Greece’s depression is IMF’s idea of ‘progress’

The International Monetary Fund congratulated itself last week for the splendid job it is doing in Greece, declaring the country “is making progress in overcoming deep-seated problems.” With an unemployment rate of 27.2 percent, an economy that has shrunk by at least 20 percent and children going hungry, one has to shudder at the thought of what a lack of success might look like.

Temple of Zeus photo by Andreas Trepte (www.photo-natur.de)

Temple of Zeus photo by Andreas Trepte (www.photo-natur.de)

The depression in Greece is the logical conclusion of austerity, but while Greece is the first in Europe to arrive it is not alone — the composite eurozone unemployment rate reached a record 12.1 percent in March. The eurozone unemployment rate rose to 24 percent for men and women below the age of 25; the European Union-wide rate is nearly as high.

The IMF’s solution? Eliminate more jobs. In its latest report on Greece, issued on May 3 following its latest inspection visit, the IMF graciously mentioned that Greece’s wealthy don’t pay taxes:

“Very little progress has been made in tackling Greece’s notorious tax evasion. The rich and self-employed are simply not paying their fair share, which has forced an excessive reliance on across-the-board expenditure cuts and higher taxes on those earning a salary or a pension.”

But the IMF report quickly followed up by grumbling that:

“[T]he over-staffed public sector has been spared, because of a taboo against dismissals.”

Perhaps you will not fall off your chair in shock, but it is the latter of these two concerns that gets the attention when the IMF gave its verdict on what it expects the Greek government to do:

“A strong recovery will need to be built primarily on deepening structural reforms. … The government’s welcome public commitment to improving the business environment and accelerating privatization now needs to be matched with results.”

Diktats masquerading as democracy

Those bland-sounding words take on deeper meaning when we examine the “structural reforms” already imposed on Greece by the IMF, the European Commission and the European Central Bank, the “troika” that dictates Greek policy. In February 2012, for instance, the Greek government agreed to reduce the already low minimum wage by more than 20 percent, to freeze all public-sector wages until the unemployment rate falls below 10 percent and to deep cuts in pensions.

The Greek minimum wage is €751 per month (equivalent to US$990 or £636). How well could you live on such a sum?

Overall, wages have fallen 40 percent and health care spending has been cut 25 percent. Meanwhile, most of the money released by the troika goes straight back to lenders, not for internal relief. As a result of this austerity, it is no surprise that retail sales in Greece have declined by 30 percent over the past three years and an estimated 150,000 small businesses have closed. Poverty has become so widespread that an estimated 10 percent of Greek’s children go to school hungry.

All this in a country where its biggest and wealthiest industry, shipping, pays no taxes — its tax-free status guaranteed in the constitution. Greece’s wealthy pay little or no taxes, stashing their cash outside the country. Government employees are the people who can’t evade paying their taxes — yet they are the ones scapegoated for economic troubles. (A common pattern in many countries.)

The IMF made no mention of its own role in bringing about this depression in the May 3 report, instead blaming a “lack of confidence” for Greece’s struggles:

“Looking over the period 2010–2012, the much deeper than expected recession was overwhelmingly due to a progressive loss of confidence. … With fiscal adjustment set to remain a drag on GDP growth for several years to come, the key challenge is to generate the improvement in confidence needed for a recovery in investment to begin to more than offset this drag. This cannot happen unless Greece can secure broad domestic support for the program and the political stability that would come with this.”

Yes, if only Greeks would believe that hunger is a sign of progress, everything would be better! In lieu of a sudden spasm of optimism, generating “broad support” for bleeding the country dry to pay back financiers who made reckless gambles might be difficult.

Ideology masquerading as economics

Although it might be tempting to note that doing the same thing over and over while expecting different results is unreasonable, reasonableness is besides the point here: Austerity programs are designed with ideology in mind, not with economics based on the real world. One clue to this is that “structural re-adjustment” programs invariably demand sell-offs of public assets — holding fire sales of state enterprises means private capital can scoop them up at very low prices, and profit nicely from doing so at public expense.

The neoliberal concept is that people exist to serve markets rather than markets existing to serve people. Entire countries have been harnessed to the dictates of “markets.” This has long been the pattern imposed by the North on the South through institutions like the IMF; now the stronger countries of the North are imposing it on their weaker neighbors. Taxpayers in those stronger countries are on the hook, also, as some of their taxes go toward the bailout funds, for which bailed-out countries are merely a conduit to pass the money to financiers, often from their own country. Much of the money Europeans lent to Greece was used to bail out German and French speculators.

The race to the bottom, of which austerity programs and the continual shifting of production to locations with ever lower wages constitute crucial components, represents an intensification of market dominance over human life. It is also a result of a scramble to maintain profits, which have been under continual pressure from the economic crisis.

But neoliberalism is not the product of a cabal “hijacking” economies or governments; it is the natural progression of a system that insists “markets” should be the arbiter of all human problems and the model for social relations and institutions. Capitalist markets are not neutral abstractions perched loftily above the Earth; they are the aggregate interests of the wealthiest industrialists and financiers as expressed through the corporations and other institutions they control.

“Markets” dictate that school children faint at their desk due to hunger while billionaires grab ever more. We can do better than this.

52 comments on “Greece’s depression is IMF’s idea of ‘progress’

  1. Jeff Nguyen says:

    I remember listening to Ralph Nader in 2008. He was incredulous that Hank Paulson first went to Congress with a 4-page proposal to request hundreds of billions of dollars of Treasury (taxpayer) money and expected them to sign off on it because the banks were TBTF. Although, Congress made Paulson write a few more drafts of his masterpiece it was a mere formality to possibly the largest single-moment transfer of wealth (I think) in American history. Nader couldn’t believe the media weren’t shouting from the rooftops to stop the bailouts but the smartest men in the room had already shook hands on the deal.

