Dinàmica Macroeconòmica 2019 2020gandalf.fee.urv.cat/professors/AntonioQuesada/Curs1920/... ·...
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Dinàmica macroeconòmica · Desigualtat ǀ 2 d’octubre de 2019 ǀ 1 Dinàmica Macroeconòmica 2019‐2020 “It’s our currency but it’s your problem.” US Treasury Secretary John Connally 1. Daniel Bell’s trilemma: capitalism, democracy, culture “The argument elaborated in this book is that the three realms—the economy, the polity, and the culture— are ruled by contrary axial principles: for the economy, efficiency; for the polity, equality; and for the culture, self‐realization (or self‐gratification). The resulting disjunctions have framed the tensions and social conflicts of Western society in the past 150 years.” (pp. xxx‐xxxi) “The economic dilemmas confronting Western societies derive from the fact that we have sought to combine bourgeois appetites which resist curbs on acquisitiveness, either morally or by taxation; a democratic polity which, increasingly and understandably, demands more and more social services as entitlements; and an individualist ethos which at best defends the idea of personal liberty, and at worst evades the necessary social responsibilities and social sacrifices which a communal society demands. In sum, we have had no normative commitment to a public household or a public philosophy that would mediate private conflicts.” (pp. 248‐49) “I see the contradictions of capitalism in the antagonistic principles that underlie the technical‐economic, political, and cultural structures of the society. Now, the technical‐economic realm, which became central in the beginning of capitalism, is, like all industrial society today, based on the axial principle of economizing: the effort to achieve efficiency through the breakdown of all activities into the smallest components of unit cost (…) The axial structure, based on specialization and hierarchy, is one of bureaucratic coordination. Necessarily, individuals are treated not as persons but as ‘things’ (…), as instruments to maximize profit. In short, individuals are dissolved into their function. The political realm, which regulates conflict, is governed by the axial principle of equality: equality before the law, equal civil rights, and, most recently, the claims of equal social and economic rights.” “Because these claims become translated into entitlements, the political order increasingly intervenes in the economic and social realms (in the affairs of corporations, universities, and hospitals), in order to redress the positions and rewards generated in the society by the economic system. The axial structure of the polity is representation, and, more recently, participation (…) The tensions between bureaucracy and equality frame the social conflicts of the day.” “Finally, the cultural realm is one of self‐expression and self‐gratification. It is anti‐institutional and antinomian in that the individual is taken to be the measure of satisfaction, and his feelings, sentiments, and judgments, not some objective standard of quality and value, determine the worth of cultural objects.” 2. Dimensions of equality “There are, logically speaking, three dimensions of equality: equality of conditions, equality of means, and equality of outcomes. Equality of conditions, by and large, refers to equalities of public liberties (…) Equality of means has meant, both in the liberal and socialist traditions, equality of opportunity—equality of access to the means of securing the unequal outcomes (…) Equality of opportunity has been the overriding definition of equality in the liberal societies of the West which have established individual, social and geographical mobility as a value. By and large, this principle has been unchallenged (…) The outcomes of the competition between individuals are disparate degrees of status, income, and authority. These disparate outcomes have been justified on the ground that they are freely gained and earned by effort. This is the basis of the idea of a ‘just meritocracy’ and, historically, of the striving to realize both liberty and equality. But in recent years there has been an outcry that the disparate outcomes are too large and unequal, and that public policy ought to seek greater equality of outcomes—in short to make persons more equal in income, status, or authority. Yet such efforts can be achieved only by restricting other individuals’ access to position or the disposition of their achieved outcomes (e.g., the use of wealth to gain other privileges). In short, the effort to reduce disparities of outcomes means that the liberty of some is qualified or sacrificed in order to make others more equal to them.” (pp. 262‐64)
Transcript of Dinàmica Macroeconòmica 2019 2020gandalf.fee.urv.cat/professors/AntonioQuesada/Curs1920/... ·...
Dinàmica macroeconòmica · Desigualtat ǀ 2 d’octubre de 2019 ǀ 1
DinàmicaMacroeconòmica2019‐2020
“It’sourcurrencybutit’syourproblem.”USTreasurySecretaryJohnConnally
1. DanielBell’strilemma:capitalism,democracy,culture
“Theargumentelaboratedinthisbookisthatthethreerealms—theeconomy,thepolity,andtheculture—areruledbycontraryaxialprinciples:fortheeconomy,efficiency;forthepolity,equality;andfortheculture,self‐realization(orself‐gratification).TheresultingdisjunctionshaveframedthetensionsandsocialconflictsofWesternsocietyinthepast150years.”(pp.xxx‐xxxi)
“TheeconomicdilemmasconfrontingWesternsocietiesderivefromthefactthatwehavesoughttocombinebourgeoisappetiteswhichresistcurbsonacquisitiveness,eithermorallyorbytaxation;ademocraticpolitywhich, increasingly and understandably, demandsmore andmore social services as entitlements; and anindividualist ethoswhich at best defends the idea of personal liberty, and atworst evades the necessarysocial responsibilities and social sacrifices which a communal society demands. In sum, we have had nonormativecommitmenttoapublichouseholdorapublicphilosophythatwouldmediateprivateconflicts.”(pp.248‐49)
“I see the contradictions of capitalism in the antagonistic principles that underlie the technical‐economic,political,andculturalstructuresofthesociety.Now,thetechnical‐economicrealm,whichbecamecentralinthebeginningofcapitalism,is, likeall industrialsocietytoday,basedontheaxialprincipleofeconomizing:theefforttoachieveefficiencythroughthebreakdownofallactivitiesintothesmallestcomponentsofunitcost (…) The axial structure, based on specialization and hierarchy, is one of bureaucratic coordination.Necessarily,individualsaretreatednotaspersonsbutas‘things’(…),asinstrumentstomaximizeprofit.Inshort,individualsaredissolvedintotheirfunction.Thepoliticalrealm,whichregulatesconflict,isgovernedbytheaxialprincipleofequality:equalitybeforethelaw,equalcivilrights,and,mostrecently,theclaimsofequalsocialandeconomicrights.”“Becausetheseclaimsbecometranslatedintoentitlements,thepoliticalorderincreasinglyintervenesintheeconomicandsocialrealms(intheaffairsofcorporations,universities,andhospitals),inordertoredressthepositionsandrewardsgeneratedinthesocietybytheeconomicsystem.Theaxialstructureofthepolityisrepresentation,and,morerecently,participation(…)Thetensionsbetweenbureaucracyandequalityframethesocialconflictsoftheday.”“Finally, the cultural realm is one of self‐expression and self‐gratification. It is anti‐institutional andantinomianinthattheindividualistakentobethemeasureofsatisfaction,andhisfeelings,sentiments,andjudgments,notsomeobjectivestandardofqualityandvalue,determinetheworthofculturalobjects.”
2. Dimensionsofequality
“There are, logically speaking, three dimensions of equality: equality of conditions, equality ofmeans, andequalityofoutcomes.Equalityofconditions,byandlarge,referstoequalitiesofpublicliberties(…)Equalityofmeanshasmeant,bothintheliberalandsocialisttraditions,equalityofopportunity—equalityofaccesstothemeansofsecuringtheunequaloutcomes(…)Equalityofopportunityhasbeentheoverridingdefinitionof equality in the liberal societies of theWestwhich have established individual, social and geographicalmobilityasavalue.Byandlarge,thisprinciplehasbeenunchallenged(…)Theoutcomesofthecompetitionbetweenindividualsaredisparatedegreesofstatus,income,andauthority.Thesedisparateoutcomeshavebeenjustifiedonthegroundthattheyarefreelygainedandearnedbyeffort.Thisisthebasisoftheideaofa‘justmeritocracy’ and, historically, of the striving to realize both liberty and equality. But in recent yearstherehasbeenanoutcrythatthedisparateoutcomesaretoolargeandunequal,andthatpublicpolicyoughttoseekgreaterequalityofoutcomes—inshorttomakepersonsmoreequalinincome,status,orauthority.Yetsucheffortscanbeachievedonlybyrestrictingotherindividuals’accesstopositionorthedispositionoftheir achieved outcomes (e.g., the use of wealth to gain other privileges). In short, the effort to reducedisparitiesofoutcomesmeansthatthelibertyofsomeisqualifiedorsacrificedinordertomakeothersmoreequaltothem.”(pp.262‐64)
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3. Equality/libertyandequity/efficiency
“The issue of equality and liberty is the question of the disparities between persons and the role of thegovernment in reducing these disparities or containing their undue influence. The question of equity andefficiency is the problem of balance between the ‘economizing mode’ of the society—the doctrine ofproductivity,ortheefforttoachieveincreasedoutputatlessercost—andthesocialcriteriaofnon‐economicvalues.Inanothersense,itisalsothequestionofthebalancebetweenpresentandfuture:howmuchdoesthe present generation have to forgo (in consumption) to insure a higher rate of capital stock for futuregenerations?And,conversely,howmuchofexhaustibleresourcescanthepresentgenerationuseupattheexpenseofthenextgenerations?”(p.269)
“The major dilemma in fiscal sociology arises from the structural imbalance between the technological(industrialandscientific)sectorandthehumanandgovernmentalservicessector,inrelationtoproductivity,wageincreases,unitcosts,andinflation.”(p.234)
“Thesociologicaldilemmaforthemodernpublichouseholdisthatitnotonlyhastoprovideforpublicneedsin the conventional sense,but it has alsobecome, inescapably, thearena for the fulfillmentofprivate andgroup wants; and here, inevitably, the demands cannot easily be matched by the revenues, or by thesociologicalknowledgeadequatetothesedemands.”(p.232)
“… what ultimately provides direction for the economy is the value system of the culture in which theeconomyisembedded.Economicpolicycanbeefficaciousasameans;butitcanonlybeasjustastheculturalvaluesystemthatshapesit. It is forthatreasonthatIamasocialist ineconomics.Forme,socialismisnotstatism,orthecollectiveownershipofthemeansofproduction.Itisajudgmentontheprioritiesofeconomicpolicy. It is for that reason that I believe that in this realm, the community takes precedence over theindividualinthevaluesthatlegitimateeconomicpolicy.Thefirstlienontheresourcesofasocietythereforeshouldbetoestablishthat‘socialminimum’whichwouldallowindividualstoleadalifeofself‐respect,tobemembersofthecommunity.”
“Yet I am a liberal in politics—defining both terms in theKantian sense. I am a liberal in that,within thepolity, I believe the individual should be the primary actor, not the group (be it family or corporation orchurch,orethnicorminoritygroup).Andthepolity, Ibelieve,has tomaintain thedistinctionbetweenthepublicandtheprivate,sothatnotallbehaviorispoliticized,asincommuniststates,orleftwithoutrestraint,asinthejustificationoflaissez‐faireintraditionalcapitalistsocieties.”
“IamaconservativeinculturebecauseIrespecttradition;Ibelieveinreasonedjudgmentsofgoodandbadaboutthequalitiesofaworkofart;andIregardasnecessarytheprincipleofauthorityinthejudgingofthevalueofexperienceandartandeducation(…)ThetriunepositionsIholddohaveaconsistencyinthattheyuniteabeliefintheinclusionofallpeopleintocitizenshipthroughthateconomicminimumwhichallowsforself‐respect, the principle of individual achievement of social position on the basis of merit, and thecontinuity of the past andpresent, in order to shape the future, as the necessary conditions of a civilizedorder.”
Bell,Daniel(1978):Theculturalcontradictionsofcapitalism,BasicBooks,NewYork.
4. Atrilemmainthemanagementoftheeconomy
“Thereisa fundamentalsetoftrade‐offs—a“trilemma,”orthree‐waydilemma—inthemanagementoftheeconomy—usingresourcesasefficientlyaspossible,sharingthemfairlybetweenpeople,andallowingpeopleasmuchfreedomandself‐determinationaspossible—anditisonlypossibletohittwoofthesethreeaimsatanyonetime.Thustiltingtowardmarketsforefficiencyandhighergrowth,andtowardgreaterlibertyatthesame time, will set back equality. Emphasizing equality as well as efficiency requires downplayingindividuality and self‐realization; instead of looking out for themselves and their own standard of living,peoplewill need to develop for themselves a sense of self‐discipline,much as the ‘Protestantwork ethic’drovetheachievementsofearlycapitalismandallowedthesetobewidelyshared.”
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“InrecenttimesWesterneconomieshavefocusedongrowthandindividualismbutthishasbeenachievedattheexpenseofequality.Ifequalityisprioritizedinstead,associalchasmsinsomecountrieswouldseemtorequire, then in adiverse societywithhuge variation in incomes and capabilities it is hard to seehow toavoidthekindsofinefficienciesthatwouldreducegrowth.Ifwedidwantinsteadtocombineanefficientanddynamiceconomywithgreaterequality,Bellarguesthatindividualismandself‐realizationwouldneedtobesacrificedbecausethosewhoearnedthemostwouldhavetoadoptaself‐denyingethic.”
“Thistriad—community,relationships,environment—hasbeenidentifiedasthevictimsofeconomicgrowtheversincemoderncapitalismbeganintheIndustrialRevolution.”
5. Globalinequality
“Oneofthemostneuralgicissuesinthedebateaboutglobalizationinrecentyearshasbeenwhetherornotithasbeenunfair.The“pro”camparguesthatthedecadessince1980havebroughtaboutthebiggestreductionin inequality theworld has ever experienced. The “anti” camp argues that globalization has helped a fewprosperbutleftbehindthemajority,leadingtothegreatestdegreeofinequalityinhistory.Bothholdsometruth,dependingonhowyoulookatinequality.Inparticular,thereisadistinctionbetweeninequalitywithincountriesandinequalitybetweencountries.Startingwiththelatter,andlookingataverageincomepercapitanationbynation,countriessuchastheUnitedStatesandUnitedKingdomhavepulledmuchfurtheraheadofthepoorestcountriessuchasZimbabweandNiger.Atthesametime,therehasbeenahugeriseinaverageincomepercapitainChinaandIndiasuchthattheyhavenarrowedthegapwiththerichestcountries.Thislatter developmentmeans global inequality has decreased substantially, but inequalitywithin nations hasnot.”
6. Whyinequalityincreases
“…there are twomainpossible explanations for thedevelopment of greater inequality comparedwith thepreviouseconomicepoch.Oneisglobalization,ineffectbringingalargenewsourceofcheaplaborintothedomesticeconomy;eitherthroughcheapimportsortheoffshoringofproduction,domesticworkershavetocompetewithworkerselsewherewhoworkformuchlowerwages(althoughtheyarealsolessproductive).This could explain downward pressure on blue‐collarwages or the low pay in basic services such as callcenters (…)Theotherpotential explanation is theadoptionofnewtechnologies requiringskills thatwereinitiallyinshortsupply.Companiesthatusecomputersandothernewtechnologiesneedpeoplewithgreatercognitive abilities—computers can do the easy, repetitive work, so the humans need to do the morechallengingandcreativework.Thisisgreatnewsinthesensethatalotofdulljobshavegoneandworkformanyhasbecomemoreinteresting,butithassubstantiallyreducedthedemandforworkerswithonlybasicqualifications,andswathsofformerlywell‐paidshopfloorjobshavevanished(…)Onbalance,however,thetechnicalchangeexplanationemergesasthemostimportantdriverofincreasingincomeinequality.”
“…structural changes in the economy driven by new technologies are the fundamental driver of greaterinequality, inmuchthesamewaythatthewaveofinnovationofearlycapitalisminthenineteenthcenturyledtogreatinequalityuntiltheworkforceasawholedevelopedthenewskillsthatwereneeded.Technologyhasinteractedwithglobalizationtoexacerbatethetrendtowardgreaterinequality,contributingtoincomeinequalitywithin countries through themove of low andmedium skill jobs overseas, and creating a richglobalelite.The failureof someof thepoorest countries toparticipateatall in theseeconomic trendshasmadegreaterinequalityaglobalphenomenon.”
Coyle,Diane(2011):Theeconomicsofenough.Howtoruntheeconomyasifthefuturematters,PrincetonUniversityPress,Princeton,NewJersey.
7. Governmentvsmarket:efficiency,equality,stability
The chart below on the right (de Grauwe, 2017, p. 88) shows the presumed link between efficiency andequality. If correct, this linkestablishes limits towhatcanbeachieved troughredistributionpolicies. “Thelossofprosperitycanbesogreatthatmanypeoplerejectthesystem.Thisreactionwasanimportantfactor
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in the implosion of communist regimes,whichwere nolonger capable of guaranteeing minimal materialprosperity. They had clearly exceeded their limits andwerepunished.”
The chart below (de Grauwe, 2017, p. 150) shows thepresumedlinkbetweeninstabilityandinequality.“Wheninequality increases, so does the degree of political andsocial instability. At Bwe have reached a tipping point.Great inequality leads to revolution, violently
overturning themarket system. From that point onthedegreeofinequalityisdramaticallyreduced.Suchrevolutions,however,donotalways leadtoreducedinstability; in fact instability may initially rise,because many conflicting groups attempt to grasppower. In time this tends to lead to consolidationofpower in the hands of an authoritarian regime. Thecyclecanbeginagain.”(deGrauwe,2017,p.149)
deGrauwe,Paul(2017):Thelimitsofthemarket:Thependulumbetweengovernmentandmarket,OxfordUniversityPress,Oxford,UK.8. Thegains fromglobalizationarenot
evenlydistributed:relativegains
The elephant curve on the right showsthe percentual gain in real per capitaincome between 1988 and 2008 (thehigh globalization period). Thehorizontal axis ranks people in theworld from the poorest (extreme left)to the richest (extreme right). Themaximum gain (point A) is near themedian(peopleslightlyabovethe50thpercentile of the global incomedistribution) and for the richest (thetop 1%, point C). The minimum gain(point B) corresponds to the global80thpercentile(mostof it inthelowermiddleclassoftherichcountries).
Beneficiariesofglobalization(1988‐2008).(1)Peoplebetweenthe40thandthe60thpercentile(1/5oftheworldpopulation).MostmembersinthisgroupbelongtoAsianeconomies(China,India,Thailand,Vietnam, and Indonesia): the emerging globalmiddle class. Hence, the Asian poor andmiddle classesdefinethegreatwinnersofglobalization.(2)Theglobalveryrich(theglobalplutocrats).
Theleastbenefitedfromglobalization(1988‐2008).(1)Theglobalpoor(locatedinthecountriesthatarenot rich). (2)Theglobal lowermiddle classes (mostofwhom live in the rich countries).Thus, thegreatlosersofglobalizationarethelowermiddleclassesandthepoorersegmentsoftherichworld.
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http://prospect.org/article/worlds‐inequalitywid.world/wp‐content/uploads/2018/01/ElephantCurve.pdf
9. Thegains fromglobalizationarenotevenlydistributed:absolutegainsThe chart on the right shows how thetotal increment in income between1988and2008hasbeendistributedbyglobal income level. It indicates thataround the 44% of all the gains hasbeen receivedby the richest5%of theworldpopulation(thetop1%receiving19% of the income rise). The otherbeneficiaries of globalization (theemergingglobalmiddleclass)pocketedonlybetween2and4%.
