Bookmarker tag: archive/so478 (31 notes)

In my view, for a historical system to be considered a capitalist system,
the dominant or deciding characteristic must be the persistent search for
the endless accumulation of capital—the accumulation of capital in order to
accumulate more capital. And for this characteristic to prevail, there must
be mechanisms that penalize any actors who seek to operate on the basis
of other values or other objectives, such that these nonconforming actors
are sooner or later eliminated from the scene, or at least severely hampered
in their ability to accumulate significant amounts of capital. All the many institutions of the modern world-system operate to promote, or at least are
constrained by the pressure to promote, the endless accumulation of capital.

[...] fear leads to the search for political alternatives of kinds not entertained before. The media refer to this as populism, but it is far more complicated than this slogan term suggests. For some the fear leads to multiple and irrational scapegoatings. For others, it leads to the willingness to unthink deeply ingrained assumptions about the operations of the modern world-system. Th
is can be seen in the United States as the difference between the Tea Party movement and the Occupy Wall Street movement.

Although educational credential inflation expands on false premises—the ideology that more education will produce more equality of opportunity, more high-tech economic performance, and more good jobs—it does provide some degree of solution to technological displacement of the middle class. Educational credential inflation helps absorb surplus labor by keeping more people out of the labor force; and if students receive a financial subsidy, either directly or in the form of low-cost (and ultimately unrepaid) loans, it acts as hidden transfer payments. In places where the welfare state is ideologically unpopular, the mythology of education supports a hidden welfare state. Add the millions of teachers in elementary, secondary, and higher education, and their administrative staffs, and the hidden Keynesianism of educational inflation may be said to virtually keep the capitalist economy afloat.

As long as the educational system can be somehow financed, it operates as hidden Keynesianism: a hidden form of transfer payments and pump-priming, the equivalent of New Deal make-work setting the unemployed to painting murals in post offices or planting trees in conservation camps, Educational expansion is virtually the only legitimately accepted form of Keynesian economic policy, because it is not overtly recognized as such. It expands under the banner of high technology and meritocracy—it is the technology that requires a more educated labor force. In a roundabout sense this is true: it is the technological displacement of labor that makes school a place of refuge from the shrinking job pool, although no one wants to recognize the fact. No matter—as long as the number of those displaced is shunted into an equal number of those expanding the population of students, the system will survive.

The 1968 Civil Rights Act made housing discrimination illegal, but subtler forms prevailed. Crystal and Vanetta wanted to leave the ghetto, but landords like the one on Fifteenth Street turned them away. Other landlords and property management companies--like Affordable Rents--tried to avoid discriminating by setting clear criteria and holding all applicants to the same standards. But equal treatment in an unequal society could still foster inequality. Because black men were disproportionately incarcerated and black women disproportionately evicted, uniformly denying housing to applicants with recent criminal or eviction records still had an incommensurate impact on African Americans. When Crystal and Vanetta heard back from Affordable Rentals, they learned their application had been rejected on account of their arrest and eviction history.

From this account, it is clear that the relationship between unemployment and inequality is an intricate one [...] Nonetheless, involuntary unemployment is of concern in its own right, and for this reason alone it receives considerable attention in what follows. Unemployment, and attendant job precariousness, are themselves sources of inequality. A person rejected by the labour market is suffering a form of social exclusion, and even if full income replacement were to allow his or her standard of living to be maintained during unemployment, the individual's circumstances would have worsened. Above all, it is a matter of agency and a sense of powerlessness. [...]

• globalisation
• technological change (information and communications technology)
• growth of financial services
• changing pay norms
• reduced role of trade unions
• scaling back of the redistributive tax-and-transfer policy

[...] we risk creating the impression that inequality is rising on account of forces outside our control. It is far from obvious that these factors are beyond our influence or that they are exogenous to the economic and social system. Globalisation is the result of decisions taken by international organisations, by national governments, by corporations, and by individuals as workers and consumers. The direction of technological change is the product of decisions by firms, researchers, and governments. The financial sector may have grown to meet the demands of an aeing population in need of financial instruments that provide for retirement, but the form it has taken and the regulation of the industry have been subject to political and economic choices.

