GlobalTalk

Only One Way to Tax Corporations Effectively

It is well-noted that the Republicans’ tax plan is a boon for corporations because it “permanently” (until another Congress decides differently) cuts the corporate tax rate by about half.

That’s a boondoggle for corporations, but, truth is, many of them pay little or no taxes, even under the current law. One issue is overseas revenues that, kept overseas, never turn into taxable profits; another is overseas tax havens through which corporations and the elite who run them park money in secret accounts specifically designed to hide otherwise taxable income; a third derives from the fact that corporate expenses are deducted from revenues before profits are declared and taxed, but such “business deductions” are near impossible to review, evaluate or limit; a fourth is the general laxness of corporate tax enforcement as successive administrations, catering to the cut-taxes mantra of recent decades, have cut funding for the IRS.

The fact is: with virtually unlimited assets devoted to the task, the corporate sector is hugely successful in minimizing its taxes. This has been the case for decades, and only the most naïve liberals still imagine that, somehow, the US government will reform itself into a powerful corporate tax collector. Never was and ain’t ever gonna be. Nothing for progressives to gain by getting lost in the weeds trying to retain or improve it.

Unless...

Unless progressives – and the politicians we elect to office – take up the only way to tax corporations effectively: a bank tax on corporate transactions. Under such taxes – which have been applied to other sectors in some countries and are under consideration in the European Union – banks collect a small fee on the electronic funds transfers (ETFs) of corporations, creating a potentially very large revenue stream for public use. And the tax is unavoidable, collected automatically on every EFT (and, of course, the financial system maintains records of all EFTs so oversight is feasible).

This kind of tax is equitable because it taxes every corporation at the same rate and precisely to the extent of its commercial activity in the US economy. Other countries that rely on the dollar for credit and currency might partner with the US to extend the transaction tax’s reach and bolster their own programs. Further, the rate of taxation can be easily adjusted to ensure that revenues keep up with a society’s needs.

The actual rate of taxation would be determined by the extent of social and ecological need. Such needs are complex, diverse and extensive, but they all share the reality that addressing them requires a lot of creative and sustained, worldwide effort that seldom, if ever, amounts to a profit-making enterprise. Because little profit can be made in solving socioecological problems, investors – in particular, the big financial institutions that dominate the global market – find no reason to extend credit to the non-profit, NGO sector that is trying to make a difference. Thus, this vital sector – which, remarkably, has both the answers to our social and ecological problems and the capacity to fully employ the world’s people in actually solving them – is financially starved and unable to perform at the level necessary to save civilization from an impending dark age.

The tax rate on corporate EFTs should be enough to adequately back a new NGO investment program designed to foster full employment through non-profit social and ecological problem-solving. This is the real meaning of corporate accountability: they have to pay for society to solve the problems they create. Despite dependence on civilization and nature as the source of their profits, corporations are destroying the climate, depleting resources, contaminating water and polarizing wealth as never before. Nevertheless, only corporate commerce has a revenue stream adequate to save civilization and nature from this corporate-driven catastrophe. Full employment must be the new barometer by which corporate tax rates are set.

The Republican plan is likely to be passed and put into effect. As past evidence clearly shows, the plan will be a boondoggle for corporations, but most will not expand operations, preferring instead to buy-back stock to enhance their on-paper respectability among core investors. At this world-historic juncture, when further industrial growth is strategically constrained by ecological factors, few corporations will risk putting money into expanded factories and transportation systems. Instead, they (and the elites who manage them) are looking to financial schemes, speculative bubbles and tax shelters. The bottom line is this: the global economy’s system of mass production and distribution has reached the limits of its real growth, but it still fails to adequately employ about 40 percent of the world’s people, including a substantial percentage in the US.

The only way to employ all these people – and, in the process, achieve sustainable and secure communities all over the world (defeating the underlying cause of violence and war) – is to grow the non-profit service economy, in the US and all over the world.

Yes, conceptually, this is a new system of corporate taxation, based on corporate accountability to civilization and nature. We can start in the US, possibly with a progressive Presidency and Congress (after 2020). But, corporate commerce, especially corporate finance, is a global system, and a progressive US administration – if it ever hopes to cut the US military and end its force applications (wars!) all over the world – will have to pursue the global adoption of this tax (and its full-employment mission), the only constructive alternative to force. Through its dominate position in the IMF, a progressive US government should be able to win British, European, Japanese and Chinese agreement to fund worldwide expansion of non-profit employment through this kind of corporate taxation.

It may seem too neat and clean, too simple and direct, but a tax on corporate EFTs can finance full employment worldwide while tackling social and ecological problems of every type. It can save civilization from a new dark age. This is the kind of tax reform progressives should support.

In the meantime, the Republicans will do theirs. It’s not going to work, and voters in 2018 and 2020 aren’t going to be satisfied. The wave of new politicians that we will see after these campaigns will be looking for a better tax remedy. A bank-collected tax on all corporate transactions is an idea whose time has come.

Let’s pave the road in that direction.

[Steve Clark]

Patriarchy: what is it, where’d it come from, what’s its future?

The #MeToo movement threatens to uproot the very long-established tradition of men exercising decisive power over women, especially in family, work and politics. To fully appreciate the potential of such women’s liberation, it’s important to understand the origins of patriarchy and its long, dysfunctional history.

Humans, of course, were not the first animals on earth. Our species, homo sapiens, is the last of several human species that evolved in east Africa over the course of millions of years. Our specific species evolved about 200,000 years ago, and, blocked by the impenetrable desert across northern Africa, gradually spread out to occupy the entire sub-Saharan region. Then, about 100,000 years ago, when a brief, global, cooling trend temporarily allowed migration across the continent’s desert, some humans left Africa, initiating the diaspora that led eventually to human occupation of every habitable location on the planet.

Throughout the millions of years of human evolution (up to about 10,000 years ago), human clans were matrilineal. This was because the father of a woman’s child was typically uncertain so all children were the responsibility of their mothers who resided in clans with their own mothers, aunts and sisters. All humans – male and female alike – were raised in female-dominated cultures in which the needs of women and children were center stage. When girls reached the age of menarche and boys reached manhood, a young woman might choose mates within her clan or find mates in other clans, but any offspring were the woman’s responsibility. A presumed male parent either moved in with a woman’s clan (if she wished), or (if not) matrilineal culture guided women to raise their offspring with support of their female relatives, without a father’s participation. Further, because all pre-agricultural human societies relied on hunting and gathering, women’s gathering work (along with men’s hunting endeavors) was critical to clan survival. Research shows that in today’s few remaining hunter-gatherer societies, women gather about 60 percent of a clan’s caloric intake while men hunt down about 40 percent. Because our female ancestors were so much in charge of the future of life (production and reproduction), they exercised decisive control over social mores within their clans. Men simply enforced rules made by women, and disrespecting males were banished from the clan.

After a few million years of evolution along these lines, the natural character of gender relations was firmly established, but 10,000 years ago, an ecological crisis suddenly gave men the upper hand, creating a social catastrophe in the process. How did that happen?

Conditions for this retrograde transformation began building up after our homo sapien ancestors first left Africa 100,000 years ago. After that departure, the global climate warmed, and the desert returned across the top of Africa, once again barring migration out of the continent. In effect, humans lived, then, in two centers, one below the Sahara in Africa and another above the desert in today’s Middle East. In both regions, ongoing population growth was steady, but outside Africa, as increased hunting (necessary to support the expanding population) depleted big game animals, some humans simply moved on to adjacent regions where the game remained plentiful (this was the drive that eventually led humans to occupy all of the planet’s habitable regions). Below the Sahara, however, such migration was foreclosed. Here, as population slowly expanded and big game was killed off, human survival became increasingly difficult.