Top 1%. According to Oxfam (16January2017),theeightrichestmenintheworldtogetherhavethesameamountofwealth($426billion=0.16%oftheworld’swealth)asthepoorest50%oftheworldpopulation.
$426billion.Spendingonedollarpersecond($86,400perday),itwouldtakemorethan13,500yearstoexhaust$426billion.
https://www.oxfamamerica.org/static/media/files/170105_bn‐economy‐for‐99‐percent‐160117_embargo‐en.pdf
10. TheGreatEscape(AngusDeaton)
The expression, taken from themovie about prisoners ofwar inWorldWar II (directed by John Sturges,1960),referstothefactthat,thankstothematerialprogressinitiatedintheIndustrialRevolution,largepartsof humanity have escaped from poverty, disease and deprivation. Despite this, episodes of progress aresimultaneously episodes of growing inequality. “The greatest escape in human history is the escape frompovertyanddeath.”
LifeevaluationandGDPpercapita.ThetwochartsnextshowsaveragelifeevaluationagainstGDPpercapita(average income).The leftchartshowsthepositivecorrelationbetweenlifesatisfactionandincomelevels. It may give the wrong impression that, after around $10,000, additional income does not help toimprovemuchone’s life.The same information ispresentedon the right chartona log scale forGDPpercapita (each tick on the horizontal axis multiplies income by four: equal distances are not equal amountincreasesinincomebutequalpercentageincreasesinincome).Nowitappearsthatincomealwaysmatters:equalpercentagedifferencesinincomearecorrelatedwithequalabsolutechangesinlifeevaluation.
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Deaton,Angus(2013):TheGreatEscape:Health,wealth,andtheoriginsofinequality
11. Inequalityconcepts
Concept1ofinequality:unweightedinternationalinequality.Concept1associateswitheachcountryarepresentativeindividual,whoisassignedthecountry’sGDPpercapita. Concept1actuallycomparescountries,withallofthemgiventhesameweight.
Concept2of inequality:population‐weighted international inequality.AsConcept1, it isassumedthateveryperson inacountryreceives thesameincome (the country’s GDP per capita), but nowthe number of representative individualsattributed to each country depends on thecountry’s size. Concept 2 ignores inequalitywithincountries.
Concept 3 of inequality: individualinternationalinequality.InConcept3inequalitymeasuresaredetermineddirectlyon individuals,all individuals in theworld,with each individualcountingthesame.
Divergentmeasures of inequality. The chart above shows two interpretations of the same reality:according to Concept 1, international inequality has increased (upward trend) in the last decades;whereasConcept2suggestsa fall (downwardtrend).Thedifference: thebehaviourofChinaand India(reduction in inequality essentially limited to afewbigcountries).
Gini coefficient (CorradoGini). It is ameasureofinequality(andincomedistribution)goingfrom0(maximumequality)to1(maximuminequality:a single individual receives all the income). TheGini index is the coefficient in percentages.Graphically,itis(twice)theareabetweenthelineof perfect equality (the main diagonal) and theLorenzcurve(whichchartstheproportionoftotalincomereceivedby thecumulativeproportionofrecipientsrankedbytheirpercapitaincomefrompoorertoricher;inthegraphontheright,pointAmeans that the poorer 5%of individuals receivethe2%oftotalincome).
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Milanović,Branko(2007):Worldsapart:MeasuringInternational and Global Inequality, PrincetonUniversityPress,Princeton,NJ.
The rise of the super‐rich in the UK (McQuaig, Linda;Neil Brooks (2013): The troublewith billionaries: Howthesuper‐richhijackedtheworld(andhowwecantakeitback))
12. Yates’dilemma(MichaelYates,2016,p.47)
“Itisimpossibletocreateasocietythatisbothjustandcapitalist.”AccordingtoYates,inacapitalisteconomy,capital rules: the systemworks by creating a fewwinners andmany losers, poles of wealth and poverty,periods of expansion and recession, overworked employees, alienating workplaces, exploitation by thepowerful,despoiledenvironments…“Lossesarealwayssocialized,andgainsarealwaysprivatized.”
Yates,Michael(2016):Thegreatinequality,Routledge,NewYork.
13. Inequalitymyths
Myth1:Inequalityisanecessarycounterpartofeconomicdynamismandcompetitiveness.Accordingtothis myth, rising inequality is an inevitable consequence of rapid economic growth (or a necessaryconditionforcompetitiveness).Policiesthatlowerinequality,itisclaimed,reducetheincentivestoworkhardandinnovate.
Myth2:Thebestwaytohelpthepooristohelptherich(“Equityneedsgrowth”).
Myth3: Inequality isactuallynotaproblemas longasextremepovertyisavoidedandincomesareallrising(“therisingtideliftsallboats”).
Myth4:Aspayisrelatedtoability,risinginequalityisjusttheresultofincreasingdifferencesinpeople’sability(IampaidmorebecauseIamworthit).
SudhirThomasVadaketh;DonaldLow(2014):ChallengingtheSingaporeConsensus.
14. TheKuznetscurve(orhypothesis)
TheKuznetscurve is theconjecture(bySimonKuznets)relating the levelofeconomic inequalitywith thelevelofrealincome.Graphically,ittakestheformaninvertedU:forlowincomelevels,inequalityislow;asincomegrows, inequality increases;and, fromsomesufficientlyhigh incomelevelon, inequalitydecreases.However, the recent experience of the advanced economies shows that inequalityneednotdecreasewithdevelopment.
15. TheKuznetswave(orcycle)
The Kuznets wave is the conjecture(BrankoMilanović) that there arewavesof alternating increases anddecreases ininequalityintime(asincomeincreases).
Before the Industrial Revolutioninequality undulated around a fixedaverageincomelevel(inaMalthusiancycle the source of the fluctuation ininequalityisdemographic:anincomeriselowerinequalityandtriggersapopulationincreaseamongthepoor; in the presence of a decreasing marginal productivity of labour, a larger population leads to a
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reduction in productivity and a fall in income, which increases inequality and moderates populationgrowth).
TheIndustrialRevolutionmadepossibleasustainedgrowthofincomeandalsoanincreaseininequality.First, because higher incomes create the potential for more inequality. Second, because structuralchanges in theeconomy (urbanization, rising importanceof the industrial sector)droveup inequality.Inequality eventually decreased when the supply of more educated workers increased and economicpoliciesrespondedtopressurestocorrecttheunevenessofthedistributionofincome(thewelfarestate).Militaryconflictsandpoliticalrevolutions(themselvesoftenconsequencesofexcessiveinequality)alsocontributedtothereductionininequality.The‘GreatLeveling’referstothereductionininequalityintherichercountriesbetween1945and1980.
Anewtechnologicalrevolutionaffectedtherichcountriesinthe1980s(digitalrevolution)bywideningincomedisparities.Thenewtechnologiesrewarded themoreskilledworkers,pushedup thereturn tocapitalandmadethelessskilledworkersufferthestrongcompetitionfromChinaandIndia.Theservicesector increased in importance,withmanyof thenew jobsnotrequiringmuchqualificationandbeingbadlypaid.Moreover,pro‐richeconomicpoliciestendedtobeuniversallyadopted.
Milanović, Branko (2016): Global inequality: A new approach for the age of globalization, HarvardUniversityPress,Cambridge,MA.
16. Howtoreduceinequality
Extreme inequality canbe solved through the tax system.Themechanisms involved in the first reductionwereincreasedtaxation,socialtransfers,hyperinflation,nationalizationofpropertyandwars.Globalizationmakesmoredifficulttoraisetaxationoncapitalincome:itishardertotaxamobilecapital.Thericharealsoresistanttotheapplicationofredistributivemeasures(neoliberalismandtrickle‐downeconomics).Andoneofthecharacteristicsofglobalizationisthatthewinnertakesall.
17. Piketty’sr>gtheoryofinequality:thefundamentalforceofdivergence
Thesymbolrstandsforanaveragerateofreturnonholdingsofwealthoverlongperiods(averagereturnofstocks, corporate bonds, savings accounts, government bonds, real estate, other financial assets…). ThesymbolgistheGDPgrowthrateandcanbeinterpretedastheaveragespeedatwhichincomesinaeconomygrow.Piketty’s theory(thefundamental inequalityofcapitalism) is that inequality increaseswhenrgrowsfasterthang.Withr>g,wealthgrowsmorethanincome;andaswealthisdistributedmoreunequallythanincome, a faster growth of wealth with respect to the growth of income contributes to an increase ininequality: therewardstotheownersofwealthare largerthanthe incomethat,onaverage,generatestheeconomy.
aggregateincome=salaries+profits
rateofreturn=profits/capital
′
capitaltomorrow=capitaltoday+investment
investment=savingsrate·income
1
incometomorrow=(1+incomegrowthrate)·incometoday
Income inequality in the US
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Let , andY ,where ispopulationand isaverageproductivity.Therefore, :income
growthisapproximatelyequaltoproductivitygrowthpluspopulationgrowth.As ,itfollowsthat /
or,equivalently,
whichPikettycalls“thefirstfundamentallawofcapitalism”.Moreover,
′′ ′ ′ ′ 1 1
11 1
.
At a stationary state, . Hence, solving for , it is obtained Piketty’s “second fundamental law of
capitalism”ordynamiclawofaccumulation:
Afallingshare ofwagesinincomecanbeinterpretedasariseininequality:capitalgetsanincreasinglarger
portionofincome.From ,1= .Asaresult,
1 1 1 1
.
Theaboveequationindicatesthatthewageshare decreases(inequalitygoesup)when:
(i) thesavingsrate rises;
(ii) therateofreturn rises;
(iii) therateofgrowthoflabourproductivityfalls;
(iv) therateofgrowth ofpopulationfalls;or
(v) therateofgrowth oftheeconomydeclines(thisisacombinationof(iii)and(iv)).
18. Forcesofconvergenceanddivergenceofmarketeconomies
Withaconstant ,thedynamicsofinequalityisexplainedbytheevolutionoftheprivaterateofreturn oncapitalandtherateofgrowth ofincome.Having impliesthatwealthaccumulatedinthepastgrowsfaster than income (andwages). That capital tends to expand itselfmore rapidly than the economy is theprincipal force of divergence (inequality). The diffusion of knowledge and skills is a powerful force ofconvergence(andsocialstability).
Globalization seems to have favoured so far the forces of divergence: the narrowing of income inequalitybetween countries has been relatively small (look at the Earth at night: light = prosperity; darkness =poverty).
19. Piketty’sclaims
The growth (or contraction) of an economy’swealth‐to‐annual‐income ratio ( K/Y) is the quotient/ betweenthenetsavings(theaccumulationrate)andtheeconomy’sgrowthrate.
Wealth is eventually concentrated in the hands of a small group: the larger , themore unequal thedistributionofwealth.
Anunequaldistributionofincomeistheconsequenceofanunequaldistributionofwealth:theprivilegedsmallgroupwillsteerpoliticaldecisionsontheirbehalf,topreventtherateofprofitfromfalling.
Theprivilegesofthesmallgroupwillbepreservedthroughinheritance.
When wealth is inherited, the small privileged group will possess great influence (politically,economically,socioculturally)thatwillmostlikelybeexercisedtothedetrimentofthemajority.
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“The process by which wealth is accumulated and distributed contains powerful forces pushing towarddivergence,oratanyrate towardanextremelyhigh levelof inequality(…) It ispossible to imaginepublicinstitutionsandpolicies thatwouldcounter theeffectsof this implacable logic: for instance,aprogressiveglobaltaxoncapital.Butestablishingsuchinstitutionsandpolicieswouldrequireaconsiderabledegreeofinternationalcoordination.”(Piketty,2014,p.27)
Piketty,Thomas(2014):Capitalinthetwenty‐firstcentury,BelknapPress,Cambridge,MA.
Dickens, Edwin (2015): “Piketty’s Capital in the Twenty‐First Century: A review essay,” Review ofPoliticalEconomy27(2),230‐239.
López‐Bernardo, Javier; Félix López‐Martínez; Engelbert Stockhammer (2016): “A Post‐KeynesianResponse to Piketty’s ‘Fundamental Contradiction of Capitalism’,”Review of Political Economy 28(2),190‐204.
https://upload.wikimedia.org/wikipedia/commons/b/ba/The_earth_at_night.jpg
20. Anewcountry:Richistan
“(IntheUS)Therichweren’tjustgettingricher;theywerebecomingfinancialforeigners,creatingtheirowncountrywithina country, theirownsocietywithina society, and theireconomywithinaneconomy.TheywerecreatingRichistan.”TherearefourclassesinRichistan.
LowerRichistan.Some7millionhouseholdswithnetworth$1‐10m.“Mostof themarewelleducated,work‐a‐dayprofessionals:corporateexecutives,doctors,lawyers,bankers,designers,analystsandmoneymanagers.Morethanhalftheirwealthisderivedfromincome,withanotherthirdcomingfrominvestmentreturns. Inanincreasinglyglobal,hightech, finance‐orientedeconomy,LowerRichistanishavebenefitedfromthegrowingdemandforhighlyeducatedworkersandrisingpayatthetop.”
MiddleRichistan.Itincludesmorethan2millionhouseholds,withnetworthbetween$10mand$100m.“MostMiddleRichistanismaketheirmoneyfromsalaries,smallbusinessesorinvestmentreturns.Asyoumove fromLower toUpperRichistan,however, thenumberofentrepreneursandbusinessownersstartstoincrease.MiddleRichistanhastwiceasmanyentrepreneursasLowerRichistan,showingthatthesurestpathtobigwealthisstartingyourowncompanyandsellingit.”
UpperRichistan.Itincludesthousandsofhouseholds,withnetworthatleast$100m.“Mostmadetheirmoneybystartingtheirowncompaniesandsellingthem,althoughCEOsandmoneymanagers(especiallyhedge funders) are rapidly joining the ranks. The lives of Upper Richistanis have become incrediblycomplicated.Torunthem,they'recreating‘familyoffices’—largecompaniesdedicatedentirelytoservinga family’sday‐to‐dayneeds, from investmentsand legalwork to travelplansandhiringhousestaff (…)Whenyou live inUpperRichistan, yourentirephilosophyofmoneychanges.You realize that youcan’tpossiblyspendallofyourfortune,orevenpartofit, inyourlifetimeandthatyourmoneywillprobablygrow over the years even if you spend lavishly. So Upper Richistanis plan their finances for the nexthundredyears.”
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Billionaireville. With 13 inhabitants in 1985, it had more than 400 in 2006. “The personal lives ofbillionaires aremore like companies.Theirhomesare likehotels—sprawling campuseswith theirownlogos,purchasingbudgetsandlegionsofstaff.Askabillionaireforhisorherbankstatementandyou’llgetafive‐levelflowchartofinterlockingsubsidiaries,holdingcompanies,investmentfundsandfoundations.”
Frank,RobertL.(2007):Richistan:AjourneythroughtheAmericanwealthboomandthelivesofthenewrich,CrownPublishers,NewYork.
21. Globalizationisanasymmetricprocess(leadingtodifferentiatedoutcomes)
Rich countries are in a better disposition to rip the benefits of globalization. The preconditions for thesuccess of globalization are more likely to are more easily satisfied by the rich countries: physical,educationalandsocial infrastructure (transportationnetworks,humanskills, trust,political institutions…).These preconditions are also necessary to produce high‐reputation goods (positional goods: trade inservices,decommodifiedgoods,currencies), thetypeofgoodsthatarebecoming increasingly importanttobenefit from globalization. Reputation is the key competitive factor in a globalized economy and is notsubject tothetraditionalanalysisbasedoncomparativeadvantages.There isanentrycost tobenefit fromglobalizationthatthepoorercountriescannotpay.Inviewofthis,globalizationseemstobestowitsbenefitsasymmetrically,deliveringdisproportionaltradebenefitstotherichercountries.
22. Thenewpovertytrapofcurrentglobalization
This trap is the resultof lackingadequatephysical infrastructures, capital stock, educational achievement,appropriateinstitutions,governanceskillsandabilitytocontrolthedomesticmacroeconomicfundamentalsin thepresenceof free flowsof international capital. It also contributes to the trap theenforcementof aninstitutional internationalorder that favours the rich: transformationofglobal competition intopositionalcompetition(moreimportanceofthetradeinservicesanddecommodifiedgoods)andlegalarchitecturethatreinforcestheleadersinthepositionalcompetition(protectiontointellectualpropertyrightsandtothefreemobilityofcapital).
23. Twoviewsonthebenefitsandcostsofglobalization
Critics:globalizationhasexploitedpeopleindevelopingcountries,causedmassivedisruptionstotheirlivesandproduced fewbenefits in return. Supporters: reductions inpoverty achievedby countrieswhichhaveembraced integrationwith theworldeconomy,withChinaand Indiabeing thecurrentposter‐countriesofsuchsuccess.
Yotopoulos,PanA.;DonatoRomano(eds.)(2007):Theasymmetriesofglobalization,Routledge,LondonandNewYork(especiallychapter10:“Whathavewelearnedaboutglobalization?”).24. Theglobalizationslowdownthesis(AntimoVerde,2017)
Presumingthatthemiddleandlowerclassesarecapableofaffectingthefutureofglobalization,Verde(2017)claims that globalizationwill inevitably slowdown if themiddle classesmanage to protect their interestspolitically.Thisconclusionfollowsfromtheanalysisofthreequestions.
Whichactorswouldbemoreinterestedinlimitingtheexpansionofglobalizationbecausetheyareworseoffunderglobalization?Hisansweristhatmiddleandlower‐middleclassesofdevelopedcountries(andofsomedevelopingcountries)arethemainlosersofglobalization.Helistssomestructuralcausesforthis:skill‐biased technological changes;aging;predominanceof the financial sector;unfair competition fromthe developing countries; unfair free trade; delocalization of production activities; diminished role oftradeunions;detrimentaldistributionaleffectscausedbytheadoptionofnationalpoliciesforcedbytheglobalizationprocess;globalizationitself…
Which factorswould justifyananti‐globalization reaction? Immigration, terrorismand rising inequalityarepresentedasnon‐temporaryreasonsorproblemsthatwould leadthemiddleclassestoopposeandreactagainstglobalization.
Howwould the losing actors organize an effective reaction against the globalization process?By usingtheirvotestoprotecttheirinterests:middleandlowerclasseswillelectpoliticalpartiesthatproposeto
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adoptanti‐globalizationnationalpolicies.If,asusual,suchclassesconstitutethemajorityoftheelectorate,thenthepoliticalchangethatwillputbrakesonglobalizationseemsguaranteed.
Verde, Antimo (2017): Is globalisation doomed? The economic and political threats to the future ofglobalisation,PalgraveMacmillan,Cham,Switzerland.
