Plausible Basis for Rents

The book I’d like to write is Plausible Basis for Rents. It would have two parts, one a scholarly contribution to Political Sociology, and the other a sef-hep commercial bookstore book for people around the world who want to get in on the American Confidence Man action.

Advertisements

MMT as a tactic toward challenging rentier capitalism and its production of social and ecological crises

We are dominated by rentier capitalists, see here and here. That is why we are unable to pursue ecologically-rational and socially-rational policy changes. One tactic forwarded toward changing this rolling crisis is MMT . After all, given climate change is such a crisis that we’re being asked to to build nuclear plants and shoot people onto Mars, we should be able to tackle an extremely problematic social group we host, the rentier capitalists, coordinating capital and enforcing the accumulation-maximizing policy and institutions behind climate crisis.

People against MMT argue that capitalists create value or wealth, and states are totally epiphenomenal to that. They argue that if states–even the United States, the origin and capitalist-trusted protector of the global currency–ignore capital strike (the irrational diversions from managing liquidity for productive investment, including diverting  privatized wealth to rivalristic speculative claims on public wealth and future worker income; paying off a guard-dog layer cake of police, war, comms, and FIRE rentiers for their cooperation; hoarding; and so on) and strategically print money to fund socially- and environmentally-rational production, that will structurally cause inflation. These finance spokesgentlemen are arguing that financial rentiers are society’s only protection from price gouging–that is to say, workers demanding a larger share of society’s wealth, “forcing” global capitalists to fight “back” with price gouging (as well as asset-inflationary privatizations of public wealth).  Yes, that is a protection racket. But does the state today, particularly the American state, really have no capacity to modify financialized capitalism’s mafioso imposition?

Not only labor and appropriated ecological- and human-organized work provide the security underlying rents. Also states, particularly that old labor camp prison guard to the world, the United States, play a rather central role in often-forcibly securing the wealth and productive capacity that also is crucial to providing the underlying security for the capitalist class’ rivalristic claims on all that wealth. I think the anti-MMT arguments are a whole theoretical hodge-podge (A handful of class-technocratic warrior neoclassical economics! A dash of romantic structural Marxism! Who cares if the assumptions clash? We’re living in capitalism!) mess of marketeering junk on behalf of finance and against ecological and social change. But there are still important concerns to be worked out, and these involve high-stakes political strategy.

The main thing to recognize about inflation is, all capitalist theory aside, inflation is not necessarily structurally determined. Inflation is also a manipulable political tool for controlling states and territories through populations. In capitalism, capitalists have many degrees of strategic freedom. Highly-coordinated business has strategies besides capital strike. These financially-coordinated capitalist strategies include the capacity to raise prices–to induce inflation until the working class and any working-class accountable state institutions cry uncle and submit. Finance is the organizer of capitalists. We live in an era of financial penetration and domination.

Nixon’s corporate pricing board experiment, and capital’s subsequent refusal to cooperate, showed this to be the case. On the other hand, Nixon was unwilling to get back in there and use the state to bring capitalists back to heel because Nixon was an ideological inegalitarian and pro-capitalist. (And also, because capitalists and their police state are a mafia, Nixon was probably threatened with assassination, or even, like, job loss. JK! Kinda.)

MMT is structurally correct–state debt as a limit is a moral and political variable in the country producing and circulating the global currency.  Implementing policy based on MMT, particularly in a country of exorbitant privilege, could be feasible. But history has shown that the problem of implementing MMT -backed policy simply would be: Is there a way to disrupt or outmanoeuver finance’s capacity to coordinate capitalists to choke out MMT-fueled egalitarian and ecological reform, such as The Green New Deal?

This problem is all Kalecki: I am assuming that capitalists value above all (their ultimate use value is) control over the surplus and the conditions for the reproduction of exploitation and appropriation. So capitalists, particularly those who rely on the US for their wealth appropriation, have insufficient incentive to support pro-ecological and pro-social change. They would much rather wreck the Earth and shoot workers onto Mars, which would be a worse place for humans to live than Winnipeg. This Marxist assumption is borne out in the angry business comms reaction to MMT and the Green New Deal. Moreover, as the US protects global capitalist citizenship, not territorial citizenship, the US incentivizes and attracts the globe’s most antisocial capitalists–those who do not have to live with the social and environmental destruction their strategies create. By calling capital’s bluff, MMT exposes Americans’ conflict with the ultimate capitalist thugs (home-cultivated and beckoned), an over-fed, over-bred, over-cosseted, all-consuming moth blanket devouring the US and the globe…all for the glory of bigger yacht rivalry and owning New Zealand.

