The Real Name Of The Game.

 

 

The referendum on Britain remaining part of the European union has focused minds on the benefits and disadvantages of membership.

In truth it is impossible to make a rational and considered case for staying or leaving on the basis of a simple comparison of National Advantage or disadvantage for any member of the EU.

Political, economic and cultural relationships between the signatory states are so entangled and interdependent that there is no simple way to conclude that any one aspect of the EU agreement is either all beneficial or all bad.

In addition the entire European Union project has historical components that cannot be reduced to contemporary accountable credits and debits – the political and cultural rehabilitation of Germany being the foremost of these.

These complicating factors mean that both sides of the argument are finally reduced to motivating their respective constituencies through vague fears and even vaguer aspirations.

Pro-EU argue that the dangers from leaving the European Union are too great. Anti EU argue that fear of change reflects an unpatriotic lack of confidence on the part of their opponents. They say that Britain can be great outside of Europe. For anyone who wants to really understand the underlying meaning of the European referendum debate this superficial tub thumping is pretty depressing stuff.

There is a way to make a rational accounting of the pros and cons of European membership. But in order to do this we must have an understanding of what membership of the European union actually means within its component states.

Let us start from deconstructing the ‘national advantage’ perspective.

The relationship between Britain and Europe is based on treaties that specify certain obligations. Either the disadvantages arising from obligations outweigh the benefits of membership, or the benefits outweigh the obligations. That seems straightforward enough.

So from the national advantage point of view, our task would be to determine whether Britain or Europe is the net beneficiary of the relationship.

Let us assume that membership of the European Union is net beneficial for Britain and correspondingly less beneficial for the rest of Europe. If this were the case, European elites will be in favour of Britain leaving the European Union. But all of the European union leadership is increasingly openly bargaining for Britain to remain part of Europe.

If on the other hand, membership of the EU net benefits Europe more than Britain we would expect all sections of British society (including the financial elite) to argue that Britain should leave the EU. This is clearly not happening. The financial and industrial elites of Britain are increasingly openly arguing that Britain should remain part of the European union.

The actually observed behaviour of European and British elites does not correspond to a situation where Britain net benefits from the association to the detriment of Europe, or Europe net benefits from the association to the detriment of Britain. From this we can conclude that neither side has net national benefits or disadvantages from this association. Or at least, any comparative advantage or disadvantage is so small as to be incalculable.

If this is the case, comparative national advantage cannot be the rational basis for national elites (or anyone else), deciding either to remain or leave the EU. If the difference is so small as to be negligible why does it matter to anyone either way?

Because the significance of the EU does not lie in the formal relationship between the nation state members and their respective elites.

The first thing most important thing is to establish is that EU is an agreement between elites. European ‘politics’ is actually based on media and politicians doing what is necessary to get respective populations on board with ever increasing integration.

A classic example of this was the excruciating Irish referendum where the people were forced to keep voting ‘until they got it right’. The subsequent political and economic European gangbang of Greece was a further extension of this process. The people don’t ever get a say is a fundamental principle of the EU..

That Europe is a project of elites is hardly a revelation, most people get that. But what most people don’t understand is the consequences of this state of affairs.

Europe is effectively creating a new DEMOS – a new constituency; actually a new republic funded by wealth redistribution within nation state members. The EU is using the existing wealth of nation states to fund the creation of a new organism from within the shell of the old one. It is doing this by redistribution.

What is the nature of this internal redistribution ?

In a British example redistribution means that those who are disadvantaged by various European agreements are effectively paying a toll to those who are advantaged by those same agreements. Of course, it will come as no surprise that those who are disadvantaged tend to be the already poor and those who are advantaged are the already rich.

Here are a couple of specific illustrations of the redistribution process in Britain. They are illustrative of the process as it applies to all relatively affluent nations in western Europe:

Rents

Increased immigration (labour force mobility), from Europe means that rents rise due to increased demand for lower end housing. As a consequence of these rent rises landlords benefit directly. House prices in general are also pushed up as a consequence and all those who profit from housing in general benefit. People who have to pay rent lose out correspondingly. Where do immigrants tend to congregate? Not in affluent areas- prices are already too high! The congregate in poorer areas. Rents and house prices in poorer are pushed beyond the reach of local poor people.

Schools

Increased immigration means that more children are forced into existing provision. Foreign children who do not have English as a first language require many more extra services. These extra services have to come from the provision from existing children.

Where do immigrant children go to school?

Where they congregate of course.

Where do they congregate?

In poorer areas!

Healthcare

See above

Wages

Supply and demand. Increased immigration leads to lower wages.

There is a clear process that can be observed. Over time, the wealth and living conditions of immigrants tend to converge with the wealth and the living conditions of the local host community. In other words, the living standard of a Romanian immigrant into England will tend to rise somewhat and the living standard of the English people around him will tend to move downwards towards the Romanian standard.

This is not controversial. It is an openly stated objective of EU policy to harmonise living standards across the EU. What is not openly stated is that this harmonisation will involve the falling of living standards for a considerable section of the European population.

With this process in mind, one or two things become immediately clear.

There is no national interest as such, in voting for the EU, there never can be. By its very nature the purpose of the EU project is to divide nations up; it is meant to do this. It can never be in ‘Britain’s’ or any other nations interest to stay in the EU or leave because this is a fundamentally mis-stated question!

If you are in an area, that is targeted for transformation, (i.e. if you are a relatively poor member of a relatively rich society), your immediate interest is in stopping the process, since you will immediately lose out. Of course, the poor and ignorant are the least likely to vote or take part in the politics. This accounts for the relatively easy ride the process has had so far.

The areas transformed by immigration will necessarily expand over time. The longer the process goes on, the more that people ‘doughnutted’ in wealthier areas around immigration hotspots will start to feel the effects of the process and realise that they should oppose it.

Because of this, it is CRUCIAL to have as many referendums etc as early in the process as possible (and it is still relatively early in the process), since the longer it goes on, the more likely there is to be organised resistance to the process within relatively wealthy sections of national communities.

And doesn’t this, rather than the supposed national advantage perspective, more accurately correspond with what we actually see?

All over Europe it is people who live in the ‘immigration doughnut’ regions of western Europe who are protesting most about EU integration. (NOT, you will note, those on the EU periphery such as Greece..)

All over Europe it is those sections of national communities that have clearly benefited from ‘freedom of movement’ that argue for increased EU integration. (In Britain, this would be the City of London etc)

To go back to the original question:

Is it possible to make some kind of rational assessment of how much EU has benefited its constituency and disadvantaged those around it?

Well a couple of graphs here* can point towards an estimate:

This is the Earnings to mortgage ratio.

house-price-to-earnings-ratio-600x536

And this is  Bank of England base rates:

base-rates-bank-rates-mortgage-rates-500x354

You can see that broadly speaking, house prices take up an ever increasing proportion of wages in Britain. This process has begun to accelerate in the last decade. The only reason it has not accelerated even more is explained in the second graph which shows that the Bank of England policy of keeping base rates at zero has meant that mortgage rates have been ‘artificially’ held at a relatively low level. As a consequence mortgages are an artifically low proportion of wages.

You can see that where immigration and in particular European immigration is at its most concentrated, in the London region, the disparity between housing and wages is at its most acute.

This is what we would expect to see in line with my description of the redistribution process.

If I had to make a guestimate of the total loss to the poorest part of the British population as a result of European integration I would say:

Loss of wages.

Lack of access to health and education.

Increased rents

Increased house prices

Lost social benefits,( denial of trades union membership, denial of social welfare benefits)

All adds up to a loss of 25% of total wealth so far.

And this is only the beginning.

 

Typical tenant pays £40,000 in rent over five years, report finds

http://www.theguardian.com/society/2016/mar/03/tenant-paid-40000-rent-five-years-shelter

Wages for British workers will rise in the event of a Brexit, head of in campaign says

http://www.telegraph.co.uk/news/newstopics/eureferendum/12181385/Wages-for-British-workers-will-rise-in-the-event-of-a-Brexit-head-of-in-campaign-says.html

*http://www.economicshelp.org/blog/5709/housing/housing-market-stats-and-graphs/

 

There is more to say here:

The Fall of Europe and the Rise of Eurasia

The geo-political reality is that Europe -whatever it’s disputed borders might actually be- is the western part of EURASIA. Europe has managed to exist ‘separately’ for 4-500 years or so because of its relative economic and cultural advantages over the rest of the landmass. It was an economic/cultural grouping strong enough to keep Eurasia out. That relative strength adavantage is evaporating quickly now. The fall of Europe is the rise of Eurasia.