25. Globalizationis‘thegreateventofourtime’(MartinWolf,2004,p.ix)andworks
Wolf (2004)offers theconventional arguments insupportof liberalmarketeconomies: theycontribute toprosperity, democracy and personal freedom. He contends that, despite some not so favourableconsequences, the world would be worse under alternative economic systems (or at least the systemssupportedbythecriticsofliberalmarketeconomies).Wolfalsoremarksthat,insomeaspects,globalizationhasnotadvancedasmuchasinpreviousepisodes.Heconsiderthebiggestfailureofcurrentglobalizationtheinsufficienttransferofcapitalandknowledgetothedevelopingeconomies.Headdsthatthereisinfacttoolittleglobalization:
“thechiefobstacletomakingtheworldworkbetter(…)isnotitslimitedeconomicintegration,ascriticsofeconomicglobalizationargue,butitspoliticalfragmentation.Itisthedeep‐seateddifferencesintheinstitutionalqualityofstatesthatdeterminethepersistenceofinequalityamongindividualsacrosstheglobe.Thebigchallenge(…)istoreconcileaworlddividedintostatesofhugelyunequalcapacitieswithexploitation of the opportunities for convergence offered by international economic integration. Inshort,ifwewantabetterworld,weneednotadifferenteconomics,butbetterpolitics.”(pp.11‐12)
Wolf,Martin(2004):Whyglobalizationworks:Thecase for theglobalmarketeconomy,YaleUniversityPress,NewHavenandLondon.26. U‐shaped/saucepancurveofhierarchical/egalitariansocieties
The U‐shaped curve captures “the puzzling fact that most non‐human primate species live in extremely hierarchical groups (avertical line), whereas early human beings lived in remarkablyegalitarianmini‐societies(ahorizontalline)—andcivilisedhumanbeings, for the most part, have reverted to extreme hierarchies(anothervertical line, and thusaU‐shaped curve) (…)ThepuzzlewasnotjustaU‐shapedcurve.Itwasmorelikethecross‐sectionofa saucepan, and the (horizontal) saucepan handle was what had happened over the past two‐and‐a‐halfcenturies in theWestandwashappeningall around theplanet rightnow: there‐emergenceof egalitarianvaluesinpoliticsandthespreadofdemocraticsystemsinmodernmasssocieties.”
Dyer,Gwynne(2018):Growingpains:Thefutureofdemocracy(andwork),Scribe,MelbourneandLondon.
27. Thefinancialsector’srisetopower(MichaelHudson,2015)
“A nation’s destiny is shaped by two sets of economic relationships. Most textbooks andmainstreameconomists focus on the ‘real’ economy of production and consumption, based on the employment oflabor,tangiblemeansofproductionandtechnologicalpotential.ThistangibleEconomy#1iswrappedina legalandinstitutionalnetworkofcreditanddebt,propertyrelationsandownershipprivileges,whileEconomy #2 is centered on the Finance, Insurance and Real Estate (FIRE) sector. This ‘debt andownership’economytransformsitseconomicgainsintopoliticalcontroltoenforcepaymentofdebtsandtopreservepropertyandnaturalresourceormonopolyrentprivileges(typicallyinherited).”
“Today’sbanksdon’tfinancetangibleinvestmentinfactories,newmeansofproductionorresearchanddevelopment–the‘productivelending’thatissupposedtoprovideborrowerswiththemeanstopayofftheirdebt.Bankslargely lendagainstcollateralalreadyinplace,mainlyrealestate(80percentofbankloans),stocksandbonds.Theeffectistotransferownershipoftheseassets,notproducemore.”
“Borrowersusetheseloanstobiduppricesfortheassetstheybuyoncredit:homesandofficebuildings,entire companies (by debt‐leveraged buyouts), and infrastructure in the public domain on which toinstall tollboothsandchargeaccessrents.Lendingagainstsuchassetsbidsuptheirprices–Asset‐PriceInflation.”
?
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“Mainstreampolicy pretends that economies are able to pay their debtswithout reducing their livingstandardsor losingproperty.Butdebtsgrowexponentially faster than theeconomy’sability topayasinterestaccruesandisrecycled(whilenewbankcreditiscreatedelectronically).”
“Debtsthatcan’tbepaid,won’tbe.Thequestionis:howwon’ttheybepaid?Therearetwowaysnottopay. The most drastic and disruptive way (euphemized as “business as usual”) is for individuals,companiesorgovernmentstosellofforforfeittheirassets.Thesecondwaytoresolvemattersistowritedowndebtstoalevelthatcanbepaid.Bankersandbondholdersprefertheformeroption,andinsistthatall debts can be paid, given the “will to do so’ (…) This is the solution that mainstream monetaristeconomists, government policy and the mass media popularize as basic morality. But it destroysEconomy#1toenrichthe1percentwhodominateEconomy#2.”
“Thefinancialsector(theOnePercent)backsoligarchies.”
“Everyeconomy isplanned.Thequestion is,whowilldo theplanning:banksorelectedgovernments?Willplanningandstructuringtheeconomyserveshort‐termfinancialinterests(makingasset‐pricegainsandextractingrent)orwillitpromotethelong‐termupgradingofindustryandlivingstandards?”
Hudson,Michael (2015):Killing thehost:How financialparasitesanddebtbondagedestroy theglobaleconomy,CounterPunchBooks,Petrolia,California.
28. Inequalitytrends(intheUS)
“While US inequality is part of a global trend, the condition is more acute due to the nature ofhyperindividualisticcapitalismandpublicpolicyinthiscountry.”
“One of themost important trends (…) is the persistent stagnation ofwages since the 1980s. After aperiod of relative shared prosperity, between 1947 and 1977, when real wages doubled for everystratumofUSsociety,weenteredaphaseofflatorfallingpaychecksforamajorityofUSwageearners.Since1975,therehavebeenextraordinarygainsinproductivity.ButoverhalfofUSwageearnershavenot shared in the fruits of their labors. In1970, the bottomhalf ofwage earners, roughly117millionadults,madeanaverageof$16,000ayear incurrentdollars.By2014,earnings for thebottomhalfofhouseholdshadremainedvirtuallyunchanged,bumpingupslightlyto$16,200.Overthesameperiod,theincomesofthetop1percenttripled,fromaverageannualwagesof$400,000to$1.3million.
Theresultispersistentpovertyatthebottom,aworktreadmillforlow‐wageworkers,andasqueezeonmiddle‐classworkers.Formore than fourdecades,povertyrateshaveremainedunchanged.Over13.5percentofthepopulation,anestimated43millionpeople,livebelowthepovertyline.”
“Another form of income inequality is the increasing gap between the compensation of CEOs and topcorporateexecutivescomparedtoaverage‐orlowest‐paidworkersinfirms.Inthemid‐1960s,theratiobetweenCEOpayandaverageworkerpaywasabout20:1.Inrecentyears,theratiohasswollentomorethan300:1.SkyrocketingCEOpayisoneofthedriversofincreasedincomeconcentration.”
“Another alarming trend has been the updraft of both income and wealth to the very wealthiesthouseholds.Between1980and2013,therichest1percentsawtheiraveragerealincomeincreaseby142percent,withtheirshareofnationalincomedoublingfrom10percentto20percent.Butmosteconomicgainsduringthisperiodhaveflowedtothetop0.1percent–thetopone‐tenthof1percent–whoserealincomeincreasedby236percent.Theirshareofnationalincomealmosttripled,from3.4percentto9.5percent. Since the economicmeltdownof 2008, an estimated$91of every$100 in increased earningshave gone to the top1 percent (…)Wealth has increasingly concentrated at the top. Thewealthiest 1percentofhouseholdsnowholdroughly42percentofprivatewealth,upfrom33percentin1983.AttheverypinnacleofUSwealthistheForbes400(…)withacombinednetworthof$2.3trillion.Together,thisgrouphasmorewealth than thebottom62percentof theUSpopulationcombined.The20wealthiestbillionaires(…)havemorewealththantheentirebottomhalfoftheUSpopulation.”
“One reason thewealthyhave somuchmore than thebottomhalfofUShouseholds is that almost20percentofUShouseholdshavezeroornegativenetworth.”
“Reflectingthehistoricinequalitiesbetweenwhite,black,andLatinohouseholds,theracialwealthdividehas grown over the last several decades. In 2013, the median wealth of white households was analarming 13 times greater than themedianwealth of black households—up from 8 times greater in
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2010.Whitehouseholdshad10timesmorewealththanLatinohouseholds.Therichest100billionaireshavemorewealththantheentireAfricanAmericanpopulation(…)42millionpeople.Thewealthiest186billionaireshaveasmuchwealthastheentireHispanicpopulation:morethan55millionpeople.”
“InequalityinAmericaisreversible(…)Thepolicyagendadescribedinthisbook—suchaseliminatingstudentdebt,expandinggood jobs throughgreen infrastructure,establishingauniversalbasic income,andexpandinghomeownershipandwealth‐buildingopportunities—areexamplesofbig interventionsthatwillreverseinequality(…)Reversinginequalityisnotonlypossible.Itistheonlypathforward.”
Collins,Chuck(2018):IsinequalityinAmericairreversible?,PolityPress,Malden,MA.
29. Isglobalizationpronetorecurrentlygeneratebacklashesandcollapses?
“Globalization isnotonlyaprocess thatoccurssomewhereout there—inanobjectiveandmeasurableworld of trade andmoney. It also happens in ourminds, and that part of globalization is oftenmoredifficult to manage. To understand both the process and our reactions to it, we need a historicalgrounding.”
“Thephenomenonofglobalizationhastodaybecomeaubiquitouswayofunderstandingtheworld,butpeoplewhousedtheconceptasatoolofanalysisfailedtounderstanditsvolatilityandinstability.”
“Globalization not only involves international movements of goods, people, and capital, but is alsoassociatedwithtransfersofideasandshiftsoftechnology,whichaffectandrestructureourpreferences.Inconsequence,globalizationgeneratescontinuousuncertaintyaboutvalues.”
“Globalizationisvulnerabletoperiodicfinancialcatastrophes,whichinvolveverysuddenalterationsofconcepts of value. That is, our values themselves are reevaluated during such crises. During a crisis,unexpectedandapparentlyrandomlinkagesbecomeapparent.Peoplebegintoseeinwhatcomplexwaystheworldhasbecomeinterconnected.”
“The perception of instability calls into question the sophisticated techniques devised for monetarymanagement (…) In the uncertainty of globalization setbacks, the experience of the past becomes apowerful template for understanding the contemporary predicament (…) Today, we look back to theGreat Depression of the late 1920s and 1930s as amodel forwhat can gowrongwhen globalizationbreaksapart.”
“Politics and economics are inextricably and inherently linked, and politics provides an alternative tomarketmechanismsforthemanagementofglobalizationcrises.”
“Whenbreakdownsoccur,reconstructionisextremelydifficultandinvolvesalongandarduouseffortfortherebuildingofsocialtrust.Valuerenewaltakestime.”
30. Globalizationcycles:canthefutureofglobalizationbeseeninitspast?
“Globalization isnotonlyaprocess thatoccurssomewhereout there—inanobjectiveandmeasurableworld of trade andmoney. It also happens in ourminds, and that part of globalization is oftenmoredifficult to manage. To understand both the process and our reactions to it, we need a historicalgrounding.”
“Allofthesepreviousglobalizationepisodesended,almostalwayswithwarsthatwereaccompaniedbyhighly disruptive and contagious financial crises. Globalization is often thought to produce auniversalization of peace, since only in a peacefulworld can trade and an interchange of ideas reallyflourish. But in practice, a globalization of goods, capital, and people often leads to a globalization ofviolence.”
“Itisthuspossibletospeakofglobalizationcycles,withlongperiodsofincreasedinterchangeofgoods,and flows of people and capital. But then something happens. People feel there has been too muchinteraction;theydrawbackfromtheglobalsettingandlookinsteadforprotectedareasinwhichtheycanbesafefromglobalthreatsandglobaldevastation.Theshockortraumaisoftenconnectedwithfinancialcollapse,especiallytheprofounduncertaintythatfinancialdisasterbrings.”
James,Harold(2009):Thecreationanddestructionofvalue:Theglobalizationcycle,HarvardUniversityPress,Cambridge,MA.
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31. Globalpowerelitesandthetransnationalcapitalistclass(PeterPhillips,2018)
“[In 1956, C.Wright]Mills described the power elite as those ‘who decidewhatever is decided’ ofmajorconsequence. Sixty‐two years later, power elites have globalized and built institutions that facilitate thepreservationandprotectionofcapitalinvestmentseverywhereintheworld.”
“TheGlobalPowerElitefunctionasanongovernmentalnetworkofsimilarlyeducatedwealthypeoplewithcommon interests of managing, facilitating, and protecting concentrated global wealth and insuring thecontinuedgrowthof capital.GlobalPowerElites influenceanduse international institutions controlledbygovernmentalauthorities—namely,theWorldBank,InternationalMonetaryFund(IMF),NATO,WorldTradeOrganization(WTO),G7,G20,andmanyothers.Theseworldgovernmentalinstitutionsreceiveinstructionsand recommendations for policy determinations from networks of nongovernmental Global Power Eliteorganizationsandassociations.”
“Wenamesome389individualsinthisbookasthecoreofthepolicyplanningnongovernmentalnetworksthatmanage,facilitate,andprotectthecontinuedconcentrationofglobalcapital.TheGlobalPowerElitesaretheactivistcoreoftheTransnationalCapitalistClass—1percentoftheworld’swealthypeople—whoservethe uniting function of providing ideological justifications for their shared interests and establishing theparametersofneededactionsforimplementationbytransnationalgovernmentalorganizations.”
“Thisconcentrationofprotectedwealthleadstoacrisisofhumanity,wherebypoverty,war,starvation,massalienation,mediapropaganda,andenvironmentaldevastationarereachingaspecies‐levelthreat.WerealizethathumankindisindangerofpossibleextinctionandrecognizethattheGlobalPowerElitesareprobablytheonlyonescapableofcorrectingthisconditionwithoutmajorcivilunrest,war,andchaos.Thisbookisaneffort tobringawarenessof the importanceofsystemicchangeandredistributionofwealth, toreadersaswell as to the Global Power Elites themselves, in the hope that they can begin the process of savinghumanity.”
Phillips,Peter(2018):Giants:Theglobalpowerelite,SevenStoriesPress,NewYork.
32. Willmoneyeverbecomeobsolete?(TheOrville,Season1,Episode11)
“It [money] became obsolete with the invention of matter synthesis. The predominant currency becamereputation (…)Human ambition didn’t vanish. The only thing that changedwas howwe quantifywealth.Peoplestillwanttoberich,onlynowrichmeansbeingthebestatwhatyoudo.”
33. Rodrik’s(2018,ch.10)newrulesfortheglobaleconomy
‘Marketsmustbedeeplyembeddedinsystemsofgovernance.’Marketsarenotself‐regulatedinstitutions:forproperfunctioningtheyneedthesupportofotherinstitutions(courts,legalsystems,regulators,socialinsurance, redistributive taxation, infrastructure, public investment in R&D…). This applies to globalmarketsaswellasnationalmarkets.
‘Democratic governance and political communities are organized largely within nation‐states, and arelikelytoremainsofortheforeseeablefuture.’‘Thequestforextensiveglobalgovernanceisafool’serrand,bothbecausenational governments areunlikely to cede significant control to transnational institutionsandbecauseharmonizing ruleswouldnotbenefit societieswithdiverseneedsandpreferences.’ ‘Wheninternationalcooperationdoes“succeed,”ittypicallycodifiesthepreferencesofthemorepowerfulstatesor,evenmorefrequently,ofinternationalcorporationsandbanksinthosestates.’
‘There is no “oneway” toprosperity.’ Since ‘the core institutional infrastructureof the global economymustbebuiltat thenational level, it freesupcountries todevelop the institutions that suit thembest.’Regulationsthatcoverlabormarkets,corporategovernance,antitrust,socialprotection,andevenbankingandfinancedifferconsiderablyinprosperoussocieties:US,Europe,Japan…‘Themostsuccessfulsocietiesofthefuturewillleaveroomforexperimentationandallowforfurtherevolutionofinstitutionsovertime.Aglobaleconomythatrecognizestheneedforandvalueofinstitutionaldiversitywouldfosterratherthanstiflesuchexperimentationandevolution.’Theprosperitygameneverends.
‘Countries have the right to protect their own regulations and institutions.’ ‘The recognition ofinstitutionaldiversitywouldbemeaninglessifnationswereunableto“protect”domesticinstitutions.’
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‘Countriesdonothave theright to impose their institutionsonothers.’ ‘Therecognitionof institutionaldiversitywouldbemeaninglessifnationswereunableto“protect”domesticinstitutions.’‘Nationshavearighttodifference,nottoimposeconvergence.’
‘Thepurposeofinternationaleconomicarrangementsmustbetolaydownthetrafficrulesformanagingtheinterfaceamongnationalinstitutions.’
‘Nondemocraticcountriescannotcounton thesamerightsandprivileges in the internationaleconomicorder as democracies.’ ‘What gives the previous principles their appeal and legitimacy is that theyhighlight democratic deliberation—where it really occurs,within nation‐states.Whennation‐states arenot democratic, this scaffolding collapse.’ ‘These principles support a different model of globalgovernance,onethatwouldbedemocracyenhancingratherthanglobalizationenhancing.’
Rodrik,Dani(2018):Straighttalkontrade:Ideasforasaneworldeconomy,PrincetonUniversityPress,Princeton,NJ.
34. Developmenttraps
Theexistenceofdevelopmenttrapsisdeniedbytheright:goodpoliciesallowanycountrytoescapepoverty.Theleftconsiderthesetrapsaby‐productofglobalcapitalism.Collier(2007)identifiesfoursuchtraps:theconflict trap (civil war and coups), the natural resources trap, the trap of being landlocked with badneighbors,and the trapofbadgovernance inasmallcountry.No trap is inescapablebutglobalizationhasmadeitmoredifficulttousetheglobalmarkettoescapefromthem:totakeadvantageofglobalization,aneconomyshouldbesufficientlydeveloped(“strong”)andtheproblemoftheeconomiestrappedisthattheyare insufficientlydeveloped (“weak”).There is thenaviciouscircle: a country isunderdevelopedby sometrapbecauseitcannotjoinproperlytheglobalizationprocess,anditcannotjointheprocessbecauseofthecountryisunderveloped.In2006,accordingtoCollier(2007),therewere58trappedcountries,witharound980millionpeoplelivingthere.Thetypicalfeatureofthesecountriesisbeingsmall.
Collier,Paul(2007):Thebottombillion:Whythepoorestcountriesarefailingandwhatcanbedoneaboutit,OxfordUniversityPress,NewYork.
Reinert,ErikS. (2011): “ReviewofThebottombillionbyPaulCollier”, JournalofGlobalHistory6(1),156‐158.
