Someone tweeted this part of an interview with an ex-KGB agent, Yuri Bezmenov, from 1984. Bezmenov defected to Canada in 1970.
Back then the Soviet Union was committed to spreading the ideology of Marxism-Leninism throughout the world using these techniques called Ideological Subversion or Active Measures, Psychological Warfare has four stages. Espionage forms only a minor part of this process.
The goal is to "change the perception of reality to such an extent that despite the abundance of information, no one is able to come to sensible conclusions [in their own interests]".
This occurs in four stages.
Demoralization. 15-20 years. A propaganda and disinformation campaign aimed at students that contravenes the values of the country. The result is that "exposure to true information does not matter anymore. A person who is demoralised is unable to assess true information." Even if the demoralised person is presented with clear documentary evidence that their view is wrong, they will not refuse to believe.
Destabilization. 2-5 years. The focus shifts from individuals to subverting state essentials: economy, foreign relations, defence. Politicians make extravagant promises.
Crisis. 6 weeks. A violent change of structure.
Normalization. Indefinite. The new "Big Brother" regime exerts itself, crushing the demoralised citizens.
Note that Bezmenov says that the demoralisation phase of the KGB program in the USA is already complete. "Most of it is done by Americans to Americans, thanks to lack of moral standards."
Bezmenov suggests that aim of Soviet operations was to destabilise the free enterprise system. But we need to look at the history of the collapse of economic liberalism the first time around. Economic liberalism is inherently unstable because it creates a super-rich class who misuse the excessive wealth and power they have to subvert democracy. The Soviets cannot take responsibility for the 1929 stock market crash or the Great Depression.
Bezmenov implicates socially liberal educators. Educated people score higher on the openness trait of the Big Five psychometric test and all people who have high scores on this trait tend to be more socially liberal. Bezmenov also implicates civil rights defenders in destabilisation.
One needs to emphasise in response to Bezmenov that the Marxism-Leninism take over of the USA never happened. Indeed, by the time he was giving this interview, in 1984, the USA was moving decisively to the right economically and it continued to do so until Trump. Bezmenov is in fact quite off-beam in his assessment of US politics and social attitudes.
The methodology he describes however is interesting because what we see in 2019 is Americans refusing to believe authentic, documentary evidence of Trump's misuse of power and his subversion of the economy, foreign relations, and defence for his own ends - sometimes in ways that seem consistent with him furthering his own interests and sometimes seemingly at random (though in ways that play to his base).
Last week it emerged that the combined intelligence community is unanimous about the fact that Russia interfered in the 2016 election to help Trump. And that they have presented a classified briefing to the Senate, including authentic documentary evidence, that this was so and that the Ukraine meddling story was a Russian disinformation campaign being promoted by the Russia intelligence community.
Despite the unanimous voice of the FBI, CIA, NSA, and a dozen other intelligence agencies, Republican senators, at the urging of Trump, launched an investigation into the subject of the Russian disinformation campaign. The President and key members of the Republican Party are dismissing the unified voice of the US intelligence community despite the evidence. They seem "unable to assess true information."
At the same time, despite clear and overwhelming evidence of Trump's repeated and ongoing misuse of power for personal gain, half of America and all of the Republican Party are denying that anything untoward happened. The testimony of career foreign service officials made no difference at all.
Although Bezmenov was clearly over-estimating the impact of Soviet Marxist-Leninist propaganda, we are in fact in just the same state of demoralisation as he describes, but with respect to President Trump's agenda and his support amongst the alt-right.
What happened in the USA was not what Bezmenov predicted. Rather it was a replay of the collapse of classical liberalism because of the chaos caused by the super-rich and their irresistible desire to manipulate things for their own ends. The 2019 version of economic liberalism sees billionaires battling it out for control of the government in the open, with the ability to outspend all their rivals combined. Bloomberg, a former Republican, entered the democratic primary by spending $30 million on advertising. The other candidates have raised considerably less than this in total, let alone for advertising.
It's also clear that Russia has also been at work in the UK, especially in the process of the UK leaving the EU (aka Brexit). They seem to have part funded the Leave campaign and to have facilitated a process of demoralisation including 20 years of fake news about the EU.
The Institute for Global Affairs, London School of Economics, released a report in 2017: Soviet Subversion, Disinformation and Propaganda: How the West Fought Against It. An Analytic History, with Lessons for the Present. This provides more details as well as counter-measures that the US Govt developed to combat active measures. They point out that modern Russian propaganda is no longer ideological; it is distributed between state actors and various other interests and it is opportunistic. And there is no concerted effort to combat it.
I've been following the impeachment hearings in the USA with interest. They are not only inherently interesting and political drama of the highest calibre, but they are a welcome distraction from the sewer of British politics and electioneering.
The information coming out is complex and in order to organise it I started a diagram of how the players are connected.
click to embiggen.
This diagram is still a bit messy, but it does help me to see certain things. I say "in a nutshell" but it's a big nut. I'll keep working on the diagram and update it as and when I can.
Here is the story as I understand it.
Joe Biden was instrumental in removing corrupt Prosecutor General Shokin from office. Shokin wanted revenge and so floated the story that he had just been about to open an investigation into Burisma and Biden's son Hunter who was a fig-leaf on the board. His replacement Lutsenko did investigate Burisma, but found nothing. He supported Shokin's allegations and helped to spread them to the US via various channels: a journalist named John Solomon, Paul Manafort, and the President's personal lawyer, Rudy Giuliani, who met with both Shokin and Lutsenko.
Manafort was Trump's campaign manager. He formerly worked on Ukraine President Yanukovych's campaign and when this came out he was forced to resign (because of corruption) and fled to Russia. Later he was convicted of financial crimes and is still in jail and facing further indictments.
As well as his connections to corrupt government officials, Giuliani has been cultivating business interests in Ukraine via Lev Parnas and Igor Fruman. These two were involved in a number of business deals including the ironically named Fraud Guarantee which has no customers and provides no actual services, and thus has no bone fide income, yet paid Giuliani $500,000 to provide legal services. Parnas and Fruman are charged with campaign finance violations after they channeled Russian money to Trump's campaign via fake intermediaries. Foreign political donations are illegal in the USA. Parnas has agreed to testify to Congress although I don't think he is scheduled yet.
Another story, possibly originating from Putin (who spoke about it in a 2017 press conference) was circulating that it was Ukraine who hacked the DNC server and meddled in the election. Though this story is confused because they are supposed to have intervened on Clinton's side but all the leaks were damaging to Clinton. The hacking was interference in favour of Trump, who subsequently won the election (although he lost the popular vote). Also the US intelligence community conclusively proved that is was Russia that had hacked the server. The idea is that a physical DNC server was somehow smuggled out of the US and is being hidden in Ukraine.
The Biden story made its way to Trump. He put two and two together and made five. Trump saw two opportunities. Firstly he could hurt his main political rival, Joe Biden. Secondly, he could cast doubt on the work of the US intelligence community (who he felt were working against him) and exculpate his friend and ally Vladimir Putin. He decided to use his the weight of the office of president and the apparatus of state to force the new and inexperienced Ukraine president Volodimir Zelensky to publicly open investigations into the Bidens and the server. This would achieve both aims.
It's possible that Trump believed the stories to be true, but even so, he was clearly abusing his power in choosing to take this action, whether or not it succeeded.
Trump's first problem was the Ambassador to Ukraine, Marie Yovanovich. She was competent, intelligent, and actively fighting corruption. She had implicated the head of the anti-corruption unit of the Prosecutor General's office, Nazar Kholonitsky, in witness tampering (they bugged his fish tank). Yovanovich was publically calling for his removal and prosecution.
Rather than simply recally Yovanovich, as he could have done, Trump allowed Giuliani to cook up a smear campaign against her. Her exemplary record and character notwithstanding, Yovanovich, who had served in active war zones and been shot at in the course of her duties, was smeared by Lutsenko, which was repeated by Giuliani, lawyers for the President DiGenova and Toensing (picked up by Fox News), and by Trump Jr. Finally she was smeared by Trump just before he removed her from her role and again while she was giving testimony to Congress (thus committing the federal crime of witness tampering).
Yovanovich was replaced by William Taylor a man of impeccable record and character. Although he was named Chargé d'affaires rather than Ambassador (the post remains unfilled). Taylor's appointment was a smoke screen as he soon came to realise. He took up the regular role of representing the US's interests in the Ukraine. However, there was another White House team at work in Ukraine, seemingly managed by Giuliani.
