?

Log in

No account? Create an account
How Neo-liberals Killed the Common Good
australianvoice
If you are using the language of your opponents, you have already lost.

The set of tweets reproduced here is ABSOLUTELY VITAL for understanding how political discussion in Australia, the EU, UK and the US HAS CHANGED since the days of Thatcher and Reagan. The change has been so subtle and enacted so slowly that many don't even realise how profoundly our thinking about politics and the economy have changed. Of course if you were born after they came to power, YOU WOULD ONLY KNOW THIS NEW WAY OF THINKING AND TALKING. This is no accident. The first major neo-liberal, free market think tank called the Mont Pelerin Society began in 1948, when I was only 4 years old.

In 1987 Margaret Thatcher said: “There is no such thing as society.”(1) She asks “Who is society”. Here is her answer: “There are individual men and women and there are families, and no government can do anything except through people and people look to themselves first.”(2) This is known as individualism. Society is nothing in itself. There are just individuals, families and governments. It has a kind of simple plausibility until you realise that wholes are not just the sum of their parts. In the same way one can say that individual humans are just a collection of molecules, so there is no such things as individuals.

If there are no societies, then what are we to make of the differences between the UK and France? Are the people in UK and France just different individuals who happen to (mostly) to speak different languages, prefer different kinds of foods, and tend to live in different places? In fact, different societies have different cultures and different expectations of the members of their society. In Australia a man who kills and eats his dog would be expected to be charged with animal cruelty. It appears that in China dogs are eaten more or less like pigs, so people there would be outraged by any arrest or conviction which is based on their regular practice.

So why would Margaret Thatcher say such a strange thing? If there is no such thing as society, then there is no such thing as the common good of the people in that society. If there is no such thing as the common good, then there is no obligation for a government to look after the common good. She says: “It is our duty to look after ourselves and then after our neighbour … and people have got the entitlements too much in mind without the obligations.”(3) Remember Joe Hockey said that the age of entitlements is over? This is exactly what Thatcher had in mind over 40 years ago. Neo-liberalism has been a long time in the planning and execution. Now it has completely taken over our thinking about politics and economics in a way that is hard for most to appreciate.

Now it is time to repeat the slogan at the beginning of this article:

If you are using the language of your opponents, you have already lost.

If we want to oppose neo-liberal policies like austerity, privatisation and reduced taxes for corporations we need to think and speak differently. We need to remember the way people thought about society BEFORE NEO-LIBERALS SLIPPED THEIR THINKING INTO OUR BRAINS.

This is the aim of the following thread from Twitter. We need to revive the political ideas that were driven out of people's minds by the dogmas of neo-liberalism. Modern democratic governments arose out of an idea of popular sovereignty. People organised rules for themselves and the common good. Neo-liberalism cannot be defeated until people have a clear idea of how to think differently and expect different policies by governments. The left is floundering because they all think like neo-liberals. Therefore THEY CANNOT IMAGINE DOING THINGS IN A WAY THAT IS DIFFERENT FROM THEM. Thinking differently on its own will not change things, but there can be no change for the better without erasing neo-liberal thinking from our minds.

(I believe that there is also a NEW idea which is necessary to undermine the neo-liberal approach to economics. This new approach is known as Modern Money Theory. The author of these tweets does not seem to accept MMT. However at the end of his discussion I will explain how MMT dovetails with the political ideas of democracy as popular sovereignty setting rules for the common good.)




Death of the Common Good and the Commonwealth: A Quick Thread


by The Earl of Heckles @Noodles_Romanov

The left is floundering world wide. Once of the key reasons is that the very conception of "government" and its role has drifted to a place where the left has little to say. Here's what to remember.

We are guilty of swallowing the bullshit of Friedman and Hayek. The Government that once embodied the soverignty of the people in a democracy has now been mischaracterised by the Right as an arguably necessary evil that steals "our" money and binds us in red tape.

But is that what government is? Was it ever? The answer is no. Modern democratic governments arose out of an idea of popular sovereignty. That basic organising unit of such societies is the human being. Those human beings organised rules for themselves and the common good.

The thing about governments was that they were sovereign. They didn't really have budgets, they simply had social obligations to perform. They were mandated to raise the funds needed to perform their obligations for the common good. These days, that idea almost sounds weird.

Government was the sovereign social rule maker with a monopoly on the use of force. It made the rules to benefit the people it governed. The rules were informed by moral and justice imperatives which reflected the goals and ideals of the society. Government presumes society.

The economy is what happens within the rules. Economics has no moral imperative. Ask "the market" to kill a bacterial colony and petrol with a match is the most "efficient". That colony being in the back of my throat makes no difference to the market but it does to a society.

The Market doesn't know it can't set fire to people unless it's told so by laws. That's why the laws come first. They come from a place where the good of society is the guiding principle. Laws should never be shaped by markets. They can't be. Markets are an amoral result of laws.

To give that concept wings- here's a lobbyist for bacterial colony killing industry on the cost of having to invent antibiotics. "Studies show that our industry would be a thousand times more efficient if the government would remove the red tape around setting fire to people".

Economic arguments against regulation are almost always that stupid (even if they don't sound it). They are stupid because they take the form of people suggesting that their desire to operate cheaply is more important to society than the purpose for which the laws were enacted.

The thing is that when you're a participant in a rule framework rather than an architect of it, your world view and lived experience is dominated by your own place in the rules. You're generally thinking in terms of how to make your life easier and not how to make society better.

Most people just universalise their own experience and tend to think that if a rule is good for them it would be good for everybody. There's a specific skillset associated with putting systems of rules together for the greater good. Governments used to have them.

