Saturday, September 22, 2012

The Greatest Transformation - A Response by Eric Aarons

above: A recent book by Eric Aarons - exploring the clash between Karl Marx and Friedrich Hayek.

In the following article former Communist Party of Australia leader Eric Aarons responds to our earlier article by Shayn McCallum.  (Shayn's article can be found here:  )  Aarons critiques 'social market' approaches to change, positing global warming and other environmental challenges as the most important issues facing humanity. While recognising the necessary role of some markets, Aarons proposes an egalitarian services-based economy, and an economy which goes beyond the treadmill of over-work and over-consumption.  DEBATE WECOME!!!

nb also:  In addition to our article here, a very detailed review of Aarons' larger, more academically-inclined book on the same theme of Hayek and Marx can be found here - where we welcome debate!!!:


Finally:  Our Facebook group can be found at the following URL - where we welcome free-ranging progressive debate and promote new posts at the blog!  New members welcome! 


Eric Aarons, Sep 22, 2012

This article is a response to Shayn McCallum’s article ‘State and Market – a Democratic Socialist Approach’ that appeared on a Tristan Ewins’ website. I do so because the concerns it deals with are close to my own – that is, seeking to formulate  a substantive definition of what currently  active people of the left should do or ‘stand for’.

My response is not intended as a polemic, though it is forthright and direct because I assume that neither Shayn nor I wants to smarm over difficulties or differences. I therefore begin with the title of his piece stated above. 

Shayn poses ‘a mixed economy’ as one reasonable answer to the question posed by his title ‘State and Market’. But that term, which I also use, can’t take us very far or generate enthusiasm unless the nature of the mix is further clarified. I also use the term, sometimes with the proviso that the ‘mix’ must be devoid of the extremes evident in the continuing practices of capitalism and the type of socialism that came to prevail in the Soviet Union or Maoist China and blackened the very term.

But I believe that ‘mixed economy’ is not made adequate by adding the word democratic, or the phrase ‘devoid of extremes’. Similar problems arise with ‘economic democracy’. I agree that ‘The Social Market’, as devised by its founders and analysed by Australia’s Hugh V. Emy,  Professor of Politics at Monash University, poses little danger to the existing system, or possesses any significant transformative power.

Thus we seem to agree that no expression has yet been found that contains the emotional and intellectual force possessed in the past by the ‘left’, and backed by the capacity to enthuse people into action by concretising general aims in specific strugggles.  Shayn points out that much of social democratic (in Australia, particularly Labor Party) discourse is ‘excessively tenuous, somewhat vacuous’ and limits its criticism of [neo] liberalism to the details rather than its over-arching vision.’ That comment, I believe, is justified, but loses much of its force when Shayn himself fails to outline what the content of an effective critique of that vision would be.

I don’t feel lacking in that area, having written three books on the subject, the last being Hayek versus Marx (2009).  The publishers insisted on that title because it was part of a planned series (mine came out as the 180th  work in      that series). But I eventually persuaded them to add the subtitle: And today’s challenges, the significance of which for discussions like the present one I explore later.

But I think it is essential to appreciate the vast difference between the retail markets that we visit almost every day, and the financial markets that played a crucial role in generating the Great Financial Crisis of 2008, to the present time, when it threatens to break out with even greater force at any moment in Europe.                     

The necessity of some markets

As Shayn clearly recognises, markets existed to one degree or another in practically every society later than the stone age. (For instance, the Conquistadores found extensive markets in some of the countries of what is now called Latin America). But Shayn neither distinguishes between different kinds of market, nor explains the reasons for the universal existence of some of them.

The foremost of these concerns has to do with what most of us perforce do every day, in response to the natural evolution of the division of labour. This compels us to engage in exchanges, usually of money from our wages, to obtain the mix of different commodities we need to live. These range from foodstuffs to transport, liquor, haircuts, entertainment and other items. One doesn’t need a vivid imagination to envision the difficulties, not to speak of the public outrage, that would result from any attempt  to plan and institute an alternative, for example, one of state allocation of the same  items or meals for all irrespective of the work they may, or may not have contributed in Mao’s ill-fated Chinese rural communes, while in competitive marketts, it is equals that are generally exchanged.      
 (I don’t think it necessary to pursue the many further variations that arise in areas such as whitegoods, TVs, computers, houses or cars, where the state may step in with requirements for performance standards, health requirements and the like.)

