Wednesday, October 1, 2014

Fascism is based on lies

“Outraged by the carnage of World War I, [Ezra] Pound lost faith in England and blamed the war on usury and international capitalism. He moved to Italy in 1924, and throughout the 1930s and 1940s embraced Benito Mussolini's fascism, expressed support for Adolf Hitler and wrote for publications owned by the British fascist Oswald Mosley.”

Wikipedia, Ezra Pound

Pound “blamed the war on usury and international capitalism”, as did all Fascists.
However, 30 years later the German historian Fritz Fischer proved that the war had been caused, not by usury and international capitalism, but instead by Germany’s relentless militarism and overweening ambition.

Fritz Fischer (1908-1999) conclusively demonstrated in the 1950s that Germany alone was to blame for the outbreak of WWI.  "Fischer was the first historian who examined all of the Imperial German government archives in their entirety and as a result ... instantly rendered obsolete every book previously published on the subject of responsibility for the First World War".

So fascism was based on an assumption that was later proved to be false.

This is the sort of preparatory work Pound performed for the few years leading up to his decision on who was to blame for WW 1:

”… in January 1917, he had the first three trial cantos, distilled down to one … published in Poetry.[66] He was now a regular contributor to three literary magazines. From 1917 he wrote music reviews for The New Age under the pen name William Atheling, and weekly pieces for The Egoist and The Little Review – many of the latter directed against provincialism and ignorance. However the volume of writing exhausted him and he feared he was wasting his time writing outside poetry,[67] exclaiming that he "MUST stop writing so much prose".[68]

In other words Pound’s political ideas were bullshit. They were based wholly on primitive instincts and whim, not on any kind of research or reflection.

Ezra Pound is a shining example of blinkered ignorance whimsically proclaiming supposedly profound truths designed to turn society into a wretched zoo. 

