With the return of an acute phase of the world’s ongoing economic crisis we are seeing the neo-liberal, also called economic rationalist, addicts pushing for more power for world straddling corporations. That is more of the approach that is a major cause of current problems. One obvious reason for the crises is that the wealth generated by the labour of working people is being increasingly appropriated by a wealthy few. It is to be hoped that the approach, to climate change and simultaneously making minimal moves to correct equity issues, publicised by Julia Gillard on July 10 is suggesting the beginning of change for the better. But if this is to be so, much more will have to be done by the extra Parliamentary Movement for more equity and curbing the power of the polluting corporations.
The agenda for this agreement is being set by giant US corporations that want a legal right to sue governments that prevent them from getting away with charging more for medicines, paying minimal wages and denying workers rights as well as plundering physical environments. This is something that if allowed to happen would, for example, make Tasmania’s current problems still worse. It would, still further increase health costs. It could also, via the Malaysian timber giant Ta Ann, which is already operating in Tasmania, enable even further rape of our forests and continuing imposts on the public purse.
A feature of very recent history is the extent to which so many of the hard won rights organised workers, supported by a few people slightly better off, have won are under attack by the corporation chiefs who control a great deal of the means of production. These same few corporation heavies have powerful influence over governments and the distribution of information or more correctly in the frequent case misinformation. As the already over rich few accumulate still more wealth and power the capacity of working people, who actually produce the wealth these few control, to purchase the necessities and a few luxuries of life continues to decrease and in consequence the economic crisis deepens.
What then is there by way of alternative paths? Short of ridding ourselves of rule by capitalist greed and as an alternative to the worst of capitalism as represented by the current situation are there short term measures that public opinion could be mobilized to support and organize for? Currently ever more power, over others, is being exerted by corporation chiefs. Could the policy positions advocated by the once influential economist Maynard Keynes perhaps bring some short term relief to what is an increasingly desperate situation? My answer to this last question is a qualified yes.
This qualified yes answer to the last of the above posed questions is qualified for several reasons including that Keynes, theories particularly as interpreted by most classical economists, have serious shortcomings. Galbraith and others spelled out several aspects of these problems with Keynesian ideas almost 40 years ago (see foot note 1).
Despite these basic flaws, some of Keynes’ views could improve our current situation particularly his view that, “Ideas, knowledge, hospitality, travel - these are the things which should by their nature be international. But let goods be homespun where ever it is reasonable and conveniently possible, and above all, let finance be primarily national.”(2) Much more recently this approach of giving, where possible, priority to national self sufficiency has been advocated by the well informed Canadian writer and thinker John Ralston Saul(3).
Some immediate policy needs ….In his last book “The Good Society’ Galbraith brought up to date what, with a bit of additional creative thinking, could become the basis of an updated Keynesian approach. A starting point, advocated decades ago, by Galbraith is to recognise that in our modern world: ...” When the modern corporation acquires power over markets, power in the community, power over the state, power over belief, it is a political instrument, different in form and degree but not in kind from the state itself.”
As Galbraith went on to write in 1977 ” …Neo classical or New Keynesian economics … offers no useful handle for grasping the economic problems that now beset modern society.” The steps Galbraith and some others who are not Marxists proposes as necessary to tackle these modern problems, in my view are very similar to what modern Marxists who have thought seriously about our current situation see as immediate issues that we need to get action on now. (4)
These steps involve several key measures including:
*legislative and other steps by governments to regulate markets along with openness in economic decision making in order to undermine the corruptive potential that corporations now have and exercise over governments and top public servants particular when using the devise of “Commercial in Confidence deals’ that deny information to the public about what is happening to very large sums of public money
*substantial increases in taxation of corporations and of very high individual incomes—-Galbraith argues for this to provide the necessary finance to governments to enable them to initiate socially necessary and ecologically sustainable economic projects. He suggests that, when necessary, governments should borrow for such positive purposes see footnote(1) He argues the need for governments to borrow to make possible constructive government projects in the sorts of economic circumstances most of the world is now in. These are circumstances that recent developments suggest Australia could well be about to experience in a devastating way. The budget surplus fantasies that most of our main stream economists promote will only serve to prevent government actions that could improve our economic position.