35. Whyisnotalltheworlddeveloped?
Easterlin(1981)viewsthespreadofmoderneconomicgrowthasdependingonthediffusionofknowledgeofnewproductiontechniques,whoseacquisitionandapplicationofthisknowlegehasdependedontheextentto which the population has acquired the traits andmotivations that formal schooling provides. In turn,political conditions and ideological influences seem tohavedetermined in thepast the implementationofmoderneducationsystems.Easterlin(1988)attributestheinsufficientdiffusionoftechnologytothelackofappropriateinstitutions(socialcapabilities).
Willalltheworldbecomedeveloped?“This, then, is the future to whichthe epochof moderneconomic growth is leading us: aworld inwhich ever‐growing abundance isalways outpacedbymaterialaspirations,aworldofincreasingculturaluniformity.(…)Theproximaterootsoftheepochofmoderneconomicgrowthlieinthegrowthofscienceanddiffusionofmoderneducation”.
36. TheEasterlin(happiness‐income)paradox
Theparadoxisthatempiricalstudiesindicatethathappiness(subjectivewell‐being)increaseswithincomeatapointintimebut,overtime,thisrelationshipdisappears:theaveragelevelofhappinessisunrelatedtoeconomicdevelopment.Easterlin’s(1988)explanationisthathappinessispositivelyrelatedtoone’sincomebutnegativelyrelatedto the incomeof therest:you feelbetteroff ifyour incomeriseswhen, for therest,incomeremainsconstant;andyoufeelworseoffifitisyourincomethatremainsconstantwhilethatoftherestgoesup.
Easterlin,RichardA.(1981):“Whyisn’tthewholeworlddeveloped?”,JournalofEconomicHistory41(1),1‐19.
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Easterlin,RichardA. (1988):Growth triumphant:The twenty‐firstcentury inhistoricalperspective,TheUniversityofMichiganPress,Michigan,IL.
Stevenson,Betsey;JustinWolfers(2008):“Economicgrowthandsubjectivewell‐being:ReassessingtheEasterlinparadox”,BrookingsPapersonEconomicActivity2008,1‐87.
37. Collapse
“…aNASA‐fundedgrouprecentlycreatedtheHumanandNatureDYnamics(HANDY)programtomodelthefall of the Roman, Han, Mauryan, and Gupta Empires, and when they pushed the button, it spit out adisquieting forecast: ‘Global industrial civilization could collapse in coming decades due to unsustainableresourceexploitationandincreasinglyunequalwealthdistribution.’(…)Inthismodel,bytheway,oneofthegreatestdangerscamefromeliteswhoarguedagainststructuralchangeonthegroundsthat ‘so far’ thingswereworkingout.That‘sofar’isalwaystheproblem,asthemanwhofellofftheskyscraperfoundout(…)
We’vedisplacedmosteverythingelse:ifyouweightheearth’sterrestrialvertebrates,humansaccountfor30percentoftheirtotalmass,andourfarmanimalsforanother67percent,meaningwildanimals(…)totaljust3percent.Infact,therearehalfasmanywildanimalsontheplanetastherewere in1970,anawesomeandmostlyunnoticedsilencing.Andyetnothingslowsusdown—justtheopposite.Bymostaccounts,we’veusedmoreenergyandresourcesduringthelastthirty‐fiveyearsthaninallofhumanhistorythatcamebefore(…)OnhiswaytothetheoreticallygroundbreakingRioenvironmentalsummitin1992,thefirstPresidentBushfamouslydeclared,‘TheAmericanwayoflifeisnotupfornegotiation’(…)
Whyshouldyoutakeseriouslymyfearthatthegame,infact,maybestartingtoplayitselfout?Thesourceofmydisquietcanbesummedupinasingleword,awordthatwillberepeatedregularlyinthisbook:leverage.We’resimplysobig,andmovingsofast,thateverydecisioncarriesenormousrisk.
Rome’scollapsewas,ofcourse,alarge‐ishdeal.Butgiventhattherewerevastswathsoftheworldthatdidn’teven know therewasa Roman Empire, it wasn’t a big dealeverywhere. Rome fell, and the Mayans didn’ttremble,nor theChinese,nor the Inuit.Butan interconnectedworldisdifferent. Itoffersa certainkindofstability—everyoneineverycountrycanallhearthescientistswarningofimpendingclimatechange,say—butitremovesthedefenseofdistance(…)Weareputtingthehumangameatrisk,thatis,fromthingsgoingpowerfullywrongandpowerfullyright.Asweshallsee,humanshavenowemergedasadestructivegeologicforce (…)Andhumanshavesimultaneouslyemergedasamassivecreativeforce, inways that threaten thehumangamenotthroughdestructionbutthroughsubstitution.Robotsarenotjustanothertechnology,andartificial intelligencenot justonemore improvement likeasphaltshingles.Theyare insteadareplacementtechnology, and the thing’s that’s going obsolete may well be us (…) The outsize leverage is so crucialbecause,forthefirsttime,wethreatentocutoffourownlinesofretreat.WhenRomefell,somethingelsewasthere(…)Thehumangamewe’vebeenplayinghasnorulesandnoend,but itdoescomewithtwologicalimperatives.Thefirstistokeepitgoing,andthesecondistokeepithuman.”
McKibben,Bill(2019):Falter:Has thehumangamebegun toplay itselfout?,HenryHoltandCompany,NewYork.
38. Nonlinearities,resilience,sledgehammerandthresholdeffects
“Theone thingwecan relyonabouthumanity's future trajectory is itsnonlinearity.That factpresentsuswithbothhumanity'sgreatestperilandourgreatestreasonforhope.Ourperilarisesfromthefactthatwecan'tjustlookattherecentdecadesofprosperityenjoyedbymuchoftheworldandassumeitwillcontinueindefinitely;atthesametime,wecangleanhopefromtherealizationthathumanity'sunsustainablegrowthin consumption, inexorable as it appears, will not necessarily continue until our global civilization isdoomed.”
“Critical transitions can occur for two kinds of reasons: sledgehammer effects and threshold effects. Asledgehammer effect (…) arises when an outside force causes dramatic change in a system (…) A good
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exampleofasledgehammereffectistheasteroidthatisbelievedtohavewipedoutthedinosaursaboutsixty‐fivemillionyearsago(…)Thresholdeffects(…)refertothecriticaltransitionthathappenswhenasystemchangesfromwithin.Oneexampleofathresholdeffect(…)ishowlanguageemergedfromafeedbackloopbetween the cultural and biological evolution of humans (…) In complex systems, critical transitionsfrequently arise from an interplay between threshold and sledgehammer effects (…) The resilience of asystemdetermineswhetheritcanwithstandbigshocksorissusceptibletocollapsefromasmalldisturbance.Resiliencecanbeunderstoodasthecapacityofasystemtorecoverfromadisturbance.”
39. Changeincomplexsystems:theadaptivecyclemodel
“This model sees complex systems as passing through four phases of a cycle. The cycle begins with arapidgrowthphase,duringwhichinnovativestrategiescanexploitnewopportunities.Inacapitalistsystem,this is the period when entrepreneurs thrive, developing new products and targeting new markets.Gradually, the systemmoves to amore stableconservationphase,when rules and established connectionsbecomemoreimportant.Thisphasecanlastforalongtime,duringwhichthefutureseemsquitepredictable,butastimegoeson,thesystembecomesincreasinglybrittleandresistanttochange.Itbecomeslessresilient.Atacertainpoint,asmalldisturbancecancausetheentiresystemtocollapse,whichisthereleasephase.Thiscouldbe the lightning igniting a forest fireor, in financialmarkets, a sudden lossof confidence leading topanic.Following thesystem'scollapse,aperiodof chaosensues,anduncertainty rules.Newopportunitiesemergeforcreativity,whichiswhythefinalstageinthecycleiscalledtherenewalphase.Inthisperiod,smallchanceeventscandrasticallyshapethefuture.Inanecosystem,newspeciesmayemergethathadpreviouslybeensuppressed(suchasthemammalsthattookoverfromthedinosaurs).Insocialsystems,thisisthetimewhencharismaticindividualsmighthaveaninordinateimpactonpublicopinion,eitherforgoodorforevil.‘Early in therenewalphase,’expertsnote, ‘the future isup forgrabs.’ (…)Whichof these fourphasesbestdescribesourcurrentglobalsystem?There'snosimpleanswer,partlybecauseourglobalsystemisitselfanetworkofdifferentsystems,eachofwhichmightbe inadifferentphaseof itsownadaptivecycle.Thosewho focus on technology, for example,might arguewe're still in a growth phase,withwaves of progressresulting from innovation. On the other hand, the earth's natural systems appear to be entering the latestages of a conservation phase, coming precariously close to tipping points that could destabilize ourcivilization.Couldourglobalcivilizationitselfbeinthelatestageofaconservationphaseandfaceimminentcollapse?(…)Thecrucialquestionishowmuchresilienceisbuiltintoourglobalsystem.Unfortunately,muchofithasbeendesignedwithshort‐termefficienciesinmind,whichhavetendedtoreduceresilienceratherthanincreaseit.Inaresilientsystem,individualnodes—familiesorcommunities—needtobeself‐sufficientenoughtosurviveinanemergency.Inourmoderncivilization,mostofuslackself‐sufficiency.”
40. Globalscenarios
“Inourcurrentworld, two important thresholdeffectsare theexponentialprogressof technologyand theever‐widening globalwealth gap.There are also twomajor sledgehammer effects: climate change and thedepletion of theworld's natural resources. Under one scenario, the sledgehammer effects overwhelm thethresholdeffects,andourglobalcivilizationcollapses(…)Inanotherscenario—let'scallitTechnoSplit—thesledgehammer and threshold effectswork together to split apart thehuman racewhilemaintaining someformoftechnologicalcivilization.Continuedexponentialtechnologicalprogresspermitscivilization,fortheaffluentminority, to keep advancing (…) Eventually, theywould become—effectively, if not literally—twoseparatespecies.Onespecies,geneticallyandtechnologicallyenhanced,exploringentirelynewwaysofbeinghuman;theotherspecies,geneticallyakintous,barelysurvivingwithinitscollapsed infrastructure. Isthiswhatwedesireforhumanity'sfuture?ThosewhoagreewithKurzweilthathumanity'sdefiningfeatureistheability to reach beyond the limitations of biology might believe so and celebrate humanity's ultimatetriumph: the unfettered progress of humanity's CONQUEST OF NATURE. But there's another view ofhumanitythatpermeatesthemodernworld,onebasedonthe“recognitionoftheinherentdignityandoftheequal and inalienable rights of all members of the human family.” Thesewords, from the UN's UniversalDeclarationofHumanRights,representadifferentkindofprogress:theprogressofhumanity'smoralscope,
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whichhasexpandedbeyondtribalgroupingstoencompasstheentirehumanrace(…)Fromthisviewpoint,theTechnoSplitscenariowouldbea fundamentalbetrayalofhumanvalues. Itwouldbe,asonecriticsaidaboutSingularityvisionaries,akinto‘richpeoplebuildingalifeboatandgettingofftheship.’”
41. TheGreatTransformation
“Ascenarioinwhichhumanityremainsresilientrequiressomethinggreaterthaneventhemostcompellingpolitical and technological solutions to our current crises, such as a global price on carbon and massiveinvestment in green energy. These are undoubtedly necessary to avert disaster, but, even if they're fullyeffective, they wouldn't be sufficient to avoid the Techno Split scenario. That would require a morefundamentalshiftintheunderlyingvaluesthatdriveourday‐to‐daydecisionsaboutwhatwepurchase,whatweeat,howweearnourmoney,andhowweseekfulfillment(…)Manyhavecometorecognizetheneedforthisfundamentalchangeinvalues.It'sbeenvariouslycalledtheGreatTransformation,theGreatTransition,theGreat Turning, andhumanity'sGreatWork. Like the two earlier great transitions of humanhistory, itwouldencompassatransformationofvirtuallyeveryaspectofthehumanexperience:ourvalues,ourgoals,andourcollectivebehavior.
There is a major difference, however, between this Great Transformation and the earlier ones. Bothagriculture and the Scientific and Industrial Revolutions were the result of generations of peoplemerelyacting in ways that made sense to them at the time, without necessarily holding a vision of where theircollective actions were leading humanity. It was only long afterward that people could look back andrecognizethetransformation.Thisthirdgreat transition,bycontrast,willonlytakeplace ifenoughpeopleare conscious of its need and prepared to change their own values and behavior to affect humanity'sdirection.Itwouldbeauniqueachievementinhumanity'shistory.AGreatTransformationwouldneedtobefoundedonaworldviewthatcouldenablehumanitytothrivesustainablyontheearthintothefuture.”
“Whatvalueswouldarisefromthisworldview?Threecorevaluesemerge.Thefirstisanemphasisonqualityofliferatherthanmaterialpossessions(…)Secondly,wewouldbasepolitical,social,andeconomicchoicesonasenseofoursharedhumanity,emphasizingfairnessanddignityforallratherthanmaximizingforourselvesand our parochially defined social group. Finally, wewould build our civilization's future on the basis ofenvironmental sustainability, with the flourishing of the natural world as a foundational principle forhumanity'smajordecisions.”
Lent, Jeremy (2017): The patterning instinct: A cultural history of humanity’s search for meaning,PrometheusBooks.
42. Fundamentalpoliticaldilemma(BarryWeingast)
“A government strong enough to protect property rights and enforce contracts is also strong enough toconfiscatethewealthofitscitizens.”
Weingast,BarryR.(1995):“Theeconomicroleofpoliticalinstitutions:Market‐preservingfederalismandeconomicdevelopment”,JournalofLaw,Economics&Organization11(1),1‐31.
Hanson, JonathanK.(2014):“Forging then tamingLeviathan:Statecapacity,constraintsonrulers,anddevelopment”,InternationalStudiesQuarterlyVolume58(2),380‐392.
43. Threeresponsesbytheworld’spoliticalleaderstoglobalwarmingpoliticaldilemma
PlanA: business asusual indefinitely, until theEarthbecomeshell and civilization extinguishes (theplancurrently followed).PlanB: theequivalent toawartimemobilization to cut carbonemissionsrapidlyandrestructuretheworldenegyeconomy:“ifPlanBiscarriedout,livinginourworldwillbe,whileunpleasant,nothell–physicistJoeRommhascalledit‘PlanetaryPurgatory.’”PlanC:“thepresentpoliticalleadersoftheUnited States – along with those of China, the other chief emitter of CO2– will delay. Thinking that thescientists’predictionsmightbewrong,theytakeawait‐and‐seeapproach.”
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“It is possible that, although Plan Cwould result in a hellish existence, itmightallowus,ifwearelucky,toavoidextinction. More likely, however, theresults would ultimately be nodifferentfromthoseofPlanA.Theonlyrationaloption,therefore,isPlanB.”
Griffin, David Ray (2015):Unprecedented: Can civilization survivetheCO2crisis?,ClarityPress
JaanS.Islam,M.R.Islam,MeltemIslam,M.A.H.Mughal(2018):Economicsofsustainableenergy,Wiley.
44. Varoufakis’sglobalminotaurhypothesis
“ImighthavecalledthisbookTheGlobalVacuumCleaner,atermthatcapturesquitewellthemainfeatureofthe secondpost‐warphase thatbegan in1971withanaudacious strategicdecisionby theUSauthorities:insteadofreducingthetwindeficitsthathadbeenbuildingupinthelate1960s(thebudgetdeficitoftheUSgovernmentandthetradedeficitoftheAmericaneconomy),America’stoppolicymakersdecidedtoincreasebothdeficits liberallyand intentionally.Andwhowouldpay for thered ink?Simple: therestof theworld!How?Bymeansof apermanent tsunamiof capital that rushed ceaselessly across the twogreat oceans tofinanceAmerica’s twindeficits.Thetwindeficitsof theUSeconomythusoperated fordecades likeagiantvacuum cleaner, absorbing other people’s surplusgoodsandcapital(…)itdidgiverisetosomethingresemblingglobalbalance:aninternationalsystemof rapidly accelerating asymmetrical financial andtrade flows capable of creating a semblance ofstabilityandsteadygrowth.PoweredbyAmerica’stwindeficits,theworld’sleadingsurpluseconomies(e.g. Germany, Japan and, later, China) keptchurning out goods that Americans gobbled up.Almost70percentoftheprofitsmadegloballybythese countrieswere then transferred back to theUnited States, in the form of capital flows toWallStreet. And what did Wall Street do with them? It instantly turned these capital inflows into directinvestments,shares,newfinancialinstruments,newandoldformsofloansand,lastbutnotleast,a‘nicelittleearner’ for thebankers themselves.Through thisprism,everythingseems tomakemoresense: theriseoffinancialization, the triumphof greed, the retreatof regulators, thedominationof theAnglo‐Celtic growthmodel (…) The role of the beast was played by America’s twin deficits, and the tribute took the form ofincominggoodsandcapital.”
“Centraltothisglobalsurplusrecyclingmechanism(GSRM),whichIhavelikenedtoaGlobalMinotaur,werethetwogargantuandeficitsoftheUnitedStates:thetradedeficitandthefederalgovernmentbudgetdeficit.Withoutthem,thebookargues,theglobalcircularflowofgoodsandcapital(seediagrambelow)wouldnothave‘closed’,destabilizingtheglobaleconomy.ThisrecyclingsystembrokedownbecauseWallStreettookadvantage of its central position in it to build colossal pyramids of privatemoney on the back of the netprofits flowing into theUnitedStates from the restof theworld.TheprocessofprivatemoneymintingbyWallStreet’sbanks,alsoknownas financialisation,addedmuchenergytotherecyclingscheme,asitoozedoodlesofnewfinancialvitality,thusfuellinganever‐acceleratinglevelofdemandwithintheUnitedStates,inEurope (whose banks soon jumped onto the private money‐minting bandwagon) and Asia. Alas, it alsobroughtaboutitsdemise.”
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“Inconclusion,acrystalclearpicture isemerging: theCrisisdidnotalter thedeficitpositionof theUnitedStates. The federal budget deficit more or less doubled while America’s trade deficit, after an initial fall,stabilisedatthesamelevel.However,theUSdeficitsarenolongercapableofmaintainingthemechanismthatkeepstheglobalflowsofgoodsandprofitsbalancedataplanetarylevel.Whereasuntil2008Americawasabletodrawintothecountrymountainsofnetimportsofgoods,andasimilarvolumeofcapitalflows(sothatthetwobalancedout),thisisnolongerhappeningpost‐2008.Americanmarketsaresucking24percentfewernetimports(thusgeneratingonly66percentofthedemandthattherestoftheworldwasusedtobeforetheCrash)andareattractingintotheAmericanprivatesector57%lesscapitalthantheywouldhavehadWallStreetnotcollapsedin2008.
Inshort,ofthemightyGlobalMinotaur,theonlyreminderthatremainsisthestillacceleratingflowofforeigncapital into America’s public debt (…), evidence that the world is in disarray and money is desperatelyseekingsafehaveninthebosomofthereservecurrencyinthisageoftumult.ButaslongastheRestoftheWorld is reducing its injectionof capital intoAmerica’s corporate sector and real estate,whileAmerica isreducingitsimportsoftheirnetexports,wecanbecertainthatthebeastisdeadandnothinghastakenitsplacewithacapacitytore‐starttheessentialprocessofsurplusrecycling.”