Three WH officials operated an alternative mission to Ukraine. Ambassador to the EU, Gordon Sondland bought his post with a $1 million donation to the Trump campaign. The hotelier has no political experience. He was teamed the Secretary of Energy, Rick Perry, and the Special Envoy to Ukraine, Kurt Volker. They affectionately referred to themselves as the "three amigos". The trio were charged by Donald Trump to put pressure on Zelensky to publicly support Trump by announcing investigations into Biden and the mythical server. Giuliani was their line manager, but SOndland at least spoke directly with Trump about this project.
In a series of meetings they conveyed Trump's message that US support was contingent on support for Trump's witch hunt to Zelensky and his top officials. On offer in payment for this compliance was a public meeting in the White House for Zelensky (which would help bolster his support and legitimise his presidency). Trump has often publicly supported his allies such as Kim, Putin, and Erdogan in this way.
Mike Pence was also roped into delivering the ultimatum. He claims ignorance of the machinations, but this hardly seems credible. If he did not know then he is incompetent. Zelensky, faced with multiple White House Officials bullying him had to play along. But he could not easily capitulate to the US without a backlash from Russia and from his own people. He was in a serious bind and stalled for time.
Seemingly Trump did not feel enough pressure was being brought to bear on Zelensky so he had his Chief of Staff, Mick Mulvaney, intervene in the Office of Budget Management to hold up financial aide to Ukraine. Zelensky did not know about this during the infamous phone call, but he was already under considerable pressure from Trump's goons. The hold on the aide was made known to Ukraine, who were agreeing to do what was asked, but not actually doing anything. Zelensky was trapped and agreed to make the required announcement, but still stalled.
Finally a whistleblower who heard about the call and some of the machinations going on, reported this to their boss. The complaint was illegally withheld from Congress, but eventually released and impeachment inquiry announced within days. At this point, the aide to Ukraine was released and Zelensky escaped from the trap Trump had set for him. However, he was still compelled to support Trump publicly, he is still under Trump's thumb and having serious problems at home. At the same time the call was moved to a high security server set up for matters of national security in a rather inept attempt at a cover up.
As pressure mounted on the President in the form of openly leaked excerpts of secret depositions in the impeachment hearings, Mulvaney went on national television and confessed that they had been trying to bribe Ukraine (by demanding investigations into Biden and the mythical server) and asserted that this was simply the norm in foreign policy. "Get over it". This has caused an ongoing rift with top White House lawyer, Pat Cipollone. There has been no coherent message from the White House.
The impeachment hearings continue and the Congress are still taking depositions in private.
Sondland is the weak link of the White House goons. His testimony to date could well leave him open to perjury charges as its apparent he knew much more than he is saying - he was fully involved and fully informed, even he is was not experienced enough to know he was breaking the law. Ignorance is not a legal defence. If you watch no other public hearing, watch Sondland's testimony on Wed 20th. He had personal phone calls with President Trump about his clandestine mission in Ukraine. Weirdly he had them on an unsecured line in a country where Russia routinely monitors communications, and with Trump speaking so loudly that others could hear the whole conversation.
Sondland is going to have to betray Trump or face jail time. And this may weaken Trump enough open the floodgates.
The way I read it, Trump is guilty of abusing his power in the form of bribery to seek foreign interference in the 2020 election. Of course the call notes so far released are clear evidence of this, but the weight of it is in the actions of his goons in Ukraine. He is also guilty of obstruction of Congress for refusing to comply with lawful subpoenas and for blocking others from complying with lawful subpoenas. And he is guilty of obstruction of justice in the form of witness tampering. All are impeachable offenses. However, as we know, he is also guilty of obstruction of justice in the Mueller Inquiry.
It seems to me that many of the people involved have criminal liability including Giuliani. Interesting just a few days he "joked" that he had insurance in case Trump did not remain loyal to him. I do not believe for a second that this was a joke. It was a threat.
It seems clear to me that Pence, Pompeo, and Barr all knew was was going on. Mulvaney was probably involved in the strategy. They are all complicit. And it's no wonder that the GOP are fighting so hard to undermine the credibility of the impeachment inquiry. Knowingly supporting a corrupt President is hard to sell to voters. If they fail to dismiss the charges they are all going down with Trump. Indeed it seems likely that, if they fail, Trump would consider them his enemies and make a point of taking them down with him.
Many more Trump aides are looking at criminal indictment (joining the long list of criminals that Trump has associated with over the years).
Last week Trump was found guilty of misappropriating and misusing funds from his charity for personal gain. It is now a matter of public record that he is corrupt. Trump is presently being investigated by the Southern District of New York for fraud and is likely to spend the rest of his life in court if not in prison once he leaves office. He has been fighting very hard to prevent his tax returns from being released and we can only assume that this is because they are incriminating in some way. His business empire is crumbling now that his father is no longer able to bail him out. The transparent attempt to subvert the emoluments clause in holding the G7 at this own resort failed, which leaves Doral losing vast sums of money for Trump.
The institution of democracy and the validity of the Constitution of the USA hang in the balance. But the Founders anticipated this moment. They gave the three branches of government equal status and power. It will all turn on whether Republican senators back Trump and corruption or back the Constitution and take their bitter medicine.
This comparison of two stories from the Express says it all.
One party want to raise the minimum wage to £10.50. The other party wants to raise the minimum wage to £10.00. One is hailed as a boon for workers while the other is derides as destroying jobs. Logic suggests that the higher amount ought to draw fire for hurting jobs, since the argument is that higher wages suppresses job creation.
But the paper does not follow logic. In Sept 2019 it rails against £10.00 proposed by Labour, but in Nov 2019 it hails the Tory proposed increase to £10.50.
This is nonsense. This is fake news. This is misinformation. The "free press" may be free, but they are liars. What the hell do we do about this?
It's scary in several ways. Look particularly at the bottom left under "Unfunded Liabilities".
Unfunded Liability - (n) liability is a debt or obligation one party owes to other(s) some future date in time. Debt gets commonly settled by payment or performance of a service. An Unfunded Liability describes any liability, debt, mortgage, or obligation that one either does not have savings set aside for it.
At present the US Government has unfunded liabilities of $126 trillion. Just to be clear the US government has promised to $126 trillion but has no budget for paying any of it. This is medicare, pensions, social security, government debt, and so on.
And the GDP of the USA is $19 trillion. So the unfunded liabilities are 679% of GDP.
What happens when the US government defaults on its obligations? The constraints on debts to banks and other nations mean they will get priority. A major power defaulting on debts would threaten global chaos on a scale that would make the global financial crisis look like a day in the park. So what will happen is defaulting on domestic obligations: medicare, pensions, social security.
The other thing to notice is the differential between rise in wages and the rise in health care and education. Comparing 2000 and now.
mean income: $30,872 → $33,445 (+ 8.3%) healthcare costs: $5,508 → $11,516 (+109.1%) college tuition: $11,897 → $24,568 (+106.5%)
This trend is only continuing. It goes with another fact: successive generations have saved less, and fewer have saved at all, for retirement. Saving for retirement requires that we earn enough to put some aside. In my life time the developed world has moved from the wages of one man supporting the entire family with some put aside for a pension, to the wages of both parents being insufficient for live on.
This has been great for corporate profit margins. It has been great for shareholder dividends in this generation. But in another 50 years not only will the population be aging and longer lived, but it won't have saved for retirement. Just at the time when the government's own financial crisis is forcing them to stop spending on domestic obligations.
“We are not from the Right
nor from the Left.
We are from the Bottom
and we are coming for the ones at the Top”
In the politics of the Bottom we have to acknowledge that the Bottom have a uniformly terrible experience of government bureaucracy. They especially have a terrible experience of the legal system and the welfare system. Less money is spent on the Bottom. They get a worse education. They work harder. They don't live as long. They are bullied by the state and management. They are despised.
So the Bottom might not see socialism (the state running things) as a great idea. Handing power to the people who torment, torture, and kill the Bottom may seem like a bad idea to folk at the Bottom. Hence, many vote on the right to the consternation of the left. And they would not be wrong. You cannot empower the disempowered, by handing power to the state. The social liberal aims to give the Bottom a step up through education, healthcare, etc. But the bias in the system constantly sabotages this.