The Social Market

I agree with Shayn that the term ‘social market’ doesn’t take us very far. Its origin and meaning was well analysed by Australian academic Hugh Emy as the vision of some genuinely liberal-minded post-war German theorists, couched in moral as well as economic terms. It centred on the idea of ‘co-determination’ by owners and workers in businesses but ruled out any interference with ownership relations. It had some progressive content, but was by no means a transformative development.

Shayn rather airily dismisses cultural issues and contests, defining them as though they were lightweight compared with a physical presence or direct economic content. Without trying here to cover the full scope of culture, political activists need to realise that morals, values and attitudes, among other features of human behaviour and consciousness, are sources of action or passivity, which are surely of central importance in politics.

Without entering the field of values, for instance, I see little chance of constructing an effective critique of the neo-liberal vision which at present still holds (now less securely) a hegemonic position, or defining an effective social democratic one. Shayn instead speaks of confronting the ‘questions of class power’, that he then nominates in purely economic terms as ‘redistribution or the provision of social goods and services’.                                   

I am far from dismissing the importance of this for a segment of the population of our country, a similar proportion of other economically developed countries, and massive numbers in the undeveloped. But I am convinced it is the wrong direction, at this particular juncture, in which to look for a liberating, emancipatory, transformative orientation.

Today’s  main  challenges                                                                                                                 

The general social conditions and forms of economic restructuring that would be involved in meeting those challenges, the first of which is Global warming, requires sober calculation, including of the time frame. Solutions need to be, or clearly becoming, politically possible within two or three decades, or the problem could take a disastrous turn, for example by the melting of the tundra in Siberia, Greenland and elsewhere which would release huge quantities of now frozen methane – an even greater ‘greenhouse effective’ gas than carbon dioxide.

 ‘Politically possible’ means that to be democratically effected there has to be near enough to majority support for the measures involved type. There are already in existence more than needed of what I call ‘if only’ plans  – ones that pose preconditions having little chance of being realised, and which in any case are inadequately campaigned for.

Global Warming occurs today mainly because we are burning increasing quantities of fossil fuels (coal, oil and gas) to generate our ever-increasing energy requirements. The burning  process produces carbon dioxide gas which has the physical property of acting like a greenhouse – that is, a kind of‘house’ device, usually made of glass that lets in the sun’s rays, or is internally heated to cultivate plants that need heat to grow, but doesn’t let the heated air inside escape. Carbon dioxide and other gases, in the quantities now being generated by burning, mix uniformly in the global atmosphere from whatever country they come, warming the world, from frozen poles and glaciered areas to the tropics, causing the escalating number of weather extremes we all see on TV or ourselves experience, and raising ocean levels by melting ice.

 Earth’s resources are not infinite

The related major challenge of our times is first of all the growing threat to the sustainability of the supply base for all this burning of fossil fuels.  It is clear that oil will soon run out, while coal and gas won’t last forever. Water is becoming scarce in many places, and large quantities of underground water are being polluted by the fracking of coal and shale beds to produce gas. ‘Rare-earth’ elements, essential for many sophisticated electronic apps are scarce. Phosphorus, one of our main fertilisers (and an essential component of DNA) is in short supply, as is potash.

Fish are becoming scarcer, and some of its best food species are on the verge of extinction, while ever-larger trawlers are built to pursue others still existing. New agricultural land is scarcely to be found and the productivity of large areas is being reduced by overuse and  more extreme weather events.

Much more information is readily available, but is not acted upon. Nor are either the dangers, or the transformational possibilities flowing from victory in the struggle to overcome them sufficiently taken on board by the left including, regrettably, the trade unions.

