allowed to criticize our immigration policy (the goal is to increase our population by 65 million over the next 82 years) without being called a racist, which is roughly the equivalent of “capitalist wrecker” in 1930’s Russia. Of course, these policies are great for those who enjoy the cheap labor and the higher housing prices.

  109. JMG:

    I’d like to recommend three books to the Ecosophians that have helped me better understand political economy. In no particular order they are:

    1) Dune
    2) Dune
    3) Dune

    The spice must flow sums it up for me!

    Good work predicting this unfolding crypto-crash. Come to the horse track with me if we ever meet?

    I bestow upon you the kenning of Bubble Burster!

    Your predicitive work in economic observation must make Krampus cry happy tears of coal during this most Saturnal beginning of our seasonal lead.

    Take care friend of our mentalities.

    Saturn’s Pet

  110. @Clay Dennis, in relation to “a feudal medical system” while this quote is not from strictly feudal times, it does relate to the last years of Irish “chieftain” society…

    Quote: “what J.B.van Helmont (1577 -1644) wrote in his Confessio Authoris about medical care in the old Gaelic society:

    For I remember the Chieftains of Ireland used each to give a piece of land to a healer who lived with them; not one who came back trained from the universities but one who could really make sick people well. Each such healer has a book crammed with specific remedies bequeathed to him by his forefathers. Accordingly, he who inherits the book inherits also the piece of land. The book describes the symptoms and ailments and the country remedies used for each, and the people of Ireland are cured more successfully when ill, and have generally far better health than the people of Italy.” End Quote

    From this webpage https://www.westernherbalmedicine.com/Western-Herbal-Medicine/An-Overview-Of-The-Irish-Herbal-Tradition.html

    I really like the phrase “not one who came back trained from the universities, but one who could really make sick people well”. That is the kind of thing we are now hungry for, very much including in Ireland!

  111. When we weigh political-economic systems with respect to the amount of bloodshed involved, I wonder whether we overlook something really fundamental: what regulates the absolute size of the population? In our notianal feudal system, each peasant has his plot, which provides for his needs and enough to share up the hierarchy. But what happens when the peasant has two sons? One is the heir. What becomes of the other? If he finds another family that needs a husband, he gets his plot, but if not, there are a few options: he could be a tradesman (blacksmith, clergy, soldier, whatever) who provides service to the community, but there is a limit to the number of people that the land can support.

    Either fecundity must be regulated, or people will die. Whether they die of malnutrition and disease, local violence, or warfare, may be among the choices that political-economies control.

    The limit of maximum-sustainable population is not a fixed number, as it depends on (at the moment) fossil-fuel derived mechanization, fertilizers, and pesticides (as well as benign advances in plant and animal breeding). When the limit is rising, every -ism looks good. When the limit is falling, any -ism looks bad. So, we need to distinguish between the qualities of “good systems in bad times” and “bad systems in good times”.

  112. Just a meta-comment on definitions: People, if you must argue definitions, can you please include citations for your claim? “In my dictionary…” is ambiguous as to whether one is refering to the published dictionary on your bookshelf, or your personal dictionary (in which words mean just whatever you want them to mean). More broadly, meaning varies with time and location, and when we have contrasting definitions, more context might help synhesize a holistic comprehension. If your definitions come from 19th century Spain, and someone else’s come from 21st century Germany, they cannot be said to contradict each other.

    That said, I really don’t want to encourage argument by authority on terms. As a part-time mathematician, I’m comfortable with statements like “let x=3”, and I don’t argue that “Hold on, there. You said that x was 5 yesterday.” Instead, let’s see what follows from holding in mind the idea that x is 3 just now, and see what follows from that premise. So it should be with “socialism is ….” and “fascism is …” Focus on what follows from that premise.

  113. What a discussion; I haven’t popped so much corn in ages!

    I, for one, was happy with your definitions, not because they cover the entirety of each term, but exactly because in doing so you were setting out your stall for the discussion to come.

    Those who want to talk about the means of exchange, money etc, especially if they are of a Christian bent, may appreciate this article about Michael Hudson’s forthcoming book: ‘…And Forgive them their Debts: Credit and Redemption’ 

    https://renegadeinc.com/he-died-for-our-debts-not-our-sins/

  114. Regarding your comments on fascism – the economic side of it worked quite well, that’s why we have that phrase: the trains run on time. FAscists tend to run a tight ship economically speaking. They combine with corporate power but also tell it what to do. Corporations are forced to fit a role, but one that is very profitable. The problem of course was the other side – how they came to power, by attacking minority groups and blaming them for all the problems their societies suffered from, and it is this side that most people identify with fascism today. Most of the 1930s fascists may not have been as expansionist as the Nazis. And if not for that and the war that resulted, we might still have a lot more of them.

    I wonder why you consider social democracy to be a mix that includes fascism. If it because of Bismarck? Fascism does include a welfare state element but I never saw fascism as owning that, though Bismarck was an early advocate of such policies. I don’t see Bismarck as a fascist – he worked under a monarchy.

  115. John,

    Question about Michael Hudson’s book “And Forgive them their Debts: Credit and Redemption” as described in Naked Capitalism – https://www.nakedcapitalism.com/2017/12/michael-hudson-died-debt-not-sins.html. From the interview, does the idea that originally sin often really meant debt in the ancient writings hold water? I have a gut sense this might be correct, but I seen too many modern reinterpretations of history with a partisan slant, like how the Athenians were capitalists and the Spartans were socialists.

  116. david – certainly no prospective political leader is going to get elected, or run, on a platform of figuring out how to wind down industrial society any time soon, that will have to come from civil society. But leaders need to move us in the right direction so that people will be more open to it. But I think these kinds of innovations never start with political leaders. In a free society they usually start from what is considered outside the mainstream. Abolitionists were considered completely nutty at first. So were suffragists. Then they won. The political leaders are dragged along later on. But some leaders can help move us in that direction.

  117. JMG, I just saw something that dovetails with your post, regarding the “prairie populists” I spoke of before. Just out of curiosity, I googled them to refresh my memory, and found this on Wikipedia: (Note the third line)
    “The United Farmers of Alberta (UFA) and United Farmers of Saskatchewan (UFS) were formed by Prairie farmers that rejected party-dominated parliamentary representation **advocated a quasi-syndicalist system of functional representation in a delegate democracy. [5] The UFA governed the province of Alberta from 1921 to 1935.[5]”

  118. Agree with Gavin… been waiting a long time, JM! This post + has been pure pleasure. I consider it a Christmas gift from you to me 😉

  119. According with the economist Mikhail Khazin:

    The present crisis, started in the seveties, is a crisis motivated for the imposibility for the expansion of the markets of the capitalist system. This crisis was posponed by the bankrupty of the socialist block, and the consecuent depredation that It suffered by the capitalist countries. And, in the present moment,the crisis is worsening and it will lead to the end of the dollar and to the end of the global economy.

    In few years Kazhin says that we´ll see the world econmy divided in few economic and monetary zones,relatively isolated , with a population of a thousand million people in each of these.

    An interesting refection of this author is that in those zones the tecnologicla progress will be reverted to standars corresponding aproximately with the 1920.

    Khazin affirms that in the socialist countries the political economy have been studied and developed till the years 1980´s.

    For me this author make the mistaken of to avoid to consider the importance of the oil peak.

    There are an historian , called Andrei Fusrsov , who states that capitalism is a set of instituitions for to restrain the tendence for the maximization of profit of the capitalists firms , with the purpose of garantee his supervivence in the long term.

    Fursov states that this systen of self restriction is in process of dismantling ordered by the same capitalists. In a similar way to wich followed by the nobles during the renaissance who arranged an alliance with the high burgesses for to share the powe

  120. Regarding Ace and the New Deal: In my experience a “mixed economy” seems about the best we are likely to achieve. Trouble is, that being a pragmatist’s solution, it is not ideologically pure and doesn’t please the ideologues. Those laissez-faire fellows are just as much utopians as anyone else.

  121. To David, by the lake;
    To sell LESS, politically, one has to note and advertise the benefits. Benefits of LESS include weight loss, improved relationships with family and others, a less stressful life, etc.

    Thinking of running for office myself, but life is rather unbalanced at the moment, suspect better to wait.

    I ordered one of Salatin’s books on small scale farming as a Three Kings’ Day present to our grown-ups. Looks like a record water year-currently enjoying a blizzard, going to end up around two feet of precipitation this year unless we get slammed again in the next week. Any author recommendations from the peanut gallery here, particularly for arid climates, zone 3-4?

  122. Dean.. I think the major problem is that ordinary folks can SEE no alternative to the current ‘work/shop’ lifestyle…Thatcher’s T.I.N.A. mantra makes sense in a vacuum.

    Plus, effective communication (per successful marketers) requires a ‘picture’ … real or imaginary. IF there were an attractive, feasible, affordable ‘alternative’ that they could actually ‘see’… who knows! I think Occupy’s meme, ‘1% vs 99%’ planted a seed in many folks’ minds that blossomed in Bernie’s candidacy. And I think it was effective because it resonated with the value of ‘fairness’… and values carry much more weight than facts.

    So… do you know anyone who’s working on this…. ? (Well, I suppose there has to be an ‘alternative’ to present…. : ) Looking forward to JM’s next post!

