Tag Archives: Capital

The European Unraveling?

By Ana Palacio – The problem for the EU is no longer the indifference that marked the worst elements of President Barack Obama’s approach to Europe. It is outright US hostility. Trump’s praise of Brexit, which emphasized the British people’s “right to self-determination,” and his belittling reference to the EU as “the Consortium” in his appearance with British Prime Minister Theresa May, underscores his hostility.

Europe is now stuck between a US and a Russia that are determined to divide it. What are we Europeans to do?

One option is to pander to Trump. That is the approach May took on her visit to Washington, DC, when she stood by silently as Trump openly declared his support for the use of torture at their joint press conference.

But, for the EU, such appeasement would be counter-productive. It is our values, not our borders, that define us. It makes little sense to abandon them, especially to ingratiate ourselves with a leader who has shown himself to be capricious and utterly untrustworthy.

The third option – and the only viable one for the EU – is self-reliance and self-determination. Only by strengthening its own international positions – increasing its leverage, in today’s jargon – can the EU cope effectively with America’s wavering fidelity to its allies and the values they share. more> https://goo.gl/FRuIrO

Crisis of capitalism? Perhaps, but don’t blame it on globalization

By Simon Tilford – Donald Trump, Brexit, serious populist pressures in other EU countries: are we entering a full-blown crisis of international liberal capitalism? There is no doubt that globalization poses policy challenges for governments.

But globalization by itself did not force governments to adopt policies that have divided their countries, exacerbated inequality and hit social mobility. Many of them did those things by choice.

The problem is not that we have allowed an increased role for markets, as many on the left (and increasingly on the populist right) argue. Open markets remain the best way of generating wealth and opportunities, of challenging vested interests and of expanding people’s freedom. We are in this mess because we’ve forgotten the lessons of the post-war period. Basically, we have a crisis of distribution and opportunity.

Globalization is a net positive, and has played a huge role in reducing poverty globally over the last 30 years. But there are winners and losers from increased trade and movements of capital, as there are from rapid technological change, and many countries, notably the US and the UK, have failed to take the necessary corrective action. more> https://goo.gl/ei52Zk

The great cryptocurrency heist

By E J Spode – We need to talk about trust and its place in the fabric of our lives. Trust seems to be in short supply these days, although we have no choice but to rely on it.

We trust schools and babysitters to look after our children. We trust banks to hold our money and to transfer it safely for us. We trust insurance companies to pay us should we meet with some disaster. When we make a large purchase – such as a house – we trust our solicitors or an escrow company to hold the funds until the transaction is complete. We trust regulators and governments to make sure these institutions are doing what they are supposed to be doing.

A good way to wrap our minds around ‘blockchain’ concept is to think of its most famous application: Bitcoin. And the best way to think about Bitcoin is not in terms of coins at all but rather as a giant ledger.

Bitcoin is just one version of the blockchain. The fundamental technology has the potential to replace a much wider range of human institutions in which we use trust to reach a consensus about a state of affairs. It could provide a definitive record for property transfers, from diamonds to Porsches to original Picassos. It could be used to record contracts, to certify the authenticity of valuable goods, or to securely store your health records (and keep track of anyone who’s ever accessed them).

But there’s a catch: what about the faithful ‘execution’ of a contract? Doesn’t that require trust as well?

What good is an agr’ement, after all, if the text is there but people don’t respect it, and don’t follow through on their obligations? more> https://goo.gl/rW7huO

Backing into World War III

By Robert Kagan – Think of two significant trend lines in the world today. One is the increasing ambition and activism of the two great revisionist powers, Russia and China.

The other is the declining confidence, capacity, and will of the democratic world, and especially of the United States, to maintain the dominant position it has held in the international system since 1945. As those two lines move closer, as the declining will and capacity of the United States and its allies to maintain the present world order meet the increasing desire and capacity of the revisionist powers to change it, we will reach the moment at which the existing order collapses and the world descends into a phase of brutal anarchy, as it has three times in the past two centuries.

