Nash Taylor, Indie Economist.

"Life imitates art far more than art imitates life" (Oscar Wilde, "The Decay of Lying - An Observation")

I'd bet you've met someone similar. Usually young, seemingly exuding self-confidence, hugely ambitious and with an ego to match; their aspirations, however, always seem to wildly exceed their capabilities. You know, too much bubble for so little bubble-gum.

But let's leave aside young post-modern macro economists, slash philosophers, slash journalists, slash writers. Enter Nash Taylor, the fictional "lead singer of Sydney indie outfit Boy-Crazy Stacey":

"For years now he's worked hard at emulating his rock heroes - he learned the licks, developed a swagger and pulled on the ridiculously tight jeans. But for all his attempts to look like someone who just doesn't give a damn, he's self-conscious, anxious and a raging control freak. In short, he's a nerd with a cool haircut."

Written by Josh Mapleston, who also played the role of Nash, the 2010 TV comedy / drama miniseries I Rock had a short and not particularly distinguished life. That was unfortunate, as the series, ironically a bit of an indie project itself, had an excellent premise (and one viewers will recognize quickly) and Mapleston and the cast performed more than adequately.

All in all, a very decent first attempt.

Here is a short video interview with Mapleston:

The show is freely available, for a limited time, on ABC's iView website.

----------

"For Nash, nothing is ever his fault, especially not the total obscurity that plagues his band. He's not sure what the problem is - is it his bandmates? The booking agents? The idiots at the radio stations? What he doesn't realise is that it's not really any of those things. Nash's biggest problem is himself."

Another Year...

Source

What a Difference a Day Makes.

November 26. John Aziz warns us: "humanity is engaged in an epic battle against fast-adapting and merciless predators" (Link)

"Why the post-antibiotic world is the real-life version of the zombie apocalypse
"The perverse economics of the antibiotics industry means the human race could be in trouble"

So, there you have it: markets are perversely ushering in a post-apocalyptic, post-antibiotic world.

----------

24 little hours later…

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November 27. John Aziz, always the creative soul, channels Ronald Reagan's ghost against Pope Paco (or Pancho or Chico, for Latin American readers):

"Hey, Pope Francis: Markets are the solution, not the problem
"Capitalism gets a bad rap from the new pontiff"

After Subjectivism (the very most bestest idea ever in economics, bar none), Aziz says, the markets are, like, mega-awesomeness embodied:

"This doesn't mean that markets are perfect systems, or that they are the end of history. But the historical record suggests that states charged with vigilance for the common good should establish market economies." (Link)

----------

So, let me quote my own notable: Whiskey-Tango-Foxtrot-Bang-Query-Bang-Query.

The Michael Jackson Strategy.

"Keep your distance, Chewie, but don't look like you are keeping your distance". Han Solo to Chewbacca.

Consider this situation: blacks and other ethnic/religious minorities are discriminated against in mostly white European/North American countries. For some reason, white people in these countries feel a deep, automatic and irrational aversion towards people who look differently.

If you faced that problem, what should you do?

Simple! Bleach your skin and hair, go to a plastic surgeon; dress like everybody else. All this should make you look less different, and, hence, more acceptable.

In other words, you do like Michael Jackson did: you give up being black and become white.

----------

Although this may be just wishful thinking, I hope most readers would find the previous suggestion lies somewhere between the "obviously ridiculous" end, and the "just plain offensive" end: after all, if one's mere existence disgusts someone else, surely, the solution cannot be to change one's appearance or habits?

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In a way, something similar happens to Marxists. I'm sure the reader has witnessed this: someone mentions the words "Marx", "Marxism", "socialism"; in an almost Pavlovian reaction, all sorts of disparaging comments pop up: the bell sounds and the dogs start barking.

So, what should socialists do?

For one, there is the democratic solution: to defend, argue and reason one's position, hoping -- perhaps against all hope -- that someone will believe the truth. It's not an easy solution. In fact, it sucks: it requires patience, courage and dignity; it's hard, it's tiresome and, at times, maddening. And, in spite of all your efforts, you may still fail. But that's how democracy is supposed to work.

Is there another solution? I can see none; but then, maybe I'm not clever enough.

Some disagree. There is an easier solution, they say, and propose this:

"However the fact of the matter is that Marxism, like Anarchism and even Socialism, are tainted words in the minds of the electorate. Those terms will have to be abandoned.
"A clear win for the PR machine of Corporatism indeed, but that's the dirty fight we are in." (Neil Wilson, see comments here)

So, no, according to Wilson, you don't need to defend your position. You don't argue or reason, either. You just shut up. This much is clear: that's a much easier task.

In the spirit of Han Solo's quote, deep inside you could even remain a socialist; the only thing required is not to look like one.

Above all, you don't use those "tainted" words, ever; never mind that by doing so you proclaim victorious "the PR machine of Corporatism".

In other words, you follow the Michael Jackson strategy: you accept and internalize repression and play by its rules. You give up looking black and try to look white; not out of being ashamed of being black, but to bamboozle the racists into accepting you.

Likewise, as a socialist (indeed, a cryto-socialist), you give up even the word "socialism"; but you do this for a higher purpose: to lay the foundations of socialism.

Ingenious, isn't it? (!?).

And you pray you fool those around you, because, hey, that worked out very well with Michael. And you become a mainstream politician, the kind who lies and makes of the word democracy a bad joke. 

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It's a sad day when cowardice, madness and self-inflicted repression is seen as wisdom and realism.

Inequality: Bits and Pieces.

[A]

Mark Thoma (h/t David Ruccio) and Chris Dillow have had very interesting things to say about what shapes people's views of themselves and their place in our increasingly unequal society.

Dillow doesn't come up with any answers of his own ("Now, I say all this because I'm confused, and I suspect many others are too"), but just to bring the subject to his readers' attention is already a contribution.

Curiously, though, Dillow frames the question around the notion of "preferences", while quoting from Amartya Sen:

"The deprived people tend to come to terms with their deprivation because of the sheer necessity of survival, and they may, as a result, lack the courage to demand any radical change, and may even adjust their desires and expectations to what they unambitiously see as feasible. (Development as Freedom, p63)".

So, my question is: what "preferences" have to do with people accepting a fait accompli, as depicted by Sen in the quote above?

Thoma, on the other hand, does have a more concrete hypothesis (and one that sounds quite plausible):

"This social stratification leads those at the top to begin imposing [and maybe even believing themselves] a virtue and vice story to justify their desire to stop paying the taxes needed to support social insurance programs [which they don't need]. Those at the top did it all by themselves. They 'built that' through their own effort and sacrifice with no help from anyone else."

----------

Still on the subject of inequality.