  123. Hi John Michael,

    A happy solstice to you and Sara!

    I’ve been so under the pump this past month that I celebrated the solstice on the day as the sun was setting below the horizon and dark was creeping over the land, but on an otherwise warm summers evening. It was quite nice, but somehow different from day time celebrations and I can’t put a finger on the why of it? Dunno. Is that to be expected? The richness of the celebration becomes clearer with each passing cycle.

    Your essay is a spot on analysis of the crucial failure point. In my professional capacity, I’m seeing that playing out. It is an ugly, but inevitably self defeating (and correcting) business. The thing that troubles me the most about the situation is that people who still have their noses deep into the feed trough are completely oblivious. In fact, I’d have to suggest that they don’t want to hear about the plight of others! I’m very uncomfortable about the scenario that you sketched out.

    Cheers

    Chris

  124. No need to publish this, I think, but, fyi, I also suggested to my library system (King Co)… about 5th biggest in the country!!.. and they purchased Retrotopia. Of course, folks buying it would be best, but at least I can encourage them to check it out, for free : ) (I personally never buy a book I haven’t already at least skimmed.)

  125. In reference to the Japanese form of feudalism, I would note that its stability relied on population control, which in the absence of effective contraception often meant infanticide.

    My take on discrimination by Christian bakers is this: be consistent, enforce all of your morality. No cakes for same sex couples? fine, no cakes for second marriages of divorced people either. And be sure to check for marriage certificates before doing cakes for baby showers; we don’t want to celebrate illegitimate births. Pretty sure that signs announcing that you are an all around bigoted busybody would spare you having to make very many cakes at all.

    I second the notion that the constant bickering over definition should be labeled as an obstacle to thought and discussion. Especially that type known as the “no true Scotsman” argument, which we are seeing crop in this discussion. We see some argue that what JMG defines as socialism is not “true socialism” while systems that he fails to label as fascism really _are_ fascism.

  126. John,
    I honestly prefer the old style of thearchdruid report, when you each week wrote about exacly what you wanted to write about, perhaps steered indirecly by the conversation that occured in the comments.
    I never felt uneasy about lashing out an out of topic question if I had one either!

    The experiment with different weeks and different topics in ecosophia has had an adverse effect on my habit of eagerly pushing refresh every wednessday.

    The structure of the blog and your writing is entierly yours, and I love your work nevertheless, but now is the first time I have ever had something close to negative critique to offer, I feel obliged to share.

  127. @Dean Myerson

    The way I see it, the municipialism you propose in our age has a hard time putting itself into place. The way our technological society functions, there will by necessity be municipalities which own a major part of the productive means. We live in a labor divisive society, and industrial production is as centralized as it is out sourced.
    So these few municipalities will be able to exert enormous pressure on any single municipality when negotiating the terms under which a necessary ( at least today) industrial product is delivered to a single other municipality.

    Of course, municipalities can form a board of municipalities under which such terms are collectively negotiated with the few, rich and important municipalities.
    But then, this board can also exert enormous pressure on any single municipality.

    It actually is what we already have all over.

    In frontier days America, there was plenty of “uncharted” land and the means of control and communication where not developed enough to control the settler families in a way municipalities are controlled today. More importantly, settler families of that generation were still able to feed and clothe themselves off their land mostly, self sufficient lifestyle except for a few tools and such.

    This is also the point; our modern day global society is a centralizing clockwork with the big cogs turning all other small cogs. As long as highly complex products are produced, a highly complex and centralized infrastructure is necessary and unavoidable.

    Only by reverting to lifestyles that rely on local natural cycles rather than global fossil fuel cycles, anything like what you propose is, in my opinion, possible.

  128. Kia ora JMG. Have you ever read Kim Stanley Robinson’s Mars Trilogy? You’ve mentioned him before on your blog, particularly with respect to his novel ‘Aurora’. I only ask because he goes on at length in the novels about the creation and mechanics of a democractic syndicalism as it comes into being on his fictional Mars. Though perhaps the novels might be too progress oriented for your tastes, they also cover the trials of Earth undergoing drastic climate change and social upheaval.

  129. @Darkest Yorkshire
    “Why not just make it legal for people to use what they know in making investment decisions?“

    Because those investment decisions will have consequences which affect other investors who don’t have that inside information. For example, insider trading can lead to stock price manipulation which favors the inside trader (and his buddies) who buy the stock knowing in advance that the price will go up. In the same vein, “disclosure laws“ prevent people knowingly selling defective houses, cars, etc. to the general public who may not be in a position to do costly in-depth checks on hidden defects which are known to the seller.
    In general its the concept of the “level playing field” and why athletic doping is also illegal.

    @Gavin Harris,
    “The problem is that the capitalist fundamentalists are right when they say that someone who is rewarded with the fruits of his own labour will work harder, longer and more profitably that one who works for the state“.

    Sorry i don’t buy this argument. First of all what does “rewarded with the fruits of his own labour“ actually mean? Literally does that mean if I pick apples I get some apples? If I work for a corporation making widgets do I get some of the widgets? If the “fruits of my own labor mean money, a paycheck, then does it really matter who I work for? It could be evil capitalists exploiters or a benevolent state or I could be self-employed, as long as I feel the rewards for my labor are in proportion to the value I put on it I’ll be a happy hard-working worker. As to working longer, well are you personally willing to work 14-16 hour days for no overtime?

    Here in New Zealand in the 50-60’s, the State built houses for low income people which they could rent at reasonable rates and eventually buy. There were gangs of builders who moved around the country building solid, well-built, simple houses with some pre-fab elements. Many of these 60+ year old houses are still standing today alongside houses only 10 years old built by private enterprise that are rotting and leaking to the tune of billions of $’s because of shoddy workmanship and crappy cheap untested materials which originated from “innovative” ideas by some young whippersnapper whiz kid “individual” who never picked up a hammer in his mostly virtual life.
    (A little nod here to Gnat, who really needs to lay off reading Ayn Rand and idolizing the mostly mythical “lone wolf” heroic innovator and prattling on about the only jobs that matter are ones that foster more efficiency and productivity. Gnat, I used to build replicas of antique harpsichords. They didn’t increase anyone’s productivity or efficiency. They weren’t “innovative”. They weren’t “consumed”. They were played for the simple sublime pleasure of listening to great music performed on the instruments the music was written for. But gee, I guess that’s not really good enough. In your world Gnat, I should have changed jobs or maybe I should have been banished to some gulag for “non-productive, non-innovative“ farm-animal-like, half-human, just ordinary folks so all you brilliant, efficient, productive, heroic, individual innovators can get on with your fabulous lives without having to deal with the rabble who just clutter up your plastic paradise, huh?).

    Anyway, there are videos of the above mentioned gangs of builders working for the State, building a better New Zealand where ordinary folks got a chance at house ownership or paid reasonable rents to the State agency who owned the houses. These guys took real pride in craftsmanship, in being part of a team, in the knowledge that they were actually doing something other than building bloated ugly McMansions for rich folks, rather actually contributing something of value to the larger society of which they were an integral part. They certianly thought they were getting rewarded with the fruits of their own labor, and probally many of those workers ended up living on one of the houses he built. Of course that’s all gone now. Its every man for himself and if you can’t be a heroic innovator, then on the scrap heap you go, just like Friedrich Nietzsche‘s worn out horse in the street.

  130. Political economies in a more realistic world might be like ecologies – there could be a lot of them, each integrated more or less within particular location. If you want a peek at a more cheerful human balance and a place that seems to follow pretty much all of the Six Laws, I happened to pick up decades ago now a geographical study ‘Himalayan Buddhist Villages, Eds. Crook & Osmaston (1994). For all I know Ladakh has been modernised since, but judging by many of the questions or theories thrown up in this week’s commentary, we could do with regaining a bit of faith in longer term humanity. A point to remember seems to me that much of agrarian Ladakh is, and always has been, under more than usually severe ecological constraint regarding human prosperity. The other point might be that nobody can be ‘self sufficient’.

    I come from a long line of landless English farm laborers and artisans. The history of ‘landless’ is interesting in itself, but our own family lineages also include the end of the home-weavers’ trade and for one direct laborer ancestor, transportation to Australia. We have also a letter from the 1840s of a Sussex boy who was voluntarily recruited to the Australian outback as a shepherd at a remote place that became known as Lanyon. Chris at Fernglade’s comment (thanks Chris – I liked your Southern Solstice) made me think. Chris seems to be making the crucial step in knowing that this is ‘not-Sussex’, nor even similar – a point that seems to have evaded his country until now.

    best
    Phil H

  131. Hello mr. Greer Happy solstice. I have been reading your blogs for a few years and i am thinking about starting my own blog. I would like your permission to name my blog “the green wizard from Tiel” ( Tiel is the name of my hometown in the Netherlands) I plan to make it bilingual for those who dont speak or read dutch. Greetings and best wishes for the new year. Wilco Bokken.

  132. John,

    I don’t know if you seen, or even are planning to see, the new Star Wars film from the big D. But it has two plot elements that I think merit mentioning on this blog.

    The first is the most shocking – energy limitations! Spaceships running of fuel is a major plot driver. When I saw this, I had flashbacks to seventies popular literature – the last time I can recall something like this being anything but a minor gag in the plot.