“Europe is disintegrating because its architecturewas simply not sound enough to sustain the shockwavescausedbyourMinotaur’sdeaththroes(…)Fortwoyearsnow,theGermanpublichasbecomeconvincedthatGermany has escaped the worst of the Crisisbecause of the German people’s virtuous embracing ofthriftinessandhardwork;incontrasttothespendthriftSoutherners,who,liketheficklegrasshopper,madenoprovisionforwhenthewindsoffinancewouldturncoldandnasty.Thismindsetgoeshandinhandwithamoral righteousness which implants into good people’s hearts and minds a penchant for exactingpunishmentonthegrasshoppers–evenifpunishingthemalsopunishesthemselves(tosomeextent).Italsogoes hand in hand with a radical misunderstanding of what kept the eurozone healthy and Germany insurplus prior to 2008: that is, the Global Minotaur whose demand‐generation antics were for decadesallowingcountrieslikeGermanyandtheNetherlandstoremainnetexportersofcapitalandconsumergoodswithinandwithouttheeurozone(whileimportingUS‐sourceddemandfortheirgoodsfromtheeurozone’speriphery). Interestingly, one of the great secrets of the post‐2008 period is that the Minotaur’s deathadverselyaffectedaggregatedemandintheeurozone’ssurpluscountries(Germany,theNetherlands,AustriaandFinland)morethanitdidthedeficitmemberstates(likeItaly,Spain,Ireland,PortugalandGreece).”
“Torecap,theMinotaur’ssurplusrecyclingwasessentialtothemaintenanceoftheeurozone’sfaultyedifice.Onceitvanishedfromthescene,theEuropeancommoncurrencyareawouldeitherberedesignedoritwouldenteralong,painfulperiodofdisintegration.Anunwillingnessbythesurpluscountriestoacceptthat,inthepost‐Minotaur world, some other form of surplus recycling is necessary (and that some of their ownsurplusesmustalsobesubjecttosuchrecycling)isthereasonwhyEuropeislookinglikeacaseofalchemy‐in‐reverse:forwhereasthealchemiststrovetoturnleadintogold,Europe’sreversealchemistsbeganwithgold (an integration project that was the pride of its elites) but will soon end up with the institutionalequivalentoflead.”
Varoufakis,Yanis(2015):Theglobalminotaur:America,Europeandthefutureoftheglobaleconomy,ZedBooks.
45. Howtoachieverapideconomicdevelopment
“… there are three critical interventions that governments can use to speed up economic development.WheretheseinterventionshavebeenemployedmosteffectivelyineastAsia–inJapan,SouthKorea,TaiwanandnowChina– theyhaveproduced thequickestprogressions frompoverty towealth that theworldhasseen.When,by contrast, other eastAsian stateshave setoffwith the sameambitionsand equal orbetterendowments,buthavenot followedthesamepolicies, theyhaveachieved fastgrowth foraperiodbuttheprogresshasprovedtobeunsustainable.”
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“Thefirstintervention–andthemostoverlooked–istomaximiseoutputfromagriculture,whichemploysthevastmajorityofpeopleinpoorcountries.SuccessfuleastAsianstateshaveshownthatthewaytodothisistorestructure agriculture as highly labour‐intensive household farming –a slightly larger‐scale form ofgardening.Thismakesuseofallavailablelabourinapooreconomyandpushesupyieldsandoutputtothehighestpossiblelevels,albeitonthebasisoftinygainsperpersonemployed.Theoverallresultisaninitialproductivesurplusthatprimesdemandforgoodsandservices.
The second intervention –in many respects, a second ‘stage’– is to direct investment and entrepreneurstowardsmanufacturing.Thisisbecausemanufacturingindustrymakesthemosteffectiveuseofthelimitedproductiveskillsoftheworkforceofadevelopingeconomy,asworkersbegintomigrateoutofagriculture.Relatively unskilled labourers create value in factories by working with machines that can be easilypurchased on theworldmarket. In addition, in east Asia successful governments pioneered newways topromoteacceleratedtechnologicalupgradinginmanufacturingthroughsubsidiesthatwereconditionedonexport performance. This combination of subsidy and what I call ‘export discipline’ took the pace ofindustrialisationtoalevelneverbeforeseen.
Finally, interventions in the financial sector to focus capital on intensive, small‐scale agriculture and onmanufacturingdevelopmentprovidethethirdkeytoacceleratedeconomictransformation.Thestate’sroleistokeepmoneytargetedatadevelopmentstrategythatproducesthefastestpossibletechnologicallearning,andhencethepromiseofhighfutureprofits,ratherthanonshort‐termreturnsandindividualconsumption.Thistendstopitthestateagainstmanybusinessmen,andalsoagainstconsumers,whohaveshorterstrategichorizons.”
“WhattheAsiancrisisclarifiedwasthataconsistentsetofgovernmentpolicyinterventionshadindeedmadethedifferencebetweenlong‐runsuccessandfailureineconomicdevelopmentineastAsia.InJapan,Korea,TaiwanandChina,governmentsradicallyrestructuredagricultureaftertheSecondWorldWar,focusedtheirmodernisation efforts onmanufacturing, andmade their financial systems slaves to these two objectives.Theytherebychangedthestructuresoftheireconomiesinamannerthatmadeitallbutimpossibletoreturnto anearlier stageofdevelopment. In the south‐eastAsian states [Malaysia, Indonesia, Thailand] –despitetheirlongperiodsofimpressivegrowth–governmentsdidnotfundamentallyreorganiseagriculture,didnotcreate globally competitivemanufacturing firms, anddidacceptbadadvice fromalready rich countries toopenupfinancialsectorsatanearlystage.TheJapaneseeconomistYoshiharaKuniohadwarnedinthe1980sthat south‐east Asian states risked becoming ‘technology‐less’ developing nations. This is exactly whathappened,andtheyslidbackwardswhentheirinvestmentfundsdriedup.Inshort,differentpolicychoicescreated–andwillprobablyfurtherwiden–adevelopmentalgulfintheAsianregion.”
“In the boom years of the 1980s and 1990s, the failure to generate indigenous manufacturing andtechnological capacity was hidden by the arrival of high levels of foreign direct investment, much of itconcentratedonprocessingoperationswithinquiteadvancedmanufacturingsectors.WiththeonsetoftheAsian crisis, however, the industrial difference between south‐east and north‐east Asia became starklyapparent. South‐east Asia has almost no popularly recognisable, globally competitive manufacturingcompanies.”
“In south‐eastAsia, countrieswere blessedwith high levels of savings in their banking systems just as innorth‐eastAsia.Butgovernmentsdirectedtheheftyinvestmentsthismadepossibletothewrongends–tolower‐yield,large‐scaleagriculture,andtocompaniesthatwereeithernotfocusedonmanufacturingoronlyonmanufacturing forprotecteddomesticmarkets. South‐eastAsian states thenmade theirdevelopmentalprospects evenworse by following rich country advice to deregulate banking, to open up other financialmarkets,andtoliftcapitalcontrols.”
“Premature financial deregulation in south‐east Asia led to a proliferation of family‐business‐controlledbankswhichdidnothingtosupportexportablemanufacturingandwhichindulgedinvastamountsofillegalrelated‐partylending.Itwasastoryofbanksbeingcapturedbynarrow,privatesectorinterestswhoseaimswerealmostcompletelyunalignedwiththoseofnationaleconomicdevelopment.TheprocesswasonewhichhasalsobeenobservedinLatinAmericaand,morerecently,inRussia.”
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46. Twoeconomics(JoeStudwell,2013)
“Themessage that east Asia –and indeed an historical understanding of development around theworld–sends to economists is that there is noone typeof economics.At aminimum, there are two.There is theeconomicsofdevelopment,whichisakintoaneducationprocess.Thisiswherethepeople–andpreferablyallthepeople–whocompriseaneconomyacquiretheskillsneededtocompetewiththeirpeersaroundtheworld. The economics of development requires nurture, protection and competition. Then there is theeconomicsofefficiency,applicabletoalaterstageofdevelopment.Thisrequireslessstateintervention,morederegulation,freermarkets,andacloserfocusonnear‐termprofits.Theissueisnotwhethertherearetwokinds of economics that exist at different stages of development. The question iswhere these two stagesmeet. This is the difficult and interesting subject to which economists could more productively applythemselves.
Unfortunately, the intellectual tyrannyofneo‐classical ‘efficiency’economics–thenaturalsubjectmatterofrichcountries–meansthatitisallbutimpossibletohaveanhonestdiscussionabouteconomicdevelopment.Poorstatescanonlybesuccessfulby lying.Theyhavetosubscribepubliclytothe ‘freemarket’economicstoutedbytherichwhilepursuingthekindofinterventionistpoliciesthatareactuallynecessarytobecomerichinthefirstplace.”
“Whatseemsmostwronginallthisisthatwealthynations,andtheeconomicinstitutionsthattheycreatedlike theWorld Bank and the International Monetary Fund, provided lousy developmental advice to poorstates that had no basis in historical fact. Once again: there is no significant economy that has developedsuccessfullythroughpoliciesoffreetradeandderegulationfromtheget‐go.Whathasalwaysbeenrequiredisproactive interventions–themosteffectiveof theminagricultureandmanufacturing–that fosterearlyaccumulationof capital and technological learning (…)Ourunwillingness to look thishistorical fact in thefaceleavesuswithaworldinwhichscoresofcountriesremainimmiserated.”
Studwell,Joe(2013):HowAsiaworks:Successandfailureintheworld’smostdynamicregion,GrovePress,NewYork.47. Zigzagsintheevolutionofhumanequality
“Our Great Ape ancestors lived in hierarchical societies. Webelievethisbecauseourclosestrelatives,chimpanzees,bonobos,and gorillas, all live in societies with very strong dominancehierarchies (…) Early humans broke the pattern, evolving areversed dominance hierarchy whose goal was to suppresspotential alpha males. This worked for tens of thousands ofyears—until theadoptionofagricultureand theriseof the firstcentralized polities allowed the alpha male to resurface withunfetteredpower in archaic states thatwere themost despoticsocieties inwhich people have ever had themisfortune to live (…) The second turn, away from despoticarchaic states, is much more ancient than might be supposed—the Axial Age, rather than the Age ofEnlightenment (…)Themilitary revolution of 1000BCE that begandeep in theEurasian steppe triggeredmomentous developments in the belt of agrarian societies stretching from the eastern Mediterranean toChina.Thenewideologies—Axialreligions—introducedanumberofculturalinnovationsthatbuttressedourcapacity for cooperation in large groups. These innovations included social norms and institutions thatconstrainedrulerstoactinlessselfishanddespoticways.”
Turchin,Peter(2016):Ultrasociety:How10,000yearsofwarmadehumansthegreatestcooperatorsonEarth,BerestaBooks,Chaplin,Connecticut.
48. TheIronLawofOligarchy(RobertMichels,1911)
“All forms of organization, regardless of how democratic or autocratic they may be at the start, willeventuallyandinevitablydevelopintooligarchies.”
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Ultrasociality(PeterTurchin,2016)
“…ultrasociality—theabilityofhumanbeingstocooperateinverylargegroups of strangers, groups ranging from towns and cities to wholenations,andbeyond.”
“Theincreaseinthescaleofhumansocieties,measuredbythenumberofpeopleinapolity(apoliticallyindependentunit).”(100s=between100
and1,000)“Time(kya)istimeinthousandsofyearssincethefirstappearanceofthe
politytype.”
“…cooperationisactuallyastonishinglydifficulttoachieveand,onceachieved,hardtopreserve.Wetendnottoappreciatejusthowfragileitis(…)Todayweliveinhugesocietiesofmillionsofpeople,mostofwhomareperfectstrangerstous.Wedon’tfearstrangers(…).Morethanthat,weactuallyneedthem.Weoftenforgethowmuchwedependonthekindnessofstrangers.”
“Thecentralquestionofthisbookiswhy,duringthepast10,000years, large‐scale,complexsocietieshavereplacedsmall‐scalesocieties(…)Thepaceofculturalevolutionisfastertoday,butresearchshowsthattheeconomic development and political stability of a modern country depend on cultural innovations andpolitical decisions made decades and even centuries ago. If we want to make life better for peopleeverywhere, we need to learn how to fix failed states and restart failed economies. The key (…) iscooperation. Where millions of strangers cooperate with each other, we see strong states and thrivingeconomies.Wherecooperationfails,sodostatesandeconomies.Thatiswhyitissoimportanttosolvethepuzzleofultrasociality;tounderstandhowthehumancapacityforcooperatinginhuge,anonymoussocietiesevolved.”
49. Balancedsocietyandthepluralsector(HenryMintzberg,2015)
“Enoughof the imbalancethat isdestroyingourdemocracies,ourplanet,andourselves(…)Enoughof thevisibleclawoflobbyinginplaceoftheinvisiblehandofcompeting.Enoughoftheeconomicglobalizationthatunderminessovereignstatesandlocalcommunities.”
“WhenthecommunistregimesofEasternEuropebegantocollapsein1989,punditsintheWesthadareadyexplanation: capitalism had triumphed. They were dead wrong, and the consequences are now provingfateful.Itwasbalancethattriumphedin1989.Whilethosecommunistregimeswereseverelyoutofbalance,with somuchpowerconcentrated in theirpublic sectors, the successful countriesof theWestmaintainedsufficient balance across their public, private, and what can be called plural sectors. But a failure tounderstandthispointhasbeenthrowingmanycountriesoutofbalanceeversince,infavoroftheirprivatesectors.
Therearethreeconsequentialsectorsinsociety,nottwo.Theoneleastunderstoodisknownbyavarietyofinadequatelabels,includingthe“not‐for‐profitsector,”the“thirdsector,”and“civilsociety.”Callingit“plural”canhelpittakeitsplacealongsidetheonescalledpublicandprivate(…)Considerallthoseassociationsthatareneitherpublicnorprivate—ownedneitherby thestatenorbyprivate investors—suchas foundations,places ofworship, unions, cooperatives, Greenpeace, the Red Cross, andmany renowned universities andhospitals. Some are owned by their members; most are owned by no one. Included here, too, are socialmovements that arise to protest what some people find unacceptable (…) and social initiatives, usuallystarted by small community groups, to bring about some change they feel is necessary (…) Despite theprominence of all this activity, the plural sector remains surprisingly obscure, having been ignored for solonginthegreatdebatesoverleftversusright.”
“…pictureinsteadabalancedsocietyassittingonastoolwiththreesturdylegs:apublicsectorofrespectedgovernments, to provide many of our protections (such as policing and regulating); a private sector ofresponsiblebusinesses,tosupplymanyofourgoodsandservices;andapluralsectorofrobustcommunities,
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whereinwe findmany of our social affiliations. Howdowe regain balance in our societies? Some peoplebelieve that theanswer lies in theprivate sector—specifically,withgreater corporatesocial responsibility(…)Otherpeopleexpectdemocraticgovernmentstoactvigorously.Thistheymustdo,buttheywillnotsolongaspublicstatescontinuetobedominatedbyprivateentitlements, domestic and global. This leaves but onesector, theplural,which isnotmadeupof “them”butofyou, and me, and we, acting together. We shall have toengage in many more social movements and socialinitiatives, tochallengedestructivepracticesandreplacethem with constructive ones. We need to cease beinghumanresources,intheserviceofimbalance,andinsteadtapourresourcefulnessashumanbeings,intheserviceofourprogenyandourplanet.”
“Asocietyoutofbalance,withpowerconcentrated inaprivilegedelite,canberipe forrevolution(…)Thetroublewithrevolutionisthatitusuallyreplacesoneformofimbalancewithanother.Assomepeopleamongthedisenfranchised gainpower through force, they tend to carrytheirsocietytowardsomenewextreme.”
“The plural sector is not a “third way” between the other twosectorsbut (…)oneof threewaysrequired inabalancedsociety.Eachsectorsuffersfromapotentiallyfatalflaw.Governmentscanbecrude.Marketscanbecrass.Andcommunitiescanbeclosed—atthe limit, xenophobic (…) Crudeness, crassness, and closed‐nessare countered when each sector takes its appropriate place insociety, cooperating with the other two while helping to keepboth—andtheirinstitutions—incheck(…)Healthydevelopment—social, political, and economic—allows power to shift among thesectors according to need, in a dynamic equilibrium thatencouragesresponsivenesswithoutdomination.”
Mintzberg,Henry (2015): Rebalancing society: Radical renewal beyond left, right, and center, Berrett‐KoehlerPublishers,Oakland,CA.50. Balanceandimbalance(HenryMintzberg,2015)
“Countriestodayseemtobegoingbackward,toimbalance,inthreeways,andperhapsinonewayforward,towardbalance.Onesectordominateseachofthewaysbackward,showninthefigure(…)bythelopsidedbulgesshadedinsidethecircle.Ontheleftisstatedespotism,dominatedbygovernmentinthepublicsector(aswehave seen under communism (…)).On the right ispredatory capitalism, dominatedby exploitativeenterprises in theprivate sector (…).Andat thebottom isexclusivepopulism,where somesegmentof theplural sector dominates society, excluding even other segments in that sector (as did the MuslimBrotherhood in Egypt). Take your choice—crude, crass, or closed—bearing inmind that one can lead toanother.Exclusivepopulismeasilygivesrisetostatedespotism(asinNaziGermany),whilethefallofstatedespotisminthecommunistregimesofEasternEuropehasencouragedthegrowthofpredatorycapitalismin the West. In contrast, connected around the outside of the circle, in the spirit of balance, are pluralinclusion, based on open collaboration; responsible enterprise, concernedwith the legitimate needs of allstakeholders;andengagingdemocracy,whichseekswidespreadinvolvementofthecitizenry.Nooneofthesecanrebalancesociety,buttogethertheycan.”
51. Roleoftheliberalclass
Theroleoftheliberalclassinatraditionaldemocracyistoensurethatreformremainsaviablealternative.Itisplacedbetweenthepowereliteandthegeneralpopulation.Theliberalclasscontrolsthebehaviourof(andcivilizes) the power elite, offers hope for change to the general population,makes proposals to graduallyreduce inequality and protect the weak, and becomes useful to power elite by discrediting proposals of
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radicalchange.Inthelastinstance,theliberalclassattributeslegitimacytothepowereliteandservesasavoicetothegeneralpopulationintheirdemandsforchangeandimprovement.