    I had an epiphany today on why the princes of privatization love the data-driven approach as it relates to such matters as education or entitlement “reform”. Numbers are preferred because a) they’re impersonal and b) they’re easily manipulated to fit an ideology, as you astutely note, or agenda.. That may seem obvious to most but for people like me, with little knowledge of economic theory and practice, it was an “aha!” moment.

    Thank you, sincerely, for making me a smarter blogger and human being.

    • Jeff, considering the high quality of your blog, I am flattered by your generous comments. And as to theoretical knowledge, I find the most important thing are instincts. You have excellent instincts; theory is filling in the details. In my past years when I was an activist I found some of the best folks were people who didn’t know much theory but sure had strong instincts — these were folks who consistently land on the correct side of a question because they understood the difference between right and wrong.

      The people who like numbers —- indeed because they are impersonal and easily manipulated — are often referred to as “technocrats,” as if they are above politics or social struggle. Funny, though, the “technocrats” invariably carry out the agenda of the most powerful as if the numbers impersonally dictate that harsh polices should be made harsher.

    • Duviel says:

      From what I have gathered, the large majority of the bailouts where paid back with interest. Just playing devils advocate to elicit an explanation.

      I think we should look at the entire financial/banking system (can only speak for US) as being a corrupt system that transfers enourmous amounts of wealth regularly to big finance. Banks creating money out of thin air, Banks lending (the publics own treasury funds) to the public at much higher interest rate than what they get from Fed via Treasury, etc, etc.

  2. Jeff Nguyen says:

    I distracted myself and forgot to even mention Greece. In the midst of the ongoing economic crisis in Greece, public workers have seen their wages cut drastically to pay debts they never created. But when the head of the IMF told Greece they better stop laying around eating feta and drinking ouzo all day and pay their stinking debts, she might as well have been scolding us wayward Americans who had the audacity to hope that we could live in affordable homes, enjoy universal healthcare, and go to decent paying jobs every day.

    Lagarde dared to say what other members of the Über-wealthy capitalist class truly think about their captives when she compared the Greek people to her more deserving children, “I think more of the little kids from a school in a little village in Niger who get teaching two hours a day, sharing one chair for three of them, and who are very keen to get an education. I have them in my mind all the time.” Ouch, talk about kicking people when they’re down. Meanwhile, the little kids from a little village in Niger wait for Mama Lagarde to come home from a hard day’s work to read them a bedtime story and tuck them in for the night.

    http://www.guardian.co.uk/world/2012/may/25/payback-time-lagarde-greeks

    • It’d almost be funny, except that, according to the Organisation for Economic Co-operation and Development, Greeks work the longest hours of any people in the European Union — 43.2 hours per week, as compared to 35.7 hours per week for Germans. People like Christine Lagarde assume that nobody looks at their own statistics. (These are figures from a year ago, when I first researched the question, but there is probably little if any change.) Moreover, the average Greek wage was 73 percent that of the German.

  3. Vassilis says:

    A wondergully detailed post. Hope more people are visiting and reading it. This is another problem: the information channels. In Germany even if people read this, probably they will think it is just excuses. The press and TV has affected greatly the public opinion, in such an extent that the failure of the economy is translated in Greeks’ laziness and thieving. It is not only about the money, but they also turn it into a moral issue that makes whole nations hate the others.

    • Nationalism is wielded as a weapon in Germany, as it is across Europe and the rest of the world. We see it in Greece, too, where the nationalist Right portrays Germans as Nazis and this nationalism is expressed in violent ways by the Golden Dawn. Fortunately, there are strong Left forces in Greece to counter that, just as not all Germans fall for right-wing siren songs.

      There is no national solution to the problems of Greece (or any other country), there are only international solutions. Even if Syriza, other Left formations and the Greek people brought about a new socialism, Greece could not survive as a small island surrounded by a hostile capitalist world. Europe together will have to transition to a better system; internationalism on the basis of building together rather than every one (and every country) for itself. It was a much needed sight to see the co-leader of the German Left Party, Bernd Riexinger, standing with Alexis Tsipras during one of the major demonstrations in Greece last winter.

  4. Alcuin says:

    “But neoliberalism is not the product of a cabal ‘hijacking’ economies or governments; it is the natural progression of a system that insists ‘markets’ should be the arbiter of all human problems and the model for social relations and institutions. Capitalist markets are not neutral abstractions perched loftily above the Earth; they are the aggregate interests of the wealthiest industrialists and financiers as expressed through the corporations and other institutions they control.

    “‘Markets’ dictate that school children faint at their desk due to hunger while billionaires grab ever more. We can do better than this.”

    I would alter this to say that “… capitalist markets are neutral abstractions …” in the eyes of neoliberals. In our eyes, of course, they are not neutral, they “are the aggregate interests of the wealthiest industrialists …”

    But, understand this: individualism and self-interest is what drives markets. For an interesting piece that explores this, read this post at Dawn Paley’s blog.

    In particular, focus on these two paragraphs:

    “MAG Silver has denied its operations have anything to do with the murders. ‘MAG and our Mexican consulting contractor, El Cascabel, had absolutely no involvement in the tragic event,’ Dan MacInnis, the CEO of MAG Silver, wrote in an email to The Dominion. Instead, MacInnis earlier claimed, ‘We are victims broadsided by a long-standing community dispute.'”

