Martin Wolf has just noted on the FT website that:
Today ... the liberal international order is sick. As Freedom House's Freedom in the World 2018 states, “Democracy is in crisis.” For the 12th consecutive year, countries that suffered democratic setbacks outnumbered those that registered gains.
Before adding:
Under Mr Trump, the US also questions the fabric of international co-operation – security treaties, open markets, multilateral institutions and attempts to address such global challenges as climate change. It has, instead, proclaimed its intention to look after its own interests, even at the direct expense of longstanding allies.
And noting that:
Nor is the underpinning of the world economy in better shape. The economy may be recovering, but no significant trade liberalisation has occurred since China's accession to the World Trade Organization in 2001. Brexit will also prove to be an act of deglobalisation.
Then concluding
Those who believe in the symbiosis of democracy, a liberal world economy and global co-operation simply have to find all this more than a little scary.
Before arguing that:
The liberal international order is crumbling, in part because it does not satisfy the people of our societies. Those who attend Davos need to recognise that. If they do not like Mr Trump's answers – they should not – they need to advance better ones.
The overall goal Wolf has in saying all this is as, as the headline notes, that:
[Davos] delegates need to consider what is to be done to save the [liberal international] model from wreckage
Now Martin Wolf is no fool, but he's very clearly asking the wrong question. What is clear is that the liberal international model as was is, as I noted yesterday, dead. So the only question to be asked is not what can save the existing, and deeply corrupted, liberal international order that is beyond salvation as a result, but what better order might replace it?
I am glad Wolf agrees the parrot is nailed to its perch. But it's pointless to pretend it is alive as a result, and that is what he is still doing.
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The World now faces complex and rapidly evolving challenges which cannot be answered by simplistic historical ideologies, of either right or left wing politics. The answer to this problem is to delegate the power to make economic decisions to a level never yet attempted in human society.
It should be easily understood that money is essentially the power to control the work of others. The right wing want all this power to reside with corporations and owners of wealth, while the left wing want the government to control spending, so that they can determine what jobs are available ( including so called job guarantee schemes ). But the real answer is to be brave enough to give this power for the first time to individual citizens and local communities in the form of a Universal Basic Income.
Once their basic spending needs are met, individuals are free to determine their own “work” priorities and come together with others to do what seems important to them within their local communities. Such an approach scares the pants off politicians and academics alike, who all suspect that working people are either inherently lazy and/or too stupid to be trusted to make the right decisions. The truth of course is that many will make mistakes, but for each individual or community that gets it wrong, there will be many more that thrive, creating new models and successful examples for others to follow.
The real question is whether the elites who already have the personal freedom that only education and stable income can convey (including politicians, journalists, campaigners and probably anyone reading this article), are willing to see this power of choice given to every citizen. Once we are willing to take this step we will unlock human potential across our societies far beyond anything we have seen in human history to date. But will any of those who fight constantly to carve out just a little corner of power over policy, be willing to give it over to ordinary citizens, and create a different kind of economy. So far few show this maturity of spirit, but we can yet hope.
What new system?
My money is on a system very similar to the current one, which has created more wealth, seen more innovation and lifted more people out of poverty in the last 100 years than has occurred in the whole existence of mankind before.
Certainly not the sort of poverty creating, incentive destroying centrally managed economy that you would prefer. That’s about as inviting as a week old dead fish for supper.
I argue for a mixed economy in which private enterprise plays on a level playing field
What’s your system? Please tell me (spoiler: it’s not what I am asking for)
Care to name one thing currently done mostly by government which should be done by the private sector?
And one thing currently done mostly by free enterprise that government should do?
That would at least be a sign of a mixed economy fan.
Government has been so cut back it is hard to think of a move required in that direction
The Royal family could raise theor own funding though
After that I struggle becasue far too much ahs been privatised already
All natural monopolies have to be in the state sector to prevent abuse: there is no market
And to deliver a true mixed economy tax collection has to be properly enforced
To quote George Galloway – anyone who has ever bought a suit from a state-run tailor in the former USSR will know that are are some things that even the biggest lefties think should be left to the market. Not that I would call Richard a big lefty – he’s very firmly in the mixed market camp (as I think most readers on here, and most people in the UK are as well).
I think even many on the left could agree with privatisation of some (emphasis on some) public services if it is clear that they can be run more efficiently and provide better outcomes.
In short, Duncan, you’re presenting a straw man argument, and a false dichotomy. P.S. I preferred Paul Calf.
