Quo Vadis Australia?

Although under the extremely competent management of the COALition (particularly of Treasurer Josh Frydenberg), the Australian economy, ungrateful that it is, is not doing well. It is not for nothing, I suppose, the RBA has cut interest rates to historical lows … twice … in two consecutive months.

But how worried should Australians be?

Well, I am no expert. It would be hard for me to say. So, I decided to find out what the experts have to say.

The problem is that they give conflicting messages. Philip Lowe, for instance, the RBA governor,  says everything is under control. Steve Keen, however, believes there is a 95% probability of a recession in the next two years.

That, as readers might have guessed, left me uneasy.

Getting all Tied Up (5)

This series considers Paul Mason’s “Risks are ‘a Thing’… and so is the Death of Capitalism”, a critique of MMT.

In the previous post I argued that Mason’ s choice of Prof. Ferguson’s views as emblematic of the theoretical differences between Marxism and MMT was problematic.

Thus, so far in this series I’ve focused on things I believe Mason got wrong. But it’s time to go into the things he got right.

There may not be a theoretically “irreconcilable split” between Marxism and MMT, as Ferguson claims. However, to me and in terms of policy recommendation, things look different. Mason pointed to this passage in Ferguson’s article

“Rather it [MMT] implicitly de-prioritizes gravity’s causality in political and economic processes, showing how the ideal conditions the real via money’s distributed pyramidal structure”.

That was a good choice.

Getting all Tied Up (4)

This series considers Paul Mason’s “Risks are ‘a Thing’… and so is the Death of Capitalism”, a critique of MMT.

In the previous post I argued that Prof. Tcherneva’s quote doesn’t support Mason’s “finding” of a monetary theory of value native to MMT.

To buttress his case on the alleged differences between MMT and Marxism Mason invokes Prof. Scott Ferguson’s article “Some Remarks on MMT & Marxism”, from where Mason takes this quote, which, in his opinion, sums up neatly said differences:

Marxism assumes that money is a private, alienating, and crisis-ridden exchange relationship that ought to be overcome. Yet MMT holds money to be a boundless public utility that, while by no means untroubled, is well-equipped to actualize radical collectivist ends.

Ferguson’s views on the differences between Marxism and MMT are the subject of this post.

Getting all Tied Up (3)

This series considers Paul Mason’s “Risks are ‘a Thing’… and so is the Death of Capitalism”, a critique of MMT.

Mason believes to have detected in MMT a monetary theory of value. In the previous post I argued that is just a mirage. So, where did he take a wrong turn?

Much like Marxists, MMTers write a lot. Out of the ever expanding MMT literature, academic and popular, this single sentence, taken from one of Prof. Pavlina Tcherneva’s papers, is the smoking gun proving the existence of an MMT ToV: “since the currency is a public monopoly, the government has at its disposal a direct way of determining its value” (Mason’s emphasis).

Getting all Tied Up (2)

This series considers Paul Mason’s “Risks are ‘a Thing’… and so is the Death of Capitalism”, a critique of MMT.

The previous post discussed Mason’s political doubts about tying the Green New Deal to MMT. Although that is evidently an urgent concern, by itself it has little theoretical implications for Marxists. The focus of this and the next posts are the two subheadings “What does MMT say?”, “What’s wrong with MMT?”, where Mason expresses his views on what MMT is.

Getting all Tied Up.

(right-click to open a larger image in a separate tab)

The big and tiresome MMT versus everybody else punch-up seems to be abating. Finally. Readers may guess the whole thing has left me unimpressed.

But my expectations about the part of the debate involving mainstream economists were low to begin with, so their bit in the debate didn’t surprise me. What surprised me, in the worst possible way, was how awful the MMT/Marxists debate was.

Commenting recently on that, Prof. Bill Mitchell, one of MMT founders, writes that Marxists are getting all tied up on MMT.

As both a Marxist and a sort of MMT sympathiser, I reached the conclusion he is right, unfortunately. But there’s more to that.

Gelman and the Economists.