However, this is not the Nixon era. For example, today capitalists already compete with each other to capture the future income streams provided by running a mass consumption economy on credit (debt) rather than income, and that highly-coercive private financial appropriation of future popular wealth has already given us enormous asset inflation, as individual asset owners are relieved of current structural limits like income stagnation. What would it look like to have commodity inflation on top of a mountain of asset inflation at the investment- and currency-core of the global capitalist system? That sounds mighty disruptive to me–sure, terrible for the working class, who by structural definition don’t own enough to protect themselves in capitalism…but it also looks like global capital wouldn’t even be able to see the US as a reliable chain gang boss to send their investment capital to anymore.

Because society in the resource-rich US has been organized and disorganized for this very purpose, the US state has small interest in losing the exorbitant privilege status. But in terms of credible threat and degrees of freedom to pursue more developmental and repairing social and environmental policy, the US state could probably bargain a lot better with global capital if its conservative political rentier class were increasingly sidelined. There probably is no ready substitute for the US as the capitalist stronghold. Starting with an imperial Presidency and antidemocratic judiciary, slavery, the Federalist framework and inter-state rivalry, the US worked long and hard to form itself into a giant, once-gilded, increasingly bare-life, militarized working-class prison. (The very structure that permits exceptional, meritorious metropole cosmopolitan sapeurs to efficiently abject and write off “ruined” hinterlands US life, enjoying their exceptional imperial space, instead of organizing for development.)

At this historical juncture, is any state in a position to take over and maintain global capitalists’ currency, to guard the globe’s privatized wealth? Is the City of London, with the (post-Brexit) UK state (not the EU) behind it, ready to step in? It’s a buttress and prod to Wall Street, but if the UK could run the global economy, they would. Now they’re mostly just a financial city-state. Is Brussels, with a European population that has long fought slavery on its shores and is heavily invested in ecological modernization? When Europe, particularly France, manoeuvered toward dropping the gold-backed dollar in the Nixon era, it wasn’t only because the US’s war against the Koreans was paid for with printed money, it was also because the European population did not support the Korean War as a reason to print money.  The incomplete mobilization toward dumping the US dollar required class coalition in Europe. Is China ready to take over the global interior-exterior capitalist gendarme role from the US? It’s still trying to build markets with social credit experiments.

There might be leverage here. Could the US state have any capacity to bargain harder and better with global capital at this historical point? Could this current historical constellation present US-global working class leverage, including through the Justice Democrats, as a contributor to a multi-tiered, internationalist, democratic strategy to distribute wealth for human development and ecological repair? We have less to lose than we have long imagined. Not only are we fast ecologically imploding, not only is wealth being rapidly extracted from the US hinterlands, but now we know, thanks to Piketty et al’s historical research, that capitalism will never be able to fulfill wealth distribution promises, always requires crippling and stunting inequality, and always requires “corrective” war anyway.

We have a lot to gain. What sorts of solidarity organization is needed to support strategy? To strategically soften the impact of belligerent capitalist strike strategies, including inflation and capital withdrawal, could the global working class build solidarity networks past the monstrous US policing system, to help US workers survive a potential, disciplinary inflationary blow-out, to win a class battle against global capitalists from the US, and correct socially- and environmentally-irrational capitalism?

 

A New International?

Because rents of global exploitation and appropriation have trickled down to US workers, it’s been easiest for global workers to say “Fuck that” to solidarity with US workers. On the US side, the working class is too immigration policy-selected, and police- and comms-disorganized to signal willingness to fight and sacrifice for the advancement of socio-economic and ecological rationality. The US has long perfected co-opting and constraining workers to conservatism with policing and military jobs, defanged and dwindling business-subordinated unions like the AFL-CIO, extending public subsidies that workers tap into to cycle through ratty small business ownership, and selling conservative morality narratives suggesting that White and ethnic exploitation and patronage networks are sufficient to weather capitalism.

But strategically, in terms of global internationalist strategy, US worker-consumers occupy a key economic niche, supplying the underlying value to global capitalists’ rents; and US workers have been suffering in that position for a while. Political science data (including Gilens & Page) say that everyday Americans are not as reality-resistant, not as conservative as they’re drawn.

We need organization.