I don’t think anyone who has any knowledge of the history of the West over the last two hundred plus years would argue with you about the creation of wealth etc. But the ‘ lifting out of poverty ‘ did not come about as a result of the kindness of the hearts of capitalists ( and I say this as a very small one myself with a business and employees dependent on it for their livelihoods ) . The history of the Industrial Revolution particularly in its early decades is anything but one of prosperity for the masses. That only came about much later – well into the twentieth century – in fact , once trades unions had achieved power sufficient to bargain for better wages etc on behalf of the workers . Fast forward to 2018 and what do we have in the West ; a large pool of unemployed, or underemployed people struggling to keep going with increasing debt to fill the gap between what they need and what they get paid . Even in prosperous Cambridge last week I saw in shop a notice for the Cambridge food bank . My parents ordinary working people in the fifties would have been horrified by such a thing. Now we pass by on the other side of the street and keeping talking on our flashy gizmos. So that Steve is the issue and under the present set-up it isn’t going to change so we need something new . It won’t be Communism that failed , but it will , I believe involve some sort of co-operative model, yet to be devised, which will cater for the many rather than the few.
I think it very likely that cooperation will play a part
We tend to praise one system or another but developments in technology and its spread across the globe is surely the main reason we can produce more and improve the quality of physical goods. Socialism with Chinese characteristics has seen tremendous growth over the last two decades. It had used many capitalist features, stock market , independent companies etc but the state has played a role in directing resources in accordance with an overall plan. As has South Korea and Japan, both of them different to American capitalism and European social market economy. All are a mixture of private and public but in different measures.
Indeed Ian, if you look at the countries that have developed significantly over the past 40 years, almost without fail it is those countries that have turned their back on conventional Washington/Post-Washington consensus development theory, i.e. liberalise your markets and get rid of all of your social programmes and you will become rich like the West.
The problem is, this development theory is built on a fundamental historical inaccuracy. The West did not develop as a result of pursuing free market economic principles. Was the British Empire a free market institution?
Ha Joon Chang nails this argument in “Kicking Away the Ladder” which is a must read book on economic development. (He has subsequently written much more accessible books aimed at a general audience).
In short, he argues that developed Western countries are forcing a developmental model onto developing countries that is totally at odds with how they developed, i.e. they are kicking away the developmental ladder from underneath them.
Now, in my opinion, we are seeing capitalism eat itself. The desire for profit and marketisation is undermining the very structure and fabric of society. Essential institutions and support structures which support the wellbeing, education and standards of living of the many are being eroded for a quick profit, which in the long term will only lead to decline. We are selling off and leasing back the geese that laid the golden egg under a terrible PFI deal.
That’s the $64,000 question. I’m totally convinced that the answer cannot be found within existing sructures. And because I can’t envisage any of the main UK & US parties* radically re-inventing themselves, I believe the only long-term solution may be the formation of a new cohesive, international political movement to challenge the prevailing order and outdated shibboleths rooted in both the 19th and 20th centuries. (* – I don’t know enough about Canada, Australia and other major sovereign states issuing their own currency).
Somehow or other, probably via numerous ‘agencies’ that already exist, a ‘Manifesto for the Future’ needs to be articulated, creating a ‘philosophical’ (for want of a better term) critical mass that Millennials and Centennials could relate to, support and promote.
There is a precedent which has sadly failed to live up to its promise and that is the Green movement. While it has had more success in countries with PR, it has never captured the general public’s imagination, in spite of its core agenda now routinely headlined in one way or another across the globe (https://www.globalgreens.org).
I wonder if it could it be possible to build on its base and transform it into a broader political movement. Not for the first time in its history, this would necessitate a name change as it would have to shed its ‘hippy’ image.
The more obvious candidate would be the International Socialist Parties (http://www.socialistinternational.org) but I fear they are now too disparate and even ossified in their own past. But, never say never. They too would have to have a complete image makeover, with a corresponding name change, which isn’t going to happen, is it?
The fundamental economic tenet of any such new party has to be based on the principles of MMT (which also needs a name-change as discussed previously on this site) enabling it to present a realistic and achievable vision for the future.
Maybe such a coordinated movement could emerge from the exisitng MMT academic roots in such diverse locations as Kansas City, Newcastle (Aus), Kingston Upon Thames and ofc Clerkenwell!
As you can tell, I’m thinking on the hoof here …. desperately seeking a solution to all the problems discussed at such length over so many years here and on all the hundreds of other progressive blogs/websites etc.
