Friday, May 18, 2018
RE DK CURRENT POST LEFT ECONOMICS
These are a few comments that struck me, but since there are more perhaps, I thought to set them here rather than cluttering DK's site too much.
"...There is one huge difference which Crain's review, at least, does not mention. In the 1930s, the world economy had largely broken down; today it is generally thriving....In both cases, however, profound economic changes had wreaked havoc among the lower classes of society in various parts of the world, causing significant hardship and anxiety. " DK
In the 30s, the world economy broke down as a result of overwhelming economic and financial consequences of war, not because of Enlightened or unenlightened theories of economists like Keynes, Polanyi, or anyone else, or because of mere government policies based or not based on them. Keynes himself was well aware of that, but also coincidentally overstated his (correct) case re economic consequences of the peace.
Another point to make about this passage is that if the world economy is generally now thriving, a thesis coincidentally contrary to most economists' views it seems (most economists now consider all economies in the world fragile, or so they say), how does that square with this companion assertion: 'profound economic changes had wreaked havoc among the lower classes of society in various parts of the world, causing significant hardship and anxiety' ? How could a thriving global economy simultaneously be wreaking widespread hardship? I suppose by thriving he means thriving for the top .1%, but that kind of 'thriving' can hardly be equated with 'healthy'.
A somewhat different point is that if such changes have wreaked havoc on lower classes, hardly a homogeneous group across countries and civilizations, masked over by the singular term "society", haven't they also wreaked havoc on other higher up classes in those same societies, plural, as well? A class society is after all rather like a swimming pool.
Another DK quote:
"While discussing Kuttner's book, Crain refers to Thomas Piketty, but not to Piketty's most fundamental insight: that the natural tendency of capitalism is to produce inequality, because capital accumulates more rapidly than the economy grows as a whole."
As I recall, Piketty claimed to have established that capital has been accumulating more rapidly than growth since only about the beginning of the so called Industrial Revolution.
Most reputable theories of what is called capitalism seem to argue that capitalism has been around not merely since 1800 or so but since around 1500. This is one tenet of Braudel's work Civilization and Capitalism 1500 To 1800, as I recall. But it was not a natural tendency for capital to accumulate faster than growth before about 1800.
I haven't looked at Braudel for a long time, but it may even be that Piketty took his most fundamental insight directly from Braudel's work, although Braudel would not have been in a position to marshall data as Piketty has since been able to do.
Another DK quote:
"...Piketty's most fundamental insight: that the natural tendency of capitalism is to produce inequality, because capital accumulates more rapidly than the economy grows as a whole. That, we should note, is true regardless of the degree of free trade and globalization at any particular moment. If globalization increases economic growth overall--and it evidently does--it will increase inequality more rapidly, but capitalism itself, not globalization, causes inequality--unless something is done to reduce it...."
The natural tendency of capitalism to produce inequality was a tenet of Marx long before Piketty, not because capital accumulates more rapidly, but for other reasons Marx described.
Is this also true, that capital accumulates more rapidly regardless of the degree of free trade and globalization, at any particular moment? No.
Marx's view was that the natural tendency of capitalism was to globalize. He considered that globalization and the spreading of inequality globally was an inherent feature of capitalism, not an accidental feature. The rising up of the workers of the whole world was intimately related to the concept of international capitalism.
Thus Marx would have differed with Professor Kaiser re capitalism, not globalization, causing inequality; and differed re Professor Kaiser's thesis that capitalism alone causes inequality regardless of the degree of free trade and globalization at any particular moment.
I side with Marx in this discussion, as far as it goes, not that there are not other possible drivers for globalization than market capitalist ones.
Another DK quote:
"While discussing Kuttner's book, Crain refers to Thomas Piketty, but not to Piketty's most fundamental insight: that the natural tendency of capitalism is to produce inequality, because capital accumulates more rapidly than the economy grows as a whole."
As I recall, Piketty claimed to have established that capital has been accumulating more rapidly than growth since only about the beginning of the so called Industrial Revolution.
THOMAS PIKETTY, a French economist from the Paris School of Economics, is best known for his involvement in the joint project (with people like Emmanuel Saez and Anthony Atkinson) to build long-term series on income earned by the rich. It is thanks to these efforts that we know, for example, that the share of American income earned by the top 1% has returned to a level close to 20%, nearly matching the all-time high set in 1928. But Mr Piketty is likely to become much better known in 2014, when the English version of his 2013 book is published in March. The book aims to revolutionise the way people think about the economic history of the past two centuries. It may well manage the feat.
It is, first and foremost, a very detailed look at 200 years' worth of data on the distribution of income and wealth across the rich world (with some figures for large emerging markets also included). This mountain of data allows Mr Piketty to tell a simple and compelling story. Wealth as a share of income held steady at very high levels in the 18th and 19th centuries, contributing to stark inequalities in wealth and income. Rising worker wages in the late 19th and early 20th centuries stabilised growth in wealth concentrations but did nothing to reduce inequalities, which were only eliminated by the great shocks of the period from 1914 to 1950. Economists tricked themselves into thinking that the resulting compression in the income and wealth distribution was a natural feature of the maturation of capitalist economies. But as the shocks receded wealth began to accumulate again and growth in income inequality resumed. From the perspective of 2014, concentration of wealth and income begins to look like the natural state of capitalism rather than an exception.
Most reputable theories of what is called capitalism seem to argue that capitalism has been around not merely since 1800 or so but since around 1500. This is one tenet of Braudel's work Civilization and Capitalism 1500 To 1800, as I recall. But it was not a natural tendency for capital to accumulate faster than growth before about 1800.
I haven't looked at Braudel for a long time, but it may even be that Piketty took his most fundamental insight directly from Braudel's work, although Braudel would not have been in a position to marshall data as Piketty has since been able to do.
Another DK quote:
"...Piketty's most fundamental insight: that the natural tendency of capitalism is to produce inequality, because capital accumulates more rapidly than the economy grows as a whole. That, we should note, is true regardless of the degree of free trade and globalization at any particular moment. If globalization increases economic growth overall--and it evidently does--it will increase inequality more rapidly, but capitalism itself, not globalization, causes inequality--unless something is done to reduce it...."
The natural tendency of capitalism to produce inequality was a tenet of Marx long before Piketty, not because capital accumulates more rapidly, but for other reasons Marx described.
Is this also true, that capital accumulates more rapidly regardless of the degree of free trade and globalization, at any particular moment? No.
Marx's view was that the natural tendency of capitalism was to globalize. He considered that globalization and the spreading of inequality globally was an inherent feature of capitalism, not an accidental feature. The rising up of the workers of the whole world was intimately related to the concept of international capitalism.
Thus Marx would have differed with Professor Kaiser re capitalism, not globalization, causing inequality; and differed re Professor Kaiser's thesis that capitalism alone causes inequality regardless of the degree of free trade and globalization at any particular moment.
I side with Marx in this discussion, as far as it goes, not that there are not other possible drivers for globalization than market capitalist ones.
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