    “The police investigation into the murders back up the fact that it was a community dispute that triggered acts of violence ending in the murder of Ismael and Manuela. But it also makes clear that the prospect of well paying jobs MAG Silver brought to Benito Juárez was at the heart of the dispute.”

    I italicized the last sentence to emphasize my point of how capitalism plays on human weakness by appealing to individualism and self-centeredness. Benito Juárez is an ejido, 53,000 acres of land collectively owned and farmed by 400 families.

    Karl Polanyi, in his The Great Transformation explored how the idea of the market was changed by the rise of capitalism. It is only when we, collectively, re-embed the market in society that the abuses of capitalism will start to subside. As I’ve written before, in the immortal words of Pogo, “we have met the enemy and he is us.”

    • A tragic story. I note the contrast between the communal nature of the community — a community located in such a harsh desert climate could not have survived without a high level of cooperation among its members — and the individualism fostered by outside capital that has led to deep divisions and these killings. Such a devolution required only a few people to jump at the supposed high-paying jobs dangled in front of them by the Canadian multi-national mining company.

      Even if such jobs did materialize, they’d be short term, gone as soon as the mine lost its profitability, and the land the community relied on would be ruined. A boom town, based on resource extraction, which becomes a ghost town or a shell of its former healthy condition soon enough. And the “boom” is created through violence, itself enough to tear apart a community. This story is replicated all over the world, again and again.

      Indeed, this story of the village of Benito Juárez is an example of what happens when markets become the arbiter of social relations and the dominate decision-maker in economic matters.

  5. Duviel says:

    Im guessing IMF wants its loans re-paid? Why would IMF impose something that is going to weaken economy and therefore ability to pay loan?

    Austerity is going to reduce consumption and GDP and increase un-employment but Greece could not continue to sustain its government expenditures without either more loans or much higher tax inlays. The US and most other large economies have been getting away with this but, today Greece is not the USA, Germany, France, or Japan.

    US can get away with perpetual government budget defeciets because nations like China and Japan have no choice but to continue to lend to US as long as they remain reliant on US consumers to buy their products. Also, Institutions and individuals world wide continue to buy US Fed Bonds with unending thirst. But, probably most of all the majority of the world is heavily reliant on US consumers (that make up roughly 1/3 of world consumption) and (when it comes to Europe and Asia) reliant on US armed forces for defense.

    Also, the US can and does print its own money at roof high levels without anyone batting an eye. That printed $$ is then used to buy Fed bonds. So basically, US can lend to itself the money it prints.

    • The IMF imposes conditions that weaken the economies of countries its loans to in order to force privatization. When a country can’t pay back the loan, it is forced to raise the money through taxation on working people (never on corporations or the rich, of course) and through fire sales of state-owned property. Greece right now is selling off its port to a Chinese company so it can pay back its loans, which were taken out to pay back the German and French (and some other) banks that loaned the money in the first place.

      The U.S. maintains its privileges through possessing the world’s reserve currency. It can run deficits as long as this status holds. If the center of the world capitalist system shifts to another country, then the downfall will come, and won’t be pretty.

      As to your “devil’s advocate” question above, that most of the loans given out in 2008 were re-paid doesn’t alter the fact that the financial industry has a stranglehold on the economy, nor that it flies in the face of the supposed “free market” that kills off uncompetitive enterprises. But, besides the TARP money, let us not forget the trillions of dollars handed out by the Federal Reserve in its quantatative-easing programs or the many other goodies handed out to hungry multi-national corporations, such as the hundreds of billions given to the insurance firm AIG so it could pay off the bad bets it made with various financial companies. This was an additional subsidy to Citbank, et al.

      • Duviel Rodriguez says:

        Please explain what you mean by shift in center of world capitalist system. How would that look.

        • The world capitalist system (which is how we should think of it, even if it is only in recent times that it actually covered the entire globe) always needs a center. The center functions as the financial pivot and has successfully been located within larger and more cohesive countries that can project military power further. The U.S. military does the dirty work of maintaining global capitalism, supplementing as necessary financial and other means of domination.

          In earlier times, the seat of a small republic such as Venice could be the leading financial center on the strength of its trading networks. Once capitalism took hold, however, the financial center was successively located within a larger federation that possessed both a strong navy and a significant fleet of merchant ships (Amsterdam); then within a sizeable and unified country with a large enough population to maintain a powerful navy and a physical presence throughout an empire (London); and finally within a continent-spanning country that can project its economic and multi-dimensional military power around the world (New York).

          For capitalism to continue to function, either the U.S. must remain top dog, with New York as financial center, or it must be replaced by another country, one larger and able to take on all the functions, including military, that the U.S. currently sustains. There is no such potential currency or country right now.

          European capitalists might like to have the euro replace the dollar, but the EU is not stable enough to be a realistic candidate. Making European capitalism stronger in competition with U.S. capitalism is the driving force of the EU, which is why it is such an undemocratic, top-down structure. China, heavily dependent on exports to the U.S. and Europe, and with a currency still not fully convertible, is nowhere near strong enough to replace the U.S. So the U.S. will likely be the capitalist center for some time yet to come.

          What happens if the U.S. starts to break down from the stress of its accumulated debt and hollowed-out economy and there is no other candidate to assume its duties? Capitalism as we currently know it would begin disintegrating, and, it is to be hoped, creating spaces for alternative economies to emerge.

          • Duviel says:

            I think we need to differentiate between capitalism (as in free markets) from global financial fiat system.

