A piece here from today’s Guardian newspaper about the benefits to thousands of low paid workers in the social care sector of the recent rise in the national minimum wage. It is now called the ‘Living Wage’, which typically reflects the highly political nature of the policies of former UK finance minister George Osborne. His policy was simply a decent rise in the minimum wage, but of course he had to rename it. The name was stolen from those campaigning for an even higher minimum wage which would ensure that its recipients had enough income to live on.
There were fears that the level of the new Living Wage would damage the care sector in particular, which employs a huge number of low paid workers. But the new research suggests this has not come to pass. The pay bill has apparently risen by nearly 7%, and there has been some compression of wages at the bottom of the pay scale in the sector.
It should be noted that the majority of local councils commissioning social care have raised the fees they pay to providers so that the overall impact on society is partly redistributive, away from taxpayers and towards the low paid. But overall it represents a significant positive change.
Michael Pettis is a Professor at Peking University in Beijing, and writes lengthy but infrequent blog posts here. He is author of The Great Rebalancing, a fascinating take on global trade and financial imbalances as the cause of the 2008 recession and its aftermath and resolution. In this short video, he talks about the problems of Chinese private debt, inequality around the world, and the future of the Eurozone in the aftermath of Brexit, including its possible breakup.
“Currents of time swirling and eddying all about us, on the battlefields and in the military headquarters, in the factories and on the streets, in boardrooms and cabinet chambers, murkily at first, yet tending ever towards a moment of transfiguration in which pattern is born from chaos.”
J.M. Coetzee (1983), Life and Times of Michael K.
“The economic history of the developed capitalist world appears to be one of almost constant progress: inexorable growth, rising standards of living, rising productivity, and ever-improving health, well-being and welfare. Seen from afar, it is the system’s order, its internal coherence, which stands out.
Yet the closer one looks, the more haphazard it all seems. Individuals wander along entangled paths, propelled by obscure motivations towards some dimly imagined ends, crisscrossing and colliding as they act out their economic roles as buyers and sellers, bosses and workers, producers and speculators, employed and unemployed. Information, misinformation, and disinformation hold equal sway. Ignorance is as purposeful as knowledge. Private and public spheres are intertwined throughout, as are wealth and poverty, development and underdevelopment, conquest and cooperation. And everywhere there appears a characteristic unevenness: across localities, regions and nations; and across time, in the form of booms, busts, and breakdowns. Seen up close, it is the system’s disorder that is most striking.”
Anwar Shaikh (2016), from p.3 of Capitalism: Competition, Conflict, Crises
Michael Roberts, author of the recently published The Long Depression, is a Marxist economist working in the City of London, and he blogs here. Much of his economic analysis draws on Marx’s ‘tendency of the rate of profit to fall’ (TRPF) and its importance in his explanation of booms and slumps under capitalism.
The rate of profit so described is the average or economy-wide rate, so there is necessarily some debate when it comes to measuring and drawing implications from it, which I will not go into here.
This particular Marxist viewpoint holds that profit is vital to growth under capitalism since it provides the main source of funds for investment in productivity-enhancing capital. Without a sufficient rate of profit, investment will be weak, and hence growth in output, employment and productivity will be weak. Continue reading →
An interview from the Real News Network with Professor John Weeks of SOAS in London, which punctures some of the myths put forward by proponents of neo-liberalism. In short, he shows with a few examples that under capitalism markets and government need each other to function well. Some of the video is not the best quality, but stick with it. Weeks gave this interview in the wake of the publication of his book Economics of the 1%, a passionate rebuttal of modern mainstream economics, which he terms fakeconomics.
A connection between dialectics, in which everything is considered to be in the process of becoming (something else), and Chinese language and Daoist philosophy. This is a helpful way of thinking when analysing economic growth and development, drawing on Marx’s method, which in turn drew on Hegelian thinking.
“In Chinese, properties take a processual or verbal form. One cannot say that the grass is green but must say that the grass is greening…there is no absolute or simple distinction between noun and verb in Chinese. Metaphysically…in their thought one thing is always passing into something else.”
