Richard Wolff on Trump’s budget proposal

Economist Richard Wolff discusses in the video below Trump’s budget proposal, which aims to dramatically slash various benefits for many of the poorest Americans, cut taxes for the richest and ramp up military spending. It is unlikely to pass through Congress unaltered, and it is apparently somewhat fantastical in its economics, but it remains disgraceful.

I am not a socialist. In my view, social democracy, the mixed economy and a reformed capitalism which deliver widespread prosperity is surely an effective bulwark against revolutionary socialism. Indeed, in the early decades after World War II, this was more widely accepted in the West as part of the ‘soft’ fight against communism. If capitalism does not deliver the goods to the majority, it will lose legitimacy.

In a number of European countries, relatively strong unions which act as social partners with government and business, rather than as shock troops of the revolution, have helped to achieve both prosperity and a degree of social justice alongside individual liberty. There may sometimes be trade-offs between these goals, but they are worth shooting for together.

Fakeconomics and austerity: how did it happen?

keep-calm-and-join-a-trade-union“The enforcement of fiscal austerity qualifies as the single most important public policy consequence of the abandonment of economics in favour of fakeconomics. Acceptance of austerity by the public in almost every major advanced country is even more perversely impressive than the austerity itself. Anyone born after 1960 must find it hard to believe that once, long ago it seems, the belief in balanced budgets did not drive public finances, nor did governments agonize over and quake in breathless anticipation of the “verdict of financial markets” on their policy decisions.

The overthrow of rigor and common sense in what we once called the economics profession did not cause this seismic shift in the ideology of public policy. We can trace the chronology of causality quite clearly, especially in Britain and the US. The cause lies in the secular decline in trade union influence and the parallel rise in the power of capital. Aneurin (“Nye”) Bevan, tireless Welsh campaigner for the rights of working people, stated the danger succinctly. Unless the working majority organizes to prevent it, “it is an axiom, enforced by the experience of the ages, that they who rule industrially will rule politically.” In the twenty-first century we can replace “industrially” with “financially.”

John F. Weeks (2014), Economics of the 1%

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Some words of warning from Franklin D. Roosevelt

Biography-13-World-Leaders-Franklin-D-Roosevelt-SFThe following quote comes from a speech made to the US Congress in 1938 by Franklin D. Roosevelt. He had in mind the potential danger that can result from the accumulation of economic and political power by elite individuals and groups in society, and was speaking in the aftermath of the Great Depression, which was then followed by the horrors of World War II. His words ring true once again.

Unhappy events abroad have retaught us two simple truths about the liberty of a democratic people. The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to the point where it becomes stronger than their democratic State itself. That, in its essence, is fascism-ownership of government by an individual, by a group or by any other controlling private power. The second truth is that the liberty of a democracy is not safe if its business system does not provide employment and produce and distribute goods in such a way as to sustain an acceptable standard of living. Both lessons hit home. Among us today a concentration of private power without equal in history is growing.

Those wondering at the rise of Bernie Sanders and Donald Trump need look no further. FDR didn’t get it all right, but he made the case for state intervention to protect people against the instability and criminality that unfettered capitalism periodically produces.

Political turmoil and a new Prime Minister. Time for One Nation?


Theresa May. Image from ukhomeoffice via Wikimedia Commons

A new Prime Minister is on her way, starting tomorrow. This is the latest chapter in the political turmoil that has engulfed the UK since the vote for Brexit a few weeks ago. Theresa May, formerly the Home Secretary, is to become the UK’s second female PM. Now I am not a great supporter of things Tory, at least from the perspective of economic policy, but I was interested to read some excerpts from May’s speech which formally launched her campaign to become the next leader of her party. Of course, this was before the dramatic withdrawal of her only remaining opponent in the contest, Andrea Leadsom.

Some of the details of the speech can be found here. I know that skilled politicians are good at making the right noises to attract voters and ultimately win power. Her bid was to unite her party and the country in the aftermath of Brexit, which will be hard going. But some of the quotes from her speech could have been taken from speeches by Ed Miliband, the former Labour leader. Miliband championed a ‘One Nation’ Labour party, and policies which would aim to promote his centre left, social democratic vision of Britain. Continue reading

Bernie Sanders: democratic socialist or social democrat?


Senator Bernie Sanders

The results in yesterday’s Iowa caucus in the US, with the Democrat race between Hilary Clinton and Bernie Sanders virtually neck and neck led me to take a quick look at Sanders’ website. He claims to be a ‘democratic socialist’, which puzzles me.

Socialism is, as far as I am aware, much more of a dirty word in America than in much of Europe, or at least it has been. For sure there are socialists across the pond, but they have seemed to be much more in a minority than over here. Calling yourself a socialist brings an association with anti-capitalism and the history of socialist and communist regimes past and present. Compared with the UK, France, Germany etc, politics and politicians, whether Democrat or Republican, have in recent decades been to the right of their transatlantic contemporaries. Continue reading

Politics, institutional diversity and economic performance

A recent rereading of a 1995 chapter by the SOAS economist Mushtaq Khan, ‘State Failure in Weak States: A Critique of New Institutionalist Explanations’ has given me new hope that national economies can achieve their goals in terms of the material progress represented by economic growth and social justice. Continue reading