Reading Capital 150 Years Hence

Erinç Yeldan

Karl Marx published the first volume of Capital one hundred and fifty years ago. The writing of Capital was aimed at uncovering the operational laws of capitalism, as well as providing a theoretical weapon for the working class in its historical struggle for freedom and equality against the bourgeoisie. We have to remember that the main motivation behind this Herculean theoretical effort was not limited only to a realistic depiction of the conditions of the working class under capitalist accumulation, but to unearth the intrinsic elements of these iron laws in their sheer brutality.

If we are to read Capital once again hundred and fifty years after its publication, we ought to distinguish between Marx’s efforts to understand the logic of capital in its abstract form and his efforts concerning the realization of this logic in terms of class struggle. In other words, if we were to interpret Marx’s writings in a deterministic and mechanical fashion, we would not be able to understand the dynamics of the evolving “new international division of labor” between different countries, different geographies, and the new forms of capital and working classes.

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Globalization and the End of the Labor Aristocracy, Part 2

This is Part 2 of a four-part article by Jayati Ghosh, published in the March/April 2017 special “Costs of Empire” issue of Dollars & Sense magazine. Part 1 is available here. Subsequent parts will appear on Triple Crisis over the next two weeks. In this section, Prof. Ghosh focuses on the new international economic architecture for trade, investment, and property rights.

Jayati Ghosh

International Economic Agreements

The past two decades have witnessed an explosion in the treaties, agreements, and other mechanisms whereby global capital imposes it rules upon governments and their citizenries. Unlike the conditions imposed on developing countries by the IMF and the World Bank, these rules apply even to countries that are not debtor-supplicants to international financial institutions. They require all countries to restrict their policies, though these restrictions are especially damaging to the prospects of autonomous economic development in the “periphery” of the world capitalist economy.

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Securing Land Rights in Zambia

Timothy A. Wise

Chief Ndake received us in the community land rights office of the small compound that constitutes his “palace.” As one of Zambia’s traditional authorities, he reigns over a swath of Nyimba District in the country’s Eastern Province, and he is working with the Zambia Land Alliance to improve land rights and tenure security for his subjects.

The only thing traditional about Chief Ndake was the formal greeting we were expected to offer, on one knee. He greeted us casually and warmly, smiling from beneath his glasses. Perhaps in his forties, the chief wore a polo shirt emblazoned with the slogan-of-the-day: “We use a toilet—do you?” The chief explained that they had just installed a lot of toilets across his kingdom, a major public health advance.

Chief Ndake is one of a number of traditional leaders trying to bring order and tenure security to those who live without land titles on customary land, which covers more than half of Zambia and is home to the vast majority of its small-scale farmers. These leaders are seeking to construct a middle ground in a battle over Zambia’s new land policy, one that rejects efforts to privatize customary land through formal titling but improves tenure security by granting villagers traditional landholding certificates.

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Reflections on World Health Day

Martin Khor

What is the most precious thing in the world which unfortunately we take for granted and realise its true value when it is impaired? Good health, of course.

In the last Global Trends, I wrote about the importance of water on World Water Day.

On April 7 we celebrated World Health Day. Water and health are the most critical things in our daily life.

In the 1980s, the World Health Organisation’s director-general Half­dan Mahler steered through a declaration with the popular slogan “Health for all by the year 2000”.

We crossed into the 21st century without realising that noble goal. Although health has improved in most countries, due mainly to cleaner water and sanitation and also better treatment, much remains to be done.

In recent years, the slogan “Health for All” has been strengthened by the recognition in the United Nations of health as a human right. It has been further boosted by the adoption of the principle of universal healthcare.

This means that no one should be deprived of healthcare, even if he is too poor to afford it.

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Globalization and the End of the Labor Aristocracy, Part 1

This is part one of a four-part article, first published in the March/April 2017 special “Costs of Empire” issue of Dollars & Sense magazine. Subsequent parts will appear on Triple Crisis over the next three weeks.

Economist and Triple Crisis contributor Jayati Ghosh argues that imperialism has not disappeared, but changed shape. The direct military conquest and control of economic territory by the great powers has given way (at least some of the time) to control through multilateral agreements and international institutions. Economic territory may still mean the seizure of land, mines, or oil fields—but it also may mean privatization of public assets and services, or the extension of intellectual property rights to new realms. Where the “labor aristocracy” of the imperialist countries once shared in the bounty of empire, the new incarnation of empire as “globalization” has helped grind away the incomes and status they once enjoyed.

Jayati Ghosh

Twenty-first century imperialism has changed its form. In the 19th century and the first half of the 20th century, it was explicitly related to colonial control; in the second half of the 20th century it relied on a combination of geopolitical and economic control deriving also from the clear dominance of the United States as the global hegemon and leader of the capitalist world dealing with the potential threat from the Communist world. It now relies more and more on an international legal and regulatory architecture—fortified by various multilateral and bilateral agreements—to establish the power of capital over labor. This has involved a “grand bargain,” no less potent for being implicit, between different segments of capital. Capitalist firms in the developing world gained some market access (typically intermediated by multinational capital) and, in return, large capital in highly developed countries got much greater protection and monopoly power, through tighter enforcement of intellectual property rights and greater investment protections.