Borrowing to use public money to bailout failed banks and other institutions, owned by privately owned and controlled corporations, is of course an entirely different matter and as the USA’s current situation indicates only prolongs and worsens the situation. It is the use to which governments put borrowed money that counts. In our present situation governments investing in and or supporting community based cooperative ventures such as renewable energy and other socially necessary and ecologically sustainable ventures serves the double purpose of beginning to tackle climate change problems and substantially improving the economy. ( Again see an admittedly quite lengthy footnote (1)
*recognition, in all decision making about economic matters, that the market system is hostile to environmental protection and that responsible and transparent government intervention in economic matters is essential. We need to recognise the truth of the view of one time chief economist of the then environmental division of the World Bank Herman Daly’s that the market cannot recognise either equity and social justice issues or ecological issues (5)
*We could also draw on the ideas of Australia’s outstanding economist of the twentieth century namely H.C (Nugget) Coombs.who warned of the return of scarcity that we are now witnessing as Millions starve in many parts of the world. Coombs warned against Australia continuing to be a quarry and for much more sustainable attitude to mining Australia’s mineral wealth.
The following initiative indicates a way to provide environmentally positive work opportunities.-Latrobe Valley residents and workers everywhere will have an opportunity to purchase a stake in their future following the launch of an innovative campaign to establish a solar hot water factory in Morwell. The Earthworker Cooperative launched its 100,000 Australians Campaign on July 28, 2011, in Morwell, aimed at finding 100,000 people to become members of the cooperative and to use the funds to establish the factory.
Membership of the cooperative costs $20 and the project has already received backing from unions, community groups, councils and faith-based organisations. Earthworker spokesperson Dave Kerin said the cooperative had already developed a business plan and picked out a site in Morwell (Search Foundation News August 2011)
*This cooperative approach could be applied in a variety of ways including to the establishment of largely self sustaining villages, on suitable sites, catering for retired people who are finding it increasingly financially difficult to maintain themselves in suburbia and do not want to surrender their independence. Many of us oldies have gardening skills and enjoy a limited amount of light physical work that, with a sensible approach, could contribute considerable to largely self sustaining village communities that could also include, in fact would also need some younger people. Intelligent use of government resources to assist the establishment of such projects with adequate appropriate health and other services could, if intelligently, including democratically approached, make a major contribution to overcoming much of the much talked about aging population problems. There are several ways in which savings to the community and public purse could be achieved by such projects. These possibilities include a substantial drop in the use of pharmaceutical drugs now used in aged care facilities many of which have been exposed as being substandard.
The immediately above points are only some of many changes that could be made given an informed and politically socially more active public and much more people, rather than corporation influence, over of what parliamentarians actually do .We need to learn from what is currently happening in England and refuse to fall for Abbott’s thinly disguised ploys for power to tax people rather than the polluting corporations. More can and needs to be done along the lines of linking measures to give the less privileged greater economic and social equity as we implement policies and actions to combat climate change.
(1)Neo classical and neo-Keynesian economics flawed
“Neo classical or New Keynesian economics, though providing unlimited opportunity for demanding refinement, has a decisive flaw. It offers no useful handle for grasping the economic problems that now beset modern society. And these problems are abrasive .... in making economics a non political subject- neo classical theory by the same process, destroys its relation with the real world. ... When the modern corporation acquires power over markets, power in the community, power over the state, power over belief, it is a political instrument, different in form and degree but not in kind from the state itself.” These are the words of a very eminent economist, namely John Kenneth Galbraith, in his Presidential address to the American Economic Association on Dec. 29th 1972.
