Posts Tagged ‘economy’

con_democracy

It’s an issue that often comes up with my students. They believe the key problem in the country is the growing polarization between the two major political parties. Nothing gets done because politicians from opposing parties don’t seem to agree on anything.

But, as Robert Weissman [ht: ja] explains, “That story is not true.”

In fact, Americans overwhelmingly agree on a wide range of issues. They want policies to make the economy more fair and hold corporate executives accountable. They want stronger environmental and consumer protections. And they want to fix our political system so that it serves the interest of all, not just Big Money donors. These aren’t close issues for Americans; actually, what’s surprising is the degree of national consensus.

The problem isn’t that Americans don’t agree. The problem is that the corporate class doesn’t agree with this agenda, and that class dominates our politics.

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The question in the table from a recent Democracy Corps/Roosevelt National questionnaire (pdf) is a good example. Fully 73 percent of those polled were (very or somewhat) convinced by the following story:

The rules that govern our economy no longer work for Americans. For 40 years, economic policies have rewarded large corporations and the wealthiest with the promise that their gains would “trickle down” to everyone else. It hasn’t worked. Instead we have faced sluggish growth and economic insecurity for more and more Americans with all the gains going to the top. It is time to rewrite the rules of our economy so small businesses and average American families have a chance too, not just the wealthy and well-connected. That starts with preventing corporations and CEOs from flooding the political process with money so they can manipulate the rules to their advantage. Then we can focus on policies that will grow our economy and level the playing field—rebalancing the tax code so those at the top pay their fair share like the rest of us, changing corporate governance so CEOs prioritize long term investments in workers and their companies over short-term gains and speculation, and ensuring banks do what they’re supposed to do and serve America’s families and provide loans to productive businesses. We can also raise wages for working people by guaranteeing equal pay for women and create more family-supporting jobs by investing in infrastructure and making college more affordable. We have the power to rewrite the rules of our economy.

The same is true on a wide variety of issues, from increases in the minimum wage to expanding Social Security.

American opinion is not divided. What is true is that the views of the average voter are trumped by a corporate elite that finances and writes the rules for political debate in the United States.

That’s the real gridlock that needs to be broken up.

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Throughout American history, whenever workers try to organize, they’re opposed by their employers.

That was true in the period of manufacturing, and then with the growth of the service sector. Now, it’s true in the so-called sharing economy.

Seattle [ht: sm] was the first city in the nation to allow drivers for companies such as Uber and Lyft, as well as taxi and for-hire drivers, the right to collectively negotiate on pay and working conditions.

Back in January, Uber tried to stop workers from organizing by having their customer service representatives engage in union-busting by reading anti-union statements to drivers.

“Drivers choose Lyft to earn extra money when, where and for however long they can work,” a company spokeswoman told PCMag. “We continue to share concerns raised by city officials that the ordinance threatens the privacy of drivers, conflicts with longstanding federal labor and antitrust law, and may undermine the flexibility that makes Lyft so attractive both to drivers and passengers.”

Now, the U.S. Chamber of Commerce is suing Seattle over the new ride-sharing ordinance.

“This ordinance threatens the ability not just of Seattle, but of every community across the country, to grow with and benefit from our evolving economy,” Amanda Eversole, president of the Chamber’s Center for Advanced Technology and Innovation, said in a statement.

“Technology companies are leading the charge when it comes to empowering people with the flexibility and choice that comes with being your own boss, and that is something to be championed, not stifled,” she added.

Seattle’s ordinance—approved unanimously by the city council but opposed by Mayor Ed Murray—threatens the viability of that economy, the Chamber said.

The U.S. economy today is radically different from what it was in the nineteenth and twentieth centuries. And, yet, some things have not changed: Workers are exploited and they try to organize unions to bargain over their wages and working conditions. Meanwhile, their employers do everything they can to try to stop them.

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In the beginning, there was barter. Then, and forever after, there was money

That’s the myth every student of economics learns, that money grows out of barter. The idea is that monetary exchange solves the problem of the double coincidence of wants—that a person who is interested in trading needs to find someone who wants what they have and has what they want. Money makes trade much easier, so the story goes, and thus becomes a remarkable example of both human ingenuity and economic progress.

The fact is, as Ilana E. Strauss [ht: ja] explains, the story is false. Human beings did not invent money to solve the difficulties of barter exchange. Barter turns out to be a historical myth.

various anthropologists have pointed out that this barter economy has never been witnessed as researchers have traveled to undeveloped parts of the globe. “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money,” wrote the Cambridge anthropology professor Caroline Humphrey in a 1985 paper. “All available ethnography suggests that there never has been such a thing.”

Humphrey isn’t alone. Other academics, including the French sociologist Marcel Mauss, and the Cambridge political economist Geoffrey Ingham have long espoused similar arguments.