The elites of Europe (and Anglo Saxon elites) are entirely aware of this process. They are ALREADY ‘democratically’ transforming Europe into a LATIFUNDIA system- pockets of relative wealth and stability within the larger western Eurasian area that will be subject to falling living standards and relatively high insecurity.

There will be no progressive, social Europe or EU to be part of in the next decade. There is no possiblity of reforming Europe or the EU. They are both the creation of western European elites and will always continue to be.

These elites were forced to pay lip service to the Anglo Saxon ideal in the post WWII period. But that is no longer possible or desirable for these Europeans.

 

 

 

 

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Animal Crackers In My Soup

 

tomato soup

Andy Warhol is famous for predicting that in the future everyone will be well….famous for 15 minutes. This should rightly be considered as the pre-eminent definition of the Democratisation Of Celebrity.

Even more perceptive, (although lesser-known), is another Warhol dictum: ‘Art is what you can get away with’.

In the United States of Everywhere money, like art, is also what you can get away with. So in a sense, art is money. That is to say, there is a clear parallel between the way that both art and money are produced, and a correspondence between what art and money can do- their functionality.

This brings us to Andy Warhols famous Campbells soup tin paintings.

On the surface, it appears that Warhols soup tins are something of a satirical comment on mid 20th century capitalism and consumerism. But if we look deeper and within the context of Warhols background in media, design and advertising we see that these images are something much more profound than mere satire;   an exploration and meditation on the production of authority and persuasion.

Authority is a fundamental component of persuasion. This seems to be counter intuitive. Authority is associated with force. Persuasion is generally regarded as the counterpoint to force; force is resorted to when persuasion fails. But persuasion and force are two points on the same spectrum.

Persuasion rests upon the authority of the persuader. Authority is the expression of the validity of power. In effect, you are persuaded by the force of an argument, or you are compelled by the force of an individual or organisation if the argument fails.

The nexus between Authority and Persuasion is the form of a proclamation. The proclaimer makes a statement which is then tested by subsequent events. In this sense we can think of a proclamation as a kind of contract between the proclaimed and the future, or the proclaimed and reality.

A proclamation is a statement to the effect that: ‘Things should be this way’.

Should the proclamation turn out to be in accordance with the future or with reality, the authority of the proclaimed is enhanced. Should the proclamation turn out to be at variance with the future or with reality then the authority of the proclaimed is diminished.

This all might seem a little abstract, so let’s return to the practical example of the soup tin paintings

The Naked Lunch

naked soup

Warhols soup tin paintings begin with an actual tin of Campbells soup. No soup-no paintings. More specifically, no Campbells soup, no paintings.

A tin of Campbells soup is made up of two separate components: the tin of soup itself and the label on the tin which describes what it is. After differentiating between can and label we can understand that Warhol was primarily interested in soup tin labels as opposed to tins of soup. If Warhol was actually interested in tins of soup as opposed to labels, he would probably have embarked upon a career as a chef as opposed to that of an artist….

Having isolated the Campbells soup tin label as the point of interest we can examine it in more detail. It is composed of a number of graphic elements. It is important to understand that each of these elements fulfils a specific purpose.

The first of these elements is the Campbells logo. This logo is exactly the same on every tin of soup. There is a reason for this. Consistency of this element represents consistency of intention, or more precisely consistency of contract. The meaning conveyed by a brand is: You know what you are getting; this is your guarantee.

The second of these elements is the name of the specific soup- the contents. This tells you what is actually inside the tin and varies from can to can of soup. This is also a form of contract. The fact that you can rely on Campbells soup company to produce consistently the same quality of soup that differs only in type is the substance of the contract that you have with the Campbells company.

Imagine that you purchased a tin of ‘chicken noodle’ soup only to find inside the actual tin was ‘black bean’ soup. In other words, imagine what the effect would be if the contractual elements on the outside of the tin can differed from the contents on the inside of the tin.

It Does Exactly What It Says On The Tin

In the event the soup you thought you were getting did not live up to either the quality or the description on the label then the Campbells brand would be diminished. In other words it’s value would fall.

Both the Campbells brand name and the soup type description are in fact proclamations. They are contractual proclamations made on the basis of the brand authority that Campbell soup company has. They are proclamations tested at the point of future consumption.

If you doubt this argument is correct, imagine buying unlabelled tins of ..whatever from a discount store. Could you sue the manufacturer for breach of contract if it was the ‘wrong’ flavour? Could you sue manufacturer for breach of contract if it were below desired levels of quality?

No, you couldn’t- no contract exists to be breached because the manufacturer has not specified the terms of any contract in the form of a label. Effectively the contents of the tin would have no value.

The Proof Of The Pudding

The test of the Campbell soup company proclamation comes in the opening of the tin and the eating of the contents. Either the contents live up to the label or they do not.

A money currency note fulfils essentially the same function as a Campbells soup tin label. In the same way that a soup tin label has a brand name so currency note has a brand-name; that of the issuing central bank.

And in the same way that a soup tin label has a specific flavour, so currency notes have a corresponding specific interest rate.

The brand is what all Campbells tins of soup have in common; the flavour is what they have in difference. The central bank is what all currency notes have in common, the interest rate is what they have in difference.

A bank note issued at 25 basis points is a different flavour from one issued at 50 basis points! They have the same brand label, but they are NOT the same soup !!

You test the soup proclamation by opening the tin and eating the soup. You test the central bank proclamation by bearing the money and using it to turn a profit.

If the soup tin company product turns out to be rubbish you look for an alternative, which forces the company to change its recipe. If the currency notes issued in any particular quarter at any particular interest rate prove incapable of producing a profit you also look for an alternative forcing the central bank to vary the interest rate.

The Plot Thickens….

So far so good.

Then along comes Andy Warhol who leveraged the meaning of the Campbell soup tin label and the authority of Campbells. (Remember here that the meaning of the Campbell soup tin label is a contract). By means of his soup tin paintings Andy Warhol produced what was effectively a derivative of the Campbell soup tin label.

This is one of the hardest things to understand about derivatives: the relationship between a derivative and the nominal subject of the derivative:

There is no direct relationship between a derivative and the subject of activity of that derivative. The derivative, as its name makes clear is one step removedderived from its subject.

For instance, there is no direct link between the infamous Mortgage Backed Securities and the housing which they purport to represent (as everyone found out to their cost in the Credit Crunch).

This lack of a direct link is precisely the basis on which derivatives can be said to be money and money can be said to be equivalent to derivatives.

WHEN YOU CAN’T SPECIFY (LEGALLY RESOLVE), WHAT THE RELATIONSHIP BETWEEN A CONTRACT AND THE SUBJECT OF THAT CONTRACT IS, THAT CONTRACT IS A FORM OF MONEY.

THIS MEANS MONEY IS INTRACTABLE.

Everyone is aware that there is no longer a link between silver and gold and the five pound note in your pocket. But most people still fail to understand that there is no direct link between the 5 pound note in your pocket and the wealth of the British economy. You cannot take a 5 pound note into the bank of England and claim a portion of ‘Britain’ on the basis of the contractual ‘promise’ made on a 5 pound note.

This absence of direct relationship is the basis for a currency notes which are a generalised contract being money.

Does this mean then that there is no relationship at all between activity based on a derivative and the subject of that derivative? In fact, the subject of a derivative is used as a trigger to activate a particular clause in a derivative contract in the same way that a horse race is used to trigger a particular clause in the betting contract between a punter and a bookie.

The bookie leverages the authority/power of the winning horse to run a book on the race. This is the essence of a proclamation.

The race itself can be regarded as a commons. A horse race is an open, common event. Everyone has equal access to it.   Bets are money/derivatives based on that event.

The economy/society is an open series of events. Money/Derivatives are generalised contracts like betting slips, based on this series of events.

Andy Warhol leverages the power of the Campbells brand which can also be regarded as a commons. The Campbells brand necessarily works on the basis that a large number of people recognise it and its significance, whether they actually buy Campbells soup or not.