[...] When richer families have more children, inequality is reduced [...] "The average upper middle-class familiy is only two-thirds of the size of the average working-class family. Hence, in the absence of modifications introduced by marriage, fresh accumulations, and taxation, the distribution of property would be likely to become more and more unequal." [...] better-off families having fewer children and hence accentuating the tendency towards greater inequality.

[...] The issue is not just between a lucky generation of baby-boomers now approaching retirement who got the best pension deals and benefited most from the house price boom, and a younger 'jilted generation' who have little. Many baby boomers have little wealth, and only a minority enough to see them through retirement without state pensions playing a major role. And a significant proportion of younger people stand to gain a great deal from inheritance and lifetime help from parents and grandparents. The conflict of interest is ultimately between the more affluent half of the baby-boom generation and poorer members of their own generation and younger households with the 'wrong' relatives, for whom advantage will not cascade down the generations.

It maybe should not be a surprise that there is a symbiotic relationship between high inequality in a society and low social mobility. In a highly unequal society, many advantaged parents will do all they can to ensure that their children do not slip down the economic ladder--they know that it goes a long way down. And if incomes and wealth are unequally distributed, they have the resources to help them. At the same time, they may realise that higher rates of social mobility, in relative terms, cannot be a one-way street. If policy helps increase the chances of someone starting in a less privileged position to go up the social scale, that must mean that someone else's chance of going down has to rise, which may include their own children, and does not then seem so attractive. While many favour increased upward mobility, few want to mention the increased downward mobility that has to go with it (in terms of relative positions, at least).

1. Liberalization (drop tariffs, subsidies, capital controls, export restrictins, etc.)
2. Privatization (sell state holdings, which in many cases are substantial)
3. Stabilization (allow currency to float at its "natural" [usually lower] exchange rate)

As this outline of the neoliberal policy package shows, neoliberalism is [...] a description of at least two powerful and intertwined contemporary economic dynamics: globalization and financialization. Neoliberalism can be understood as the historical conjuncture, and political legitimization (via both coercion and consent) of these two processes. Globalization is the integration of the international economy via trade. The original version of liberalism certainly involved globalization, but without the kind of financialization we have today with _neo_liberalism--or at least, back then, finance played a different and subordinate role as investor in productive enterprise.

[...] this definition of neoliberalism is helpful since it allows us to [...] understand the differences between what is sometimes called the "first era of globalization"--British free trade imperialism in the nineteenth century--and what we call globalization today (by which we mean something more specifically neoliberal).

[...] Neoliberalism is not just about getting rid of rules, or "deregulation." Removing tariffs, capital controls, currency pegs, restrictions on foreign ownership, and so forth are all essential elements of neoliberal regulatory programs, abolishing rules that limit firms' opportunity to maximize short-term returns. But states and firms and international institutions need not only to eliminate rules, they must also create new ones, imposing, extending, or deepening regulatory or legal structures where they were previously underdeveloped or nonexistent. For example, countries the world over have established intellectual property rights regimes for everything from medicinal plants to corporate logos, often where no such legal frameworks existed before. That is not deregulation by any stretch of the imagination. Jamie Peck and Adam Tickell were among the first to point out these complexities in "actually existing neoliberalism," which they label "roll-back" (deregulation) and "roll-out" (reregulation). Neoliberalism has always involved both.

[...] The institutionalized meritocratic system helps a few to gain access to positions they merit and from which they might otherwise be barred. But it allows many more to gain access to positions on the basis of ascribed status under the cover of having gained this access by achievement.