Roy Bhaskar (2016), From East to West, Odyssey of a soul, Second Edition
A number of rents, and the rent-seeking which sustained them, played a critical role in the development of capitalism in the East Asian countries. Not only was the creation of rents critical for primitive accumulation and learning, transfer rents were critical for maintaining political stability even though the economic implications of these transfers varied significantly. The role of rents in economic development is worth stressing in the aftermath of the financial crisis of the late 1990s. The depth of this crisis led many economists to link the immediate economic woes of the regions to the systems of rents and rent-seeking popularly described as ‘crony capitalism’. The implicit counterfactual to ‘crony’ capitalism is a ‘genuine and impartial’ capitalism of free markets, zero rents, fair market-determined returns for everyone, and a minimal state which only maintains a level playing field. However appealing such a mythical capitalism may be, our discussion has been concerned to establish that such a model is not relevant for developing economies, and perhaps not for any economy. The relevant distinction is between rent-seeking systems which are developmental and those which are crippling. The relevant policy question is to understand how one may transform into the other…
…The long-run relationship between rent-seeking and growth is of much greater interest. If growth requires the management of growth-enhancing rents rather than the abolition of all rents, high-growth countries will always have rents and will therefore inevitably have to live with rent-seeking. Globalization and liberalization will not change this fundamental economic problem, nor is globalization or liberalization likely to succeed if policy-makers attempt to proceed on the basis of inappropriate no-rent market models. The no-rent model remains compelling not because the evidence supports it, but because its policy implications are much simpler to understand. Our analysis suggests that identifying the conditions which have in the past been conducive for growth is a much more challenging task. The conditions which allow value-enhancing rents to emerge and which limit rent-seeking costs vary from country to country because countries do not have the same political conditions and do not follow the same technology trajectory. This is where a deeper examination of the historical evidence is important to warn us against falling for seductively simple theories. There is no evidence in Asia, possibly no evidence anywhere, of long-run development taking place on a no-rent basis. Instead, the policy challenge is to construct and reconstruct institutions and politics in developing countries to sustain developmental rents and rent-seeking while attacking value-reducing rents and rent-seeking.
Mushtaq H. Khan (2000), Rent-Seeking as Process, in M.H. Khan and Jomo K.S. (eds) Rents, Rent-Seeking and Economic Development
Productivity growth is essential to the prosperity of the economy. If it does not grow, then there is no room for wages and profits, as the two main categories of income, to grow together, so as to improve the material conditions of the majority. Of course, growth needs to create jobs as well, since those without employment cannot share in rising incomes, other than through out-of-work benefits which represent incomes redistributed from those in work. Employment in the UK has grown strongly since the recession, but wages have not, so that the economic ‘pain’ due to sluggish growth has been shared more fairly, with more people in work alongside stagnant wages. Continue reading →
A few years ago I set myself the task of reading the three volumes of Marx’s Capital, which I achieved, not without struggle. I fully admit that I found it difficult, and I am probably not the first. The writing style, translated from the original German, is sometimes hard to comprehend, and at times the same ideas are repeated over and over in different ways. But it contains many memorable phrases and profound insights too, so one doesn’t need to be a socialist to find the effort worthwhile.
Only volume one was completed in his lifetime, while Engels assembled volumes two and three from Marx’s notes after his death. I was greatly helped along the way by two books summarizing and discussing the contents: Ben Fine and Alfredo Saad Filho’s Marx’s Capital and Anthony Brewer’s A Guide to Marx’s Capital, both of which I can highly recommend. Continue reading →
Some of my readers may well be enjoying coverage of the Olympic Games in Rio de Janeiro at the moment, if that’s your thing; others may be fed up with it and doing all they can to avoid it. Yes, this post is about sport, but it is also about political economy and social science, whose practitioners have throughout their history debated the meaning of and relationship between the individual and the social in society. I want to explore the lessons for these subjects of countries such as Great Britain, which has done very well in last three Olympic Games in terms of medals won, and overall team performance. Continue reading →