They recognise the significance of the label and the contract that the label represents. This is related to, though separate from the soup itself. The Campbells commons is separate from the soup- nothing to do with the physical soup. It is to do with the label, the contract and the meaning. The brand value; paid for by advertising and found on supermarket shelves.

The soup is private, the label is a commons.

The Campbells label contract is ubiquitous. Ubiquity is always a characteristic of a commons. As I explain on previous occasions the appropriation of all or part of a commons is the fundamental process of democratisation. Democratisation- the process of creating a Democracy, works by stealing a commons from the people. That is what democratisation is and always has been.

The reason that the soup paintings have ‘cultural power’ is the ubiquity of the Campbells brand. Andy Warhols soup tin can paintings based on the soup tin originals are a private appropriation of cultural commons.

Who is appropriating this commons?

Andy Warhol and the wealthy patrons of Andy Warhols art. Andy Warhol is issuing a proclamation based on the Campbells Soup Tin Contract (the ‘Andy Warhol proclamation’), and his art dealers and patrons are trading on that proclamation. Andy Warhols reputation and value as an artist (like an issuing bank) is derived from the reputation and value of the Campbells Soup Co.

The use that this derivative will be put to is considerably different from the use that the original label contract was put to And the effect of this is that an Andy Warhol painting of a tin of soup it’s worth a hell of a lot more than the tin of soup that it derives its value from.

Still, there is nothing here that is fundamentally unstable. The problem arises when the paintings of the soup cans no longer actively correspond with the with the reality of the soup cans they are based on. So for instance, if Andy Warhol produces a painting of ‘mosquito wing and belly button lint’ flavoured soup, this clearly does not correspond to any soup that exists in the real world.

In other words if the Andy Warhol painting is judged to be inauthentic then its value or the value of the proclamation it makes will be reduced, possibly to nothing.

And this, believe it or not, was the basis for the credit crunch that destroyed so much of the western economies since 2008.

Before financialisation managed to establish a death-grip on the worlds developed economies, the production of currency proceeded more or less more or less along the lines that the Campbell soup can company produces soup.

Every three months or so central banks produced soup at a proclaimed interest rate, (equivalent to a flavour), and people decided whether to buy that soup or not.

Then along came Andy Warhol (derivatives creators and traders) and Andy Warhol chose Campbells soup to be the subject of his painting practice. Note that there is no direct relationship between soup production and painting production, there is only an indirect derived relationship.

Financial institutions decided that housing would be a good area to base their derivative production on. Just like Andy Warhol, it was simply a matter of choice..

After a while, as they became more confident, financial institutions began to imagine all kinds of strange flavours of soup in the images they produced. They could do this because no one dealing in these images was actually going to eat any soup or have to taste it. Unlike the Campbells soup company there no   constraint on the about what flavour of soup got the financial institutions could produce.

And this went on until 2008 when those who dealt with and owned this new form of art became increasingly worried about the validity of their purchases. This can and does regularly happen in the art world of course. Some art appreciates in value and some doesn’t.

Now imagine that Andy Warhol found that his ‘mosquito wing’ flavour soup tin paintings weren’t being well received by the critics or selling so well. So he contacts the Campells soup company and tells them that they need to actually start producing mosquito wing soup so that he can point to the real tins on a supermarket shelf and prove that his vision is valid.

‘Why In Gods Name would we want to do that?’ asks the soup company

‘Because I am a very famous artist’ says Andy Warhol

‘The people who buy and trade my art are very rich and very important. If they lose money on my paintings and go bankrupt this will bring the entire economy down. In other words, I am Too Big to Fail’

And that is more or less what actually happened in Quantitive Easing!

For the past seven years, like Oliver Twist and the foundlings in the workhouse, savers have been put on an enforced diet of Campbells Very Thin Gruel. Meanwhile, the sick and the old have been treated to Campbells Good Old Fashioned Poverty Broth.

Developing economies have enjoyed Campbells Hyper Liquidity Hot Money (a spicy concoction that burns going in and burns even more at the other end)… And for the upper echelons of the market it is Campbells Extra Thick Full Fat Cream Flavour.

And the reason that the shelves are full of this stuff and are going to remain so for the foreseeable future, is so that the derivative soup tin paintings look authentic and the proclamations they made are valid…

Bon appetite.

 

 

2016: The Great Unraveling

 

 

 

Had a coat of fine leather and snakeskin boots
But that coat always had a thread hangin’ loose
Well I pulled it one night and to my surprise
It led me right past your house and on over the rise’

 

‘Lucky Town’- Bruce Springsteen

 

The World’s Political And Economic Order Is Stronger Than It Looks

8:39PM GMT 30 Dec 2015

 Telegraph.co.uk/finance/economics/12074226/The-worlds-political-and-economic-order-is-stronger-than-it-looks.html

In the last days of 2014 I identified 2015 as the first Year Of Culture. I described the rise of the cultural constituency – a new kind of sub national grouping transforming the nature of politics internationally and domestically.

The dramatic rise of SYRIZA in Greece, PODEMOS in Spain, Trump in America, and even the division of Scotland and England between SNP and the Conservative party proved my observation to be accurate. No one else came close to predicting the rapid and transformative rise of the cultural constituency .

My analysis comes from the perspective that fundamental and far-reaching change is taking place. This affects not only the way that politics and economics is practised but the core ideological principles that underpin these disciplines in the ‘western’ world.

Economics as we have understood it has fallen apart – there is no longer an economic rationale -a unifiying ideology that underpins the debate between opposing factions. Instead, it has been substituted for by a cocktail of emotion and morality that is the precursor to fully fledged sub-national identities.

Until the end of the Cold War questions of group identity and conflict appeared to be successfully subsumed within the modern nation state. It was argued by our liberal elite that this process of sublimation to liberal democracy would continue throughout the world. Loyalty based on district or ethnicity or religion would gradually wither away and be replaced by loyalty based on ‘class’ and comparative economic advantage economic rationale.

 

This transformation was the essence of progress and modernity and was supposed to be unstoppable. But by now it is now becoming increasingly obvious that not only has the global process of liberal expansion stalled, it is now being reversed– even within the core nations of Western Europe where it began 450 years ago.

The bigger picture has been revealed over the past year. If 2015 was the first Year of Culture then 2016 is the first year of The Great Unravelling.

In a recent piece in the Telegraph, ‘The World’s Political And Economic Order Is Stronger Than It Looks’ Ambrose Evans Pritchard (AEP) compares the world as it is now and as it was in two other periods of great upheaval; the interwar decades between 1918 and ‘39 and the time of The Thirty Years War that divided Europe into Protestant and Catholic states.

In AEP’s brief description what is immediately striking is the central significance of Germanic thought in these crises; its liberal wing personified by Erasmus and Stefan Schweig, its prescriptive wing by Martin Luther and Adolf Hitler.

 

It is also striking to note that despite recognising the centrality of German politics and culture in the rise of Protestantism and the World Wars, AEP somehow fails to recognise the possibility that German culture and politics is again at the centre of a global crisis we now find ourselves in.

 

Indeed, it is not even clear that AEP is sure that there IS a specific crisis.

 

‘Readers have scolded me gently for too much optimism over the past year, wondering why I refuse to see that the world economy is in dire trouble and that the international order is coming apart at the seams’.

 

His central prognosis is that things could be a lot worse; is this justified optimism or blindness?

 

AEP is unable to see both the ‘Germaness’ or the danger in the present crisis because contemporary events frame the end of Empire, something which is likely to be beyond the ability of the adherents of that empire to discuss rationally.

 

Protestantism and the Enlightenment were markers for the beginning of the age of the modern Germanic nation state which displaces ethnic and cultural regional identity. Luther and Protestantism represent the birth and growing pains of an Empire Of Thought co-existing with the physical Germanic empire. The split between Protestant and Catholic thought in Germany was characterised by German philosophy as the failure of Catholic thought.

 

The World wars that began almost exactly three hundred years after the Thirty Years War represented another intellectual milestone -an irretrievable split between Continental German and Anglo Saxon thought. This split centered on the failure of the liberal continental German tradition of Goethe and Schiller (and even Marx) to resist the rise of barbarism. This was in turn characterised by Saxons as the failure of continental German thought.

 

There is a pattern here: The prevalent form of thought is said to have failed as a competing form of thought emerges, then there is an unraveling that spirals into conflict.