Unfortunately, contra the Liberal myth, the Bottom want to be empowered without taking responsibility. Who appears to offer this? Fascists. The Mafia. Gangs...
"Join us! No one will push you around (except us), we'll look after you and your family, you'll make good money, and there is a career path if you want it."
Fascists understand the bottom better than Socialists or Social Liberals. This is not a good thing... Economic Liberals (NeoLiberals) see the Bottom as an obstacle to prosperity.
The is a problem of Essentialism: the idea that being at the Bottom is not a matter of circumstances or chance; that is is somehow meaningful. If you trace back, people at the Bottom usually had everything taken away by the Top at some point and never recovered.
We have to somehow find a new dynamic. The court cases in the USA which aim to hold the oil companies to account for their deceptions on climate change is one good sign. Similarly the holding of big pharma to account for the opioid crisis.
Orwellian doublespeak has become the norm for politicians and big business. The tools of semantics leave us scratching our heads when someone says something and then claims not to have said it, or to have said something different, or to have meant something different. Pragmatics takes the nonsense in it's stride and asks the same question: what is the author of the speech act trying to do.
Sowing confusion amongst your enemies using disinformation is a classic military tactic. It undermines the ability of the enemy to understand your true intent and leaves them expending time, energy, and resources sifting through your utterances looking for the truth.
The use of disinformation and propaganda in warfare is not new. The routine overt use of them in domestic politics is. This tells us that the elite are on a war footing. And we, the people, are their enemy.
Google and other large internet companies rely on section 230 of the Communications Decency Act to avoid liability for what people like me publish on my Google-owned blogs. This part of the CDA offers the internet giant legal immunity for content I create using their platform "in effect treating them as distributors of content and not publishers". And this seems fair enough. Google owns Blogger. There are millions of blogs on this platform and Google cannot reasonably moderate them expect retroactively if people complain. Google merely distribute my words. And I should be the one who has the liability.
Still, this doesn't explain why Google are giving a lot of money to quite so many right-wing think tanks. Nor why Google have been so defensive about being caught out.
“We’re hardly alone among companies that contribute to organisations while strongly disagreeing with them on climate policy,” the spokesperson said.
The reason they have been making contributions is that Republican senators, particular Ted Cruz have been calling for repeal of §320. And in particular Cruz argues that Google is biased in favour of the Democrats. That is that Google search results are biased. Here is Cruz grilling a Google representative on 16 July 2019:
Make no mistake, this is a disaster for Google! Because senators have power to change laws. If Google were deemed to be a publisher then they would be open to vast number of lawsuits from Republican supporters.
In Aug 2019 Slate ran an article with a bit more information on this.
"Fox News’ sister network Fox Business had discussed the July Senate testimony of a psychologist named Robert Epstein, who said that “Google’s search algorithm likely impacted undecided voters in a way that gave at least 2.6 million votes to Hillary Clinton.”
And President translated this into a Tweet that said in part "Google manipulated from 2.6 million to 16 million votes for Hillary Clinton in 2016 Election!" Now this is an obvious distortion of the facts and one of tens of thousands of lies that Trump has told.
Epstein works at the American Institute for Behavioral Research. But Epstein was already in a long standing conflict with Google: "In 2012, Epstein publicly disputed with Google Search over a security warning placed on links to his website" (NYTimes). He subsequently made a career of criticizing Google and other big internet companies. And of course in the increasingly divided and paranoid politics of the US, Republicans latched onto this idea that Google had manipulated search results.
Of course Google has responded through the usual channels - the mainstream media. They have testified in But the parts of the media controlled by Republicans of the extreme views we associate with Cruz and Trump are not bound to give Google a fair hearing. The comments under that Ted Cruz video are disturbing in their partisan credulity and paranoia.
The original liberal country, the home of liberal democracy, the nation that has inscribed liberalism into the very fabric of their constitution has produced a generation, of mainly younger white men, who hate liberalism. I saw yesterday that young white men have issued death threats to Greta Thunberg who they see as representing a vast conspiracy against them. Angry older white men like Jordan Peterson have only stoked the fire higher by confirming their fears of a liberal conspiracy. It's not quite clear what this liberal conspiracy will achieve apart from free healthcare and green energy, but the paranoiacs associate it with gun control and with progressive social values.
We often see negative comments about Google bowing to political pressure to censor results in China. We seldom see analysis of the kind of political pressure that Google has to deal with in the USA where society was always economically right wing, but has become increasingly socially conservative and authoritarian. And make no mistake, Epstein has put Google firmly in the cross hairs.
Google should be scrutinised. It enjoys a monopoly on the market and it is not always a friend to the individual citizen. Issues about privacy, data, metadata, and censorship are important and Google should be seen to be conforming to social norms on these issues, or at the very least complying with relevant law.
But the pressure Google face from paranoid Republicans and the rednecks who support Trump is something else. We can perhaps understand why they have resorted to giving large (but undisclosed sums) to right-wing think tanks. Google is fighting for survival and needs allies in the Republican Party to help thwart the insane clown posse that is Trump and his supporters. They cannot simply make a rational argument and present evidence because the other side don't operate on facts and reason. They operate on emotions and prejudice.
Still there is something fundamentally immoral about supporting these organisations that are contributing to climate change denial. Sure, other big companies are doing it, but since when has that been a valid moral argument? Two wrongs don't make a right. Climate change is the issue of our time. And even if we are wrong about everything and we clean up the environment only to realise that we needn't have, we still have clean air, clean water, lower deaths from pollution, and so on. We have to make the transition to a Green Economy anyway. Climate change just makes it urgent.
Lewis Powell argued in 1971 that the American free enterprise system was under attack by progressive social attitudes (by which he specifically meant the environmental movement, but at that time presumably also the civil rights movement as well).
The freedom of economic liberals has always been about the freedom to exploit the people and world for profit. The so-called free enterprise system only ever worked well for large multinationals that pursued and gained monopoly power. It wasn't free for anyone else. The free market ideology that combined classical economic liberalism and the new economic theory of monetarism never really addressed the complete lack of freedom of markets. Google is fighting to survive and against a pernicious trend led by a corrupt politician who is misusing his office, but they are using their wealth to buy political influence. This is the flaw in the free market system: those who could, always have manipulated markets for their own benefit.
Capitalism always ends up being about the elites fighting for power over the workers. If that means drafting our workers to kill your workers, then so be it. The various factions get involved in the deluded idea that by backing the right tyrant they will get special treatment in the new dispensation. So suddenly the young right-wing white men of the USA are against Google, even though Google's contribution to their lives far exceeds that of senator Cruz and this cronies. It's all part of a sinister plot.
All this is frankly terrifying. Trump, Cruz, the Republican Party, are corrupt and disinterested in dealing with climate change because it shifts profit making to other industries. Google, in a shameless attempt to buy political influence with the allies of these corrupt politicians in order to stave off a disadvantageous change i the law, are making large contributions to the very think tanks that fuel the Republican climate change denial. The only winner here is climate change denial.
The UK where I live is scarcely any better. Venal millionaire politicians are destroying democracy for money.
"By the end of the 19th century, some unforeseen but serious consequences of the Industrial Revolution in Europe and North America had produced a deepening disenchantment with the principal economic basis of classical liberalism—the ideal of a market economy. The main problem was that the profit system had concentrated vast wealth in the hands of a relatively small number of industrialists and financiers, with several adverse consequences. First, great masses of people failed to benefit from the wealth flowing from factories and lived in poverty in vast slums. Second, because the greatly expanded system of production created many goods and services that people often could not afford to buy, markets became glutted and the system periodically came to a near halt in periods of stagnation that came to be called depressions. Finally, those who owned or managed the means of production had acquired enormous economic power that they used to influence and control government, to manipulate an inchoate electorate, to limit competition, and to obstruct substantive social reform. In short, some of the same forces that had once released the productive energies of Western society now restrained them; some of the very energies that had demolished the power of despots now nourished a new despotism."
"As modern liberals struggled to meet the challenge of stagnating living standards in mature industrial economies, others saw an opportunity for a revival of classical liberalism. The intellectual foundations of this revival were primarily the work of the Austrian-born British economist Friedrich von Hayek and the American economist Milton Friedman. One of Hayek’s greatest achievements was to demonstrate, on purely logical grounds, that a centrally planned economy is impossible. He also famously argued, in The Road to Serfdom (1944), that interventionist measures aimed at the redistribution of wealth lead inevitably to totalitarianism. Friedman, as one of the founders of the modern monetarist school of economics, held that the business cycle is determined mainly by the supply of money and by interest rates, rather than by government fiscal policy—contrary to the long-prevailing view of Keynes and his followers. These arguments were enthusiastically embraced by the major conservative political parties in Britain and the United States, which had never abandoned the classical liberal conviction that the market, for all its faults, guides economic policy better than governments do."