            Also I think the blame for some of the ills of capitalism (un-equal distribution of wealth and corporate profits being put ahead of more important things like health and environment) needs to be laid on the corruption of the governments that regulate the system not on the system itself.

            I (like most independent economists) believe free markets and capitalism in general is the best social-economic system around if managed and regulated smartly. In other words if un-corrupted.

            What alternative economies do you suppose will be better than capitalist free markets?

            Any system that becomes corrupted by special interests will fail the people.

            Also, I am not sure moving the center of the world economy from the US to somewhere else (lets say EU or China in a future world) will bring down the system or the US economy. Some things will change but not a collapse. It will probably happen too slowly to shock anyone.

            • The “global fiat system” is intimately a part of capitalism. The world has not arrived at its present predicament by accident but rather through the development of capitalism and its internal logic. Inequality of wealth and profiteering are put far ahead of health and the environment because corporations can externalize those costs onto society, and because of the towering imbalance in capital, and the political power that follows from that, it can’t be otherwise.

              If you are interested in examining these arguments, I would highly recommend The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China by John Bellamy Foster and Robert McChesney, which I have reviewed and summarized.

              If another center of the world economy were to emerge, the system would reach a new period of relative stability, although the loss of its status as printer of the world’s reserve currency would lead to severe problems in the U.S. But if there no center, capitalism in its present form would be difficult to sustain, and with parts of the world potentially breaking away and putting themselves on a more democratic and independent footing, that would mean the world capitalist system would be shrinking. For a system that requires perpetual growth, such shrinkage would be catastrophic.

              My own opinion is that we are living in the last century of capitalism. You can’t have infinite growth on a finite planet and there are only so much resources in the ground. Without a revolutionary intervention, the breakdown of capitalism will likely unfold over decades. I do not believe there will be a fast collapse, but periods of stagnation alternating with downturns.

              What will follow? It could be a socialist system geared toward human and environmental need instead of the present system that is geared toward private profit. That is possible with a global mass movement. It could be some hideous combination of feudalism and high-tech fascism as a corporate elite scrambles to keep itself in wealth and power in a world stripped of resources and environmental degradation. The latter is what capitalism has in store for us if working people don’t intervene. Everything of human creation comes to an end.

              • Duviel says:

                Very short on time but, Fiat system is a corrupted manipulation that has been injected into today’s corrupt economies that call them selves capitalism. Not needed and in-fact not useful for true free-market capitalism. Stable currency is much better.

                I hope we can figure out how to bring together best parts of various systems. Capitalism has proven to be best at producing more and better goods and services or in increasing the size of the pie. Problem is that without some good rules the share of the pie going to top tiers keeps growing.

                Capitalism is not good at doing macro level things to benefit society generally, like solving climate change. Thats what governments should be doing through taxing capitalism. But governments have been allowed to become nothing more than rubber stamps for big capital interests. Not representing the masses.

              • Duviel says:

                True Capitalism has no requirement for perpetual growth. Growth is good but not needed. Greed and stock market investments do require constant growth but thats a different story.

            • I don’t think capitalism has anything to do with “free marekts” or markets at all. I don’t even believe “free markets” even exist, I’ve been given multiple contradicting definitions of “free markets” from proponents and none of which have been able to demonstrate what a free market is.

              What exactly is an “independent economist”?

              • Duviel says:

                True Free Markets dont exist in practice at a macro level. Honestly 100% free market will not work because of corruption by powerful entities that will manipulate system. There has to be rules and regulations to protect against corruptions like collusion, price fixing, monopolies, etc.

                A free market is simply a market in which producers of goods and services are free to produce and bring to market and buyers are free to choose among all available producers. Also, Firms are free to enter into contracts with providers of capital goods and labor. All sides are free to negotiate and or hire agents to negotiate for their respective interests.

                A stable common currency is needed. Differences in currency values in markets skews everything.

                Competition and consumer choice will lead to best prices and best products or services.

                Its really complicated. Hard to understand free markets in a blog post. You will have to do a lot of study

                Free Markets have existed since beginnings of civilization. But, so has human corruption.

              • Duviel says:

                An independent economist is one not in the pocket of some special interest. Those are the few.

              • When has your conditions vis-à-vis markets ever existed? Markets, large and small have always encountered and produced manipulation and coercion and control, I cannot think of one example in history of a market being “free” under your definition.

            • When has there ever been capitalism without constant economic growth?

              • Duviel says:

                I dont know I would have to look back at every economic system over hundreds of years.

                I know growth is not a requirement, although its always better for the big capitalists and sometimes for the population too.

                Enough growth to keep up with population growth yes but thats not real growth. You have to subtract inflation and population growth to get real growth.

                Growth is good in any economic system but lack of it is not a travesty.

                Dont get me wrong economic growth generally speaking is great not a bad thing. My point is stagnation is not bad. Not good but, not bad either.

                Bad for stock market investors. Bad for greedy people who want more and more. But if your currency is stable and sound not bad at all.

                I think the best and fairest system in a world economy requires one single world currency that cant be inflated instead allowing a peged stable growth to keep very slightly ahead of population growth.

                I think we will continue to have growth. Natural resources may be an issue with growing population but technology will solve that some. Technology will actually probably make production much more efficient and cost effective.

                We will eventually mine comets, moons and other planets to get resources and there is still plenty of land water. Drive around almost any country and you’ll notice its all mostly empty expanses. Of course we need this vegetation for healthy environment.

                The issue in future economies is how to make it so that populations maintain real income levels while working much fewer hours. Robots can replace labor but then who consumes the goods and services if no one has a job?