[...] This could be the first technological revolution that is generating more work, even though it is disrupting and replacing paid labour. But it is contributing to the growing inequality of income. Tim Berners-Lee, inventor of the World Wide Web, says he supports basic income as a tool for correcting massive inequality brought about by technology. [...]

[...] Was not capital’s claim to a part of the revenues originally justified by its willingness to assume economic risk, with employees abandoning a part of the added value of their labour in exchange for a fixed remuneration, shielded from the vagaries of the market? Yet the new structural conditions endow the capitalist desire with enough strategic latitude that it is able to decline to bear even the weight of cyclicality, pushing the task of adjusting to it onto the class of employees, precisely those who were constitutively exempt from it. [...]

That is why the issue of debt relief necessarily raises historical and political questions about the way such debts have been contracted, enforced, and unequally imposed across whole societies and the whole world. There is, to say the least, always a disparity between the official parties who contract debts and the multitude of people who try to live under the burdens of sovereign indebtedness. In the contemporary global economy, indebtedness should not be viewed as the accidental product of bad luck or poor planning: as we have seen, it functions everywhere as a regime of top-down control and network discipline, designed to replace older forms of social negotiation and political autonomy. As this regime becomes entrenched, every dimension of social life will be restructured according to the wishes of the creditors and their local enforcers, rationing access to everything from work and education to clean water and air, subjecting every component of the local economy to increasingly direct pressures from the global markets. [...]

[...] One particularly important approach was a political-economic strategy to link the crisis of capitalism to union power. The subsequent defeat of organised labour throughout the core capitalist nations has perhaps been neoliberalism’s most important achievement, significantly changing the balance of power between labour and capital. The means by which this was achieved were diverse, from physical confrontation and combat, to using legislation to undermine solidarity and industrial action, to embracing shifts in production and distribution that compromised union power (such as disaggregating supply chains), to re-engineering public opinion and consent around a broadly neoliberal agenda of individual freedom and ‘negative solidarity’. The latter denotes more than mere indifference to worker agitations – it is the fostering of an aggressively enraged sense of injustice, committed to the idea that, because I must endure increasingly austere working conditions (wage freezes, loss of benefits, a declining pension pot), then everyone else must as well. The result of these combined shifts was a hollowing-out of unions and the defeat of the working class in the developed world.

[...] Today's global capitalism brings the relationship of debtor/creditor to its extreme and simultaneously undermines it: debt becomes an openly ridiculous excess. We thus enter the domain of obscenity: when a credit is accorded, the debtor is not even expected to return it--debt is directly treated as a means of control and domination.

It is as if the providers and caretakers of debt accuse the indebted countries of not feeling enough guilt [...]

[...] As capital and capitalist markets began to outgrow national borders, with the help of international trade agreements and assisted by new transportation and communication technologies, the power of labour, inevitably locally based, weakened, and capital was able to press for a shift to a new growth model, one that works by redistributing from the bottom to the top. This was when the march into neoliberalism began, as a rebellion of capital against Keynesianism, with the aim of enthroning the Hayekian model in its place. Thus the threat of unemployment returned, together with its reality, gradually replacing political legitimacy with economic discipline. Lower growth rates were acceptable for the new powers as long as they were compensated by higher profit rates and an increasingly inegalitarian distribution. Democracy ceased to be functional for economic growth and in fact became a threat to the performance of the new growth model; it therefore had to be decoupled from the political economy. This was when ‘post-democracy’ was born.