The scale of all this
Geology Professor Mike Sandiford of Melbourne University gives us a striking  measure of this scale:
Rivers and glaciers have moved about 10 billion tons of sediment from mountain to sea each year on average over geological time. Each year humans mine about 7 billion tons of coal and 2.3 billion tons of iron ore. We shift about the same amount again of overburden to access these resources, along with construction aggregate and other excavations. In short we are now one of the main agents shaping the earth’s surface. (Sydney Morning Herald, May 23, 2011)
The course of solving it will not only help to change the present unfavourable-to-the-left balance of political forces. It will provide us, and especially succeeding generations, with clues about the best course to further economic and cultural steps.
                                   *                       *                      * 
Inverting the meaning of Karl Polanyi’s striking title to his famous book The Great Transformation which he used with the subtitle The Political and Economic Origin of Our Time, I have called success in meeting fully the present challenges The Greatest Transformation.
This may seem exaggerated, but consider the fact that for the first time ever in history, all countries and cultures will eventually have to become involved, and that the vast majority of people will then have to be guided by the principle that excesses in resource consumption must be avoided.
Some may be alarmed at this and consider it to be going backwards. But I hold that it is true progress, liberating us from toils of consumerism which daily (and nightly) consume the time and energy of a growing proportion of the world’s population, while also keeping a large proportion of humanity in wretched poverty or on the brink of starvation.             
Transformation, emancipation
Those on the political right, centred on the ideology of neo-liberalism, and their rabble-rousing foot soldiers, simply deny what is there to be seen and experienced. Maybe they simply fear change as such, perhaps believing that what now exists is the pinnacle of possible human existence, as Frances Fukuyama once asserted, but now, to his credit, has changed his tune.
Even those on the left, the core of which are the social democrats, and the Greens (who are to the left of them on some issues), aspire to something better and more constructive for the future, but have yet to develop a sufficiently coherent social philosophy.
And I am concerned that Shayn gives so little attention to these issues. Could it be that he holds the view common among a small section of the left, that no substantial progress can be made in any social field until the economic base on which it has arisen is first transformed? Such views have dogged the socialist cause almost from its beginnings, with Eduard Bernstein, for one, struggling with it through most of his life.
Of course, no one political strategy could meet every different set of conditions; but my judgment is that the issues stated above are tailor-made for a strategy of resolving pressing major issues, not instead of (perhaps) more basic ones, but rather as an essential step on the way to actually doing so.
Consumption is essential up to the point of sufficiency (which of course cannot be too narrowly defined) but taken beyond that to the very aim of life is a view and practice that is far from liberating. It binds a majority of people in the economically developed countries to a daily (and often nightly) treadmill that is now restricting rather than helping to extend our development as human beings.

Friedrich Hayek, who developed neo-liberal philosophy to its present (though declining) predominance, helped elevate consumerism to its present peak above more worthy and humanly satisfying aims by denouncing those who rejected his view ‘that the great ideal of the unity of mankind should in the last resort depend on the relations between the parts being governed by the striving for the better satisfaction of their material needs.’ (LLL2, 111)

He followed that up by denigrating working people with the assertion that ‘their intuitive craving for a more humane and personal morals corresponding to their inherited instincts is quite likely to destroy the Open Society [capitalism].’ (LLL2, 146).

Let us wear this as a badge of honour.                                               
Human development       
One aspect of switching our view of progress from more material goods to greater human development is to expand and deepen our relationships with other human beings, family and otherwise. This activity is both pleasurable and emancipatory, cultivating our human sensibilities whose possibilities are inexhaustible, as are the possible accomplishments of our reason.  

Furthermore, caring occupations require increased human participation, as do educational, and health services, and individual and collective cultural and artistic pursuits, while engineering and related developments to create more material commodities often cut employment, though capturing sufficiently more of the sun’s heat and electronic rays to replace burning for energy will keep the need for engineering and related activities, including science, fully employed indefinitely into the future.