Andrew Gelman, professor of statistics, believes that “a quick rule of thumb is that when (1) someone seems to be acting like a jerk, an economist will defend the behavior as being the essence of morality, but when (2) someone seems to be doing something nice, an economist will raise the bar and argue that he’s not being nice at all”.

I think he is right. Readers should pay attention.

The Preconditions of Socialism: a Critical Review (and xi)

“Looks like she didn't have nobody to help her. I felt right sorry for her. She seemed...” Tom Robinson

In spite of the absolute lack of evidence against him, in spite of the best efforts of his defence attorney, Tom Robinson was found guilty. Those words sealed his fate. He was innocent of the crime he had been charged with, but he had to be convicted of a crime, any crime. The one at hand was that him, a black man, had felt sorry for a white woman.

The Preconditions of Socialism: a Critical Review (x)

“Das ist nicht nur nicht richtig; es ist nicht einmal falsch!” Wolfgang Pauli.

In the last two posts in this series we’ve introduced Thomas Piketty’s “capital” inequality data. As is well-known, Piketty and co-workers derive their findings largely from tax return data. Bernstein employed similar data.

Piketty’s results seem to corroborate Marxist views on distribution of wealth. Bernstein’s, however, contradict them. Someone has got to be wrong. It’s time to scrutinise Bernstein’s empirical argument.

The Preconditions of Socialism: a Critical Review (ix)

It’s time to go back to Thomas Piketty’s data and their application to the assessment of Preconditions.

A first question about Piketty’s 1910s Europe “capital” data would be how representative of a particular, historical, observed national economy that data are?

At the World Inequality Database the only series (personal wealth distribution: analogue of “capital”) with data for the lowest 50%, the middle 40%, the upper 9% and the top 1% I could find for that general time period was the one for France, for the years 1902, 1903, 1904, 1905, 1907, 1909, and 1910.

The Preconditions of Socialism: a Critical Review (viii)

“The period of the first globalization is as fascinating as it was prodigiously inegalitarian”. Thomas Piketty (Capital in the 21st Century, 2014. Kindle Locations 595-597. Harvard University Press. Kindle Edition.)

We finally made it to Chapter 3 of Preconditions (2 of Evolutionary). As the review will now deal with statistical data, this post contains an unusually large number of links to resources freely available over the Internet. Although readers may find the task daunting, I’ll invite them to carefully check those links. I personally visited each and every single one of those pages, and in my opinion they are educative.

Eduard Bernstein composed and published Preconditions during the late 1890s. The largest national capitalist economies had been experiencing a period of overall prosperity, punctuated by the usual downturns. In some places that bonanza started as early as the 1870s; in the US it would extend well into the Roaring Twenties.

Although there are more evocative names, Thomas Piketty, in his Capital refers to those times in general with the more neutral-sounding, but very appropriate, “‘first globalisation’ of finance and trade (1870-1914)” (Kindle Location 594).

And it’s not coincidental that Piketty mentioned Bernstein three times: both deal with some of the same subjects and variables, using tax return data [maybe other authors before Bernstein had studied tax returns, but Preconditions is the earliest example I could find (p. 60) and the most unfortunate].

But the usefulness of Capital to assess Preconditions goes far beyond periodisation or noticing that Bernstein and Piketty studied similar data for Europe, roughly during the same period.

The Preconditions of Socialism: a Critical Review (vii)

“There are few writers or thinkers in history whose every word and grunt has been examined by hostile critics so minutely as Marx’s has”. Hal Draper.

The usual reference Marxists give those asking about “historical materialism” (aka the “materialist conception of history”) is Marx’s 1859 Preface to A Contribution to the Critique of Political Economy (example 1, example 2). If readers downloaded and printed it from the Marxists Internet Archive, depending on their printer settings, they’d get something like this:

Right-click to open a larger version in a different tab.

The Preconditions of Socialism: a Critical Review (vi)

“When I use a word, it means just what I choose it to mean—neither more nor less.” Humpty Dumpty.

There’s a way to see Preconditions (or Evolutionary) that should help understand Eduard Bernstein’s argument: what goes where and why.

Imagine you are in Maycomb, Alabama. It’s the 1930s.