I've been reading "Battlers and Billionaires", by Andrew Leigh. Leigh, who has researched Australian inequality, holds a PhD in economics from Harvard (Kennedy School of Government), is a former economics professor from the Australian National University and currently is a Labor MP for the seat of Fraser (ACT).

Leigh did his homework compiling statistics for this book; there is no doubt about this. This is the highlight of the book.

Leigh also attempts to provide an explanation:

"One of the issues I'll discuss in this book is how the very rich make their money. Are they benefitting from hard work or a breakthrough innovation? Or are they earning what economists call 'rents'?"

In this he is much less successful. His explanation sounds contradictory.

At times Leigh attributes certain individuals' fortunes to economic rent and sheer luck:

"One way to see it is to compare Gina Rinehart with her father, Lang Hancock. … Is Rinehart really 190 times more ingenious than her father? Not by her own account. … In explaining the vast wealth difference between Hancock and Rinehart, it's hard to ignore the tenfold increase in the world iron ore price since 1992, delivering economic rents to Rinehart that her father could only have dreamed of".

But then, in chapter 4:

"In this chapter, I will discuss the big factors that drive these differences across countries and changes over time. These include technology and globalisation (which have combined to create 'superstar' workers), union membership, taxation and education".

So, what gives?

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From the Cloud Atlas soundtrack (with a reference to Bach's Toccata and Fugue in D minor):

Image Credits:
[A] "Pyramid of Capitalist System". Public Domain. Author: Industrial Workers of the World. Wikipedia.

Liberals' "Ethnic Brain"

Being myself an "ethnic" person, I empathize with failed "Liberal" candidate Andrew Nguyen. I feel his frustration. I swear.

Nguyen lambasted the Liberal Party for lacking an "ethnic brain", after being forbidden to speak to the media:

"I was not allowed to talk to anyone, I was told to turn off my phone.
"When the party restricts me, it is very hard for me to win. You have to earn the respect of every individual in the area. I didn't do that." (See here)

Nguyen claims to have "been hindered by party rules that barred him from speaking freely to the media in the wake of Jaymes Diaz's difficulties".

Another "ethnic" background person unsuccessfully running for election with the "Liberals", Diaz was considered gaffe-prone and -- apparently -- could not be left alone with the media, without embarrassing himself.

Worse still, they could embarrass the Coalition as a whole, which is unfair to all those non-gaffe-prone, "non-ethnic" background candidates, who can be trusted with the media.

After all, people like PM elect Tony Abbott's record on that matter is spotless… Whoever said the "suppository of all wisdom" doesn't work?

----------

While I sincerely empathize with Nguyen, I feel no sympathy for him.

Every "ethnic" person in Australia knows racism, xenophobia and elitism may not be generalized among Aussies, but are not unknown (and, believe it or not, I am speaking of both Aussies of "ethnic" and "non-ethnic" backgrounds).

And, in my experience, racists, elitists and bigots tend to be attracted to the Coalition, like flies tend to be attracted to crap.

If Nguyen, Diaz, and the other unsuccessful "ethnic" "Liberal" candidates didn't know that, it was time they learned the truth.

Consummatum Est.

Or, shit happens...

Yesterday Australia went through the Australian federal elections.

Depending on where you stand, you could say that was a big deal, that a brand new government will be formed.

My own perspective is much more modest: not much really changed.

But, how can that be? How can a government possibly change, without things changing much?

Simple. Let's just remember the new Prime Minister's name… His name is… huh… just a second… Tony Murdoch? No, sorry. Ah! Tony Abbott:

Tony Abbott. [A

The former Prime Minister was called what? Rupert Rudd? No! He was Kevin Rudd:

Kevin Rudd. [B

This is what happened: after 6 years, the Australian plutocrats sacked one prime minister and replaced it with another. They evaluated the performance of Kevin Rudd and the ALP and were not happy with it; so, they decided the "conservative, centre-right, libertarian" LNP and Tony Abbott would be given the job.

In short: Rudd and the ALP lost, Abbott and the LNP won.

Other than a few faces, surnames and acronyms, things did not really change for the plutocrats. They feel they must be at the top of the "natural order of society"; and, well, they remain there. Sure, they invested some money in the guise of donations, they forced their journalists write propaganda material; some will recover their investment and then some; others will lose some pocket change. Not a big deal, really.

(source: www.macrobusiness.com.au)

The individuals directly affected would see things differently. For them, the election result is the biggest deal. Ask Rudd, Abbott and their closest associates. For them it's a matter of making more money, a chance to further network, a welcome addition to their CVs. More importantly, they think they made it to the top and joined the elites: didn't they win/lose? As long as in their heart of hearts they acknowledge their real masters, those who put them there may even play along for a while.

----------

How about people like you and me? Are the elections' results entirely irrelevant?

It depends, largely on the still inconclusive Senate results. If Abbott and his Coalition achieve majority in the Senate, things could could get real bad, as we've seen overseas (this is my personal guess, for what it's worth). Otherwise,  it could get less bad. Your guess is as good as mine.

This is what the "great Australian democracy" is all about: you are free to vote in order to elect among representatives of the elites. A dictatorship of the bourgeoisie, either an "enlightened" one or a brutal one.

----------

Incidentally, the elections' results did not surprise anybody in Australia. They were eminently predictable. You could see it coming with the unavoidability of a Greek tragedy.

So, dear readers, whenever you hear universal specialists on everything and more saying that human behaviour is infinitely variable and unpredictable, you know that is, strictly speaking, bullshit.

And yet, you also need to acknowledge something: elections' results depend on the actions of individuals. That is, your actions and mine.

So, inevitability does not leave us off the hook. We, together, could have avoided it.


Image Credits:
[A] Tony Abbott in 2010. Author: MystifyMe Concert Photography (Troy)
Source: Wikipedia. File licensed under the Creative Commons Attribution 2.0 Generic license.
[B] Kevin Rudd. 16/01/2013. Author: Eva Rinaldi Celebrity and Live Music Photographer
Source: Wikipedia. File licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license.
My usage of the files does not in any way suggests their authors endorse me or my use of the works.

Internet Filter: Gospel Truth?

"The statements that need to be taken absolutely as Gospel Truth are those carefully prepared, scripted remarks" (Tony Abbott, 7.30 Report, May 17th, 2009)

After the Coalition's stunningly embarrassing backflip on mandatory (?) Internet filtering, one day before the election:

"The Opposition document on enhancing child safety online said an Abbott government would force mobile phone operators and internet service providers (ISPs) to install filtering services to block adult content.
"But in an embarrassing blunder, Coalition communications spokesman Malcolm Turnbull promoted the policy on triple j's Hack, before quickly backtracking." (See here)

One is reminded of the flexible and tenuous relationship between the Coalition's statements and the truth:

Now, it appears, not even "carefully prepared, scripted remarks" can be taken as Gospel Truth.