The Services Society

Largely unnoticed and unremarked till recently is the fact that provision of services rather than material consumption commodities is by far the largest part of the economies of the developed countries.    
Last year, two Reserve Bank economic analysts, Ellis Connolly and Christine Lewis, quantified the changes in Australia. Titled Structural Changes in the Australian Economy, it showed that 80 per cent of the total value produced in our country came from the service sector, and embraced 85 per cent of the total workforce. The remaining 20 per cent of value was produced by agriculture, manufacturing and mining which employed the remaining 15 per cent of the workforce.
I queried them about the inclusion of ‘construction’ (for instance, construction of massive office blocks) and they replied that they did so because it is listed in the Australia and New Zealand Standard Industrial Classification (ANZSIC).  However, they did agree that there is no clear distinctions between industries that are ‘services’ and those that are ‘non-services’.
As a lay-person in this area I would estimate that a more realistic figure might be about two thirds services. But that figure, and the fact that only 15 per cent of the workforce, in manufacturing, mining and agriculture, produces no more than 20 per cent of all value indicates a major restructuring of society is already under way, I believe with great significance for proceeding to ‘the greatest transformation’ that humanity must accomplish before the end of this century. And building on a spontaneous/evolutionary development is generally far easier to accomplish than trying to create something so radically different that people may be more reluctant to embrace it, while it can also be more subject to violent reversal.                                                             
Consumption goods cannot be distributed equally because people and families are different, have different responsibilities, different incomes and different tastes, Services, however, from electricity, water and sewerage supplies, health and education and transport and communication services … are equally essential to everybody, indeed possess an egalitarian aspect that is desirable, but     rare in present society. This fact is expressed in the so far unsuccessful attempt to globalize and privatise trade in services through GATS (General Agreement on Trade in Services), leaving most services still locally supplied, with a major portion still in state hands.

The Australia Institute conducted surveys that revealed a majority would prefer better services over tax cuts. When asked which election promise was more likely to win their vote, 56 per cent of those surveyed chose better services to increased living standards compared to 44 per cent who said that tax cuts would sway their vote. Of all those surveyed, 63 per cent wanted services to benefit Australians equally.

As well as treasuring this egalitarian factor, we should remind ourselves e forget conditions of work have an effect on ways of thinking, ‘big industry’ significantly generating trade unionism and to a certain extent socialist thinking. This is not to suggest that trade union and socialist sentiment cannot arise among workers in, for example, caring activitie, only that they may have to be approached in a rather different way, as do workers in country areas compared with the city. The conclusion should be that understanding the ways of thinking of differently placed, differently formed, differently parented and differently educated people, is not simply the product of class economic relations.

Taken generally, we need to realise that politics is an art rather than a science where ‘theory’ alone is adequate to decide on policy and practical activity. Or, put somewhat differently, the common view in left, right, and to some extent in neutral or various other circles, that property or other economic relations have to come first – that these, often called material relations, must change before any significant society-wide alternatives can occur.

My contention is that in the concrete conditions of global warming and threats to planetary resource provision, tackling these problems should be the priority, and that succeeding in the endeavour to overcome them will do more than any other available way in which to clarify what economic changes can politically then be made.                       

Sunday, September 9, 2012

Mitt Romney - A Remedy or a Diagnosis?

above: The same of 'neo-liberal medicine' will be in order if Mitt Romney becomes US President

In this latest 'Left Focus' article, Russian economics and political writer Boris Anisimov critiques Mitt Romney's economic prescriptions for America. Specifically, Anisimov criticises the ususal Republican agenda of austerity and tax cuts: but also looks more deeply to the price America may end up paying for re-industrialization. Debate Welcome!!!!

nb: The Left Focus Facebook Group posts updates whenever we add new articles and also hosts wide-ranging political debate. You can join our facebook group here - See:

Boris Anisimov, September 9th

Who is this Mr. Romney: a new remedy for the old ailment or a new symptom of the old diagnosis?