The cost of that descent, in lives and treasure, in lost freedoms and lost hope, will be staggering. History shows that world orders do collapse, however, and when they do it is often unexpected, rapid, and violent.

The late 18th century was the high point of the Enlightenment in Europe, before the continent fell suddenly into the abyss of the Napoleonic Wars. In the first decade of the 20th century, the world’s smartest minds predicted an end to great-power conflict as revolutions in communication and transportation knit economies and people closer together. The most devastating war in history came four years later. The apparent calm of the postwar 1920s became the crisis-ridden 1930s and then another world war.

Where exactly we are in this classic scenario today, how close the trend lines are to that intersection point is, as always, impossible to know. Are we three years away from a global crisis, or 15?

That we are somewhere on that path, however, is unmistakable.

And while it is too soon to know what effect Donald Trump’s presidency will have on these trends, early signs suggest that the new administration is more likely to hasten us toward crisis than slow or reverse these trends.

It will be more than a shame if Americans were to destroy what they created—and not because it was no longer possible to sustain but simply because they chose to stop trying. more> https://goo.gl/cGZ3En

Solving the Crisis of Extractive Capitalism

By Michel Bauwens and Vasilis Kostakis – The peer-to-peer capacity to relate to each other over the Internet entails the emergence of what Yochai Benkler in the The Wealth of Networks called ‘commons-based peer production’ (CBPP).

CBPP is a new pathway of value creation and distribution, where peer-to-peer infrastructures allow individuals to communicate, self-organize and, ultimately, co-create non-rivalrous use value, in the form of digital commons of knowledge, software and design.

Think of the free encyclopedia Wikipedia, the myriad of free/open-source projects or open design communities such as Wikihouse and Farmhack.

CBPP is open to anyone with skills to contribute to a common project: the knowledge of every participant is pooled. These participants may be paid, but not necessarily. Precisely because CBPP projects are open systems in which knowledge can be freely shared and distributed, anyone with the right knowledge and skills can contribute, either paid by companies, clients, or not at all. In these open systems, there are many reasons to contribute beyond or besides that of receiving monetary payment.

CBPP allows contributions based on all kinds of motivations, but most importantly on the desire to create something mutually useful to those contributing. This also generally means that people contribute because they find it meaningful and useful. From the point of view of the contributing communities as well as simple users, the orientation of their work is most often on use value creation, not exchange value. more> https://goo.gl/TusXs3

Economics is fundamentally flawed

By David Spencer – Economics should be in crisis. But in reality it is not. Rather, economics remains largely the same as it was before the financial crisis – in effect, it remains just as problematic now as in the past. This is an issue not just for economics but for society as a whole, given the enduring power and influence of the discipline on policy and public life.

To think of economics in terms of forecasting is to limit its nature and scope. Economics ought to be about explanation. It should be able to make sense of the world beyond forecasts of the future. It is not clear that as it exists now, economics is able to understand the world in its present form. To this extent, it cannot help understand the frequency and depth of crises.

As things stand, there is little chance that economics will open up to the ideas and methods of other disciplines. Instead, the discipline has embraced a project of “economic imperialism” seeking to colonize other social sciences. Genuine interdisciplinary debate has lost out in this process. more> https://goo.gl/xDk2Mv

The Curse of Econ 101

BOOK REVIEW

Economism: Bad Economics and the Rise of Inequality, Author: James Kwak.

By James Kwak – In a rich, post-industrial society, where most people walk around with supercomputers in their pockets and a person can have virtually anything delivered to his or her doorstep overnight, it seems wrong that people who work should have to live in poverty.

Yet in America, there are more than ten million members of the working poor: people in the workforce whose household income is below the poverty line.

Looking around, it isn’t hard to understand why.

The idea that a higher minimum wage might not increase unemployment runs directly counter to the lessons of Economics 101. According to the textbook, if labor becomes more expensive, companies buy less of it. But there are several reasons why the real world does not behave so predictably.