 

The Technical Basis For Civilisation

 

A global unified Germanic philosophy emerged from Protestantism, based on the idea that there was a technical basis for ‘civilisation’ that dominated more or less the entire world:

 

‘Zweig’s description of Europe in the years leading up to 1914 is intoxicating. Everything seemed to be getting better: wealth was spreading, people were healthier, women were breaking free’….He could travel anywhere without a passport, received with open arms in Paris, Milan or Stockholm by a fraternity of writers and artists. It was a cheerful, peaceful world that seemed almost untainted by tribal animosities’ (!-AP)..

 

It was believed that the more technologically advanced a society was, the more civilized it was. The more civilised it was, the more morally developed it was. The impulse and capability leading someone to develop a combustion engine is the same impulse leading someone to create a sewer system, universal education etc. It is a process of improving the lot of mankind through individual effort.

 

Ironically perhaps, this argument reaches its apotheosis in Karl Marx (a Protestant family converted from Judaism, missing out Catholicism on the way!), who claimed that a physically materially advanced society is better in every way than a non developed society more intelligent and more moral. Crudely put, it is further along the road to ‘inevitable’ revolution and socialism.

 

But the fetishisation of technological development ended in Auschwitz and Hiroshima, after which it was undeniable that technology was also an enabler for what can only be called bestiality. WWII showed the world that you could be a savage with a V2 rocket and a computer just as easily as you could be a savage with a hatchet and a headress. The chimera of technology and civilisation was dead.

 

After the worldwide discrediting of German philosophy a section of the elite sought to preserve what they could of German intellectual heritage and corresponding cultural and political power. Welfare and Multiculturalism are what they took from the burning ruins of Germanic philosophy. These were the post WWII liberals that created the Germanic welfare societies and the European Union.

So what does it mean to say that the German elite wanted to save global Germanic philosophy? They wanted to save it from being lost within the world. The C20th saw German philosophy transformed in a few decades from a global transformative force to one in danger of being completely despised and ignored. Post war Germanic politics, both ‘left’ and ‘right’, is the process of rehabilitating German philosophy and society in the eyes of the world

 

This collapse of German philosophy was exactly the inevitable consequence of a fratricidal inter-Germanic war. After all, how can German philosophy claim to be the all inclusive end point of human civilisation when both types of Germans are trying to destroy each other?

‘even during the slaughter of the First World War, Europe still had a moral conscience. All sides still bridled at any accusation that they were violating humanitarian principles.

…Two decades later, even that had disappeared. Zweig lived to see his country amputated, cut off from its economic lifelines, and reduced to a half-starved rump.’.

German philosophy is at its root a philosophy of total world domination – its proponents on ‘left’ and ‘right’ only differ in that they advocate the use of force or industry or intellect to achieve this end.

 

From its inception German philosophy understood itself to be the future the product of progress and development. All nations HAVE to become nation state democracies because this is the consequence of ‘inevitable’ development- It claims that everybody in the world ‘yearns’ to be ‘free’ etc. German philosophy is based on Universalism therefore it has to be all subsuming. It cannot be just one of many philosophies. In a grand irony, the philosophy of competition cannot ever accept the validity of any competition with itself!

This is the kernel inside the United States of Everywhere: ‘Do you accept the pre-eminence of German philosophy?’ Seen through a contemporary prism this question presents as: Does the developing world rise because it has adopted Germanic liberal capitalist thought or because it has resisted it?

 

This question was certainly open in the initial period of globalisation when it seemed that the ‘West’ was instigating a free and comprehensive exchange of ideas and material with the rest of the world.

 

However, since the debacle of the ongoing Mid Eurasian wars and the chaos they have brought, it is becoming increasingly harder to deny that it is only through resistance to Germanic thought that progress is achieved or even basic human civilisation maintained. Developing nations are increasingly forced to turn their back to the ‘West’ in order to survive.

 

Even Saudi Arabia-a direct creation of Anglo Saxon foreign policy now finds itself driven into conflict with the nation that sponsors it as a consequence of the chaos that is engulfing the entire Middle East.

 

This brings us to what really appears to be bothering AEP. What he describes as the “managed “rise of China as competitor to the USA. AEP chooses to see this as a matter of political and economic transition rather than a cultural one.

..The fateful rupture between the US and China that many feared has not in fact happened. Washington has so far managed the rise of a rival superpower more or less benignly.

China has just been admitted into the governing elite of the Bretton Woods financial system with the backing of the US Treasury. …Barack Obama and Xi Jinping steered through a sweeping climate change accord in Paris, the template for a new G2 condominium.

In case this all seems a little implausible:

‘This is not to deny that the Pacific Rim remains the world’s most dangerous fault-line. The South China Sea is on a hair trigger. The US Navy faces the unenviable task of defending the global commons of open shipping lanes without crossing an invisible strategic line.

But not to worry:

.. the Chinese hubris that seemed so alarming four years ago has faded with the dawning realisation that they are not magicians after all – and America is not in decline after all’

What an image- the USA as defender of a ‘global commons!’ At this point I can’t help wondering if AEP is entirely serious about all this. Still…

 

Underneath the rhetoric, AEP implies that China is so thoroughly westernised that there would be no significant difference in the way global politics and economics operates were China to become the single most powerful economic and political power in the globe.

 

In contrast, I would argue that what we have already seen of China’s limited rise to power is undermining not only the economic ideology of capitalism, but even more importantly, the cultural identity that underpins it.

The German nations of NW Europe have sought ‘moral’ leadership through their loudly proclaimed willingness to accept middle eastern refugees. However, it has become increasingly apparent that no group of nations, no matter how willing they are to adopt multiculturalism, are able to physically cope with the effects of millions of foreigners who are motivated by and adapted to, what is fundamentally an alien understanding of life, culture and morality.

 

But this is not simply about Islam. A Eurasian Identity is rapidly challenging and threatening to overwhelm European identity as we have understood it for the past 400 years. The fall of Europe and the rise of Eurasia are increasingly obviously coterminous- graphically illustrated by the wave of mass immigration that has transformed the political and cultural landscape of western Europe in the past year.

 

The stark choice is that you can have a modern open welfare system of the type that has characterised post-World War II Germanic societies, or you can have mass immigration but you cannot have both.

 

So this is where the nations of western Europe find themselves. They can continue to adhere to post WWII principles in the form of welfarism or they can continue to adhere to post WWII principles in the form of mass immigration but they cannot do both.

 

The similarity between this period of crisis and the preceding crises becomes clear. In the time of Erasmus and Luther, German societies could no longer reconcile their fundamental beliefs with those of the Catholic church. The Holy Roman Empire was split and the German empire was born.

 

At the beginning of the C20th the global Germanic empire could no longer reconcile its internal differences and split. The Anglo Saxon empire separated and the Germans tried to create the European Union as a response.

 

And now at the beginning of the C21st the German nations are beginning to split within themselves because of the tension between multiculturalism and welfarism. And this is the Great Unraveling because once these nation states go, German philosophy goes finally and completely with them.

I pointed this out in a piece I wrote about Anders Brevik and the mass killing of Norwegian Social Democrats a couple of years ago. I argued then that the killing was the symptom of precisely this impending collision between the two remaining strands of postwar thought; Multiculturalism and Welfare. Since that time this contradiction has only become sharper.

 

in writing about Vector History I have observed that the intellectual framework behind welfarism is a feudal/integrating one whereas that behind mass immigration is a capitalistic/disintegrating one. Inevitably, these two impulses will come into conflict. Both are German ideas but only one can survive.

Spelling It Out or It’s Not You, It’s Me

You can often hear proponents of the ‘Austrian’ school and others on the ‘right’ calling for the market to set base interest rates. This bizarre call is a non sequitur – meaningless.

 

The market is made up of both buyers and sellers and their interests are necessarily conflicting. The market does not ‘speak’ with one voice; by definition, it cannot. How can it set anything?

 

It is like asking a field of runners halfway through a race to come to an agreement on where the finish line should be…

 

Of course the market can’t collectively determine anything. Firstly, when the market ‘speaks’ it is the preponderance of individual views of within the market. When the market ‘speaks’ it is the result of something; it is a reaction; the exact opposite of being the cause of something.

 

Secondly, for communication to convey meaning it has to be the result of some form of reason. For the market to actually express a meaningful point of view it would be necessary for it to consciously arrive at a point of view, enunciate that point of view and stick to it.

