Friday, 13 July 2018

How Does It All End? Weekend Reading

Apocalypse:  SethPDA
Here's something readers of this blog may well wish to grapple with: an intelligent vision of the end of capitalism. by one Wolfgang Streeck.  And he's not giving just the usual 1st-year undergraduate PPE Marxist guff:  as he concludes -
The demise of capitalism is unlikely to follow anyone’s blueprint.
Not for the first time, our recommended reading material comes from the New Left Review.  This one isn't new (it's 4 years old) but I only just came upon it and it's good enough to merit a weekend read.  Some choice extracts: 
Capitalism, as a social order held together by a promise of boundless collective progress, is in critical condition.  Growth is giving way to secular stagnation; what economic progress remains is less and less shared; and confidence in the capitalist money economy is leveraged on a rising mountain of promises that are ever less likely to be kept. On the three frontiers of commodification—labour, nature and money—regulatory institutions restraining the advance of capitalism for its own good have collapsed, and after the final victory of capitalism over its enemies no political agency capable of rebuilding them is in sight ... Capitalism without opposition is left to its own devices, which do not include self-restraint. The capitalist pursuit of profit is open-ended, and cannot be otherwise. The idea that less could be more is not a principle a capitalist society could honour; it must be imposed upon it, or else there will be no end to its progress, self-consuming as it may ultimately be...
Finance is an ‘industry’ where innovation is hard to distinguish from rule-bending or rule-breaking; where the payoffs from semi-legal and illegal activities are particularly high; where the gradient in expertise and pay between firms and regulatory authorities is extreme; where revolving doors between the two offer unending possibilities for subtle and not-so-subtle corruption ... After Enron and WorldCom, it was observed that fraud and corruption had reached all-time highs in the US economy. But what came to light after 2008 beat everything: rating agencies being paid by the producers of toxic securities to award them top grades; offshore shadow banking, money laundering and assistance in large-scale tax evasion as the normal business of the biggest banks with the best addresses; the sale to unsuspecting customers of securities constructed so that other customers could bet against them; the leading banks worldwide fraudulently fixing interest rates and the gold price, and so on. In recent years, several large banks have had to pay billions of dollars in fines for activities of this sort ... minuscule when compared to the banks’ balance sheets—not to mention the fact that all of these were out-of-court settlements of cases that governments didn’t want or dare to prosecute...
What is to be expected, on the basis of capitalism’s recent historical record, is a long and painful period of cumulative decay: of intensifying frictions, of fragility and uncertainty, and of a steady succession of ‘normal accidents’—not necessarily but quite possibly on the scale of the global breakdown of the 1930s.
That'll cheer up your weekend - since there's *ahem* nothing on the telly.  Enjoy.

ND

17 comments:

john cheshire said...

" What is to be expected, on the basis of capitalism’s recent historical record, is a long and painful period of cumulative decay: of intensifying frictions, of fragility and uncertainty, and of a steady succession of ‘normal accidents’—not necessarily but quite possibly on the scale of the global breakdown of the 1930s."

Is the writer telling us what he thinks will happen, what he wants to happen, our what should happen? Whatever, the future will be whatever actually happens.

dearieme said...

"the final victory of capitalism over its enemies": it's fascinating that an abstraction can fight to crush its enemies.

Anyway, his graph. What changed everything was a two-stage process. First, the appalling LBJ took JFK's stupid little war in Vietnam and expanded into a huge money-consuming disaster. Secondly he introduced a wildly extravagant welfare state with the usual array of perverse incentives. Result: the public finances looked woeful, and would clearly look ever more woeful in future.

Nixon then faced a dilemma: would he stop the war (he did, in his own sweet time) and would he demolish that welfare state (he didn't)? Or would he find some other way out of the corner into which he was being painted? He chose the latter and cut the dollar's link to gold.

And thereafter we got inflation, oils shocks, recessions, stock market collapses, and endless bloody problems. We also got US politicians who realised that there was no electoral price to pay for huge deficits; indeed, there were electoral rewards.

I suppose the point is that even as rough a beast as capitalism will thrive more usefully if The State does its job competently, or nearly so. The State didn't and now we are where we are. Ooooh matron.

Sobers said...

Its very simple - capitalism is currently involved in improving the lives of billions of poor people in the East (and would elsewhere if the people in charge of Africa would let it). The people it has already lifted to unheard of standards of living are going to have to tread water a bit while the others catch up.

Thats what all this is about - its the selfish cry of western populations that they should be able to continue on their gilded ever upwards post war path, while the brown masses elsewhere in the world continue to live in mud huts and eat rice.

