Investing in Civilization
Alan Freemanradicaldemon.org
1869
1879
1889
1899
1909
1919
1929
1939
1949
1959
1969
1979
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
0%
10%
20%
30%
40%
50%
60%
192
9
193
2
193
5
193
8
194
1
194
4
194
7
195
0
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
20%
25%
30%
35%
40%
45%
50%
1929
1934
1939
1944
1949
1954
1959
1964
1969
1974
1979
1984
1989
1994
1999
2004
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
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
194
81
952
195
61
960
196
41
968
197
21
976
198
01
984
198
81
992
199
62
000
200
4
em
plo
yee
jobs
in s
ervi
ces
as
perc
en
t of
tota
l em
ploy
ee
jobs
UK US
Japan Germany
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
Job
s in
ma
jor
eco
no
mic
se
cto
rs a
s p
rop
ort
ion
of t
ota
l
Agriculture
Services
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
4%
6%
8%
10%
12%
1960 1966 1972 1978 1984 1990 1996 2002 2008GD
P p
er
ca
pit
a a
s s
ha
re o
f G
DP
pe
r c
ap
ita
in A
dv
an
ce
d C
ou
ntr
ies
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
0%
10%
20%
30%
40%
50%
60%
70%
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
GD
P a
s sh
are
of t
ota
l, M
EP
P d
olla
rs (
Cu
rre
nt d
olla
rs a
t M
ark
et E
xch
an
ge
Ra
tes)
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