    The second is a discussion of the connection between wealth, poverty and empire, which takes place in the obligatory cantina scene, this time an extremely posh and over-the-top gambling hall for the ultra wealthy.

    I don’t know if this is a flash in the pan, or a sign of change. But energy limitations AND political economics together in a Disney film. Wow…

  133. JMG, I’m going to play devil’s advocate here, and question your assumption that people should get out of debt before the next depression hits. (For personal reference, I have no debt and have saved up some money to purchase some land or a house.) For one, I think a debt jubilee is inevitable, given that there is no way all the debt will be paid (national, student, housing, automotive, credit card, etc.) So, given that, why not advise people to go into as much debt as possible buying hard goods like land, housing, equipment, etc., knowing that the banks and companies issuing the debt will go under and never be able to collect? You’ve given the “no debt/get out of debt” advice before, and I’m just wondering the exact reasoning behind it, especially in regards to hard goods. What’s the old saying, “if you owe the bank, you have a problem, but if too many people owe the bank, the bank has a problem,” or some such.
    Now, I know JMG still feels patriotic towards the US, but I don’t, and I’ll explain why. In my mind, the US as it currently exists is nothing but a purely capitalistic, corporate entity, and all the Cold War propaganda about freedom and democracy is just empty and meaningless at this point. The US, as it currently exists, engenders no more affection from me than any other corporate entity, like Chase, Bank of America, Walmart, Costco, etc. Whatever other things the US might have been besides a purely capitalistic, corporate entity has been shed over the years in pursuit of corporate capitalism–as one president famously remarked, “the business of America is business.” It’s always been with us from the very beginning, the Puritans’ famous, “for God and profit”, and anything that ever got in the way of the pursuit of industrial financial capitalism was shoved aside until now, that is the only thing left propping up the US–all others were shoved aside. The biggest threat to the financial industrial capitalist way was the feudal, agrarian, plantation South, which is what the War Between the States was fought over–the South saw the financial industrial capitalism of the North and wanted no part of it, and was willing to fight a war to sever itself from that, and we all know who won.
    Interestingly enough, depressions have become a victim of the Progress meme over the last 30 years. As long as the Greatest Generation were still in places of power, depressions did not occur because of specific, social democratic (New Deal) regulation designed to prevent depressions, but as the Greatest Generation passed off the scene and handed off to the Silents and Boomers, policies changed, and the rhetoric changed to “depressions are relics of the past that no longer happen because we’re more enlightened now and have progressed beyond depressions.” The irony of destitute, Social Securityless and Medicareless Boomers recalling how they rolled their eyes and made fun of their parents’ stories about going through the Depression as they’re going through the next depression will be priceless. What goes around, comes around…

  134. @Pat Matthews,
    yes, the old party system may have been famously corrupt, but at least it was corrupt in a way that the average person could benefit. I could go down to the local precinct, armed with a copy of Robert’s Rules of Order and a basic knowledge of parliamentary procedure, as well as a willingness to work and get involved, and I too could become one of the guys and grease some palms, break some kneecaps, and buy some votes. It may have been corrupt, but it was corrupt in a much more egalitarian way than the corruption of today’s “pay to play”

  135. As a follow up to my comment, the US is still fighting the Cold War, which was a binary of two sides–the US and Capitalism on one side, and the Soviet Union and Communism on the other. Now, the Soviet Union has fallen apart and moved on to other things, but the US is still in late-20th century Cold War mode, and is still a doctrinaire capitalistic society that sacrifices all else to that “ideal”.

  136. @Justin,
    (please see my comment last week) The thing you must keep in mind, Canada’s immigration policy is designed to curry favour w/up-and-coming powers like China, India, and Brazil. You must see it as a diplomatic ploy by the Canadian government. Just as Canadians complained about being the “Americans lapdog”, the immigration policy is all about Canada being the Bichon Frise of the up-and-coming powers–the “multiculturalism” rhetoric is a red herring–it’s all about the diplomacy. If there are sufficient numbers of Brazilians, Chinese, and Indians living in Canada, along with concurrent investment by those countries, then those countries will not allow Canada to go into free-fall the way the US is.

  137. Thanks for another illuminating article. I think I may have stated this in the past, but the main difference between the US is that Congress is bought by big business, so all the laws are passed to benefit them. Here in the UK it is somewhat different in that it is mostly the media that determine the narrative and they are mostly owned by Rupert Murdoch or other business-friendly moguls. Hence the only way that the Labour party could get elected was to embrace the business friendly consensus.

    There is also Patronage as well (mostly Tory) politicians do favours for business and end up after leaving politics on the board of those companies they did favours for. In return big businessmen get CBE’s OBE’s and knighthoods, such as Sir Philip (BHS pension cupboard is bare, but I have 2 massive yachts) Green.

    I am still not sure that the media won’t demonise Corbyn enough to make sure he doesn’t get elected. I personally am still not sure he wouldn’t introduce some version of Venuzuela on the UK. And that doesn’t seem to be going too well.

  138. Shane, I hugely value your role here as a devil’s advocate, but I think you’re quite mistaken about the inevitability of a debt jubilee.

    A heavily indebted person is a person who can be coerced and to some extent controlled by the wealthier folk to whom he is indebted. One of the major probems that wealthy people will soon be facing — I’m certain some of them, at least, have realized this already — is the rise of the unnecessariat: that is, a large mass of people who have nothing whatever to offer the wealthy. not even their labor. Yet the unnecessariat, even if their labor is without value and they have no other wealth, inevitably deprive the wealthy of whatever resources they use to stay alive even under miserable conditions. Moreover, when their living conditions get miserable enough, a large enough unnecessariat also seriously endangers the survival of the wealthy, much as a munitions factory endangers its surrounding community.

    Thus, how to control the unnecessariat, how to disempower it, and eventually how to eliminate it altogether (to kill it off, to be blunt) — that is the hard challenge the wealthy will face very soon, if they hope to survive. But when the unnecessariat is numerous enough, that challenge cannot be met head on. The unnecessariat will always be able to kill, though they die in the process; if they have nothing to lose anyway, then that will seem like a good way to die. So the wealthy will need to be subtle and devious as they meet this challenge.

    Laws penalizing debtors (that is, those who are in permanent default) give the wealthy an obvious and subtle means to divide, conquer and eventually destroy the unnecessariat. I don’t think that those among the wealthy (those among them who are far-seeing) will allow any sort of debt jubilee to deprive them of this subtle tool. Rather, look for increasingly draconian laws against debtors who have no prosepct of paying off their debts.

  139. Simon, thanks for this. I haven’t had time to read the material yet; when I do, it’ll be interesting to see if the author’s notion of what counts as “occult” has anything to do with actual occultism, or not. (The latter’s far more common than the former in alternative culture these days…)

    Justin, funny. As for the issue of immigration, well, of course — the people who own the media and have a dominant role in public discourse all benefit from the impoverishment of the working class, after all!

    Pet, thank you. Dune‘s a good starting place, but remember that Herbert got most of the ideas for that book from studying ecology. Pick up a few good books on ecology yourself and study them closely, and you’re halfway to your Mentat’s certificate. 😉

    Lathechuck, feudal societies by and large have established outlets for younger sons. For example, they go into celibate religious institutions, they become household warriors for a feudal magnate and usually die in battle, or (in medieval Europe) they go on Crusade and generally never come back. Plague and famine take care of any inefficiencies in the system. More generally, though, population issues aren’t specific to any given system of political economy.

    Reloaded, thanks for the link.

    Dean, you’ve misunderstood what I said. Let me try this again, in slightly different words: social democracy includes several of the most popular features also found in fascism, but fits them into the political context of constitutional representative democracy instead. That made it appealing to a great many people, including the wealthy and powerful, after the Second World War. That’s why every industrial nation in the world that wasn’t already socialist embraced social democracy to one degree or another after 1945. This does not mean that social democracy is fascist; it means that they share certain economic features in common. Is that a little clearer?

    John, you’d have to ask somebody who knows New Testament Greek. I know “Forgive us our debts, as we forgive our debtors” is a fairly common alternative to “Forgive us our trespasses, as we forgive those who trespass against us” in the Lord’s Prayer, but beyond that my knowledge does not extend.

    Lydia, fascinating! Thank you.

    Nancy, delighted to hear that you enjoyed it.

    Anselmo, interesting. That sort of neo-Marxist analysis is worth watching, but the lack of attention to resource limits is not a good sign.

    1bigpig, exactly! Pure systems do not work in the real world, but intellectuals find them very intoxicating.

    Chris, Druid ceremonies really do have a different energy depending on when they’re done relative to the daily solar cycle!

    Nancy, thank you, and I’d prefer to put something like this through to encourage others to try the same thing. The King County Public Library System…oh my. I grew up in Burien and Federal Way, you know, and the libraries in those two suburbs — big pleasant brick buildings, products of the Forward Thrust public-infrastructure bond program of the late 1960s and early 1970s — were the brightest havens of a not very happy childhood. I have vivid and happy memories of both.

    Rita, and of course the point of the argument over definitions is to stonewall discussion of who owns the means of production, since in a modern industrial society, it’s the same people in either case. In a capitalist society, the means of production are managed by huge corporate bureaucracies owned by the elite class; in a socialist society, the means of production are managed by huge government bureaucracies controlled by the elite class. Tell me again what the difference is supposed to be…

    Alnus, so noted. I’d be curious if other people have an opinion about this.

