BABYLON AND BEYOND: Anti-capitalist economics

3 WHITE COLLAR GLOBAL CRIME SYNDICATE: KORTEN, KLEIN AND OTHER ANTI-CORPORATISTS

2008-09-03T13:33:00.000-07:00

on to a new chapter folks, I am slow blogging here cos I have two other blogs and a life! Corporations and fascism are a good starting point....

IBM, primarily through its German subsidiary, made Hitler’s program of Jewish destruction a technological mission the company pursued with chilling success. IBM Germany, using its own staff and equipment, designed, executed, and supplied the indispensable technologic assistance Hitler’s Third Reich needed to accomplish what had never been done before - the automation of human destruction. More than 2,000 such multi-machine sets were dispatched throughout German-dominated Europe. Card sorting operations were established in every major concentration camp. People were moved from place to place, systematically worked to death, and their remains catalogued with icy automation. (Black 2001: 8-9)

To the anti-globalisers, the corporation is a devilish instrument of environmental destruction, class oppression and imperial conquest. But is it also pathologically insane?
That is the provocative conclusion of an award-winning documentary, called ‘The Corporation’, coming soon to a cinema near you. People on both sides of the globalisation debate should pay attention. Unlike much of the soggy thinking peddled by many anti-globalises, ‘The Corporation’ is a surprisingly rational and coherent attack on capitalism’s most important institution.

Like all psychopaths, the firm is singularly self-interested: its purpose is to create wealth for its shareholders. And, like all psychopaths, the firm is irresponsible, because it puts others at risk to satisfy its profit-maximising goal, harming employees and customers, and damaging the environment. The corporation manipulates everything. It is grandiose, always insisting that it is the best, or number one. It has no empathy, refuses to accept responsibility for its actions and feels no remorse. It relates to others only superficially, via make-believe versions of itself manufactured by public-relations consultants and marketing men. In short, if the metaphor of the firm is a valid one, then the corporation is clinically insane. (Economist, 6 May 2004)

An unseasonable day. I have cycled for hours through streets empty of everybody but the police and knots of rather timed protesters, its like a city under siege. May Day 2002, McDonalds, Kings Cross, London. Five thousand anti-capitalists are on the street, bringing traffic to a halt. Home made veggie burgers are handed out to those about to enter the fast food unit. McDonalds is targeted for promoting animal abuse, hostility to unions and a war on high quality food. In the late 1990s the Mclibel trial, the longest libel action in British legal history, took place when the corporation sued a tiny anti-capitalist group for distributing a leaflet entitled ‘What’s wrong with McDonalds’ (Vidal 1997). Jo Bove, in an episode of Roquefort rebellion, demolished a McDonalds in the south of France in protest at US protectionist measures against French cheese (Herman and Kuper 2002: 57). McDonalds, along with Coca Cola and Bill Gates’ Microsoft, has become a convenient hate symbol.

Vaccinating against anti-capitalism

2008-08-08T04:29:00.000-07:00

Soros, Stiglitz and associates provide a penetrating critique of the Washington consensus that is driving globalisation. They show how some of the axioms of conventional market economics are flawed, arguing that such concepts, consciously or otherwise, are used to legitimate increasing wealth and power for a corporate elite. Soros summarises stating, ‘the system is deeply flawed. As long as capitalism remains triumphant, the pursuit of money overrides all other social considerations’ (1998: 102).
Characteristically, looking at the shock therapy that has wrecked Russian attempts to build a stable society, they praise the more cautious and successful Chinese road to capitalism. While Soros has predicted that globalisation may depose the Chinese Communist Party he suggests that capital controls allowed them to escape the 1997 Asian crisis that wrecked the economies of their neighbours. Yet such praise suggests the limitations of their approach. Soros and Stiglitz make little comment on the Tiananmen Square massacre, the occupation of Tibet or the Three Gorges dam project which will flood large areas driving millions of peasants from their land without compensation. Ecological issues are pretty much secondary to them. While advocating transparency they still believe in a world dominated by a wealthy minority who make key decisions, indeed Soros is very keen to use his wealth to increase his own personal political influence. They have no notion that economic growth is unsustainable.
Soros and Stiglitz recognise that market failure is a problem and suggest practical ways of dealing with it. Their vision of an economic alternative to neo-liberalism is neo-liberalism managed a little to make it fairer and more stable; their utopia is Clinton’s America, or a less muscular version of Karl Popper’s free market, or a more stylish and intelligent version of Blairism. Such visions are likely to look more attractive as US hyper-capitalism erodes its own base.
Given their Keynesian roots this approach is hardly surprising. Keynes has been seen as an economic radical because he strenuously criticised many of the assumptions of market based economics. He also showed an awareness of the subjective human costs of a capitalist economic system. There have been suggestions that it is possible to create a ‘green keynesianism’ (Elliott and Atkinson 1998). Indeed Keynes noted:
The love of money as a possession – as distinguished from the love of money as a means to the enjoyments and realities of life – will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease. All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting the accumulation of capital, we shall then be free, at last, to discard. (Keynes 1972: 329)
He also stated:
For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight. (Keynes 1972: 331)
The Economist noted cynically: ‘So prolix was Keynes […] that he is thought to have said everything at least once’ (9 October 2003). Keynes was indeed quite happy to promote luxury and waste as ways of sustaining economic growth. He believed that thrift was dysfunctional but greed was good if it boosted demand and prevented recession:
Keynes celebrated booms in a manner that would do a Texas populist proud. Shakespeare, said Keynes, died rich, and his days were ‘the plamy days of profit – one of the greatest ‘bull’ movements ever known until modern days in the United States…the greater proportion of the world’s greatest writers and artists have flourished in the atmosphere of buouyance […] The Shakespeares of the era of junk finance have yet to be discovered, unless Bret Easton Ellis qualifies. (Henwood 1998: 195)
Keynesianism is an ideology that sanctifies shopping and sees reduced consumption as a sin. The pioneering green economist E.F. Schumacher, author of Small is Beautiful, bitterly complained:
Maybe we do not even have to wait for another sixty years until universal plenty will be attained. In any case, the Keynesian message is clear enough: Beware! Ethical considerations are not merely irrelevant, they are an actual hinderance, ‘for foul is useful and fair is not’. The time for fairness is not yet. The road to heaven is paved with bad intentions. (Schumacher 1978: 22)
Keynes was well aware of Marx’s critique of capitalism, perhaps more surprisingly he was sympathetic to the monetary reformers like Major Douglas and Gesell discussed in chapter five. Yet Keynes sought not to destroy capitalism or to move beyond it but to sustain it. Indeed he explicitly argued that in the class war he was on the side of the bourgeois. He developed, using his insights into macro economic market failure, a theoretical understanding of how capitalism, that appeared so weak in the 1930s, could be strengthened by selective government intervention. Stiglitz and Soros are in this sense neo-Keynesians, while their criticisms of neo-liberal globalisation are telling, like Keynes it is inaccurate to describe them as anti-capitalists.
Stiglitz is a neo-Keynesian, trying in his academic work to shore up Keynesian macroeconomic analysis, which looks at national economies, with firm microeconomic principles that deal with the basic building blocks of an economy such as the behaviour of firms and consumers. Stiglitz is equally Keynesian in his project to create a more stable and faster growing capitalism. Like many other centre ground critics the point is not to halt globalisation but to heal it so it can be sustained and grow. The solutions of such mainstream critics of globalisation such as transparency and the Tobin Tax appear to be modest, realistic and just. These capitalist critics of globalisation fear that if the market is extended too quickly or too completely it will collapse. They do not, despite their lip service to Polanyi and talk of asymmetry and reflexivity, follow their doubts and challenge the market in essence. More radical opponents of neo-liberalism, by contrast, suggest that markets are innately undemocratic, that indefinite economic growth is ecologically unsustainable and that the market-based system is tyrannical because it reduces human life to a narrow pursuit of quantitative advantage. As Bob Dylan observed, money doesn’t talk, it swears.
By attacking the most obviously repellent features of neo-liberal globalisation, Soros, Stiglitz and friends seek to show how capitalism can be maintained and to channel more radical sentiments into support for a supposedly ‘nicer’ form of globalisation. They act as a vaccine against the virus of anti-capitalist protest.

Anti-Empire

2008-07-16T06:20:00.000-07:00

Given the insights of market imperfection outlined above Stiglitz has suggested that politicians need to behave ‘more like scholars’ (Stiglitz 2002: x) but observes that ‘the opposite happens too often’. Stiglitz and Soros have increasingly focussed on the fact that economics has been either used to legitimate American interests or simply junked when it gets in the way of self-interested politicians:

They talk a free-market ideology but, if you look at their politics in terms of bailouts and protectionism, it is not a free-market policy; if you look at their procurement agenda and what they did with Bechtel in Iraq, it doesn’t even look like a fair competition agenda. So you have to sort of suspect an element of ideology but more an element of particular groups seizing control. (The Observer, 18 May 2003)

Bush, they suggest, has dropped the market approach, and is looking now to heavy handed state intervention to benefit the hyper-wealthy of a hyper-power. Indeed Stiglitz and Soros in their recent writings have moved on to attack Bush’s military adventures (Soros 2004; Stiglitz 2003). A number of other voices have echoed the suspicion that globalisation has a specifically American orientation and reflects US corporate and military interests. Will Hutton former head of the Industrial Society and editor of the Observer newspaper, specifically argues that capitalism comes in different varieties and favours Asian or European flavours to those of US capitalism. He suggests that the US system discourages long-term investment and promotes dot com style paper gains over strategically focussed real growth in assets. Slashed public spending on education and health within the US system weakens the fundamentals of the economy such as a healthy work force. Equally the US system breeds systematic and destructive inequality. Despite the rhetoric of pure markets, the Government intervenes with measures ranging from subsidies to corporate interests to huge military spending, and not to help the poor or promote growth but to feed revenue to firms. Hutton argues that the IMF demand for capital liberalisation has made it easier for US financial institutions to grow and made it easier for the US to fund its trade deficit, noting that in 1995 alone ‘foreign central banks bought $70 billion of new US treasury securities’ (Hutton 2001: 191). The writer Noreena Hertz has looked to socially and environmentally friendly entrepreneurs to provide a more Keynesian and humane form of global capitalism (2001).

Hertz along with Hutton, Soros and Stiglitz have increasingly come to see globalisation as an ideological force driven not by market economics but by US demands for hegemony with the economics of the market providing a gloss of legitimacy to the pursuit of naked power. Typically, Stiglitz, notes that for many globalisation appears to be ‘triumphant capitalism, American style’ (Stiglitz 2002: 5).
This said Soros notes that European countries are far from immune when it comes to economic imperialism:

the French government, for instance, has an even stronger tradition of pushing business interests through political means. The president of an Eastern European country I know was shocked when in a meeting with President Jacques Chirac the French president spent most of their time together pushing him to favour a French buyer in a privatization sale. I shall not even mention arms sales. (Soros 1998: 204)

A genuine consensus for growth and development which advances a true rather than US corporate globalisation has been advocated by Soros and Stiglitz. They believe that the Bretton Woods institutions must be reformed and also support the introduction of the Tobin Tax, named after the economist James Tobin, on capital flows. A percentage tax on capital transactions could raise $1,000,000,000s for development projects and reduce the instability of markets. It is unlikely that universal backing for such a tax would be forthcoming but studies have shown that even if only a minority of currency transactions were covered it would bring benefits. Tobin believes that his tax could also be levied on share transactions and administered by the IMF to make it stick (Henwood 1998: 319). Henwood, a keen Tobinist who like Keynes knows that financial markets are more about gambling or playing ‘snap’ than productivity, argues gleefully:

Few things, aside from the threat of direct appropriation of their property, make Wall Streeters scream more loudly than the assertion that their pursuits are pointless or malignant, and that their activities should be taxed like noxious effluent. Listening to those screams would be another positive benefit of a transactions tax. (Henwood 1998: 319)

Tobin suggested a modest 0.5% tax and the networks campaigning for its introduction call for a levy as low as 0.2% (see chapter five). Soros also advocates the creation of new global credits to finance debt. Stiglitz suggests that the IMF’s structural adjustment to be linked to social inclusive policies. Above all the Washington institutions should act in a transparent way and engage in dialogue.