Brace yourselves for unpleasant surprises...

See also:
Herndon, Colbert and Abbott, or, the Recession we Didn't Have to Have (here)
Chronicle of a Death Foretold (here)

Game of Seats.

or Thank you Rupert Murdoch, but Australians can choose their own government


Two messages from GetUp!

... And This is Oz's Next Treasurer!

Overseas readers already met the next Australian Prime Minister.

And this was Joe Hockey, the next Aussie treasurer ("conservative, centre-right, libertarian"), a few years ago, when he wanted to sell the image of a nice guy:

Since then he shed both some kilos and the image of nice guy, replacing them with the persona of Very Serious Person, as befitting the father of Australian austerity.

----------

Each and every one of these guys is furiously anti-socialist, pro-capitalist and fan of entrepreneurs.

Cloudspotting.

[A]

I don't know about you, but Cloud Atlas seemed to me the kind of DVD to rent only if no better alternative was available. Luckily, the day I rented it, there was nothing else.

Moreover, I had not read anything about it -- which was fortunate, too -- or indeed the 2004 novel by David Mitchell which inspired the film. So I can say I watched the movie without prejudices.

It is an ambitious film. You can tell by details such as its length (165 minutes), cast (including Halle Berry, Tom Hanks, Hugo Weaving, Susan Sarandon and Hugh Grant) and by having three directors (Andy and Lana Wachowski and Tom Tykwer).

Its ambition, however, goes much further: the plot spans over four centuries, starting in an unidentified Pacific island in 1849 to end in another (apparently Hawaii). Indeed, counting a brief prologue and epilogue, the story both starts and ends beyond our planet.

The narrative is divided into six apparently separate episodes, developed in a highly non-linear fashion. In a particular case, for instance, the story of the fast-food restaurant slave-worker Sonmi 451 is told by her, while awaiting execution and presented in flashbacks, interspersed with fragments from the other stories.

[B]

Visual and verbal cues, often subtle, appear, in order to link these episodes, resulting in a larger continuity. Sometimes these cues work flawlessly; sometimes the result is less smooth.

In particular, the more well-known actors, which often play more than one role in the overall story, performed adequately. However, as their roles vary in age, race and gender, many very familiar faces end up wearing make-up, at times to a dubious effect.

In any case, the narrative contains references ranging from the mystical to the materialist and should provide reason for reflection to viewers of a more thoughtful nature.

This brings us to what must be one of the highlights of the film: the performance of South Korean actress Bae Doona, who plays the above-mentioned Sonmi-451, in a dystopian 2144 Seoul.

In spite of the limited screen time allocated to her story, 33-yo Bae's character metamorphosed from a mass-produced worker, indoctrinated to obey, serve and fear her oppressors -- literally a well-behaved child by design -- into a heroic figure of rebellion and serenity in tragedy, displaying at equal parts dignity and courage; the kind of character who deservedly becomes a legend.

This may sound silly, but I could not avoid being misty-eyed with Bae's unforgettable performance, nothing short of exceptional.

While this is a visually impressive film, to me its visual aspect comes only fourth, after the script itself, Bae's outstanding work, and the movie's very inspired soundtrack.

Composed by Tom Tykwer, Johnny Klimek and Reinhold Heil, the soundtrack deserves special reference. Directed by Kristjan Jarvi and performed by the Leipzig Radio Symphony and Choir, the soundtrack, on the basis of a shared motive, incorporates layers corresponding to the different epochs covered by the story, providing a musical link unifying the narrative, without overdoing the basic motive.

It's not surprising Cloud Atlas has attracted polarized reviews. As my description may suggest, this is not an easy film and it shall demand the viewers' attention.

Cloud Atlas is well worth it. 

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While we still can, maybe we should try cloud spotting.


Image Credits:
[A] Source: Cloud Shapes in Blue Sky - Italian Sonnet.
[B] Source: Book review: Cloud Atlas, by Karen Tay.
[C] Source: Cloud Atlas, by Michelle McCue

John Aziz on Subjectivism: Das Mudpie!

John Aziz (associate editor, Pieria: profile) on the subjective theory of value (STV) and why it, in his estimation, is "the greatest idea in the history of economics". (Like... wow!)

Aziz:

"This [i.e. individually differentiated needs] leads to variations in price - different people are prepared to pay different prices for the same good or service based on their own need or want for it. While open markets and free exchange give a level of order to this process - quote prices, and moving averages - ultimately markets are moved by individuals' subjective valuation process, and the negotiation process." (See here)

So, in Aziz's estimation, two main things determine prices: individuals' subjective valuations, mediated by markets.

Having established his initial position, Aziz proceeds then to compare the STV to its theoretical rival: "The subjective theory of value's chief rival - the labour theory of value [i.e. LTV] advocated by David Ricardo, Adam Smith and Karl Marx - is deeply problematic".

And what are those deep problems? "The great trouble with this is the notion of a real (or fundamental, or intrinsic) price. Prices are just functions of market participants' decisions."

That is, for Azziz, the LTV is "deeply problematic" because in it prices are not determined by individuals' subjective valuation, mediated by markets, as in the STV.

In other words the LTV is deeply problematic because it is not the STV. Case closed. Aziz advances no other reason. For instance, doesn't claim the STV to be more empirically accurate.

So, one could be tempted to ask why the rather obvious fact that the LTV is not the STV is such a troublesome thing?

The only reason Aziz hints at is this: in Aziz's estimation "the subjective theory of value is the greatest idea in the history of economics"! Starting with the premise, the conclusion is the premise itself: the cycle is complete! No more reason is required.

Aziz's personal estimation is the rule to decide whether something is problematic or not. Take that, Ricardo, Smith and Marx!

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While I myself find the invention of sliced bread a greater thing than the subjective theory of value, even among rabid anti-LTV people, particularly among some PKers, the notion that "individuals' subjective valuation, mediated by markets" determine prices is considered bogus.

----------

I'll be honest: I have nothing personal against John (somehow, at this moment, to address him by his first name sounds friendlier, and I am trying to be nice: you hear me, Chris?); and I have no wish to antagonize yet another young, up-and-coming, philosophically-minded writer, interested-in-economics, UK blogger, so, I'll leave things at that.

In particular I will not comment on his (to me, already strangely familiar) rather vague reference to Nietzsche and Kierkegaard. Moreover, I will not comment on the "counter examples" he proposed (particularly the extremely unfortunate Mudpie one), even at the risk of disappointing the good folks of Kapitalism101!