 

But the market changes, literally from second to second because the balance of forces within the market changes from second to second. Even if you were to somehow accept the idea of ‘speech’ from the market, you have to accept that the meaning of that speech will change in a couple of seconds time. Even if you try to argue the market has a mind, you have to accept that the market can never make that mind up.

 

Because although the buyers and sellers who make up a market are supposed to be rational agents expressing their own rational self interest, the cumulative consequence of their actions is not. These are the ‘animal spirits’ of ‘fear’ and ‘greed’ that everyone agrees the market expresses.

 

Market religion claims that by means of alchemy the market changes base instincts into what is best for everybody inside and outside the market. Somehow something even better than considered reason appears spontaneously!

 

The market cannot speak because it cannot have an established continual rational point of view and it cannot create a rational point of view because it is made up of conflicting impulses. If there was no such conflict it wouldn’t be a market.

 

It does not matter whether it is a pre-centralised system of private banks or a modern central bank system, a rational market ‘mechanism’ to set base rates is impossible.

 

It follows from this that if base interest rates are to be set for any given period, they have to be presented to the market in advance by somebody outside the market, working to some kind of rationale. And every nation and collection of nations operates on this basis.

 

So what is behind the call for base interest rates to be set by the market? The main reason given is that interest rates are seen to be all going one way. Since the Credit Crunch and the implementation of ’emergency measures’ central banks have followed a Zero Interest Rate Policy.

 

Of course, it is becoming harder and harder to see ZIRP as an ‘emergency’ measure after seven years or so. Direct government dictat has the consequence of shredding the rhetoric of supposed central bank independence.

 

And ZIRP disguises a secular decline in interest rates that has been taking place in the Anglo Saxon economies since the 1980’s. Economists on left and right have no way to explain this outside of tautology: Interest rates are low, well…. because interest rates are low.

 

I argue that base interest rates are proclamations made by an authority, be that authority elected government officials or ‘independent’ central banks.

 

The interest rate setting authority makes a proclamation; sometimes characterised as an offer depending on how you wish to portray it. Depending on how many individuals take up that offer, the issuing authority amends the offer next time, this is the market reasoning justification for the system.

 

If an increasingly large number of people take up the credit offer at a given interest rate the interest rate is increased to stem the ongoing flow of credit applications. If a decreasingly small number of people take up the credit offer at a given interest rate, the interest rate is decreased to stimulate the flow of credit applications.

 

You might ask: Why don’t authorities amend the interest rate from hour to hour or even minute to minute – why do they only change the interest rate quarterly?

 

The answer is they need time to collect, collate and process the information. Because their decision is supposed to be based on reason to some extent. You might not agree with their reasoning, but you wlll see that if a central bank announced that base interest rates will be 1.5% for the next hour based on a ‘hunch’, the economic system it was set up to administer wouldn’t last for very long!

 

In other words the system we used to have and the system as it is now are not the result of arbitrary choices, they operate at the exact limit of development allowed by politics and technology at any given time.

 

Since the system is not really open to arbitrary change what does that say about the decisions that the system makes? It means that the decisions it is making at this time are the only possible decisions it can make given the limitation of politics and technology. If we understand the constraints of politics and technology we can understand what the decisions have to be.

 

With this in mind, we should address the fact that the main decision of central banks seems to be not to make any decision. Interest rates are effectively at zero and staying there. We have the quarterly ritual of: ‘Will they, won’t they move off ZIRP?’ and the answer so far is always no.

 

This is problematic for me as I have argued that moving towards a new baseline average interest rate of 2.5-3.5% is the next step in the implementation of Democratised Money. I have also argued that international exchange rate blocs are a fundamental requirement for the international framework for Democratised Money. And neither of these things has happened yet.

 

It is possible that the delay in normalising interest rates and creating exchange rate blocs is linked to the Pacific and European TTIP agreements. Trade blocs like Pacific and European TTIP are an inevitable part of the Democratised Money world. It could be that nothing else will be done until they are both securely in place. Now that the Pacific TTIP is moving forward again, the increase in interest rates and exchange rate blocs will be implemented.

 

But I think there is another reason for continued ZIRP and it comes from the internal ‘logic’ specific to this exact time and place.

 

All central bank rate setters, be that the Federal reserve, The ECB or the Bank of England are ‘democratic’ to the extent that they vote to decide about where to set base rates but that is as far as the democracy goes.

 

Nobody elects the members of any central bank committee, they are there by appointment. So they cannot claim any democratic mandate per se. The justification for being there is actually an inversion of a democratic argument.

 

Independent central bank advocates argue that political control of base rates by an elected official is detrimental to market confidence in that rate. The rate setter needs to be able to operate independently of democratic ‘pressure’ e.g. pressure from electorates. Democratic voting is the method by which rates are arrived at, but technocratic reasoning is the justification.

 

But this line of argument presents certain problems.

 

The post 1970’s call for independent banking was justified by the Monetarist shibboleth of inflation. This was supposed to be the one and only overriding consideration. Monetarists claimed that if inflation was under control and the money supply regulated all would be well. But as the Credit crunch and resulting QE opened the door to direct political interference reasons had to be found to provide cover for and justify direct interference. And so the mandate of central banks was modified to include macro-economic ‘stability’.

 

When the situation was ‘stabilised’ to some extent it was suddenly found that central banks also needed to target unemployment and so interference would have to continue.

 

When employment seemed to recover somewhat, central banks discovered that broad economic growth must also be added to their macro economic mandate.

 

When growth seemed to recover somewhat central banks discovered the ‘productivity gap’. When it became apparent nobody really believed in the productivity gap or understood what it was, central banks discovered the threat that interest rate rises posed for developing economies and that is where we stand today.

 

The specific logical conundrum is this: If central banks are indeed identifying problems and fixing them as they claim to be, then they either have to find new problems to fix or to stop interfering in the market at some point. On the other hand, if central banks are identifying problems and not managing to fix them, then something is seriously wrong with the central bank system itself.

 

The upshot of this is that insurgents continually claim that central banks have failed to solve any of the serious macro economic problems. The establishment claim that they have solved a number of problems and are effectively managing the new ones that always seem to be appearing.

 

But what unites establishment and insurgents is the claim that central bank interference in the economy is somehow voluntary and limited. The establishment claims that the central banks will stop interfering at some point in the future because they will have fixed all the problems. The insurgents claim that the central banks interfere because they want to protect their fraudulent ponzi scheme etc.

 

But I argue that Monetarists have no choice but to interfere to in order to protect democratised money. Once the creation of privately issued money began, everything else that followed was inevitable.

 

The purpose of QE and ZIRP is to defend and promote the growth of privately issued democratised money. The Fed and the Bank of England cannot and will not stop with emergency measures until they believe that derivatives are completely integrated into the global financial system in a way that means they can never be removed.

 

It is this imperative to protect democratised money that has been the real reason behind the ongoing interference in money markets. It is this imperative that is the logic behind QE and ZIRP. And it was the belief that the project of irreversibly integrating democratised money has largely been achieved that led to the recent hints of a rise in base interest rates in America and Britain.

 

But the Fed cannot bring itself to pull the trigger. They are trapped in their own logic.

 

By citing an increasing number of different reasons for intervening, the central banks built for themselves a new group of constituencies. Effectively Inflation, GDP Growth, Unemployment, Productivity gap and Developing economies all represent constituencies that the central bank committees have come to claim to represent. And this is the argument that has largely been successful in justifying the central bank approach to the markets. It is a polygamous marriage of convenience. But to raise interest rates will undermine the interests of this collection of constituencies and bring to the fore the question of what the purpose of the central banks actually is.

 

This is the reason central banks are reluctant to begin raising interest rates. They cannot say they have fixed the central problem and ‘new normalise’ base rates without saying what the problem they have fixed, is!

 

The collection of constituencies that central banks have gathered together as a justification and cover for the democratised money project has proved to be very useful. But at some stage there is going to have to be a parting of the ways and at that moment a lot of people are going to be asking the central banks: ‘Did you ever really love me?’

In Reply to RossC or The Iago Strategem.

220px-Edwin_Booth_as_Iago

I received the following from RossC :

 

‘Hello I have followed your blog and read most of your Book/PDF not to the end yet so it may be in there but how do we take down the monetarists? how do we shift the battle field so much that it is possible to defeat them?