Then, about 10,000 years ago, another cool period triggered another Saharan transformation. As the desert reopened for migration, many struggling humans in Africa sought escape to the north. Suddenly, the Middle East, its forests already depleted after 90,000 years of human occupation, was crowded with new waves of desperate people.

In the space of what likely was just a few generations, the Middle East’s remaining forests and game animals were decimated, rendering hunting ineffective and creating a survival crisis for all humans in the region. Desperate for a new way to live, men abandoned hunting and devoted themselves, full time, to assisting women in their rudimentary practice of sowing and harvesting plant food, using some of it to domesticate animals. Success was immediate and bountiful. It quickly was obvious to all that such refocused efforts by men were vital to everyone’s survival, and, no doubt, women welcomed and encouraged male efforts to be more productive.

Once men abandoned hunting for full-time farm work, their greater physical strength, coupled with never bearing or rearing children, allowed them to assume ever-greater responsibilities (relative to women) in production. This led to a leap in each clan’s productive capacity and the end of the survival crisis in the region. Indeed, data show that agriculture eventually supported a 40-fold increase in human population in the Middle East. Thus, while women remained overwhelmingly responsible in reproduction, male labor became indispensible in overall production.

Critically, inheritance now became an important corollary in clan survival. Wealth was all but meaningless during the millions of years of hunting and gathering because, then, there was really nothing to pass from a dying elder to his or her next-youngers. All hunted and gathered food perished if not consumed rather quickly, and, for the most part, every man or woman made his or her own spears, arrows, hoes, pots or leather goods. Nothing of real value was around for inheritance. But, agriculture changed all that because farmland and animal stock had real value – indeed, vital value – for future generations. Once agriculture established itself as the foundation of human civilization, a means to pass ownership of land and animals to the next generation was essential.

Moreover, because men, now, were the primary gender in production (and the ones with actual knowledge of a clan’s specific land and animals), their wealth had to pass to their male next-youngers who could maintain its productivity. Pressed by these inheritance necessities, clans were forced to certify who, actually, were the offspring (and, thus, the inheritors) of the men who managed the land and animals. And to be certain of male parentage, women were coerced into accepting strict monogamy. For the first time ever, men acquired the right to choose mates, and, henceforth, chosen women were required to leave the clan of their mothers for the clan of their husbands. Women lost control of culture, now increasingly defined and restricted by male prerogative. Rather than allowing women to manage the daily life of human societies, as nature intended, the “dawn of civilization” relegated women to subordinate status, a rift still undermining human life all these millennia later.

Once agriculture was adopted in the Middle East, it spread by example or conquest to virtually every human community worldwide. In essence, the natural balance of gender relations in social and family life gave way to a dysfunctional, male-based authority that diminished women's and children’s necessities while unleashing the arrogant, combative, wasteful, force-oriented domination of men.

It’s been that way ever since, though the advent of industrial society about 500 years ago diversified social and class realities and enabled gains by some women in some areas (ability to work and partially support herself and her children; the right to divorce; etc.). Since the 1950s arrival and global proliferation of service-based production – a kind of production that, unlike agriculture and industry, is oriented to niche and nuance rather than brute strength – women have been rapidly regaining independence and power in production. Indeed, in most regards, women’s aptitudes, skills, instincts and perspective are more crucial to service production than much of what men bring to the table. Reversing the effect of agriculture on women’s power, the service economy – including its non-profit, NGO sector – is now rapidly empowering women, even as it remains constrained by the archaic, male-dominated structures (banks, corporations, governments) of the Industrial Age.

Hence, we witness today’s sharply antagonistic struggle of women to rid themselves and civilization of the long-outdated, now completely regressive culture of male hegemony and power. While women, like men, cannot do without corporations and governments (though new forms are necessary and inevitable), they are now beginning to revolutionize these structures by outing male oppressors and forcing their resignation from public power. As a feminine majority begins to replace the old boys’ club in government and business (worldwide), a foundation is being laid for the creation and implementation of civilization-wide policies that genuinely advance the interests of women and children. Once these programs take hold, patriarchy, finally, will be defeated, and civilization can reinvent, for these times and for our future, the natural balance of gender relations in which women can lead and thrive, pulling all of us in their wake.

Patriarchy remains in power, but its time is over. It is an odd and wonderful thing to be present at such a monumental transformation in human culture. It is exciting to think about the possibilities ahead.

[Steve Clark]

Women are This Revolution’s Foot Soldiers

Back in 1997, when Bill Strauss and Neil Howe wrote about fourth turnings – those eras, roughly 80 years apart, when the generational gestalt propels transformative political action – they noted that these times are always characterized by tightening morality.

Twenty years later, with #MeToo now remediating gender power not only in business and culture but also, specifically, in political office, we see just how insightful Strauss and Howe really were. Right now, a new morality is being imposed, and it is going to root out all politicians who can’t, won’t or don’t meet the new standard.

Today, via the microcosm of the US 2017 Virginia election and the outing of Senators Franken and Conyers, we see women liberating themselves and institutionalizing a new balance of gender power in which their concerns and interests will predominate.

Woe to Silent and Boomer generation men who failed to learn the meaning of “male chauvinist pig” back in the Sixties. Your public life is done. Not due to anger or righteousness (though both are justified), you’ve simply become, just now, historically passé. Henceforth, sex and gender transgressions doom political careers. An epoch is over.

From the point of view of social and political change, this cultural shift is going to be thoroughly revolutionary. Most fundamentally, this is because the practical interests of women in their children’s and their families’ future require (in today’s realities) a struggle to bring corporate power back under human command. To stop gun violence and war, to ensure health and education, to ensure full employment and security in old age, to restore the environment...all these things necessitate a reckoning with corporate authority, with the ceaseless drive of corporations to pursue profit no matter what the harm to people, our civilization and our planet.

Unlike women, men have a propensity to settle problems directly by force so they pay only secondary attention to collaborative problem-solving. Relying on force options (since the rise of patriarchy some 10,000 years ago), men – mostly, the wealthiest men and their male subordinates – created credit systems and states, waged wars, conquered nations and enslaved people in a constant drive to exploit nature and human labor. Women suffered horribly, losing their natural right to chose their own mates and, henceforth, enduring the domestic slavery of marriage and debt servitude. One enduring vestige of this setback is the sexual aggression routinely deployed by men who have economic and social power over certain women.

But, now, after millennia of economic and social development, civilization has matured into a single, global complex of social interactions upon which everyone is mutually dependent. In this context, that is, in today’s global market, the inherent drive of corporations to command labor and deplete nature for the private accumulations of a relative few creditors (lenders and investors) is socially and ecologically counter-productive. Today, the owners of the civilization’s massive debts are a handful of financial corporations that manage credit and money supply in American (dollar), British (pound), European/German (euro), Japanese (yen) and Chinese (renminbi) markets. These few global financial corporations exercise a near monopoly in the creation of money and debt, relentlessly “earning” superprofits from interest, fees and collateral confiscations. Meanwhile, they invest heavily in politics to exercise effective control of the policies and arsenals of the world’s biggest states (the US first among them). This means that women, to achieve their objectives, find themselves face-to-face with corporate power in politics.