1001 uses for a dead Karl Polanyi

2008-07-03T11:48:00.000-07:00

Virtually all of the critics of neo-liberal globalisation examined in this text make some use of the ideas of Karl Polanyi outlined in his book The Great Transformation first published in 1944. Typically Soros observes in his acknowledgements his thanks to ‘John Gray [who] made me re-read Karl Polanyi’s Great Transformation’(Soros 1998: v). Also an exiled Hungarian, writing in the 1940s and 50s, Polanyi argues that far from being natural markets are of secondary importance in explaining how goods and services are produced and distributed. He suggests that the role played by markets ’ was insignificant up to recent times’ (Polanyi 1957: 44). Much more important is a notion of human society within which the economy is embedded. He argues that individuals consume luxury goods, not because they directly generate satisfaction and pleasure, but because they confer status. The American economic heretic Thornstein Veblen, famous for his concept of conspicuous consumption echoes Polanyi’s views. He argues that individuals consume luxury goods, not because they directly generate satisfaction and pleasure but because they give individuals status. The native American ‘potlatch’ where individuals gathered to smash expensive and rare goods provides another example of such conspicuous consumption (Veblen 1994). The modern bling bling equivalent sees rock stars and hip hop artists smashing up hotel rooms, pouring a way bottles of crystal champagne and crashing expensive cars.
Social factors that glue communities together make the market and other forms of economic activity possible. Without an array of social, rather than state or market institutions, neither the state nor the market could function. We don’t generally dump our grandfathers on the streets. Parents feed their children but rarely ask for payment and examples can be multiplied. For Polanyi the market is based on an ahistorical myth, it is portrayed as universal and inevitable either for ideological reasons or from a failure of imagination. The market is embedded within a host of complex social institutions and practices. Indeed the move towards a society where the market is dominant, The Great Transformation of Polanyi’s title tends to erode the social institutions that the market depends upon. The ultimate extension of the market threatens the market, destroying the conditions upon which it depends. Childcare and socialisation, household maintenance including cooking and cleaning and a host of other domestic tasks traditionally undertaken by women help to maintain economic activity as do a range of social obligations such as the activities of postal workers or milk delivers who look in on the elderly. Soros utilising Polanyi, argues:
it seems clear that morality is based on a sense of belonging to a community, be it family, friends, tribe, nation, or humanity. But a market economy does not constitute a community, especially when it operates on a global scale; being employed by a corporation is not the same as belonging to a community’ (Soros 1998: 91).
Polanyi’s insights suggest that unlimited marketisation is unsustainable. Gray uses Polanyi to sustain an essentially conservative critique of globalisation in his book False Dawn. The fruits of globalisation for Gray are family breakdown, drug addiction, debt and an epidemic of alcoholism:
The Utopia of the global free market has not incurred a human cost in the way that communism did. Yet over time it may come to rival it in the suffering that it inflicts. Already it has resulted in over a hundred million peasants becoming migrant labourers in China, the exclusion from work and participation in society of tens of millions in the advanced societies, a condition of near-anarchy and rule by organized crime in parts of the post-communist world, and further devastation of the environment. (Gray 1999: 3 )
Communitarian advocates of the third way provide another spin on Polanyi, seeking to balance the market with community building, crusades against social exclusion and various partnership schemes.
Radical use of Polanyi is made by autonomist and ecosocialist critics of globalisation, examined in later chapters, such as Hardt and Negri and Kovel. Polanyi’s approach suggests that the market is merely one way of dealing with the economic problem and in historical terms a minor one – an insight that, if true, scuppers the ideological pretensions of those who advocate extending the market to virtually every area of human society. The rise of globalisation has implied that no alternative to the market is possible. The economist Amartya Sen, usually seen as a radical voice, typically suggests that banning or bypassing the market is analogous to making conversation illegal or refusing to talk to our friends (Sen 1999: 6). Polanyi suggests that economic alternatives to the market are far from absurd whereas the introduction of the market is a violent process in at least two ways. Firstly, it involves a battle between social classes: he notes that new poor laws were introduced in Britain in the 18th century as part of a battle to replace notions of a ‘moral economy’ with those of an extended market. Secondly, such processes are physically violent, with peasants being thrown off the land by processes of enclosure. In this sense the Washington consensus can be seen as a process not of development but violent expropriation whereby communal resources and informal forms of economic activity are privatised. Armies of migrants facing deprivation provide cheap labour to fuel global corporate profit-seeking.
Soros, Stiglitz, along with other and other advocates of a gentler capitalist globalisation use Polanyi’s insights to sustain a less fundamental vision. They note that the imperfections of the market, including the fact that it is by necessity embedded in non-economic institutions and practices, demand that globalisation should be introduced gradually, should remain incomplete and should be cemented with a measure of global Keynesianism. Soros and Stiglitz both suggest that a swift march from state planning to a full market economy is likely to be costly because it wrecks social institutions without providing enough time for alternatives to mature. Stiglitz in particular suggests that the gradualist approach to economic reform in China has been more successful than the shock therapy that has left the Russian economy in chaos. He argues that the IMF:
tried to create a shortcut to capitalism, without creating the underlying institutions[…] the Russian middle class has been devastated, a system of crony and Mafia capitalism has been created, and the one achievement, the creation of democracy and a free press, seem very fragile. (Independent on Sunday, 9 November 2003)

More from Stiglitz and Soros: Asymetric information and reflexivity

2008-06-28T22:14:00.000-07:00

The argument of Adam Smith [1776], the
founder of modern economics, that free markets led to efficient outcomes,
“as if by an invisible hand” has played a central role in these debates: it suggested
that we could, by and large, rely on markets without government intervention.
There was, at best, a limited role for government. The set of ideas that
I will present here undermined Smith’s theory and the view of government
that rested on it. They have suggested that the reason that the hand may be
invisible is that it is simply not there – or at least that if is there, it is palsied.

While a number of critics wish to maintain a reformed capitalism Soros and Stiglitz are particularly interesting because they challenge not just the excesses of global neo-liberalism but also some of the foundations of economics. Economists, even many Keynesians, assume that markets generally work, with the actions of consumers and producers leading to efficient outcomes at a micro level. Stiglitz and Soros accept the principle of a market-based society but doubt that the market automatically delivers efficiency. Their critique based on notions of reflexivity and asymmetric information is similar to that of Keynes.
Economists since Alfred Marshall, in the nineteenth century, have argued that human beings are ‘rational’ in that they seek to maximise their personal benefits and minimise the costs of any transaction. Consumers aim to maximise ‘utility’ and producers profit. Both groups calculate the best course of action during millions of transactions. The actions of millions of producers and consumers functions as an invisible hand creating choice, prosperity and even justice. The liberalisation suggested by the Washington consensus is founded on Marshall and Smith’s assumptions of rationality, calculation and maximising behaviour. Given these foundations it is safe to assume that the market should be extended as far as possible because it generates efficient outcomes.
Typically we might argue that if a country removes capital controls, its entry into a global money market will bring benefits. If a country has sound economic policies, money will flow in as investors ‘buy’ its currency so as to make gains. If a country is running a trade deficit, demand for its currency will fall, because foreigners will demand less of it to buy the country’s goods and services. Because demand falls the value of the currency will fall, in turn its exports will become cheaper and its imports more expensive. As more of its exports are sold and fewer imports are bought the deficit will be magicked away. The market is a structural device, a mechanism, for restoring ‘equilibrium’ or balance.
Yet, as Soros and Stiglitz argue, this notion of the market bears little resemblance to the conditions and complexities of modern economic reality. The money traded for goods is a tiny percentage of speculative currency flows, meaning that currencies are little affected by trade balances and therefore unlikely to float downwards to restore imbalance. With capital liberalisation billions of dollars’ worth of currencies flow in and out of economies in seconds. Such flows create waves of chaos rather than restoring equilibrium.
Shares, it is assumed, are bought for profit, so potentially profitable, well-managed companies will enjoy increased demand followed by rising share values. Rising share values will make it easier for such companies to expand. In reality share values can reach mountainous heights before crashing back, as the dot com bubble of the 1990s illustrated. Share values are often unrelated to company performance. Soros, who has made a billion dollar fortune from such movements, particularly currency movements, argues that the market is shaped by reflexivity. Economic rationality increasingly depends on our ability to successfully guess the behaviour of other economic actors. Such reflexivity, where individuals reflect on what they think will happen in markets and change their behaviour in response, leads to an increasingly abstract and exaggerated economic system. If share holders think others are likely to sell their stocks, shareholders sell anticipating that prices will fall, such action leads to a stampede to sell and market instability. Even if dot coms have little value the belief that others will buy pushes up share values into a bubble of inflated stock market value. Soros’s appreciation of the potentially negative consequences of a market based not on rationality but predictions of mass and often hysterical behaviour is profound:
The prevailing doctrine on how financial markets operate has not changed. It is assumed that with perfect information markets can take care of themselves; therefore the main task is to make the necessary information available and to avoid any interference with the market mechanism. Imposing market discipline remains the goal.

We need to broaden the debate. It is time to recognize that financial markets are inherently unstable. Imposing market discipline means imposing instability, and how much instability can society take? (Soros 1998: 175-176)

To understand such instability Soros uses the concept of reflexivity which he traces from Greek drama to the introduction of intersubjectivity into sociology by Alfred Schutz:

The concept of reflexivity is so basic that it would be hard to believe that I was the first to discover it. The fact is, I am not. Reflexivity is merely a new label for the two-way interaction between thinking and reality that is deeply ingrained in our common sense. (Soros 1998: 10)

Keynes was one of the few academic economists to make large amounts of money from commodity markets! The fact that he, like Soros, had a sharp understanding of reflexivity should be instructive to those who seek to play the markets. Keynes put the concept at the centre of his theoretical system:

[economics] deals with motives, expectations, psychological uncertainties. One has to be constantly on one’s guard against treating the material as constant and homogeneous. It is as though the fall of the apple to the ground depended on the apple’s motives, on whether it is worthwhile falling to the ground, and whether the ground wants the apple to fall, and on mistaken calculations on the part of the apple as to how far it was from the centre of the earth. (quoted in Moggridge 1976: 27)

Keynes feared the effect of capital liberalisation as a means of shifting investment from productive activity to a form of gambling:
The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelop our future. The actual, private object of the most skilled investment to-day is ‘to beat the gun’, as the Americans so well express it, to outwit the crowd, and to pass the bad, or depreciating, half-crown to the other fellow. (Keynes 1960: 155)
Keynes while no anti-capitalist believed that extending the market meant extending uncertainties to new areas of human existence with destabilising and potentially damaging consequences. In the third millenium see-sawing currency and share values mean that jobs may be swept away with one spin of the economic roulette wheel.
Stiglitz specifically examines asymmetric information as a form of market failure. He suggests that in the real world information is always imperfect to a lesser or greater extent. Such asymmetry means that markets may not work efficiently and if some actors have access to greater information than others there is potential for injustice. Assumptions of reflexivity and asymmetric information, ignored by the Washington consensus, powerfully shape the operation of real markets and have important consequences.

Against Washington

2008-06-28T03:11:00.000-07:00

Why the Washington Consensus does not work.

In the same way that revolutionary socialists argue that Stalin betrayed Lenin or Marx, moderate advocates of capitalism like Soros and Stiglitz argue that the IMF et al have abandoned Keynes’ original vision. It isn’t that capitalism doesn’t work; it is more the case that it hasn’t been tried. According to Stiglitz:

In its original conception, the IMF was based on a recognition that markets often did not work well – that they could result in massive unemployment and might fail to make needed funds available to countries to help restore their economies. The IMF was based on the belief that there was a need for collective action at the global level for economic stability[…]Keynes would be rolling over in his grave if he could see what has happened to his child. (Independent on Sunday, 9 November 2003)

Since the 1980s the IMF, WTO and World Bank have advocated the so-called ‘Washington Consensus’ of fiscal austerity (government spending cuts), privatisation and market liberalisation. Swept along by the neo-liberal counter-revolution against Keynesian economics the consensus argues that for development to occur barriers to the market should be swept away. The policies that failed in 1930s Europe have been exported to almost the entire globe. The Washington consensus argues that the poorest countries in the world should cut government spending and increase taxes to reduce indebtedness. The tax burden should, of course, fall on ordinary citizens; taxes on profits would discourage investment and enterprise. State assets should be privatised as thoroughly as possible, while barriers to free trade should be swept away. Export led growth is also advocated along with the removal of controls on capital. Multinationals are to be welcomed and government regulation slashed to the minimum.