 

There is I assume no going back to socialism as few would want to so how do you jump past what is and what would you present to the people to make them want to follow.

 

I am a New Zealander and we have had 30 years of monetarist policies with constant privatization, destruction of the left and the other same old things house boom, wage stagnation and attacks on welfare yet still we vote national (tories to you) and even with a labour government we get only small changes.

 

We do have an MMP electoral system with 70% voting this leaves 30% outside the system a large portion young or poor non-voters.

 

What shape should any future look like to oppose the monetarist system?

 

Cheers’

 

RossC, Thank you for your comments:

 

‘how do we take down the monetarists? how do we shift the battle field so much that it is possible to defeat them?’

 

There are two aspects to your question.

 

  1. The short term need to stop this specific phase of the Monetarist program and
  2. To address the underlying causes that brought Monetarism about.

 

Monetarism and the Democratisation of Money is the project to privatise the issuance of money, that is to privately control what money is issued, what kind of money it is, and when it is issued.

 

Why is this a problem?

 

Because this project seeks to destroy the Social Aspect Of Money– the fact that money ‘in common’ is in itself is a social good.

 

If your neighbour has a nice garden and a clean tidy house it benefits you and it benefits everyone in the neighbourhood, even though individual people in the neighbourhood don’t actually own any of the house. You benefit from the social aspects of the house. It is part of THE COMMONS. Of course if the house is scruffy and run down then you and everybody else suffers correspondingly.

 

Though people find it hard to understand, money basically has the same social aspect. The kind of money in circulation, where and when it is put into circulation affects the well being of everybody. The social benefits of money as a common good benefit everyone, even people who don’t actually own any money!

 

This is the antidote to Monetarism.

 

Just as Monetarists believe that there is no such thing as society in general terms they also believe that there is no such thing as society in monetary terms.

 

From what I have said that we can understand the Monetarist project as the destruction of the social benefits of money. Our response should be to restore and expand the social benefits of money. That means we have to understand and explain the social benefits of Government Issued Money in common.

 

Here are some of the social benefits of Government Issued Money that Monetarists are destroying and the way that they can be restored:

 

 

Social Benefits of Government Issued

Money In Common

Why Is This A Benefit? How Monetarism (Democratised Money) Is Removing This Benefit How Can We Restore This Benefit?
The right to privacy Government issued Paper money can be exchanged and stored in private. You can conduct your financial affairs in line with your own best interests by means of free association giving you comparative rights with those wealthy enough to buy privacy. The Shadow Economy is privacy for bankers FROM public scrutiny.   Transferring more and more economic activity to digital banking and the Permanent Credit Economy means all public activity can be tracked and permission given or withheld by a digital economy elite. (Ditto Bitcoin). Remove all legal limits on amount and purpose of cash transactions. Strictly control information that can be gathered and passed on bank activity. Advise people to hold as much cash as possible. Rebuild the cash economy. Make the Shadow Economy (Democratised Money) illegal.
The right to enter in and out of the economy at will. By having access to money notes that can be entirely held outside the economy, each individual can maximise personal financial benefit by choosing where and when to interact with the wider economy. By destroying bank interest and forcing growing dependence on the Permanent Credit Economy this is the Participation Economy. By allowing banks to operate with below minimum reserves. By maximising the amount of money held by individuals in cash. By forcing all parts of the economy to accept cash as payment and payments to be made in cash if required. By restoring interest rates to long term averages. By making derivatives (D Money) illegal.
The right to collective negotiation with the state on taxes and benefits. Collective groups will have more leverage than individuals when dealing with the state. By preventing any democratic political access to the control of the issuance of money Make monetary policy the subject of democratic process. Make illegal any money issuance outside of political process.
The right to collective negotiation with private entities Collective groups will have more leverage than individuals when dealing with private entities. By destroying the cash wage economy, the traditional employment model and trades unions. Restore the cash wage economy the traditional employment model and trades unions.
The right to commonly decide interest rates Interest rates can be used to promote the kind of economy and job availability that maximises benefit for the most people. By preventing any democratic political access to the control of the printing of money Make monetary policy the subject of democratic process. Make illegal any money issuance outside of political process.

 

 

Money in common is a social good. Money that is privatised, Democratised Money, is a destructive force. Its purpose is to destroy the post war settlement that benefited the ordinary people of the developed world to such a great extent.

 

The points in the above table outline a short to medium term strategy for dealing with Monetarism. What about a longer terms strategy, dealing with why Monetarism has come about?

 

A couple of the points RossC makes illustrate this very clearly.

 

‘There is I assume no going back to socialism as few would want to so’

 

This is a strange thing to say. Socialism has never been more popular among the rich and bankers. The entire financial system is run as an international socialist syndicate. It is widely accepted in right wing as well as left wing circles that what we have now is ‘Socialism for the rich and Capitalism for the poor’. How can we explain this bizarre set of circumstances? We have to turn to the study of WHITEISM.

 

 

‘ how do you jump past what is and what would you present to the people to make them want to follow’.

 

We must explain the Social Aspect of Money, this is the missing part of the opposition response to Monetarism and Austerity. Monetarists have succeeded in promoting the idea that it is in the best interests for a small elite to control the money supply. This is the essence of their attack and this is the place we must meet them head on.

‘ yet still we vote national (tories to you) and even with a labour government we get only small changes.’

 

There is a direct relationship between the Democratisation of Money and Whiteism. There is no long term answer without understanding and addressing Whiteism.

 

The key to take away from all this is that:

 

There are social goods that we all hold in common. Monetarism seeks to take advantage of the fact that most people do not understand the importance and the benefits of these social goods. They hope that this ignorance will allow Monetarists to hijack these social goods permanently and to use the massive power this gives them to institute a new permanent global power system.

 

We have not lost control of these social goods yet, although the entire purpose of Monetarist propaganda is to try to convince us we have. Call this the IAGO STRATEGEM.

 

Our battle is to inform people of the existence and benefit of these social goods in particular COMMONLY HELD MONEY and to convince them to fight to defend them.

 

This is the battleground where the fate of Monetarism will be decided…..

 

Write again soon….

 

@P

 

 

 

 

A SHAME Or Why Crackernomics Matters

crying-sad-clown-23899989

It has been 7 years since what has come to be generally called ‘The Credit Crunch’ exploded in the world economy. And now after those 7 years Monetarists are ready to declare complete and unconditional victory in their battle to fundamentally and irrevocably alter the global economic and political landscape.

 

‘Alternative’ voices on the ‘left’ and the progressive ‘libertarian’ movement have totally failed to mount any sustained attack on the physical and intellectual structures that Monetarists have put in place. They have conceded every substantial point in economics and politics in the post Credit Crunch world. As a consequence there is nothing to stop the Monetarists concluding their takeover of existing systems and creating new global structures to further their plans.

 

Monetarist global restructuring is a massive and risk laden enterprise. But at every step of the way; at every major juncture when there was a danger of the Monetarist plan coming unstuck, the one thing that Monetarists have been able to count on is the unfailing inability of their opposition to understand the significance of the situation and take appropriate action.

 

As a consequence of these repeated failures what began as a hard beating has turned into a humiliating rout. Were this the extent of our woes it would be bad enough. But intellectual and moral collapse means that the very ideas that could underpin any chance of an alternative being created in the future are being corroded to the point where they will be soon be unsalvageable.

 

Those who claim that alternative economic and organisational forms will somehow spontaneously spring up as a response to the Monetarist onslaught are worse than naive. They are perhaps the most destructive force we face. Not only do they not challenge the new world order, but their ideas and prescriptions are built upon the very forms that give rise to it. They reinforce it. They guarantee its total victory.

 

You may disagree with this prognosis.You may think it overly gloomy. Or you may accept some of it but take comfort in the fact that ‘life’, your life and the lives of those you care about will go on, maybe not as well as before, but go on nevertheless. And in some sense you are right. It might be possible to put your head down, shut your mouth and try to get on with things the best you can within the situation you find yourself.