Meet the Next Aussie PM.

I haven't written much about Australia, lately.

So, dear overseas readers, meet the incoming "conservative, centre-right, libertarian" Australian prime minister, Tony Abbott:

See also.

The best possible example of meritocracy in action!

Update:
16-08-2013. It didn't take long for an update! Australia will give the flick to 32 thousand asylum seekers already here.

As we are in a budget deficit crisis (OMG, OMG), to solve it, Abbott will cut corporate taxes, for the common good. Yes, dear reader, believe it or not, Abbott re-discovered that wonder of economics: the "trickle down".

Although Abbott said the Goods and Services Tax will remain unchanged, he also announced a tax reform commission whose job is to recommend what taxes should be changed. Among the taxes to be evaluated is the GST.

And however dead, cremated and buried, a WorkChoices by any other name would smell like shit. And something definitely smells bad.

Keynes and Hayek: Yin and Yang.

Commenter 1: "It is simply misleading to lump in social democrats and socialists together. There are no similarities between them."
Commenter 2: "This appears to me correct. I think Hayek et al were more concerned with worker control over anything else. It followed from their understanding of economics -- and their lauding of the entrepreneur.
"Social democrats - especially Fabians - had and have a tendency to be elitist (Keynes is a classic example of this). They have a distinct - and I feel, correct - distrust of the masses running their own economic system democratically (through collective, Soviets, syndicates etc)." (see comment thread here)

The quote above is real.

I'm sure readers will find huge inaccuracies in that comment. For starters: the statement that there are no similarities between social democrats and socialists. Historically, it's hard to imagine a greater nonsense. Further, currently the terms "socialism" and "social democracy" have become practically interchangeable. Which is quite unfortunate, for what little is left of the socialists.

But that's neither why I reproduce that quote, nor is online ignorance any news.

[A]

What caught my attention is that, if you look past the unapologetic asininity, you'll actually find two interesting facts in that comment.

Firstly, it reminds us of something many lefties prefer to ignore: whatever else they were, Keynes and the Fabian "social democrats" (as Commenter 2 would have) were indeed elitists. Commenter 2 is right on that. Paul Samuelson, for instance, also said that Keynes (like Bertrand Russell) "was an elitist exponent of the middle classes" (see here)

In that sense, Keynes and the Fabian socialists were no different from "Hayek et al".

Whatever differences Hayek and Keynes had in a number of areas (and I am not implying these differences were unimportant), they both shared something fundamental: a belief that there is a natural order to society, a necessary social hierarchy.

It just so happens that in said hierarchy, they and their peers were at the top; and the rest of us at the bottom. For them, that's how things are and that's how they should be.

Theirs is a hard job, but someone's got to do it...

As Commenter 2 put it:

"I think Hayek et al were more concerned with worker control over anything else. (...) They [i.e. "Hayek et al" plus Keynes and the Fabians] have a distinct - and I feel, correct - distrust of the masses running their own economic system democratically (through collective, Soviets, syndicates etc)."

Note very carefully now: Commenter 2 is speculating about the reasons Hayek and Keynes had for their "concern with worker control". They weren't concerned because they thought worker control was inherently totalitarian and there was no democratic alternative to an elitist society. No. They, like Commenter 2, knew that worker control was a democratic alternative.

The problem, according to Commenter 2, is that they distrusted that democratic alternative. They did not approve of it: "They distrust of the masses running their own economic system democratically". And Commenter 2 feels it, it is correct.

The perceptive reader may oppose that, strictly speaking, the passage above is only Commenter 2's guess about something he cannot possibly know with any certainty (i.e. Hayek and Keynes' intimate reasons to be anti-socialists), and that it says more about Commenter 2's fears and bigotry than about Hayek and Keynes'.

This is where I indignantly reply to the perceptive reader: "How dare you! Commenter 2 is a serious, responsible intellectual!"

Just kidding! I'll say: "My point, precisely".

Commenter 2 was expressing his own class prejudices, and trying to make them look acceptable by hiding behind Hayek and Keynes (and you wouldn't dare arguing with them, would you?). In reality, he detests socialism because it is intrinsically anti-elitist: it is democratic.

Commenter 2 sees himself as a member of the elites: his own approval is relevant to evaluate Hayek and Keynes on this ("and, I feel, correct").

----------

Whatever the reasons Hayek and Keynes had to be anti-socialists (and I wouldn't rush to dismiss Commenter 2's opinion on that) we are left with two opposing visions of how to manage a hierarchical society on behalf of the elites.

Corey Robin, in a recent essay, which I urge you to read, argued that for Hayek freedom is conditional on property and is proportional, in a way, to it; in Hayek's "liberal government" one class commands, while the other is free only to choose between obeying or starving. That's one end, the Hayek's yin, in the Hayek-Keynes hierarchical society continuum.

Paraphrasing Joseph Weydemeyer: a dictatorship of the bourgeoisie, and a particularly brutal one, at that.

At the other end of the Hayek-Keynes continuum it's Keynes' yang: a "democracy" where the same propertied few are still in command, and the same majority still needs to obey; the big difference is that now, during economic downturns, the enlightened few will not allow the deserving majority to starve, provided that majority accept their betters' God-given right to rule.

Still a dictatorship of the bourgeoisie, but an "enlightened" one: you will be spied upon, to make sure you are deserving. Guantanamo Bay, "enhanced interrogation" and "selective targeting" will only happen if you fail to prove yourself reasonable, trusting, meek, and stupid enough (i.e. "trustworthy") every day.

Blessed are the meek...

----------

I've gone through one of the two interesting facts in that quote. What about the other?

You'll have to take my word for it, for I am not interested in controversy with Commenter 2 and his kind (and if this sounds contemptuous, that's intentional), but the fact is, that quote comes from a blog popular with MMTers, Post-Keynesians (or PKers) and sundry lefties (plus their customary sparring buddies from the Austrian blogosphere).

Commenter 2, as it happens, is a well-known "online" PKer, one sharing an almost medieval, Austrian outlook on class and society. It takes all sorts, I guess.

Let me be crystal clear: with this I don't mean to put all Post-Keynesians, particularly respected professors, in the same bag with Commenter 2. I am convinced many PKers (not only scholars, but also their more serious online following), would sincerely disown those views. I suspect many rank-and-file PKers will be surprised with the connection.

Further (and readers must understand this), those comments do not devalue Post-Keynesian theoretical insights.

So, having explained what I don't mean to do with this post, I must explain what I do mean. I am warning my readers to a risk: the risk of assuming that the label "Post-Keynesian" is synonymous with progressive or liberal, or - worse error - with socialist or democrat.