We could also use research: What constellations of conditions, can we observe, reduce finance’s capacity to coordinate capitalists to choke society into submission to their antisocial projects of self-aggrandisement, ceaseless imperial war and social disruption, and ecological annihilation?

We know that a combination of massive-scale capital-destructive war and communist organization is one set of conditions (per Piketty 2014). Are there any others?

Tactical Components for Dismantling Rentier Capitalism’s Chokehold, Addressing Social, Economic and Ecological Problems in the 21st Century

  • Socialists in the state
    • MMT or credible MMT threat
    • UBI & UBS
    • Cooperative capacity building policy and institutions
    • Diverting funding from carceral state to social citizenship supports
  • Working Class Organization
  • Worker Internationalism
  • ipsum lorem

Enabling Conditions for the Effectiveness of the Tactical Components

  • War
  • Socialism
    • Socialist Ideas
    • Socialist Organization
    • Socialists in the US state
  • Lack of state capacity to host global currency and enthrall workers
    • Brexit and City of London-UK decapacitation
    • Chinese consumption capacity not fully developed
    • European workers disinclined to/ too capacitated to tolerate servitude
  • ipsum lorem

Challenges that Reproduce Rentier Capitalism, Social Crises, Ecological Crises

  • US working class co-optation
    • US police/military state
      • US working class disorganization
    • Longtime capitalist-subsidiary unions, such as the AFL-CIO
    • Public subsidization of irrational junk businesses
    • Meritocracy ideology and managerialist incentives
  • Global capitalist organization via finance
    • Capital strike tactical capacity
    • Inflation-inducing tactical capacity
      • working class disorganization and co-optation
      • state decapacitation and subordination
    • Asset-inflation
      • working class disorganization
    • ipsum lorem
  • ipsum lorem

 

The carceral core

the carceral state 21st c

From Bauman, Valerie. 2018. “Incarceration vs. education: America spends more on its prison system than it does on public schools,” The Daily Mail, 25 October.

Dysfunction-function junction

“Hamilton-Paterson sees the destructive impact of the ‘money men’ on industries more clearly. The catastrophic and unnecessary fate of ICI (which broke the hearts of some of my own chemical-engineering relatives) came about as men and women with long shop-floor experience and technical qualifications were pushed out of management by newcomers who claimed to be financial wizards. They weren’t. They played the great corporation for short-term stock-market gains, and they lost.

Hamilton-Paterson adds the example of Network Rail’s bungled electrification of Great Western (its cost rose in two years from £874 million to £2.8 billion). ‘That’s privatisation for you: layers upon layers of managers and accountants who know nothing about railways. The old British Rail alternative was layers upon layers of experienced railwaymen who knew nothing about accountancy but who did know exactly what electrifying a line entailed and simply got on and did it.’ Later in his book, he attacks the notion (‘holy writ’ today) that a college degree in management enrols one in a portable profession in which it hardly matters what a company does.”

Neal Ascherson, “As the toffs began to retreat” LRB 40(22).

If your goal is to play the institution housing an accretion of wealth–the corporation, or the privatized public good/service–for stock-market gains, then it very much doesn’t ever matter if you accomplish any substantive social or environmental goals.

“People talk easily about political ‘consensus’ in the postwar years. Edgerton disagrees. There was no lasting consensus between the parties on the welfare state, he says, and the idea of a ‘Butskellism’ common to Labour and Tory is a myth. Only for the ‘warfare state’ was there a consensus, to keep its secrets and to pay its vast bills. Britain’s hugely profitable arms trade is an enduring by-product of that state, and here Hamilton-Paterson contributes an unsettling thought. ‘It is the arms industry perhaps more than any other that best preserves the inventive standards and traditions of British engineering, research and technical expertise.’”–Ascherson

Slavery and absolute elite freedom

“For us (Western civilization) freedom has been understood to sanction the ability of creditors to demand payment from debtors without restraint or oversight. This is the freedom to cannibalize society. This is the freedom to enslave. This is, in the end, the freedom proclaimed by the Chicago School and the mainstream of American economists.” —John Siman, reviewing Michael Hudson’s “And forgive them their debts” (2018).

Hudson argues that prior to the Roman Empire, previous agrarian Western civilizations enforced periodic debt amnesty in recognition of the inevitable, inevitably corrosive relationship between financial speculators and smallholding producers. After the Romans, Western economic elites were able to outrun the negative consequences of forcing those with the least degrees of freedom to carry the costs of market failure.