In November 2012 we are anticipating the sequel to the much-talked-about drama serial known as the US elections. The air is going to be filled with celebration: flags, ribbons, ardent slogans from the pulpits and reciprocal exclamations from the crowd. Having completed the regular public debate ritual, US voters are going to line up in front of ballot boxes in order to entrust the urns with their most precious possession, namely their hopes for a brighter future. And judging by what is now happening to the American middle class, they hardly have anything else to entrust them with [1]. The danger of the middle class’ extinction is being seriously discussed in the US. One can think of some old truism about living in debt being fun until it is time to pay up. Households, corporations, banks, governments are all stepping up their debts while the resentment of the masses is growing bitter upon a realization at the outbreak of the on-going crisis that if there is a binge, there is going to be a hangover.

In times like this, the political farce gets unfurled in the most ruthless way. Any means which serves the purpose gets put to use. As highly-paid professional windbags publicly compete in slinging mud at one another, the voters, disunited into small interest groups, get distracted from the important matters and rail furiously for farfetched reasons.

I would probably say that the novelty of the current political season in the US is Mitt Romney, a well-to-do Mormon with experience of a businessman and a governor. The American political machine has once again demonstrated to the whole world its ability to come up with unexpected arrangements. The winner of the previous season, the African American under the non-Anglo-Saxon name of Obama, is no longer a thrill. He already acquired the status of a political old-timer and managed to lose some of his appeal. Now the public is presented with a new office-running novelty – a Mormon millionaire.

It is not his millions that became the talk of the town (well-to-do candidates for high political positions are common in the US), but his religion. Romney’s opponents did not miss the opportunity to ridicule his faith. However, any sound-minded individual understands that religion does not occupy the number-one position in a politician’s list of priorities – a politician is not paid for religious views but for protecting somebody’s interests.

It is also obvious that it is not theological preferences that will decide the outcome of the ultimate battle between Romney and Obama for the top position, but the future of the US economy. In crisis, this topic gets repeated more often thus implying that the number of economic promises pronounced from the lofty pulpits is going to increase. It would be interesting to count how many times during the debates each of the candidates will resort to some variation on the unofficial slogan of Bill Clinton’s campaign in 1992 – “It is the economy, stupid». [2]

Any unusual phenomenon, which disrupts the conventional order of things, is either a precursor of a change or an inertial consequence of existing problems. I am wondering what Mitt Romney is all about from this standpoint. Who is this Mr. Romney: a new remedy for the old ailment or a new symptom of the old diagnosis?

Mr. Romney’s official site will dazzle you with promises [3], the main one being a sharp turn away from the «current course», by which policies of the present occupant of the White House are implied. Romney recognizes the need to boost employment, and puts this issue as his number-one priority in his economic policy.

So what is he suggesting?

1. Tax cuts;

2. Further deregulation;

3. Opening new external markets for US industries;

4. Producing more domestic energy in order to cut costs;

5. Greater “flexibility” of the labor market;

6. Retraining workers;

7. Government spending cuts.

Honestly, there is nothing new here – it is the “good” old neoliberalism, which is called neoconservatism in the US. It is all in line with the western economics manuals, which Mr. Gaidar and his bunch used for reforming us in the early 1990’s. That same economic policy with certain alterations is preserved in Russia until this day. The local “Chicago boys” – the Russian pro-western neoliberal monetarists, whose notorious heritage we can still see today – had quite a fancy for such a policy.

Interestingly enough, Romney and the Russian neoliberal reformers have the same flaws in their economic reasoning. Allowances must be obviously made to the United States’ position as the global hegemon. There is a growing suspicion that the program that Romney revealed only constitutes a portion of the real agenda because a set of mutually contradicting items in it make it unfeasible in its current form. What are the contradictions?

Taxes vs. Budget Deficits. Tax cuts for the sake of economic growth and lower unemployment make sense, but budget deficits due to tax cuts do not. Over the last decades, the US budget has been passed with a constant deficit, which gets monetized by the Fed. Many economists attribute the growing public debt in the US to the lack of funds due to tax cuts. The debt increment started accelerating astronomically in the early 1980’s, precisely when neoliberalism as politico-economic project came into existence. That very period was also marked by the advent of Republican Ronald Reagan at the White House where he convincingly played the role of a US president as he advocated tax cuts for the rich. And reaganomics – the economic constituent of the neoliberal theory – received this informal name after him.