 

But that is simply to rationalise and accept loss. To turn your face away from the horror of your situation. Because once lost, freedoms are not retrieved, no matter what you might say to console yourself. Within half a generation people will not even remember what those freedoms were. They will become incomprehensible marks and signs in a book that mean nothing. Your children will be taught to despise them just as you have been taught to despise the freedoms and the dignities that existed before Capitalism. Or even the freedoms and the dignities that existed before WWII…

 

…Just like Winston Smith scribbling in his notebook. The real tragedy behind 1984 is not that it is so bad, it is that it is not so bad. People adapt. After a while the amputee can’t even remember what it was like to have two legs. That is not rhetoric, it is reality. And those who are most adaptable, best at forgetting, rise to the top just like Darwin says they must. We are programmed to forget.

 

Make no mistake, this is fundamentally about freedom. If you imagine yourself as an individualist and a libertarian who is happy to see the welfare state being dismantled and the post war liberal corporatist settlement being torn up, don’t kid yourself that the state is actually going to shrink as a consequence of all this. Not for one second.

Because if there is no butter on offer there will surely have to be plenty of guns. Now you are going to find out what a big state is really all about…

 

When I began writing the ‘United States of Everywhere’ I did so out of a sense of increasing incredulity at what I was seeing unfold. I saw the Credit Crunch and Q.E. as clearly the product of Monetarism, after all Q.E. was simply Monetarist ideology taken to its logical conclusion.. Was this analysis overly simplistic? Bernanke and Greenspan, all admitted Monetarists were advocating unprecedented printing of money while dismantling the post WWII welfare state. What else could this be but hard core Monetarism? I thought that many others would see this as clearly as I did and argue from this context. But they did not.

 

I tried to understand what could be stopping the majority of people from drawing what I thought were fairly obvious and uncontroversial conclusions. I began to wonder if there was something more deep seated within ‘western’ society that could account for this. I began to question the fundamental idea of progressive politics and of the left. Not whether they were ‘right’ or ‘wrong’ but whether they had ever really existed in any meaningful sense. And I began to research more closely what had actually happened in the Credit Crunch instead of relying on anybody elses (including the self-proclaimed opposition) analysis. And this was when I really became uneasy.

 

When I looked at actual information, I quickly became aware that what was being reported as the course of the Credit Crunch and Q.E. was not what was actually happening. And if this failure to report was true of the ‘establishment’ it was doubly true of the ‘opposition’. I could rationalise to myself that I understood why the ‘establishment’ would seek to put a certain spin on what was happening but I could not understand why the ‘oppostion’ would as well. It was clear to me that the problem was not just what was coming out of the opposition but what was going in. The input was just as distorted as the output. Why was this?

 

As I deconstructed what I read I realised that the securitisation of mortgages (bundling and re-selling), was a self sustaining system and that mortgages were being created to ‘feed’ the mortgage securities system and not the other way round! This was a self sustaining, potentially unlimited system and it was actually a license to ‘print’ money! In fact Securitised Mortgage Bundles (financial instruments) were money. What else can they be? What else can the term ‘financial instrument’ actually mean but money?

 

Financial:

pertaining or relating to money matters; pecuniary:

 

Instrument:

a tool or device used for a particular purpose; especially : a tool or device designed to do careful and exact work

 

I initially called this process the ‘Privatisation of Money’ but I realised that this terminology would be confusing because people understood money as private anyway. They were unaware of the social aspect of money. I realised that this process was actually better characterised as the Democratisation of Money.

 

Only later did I appreciate the significance of this.

 

The nearest analogy I can think of is that of a scientist drawing conclusions from a set of data. If the scientist draws an incorrect inference from data even if he does this knowingly, he is still operating within the terms of science, although bad science.

 

But when a scientist makes up data to conform to a pre arranged conclusion that is ‘Democratisation’. And if those conclusions are used to make a drug which kills lots of people that is the Credit Crunch. And if the scientist and the drug company he works for is let off by the Courts with paying a fine for all the damage they have caused, that is the United States of Everywhere.

 

After this I drew a link between Monetarist policy and privatisation. It went like this:

 

Monetarists seek to manage the economy through control of the money supply.

They seek to maximise privatisation.

They will seek to merge privatisation and Monetarism.

They will seek to privately control the money supply.

 

Is this analysis so incredible?

Is it so unbelievable?

I can’t understand why it is not generally accepted.

 

Well, that’s a shame of course but none of the above explains why Crackernomics matters to you, now.

 

Because all around us, if you look you will see that the opposition is starting to adapt to the new reality.

All the right wingers who were screaming about hyper-inflation and the Austrians who said there never could be a rise in interest rates and the radical leftists who put their faith in SYRIZA and all the countless others, the Gold Bugs and the Bitcoiners and all the rest are all starting, bit by bit, to make their accommodation with the way things are going to be.

 

Of course there will be back biting and recriminations and score settling and grumbling and selling out and all that stuff but when the smoke is settled the Monetarists will have got everything they wanted.

 

And the reason for that is the opposition have never really understood why they are fighting.

 

They have never really understood what they are fighting for.

 

And that is a shame.

 

The only way anyone can really appreciate what is actually at stake is through understanding Crackernomics and the Democratisation of Money.

 

For this reason I have no hesitation is recommending that you spend a little of your time reading ‘Crackernomics’ (it is free to download).

 

And I have no hesitation is suggesting you recommend it to anyone you think might be interested.

http://www.smashwords.com/books/view/312882

CULTURAL CONSTUENCIES : FALLOUT .Economic Circles

krugman

 

The Austerity Delusion Paul Krugman Guardian April 29 2016

http://www.theguardian.com/business/ng-interactive/2015/apr/29/the-austerity-delusion

‘It is rare, in the history of economic thought, for debates to get resolved this decisively. The austerian ideology that dominated elite discourse five years ago has collapsed, to the point where hardly anyone still believes it. Hardly anyone, that is, except the coalition that still rules Britain – and most of the British media’.

 

In the aftermath of a shock Conservative general election victory there is inevitable fall out across the mainstream left and nowhere more so than in the Labour Party camp.

 

I argue that ‘classical’ economics has become increasingly irrelevant in the new world. Comprehensive state control of the economy means that there is no economics now; only politics –and that is one party politics.

 

Since there is no way to manifest and resolve differences through economics, culture is re-emerging as the defining pivot around which social conflict is based. With this in mind I argued that the Conservative victory was essentially the result of playing to a cultural constituency and not any economic rationale.

 

Nevertheless, despite the widespread admission among the left that culture is raising what they regard as its ugly head, many on the ‘left’ are not willing to kiss goodbye to old fashioned economics just yet.

 

Two camps are emerging to contest leadership of the English opposition in the aftermath of the elections. In the blue corner we have ‘Blairism’ and in the red corner ‘Keynesianism’ is being dusted off for a re-run against austerity.

 

The nominal question being asked is: Which of these two economics can best offer an alternative to the program of the Conservatives over the next five years?

 

Blairism was concocted as a replacement for the Keynesianism that had become   discredited as a result of 1970’s industrial production collapse. Tony Blair famously signalled the end of independent political or economic perspective when he abandoned the Labour Party commitment to Clause 4 and wealth redistribution. Whatever opposition in Britain would be from now on, it would not be based on alternative political economy.

 

Fast forward twenty years and post Credit Crunch, Blairism itself was utterly discredited. The gap between rhetoric and reality encapsulated in an infamous speech to the City of London in which Chancellor Gordon Brown opined that the world was witnessing the emergence of a ‘Golden Age of Banking’. Then came, well you know.

 

Following a leadership election Ed Milliband appeared waving the banner of ‘Not Blairism’. That’s not rhetoric on my part – ‘Not Blairism’ is literally what Miliband said he was campaigning under! And now that ‘Not Blairism’ has been roundly defeated there seems to be nowhere left for the ‘left’ to go.

 

Except perhaps back to Keynesianism, or Neo Keynesianism anyway.

 

Which brings us to Paul Krugman and his lengthy Guardian piece: ‘The Austerity Delusion’

 

Written shortly before the British election, it captures the essence of the Neo Keynesian argument; there was no need for Austerity and no economic justification for it. More surprisingly, Krugman then argues that it is only in Britain that a residual attachment to austerity remains,

 

‘I don’t know how many Britons realise the extent to which their economic debate has diverged from the rest of the western world – the extent to which the UK seems stuck on obsessions that have been mainly laughed out of the discourse elsewhere’.

 

Even a superficial survey of developed economies would quickly show that this is wishful thinking. All across the globe there is a sustained attack on levels of government spending on social programs. This is Austerity by any definition. The difference between those countries that have severe Austerity and those that don’t is the willingness on the part of the broad population to oppose such attacks and its ability to do so. Austerity is not the consequence of any intellectual difference on the part of politicians and economists.

