Struggle is the reality!

The mainstream press and right wing political opinion would have us believe that Britain is a nation of millionaires, with a quest to hermetically seal our borders, to the detriment of our trading efficacy, and that individual choice from a menu of abundance is the default position for all ‘hard-working’ families and households in the UK.

How wrong can they be?

The reality for many working families is that choice does not exist and resources do not, under any prevailing economic conditions, match aggregate demand as a household unit. (‘…my income does not even cover my rent…’ a plaintive comment in this film from the Labour Party…).

Policies of austerity and the tolerance of vast inequality in social and economic matters create voices of despair in our communities.

From Franklin Delano Roosevelt’s New Deal to the Keynesian interventions in the rebuilding of Europe after devastatingly destructive war and resource depletion, the solution to a fairer, more compassionate and prosperous society is spending on public infrastructure, with that infrastructure in public ownership, and the creation of economic motive and delivery that sees the redistribution of wealth, not downwards for the few, but upwards for the many…vote Labour and change the model!

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This journal of comment and analysis is devised and published in the East of England...leaning to the left, thinking independently, arguing for humanity...

Editor: Tim Smith MA, FRSA

Now living in rural Suffolk, I have wondered all my adult life why ordinary people like me, would vote to make the policies of the self-interested Right ascendant? I now think, older as I am, that I have pursued entirely the wrong question, despite voting Labour my entire life. Why on earth cannot collaborative socialism make the Left successfully ascendant? This is the new quest.

Tim is a Partner at SmithMartin LLP - a Cambridge based social business working to create projects which tackle inequality.

Collective Conversations is a not for profit, publishing project - the views and interpretations expressed are solely those of the individual contributors to the work.

No endorsement of any party or person is sought or implied...

Economic apocalypse? …a versioning

 Afloat in the economic ocean?

 

Are we heading for a new depression, economic collapse or is the ‘great recovery’ under way?

Thomas Carlyle is credited, in reference to the work of Malthus, as characterising economics as a ‘dismal science’. The truth appears to be more prosaic. Carlyle was, in fact, writing about the promotion of slavery, the better to regulate labour and markets. Read more here.

A wonderful example of how pragmatic economic theory changes over time. Not to say that sometimes the moral ascendancy can triumph over cash!

It is ironic that economists, in wrangling with future financial forecasts, gambling in all but name in a free market, should so often be wrong or just plain at odds with each other.

In this short article we look a set of distinct economic analysis, leaving it to the reader to cleave to the one most favoured. What does the future really hold, perhaps we will only know when we get there?

In the mainstream:

Weekly Economics Podcast on Twitter: www.twitter.com/weeklyeconpod
Olivier Vardakoulias Twitter: www.twitter.com/o_vardakoulias
Kirsty Styles on Twitter: www.twitter.com/kirstystyles1

This is is the first of a revised New Economics Foundation weekly podcast on matters economic, always available on SoundCloud. The message from economist Olivier Vardakoulias is cogent, articulate and persuasive. It tracks the major players and movements in world commodity and financial affairs across the coming year, but it does not question the veracity or effectiveness of the market mechanism, nor does it decline to accept the prevailing mores and currency of mainstream financial wisdom.

Drifting to the Left:

This TEDtalk by Yanis Varoufakis of Greece, a libertarian Marxist who has achieved real influence in his home country,  presents a darker picture of the grip of economic policy on the neck of democracy.

Varoufakis presents a bleak future, of a nastier and wasteful economic control of the market that seeks to deny democratic function. His ‘twin peaks’ theory looks at the mountains of cash which are left idle, rather than being invested into productive capapcity to support social and infrastructure change. A ‘mountain of idle debt’ sits alongside ‘massive cash stockpiles’.

In his talk he presents his audience with the Aristotlian thesis of democracy. The constitution in which the free and the poor, being in the majority, control the government. The Athenian model, Varoufakis offers us, gives the poor a say in the workings of the state and in the decisions that affected their lives. The masterless citizen and the working poor.

He sees the current separation of the economic and political sphere as a ‘democracy free zone’. We now see politicians who are in government but not in power. Brilliant!

Economic crisis is coming. Democracy is in danger. This might be the Varoufakis headline.

We go over the cliff:

“Sell everything except high-quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small.” It said the current situation was reminiscent of 2008, when the collapse of the Lehman Brothers investment bank led to the global financial crisis.

Source: RBS advice to clients in 2015

Albert Edwards is a strategist at the bank Société Générale, and he echoes the advice from RBS in a telling article in The Guardian early in January this year. See the full text here.

Edwards declares that the state of the US economy is in far worse shape than the Federal Reserve is willing to declare, and that the huge credit expansion in the US is designed to facilitate share buy-backs. It is not, Edwards opines, ‘real economic activity’. This pressure is matched by an equally large collapse of credit demand in China, for example.

The Guardian article makes much of the seismic shifts currently taking place in national economies, with the proviso that much of it is undeclared, and that, in reality, the crisis is upon us.

Hard evidence of debt accumulation, cash accrual by international corporates and banks, and the crushing weight of default for the ordinary citizen is not hard to find.

deleveragingGenevaReportcoverPic2
Full Report, pdf.

In the Geneva Report on the World economy, No. 16, ICMB, International Center for Monetary and Banking Studies 2014, lies a wealth of data and analysis regarding the last financial crisis and the fires being stoked for the next.

On page 3 of the report, in this section, is a comparative graphic of the rising levels of financial assets in mature economies and in emerging economies.

What is interesting is the feature that the proportion of bonds and banking stock remain relatively similar over time and in both comparators. However, levels of debt, or rather outstanding loans, and stock market capitalisation contunully rise across both comparators, although the scales are different, a la Varoufakis.

Also interestingly, in the Policy Options section of the report (Page 81 onwards) there is no argument presented to counter the prevailing theory that re-capitalisation of failing banks with public money is both desirable and necessary.

Here at CollCon we lean away, by instinct, from the capitalist conspiracy theory of the economy. However, with lack of challenged thinking and ‘citizen focused’ solutions on the agenda, something of the mystery of unseen collaboration is hard to escape.

We were reading this week a rather telling article on the web pages of War on Want. In them a German MP, Katja Kipping, attempts to gain access to the new ‘public’ library of the TTIP negotiations in Berlin.

For the economically minded, democratic social activist it is an alarming read…

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This journal of comment and analysis is devised and published in the East of England...leaning to the left, thinking independently, arguing for humanity...

Editor: Tim Smith MA, FRSA

Now living in rural Suffolk, I have wondered all my adult life why ordinary people like me, would vote to make the policies of the self-interested Right ascendant? I now think, older as I am, that I have pursued entirely the wrong question, despite voting Labour my entire life. Why on earth cannot collaborative socialism make the Left successfully ascendant? This is the new quest.

Tim is a Partner at SmithMartin LLP - a Cambridge based social business working to create projects which tackle inequality.

Collective Conversations is a not for profit, publishing project - the views and interpretations expressed are solely those of the individual contributors to the work.

No endorsement of any party or person is sought or implied...