After Neo-Liberalism?

[butchersapron]

Perhaps. The reason I see for how it could happen is the destruction of returns on capitalist investment. We're already seeing this, with capital taking refuge in state bonds. So the economy tanks and the state sees that it is the only replacement for capitalist investment available. Even the tories are seeing this now, and it was a right-wing government in Japan that saw and responded to the same thing. Now the tories are responding in a rather crap way that won't be very effective, because they are still wedded to the old, failing model. But the failure of capitalist investment structures does leave room - not only room, but a necessity - for other kinds of investment to take their place, kinds of invesment that see zero return as worth doing. So how is zero-return worth doing? when it gives jobs, generates wealth and taxes. It is something a government has a self-interest in doing. And perhaps it is something that the rest of us might be able to influence too.

I don't pretend that there is some golden age of worker-owned businesses around the corner. But I do think the space for such things to develop in significant ways may open up as current systems fail.

This doesn't require old school tripartite systems with labour being offered a privileged position though. And more to the point, the state and capital, whilst being closely intertwined are not the same thing - and the latter has no interest whatsoever in zero-returns. It will happily push this sort of investment onto the state whilst it continues along it's neo-liberal path and continuing to pressure the state to do all it can to remove any obstacles to it doing so. I cannot see a path to social-democracy through increased state investment - esp if it's infrastructure investment that is simply going to remove the burden of financing these necessities from the shoulders of capital.

 

[butchersapron]

This is a very valid point. But surely the suppressing of wages is itself self-defeating, destroying demand. Isn't that the point about where massive personal debt arose in the last 30 years or so?

That's not got anything to do with what i said though -i was talking about changes in the world of work, how the working class is forcing capital into certain developments and how capital tries to get around this and so on. (And not really anyway, wage suppression has been great for capital and the state and helped hold off the current crisis for an extended period - from their perspective (and that of total capital rather than individual capitals) it's all win).

 

[deke t lefel]

Well this is the question that the thread is asking. If we examine how past compromises or fixes came about we will find that, for example, the social-democratic fix came about through a combination of factors Technical - deskilling produced the mass worker which did away with a class relation based on restrcicted access to skills, which then helped produce a political situation suited to bourgeois representative democracy and the incorporation of the political representatives of labour within the sphere of national and international power relations, and then an economic and technological increase in the amount of commodities produced and the democratic market leading to a further flattening of the way that capital functions that requires an integrated working class for all the above reasons.

Which would suggest that today, if we wish to uncover the outlines of future developments we might be wise to have a look at what is happening in the world of wage-labour, in the political representation of the working class and the functional requirements of capital. If you have a look at all these and can see a way that they lead back to classical social-democracy then i'd be interested to see it.

a reduction in the economic polarisation between the east and west, particularly labour, leading to tripartism out of necessity in the west

 

[butchersapron]

a reduction in the economic polarisation between the east and west, particularly labour, leading to tripartism out of necessity in the west

The introduction of area of relative privilege into the old third world and the development of areas of third world style poverty in the 'west' has been going on for two decades at least, and on the basis of neo-liberal conditions, of the heightened mobility of capital and of the effective sidelining of labour by both the state and capital, not by re-introducing advantages for labour via political and economic incorporation. I see no dynamic in this that leads to social-democracy, that requires it. In fact, talking of east and west in this way is just too crude to make any sort analysis such as that.

 

[deke t lefel]

The introduction of area of relative privilege into the old third world and the development of areas of third world style poverty in the 'west' has been going on for two decades at least, and on the basis of neo-liberal conditions, of the heightened mobility of capital and of the effective sidelining of labour by both the state and capital, not by re-introducing advantages for labour via political and economic incorporation. I see no dynamic in this that leads to social-democracy, that requires it. In fact, talking of east and west in this way is just too crude to make any sort analysis such as that.

one of the reasons for the proliferation of neo-liberalism in the west was the availability of inexpensive products from the east, creating a false sensation of success. The changes in that dynamic may bring about a greater respect for labour within the west

 

[littlebabyjesus]

I cannot see a path to social-democracy through increased state investment - esp if it's infrastructure investment that is simply going to remove the burden of financing these necessities from the shoulders of capital.