While Soros and Stiglitz are by no means naturally hostile to the US, given their close links with previous American governments, they believe that the Washington consensus, rather than being based purely on market ideology, is also inspired by the interests of an essentially US corporate elite. The Bretton Woods institutions have massive power to impose their free market medicine because if they refuse to give a country a clean bill of health, foreign capital floods out, leading to economic chaos. If a country rejects free market approaches, money floods out, forcing a rethink. By insisting that barriers to the movement of financial capital are removed the Bretton Woods institutions make it difficult for countries to act independently and they become more closely tied to the whims of global financial markets. Indebted countries that reject the consensus are refused financial stabilization deals by the IMF and aid from the World Bank. Even countries that are independent of IMF financial aid are influenced by the institution’s prescriptions. Typically, British Chancellors of the Exchequer and Japanese finance ministers take close interest in the IMF’s annual report of their countries’ financial health.

Stiglitz believes that the emphasis on fighting inflation and reducing debt advocated by the IMF can be appropriate in some circumstances. He suggests that some Latin American countries during the 1980s attempted to print money to spend their way of crisis with predictable results in terms of high inflation, ‘Countries cannot persistently run large deficits; and sustained growth is not possible with hyperinflation. Some level of fiscal discipline is required’. Neither does he reject all privitisation, ‘Most countries would be better off with governments focussing on providing essential public services rather than running enterprises that would arguably perform better in the private sector, and so privitization often make sense’ . Equally, ‘When trade liberalization – the lowering of tariffs and elimination of other protectionist measures – is done in the right way’, so that inefficient sectors of the economy are removed and replaced with more competitive ones, there can be ‘significant efficiency gains’ (Stiglitz 2002: 53). Soros argues that in an ‘ideal world’ the complete removal of capital controls would be beneficial, noting that restrictions to prevent money moving across national borders creates ‘evasion, corruption and the abuse of power’ (Soros 1998: 192). Suggesting that the collapse of the Soviet economy demanded significant change including major privatisation, Soros notes ‘The fact that radical reforms are often radically misconceived does not obviate the need for radical reforms’ (1998: 226).

However both he and Stiglitz argue that these radical market-based policies have been applied in an inflexible and inappropriate way. Stiglitz argues that the Washington Consensus’s obsession with reducing inflation is particularly damaging because it means that some of the poorest countries in the world have to cut spending to prevent prices rising when problems of joblessness and low growth are likely to be far more damaging. In Indonesia, to pick just one example, Stiglitz notes how IMF-inspired cuts to food and fuel subsidies for the poor led to rioting (Independent on Sunday, 9 November 2003).

Privatisation breeds corruption when assets are sold off. Even when clean it often enriches an elite of corporate fat cats. Privatisation during a debt crisis when an economy is in chaos can mean that assets are sold at knock-down prices, which may simply mean that they can be bought up by US corporations who become stronger at the expense of developing countries. In Russia, according to Stiglitz, the swift privatisation of state assets led to their purchase by a criminal class who thereby gained massive political power. Capital liberalisation has reinforced the tendency for democratic decision making to become subordinated to the demands of financial markets. Soros notes that tax burdens have been shifted from firms and financial operators to citizens increasing inequality:

Interestingly, the state’s share of GNP has not declined perceptibly. What has happened instead is that the taxes on capital and employment have come down while other forms of taxation particularly on consumption have kept increasing. In other words, the burden of taxation has shifted from capital to citizens. That is not exactly what had been promised, but one cannot even speak of unintended consequences because the outcome was exactly as the free-marketers intended. (Soros 1998: 112)

A country implementing policies that the financial markets find distasteful may find that they take their hot money and emerging share market portfolio funds elsewhere, causing slump and currency collapse. As well as tying developing countries to the free market agenda of the Washington consensus, capital liberalisation means that such states are more susceptible to movements in global currency markets that can cause sudden shocks to fragile economies:

It has become an article of faith that capital controls should be abolished and the financial markets of individual countries, including banking, opened up to international competition. The IMF has even proposed amending its charter to make these goals more explicit. Yet the experience of the Asian crisis ought to make us pause. The countries that kept their financial markets closed weathered the storm better than those that were open. India was less affected than the Southeast Asian countries; China was better insulated than Korea. (Soros 1998: 192)

Free trade is theoretically beneficial, but opening up an underdeveloped economy to trade has several major drawbacks. It may force down the price of commodities such as sugar or coffee, wrecking the livelihoods of peasant farmers who have little possibility of alternative employment. It can also destroy ‘infant industries’, new industries that have yet to mature and become efficient and will be killed by unprotected exposure to foreign competition. Stiglitz notes that to achieve growth the successful Asian economies such as Hong Kong, Japan and South Korea initially used selective protectionism to allow their industries to take off.

Soros and Stiglitz feel that the advocates of the Washington consensus are remote from the problems of the developing world, act arrogantly and are consistently biased to the needs of the rich.

[M]odern high-tech warfare is designed to remove physical contact: dropping bombs from 50,000 feet ensures that one does not ‘feel’ what one does. Modern economic management is similar: from one’s luxury hotel, one can callously impose policies about which one would think twice if one knew the people whose lives one was destroying. (Stiglitz 2002: 24)

The institutions promoting the Washington consensus act as if they continue to bear the ‘[w]hite man’s burden’ persisting according to Stiglitz with the notion that they always know what is best (2002: 25). Stiglitz and Soros argue that the arrogance of the Washington institutions means that developing countries have little say in their own economic development and policies are imposed from above. Such arrogance inevitably breeds discontent and even where globalisation has the potential to bring benefits; the Washington consensus has fuelled a hostile counter movement. Discontent is met by repression: rubber bullets against starving rioters. As Stiglitz observes:

A common characteristic is: We know best, and the developing countries should do what we tell them to […]They really see themselves as a harsh doctor, giving them the cod liver oil they need, even if they don’t want it. The problem, of course, is that quite often the medicine […] kills the patient. (Independent on Sunday, 9 November 2003)
It is difficult to think of a single example of a country that has gained from the IMF model of structural adjustment. Botswana is often mentioned but commentators but despite enjoying one of the globe’s fastest economic growth rates the Washington consensus has not delivered sustainable prosperity:
The richest twenty per cent of the population earned more than twenty-five times as much as the poorest twenty per cent.[…] Botswana, at twenty-two per cent, has the world’s sixth highest unemployment rate […] One of the few products of Botswana’s increased economic activity which has been widely shared by its poorer inhabitants is AIDS. Women driven into prostitution by poverty are purchased by the truck drivers delivering goods to the elite. (Monbiot 2003: 214)

Argentina, the Washington consensus exemplar from South America, plunged into severe recession after following the model rigorously, with resulting mass unemployment, poverty and chaos.

The nice cartoon is from the Global Policy Forumwho have lots of material on the Washington Consensus worth a click

From Keynes to Bretton Woods

2008-06-25T23:16:00.000-07:00

Soros, Stiglitz and other establishment critics of neo-liberalism draw upon the work of John Maynard Keynes, who believed in the necessity of managing capitalism, both to provide a fair society and to maintain a capitalist system. During the 1930s Europe and North America were plunged into recession. Economies shrank and unemployment figures mushroomed to millions. The resulting turmoil fuelled the political chaos that lead to World War Two. The conventional ‘liberal’ or ‘classical’ free market economists believed that the economy worked best without government controls and tended to automatically correct any disequilibria. If demand for goods fell, prices would fall too and eventually shoppers would increase demand as they snapped up bargains. If individuals were unwilling to borrow money, interest rates (the price of money) would fall, and if rates fell low enough demand for loans would pick up rescuing the economy. Furthermore if workers became unemployed they could cut their wages until firms found them cheap enough to employ. These market advocates believed that apparently humane attempts to deal with poverty and unemployment such as state welfare benefits would simply make the recession deeper by discouraging wage-setting. Even socialist politicians such as Hilferding in Germany and Snowdon in Britain accepted this orthodoxy. As the years went by and liberal policies of non-intervention were accompanied by deeper recession, conventional economics became increasingly discredited. The only economies that seemed to work were to be found in Hitler’s Germany and Stalin’s Russia.

By the late 1930s the western economies were slowly pulling out of slump and demand rose with employment as war led to large factory orders for guns, planes and assorted military paraphernalia. Nonetheless by the 1940s and 1950s the economic orthodoxy was largely abandoned for Keynesianism. Keynes suggested that economics has a psychological element that means if confidence is low, so too is consumption and growth. Prices, wages and interest rates may be ‘sticky’, by which Keynes meant they would not fall easily, because firms, banks and workers may be reluctant to lower them if they feel that they will still suffer when demand is low. Keynes argued that if people think bad economic news is on the horizon they spend less and the bad economic news becomes a recessionary reality. Businessmen and even women are particularly edgy and suffer from a herd mentality, cutting investment when they fear bad economic news. Like deranged beasts they stampede towards slump. The answer is for governments to inject spending in the economy when recession looks likely. In turn if excessive spending threatens the economy, governments can control it by raising taxes and cutting expenditure.

In July 1944 Keynes acted as the British government’s representative to the Bretton Woods Conference in New Hampshire, USA. Bretton Woods aimed to create a new financial architecture and new global institutions to restore economic stability and remove the threat of world recession, after the war had been won. It called for the creation of three key institutions. During the 1940s the General Agreement on Trade and Tariffs (GATT), now known as the WTO, was established to sweep away barriers to trade so as to promote faster economic growth. The International Bank for Reconstruction and Development, commonly known as the World Bank, was set up to lend money to countries, initially for restoration of infrastructures decayed during recession and smashed by war. Its role has increasingly shifted towards funding development projects in the south of the globe. Finally the IMF was created to help countries faced with severe debt problems or balance of payments deficits. Stiglitz sees all three institutions as essentially Keynesian, examples of government intervention, aimed at making the market work and capitalism expand.

Ch2, pt 2 Stiglitz and Soros

2007-06-15T11:22:00.000-07:00

That a self made capitalist, who has clawed his way to unimaginable wealth using the most abstract and advanced tools of unproductive finance such as derivatives and currency deals, is an opponent of the IMF and George Bush, should give apologists for ‘business as usual’ pause for critical thought.

Stiglitz and Soros
Joseph Stiglitz became Chief Economist of the World Bank in 1997. He was also one of President Clinton’s key economic advisors and chaired the US Council of Economic Advisors. His ground breaking academic work on asymmetric information, the idea that markets may fail because consumers and producers have imperfect knowledge, won him a Nobel Prize (Guardian, 11 October 2001). In 1999 he resigned from the World Bank because he felt that the more powerful IMF was blocking its agenda of reform. In 2001 he published Globalization and its Discontents, arguing that neo-liberal globalisation had led to poverty for millions of people and would fail unless thoughtfully reformed. The title echoes Freud’s Civilisation and its Discontents, an explosive tome that shows how apparent rationality is based upon repression. Stiglitz comes closer to endorsing violence against economic repression than any other commentator outside of autonomist anarchism, bitterly observing, ‘For decades, people in the developing world have rioted when the austerity programs imposed on their countries proved to be too harsh...what is new is the wave of protest in developed countries’ (Stiglitz 2002: 3). While the prophets of capitalism ignore or ridicule most of their opponents, they hate Stiglitz with a corrosive passion:
Mr Stiglitz's prose reads like a draft dictated to a secretary whose mind was apt to wander: readers too will be drifting off a lot. Also, the narrative conveys a whining self-righteousness that is always tiresome and sometimes downright repellent. (Economist, 6 June 2002 )

George Soros was raised in poverty, made a fortune and is now best known for using his wealth for ambitious political and social projects. Born in Hungary, his family hid their Jewish origins to avoid extermination by the Nazis and their anti-semitic puppets. In the post-war years Soros found his way to Switzerland, moved to the UK to study at the London School of Economics. In 1956 he left for the United States where he managed to make a massive investment fortune. He specialized in arbitrage, the art of skimming off the differential change in value from dealing, especially dealing in currency. He was an early practitioner in the high risk hedge fund market, an ‘investment of $100,000 in Soros’s Quantum Fund in 1969 was worth $300 million by 1996’ (Hertz 2001: 137). In 1992 he bought billions of dollars worth of foreign currency being sold by the British government to prop up demand for sterling. As the pound slid in value his currency worth accelerated upwards.

Fiercely hostile to the totalitarianism of both Hitler and Stalin, he embraced the free market philosophy of the Austrian philosopher Karl Popper. Soros established the Open Society Institute, his philanthropic foundation, in 1979, ‘to help open up closed societies, help make open societies more viable, and foster a critical mode of thinking’ (Soros 1998: 69). Popper argued that socialism led to a closed totalitarian society ruled by experts. Marx, for Popper, is prefigured by Plato who believed in a utopia governed by an elite of philosopher kings. Yet by 1995 Soros had come to believe that unfettered capitalism rather than socialist totalitarianism had become the main threat to freedom. Such sentiments are summed up in the title of his 1998 book, The Crisis of Global Capitalism: Open Society Endangered which sees globalisation as a force that must be tamed if a market based society is to be sustained.

