Poor old Lord Keynes. The world’s press has spent the past week blackening his name. Not intentionally: most of the dunderheads reporting the G20 summit that took place over the weekend really do believe that he proposed and founded the International Monetary Fund. It’s one of those stories that passes unchecked from one journalist to another.
The truth is more interesting …
Archive for the 'Global economics' Category
Keynes is innocent: the toxic spawn of Bretton Woods was no plan of his:
Oh New Zealand, what have you done? Roger Douglas on election night fantasising about the mandate he thinks he has:
We have to make some changes and there’s going to be a lot of hurt for a lot of people.
What a cheek, coming from the scoundrel who lied his way into government in the eighties, unleashing an economic revolution without a democratic mandate, selling off New Zealand’s resources and devastating our democracy by stripping away government control over the flow of capital, effectively handing over the keys of democracy to private investors who can choose at any time to sink the country’s economy by moving capital out of the country if government policy is not conducive to their “business needs.”
Simon Bowers reported yesterday that Wall Street bankers are to take $70bn in bonuses this year, 10% of the U.S. government handout. It’s a mistake, however, to blame the financial meltdown on bankers and their greed. These people are simply following the rationale of the capitalist system: take as much as you can, irrespective of the expense incurred to others.
If you think it’s scandalous to take such bonuses, especially in the current climate, as I do, then blame the scandalous framework they work within, not them for working within the framework.
I got talking to a homeless guy on the street the other day. He joked to me about how meaningless this crisis is to him, and while the current situation could make his predicament far worse I took his point: for a large number of people on this planet—about 80% of the population—capitalism is perpetually in crisis. Every day. What makes this a “crisis” is that a large portion of the other 20% are getting fucked too.
One of the most anti-democratic and destabilising features of global capitalism is the lack of control governments have over the flow of capital and corporations; capital and corporations freely move to wherever profits are highest, costs are lowest and governments are most fearful of the way global markets will react to their policies.
So if the people of a country happen to vote in a government that implements policies largely for the benefit of the people rather than largely for the benefit of private investors and their profits, market traders will move capital to some other economy offering an environment more conducive to “business needs,” in the process inflicting devaluation, inflation and unemployment. Government policy, therefore, ends up being formulated under a grotesque framework whereby profits are sacrosanct, trumping all other considerations.
The assumption underlying all this is that the market knows best, probably one of the most damaging of ideas of our time. In fact so damaging that it could render the planet uninhabitable.
Noam Chomsky has a piece in the Irish Times today that goes into a little of the history of this in light of current events. Here’s a little taste:
Bretton Woods was the system of global financial management set up at the end of the second World War to ensure the interests of capital did not smother wider social concerns in post-war democracies. It was hated by the US neoliberals - the very people who created the banking crisis writes Noam Chomsky
Financial liberalisation has effects well beyond the economy. It has long been understood that it is a powerful weapon against democracy. Free capital movement creates what some have called a “virtual parliament” of investors and lenders, who closely monitor government programmes and “vote” against them if they are considered irrational: for the benefit of people, rather than concentrated private power.
The United States effectively has a one-party system, the business party, with two factions, Republicans and Democrats. There are differences between them. In his study Unequal Democracy: The Political Economy of the New Gilded Age, Larry Bartels shows that during the past six decades “real incomes of middle-class families have grown twice as fast under Democrats as they have under Republicans, while the real incomes of working-poor families have grown six times as fast under Democrats as they have under Republicans”.
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Participatory economics, an economy proposed as an alternative to contemporary capitalism.
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