Depends how it's done. For instance, at the moment, the Tories are offering govt guarantees to private businesses. We'll see if they get away with that, or even if it makes any significant difference. But if you're looking at a society and trying to work out how that society works, probably the most fundamental question that you need to ask is 'who owns what?' If state investment in infrastructure were done in such a way that ownership of that infrastructure remained with those who financed it, that would change the patterns of ownership in a significant way. If capital does not own the infrastructure, capital is weakened.

 

[butchersapron]

one of the reasons for the proliferation of neo-liberalism in the west was the availability of inexpensive products from the east, creating a false sensation of success. The changes in that dynamic may bring about a greater respect for labour within the west

Not really, it was the increase in global capital mobility (why this came about is one of the things that needs looking at to come up with a half-decent map of where we are and where we are going) that put pressure on local and national administrations to undermine working conditions, to do away with the requirement for capital to fund social reproduction, to remove wage and other guarantees that then allowed the series of conditions for those cheap commodities to be produced (construction of labour markets, integration of transport networks and other infrastructure, undermining of means of reproduction/capitalisation of agriculture etc). This was in a nutshell done on the basis of degrading the conditions of labour - what in the successful degradation of those conditions would lead to 'greater respect for labour in the west'? Why would it?

 

[butchersapron]

Depends how it's done. For instance, at the moment, the Tories are offering govt guarantees to private businesses. We'll see if they get away with that, or even if it makes any significant difference. But if you're looking at a society and trying to work out how that society works, probably the most fundamental question that you need to ask is 'who owns what?' If state investment in infrastructure were done in such a way that ownership of that infrastructure remained with those who financed it, that would change the patterns of ownership in a significant way. If capital does not own the infrastructure, capital is weakened.

If capital can get the state (effectively labour) to finance and pay the costs of non-profit making infrastructure then it's laughing, not weakened. That has been the aim of neo-liberalism for the last 3 or so decades.

 

[deke t lefel]

Depends how it's done. For instance, at the moment, the Tories are offering govt guarantees to private businesses. We'll see if they get away with that, or even if it makes any significant difference. But if you're looking at a society and trying to work out how that society works, probably the most fundamental question that you need to ask is 'who owns what?' If state investment in infrastructure were done in such a way that ownership of that infrastructure remained with those who financed it, that would change the patterns of ownership in a significant way. If capital does not own the infrastructure, capital is weakened.

surely infrastructure is the capital?

most, if not all infrastructure, is financed and maintained by workers (either through taxes or rates)
it's a question of whether workers will continue to allow capitalists to make a profit out of the arrangement or whether capitalists will make a loss due to the expense of delivery to keep the system going

 

[littlebabyjesus]

Sorry, yes, infrastructure is capital. And if it isn't owned privately, that is a very significant thing. If private capital won't finance it, and relies on public financing, it is weakening itself - it is loosening its hold.

 

[littlebabyjesus]

If capital can get the state (effectively labour) to finance and pay the costs of non-profit making infrastructure then it's laughing, not weakened. That has been the aim of neo-liberalism for the last 3 or so decades.

All infrastructure has the potential for profit, though. Isn't that the point of the last 30 years? Owning a monopoly or near-monopoly provision of an essential service has to be just about the easiest way to make money going.

 

[butchersapron]

All infrastructure has the potential for profit, though. Isn't that the point of the last 30 years? Owning a monopoly or near-monopoly provision of an essential service has to be just about the easiest way to make money going.

I don't think so no. The reason that the state took over lots of infrastructure was because capital was not investing in them at the required level due to the low rate of profit and high cost of entry. So in order to safeguard total capital against the failings of individual capitals the state stepped in, but made the price of this move that they were then financed by a general tax on total capital. The story of one significant part of neo-liberalism is the attempt to reduce or remove this latter part whilst still leaving the state (read labour) as paying for it, as paying to produce the conditions that capital requires to exploit labour (and this extends to wider social reproduction and other conditions as well, not just technical infrastructure).

 

[littlebabyjesus]

Ok, that makes sense, but are we not back at the start of that process, with capital not investing in infrastructure and the state the only alternative to step in? Also, state-built infrastructure has been sold off massively, of course, to private money. Once built, it is massively lucrative to own, surely.

 

[butchersapron]

Ok, that makes sense, but are we not back at the start of that process, with capital not investing in infrastructure and the state the only alternative to step in? Also, state-built infrastructure has been sold off massively, of course, to private money. Once built, it is massively lucrative to own, surely.