Summing up, social life and capital accumulation in the post-capitalist interregnum depend on individuals-as-consumers adhering to a culture of competitive hedonism, one that makes a virtue out of the necessity of having to struggle with adversity and uncertainty on one’s own. For capital accumulation to continue under post-capitalism, that culture must make hoping and dreaming obligatory, mobilizing hopes and dreams to sustain production and fuel consumption in spite of low growth, rising inequality and growing indebtedness. It must also provide technical assistance enabling people to keep themselves unreasonably happy, while at the same time producing a stream of incentives and satisfactions motivating them to constantly intensify their work effort regardless of stagnant or declining pay, unpaid overtime and precarious employment. Capitalism without system integration requires a labour market and labour process capable of sustaining a neo-Protestant work ethic alongside socially obligatory hedonistic consumerism. Enthusiastic hard work must be culturally defined and recognized as test and proof of individual value, corresponding to a meritocratic worldview that explains inequality with differences in effort or ability. For hedonism not to undermine productive discipline, as none less than Daniel Bell was confident would happen, the attractions of consumerism must be complemented with a fear of social descent, while non-consumerist gratifications available outside of the money economy must be discounted and discredited. All of this presupposes the presence of a broad middle class willing to seek social integration through the labour market, accepting as a matter of course expectations of employers for full identification with whatever jobs they may be assigned and taking for granted the need for social life to respect the primacy of dedicated work and the pursuit of, it is hoped, life-structuring careers.

[...] What the deterioration of public finances was related to was declining overall levels of taxation (Figure 1.5) and the increasingly regressive character of tax systems, as a result of ‘reforms’ of top income and corporate tax rates (Figure 1.6). Moreover, by replacing tax revenue with debt, governments contributed further to inequality, in that they offered secure investment opportunities to those whose money they would or could no longer confiscate and had to borrow instead. Unlike taxpayers, buyers of government bonds continue to own what they pay to the state, and in fact collect interest on it, typically paid out of ever less progressive taxation; they can also pass it on to their children. Moreover, rising public debt can be and is being utilized politically to argue for cutbacks in state spending and for privatization of public services, further constraining redistributive democratic intervention in the capitalist economy.

[...] there is no indication that the long-term trend towards greater economic inequality will be broken any time soon, or indeed ever. Inequality depresses growth, for Keynesian and other reasons. But the easy money currently provided by central banks to restore growth – easy for capital but not, of course, for labour – further adds to inequality, by blowing up the financial sector and inviting speculative rather than productive investment. Redistribution to the top thus becomes oligarchic: rather than serving a collective interest in economic progress, as promised by neoclassical economics, it turns into extraction of resources from increasingly impoverished, declining societies [...]

[...] In the United States in recent years, one frequently has heard this type of justification for the stratospheric pay of supermanagers (50– 100 times average income, if not more). Proponents of such high pay argued that without it, only the heirs of large fortunes would be able to achieve true wealth, which would be unfair. In the end, therefore, the millions or tens of millions of dollars a year paid to supermanagers contribute to greater social justice. This kind of argument could well lay the groundwork for greater and more violent inequality in the future. The world to come may well combine the worst of two past worlds: both very large inequality of inherited wealth and very high wage inequalities justified in terms of merit and productivity (claims with very little factual basis, as noted).
Meritocratic extremism can thus lead to a race between supermanagers and
rentiers, to the detriment of those who are neither.

Unemployment, that more or less well-calculated deregulation of a new market, new technologies, new worldwide competitiveness, would no doubt, like labor or production, deserve another name today. [...] The function of social inactivity, of non-work or of underemployment is entering into a new era. It calls for another politics. [...]

So, even before Thomas Piketty’s book, the topic of ‘inequality’ had arrived in the economic mainstream, and with the following line of argumentation: inequality and poverty are no longer regarded so much as a consequence of capitalist economic growth, but rather as a brake on such growth and as a problem for stability. [...] What stands at the centre of attention are no longer the problems that the poor have with capitalism, but the problems that the poor pose for capitalism and its growth. The demand that follows from this is no longer a fundamental change of economic system, but merely a correction of the existing one – and not a correction of wealth to the benefit of the poor, but a correction of poverty for the benefit of wealth. The goal is not a better life for people – such a better life is only supposed to be a means of making economic growth smoother and faster. [...]

