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Since quite some time I feel that political economy is like a game of Rock-paper-scissors.

[A [vicious] cycle of various systems that each beat each other…]

Before capitalism, there was feudalism. The dynamic growth of the industrial revolution allowed capitalism to displace earlier forms of organization, but the wild original capitalism also produced extreme inequality and was vulnerable to heavy cyclical shocks.

So, capitalism is vulnerable to socialism and communism, who was promising prosperity and equality. While initially allowing a strong mobilization of resources, communism tends to petrify, and therefore lose any progressive dynamic after some time.

Therefore, communism is vulnerable to a ‘social market economy’, basically Keynesian macroeconomics. Such a policy is more dynamic than communism, and not so exposed to shocks and inequality as ‘originial’ or ‘Austrian’ capitalism.

Unfortunately, Keynesian economics is vulnerable to ‘neo classical’ capitalism, as unconstraint companies without respect for environment or workers can make more profit than those playing by the Keynesian rules…

So, the sequence would go… Classical capitalism is beaten by socialism, which, in turn is beaten by Keynesian economics, which are then, beaten by neo-classical capitalism. The sequence should then repeat itself….

Or, in other words, the only fact that makes capitalists accept a relatively fair and prosperous model like Keynesian economics, is fear of violent communist revolution. With that fear weakening, they see no reason why they should care about unemployment and general prosperity.

[One historical variety is of course fascism. It keeps the old big business elites in power (unlike communism) and usually accepts deficit spending (for wars and the like)] As it modernizes less than communism and is at least as static when in power, it should last even shorter, even if they aren’t losing a big war]

Unfortunately, I can’t see a way how MMT ore some form of Neo-Keynesianism can beat Neo-liberalism.

The natural successor of neo-classical capitalism would have to be some form of Neo-communism. But with communism so discredited as it is at present, this seems unlikely.

So, my pessimistic view: The most likely things will be some fascism-like systems, that will, without an alternative, be followed by series of failed states, and a collapse of civilization, back to the middle-ages.

Posted by Good Habit, 05. March 2011, 21:40 Uhr /GMT +1

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    Why always blame China?

    It has become some recurring theme among American comentators, like recently (again) from Paul Krugman, to complain about the unfair advantage China get's from it's undervalued Yuan, although, sometimes, with inflation in China rising, even the advantages seem doubtful...

    see Krugman here

    Fact is, however, that the US economy suffers from to little aggregate demand, and it would do so even if Chinese products would be a bit more expensive.

    As Krugman often (correctly) notes,what would be needed would be way more stimulus spending, but that's not what Obama and Congress are likely to do.
    So, instead of pointing out that fact clearly and consinstently, we return to the 'blame China' game.

    But the US would have it in their hands to create sufficient AD for full employement, if they could bring themselves to accept a higher deficit, and particularly, more targeted spending.

    So, the blame China game put's the blame where it doesn't belong (this doesn't mean that all is well in Bejing, but that's not the issue here), and spares those who would righfully deserve it (the US political and financial elite).

    While, unfortunately, if you wan't to have a political impact - it is often necessary to use scare and blame tactics, if this campaign should show a positive effect, it should adress the just fears, and blame the real responsibles - that would, in that case, be:
    make people afraid that they will lose Social Security and Medicaid, and that their kids could loose their education and future, and blame it on deficit hawks and banksters.

    And then, point out, that the Fed can create as many dollars as necessary, but it' shouldn't do so for bailing out banks involved in ponzi-shemes, but for financing Soc.Sec, healt care for all, jobs for the unemployed, education for the young, and excellent infrastructure for the future.

    But what purpose could blaming China serve? Unless this results in a war scare big enough to deficit spend WW II style to 'keep America safe from the yellow peril', it will do nothing to revive the American economy.
    So the only purpose could likely be - shift blame away from Obama (where it would belong) and shift it to China (where it doesn't belong), and hope that this distracts voters enough from the facts so that the President can get a second term.. (undeservingly...).

    Posted by Good Habit, 13. Januar 2011, 21:40 Uhr /GMT +1

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