    Adam, not yet. I’ll doubtless get to it one of these days.

    Phil, er, Six Laws, or Seven Laws? The Six Laws appear in my first published novel, The Fires of Shalsha, and I’d be astonished if they’re known in Ladakh, much less enforced there!

    Wilco, of course you can. I have no ownership of the phrase!

    John, fascinating. I won’t be seeing it, but that’s interesting to know.

    Shane, I think you’re being hopelessly naive in expecting a debt jubilee anywhere this side of a massive political-economic crisis — and if we get such a crisis, people who are in debt will be in a world of hurt long before the jubilee can be declared. Your argument is like the one used by stock market fans who insist that even if you bought at the top of the 1929 market, eventually you’d still come out ahead. Sure — but you’d have had to get by somehow between 1929 and sometime in the mid-1950s, when your investments would first break even. In exactly the same way, sure, your debts will eventually go away — more likely by means of a collapse in the value of the dollar than by a formal debt jubilee — but you have to get there from here, and “there” is a long way off yet.

    Alex, the problem with Venezuela is that they built their entire system on the assumption that oil would cost over US$100 a barrel forever, and then the price collapsed. It was a dumb move, sure, but socialism doesn’t inevitably have that result. (That’s not to say it doesn’t have its own pervasive and drastic downsides; it does, just as capitalism does; it’s just that what’s happening in Venezuela just now isn’t one of them.)

  140. If I understand this (very readable and engaging) overview correctly, would it be fair to say that some of the more successful capitalists have been those who functioned (at least in their beginnings) with a very feudal understanding of ensuring loyalty through valuable repayment? I’m re phrasing to ensure that I’ve got your definitions well in mind, I don’t speak economics so the comments have been somewhat hard to follow. I can talk at length about micronutrient interactions and heritability of traits and timetables for most profitable breeding of herds based on various preferred harvest times…. But that’s my own personal economics, not Economics, apparently

  141. @Scotlyn – First, I want to sidestep the label “Austrian”; I got a lot of value from what I read from mises.org in the early 2000’s first in helping me process the NASDAQ bubble and likely outcomes and, especially, later in helping me navigate the housing bubble to considerable profit and avoiding all the crash (I got OUT). NO other flavor of economics was helpful (well, Minsky had some value).

    With that said, I have had some disagreements with some of the current leaders in the Austrian movement as they don’t seem to recognize that Ricardo had a lot of premises behind his “Theory of Comparative Advantage” — including (a) factors of production can’t be moved [which might have been somewhat true but is absolutely not true in the “free’ petroleum age] and (b) there are NO government interventions in pricing [when — as any idiot knows — governments, including the US, regard it as their highest duty to molest free trade and pricing…from fiat currency, interest rate setting, minimum wage tinkering, etc.]. Anyway, “free trade” might well work — but it doesn’t exist and citing Ricardo when it obviously is completely subverted on all fronts is absurd.

    But, then, that is a complaint not just against modern Austrians but effectively ALL modern economists who call for globalization in the name of “free trade”.

    The problem with ‘redistribution” is fundamentally that it ALWAYS and pretty much immediately becomes a vector for MASSIVE, MASSIVE, MASSIVE corruption and mispricing of risk.

    History is very clear about that. Please show me even ONE good example of a human society where that hasn’t occurred. Every “worker’s paradise” from Rome to the US to Red China/USSR almost immediately puts in place tiered benefits where the politicians and other connected people get special treatment…and one way or another a massive piece of the flow through “redistribution”.

    I can’t stand corruption on any level. Redistribution (from those who produce more than they consume to those who consume more than they produce) in the hands of “government” is a 100% guaranteed fast-track to corruption of the worst sort…and, by reasonable estimate, something more than 100 million humans were butchered during the last century to try out all the flavors of government redistribution….I’ve seen enough of that evil…. Right now it is going on in the “workers’ paradise” of Venezula; they were partying hard just a few years ago — now they are eating zoo animals and each other.

    Anyway, I’ve seen enough. Legitimate CHARITY (as JMG has detailed in describing the various lodges, fraternities, and churches) used to be how charity was handled locally. Centralizing charity to a government function corrupts everything and destroys the basis of legitimate more local and knowledgeable charities and churches.

    Hopefully that was worth my typing. I can’t stand evil by proxy.

  142. @Scotlyn “You’d wonder why a producer wants to produce in abundance”. Why should painters keep painting after they’ve painted their first picture? Why does JMG keep writing books? Why should contractors keep building houses or farmers farming? Why do parents keep having kids? Why do you get up in the morning? Aren’t these similar questions?

    I’ve got a question for you: What is wealth? In contrast, what is poverty? Which would you rather distribute? How do you propose to redistribute wealth if nobody chooses to produce in abundance?

    Have you read the news from Venezuela lately? Barack was praising them as a workers’ paradise only a few years ago. Now they are killing each other, along with pets and zoo animals, to stay alive. For me, at least, I’m glad some producers choose to produce in abundance; although maybe they won’t want to for much longer.

  143. @Robert,
    I think you’re putting way too much faith in the lack of senility among our elite–by all indications, we are led by a very senile, bumbling elite, but if you have faith in them, there’s nothing I can say. Regarding the unnecessariat, that is dependent on increasing automation and obsolescence of labor, and it’s an open question if we’ve already hit “peak automation” and are entering a decline of automation and labor obsolescence. Certainly, the up-and-coming powers use much simpler, less automated, more effective technologies–take the contrast between the tech heavy, failure prone, buggy stuff US military contractors churn out vs. the more effective, yet simpler weaponry of Russia. Another factor is the replacement of the US$ as reserve currency, which looks likely within a year–it’s an open question how much oil, if any, the US will be able to import once the $ loses reserve status, and automation and labor obsolescence is dependent on increasing amounts of fossil fuels to run all that machinery instead of having humans do the work instead.
    JMG, Robert, debt jubilee and hyperinflation bring up another question: if the US$ loses reserve status, which looks increasingly likely, won’t the Federal Reserve default on the national debt? To me, the only reason we’ve been able to amass such a gigantic debt is because of the $’s reserve status, so I can’t see the debt lasting very long after the $’s replacement, and I’d expect the Federal Reserve to move quickly to hyperinflate the debt out of existence or cancel it by some other means once the $ loses reserve status.

  144. @Dean Myerson – I apologize; I think you are correct that I did a poor job of answering your point about the fundamental supply side vs. demand side forces. “The fundamental economic debate as I see it, is the supply side vs demand side. Supply side says the innovators and investors are the driving force. Demand side sees a thriving middle class as the driving force which makes innovation both possible and profitable….”

    I confess I find myself still puzzling over the question of how to kick-start an economy when I visit rural areas in the US or other countries where there is clearly scarcity in both ability to buy and availability of goods for sale (a slow or impoverished economy).

    I think real wealth in a region or a country ultimately comes from EXPORTING more than you are importing. Otherwise you are just selling to the people who are ultimately selling to you, or you are producing a net IMPORT … as a wealthy person might import from another region to get the goods and services which aren’t otherwise available.

    Someone asked me “What is wealth?” a long time ago and I’ve been thinking about that ever since. I think it is a really worthwhile question which falls into a category as so obvious that few actually stop to think about it.

    Mark Twain In “Connecticut Yankee” pointed out that it isn’t how much money you are getting paid and how much things cost.

    I was attempting to make the point that people have a lot more control over disposable wealth than is commonly thought. I don’t think wealth flow is a zero sum game in a well functioning capitalistic society. There is an ENORMOUS amount of pure waste in nearly everything humans do. Waste is anything which isn’t optimal in a process of doing or making anything and there is always another bottleneck which can be removed or minimized further — and the net result is greater wealth which can…and should…be shared with those who helped make the process or product more efficiently. The ideal, as I tried to say, is a product or process which, in turn, produces more for the person who buys the product or process. That starts a virtuous cycle.

    I think a lot of that virtuous cycle in the 20th century came from stored sunlight in the form of depleting fossil fuels. That is unfortunate — both because a lot was wasted and because a lot of opportunity to optimize was wasted. Information Technology produced another big point of leverage — but a lot of that has been wasted by the bloating of government even faster than productivity improved. So we have a pickle.

    I think the supply vs demand debate fundamentally violates an integral; sort of like Descartes did with his mind-body distinction. To focus on one side or the other in isolation is ultimately not useful. I think EVERYONE should make it their duty to legitimately produce more than they consume, as much as they can, as that is the only way to increase net wealth in the system in a sustainable fashion (the alternative is looting or burning through depleting resources which ultimately is paid for with suffering by your children or their children). Otherwise you end up with an — unnecessary — zero sum game for real.

    The net wisdom of humanity needs an upgrade. I’m trying to make that happen. I suggest we all try harder … or wiser.

  145. @John B
    Sin vs Debt

    The gospels open with John the Baptist baptizing people in the River Jordan “for the remission of sins.” John was not a government who could forgive monetary debts, and baptism is not a bankruptcy proceeding.