Meanwhile, as a world system, corporate capitalism (aka, the global market) is in crisis, unable to support civilization’s population while, nevertheless, destroying our climate, polluting our seas and decimating the planet’s biological diversity. Worldwide, the corporate system fails to adequately support or employ almost half of all people, and most are Millennials and GenXers. While the labor and creativity of these people are just what the world needs to repair civilization’s social and ecological catastrophe, corporate finance – because there is no money to be made in lending to non-profit projects – has no incentive to get involved.

Women know these stark realities, deep in their souls. When women finish their work of taking power and begin directing social rectification, they will ignore calls to violence and seek other ways to address concerns. First among them, the most obvious other option, is holding the corporate system to account. It created this mess, and it can clean its mess up – under popular (women’s!) direction. Indeed, if not the corporations, who is going to pay to put everyone to work tackling this world’s cascading crisis?

Men aren’t women so, inevitably, we see reality with a different lens and different blinders, too. I’m excited to see how fast women will go.

We can't be sure that Alabamans will take Roy Moore down, but if they do, it will be because suburban Millennial and GenX women, who voted for Trump (and other conservatives) in 2016, desert the rightwing ship of their elders. Necessity is firm guidance, and, always, it is young women (as opposed to older women and all men) who change first. But, even if Moore survives this round in Alabama, his further exposure and the erosion of his support is inevitable. Franken did his best to apologize; perhaps, he had an epiphany and is sincerely horrified by himself (one can only hope). But now, he has to resign.

This unfolding tidal wave was made evident in the Virginia elections. The state’s elections are a year ahead of the national cycle, and Republicans already controlled the Virginia legislature when Trump ran and won election in 2016. Thus, many of the state’s male legislators had the opportunity to react to Trump’s Access Hollywood revelations and, later, to the outpouring of women’s power demonstrations right after he took office. Unfortunately for several of them, they not only defended Trump, they also took the opportunity to make sexist remarks about his feminine critics. This behavior directly provoked a number of GenX and Millennial women – including a transgender woman – to run against and defeat these jokesters. Indeed, with three seats still to be recounted, Democrats have the potential to swing 16 seats their way and take majority control of the Virginia House of Delegates! Totally unexpected thrashing. And of the 16 winners, 12 were women (several, women of color).

Similar outcomes were evident in New Jersey and the wide range of local races in this off-year expression of electorate trends.

Just imagine that the Virginia trend ripples through the 2018 Congressional and statehouse elections nationwide. Suddenly, we could find strong grassroots women holding office and pursuing change all across the country. (Indeed, a startlingly similar trend is unfolding in Britain, too.) Imagine breaking the Republican monopoly of Congressional power with a host of new, nominally Democratic but independent-minded Congresswomen. The march into the 2020 Presidential campaign is clearly delineated.

I am heartened by remarks that Senator Bernie Sanders (I-VT) made in the aftermath of the Virginia results. Clearly buoyed, he expressed confidence for the movement seeking to hold billionaires and corporations to account, and he urged the Democratic Party to open all state primaries for participation by independents (as candidates and as voters). Sound talking points. At this time, Sanders seems the best positioned of Americans who might rise to the status of Gray Champion in this Fourth Turning.

In any case, IMO, we are now at the revolutionary juncture we Boomers have awaited our entire political lives. The issues that animated our youthful, Sixties rebellion – war, racism, sexism and the Earth – are coming full circle. Our generation’s “rendezvous with destiny” is now. Clearly, the window is open in the US for progressive forces to take the Congress and Presidency through the 2018-20 election cycle. Other nations are on similar trajectories. These successes will reset the global stage for the final showdown in civilization’s epic struggle to subordinate corporate finance to human needs.

Boomers know our children. The GenXers among them are just about at their wits end, and the Millennials seem not to have a real chance at even proving themselves. All are enlightened; they see the world as it is. They’ve got no choice but to stand up, at least to listen to the candidates and vote…and as the turnout in Virginia and New Jersey showed, turnout they will. They’ll also volunteer, donate money and run for office. In history, at all fourth turnings, the rising generations always tighten morality and make fundamental change.

This time will be no exception, and it is women who are turning the tide.

[Steve Clark]

Trump the Neoliberal?

I find Trump’s “Russiagate” crisis both intriguing and instructive. It's starting to look like this dark hole opens a new horizon for him in 2020...

My starting point is the 2016 election. Initially, it was going to be Hillary Clinton versus Jeb Bush (meaning, whoever won, a continuation of the same neoliberal politics that have governed the nation since at least 1988). But the dreariness of this possibility (against the backdrop of increasing social and economic polarization) aroused widespread popular resistance and brought forth two anti-establishment (yet, wildly different) candidates, Bernie Sanders and Donald Trump.

The Clinton machine managed to block Sanders in the primaries, but the Republican Party is a fragmented conglomeration of retro political trends (including the neoliberal Bushes) and could not unite in opposition to Trump. Libertarians, social (Christian) conservatives, corporate nationalists (Koch brother-types), Zionists, white supremacists and homophobes found enough slivers of common ground with Trump’s “populism” to sidestep outright rejection.

Trump is not a corporate or financial capitalist (one reason that Republican neoliberals – Bush, Cheney, Romney, McCain, Graham – were wary). Rather, he is a celebrity businessman, his wealth rooted in the private speculation and deal-making of property development. Apparently, his real world “empire” has been an up-and-down affair masked for the public by his positioning in mass and social media but obvious to corporate lenders who endured his bankruptcies and other escapes.

Long before his decision to run for President and, certainly, after the 2008 financial crisis greatly tightened access to bank financing in the US, Britain and Europe, Trump apparently courted alternative financing through relations with Russian bank oligarchs and Putin’s Kremlin. Additionally, such relations served as a means to launder revenue and avoid taxes. His Russian connections were just expedient, prosperous, happy deal-making until Trump launched his run for President. Then, without a substantial political agenda of his own yet committed to an outsider campaign, Trump began imagining that his relations with Russia might provide some new kind of governing framework if he managed to win the election. Accordingly, he surrounded himself with others also dipping into Kremlin funds. Upon winning, yet naïve to the power of the neoliberal bureaucracy, Trump set about formulating and pursuing an agenda that might somehow bridge Russian and conservative American interests.

Instantly, he aroused hostility among the neoliberal elite (who began the search for evidence that he had stolen the election with Russia’s help), and his dalliance with extremists of all stripes (his immigration bans, Charlottesville remarks) deeply undermined his popularity within America’s essentially tolerant mainstream. Meanwhile, the patchworked opportunists of the Republican Congress demonstrated their inability to govern, failing to repeal Obamacare or enact meaningful legislation of any sort.

It’s probably no accident that it was monster hurricane Harvey in Texas that finally brought Trump to his senses. Against such destruction, fiscal conservatism had no answer. Trump knew he was going to have to spend and spend big. He knew this precluded building his farcical Wall as well as any fiscal showdown with Democrats over the federal deficit. Further, he knew that immigrant labor was vital to any real effort to rebuild so deportations had to be reigned in. And behind Harvey came Irma. Nature imposed her will on politics because Trump’s popularity – not only as a politician but, more important to him, as a cultural icon – was at stake.

Moreover, behind the scenes, the neoliberal-spawned investigation into Russian meddling has been proving Trump’s and his family’s connections to Russian money. Yet, in his mind, his flirtation is no worse than Clinton Campaign Chair John Podesta and others who used Russian avenues for financial gain. Still, for him, impeachment would be the ultimate crash of his celebrity status, and, for safety’s sake, he’s steadily axed the people around him (Flynn, Bannon, Manafort) who went too far, invited too much scrutiny and could not be defended. Nevertheless, the squeeze on him continues.