                We will need some imagination. Every issue is very solvable if we eliminate human corruption ans special interests.

                Human corruption is the X factor that leads to most of our problems and Poor decisions on this planet.

              • Of course capitalism requires growth; every indicator says this clearly. First off, we’ve had eight years of stagnation (i.e., only very small growth) and the results are all around us. A former White House Council of Economic Advisers chair, Christina Romer, calculates the economic growth of 2.5 percent is necessary simply to maintain the unemployment rate where it is and “substantially stronger growth than that” is necessary for a rapid decrease.

                When profits don’t rise, stock prices don’t, and that causes pressure from financial markets, Wall Street and elsewhere. The entire neoliberal era from the late 1970s is a response to falling profit margins. The relentless pressure of capitalist competition – grow or die — mandates growth. When one enterprise finds an advantage and boosts its profits, its competitors must do the same, requiring it to either find new advantages or expand into new markets. All of these factors mandate endless growth, which we can not have forever on a finite planet.

                Even if humanity is able to tap into natural resources on the Moon or in the asteroid belt, the solar system is finite, too, and limits will be reached. But I doubt we’ll find any oil or natural gas off Earth. And that assumes that an Earth stripped of resources and damaged environmentally would have the ability to strip-mine the solar system.

                The multiple crises we’re facing are the natural outcome of the capitalist system; the dominance of ever larger corporations is the direct result of competition and the need for constant growth. All those corporations started out as small businesses, by the way — we really should set aside romantic 19th century notions of pastoral capitalism. What you see is inevitably what you get.

                And, of course, once enterprises grow to these enormous sizes, they get to dominate the world’s government and do so, surprise!, for their own narrow interests, the rest of the world be damned. So there really is no such thing as a “free market,” because markets become the instruments of the most powerful enterprises. What are markets in a capitalist economy? Nothing more than the aggregate interests of the biggest industrialists and financiers. They cannot be anything else.

              • Duviel says:

                “Of course capitalism requires growth; every indicator says this clearly. First off, we’ve had eight years of stagnation (i.e., only very small growth) and the results are all around us. A former White House Council of Economic Advisers chair, Christina Romer, calculates the economic growth of 2.5 percent is necessary simply to maintain the unemployment rate where it is and “substantially stronger growth than that” is necessary for a rapid decrease”

                I did not see any collapse during 2008-10 period. There was a period of high un-employment and east money was not flowing as before but no collapse of the system. Even the great depression of 1929-late 1930’s was reversed.

                Every down turn has an initial overreaction by firms and consumers producing and especially by stock-markets. People stop spending and hold their cash, firms do the same and stockmarket prices drop due to this sky is falling mentality. But, eventually the waters again reach their natural levels.

                The crash of 2008 was a financing and housing crash more then anything. The housing bubble inflated beyond belief and (just as with the Dutch tulip bubble) and when people started to realize it was a bubble the inevitable price crash led to huge losses for banks. The fact Walstreet had created and sold financial instruments based on bulk mortgage packeges made things worse for many securities investors.

                The 08 crash was bad, corrupted, un-regulated, economics. What causes these bubbles is central banks fiat creation of easy falsely cheap currency. Central bank policies that entice banks to loan more than they should.

                Free markets and capitalism does not require this fiat system that todays capitalist system operates and big financials profit from. In fact, I beleive that a stable value currency with a pegged currency base growth to keep very slightly above population growth will be the best driver of real economic growth. Stock-market growth is not real economic growth its fake paper growth.

                I am okay with taxing capitalism to finance some social programs and macro benefits that markets cant do well. But, too much taxing is damaging as governments are much less efficient then a smartly regulated free market system at using resources.

                One of the best things about Capitalism is that it takes human nature into account. Humans are self interested and will seek profits/benefits to themselves. If there is no profit/personal benefit to hard work, inovation, and investment people will become lazy. No one wants to work their butts off for the good of their neighbors that fantasy.

                Thats why I am also against social welfare programs that grow too large and become lifetime lifelines. These programs create reliance on government and motivate laziness. I am also against corporate welfare that insure corporate losses and reduce need to be highly efficient in production for samilar reasons.

                “When one enterprise finds an advantage and boosts its profits, its competitors must do the same, requiring it to either find new advantages or expand into new markets. All of these factors mandate endless growth, which we can not have forever on a finite planet”

                This means higher efficiency and better products to stay in business in free market. This leads to more efficient use of resources and better products to attract consumers away from competition. Dont know how competition mandates constant macro-economic growth? It does lead to bigger and bigger firms as competitors are put out of business by gains in economic scales. Thats where strong pro-competition and anti-monopoly regulations have to come in. We are severely lacking these regulations in the USA and in entire capitalist world.

                I am not saying capitalism is perfect and it must be made better by smart regulations. But, if you know of a better system than free markets with capitalist overtone please explain to me what it is.

                Ps. A well regulated economy is not a heavily regulated economy. Its a smartly but simplyregulated economy.

                Forgive me for being superficial in my statements. I have a very busy life and I blog on my free time in-between clients. In-fact I am breaking one of my rules today. That is that weekends are for family time and outside activities not for work, blogging, or any time on my computer or smart phone.

              • You haven’t demonstrated how capitalism can survive without constant growth. You’ve only essentially affirmed that it cannot.

              • Duviel Rodriguez says:

                Very busy. Cant write too much. How about someone dmonstrates why it cant survive wirhout constant growth.