When barter has appeared, it wasn’t as part of a purely barter economy, and money didn’t emerge from it—rather, it emerged from money. After Rome fell, for instance, Europeans used barter as a substitute for the Roman currency people had gotten used to. “In most of the cases we know about, [barter] takes place between people who are familiar with the use of money, but for one reason or another, don’t have a lot of it around,” explains David Graeber, an anthropology professor at the London School of Economics.

A good example is the kind of exchange described by Fibonacci in his Liber Abbaci. He devoted the ninth chapter to “barter of merchandise and similar things.” But it wasn’t pre-monetary barter. Instead, as Randy K. Schwartz explains,

A barter was often recorded as such in a register or account book, as if actual coins had been exchanged, when in fact no coins at all were involved.

Because coins were still scarce, the widespread custom among merchants was to set the barter price for a commodity by “marking up” the cash price by a certain percentage. The two barterers had to agree on the markup rate ahead of time, or else one would feel cheated.

In other words, this was exchange that took money as the unit of account but, because coins were scarce, it took the form of the direct exchange of goods—say, wool for cloth.

And there are many other examples in the historical and anthropological record of forms of exchange that precluded money—centralization and redistribution, gifts, potlatch, trade at the edges of and between non-monetary societies, and so on. But there was no original barter economy, which was then surpassed by the use of money.

That’s a myth that began with Adam Smith:

But when the division of labour first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations. One man, we shall suppose, has more of a certain commodity than he himself has occasion for, while another has less. The former, consequently, would be glad to dispose of; and the latter to purchase, a part of this superfluity. But if this latter should chance to have nothing that the former stands in need of, no exchange can be made between them. The butcher has more meat in his shop than he himself can consume, and the brewer and the baker would each of them be willing to purchase a part of it. But they have nothing to offer in exchange, except the different productions of their respective trades, and the butcher is already provided with all the bread and beer which he has immediate occasion for. No exchange can, in this case, be made between them. He cannot be their merchant, nor they his customers; and they are all of them thus mutually less serviceable to one another. In order to avoid the inconveniency of such situations, every prudent man in every period of society, after the first establishment of the division of labour, must naturally have endeavoured to manage his affairs in such a manner, as to have at all times by him, besides the peculiar produce of his own industry, a certain quantity of some one commodity or other, such as he imagined few people would be likely to refuse in exchange for the produce of their industry. Many different commodities, it is probable, were successively both thought of and employed for this purpose. In the rude ages of society, cattle are said to have been the common instrument of commerce; and, though they must have been a most inconvenient one, yet, in old times, we find things were frequently valued according to the number of cattle which had been given in exchange for them. The armour of Diomede, says Homer, cost only nine oxen; but that of Glaucus cost a hundred oxen. Salt is said to be the common instrument of commerce and exchanges in Abyssinia; a species of shells in some parts of the coast of India; dried cod at Newfoundland; tobacco in Virginia; sugar in some of our West India colonies; hides or dressed leather in some other countries; and there is at this day a village in Scotland, where it is not uncommon, I am told, for a workman to carry nails instead of money to the baker’s shop or the ale-house.

In all countries, however, men seem at last to have been determined by irresistible reasons to give the preference, for this employment, to metals above every other commodity. Metals can not only be kept with as little loss as any other commodity, scarce any thing being less perishable than they are, but they can likewise, without any loss, be divided into any number of parts, as by fusion those parts can easily be re-united again; a quality which no other equally durable commodities possess, and which, more than any other quality, renders them fit to be the instruments of commerce and circulation. The man who wanted to buy salt, for example, and had nothing but cattle to give in exchange for it, must have been obliged to buy salt to the value of a whole ox, or a whole sheep, at a time. He could seldom buy less than this, because what he was to give for it could seldom be divided without loss; and if he had a mind to buy more, he must, for the same reasons, have been obliged to buy double or triple the quantity, the value, to wit, of two or three oxen, or of two or three sheep. If, on the contrary, instead of sheep or oxen, he had metals to give in exchange for it, he could easily proportion the quantity of the metal to the precise quantity of the commodity which he had immediate occasion for.

It’s a myth that continues to be taught to hundreds of thousands of economics students every semester.

It occupies much the same position as the Robinson Crusoe story. In both cases, it’s a myth that starts with self-interested individuals who make decisions—to trade with money or to enter into a division of labor—that, at one and the same time, benefit themselves and society as a whole.

But, of course, there are many things missing from these mythical origin stories. There’s no exploitation or instability; no debt, unequal power, or state coercion; no social relations or embeddedness of the economy within society.

Instead, what mainstream economics offers starting with Smith, and continues to offer studies today, is a story about the mythical—not real, historical—origins of capitalism.

The sooner we recognize those stories for what they are, the sooner we can get on with the business of imagining and creating alternative economic institutions.

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