Thus, a crossroads has arrived. Feeling the noose around his neck and seeing the abject failure of Republican governance, Trump has switched tracks, going over to neoliberalism by embracing Nancy Pelosi and Chuck Schumer. He is hoping that, with their help, a deal can be struck to avoid impeachment and the fatal notoriety of a traitorous Presidency.

It remains to be seen whether Bob Mueller is truly independent or merely a tool of the neoliberal elites and their state. If he is the latter, his investigation, perhaps, will be headed off at the pass, before Trump’s complete public exposure. Or, if he is truly independent, Trump – on the basis of some public mea culpa, his embrace of the Democrats’ agenda (DOCA/immigration reform, climate change, global policing and “free trade”) and an expedient blessing from Pelosi/Schumer – can retain the Presidency despite Mueller’s exposé. One way or the other, Trump hopes to retain office and become a President that the American mainstream can tolerate and, eventually, come to respect and love.

Of course, after Clinton-Bush-Obama, neoliberalism is a dead end in US politics, but Trump, despite his solid, 2016 instinct to oppose it, now finds it immensely powerful and meaningful relative to his life’s fundamental necessity: placating his narcissism. It now appears possible that Trump, if he can collar Pelosi and Schumer to deflect Mueller, might not only avoid impeachment but even run for re-election in 2020 as neoliberalism’s candidate, possibly as head of the Democratic Party or, if the Sanders wing gains the upper hand, some other “national unity” party the three of them might create.

The bottom line: (1) neoliberalism needs a candidate to oppose Sanders (or his next-in-line) in 2020, and (2) Trump needs to avoid cultural oblivion. Two devils seeking a deal.

[Steve Clark]

The Future of Globalism Reviewed

Unless you’ve been giving thought to how the world might be better governed (as opposed, say, to how to make the world’s nation-states better instruments of government), you’ll probably find the Globalist’s seven-part series on The Future of Globalism by Dirk Holbing a bit esoteric. I say that not to discourage a quick read – each part is short and to-the-point – but to say I realize that restructuring civilization’s means of self-governance isn’t even a blip in today’s politics. It’s just not yet a practical political concern.

But, IMO, it should be…and soon will be, for all the reasons Part I articulates:

Faced with climate change, financial, economic and spending crisis, mass migration, terrorism, wars and cyber threats, it appears we are very close to global emergency. Given this state of affairs, we are running out of time to fix the problems of our planet. The lives of billions of people are at risk…

By now it is obvious that all traditional problem-solving approaches have failed to work. Therefore, we need new ways of participatory decision-making as well as new designs of the monetary, financial and economic system.

Citing (in Part II) “an increasing amount of evidence that more energy-efficient or environmentally-friendly solutions have often been suppressed by established industries in attempts to maintain their ‘cash cows,’” the Globalist calls for a “new social contract” (in Part III).

So far, so good. But, now, Holbing begins to wander (Parts IV and V), calling, vaguely, for “new currencies” and “a universal right to benefit from money creation.” He advocates for “full transparency” and a global ban on lobbying while proposing replacement of the UN with “a World Council” in which 1,000-person chambers of four constituencies – regional representatives, elite (business sector) reps, leading scientists and smart citizens – would “harness collective intelligence.”

Despite the fantasy involved in imagining that nation-states – the agencies that created the federated UN in their own image and interest – would abolish it in favor of any kind of global democracy, I found Holbing’s elaboration (Part VI) of how “digital democracy” might work edifying (as I have often suggested, without really knowing how, that newly designed platforms in social media can enable effective, global, popular decision-making). Holbing is a professor of Computational Social Science, which, if you think about the title, suggests he may know something about how this can be done. He writes:

Constructive forms of massive open online deliberation (MOOD) require new kinds of participatory platforms, which allow people affected by a problem to contribute arguments, ideas and concerns to the related debate. Once the different arguments and perspectives are clear and possible solutions have been suggested, one should start a round table with key representatives of the different perspectives to work out integrated solutions in an innovative deliberation process. A vote by the affected people on a “best of” list of integrated solutions should then decide which of the integrated solutions fits the needs of the people in the respective region best. It should then be implemented there.

I like to think he could go further along this line and that people like him can construct a perfecting system of online, participatory problem-solution analysis and evaluation that can vastly improve upon the decision-making process of today’s nation-states.

Part VII is devoted to a 12-point set of “Guiding Principles for a Golden Age of Prosperity and Peace.” I can’t argue with the principles, but I do know that the Globalist’s failure to identify and fight enemies – while, instead, focusing solely on positive initiatives – will never effectively rally mass support. Oppression is real; it breeds resistance and demands justice. By appealing to the best instincts of the most enlightened and sacrificing elites, the Globalist apparently hopes to leap over the seething jungle of popular revolt, an impossibility in today’s desperate and difficult times.

Still, by acknowledging today’s civilizational crisis and making an effort to define the direction forward, the Globalist lends its credibility to the revolutionary cause. Sooner or later, as the world’s people challenge the domination of corporate power, we must find (in lieu of today’s nation-states) new, global mechanisms of our own administration. Indeed, the first outlines of such mechanisms are bound to arise from the struggle against corporate authority, itself, including the nation-states they control. In that regard, Holbing’s sketch is a useful tool for reflection, correction, further elaboration and, eventually, practical revolutionary organizing.

[Steve Clark]

“Socialism” or Another Name…Only Possible Remedy is Global

The effort of John Judis (The Socialism America Needs Now) to assess the meaning of socialism in today’s context is a worthy one, and its Facebook posting by Mark Rudd (Aug 28) aroused useful commentary, including Rudd’s own sleepless-night questions of “what would Black Lives Matter say about the Judis piece” and “how do we deal with the fact that the military and the corporations feeding off it have had complete reign for almost 80 years and now have found a pot of gold in the Trump administration?”

Good questions.

The corporate system and military might are historically evolved and synergistic, as Rudd – and Reverend Barber’s North Carolina Poor People's Campaign (touted by Rudd) – suggests, but they are not unique to the US. The corporate system operates worldwide, not nation-by-nation, and virtually all states exert force to the extent necessary and possible (given their means) in collaboration with or opposition to the world’s remaining military superpower, the US.

Indeed, the corporate system and its military-industrial complex is really a global system, and no corner of today’s civilization avoids its devastating impacts. Most prominently, these include ecological destruction and socioeconomic polarization, both global in scope despite a vast array of local and national particularities.

Today’s crisis is truly a global crisis, and a failure to find a global remedy will produce a dark age worldwide. I agree with Rudd, “We’re all in this together and time is short.”

Unfortunately, however, Rudd (like Judis and Barber) falls prey to the inevitable tendency to see things more narrowly than they actually are, that is, to see things in local and national terms rather than global. While, of course, we must encourage cross-cultural unity in our fight-back and we must fight on every immediate front, until we also unite and fight globally for a practical program to subordinate corporate power to human necessity, we cannot prevent civilization’s impending collapse.

It is an illusion that the tattered and now-dysfunctional social contract under which we Westerners all grew up is purely national in character. Yes, in the US it had its own name (New Deal), but it was essentially the same as that adopted throughout Europe (social democracy). This social contract and its global financial arrangements were codified in the establishment of the International Monetary Fund (IMF) at Bretton Woods in 1945. The West’s former colonies had no choice but to accept their dependent role in this institutionalization. And, further, since the end of the Cold War circa 1990, the social contract in Russia and China, known as socialism, has fallen into the same strait. Civilization has one social contract, not hundreds, and the one we have is failing us all.