Soros has advanced his ideas practically by funding an interesting range of charitable projects and political campaigns. He sent four hundred photocopiers to his native Hungary to promote information access in the pre internet era. He allegedly helped to topple the President of Georgia in 2004 and poured dollars into anti-Bush campaigning:
[He] gives away $400m a year through his Foundation and thus subsidizes many of the activist groups, luminaries and publications of the American left, probably dwarfing the sums that once trickled out of Langley or Moscow […] his monetary influence is one of those hushed secrets inside the left usually dismissed as conspiracy-thinking. (Sheasby 2003)

That a self made capitalist, who has clawed his way to unimaginable wealth using the most abstract and advanced tools of unproductive finance such as derivatives and currency deals, is an opponent of the IMF and George Bush, should give apologists for ‘business as usual’ pause for critical thought.

2 VACCINATING AGAINST ANTI-CAPITALISM: STIGLITZ, SOROS AND FRIENDS

2007-06-08T10:19:00.000-07:00

well new chapter, on to those Keynesians a bit critical of nasty old capitalism, thought that Hari's description of Stiglitz is silly but rather amusing.

[Joseph Stiglitz] looks like a caricature of a Wicked Capitalist from a Bolshevik propaganda poster circa 1917. You know: the one where a pig-like businessman rests his feet on a perspiring, emaciated worker and spoons caviar into his fleshy gob. Stiglitz is round and portly, with braces to hold up his trousers. He has a big grin, worn on a mouth that looks like it was born to hold a fat cigar. Yet he is one of the most important left-wing economic and political thinkers of our time, and his agenda cuts to the heart of the most urgent moral issue in the world: mass poverty. (Johann Hari, Independent on Sunday, 9 November 2003)

Though these banner-wavers hog the headlines and disrupt the streets, they pose no serious threat to the two Bretton Woods institutions [the IMF and the World Bank] Their goals (such as ‘end capitalism’) are too absurd; their arguments too incoherent. But this year, more than most, the IMF faces criticism from a more serious source – those inside rather than outside the barricades. A growing chorus of insiders, from staff members (sotto voce) to Wall Street bankers (more loudly), is asking whether the Fund and the rich countries that largely determine its policies know what they are doing. (Economist, 26 September 2001)

Along with the black-clad messengers and NGO activists some surprisingly sober figures have been prepared to challenge neo-liberal globalisation. The fact that bankers, economists and speculators are questioning the system that made them wealthy clearly disquiets advocates of unfettered capitalism. While some of these ‘insiders’ criticise the IMF for lack of true zealotry in the capitalist cause, many believe that the globalisation it promotes is socially and economically destructive. Joseph Stiglitz, former Chief Economist of the World Bank and George Soros, perhaps the world’s best-known financier, are the most important, other ‘establishment’ figures have echoed their assumptions that the capitalist market needs careful national and international regulation to function sustainably. The late Sir James Goldsmith, the corporate asset-stripper once condemned as personifying capitalism at its worst, attacked free trade and took on GATT, before it was fashionable to do so, during the 1990s (Goldsmith 1994). James Tobin the economist who argues that speculative flows of capital should be taxed also springs to mind. The Nobel prize winner Amartya Sen is also one of a number of economists who have echoed Stiglitz’s perspective (Sen 1999). The example of John Gray, a former Thatcherite and contributor to the free market Institute of Economic Affairs, is instructive. His detailed and passionate attack on globalisation from the right is difficult for conservatives to answer (Gray 2002). Drawing upon the Austrian social thinker Karl Polanyi, he argues that neo-liberalism leads to social chaos, smashing the bonds of family and community necessary for a stable human order.
These critics argue that US-style capitalism is far less efficient than European or Asian variants. They believe that the Washington consensus of unlimited free trade, privatisation and strong deflationary policies actually prevents capitalism from growing and developing countries from becoming financially secure. They echo the key assumption of the economist Keynes, whose policies helped rescue the post-war global economy from recession and mass unemployment, that government intervention actually makes markets work more effectively. Their critique is not dissimilar to that of Hirst and Thompson who argue from a social-democratic perspective that capitalism can (and should) be reined in by the nation state (Hirst and Thompson 1999). This chapter focuses on Stiglitz and Soros, examines their challenge to economic orthodoxy and shows how their ideas are derived from John Maynard Keynes reformist interventionist economic approach developed in the 1930s.

Debating apocalypse

2007-06-07T12:31:00.000-07:00

Chesterton [the founder of the National Front] combined his anti-Semitism, his anti-Communism, his anti-Americanism and his fervent patriotism and concluded that Jewish Wall Street capitalism was the same thing as Russian Communism. Jewish capital had funded the Bolshevik Revolution of 1917, he believed, and Jewish capital had funded the development and technological base of Soviet Russia. The Moscow-Wall Street axis had its major objective the ruin of the British Empire, the mongrelization of the British race, and eventual world government. The United Nations, NATO and Jewish people were all to be regarded with the deepest suspicion as agents of ‘the money power’. (Walker 1977: 29).

Conspiracies make life easy to explain and provide enemies, the bankers, the capitalists, the US, that are easy to attack.

Well if you have read all the entries, well done...first chapter read, hope it was not too obvious, things step up chapter by chapter.

This section looks at some big theoretical questions that run through book and briefly looks at neo-nazi anti-capitalism from the founder of the National Front, the nasty anti-semitic conspiracy stuff. Not all anti-capitalism is progressive.

Happy reading, friends.

Debating apocalypse
Even a brief survey of the main currents of anti-capitalism throws up a number of difficult debates that demand attention. First, is the issue of what can be crudely termed conspiracy or concept? Are economic concepts just window dressing to help legitimate the power of one group over another? While conventional market economists, the media and most politicians argue that there are enduring economic ground rules that provide a guide to constructing a prosperous future, many anti-capitalists suggest that economics is almost entirely irrelevant as an explanation for the workings of the system. The monetary reformers often argue that bankers control the politicians so as to maintain power over the monetary system. The autonomists believe that the economic system is manipulated to control the working class and exploit them. Many of those concerned with trade, whether localists who want more protection or fair traders who want less, believe that bodies like the WTO are motivated not by a concern with comparative advantage and other economic principles, but simply by a wish to benefit the rich and powerful.

Conspiracies make life easy to explain and provide enemies, the bankers, the capitalists, the US, that are easy to attack. There is little doubt that many of our problems result from those with power exploiting those without. Unfortunately conspiracy does not explain everything. The conspiracy view of economics seems to generate a cartoonish air of unreality. Autonomist Harry Cleaver, to give one example, argued in the 1970s that inflation had been deliberately created by capitalist states to weaken the power of trade unions by reducing the purchasing power of their wages (1979: 95). Yet most commentators agree that deflation where prices fall, rather than inflation where prices rise, is much more damaging to workers because it leads to unemployment. Right wing politicians like Mrs Thatcher have been obsessed with reducing inflation, an unlikely strategy if inflation really did harm the very poorest as opposed to bankers defending the value of their assets. While conspiracies exist activists should also be critical of concepts and should beware stereotyping that delivers an enemy who is satisfyingly easy to label, condemn and attack.

The blame game can shade into a form of pseudo or not so pseudo-racism where entire groups are scapegoated for economic ills (Chua 2003). In the United States politician Pat Buchanan has campaigned against the WTO, arguing along with other far right nationalists that a one world conspiracy exists to limit local diversity. Banking and capitalism are seen as creating a new world order that benefits only rootless cosmopolitans and wrecks nation states. The far right unites with the far left in its choice of conspiracy enemies (Rupert 2000). Martin Walker in his study of the far right British political party the National Front, described a racist anti-globalism:
Chesterton [the founder of the National Front] combined his anti-Semitism, his anti-Communism, his anti-Americanism and his fervent patriotism and concluded that Jewish Wall Street capitalism was the same thing as Russian Communism. Jewish capital had funded the Bolshevik Revolution of 1917, he believed, and Jewish capital had funded the development and technological base of Soviet Russia. The Moscow-Wall Street axis had its major objective the ruin of the British Empire, the mongrelization of the British race, and eventual world government. The United Nations, NATO and Jewish people were all to be regarded with the deepest suspicion as agents of ‘the money power’. (Walker 1977: 29).

A second key issue is that of productivism versus primitivism. Many anti-capitalists would like to see the economy grow essentially forever. The west provides a development model for the rest of the globe. The problem is that the current workings of the IMF, WTO and other global institutions of economic governance is that they prevent real growth. Yet for other anti-capitalists, inspired by the green critique such as the ecosocialists, economic growth, however measured in a capitalist society, will destroy scarce resources, devastate global ecology and impoverish us in a whole range of ways subtle and not so subtle. The debate about growth throws up profound difficulties, it seems like madness to say that developing countries should not grow; yet capitalist growth for a minority already looks unsustainable given problems such as the greenhouse effect. What would the planet look like if car ownership was as high in mainland China as it is today in New Jersey? Perhaps ways can be found of enjoying life and meeting needs without producing more and more for ever and ever?

A third area concerns strategy. Can the global economic system be changed by gentle reform plans or are the problems identified so profound as to demand sudden and even violent change? Is it possible or desirable to describe a utopia, to paint a picture of a world without capitalism? How can a new kind of society be built that delivers prosperity without creating unsustainable environmental damage or crippling injustice? Changing apparently fixed tracks to the future is not going to be easy. Should anti-capitalists build alternatives or focus on blocking what exists and is cancerous?

These issues run through the entire book and must run beyond it. Suffice to say, we need to take history by the scruff of the neck and debate alternatives that genuinely benefit humanity and other species. The literary theorist Terry Eagleton has argued cogently that the most bizarre utopians are those who predict that capitalism can feed the world and continue into the distant future. The soothsayer ‘with his head buried most obdurately in the sand, is the hard-nosed pragmatist who imagines the future will be pretty much like the present only more so […] Our children are likely to live in interesting times’ (Red Pepper, February 2004). While Marx famously taught us to doubt everything, we can be certain that another world is both possible and necessary. Getting there remains the question.