              • Tbf mining for Helium 3 and other resources in space can and should be part of the solution to transitioning off fossil fuels,and I’m not a degrowther green type, all I am disputing is that growth isn’t necessary for a capitalist economy. The most interesting thing though is capitalism is not conductive to any serious scientific expansion, I mean it’s no coincidence the one nation that actually ushered in space exploration (and its fall has seen such endeavors practically grind to a halt) is the USSR.

                https://www.jacobinmag.com/2012/09/back-on-the-moon/

                https://www.jacobinmag.com/2015/03/space-industry-extraction-levine/

              • I’ll let Systemic Disorder respond to the rest of your post if he feels so inclined, since your post is directed at him, but I had to chime in on one part:

                “Thats why I am also against social welfare programs that grow too large and become lifetime lifelines. These programs create reliance on government and motivate laziness. I am also against corporate welfare that insure corporate losses and reduce need to be highly efficient in production for samilar reasons.”

                This is actually complete horseshit, but it is a popular fantasy and belief among capitalist apologist, especially American “libertarians”.

                http://www.independent.co.uk/news/world/europe/generous-welfare-systems-actually-make-people-more-keen-to-work-europe-wide-study-finds-10144712.html

                The reality is extensive social safety nets equal more economic productivity. The US is in the toilet largely because of it’s small safety net and savage hyper capitalism. Like duh.

              • Duviel Rodriguez says:

                You quote some article with dubious claims I bet I can find a dozen (in fact I have read many) that claim the opposite.

                The question in the study “would you enjoy paid work” is irrelevant. Most people work not because they enjoy it but because it pays and they need the money. I dont enjoy work yet I work 55-60 hrs weekly.

                Scandinavian countries have broad social programs but they also do a lot right. Low government corruption, efficient job training/educational system. Better tax code, etc. Even then, economically speaking the scandinavians are behind the US in economic standards of living.

                For many if government meets all their main needs they will take that and not work. People work cause they need to. Just common sense and what I have lived and seen. no fancy study that we should know will yield hatever results the researcher wants.

              • Do you have any actual facts disputing the study or just your ideological assumptions based on falsehoods?

              • Duviel says:

                “Do you have any actual facts disputing the study or just your ideological assumptions based on falsehoods”

                Yeah the fact that its only one study and there are many more that claim the opposite. The main question in the poll is intended to skew the results in my opinion. “would you enjoy paid work” Fact is most people dont work cause they enjoy it they work when they have to in order to meet their needs or wants.

                Look men, this is a debate! We will both be right and wrong at times and usually somewhere in between. The fact that you think you know it all and are clearly correct in all your premises makes me beleive you will struggle to ever learn.

                “Now I know you’re full of donkey shit, because the Scandinavian nations are far ahead of the US in quality of life, the US has an unusually low quality of life for “the West”, which is why we’re a laughing stock in the world and not a source of emulation”

                First of all watch your language. Otherwise this is going to get nasty and not conducive to any debate.

                Not ahead in economic quality of life. Maybe in other social measures such as low crime, more leisure time, etc.

                Even taking into account the huge disparities in US economy Avg. American maintains higher economic gains then pretty much any other country of comparable demographics.

                Poverty in US is highly exaggerated because most welfare programs require you to report income below a certain limit. So, folks work under the table and keep their welfare.

                I dont care what the world thinks. Most people are very nationalistic When you are the worlds lone superpower, accounting for 1/3 of world GDP and with the largest most capable military you are going to have haters. You want the world to love you, be worse of then them. People dont like the neighbor with the biggest house and nicest car. I dont care about being liked or emulated.

                Look men, I don’t know it all. I know a bit and I have a perspective I will try to explain and defend but I am still learning. Which is why I am here on this blog and others.

                You seem to think that you know it all and those are usually the folks that dont know much or cant learn because they already know it all.

                I hope we can debate, disagree and maybe learn some things in the process.

              • “economically speaking the scandinavians are behind the US in economic standards of living.”

                Now I know you’re full of donkey shit, because the Scandinavian nations are far ahead of the US in quality of life, the US has an unusually low quality of life for “the West”, which is why we’re a laughing stock in the world and not a source of emulation.

  6. Duviel says:

    Yes, dictatorial governments have capacity to do some macro things that elected governments cant do well. But only in short term because government run economies that do not operate as free markets and remove profit incentives are stagnanat and reduce standards of living. Governments rely on flourishing economy for funding of these big social programs. USSR was a good example.

    • Well you completely missed the point I was making and the point of the articles I linked to then. This has nothing to do with “dictatorial vs electoral” governance, it has to do with long term priorities. Capitalism does not prioritize “blue sky research” and long term prosperity, it prioritizes short term gains. Drawing a bizarre conclusion on elections from this is just ridiculous. Secondly, the US government did do such things very well when threatened, the heyday of NASA is practically the US’s last and perhaps greatest achievements, and no surprise that with the end of the “blue sky” era the US has been in considerable decline. Even Nixon recognized this, which is why he cancelled NASA’s more ambitious programs, out of fear the public would be more supportive of “government efforts. Lastly, calling the US an “elected government” is kind of a joke, we have semi-free elections at best, and it’s no wonder that even The Economist lists the most left-wing nations as being the most democratic, with the US not even close.

      ” government run economies”

      All economies are “government run”. Name one in existence that isn’t.

      “d remove profit incentives are stagnanat and reduce standards of living. ”

      You mean like the capitalist world economy right now? Lol.

    • I did provide some reasons for why capitalism needs constant growth (hardly a controversial statement, by the way; there are few pro-capitalist economists who would disagree), you just decided to ignore them.

      I did not see any collapse during 2008-10 period.” You’re the only one who missed it.