Saturday, March 15, 2014

New Progressive Political Economy

REPLY to "A New Progressive Political Economy"
A New Progressive Political Economy, by David Sainsbury
Note: When I dashed off this review i was labouring under the misapprehension that D. Sainsbury was American. Since then I have learned that he is British. However, since Britain  and the US are both dominated by essentially the same ideological constraints, my remarks remain essentially accurate.
Firstly I wish to make clear that I basically agree with ninety per cent of the policy recommendations in D. Sainsbury’s article A New Progressive Political Economy.
However I find grave flaws in the way he presents his ideas. These flaws consist in a concerted attempt to perpetuate the pernicious ideology of the ruling classes, even while making a few concessions in the sphere of practical economic policy.   
The defects in Sainsbury’s article can be classified under several main headings:
1.       Gross ignorance of the history of economic thought. It starts with the title “NEW Progressive Political Economy”. But NONE of the ideas he presents are new.  Some of them can even be found in the 1858 edition of Principles of Political Economy by John  Stuart Mill, the last great thinker of the Classical School of English economic theory [which was soon supplanted by its nemesis the NEO-Classical School, that contradicted its basic approach and prepared the terrain for Neoliberal madness]. Other “new” ideas that Sainsbury mentions were propounded in the 1940s and 50s by the German liberal economist Walter Eucken, who greatly influenced West German economic policy between 1948 and 1973 [i.e. the German economic boom period].
This abject ignorance of the history of economic thought is the result of the fact that economics programs at American universities do not offer courses in the history of economic ideas.  This amazing lapse turns most American economists into lobotomised zombies incapable of perceiving even gross differences among various theoretical constructs, since most economic ideas are not value-free statements of fact, but instead are formulated in terms of concepts that have well defined historical pedigrees and reflect ideological conceptions that must be made explicit for the sake of clarity.
2.       Failure to designate neoliberal economic thought as an ideological venom secreted by the parasitical financial oligarchyNeoliberalism is  the bankster ideology par excellence, carefully fomented and propagated over many decades by the academic lackeys of banksterism, one of whose most grovelling exemplars is Thomas Sowell. The effect of neoliberalism is to blur the distinction so stressed by Classical economics [and so carefully obscured by Neo-Classical economics] between productive and unproductive economic endeavours, which matches the distinction between productive social classes and parasitical social classes. Michael Hudson explains this paramount distinction in some of the many enlightening articles to be found on his blog at
3.     Ethnocentric preoccupation with specific issues affecting the United States. This would not be a problem if he only bothered clearly to label these issues as American issues. But instead he gives the mistaken impression that they are global issues. This too is a blatant sign of ignorance.
“… egalitarianism is not a popular policy even for many low-income people” [that may be true in the Benighted States of America, where free-market libertarian twaddle has penetrated every sector of the population] . “In my experience, trade unions are much more interested in wage differentials than in a simple policy of equal pay for all” [More of his ethnocentric malarkey].
4.       Sainsbury repeats, zombie-like, the mantra of “markets when recommending “an economic system in which most of the assets are privately owned, and markets [my stress] largely guide production and distribute income “. What KIND of markets, you lamebrain? [See Walter Eucken]. As I never tire of explaining, “markets” per se are a guarantee of NOTHING AT ALL. Classical economists took great pains to enumerate the conditions under which markets assure optimal economic outcomes for all participants, i.e. all members of society. ONLY COMPETITIVE MARKETS assure optimal results.[1]  Moreover contemporary economists like George Akerlof, Joseph Stiglitz et al  have discovered new sources of market failure that Classical economists failed to detect, namely those explained by their new field called “Economics of Information”.
5.       Sainsbury perpetuates harmful myths that assert a supposed neutrality of government economic policy. He recommends that “governments abandon the belief that they have no role to play in the economy”. As Dean Bakes so ably explains, the existing distribution of income and wealth is the result of conscious and deliberate efforts to expose the American working class to the chill winds of international competition, while carefully protecting doctors and other privileged groups from similar outrages. “The recent financial crisis was made far worse by profound institutional failures, such as the high level of leverage that banks were permitted to have.” I fully agree with the content of Sainsbury’s statement, but the wimpy expression “that banks were permitted to have” conceals the ugly fact that the banksters a.k.a the parasitical financial oligarchy [or the Wall Street Hyenas, if you prefer] ARE RUNNING THE SHOW. Every single US Secretary of the Treasury in living memory has been a top Wall Street plutocrat, inducting straight from his main gig of looting the world economy’s wealth.  The correct expression is not “that banks were permitted to have” but “that banks seized by subverting and corrupting the democratic process”. As Michael Hudson perceptively notes, “The financial sector is a parasite wrapped around the real economy and sucking it dry.”[2]  An indispensable source on the wiles of banksterism is Nomi Prins, like Hudson a former top Wall Street apparatchik, who popularised the use of the term "looters" to describe the leaders of the financial industry. Her blog is an eye-opener. 
6.       Moreover Sainsbury parrots some conventional bromides that have long been exploded or at least called into question. there is a real tradeoff between equality and economic growth.” Okun's 1975 conclusions about the "leaky bucket" of redistribution has been relativised in terms of various political variables by the recent paper "Redistribution through a leaky bucket: What explains the leakages?" by Fabio Padovano and Gilberto Turati, online. 
As a result of all these severe and by no means coincidental defects, David Sainsbury must be classified as nothing less than a Trojan Horse in the field of progressive economic thought. Whether he is aware of it or not, Sainsbury is a member of that treacherous fifth column that releases progressive-sounding ideas wrapped in sound bites that perpetuate the parasitical financial oligarchy’s  ideological stranglehold  on the world of economic ideas. A stranglehold that consolidates and justifies its stranglehold on society and on the economy.

[1] I must qualify this statement by acknowledging that monopoly is not always a bad thing. However IN GENERAL monopoly is indeed a very bad thing, and any exception to this general rule should be explicitly set forth every single time any monopolistic arrangement is excused or justified. That means that the empirical and theoretical justification for any specific sort of monopolistic arrangement must be completely set forth.
[2] It is a well known fact that many of the most ruthless looters, like President  Clinton’s Secretary of the Treasury and CEO of Shiticorp, Robert Rubin, are ethnic Jews.  However, this does not prove that Jews are evil, but merely that many Jews are exceedingly clever. For some of the parasitical financial oligarchy’s fiercest  critics, like economists and Nobel prize-winners Paul Krugman and Joseph Stiglitz, ARE ALSO ETHNIC JEWS!

Thursday, February 20, 2014

Those bungling capitalists!

By Carl Stoll

A review of “Chávez Decaffeinates Venezuela. Coffee shortages predictably follow his price controls", by Mary Anastasia O'Grady, Wall Street Journal, May 3, 2010

Author’s note: It is not my intention in this review to defend President Hugo Chávez’ nationalization of the coffee plantations. On the contrary, I agree with Ms. O'Grady that price controls are useful measures only in emergency situations, not as instruments of steady economic policy.