Galbraith went on to say ” To hold otherwise- to deny the political character of the modern corporation- is not merely to avoid the reality. It is to disguise the reality. The victims of that disguise are those we instruct in error. The beneficiaries are the institutions whose power we so disguise. Let there be no question: Economics, so long as it is thus taught, becomes, however unconsciously, a part of an arrangement by which the citizen or student is kept from seeing how he (sic) is, or will be , governed…”
Five years later Galbraith wrote: “There are other problems. Keynesian support to the economy has come to involve heavy spending for arms. This.we’ve seen, is blessed as sound while spending for welfare and the poor is always thought dangerous. With time, too,it has become evident that Keynesian progress can be an uneven thing: many automobiles, too few houses; too many cigarettes, too little health care. The great cities in trouble. As these problems have obtruded, the confident years have come to an end. The age of Keynes was for a time but not for all time (Galbraith p p 225-226).
There is agreement even in high military circles that the naked weapons competition cannot go on. Some will ask the hard question, what will take its place? What of the jobs it provides? What will replace the purchasing power it generates? John Maynard Keynes proposed that the British government put bundles of pound notes into disused coal pits and fill the pits up. This would create jobs. And much more employment would be created by men digging out the pounds, and much demand would then be created by the spending of the notes. The idea was never taken up; instead, in the post-Keynesian world, weapons expenditures - the cycle of design, production, obsolescence, replacement - have served instead. I once called it military Keynesianism.
All candid economists concede the role of military expenditures in sustaining the modern economy. Some have held that expenditures for civilian purposes _ health, housing, mass transport, lower taxes leading to more private consumption - would do as well. The transition would be rather easy. This ignores the entrapment. And it ignores the economic power that sustains the trap and keeps it shut. Behind the new manned bomber is the military and industrial colossus we have been examining. It is strong and resourceful in defending its interest, and we may assume that it is strong and resourceful in the Soviet Union too. Back of improved housing and cities there is no similar power as there is no similar competition. There is only, by comparison a vacuum.
One should observe that there is no problem of magnitudes. For the price of a smallish fleet of manned supersonic bombers, a modern mass transit system could be built in virtually every city large enough to have a serious bus line. What would be built then? The question is one for a later word. ...” (Galbraith 1977 p 255).
The specifics of the correct public measures against recession and depression are clear. Interest rates should , indeed be reduced, for what ever effect this may have. But the only truly substantive action is for the government to provide jobs for those for whom unemployment is otherwise inevitable. In doing this, it must borrow and accept the reality of a larger deficit in the public accounts.
The deficit, as will presently be noted, must not be seen as a barrier to effective public action, for by stimulating economic activity it increases earnings and tax receipts. Improvements to the public infrastructure- roads, schools, airports, housing- that are made by those newly employed also add to public wealth and income. Public borrowing, overtime, can be a fiscally conservative act. (From John Kenneth Galbraith “THE GOOD SOCIETY The Human Agenda” pub.1996 by Houghton Mifflin Company Boston New York)- -COMMENT by Max Bound——borrowing for the above constructive purposes is a entirely different matter to borrowing to bail our institutions that have collapsed because of their own greed as has /‘is currently happening in the USA
(2) Keynes, John Maynard, National Self- Sufficiency 1933, as quoted by E L Wheelwright in his introduction to an ABC Radio program, Book taken from Lateline & Investigations ABC Radio programs. Book title POLITICAL ECONOMY OF DEVELOPMENT published 1977.)
(3) “The Collapse of Globalism and the reinvention of the World” (pub Viking Penguin Books 2005)
(4) I am in process of writing what will, in some respects, be a sort of sequel to this and earlier articles in that it will examine the question of how wealth is created including Marx’s exposition of what Aristotle revealed, aeons of time ago as the difference between (economics and Chrematistic-.or the gaining of money. Parts of the ancient writings of Aristotle, strangely enough, are relevant to helping explain the madness of today’s growth mania. This relevance of parts of Aristotle’s writings, once made available,should easily make sense to thinking environmentalists who are prepared to admit that serious environmentalism is very much an economic, social and cultural matter. For the addicts of economic rationalism or neo-liberalism, even those pretending to environmental concerns, it will obviously be quite difficult to grasp or admit to.
(5) H. E. Daly addressing a Hoover Institution Conference on “Sustainable Development from Concept and Theory to Operational Principles, Population and Development Review in 1989 stated “… the market cannot find an optimal scale any more than it can find an optimal distribution. The latter requires the addition of ethical criteria: the former requires the further addition of ecological criteria.”