Diversity or chaos: Cataloguing different anti-capitalisms

2007-06-05T12:22:00.000-07:00

The most militant participants in the anti-capitalist protests have been the anarchists, many are non violent but others participate in the street fighting ‘black blocs’. The anarchists are inspired by diverse thinkers but perhaps most prominently by the ‘autonomists’ such as the academics Harry Cleaver, Michael Hardt and Toni Negri. Like Marx, they argue that globalisation is a product of the most destructive tendencies of capitalism. For them the market is not a means of regulating the economy but a weapon used to imprison workers. They see the work place as a prison and believe that workers’ struggles to escape from the power of capitalism have encouraged firms to relocate globally.
The demands of the movement seem relatively straightforward. Neo-liberal globalisation is delivering poverty, injustice, authoritarian controls and environmental destruction, so demands our opposition. However, a closer look at the movement indicates intellectual confusion and a chaotic mismatch of contradictory assumptions. While it may be difficult to reach agreement on all issues given the diversity of the groups and networks involved, some of these contradictions seem extreme.
An excellent example is the issue of trade. Groups such as Oxfam believe that the removal of tariffs and other barriers to trade will help developing countries. At present the European Union, the USA and Japan heavily subsidise their own farmers and place huge tax on food imports from the rest of the world. A fair trade campaign put together by the NGOs is aimed at removing barriers to trade so countries in the south of the globe can sell more of their agricultural products in the wealthier parts of the world.
Many others in the anti-capitalist movement including farmers from the south of the globe believe that free trade, which after all is the aim of the WTO, will actually create greater poverty and drive them away from the land. Free trade means that large scale western farmers, particularly in the mid West of the USA can undercut small developing country producers and drive them out of business by providing farm products at a fraction of the price. Such fears motivated one Korean beef farmer at Cancun to commit suicide in protest (Guardian, 16 September 2003).
How can advocates of free trade and protectionism be part of the same movement? To an extent, the dichotomy is artificial. The US, EU and Japan have embodied the same contradiction ever since GATT was established in 1947. The US government has campaigned strongly for free trade in agriculture when it has benefited and against when it is not in the perceived US interest. For example, the US, under President Clinton, took the EU to court to force them to end support for small-scale banana producers in the Caribbean because this was detrimental to US multinationals like Del Monte who have large banana plantations in South America. Successive US governments have given huge subsidies to American cotton farmers because this is seen as politically expedient. May be the anti-capitalists could simply advocate protectionism when it helps the south and promote free trade where it brings benefit? Nonetheless, the trade issue is an excellent illustration of the contradictions that the movement must address if it is to succeed in creating a fairer, greener and more democratic world order.
It is possible to disentangle a series of different, although to some extent overlapping, anti-capitalisms. One group whose work under pins the protest and who are examined in chapter two, can be termed ‘anti-capitalist capitalists’. While ‘anti-capitalist capitalists’ are unlikely to be on the streets at major international protest, they are none less important to the movement. They don’t reject the market, greater international trade or economic growth. In the past, they have been prominent supporters of neo-liberalism. As establishment figures who have participated in global economic institutions, they cannot easily be dismissed by advocates of globalisation. George Soros and Joseph Stiglitz are excellent examples. Soros, an international financier who has made millions of dollars from playing the money markets, has come to argue that unrestrained free market forces erode democracy and create social chaos. Stiglitz, who won a Nobel Price for his development of micro economic theory, who echoes many of Soros concerns, is a prominent economist who headed the World Bank and was one of Bill Clinton‘s key advisors (Stiglitz 2002 and 2003).
Others in the movement focus on the destructive role of multinational corporations, arguing that footloose international companies drive down wages, hypnotize us into destructive consumerism and lower environmental standards. Naomi Klein’s book No Logo sees globalisation as leading to a race to the bottom, where countries struggle to lower standards so as to attract inward investment (2000). Multinationals selling brands outsource production to companies that use the cheapest of labour. David Korten, author of When Corporations Ruled the World argue that large corporations should be removed and replaced with a local markets based on family and community run business (2001).
It is possible to contrast those NGOs who support further free trade, albeit in a ‘fair’ context, with those who see trade as damaging. Green localists that free trade will impoverish millions of small peasant farmers and accelerate ecological damage. Colin Hines, who co-wrote The New Protectionists with Tim Lang (1993) and Localization (2000), is representative of such a trend. The new protectionists or localists have also been instrumental in creating the International Forum on Globalisation, a major anti-capitalist think tank and campaigning body. While Hines concurs with many of the concerns of Korten and Klein his emphasis is on the need to build largely self-sufficient local economies. Perhaps the best-known green localist is Caroline Lucas, the charismatic Green Party MEP who with the late Mike Woodin wrote Green Alternatives to Globalisation (2004). The Indian academic Vandana Shiva is another localist. Others such as the journalist George Monbiot have attacked the localists in the movement for ignoring the real benefits of trade and for failing to examine how global economic forces can be democratized(2003). Chapter four deals with green localism.
A section of the anti-capitalist movement focuses on money, banking and debt. The international debt crisis has created the Jubilee movement for debt relief in the South of the globe, while economist James Tobin has suggested that a tax could be levied on speculative flows of currency to create a more stable economic system and to inject some of the money made by financiers back into the real economy. The ATTAC movement, originally formed by journalist from the French newspaper Le Monde Diplomatique but now with branches in many countries has been campaigning with some success for this ‘Tobin Tax’. ‘Social creditors’ and other related ‘monetary reformers’, inspired by the unorthodox theories of figures like Major Douglas and Silvio Gesell see finance as an evil and advocate the creation of debt-free money by the community to generate a different kind of world order (Hutchinson, Mellor and Olsen 2002; Rowbotham 1998 and 2000). The critics of finance capital are discussed in chapter five.
Marxists, other socialists and trade unionists have marched at Seattle and other protests against neo-liberal globalisation. Marxist explanations of crisis are particularly important in discussing the approach of socialist opponents of neo-liberal globalisation including Communits Parties, the Fourth International or Socialist Workers Party (Callinicos 2003; Petras and Veltmeyer 2001 and 2003; Went 2000). The President of Cuba, Fidel Castro has produced a fascinating socialist account of global capitalism (Castro 2002). Some Marxists and ex-Marxists have argued that globalisation may lead to a post-capitalist society and the liberation of humanity. Nigel Harris (2003) and Meghnad Desai (2004) both suggest that Marx argued that capitalism by industrializing the planet would create the conditions necessary to sustain a prosperous socialist society. Marx they suggest argued that capitalism by industrialising the planet would create the conditions necessary for a fair and prosperous society. Chapter six introduces Marxist accounts of globalisation.
The most militant participants in the anti-capitalist protests have been the anarchists, many are non violent but others participate in the street fighting ‘black blocs’. The anarchists are inspired by diverse thinkers but perhaps most prominently by the ‘autonomists’ such as the academics Harry Cleaver, Michael Hardt and Toni Negri. Like Marx, they argue that globalisation is a product of the most destructive tendencies of capitalism. For them the market is not a means of regulating the economy but a weapon used to imprison workers. They see the work place as a prison and believe that workers’ struggles to escape from the power of capitalism have encouraged firms to relocate globally. In Empire Hardt and Negri (2001) argue that a militant movement, the multitude, can over throw capitalism and create a new kind of society. Autonomism is placed in a historical tradition of anarchist economic thought ranging from Kropotkin to the workers communes of the Spanish Civil War. The Marxist and post-modern influences on militant autonomism are also outlined in chapter seven with an emphasis on Empire.
Ecosocialists such as the US Green presidential challenger Joel Kovel (2002) maintain that the best insights of both Marx and the Greens need to be combined if globalisation is to be understood and resisted. For ecosocialists the basic atoms and molecules of capitalist production conjure up debt, multinational corporations, the dislocations of ‘free’ trade and all the rest. For the ecosocialists, analysed in chapter eight, the idea that capitalism must continue to grow and dominate the planet is alien. Chapter eight outlines the case for ecosocialism. Finally chapter nine concludes with a look at how an anti-capitalist economy can be built and sustained.

Capitalism is ecologically destructive, socially unjust and undemocratic. Discuss.

2007-06-03T01:56:00.000-07:00

Slavery, land enclosure, forced labour, colonialism and most of the accompanying rape and pillage is ignored. Capitalism did not evolve gently but emerged covered in blood, splinters of bone and slimy viscera. When things fall apart the results are rarely pretty. The capitalist scholars today are also largely silent when it comes to the creation of new markets in far from democratic states such as Chile under General Pinochet and China. Equally the greenhouse effect, declining fish stocks, the rise of the automobile and the prevalence of low-level nuclear waste suggest that statistics indicating a cleaner environment need questioning.

Capitalism is ecological destructive, socially unjust and undemocratic. Discuss.

Whats wrong with capitalism?
Anti-capitalists vigorously challenge the claims of the market utopians such as Lomborg or Norberg. The modern market is dominated by a tiny number of mega corporations who have scant interest in ‘market forces’ but this is of little concern to advocates of capitalism who have simply invented new economic theories that explain why planning and control by monopolistic multinationals is in the public interest. For example, the Austrian economist Schumpeter has argued that monopolies through a process of creative destructive, where by they invent new patented products to preserve their power, drive economic growth. Other neo-liberals deny that corporations have more power than the thousands of individual firms in competitive markets:
That isn't true. Corporations can acquire monopoly status in a system of tariffs, licensing and coercion, because then consumers are denied the option of buying from anyone else and potential new businesses are prevented from competing. Capitalism means freedom to pick and choose and to reject the businesses which aren't up to scratch. Corporate liberty in a capitalist economy is the same thing as the waiter's liberty of giving the customer a menu to choose from. And the whole point of free trade is that other waiters - even foreign ones - are allowed to come running up with alternative menus (http://www.johannorberg.net/?page=indefense_qa).

The neo-liberals have been more than happy to surf across their contradictions. Planning by governments or local communities is still condemned by the Economist and similar journals as essentially flawed. Most fundamentally, the far from bloodless origins of capitalism are mythologized out of the neo-liberal version of history. Slavery, land enclosure, forced labour, colonialism and most of the accompanying rape and pillage is ignored. Capitalism did not evolve gently but emerged covered in blood, splinters of bone and slimy viscera. When things fall apart the results are rarely pretty. The capitalist scholars today are also largely silent when it comes to the creation of new markets in far from democratic states such as Chile under General Pinochet and China. Equally the greenhouse effect, declining fish stocks, the rise of the automobile and the prevalence of low-level nuclear waste suggest that statistics indicating a cleaner environment need questioning.
Challenging the neo-liberal orthodoxy, anti-capitalists point to a range of problems that have grown with globalisation. Poverty is perhaps the most obvious, despite the fact that neo-liberalism should according to its advocates deliver high levels of growth that reduce poverty, there is much evidence to suggest that income inequality has grown over recent decades. Indeed during the 1990s both absolute and relative poverty have increased.
The World Bank (Economic Outlook 2000) shows that since 1980 the number of people living on less than $2 per day has risen by almost 50% to 2.8 billion—almost half the world’s population. A report from Christian Aid noted that between 1960 and 1997 the gap between the poorest fifth and richest fifth more than doubled, that the top fifth had 86% of the world's wealth, while the lowest twenty percent had just one percent. The wealth of the world's three wealthiest billionaires is more than that of the GNP of all the least developing countries and 'their 600 million people.' Those who argue that globalisation reduces poverty would do well to study the record of the US, arguable the most globalised nation on Earth:
The gap between rich and poor in America is the widest in 70 years, according to a new study published by the Center for Budget and Policy Priorities.
The research, based on newly released figures from the non-partisan Congressional Budget Office, shows that the top 1% of Americans - who earn an average of $862,000 each after tax (or $1.3m before tax) - receive more money than the 110m Americans in the bottom 40% of the income distribution, whose income averages $21,350 each year. The income going to the richest 1% has gone up threefold in real terms in the past twenty years, while the income of the poorest 40% went up by a more modest 11%. (Schifferes 2003).
In the former Soviet Union the creation of a market economy has led to catastrophe. In an article subtitled ‘Russia appears to be committing suicide’, the Economist (2 October) notes that since 1989 the countries population has plunged by several million and is projected to fall from 147 million today to 120 million in 2030. Declining fertility, violence, sexually transmitted diseases, tuberculosis and alcoholism are just symptoms ‘of the long, dark night of the Russian soul ushered in by the disorienting collapse of communism’.