The answer is a new social contract, one commiserate with our time (and the future), not some redo or update of the old contract, especially, not some illusory (imaginary) reform of the corporate system via nation-by-nation politics (that are already dominated by corporations). The new social contract must be between the global masses and the corporate elite, themselves, not between each nation’s people and their state (though, of course, local and national political reform is one element of the overall struggle). How do we take the struggle to the corporate elite and enforce our demands in a new, global social contract? That is the real question of our time.

Our civilization has grave social and ecological problems that demand extensive and immediate attention, yet without much profit to be made, corporations pay no heed. Meanwhile, roughly 40 percent of the world’s people are underemployed (or worse). With a new social contract (and corresponding financial system), full employment, social stability and ecological restoration can be had, but only if the corporate system pays the freight. We should aim action at the IMF, the Institute of International Finance (the IIF, the global trade association of corporate finance) and the G-20 finance ministers, demanding a new social contract with a permanent tax on corporate commerce (a bank tax on corporate electronic fund transfers) to finance sustained expansion of the non-profit, NGO, problem-solving, full-employment economy worldwide and to support a new arm of popular, online, financial decision-making.

Call it “new socialism,” or find another name, but this is the practical way to subordinate corporate power and enable human potential at this critical juncture in civilization’s history.

Let’s unite on this and engage all our diverse struggles as components of the global fight for the social contract to save ourselves and our planet.

[Steve Clark]

Corbyn and Imperialism. Any Answers Here?

My question is directed to friends, progressives, MMTers, activists, and socialists in the pound-denominated currency zone known as Britain (dollar-zone Americans will see the relevance...):

I like Jeremy Corbyn’s chances of becoming the next British Prime Minister. With inept Conservative Theresa May (like Trump over here) ready to topple at any moment, Corbyn is far closer to actual power than Bernie Sanders ever got in 2016, nor is today. Indeed, Corbyn likely will become Prime Minister while Trump remains in office (or his term is completed by Spence or Ryan).

That conflict of values may serve as a crucible for the formulation of the so-far-elusive, yet vital foreign policy alternative to traditional Western corporate exploitation enforced by the US-based, military-industrial complex. After centuries serving extraction of the Middle East's wealth and its concentration the hands of British corporations, what ought the British government – once under the leadership of Corbyn and Labour – do to remedy the social and ecological tragedy it (in alliance with US imperialism) has made there (and worldwide)?

As an American looking in on the British elections (and thinking ahead to the stance that revolutionaries should adopt in the US elections in 2018 and 2020), I wonder what will be the cornerstone of Corbyn foreign policy with regard to the legacy and reality of late industrial age corporate capitalism: its monopolization, its nationalism and militarization, its outright seizure of the industry and markets of other people, and its permanent subjugation of their lives and livelihoods to credit from British (and other) corporate banks. What does Corbyn propose to right imperialism’s global devastation?

Having the relative political advantage of not being (like the US government) the actual engine of military aggression in today’s world, a Corbyn government will certainly have wider latitude in scratching around for sound, post-imperial policy than would a new American Administration. In charge of our civilization’s largest and most deployed arsenal, a progressive American President will be on an immediate hot seat, with every interest group anywhere on earth – especially, dollar-denominated corporate forces – hailing any action as either defense of traditional US foreign policy or the delineation of an unsketched and uncertain alternative. What if such a President, following a British example, announced an end to US military action in the Middle East, and the West's house of cards begins to collapse? From Day One, the US President’s agenda will count, and he will be tested and held accountable; crippling misjudgments and mistakes are possible. Prime Minister Corbyn, perhaps, has a bit more room and time for manoeuver.

Certainly, he would cease Britain’s military participation in imperial war in the Middle East (in particular) and elsewhere. That sends a powerful message (and it’s actual execution will foster existential resistance and require rigorous supervision to succeed...all the more in a disengaging US Administration). But, by itself, ending military aggression does nothing to end the region’s exploitation by western corporations, in particular, by British (and US) finance corporations that have grown wealthy beyond imagination from credit extended in (and wealth extracted from) the Middle East over the past century, yet have left the region’s people in catastrophic straits. This extraction is called imperialism, and until it is both ended and repaired, it will continue to flame resentment, rebellion and violence against British interests in the Middle East and at home.

Corbyn will have to have an answer for this, or, despite his progressive values, he and the on-going government of Britain will be seen by the world’s suffering masses as still part of the problem…and, thus, still worthy of attack. The US, of course, is the most hated target of all among the world’s dissatisfied people, so whoever follows Trump will face an even more daunting reimagining task in every region of the world. In charting a new course in world affairs, American progressives have much to ponder.

The question of imperialism – the population acceleration, poverty, social polarization, displacement, violence and ecological destruction corporate capitalism has imposed on civilization over the last 150 years – is the central issue of today’s worldwide, generational rebellion. The right and practice of corporations to exploit civilization and nature for their own sake -- a right advanced by Big Five currency zone states and backed by US war machinery -- is the underlying and unifying target of today's generational, civilization-wide uprising. Until the alternative to imperial oppression is found and embraced, civilization’s tattered social contract cannot be rewritten, and our slide into social and ecological disaster (aka, a new dark age) cannot be reversed.

When he becomes Prime Minister, Corbyn will have the first shot at articulating the remedy to imperialism in today’s world. Not that Britain, alone, can make it happen (of course, it can’t), but he will be the first elected progressive in an imperial state to confront what must be done to end imperialism, repair its desperate legacy and restore peace and collaboration as the heart and soul of human civilization. It is an opportunity awesome with potential, and it is with great anticipation that I await Corbyn’s wrestle with this world-historic challenge.

How might such a challenge be tackled? Not an easy answer. As an American progressive thinking ahead, I’m partial to a practical, if revolutionary premise and approach: (1) establish sustainable, full employment worldwide through (2) expansive, NGO-led job growth in social and ecological services (3) financed with credit advanced via a new, popular currency that is (4) backed by a permanent revenue stream of IMF-imposed fees on corporate bank transactions and (5) administered through a new, online system of popular discussion and decision-making on behalf of global problem-solving.

Call it:
People Power over Corporate Power – the Only Way Out of the Mess They Made!

Or constructively:
To put ourselves to work solving our problems, we need our own credit and demand a corporate bank tax to fund it.

Or confrontationally:
Attn: IMF, IIF, BIS, and G-20. Time for a new Social Contract!

[Steve Clark]

Credit Line Politics: Russia v the Big Five

In what has Trump been snared and why does it matter so much?

“Follow the money!” is well-accepted advice, but “Follow the credit lines!” more precisely explains the big brouhaha over Russian interference in the US elections.

In the global economy, many states issue currency for their domestic markets, and many domestic bank corporations issue local credit in such currencies. But any credit extended across international borders must be denominated, serviced and repaid (if lenders wish legal protection in international tribunals), not in domestic currency, but in one of five currencies designated by the IMF. The Big Five are the dollar (US), pound (Britain), euro (Germany/ECB), yen (Japan) and reminbi (China). No other currencies are deemed worthy for settlements of global accounts.

Therefore, since all economic growth – real or speculative – requires credit to get off the ground, would-be economic players in the global economy are compelled to borrow, pay interest and retire their financing in one of these five currencies. This monopoly confers benefits on Big Five financial corporations and their states by expropriating much of the profit-generating capacity of local economies within their currency zones. Meanwhile, because the non- and low-profit service sector of such local economies (often advanced through NGO initiatives) cannot pay the cost of monopolized (for-profit) finance, it gets no financing at all (and must rely on charity).