    As I understand Christian theology, sin is an actual force that corrupts people on a spiritual level. When Jesus said “your sins are forgiven you,” he was not saying the person’s account at the local money-lender had been paid off. He was doing an effective cleansing ritual of some kind.

  146. JMG:

    Affirmative regarding your suggestion regarding books about ecology! Herbert studied ecology for years while writing Dune right? I heard that he even moved his writing desk into a local sand dune and ate only cinnamon.

    My list of books about ecology would feature in no particular order:

    1)Overshoot
    2) Overshoot
    3) Overshoot

    I’m one of those people who did crawl over rusty scrap metal to get a copy of Overshoot when you advised your readers to do so thirty or so moons ago in an ADR post. Then the dark gods of limits arranged for me to read it in a days-long power outage. What a gift!

    Hot Earth Dreams is a relatively recent title I’ve studied. Check it out Ecosophians!

    And of course your works JMG. I would list them but there is no need and I have already reached the polite limits of being a fanboy!

    Until Again,

    Saturn’s Pet

  147. Well, I live in Federal Way now (71 yo)…. a LOT has changed since the inevitable incorporation. But my childhood was in Rainier Valley and fell in love with the very handsome Columbia City branch. Good times (since we survived : )

  148. I’m sorry, Robert, but having read so much JMG has sharpened my “false god” alarm–whenever I see people ascribing god-like qualities like omnipotence to things that are not gods (technology, Man, Progress, the elite, etc.), it just sets off my “worshiping false god” klaxon…

  149. JMG, like I said, I was just playing devil’s advocate b/c I wanted to understand your rationale for the debt advice. By personal example, I have no debt–but I know that people like Oilman have said that a lot of current debt instruments are so byzantine that in the event of a bubble burst or depression, it would be impossible to suss out who owns what…

  150. JMG
    Oops. I never could count!
    Make it the Seven Laws – I guess Ladakh got them the same place you did.
    Definitely not Shangri-la but cheerful enough for all that.

    very best
    Phil

  151. @nancy sutton – the problem is that people can’t see it first because it is only being created by us. This leads to what
    @labor case said – the municipalist course I’m suggesting really can’t work in a full-on industrial society except at the fringes. This is why the people working on it have named their idea “the next system project” – so almost by definition people will not get to see all of how it works ahead of time. There will be no multiple choice test for what comes next. We have to build it in the midst of crisis and conflict – in order to avoid worse conflict. But for those who accept the underlying theme here that the days of today’s status quo are numbered and the solution is not some Muskian move to Mars or beyond, this seems to me like a plausible thing to advocate for.

    @JMG – thanks for the clarification on social democracy, it does make sense. I find it ironic the Bernie Sanders is a true social democrat and I think no true socialist, but nonetheless accepts the latter term, and I think he has to know the difference. This is what I referred to once before as a tribal ID badge, IMO.

    It’s Dec 25 so I hope everybody has a wonderful day however you are spending it. I’m no Christian but our family still gets together for a good time. So Merry Christmas or Happy Whatever to all.

  152. John Michael,

    I must be lost in a chaos of swirling definitions here, and I thought that Gnat in his argument with Dean missed the point (which is not about abstruse subtleties of supply and demand, but simply that if you’re gonna have a thriving materialist economy, workers have to be paid enough to buy stuff) but when you said:

    “Gnat (if I may), in the real world, economics is always a zero-sum game, because the laws of the conservation of matter and energy can’t be dismissed by economic handwaving. That’s ultimately the thing that makes capitalist economics self-defeating: the delusion of limitlessness that lies at the heart of capitalist rhetoric.”

    You lost me a little. Isn’t it possible to have trade relations that are not exploitative? Or are you defining capitalism as a monetary system of business investment that requires growth? It’s the zero sum part I’m confused about, not the problem of limits.

  153. Shane — In my position as a professor at an Ivy league university I have rubbed shoulders to some extent with our country’s elite over the last fifty years. Even decades ago, when these people were much younger, they did not seem to me to be to be exceptionally intelligent, so aging is not going to make all that big a difference in that respect. What I did see distinguishing the elite from the rest of us was their exceptional levels of ruthlessness and so-called animal cunning, covered (to be sure) by a velvet mask of gentility. These people are apex predators, and the best of them are very very good at predation. And they know what they are, though they would rather die than admit it in public. Of course, only a fool puts any faith in the predators who prey on him. I put no faith in the elite, or indeed in humanity in general. There is nothing more likely to destroy all faith in humanity than contact with “the great and the good” of our nation (or of any nation).

    (What I have relied on, over the years, to counter this disillusionment in humanity is steady contact with “the small and the modest” in my city: the janitors and other unionized workers at my university and at a nearby hospital, the laborers who dig up the pipes under the city streets and then put down new asphalt, the impoverished members of the congregation of a local church serving people of color, a barber who has rarely raised his prices only modestly over the sixty years he has cut hair, and still charges only $17 for a really fine haircut … and so on. These are some of the men and women who nourish what faith I still have in humanity, and I cherish them, or their memory after they pass on.)

    As for the unnecessariat, I do not think that they have been created primarily by the rise of automation, nor does the inevitable decline of automation seem likely to reduce the size of the unnecessariat. The unnecessariat is created primarily by predation, both economic and political. It will increase in size as the apex predators become more skilled in the new modes of political and economic predation that have come into vogue over the last few centuries. And when there is nothing more to be extracted from it, it will be destroyed and eliminated in slow and subtle ways that escape its notice until it becomes to late to resist them.

    And this is where massive debts that cannot ever be repaid become extremely useful to the apex predators. They provide a convenient pretext for the legal measures that are sure to be put into place to, first, disempower the unnecessariat, and second, to eliminate the people who comprise the unnecessariat. The inevitable collapse of the dollar plays right into the hands of the apex predators of whom I have been speaking here.

    Of course, men of good will, such as you and I, can agree to disagree amicably. Time alone will tell which of us has come closer to the truth of the matter.

  154. @Gnat
    Your world view is obviously very different from mine. That is a good thing and i found it very interesting to get a glimpse of your reality.
    However occasionally you do clash a bit with reality.
    A virtuous cycle is “a complex chains of events that reinforce themselves through a feedback loop” [Wikipedia].
    Unless you take the Humpty Dumpty approach, burning through several hundred million years worth of stored sunlight is not what you could call a virtuous circle.

    Another thing is redistribution. You obviously don’t like it, and claim it has a bad track record and it does not fit into your world view, but it works just fine here in Australia. And in every other country i ever lived in.
    But you are entitled to your own little belief system. This is after all a spiritual blog, so many of us here, including myself, have an interest in religion.

    And maybe you could take it easy on the CAPSLOCK. Makes you sound a bit preachy, but that’s ok too.

    However at the very end you said something that was at the same time the scariest, most arrogant and funniest thing i heard in a long time:
    “The net wisdom of humanity needs an upgrade. I’m trying to make that happen. I suggest we all try harder … or wiser.”
    Seriously?
    An upgrade? Like the one that crashed my computer last week? Yeah great, lets do that.
    And you ‘ll tell us how and what to do? Are you the messiah? Great to have you back. Been a while.

    so you have this belief system which has never actually worked in the real world, and you want to create a utopia by getting the whole world to adapt it?

    now, where have i heard that before?

  155. When I was in the Socialist Workers Party socialism meant workers taking over and running society themselves (not expecting it to be handed to them by enlightened rulers), using control of the means of production as the longest lever to do it. The process was supposed to involve a ‘workers state’ but it probably wouldn’t bear much resemblance to what we think of as a state or government. Syndicalism was one plan of getting there, specifically trade unions becoming increasingly powerful until they could take over the whole economy. The SWP regarded it, along with social democracy, as forms of gradualism doomed to fail at the point they pushed the ruling class to the point of armed reaction and would either have to become full revolutions or fall to the counterrevolution.

    On fascist economics, even the people who write about it full time don’t fully understand it. Adam Tooze’s The Wages of Destruction: The Making and Breaking of the Nazi Economy is amazing for a bunch of reasons, one of which is his analysis of the interaction between capitalism and Nazism, but he is clear that we still don’t understand a lot of what went on inside the coal and steel industries in the Nazi era. It may also be of interest to readers here, along with Oil and War by Robert Goralski and Russell W Freeburg, for depictions of what happens to a modern society when it runs out of oil and other key materials. After reading about jet fighters being towed onto the runway by teams of oxen because there isn’t any fuel for the motorcycle half-track thing that normally does it, just hearing a car engine left running is infuriating.

  156. Kind Sir,

    thank you for the reply.
    It makes sense. We need a supply of energy that is for all practical purposes unlimited to play the game we play at the moment. Quite obvious really.

    Now I wonder, when we hit upon the idea of burning coal and oil, did we have a choice at all?
    When an animal species stumbles upon a new pool of resources, it increases its numbers to the new limits. This is just basic population dynamics. In the long run this will lead to all sorts of unpleasantness, but what interests me here is, once we worked out the trick to turn fossil fuels into food, could we have acted differently?
    Could we possibly have decided to not embark onto this ponzi scheme?
    To invest our inheritance wisely (whatever that would mean)?
    I can’t really see how but maybe there were civilisations that faced comparable temptations and made better choices?

