The Economic Picture from the ACTUAL Far Left

The face of Socialism! (as imagined by the Tea Party)

Unlike The Phantom Menace version of Socialism paraded around at Tea Party rallies where Obama is compared to Stalin, there are actual socialists in the world who hold actual socialist views of what’s happening in the economy.  Sometimes it’s useful to listen to these voices, not because they are right (although sometimes they are), but because they offer an alternative worldview that serves as a useful intellectual foil for our current austerity vs stimulus debate.

Marxian economist Richard Wolff is one such useful voice.

Capitalists prefer austerity for many reasons. Because universal suffrage allows politics to undo capitalism’s consequences such as unequal wealth, income and power distributions, capitalists worry about how far universal suffrage will go. Majorities may, during crises, reject bailouts and austerity. The Greek and French just did. They may then demand Keynesian “growth” via government jobs and income and wealth redistribution. Or they may demand transition beyond capitalism to democratize their economies by socializing means of production, planning the economy and transforming enterprises into self-directed worker collectives. No wonder that conservative mainstream economics (so-called “neoclassical economics”) celebrates capitalism as a self-healing system requiring no government intervention.


The “great” debate between neoclassical and Keynesian economists is neither great nor much of a debate. Both sides endorse, celebrate and defend capitalism. Their “debate” – between Plans B and A, more or less government intervention to sustain capitalism – periodically revives as a substitute for seriously engaging with critical economic theories, anti-capitalist social movements and their demands for economic democracy. The debate between austerity and growth policies is a sideshow for the main event: capitalism’s weakening battles with its own contradictions and with looming demands for transition beyond capitalism to economic democracy.

It’s important to keep reminding yourself that Keynesian economics is no more “socialism” than is neo-liberal economics.  They are two sides of the same capitalist coin.  Personally, I believe in market economies, but you can have free markets without capitalism.  Or you can have managed markets with capitalism.  Capitalism is not the same as free markets.  Capitalism is about what you do with the surplus value created by labor and markets.

In the end, neither versions of capitalism, neo-liberal or Keynesian, address the question of economic democracy which is the principal concern of “real” Socialists.

Inconvenient Economic Truths

The only issue that matters in the 2012 election is the income disparity between rich and poor.  And the fact that, as a whole, people are not seeing the benefits of the growth in GDP.

Slowincomegrowth figure1 version1

That red line is 1980 (about) when America embarked on a reckless experiment with supply-side economics.  This chart

shows inflation-adjusted GDP per capita and median family income from 1947 (the earliest year for which the income data are available) to 2007. To facilitate comparison of the over-time trends, each is indexed to its 1973 level. Since the mid-to-late 1970s, growth of income at the median has been slow — very slow — relative to growth of the economy. The current decade, with no improvement at all in median income, is especially striking.

And what is distribution of that “median family income?”  Well, we’ve all seen versions of this chart before.

Income Inequality

This is the consequence of abandoning Keynesian economics and it’s only going to get worse.  Neither Romney nor Obama have demonstrated any understanding of this problem.  Both continue to talk in terms of “expansionary austerity.”  Economic recovery will happen in spite of what the politicians in Washington do, not because of it.


Bruce Bartlett Goes Rogue

Holy mackerel! Bruce Bartlett, economic advisor to Ronald Reagan and George H.W. Bush makes a surprisingly strong case for Keynesian fiscal stimulus.  He also says that, between Obama and Congress, it’s never going to happen.  He dismisses the idiocy of regulation as causing the lack of aggregate demand.

“We should be borrowing like mad.”

“We should be spending more in the short run…”

The Train is making people crazy….

Today in the front page of the Wisconin State Journal, Scott Walker Vows to stop the train.

All of this ideology also fails to mention,

Some $800 million in contracts, a series of difficult legal hurdles and a struggling economy will not stop Governor-elect Scott Walker from doing what he promised on the campaign trail — stopping the train.

I understand the need for ideology in spite of common sense to get elected, but at some point we need to get our state and country back on track. As Peter Beinart points out,

The real loser is Keynesianism: The idea that when businesses and individuals stop spending, government must. That idea will not rebound; it’s over for this period in economic history. First Britain, and now the United States, are responding to the worst economic contraction in 75 years by contracting government, despite the fact that the world’s best economists are screaming that it’s exactly the wrong thing to do

He also points out how this ideology is making us fall further and further behind the rest of the world.

Historians may also look back at 2010 as the first post-9/11 election in which fears of China loomed larger than fears of Al Qaeda. Given that China has stimulated its way out of recession and is set to pour even more government money into infrastructure, leaving America further behind, I doubt it will be the last. In his Senate victory speech, Republican megastar Marco Rubio announced that “America is the single greatest nation in all of human history. A place without equal in the history of all mankind” because “almost every other place in the world…what you were going to be when you grow up was determined for you.” Almost every other place in the world? From China to India to Brazil, hundreds of millions of people are rising economically in ways their parents could scarcely have imagined, in part because their governments are investing in infrastructure in the way the United States did in the late nineteenth century. The American dream of upward mobility is alive and well, just not in America. And rather than looking at what those other countries are doing right, the Republicans have taken refuge in an anti-government ideology premised on the lunatic notion that America is the only truly free and successful country in the world.

as the Cap Times did recently:

For Wisconsin “conservatives” opposed to rail (note the quotes), the Eurostar is a stark reminder that this debate isn’t about a train or the growth of government. It’s about economic growth, economic efficiency and the development of urban and rural areas alike.

Rail is cheaper to build, easier to maintain, faster, more energy efficient — and expanding rail’s capacity is as easy as adding more cars or more trains.

They won the election, and as John McCain says “elections have consequences”, lets just hope that we will be able to recover from the consequences that we have wrought upon ourselves this time.