      The 08 crash was bad, corrupted, un-regulated, economics. What causes these bubbles is central banks fiat creation of easy falsely cheap currency.” Central banks are a necessity to regulate capitalist economies, which is why every capitalist country has one. Without a central bank, big banks would have even more control over the economy, and the economy would be subject to much greater extremes. That’s why the Federal Reserve, for example, was created. This is Economics 101. Your problem isn’t with central banks, it’s with capitalism.

      And that, for me, will conclude this back-and-forth which has gone past the point of diminishing returns. But you have given me the idea of writing an article on why capitalism needs constant growth, which I will do in the near future to address this topic with greater depth.

      • Duviel Rodriguez says:

        I work 60 hrs a week and have a family I agree that I have presented little data and have failed to go in depth but honestly neither have you.

        I continue to disagree with you on just about everything. I cant wait for your article. I would also like to know what economic system do you propose is better?

        • “I would also like to know what economic system do you propose is better?”

          Stop being obtuse. You know what he “prefers” and you’re trying to goad him into a “gotcha” statement. I’m not trying to be rude, but stop with the childishness.

          • Duviel Rodriguez says:

            I dont play those games bro. If the men beleives something say it. No gotcha involved. Im new to this blog and I think i have an idea of his economic theory but im just asking a question. If he already answered it he can direct me to that writing. Or he can do whatever the hell he wants. We are all here voluntarily and hopefully we are all trying to learn not just preach what you think to be fact.

            • His books seems to be indication enough

              • Duviel says:

                I love books. Please point me in the right direction and I’ll buy them.

              • It’s Not Over: Learning From the Socialist Experiment is my book.

                Direct link to book page on publisher’s Web site: http://www.zero-books.net/books/its-not-over. This will direct you to online distributors, and you can find copies well below the list price.

                A little more information on the book on this blog page: https://systemicdisorder.wordpress.com/its-not-over/

              • Duviel says:

                Thanks. I look forward to reading your book/books.

                Which one do you recommend first?

                I am a psychologist by trade. But, I love learning. I started with military tactics and strategy, I than moved into geopolitics, lately I have really made macro-economics my favorite past-time. I love this stuff more then I thought I would.

                I believe that in most things common sense and an open mind are paramount and I dont necessarily value titles and degrees that much. So, even though you are probably a highly trained economist with many books published, dont expect me to bend to your will in this topic.

                I have had an interesting life with varied experiences so I see things from a different perspective at times as well.

                If you like spirited debate you will like me. If you just want to preach from your pulpit and dont want to be questioned you will not like me.

                My time is limited and much depends on my job requirements but I will do my best to engage.

              • Duviel says:

                “Dolack cogently recognizes the incredible advances of socialism in improving the quality of life among workers and peasants”

                I have not read your book but I have issue with even this statement above. I am not saying that there are not parts of socialism that can be useful to society but for all your criticism of Capitalism for you to make such statement!

                Socialism in practice has failed everywhere its been attempted.

                I think that we need to learn from Scandinavian countries that have managed to incorporate many socialist ideas and a heavy load of social programs while still maintaining generally a free market capitalist economy. Of course these are also smaller countries that have managed to control corruption somewhat well.

                Even if un-corrupted, socialism does not work well. An un-corrupted Free market capitalist economy will outperform a socialist economy always. Even with high levels of corruption Capitalism still manages considerably better results then socialism has ever achieved.

                Anyone (including my family) who has grown up in a socialist system can tell you that it does not work because without personal gain and profit incentive, people dont want to work hard, innovate, take risks, etc. Competition and profit incentive creates better products and efficiency.

                Look at my parents homeland of Cuba. Even the culture has been destroyed by socialism. Cuban people used to be hard working people. Now no one over there wants to work. People that do work are usually trying to get fired because work does not pay. People live off stealing from the government, stealing from each other, tourism, and money coming in from family outside. a Thief used to be looked at as scum, now its normal and accepted.

                And dont give me the embargo BS. Cuba from 1960-90 traded with the entire Soviet block and the rest of the world freely. Even after 1990 the only nation that enforces the embargo is the US. Everyone else has no embargo. So its not really an embargo. Its just an embargo with the US and not really a full one either. Cubans in the Island have been living of Cash from Cubans in the US for decades.

                Yes the education is good but there is no use for your education unless you leave the Island.

                There are plenty of good doctors but no medical supplies or medicine. I have to ship meds to my uncle in Cuba that has blood clots to keep him alive. Without the blood thinners I send him, he would be dead. You cant even find antibiotics or even IV bags. Hell, anesthesia for surgery is in very short supply. Whatever supplies exist get stolen half the time by employees who barely get paid. My cousin was a doctor in Cuba for two decades and she just recently escaped from Venezuela to Miami. I am talking with inside knowledge here, not theory.

                Im trying to stay level headed with this but I just cant see how anyone can argue that Capitalism is a failure and then turn around and say this “the incredible advances of socialism in improving the quality of life” Really dude?

                Socialism lacks many key factors even in theory and it sure as hell does not work in practice!

                You need to get your nose out of the academia world and live in the real world.

              • Really, this has become tiring. First off, one should read a book and understand its contents before critiquing it; to do so otherwise is just right-wing spouting.

                Second, and much more importantly, there is no such things as an “un-corrupted free market capitalist market.” Capitalist markets are the aggregate expressions of the interests of the largest financiers and industrialists, and can not be anything else. That is why we are living through the times we are living in. And there has also never been a socialist economy. We have had countries that overthrew capitalism and attempted a transition to socialism and never got there. Cuba is among those countries.