One of the consequences of globalization has been the accumulation of economic power (and, through it,politicalinfluenceandevenpoliticalpower)inthehandsofmultinationalcorporations.Thispowerhasbeenusedtoassaultthetraditionaldemocraciesanddeprivetheliberalclassofitsroleasasafetyvalve.Theroleoftheliberalclasshasbeenreducedtoofferemptyrhetoric.“Theinabilityoftheliberalclasstoacknowledgethatcorporationshavewrestedpowerfromthehandsofcitizens,thattheConstitutionanditsguaranteesofpersonallibertyhavebecomeirrelevant,andthatthephraseconsentofthegovernedismeaningless,hasleftitspeakingandactinginwaysthatnolongercorrespondtoreality.”(Hedges,2010)Sincetheliberalclasshaslostitsabilitytoarticulateresponsestodiscontent,itbecomesmorelikelythatpopulistmovementsand/orviolencewillarisetodealwiththesourcesofdiscontent.
Onepoliticallessonofhistoryisthatthoseinpowerthatappearincapacableofperformingtheirduties,andthisnotwithstandingpersist in retaining theirprivileges, tend tobe removedby force.Bynot fulfilling itstraditionaltaskstheliberalclassisexposedtothesamefate:tobebrutallydiscarded.
Anineffectual(dead)liberalclasscreatesamorepolarizedsociety:thepowerelitehasnochecktopreventtheplunderingoftheeconomyandthegeneralpopulationincreasesitsfrustrationandfindsmoreattractivefindingsolutionsoutsidethedemocraticinstitutionsorwithouttheinstrumentsofatraditionaldemocracy.Inkillingtheliberalclass,the‘corporateclass’behaveslikeaparasitethatkillsitshost:withouttheliberalclassthepowereliteisfreetodemolishthesystemofmeasures(welfarestate)erectedbytheliberalclasstoprotectthegeneralpopulationfromtheinequitiesoftheeconomicsystem.
Hedges,Chris(2010):Deathoftheliberalclass,NationBooks.
Mau,Steffen(2015):Inequality,marketizationandthemajorityclass:WhydidtheEuropeanmiddleclassesacceptneo‐liberalism?,PalgraveMacmillan,NewYork.
52. ‘Thestateofourimbalance’(HenryMintzberg,2015)
“Consumedbyconsumption. In today’sworld,we glorify consumptionwhilewe consumeourselves andourplanet.”
“Corporatepersons andhuman resources. As corporations have become ‘persons’ in the law, personshavebecome‘resources’inthecorporations.Areyouahumanresource?Iamahumanbeing.”
“Thecorporatepress.Most countries calleddemocratic do not have an independent press somuch as acorporatepress,beholdentotheownersandtheadvertisers(…)Torestorebalanceinsociety,weneedmorealternatevoicesinthepressandthemedia,notfewer.”
“Numbedbyadvertising.Stopforamomentandhavealookatthenextfewadvertisementsyousee.Askyourselfhowmanyofthemgobeyondinforming,todemeanbasichumanvalues(mixingupdiamondswithlove,forexample)orelsetolieoutright,bycommission(…)orbyomission.”
“The commercialization of almost everything. Consider the extent to which our world has becomecommercial,whereeverythingpossibleissupposedtobe‘monetized.’”
“The emasculation of government. In the win‐win scenario of communism, the state was supposed to‘witheraway.’Nowcapitalismisworkingonitinstead—atleastforthosegovernmentdepartmentsthatdonotserveitspurposes.Manycountrieshavebeenrelentlessly‘privatizing’theirpublicservices,asifbusinessisinevitablysuperiortogovernment.”
“Globalization for theglobal. In thenameof globalization,many large enterprises run freely around theglobe, cheered on by the powerful international agencies that should be regulating them, all of theseeconomic: the International Monetary Fund, the World Bank, the World Trade Organization (…) Here iswhere the economic dogma has dug itself in most deeply, for the benefit of corporate entitlementsworldwide.”
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“DemocracyinAmerica—Twenty‐fiveyearslater.Democracyisadynamicprocess,notsomefixedstate.It comprises a variety of components, such as a truly free press, open elections, equal rights, and anindependentjudiciary.Nocountrycanjustbedeclareddemocratic(…)TheUnitedStateswrotethebookondemocracyasweknowit.Howhasitbeendoinginthequartercenturysincethetriumphofimbalance?Notwell(…)Manypeopleinthe‘developed’worldpointtheirfingersatthecorruptionofpoliticsinsomeofthepoorcountries.ThedifferenceinAmericatodayisthatthecorruptionislegal.”
“The country’s greatest periodofdevelopment—socially andpolitically aswell as economically—arguablycameinthefourdecadesfollowingWorldWarII(…)Theyearssince1989havebornewitnesstoanalarmingreversal on many fronts, including some where the country used to have the best record in the world.Considertheevidenceonratesofincarceration(thehighestintheworld)andobesity(thesecond‐highest);theuseofantidepressants(thesecond‐mostprescribeddrugsintheUnitedStates);thecostsofhealthcare(thehighest in theworldby far,withmediocreresults); levelsofpoverty (thehighestrates in52yearsofreporting),ofvoterturnout(114thofallnations),ofhighschooldropouts(18thofthetop24industrializednations),ofcollegegraduationpercapita(16thintheworld),evenofsocialmobility(nowbehindanumberoftheindustrializedcountries)(…)Yetdenialremainstheorderoftheday.Inrevisitinghis‘endofhistory’thesisaftertwenty‐fiveyears,FrancisFukuyama(2014)concludedthathewasrightafterall (…)TheNewYorkTimespublishedanarticle(Shane2012)thatalsodiscussedsomeofthisevidence,butunderatitlethatindicated another conclusion: “A Rule for U.S. politicians: ‘We’re No 1!’” In denial, at least. EspeciallyworrisomeisthatsomuchoftheAmericanpopulationhaspassivelyacceptedsuchmyths.Whatwillhappenwhentheyhavetofacethereality?”
“Democracy for theglobe? TheAmerican record abroadhasbeenmixed, yet here, too, a powerfulmythprevails (…) The country has (…) promoted democratic elections in many countries. Meanwhile, nastyAmerica has supported its share of oppressive regimes and hasworked to undermine some decent ones,muchofthistoprotecttheinterestsofitsbusinesses(…)Mustwerelyonasinglecountrytoleadtheworldtosome justorder,especiallyacountry thatcontinues topromote internationally theverymodel thathasbeen causing so many of its domestic problems? Can the world’s most enthusiastic proponent ofindividualism—for itself as a nation alongside its citizens—be expected to foster the cooperation that theworldsodesperatelyneeds?”
53. Themodernworld‐system:core,peripheryandsemiperiphery
“Thecomparativeworld‐systemsperspectiveisastrategyforexplainingsocialchangethatfocusesonwholeintersocietal systems rather than single societies. Themain insight is that important interactionnetworks(trade, information flows, alliances, and fighting) have woven polities and cultures together since thebeginningofhumansocialevolution.Explanationsofsocialchangeneedtotakeintersocietalsystems(world‐systems) as the units that evolve. But intersocietal interaction networks were rather small whentransportationwasmainlyamatterofhikingwithapack.Globalization, in thesenseof theexpansionandintensification of larger interaction networks, has been increasing for millennia, albeit unevenly and inwaves.World‐systemsaresystemsofsocieties.Systemnessmeansthat thesesocietiesare interactingwithoneanotherinimportantways.”
“The modern world‐system is structured politically as aninterstatesystem—asystemof competingandallyingstates (…)The modern world‐system is also importantly structured as acore‐periphery hierarchy in which some regions containeconomically andmilitarily powerful states while other regionscontainpolities thataremuch lesspowerful and lessdeveloped.The countries that are called ‘advanced’ (…) The modern coreincludes the United States, the European countries, Japan,Australia, and Canada. In the contemporary periphery we haverelatively weak states that are not strongly supported by thepopulationswithinthemandhavelittlepowerrelativetootherstatesinthesystem.”
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“The core‐periphery hierarchy in themodernworld‐system is a system of stratification inwhich sociallystructuredinequalitiesarereproducedbytheinstitutional featuresofthesystem(…).Theperipheryisnot‘catchingup’withthecore.Rather,bothcoreandperipheralregionsaredeveloping,butmostcorestatesarestaying well ahead of most peripheral states. There is also a stratum of countries that we call thesemiperiphery:countriesthatareinbetweenthecoreandtheperiphery.”
“Sothemodernworld‐systemisnowaglobaleconomywithaglobalpoliticalsystem(theinterstatesystem).(…)Culturally themodernsystemiscomposedofseveralcivilizational traditions(e.g., Islam,Christendom,Hinduism), nationally defined cultural entities—nations (…), and the cultures of indigenous andminorityethnic groupswithin states. Themodern system ismulticultural in the sense that important political andeconomic interaction networks connect people who have rather different languages, religions, and otherculturalaspects.Mostearlierworld‐systemshavealsobeenmulticultural.”
“Oneoftheimportantsystemicfeaturesofthemodernsystemistheriseandfallofhegemonic core powers—the so‐called hegemonic sequence. A hegemon is a corestatethathasasignificantlygreateramountofeconomicpowerthananyotherstateandthattakesonthepoliticalroleofsystemleader.IntheseventeenthcenturytheDutchRepublicperformedtheroleofhegemonintheEurope‐centeredsystem,whileGreatBritainwasthehegemonofthenineteenthcentury,andtheUnitedStateshasbeenthehegemoninthetwentiethcentury.Hegemonsprovideleadershipandorderfortheinterstatesystemandtheworldeconomy.Butthenormaloperatingprocessesof the modern system—uneven economic development and competition amongstates—makeitdifficultforhegemonstosustaintheirdominantpositions,andsotheytend to decline. Thus the structure of the core oscillates back and forth betweenhegemony and a situation in which several competing core states have a roughlysimilaramountofpowerandarecontendingforhegemony.”
Hall, Thomas D.; Christopher Chase‐Dunn (2006), chapter 3 in Chase‐Dunn,Christopher;Salvatore J.Babones;eds.(2006):Globalsocialchange:Historicalandcomparativeperspectives,TheJohnsHopkinsUniversityPress,Baltimore,Maryland.
54. Someideas
“Moneyflowsacrossfrontiers,butlawsdonot.Therichliveglobally,therestofushaveborders.” Thereisan“inevitabletensionbetweenborderlessmoneyandborderedstates.” “In advancedcountries increasing inequality is the result of three interacting factors: the strengtheningof
capitalversuslabour, increasingindividualismandthewithdrawaloftheredistributiveroleofthestatebydecreasing taxes on high incomes, and reductions in the provision of public services through non‐marketsystems, such as education , health, social security and pensions (…) In short, rising inequality has beencausedmostlybyhugegainsmadebythebankingsectorandtheloweringoftaxratesonhigherincomes.”
“The fundamental flaw of neoliberals is to have just a single and universal recipe for all problems andcircumstances. This is too narrow a focus on curtailing the role of the state in the economy and theimpedimentstotheflowofgoods,capitalandmoneyacrossborders.”
Morroni,Mario(2018):WhatisthetruthabouttheGreatRecessionandincreasinginequality?Dialoguesondisputedissuesandconflictingtheories,Springer,Cham,Switzerland55. Rulesofthumbtopreventdisasterinpolicy‐making
A“fewrulesofthumbthat,ifobserved,couldmakedevelopmentplanninglesspronetodisaster.
Take small steps. In an experimental approach to social change, presume that we cannot know theconsequencesofourinterventionsinadvance.Giventhispostulateofignorance,preferwhereverpossibletotakeasmallstep,standback,observe,andthenplanthenextsmallmove.
Favor reversibility. Prefer interventions that can easily be undone if they turn out to be mistakes.Irreversibleinterventionshaveirreversibleconsequences.
Planonsurprises.Chooseplansthatallowthelargestaccommodationtotheunforeseen.
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Planonhuman inventiveness.Alwaysplanunder theassumption that thosewhobecome involved intheprojectlaterwillhaveorwilldeveloptheexperienceandinsighttoimproveonthedesign.”
Scott, JamesC. (1998): Seeing likea state:How certain schemes to improve thehuman conditionhavefailed,YaleUniversityPress,NewHavenandLondon.
56. ‘We’versus‘Me’
“The energies of a duality drive thePendulumof public opinion.On oneside is ‘Me,’ the individual—unique,special, and possessing unlimitedpotential.Ontheothersideis‘We’—the group, the team, the tribe, thecollective. ‘Me’ and ‘We’ are theequal‐but‐opposite attractions thatpullsociety’sPendulumoneway,thentheother.Thetwenty‐yearUpswingtotheZenithof‘We’(e.g.,1923–1943)isfollowedbyatwenty‐yearDownswingasthat‘We’cyclelosesenergy(e.g.,1943–1963).Societythenbeginsatwenty‐yearUpswinginto‘Me’(e.g.,1963–1983),followedbyatwenty‐yearDownswingasthe‘Me’cycle losesenergy(1983–2003).Thinkof thePendulumasthe forty‐yearheartbeatofsociety,systolicanddiastolic.”
“The‘Me’cycle.
1.demandsfreedomofexpression;
2.applaudspersonalliberty;
3.believesonemaniswiserthanamillionmen:‘Acamelisaracehorsedesignedbyacommittee’;
4.wantstoachieveabetterlife;
5.isaboutbigdreams;
6. desires to be Number One: ‘I came, I saw, Iconquered’;
7.admiresindividualconfidenceandisattractedtodecisivepersons;
8. believes leadership is ‘Look atme. Admireme.Emulatemeifyoucan’;and
9. strengthens a society’s sense of identity as itelevatesattractiveheroes.”
“The‘We’cycle.
1.demandsconformityforthecommongood;
2.applaudspersonalresponsibility;
3. believes a million men are wiser than one man:“Twoheadsarebetterthanone”;
4.wantstocreateabetterworld;5.isaboutsmallactions;
6.desirestobeaproductivememberof theteam: ‘Icame,Isaw,Iconcurred’;
7. admires individual humility and is attracted tothoughtfulpersons;
8.believesleadershipis‘ThisistheproblemasIseeit. Please consider the things I am telling you andperhapswecansolvethisproblemtogether’;and
9. strengthens a society’s sense of purpose as itconsidersallitsproblems.”
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“It’snotaboutage;it’saboutattitude.It’snotaboutwhenyouwereborn;it’sabouthowyouseetheworld.Inthisbook,thewordgenerationwillbedefinedas,‘lifecohortsbondedbyasetofvaluesthatdictatetheprevailingworldviewof themajority.’Lifecohorts,notbirthcohorts.Everyonealive—regardlessof theirage—whoseestheworldthroughthelensofaparticularsetofvaluesispartofthatgeneration.”
“New values are introduced every forty years at a tipping point, also known as a fulcrum. This tippingpoint/fulcrumiswherethePendulumhangsdirectlydownward,havingjustcompletedaDownswingandready tobegin theUpswingon theother side.Onone sideof society’sPendulum is ‘Me,’markedby theidealizationofindividualityandfreedomofexpression.Thevaluesof‘Me’arethevaluesofthegrasshopper,not the ant. The grasshopper is happy‐go‐lucky, living always in the moment. On the other side of thePendulum is ‘We,’ marked by theidealization of authenticity and belongingto a tribe, working together for thecommongood.Theantsare ‘We,’tryingtodo the right thing, fulfilling theirobligations, cleaning up the mess thegrasshopperleftbehind.”
“It would appear that the Eastern andWesternPendulumsarelockedinoppositecycles.WesternEurope, theAmericas,andAustralia are headed into a ‘We’ just asChina,India,andtherestofAsiaseemtobeheadedintoa‘Me.’Inessence,Chinaisexperiencingthe’60s.Our1963happenedforthemin2003.”
57. Salientfeaturesofcurrentglobalization(ThomasHyllandEriksen,2014)
“Disembedding, including delocalization. Globalization implies that distance is becoming irrelevant,relative, or at the very least less important. Ideas, songs, books, investment capital, labor, and fashionstravel faster thanever,andeven if theystayput, their locationcanbe less important than itwouldhavebeen formerly. This aspect of globalization is driven by technological and economic changes, but it hasculturalandpoliticalimplications.”
“Speed(…)Anythingfrominexpensiveplaneticketstocheapcallscontributetointegratingtheworld(…)However, acceleration is uneven, and relative slowness may be just as significant as relative speed.Differentpartsofsocietiesandculturalworldschangeatdifferentspeeds.”
“Standardization (…)The rapid increase in the use of English as a foreign language is suggestive of thisdevelopment,asistheworldwidespreadofsimilarhotelsandshoppingcenters,aswellasthegrowingwebofinternationalagreementsandindustrystandards.”
“Connections.Thenetworks connectingpeople across continentsarebecomingdenser, faster, andwidereveryyear.”
“Mobility. The entire world is on the move, or so it might sometimes seem. Migration, business travel,internationalconferences,andnotleasttourismhavebeengrowingsteadilyfordecades.”
“Mixing.Althoughculturalcrossroads,wherepeopleofdifferentoriginsmet,areasancientasurban life,theirnumber,size,anddiversityisgrowingeveryday.Bothfrictionsandmutualinfluenceresult(…)Theinstantaneousexchangeofmessagescharacteristicoftheinformationeraleadstoprobablymoreculturalmixing than ever before in human history. However, cultural mixing does not necessarily lead to thebreakdownofboundariesbetweenidentities.”
“Risk. Globalization entails theweakening, and sometimes obliteration, of boundaries. Flowsof anythingfrom money to refugees are intensified in this era. This means that territorial polities have difficultiesprotectingthemselvesagainstunwantedflows.TypicalglobalizedrisksincludeAIDSandotherepidemics,transnational terrorism, and climate change (…) Most of these risks cannot be combated efficiently bysinglenation‐states.”
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“Identity politics. Politics founded (…) in the maintenance and strengthening of particular collectiveidentities(…)Identitypolitics,whethernationalist,ethnic,religious,orregionalist,aredirectresponsestoglobalizing processes, which seemtothreatenthelocal.”
Alterglobalization. “The new socialmo‐vements,rangingfromATIACinFrance to theOccupymovement intheUnitedStates,theSlumDwellerAlliance in Mumbai, and losindignados in Spain, are notopposedtoglobalconnectednessassuchbutrejectthenarrowlyprofit‐seeking neoliberalist version ofglobalization,which they seeasdehumanizingandoppressive.What thesediverseorganizationshave incommon is resistance to the disembedding tendencies of globalization, and they may be describedcollectivelyasreembeddingmovements.”
Eriksen,ThomasHylland(2014):Globalization:Thekeyconcepts,secondedition,Bloomsbury,London.