I’ll end before I dig myself into a bigger hole but not before quoting from one of the 20th century’s great thinkers, Buckminster Fuller: “Those who play with the devil’s toys will be brought by degrees to wield his sword” and “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”
I wholly agree with the last
That’s why existing parties are unlikely to shape the new reality, I am afraid
What I find really interesting in – say – responses like Steve Day’s above is why does it have to be the Left that reforms capitalism?
Why can’t the Right do it?
It is to me a fundamental question.
We have not had a truly Left leaning Government since 2010 and perhaps, further back. So we can’t blame the Left. And by the way it was chiefly the oil shock of the 1970’s that put societies and all Left leaning governments in trouble everywhere – not Left leaning policy itself.
All the present problems that we have are based on a lack of the fair distribution of the outputs of capitalism as well as a misallocation of finance and resources throughout our societies into speculation and short term fads.
Capitalism works best when the worker is rewarded well and the gap of that reward between the manager or the owner of capital is lower. The Right has the means to address this but does not.
Why?
Carping about the Left is all very well. All we seem to get from the Right is policy stasis or doing ‘the wrong thing righter’ – more privatisation, more PFI, more austerity.
You have me thinking
Thank you.
Pilgrim, in my counselling work I have observed that employers who really invest in their employees tend to get repaid by better outcomes such as a willingness to change methods and structures, by not leaving and prepared to tackle a crisis.
It may be part of the answer is that the modern form of finance capitalism is driven by American theorists and exponents. In that country there is still a lot of what I call ‘religious’ thinking, in the sense that certain propositions are considered un challengeable and settled for all time. We in Britain once a reputation for being more pragmatic. I hope we can find it again.
The other explanation is that the powers that drive neo-liberalism are just focused on short term gain.
Pilgrim Slight Return says:
January 23 2018 at 9:43 pm
“What I find really interesting in — say — responses like Steve Day’s above is why does it have to be the Left that reforms capitalism?
Why can’t the Right do it? ”
Cynically you might say they don’t have the intelligence — or strictly speaking the right sort of intelligence perhaps. JK Galbraith said he had discovered that wealth and intelligence were not consistently related.
The ‘right’ mindset is highly competitive so in its youth ambitious and aspirational, having got to the top (or a high enough branch) it becomes (I’m guessing a bit because I haven’t been very close to the top of anything except Ben Nevis) it becomes rather more risk averse because there is more to lose; more at stake. And if it ain’t broke it don’t needs fixed.
I suspect the peer pressure to not rock the boat is fairly intense by the time you’ve got into a senior enough position to effect significant change. That’s my theory.
The exceptions to that general pattern are ….exceptional.
Right and left go through their own transmutations – MacMillanite One Nation paternalism is nothing like the neo-Georgian mercantilism of the current lot. And no matter how much I clean my spectacles I can’t see Blair as anything other than New Public Management/Third Way which sort of mushes political ideology into one grey mess (albeit with a sharp suit and good PR).
But it’s the Third Way tendency that is wriggling through all discourse at the moment, it seems to me. There is a rabid revolt in certain quarters against any suggestion that we return to anything resembling nationalisation of our public services. ‘The 70s’ are invoked as the direst warning (both by those who did and those who did not live through them). Alternative ways of managing public services are proposed – like keeping them in the private sector but putting government representatives on the board, setting up co-ops, the ‘John Lewis’ model…..anything but actual public ownership. (And UBI is part of that revolt against state ownership and intervention. Give them the money and let them make their own choices, free and unencumbered…..doesn’t actually sound like anything that would happen in real life. Give ‘em a fixed pittance and then blame it on them for not taking advantage and ‘making something of their lives’ seems more likely…)
Along with ‘the government has no money of its own’, we have ‘the government can’t manage anything’ and ‘we mustn’t go back to failed monolithic bureaucracy’ trotted out as credo by one political commentator after another.
It’s all a nonsense, of course. Business today does not resemble business of the ‘70s. There is no reason to assume that a nationalised industry of today should resemble a ‘70s one either. We want and expect our services to be modern. But I betcha one thing will be pretty much the same – it will deliver more for its money than the private sector can.
Thanks
I bet you are likely to be right
“My money is on a system very similar to the current one, which has created more wealth, seen more innovation and lifted more people out of poverty in the last 100 years than has occurred in the whole existence of mankind before.”