It is not. It will never be. To use a statistical metaphor: there may be a positive PK/progressive correlation, but correlation does not imply causation.

By extension, the application of some otherwise interesting PK insights, like MMT (insights that exceed Keynes' in scope, btw), could improve our current situation, but could also be used to further the class domination of our masters. This and no other is Commenter 2's goal and in this I believe he faithfully follows Keynes. So, with all due respect, I'll remain skeptical on PK ideas as long-term solutions.

Nor should socialists/Marxists harbor undue illusions about progressives and liberals, however genuinely wise and well-intentioned (and I'll repeat this: there are many who are indeed wise and well-intentioned).

Here I'll urge you to read a very important essay by Bhaskar Sunkara (editor, Jacobin magazine), from where this passage was extracted:

"Liberalism's original sin lies in its lack of a dynamic theory of power. Much of its discourse is still fixated on an eighteenth-century Enlightenment fantasy of the 'Republic of Letters,' which paints politics as a salon discussion between polite people with competing ideas. The best program, when well argued by the wise and well-intentioned, is assumed to prevail in the end. Political action is disconnected, in this worldview, from the bloody entanglement of interests and passions that mark our lived existence".

[B]

In that quote, again you see the yin and yang of elites discussing our future, while the rest of us watch humbly from the sidelines, always mindful of being polite, reasonable and moderate, never radical, socialist, or what's the same, "fanatical" (God forbid!). Children should be seen but never heard.

Sunkara's views are not the Bible; but he does make some good points.

Update: I've changed my mind (29-07-2014) and added a link to the post where those comments appear.

Image Credits:
[A] Duty Calls. Source: xkcd.com or here
[B] Yin and Yang. Author: Klem. Public domain. Wikimedia.

Mark Harrison and Whig History.

Or, Picking and Choosing the Past to Shape a Better Future.

"Whig history (or Whig Historiography) is the approach to historiography which presents the past as an inevitable progression towards ever greater liberty and enlightenment, culminating in modern forms of liberal democracy and constitutional monarchy." (See here)

I hate this kind of polemic, I really do and I try to avoid it like the plague. Regrettably, I'll have to make an exception this time.

Mark Harrison (Professor of Economics, University of Warwick, contributor to Pieria, profile) wrote two typical TINA articles (i.e. "Liberal capitalism isn't perfect", but the alternative is necessarily a "nightmare": so, shut up, quit complaining, and stick to Liberal capitalism, link, link):

"At one point I thought of calling this blog 'Alternatives to Capitalism: the Search for a Red Herring' (a 'red herring' is something that doesn't exist but people look for it anyway.). But I realized that would have been wrong, because alternatives to capitalism have actually existed. The problem with the alternatives is not that we cannot find them. It is that the people who went searching for them fell into a dream and woke up to a nightmare."

Normally, I'd leave that be. Frankly, while I am a communist, I am not in the business of whitewashing the crimes of Stalin, Ceausescu, Mao, Pol Pot, Honecker and their likes. I'm just not their defense attorney. If the idea is to judge them in the court of history, my role shall be as a witness, not as a lawyer.

But Prof. Harrison is not acting as a prosecutor only: he is advancing his own view of what's best for the future. Prof. Harrison is also acting as a salesman for "Liberal capitalism". And that's his prerogative; but I, for one, won't buy it.

So, I'll allow myself a few comments to explain why. Basically, because I have a very good memory and I do read newspapers.

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The first thing about the Harrison pieces is that, in reality, they do not compare capitalism with socialism: they compare a very selected bit of 20th century capitalism with all of 20th century socialism. But capitalism is way older than that: Prof. Harrison, an economist, should know that.

Further, Prof. Harrison disowns Nazi/Fascism as non-liberal. What exactly is the difference between the liberal and the non-liberal flavours? Aren't "entrepreneurs" motivated by profit in the liberal version? Don't they own wealth? Can't they fund election campaigns and bribe bureaucrats with that wealth? Can Prof. Harrison show one example of historical liberal capitalism?

At any rate, Nazi/Fascism was no alternative to capitalism, as Prof. Harrison claims: Nazi/Fascism was really-existing capitalism. IG Farben, Siemens, Volkswagen, Deutsche Bank, Krupp, Lufthansa and even Hugo Boss (to name just a few big German corporate names, leaving American, Swiss, French, Swedish and Italian firms out of the story) have many reasons to be grateful to those guys. Search for Monowitz (aka Auschwitz III).

But even if we arbitrarily and conservatively limited capitalism to what came after the Industrial Revolution (leaving, therefore, the mercantilist period out, with the extremely bloody colonization of the Americas), excluding the unsavory Nazi/Fascism bit, he should account for part of the 18th century and all of the 19th: but he didn't mention the Irish Potato Famine of 1845-47 (largely under Sir Robert Peel's Whig government!), nothing said about continental Europe, or the Indian Famines (under British capitalist rule!); he didn't mention the neo-colonialism in Africa or Asia. Why not?

What about the depressions during the 19th century? The Great Depression, the 1970s stagflation, the Latin American debt crisis, the Asian crisis, and the Russian default? I know that people have short memories, but Prof. Harrison didn't even mention the current global recession, for Christ's sake!

And what about the bloody repression during the 1848 European Revolutions, weren't they carried out by non-communist governments? And 1871, during the Paris Commune?

I can understand Prof. Harrison not knowing about South America. That's an "arcane" subject, so I suppose only specialists know about it, and although he delves in history, he's no historian. Fine. So he never heard about the Paraguayan War, when British and European interests pushed Argentina, Brazil and Uruguay to crush Paraguay, which was industrializing.

I'd say the American Civil War should be a less arcane topic. But he doesn't mention, either, the behavior of the Union and Confederacy. Does he mean it was up to scratch or that those weren't really capitalist governments? Not a word on the Indian Wars, the Boer Wars or the Boxer Rebellions.

Prof. Harrison says he doesn't know how many people the Imperial Japanese Army killed in China. Fair enough; let me give him a hand. The Chinese government claims something like 20-25 million people, in China alone. Is that figure good enough, or will he suggest some revisionism?

Maybe Prof. Harrison should try a Google search on the names Vietnam, Laos, Cambodia, Algeria, Mozambique, Angola, Namibia, Indonesia, Zimbabwe/Rhodesia, Congo (both Brazzaville and Zaire), Sierra Leone, Kenya, and actually, pretty much all Latin America. In each and every single one of these countries we had either anti-colonial wars against a capitalist metropolis, a war against a capitalist racist government or a capitalist government waging war against workers and peasants.