This is the reality of imperialism in the present-day global economy: it slurps up whatever profit a local economy can generate and stashes it in external corporate coffers; meanwhile, it fails to finance NGO and service sector job growth, leaving upwards of 40 percent of the world’s people underemployed and insecure. As a consequence, violence and social dislocation is widespread and out of control, and, on the ecological front, fundamental repair is impossible.

One force bucking this reality – but only for self-interested reasons – is Russia and its ruble, once the imperial currency of the Soviet Union (see Is China Socialist or Capitalist and What Does It Matter?). Although the break-up of the USSR did immeasurable damage to the ruble’s market (the loss of much of eastern Europe), it did not destroy it. Russia, itself, is a big country, and a number of former soviet republics in southwest and central Asia still use the ruble as domestic currency. Moreover, because of Russia’s relatively vast supply of natural gas (critical in today’s global economy), it has cash flow that supplies leverage for the statist-oligarchy (led by Putin) running Russia’s banking system.

Like all banking systems, Russia’s makes money by supplying credit on account – that is, without actually putting up any real cash – to other states and private entities who then retire their financing from the profit of their production. However, under IMF rules, such credit supplied across Russian borders would have to be extended and retired in one of the Big Five currencies, a process that requires the Russian central bank to acquire actual Big Five currency assets to buttress its loans. In contrast, the central banks of the Big Five allow bank corporations to extend credit without need of such reserves. Indeed, the necessity to operate under this imperial constraint is exactly what enables the US (and other Big Five states) to impose “financial sanctions” on Russia over alleged aggression in Ukraine (where dollar-, pound- and euro-zone credit seeks to upend Russia’s own long-time credit monopoly).

Of course, Russia doesn’t like operating under these restraints and has made efforts with its ruble partners to build a free-trade zone outside IMF-controlled parameters (Ukraine’s decision not to participate is what triggered Russian military action there). Another thing the Russian bank system does is provide avenues for sheltering investor returns from the tax arms of western nation-states, something of which Clinton campaign chair John Podesta and his law firm apparently took advantage. A third avenue for circumventing the Big Five credit monopoly is working out private “under the table” financing for global players considered overextended and too risky by corporate lenders and for mainstream investors looking for higher countertrend (hedge) returns against increasingly volatile and unsure corporate dividends.

Trump, Kushner and their crew seem like people who were tempted by Russia’s credit offerings and got caught with their hands in the cookie jar. It looks, now, like they will be dumped, but that won’t end Russia’s pursuit of self-interested, worldwide, political gaming. For that, the global monopoly on credit that the IMF proclaims and the Big Five states (especially, the US) enforce would have to end, and with it, the practice of Big Five zone corporations extracting wealth from the rest of the world’s nations and people, including the Russians.

While civilization searches for a revolutionary way to transcend corporate power for the sake of the planet and our future, expect Russia’s energy independence and pariah status to fuel ongoing attacks on the Big Five’s financial monopoly, including through intervention in their political affairs. Recall that back in 1996, after he was hosed in the media for flirting with Chinese political donations, Bill Clinton deflected further infiltration by agreeing to work for the eventual inclusion of the reminbi among the IMF’s Big Five (then, of course, the Big Four). Then, the global economy was surging and China could be (had to be) accommodated; today, the global economy is in crisis, and there’s no room to accommodate the ruble. Excluded by the Big Five, Russia and its credit merchants, inevitably, will continue to make every effort to influence the actions of key nation-states, especially the US government and its dollar-denominated credit lines.

[Steve Clark]

MMT's Fatal Flaw Elaborated

(Part III in a series)

After the Part II post, a reader asked several question that warrant further response. This was her comment:
"Hi Steve. Can you give an example of one of the mission-driven NGOs that you are part of, that agrees with your analysis and is leading this charge? Also, why do you think IMF-money is more pure, or will be more pure, than the Big Five currencies? Aren't they the same? I can't see the response of Scott Fullwiler and Pavlina Tcherneva that you referred to and wonder if you could tell me where to look for it. Thanks. Cathy Pierce." Here is my response.

NGO Power

There are many branches of NGO activity, each with its own variety of mission-driven, essentially non-profit enterprises supplying service and employment in socially and ecologically useful ways. Most are focused on providing some direct service or solving some kind of actual problem so their domain of social worthiness and respect is primarily work-, not PR-delineated. Doctors Without Borders is a great global example; the Godman Guild, a settlement house where I worked in Columbus, is a good local one.

Even though NGOs arose (over the past four decades) in de facto acknowledgement that our world’s corporate economy and its governments were not and could not adequately address civilization’s social and ecological plight, they inevitably display the limitations imposed on them by the dominant entities (corporations and states) of the now passé Industrial Age. In essence, NGOs must be (1) mission-driven, (2) non-profit, (3) publicly-accountable, (4) financially transparent and (5) self-governing. If so, NGOs are empowered to secure various revenue streams to support employment and work on behalf of their missions. In the US where I was employed in a variety of non-profits, Reagan-era tax reforms encourage extensive, pretax corporate support of non-profits. Most non-profits have a variety of other revenue streams; typically, direct government support is not among them. Despite the necessity to operate within the legal framework of at least one nation-state, NGOs are more situated along a local-global nexus than within the operational frameworks of national production/international trade that were the hallmark of civilization until the end of the Cold War.

As economic entities, NGOs exist in today’s system because corporations and states accepted the need – for the sake of social stability – to permit and, often, subsidize a wide array of private actors wishing to pursue the public good. It turns out that the people are willing to pay for such pursuits, and, thus, social entrepreneurs are able to successfully employ others, creating one of only a few growth markets for well-educated, well-connected, usually multi-cultural Millennials (worldwide). In terms of global job growth over the past 40 years, NGO sector growth far exceeds that of the industrial economy or the service economy (once NGO jobs are subtracted). The point is, NGOs exist (and have come into existence) because of the material, survival necessities of an overgrown human civilization facing an existential crisis. Because they are potentially limitless in their employment capacity, yet do not exploit nature or labor in unsustainable fashion and do not tilt social dynamics with vast, profit-based wealth accumulation, NGOs provide the ideal form (ah, duh!) for a sustainable, problem-solving, full-employment economy for the crisis-management-oriented global economy that now represents civilization’s only potential salvation.

Politically, NGOs have stood at the forefront of rebellion against the corporatist-state machine wherever that may be: Tahrir Square, the Arab Spring, Syriza, Iceland, Kurdistan. All these struggles arose from NGO circles and were enflamed to revolutionary proportions via social media. In the West and in China (that is, in the Big Five currency zone nations), NGOs maintain non-partisan positions on candidates while pressing agenda in the political realm. Trump’s election and his bumbling/crumbling administration spur them to more direct political action in the US and elsewhere. In Russia, Venezuela, Nigeria and other oil-rich places, NGOs face the necessity to align with the state or endure its animosity, for better or worse.

Unfortunately, I see no force within the NGO community that currently advances a revolutionary perspective on itself, its position and its role in saving a desperate civilization. But I hardly have the scope to know all of these millions of entities’ positions. I suspect the employees of NGOs would support expansion of the NGO economy as would the non-profit organizations that comprise it. Sadly, because the entire concept of credit lines for NGO expansion is anathema to conventional for-profit (interest-earning) lending institutions, it is foreign to the economics profession as well. Indeed, it is to upset this intellectually-bankrupt applecart that I am polemicizing MMT.