  157. @Robert,
    I’m just so taken by how sinister an age the 50s must have been to have left such a sinister outlook upon all the people who came of age during that era. God, a curse befell us, judging by those who came of age during that time.

  158. Dagan, yes, it’s actually quite profitable to be good to your employees — you get better labor force retention, fewer mistakes, more commitment to doing the job well, and a range of other benefits. It intrigues me that so many capitalists lose track of this, and start going out of their way to deliberately maltreat their employees — the behavior of Wal-Mart and Amazon toward their employees, to cite only two examples, can hardly be described in any other terms. I suspect, though I’m not sure of this, that it’s basically a sadistic impulse: power doesn’t have to be absolute to corrupt absolutely…

    Pet, William Catton would tell you to get out there and read at least one other book on ecology! I recommend Odum’s Ecology and Brewer’s Principles of Ecology — there may be newer books out, but those were the ones I studied in college, and they’re solid. Never rely on just one book; that way lies a galaxy of troubles.

    Nancy, my family lived in Federal Way from 1969 to 1973, in the Marine Hills suburb right next to Dash Point Road; I used to ride my bike to the Federal Way public library all the time. I haven’t been anywhere near there for ages, but I still have plenty of memories.

    Shane, the courts can force you to pay a debt even if you claim that you’re not legally required to do so. Remember the Golden Rule; those who have the gold, make the rules!

    Phil H., okay, that’s what I thought, but the notion of Halka and Halvedna in the mountains of Ladakh was just too good to pass up. (As long as there are no battle-drones there…)

    Dean, I think Bernie has realized that the Republican denunciations of “socialism” have created a huge potential market for the first political movement to embrace that label. He’s a very clever guy.

    Onething, a zero-sum game is one in which one person’s gains are another person’s losses. You can have trade relations that aren’t exploitative as long as neither side makes a profit at the expense of the other. Capitalism, though, depends on making a profit — that’s what allows you to build up capital, with which you then exercise control over the means of production — and so, since the real world is always zero-sum except in the short term, capitalism always impoverishes the many in order to enrich the few.

    Yorkshire, as I noted (and will note again), different people use the label “socialism” to mean different things. If the SWP had ever succeeded in seizing power, I suspect all the enthusiastic talk about workers owning the means of production would have given way to the same reality of centralized planning and worker disenfranchisement that every other socialist country has produced, but of course it’s impossible to know for sure, isn’t it?

    I’ve used the Nazi experience with oil more than once in my essays, because it’s a fine example of why you can’t just convert one fuel to another. The Nazis had very large coal reserves, the best coal-to-oil conversion technology on the planet, an unlimited supply of slave labor, and absolutely no qualms about doing whatever it took to keep the Panzers fueled — and they still ran out of vehicle fuel. That shows us that running our current transportation grids on anything but oil is almost certainly not going to work.

  159. On the “sums of the game”: I think we can agree that double-entry bookkeeping is a zero-sum game. Every payment increases one account as it diminishes another account. Call this the “micro-finance” level.

    In finance bove the micro- level, we have debts that require interest to be paid, which seems to require ever increasing sums, but the interest accumulates with the financial elites. (Exactly where the money to pay interest is created is one of life’s mysteries, so I can’t tell whether the game is zero-sum, or something else.)

    Below the financial level, at every moment, I can decide whether to do something more productive, or less. I have the choice to turn time into value, either for myself or for “export”. At this moment, I can decide to take a nap, express myself on a blog, repair a guitar, or fabricate a tool for repairing guitars. By deciding in favor of productive activities, the game (Lathechuck vs. entropy) has a positive sum. I add value to primary wealth to create secondary wealth. (Not to violate the 3rd law of thermodynamics, I’ll say that the sum is “positive, relative to the default trajectory of decline.”) If my neighbors also choose productive pastimes, we may have surpluses to share. If we invest in specialization and improved means of production, our surpluses may grow larger, in which case we have a positive sum game (with the same nod to the 3rd law) within the neighborhood. The trick is to do it without engaging the financial level (and paying interest)!

    BTW: I commend to all the “2017 Year in Review” by David Collum. I found it at the Peak Prosperity blog. Its combination of wit and gloom remind me of “The Great Crash” by Galbraith. You may need to pay close attention to distinguish between his sarcastic humor and the bizarre truth.

  160. @OneThing (though JMG has already responded):

    Alf Hornborg, an ecological economist recommended by JMG before, has a profound definition of exchange (I am just paraphrasing from memory). He says that in the best case (no coercion), each side values what it receives at least as highly as what it gives, and there is no way an economist or sociologist can say they are wrong. My example is exchanging the equivalente of a metric ton of highly nutritive beans for a sweaty soccer shirt signed by Cristiano Ronaldo… However, if you sum up all the exchanges that occur between two parties over time, you can objectively measure if one of the parties consistently gives large quantities of high-energy materials (iron ore, unprocessed food, raw cotton etc.) and the other one gives small quantities of rather lower-energy materials (designer chairs, coffee pads, sweaty shirt etc.). If that is the case (and it is very often the case), then that trade relationship can be objectively called unequal, even though both sides think it is fair.

  161. Shane,

    “I’m just so taken by how sinister an age the 50s must have been to have left such a sinister outlook upon all the people who came of age during that era. God, a curse befell us, judging by those who came of age during that time.”

    Your ageism is becoming almost unbearably tiresome if only because it is rather silly. Just wait and see, should you be granted the opportunity to become older and wiser, how lovely the next couple of generations younger are going to turn out to be. I think you’ll be surprised.

    Was it deliberate that you turned Robert’s small class of elite predators into “all the people” despite how many he named that don’t fit that description?

    You express a constant stream of ill will to a point I find shocking.

  162. John Michael,

    So making a profit (amassing capital) is the problem? Engaging in trade is OK so long as profits are small and remain fairly steady without increase?

    If that’s what you’re saying, capitalism sounds a bit like usury or interest. Long term it can be unsustainable due to increase.

  163. @ Robert Matheisen – That’s a devastating description of the elites, even darker than the worst I imagined. I am strongly inclined to believe it. I appreciate being told with such clarity what I and mine are likely to be up against.

  164. @ gnat

    “I think real wealth in a region or a country ultimately comes from EXPORTING more than you are importing. Otherwise you are just selling to the people who are ultimately selling to you, or you are producing a net IMPORT … as a wealthy person might import from another region to get the goods and services which aren’t otherwise available.”

    A country or region can export non-renewables untl they’re gone, then have nothing left with which to purchase imports. A country can do as some in the Middle East do, and export oil. They can take their earnings and invest in stocks/bonds/real estate, but those investments may peter out after the oil runs out. Most of what they’re invsting in is part and parcel of the fosil fueled economy, though not exclusively. Real wealth, it seems to me, is achieved, in part, by replacing imports with one’s own production then importing something not previously imported. If this can be repeated, many times, a country or region can have a large number of goods and services available, many of their own manufacture, and many others imported with export earnings.

    Of course some things will always have to be imported, such as bananas in Maine.

    There are other factors in wealth creation but import replacement seems, at least to me, one of the most important.

    Historically we placed tarriffs on imports, in part, to make them more expensive so that the process of import replacement could take place. Shortly after the American Revolution it was possbile to buy many manufactured goods from Europe cheaper than the same products made in the USA. W/o tarriffs our industries would never have gotten off the ground. We are almost certainly wealthier for our import replacing than had we simply been content to be a source of raw materials for European manufacturers.

  165. @gnat:
    My reaction to your thoughts about socialism, producers and consumers was rather emotional, and frankly not in a positive way, but instead of responding to what I may have misunderstood, I would like to ask you to simply tell me for the following examples if you consider them producers (P) or consumers (C), assuming that (where applicable) they display common human decency. My apologies if this derails the thread, feel free to delete.

    1. Baby P or C
    2. Healthy 90-year old P or C
    3. Alzheimer’s patient P or C
    4. School teacher P or C
    5. Sumerologist P or C
    6. Judge P or C
    7. CEO P or C
    8. Napoleon P or C
    9. Gengis Khan P or C

    I would also like to know which of the following, if any, are not included under the rubric “socialism”:
    a) Periclean Athens, where citizens received a diet for participating in popular assemblies
    b) Sparta, where Spartiates received a living allowance for being at arms
    c) 7th century Islam, where Muslims received a salary for being Muslims
    d) Jane Austen’s Britain, where gentlemen lived on the yields of their inheritance because they were gentlemen.

    Thank you very much.

  166. @gnat – thanks for your considered and considerate reply. I’ll admit my first comment to you was a hasty and self-indulgent reaction against your choice of words such as “non-producer”… and “re-distribute”. I believe that you are using these words to mean very specific and narrowly focussed things (which may or may not exist to the extent you believe, but that’s another argument), but the words do have much wider application that you intend, and can also be used in darker ways than you likely intend.

    When you ask:

    “I’ve got a question for you: What is wealth? In contrast, what is poverty? Which would you rather distribute? How do you propose to redistribute wealth if nobody chooses to produce in abundance?”