Firstly, Ms O’Grady inexplicably confuses central planning with price controls. These two sorts of state intervention in the economy are both deplorable, but should be kept analytically separate because their economic effects are different, as pointed out by Ludwig von Mises in his works A Critique of Interventionism and Middle of the Road Policy Leads to Socialism.

Ms O’Grady cites a prominent economist, the late Milton Friedman, to the effect that governments are always incompetent bunglers. Milton Friedman was undoubtedly a very talented economist and much of what he wrote is very sensible indeed. His arguments against a gold standard, his critique of federal regulatory bodies as artificially imposed cartels, and numerous other positions he espoused are well worth reading and have held up well against the ravages of time and fashion. .

Nonetheless Mr. Friedman had an unfortunate proclivity for dogmatism when it came to the issue of government participation in the economy. This proclivity drove him to propagate what can only be called blatant and horrendous lies. Mr. Friedman’s sleazy record on this score is exposed in excruciating detail by Elton Rayack in his book Not So Free to Choose: The Political Economy of Milton Friedman and Ronald Reagan, published by Praeger in 1987. Rayack cites claims from Friedman’s works that are patently ridiculous and are obviously purely ideological secretions lacking any empirical basis whatever. For example Friedman claimed that Japan’s 19th-century industrialization was driven by private entrepreneurs, whereas the most cursory glance at Japanese economic history reveals that the state played the decisive role in every single stage of Japanese economic history since at least 1850! And that is but one example of many.

Consequently I am not terribly impressed by one more Friedman quote badmouthing government.

I admit that governments often make blunders. However the government is not the only party guilty of mismanagement. In the article "America the Resilient. Defying Terrorism and Mitigating Natural Disasters” by Stephen E. Flynn, that appeared in the March/April 2008 edition of Foreign Affairs, I read the following:

“In 2005, after a review of hundreds of studies and reports, the American Society of Civil Engineers issued a scathing report card on 15 categories of infrastructure: the national power grid … received [a] D … the best grade, C+, went to bridges …”

The US power grid is owned and operated by power companies, the great majority of which are privately owned. According to National Public Radio, "The U.S. electric grid is a complex network of independently owned and operated power plants and transmission lines. Aging infrastructure … has forced experts to critically examine the status and health of the nation's electrical systems.”

On the other hand US bridges are almost without exception government property.

How do you explain that, according to the American Society of Civil Engineers, in 2005 the infrastructure belonging to and maintained by the government was in better shape (score: C+) than the infrastructure belonging to and maintained by private enterprise (score: D)?

Don't bother to reply. I know the answer already. My many years of researching the issue of private vs. public ownership of the means of production have persuaded me that the slogan “the government can't do anything right” has a certain basis in reality, but it is by no means a universal rule.

Furthermore I have concluded that private enterprise is guilty of just as much incompetence, waste and sundry other misdeeds as the government.

Blaming the government for everything is merely a right-wing hobby, very much cultivated in the US, where it has become a kind of folk religion.

The US is perhaps the only industrial country that lacks an integrated national power grid. Those bungling capitalists have been extremely negligent about connecting the East with the West, and Texas has its own separate grid! (At least when I researched the matter in 2003, links among those three segments were both scarce and feeble.)

If the power grid were run by the government, as I think it should be, the US would undoubtedly have been provided with an integrated power grid many, many years ago. Like Mexico, for example, where electric power was a state monopoly for many years.

I believe that judgments on economic phenomena should be based on meticulous study of the facts and not on right-wing propaganda à la Milton Friedman.

Libertarians’ flawed economic concepts

Concept of property
Your libertarian argument based on property rights is utterly conclusive, because it is purely logical, being based on the definition of the term “property”.
However I reject your definition of the term “property”. Property is a social institution. Its definition must be adapted so as to maximise the welfare of society as a whole – without however despoiling the proprietor, which would discourage productive efforts. 
Private property exists only thanks to the vigilance of the state. Private property can be enjoyed only thanks to the provision of infrastructure, which in practically all historical instances has been provided by the state. The very concept of private property is defined by the state in its laws.
You attempt to define property ahistorically on the basis of an abstract morality that fraudulently claims to have no social or historical roots. Such a claim cannot be taken seriously.   