                We can call countries such as Cuba or the late Soviet Union “post-capitalist,” as I do (following in the tradition of Isaac Deutscher) or we can call them “state capitalist,” as many do. We can’t call them socialist, because they weren’t; they froze in a deformed transitional state for many reasons, not least the hostile encirclement of the capitalist world that did all they could to destroy them. The embargo on Cuba has been total — any company that trades with Cuba is automatically barred from trading within the U.S.; naturally the U.S. with a population more than 20 times larger is one multi-national capital can not afford to be excluded from.

                Then there is the endless acts of terrorism against Cuba by U.S. agents or right-wing Cubans acting under U.S. protection. Then we’d also have to look at what the conditions of life were under Batista and earlier, as opposed to under the revolution, and there the revolution by any reasonable standard has improved material conditions. Perfect? Of course not. But with all these countries, we should look at what people’s lives were like before and after. I wrote at length on Cuba in BigCityLit, a literary magazine, in 2002. It can be found here: http://www.nycbigcitylit.com/aug2002/contents/articledolack.html.

              • Systemic Disorder, I wouldn’t recommend you continue your back and forth with “Duviel”, since he was disingenuous from the get-go. He was clearly looking for an argument on socialism, which he wasn’t honest about from the get-go, and he constantly argues on points already addressed, refuted or are just silly. His use of Cuba as an example of “the failures of socialism” is a good example, beyond everything you’ve said, it’s a logical fallacy to presume all socialist endorse the Cuban model to begin with.

              • I quite agree. By coincidence, I was at a talk by a group of Cuba anarchists last night. They were critical of the government for multiple reasons (and broadly agreed with your assessment of Cuban cooperatives) but nonetheless were firmly anti-capitalist with no illusions about U.S. imperialism or about capitalism. I am not an anarchist myself, but it must be said their perspectives on Cuba (they live there) were vastly more intelligent and informed than Duviel’s rants.

            • I’d be very curious to read what these anarchists had to say, and I’m especially curious how you came in contact with people in Cuba, I imagined they had a Chinese “great firewall” there, or is this just an exaggeration?

              Do not confuse my misgivings and critiques of the Cuban government with this guys garden variety style “anti socialist” criticisms! Much of what he says is just total BS, like Cuba heavily relying on remittance or being some sort of crime infested wasteland. The reality is Cuba is among the safest countries in Latin America, especially compared to US allies like Colombia and Guatemala where people are actually dragged out into the street and shot for political activities, oh and you know, the mass hunger and inequality and depravity in these societies. It’s health care is among the best in the region, hence why Cuban doctors are valued in other countries, even when compared to the US, for obvious reasons.

              Also his example of using Scandinavian social democracy as a vindication of capitalism is ironic because that kind of blows up in his face. The fact that capitalism, whether in the US or Scandinavia, was at its most prosperous and productive when capitalism was more reigned in is kind of a tacit acknowledgement that capitalism is flawed and a failure, especially when the “socialistic capitalisms” of the mid 20th century Scandinavia (which Fidel Castro cited as a model to emulate in the 1970s!) are by far the most successful examples of equitable economies we’ve had yet in human history, in spite of capitalism. Add to the fact that the “socialist bloc” is widely acknowledged even by pro capitalist economist as undergoing the most successful industrial drives and economic growth rates n history, alongside practically getting humans into space, which formed the basis for the telecommunications economy that capitalists rely on so much, so calling “socialism” even if you use the USSR, etc as an example, a failure is quite laughable.

            • Just for fun:

              https://www.jacobinmag.com/2012/10/soviet-space-opera/

              “How the Soviet imaginations put us on the moon.”

              • Be most assured I would not for a second confuse your principled critique of Cuba with the standard laughable right-wing propaganda we are bombarded with every day, including that to which we have recently been treated.

                I met the Cuban anarchists (with many others in attendance) in the Northeast at an anarchist space. I’d prefer to not be more specific to avoid any complications for them. It was a quite wide-ranging talk and Q and A. They told of carrying a banner saying “Socialism is Democracy” in a march and being told to take it down! They talked of the difficulty of organizing publicly; meeting in private is fine but a public event will lead to the police intervention.

                Much of their talk was taken up by their fear of Cuba being swamped by capitalism and a firm call for the blockade to be ended, which they acknowledge as causing shortages. They are strong environmentalists, and talked about their fear, for example, of genetically modified foods pouring into Cuba and the need for Cubans to fight that. They believe is Cuba going down the capitalist path of China and Vietnam, which as socialist they oppose.

                There is no equivalent of the Chinese “fire wall” in Cuba; rather Internet access is expensive so it is out of reach for many Cubans. It is difficult for Cubans to learn about the outside world but the politically aware are well informed on what goes on in the rest of the world, and I think we can be confident that the grapevine across the country is active.

                To give my opinion, until a free exchange of ideas is allowed in Cuba it will be impossible to solve its problems or put itself on a proper path toward socialism. Indeed, socialism is democracy.

      • Duviel says:

        Remember, my premises is that you do need enough growth to at least keep up with population growth. But, I dont consider that real growth. All things remaining the same, as population grows economy will always grow. Current world capitalist system revolves and relies on economic growth and currency base growth (fiat inflation). I am not debating that. My point is that this is a faulty capitalist/free market system.

        Pure and best capitalism does not require fiat banking or constant growth beyond population growth.

        It all comes down to corruption. Any system that becomes corrupt will not follow best principles and will have issues if not fail altogether.

        Just wanted to clarify my position.

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