58. Shorthistoryofmoderncapitalism
“Liberal capitalism in the nineteenth centurywas confronted by a revolutionary labourmovement thatneeded to be politically tamed by a complex combination of repression and co‐optation, includingdemocraticpowersharingandsocialreform.Intheearlytwentiethcentury,capitalismwascommandeeredto serve national interests in internationalwars (…) After the FirstWorldWar, restoration of a liberal‐capitalisteconomyfailedtoproduceaviablesocialorderandhadtogivewayinlargepartsoftheindustrialworld to either Communism or Fascism, while in the core countries of what was to become ‘theWest’liberalcapitalismwasgraduallysucceeded, intheaftermathoftheGreatDepression,byKeynesian,state‐administered capitalism. Out of this grew the democraticwelfare‐state capitalism of the three post‐wardecades, with hindsight the only period in which economic growth and social and political stability,achieved through democracy, coexisted under capitalism (…) In the 1970s, however, what had withhindsight been called the ‘post‐war settlement’ of social‐democratic capitalism began to disintegrate,graduallyandimperceptiblyatfirstbutincreasinglypunctuatedbysuccessive,evermoreseverecrisesofboththecapitalisteconomyandthesocialandpoliticalinstitutionsembedding,thatis,supportingaswellas containing it. This was the period of both intensifying crisis and deep transformation when ‘latecapitalism’,asimpressivelydescribedbyWernerSombartinthe1920s,gavewaytoneoliberalism.”
Streeck,Wolfgang(2016):Howwillcapitalismend?Essaysonafailingsystem,Verso,NewYork.59. Escaperoutesfromcapitalistcrises
“Technologicaldisplacement is themechanismbywhich innovations inequipmentandorganizationsavelabor, therebyenabling feweremployedpersonstoproducemoreat lowercost.MarxandEngelsarguedthatcapitalistsstrivetoincreaseprofitincompetitionwitheachother;thosewhofailtodosoaredrivenoutof themarket.Butas labor‐savingmachineryreplacesworkers,unemploymentgrowsandconsumerdemand falls.Technologypromisesabundance,but thepotentialproductcannotbesoldbecausetoo fewpersonshaveenoughincometobuyit.Extrapolatingthisunderlyingstructuraltendency,MarxandEngelspredicted thedownfallofcapitalismand its replacementbysocialism.Whyhas thisnothappened in the160yearssincethetheorywasformulated?”
“MarxandEngelsfocusedonthedisplacementofworking‐classlabor;theydidnotforeseetheriseofthemassive middle class of white‐collar employees, of administrative and clerical workers and educatedprofessionals (…) Until the 1980s or 1990s, mechanization chiefly displacedmanual labor. In the mostrecentwaveof technology,wenowhave thedisplacementofadministrative labor, thedownsizingof themiddleclass.Informationtechnologyisthetechnologyofcommunications,andithaslaunchedthesecondgreat era of contraction of work, the displacement of communicative labor, which is what middle‐class
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employeesdo.Mechanizationisnowjoinedbyrobotizationandelectronicization(…)Astheworkingclassshrunkthroughmechanization,capitalismwassavedbytheriseofthemiddleclass.Nowcomputerization,theInternet,andthewaveofnewmicro‐electronicdevicesarebeginningtosqueezeoutthemiddleclass.Cancapitalismsurvivethissecondwaveoftechnologicaldisplacement?”
“In thepast, capitalismhasescaped from technologicaldisplacement crisesby fivemainescape routes. Iwillarguethatallfiveofthesenowarebecomingblocked—deadends.”
Escape1:“Newtechnologycreatesnew jobsandentirenew jobsectors.”“Computerizationofthemiddleclassisnotbeingcompensatedbythecreationofnewjobsatanequalrate.Newjobsarecreated,buttheydonotmatchthenumberofjobseliminated,nordotheyreplacelostincome(…)InanadvancedeconomysuchastheUnitedStates,jobsintheservicesectorhavegrowntoabout75%ofthelaborforce,aresultofthedeclineinindustrialandagricultural/extractiveoccupations(…)ButtheservicesectorisbecomingsqueezedbytheITeconomy.”
Escape2:“Geographicalspreadofmarkets.”“Wetendtothinkofmarketspreadasglobalization,butglobalizationisonlyaquantitativedifferenceindegree,notaqualitativedifferenceinkind.Evenwithintheconfinesofstateborders,marketshavegrownbyspreadingtoregionswhereaproductwasinitiallyunknown(…)Theliberalversionofthismechanism,ontheglobalorinterstatescale,ismodernizationtheoryordevelopmenttheory;eachpartoftheworldsuccessivelyascendsthestages,untilpresumablyallwillbefullydeveloped,tertiary‐sectorserviceeconomies(…)TheNeo‐MarxistversionofthisprocessisWorld‐Systemtheory(…)Thisisalessbenignversionofthegeographicalspreadofcapitalistmarkets;worldmarketdominationisbuttressedbymilitarypowerandpoliticalinfluence;thehegemoniccenterexploitsthelabororrawmaterialsoftheperiphery,withtheaidofatransmissionbeltofsemiperipheralregions.World‐systemtheorycomplicatesthepatternbyasuccessionofhegemoniesmarkedbymajorwars,andkeyedto longKondratieffwavesofrelativeexpansionandstagnationinworldmarkets.Butthese cycles of serial hegemons—Spain, Holland, Britain, the United States, conjecturally China—logicallycometoanendwhentheperipheryisexhausted,andeveryregionoftheglobeisfullybroughtintothecapitalistmarket.Therearenomoresafety‐valves,nomoreregionsforexploitation;capitalistprofitdriesup.”
Escape3:“Meta‐marketsinfinance.”“Ifworking‐classandthenmiddle‐classlaboraretechnologicallydisplaced, can the slack be taken up by everyone becoming a capitalist? (…) Recent financialmanipulations are examples of a deeper structural tendency in capitalism: the pyramiding of meta‐marketsuponeachotherinfinancialmarkets(…)thehistoricaltendencyforanygivenfinancialmarketto give rise to a higher‐ordermarket in lower‐order financial instruments (…) Themore pyramidedfinancialmeta‐marketsare,themorevolatileandcrisis‐pronetheyare,withboomsandbustsfaroutofproportiontowhatishappeninginthelow‐levelmaterialeconomy(…)Butisitconceivablethatinthefuturewheneverythingisautomatedthatentirepopulationswillspendtheirlivesasfinancialinvestors,a reserve army of gamblers in lifelong casinos? (…) Financial markets are intrinsically inegalitarian,concentratingwealthinthesmallnumberofbigplayersatthetopofthepyramid.”
Escape4:“Governmentemploymentand investment.” “Unrestricted free‐market capitalism, left toitself, has noway of heading off such crisis (…) The pro‐welfare state forces in principlemay have asolutiontounemployment,buttheyrunupagainstthebudgetaryproblemsofthestate.Astatewhichfundsanexpensivewelfarestateopensitselfuptothepressureoffinancialmarkets,riskingdestructionofthepurchasingpowerofitscurrency.”
Escape 5: “Educational credential inflation.” “Credential inflation is the rise in educationalrequirementsforjobsasarisingproportionofthepopulationattainsmoreadvanceddegrees.Thevalueofagiveneducationalcertificateordiplomadeclinesasmorepeoplehaveone,therebymotivatingthemtostayinschoollonger(…)Themorepersonswhoholdadvanceddegrees,themorecompetitionamongthemfor jobs,andthehigher theeducationalrequirements thatcanbedemandedbyemployers.Thisleads to renewedseekingofmoreeducation,morecompetition, andmorecredential inflation.Withinthisoverall inflationaryprocess, themosthighly educated segmentof thepopulationhas receivedanincreasinglygreaterproportionoftheincome(…)Althougheducationalcredentialinflationexpandsonfalsepremises—theideologythatmoreeducationwillproducemoreequalityofopportunity,morehigh‐tech economic performance, and more good jobs—it does provide some degree of solution to
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technological displacement of themiddle class. Educational credential inflation helps absorb surpluslaborbykeepingmorepeopleoutofthelaborforce(…)Ofthefiveescaperoutesfromcapitalistcrisis,continued educational infl ation seems to me the most plausible (…) It is conceivable that liberalgovernmentsmight find theirway tokeepexpandingeducational systems,using themasaKeynesiansafety valve, and a form of transfer payments from the capitalists and the diminishing sector of theemployed,tosustaintheotherwiseunemployed.Buttogetsuchagovernmentmightwelltakeanear‐revolutionarydisillusionmentwithcapitalism.”
Collins,Randall(2013):“Theendofmiddle‐classwork:Nomoreescapes,”chapter2in.60. Systemicdisordersofcontemporarycapitalism(WolfgangStreeck,2016)
“Capitalismwithoutoppositionislefttoitsowndevices,whichdonotincludeself‐restraint.Thecapitalistpursuitofprofitisopen‐ended,andcannotbeotherwise.”
Disorder1:Stagnation.“AsKeyneswouldhaveknown,concentrationofincomeatthetopmustdetractfrom effective demand andmake capital owners look for speculative profit opportunities outside the‘realeconomy’.Thismay in facthavebeenoneof thecausesof the ‘financialization’ofcapitalismthatbeganinthe1980s.Thepowerelitesofglobalcapitalismwouldseemtoberesigningthemselvestolowornogrowthonaggregate for the foreseeable future(…)Thescenarioof ‘stagnationwithachanceofbubbles’maymostplausiblybeimaginedasabattleofallagainstall,puncturedbyoccasionalpanicsandwiththeplayingofendgamesbecomingapopularpastime.”
Disorder 2: Oligarchic redistribution. “There is no indication that the long‐term trend towardsgreatereconomicinequalitywillbebrokenanytimesoon,orindeedever.Inequalitydepressesgrowth(…)Buttheeasymoneycurrentlyprovidedbycentralbankstorestoregrowth–easyforcapitalbutnot,of course, for labour – further adds to inequality, by blowing up the financial sector and invitingspeculativeratherthanproductiveinvestment.Redistributiontothetopthusbecomesoligarchic:ratherthanservingacollectiveinterestineconomicprogress,aspromisedbyneoclassicaleconomics,itturnsinto extraction of resources from increasingly impoverished, declining societies (…) Under oligarchicredistribution,theKeynesianbondwhichtiedtheprofitsoftherichtothewagesofthepoorissevered,cuttingthefateofeconomicelitesloosefromthatofthemasses.”
Disorder3:“Plunderingofthepublicdomainthroughunderfundingandprivatization.”“Foremostamong thecausesof this shiftwere thenewopportunitiesofferedbyglobal capitalmarkets since the1980sfortaxflight,taxevasion,tax‐regimeshoppingandtheextortionoftaxcutsfromgovernmentsbycorporationsandearnersofhighincomes.Attemptstoclosepublicdeficitsreliedalmostexclusivelyoncutsingovernmentspending–bothtosocialsecurityandtoinvestmentinphysicalinfrastructuresandhumancapital.Asincomegainsaccruedincreasinglytothetop1percent,thepublicdomainofcapitalisteconomiesshrank,oftendramatically,starvedinfavourofinternationallymobileoligarchicwealth.Partof the process was privatization, carried out regardless of the contribution public investment inproductivityandsocialcohesionmighthavemadetoeconomicgrowthandsocialequity.”
“WhatmaybesurfacinghereisthefundamentaltensiondescribedbyMarxbetween,ontheonehand,theincreasinglysocialnatureofproductioninanadvancedeconomyandsociety,andprivateownershipofthemeansofproductionontheother.Asproductivitygrowthrequiresmorepublicprovision,ittendstobecomeincompatiblewithprivateaccumulationofprofits,forcingcapitalistelitestochoosebetweenthetwo.Theresultiswhatweareseeingalreadytoday:economicstagnationcombinedwitholigarchicredistribution.”
Disorder4:Corruption.“Fraudandcorruptionhaveforeverbeencompanionsofcapitalism.Buttherearegoodreasonstobelievethatwiththeriseofthefinancialsectortoeconomicdominance,theyhavebecome (…)pervasive (…)Finance is an ‘industry’where innovation ishard todistinguish fromrule‐bendingorrule‐breaking;wherethepay‐offsfromsemi‐legalandillegalactivitiesareparticularlyhigh;where the gradient in expertise and pay between firms and regulatory authorities is extreme;whererevolvingdoorsbetween the twoofferunendingpossibilities for subtle andnot‐so‐subtle corruption;where the largest firms are not just toobig to fail, but also toobig to jail, given their importance fornationaleconomicpolicyandtaxrevenue;andwheretheborderlinebetweenprivatecompaniesandthestateismoreblurredthananywhereelse.”
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Disorder5:Globalanarchy. “Global capitalismneedsacentre tosecure itsperipheryandprovide itwithacrediblemonetaryregime.Until the1920s, this rolewasperformedbyBritain,and from1945until the 1970s by the United States (…) Stable relations between the currencies of the countriesparticipating in the capitalistworld economyare essential for trade and capital flows acrossnationalborders,whichareinturnessentialforcapitalaccumulation;theyneedtobeunderwrittenbyaglobalbankeroflastresort.Aneffectivecentreisalsorequiredtosupportregimesontheperipherywillingtocondonethelow‐priceextractionofrawmaterials.Moreover,localcollaborationisneededtoholddowntraditionalistoppositiontocapitalistLandnahmeoutsidethedevelopedworld.Contemporarycapitalismincreasinglysuffersfromglobalanarchy,astheUnitedStatesisnolongerabletoserveinitspost‐warrole,andamultipolarworldorderisnowhereonthehorizon.”
“Capitalism, as a social order held together by a promise of boundless collective progress, is in criticalcondition. Growth is givingway to secular stagnation;what economic progress remains is less and lessshared;andconfidenceinthecapitalistmoneyeconomyisleveragedonarisingmountainofpromisesthatareeverlesslikelytobekept.Sincethe1970s,thecapitalistcentrehasundergonethreesuccessivecrises,ofinflation,publicfinancesandprivatedebt(…)Whatistobeexpected(…)isalongandpainfulperiodofcumulativedecay:ofintensifyingfrictions,offragilityanduncertainty,andofasteadysuccessionof‘normalaccidents’–notnecessarilybutquitepossiblyonthescaleoftheglobalbreakdownofthe1930s.”
Streeck,Wolfgang(2016):Howwillcapitalismend?Essaysonafailingsystem,Verso,NewYork.61. Thesocialcapitalthesis
“Social capital represents a propensity for mutually beneficial collective action, and it derives from thequality of relationships among people within a particular group or community. Communities with highsocialcapitalwillachievesuperioroutcomesinmultipledomains,itisclaimed;andcommunitieswithlowsocialcapitalcanbeassistedtobuildupstocksofthisresource,sotheirperformancewillalsoimproveovertime.Economicdevelopment,communitypeace,anddemocraticparticipationcanallbepromotedinthismanner,simplyby investing inthestockofsocialcapital.Socialcapital isnotdirectlyobservable;peoplecarryitinsidetheirheads.”
“Social capital is defined by Putnam (1995: 67) [Putnam, Robert D. (1995): “Bowling alone: America’sdecliningsocialcapital,”JournalofDemocracy,65‐78]as‘featuresofsocialorganizationsuchasnetworks,norms and social trust that facilitate coordination and cooperation formutual benefit.’ Relatively stablepatternsofsocialinteractionexistwithinsomecommunitiesthatareuseful,socialcapitaltheorysuggests,forsustainingmutuallybeneficialcollectiveaction.”
“The broadest argumentmade on behalf of social capital can be briefly summarized as follows. Personsboundtogetherindensesocialnetworks,infusedwithnormsofreciprocityandtrust,arebetterableandmore inclined toactcollectively formutualbenefitandsocialpurposes(…)Theexistenceofsuchnormsand networks enables these groups—and society as a whole—to deal smoothly and effectively withmultiple social and economic issues. In addition to cooperating with each other for mutual economicbetterment,citizensboundtogetherbynormsandnetworksarealsoabletoobtainbettergovernance.”
Krishna, Anirudh (2002): Active social capital: Tracing the roots of development and democracy,ColumbiaUniversityPress,NewYork.62. Fiveglobalizationmyths(JohnAgnew,2018)
“The firstmyth is that theworld is ‘flat.’ Associated above all with the American journalist ThomasFriedman, this perspective sees the world as an increasingly undifferentiated investment surface inwhichtradeandinvestmentflow(orwillsoonflow)relativelyunhinderedfromplacetoplace.Atthesametime,thepresumptionisthatthisprocessbringsunambiguousbenefitstotheworldasawhole(…)Thecorollary thatFriedmanseesas following from this trend in thediffusionofproduction, thedecreased relevance of states to the world order, does not follow. Indeed, China’s very economicsuccesshashadmuchtodowithitsstate‐organizedresponsetonewglobalopportunitiesratherthanbeingasimpleoutcomeofincreasedfreetradetoutcourt.”
“Thesecondmythisthatglobalizationasweareexperiencingitisentirelynew.”
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“Contemporary globalization is also oftenmergedwith the overlapping but hardly analogous idea ofliberalization (usually under the label of neoliberalism to distinguish it from classical nineteenth‐centuryliberalthought).Thisthirdmythisimportantbecauseitimpliesthatglobalizationhasatrootasingularideologicalinspiration:toreplacestateswithmarkets.Fromthisviewpoint,globalizationisapoliticalmovement rather thana socioeconomicprocess (…) It is clear that globalizationhas severalaspects to it that have had nothingmuch to dowith neoliberalism (…) globalization, in the sense ofincreased reliance on markets and consumer capitalism, is not simply an ideological projectioninvented in the 1970s (…) but the result of US government sponsorship of a ‘free‐world’ economyduring the Cold War (…) Globalization has its ideological roots in this process, not just in theneoliberalismofthe1980s.”
“Whatever its precise ideological provenance, however, from this viewpoint globalization must beantitheticaltothewelfarestate.Atleastthisisthetypicalstorytoldbybothitsproponentsandbyitscritics. This is the fourth myth of globalization. The presumption here is that under conditions ofglobalization states will be disciplined by global ‘markets’ to cut back on their welfare services(pensions,unemploymentbenefits,etc.)because,iftheydonotemulateotherstatesthatdosotheywillbe left at a competitive disadvantage when it comes to attracting inward investment (…) Yet (…)economic development has always required infrastructure investment and investment in publicservicestomaketheprivateinvestmentpayoffatall.Indeed,acasecanbemadethatunderconditionsofenhancedcompetitionforcapitalinvestment,statesneedtoincreasetheirspendingoneducationandinfrastructureratherthanreduceit.”
“ThefifthmythofglobalizationisthatThereIsNoAlternative(TINA)to it(…)Thereisnodestinytocontemporaryglobalization.IthasappearedunderUSgeopoliticalsponsorshipandcouldbeattenuatedas the United States goes into geopolitical decline. Even if that happens, an invigorated Chinesegovernment shows signs of wanting to pick up the slack in the face of Trump’s “America First”campaign.Asaconsequence,globalizationcouldbegintotakeonadifferentform.”
KOFGlobalizationIndex2016 SharesofworldGDP(2016)·https://www.imf.org/en/Data
https://www.statista.com/statistics/268168/globalization‐index‐by‐country
https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD
TheKOFGlobalisationIndexmeasurestheeconomic,socialandpoliticaldimensionsofglobalisation
“Larger national economies tend to rank lower in globalization because of lower dependence on foreigntransactions:theUnitedStatesranks34,Germany27,Brazil75,Japan48,India109,andChina73.”