The view that capitalism has pulled so many from poverty is often espoused. The truth is that prior to the 1st World War society was hugely unequal and little to none of the amassed prosperity filtered down to the working man. What changed that was two catastrophic world wars which harnessed the workers to protect the wealth of the plutocrats in exchange for a greater say in politics and a bigger share in the economic pie. What we are seeing now is to some extent a return to that Edwardian era of inequality as the need to share the wealth of the world has diminished and the 1% now feel able to appropriate 82% of the wealth.
I agree
“Under Mr Trump, the US also questions the fabric of international co-operation – security treaties, open markets, multilateral institutions and attempts to address such global challenges as climate change.”
Mr Trump is likely to get a lot of blame for this, but he certainly didn’t start the process. US isolationism and exceptionalism was well established years ago.
The second Iraq war and overthrow of Saddam was (with our complicity and cooperation) in complete disregard to the UN position. The suggestion that the US was simply doing what the UN was too weak to decide to do was blatant nonsense.
When individuals or small groups do this in civil society we call it vigilantism or ‘taking the law into one’s own hands’.
The US mindset was well established as long ago as the Nuremberg war trials. A war crime was effectively defined (as Noam Chomsky puts it) as anything the allies hadn’t done or could pretend not to have done.
If the finance system crashes again on Trump’s watch he’ll be blamed for that too but all the necessary elements were in place before he even started on the campaign trail.
But if Donald Trump is the scapegoat the neoliberals need to accept that the prevailing orthodoxy has to shift then so be it. The Donald has thick skin. He can take it.
I would give more credence to Wolf’s conclusion that “[Davos] delegates need to consider what is to be done to save the [liberal international] model from wreckage”, if I thought that was what they were considering. I think rather they are looking at how they are going to best profit the destruction.
Trump got rid of TPP and TTIP as many of us who were paying attention breathed a massive sigh of relief.
Even an idiot can get one thing right (and in this case its not Martin Wolff).
Marco Fante says:
January 24 2018 at 3:49 pm
“Trump got rid of TPP and TTIP as many of us who were paying attention breathed a massive sigh of relief.
Even an idiot can get one thing right”
Sure like the clock that’s right twice a day as long as the pointers don’t move. I notice you say ‘can’. I’m wondering if you can dredge up an example for George W Bush. 🙂
Question for any body who might have an answer.
My recollection which is vague because I suppose I wasn’t really paying attention (and elected not to care very much because I didn’t think I could do anything about it)…is that the big privatisations of the Nationalised utilities was on the basis that the government was only selling a 51% share that granted control of these industries.
All the flotations were a scam because they paid little heed to ‘market’ valuations but were rather priced by the agents (financial experts) of the vested interests who wished to buy them. So a notional value was ‘agreed’ which would be at a low enough price to ensure full take up of the shares on offer. It was implicitly understood that the shares would offer good returns because the shares at sale were underpriced. The government was principally motivated to sell for ideological reasons rather than financial return.
So does the Government still own 49% of these former nationalised assets?
My advice is to read the contract of sale.
But let’s be honest – if a courageous Government wants to nationalise something in the nations interests – it can. In the British case it is an expression of a sovereign government who have been democratically elected.
That is why the Government nationalised the Bank of England in 1946 according to its website. If it does not own the assets it can acquire them in the nations interest.
Labour aren’t the answer because any party which accepts paid work as somehow being normal has accepted the malevolent exploitation paradigm. I doubt that politics can deliver an answer as it seems to work best for politicians, not for the general public. I’d like to see an end to the need for growth, which means we stop using bank IOUs as money, which could arguably be brought about through politics, and a return to the domestic autarky of households of earlier centuries, probably to be achieved via technology. A household which doesn’t need to trade labour for bank IOUs to trade in turn for power, light, heat, food, clothing can resist the exploitation which currently passes for normal. I do accept, however, that what we’ll end up with after the end of neoliberalism will be whatever is fought for the hardest. Fans of the concept of the Fourth Turning, by the way, will be pleased to note it’s all bang on schedule. Going by their criteria, the new system, whatever it is, should be up and running by 2025.