I believe the present wave of authoritarian, nationalistic, and violent politics is the direct result of 40 years of neoliberalism undercutting workers pay and conditions, undermining job security, and generally telling the citizen that they don't matter. 40 years of neoliberal politicians and corporate CEOs corrupting public office and subverting democracy.
There is no govt money for the people because it's all going to subsidise multinational corporations. We have pogroms against "benefit cheats" but tax cheats who steal 100x more are routinely ignored.
This is a mirror of what we saw during the decline of classical liberalism. It "concentrated vast wealth in the hands of a relatively small number of industrialists and financiers," and the masses did not benefit; it caused cycles of boom and bust; and lastly those who had great wealthy used it to buy influence in and control of government, and to manipulate the electorate. (Adapted from Encyclopedia Britannica).
While authoritarian, nationalistic, and violent politics did not take hold everywhere as a result, it did take hold in enough places that we had to fight WWII to stop it. And after that we saw a brief period of humanistic, society-oriented politics until the early 1970s when the economic liberals merged their ideas with the new monetarism to create the new classical liberalism or neoliberalism. The neoliberals launched a "counterattack" against what Lewis Powell called the attack on the free enterprise system. They bought up the media. They bought up business schools. They founded think tanks to employ the business school graduates to keep the message in the media. They built power base that is more or less impervious to governance and democracy.
We did not learn the lessons of history. And now the farce is playing out as tragedy. The difference this time is that 40 years of neoliberalism have ignited climate change, which may well already be irreversible.
In response to this, Monbiot really does have much to offer beyond some simple common sense. I agree that insulting the opposition is a mistake. Insults raise the tension and make resolution less likely. Of course appeasement is not going to work in this case either. This also has historical precedent.
I think we have to take to the streets in large numbers and demand change. But the UK is a deeply divided country at present, and this favours the Romans Tories, while the Judeans Left cannot stop their infighting even for a second. So a political solution seems a long way off, because the party that creates discord is not going to be stopped by the party embodying discord. In the USA the impeachment of Trump looks encouraging, but remember that Pence will be his replacement. Elsewhere things seem to hang in the balance. And every day the earth is heating up...
Still trying to unravel political terminology. My latest attempt:
The opposite of liberal is socialist
The opposite of conservative is progressive
The opposite of libertarian is authoritarian
These three axes are theoretically independent of each other.
I think some will find this counter-intuitive because these terms are typically mixed up. We call authoritarian groups "far-right" and we think of liberals as of "the left". But I've always found this confusing and the more I study the history of liberalism, the less it makes sense.
Liberal/Socialist
These are primarily economic terms. Liberals are for small government, free markets, and laterly for monetarism (using monetary policy to control inflation). Socialists are for state ownership on behalf of the people, regulated markets, and usually take full employment as their economic goal. The original liberals were against democracy because it threatened a tyranny of the majority (which we have in the case of Brexit).
Many people will be confused by the association of liberalism with the right-wing. But all the key right-wing economic policies came from the classical liberals (Hobbes, Locke, Smith, Mills, etc).
To be far-right in this view is to advocate for allowing markets to decide everything without interference. In this sense, neoliberals who see a role for state in the markets are less right wing than the classical liberals. Mind you the role of the state is strictly limited to managing the money supply to control inflation (monetarism) and preventing monopolies. The latter has not prevented most industries seeing a massive contraction in the number of players. Virtual any class of goods and services you might purchase is not controlled by 3 or 4 companies globally. 4 oil companies, 3 food manufacturers, and so on. And though they are not monopolies these very large and dominant conglomerates have the same effect of suppressing competition. They simply swallow up any competition.
Socialists mainly advocate state ownership of the provision of basic services such as housing, utilities, education, and healthcare. In the past this led to full employment but also to inefficiency.
There are two distinct approaches to welfare. One of the classical liberal arguments for how the state should help citizens is "give a man a fish and you feed him for a day, teach him to fish and he can feed himself for the rest of his life." Liberals want to help a person to help themselves. What welfare liberals imagined is everyone with a fishing rod catching fish to feed themselves. Socialists take the approach that if the strongest members of the society go fishing with a net, they can catch enough fish to feed everyone.
But actually happens under liberalism is that a businessman captures the market on nets, boats, and fish and sells fish to people at the highest price they can extract from the people. In the name of freedom they make everyone slaves to this system.
Now socialism sometimes works well as it did in Scandinavia where everyone paid very high levels of tax (60-90%), but the govt ensured everyone had a job, everyone received an excellent education, very good healthcare, and they had the highest standards of living anywhere in the world. In other places, socialism led to stagnation as the state control was bureaucratic and apathetic. In Scandinavia government was highly motivated to look after citizens, whereas in Britain, with it's much greater population and history of rigid class distinctions, the system bogged down and worked against the citizenry.
As far as the environment goes, liberals treat corporations as legal persons who have the right to engage in economic activity unhindered by excessive regulation. Laissez faire attitudes meant that pollution, greenhouse effects, and habitat loss were acceptable consequences of economic activity, even if they negatively impacted on the health and well-being of citizens. This reminds us that liberalism has always talked expansively, but acted to preserve the privileges and profits of the elite.
Conservative/Progressive
Conservatives are for the status quo. The aging members of the Soviet Politburo were conservatives of the left. Americans who oppose changes to gun laws on the basis of individual liberty are conservatives of the right.
Progressives want to change things. One of the most striking changes of our time was the transition from Hick's interpretations of Keynesian economic policies to those of Friedman and Hayek interpreted by Alan Greenspan. I call this "progressive", not because it led to progress or was a good change, but because it moved decisively away from the status quo.
The problem here is that the term "progressive" is usually associated with progress towards some ideal. With liberals the goal is always individual liberty (though of course companies have the rights of individuals in law). Indeed liberals argue that liberty is not something the government can grant, because liberty is our inalienable natural right. Government can only limit or deny liberty. Most liberals accept, following arguments first made by John Locke, that there are a narrow range of situations in which the government may limit the liberty of an individual and that is where an action or activity harms another citizen.
Just as there are few if any socialists in the USA, there are few if any conservatives in the UK. The Conservative Party of the UK was historically a party which resisted change being proposed by liberals (free markets) and radicals (democracy). But they were taken over by neoclassical liberalism in the 1970s and began a series of massive social and economic reforms, completely changing how the UK economy worked, negating the power of labour unions, and privatising government assets and enterprises (crippling the ability of the state to help citizens).
Libertarian/Authoritarian
I think these terms are fairly clear. Although the UK follows liberal (right-wing) economic policies, these have been adopted by governments who insisted we have no choice. They also happen to resist evidence based policies in favour of the moral commitments of the leaders - typically a "we know best" approach. And this is authoritarian. At the extreme are leaders who dominate (or attempt to dominate) the process of governing, like Trump.
Beyond this are absolutist forms of government such as what we see in North Korea or Saudi Arabia. Libertarians of the right or left (anarchists) are resistant to anyone telling the what to do.
And at the other extreme are the people who don't think the government should tell anyone what to do. These are often people who are already in a position of privilege who see the liberty of other people as a threat to their own power. This has been a feature of the history of liberalism - classical liberals resisted democracy for example, working against the extension of voting rights at every step.
Many libertarians turn out to be socially conservative. They don't want anyone to tell them what to do but they're against the expansion of rights for other groups. So we see US libertarians against the extension of civil rights to transexuals for example. Fundamentalist Christians are anxious to assert their absolute rights to freedom of assembled, worship, and expression, but some of them will murder a doctor who performs an abortion because they insist their worldview is the only valid one. Any libertarian who is against pluralism should face some hard questions, though they seldom do.
Conclusion
This is where I've got to in trying to understand political terminology and the dynamics that it applies to. I'll be continuing to think about for a long time to come I suspect.
It does seem helpful to understand where these terms come from and how the usage has changed over time. It seems helpful to disentangle some of the terms that have begun to merge: like liberal and socialist or liberal and progressive, and all of these with "left-wing"; or conservative and right-wing.
