Capitalism 2.0? Yeah, Right.

As national anthems go, "Advance Australia Fair" isn't in the same league as, say, "La Marsellaise" or "The Star-Spangled Banner". It's not so much that people hate it, but that I don't know anyone who really likes it. That's why every now and again someone wants it changed.

The big debate starts. There are three parties: (1) It's not broken, don't fix it. (2) C'mon! Let's adopt a new anthem (me, I like "Waltzing Matilda" better); (3) Let's be realistic. We may not like it, but let's keep it anyway. To keep everybody happy, let's change its lyrics.

People argue and argue, until they tire and forget all about it.

That reminds me of Daniel Little's post "Capitalism 2.0?" (June 17, 2016). 

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Until 2008 the consensus among the good and wise was that capitalism wasn't broken. Since the collapse of the housing bubble, however, it's been impossible to say that in public.

Little didn't try. Instead, he offers a list of nine issues, which I summarise in two broad categories: inequality (income, wealth, opportunity, power, and influence), and several structural inabilities. (He doesn't mention economic instability or under/unemployment, but that may be just a simple oversight).

To address those problems, particularly income inequality, Little proposes some institutional changes to our current political economy, such that a revised capitalism is better at satisfying the demands of justice and human well-being. He doesn't much like this capitalism, so let's change the lyrics, but not the tune: Capitalism 2.0.

One of Little's proposals is the Speenhamland system, sorry universal basic income. How would it be funded? Presumably, thus: "All of these ideas about a more just capitalism require resources; and those resources can only come from public finance, or taxation".

In one single stroke one's expectations were downgraded, from Capitalism 2.0 to 19th century Capitalism beta release. (See here, here; and here and here)

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The problem with Little's UBI proposal is that he is a philosopher of social sciences: if he can't imagine drawbacks, then there aren't drawbacks. Capitalists will accept the UBI and won't take undue advantage of it because. He, in other words, assumes away class conflict: it's an "outmoded" Marxist notion, as outmoded as "Waltzing Matilda".

Further, for Little income inequality is an accident, not a necessary consequence of deliberate stabilisation policies. But, don't worry, I won't argue otherwise based on "invalid" Marxism; after all, there are non-Marxist economists who can do it for me:

"When the Fed perceives inflation as being too great a problem, it raises interest rates to limit employment growth. If it raises interest rates far enough, then it can actually cause the economy to start losing jobs, thereby raising the unemployment rate. A higher unemployment rate puts downward pressure on wages. If wages start to drop, then there is less inflationary pressure in the economy and the Fed has accomplished its goal, although it comes at the cost of higher unemployment and lower wages.

"This is not the whole story. The Fed's interest rate hikes do not affect all workers evenly.

"When the Fed raises interest rates to slow the economy and increase unemployment, the people who disproportionately lose their jobs are the more disadvantaged groups in society, specifically workers with less education and racial and ethnic minorities. Firms do not lay off their CEOs and top managers when business slows, they lay off assembly line workers, custodians, sales clerks and other workers viewed as disposable. This means workers without college degrees are far more likely to end up unemployed when the Fed raises rates than workers with college or advanced degrees. Hispanic and African American workers can also expect to take a hit when the Fed cracks down." Dean Baker, "The Conservative Nanny State" (Kindle Locations 149-159).