Investing in Civilization

Alan Freemanradicaldemon.org

1869

1879

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1929

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1989

What is economic recovery?

1929, 1893Crash after 20 years slow growthLong (10 years) period of high unemploymentPolitical, social upheaval and suffering (war, etc)Long (20 year+) period of growthWorking definition of ‘recovery’

Recovery starts with war

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Government spending + private investmentGovernment spending (% of GDP)Gross private investment (% of GDP)Unemployment (% of workforce)

Sources: GDP components, Bureau of Economic AnalysisUnemployment rate: Bureau of Labour Statistics and John T. Dunlop and Walter Galenson, eds., Labor in the Twentieth Century (New York, Academic Press, 1978), p. 30.

• Unemployment high• Investment low• Government replaces

investor• ‘Fordism’

• Welfare state• New growth• New use values• New era

War

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What made the profit rate rise?

Source: US Bureau of Economic Analysis www.bea.gov. NIPA tablesC=Fixed Assets table 1.01 (Current-cost net capital stock of private enterprises)L=Output, table 1.9.5, line 2 (output of private enterprises)Accumulation Ratio = L/C

War

Value

State restored the profit rate

It ‘used up’ accumulated private capital

It substituted for the ‘normal’ function of slump

The ‘numerator’ in the profit rate was slashed

When the economy was ‘handed back’ to private capital, they obtained a high return

It secured the productivity of the economy USA entered postwar with unit costs 1/3 nearest rival

Without increasing capital stockProfit rate was highest ever – because capital stock was lowest ever (relative to output)

The Dark Side

War needed for recoveryWar leaders were social reformers‘Universal’ rights confined to victorsSmall advance, enormous sufferingIs there an alternative?

‘Universalist-civilisational’ - ‘Reactionary-Parasitic’

Coexist in same historical processes

The Heart of Darkness

“[England] needs new lands from which we can easily obtain raw materials and at the same time exploit the cheap slave labour that is

available from the natives of the colonies in order to save the 40 million inhabitants of the

United Kingdom from a bloody civil war”

Sources: Bigelow, B.and B. Peterson, Rethinking globalization. P44The Radical Programme – Joseph Chamberlain

- Cecil Rhodes, founder of Rhodesia (Zimbabwe) and de Beers

1870 Radical Programme (Liberal Unionists)Universal educationSocial Housing‘three acres and a cow’-to be financed by colonial revenue

The Bright Side

Also new ‘social consumption’

Health, education, jobs, minimum wage, pension

New consumptionism (car, gadgets)

Which, hitherto, only the rich consumed

What the state actually invested in

Services: a silent transition

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Japan Germany

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Agriculture

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Manufacturing

Share of services in employment

Advanced Countries China

The Cost Illusion

“Human Rights” are productiveState invested in the labour force

Raised productivity (skills, health, reduced costs, etc) of the workforceReduced the value of labour power – the cost of the wage billNeoclassical economics resents as a ‘cost’ – actually, it was an assetTypical Canadian auto wage $1500 lower than US: employer does not pay health insurance

This is ‘investing in civilization’

The Physicalist Illusion

Assumes productivity only by machinery

Decisive advances in history raised human capacity

Hindu-Arabic numbersThe BookMass Education, numeracy, literacy

Germany recovered twice within 5 years after enormous physical destruction

Implications of the service economy

Enough material resources to feed the world$6,000 average 2008 = Western average 1950

Most production not material86 per cent work in servicesAccess to advanced services confined to fewArtCare (children, education, elderly care, disability)‘Green’ investment is a middle-class indulgence

We have to make these things universalThis requires a new declaration of rights

Investing in Civilization

What is needed?Investing in primal productive force of society – humans

New universal rights: ‘right to care, create, and sustain’

Reduced material basis, expanded spiritual basis

Achieve on a world basis

Who? How?All previous solutions: ‘the nation’

• Universalism for the rich nations • at the cost of destitution for most of the world poor

Marx: world working class + oppressed and poor

“Socialism versus barbarism”

Economic Ideology TodayEquilibrium:market is perfect

In crisis ‘the invisible hand shakes’ humans re-appear as agents

Physicalism: market allocates things

Overestimates machines

Underestimates humans

Inequality: an unsustainable truth

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1960 1966 1972 1978 1984 1990 1996 2002 2008GD

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Source: International Comparison Project (ICP), World Economic Outlook, German statistical office

Inequality between Global North and South

Leading – or crushing?

Shares of World GDP 1950-2006

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USEuropeAdvanced East AsiaRest without ChinaRest with China

Break in series - China data available from 1970

Sources: World Bank WDI indicators, IMF World Economic Outlook, United Nations TED database