Okay, that was long ago. But Prof. Harrison doesn't even mention Afghanistan and Iraq! He is an economist, so geography is not his forte, either; okay. I could point these places in a map for him, so that he can be sure those places actually exist.

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The second thing I noticed is that Prof. Harrison does not include the whole of really existing capitalism: he considers capitalist governments, only.

But, what about the private sector? No mention whatsoever, which is kind of strange for a liberal. I mean, to forget the private sector????

No reference to organized crime, for instance. But if someone could claim to embody the ideal of the Randian entrepreneur, as I said elsewhere, is the organized crime capo: they actually fight the government, like, with weapons and bombs! What about the Opium Wars and the Colombian and Mexican drug wars? The American mob? If their motive is profit and they sell stuff, aren't these, by definition, entrepreneurs?

No reference to Bhopal, or Deep Horizon, or Dhaka or to fracking; nothing about financial fraud (from John Law, to Charles Ponzi, to the S&L scandal, to Banco Ambrosiano, to Enron, to Bernie Madoff, to Goldman Sachs' "shitty deals", to LIBOR fixing).

What about the narco-right wing Latin American dictatorships, a la Manuel Noriega? The very definition of private/public sector partnerships: the police/army kill trade unionists, the bosses lower wages and, with the savings, pay the cops kick backs.

In Guatemala alone, 200 to 300 thousand people were murdered, largely under the government of general José Efraín Ríos Montt, who was convicted of genocide but let go free. Of Ríos Montt, U.S. President Ronald Reagan said: he is a "man of great personal integrity". Incidentally, the notoriously violent Mexican drug cartel Los Zetas was founded, among others, by veteran Kaibiles, former counter-insurgency troops under Ríos Montt.

What about the United Fruit Co. (creators of banana republics), or the mercenary armies; the Dearborn (MI) massacre, or the Battle of Mount Blair (WV); Standard Oil. Did Prof. Harrison ever hear about Major General Smedley D. Butler (U.S. Marine Corp.):

"I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers".

What about the right-wing 1970 narco-cup in Bolivia, when Klaus Barbie was an advisor to the putsch, as he once was to the CIA in the hunt for Ché Guevara?

Has Prof. forgotten about Augusto Pinochet's Nazi links? I mean, wasn't Pinochet the good dictator, the Liberal one? Surely, he remembers Friedrich August von Hayek and Milton Friedman?

Okay, Prof. Harrison forgot all that. We are all human and memory is fickle.

What about more recent cases: the murder of African and Latin American activists ordered by Royal Dutch Shell and Coca Cola? Did Prof. Harrison ever hear about sweatshops and Foxconn? What about the blood diamonds and arms dealing, and people smuggling, trafficking and slavery (currently some 20 million worldwide, they say). Isn't that the private sector at its most authentic?

And the latest: organ trafficking!

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Either Prof. Harrison has a penchant for understatements ("Liberal capitalism isn't perfect"), some serious memory problems, or he has never read a newspaper.

In any case, he should really try a better sales pitch: there's no way that I'd buy into "capitalism", in either of its varieties (really-existing or fairy-tale). And that's my prerogative.

How about you?

Carlyle on Heroes.

Or, an Exercise in Literary S&M

Quarter-plate daguerreotype
of Thomas Carlyle (1848). [A]

Today I finally decided to have a look at Thomas Carlyle's "Lectures on Heroes, Hero-Worship and the Heroic in History".

I'll admit it: I haven't read the whole thing, yet. So, my first impressions, which follow, may be unfair. If so, I guess I'll have to apologize and I'll be glad to.

With the caveat in place, and for what it is worth, here is my opinion. It's hard to say what is more appalling in "On Heroes": Carlyle's shameless sycophancy, his literary style or the sheer length of the writing (137 pages in Word, single space, Times New Roman 12).

Carlyle finishes with:  

"Our last [Hero, with capital H: i.e. Napoleon], in a double sense. For here finally these wide roamings of ours through so many times and places, in search and study of Heroes, are to terminate. I am sorry for it: there was pleasure for me in this business, if also much pain. (...)"

At this early stage of my reading, I suspect Carlyle is right on that: this will be a painful exercise (although so far I haven't found any hint of pleasure); and, a long way before finishing the "Lectures", I am already feeling sorry.

Image Credits
[A] Quarter-plate daguerreotype of Thomas Carlyle (1848). Harvard University Library. Author unattributed. Public Domain. Wikipedia.

Krugman on Inequality: Salsa Version.

Prof. Paul Krugman, who doesn't need any introduction, has written a lot about inequality (see here for a brief, partial and already dated overview).

Except from praising inequality, Krugman has adopted pretty much every other position in the spectrum. Starting from the belief that inequality was a statistical curiosity and a matter of individual preferences and morality (back when in 1992), to his own ideas about how inequality influences U.S. politics (in 2002), one could discern a kind of general progression in Krugman's thought on inequality.

Well, one could discern that pattern until Thursday, July 25. That day, from being avowedly anti-Keen, Krugman, commenting on Obama's speech, became a Minskyite:

"The president came down pretty much for what we might call a Stiglitzian view (although it's widely held): debt was driven by rising inequality. The rich were taking an ever-larger share of the pie, but not spending to match, while working Americans took on ever more debt to make ends meet.
"What's the alternative? Minsky" (See here)

And not just that. Now, inequality is back again to be largely a morality play:

"Personally, I'm more of a Minskyite than a Stiglitzian, although not 100%; although things like subprime lending were, I believe, mainly about forgetting the past, Elizabeth Warren's old work on bankruptcy pretty clearly shows that at least some families took on excess debt as a result of rising inequality. But I'm inherently suspicious of any story that makes economics a morality play".

Reading Prof. Krugman, I can't help but remember the salsa song:

Un pasito pa'lante, un pasito pa'trás

Tankus, Marx and Ireland.

Skibbereen, by James Mahony (1847) [A]

Nathan Tankus (INET profile, student and research assistant at the University of Ottawa) explains the two notions of surplus population, as applied to Ireland during the Great Potato Famine of the 1840s:

"According to the Malthusians (as seen by Marx) absolute overpopulation [i.e. absolute surplus population] means that there are too many people no matter how society is organized. In contrast, Marx argued that the starving, under/unemployed and emigrating were only superfluous 'relative' to the demand for labor by Capitalists, rentiers, (especially in the Irish case) Landlords etc. [i.e. relative surplus population]". (See here)

Leaving aside the question of the degree of the catastrophe, Tankus quite correctly draws a parallel between the events in Ireland then, and now. I'd extend that to Southern Europe.

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But let's explore the theoretical matters in a little more detail.

According to Malthus, the supply of means of subsistence was, to all practical purposes, more or less constant, while population's demands increased much more rapidly, due to natural population increase.