Why were elites able to dump economic failure on nonelites, cut and run, from the Romans onward–which is generally, popularly considered the geographic and historical boundary of Western civilization? Perhaps Hudson answers this? My guess: Incentives or balance of power changed in the relation between the king and the oligarchy/financiers. Why from the Romans on did it not usually pay for the king to intervene between financiers and their slaver tendency? Did monarchs become more dependent upon financiers, for example to fight wars and imperial wars? That Sweden was a late exception is interesting–In that country, there was alienation between the king and the aristocracy into the 19th century, which produced a heritage of space for non-elite semi-sovereign agency. Did something–for example the capacity to concentrate agriculture ownership and production–change in societies’ ability to contain economic and  political damage within their enslaved smallholder class? This was clearly a part of the British advantage in achieving early capitalism.

But what permitted this shift? Transportation technology, permitting export-oriented agriculture? Perhaps this is why economists are so insistent that agricultural production be export-oriented: Export-oriented agriculture removes control over the means of reproduction from non-elites. [Note to self: Draw the following mechanism out with examples:] Centrally controlling the means of reproduction, as means of production, coheres otherwise-divided elite interests, permits elite solidarity around a shared interest in advancing slavery.

As Siman says, this reproductive-productive controlling ownership is what we define as “economic growth;” it creates certain kinds of heavily-touted benefits, but certainly we recognize it produces vast, deep, endemic costs: epigenetic, environmental, war and violence, institutionalized incapacity to shift into ecologically- and socially-rational directions, stunting smallholders’ development, imposing a sin and shame psychological burden upon smallholders, racialized and genderized alienation and defection, inducing corrupt governance, etc.

With the French Revolution and the mass emigration, however, all of Europe’s financial class were restrained from enslaving the domestic population…slavery was instead imposed in the colonies. To this day, nonelite sovereignty is fragile or highly compromised in the colonies.

Research note: Seems like you could trace this ultra-burden/ultra-freedom discrepancy epigentically.

While debt is the slavery-instituting mechanism, Hudson’s analysis complements and goes back in history beyond Losurdo (2011) and Blyth (2002), locating the connection between Western political economy and slavery not just in liberalism, but liberalism as an extension of that Roman elitist innovation in transferring risk and culpability for market failure onto debtors rather than on gambling financiers.

“Moral Hazard” My Ass

…The last bit of Siman’s article, having to pedantically explain that it’s a little weird that conservative economists’ “Moral Hazard” only applies to smallholders, and doesn’t apply to financial speculators, despite their theory that these speculators are the agents, principally doing everyone a liquidity solid (favor), reminds me of a grad geographic economics class I took as a student. This, and how other blind spots were strutted out as if they were logical achievements, rather than formalized marketing and legitimation flim-flammery, went a long way toward revealing what the Economics discipline actually is and does.

Engels on Speculation and Political Formation in the US

Friedrich Engels (1892) on political-economic constraints, including speculation, on US political development:

“(W)holly different groups and interests are represented in each of the two big parties, depending on the locality, and almost each particular section of the possessing class has its representatives in each of the two parties to a very large degree, though today big industry forms the core of the Republicans on the whole, just as the big landowners of the South form that of the Democrats. The apparent haphazardness of this jumbling together is what provides the splendid soil for the corruption and the plundering of the government that flourish there so beautifully. Only when…settlement on the land becomes more and more difficult or falls prey to gouging — only then, I think, will the time come, with peaceful development, for a third party. Land is the basis of speculation, and the American speculative mania and speculative opportunity are the chief levers that hold the native-born worker in bondage to the bourgeoisie.

Only when there is a generation of native-born workers that cannot expect anything from speculation any more will we have a solid foothold in America. But, of course, who can count on peaceful development in America!”

Merci to Doug Henwood.

America’s Neo-feudal Economy

“The Progressive Era developed the view that public utilities and other natural monopolies rightly belonged in the public sector, where governments would provide their basic services at a subsidized price or even freely as in the case of roads. The idea was to keep user fees no higher than the actual cost of production, so as to avoid rent seeking. This pejorative term means extracting income by placing tollbooths on the economy’s key infrastructure. To leave roads and railroads, electric and power utilities in private hands ran the risk of private owners ‘rack-renting’ the population, adding to the cost of living and doing business.

(Today) U.S. policy is just the opposite (of Progressive Era rent-reduction policy).”

Hudson, Michael. 2010. ” The Deficit Commission and America’s Neo-feudal Economy.” Creditwritedowns.com, December 6.