I thought that your suggestion was that the state is now likely to invest in non-profit making infrastructural development and that for some reason this might form the basis for old school style corporatism? If the infrastructure makes a profit then there is no need for the state, and if there is no need for the state then there is no need for the relative political and economic privileging of labour or its representatives that the suggestion contained. It's just capital, capital operating.

 

[littlebabyjesus]

My suggestion was that, generally, private investment returns are tending towards zero, which is a massive problem for private capital. And then the state does need to step in. Now yes, the reason the state steps in is because there isn't the rate of return for private investment, but the result of that is - or could be - a whole load of stuff not owned privately. That is the crisis of capital currently unravelling, surely - that it isn't finding a profit incentive in things that need to be done; that, left to its own devices, it would simply destroy itself.

And I'm not really suggesting corporatism. I'm suggesting something else - the sidelining of private capital altogether.

 

[deke t lefel]

I thought that your suggestion was that the state is now likely to invest in non-profit making infrastructural development and that for some reason this might form the basis for old school style corporatism? If the infrastructure makes a profit then there is no need for the state, and if there is no need for the state then there is no need for the relative political and economic privileging of labour or its representatives that the suggestion contained. It's just capital, capital operating.

that is the question, can capitalism continue operating at a profit?

infrastructure requires maintenance, which requires labour backed by machinery, or just labour

 

[butchersapron]

My suggestion was that, generally, private investment returns are tending towards zero, which is a massive problem for private capital. And then the state does need to step in. Now yes, the reason the state steps in is because there isn't the rate of return for private investment, but the result of that is - or could be - a whole load of stuff not owned privately. That is the crisis of capital currently unravelling, surely - that it isn't finding a profit incentive in things that need to be done; that, left to its own devices, it would simply destroy itself.

And I'm not really suggesting corporatism. I'm suggesting something else - the sidelining of private capital altogether.

Private investment returns are not tending towards zero though. Don't confuse a period of historically low average rates of profit with the idea that profits are not being made - they are. And if you look globally, they are being made on an unprecedented basis in terms of breadth. Donth't confuse a covert investment strike with profits not being made - if anything it shows that there is a huge mass of surplus capital that has grown precisely due to prior and ongoing profit making. Classically, the mass of profit being made is still expanding.

The state owning and operating infrastructure on behalf of capital simply is not a problem for capital - even less so when it has managed to shift the cost of establishing and maintaining this infrastructure back onto labour via the state. That represents a huge victory for capital over labour and not an unraveling, whilst allowing for a increased productive investment globally when conditions allow.

 

[butchersapron]

that is the question, can capitalism continue operating at a profit?

infrastructure requires maintenance, which requires labour backed by machinery, or just labour

So does non-infrastructure. Yet i don't see any moves towards social-democracy in those sectors. I see the ongoing destruction of the remains of the post-war social-democratic fix.

 

[littlebabyjesus]

- if anything it shows that there is a huge mass of surplus capital that has grown precisely due to prior and ongoing profit making.

That is true. I'll think about that. But again, finding investment globally in a way that suppresses wages in the places you want to sell your stuff creates a crisis in demand. How is that solved? Surely this is a massive question for capital at the moment. On another thread, someone suggested - I think quite reasonably - that strong unions keeping wages up actually do capital a favour for this very reason. They don't allow it to eat itself.

 

[butchersapron]

That is true. I'll think about that. But again, finding investment globally in a way that suppresses wages in the places you want to sell your stuff creates a crisis in demand. How is that solved? Surely this is a massive question for capital at the moment. On another thread, someone suggested - I think quite reasonably - that strong unions keeping wages up actually do capital a favour for this very reason. They don't allow it to eat itself.

Well, you construct the world market. Precisely as they are doing.

edit: oh yeah, and you financialise domestic economies and commoditise social reproduction in a series of new enclosures.

 

[deke t lefel]

So does non-infrastructure. Yet i don't see any moves towards social-democracy in those sectors. I see the ongoing destruction of the remains of the post-war social-democratic fix.

oh well, time will tell,
have a good evening

 

[butchersapron]

oh well, time will tell,
have a good evening

Thank you - off on my hols in the morning.

 

[butchersapron]

Btw, i would recommend two Paul Mattick books on this: Marx and Keynes: The Limits of the Mixed Economy and Economics, Politics and The Age of Inflation (spent months getting them scanned and on-line as well).