There are number of explanations as to why globalisation paradoxically boosts GNP rates and at the same time pushes up poverty. Globalisation by allowing companies to move easily from country to country means they pay far less tax to governments, which leads to less redistribution. The monopoly power of drug firms has been a major factor in pushing down life expectancy in Africa. Christian Aid cites Mara Rossi, head of the AIDS department of the Catholic Diocese of Ndola, Zambia, who noted "The availability of drugs to treat HIV/AIDS is an example of how globalisation fails to benefit some of the world's poorest and most needy people. Because of the monopoly of multinational pharmaceutical companies, drugs are not available to the majority of HIV infected people in Asia and Africa. These drugs must be made accessible in countries such as Zambia. It's no good promising loans to buy anti-retroviral drugs that in the end will increase foreign debt. The majority of AIDS patients in Africa need clean water and food as well as drugs to treat their illness" (Christian Aid 2000) Neo-liberalism encourages governments to cut welfare programmes in both the south and north of the globe. Subsidies for cheap food have largely gone, increasing levels of starvation. Privatisation has made it more difficult for the poorest to afford basic utility services such as clean water. Welfare benefits have been made reduced or abolished in parts of the globe including the US. Trade unions are under threat. Typically Zhang Junjiu, vice chairman of All-China Federation of Trade Unions (ACFTU) has argued that globalisation makes it difficult for trade unions to protect workers pay and conditions. While the Chinese economy grew strongly in 2004, millions were laid off by state enterprises and multinationals relied on casual workers with low pay. Urban unemployment rose to 8 million. Multinationals can keep moving to countries with low wages, making it difficult for workers in developed countries to maintain employment and for those in poor countries to improve conditions (www.chinaview.cn 2004-10-10).
Democracy is another area of concern for the anti-capitalists, while the number of states with nominally democratic systems has increased, globalisation has robbed voters of much of their influence over governments. WTO rules tend to reduce the sovereignty of local and national government by ruling that much legislation, produced by states, is protectionist and therefore illegitimate. The US government used WTO rules to force EU countries into taking dairy products that contained growth hormones. At present, the WTO is battling to make the EU accept unlabelled genetically modified products, despite the fact that opinion polls suggest that the majority of European citizens wish to be protected from GM. Multinationals who often have more wealth than nations can effectively force countries to reject legislation that may damage corporate interests. Even supporters of capitalism sometimes admit the essentially undemocratic nature of the market, for example, Thomas Friedman author of The Lexus and the Olive Tree, a long hymn to the neo-liberal globalisation, has argued:
For globalism to work, America can't be afraid to act like the almighty superpower that it is....The hidden hand of the market will never work without a hidden fist -- McDonald's cannot flourish without McDonnell Douglas, the designer of the F-15. And the hidden fist that keeps the world safe for Silicon Valley's technologies is called the United States Army, Air Force, Navy and Marine Corps. (New York Times, March 28, 1999)
Poverty is increased and democracy eroded by a process of social dumping or levelling down driven by both the WTO and the multinationals. Countries that reduce governmental controls, taxes and public expenditure attract more investment by international corporations. In the desperate race to attract foreign investment countries have a huge incentive to sweep away forms of social protection such as trade unions rights, maximum working hours and an adequate minimum wage. Despite an ageing population fewer and fewer workers can gain access to adequate pensions from their employers. In countries such as China and the Philippines blandly named Export Processing Zones (EPZs), have been created where manufactures can ignore legislation protecting workers, so as to drive pay and conditions down to lower average total costs.
The anti-capitalists believe that the process of neo-liberal globalisation has concentrated wealth and power into the hands of an ever-diminishing minority. This minority is increasingly US based and uses both global institutions and the US state to cement its dominance. Thus, the existence of the USA as the world’s hyper power is seen as increasingly damaging, allowing a tiny minority of North Americans to shape the world so as to serve their own interests. The growth of capitalism is based on the exploitation of the working class, small farmers and peasants and it largely excludes women from meaningful participation in political and economic decision-making. Racism is part of the process. All but a tiny minority are defined as ‘the other’ and seen as a means of creating wealth rather than as human beings with their own ends: creative, social, cultural and ecological. Anti-capitalists also critique the ethos of capitalism, where local diversity in the arts, cuisine and other aspects of life are driven out creating a homogenized global culture. Everywhere individuals drink Coca Cola, wear Nike and eat McDonalds. The sociologist George Ritzer has created the concept of the macdonaldisation of society to explain how mass production has delivered a world of increasing modular uniformity (Ritzer 1995). Such a capitalist culture breeds alienation, a feeling of homeless in a world dominated by accountancy, which degrades even those who benefit in material terms from the rule of capital.
Ever increasing capitalist globalisation damages the environment by lowering standards of protection and by locking us into an escalating system of waste. The world circles to destruction around a mountain of decaying trainers and trashed soft drink cans. The drive for endlessly increasing international trade means that goods are transported ever rising distances driving up fuel consumption and in consequence, the greenhouse effect. Higher agricultural exports tend to depress prices because of over supply and force farmers to exploit ecologically sensitive and essential mangrove swamps and rainforests. Ever increasing economic growth in turn means that more and more scarce resources are demanded, so as to maintain the profit system. Capitalist growth for the whole planet would demand according to some critics the resources of four planet Earths and such resources would have to grow to maintain the capitalist system into the future (Wilson 2002). Neo-liberals argue that the world is getting cleaner, resources are growing rather than shrinking, poverty is disappearing and democracy is on the rise. The evidence is against them on all these counts.

Why we love capitalism.

2007-05-31T11:33:00.000-07:00

Adam Smith

This section very quickly defines some terms and looks at the benefits, according to advocates, of markets and capitalism.

Globalisation, capitalism and the arguments for neo-liberalism
It is important to define the key terms and to explore, albeit briefly, the arguments used to defend economic orthodoxy. Supporters of capitalist globalisation are most commonly termed 'neo-liberals' because of their renewed faith in the 'liberal' unconstrained free market. Globalisation is a much debated term but can defined straightforwardly by the decline in the power of nation states and the growing flow of resources on a planetary scale. While technology, culture and other factors come into play, globalisation is first and foremost an economic process driven by market forces. The market is a system where we buy and sell items. In theory the market is made up of thousands of competiting firms, whose desire for profit means they provide goods and services. Even some supposed 'anti-capitalists' such as David Korten, author of When Corporations Rule the World, view the market as a positive and practical way of organising economic activity. However, the market tends to evolve into capitalism. Capitalism is, essentially, a system where profits are made within a market based context and reinvested in new capital equipment, i.e. machines and IT used to produce more goods and services. Some theorists have suggested that forms of 'state capitalism’ can also be identified, where the state rather than private companies exploits workers and the environment.

Capitalism is based not on the intense competition of thousands of companies but the creation of markets dominated by just a handful of enormous firms. Food retailing is a good example of the process. In Britain thousands of bakers, green grocers and corner stores have disappeared and four or five large supermarkets control much of the market. To survive a firm must, generally, make profit. Profit is reinvested to expand the size of the firm; if profit was frittered away rather than reinvested, the firm would risk being put out of business by more efficient rivals. Investment allows a firm to expand its market share and as it sells more items it can exploit economies of scale. This concept is based on the idea that as a firm becomes bigger, production costs fall per item produced. Such economies occur because larger firms can bulk buy raw materials more cheaply than smaller firms, larger firms can make more efficient use of machinery, employ specialist staff and gain funds for expansion in the form of bank loans more easily. Smaller firms generally have higher costs and tend to be pushed out of business. There are numerous linked process that help explain the evolution of markets into capitalist systems. The creation of public limited companies, allows firms to borrow money in return for giving others a 'share', such share ownership allows swift expansion but aids the process of replacing small businesses owned by individual entrepreneurs with faceless corporations. Public companies gain an institutional existence, have the legal status of individuals and like all good bureaucracies grow tend to be self-perpetuating.

The capitalist system, as we shall see in successive chapters is a complex one, workers have to be made to work and consumers to consume to sustain the growth of companies. Ever more complex financial instruments are used to allow capitalism to grow and change in order to survive. Banks to cut a long story short lend money from depositors to borrowers and create more money in the process. Banking has been one target of anti-capitalist concern because of banks ability to make money out of money and use this power to shape society. Share ownership and the basic banking functions are the first steps on a ladder of increasing financial abstraction with ever more esoteric devices being used to make money out of money and, at the same time, to support capitalist growth. The drive for profit fuels globalisation as firms seek new markets to sell their products and new sources of cheap raw materials and labour. The creation of global markets is also strongly conditioned by the financial side of capitalist growth. 'Hot money' so called because it moves from one country to another and is transformed from one currency to another and then back again, erodes the barrier between nations. If a country introduces policies hostile to capitalism, currency tends to flow out, creating economic crisis. To maintain a strong exchange rate, pro-capitalist policies are often a necessity.

Hedge funds are an increasingly important financial institution. Hedging started by meeting a practical need but soon changes into something much more complex. Hedging is a way of providing security as in the phrase 'hedging a bet'. For example, an investor concerned that the exchange rate for £ will fall, can buy the right to sell £s in three months time at the present value, so if the currency crashes losses will be prevented. For a fee, risk is removed. Various forms of right to buy such a right to hedge are bought and sold including varied financial 'options' and 'derivatives'. Essentially, mathematically complex forms of betting have become an increasingly important global economic activity.

Supporters of the market are confident that the pursuit of financial gain, the accumulation of private property and the race for personal wealth are to be welcomed (Bhagwati 2004; Wolf 2004). They believe that capitalism is the road to prosperity, pleasure, freedom, justice and all that is beneficial. Capitalism because it is based on market forces is both natural and good. For the advocates of unrestrained capitalism the only alternative to market forces is government planning and control. They consider intervention inefficient because government planners cannot take into account all the thousands of pieces of information necessary for an economy to function well. In the Soviet Union planning did not meet the needs of consumers and provided no incentive for workers to work hard so as to raise production.

In contrast to bureaucratic planning, the market regulates the economy via forces of demand and supply. Adam Smith, whose book The Wealth of Nations launched market based economics in 1776 believed that these market forces acted like a giant invisible hand managing wealth for the good of the community. If consumers demand goods and are prepared to back up their desire with hard cash, firms will supply their wants so as to make a profit. Competition between firms means that neither consumers nor workers will be exploited. If a firm cuts its wages workers will sell their labour to a rival and maintain their standard of living. Wage rises can be used to encourage workers to retrain, work harder and raise production through greater participation. Likewise, market forces benefit shoppers: if a firm provides shoddy or expensive goods consumers will go elsewhere. The market is freedom. It is a tool of liberation for workers, who can chose to work for the firm that pays the highest wage.
The market system leads to capitalism because firms have an incentive to invest in new technology to produce cheaper goods to undercut rivals and maintain profits. The market system is based on greed but greed fuels the common good and drives progress forward as industrialists strive to create new products and new production techniques. Such growth tends to spread prosperity to the entire community via a process of ‘trickle down’. Even if a wealthy minority do exist, they have to use their wealth to purchase goods and services from others. In doing so they create jobs and the basis for growing prosperity.

The market is seen as a force for democracy because it breaks up the power of the old feudal elements of society. Kings lose their power and companies have to respect the rest of the community if they wish to gain customers and to attract staff. Money is profoundly democratic because whatever the social rank, gender or ethnicity of the person spending it, it still has the same value for firms seeking profit. The notion of private property, a precondition for and goal of the market makes it difficult for the state to control private citizens.
The pro-capitalist messengers believe that the system brings ever greater benefits. The classic free market is decentralised with economic decisions being taken at a grassroots level. The market also provides a cleaner environment because consumers can purchase greener goods and as levels of prosperity rise societies generally become more environmentally aware. Bjorn Lomborg, the Danish statistician has argued at great length that information showing declining environmental quality is distorted and entering the third millennium resources such as oil and fish are increasing in quantity, while pollution is being defeated by prosperity (Lomborg 2001).

Globalisation brings the benefits of capitalism to all, according to the author Johan Norberg,

The statistics speak for themselves. Over the past 40 years, average life expectancy in the developing countries has risen from 46 to 64 years. Since 1950, infant mortality has fallen from 18 to 8 per cent. The proportion of illiterates has fallen from 70 per cent to about 25. Since 1970 child labour and the proportion of people in the world who have to go hungry has fallen by more than half. Since 1980 the number of people in absolute poverty was reduced by more than 200 million. The number of states which are democratically governed and respect human rights is increasing all the time. Today there are 120 democratic states with a combined population of 3.5 billion people (roughly 60 per cent of the world population), more than ever before in world history. There are still enormous problems in the world, but to anyone who cares to look it is obvious that the world, in most ways, has become a better and a fairer place (http://www.johannorberg.net/?page=indefense_qa).

The anti-capitalist movement

2007-05-30T14:05:00.000-07:00

A very clear rejection of the institutions that multinationals and speculators have built to take power away from people, like the WTO and other trade liberalisation agreements.

A confrontational attitude, since we do not think that lobbying can have a major impact in such biased and undemocratic organisations in which transnational capital is the only real policy maker.

A call for non-violent civil disobedience and the construction of local alternatives by local people, as answers to the actions of governments and corporations.

An organisational philosophy based on decentralisation and autonomy.

A sketch of the 'movement' the anti-capitalist networks and a little on the origin of anti-capitalist ideas.