The Preconditions of Socialism: a Critical Review (v)

“For with what judgement ye judge, ye shall be judged: and with what measure ye mete, it shall be measured to you again.” (Matthew 7:2 KJV)

By now anti-Marxist readers (openly right-wing or reformists, it makes no difference) must have felt something of what Marxist readers of Preconditions felt in the late 1890s. What’s sauce for the goose, is sauce for the gander.

Unlike those Marxists, the more enterprising among anti-Marxists may even have discovered the trick I played them: unlike Bernstein, I explained it to them.

An Economic Parable.

The chickens were alarmed. Every Sunday, a couple hours before lunch, a chicken would go missing, never to be seen again. Nobody knew why or what happened to them. Was there something in common in those disappearances? No one could say.

After intense debate and much speculation, the flock decided to approach the farmer with their concern.

“Do you know what’s going on?” -- they asked Old MacDonald.

The Preconditions of Socialism: a Critical Review (iv)

“What’s sauce for the goose, is sauce for the gander”. English proverb, 17th century.

After the last post, I think I am in position to offer a general -- impressionistic, if you like -- assessment of Preconditions, for those readers less than vitally interested in details. A real attempt to decipher his argument must of necessity take more time.

Mean-Spirited Ideas.

Zach Carter:

“Politicians don’t generally turn to economists for new insight into how the world works. Economists instead serve as a kind of credibility shield - experts who can be trotted out to assure the public that there are very complex and sophisticated reasons political leaders should be doing the things they do. A big part of any Washington economics job is providing a sense of scientific certainty to political judgments that are, by their very nature, uncertain. This is true for big policy changes as well as straightforward tasks like projecting growth rates and government revenue.

“The job, in other words, is to back up your team.”

John Maynard Keynes:

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else.”

Call me cynical, but I think someone was bullshitting us, and that someone isn’t Carter.

The Preconditions of Socialism: a Critical Review (iii)

After a week’s pause, it’s time to go back to Preconditions. Last time we examined that book’s general content and its Cold War re-discovery.

Suppose the reader, intent on saving him/herself a time-consuming engagement with Bernstein’s “scholastic” (his own term) argument decided instead to jump straight in Chapter 3 of Preconditions (2 of Evolutionary) where he makes his empirical argument.

Although perhaps unfamiliar with details, the reader is, of course, aware of Bernstein’s general intent, and particularly of what his final goal (pun intended) is: he is there to fell Marxism, much like a logger fells an old tree [“In principle, Marxism stands or falls with this theory” (p. 12)]

In section b of that chapter (P3§b E2§b) after presenting his statement of what Marxism explains, Bernstein asked himself the following question: “Now, is all this correct?” (p. 57, "Now, is all that right?" in Evolutionary).

Predictions and Economic Debate.

Before going into matters, I want to register my protest against the massacre perpetrated by the Israeli racist government of Benjamin Netanyahu against Palestinian demonstrators.

I also want to protest against the jaw-dropping hypocrisy of Australian Prime Minister Malcolm Turnbull and Foreign Minister Julie Bishop, who as always are ready to spin excuses for the inexcusable.

You don't speak for me. I don't condone crimes against humanity.

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The Job Guarantee MMTers promote seems to be getting some public attention in the US. Not only that, recently Prof. William “Bill” Mitchell and co-author Thomas Fazi had an article in the popular Jacobin Magazine.

Personally, I can see the attraction of a JG, and I myself am not immune to it, although as a Marxist I have doubts about its political feasibility and its longer-term implications. But I am no expert.

The Preconditions of Socialism: a Critical Review (ii)

“The importance of a work, however, cannot be judged solely on an absolute plane; one should also take into account its influence and its political function.” (Zeev Sternhell et al, The Birth of Fascist Ideology)

Below, side by side, are the tables of contents of Evolutionary Socialism (first Schocken Books paperback edition 1961, fourth printing 1967) and The Preconditions of Socialism (Cambridge University Press, 1993, reprinted 2004)

(right-click to open a larger version in a separate browser tab)

That of Evolutionary corresponds exactly to the version hosted by the Marxists Internet Archive. As reflected above, both tables show only what Bernstein wrote.