 

[Gmart]

[...]What about the folks who don't have the choice to put food on their table? Where do they fit in? Free to starve, free to choose![...]

There should be safety nets to provide for the worse off in society.

[..]contempt for those less able in their choice and freedom than you.

I feel no such contempt. safety nets take resources, which come from taxation, this is part and parcel of a system of safety nets, and nothing I said indicated anything so dramatic as your post describes.

Me: The law of the jungle was stopped the moment we invented a system of laws to live by.

Was it? Or did that system of laws itself develop from the unwritten 'law of the jungle'? Social animals live by certain rules. They have to, otherwise their society would break down. Among baboons, for instance, it is utterly socially unacceptable to injure an infant, so much so that they may hold up an infant in front of them to stop another adult from hitting them.

I would argue that there is consciousness in baboons similar to ours, but with written language there is a more defined system and an implicit acceptance that the world is better if we accede to the rule of law, which means putting the individual second to society as a whole.

Law has always played this dual role - regulating behaviour for the benefit of all, but also regulating behaviour in such a way as to preserve and reinforce the hierarchical structure. And these two imperatives may come into conflict - but where they do, unsurprisingly the preservation of the structure, of order, wins out as the prime directive of law enforcement.

The prime directive of the system is to avoid and prevent the violence that is inherent in the 'law of the jungle' world. For example territory is fought over by many animals and is a waste of such resources - with a system of ownership this energy is not wasted, and the winners are not just the most violent/biggest, to the advantage of all.

[...] The reason I see for how it could happen is the destruction of returns on capitalist investment. We're already seeing this, with capital taking refuge in state bonds.[...]

Sooner or later the low returns on bonds, and the lower price of the shares on the stockmarket will entice those who wish to invest back. There will always be certain 'sunrise' industries which are worth investing in. Microsoft, Apple, and commodities which are getting scarcer as time goes by.

People want to hold assets, and this is a key freedom for I would say the majority, and ignoring this fact is alienating and prejudicial.

[...] the failure of capitalist investment structures does leave room - not only room, but a necessity - for other kinds of investment to take their place, kinds of investment that see zero return as worth doing. So how is zero-return worth doing? when it gives jobs, generates wealth and taxes. It is something a government has a self-interest in doing.[...]

As BA points out, only the government could do this because there are no returns to attract finance. However this leaves room to encourage people to set up cooperatives, renationalise and provide no-frills services for survival and public services. Why are bus services so poor? Because the government ducked out of providing them. They could be run as a cooperative and the government could help to build up such a sector.

[...]deskilling produced the mass worker which did away with a class relation based on restricted access to skills, which then helped produce a political situation suited to bourgeois representative democracy and the incorporation of the political representatives of labour within the sphere of national and international power relations, and then an economic and technological increase in the amount of commodities produced and the democratic market leading to a further flattening of the way that capital functions that requires an integrated working class[...]

The discovery of division of labour and hierarchy as an efficient method to produce products for profit certainly required workers who had limited skills and who were thus restricted in their options leading to a low wage.

This is an argument for a system which encourages better education and the opportunity to enskill oneself. However even in the best systems there will be some who choose not to do so, sticking with driving a taxi (for example) or other low skilled jobs. If individuals did not choose to do so then these services would become more expensive making these areas more attractive, but also risking the invention of an automated car which is run by a computer.

Technology is tending the world towards a position where either you have skills which are valuable, or you live on benefits. There would be pressure on those who choose to be on benefits because those who pay tax will ask why their tax burden should be higher when they chose to use the system to enskill themselves with a set of valuable skills.

Two additional points:

1. there is a sordid competition to attract the rich, even though they will tend to leave their assets in stockmarkets and banks which pay the highest return.
2. there is a vile competition to see who can get away with paying/treating their population the most competitive wage worldwide. This is exacerbated by currency differentials and the corporate sector will take advantage of the situation if governments and unions do not cooperate.

Cooperation to close loop holes for tax for example would clip the wings of the corporate/financial sectors, as would 'leveling the playing field' worldwide for example consistent world limits on pollution.

Worldwide free trade would raise up millions out of poverty in Africa and Latin America for example, but this would cause what Schumpeter called 'creative destruction', as 'sunset' industries which are unable to compete fall and investment moves into sunrise industries.

[...]to do away with the requirement for capital to fund social reproduction[...]

This is a duty of government, not 'capital'. Government taxes and then spends these resources on the services that are required.