Eventually, even without a fall in production (or employment), demand would exceed supply and prices would rise beyond labourers' reach: employed or not, a part of the population would lack the wherewithal to acquire their means of subsistence, due to the high (and rising) food prices and the low (and falling) wages. That part of the population was called "absolute surplus population".

And their fate was grim: either through starvation, disease, war or emigration, eventually population and labour supply would fall, only to re-start the cycle once again. Malthus' version of the Invisible Hand was much more ruthless than Adam Smith's and during the early 19th century many decision makers in London believed in it, as shown by history (I've written about a closely related subject).

Astute readers will observe that, while for Malthus the labour market adjusts through (ominously) quantity changes, mainstream economists nowadays predicate a much less lethal adjustment: a wage adjustment. Both, Malthus and mainstream economists, however, agree that the labour market will clear.

To this Marx opposed his own view: unlike Malthus maintained, the demand for labour is variable; at any time, a part of the labour supply may become unemployed, even with a stationary or falling population: it's enough that labour demand falls. Because the surplus is relative to something (i.e. demand), Marx called this "relative surplus population". And there is no need for the labour market to clear: the reserve army of the unemployed.

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You would have thought that self-proclaimed experts on Keynes (and pretty much everything else besides) would find Marx's views, at least in this point, quite congenial. After all, it's all about labour supply and demand, market equilibria (or their lack)

Alas, you would be mistaken.

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I recommend Tankus' essay (as a bonus, he provides some very interesting links!) and congratulate Naked Capitalism for gaining yet another good guest blogger. Until recently, they had a few really shitty ones.


Image Credits:
[A] From a series of illustrations by Cork artist James Mahony (1810-1879), commissioned by Illustrated London News 1847. Public Domain. Wikipedia.

We Are Detroit.

Prof. Richard D. Wolff (The New School Graduate Program in International Affairs, with links) has an interesting piece on the collapse of Detroit (h/t David Ruccio). Beyond its relevance to understand the collapse of Detroit as a separate historical event, I believe that history can help us in Australia understand where we are.

Wolff focuses on "the automobile companies' competitive failures, and then their moves" out of the Detroit area. That was an insightful choice.

The auto makers became uncompetitive for many reasons (including their own managers' incompetence), says Wolff, but one of them was the higher wages they paid their workers. In other words, it was the very success of militant unions that determined Detroit's history: "Detroit's decline, like the parallel decline of the United Auto Workers, teaches an inescapable lesson. The very contracts that militant unions win with employers give those employers great incentives to find ways around those contracts."

The way around the Detroit auto makers found was to rush to the exit: "Detroit's capitalists thus undermined the middle-class conditions workers had extracted from them - and thus destroyed the 'capitalist success' city built on those conditions."

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This leaves us with a conundrum: if higher wages help make capitalist firms uncompetitive in a world awash in cheap labour, what is the solution?

Hourly compensation in China has been increasing... but was still less than USD 2 an hour in 2009.

(source)

One answer, presumably the answer capitalists prefer, was given by Peter Reith (former minister in the Howard "conservative, centre-right and libertarian" Coalition government and frequent contributor to The Drum: profile) last month:

"The most successful political leader from the centre left on the world scene in recent years has been Tony Blair. He was proudly New Labour. Julia Gillard is old Labor. Blair kept Thatcher's deregulated labour market whilst Gillard has busily overturned the Howard reforms. The unions can't ever admit the reality that old Labor is finished. So, as a result, the failure to reform and their many wrong policy decisions have left the ALP stranded in its own mess. Regardless of which side is in power, the following current Labor policies are all unsustainable: the Hansonite policy on 457 visas; labour market reregulation; shipping industry; car industry protection; the transport industry; and the constant promulgation of green-inspired red tape on environmental projects. Labor's approach is undermining Australia's longer term future." (See here)

I can't blame Reith for being indirect: we are in an election campaign, after all, and the policies he proposes are unpopular (and rightly so) with most voters, who actually depend on wages to survive. But I will be more direct: what Reith tells us is that we must accept lower wages; we must undo what little remains of what we (not Gillard, not Labor) achieved, before we are forced by our masters, on whose behalf Reith speaks. That's Plan A.

And then, there's Plan B: we expropriate capital and give it to those who actually make it produce.

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Now, personally, I can't see any obvious third alternative: it's either Plan A (a.k.a. capitalism) or Plan B (a.k.a. socialism).

So, you've been warned. If you make the wrong decision, please, don't come later saying that nobody warned you.

Detroit, Change and Marx.

"You ever get the feeling that everything
In America is completely fucked up?"

Detroit's Vanity Ballroom dance floor, by Albert Duce. [A]

Detroit, MI, had a population of 1.85 million people in 1950. By 2010 its population had plummeted 61%, to 0.71 million, partly as a consequence of the so-called White Flight, induced by the migration of black Americans, searching better employment opportunities in a by then already changing auto industry. And then, globalization, offshoring and depression happened.

Abandoned house in Delray, Detroit, by Notorious4life. [B]

Last Friday, July 19, Detroit mayor Dave Bing announced the city had filed for bankruptcy, as municipal revenues shrank together with the taxpaying population and economic activity.

Detroit, if the largest bankrupt municipality in American history, is only one struggling city in the so-called Rust Belt.

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Karl Marx and Friedrich Engels characterized the normal development of capitalist economies in the following terms:

"Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. (...) All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses, his real conditions of life, and his relations with his kind.
"The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.
"The bourgeoisie has through its exploitation of the world-market given a cosmopolitan character to production and consumption in every country". (The Communist Manifesto)

Although the passage above seems relevant to describe Detroit's predicament, it would be silly to claim that Marx (and Engels, Marx's co-author) "forecasted" that city's downfall.

When mainstream economists think of prediction, they think of an accurate forecast (and one whose required accuracy will grow in proportion to how much one dislikes the forecaster): something like an astronomer predicting a lunar eclipse, which will start at a certain time, will last so many seconds and will be visible in such and such places.

That's not what Marx did. What he did is akin to what geologists do: they do not forecast when an earthquake will happen, what intensity it will have, how many buildings will crumble and how many people will die inside them. They identify areas where earthquakes are likely to happen and they explain why.

Marx gave us reasons to expect radical change as a normal part of life under capitalism. He explained it, too: change is inherent in capitalism, much more so than in any other mode of production, because it is generated endogenously (i.e. "laws of motion").

Unlike mainstream economists, change for Marx doesn't come about only as consequence of unpredictable and unexplainable exogenous "shocks", disturbing an otherwise equilibrated and somehow optimal and stable state of society:

David Cassidy: "So what caused the recession if it wasn't the financial crisis?"