A higher minimum wage motivates more people to enter the labor force, raising both employment and output. Finally, higher pay increases workers’ buying power. Because poor people spend a relatively large proportion of their income, a higher minimum wage can boost overall economic activity and stimulate economic growth, creating more jobs. more> https://goo.gl/tZkyjV

A General Logic of Crisis

BOOK REVIEW

How Will Capitalism End? Author: Wolfgang Streeck.
Buying Time, Author: Wolfgang Streeck.
The Deluge: The Great War and the Remaking of Global Order 1916-31, Author: Adam Tooze.

By Adam Tooze – The core of Streeck’s crisis theory is non-Marxian. It does not rest on the violence of original primitive accumulation, or on the alienation or exploitation inherent to the productive process, or even primarily on the declining rate of growth or accumulation.

In one disarming passage he describes capitalism as a ‘a non-violent, civilized mode of material self-enrichment through market exchange’. What makes capitalism toxic is its expansiveness, its relentless colonization of the rest of society. Drawing on Karl Polanyi, Streeck insists that capitalism destroys its own foundations.

It undermines the family units on which the reproduction of labor depends; it consumes nature; it commodifies money, which to function has to rest on a foundation of social trust. For its own good, capitalism needs political checks.

The significance of 2008 and what has happened since is that it is now clear these checks are no longer functioning. Instead, as it entered crisis, capitalism overran everything: it forced the hand of parliaments; it drove up state debts at taxpayers’ expense at the same time as aggressively rolling back what remained of the welfare state; the elected governments of Italy and Greece were sacrificed; referendums were canceled or ignored. more> https://goo.gl/T9bS8i

How the Profound Changes in Economics Make Left Versus Right Debates Irrelevant

BOOK REVIEW

The Origin of Wealth, Author: Eric Beinhocker.
The Gardens of Democracy, Authors: Eric Liu and Nick Hanauer.

By Eric Beinhocker – Economic thinking is changing. If that thesis is correct – and there are many reasons to believe it is – then historical experience suggests policy and politics will change as well. How significant that change will be remains to be seen.

It is still early days and the impact thus far has been limited. Few politicians or policymakers are even dimly aware of the changes underway in economics; but these changes are deep and profound, and the implications for policy and politics are potentially transformative.

For almost 200 years the politics of the west, and more recently of much of the world, have been conducted in a framework of right versus left – of markets versus states, and of individual rights versus collective responsibilities.

New economic thinking scrambles, breaks up and re-forms these old dividing lines and debates. It is not just a matter of pragmatic centrism, of compromise, or even a ‘third way’. Rather, new economic thinking provides something altogether different: a new way of seeing and understanding the economic world. When viewed through the eyeglasses of new economics, the old right–left debates don’t just look wrong, they look irrelevant. more> https://goo.gl/80n0Ke

Shaping the Future of Production

A. T. Kearney – The world of production is one that we define as the full chain of activities to “source-make-deliver-consume-reintegrate” products and services, from origination of inputs, product design, manufacturing and distribution to customer/consumer use and return/reuse.

Production fundamentally impacts our economic structure at a global, regional, national and local scale, on the levels and nature of employment, and is now inextricable from environmental and sustainability initiatives.

Collectively, the sectors comprising production have been an important source of economic growth for developed and emerging nations alike, providing well paid jobs for an increasingly skilled workforce, and they continue to be the dominant focus of innovation and development efforts in most countries.

Disruptive technologies from additive manufacturing to artificial intelligence are transforming global production systems and unleashing a new wave of competition among both producers and countries. They impact and alter all end-to-end steps of the production process and, as a result, transform the products that consumers demand, factory processes and footprints, and the management of global supply chains, in addition to industry dynamics and countries’ access to value chains. Just as we look back at the invention of the spinning jenny, steam engine or the assembly line as turning points in history which changed society, the economy and environment, our descendants are likely to look back on today’s technological advances as the start of a new industrial revolution. more> https://goo.gl/zB86hS

Related>