Piketty’s central point of critique is aimed at the legitimation of inequality. Bourgeois society’s self-description, in which inequality is a consequence of different abilities, will no longer be accurate in the future. To make a long story short: effort will no longer be worth it.

While Piketty attacks the dominant economic form, capitalism, he never argues in an anti-capitalist way. First of all, his ‘laws of distribution’ according to his work are valid in every economic formation, not just in capitalism (which he also leaves conceptually vague). For Piketty, growing inequality is a law of wealth per se, not of a specifically capitalist form of wealth. Secondly, his political demands do not amount to a fundamental transformation of the system, but rather are limited to a few changes in the tax system, which are supposed to make capitalism more stable. Piketty’s enormously constructive critique of capitalism makes him compatible to the reigning crisis discourse. Despite all coquetry, Piketty never misses a chance to distance himself from Marx’s ideas (which are attributed to him).

Since it has to do with knowledge-goods, financialisation appears in a first phase to remove the obstacles that these present to their transformation into goods that are rival, divisible and excludable. But, in the era of the digital, it calls for the creation of enclosures by means of new property rights and digital management rights. These new enclosures have a depressive effect on the intensity and quality of innovation. The alternative strategies consist in the creation of new public spaces and conditions for free public access to the digital commons [...]

[...] The economy is not based on knowledge as such (although society itself is), but on the exploitation of knowledge. With the digital revolution [...] codified knowledge (databases, software) becomes information-goods and public knowledge. Economic models which since industrial capitalism have been based on the sale of them are in serious crisis: digitisation has drastically downgraded the old implementation of intellectual property rights, while the advantages gained in the field of codified knowledge are lasting for less and less time. [...]

There are indications that profits have been increasing as a result of the relative decrease of wages and the increase of low-paid precarious employment. [...] the capitalist relations of production have in the latter decades of the 20th century and the first decade of the 21st century been shaped by an increase of socio-economic inequality that benefits capital at the expense of labour. Neo-liberalism has been a political class struggle project aimed at the "reconstruction of the power of economic elites" and "a system of justification and legitimation for whatever needed to be done to achieve this goal" (Harvey 2007, 19). The relations of production are shaped by a deep class conflict between the interests of labour.

[...] "Before Uber there was in Milan, Italy, in Lyon, France, two or three mini-cab companies that used to compete [...] They've all ceased to exist. The same thing will happen all over the world. You will still have drivers. But that's the most unskilled job in the line. The rest of the money will flow to Uber shareholders in Silicon Valley. So a huge chunk of the Italian GDP just moved to Silicon Valley. With these platforms, the Valley has become like ancient Rome. It exerts tribute from all its provinces. The tribute is the fact that it owns these platform businesses. Every classified ad in Italy used to go into a town newspaper. Now it goes to Google. Pinterest will basically replace magazine sales. Now Uber dominates transport."

[...]

This is an alarming trend, and to an extent, Charlie is right. There's value leaving local hubs and heading to Silicon Valley. But the drain is mitigated by a few factors. First, there is the near-inevitable fact that the large platforms in Silicon Valley will be going public. Their ownership will be much more distributed than those locally owned cab companies, and many of the beneficiaries of those early investments are pension funds that invest in the big venture capital and private equity funds. Those pension funds manage the retirement funds for people in the working class like teachers, police officers, and other civil servants. This doesn't fully account for the loss, and it doesn't negate the irony that the people driving cars for Uber don't have pensions, but it's worth noting in the face of Charlie's predictions. Also important is the fact that there is indeed new value being created in local hubs whenever platforms like Airbnb become an option.

[...] As soon as the fiction of GDP is abandoned as the criterion of affluence, we have to admit that growth neither takes us further from, nor brings us closer to, affluence. It is logically separated from it by the whole social structure which is, here, the determining instance. A certain type of social relations and social contradictions, a certain type of `inequality', which used to perpetuate itself in the absence of economic progress, is today reproduced in and through growth.