If we can call things by the proper name then it will help us to understand our differences and similarities. For example, although I see many of the liberal attitudes as pernicious in practice (if not always in theory) I can appreciate that the concept of liberty is one that they championed. Liberty is certainly something to celebrate, but it would be nice to spread it around a little more in my view.
But also I think it will be essential in the fight against the climate and biodiversity crisis to frame it in the values of the people we are trying to persuade to help us. Where liberalism is the dominant ideology, as it is in most of Europe and America, it makes sense to frame the discussion in terms of liberty.
If someone poisons the air I breath and thereby shortens my life or causes me to suffer, then this can be frame in many ways. But one important way to talk about, given the values of the ruling elites, is as an infringement of my liberty. It is fundamental to liberalism that if the government has any role at all, it is to prevent other citizens from infringing on my liberty, especially in the form of harming me.
Neoliberalism: the idea that swallowed the world.The word has become a rhetorical weapon, but it properly names the reigning ideology of our era – one that venerates the logic of the market and strips away the things that make us human. By Stephen Metcalf. Guardian. Fri 18 Aug 2017.
Neoliberalism: Oversold?Finance & Development (IMF Journal), June 2016, Vol. 53, No. 2. Jonathan D. Ostry, Prakash Loungani, and Davide Furceri. Inside the stock exchange in Santiago, Chile, one of the first countries to adopt a form of neoliberal policies. Instead of delivering growth, some neoliberal policies have increased inequality, in turn jeopardizing durable expansion.
Neoliberalism – the ideology at the root of all our problems. George Monbiot. Guardian. 15 Apr 2016. Financial meltdown, environmental disaster and even the rise of Donald Trump – neoliberalism has played its part in them all. Why has the left failed to come up with an alternative?
I keep seeing naive arguments for degrowth that don't account for the disastrous impact of deflation on an economy, especially in the light of very high levels of private sector debt (across the first world). It would not be so bad if the advocates of degrowth had any sense of how deflation works, but they seem not to.
Deflation
Deflation has similar risks to inflation and can get out of hand just as easily. Deliberately pursuing a course of deflation is dangerous. In deflation, prices fall and consumers assume that if they delay a purchase the price will be lower. So it makes sense to delay it if possible. Demand for products tends to drop, putting further downward pressure on prices (there is a positive feedback loop). But as demand falls off, production has to fall off as well. Supply chains slow down and sometimes dry up. Wages start to fall, and businesses start to lay off workers, usually starting with the low paid, unskilled workers.
Normally we would hope that the fall in wages and rise in unemployment would counteract the deflationary spiral. But if we are actively pursuing degrowth then the deflationary spiral will keep going, we might see the first examples of hyper-deflation.
We don't live in the kind of world that accepts equality of economic outcome as a goal. Thus the poor are going be worse off. The middle classes will cling on, while they have job. The ruling elite are now excessively insulated against declines by the ability to short stocks and buy credit default swaps in advance of the change of economic policy. They will actually grab an even larger share of a shrinking pie. And this will exacerbate the effects of degrowth. Businesses will downsize and force workers to work harder to preserve investors capital.
Debt Deflation
A problem that almost no one talks about is the fate of debt under deflation. While it is true that buying power increases in the short-term the subsequent fall in wages will cancel that out in time. The trouble comes when your debt stays the same in numerical terms, but your income is shrinking in real terms. In effect deflation multiplies debt. And we need to be clear that the first world is highly indebted. Politicians bang on about govt debt, but private sector debt is much larger. In the UK private sector debt is about 350% of GDP. Household debt alone is slightly over 100% of GDP. But debt is currently rising. Households have spent more than they earned for 9 straight quarters in the UK.
The interest on these debts must be a significant figure, though I have never found anyone who could tell me what that figure might be. If the average interest rate is 10% then the interest payments on debts to the value 350% of GDP are 35% of GDP per annum! As I say, no one seems to be able to tell me what that figure might be, not even the heterodox economists who bang on about private sector debt.
Consuming Less & Kill the Third World
There are powerful arguments for consuming a great deal less in the West in order for us all to survive the climate emergency and to turn around the mass extinction. But this will have massive consequences.
However, this is going to be happening on a global scale. Those countries most at risk from the climate emergency are also most at risk from degrowth.
If Europe stops consuming, say, jute and cheap clothing from Bangladesh, then vast numbers of Bangladeshis lose their livelihood and have no welfare to rely on. And just as we wipe out their economy to save ourselves, their whole country is inundated with floods and because we are following degrowth we have much less to offer them in terms aid.
If Western Europe rapidly stops using gas from Russia and Ukraine for cooking and heating then 190 million people are affected. Gas is by far the largest export from Russia and it mainly goes to the EU. We could expect mass unemployment, again without a welfare safety net. And at the same time their wheat crops are failing from the persistent drought that is already beginning to affect them. But of course we have to stop using fossil fuels and soon.
We desperately need to stop consuming plastic and a lot of the plastic tat we buy is made in China. If China suffers a downturn then we could be looking at 100s of millions of people losing their jobs.
If we suddenly stop going to Greece, or Bali, or Fiji, any of a 1000 places that rely on tourism then again, there will be job losses that create a drag on the local economy, exacerbating the deflationary trend. Factor in the effects of the climate emergency and we can see that a lot of places are going to cease to exist.
There are many of these strong dependencies in a globalised world and the poorer nations are always more vulnerable than the rich.
Surviving the Climate Emergency/Mass Extinction
Degrowth has the potential to make things a lot worse and the worst impact will be on the poor. Which is not to say that we should not consume less. The catch 22 is that if we do not consume less we will probably all die.
I would say that our priorities would be consuming less locally produced energy. Cutting down the amount of coal and oil burned to power our lifestyles. Next would be transport. It's not enough that we all switch to electric cars. We have to be thinking in terms of using a fraction of the energy resources that we currently do. We need to switch from cars to bicycles, shared vehicles, and public transport.
Switching to plant/fungi/bacteria based foods so that animal farming is reduced will make an important contribution. We need to stop exporting animal products as well. But we need to be cautious about cutting back drastically on goods from poor and services countries, especially where their economic base is narrow. They need time to work out how they will survive the coming economic crash on top of the climate emergency/mass extinction.
Some single products such as palm oil might be good to target. Making and transporting the stuff involves cutting down vast swathes of rain forest and consumes vast amounts of energy. And yet it is not so central to any nation's economy that stopping it would bankrupt them. There must be many similar such products. Coffee and chocolate are probably both in this category and we'll probably discover how committed we are when we consider them.
I follow the local Extinction Rebellion (XR) Chapter on Facebook and someone legitimately raised some doubts about the goal of getting to zero carbon (i.e. long term net zero carbon emissions) by 2025, the second demand of XR. This is what I wrote in response:
Thanks for speaking your mind. I think we have to welcome doubts and questions as much as certainty and zealousness. Doubt and the ability to speak of doubts is essential to a free society. I certainly welcome you speaking up - though clearly you were worried about the reception you would get. And that last gives me a bit of concern.
And here's my answer to your conundrum. I don't know how we'll do it. I don't think anyone does know at the moment. Extinction Rebellion is not proposing a program which gets us there. It is proposing that we hold citizen's assemblies to figure it out.
In terms of optimism, I would like the offer a story from Delhi, one of the most polluted cities in the world. In 1998 the Indian Supreme Court order that all public transport and all taxis (small auto-rickshaws make up a huge proportion of the traffic in Delhi) must be converted to CNG within two years.
CNG - compressed natural gas - is not a zero emission fuel, but it produces substantially fewer emissions. And being India, of course, it took longer than 2 years to get every vehicle converted. But most vehicles were converted and it made a substantial difference to air quality. When I visited in 2009 Delhi was still polluted, but the air was much cleaner than it had been.
As far as I can see we simple lack the will. If I were to attend a citizen's assembly, here is what I would suggest to get us on target:
* All new government vehicles zero emissions immediately . * All new buses and taxis zero emissions within 2 years. * Implement congestion charging in all major cities combined with extended ultra low emission zones. * Deregulate micro generation and reinstitute buying surplus for the national grid. * Additional taxes on all international flights - incoming and outgoing - to be sure that the cost of flying reflects the cost to the planet. * Renationalise railways and rationalise fare structure to make trains competitive with air travel. * Immediately ban fracking and seek damages from those who pursued it. * Prioritise and expedite the building of two (or more) new thorium-based nuclear power stations (thorium almost as efficient and waste is less of a problem). All new reactors to use the same design and have interchangeable parts. * Commission Tesla to make us several whacking-great batteries (as in South Australia) to store solar and wind based power for non-generating periods. * Step up programs to insulate houses that have not been upgraded. Raise standards on new builds. * I would begin lawsuits to hold oil companies to account for their role in climate change denial with a view to recovering substantial amounts of wealth to reinvest in green tech. * I would seek to reforest where possible and to reflood wetlands (which are even better carbon sinks).