I like to think that NGOs and the people who govern and work for them will rally to Global Reset-like demands if only credible, well-networked spokespersons succeed in getting them before the people. I realize that social media makes such mobilization possible, but I have no idea how to make it happen in fact. Oh well…

Big Five Currencies

The Big Five currencies are all currencies run for the benefit of corporations and the state (in the case of China, the socialist nature of the state may have strategic relevance, but that is for another post). In reality, these are not so much currencies (as we commonly think of money) but, rather, credit lines. In economies supporting expanding populations, either in relatively direct fashion (as in Chinese financing) or through private, corporate intermediaries, central banks allow financial institutions to extend credit and then accumulate credit line pay downs as non-tax profit streams. Taxable interest is collected, too, and, since credit lines, once established, are seldom paid down to zero, financial corporations acquire a permanent revenue stream of market rate interest on all credit extended. This is the historically-evolved way that financial corporations use a nation’s currency and their control of relevant domestic fiscal and monetary policy to enrich themselves and their shareholders.

I frankly do not know how to reform corporate finance and its commerce, but I do not accept that such reform should be the starting point of the discussion. I do know, instead, that corporate finance and commerce must be held accountable for the havoc it’s wrought, both to the earth and to civilization. It, alone, is the cause of our crisis, and it, alone, has the economic capacity to adequately and effectively back financing for global salvation. Moreover, the corporate sector’s own long-range survival depends on civilization’s survival.

Thus, conditions (realities, necessities!) are ripe for a global popular movement to force revolutionary concessions from corporate capitalism in a new and newly institutionalized social contract. Politically, we should aim for nothing less.

While we force the old system to pay the freight for the new, we don’t need to unravel it (through, of course, many reforms eventually will be necessary). What we need to do is transcend and subordinate it. We need to democratize finance by creating a bigger, holistic monetary regime in which global full-employment is the central mission.

And, since full employment is not possible under the present system of corporate production and finance, a new, non-profit system must be established to finance job growth through the widespread development of essential non-profit services. What does it mean to finance growth of a sector that doesn’t generate profits and, thus, lacks the capacity for traditional pay down of credit lines? Maybe, NGOs should earn credit against their debt based on the number of people they employ. Maybe, there’s another, better way to credit NGO growth and development. I don’t know the best way…only that a way must be found and that corporate commerce must pay the freight. Otherwise, full employment will not occur, social dysfunction and dislocation will further accelerate, and violence (in frustrated rebellion and overt state repression) will eventually drag down and engulf the entire civilization (if it has not already!). As in similar periods throughout human history, civilization will collapse into a new dark age.

The key to ensuring that new credit lines for NGO growth are not merely recycled versions of today’s dysfunctional Big Five (corporate-run) currencies is to make sure that their strategic management is under some kind of new, popularly-directed, full-employment agency at the IMF, created specifically to ensure oversight and direction to investment in the non-profit economy. While today’s Big Five currencies can continue under the present system of collaborative state management (the present system ensures that Big Five states control international markets of corporate investment), salvation credit lines (non-profit by design and in function) cannot be left to the direction of such a biased and profit-oriented management structure. While other remedies might serve as well or better, for now I propose creation of a new wing at the IMF that would be charged with receiving the proceeds of a permanent fee on corporate EFTs and with advancing worldwide investment in the NGO economy. This wing’s ultimate authority and direction would come from a new social media platform dedicated to assessing social and ecological problems and pursuing their resolution through full-employment programs at local and global levels.

I know economists generally and MMT economists in particular probably cannot fathom popular administration of finance for the public interest: “It’s too complicated and too risky.” Well, if that’s one’s perspective, a revolutionary he or she is not…not in today’s world, not with such a enlightened, active and revolutionary-minded, global population.

So, no, salvation currency is far different than today’s Big Five. Completely different…but not disconnected from corporate and state realities; rather, constructed on their accountability. The biggest and most fundamental differences are (1) its non-profit nature and (2) its popular administration.

These are revolutionary times, and only a revolutionary outcome will suffice. Revolution requires destruction (or, in this case, radical subordination of the old order) and construction (the institutionalization of new structures to fund humanity’s future).

Personally, I’ve grown tired to talking about how to tweak the present system (even Sander’s program, though consistent with “we are the 99% thinking,” amounted only to a few tweaks and could not have been sustained without further, extensive, revolutionary upheaval and change). While I am thrilled that the world’s broad masses are in conscious revolt against the corporate regime, I realize that this general revolt, in and of itself, cannot succeed until it finds, embraces, articulates and fights for an agenda of real financial restructuring for global full employment. While I have no doubt that the masses will fight to the end, that end – if no real remedy is found and embraced – could be, unfortunately, the final collapse of the system into dark age oblivion. If we are going to avoid that fate, leaders must soon arise who can and will focus the global rebellion on corporate finance: that is, on the G-20 central banks, the IMF and the Institute of International Finance (which is the global association of corporate finance).

Fullwiler’s Comment and Tcherneva’s Like

I’m a novice on Twitter and am not sure how to share Scott Fullwiler’s tweet, which Pavlina R. Tcherneva liked without further comment. Nevertheless, I quoted Fullwiler accurately and thoroughly. He wrote only, “Appears to be written by someone who hasn’t read any mmt.”

So far, with this Part II tweet, I’ve gotten only a three-tweet series of comment from Australian MMTer who writes: (first tweet) “To the author if you understand currency analysis operation realities of your given country, the power is yours, may it bubble up to all.” (second tweet) “Part 2 Usual complaints corporate power & environment. Not isolated to MMT. Again someone looking for policy in description.” (third tweet) “skimming part 1 & no mention of anything specific about MMT. Part way thru 2 – yes Ann Pettifor is MMT friendly, not sure if she’s MMT”

Australian MMTer is just a single commentator, so nothing should be drawn from these tweets; none of them, however, amount to any kind of cogent comment on my thesis. We will see if a wider, more cogent response from MMT and its eminents ensues.

In Conclusion...Thanks for the questions, Cathy Pierce. I hope you and others can help press this critique.

[Steve Clark]

MMT’s Fatal Flaw

(Part II in a series)

Yes, it was a “rant” (one commentator’s description of my April 6 blogpost, MMT's Fatal Flaw?), but that doesn’t mean it was wrong. Hardly. And judging from Scott Fullwiler’s and Pavlina R. Tcheneva’s reactions (see below), it seems I’ve hit a MMT nerve.

I rant from frustration with the blind, narrow nationalist orientation of MMT’s best advocates when it comes to our world’s grave social and ecological crisis. Apparently, despite this general crisis, MMT thinks, if only the leading states of the Big Five currency zones (dollar:US, pound:Britain, yen:Japan, euro:Germany/ECB and renminbi:China) can be reformed, progress will somehow trickle down to the rest of the world’s people. As articulated by leading spokesperson Ann Pettifor, MMT can solve social and ecological problems in nations with “well-regulated financial systems” (a key limitation, see below) by opening credit to the masses – to spur spending and employment – and, thereby, allowing greater profits for corporations (and other businesses) and potentially boosting tax revenue for government. Of course, as Pettifor notes, if domestically-based corporate capital flees taxation by moving (or staying) overseas, the spending program could turn inflationary. Thus, to ensure monetary stability, it is vital to curtail capital flows out of the nation. Although unstated, the success of her remedy also presumes progressing "democracy" in the wider, competitive global markets in which Big Five zone banks and states participate.