The anti-capitalist movement
The movement did not start on the streets of Seattle or Davos. Submerged and open networks of anti-capitalism flowered in 1999 but had been mobilising long before (Wall 1999). Anti-capitalist sentiments predate capitalism understood as an advanced industrial or post-industrial system based on profit and investment. Given that centuries before capitalism existed, Jesus threw the moneylenders out of the temple, one wonders how he would have reacted to contemporary church towers being used as mobile phone masts or the corporate enthusiasms of some American Protestants. Five centuries before Christ entered the temple, the Buddha, Gautama Siddhartha, set up a philosophical system in opposition to the notion of economic (wo) man and the desire for ever more consumer goods, before the term economics had been coined by Aristotle. The fact that the Buddha’s holiness was indicated, amongst other signs, by his long ear lobes, a symbol of nobility enjoyed by the then Nepalese ruling class whose lavish jewellery distended their ears, suggests that Zen is only half of the process. Rebellion against empire has a long history too. The Spartacus uprising where the slaves attempted to over throw Roman power deserves a mention, immortalised as it was by Rosa Luxemburg’s brave but failed Spartacist revolution of 1919 and put into celluloid by the Marxist scriptwriter Howard Fast (Bronner 1987; Fast 1990). From the peasant revolutionaries such as John Ball to the Anabaptists who took on and nearly defeated the Saxon Lutheran Princes there is a tradition of struggle against established economic and political power that stretches back centuries (Strayer 1991).
The creation of the capitalist market in Britain, for example, during the eighteenth century was vigorously opposed with direct action by small producers, farmers and workers who insisted instead on the maintenance of a moral economy that placed need before greed (Tilly 1975). Land enclosure was fought with a series of peasant revolts and oppressive landlords were shamed in the seventeenth century by ritual processions known as charivari or skimmingtons (Wall 2004). In Ireland, oppressive landowners were humiliated by hunger strikers who starved themselves to death at their gates in the nineteenth century. The so-called Utopian Socialists continued the habit of resistance to the market, particularly in Britain and France. It is worth mentioning Robert Owen, the factory-owning radical, who attempted to build a socialist commonwealth in the early nineteenth century (Taylor 1982). Karl Marx, who spent his entire adult life attempting to understand capitalism, at the very time it was maturing, sought to create a system to help fight it (Harvey 1990; Wheen 2000). Marx’s attitude to capitalism was akin to that of many of the utopian socialists and anarchists in its complexity; while he attacked capitalism as exploitative, he also saw it as a progressive force, which by developing the means of production would pave the way to a new society. For good and sometimes for ill, the twentieth century saw Marxist inspired revolutions over much of the globe. In turn, Marx’s anarchist detractors created militant movements opposed to capitalism during the nineteenth and twentieth centuries (Woodcock 1963).
The Frankfurt School of Western Marxists based around figures such as Adorno, Horkheimer and Marcuse saw capitalism as a totalitarian system that controlled the working class via parliamentary democracy and consumerism (Jay 1973). According to Marcuse, representative democracy seduces the public into thinking that they can participate politically, when in fact being manipulated by a capitalist elite who chose the real rulers of society. The radical New Left, who agreed with Marcuse insight that consumerism, is used to buy obedience, exploded out of the relatively conservative left parties of the 1950s and 1960s. Marcuse helped inspire the student uprisings of the late 1960s and early 1970s particularly Paris 1968 (Brown 1974).
Feminists have criticised the economic system as one that enslaves women and fails to value their contribution (Peterson and Lewis 1999). Women either work for free in the home or increasingly as low paid, part-time and poorly protected workers in the formal economy (Malos 1980). Drawing upon both the Frankfurt school and feminism, green movements have crystallised during the last quarter of the twentieth century to argue that a society focussed on market economics diminishes human beings and manipulates spiritual and social needs into forms of consumerism (Snyder 1974). Greens have attacked capitalism, above all, because of its emphasis on economic growth, which they have seen as ecologically unsustainable (Douthwaite 1992; Porritt 1984).
Activists have increasingly targeted corporations as a source of ecological and human injustice. The UK based Corporate Watch was established in 1995 by campaigners who had worked to boycott the Shell oil company for its complicity in the execution of Nigerian activist Ken Saro-Wiwa. From the boycott of Nestle over its high pressure selling of powered milk to mothers whose access to dirty water in developing countries raised infant mortality to animal rights campaigns against vivisecting companies anti-corporate protest has grown in the 1980s, 1990s and into to the twenty first century.
The Zapatista uprising of January 1994 is pivotal to any understanding of the recent wave of militant anti-capitalism. This previously obscure guerrilla army occupied five southern Mexican provinces to protest at the introduction of the North American Free Trade Association, which they believed would lead to the loss of their land by multinationals. Their spokesperson Marcos argued, ‘NAFTA is a death sentence because it leads to competition based on your level of skill, and what skill level can illiterate people have? And look at this land. How can we compete with farms in California and Canada?’ (Russell 1995: 6). The Zapatistas were reported as stating: ‘There are those with white skins and a dark sorrow. Our struggle walks with these skins. There are those who have dark skins and a white arrogance; against them is our fire. Our armed path is not against skin colour but against the colour of money’ (Earth First! UpDate 53, November 1994: 3).
In Mexico there is a tradition of hostility to prices, property and other market institutions, that predates Marxism and anarchism. The Zapatistas take their name from Emiliano Zapata who led the Mexican Revolution. He fought for ‘tierra y libertad’, the demand for communal land ownership and the defence of the peasant producers. A sub plot of Malcolm Lowry’s Under the Volcano, one of the most important novels of the twentieth century, is right wing opposition to the Mexican state, which even in the 1930s retained some notion of its revolutionary roots (1967). The Zapatista leader Marcos was originally a Maoist and remains influenced by Marxist forms of anti-capitalism however, such Mexican and indigenous roots have shaped the movement. To join NAFTA the Mexican government abolished article 27 of Zapata's 1910 revolutionary constitution, which guaranteed the right to land for those who worked it. The Zapatistas fought to prevent these 'ejidos', or communal landholdings from being sold to private landowners. The Zapatista Army of National Liberation began as a local militia to defend the poorest people of Mexico’s poorest provinces but mutated into a wider campaign against capitalism, motivated by fear that free trade would create even greater suffering in the Chiapas.
The Zapatistas exploited the power of the internet, a product of capitalism and driving force of globalisation, to help kick start the anti-capitalist mobilisation of recent years (Anon 1998; Holloway and Pelaez 1998). They have worked with a variety of groups including anarchists and radical environmentalists such as Reclaim the Streets (RTS) in the UK (Wall 1999). In 1996 they called an international encuentro or encounter to link opponents of neo-liberalism, which brought 6,000 participants to the Chiapas. A second encuentro in Spain in 1997 saw the creation of Peoples Global Action (PGA), who organised the 50th anniversary Davos demonstration against GATT in 1998. The PGA linked together ten grass roots networks including the Brazilian Landless movement and the radical Indian Farmers Union. Do or Die! a journal produced by members of Earth First! and RTS reported back from the first encuentro that four hallmark principles were used to create a measure of unity:
A very clear rejection of the institutions that multinationals and speculators have built to take power away from people, like the WTO and other trade liberalisation agreements.

A confrontational attitude, since we do not think that lobbying can have a major impact in such biased and undemocratic organisations in which transnational capital is the only real policy maker.

A call for non-violent civil disobedience and the construction of local alternatives by local people, as answers to the actions of governments and corporations.

An organisational philosophy based on decentralisation and autonomy. (Do or Die 8, 1999)
PGA used the internet to organise internationally and rejected the participation of formal NGOs and political parties including Greens and Marxists. In February 1998 the first meeting of PGA brought together 300 delegates from 71 countries, including the Uwa peoples of Columbia, Canadian Postal Workers, European Reclaim the Streets activists, anti-nuclear campaigners, French farmers, Maori and Ogoni activists, through to Korean Trade Unionists, the Indigenous Women’s Network of North America, and Ukrainian radical ecologists. ‘All were there to form a global instrument for communication and co-ordination for all those fighting against the destruction of humanity and the planet by the global market’ (Do or Die 8, 1999). A series of rolling protests at international events to promote the free trade hegemony was launched, as noted by the Economist, at the fiftieth anniversary of the GATT, in Switzerland.
A global day of action against capitalism was organised for June 18th 1999 to coincide with that years meeting of the G8. In Britain, the ‘Carnival against Capitalism’ was a carefully planned act of chaos. Fifty thousand gold flyers distributed at clubs and pubs, a global e-mail discussion list and vigorous fly posting were used to draw 10,000 partygoers to the meeting point at Liverpool Street Station. Banners proclaimed ‘Kill Capitalism’, ‘Global ecology not global economy’. Coloured masks were distributed and flags green for ecology, red for communism and black for anarchy, were used to lead demonstrators in different directions. The entire financial centre of London was severely disrupted (Wall 2004).
Major protests followed at Seattle that, as noted, derailed the WTO agenda setting talks. September 2000 saw the IMF meeting in the Czech Republic under siege. The World Social Forum met in a conscious parody of the World Economic Forum’s traditional gathering, for the first time in February 2001. The event in Porto Alegre in southern Brazil was also accompanied by direct action;
José Bové, [...] was the star turn at ‘anti-Davos’, especially after he joined leaders of Brazil’s Landless Movement on an excursion to destroy a plantation of genetically modified soya owned by Monsanto, an American company. He was briefly arrested and threatened with deportation, but was later allowed to stay. Protesters trashed a nearby McDonald’s in his honour. (Economist, 3 February 2001)
In April 2001 a Quebec meeting to create a free trade area of the Americas had to be fortified to resist an assault by anti-globalists. The next WTO meeting was in Qatar, a remote police state, chosen to reduce the possibility of protest. Such actions at major international events have continued to occur since 2001, a wave of protest is being planned as this book goes to press against the G8 meeting in Scotland in 2005. Many events have turned to violence with protesters being killed or severely injured. Local networks that undertake grassroots action of a less dramatic but no less important kind accompany such large scale and vivid events (Plows 2004).

Capitalism, by its very nature, is a permanent state of war

2007-05-29T10:08:00.000-07:00

In this chapter, I briefly examine the origins of the anti-capitalist movement, outline the arguments of their opponents who support free market globalisation and describe the different variants of anti-capitalism discussed in later chapters.

Well the introductory bit of the introductory chapter, setting the scene.

cold concepts = economic concepts drive the world

warm conspiracies = small elite groups rule the world

I play with these phrases...the balance between economic structures and maniputlation is a big and interesting question.

I don't go simply for what I describe delicately as the 'political economy of evil bastards', our problems our deeper than Bush, Blair and Brown.

The quotes at the head of each chapter are aimed to provoke a bit and give a literary feel.

Here goes:

1 WARM CONSPIRACIES AND COLD CONCEPTS

‘It was you who told me,’ I said gently, ‘that capitalism, by its very nature, is a permanent state of war, a constant struggle which can never end.’
‘That’s true,’ she agreed without hesitation, ‘But it’s not always the same people doing the fighting.’ (Houellebecq 2003: 284)

Everything becomes saleable and purchasable. Nothing is immune from this alchemy, the bones of the saints cannot withstand it […] Ancient society therefore denounced it as tending to destroy the economic and moral order. Modern society, which already in its infancy had pulled Pluto by the hair of his head from the bowels of the earth, greets gold as its Holy Grail, as the glittering incarnation of its innermost principle of life. (Marx 1979: 229-230)

October 1998, Davos, Switzerland. Grey suited civil servants are meeting to celebrate the 50th anniversary of the General Agreement on Tariffs and Trade (GATT) and the creation of its free trade successor the World Trade Organisation (WTO). A little ritualised cake cutting and mutual backslapping is all the local film crews are expecting. Instead of such self-aggrandisement, the cameras roll to the sight of:
a colourful crowd of demonstrators on the far side of rolls of barbed wire […] Free trade”, they claim, “despoils the environment and enslaves dispossessed peoples”. “God is dead”, reads one banner; “The WTO has replaced Him.”’ The protest, organised by a new network Peoples Global Action, starts quietly but becomes noisier. Most of the demonstrators act peacefully but some start to throwing stones, and bottles, then overturn cars and set them ablaze. (Economist, 1 October 1998)
Since 1998 international trade conferences, summits and other state-corporate jamborees have been disrupted on a continual basis (Anon 2000c; Katsiaficas et al 2002). If Davos marked some kind of a start, Seattle is better known. In November 1999 huge protests involving hundreds of thousands of critics of free trade disrupted the WTO talks at Seattle. Since Seattle, a huge, militant and diverse anti-capitalist movement has emerged as a global force. The aim of this book is to explain the economics of this anti-capitalist movement and, in so doing, to examine how a fairer and more ecologically sustainable world can be created.
The movement challenges the misdeeds of powerful globalising elites who seek to redistribute resources from poor to rich, to open up areas of ecologically diverse wilderness to loggers and oil companies and to start profitable wars for weapons manufacturers. However, the removal of such elites is unlikely to be sufficient to achieve a just and ecological world. At its most subversive the anti-capitalist movement is about ideas, it attacks the key concepts of conventional economics. The movement has challenged not just genetically modified crops and social injustice but contested economic assumptions ranging from free trade and economic growth to property rights. This is a rebellion against cold economics concepts as well as assumed warm conspiracies by corporations and right wing politicians. The most radical anti-capitalists tell us that almost everything we know about economics is wrong and given economic logic is the logic that runs modern society the implications of such a critique, if correct, are breathtaking.
The movement has been surprisingly successful, often slowing and sometimes reversing the supposedly irresistible march of global market forces. Not only did the Seattle trade talks collapse largely because of the protest but in September 2003, some four years on, WTO agenda setting discussions at Cancun, Mexico fell apart after an alliance of developing countries put forward many demands of the anti-globalisers. In 2003, anti-capitalists who rose up to prevent water privatisation toppled the Bolivian government (Guardian, 21 October 2003). The once forgotten global financial architecture of the International Monetary Fund (IMF), World Bank, G8 and associated institutions is constantly in the news, visible and under almost continuous criticism. From opposition to genetically modified food to successful demands to reduce third world debt, movement victories are multiple.
The movement’s diversity is also important. Mid-west anarchists have come together with trade unionists, socialists and major non-governmental organisations like the World Development Movement and Oxfam along with radical farmers like José Bové from France in the Confédération Paysanne, Greens and others. Revolutionaries in Mexico and Argentina have been part of a movement that stretches to local community groups in the more conservative parts of Birmingham or Kyoto. This has been the first radical movement to fully utilise the internet to coordinate days of action and other protests on a global scale. The movement in all its multiplicity argues that neo-liberal globalisation creates poverty, destroys diversity, wrecks the environment and erodes democracy. The globalisers on the contrary argue that there is no alternative to conventional market economics and neo-liberalism is the only secure path to prosperity. The stakes are very high.
For all these reasons and more, the anti-capitalist movement demands attention but while its slogans seem self-apparent its ideas are often contradictory, sometimes complex and have deep historical roots. It is an amalgam of different schools of thought with different forms of analysis and varied demands. The aim of this volume is to unpick the intellectual knots in the protest network, to show how anti-capitalist ideas have developed. In this chapter, I briefly examine the origins of the anti-capitalist movement, outline the arguments of their opponents who support free market globalisation and describe the different variants of anti-capitalism discussed in later chapters.