These measures dramatically increased the bargaining power of capital relative to labor, globally and in every country. In the high-income countries, this eliminated the “labor aristocracy” first theorized by the German Marxist theorist Karl Kautsky in the early 20th century. The concept of the labor aristocracy derived from the idea that the developed capitalist countries, or the “core” of global capitalism, could extract superprofits from impoverished workers in the less developed “periphery.” These surpluses could be used to reward workers in the core, relative to those in the periphery, and thereby achieve greater social and political stability in the core countries. This enabled northern capitalism to look like a win-win economic system for capital and labor (in the United States, labor relations between the late 1940s and the 1970s, for example, were widely termed a “capital-labor accord”). Today, the increased bargaining power of capital and the elimination of the labor aristocracy has delegitimated the capitalist system in the rich countries of the global North.

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Most Financial Inflows Not Developmental

Jomo Kwame Sundaram

Recent disturbing trends in international finance have particularly problematic implications, especially for developing countries. The recently released United Nations report, World Economic Situation and Prospects 2017 (WESP 2017) is the only recent report of a multilateral inter-governmental organization to recognize these problems, especially as they are relevant to the financing requirements for achieving the Sustainable Development Goals (SDGs).

Resource outflows rising

Developing countries have long experienced net resource transfers abroad. Capital has flowed from developing to developed countries for many years, peaking at US$800 billion in 2008 when the financial crisis erupted. Net transfers from developing countries in 2016 came close to US$500 billion, slightly more than in 2015.

Most financial flows to developing and transition economies initially rebounded following the 2008 crisis, peaking at US$615 billion in 2010, but began to slow thereafter, turning negative from 2014. Such a multi-year reversal in global flows has not been seen since 1990.

Negative net resource transfers from developing countries are largely due to investments abroad, mainly in safe, low-yielding US Treasury bonds. In the first quarter of 2016, 64 per cent of official reserves were held in US$-denominated assets, up from 61 per cent in 2014.

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Economics, Equity, and the Environment

Announcement and live stream of 2017 Leontief Prize presentation from the Global Development and Environment Institute (GDAE):

GDAE will award its 2017 Leontief Prize for Advancing the Frontiers of Economic Thought to James Boyce and Joan Martinez-Alier. This year’s award, titled “Economics, Equity, and the Environment,” recognizes Boyce and Martinez-Alier for their ground-breaking theoretical and applied work that has effectively integrated ecological, developmental, and justice-oriented approaches into the field of economics.

“It is essential to address the ecological crisis generated by the old-paradigm economy,” said GDAE Co-Director Neva Goodwin. “James Boyce and Joan Martinez-Alier have highlighted the relationship between economic systems, resources (materials and energy) and social issues. Their particular focus on the intersections among economics, poverty, and inequality has strongly informed GDAE’s thinking on these issues.”

GDAE awards the Leontief Prize each year to leading theorists who have developed innovative work in economics that addresses contemporary realities and supports just and sustainable societies.

The live stream will begin at 4:00 on Tuesday, March 28, 2017

Leontief2017Live

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Quantitative Easing vs. Fiscal Policy

Philip Arestis and Malcolm Sawyer

The use of “quantitative easing” (QE) has been a notable feature of monetary and financial policies conducted by many central banks (including the U.S. Federal Reserve, Bank of England and European Central Bank) in the past decade. The precise forms of QE have differed over time and country, but the central feature of QE has been the purchase of financial assets by the central bank through the issue of central bank money with the extent of those purchases set out (rather than using open market operations to maintain a target interest rate). The creation of money involved under QE has led a number of commentators to say, in effect, that the money could be used to greater effect by government (or central bank) spending. Descriptions such as “green quantitative easing” and “people’s quantitative easing” have been used, and others have invoked the idea of “helicopter money.” The term “helicopter money” invokes the story told by Friedman (1969) to illustrate the effects on the economy of an injection of dollars (dropped from a helicopter), which are then spent by the lucky recipients.

Van Lerven (2016) uses the term “public money creation” to encompass a range of proposals. (He uses the term by way of contrast with private money created by private banks as part of the loan process.) Van Lerven distinguishes three sets of proposals on how the “central bank’s ability to create money could be used.” There is, though, little reason why the use of money should be limited to these proposals. The three sets are “[1] proposals that advocate using central bank money to directly finance lending to large businesses, SMEs [small and medium enterprises], social enterprises, co-operatives and local governments; [2] proposals that advocate using money that is newly created by the central bank to finance infrastructure investment (via lending or spending); [3] proposals that advocate using newly created money to finance either a tax cut, or direct cash transfers to households, such as a one-off ‘citizen’s dividend’ (a non-repayable grant to every citizen).” A fourth set is added which offers a mix of the three just outlined. The key argument here is that if those forms of public expenditure are socially desired and desirable, then they should be undertaken using the established routes, and not reliant on the adoption of some form of “quantitative easing.”

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The Global Industrial Working Class

Immanuel Ness is a professor of political science at Brooklyn College the City University of New York and the author of Southern Insurgency: The Coming of the Global Working Class (Pluto Press, 2015). In November 2016, he talked with D&S co-editor Alejandro Reuss about the present and future of the world’s industrial working class. News of its death, Ness argues, is greatly exaggerated—in fact, the global industrial proletariat is bigger than ever—and he expects larger and more political struggles to come. (The audio version of the interview, previously posted on Triple Crisis, is available here.) Read the rest of this entry »