In other words, upon taking office, Romney will be able to cut taxes only by increasing public debt, which contradicts his commitment to cut the latter and teach America to live within their means.

Austerity vs. Growth. Budget deficits can be lowered by cutting government spending. Romney’s reasoning that supports this initiative is based on the well-known maxim that one must live within one’s means. This very principle is noble and proper, but the way the Republicans are going to implement it does raise questions. Thus, Romney insists on cutting non-security spending while it is security spending, which takes up the largest portion of the budgetary expenditures. The second largest is the servicing of the government debt. In the US federal budget for the year 2012, the security expenditures planned at $881 billion make up 23.82% of the total expenditures, the deficit working out at $1,090 billion. We can hardly expect Romney to cut security spending at least because his promises to maintain the US geopolitical standing and thereby show the world an American equivalent of Kuzma's mother are going to require significant financing. On the other hand, it is possible to cut the expenditures on the police, firemen and teachers as well as social programs like the recently adopted law on the mandatory medical insurance [4].

I agree that government spending does not automatically lead to economic growth. But the problem is much more profound than what we hear about it from the American establishment in general and Mr. Romney in particular. It is not a matter of whether to run into more debt or not – it is a matter of whether households’ aggregate solvent demand is sufficient to finance a way out of the economic impasse or else the government will have to make up for the deficiency. In this case, there are no other options but three: to raise taxes for the well-off, run into more debt or “print” more money. The last option does not only threaten to push up inflation but also increases the budgetary debt load since the Fed in actual fact issues money by monetizing the public debt. If national governments could do it without the involvement of their central banks, the currency issue would be quite a stimulus for the internal demand, but it does not mitigate the danger of inflation. So whether Romney likes it or not, the US public debt is going to grow bigger.

Internal growth vs. geopolitical expansion. In words, Romney believes that internal resources will make economic growth possible. In accordance with the neoliberal doctrine, the main task is to restore the functioning of business. It is believed that once supply is restored, demand will follow suit automatically. Encouraged by another tax cut, entrepreneurs should allegedly start hiring, and the country’s economic motor should kick start itself – this is the so-called “supply-side economics”, which currently holds sway over economists’ minds. But there is an alternative approach. The “demand-side economics”, represented by various schools, underlines the impossibility to boost the economy by stimulating supply unless the solvent demand is ready to foot the bill. Economists who share this viewpoint are speaking of a widening gap in the US between the growth of average wages and the growth of productivity, which has become evident since the mid-1970’s [5]. The old Karl Marx called this phenomenon a crisis of over-production, the essence of which is quite simple – wages grow more slowly than productivity and cannot pay for the ever-increasing supply of goods and services [6]. And the US households’ growing debt load only confirms this concept. As a result, we see sagging sales, falling revenues, lay-offs, bad debts, banks refusing to lend, and finally a depression.

One can draw the same conclusion about the falling solvent demand in the US economy by analyzing the statistics of income distribution among the population.

Income Distribution in the US from 1982 to 2006 [7]

Top 1 percent
Next 19 percent
Bottom 80 percent

Interestingly, the lowest rates for the majority of the population occurred at the beginning of the Great Depression in the late 1920’s and before the on-going crisis in the early 2000’s. And it is not a coincidence. The recent drop started in the early 1980’s upon the emergence of neoliberalism and is still continuing. 

Can we expect that American debt-ridden consumers will start spending their evaporating incomes with renewed energy in order to bring up sales to the pre-crisis levels? This is at least naïve. According to economist Mikhail Khazin, the US household expenditures over the last 30 years have exceeded household incomes by 20-25% [8]. And Romney also seems skeptical about the internal economic growth in the near future since expansion by American industries into foreign markets has been put on his economic agenda. In other words, does that imply that, should internal resources turn out to be insufficient for economic growth, we are going to see new geopolitical crusades to expand markets and boost sales? Do the American elite realize that otherwise it will be difficult to restore internal consumption pre-crisis levels? I think they do.