If elected I would also institute a Robin Hood Tax on all capital transactions - money cannot simply flee the country anymore. I would tax land so that rates of income and corporation taxes could be lowered - wealth is concentrated in land and mostly escapes taxation. I would introduce a tax on polluters and again lower income and corporation taxes. I would ban non-UK residents from owning residential property (which is the root of the housing crisis). I would also hold a modern debt jubilee: i.e. every person in the UK to be given between £5,000 and 10,000 with the understanding that any debts must be paid down before it can be spent (paid for by a government bond issue). And make personal credit harder to get from banks. We need household spending to drop below household income.
Just personally, I'd revoke Article 50 and begin aggressively arguing for reform of the EU away from Neoliberal ideology towards something more pragmatic. I would insist that the IMF and World Banks be similarly reformed away from Neoliberalism. Economic liberalism was a failure the first time around and it's a failure this time too.
This is based on many years of thinking about how to better run the UK/World economy and what I see as the best advice from heterodox economists. This is my version of the Green New Deal.
I believe it would create an economic stimulus to help us fund the transition to zero carbon. And I think that if we were to do all this, along with the ideas that other people come up with, we could get close to the target in the time required. The UK could easily become the world's first zero carbon nation and that would give us meaning and purpose. And we could export our success and help other nations achieve what we have.
After that we will need to look at zero growth or perhaps even shrinking the economy to lessen the load on Gaia. But one battle at a time.
From the Encyclopedia Britannica (16th Ed. Vo. 27, p.425):
By the end of the 19th century, some unforeseen but serious consequences of the Industrial Revolution in Europe and North America had produced a deepening disenchantment with the principal economic basis of classical liberalism—the ideal of a market economy. The main problem was that the profit system had concentrated vast wealth in the hands of a relatively small number of industrialists and financiers, with several adverse consequences. First, great masses of people failed to benefit from the wealth flowing from factories and lived in poverty in vast slums. Second, because the greatly expanded system of production created many goods and services that people often could not afford to buy, markets became glutted and the system periodically came to a near halt in periods of stagnation that came to be called depressions. Finally, those who owned or managed the means of production had acquired enormous economic power that they used to influence and control government, to manipulate an inchoate electorate, to limit competition, and to obstruct substantive social reform. In short, some of the same forces that had once released the productive energies of Western society now restrained them; some of the very energies that had demolished the power of despots now nourished a new despotism.
So the problems with classical liberalism was that it concentrated wealth in the hands of an elite and this elite misused the power this gave them. Let me put this in own words.
Most people did not benefit. Poverty was widespread and many people lived in slums, with all the accompanying social problems such as diseases and substance abuse. There was child labour and many people died in the factories.
The system of free trade lead to cycles of boom and bust. Left to itself the market is subject to extreme fluctuations. Some decades later, John Maynard Keynes showed that government investment during these periods reduced the severity and length of these periods.
Finally the government was captured by the wealthy interests, partly through lobbying, but mainly through rich people gaining party nominations and becoming representatives. Wealthy men also formed a series of exclusive networks based on such commonalities as where they went to school through which they promoted each others and excluded others.
These problems helped to give birth to the new liberalism in which the state took a role in helping the poor to help themselves. Liberalism itself abandoned the free market ideology because it was destructive to society and created a form of government that was not concerned with liberty, but which rather tended towards a tyranny of the minority.
And when Milton Friedman and Friedrich von Hayek revived classical liberalism, creating neoclassical liberalism or neoliberalism, they ignored this history. Indeed, quite against the facts of history Hayek argued in 1944 that redistribution of wealth lead inevitably to totalitarianism. And subsequent history has shown that this is not true.
Neoliberalism became the dominant political ideology of the world. Poverty decreased in the third world but increased in the first. Economic recessions came thick and fast, with the global financial crisis being the worst since the Great Depression. And government has been captured by a wealthy elite.
But worse, this time around, is the existential threat from the destruction that large corporations and governments have wrecked on the environment. Pollution, extreme weather, sea-level rise, and mass extinction threaten our very survival.
We abandoned classical liberalism because it didn't work. It still doesn't work in it's neoclassical form. And it's because Adam Smith and John Stuart Mill and others were fundamentally wrong about how human beings make decisions and about the fact of being a social primate. We need a new politics which takes into account what we now know about people.
"Those who cannot remember the past are condemned to repeat it."
An old friend posted a video clip of George Monbiot on Frankie Boyle's TV show New World Order talking about the impending climate catastrophe.
But my friend, like me, finds anti-capitalist rhetoric unconvincing. He thought I might do a better job of explaining it, so here goes.
I think we have a problem in that people of George Monbiot's age and younger have never known a form of capitalism that is not Neoliberal. They have internalised this identification. The only prominent alternative to Neoliberalism is Chinese authoritarian socialism. And no one in their right might wants that for the UK. I agree that the system needs to change, but I don't think we should frame this as an attack on capitalism, I think we have to talk about Neoliberalism which goes deeper than economics.
What does this mean?
Classical and Social Liberalism
Liberalism is all about liberty. This is great, it has won us freedom of religion, and of speech, and to some extent freedom of economic opportunity. Liberty is clearly a good thing.
Classical Liberalism, the origin of the political right-wing, argued that government should not get in the way of any individual's economic activity. Let manufacturers manufacture, let traders trade. Which in principle is OK.
However, in practice this led to the widespread untrammeled exploitation of workers, to the general degradation of humanity, and very significantly to the French Revolution. Because in practice, without any checks and balances, the new industrialists treated people appallingly badly. Child labour, no equal pay, loads of deaths at work, squalid living conditions.
But of course they weren't all like that. The Cadbury Brothers in particular were not. They moved their factory to the edge of town where there was clean air and water, created a lovely little village for their workforce, and treated everyone with respect. Other Quaker businesses were also good employers. But on the whole the industrialists were monstrous. And the degradation is vividly portrayed in the novels of Charles Dickens.
Social liberalism aimed to level the playing field. Where socialists (the left-wing) would take care of people's needs, liberals want to help them to help themselves. You do this by giving them enough and no more. They argue that there is dignity in work. Except that economic liberal happily removes the dignity from work.
Liberalism was directly tied to the British Empire. John Stuart Mill, a key Liberal thinker worked for the East India Company. Imperialism required some intellectual justification. And there was already a nasty churning mess. Firstly Christianity saw all humanity as fundamentally flawed. People are sinners. People are bad. Workers, in particular are lazy. (See Mercantilism: Six Centuries of Vilifying the Poor). But this also became mixed with a version of Darwinism in which instead of apply to species evolution applied to individuals. The individual took centre stage in intellectual life after the Enlightenment. Romanticism reinforced this, and Mill also loved Wordsworth and Coleridge. Survival of the fittest started to look like a justification of Empire, or exploitation of workers and indigenous peoples. It seemed natural that the new ruling class of industrialists, the bourgeoisie as Marx called them, should be free to rule over others and exploit their labour, even to the point of owning slaves.
But Social Liberalism tempered the worst aspects of Classical Liberalism and was soon joined by a workable form of Socialism (at least in Europe - there are no real socialists in the USA). And this is how Classical Liberalism, what we would term the economic right (small government, free enterprise etc) came to be associated with the political left (looking after people in need). I think this clouds the picture. Certainly I have felt confused because I seemed to be a social liberal and yet I kept finding myself on the wrong side of debates, because actually I'm not a social liberal, I'm a libertarian socialist. The difference is brought out by the Political Compasswebsite.