That presumption, of course, is rendered foolish by cascading social and ecological crises all over our world. But worse than their fantasy future is MMTers’ appalling disregard of their states’ imperial past. Does MMT even recognize that a decisive portion of the private wealth in Big Five currency zones was extracted over the last century or so from other nations and people by corporations backed by the military might of the US and other Big Five states? Going forward, does MMT intend to simply ignore this historic, catastrophic, on-going rip-off?

If so, independent of its professed concern for the well-being of people and the planet, MMT’s economic and political agenda, simply put, is objectively pro-imperialist. If it persists in this narrow national self-centeredness, MMT is doomed to irrelevance in the world’s popular uprising against corporate domination, just at the moment when Keynes’ clear-headed theory might actually guide construction of a new and revolutionary social contract in which the global power of (especially, financial) corporations is subordinated to human necessity.

And, necessity it is, because unless this revolution succeeds – unless it is able to institutionalize a popularly-directed, sustainable, full-employment, crisis-management economy worldwide – civilization is steaming toward dark age collapse.

Consider a few crucial realities. First, after centuries of natural resource depletions (and contaminations) by industrial corporations, civilization faces an ecological crisis of unprecedented proportions. Second, our present system of global production already leaves about 40 percent of the world’s people under- or unemployed, and this social polarization is the root cause and incessant instigator of war and social dislocation all over the world. Yet, petroleum-based, industrial, mass production (and global distribution) has passed its ecological limit. Because further growth of industrialism is not feasible, full employment is now possible only through development of the service economy. Yet, most social and ecological services simply are not profitable enterprises, the kind capable of earning substantial returns for private investors. Hence, capital and credit do not flow to the non-profit, mission-driven NGOs that, alone, can provide an avenue of strategic, sustainable growth and, thus, are the only path to genuine full employment worldwide.

A revolutionary-minded MMT would tackle this world-historic reality head-on with some kind of plan to hold corporations accountable for civilization’s crisis and make them support non-profit credit lines (and currency) to finance the growth of a full-employment, problem-solving economy. This, likely, would require some kind of routine fee on corporate electronic funds transactions (EFTs) and a new, non-profit system of credit and payments for NGOs, all decreed and implemented by an International Monetary Fund (IMF) that has been appropriately tasked by a new social contract forged in the struggle of the world’s people against the corporate regime, particularly its financial sector (the Institute of International Finance (IIF) and its ilk). It is the fight to force IMF collaboration with human and ecological necessity that begs the theory and direction that MMT could provide.

But, MMT, apparently, sees none of this. Let’s look at Pettifor’s new book – The Production of Money – which, rightly, should stand as the most advanced statement of MMT’s agenda. Pettifor introduced many of us to contemporary issues in macroeconomics with The Coming First World Debt Crisis, published in 2006. She gets completely that corporate wealth, particularly financial corporate wealth, is driving the world to the brink of disaster. She’s clear on the human suffering, the violence, the social dislocations. Her track record as an activist for the world’s distressed and oppressed people is exemplary. And in her latest work, she not only (once again) renders a clear exposition of money and debt and, alas, the failings of contemporary states to adequately tackle today’s worsening crisis; she also examines and discards a full range of proposed “remedies” (of various economic schools and political bents) before straight-forwardly laying out her own.

With MMT’s prescription so clearly stated by Pettifor, I was forced to re-examine my earlier rant to see if its errors are now laid bare. Unfortunately, whatever my errors, they were not exposed by Pettifor’s agenda, which fails completely to tackle the actual power and prerogative of corporate capital. My most fundamental point is that MMT remains so encased in the logics of financial imperialism that it cannot conceive (imagine) any way to actually assert real popular power over finance.

Careful to make clear that her prescription is applicable (only) in nations with “well-regulated financial systems," Pettifor’s line comes down simply to this: elect better domestic politicians, in particular, those who would favor government intervention to block capital flows out of a country. Then, as a citizenry manages to gain a parliamentary or congressional majority, it could unilaterally restrict cross-border capital flows and set in place conditions under which returns on corporate capital can be successfully taxed, thus allowing the government to pursue a domestic, full-employment economy. Presumably, other nations would be doing the same, and, eventually, capital would be boxed in for more effective international regulation, too. No institutional change required; nothing needs to change except a few politicians and policies, and all will be right again.

If only. Can it be that, aside from her obvious blind faith in the so far, far-less-than-successful of efforts of people to reform their governments through the ballot box, Pettifor thinks a Big Five state can simply ignore the plight of other nations while proceeding to address its domestic problems on the back of wealth accumulations extracted from the rest of the world? Remarkably, Pettifor appears to be adding a new wrinkle to imperialist logic, much to MMT’s tattering reputation.

I am pretty sure that the call for stronger capital controls isn’t going to rouse such broad support that it, in any way, plays a role in mobilizing, galvanizing or directing the flow of popular rebellion that is now, not so much sweeping civilization, but rising spontaneously from within the core of every culture.

Putting aside the fundamental problem of her narrow nationalism, Pettifor also appears far too pleasant and tame for the ferocity and scope of civilization’s mounting dysfunction. These are revolutionary times! Corporate power must be brought to heel for humanity and the planet to survive. Instead, speaking down to the world’s Millennials (the generation with the most concern for the world's future), she would channel their global resistance into disjointed efforts to reform the financial system through the same crusty, corrupt, exploitive Big Five states that created civilization's mess in the first place. She says (I extrapolate), “The first step, youngsters, is becoming the master of your own state.” As implausible as that seems even in Big Five states, her message has no resonance or utility in places like Egypt, Greece and Iraq, and it offers no collaborative strategy for popular forces everywhere in our world.

How about something more direct and potentially popular? Here’s an idea. Let’s prepare an update of Martin Luther’s theses – nailed to the church door in 1517! – and organize a day of global demand for a new social contract, for a new financial system that subordinates corporate power to human will. Then, let’s post our theses on the doors of the IIF, the IMF and the Big Five central banks and launch a global campaign for the new social contract. Certainly, we can dare at least as much as Luther did! How about we demand a Global Monetary Council for Full-Employment that is charged with approving credit lines (in a new IMF-embraced “salvation” currency) for NGO-led, problem-solving programs designed to achieve full employment worldwide? How about we demand that the corporate sector back the salvation currency with a worldwide, IMF-imposed fee on corporate EFTs? And, just to make a clean slate for the public-spirited epoch to come, how about we demand cancellation of all individual and state debts owed to financial corporations worldwide.

Too big a concept for MMT? Apparently so. And that may say what MMT is worth in today’s epic showdown between corporate and popular power. No vision, no value.

MMT needs to do better.

As noted, MMTers Fullwiler and Tcherneva dismissed my earlier criticism with this quick tweet, “Appears to be written by someone who hasn’t read any mmt.” Hmm. Here’s hoping their dismissal was merely the raised hackles of well-intentioned but busy people who’ve endured too many attacks from the economic establishment. You’re sensitive, I get it. But the issue of financial imperialism – past, present and future – remains, and until MMT has a remedy, you and it cannot help but be imperialism's lackey.

To me, that is a serious problem for ones who claim so much moral and theoretical authority among popular forces in the Big Five zones seeking a revolutionary alternative to neoliberalism. We need to draw this out. Thus, I renew my complaint about MMT’s fatal flaw. Hopefully, this time, MMT will address the substance of my rant.

To these ends, please share and retweet.

[Steve Clark]

#BDS
#MMT
#JMF
#Greece
#Bankroccupation
#RSAMoney
#woomacro
#debt
#cancelDebt
#dropDebt
#monetarypolicy
#FED