63. Furtherideasonglobalization(JohnAgnew,2018)
“Inwritingaboutglobalizationandsovereigntytherehasbeenlittlecommentaryonhowglobalizationhasbeenaccompaniedbyaseeminglycountervailingprocessofpolitical‐economicfragmentation.”
“What is new about contemporary globalization is the increasingly global dominance of images andpracticesintimatelyrelatedtothemarketplacesocietyandthespeedatwhichtransactionstraversetheworld.”
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“… the global is still intricately interwovenwith the local. In one sense there is no such thing as the‘global.’Itexistsonlyasanemergentproperty;theglobalismadeupofwebsofinteraction,movement,surveillance, and regulation between people and institutions with discrete locations in particularplaces.Whatisnewisthedensityandgeographicalscopeoftheweave.”
“Muchofthesociologicalhypeaboutglobalizationseesitassynonymouswithhomogenization,asifthewhole world were becoming alike culturally and economically. The literature on time‐spacecompression might also suggest such a prospect, if only on the distant horizon. In fact, there isconsiderableevidencethatglobalizationispolarizingtheworldasawholebetweengeographicalhavesand have‐nots: between regions and localities tied into the globalizing world economy and thoseoutsideit(Internetandall)andbetweenthosewhohavereceiveda‘legup’intothiseconomy,ontheonehand,andthosewhomayhavetoremainoutsideit,ontheother.”
“…theglobalizingworldeconomyisnotaneconomyofnationalterritoriesthattradewithoneanother,notwithstandingthetendencyoftheWorldBankandotherinternationalorganizationstoportrayitthisway.Rather,itisacomplexmosaicofinterlinkedglobalcity‐regions,prosperousruralareas,resourcesites, and ‘dead lands’ increasingly cut off from the technologies of timespace compression that fuelglobalization.Allof thesearewidely scatteredacross theglobe, even if there is abasicglobalnorth‐southstructure to theworldeconomyasawhole.Someof theprosperousareas, forexample,canbefoundwithineventhepoorestcountries.”
“… themajor geographical anchors of the new global economy are overwhelmingly located inNorthAmerica,Europe,andEastAsia.Forexample,duringtheperiod2005–2015,theUnitedStates,theEU,Japan, and China accounted for 65 percent of the inflows of foreign direct investment (FDI) and 72percentof theoutflows,and theG‐20groupofcountriesaccounts for58percentofglobalFDIstock.Trendssuggest,however, thatsince the1980s theUShasbecomerelatively less importantasbothasource and a destination for FDI whereas certain poorer countries have become relatively moreimportantasbothdestinationsandassources;China,Brazil,SouthKorea,Mexico,andMalaysiaaretheoutstanding cases. This has happened even as American companies and finance still exercisetremendouspowerover globalmarkets.The ‘grotesque sovereignty’ representedbyDonaldTrump’sadministrationintheUSfrom2017onward(…)seemsunlikelytobringbackthejobsincoalminingandsteelmaking that he promised, their loss owingmuchmore to the impact of technology than that ofglobalization.”
“Theworldofspatialvariationineconomicpotentialsandpoliticalidentitiesissimplytoocomplexforthe binary thinking—globalization versus states, markets versus states, and so on—thatcharacterizessomuchdiscussionofsovereigntyundercontemporarypolitical‐economicconditions.Weremainmiredinnineteenth‐centuryeither/orthinkingaboutterritoryversustheglobal.Globalizationand sovereignty are tied together in a wide variety of ways across the world. We can expect suchpluralismtocontinue.”
64. Rodrik’s trilemma: Clash between politics andhyperglobalization(DaniRodrik,2011)
‘The fundamental political trilemma of the worldeconomy:wecannothavehyperglobalization,democracy,and national self‐determination all at once.’ A fullyglobalized economy forces the state to preserve theeconomic globalization and satisfy the needs andexpectationsofinternationaltradersandinvestors.Whenthereisaconflictbetweentheneedsofthepeopleandtheneedsoftheseagents,thestatemustgiveprioritytothelatter.Torestoredomesticdemocraticlegitimacy,globalizationmustbelimited.Thethirdoptionistogiveupstatesovereigntytoglobalizedemocracy.
Rodrik’s central dilemma of the world economy (Dani Rodrik, 2007, p. 8). Tension between theeconomic reality (the global nature of many markets) and the political reality (the local nature of theinstitutionsunderwhichmarketsoperate).
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Rodrik,Dani (2007): One economics,many recipes: Globalization, institutions, and economic growth,PrincetonUniversityPress,Princeton,NJ.Rodrik,Dani(2011):Theglobalizationparadox:Whyglobalmarkets,states,anddemocracycan’tcoexist,OxfordUniversityPress,Oxford,UK.65. Yunus’threezeroes(MuhammadYunus,2017)
The current capitalist economic system suffers from three big failures: persistence of poverty,unemployment, environmental degradation. The systemmust be redesign by pursuing three goals: zeropoverty,zerounemployment,zeronetcarbonemission.
Yunus,Muhammad;KarlWeber(2017):Aworldofthreezeros:Theneweconomicsofzeropoverty,zerounemployment,andzerocarbonemissions,PublicAffairs,NewYork.
66. KishoreMahbubani’sGreatConvergence:‘everythingthatrisesmustconverge’
Mahbubani(2013,p.1)claimsthatmorechangehasoccurredintheworldinthelastthreeyearsthaninthe last threecenturies.Thismassivechange is creatinganewglobal civilization.The forcedrivingsuchchangeisglobalization.Theproblemisthatcurrentlytheworldeconomyislikeaboatwithoutacaptain:theinstitutionsofglobalgovernancearetooweak.
Mahbubani, Kishore (2013): The great convergence: Asia, the West, and the logic of one world,PublicAffairs,NewYork.
67. SouthKorea’ssuccess
Inthe1950s,Koreawasoneofthepoorestcountriesintheworld.Nowranksamongtherichest(GDPpercapitahigherthanSpain’s). ButKoreadidnotsucceedbecauseitconformedtothefreemarketideology.RatherKorea’seconomic‘miracle’wasbasedon:(1)nurturingcertainnewindustriesthroughgovernmentsupport, according to a national development plan, until the industrieswere ready to face internationalcompetition; (2) government control of all the banks, to be able to regulate a basic element of businessactivity:credit;(3)undertakingbigprojectsbystate‐ownedenterprises(suchasPOSCO,thesteelmaker);(4) controlling foreignexchangeand foreign investment. In sum, “TheKoreaneconomicmiraclewas theresultofacleverandpragmaticmixtureofmarketincentivesandstatedirection.TheKoreangovernmentdidnotvanquishthemarketasthecommuniststatesdid.However, itdidnothaveblindfaithinthefreemarketeither”.
Chang,Ha‐Joon (2008): Bad samaritans: Themyth of free trade and the secret history of capitalism,BloomsburyPress,NewYork.
68. Possiblefutures?
Peter Frase’s four futures. The future world can end up dominated by either scarcity or abundance(reflectingecologicallimits)andalsobyeitherhierarchyorequality(reflectingthepoliticallimitsofaclasssociety). Equality + abundance = communism (‘from each according to their ability, to each according totheirneed’: theStarTrekworld).Hierachy+abundance=rentism(‘thetechniquestoproduceabundancearemonopolizedbyasmallelite’).Equality+scarcity=socialism(‘livewithinyourmeanswhileprovidingeveryonethebestlivespossible’).Hierachy+scarcity=exterminism(‘communismforthefew’,awaitinga‘genocidalwaroftherichagainstthepoor’:NeillBlomkamp’sElysium,2013).
PeterFrase’sscenario ABUNDANCE SCARCITYEQUALITY Communism SocialismHIERARCHY Rentism Exterminism
Frase,Peter(2016):Fourfutures:Lifeaftercapitalism,Verso,NewYork.
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RobertCostanza’svisionsoftheyear2100.Thescenariomatrix involves twodimensions:worldviewsandpolicies(technologicaloptimismvsskepticism)andtherealstateoftheworld(optimisticsarerightorskeptics are right). Technological optimism + optimistics right = Star Trek (resources are unlimited,technology can solve any problemability, economic competition is good). Technological skeptism +optimistics right = Big Government (resources are unlimited but governments regulate technologicaldevelopmenttoachievesocialdevelopment).Technologicaloptimism+skepticsright=MadMax(resourcesarelimitedbutfreereignhasbeengiventocompetitionandtechnologicalexpansion,sotheworldisruledbypowerfulcorporations).Technologicalskeptism+skepticsright=Ecotopia(withresourcesbeinglimited,marketsandconsumerismhavebeendisciplinedtoachievesustainability).
DavidCostanza’sscenario OPTIMISTSRIGHT SKEPTICSRIGHTTECHNOLOGICALOPTIMISM StarTrek MadMaxTECHNOLOGICALSKEPTICISM BigGovernment Ecotopia
Costanza, Robert (1999): “Four visions of the century ahead: Will it be Star Trek, Ecotopia, BigGovernment,orMadMax?”,TheFuturist33(2),23‐28.
The liberal, optimistic, convergent view of the future. Thoughtheworldisdividedinpeacefulanddemocraticregionsandzonesinconflict, the peaceful regions will remain prosperous and stablewhilethezonesofturmoilwilleventuallydevelopanddemocratizetobecomemembersofthepeacefulzone.Itisjustamatterthatthepooreconomiesemulatetherichones.Economicconvergencewillgraduallycontracttheturmoilzone.
Thefivemostimportanttrendsinthenext50years(Watson,2012).(1)Ageing.(2)Power(economic,political, military) shifting from West to East. (3) Greater, global connectivity. (4) Convergence oftechnologies(GRINtechnologies=Genetics+Robotics+Internet+Nanotechnology).(5)Theenvironment(planetaryconditions,resourceexhaustion).
Thefivemostimportanttrendsthatwilltransformsocietiesinthenext50years(Watson,2012).(1)Globalization: everything to becomehyperlinked. (2) Localization: countertrend to globalization becausenot everyone will like globalization or homogenization. (3) Polarization: middle classes will tend todisappear,eithergoingupordownontheincomescale(upwardstoanewmanagerialeliteordownwardsto a enslavedworking class or to the unemployed). (4) Anxiety, resulting from greater uncertainty andvulnerability.(5)Searchformeaning:willsciencebecomethenewreligionorwilltraditionalreligionsbereinforced?
Watson,Richard(2012):Thefuture.50ideasyoureallyneedtoknow,Quercus,NewYork.
69. TheWashingtonConsensus(WC)
The WC represented an economic agenda for globalization (economic liberalization and global marketintegration)basedonadopting: free trade; capitalmarket liberalization; flexibleexchangerates;market‐determined interest rates; market deregulation; privatization (transfer of assets from the public to theprivatesector);balancedgovernmentbudget;taxreformsstimulatinginvestmentandproduction;securepropertyrights;protectionofintellectualpropertyrights.TheunderlyinglogicoftheWCistoreorganizethe public sector (at all levels: local, regional, national, global) to facilitate the activity of global privateinstitutionsandgivepreeminencetomarketinstitutionsinthecreationanddistributionofwealth.TheWCcapturedorthodoxeconomicthinking:freemarketsshouldregulatealleconomicactivityandstatesshouldjustattractforeigninvestorsandpreserveagoodcreditreputationthroughfiscaldiscipline;liberalization,deregulationandprivatizationoftheeconomy;andcommitmenttomakeemployment‘flexible’.
Successful integration in the global economy. The most successful examples of non‐westerneconomiesreachingwesternlevelsofdevelopmentandprosperity(Japan,SouthKorea,Taiwan)havenot followed the prescriptions of theWashington Consensus. China and India have neither adopted
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theserecommendations.Allthesecountriesachievedsustainedgrowthbyimposingprotectivebarriersandlettingthepublicsectorsponsorandsteerdevelopment.
The augmentedWashington Consensus. It adds to the original set of measures: legal/politicalreform; regulatory institutions; anti‐corruption fight; labour market flexibility; WTO agreements;financial codes and standards; ‘prudent’ capital‐account opening; non‐intermediate exchange rateregimes;socialsafetynets;povertyreduction.
Held,Davidetal.(2005):Debatingglobalization,PolityPress,Cambridge,UK.
70. TheWashingtonConsensus(JohnWilliamson,1990)
TheWashingtonConsensusisasetofeconomicpolicyrecommendationsregardingdevelopmentstrategiespromotedbytheIMF,theWorldBankandtheUSTreasury(allWashington‐basedinstitutions).Originally,itwasdefinedbythreebroadpremises:marketeconomy,opennessandmacroeconomicdiscipline.Thetenoriginalsuggestedreformswere:
Fiscal discipline. Reduce large public deficits, whichwere persumed to lead to balance of paymentscrisesandhighinflation.
Re‐orderingpublicexpenditurepriorities,towardspro‐growthandpro‐poorexpenditures. Taxreform:combineabroadtaxbasewithmoderatemarginaltaxrates. Liberalizationofinterestrates. Acompetitiveexchangerate:adoptionofanintermediateexchangerateregime(againstthetwocorner
doctrinethatacountrymusteitherfixtheexchangerateorletitfloatfreely). Tradeliberalization. Liberalizationofinwardforeigndirectinvestment. Privatization,butpayingspecialattentiontohowprivatizationisconducted. Deregulation,focusingoneasingbarrierstomarketentryandexit. Legalsecurityforpropertyrights:ensureaccesstopropertyrightsatacceptablecost.
Serra,Narcís; JosephE.Stiglitz;eds. (2008):TheWashingtonConsensusreconsidered:Towardsanewglobalgovernance,OxfordUniversityPress,Oxford,UK.
71. TheBeijingConsensus(JoshuaCooperRamo,2004)
TheBeijingConsensus (theChinamodel or theChineseEconomicModel) expresses apolitical economyview opposed to the (‘market‐friendly’) Washington Consensus. The Beijing Consensus describes thefeaturesoftheeconomicdevelopmentmodel(ofpoliticalandeconomicpolicies)thatChinaispresumedtohavefollowedinthelastdecadestodevelopitseconomy.TheBeijingConsensussuggestsnewrulesforadevelopingcountrytoachievefast,stableandsustainableeconomicgrowth.
Ramo’s original core prescriptions were: (i) a willingness to innovate; (ii) equitable growth andsustainabledevelopment;and(iii)astrongbeliefinanation’sself‐determination.
The China model is often viewed as a resizing of the ‘Singapore model’ (the long‐term one‐partydevelopmental state), a developmental model combining state capitalism (specifically, foreigninvestmentswithgovernment‐linkedcorporations)withoneparty‐rule(thePeople’sActionParty).
Li,Jun;LimingWang(2014):China’seconomicdynamics:ABeijingConsensusinthemaking?,Routledge,LondonandNewYork.
72. ThePost‐WashingtonConsensus(JosephStiglitz,1998)
Joseph Stiglitz claimed that ‘making markets work’ required more than deregulation policies and lowinflation:arobustfinancialsystem,towhosecreationthegovernmentcontributesgreatly,isnecessaryformarketstodeliverefficientoutcomes(aswasautomaticallypressumedintheWashingtonconsensus). InHa‐Joon Chang’s opinion, the crucial feature of the Post‐Washington Consensus is replacing getting‐the‐prices‐rightpolicieswithgetting‐the‐institutions‐rightpolicies.
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73. Neoliberalismorgoverningthroughmarkets
Neo‐liberalism is the doctrine that economic policy is reduced to a basic strategy of ‘leaving it to themarket’andeliminatinganypublicinterventioninmarkets.Thelasttwoorthreedecadeshaswitnessedashift in economic policy towards neoliberalism. The shifts in economic policy along the neoliberal linesinclude:
discardingfiscalpolicyinfavourofmonetarypolicy; policygoalsnolongerconcentratingonemploymentandgrowthbutoninflationandpricestability; ascribing the causes of unemployment to the operation of the labour market and, in particular, its
“inflexibility”; unemployment can only be solved through labour market ‘reforms’ and remove their ‘rigidities,’
associatedwithtradeunionpower,long‐termemploymentcontracts,andminimumwageregulations; thesolutiontotheunemploymentproblemdoesnotstemfromdemand‐sidepoliciesnorregionaland
industrialpoliciesdesignedtotacklestructuralunemployment; the liberalization and deregulation of markets (particularly, financial markets) and the removal of
capitalcontrolsthatregulatetheflowofcapitalbetweencountries.
Arestis,Philip;MalcolmSawyer(2004):Neo‐liberaleconomicpolicy,p.1.74. Revolutionarytransformationsneeded?
“Thisbookletsetsoutwhatisnowobviousfromasocialscientificpointofview:societieswillnotchangewith the necessary speed without rebellions and a revolutionary transformation of our societies andpolitics.Thisisnotamatterofone’spoliticalpartypreferences.Itisamatterofbasicstructuralsociology.Institutions,likeanimalspecies,havelimitstohowfasttheycanchange.Togetrapidchangetheyhavetobereplacedwithnewsocialsystemsofpolicy,practiceandculture.Itisaterribleandpainfulrealisation,but it is time toacceptour reality (…)Climateandecologicalbreakdownwillkillusall in thenear termunlessweactas if the truth isreal (…)Thereformistpoliticalcultureofboth leftandright inneoliberalsociety is now not fit for purpose. To put it bluntly, NGOs, political parties andmovementswhich havebroughtusthroughthelastthirtyyearsofabjectfailure–a60%riseinglobalCO2emissionssince1990–arenowthebiggestblocktotransformation.Theyoffergradualistsolutionswhichtheyclaimwillwork.Itis time to admit that this is false, and it is a lie. They therefore divert popular opinion and the public’sattentionandenergyawayfromthetaskathand:radicalcollectiveactionagainstthepoliticalregimewhichis planning our collective suicide. The paradigm shift is tomove from thewords to radical action, fromlobbying tomassbreakingof the law throughnonviolent civil disobedienceand fromelitist exclusion topopulardemocraticmobilisation.”
Hallam,Roger(2019):Commonsenseforthe21stcentury.75. Inequalitythenorm?
“Thisbookbeganwitha simpleobservation:virtually allhumansocietiesaremarkedby inequality, at alevelthatsurpasseswhatcouldbeexpectedfromnormaldifferencesinindividuals’capabilitiesalone.”
“Small deviations from total equality will increase with time. If property and assets can be inherited,inequality will also intensify from generation to generation (…) Success in competition is not alwaysdeterminedbythetraitsorbehavioralpatternsthatwewouldprefertoassociatewithsuccess.”
“The reason why policies of redistribution in the Nordic countries during the twentieth century weresuccessful is that a broad spectrum of instruments were used—education, labor market policy, socialinsurance,taxes,andtransfers.ThediscussionaroundtheworkofThomasPikettyandhiscolleagueshasbeendominatedby the issueof capital taxation,which is toonarrowaperspective.Certainof theaboveinstrumentshavebecomemoredifficulttouseasaresultofglobalization,whereasnationalgovernmentsretainfullauthorityovereducationandlabormarketpolicy.”
Molander,Per(2016):Theanatomyofinequality,MelvilleHouse,BrooklynandLondon.