Neoliberalism
Neoliberalism arose as a response to a perceived attack on the American system of free enterprise. It involved a reassertion of the values of Classical Liberalism combined with some new twists, hence Neoclassical Liberalism or Neoliberalism. Read the Lewis Powell Memo to the American Chamber of Commerce in 1971 for and outline of this kind of thinking. Everything Powell suggested came to pass. For example, conservative businessmen bought up the media and used their wealth to leverage a take over the teaching of economics in universities. They bought chairs and founded schools. They employed the graduates in think tanks and as lobbyists. They imposed a monoculture on business studies in the USA and his caught on around the world. So now, all the journalists and critics have studied the same kind of economics as the politicians and have no effective critique of Neoliberalism. There are critiques, but they are ignored. And note that despite causing the global financial crisis, the curriculum in economics departments around the world has not changed.
In Neoliberalism the liberty of the individual is extended to the corporation which now has the same rights as a person. In this view the corporation should be free to engage in economic activity without interference from government. No environmental controls are desirable since they inhibit economic activity (this was a specific concern of Powell).
Also this is now linked to the idea of the economic market that embodies the micro-economic principle of supply and demand. However, Professor Steve Keen has pointed out that from around the time of the Lewis Powell Memo, the economics profession has known that the so-called law of supply and demand is bunk, but that's another story.
In this view if pollution is undesirable then the market will punish the polluter by reducing demand for their product. Alan Greenspan, long time Secretary of the US Treasury under successive presidents both Republican and Democrat (and personal disciple of the extremist philosopher Ayn Rand) refused to prosecute corrupt banks because he believed that the market would punish them. It did not and eventually we had the global financial crisis. And that crisis was not solved by the market. It was resolved by government. In the UK the government spent the equivalent of one year's GDP to prop up failing banks. The alternative was to watch the world's financial systems collapse leaving society in chaos.
Market forces depend on knowledge. If a polluter can hide their pollution or lie about the impact—as oil and tobacco companies have done for decades—then supply and demand breaks down as an effective mechanism. If the corrupt practices don't come to light or are defended as legitimate forms of economic activity—as happens in the housing and finance industry—then the market does nothing at all. Any imperfection in knowledge or human rationality causes the markets to malfunction. And the ignorance of consumers is a vast abyss because the same corporations who pollute and lie about it also control the media.
Oh, by the way, we've known that humans don't use reason to make decisions and choices for at least 50 years. Which is why adverts are now all about imagery and emotions rather than facts and information. All decisions involve emotional weighting of which information is salient to the decision. We have free will, but not as classically envisage, not countracausal free will that only relies on reason. We create reasons for our actions on the fly and only after the fact. (See Mercier and Sperber, The Enigma of Reason)
Neoliberalism, like all forms of liberalism is based on the idea of liberty. But proponents of liberty have always made exceptions. And those exceptions have often defined where liberals feel comfortable with violence. Citizens are free but immigrants are not. Soldiers can shoot foreigners but not citizens. Men can vote, but not women. Some of the men who wrote that "all men are created equal" owned slaves. Police target black people. A car may emit deadly toxins and carcinogens but a citizen may not smoke a little weed (for their own good). And so on.
The Liberals have always emphasised the aspects of liberty that most benefit the ruling elite, while occasionally mitigating for the disasters that this causes in society. So austerity increased poverty and homelessness in the UK from 2010 onwards, but hey, two men and now get married and rich people have a choice of which school their kids go to. Liberty, but within limits and almost always to benefit the elite - or at least not to discomfort them. Indeed one might argue that by allowing same-sex marriage secularists were really just thumbing their noses at the Church which has often been the enemy of liberty (especially in the days of Classical Liberalism).
Neoliberalism prioritised the liberty of corporation over the liberty of citizens. So if a corporation decides to cut down the Amazon rainforest, do fracking in Blackpool, or pour toxic waste into a river, then Neoliberalism says that impeding them is only justified if it does not affect the corporation's ability to make a profit. Our rights to clean air, water, and food are curtailed in favour of the rights of corporations to make a profit.
For example, at present as many as 38,000 people die each year in the UK from air pollution according to Public Health England, the government's own advisory board. Now of course every one deplores this loss of life. And some steps are been taken but on the other hand most large UK cities have illegal levels of pollution under EU law. And there is a good chance we'll lose that protection after Brexit. Air pollution is an accepted part of life. Just 272 stabbings in London in 2018 cause a huge public outcry, with the authoritarian arm of the media constantly feigning outrage. 90-100 people die every day (on average) from air pollution and there is extreme reluctance to curtail the main culprit: motor vehicles.
The rights of corporations override human rights, although not always. Still, corporations are always pushing the boundaries of how they can exploit workers and the environment. Many corporations behave in ways that if we encountered them in a person would constitute a mental illness.
Corporation that apparently lack empathy for example and exploit people for profit are like psychopaths. Indeed research shows that executives are more likely to have the mental characteristics of psychopaths. They lack empathy which would stop them from exploiting people through feeling their pain. Many high level politicians literally seem impervious to the emotions that we would normally expect to see in response to suffering.
This is why the picture of Jacinda Ardern, current PM of New Zealand, openly emoting caused a stir. We never see that in the UK. We have curiously unemotional people in power. In fact most of them give me the creeps.
Conclusion
This is what we have to fight against, but it's not capitalism per se. Capitalism is just the investment of surplus wealth in projects. By using their labour workers create further wealth that is shared between all parties: workers earn wages, investor earn profits, and landowners (resource owners) earn rent. And any surplus is reinvested. This is a Marxist definition, but it's as good as any.
There's nothing inherently bad about this. And framing what we want as an attack on Capitalism is counterproductive. We are not against investments and profits per se, I think, we are against corporations being able to override our human rights in pursuit of profit.
If we frame our fight as being with capitalism then we imply, for example that we want to end the concept of private property - this is a key Marxist policy. And how do we do this? Because people are not going to give up their property without a fight. We can nationalise some stuff, but not everything.
The problem is with how we are defining liberty and the exceptions we apply. The extension of rights to corporations which override human rights the first thing I would rescind. My first law would be no one is allowed to pollute. I can't just go next door and take a shit on my neighbour's lawn. There are no exceptions to this. And given that we mostly live in cities now, then some cooperative form of dealing with waste is necessary - sewers and treatment plants, yadda yadda.
But the output of treatment is a vast resource of nutrients we need for growing food. In medieval China, night soil collectors became very wealthy transporting the shit of Changan to the farmers outside the city. The population density inside the walls was greater than modern day Manhattan. Intensive farming was made possible be recycling human waste. Which is also why traditional Chinese cuisine does not involve raw food or salads. Cooking killed the fecal bacteria that were everywhere.
I agree with George Monbiot and Extinction Rebellion that the system is broken and that climate change is urgent. But we have to frame our response in ways that will help rather than hinder. And we have to be clear about the nature of the problem and the possible solutions.
We won't solve any problems through adopting authoritarian forms of government. Indeed one the problems we face is that governments cannot hear the people because they have industry lobbyists shouting in both ears. In my view, liberty has to apply to getting change. We cannot use force to achieve our aims. But we do need to be telling the truth, fighting the lies, and getting the government to take the problem seriously. We do need rapid change and to move our investments away from fossil fuels.
I'll end with this observation. One of the suggestions is that the UK rapidly stops using gas for cooking and heating. Presumably we'd extend to this to Western Europe if possible. However, if we rapidly degassed our economy then Russia and Ukraine would be bankrupt overnight. At the same time the repeated droughts are already affecting wheat crops, their other main export. 190 million people suddenly lose their main source of income at the same time their food supplies start to run out. Can anyone predict what they will do?
Every course we chose will have serious consequences at this point. And yet we must choose quickly and act quickly, because inaction will be the worst. American literary critic, Harold Bloom, dubbed this kind of dilemma the Hamlet Complex. We appear to be in the feigning madness part of the story.
A short post on the Real-World Economics Review Blog has given me a new image for thinking about national debt. We have been taught by politicians who are either ignorant or mendacious to see the nations finances as like a household budget. We must live within our means. This is bullshit.
The Nation = Household analogy is bullshit because the household cannot issue its own currency or interest bearing bonds. A nation can borrow from its own citizens. And when it does, a nation guarantees the interest rate. It is typically low, but the risk of losing your investment for a wealthy country is almost nil - even if the economy is not doing well. This is important.
So let's consider a fictional household.
Rob worked hard and retired with a nice pension. But he and is wife Sue were used to being busy and after a couple of trips abroads started thinking about starting a business. Sue could make nifty widgets and Rob had all the skills necessary to turn widget-making into a business. But they needed seed money and didn't want to risk all of their own capital because they wanted their three kids, Jack, Sally, and Eve to inherit. So they decided they would borrow some money to finance their start up.