Bill
There are real problems here
A) money is a government IOU, not a bank one
B) most people want the choice to work
C) the household is a very uncomfortable and for some a deeply abusive place
The workplace is similarly an uncomfortable and abusive place for many, and I’m not suggesting people not be given the choice to work, rather that they not be forced into it in order to be able to gather about them the stuff of life, food, clothing, shelter etc. Bank IOUs, government IOUs… I’m not sure. I think it’s more a case, at least in the early days, of government being forced into agreeing to accept existing BofE IOUs as legal tender, the aim being to avoid economic collapse, as so many were in circulation it was apparent they could not, in practicality, be backed by the gold they were suggested to be. I’m wondering if and when any specific point was when government started issuing them itself, perhaps by the Treasury of the day writing cheques to the departments of the day. I was going to ask something about this in the MMT questions, but decided I’d wait till the answers were in. I’ll come back to this, I expect 🙂
I hope to do more work i=on the MMT questions very soon
The day job keeps intruding…
In the interim, those curious about MMT might find this useful https://modernmoneybasics.com/facts/
It looks very good – who is behind it?
Looks like this guy https://patrioticmillionaires.org/2016/09/07/why-i-am-a-patriotic-millionaire-geoff-coventry/
I’ll take a read
But the ever- slippery Mr Wolf fails to identify that this demise of ‘democracy’ has been in parallel to ‘globalisation’….
So, logically, Brexit ‘deglobalisation’ has at least the potential to revive ‘democracy’ – which is shy people voted for it.
You can think that if you wish Linda
I think there were other factors in play as well
linda kaucher says:
January 24 2018 at 5:40 pm
“So, logically, Brexit ‘deglobalisation’ has at least the potential to revive ‘democracy’ — ”
For that to be right Mr Wolf:
a) has to be right about the antipathetic relationship between globalisation and democracy. Some aspects of globalisation are potentially a good thing. What has been foisted on the world is particular version of globalisation with a strong neoliberal agenda. All to do with centralisation of power and money (in the private sector) and little to do with collective responsibility and governance. (Quite the contrary in fact)
b) he has to be right about the Brexit fiasco having much to do with reversing the malign aspects of globalisation in any meaningful way. The Brexit narrative is about being unfettered in global markets whilst shedding obligations to collective governance.
I find it difficult to see the positive aspects of this proposition in terms of increased democratic accountability.
“Revive ‘Democracy’ ” suggests there was something good there in the first place that just needs a little watering and will bloom once again. We have representational government, not “democracy”. We have FPTP which as the ERS point out effectively disenfranchises the majority of the population; we have the second largest unelected legislative chamber in the world; we have a monarchy which propagates entitlement, patronage, inequality and reduces citizens to “subjects”; we have a media controlled by oligarchs which is far from free and fearless; a society increasingly unequal; a social security system castigated by the ECSR report as failing to meet international obligations; a political elite who have introduced over the last 50 year increasingly conservative-reactionary policies limiting workers’ rights, introducing intrusive citizen surveillance and other social policies inimical to a “democratic” society etc etc.
Our political settlement doesn’t need reviving, it needs to be pulled up and put on the bonfire.
Well I do.
For one thing, the power of the City of London over UK policy-making should be forced much more into the open without the fog of the EU.
There are loads of positives.
Aren’t people more politically engaged since then, talking Left political potential that hadn’t been heard for decades?
Gender issues are coming to the fore – again in the background for decades.
For starters
Brexit its not a book that is already written.
It will be what we make it, .
But deadshit negativity doesn’t help the process
I agree that neo-liberalism is a bankrupt philosophy and that our present system is unsustainable, but I can only see those same vested interests becoming more entrenched. Sure the economic system as we know it could collapse, but I suspect this will (at least initially) be to the advantage of those extremist and fascist forces, who could use the opportunity to seize power in many nations; aided and abetted by a frightened majority. We need only look at the rise of Trump in the U.S.. If progressive movements and parties fail to provide a viable alternative, then the population will turn to those populist, demagogic groups to ‘save’ them.
Do you think Trump will survive?
I don’t Richard. But sadly he’s not the worst. There are lot lined up behind him. And the damage these people will do before we wake up.
“Do you think Trump will survive?”
That depends on the relative power of the interest groups, and how threatened they feel.
[…] wing of politics who also has some knowledge of the real world is pretty worried right now. From Martin Wolf to the IMF via many a political leader who sees inequality stripping them of any residual electoral […]
Don’t forget there’ll be no renationalisation – the basis of Corbyn’s popularity – if we stayed within the EU or accepted its rules.
Something that ordinary people seem to have realised but not the metropolitan elite.
Just how do they square their remoaner position on that?
That’s not true Linda
And we all know it
Can you explain what you think is not true in what I’ve said?
It is well known that nationalised industries exist throughout the EU