 

Krugman argues that the drive for Austerity is motivated by business and media interests that are ideologically committed to ending the welfare state and which used the Credit Crunch as a pretext for doing so. This is essentially a variation on the ‘Shock Doctrine’ analysis popularised by Naomi Klein and this observation is surely basically right.

 

From this position Krugman continues that Austerity is essentially an optional choice   and that politicians could go another way should they decide to. The Keynesian alternative of deficit borrowing and spending can be used to refloat the economy or at least offset the effects of cyclic crisis. He argues this has happened to some extent elsewhere. He is at a loss to explain why it hasn’t happened in Britain.

 

‘Is there some good reason why deficit obsession should still rule in Britain, even as it fades away everywhere else? No. This country is not different.’

 

And since Krugman cannot think of a good reason why there should be Austerity, he is persuaded to think that maybe there is no Austerity, at least not any more:

 

‘The key point to understand about fiscal policy under Cameron and Osborne is that British austerity, while very real and quite severe, was mostly imposed during the coalition’s first two years in power’

 

‘Given the fact that the coalition essentially stopped imposing new austerity measures after its first two years, there’s nothing at all surprising about seeing a revival of economic growth in 2013’.

 

So British polity is labouring under the grip of an ideology – except that it isn’t !?!

 

Krugman readily understands that his analysis will require some clarification:

 

‘By this point, some readers will nonetheless be shaking their heads and declaring, “But the economy is booming, and you said that couldn’t happen under austerity.” But Keynesian logic says that a one-time tightening of fiscal policy will produce a one-time hit to the economy, not a permanent reduction in the growth rate. A return to growth after austerity has been put on hold is not at all surprising’.

 

‘Keynesian logic’ says that permanently lowering wages and benefits for the working population will not permanently lower their purchasing power and affect demand in the broader economy?

 

How does that work then?

 

No answer I am afraid, because Paul Krugman has moved onto more important matters. Not only is there not really any Austerity but it turns out that the media that Krugman said helped introduce Austerity never really supported it anyway:

 

‘…what’s with sophisticated media outlets such as the FT seeming to endorse this crude fallacy? Well, if you actually read that 2013 leader and many similar pieces, you discover that they are very carefully worded. The FT never said outright that the economic case for austerity had been vindicated. It only declared that Osborne had won the political battle, because the general public doesn’t understand all this business about front-loaded policies, or for that matter the difference between levels and growth rates. One might have expected the press to seek to remedy such confusions, rather than amplify them. But apparently not.’

 

And if you find Krugmans account of the activities of ‘sophisticated’ media outlets such as the FT confusing, wait until he turns to the‘left’:

 

It has been astonishing, from a US perspective, to witness the limpness of Labour’s response to the austerity push. Britain’s opposition has been amazingly willing to accept claims that budget deficits are the biggest economic issue facing the nation, and has made hardly any effort to challenge the extremely dubious proposition that fiscal policy under Blair and Brown was deeply irresponsible – or even the nonsensical proposition that this supposed fiscal irresponsibility caused the crisis of 2008-2009.

 

And not only the British labour party but just about everybody else East of New York:

 
‘… the whole European centre-left seems stuck in a kind of reflexive cringe, unable to stand up for its own ideas. In this respect Britain seems much closer to Europe than it is to America.’

 

It almost beggars belief that Krugman is seriously trying to imply that Democrats under Obama have offered ANY serious alternative to Austerity and that this response can be compared favourably with anywhere else in the world. And yet here we are.

 

How can Krugman have drifted so far from reality? The answer lies in his ‘Neo’ Keynesianism.

 

How does Neo Keynesianism differ from classic Keynesianism? Let’s look at Krugmans characterisation of his opponents as ‘Austerians’; obviously a play on Austrians

 

‘People holding these beliefs came to be widely known in economic circles as “austerians” – a term coined by the economist Rob Parenteau’

 

Which is something of a revelation, at least to me. I certainly had never heard of ‘Austerians’ before I read this article; but then again, I don’t move in ‘economic circles’.

 

Krugman is obviously reluctant to name his opponents as Monetarists, which is what they are. What could be the reason for his coyness?

 

Democrats in the USA and the Labour Party in Britain both accepted the basic principles of Monetarism over twenty years ago- ‘Blairism’ in Britain and ‘Clintonism’ in the USA. Krugman has no interest in discussing this history because if did, he would have to criticise the so called ‘left’ as much as the so-called ‘right’- if he was really a Keynesian, that is. And whatever else he is, Krugman is essentially a party man.

 

Outside of ‘economic circles’ the whole world knows that Labour is up to its neck in the Monetarist project even if Krugman is reluctant to come right out and admit it. Instead the truth is obliquely referred to by Krugman when he observes that :

 

‘ the crisis occurred on Labour’s watch; American liberals should count themselves fortunate that Lehman Brothers didn’t fall a year later, with Democrats holding the White House’

 

This is breathtaking, absolutely astounding, cynicism. Krugman is hanging the pretence that Democrats can lay claim to anti Monetarist Keynesianism on the fact that they weren’t actually caught with their paws in the Monetarist cookie jar in 2008!

Let’s recap;

 

  1. The economy is now controlled by the state. This is Monetarism.
  2. There is no possibility of economic conflict as we have previously understood it. Now conflict is cultural.
  3. Blairism expressed this truth (see my last post)
  4. But Blairism was discredited by the Credit Crunch
  5. Now Labour needs an alternative to Blairism. The remains of the ‘left’ hope it can be built on Keynesianism.
  6. But this can’t happen because no genuine Keynesian could support a Monetarist Labour/Democrat party. So now we have got Neo Keynesians, which are Keynesians that accept Monetarism.
  7. Neo Keynesians argue that so long as we don’t actually get caught directly implementing Monetarist policies, we can perhaps convince people that we are Keynesians (sort of).
  8. If we do this we can pretend that there is some kind of economic alternative.
  9. Which implies that some kind of economic debate is possible.
  10. Which means that the debate does not necessarily have to come down to culture.
  11. Because if it does, we are well and truly f*cked.

 

 

That more or less covers everything. Oh, except for:

 

Putting all the cynical narrow political interests of ‘economists’ like Krugman aside, would it be possible to actually implement some kind of Keynesian alternative to Monetarism?

 

Regretfully, the answer is no.

 

As it develops Capitalism increasingly makes stuff that is increasingly useless by processes that are increasingly inefficient and chaotic.

 

But not to worry, Capitalism has an app for that.

It is called economic collapse brand name ‘Creative Destruction’.

 

All the bad stuff is wiped away and we can all start again. Which is fair enough. Except that when ‘Creative Destruction’ was first cited as a good idea, there were a lot less people who lived in a much more resilient and sustainable way.

 

In USA for example, the European population lived in relatively dispersed settlements with reasonable access to necessities such as food and water. When there was the inevitable economic crisis and clear out in the late C19th, it could be weathered by the population without much government interference.

 

But by the early C20th, urbanisation and the concentration of populations meant that it was not possible to have a Capitalist clear out without catastrophic social consequences and unrest. So the state had to get involved.

 

Enter Keynesianism.

 

The basic idea of Keynesianism was to use government spending to buy up all the useless inefficiently made stuff that capitalism has produced and so avoid the catastrophic social consequences and unrest that would come from the inevitable clear out we would otherwise have to go through.

 

And this worked pretty well for a bit until we were just about surrounded by all the useless crap that had been made and we were running out of money to pay for more…

 

Enter Monetarism.

 

The basic idea is that the state cannot afford to pay to buy all the useless stuff that is being produced, since in theory the amount of useless stuff is limitless.

 

So the state is going to have to control what is being produced. But the state will try to keep this control to a minimum.

 

And this worked reasonably well until the turn of the century when the state found itself having to interfere more and more to try to control what was produced and what was done with the stuff once it had been produced.

 

And this took us finally to the Credit Crunch in 2008. And with Q.E. now the state is all in.

 

So contrary to what the Neo Con/Neo Liberal whatever say about the Neo Keynesian whatever, a return to Keynesianism would actually represent a step backward from the existing level of state interference in the economy!

 

Its Monetarism and Cultural Constituencies from here on.