E-K said...

The world population can't all have western standards of living.

It's not treading water but huge decline.

To do this they are abolishing democracy (see Brexit.)

Sobers said...

"The world population can't all have western standards of living."

Why not?

E-K said...

Because there aren't the resources and there aren't the governments.

Equality means decline on our part.

I don't take what we have for granted, btw.

Elby the Beserk said...

@dearime

The appalling LBJ was also the politician who did what the Kennedys could not - get civil rights legislated for. Just saying. And he was a pre social media boor. Recommend Anthony Caro's majestic biography and a year off to read it!

Anonymous said...

The main resource needed to raise standards of living is plentiful electricity.

What this needs is the capital and the skilled engineers to build nuclear power stations. There's no shortage of fuel.

As for the demise of "capitalism" -- I would like a clear definition of "capitalism". Does it include corner shops ? Nationalised industries ? Crime ?

Don Cox

andrew said...

Capitalism's death is like String theory or religion for economists.
(As someone v. clever said 'not even wrong')
Doesnt define what it is or what will replace it.
Outside some special theoretical cases
(Perfect knowledge / a shortage of a resource / small closed system)
You quickly come up with skmething a lot like capitalism
Viz local food markets in n. Korea.

How else do you optimise resource allocation in a complex system.

I commend some of charles stross's earlier sf novels where he attempts to explain how capitalism 2.0 comes to exist or how capitalism in a true post scarcity economy does not work.

Nick Drew said...

Don - the author defines it thus:

"we define it as a modern society that secures its collective reproduction as an unintended side-effect of individually rational, competitive profit maximization in pursuit of capital accumulation, through a ‘labour process’ combining privately owned capital with commodified labour power, fulfilling the Mandevillean promise of private vices turning into public benefits"

I think that embraces corner shops!

Nationalised industries? I'd say that depends on the model of the n.i., and also the context in which they operate. EDF (the French co), for example, used to be a pretty ugly nationalised industry but although still majority state-owned is nowadays recognisably part of the European capitalist system

Crime? Here's what the author has to say: (you really do need to read it !)

"non-violent ‘free trade’ is typically confined to the centre of the capitalist system, whereas on its historical and spatial periphery violence is rampant. For example, illegal markets (drugs, prostitution, arms etc.) governed by private violence raise huge sums of money for legal investment—a version of primitive accumulation. Moreover, legitimate public and illegal private violence often blend into one another, not only on the capitalist frontier but also in the support provided by the centre to its collaborators on the periphery..."

Jim said...

Noel Coward seems to have summed it up nicely:-

There are bad times just around the corner
And the outlook's absolutely vile,
There are Home Fires smoking
From Windermere to Woking

etc etc etc

So here we go setting sail into choppy seas in a leaky boat with navigators who know nothing about navigation and are still fighting over the charts. Worse still as Streek implies, non of their charts is any good. The question is what credible plan could the Brexiteers have had?

Post Brexit Britain would have two tasks, firstly to catch up with the major industrial nations and then to overcome economic headwinds created by leaving a huge and nearby marketplace. All this in a world where an Englishman is worth no more than anyone else. The competitive advantage of nations has flattened out to become the economic advantage of the least incompetent, the least barrier prone and probably the least democratic.

One solution might have been to become a 'New Singapore'. A highly industrialised tiger economy. That would involve a lot of investment and a lot of concrete and tarmac and housing and probably a lot of social control too and a timescale of 15 to 20 years. I can't see the 1922 committee or Tory HQ thinking too much of that plan. Not a likely outcome.

Alternatively they might have planned for a 'Miss Marple' economy. Take Britain back to the 1950s with a smaller economy, greater social division, greater social control. Something smaller and easier to handle that leaves the nasty world beyond our shores alone. Except of course for those at the top of the social pile. Such a scheme might be attractive to the richer elements of the Tory party but the idea seems unsustainable and The Treasury won't like it much. A fairly likely outcome.

Or there is carry on much as we do now. Which begs the question 'why leave'. Which leaves Mrs May to follow that Churchillian dictum 'keep bu%^ering on'. Outlook much the same.

Anonymous said...

"Or there is carry on much as we do now. Which begs the question 'why leave'."

Leaving the EU isn't about economics. It's about regaining independence and freedom from the obsessively regulatory EU mandarins.

It's worth being a bit poorer to get out from under that tyranny.

Don Cox

Raedwald said...