    I will reply that in economics I tend to take the ecological view. I consider circulation systems, such as water through an ecosystem, or blood through a human body. Both of these circulate (or distribute) BOTH wealth AND poverty. Another way to say this is that, so long as they can flow freely, they create balances between one part of the system and another part, by delivering nutrients (wealth) and removing waste (wealth-diminishment, or poverty). Neither the flow, nor the system, are particularly selective in whether the nutrients flow to those parts which produce their own or not, or whether the waste flows away from those parts which produce their own or not. The circulation flows, the individual parts take in nutrients and produce waste, and the result is a continuously flowing RE-distribution of everything, such that balance is achieved between all parts.

    What it seems to me is that with money we have TRIED to achieve a system of circulation and flow which is capable of distributing nutrients to all parts and removing waste from all parts of the system (a “part” in this case being a human being), but our financial technology has mostly failed – partly, though far from entirely, due to these Puritanical, or moralistic, ideas that only “the deserving” should be allowed to benefit from any flow. In any case, the tendency of our money circulation system is toward unbalancing, not towards balancing, which makes it highly unstable, and, to my mind, an ecological (and economic) failure.

  167. There is one thing in the essay that I want to emphasize / repeat: “As a result, capitalist societies are anything but stable; they suffer from savage cycles of boom and bust..” Capitalism in a pure form destroys itself. There is much evidence for this, but that hasn’t stopped the true believers from sticking to the self-correction faith that the modern marketplace fixes itself if just left alone. Every time it has blown up and has been fixed in some form, the true believers say something like, well if only you would have given it more time and left it alone.

    Similarly, People who think we should just abolish the Federal Reserve without any replacement seem to ignore that prior to that the US had a major recession or depression almost every decade during the 1800s. The first government bailout in the US occurred during the administration of George Washington and it was as controversial as the one done by Bush / Obama in 2008/9. Capitalists say they hate bailouts, and they are very unfair on the whole, but capitalism wouldn’t survive without them. They can only be avoided with heavy regulation.

  168. Hi John,

    I was just curious, if as part of your annual predictions, you plan to do any follow up to the solar eclipse chart you cast for the United States back in August? I’d be curious to see your comments on that.

    In any case, I hope these last days of 2017 are happy for Sara and you.

  169. @ JMG & Shane…

    NOBODY owns anything, not in the USA. Because if you do not pay the taxes levied on things you own, then the state will declare you in default, initiate confiscation proceedings, take your property, take what you owe them from the proceeds and then sell your same property to their buddies for pennies on the dollar in a “select auction”.

    If you think you own anything, realize that at every step of these “legal” proceedings, elected judges are easily bought with a few thousand contribution to their election funds. I have witnessed this first hand many times. You may be mortgage free, but you are renting the ‘permission to own’ from government. Not really that much different from being granted the right to farm feudal lands in return for a share of the crop, otherwise known as sharecropping.

    If we were truly allowed to own things, then government would lose the leverage they have acquired with their byzantine tax and legal codes. Which is exactly why feudal lords granted rights to the land they owned rather than give the land away.

    There is nothing new under the sun….LOL The only real difference is perception. And to be honest, the land and trees and streams and fish don’t acknowledge ownership.

    And we are all here temporarily, so no reason to get panties overly knotted up.

  170. @Shane et all

    I am late for the discussion on debt. Please let me inform you how this actually developed in Mexico. I am aware that the US is different, but you will have to use your imagination and extrapolate.

    First, you are under delusion if you think you can steal from the elites. The way the Mexican banks solved the problem of people that cannot pay their debts, – a self inflicted problem, since they were the ones who began pushing credit to people that were not financially sound in the first place, – was that they raised the interest rates for everyone. Here, a mortage costs 9-13% per year, a starters credit card costs 50% and if you have a bleamish record, you will be able to cut it down to 25% in a couple of decades. So, you are not really stealing from the bank, but from your neighbour who’s still trapped in the rat race.

    Second, financial institutions don’t just raise their hands in the air and claim “Gee, I guess this particular note is uncolectible”. Instead, they sell the debt penies on the dollar to some specialized collector company and write off the difference as a loss. These collectors are lawyer firms that specialize on preying on the downtrodden, and they are really good at extracting anything of value from people. They wont break the law (in an overt way) while doing so, but they will harrass you and yours, a fave techinque of them is to try to collect from family and friends, under vague threats and unenforceable charges that are then “waved off” as a sign of goodwill. And in the few cases where they fail, they just sell the debt down the road at an even cheaper rate, to the kind of loan sharks that do actually break fingers and stuff like that.

    Third, if you specifically get loans in order to stockpile valuable goods and services, you put yourself in an undefensible position. If you are show to own anything of value, your creditor can claim ownership of your goods at a below market valuation, and then you are out of your stockpile and still in debt.

  171. Robert & Shane
    Terrific discussion. Robert, your description – the smiling recurrent ruthlessness in a not very intelligent academe, will linger in memory!
    But the ‘unnecessariat’ is something else. The slow destruction has been ongoing for a while now.
    best
    Phil H

  172. @onething,
    well, if this were blogger, I would’ve deleted that comment. I think there are generational “blind spots” that each generation has, and my reference to the 50s was more of whatever sort of dark magic come over us at the time–maybe it was all the a-bombs going off in the Nevada & Kazakh deserts? It’s just the one thing that comes through loud and clear and makes me wonder, “what was going on at the time that it seemed to blacken so many souls?” Same thing w/the fragility of most of the kids coming of age and the way they seem to spontaneously fall apart so easily. You’re just left thinking, “What the %&^^$% is going on?” And the 50s and early 60s must have been something dark to have generated such a rebellion/rejection in the late 60s, early 70s…

  173. @Shane:
    Good of you to start this inter-generational thread. You need to hear it like it was from some of my generation, and I’m happy to hear how it is for you.
    As a “baby boomer” born in 1944 in L.A. of 1st generation immigrant Jewish parents who went through the depression, growing up during the cold war and then Vietnam (I managed to not get drafted and that’s a good story), I have tell you, my outlook on humanity in general is not positive!
    When I was about 6 my mom called me from playing and sat me down in front of our little B&W tv and together we watched footage of the liberation of Buchenwald by US troops in 1945. This was the first time this footage was shown to the general public. At that time, there was still a great deal of positive feeling in the USA about “how we saved the world from fascism“, we were the “good guys”. After the doco finished, my mother looked me in the eye and said “Just because this is America, don’t think it can’t happen here”.
    Well in the next 25 years I watched all those ideals I grew up with, freedom, democracy, social justice (my folks were members of the American Civil Liberties Union), gradually go down the drain. So yes, I’ve got a big black outlook. Just a big dose of Reality mate, and it ain’t getting any better. Of course many of my contemporaries just rode the wave of prosperity and didn’t look back or give it a thought. Needless to say, I don’t hang out with those folks…

  174. Political economy isn’t dead, and actually is flourishing in some unexpected places. My alma mater, one of the more conservative small liberal arts colleges in America, has offered a major in political economy since 1946. In my day (1978-83) the chair was an avowed Marxist, and the program was (and still is) considered one of the most challenging the school offers.

  175. I know you have a PayPal link, but have you considered a Patreon account? I’d love to support monthly.

  176. The polarity you’re describing I’ve seen show up in modern mythology as a protracted conflict between bureaucrats and aristocrats (also fascism and feudalism) – does it seem likely to you that public opinion will continue to swing between the extremes you describe for some time yet? And if so, does it seem feasible to harness this momentum to build more syndicalist systems in either direction?

    I ask because I’ve been quite taken with predictions of a ‘new feudalism’ recently, and my instinct is to try and catch such a wave – but I also see dangers to aligning myself with a movement that aims past what I believe to be the golden mean, even if I think it’s in the right direction for the moment.

  177. John,
    This a bit long, for which I apologize, but I do hope you will read on, I am not trolling or evangelizing.

    Definitely enjoyed and greatly appreciated your article ‘An Introduction to Political Economy’ because
    I agree it is one of the more important things to be discussing, as you say “we need to pay attention to the thing that conventional economics systematically ignores—the mutual entanglement of political power and economic wealth—and that requires us to revive a science that has been dead and buried for well over a century now.” And because it is not a field of study at any university.

    I would however like to share with why I think the “science” that needs reviving is monetary science. Monetary history informs the study of Political Economy because it is the history of power. Further, I think within the study of Political Economy, it is the monetary system that they (the private banking industry that rules monetary policy) do not want people to see. As Henry Ford said, “It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” Even a fascist can tell the truth. However, it is difficult to talk to people about the monetary system because the mandatory schooling system leaves it out. Poeple seem to have been conditioned not to look at it as if it were Medusa, perhaps “its so simple it repels the mind.” as J.K. Galbraith said.

    As with Political Economy, Monetary Science is huge so it takes time to test the assertions against what actually happened. However we can with a robust exposure of the history actually see what happened with different monetary systems.

    History reveals that with the advent of civilization the King/Priests figured out they could replace money (which previously had been a sacred way to acknowledge the human debt to the Great Mother archetype) with credit, debt money, systematically enrich themselves without having to do anything. This is usury, the abuse of monetary authority for personal gain. Jesus, Plato, Aristotle, Dante and most great thinkers condemned the practice. It was regarded a great sin, “the anti-art,” “an extraordinarily efficient form of violence by which one does the most damage with the least amount of effort.” Usury money concentrates wealth systematically, requires constant growth and drives predatory competition. Despite some notable challenges to the terrible slavery and ecological destruction of usury, it has dominated the history of civilization.