It is time to relearn what it means to be human.

2007-05-29T03:35:00.000-07:00

So to start gently, not too much Keynes, Friedman, Marx or Negri, here is the preface from New Zealand Green Party Member of Parliament Nandor Tanczos.

Well Nandor where does one start, the man is amazing:

Tánczos, one of the more "colourful" of New Zealand's politicians, attracts both strong criticism and enthusiastic support.

The New Zealand public knows Tánczos primarily as the voice advocating the liberalisation of the cannabis law in New Zealand, although he also actively campaigns against genetic engineering and in favour of restorative justice. He also has a reputation as New Zealand's first and only Rastafarian MP. His most significant legislative achievement, the Clean Slate Act, conceals non-violent criminal offences if the offender does not re-offend after 7 years. His Misuse of Drugs (Hemp) amendment bill led the way for regulation changes to allow hemp growing in New Zealand. He currently has the Waste Minimisation Bill before parliament. In addition to his political policies, Tánczos also supports open source software, and uses Mandrake Linux on his work lap-top.

Tanczos is also notorious for his admission to occassionally consuming cannabis. He is however, a teetotaller

More from the wiki oracle here.

I was so lucky to get this, he sums up the real essentials of non capitalist economy with poetry and precision.

This is the language of 'Jah' and Shakespeare...a prophetic voice but with some impressive intellectual under pinnings.

Read and enjoy....you may well have seen this before it is happily floating around the blog sphere on several sites.

PREFACE
Nandor Tanczos
Human beings face the greatest challenge in the history of our species. We face the destruction of the life support systems on which our very existence depends, and we face it because of our own activity.
There are some who deny or diminish that threat. They mostly either retreat into fairy tale thinking – that technology, or the ‘free’ market, or UFO’s will save us - or hope that by closing their eyes they can it go away.
Yet the evidence is mounting almost daily that the threats are very real and are gathering momentum. A new report from the UK is saying that if we don't turn carbon emissions around in the next decade, we will not be able to stop runaway climate change whatever we do.
Authoritative voices are warning us that we are very close to the point where world demand for oil will outstrip the capacity of the oilfields to supply. Our total dependence on fossil fuels, the use of which has provided the energy for an enormous expansion of human activity and population, is like a chemical addiction. And as the USA has recently confirmed in Iraq, strip a junkie of their supply and the temptation to turn to crime can be irresistable.
“The American way of life” says George Bush the First “is not negotiable”.
A time of crisis, however, is also the time of greatest opportunity. More and more people are waking up to the need to change, to change at a fundamental level, and to change right now. People are waking up to the fact that the institutions of society that so many have put their trust in are failing us. Government won’t do it. Big business can’t do it.
Because the challenge we are facing is about more than changing a few policies or practises. It requires a fundamental rethink of what it means to be a human being. Government and business can become allies, but the power to make real change lies in the hearts and the lives of ordinary people.
It is already happening. The international people’s movement against genetically engineered (GE) plants and animals has demonstrated how the reckless agenda of multinational corporations, aided and abetted by our own governments, can be stopped in its tracks and rolled back. One conglomerate has been outed bribing government regulatory officials in Indonesia, GE companies are pulling out of the EU and Australia, and GE agriculture firms are facing massive stock market losses. The promised gold rush is proving to be a fantasy, largely because of global consumer resistence.
While the campaign has significant support in the scientific community, for many ordinary people it began as a sense that something just didn’t feel right. That feeling is often quickly backed up by investigation, but the sense of something being fundamentally arrogant and wrong about GE is the key - it is our humanness talking to us.
What is it to be human? Western society, at least, defines us as individuals whose value can be judged by what job we have, what colour credit card, what kind of car we drive and the label on our clothes.
Yet beneath these displays of status, real people are emotional, social and spiritual beings - intrinsic characteristics that cannot be considered in isolation from each other. We seem to have forgotten that our relationships – with one another and all the other beings with whom we share this beautiful planet – are fundamental to who we are.
There is a passage in the Bible that says “where there is no vision, the people perish”. The inability to step back and clearly see and understand the ‘big picture’ is the central problem that we face in the world today. The main motivations for Western industrial society for the past few hundred years - belief in unlimited growth and technology as the solution to all problems - are the very things that are killing us.
We cannot grow forever on a finite planet. If we continue to assume that endless growth and consumption is possible, and disregard the biosphere’s capacity to meet our greed, and if we continue to neglect social justice and fair and sustainable wealth distribution, we will reap a bitter harvest.
Neither will technology on its own fix the problem. Yes, we need better technology, more efficient technology that uses non-polluting cyclical processes and that does not depend on fossil fuels. But just more technology will not do, because the problem is in us and the way we see ourselves in the world.
We humans think that we can own the planet, as if fleas could own a dog. Our concepts of property ownership are vastly different from traditional practises of recognising use rights over various resources. A right to grow or gather food or other resources in a particular place is about meeting needs. Property ownership is about the ability to live on one side of the world and speculate on resources on the other, possibly without ever seeing it, without regard to need or consequence.
The ability to ‘own’ property is fundamental to capitalism. Since the first limited liability companies - the Dutch and British East India Companies - were formed, we have seen the kidnapping and enslavement of 20 - 60 million African people and the rape, murder and exploitation of indigenous people around the world. Colonisation was primarily about mercantile empires, not political ones. It was all about forcing indigenous, communitarian people to accept private individual ownership of resources, which could then be alienated, either by being bought or stolen. The subsequent political colonisation was just about how to enforce that ownership.
Today property rights are being extended through GATT and TRIPS agreements and through institutions such as the WTO and the World Bank. Private property rights are being imposed over public assets such as water, intellectual property and, through genetic engineering and biopiracy, on DNA sequences. Even traditional healing plants are under threat. In Aotearoa - New Zealand we have had multinationals attempting to patent piko piko and other native plants. This is all part of the ‘free’ trade corporate globalisation agenda - to create tradeable rights over our common wealth, accumulate ownership and then sell back to us what is already ours.
This is only possible because we have lost our place in the scheme of things. We think of the environment as something ‘over there’, as something separate from human activity, something to either be exploited or protected. The reality is that we are as much part of the environment and the planet as the trees, insects and birds.
It is time to relearn what it means to be human.

The book at the end of the world.

2007-05-28T02:08:00.000-07:00

Mr. Lebeziatnikov who keeps up with modern ideas explained the other day that compassion is forbidden nowadays by science itself, and that that's what is done now in England, where there is political economy. (Dostoevsky 1993: 14)

Over successive days I am going to blog from my book Babylon and Beyond, So you can read and comment on my ideas for free. Thanks for the person at the Brighton real alternatives to capitalism meeting, who said 'why don't you put it on the web'.

Babylon and Beyond can be bought, I know buying things is a bit last millenium but if you must, here and here and here.

I would love it if you ordered copies for your local public library. This is the sacred principle, prosperity without pollution, increasing access rather than the cycle of production - consumption - profit - garbage.

Babylon is two things:

1) An outline of different forms of anti-capitalist economics. Moving from the ideas of capitalist anti-capitalist like George Soros and Joseph Stiglitz, Korten and Klein, to green localists like Caroline Lucas and Vandana Shiva, Marxism from Marx to Castro, Anarchists and autonomists like Hardt and Negri, monetary reformers like Major Douglas or Tobin, ecosocialist like Joel Kovel

I look at what they say and how it can be criticised. Everything you wanted to know about anti-capitalism but were too afraid to ask.

2) Its an introduction to an economy beyond capitalism, capitalism has a built in tendancy to 'enclose' resources which are free including human creativity, to build giant undemocratic corporations and to grow for ever. In my view it is unjust and ecologically unsustainable. We can do better.

I am most interested in what might be described as 'wiki economics' an economics based on creativity rather than state control or market forces.

But there are other alternatives from Parecon to Bolivarian socialism to LETs or syndicalism or eco feminist economics, the point is to debate them and make them live.

Actually you never know Bolivarian socialism might be the real deal!

This is, of course, a political task as well, currently I am the Green Party Principal Speaker and I intend to keep on struggling for a world that actually works unlike the present order which is racing toward ecocide. If you want join the Green Party and support my efforts in this direction click here.

This is the project, you can read more over successive days and weeks. Here are some more details.

Description

"A thoughtful and inspiring guide to capitalism and anti-capitalism. This really is the first book that carefully explains the different varieties of anti-capitalist thought ... I thoroughly recommend that you read Babylon and Beyond."

Caroline Lucas, MEP

"There are far too many books on anti-capitalism out there already -- but with Babylon and Beyond, Derek Wall has removed the need to read most of them. Just read this one: a succinct, intelligent and witty summary of what it's all about."

Paul Kingsnorth, author of One No, Many Yeses: A Journey to the Heart of the Global Resistance Movement

"A synthesis of Red and Green is the future of progressive politics. Wall illuminates the interface of ecological and socialist ideas; divining common threads and offering the hope of a democratic, just and sustainable future for humankind."

Peter Tatchell, human rights campaigner

Babylon and Beyond provides the first clear and accessible guide to the economics of anti-capitalism. Anti-capitalism is a diverse movement: critics accuse it of knowing what it is against, but not knowing what it is for. Anti-capitalists want radical change, but what shape should that change take?

The truth is that different sections of the movement advocate distinct -- sometimes complementary, sometimes contradictory -- programmes for change. This book concentrates on perhaps the most divisive issue of all in the anti-capitalist struggle: how to transform the economy.

There are greens who think we must hold back economic growth and Marxists who believe the economy must move forward along capitalist lines before there can be revolutionary change; there are those who remain faithful to notions of collective or state ownership of all aspects of the economy, and those who think various kinds of reform or regulation of capitalist practice is more appropriate.

Babylon and Beyond is a modern guidebook to the complicated terrain of alternatives to global capitalism. Derek Wall explains and summarises the rich variety of theories available within the anti-capitalist movement. Chapters cover Marxism, Autonomism, Anarchism, Ecosocialism, Capitalist reformers (like George Soros and Joseph Stiglitz), Green localists (like Colin Hines), and others. Unique in its coverage, clear and accessible, the book is ideal for activists, and anyone who is trying to find a useful way forward.

This book is published in association with the Green Economics Institute.

Derek Wall is the author of five books including Earth First and the Anti-Roads Movement (Routledge, 1999) and, with Penny Kemp, A Green Manifesto for the 1990s (Penguin, 1990). He teaches Political Economy at Goldsmiths College, University of London. He is Principal Speaker of the Green Party of England and Wales.

Foreword: Nandor Tanczos

1 Warm Conspiracies and Cold Concepts

2 Vaccinating against Anti-Capitalism: Stiglitz, Soros and Friends

3 White Collar Global Crime Syndicate: Korten, Klein and other Anti-Corporates

4 Small is Beautiful: Green Localism

5 Planet Earth Money Martyred: Social Credit and Monetary Reform

6 Imperialism Unlimited: Marxisms

7 The Tribe of Moles: Autonomism, Anarchism and Empire

8 Marx on the Seashore: Ecosocialist Alternatives

9 Life After Capitalism: Alternatives, Structures, Strategies

References

Index