Category: economics

Troubles ahead for world economy the 7.30 Report. Transcript of interview with Joseph Stiglitz.

Extract:
Joseph Stiglitz is a Nobel laureate, a former chief economist of the World Bank and he chaired Bill Clinton’s presidential council of economic advisors.  His latest book, ‘Freefall’, is a worrying critique of the root causes of the Global Financial Crisis, and despite President Obama’s recent banking reforms, he says it could happen again. He’s also predicting another US economic slowdown. The veteran economist is on a lecture tour in Australia and I spoke with him in Brisbane today.

Joseph Stiglitz, if we can start with an up-to-date appraisal of the US economy: what is the state of the economy right now?

JOSEPH STIGLITZ, GLOBAL ECONOMIST: In a single word, weak, ah, and probably going to get weaker.

Austerity: Why and for Whom? by Rick Wolff. On-line article at Commondreams.org. Links austerity programmes across Europe to conditions set by banks lending to governments due to fears of defaults on government debts. For instance the high rates of interest imposed on Greece in return for bail out loans by European banks. If governments default on loans then their credit rating may prevent them borrowing more, the banks will collapse and the Governments will not be able to borrow form banks to bail them out! Is this right? The banks have lent money to governments to bail themselves, the banks, out. Presumabley these are not the same banks – it is the banks not crippled by bad investment (the ‘national’ banks’?) that are lending to governments who then use the money to bail out the failing banks. The public funding cuts are to ensure governments can service these debts to the bank, maintain their credit ratings so that, if necessary, the governments can bail out the banks in the future. If the national banks lent the money to governments to bail out the failing banks, why couldn’t the banks have lent directly to other banks? I assume they want governments, their tax streams and assets, to guarantee the loans. It is generally recognised that European national banks will make significant profits out of lending to Greece as the interest rate is significantly higher than the banks can borrow money themselves.

All this leaves open the question – why do the austerity measures punish the poor and, despite everything, wealth still grows and concentrates? That’s because for the wealthy, every problem is an opportunity. And for the political right, ironically, via neoliberal policies, it is an opportunity to enact barely masked ideologically informed policies. Given the high profits banks will make out of loans to Greece, for instance, this looks like a direct transfer of money from the poor to the financial institutions that got us into the mess in the first place.

“The Idea of Communism” at Marxism 2010 (1/2) from Kosho Yoshiyama on Vimeo.

A debate between Alex Callinicos, John Holloway and Slavoj Zizek on the Idea of Communism.

http://johannhari.com//2010/07/02/how-goldman-sachs-gambling-on-starving-the-worlds-poor-and-won

Posted by Johann Hari

By now, you probably think your opinion of Goldman Sachs and its swarm of Wall Street allies has rock-bottomed at raw loathing. You’re wrong. There’s more. It turns out the most destructive of all their recent acts has barely been discussed at all. Here’s the rest. This is the story of how some of the richest people in the world – Goldman, Deutsche Bank, the traders at Merrill Lynch, and more – have caused the starvation of some of the poorest people in the world, just so they could make a fatter profit.

In the World Tonight broadcast by BBC Radio 4 on the evening of June 30th (http://www.bbc.co.uk/programmes/b00stk6m minutes 13 to 18) a couple of small business owners were interviewed to test the claim of the ConDem govt that the reduction of the jobs in the public sector would be more than compensated by the creation of new jobs in the private sector. As far as the intentions of the programme were concerned, the test was inconclusive. However, the programme was revealing in another, unremarked upon, way. The first business was a small fashion designer. SeeMe London. Their customers had not bought anything for most of 2009. To the credit of the owners they had kept their staff on while weathering the storm and restructuring their business. Business was now expanding again but they had ditched their previous customers and markets and how re-branded themselves at the high end of the market selling high value services. The future is now looking quite rosy. The second small business was a company that specialised in tuning high performance cars, Paramount Performance. Again, over 2009 business declined dramatically. One attempted solution was to diversify and offer economy tuning rather than performance tuning thinking that their customers, in straightened circumstances, would be more willing to spend money on saving fuel. To their disappointment this did not appeal and the attracted very few customers. However, this year business is growing again and it is the high end sector that is placing the orders and spending the money.

This is only anecdotal evidence of course but may prove to be symptomatic of how this recession will play out – the already poor and the middle classes getting poorer and the rich getting richer, as is evidenced by previous recessions.

http://www.youtube.com/watch?v=qOP2V_np2c0&feature=player_embedded

As succinct account of the cause of the current economic crisis as you’ll find. The original version of the talk is at http://davidharvey.org/2010/05/video-the-crises-of-capitalism-at-the-rsa/ but I think the animations, apart from being quite witty, add a lot.

Economic and Philosophic Manuscripts of 1844
http://www.marxists.org/archive/marx/works/1844/manuscripts/power.htm

“By possessing the property of buying everything, by possessing the property of appropriating all objects, money is thus the object of eminent possession. The universality of its property is the omnipotence of its being. It is therefore regarded as an omnipotent being. Money is the procurer between man’s need and the object, between his life and his means of life. But that which mediates my life for me, also mediates the existence of other people for me. For me it is the other person”.

“That which is for me through the medium of money – that for which I can pay (i.e., which money can buy) – that am I myself, the possessor of the money. The extent of the power of money is the extent of my power. Money’s properties are my – the possessor’s – properties and essential powers. Thus, what I am and am capable of is by no means determined by my individuality. I am ugly, but I can buy for myself the most beautiful of women. Therefore I am not ugly, for the effect of ugliness – its deterrent power – is nullified by money. I, according to my individual characteristics, am lame, but money furnishes me with twenty-four feet. Therefore I am not lame. I am bad, dishonest, unscrupulous, stupid; but money is honoured, and hence its possessor. Money is the supreme good, therefore its possessor is good. Money, besides, saves me the trouble of being dishonest: I am therefore presumed honest. I am brainless, but money is the real brain of all things and how then should its possessor be brainless? Besides, he can buy clever people for himself, and is he who has [In the manuscript: ‘is’. – Ed.] power over the clever not more clever than the clever? Do not I, who thanks to money am capable of all that the human heart longs for, possess all human capacities? Does not my money, therefore, transform all my incapacities into their contrary?

If money is the bond binding me to human life, binding society to me, connecting me with nature and man, is not money the bond of all bonds? Can it not dissolve and bind all ties? Is it not, therefore, also the universal agent of separation? It is the coin that really separates as well as the real binding agent – the […] [One word in the manuscript cannot be deciphered. – Ed.] chemical power of society”.

via Posterous and Joss Winn’s Things that stick

If Marx’s theory of surplus-value is his most revolutionary contribution to economic science, his discovery of the basic long-term ‘laws of motion’ (development trends) of the capitalist mode of production constitutes undoubtedly his most impressive scientific achievement.

No other 19th-century author has been able to foresee in such a coherent way how capitalism would function, would develop and would transform the world, as did Karl Marx. Many of the most distinguished contemporary economists, starting with Wassily Leontief (1938), and Joseph Schumpeter (1942) have recognised this.

http://www.internationalviewpoint.org/spip.php?article288

http://www.internationalviewpoint.org/spip.php?rubrique66