SCENARIO ONE
Rob borrowed money from The Bank. He borrowed $100,000 at 10% interest, payable monthly and based on the amount owed at the beginning of the year (real banks use more complex formulas).
In this scenario the business breaks even after 5 years and pays back the original loan in 10. The bank gets its $100,000 back and another $100,000 in interest. So not counting the profits from the business, the family have paid $100,000 to a bank in rent for the money they used. That money did not cost the bank anything to create and most of the admin is done automatically by computers. A staff member spent an hour on it at the start, but the rest was all handed by automated payments. So The Bank makes a healthy profit and pays out high salaries to executives and dividends to investors.
There is a net loss to the family of $100,000. This is what concerns people about national debt.
SCENARIO TWO
Same family except this time Rob borrows the money from his grown up kids. Jack has a high paying job and $25,000 in savings. Sally has $5,000, and Eve has $15,000. They get the balance of $55,000 from The Bank.
Rob and Sue agree to pay out the same interest rates to their kids so the over all sums are the same. In total $100,000 of interest is paid. But now some of it goes back to the kids - their capital is increased. As they are now investors, the kids also get a share of the profits as they go so again their capital increases as a result of the investment. And they all still stand to inherit the original nest egg.
However, they realise that the kids who invest least will benefit least. They know they need an employee so they offer Sally the job. Now Sally gets a little interest, some dividend, but she also gets wages paid for out of profits. So her share, boasted by investing her labour, goes up considerably compared to just a small investment of capital.
Discussion
Scenario One is Bullshit spread by Neoliberal psychopaths.
Scenario One has been extraordinary influential in public debate. This is what people think happens. The trouble is that it isn't. Politicians have sold this image because it justifies their economic liberalism agenda. This is the kind of libertarianism that aims to liberate business from the constraints of the state; to allow them to make unfettered profits with no concern over the broader consequences (such as environmental degradation or climate change).
One problem is that such businesses routinely resort to oppression and violence to achieve their profits. Unfettered such businesses would resort to using slave labour or sweatshops. They would not pay a wage on which anyone could live. Workers would have no protections. This is part of what is driving the right-wing Brexit project - the EU is protectionist and requires the UK to treat its workers better than Tories think they should be.
The other problem that we have seen is that businesses are like children. Without clear boundaries they will routinely operate in ways that are immoral. And even with clear boundaries they will constantly be testing them and pushing the envelope. Amazon are perhaps the best known example of this. They monitor productivity on a minute scale so that they get the maximum work from a worker, with no consideration for the impact this has on workers. They'd obviously much prefer to employ robots or slaves but the technology is not yet flexible enough to make it cost effective.
The prosecution of corruption in the finance industry has been devilishly complex and slow. Sometimes immoral practices, such as betting that tranches of high risk mortgages (wrongly been approved as safe investments) would fail to be repaid enmasse, turned out not to be illegal. But there was plenty of knowing illegal behaviour as well, such as manipulating interest international rates.
How can businesses that are run by adults behave with childlike immorality? This is a complex question but it does seem that people who do well in business tend to score highly on measures of psychopathy. In other words they lack interest in the lives of other people. It's not that they lack the ability to experience empathy. They do know how other people feel, but they just don't care. That thousands of people lost their life savings and their homes in the global financial crash does not illicit compassion or sympathy.
More recently we have seen how Big Oil use their vast wealth to lie about climate change and inhibit our ability to respond to it on a national level. Like Big Tobacco, the oil companies knew about the harm being caused by their product but continued to deny it. But more than this they spend billions each year lobbying politicians and trying to impede any attempt to prevent climate change.
The "childlike" analogy is quite generous. Business is a Lord of the Flies situation (although I rather think that the children involved were modelled on English public schoolboys and that is hardly universal). Indeed it might be better to see businesses as predatory psychopaths who have to be regulated, surveilled, and policed or they run amok. Not all of them, but enough that it could result in the enslavement or death of much of the population if we did not intervene.
So libertarianism when it comes to business is a very bad idea indeed. And these are the people who are telling us that the nation's finances are like our household finances.
Scenario Two is simplistic, but a better reflection of reality.
The second scenario, while still an over-simplification and probably a bit Pollyanna-ish, gives a better idea of what government borrowing is like. Japan, for example, has very high government debt, but it is almost entirely owed to Japanese citizens rather than to banks or foreign governments. In the blog post mentioned above, Lars Syll makes the point that in this case the Japanese people pay their taxes to pay off the debt to the Japanese people. What is the net effect for Japan? Syll argues that it is zero. I.e. that when Japanese pay tax it is going to the Japanese state which benefits Japanese people.
I don't think it is quite zero however, because there is some inequity built into this model. All citizens pay tax. With the prevalence of indirect taxes such as sales tax (VAT, GST, etc) everyone pays tax, even those who do not pay income tax. But not everyone has the surplus wealth required to buy government bonds. Those who invest more of their wealth in the government and get a greater share of the taxes than others. By this I mean that everyone benefits from things like roads and other national infrastructure that tax pays for. But bond holders get a personal share of the tax revenue as interest. There is a net transfer of wealth from the poor to the wealthy.
This is why the government needs to create jobs. In the scenario I made the parents employ their daughter to illustrate how to make things a bit fairer. By employing people the government helps to redistribute the benefits of national wealth to people who would not otherwise get it.
Some opponents of this model argue that government is inefficient. But in highly privatised Britain we've seen any number of cases of private sector inefficiency or outright incompetence. Our train system is a case in point. Fare structures are incomprehensible, train stock is deteriorating, and in some areas the service is appallingly bad. Delayed maintenance in order to make a profit after having underbid to get the contract has become a serious problem in many sectors. For example, the roads where I live are a mess and as a cyclist I really notice this!
One of the reasons that governments do things poorly is that they are chronically underfunded in regimes with low taxation. But that is a whole other story.
Conclusion
National debt is certainly not unimportant. But it is very far from being as important as Neoliberals make out. Their ideology calls for zero government interference in business. Government investing in the nation, financed by borrowing from the nation, is seen as interference. But it is moronic to think we can do without this.
In fact Keynes showed, and it is still true, that for best results the government and the private sector have to work in tandem. When there is a slump in the private sector, the government takes up the slack. And when the private sector is booming then the government can focus on paying down debt.
The major problem we have in the world today is private debt, both the private business sector and households. Earlier this month it was announced that household spending outstripped household income for the 9th quarter in a row.
The levels of private debt are leading to chronically slow demand which leads to low growth. Growth is becoming a controversial topic these days, but GDP growth can be drive by increased efficiency which might lead to lower emissions. And any transition to a zero or negative growth system will have to be funded somehow.
Attempts by government to reduce spending at this time are only making the problem worse. An example close to my heart is that cuts to welfare have a negative overall impact. People who rely on welfare tend to live hand to mouth. We spend all that we get in local shops. If you cut what we spend then that means less is spent in local shops. Local shops spend less at wholesalers. Wholesalers buy less from suppliers. Over all less tax is collected and it has a negative impact on the deficit.
Contrarily if you increase welfare spending it is all spent locally. The local shops do more business and pay more tax. They buy more from the wholesaler who also does better and pays more tax. And so on. Much of the welfare spend makes its way back to the government in taxes. But it also stimulates the economy by increasing demand. While the poor people on welfare might spend on small items, the shopkeepers and wholesalers buy bigger ticket items. It also creates jobs because the retail, wholesale, supplier chain is busier. More jobs means more tax revenue.
The big problem with high levels of private debt is that it leads to what Richard Koo calls a balance sheet recession. At some point the interest bill on the debt becomes intolerable. At that point, instead of using surplus income to buy luxuries, people start paying down debt instead. If they all do that around the same time then it sends demand plummeting and causes a recession - overall economic activity shrinks, workers are made redundant, tax revenues fall, and so on.
One of the dangers for the private sector is deflation - when wages and prices start to fall. When this happens the value of debt goes up. That is to say, if there is deflation when you are in debt, it is the same as taking on more debt.
In any case we need to change the tune on national debt. We need to banish the chequebook metaphor or the household budget metaphor. Although people easily understand this the analogy is false, the reasoning is false, and the outcome is confusion about what is needed.
National debt is like borrowing from your family when you know that you have plenty of cash coming in to pay them back. It's a good investment. The interest stays in the family. And the principle stays in the family.