Defining property
You call the state a parasite because the state doesn't respect private property. However private property was created and defined by the state and is protected and maintained by the state. Without the state, private property does not exist. How can you oppose private property on the one hand to the state on the other as if private property were an independent entity unrelated to and prior to the state?
Moreover, you call the state a parasite because it encroaches on the private property that it created. However parasitism clearly implies harmful activity, activity that is pernicious to others, in this case to property owners.
To make this epithet stick, you must prove that the net effect of taxes and other state encroachments on private property is to reduce property owners’ wealth (or society’s wealth, or both).
But taxes are used among other things to pay policemen’s wages. If there were no police, property owners would be wiped out in 24 hours by bands of roving looters. So you cannot be demanding the abolition of the police. Therefore you must be implying that the state continue to maintain and defend private property for free, without charging any of its expenses to property owners. In that case, who shall pay the expense of defending property owners’ wealth?
Your theory seems to demand the existence of a class of persons who own no property, from whom the state should extract the revenue required to pay the costs of defending property.
Thus your theory of property seems to require a slave class without property rights.
The next logical step is to say, with Proudhon “Property is theft.”

Different kinds of property
Stating the issue of property as a moral question, i.e. right or wrong, is unacceptable.
There are many different sorts of property with different economic characteristics. Some assets are fixed in amount, like land, while others are easily multiplied, like human capital.
To apply a one-size-fits-all standard to these different forms of wealth would mean to restrict the state’s ability to tax them differently depending on the different effects that taxation has on them.
Many sorts of wealth are unearned. Their possessor has done nothing to earn his assets except being at the right place at the right time to collect a windfall, or has obtained his wealth through monopoly practices or by inheritance. Taxing these assets at high rates does not discourage productive efforts. Consequently they should be taxed at high rates.
The value of land is composed of the improvements that the landowner has made plus the innate value of the land that depends on extraneous factors that the owner cannot influence. This latter part should be taxed at a 100% rate.

Free-market ideology
Free-market ideology carefully avoids discussing the conditions necessary for markets to be efficient transmitters of information in the Hayekian sense.
Moreover it ignores the socio-political framework necessary for markets to exist and operate properly. Consequently free-market ideology simply fails to address fundamental issues and its conclusions are therefore irrelevant.
All the works you cite suffer from a fundamental flaw, namely that they fail to take into account numerous defects of the market, some of which are preventable and other are not.
1. Preventable market defects are monopoly, fraud, coercion and perhaps others. Any of these phenomena makes the price diverge from the competitive market price and renders the benefits of markets illusory to a greater or lesser extent.
I admit, however, that monopolies can have advantages.
The only way to prevent these defects is through government action. Government is conceived of, in this context, as a referee that sets and enforces rules and is itself not motivated by the desire for commercial gain.
2. Market defects that are not preventable are public goods and externalities. Here again the government must step in to assure the common good.
The concept of public goods is based on the concept of exclusive enjoyment, i.e. the owner’s ability to prevent others from enjoying use of his property. Goods that enable exclusive enjoyment are called private goods. Those that do not are called public goods.
Markets work well only for private goods. Public goods must be provided through non-commercial mechanisms, i.e. non-profit associations, charities or government. Free-market ideology does not address the issue of public goods. Consequently its conclusions are irrelevant.
Theoretical discussion has limitations. A more conclusive method of ascertaining the issue of whether and to what extent government intervention in the economic sphere is beneficial or otherwise is empirical research of historical cases of government action. The fact that no free-market enthusiast has ever bothered to research empirically the many cases of government action is itself an indictment of free-market ideology. I, by contrast, have researched the development of the welfare state in a number of European countries and concluded that the welfare state – if well run -- is a thoroughly beneficial institution in advanced industrial societies, which greatly increases the standard of living and assures social and political stability.
An example: the health care system in the US and in other industrial countries
In the US the health care system is highly regulated. However, this regulation cannot be considered a restriction on the freedom of action of the profit-making firms involved in the health-care industry, for the simple reason that all regulation in the industry is drafted by those profit-making firms by means of their puppets in the legislatures. Consequently the inefficiency of the US health care system cannot be attributed to government regulation as such. On the contrary, the US health care system is designed to facilitate profit-making by the firms involved.

The US health care system is a scandal, a hazard to public health. Although the US spends a huge share of its national income on health care, Americans’ health is far worse than that of comparable industrial countries. The reason is obvious: those countries have a national health care system run by public bodies and the US does not. The public bodies are not motivated by profit, but by the goal of improving public health.
The data are available in many places.