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!