Professor Eugene Fama: "(Laughs) That's where economics has always broken down. We don't know what causes recessions. Now, I'm not a macroeconomist so I don't feel bad about that. (Laughs again.) We've never known. Debates go on to this day about what caused the Great Depression. Economics is not very good at explaining swings in economic activity". (See here)

While Cassidy assumes (in my view, erroneously) that the depression was caused by the financial crisis, Fama's reply is revealing.

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But, never mind what doom doomsayers say.

Besides, there is a kind of demonic, terrible joy in dancing madly to what may well be our requiem:


Image Credits:
[A] "The Vanity Ballroom dance floor", January 16, 2010.  File licensed under the Creative Commons Attribution-Share Alike 3.0 Unported licence. Wikipedia. Author: Albert duce. My use of the file does not in any way suggests its author endorses me or my use of the work.
[B] "Delray, Detroit, MI", May 20, 2010. Author: Notorious4life. This work has been released into the public domain by its author at the Wikipedia project. This applies worldwide.

PoMo-PoKe? LOL!

"I think that any­one who has the abil­ity to do junior high-school level math or above knows exactly what I’m talk­ing about"

An image is worth a thousand words:

Or check Glenn Stehle's 2 comments and don't forget the non-answer!

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For more PoMo PoKe fun (poor Kalecki!), check "Playing Profit with the Stock Market".

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But, seriously, what's with Marx's critics? Are they deliberately chosen according to a profile and a job-description, or are they self-selected?

On Constant Returns to Scale and Marx.

Issue no. 64 of Real-World Economics Review is out.

Among others, it contains a very interesting (and to me, useful) article by Prof. M. Shahid Alam (Development Economics, at Northeastern University), about constant returns to scale.

(For those not in the know, returns to scale are a central concept in mainstream economics).

Alam's thesis is that "the competitive paradigm of neoclassical economics breaks down in the presence of constant returns to scale (CRS)".

While, in general, I found the article quite stimulating I am afraid its last section left me unconvinced.

In that section, I believe Alam is attempting a reductio ad absurdum: first one assumes a hypothesis to be negated (i.e. the presence of CRS), from this hypothesis one derives an absurd conclusion; this provides a reason to negate the original hypothesis.

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As Alam argues, assuming for argument's sake the presence of CRS, if the economic agents were in addition either (1) endowed with enough factors of production plus labour (or, alternatively, if (2) there were no factors of production other than labour, and (3) labour were homogeneous), then the result which Alam derives:

"All this establishes a presumption that a market economy may emerge in the presence of CRS only when a person's endowment of factors prevents him from producing his preferred consumption bundle".

Would certainly follow; in other words, "a natural economy [i.e. one where economic agents are self-sufficient and produce their own consumption bundles] will necessarily and fully replace the competitive market economy".

But, Alam correctly points out, in reality we live under a market economy (i.e. an economy where agents are not self-sufficient: do not produce their own consumption bundles, but exchange their initial endowments of goods/factors of production in order to acquire the bundles desired). Thus the self-sufficient economy we derived is in actuality an absurd. Thus, we should reject the hypothetical presence of CRS: which is what Alam intended to conclude.

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However (and this is why the paper failed to convince me) under capitalism neither (1), nor (2)&(3) are true: besides labour, there are other factors of production (i.e. land and capital); the ownership of land and capital is unequally distributed among the economic agents; and labour is not homogeneous. In short: self-sufficiency is not a realistic option and a market economy is the result, regardless of the returns to scale regime [#].

By assuming away these facts, Prof. Allam introduced three rather heroic assumptions which distorted the scheme of his reductio ad absurdum.

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Nevertheless, hopefully bringing Marx (and a little of history) into the discussion could help Prof. Alam.

The enclosure movement in England and Wales, started during the 16th century and characterized by mass eviction of farmers, provided a mass of economic agents whose only initial endowed "factor of production" was their own labour, with which to "trade" with the owners of land and capital[*]. The former became labourers, the latter capitalists.

A scenario where economic agents own enough "factors of production", in addition to their own labour, seems similar to the Marxist mercantile exchange, characterized by small artisans and craftsmen, and small farmer/tenants working the commons. As labour was heterogeneous, there was reason for exchange, however limited due to small surplus and considerable self-sufficiency by small producers.

Update: 
13-07-2013 Changed the place where the video goes, added footnotes and fixed some misspellings/dubious expressions.

21-07-2013 David Ruccio on primitive capital accumulation in the West and in China:
China and the West, 25-02-2012

Contra Daron Acemoglu's view that China has failed to make the "happy connection between prosperity and democracy" as Western countries supposedly did as a matter of historical necessity, Ruccio argues that "China is succeeding in showing the West its own past. The secret is the process of primitive accumulation".

The China Syndrome, 19-07-2013
Contra Paul Krugman's views:

"Indeed, the main thing holding down Chinese consumption seems to be that Chinese families never see much of the income being generated by the country's economic growth. Some of that income flows to a politically connected elite; but much of it simply stays bottled up in businesses, many of them state-owned enterprises.
It's all very peculiar by our standards, but it worked for several decades."

Ruccio asks:

"First, how is it possible to consider 'peculiar by our standards' a situation in which a large part of the income generated by a country's growth flows to a tiny elite or stays bottled up in businesses? Isn't that exactly what's been going on in the United States and in other western countries over the course of the past three decades, with the one difference being that in the West we're talking about private corporations as against China where much of the investment takes place within state enterprises?"

Those seem pertinent questions, to me, although perhaps Ruccio may be misreading Krugman: I suspect Krugman means that in China "growth flows to a tiny elite or stays bottled up in business" to be invested in poorly-paid (although, as Ruccio shows, pay conditions have improved), labour-intensive manufacturing; whereas in the U.S. growth still flows to tiny elites, but instead of being invested in the "real economy", as in China, it goes into financial speculation/labour saving technology, without generating much labour demand. Either way, internal consumption demand remains subdued.

Regardless, Ruccio and Krugman must be mistaken. That cannot happen, as good "progressive" quacks can attest: "Playing Profit with the Stock Market". You know, it's not the labour of workers that makes a country wealthy, no siree, it's budget deficits.

Notes:
[#] Clearly, by the above I am not assuming any position on which returns to scale are prevalent under current capitalism, but only that Prof. Alam's proof did not make a convincing case about constant returns to scale.
[*] The precise term is primitive capital accumulation. Mathew Forstater (University of Missouri-Kansas City) identified a similar process in colonial Africa [Taxation: A Secret of Colonial Capitalist (so-called) Primitive Accumulation, CFEPS working paper no. 25, May 2003, here]