    One challenge to the rule by the wealthy usurers was in ancient Greece when, thanks to an enlightened elite name Lycurgus, Sparta claimed its sovereign right to issue its own money for the public benefit and banned the use of gold or any other precious commodity as money. It created a prosperous economy for all for 350 years using virtually worthless brittle bronze for its currency. The was called democracy and it was the beginning of monetary science as Aristotle noted, “Money exists not by nature but by law.” The system was studied and copied by the Roman Republic who also created a prosperous broad-based and stable economy for 400 years until Julius Caesar changed their money to gold and Rome began its decline. Both eventually succumbed to the assault of those commanding vast amounts of gold and silver wealth.

    Another significant challenge to rule by the wealthiest was the American Revolution. England had succumbed to the usurers conquest, the capitalists then operating out of Amsterdam had funded the dark prince’, William of Orange, to invade England in order to gain their private control over England’s monetary system. So England was then ruled by their newly founded private Bank of England who refused to allow the colonies their own currency. The colonies figured out after much experimentation how to do it themselves and discovered monetary science, the hidden truth about publicly issued money, and also created a prosperous broad based economy. The Capitalist owned Bank of England stepped up its ban on colonial currency, sending troops to enforce the ban which eventually led to the war.

    The colonists financed their revolution by issuing their own money, the Continental which financed all but the last 6 months of the 6 year war. But despite winning the war militarily the power struggle that ensued ended with the nation losing the war monetarily. It was as Salvador Allende said of his own revolution, “We won the revolution but we did not win the power.” BTW Adam Smith bought into the commodity theory of money and supported the then private Bank of England model. The power to rule is the power to issue money, without that a government has no power except to serve those who do issue the money.

    So, publicly issued money created the nation and then later also saved the nation from dissolution when the global financiers engineered a civil war between the north and south and refused to lend money for it unless power was relinquished to them. So to save itself our government allowed public money to be issued which became known as the Greenback. After it saved the nation by financing the war, progressive movements among farmers and workers demanded more Greenbacks be issued for public works like roads, utilities, hospitals, schools and libraries to create over 4 million jobs. These were the demands of Coxey’s Army, the largest protest at our nation’s capital at the time. That struggle raged up until 1913 when the fraudulent FED was created, a privately controlled central bank with a government sounding name. The bankers bribed university professors, clergy and Congress to support their proposal and have exploited the structurally flawed debt-for-money system to the detriment of all ever since and it remains the system we have today.

    The so-called Princeton Study on government influence, based on 20 years of data, pretty well proved that we are ruled by an oligarchy. It also showed a massive inequity in the distribution of wealth and it showed that the key factor for power over public policy is money. It also gave a breakdown on the money among 6 major industry categories, pharmaceutical, agribusiness, energy, finance, defense and communications. Over just 5 years, the 200 most politically active companies in the U.S. spent $5.8 billion influencing our government with lobbying and campaign contributions.

    Those same companies got $4.4 trillion in taxpayer support – earning a return of 750 times their investment. What it didn’t show was that not only was government dependent on the finance sector but so were all those other industries, all with significant debt to the financial sector. So the banks not only lend the money, they create the money, and thus make the whole economy and polity entirely dependent on them. They have “the upper hand” over everyone else; industrialists, unionists, media, and politicians. It’s a hidden hand too because of the hidden fact that banks create money when they make loans and destroy it when the loans are repaid. Thus, the entire money supply is rented from the banks; they’re the ultimate rentiers, not landlords, not industrialists. The landlords and industrialists are all in debt to the banks too.

    Opponents, even some who claim to be progressive, when such history, law and scientific facts are brought up, yell “conspiracy theory.” Unfortunately the facts are that our history is full of conspiracy, often conspiring openly, and to ignore history is antithetical to science. Science depends on history, it is observing what happened. We all witnessed usurious abuse when the big banks were bailed out while the people and hundreds of small banks were not.

    Many people have been taught to believe that our government issues all our money and that when banks lend money it comes out of savers deposits, neither is true. Government does mint the coins and print the bills but issues only the coins as money which it sells to the banks at face value reaping the “seigniorage” which is the face value of money minus the cost of its production.

    However, government sells the bills it prints, regardless of their denomination, for the mere cost of production to the banks so that these private institutions can reap the seiniorage, the profit from issuing of our money. However, all this money is just the cash in the system which only amounts to about 3% of the money. 97% of our money is just numbers run up in electronic ledgers created and issued as debt by private banks when someone takes out a loan. Banks do not lend depositors money to borrowers, this never happens.

    Money is created simply by key strokes, immediately increasing the net assets of the bank. However, only the money for the principle of the loan is created, not the money required to pay the interest. The money to pay the interest must then come from the principle of other loans because that is the only way money is created in this system. This is true for governments, corporations, small businesses and households who must borrow money into existence. As the loan is paid off the principle money is extinguished which helps maintain a false scarcity of money.

    One can easily see why we have such an intensely competitive economy with everyone trying to pay the interest on their debt when there is not enough money in the system for everyone to do so. Furthermore interest is often compounded, interest on interest, exacerbating the problem. When a person or business cannot pay and must default on their loan the banks get the real wealth collateral backing the loan of money that was created out of thin air.

    We can now begin to see the systematic concentration of wealth that our current system causes by creating economic losers. It is a parasitic system and with the corporate externalization of costs has put most of humankind into a parasitic relationship with our planet Earth. Instead we need to restore a our natural symbiotic relationship with Earth.

    The big industrial corporations are linear wealth extracting systems for this wealth concentrating monetary system and the corporate debt is much larger than the public and household debt combined. These industrial corporations funnel huge sums of money into the big banks.
    Control of the money creation process also gives them considerable control over who, where and for what money is created and spent which gives them tremendous power over public policy as the Princeton Study shows. For instance, the banks apparently do not want to lend government all the money necessary to provide us with a public healthcare system.

    The Communist/socialist experiments suffered due to using the same debt-for-money system as the capitalist nations. Due to the considerable psychological consequences of usury money that alienates people and retards cooperation. Anarchistic Socialists in Europe and the US have a history of being used as tools of capital in derailing labor and monetary reform movements. It comes out of an ignorance that has held democracy, and socialism for that matter, at bay for generations. Like Marx their belief in the defunct commodity theory of money totally misses that money, especially bank-credit money, is itself a force of production comprising both the means and social relations. That is money is not just socially produced but is a social relation itself. Socialists tend to ignore the central feature of capitalist power.

    And regarding Dean Myerson’s suggestion of municipalism, the story of Wõrgl Currency story of 1931 or so demonstrates how publicly issued money can work astonishing well at the local level. http://www.lietaer.com/2010/03/the-worgl-experiment/

  178. @JMG, I actually had no idea of the extent of the storm of well-written posts my own posts would create. You said “Gnat (if I may), in the real world, economics is always a zero-sum game, because the laws of the conservation of matter and energy can’t be dismissed by economic handwaving…” I – and I should think many others – would appreciate an essay laying out better your logic for this position. My first counter to your statement is a question: does a syphon or a lever not better everyones’ world? And isn’t that non-zero sum? Conflating physics and economics is like conflating mathematics and “art”. From a philosophical foundation isn’t that a logic error of some pretty fundamental type? While freely engaged in trade CAN externalize harm to a system, or can become a racket if one person uses special knowledge in an unethical way, your statement is categorical…you are saying “always” and you don’t generally use specific words without specific reasons, in my observance.

    At home I am a permaculturist. I try tp PRACTICE permaculture and grow a significant portion of my own food. At work I am a “Lean” engineer, trying to remove bottlenecks and other wastes in production processes (the goods are going to be manufactured anyway; I reduce waste. I also practice NLP to remove limiting beliefs, reduce conflicts, and generally help people get what they actually want with more clarify and less friction.

    How is this zero sum? I strive to make EVERYONE involved in my “transactions” a winner and I try pretty hard to not misuse special knowledge in order to make this happen. Generally, everyone gets what they were going to get (or trying to get but stymied and frustrated) and has more time and energy and generally satisfaction than if we hadn’t had a transaction. Or I am blind. Please enlighten me.

  179. @jmg Pretty much every time I post something I look back and see typos and things I wish I had said better; your writing skill is truly a marvel. I want to be clear I understand the laws of physics reasonably well – entropy of a system is always increased, even in the process of making something local have less entropy (produce a desired result). But, again, did you make an error in conflating physics and economics — or is there a much deeper rabbit hole you care to take us down? I’d sincerely appreciate clarification and I think the blog (and maybe even world peace:-) would benefit from that.

Courteous, concise comments relevant to the topic of the current post are welcome, whether or not they agree with the views expressed here, and I try to respond to each comment as time permits. Long screeds proclaiming the infallibility of some ideology or other, however, will be deleted; so will repeated attempts to hammer on a point already addressed; so will comments containing profanity, abusive language, flamebaiting and the like -- I filled up my supply of Troll Bingo cards years ago and have no interest in adding any more to my collection; and so will sales spam and offers of "guest posts" pitching products. I'm quite aware that the concept of polite discourse is hopelessly dowdy and out of date, but then some people would say the same thing about the traditions this blog is meant to discuss . Thank you for reading Ecosophia! -- JMG

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