Reindustialization vs. outsourcing. As Boris Kagarlitsky writes in his book The Revolt of the Middle Class, the very notion of a middle class appeared in the middle of the 20th century as a result of the implementation of Keynesian prescriptions in the economic policies of the West. By redistributing a portion of incomes in the economy for the middle class’ benefit, the elite managed to ensure high consumption levels for various goods and services. The western ideologists did not miss the opportunity to demonstrate this achievement as evidence that the West was at a more advanced stage of socio-economic development in comparison with the Soviet “socialism” while, in essence, it was a left-center compromise caused by the fear of popular discontent following the Great Depression.

When the elite’s fears finally subsided, a gradual right turn started bringing about falling incomes and growing inequality among the American common folk. The «fattening» of the middle class was no longer in fashion. In order to cut costs, corporations began relocating production facilities to countries with low wages. This resulted in the United States’ love and hate relationship with China where millions of workers were ready to toil for peanuts while China’s internal solvent demand remained immensely low.

Now that the global demand is falling, China is trying to stimulate internal consumption, but this raises all production costs. So the US has already started talking about the production facilities moving back from China [9]. It is still too early to talk about the US reindustrialization. It is hard for me to imagine that the debt-ridden US middle class should consent to wages low enough to start attracting jobs in large numbers back from the third-world countries. Also, I cannot get rid of an impression that Romney’s initiatives to limit the clout of trade unions and improve workers’ re-training programs are all aimed specifically at labor cost reduction. The labor market’s “flexibility” – which, in essence, simplifies the hiring and firing of employees – can lower job security, intensify competition among the workforce and bring down wages as a result.

I think turning the US back into a leading industrial superpower in the near future will be quite problematic since a massive industrialization will require a significant reduction of the working population’s living standards. Is the American public ready for such a turn of events? Will they be able to increase spending and pay off their loans as their liabilities continue to rise merely because of accrued interest?

All initiatives aimed at reducing the middle class’ income in the US economy are likely to raise questions from the international community. As you know, the demand in the US is the largest in the world and “feeds” corporations in a lot of countries. Neither China alone nor all the BRIC countries put together have so far been able to offer the globalized transnational world consumption levels comparable with those of the US. If global consumption does not rise to the pre-crisis levels soon and continue to grow further, the danger of major financial meltdowns is going to remain acute because the world still has enormous amounts of debt previously extended in hopes that global demand should continue to expand.

When demand declines, economics manuals turn into worthless paper waste. The neoliberal economics deals mostly with the expansion of supply and believes that demand expands automatically. Our government and corporate strategies, educational programs, politics and ideology are all based on this view of the world. And Romney is one of the best representatives of this system. So, is Romney a remedy or a diagnosis? Alas, only a diagnosis. He is too symptomatic of his epoch to symbolize any kind of renewal. All his convictions on economics and foreign policies were voiced before. Carbon copied from previous republican candidates’ programs, they sound more like populist chants than a real action plan. Romney is obviously trying to win the favor of the American conservatives. You can hear him talk about “the American dream that built America” and “the spirit of entrepreneurship inherent in the American nation”, but all his talk of self-sufficiency is coupled with geopolitical rhetoric. Romney does raise the issue of the US public debt, which is now approaching $16 trillion, but fails to bring up the issue of the growing household debt, which financed the growth of corporate incomes over the last decades.

A politician who tells his or her voters that their incomes are going to decline does not stand a chance in politics. Instead, a politician must shine with optimism and make believe that he or she knows how to fix things. This is exactly Romney’s case. He is a slave to the American conservative ideology of success. In reality, he can offer even less than Obama, who is striving to pass some center-left initiatives. From the ideological stand point, Romney is hog-tied. The policies he was pursuing as Massachusetts governor were more socially oriented in comparison with what he is promising to implement if elected US president. He is now trying to prove his hawkishness, but is only turning the steadily impoverishing middle class away.

Boris Anisimov

P.S. The original article in Russian can be found at

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