Yes, an economic hurricane is forming that will trash the tissue-thin and grossly over inflated asset bubbles that sustain our current zero-growth precarious Alice in Wonderland economy - so what qualities and abilities does a nation need to best weather the storm?

In Elizabeth Longford's superb Wellington biography, she reports the Duke likening his approach to war as a rope bridle; if it breaks, one can knot the broken ends together and carry on. The French in contrast, he said, have superbly beautiful bridles made of leather - but when they break, they can't be mended and all is sauve qui peut.

When managing quite complex construction jobs, I'd often quote that to my client teams as we managed on the hoof, managed our way around unknown and unexpected circumstances and generally winged it keeping the essential outcomes always in view. It pissed off many designers if I had to announce their atrium had to go, or they had to ditch the complex and photogenic roof in favour of something that worked at the budget cost. It was only as I was coming to semi-retirement that the management experts coined a term for what Wellington eloquently described and I so diligently practiced for many decades - apparently we'd been doing 'agile management'. They were trying to teach it to the youngsters.

I could save them the trouble. Either you have the skill, or you don't. Gernerally, lots of Brits have - or with half decent leadership can easily switch course. The French, and the EU, still haven't. As Nick would tell us, no battle plan survives the first shot - something the EU just haven't learned. They will continue doggedly reinforcing defeat long after the crisis has overwhelmed them.

In my view we are by far better placed to weather the coming storm if we ourselves are at the helm. Agile, see. And for that we need to cut the ties that bind us to their floundering, wallowing, sinking ship.

Nick Drew said...

@ ... no battle plan survives the first shot - something the EU just haven't learned. They will continue doggedly reinforcing defeat long after the crisis has overwhelmed them... we are by far better placed to weather the coming storm if we ourselves are at the helm. Agile, see

I have lost count of the number of times, in my professional activities (energy sector) I have heard european speakers say - quite unprompted - Oh, they do that already in the UK; or - In Britain they do this much better

Amazing to relate, but our energy regulators are (comparatively speaking!) 'agile', and commendably empirical: they are willing experiment; to call a halt to something that isn't working; to consult genuinely and open-mindedly within the industry (grossly self-serving & disingenuous responses can easily be seen for what they are & get you nowhere, and the long-established practice is for industry respondents to play a straight bat whilst at the same time representing their legitimate interests); to rectify errors and then to go through the cycle again.

This actually only takes months per iteration - which can seem a lot until you see the euro-wallahs in action: start with an essentally a priori, doctrinally-based regulation; refuse to see when things are going wrong; stick to it doggedly through thick and thin in the face of all evidence; at length (years later) recognise it's not working, and then clunkily, unilaterally, impose something different - and probably just as fatuous

The results are: we are miles ahead on CO2 reductions; ditto on figuring out how smart-griddy things like distributed generation, fast electric-car recharging, 'prosumers', battery-farms etc are all going to work. Obviously some of you will (quite reasonably) lament some of these developments but, like it or not, they will characterise the future - and the Brits are best at it!

Agile, empirical, responsive, collaborative - these are not bad things to be known for

Electro-Kevin said...

"Take Britain back to the 1950s with a smaller economy, greater social division, greater social control"

Grammar school kids getting to the highest echelons ?

The death of capitalism is more like peak capitalism. Limited by resources and the demands of a media/showbiz/political celebrity elite that we (not they) share and redress imbalances.

The manifestation of this is the importation of poverty (mass immigration) rather than the exportation of wealth (in reality, debt.) Mass immigration has contributed to equity release - a stay of economic execution.

I understand that I (an Englishman) am nothing special but it irks that those demanding equality the most are the least likely to partake in sacrificially redistributive gestures themselves.

Yes. They may give a bit away to signal virtue but their arses are still nowhere as near the fire as mine.

I believe this to be the fundamental impetus behind Brexit and behind Trump, not the knowledge that the capitalist bus is transitory and passing but that the elites do not practice what they preach.

These weren't revolts against bankers, they were revolts against anti democratic socialist snobbery.

Capitalism is discriminatory only in that it seeks organised government - in a democracy of middle age, where there is general consensus on ideals and culture - for protection and a good value workforce.

It's not dying, just shifting its base.

dearieme said...

"The appalling LBJ was also the politician who did what the Kennedys could not - get civil rights legislated for" There's decent evidence that the Kennedy's didn't want to do it rather than that they couldn't. Anyway, compared to the harm the bloody man did I'm afraid that's rather small beer.

His motives can't have been noble - I wonder what they were.

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