Free marketeers came along and studied markets. With zero understanding of history they dispensed with the notion of popular sovereignty and the paramount nature of government. They thought markets could "fix" and dictate to governments. We've seen why that's stupid above.

More seductively, a quasi religious belief that markets would magically take all competing interests and produce the "best" result (note that "best" has no content in terms of fairness, equity or any other outcome) meant people could be selfish and the market would sort it out!

Thank God! Now we can get people to dispense with all that civic minded "public good" mumbo jumbo because everyone being selfish will magically lead to the best over all result. And like that the concept of government was executed and "the market" became the arbiter of morality.

So how to you make economic arguments work? You need to kill society. You need to pretend that government isn't actually *paramount* and that it is just another player on the same field. By hook and by crook, this is exactly what special interests have done over recent decades.

The result of this pernicious erosion is there for all to see. Governments now try to justify choices to special interest groups. Instead of simply raising taxes to fulfill its social obligations, government acts like timid boards of directors with hostile share holders.

Instead of appreciating the lawful framework of civilisation & empowering governments to do what is necessary to care for society, citizens are now convinced their role is to ensure revenue and expenditure are matched like a household and begrudgingly "donate" to its upkeep.

Where popular government is in effect, there should be only *one* argument as to whether a rule should be made or changed. That it is for the public good. Yet look at how public debate has degenerated. Lobby groups should be absurd but they are abundant. The Public good is gone.

Laws not made for the public good (unsurprisingly) don't benefit the public. When government does not make laws that benefit the public, the public does not appreciate government. Once the public doesn't appreciate government, popular sovereignty is gone.

When popular sovereignty is gone but laws are still being made, the question becomes who is the sovereign? and for whom are laws being made? In the present paradigm, "the market" is now the sovereign. The conservatives are the flunkies of the most powerful members of "the market".

And here we are. Neoliberal free marketeers who warm the benches of parliament FUNDAMENTALLY DO NOT BELIEVE IN GOVERNMENT in any recognisable sense. Their *only* motivation is to further dismantle government as a "player" and let the amoral law of the economic jungle apply.

If the left is to have any hope of resurrection it must abandon this idiotic economic discourse of citizens as limited liability shareholders and government as participants in the market. It must re-establish popular sovereignty and a discourse of the common good.

Changing an entire discourse is hard but if you're using the discourse of your opponents, you've already lost. There is ample empirical evidence debunking neo-liberalism's basic tenets but that is not enough. People need an ideas framework to attach to.

It's long past time we started saying "We tried giving the common wealth away to individuals and all they did with it was create billionaires and homeless people." It is long past time the common wealth returned to the Commonwealth to be used for the common good. Rant complete.

So now when you hear some fluff brain like Cormann say "Business doesn't need government telling it how to do things" The appropriate response is: "Business will do as it's bloody well told by any government that properly serves the sovereign body of Australian people."

Moreover, "businesses" are not citizens and do not vote in this country and accordingly, have precisely no say in any debate in which they are a subject.



Short Introduction to Modern Money Theory



Talk about “the economy” dominates political discussion today. Many policies and decisions made by political leaders are justified by the claim they are good for the economy or not good for the economy. Modern Money Theory is important because it challenges the assumptions which lie behind these policies. Its advocates insist that most economics professionals and politicians do not really understand how the economy works and what is good or bad for the economy. At the centre of this debate is the policy known as austerity and the justification given for it.

Professional economists and economics advisers used by politicians insist that what is best for the economy is for the federal government to generate a surplus by cutting expenditure so that more income is derived from taxes than it spends. They also insist that cutting taxes stimulates the economy since businesses have more money to hire workers and invest. The economic theory which lies behind these policies is known as neo-liberalism or the Washington consensus. Over the last 50 years it has come to replace all other views about the economy.


WHAT IS NEO-LIBERALISM?
Neo-liberalism is an economic theory. Most people, including myself, don't know much about economics. It is just a lot of unfamiliar words, big numbers and odd looking charts. However, two of the basic ideas behind neo-liberal economics are not only easy to understand, they are also taken to be an obvious part of common sense.

The first is that money is special pieces of coloured paper or plastic and special bits of metal called coins. Money is fundamentally cash we can put in our wallets and use to buy what we want. The second is that the way a federal government operates is like our own household. It has a source of money, or income, from taxes and it spends this money according to the policies determined by the government.

This household view of the economy helps us to understand the fundamental differences between the modern day left and right. The right, seen as greedy by the left, say that what governments do is take their hard-earned tax dollars and give them to people who have not worked for them. Their money is given to unemployed, the elderly, and used to subsidise health care and rent. The left, seen as do-gooders by the right, say that they are happy for the government to give some of their tax dollars to others in need. So when they argue over taxes and expenditure they argue over who gets taxed, how much they get taxed, and where the tax dollars should go. The key point is that both left and right accept the neo-liberal theory that a surplus is good for the economy.

These days the right keeps reminding the left that in the national economy, if the income is less than the expenditure then the government is in debt and this is bad for the economy. In fact they insist that the government should achieve a surplus, so there is more coming in from taxes than goes out in expenditure. This pressure to cut expenses and “live within our means” is known as austerity and we have been suffering from this for years.


HOW IS MODERN MONEY THEORY DIFFERENT?
First MMT says that seen as a theory about how the economy works neo-liberalism fails. Even many economists now agree that neo-liberalism doesn't seem to describe how the economy works. If neo-liberal economists were seen as car mechanics, nobody would take automobiles to them for repair. Second MMT says that the two assumptions explained above are both false.

MMT is called Modern Money Theory for a reason. 200 years ago money was either pieces of gold or silver or it was special pieces of paper – bank notes – that could be exchanged for gold or silver. Later virtually everyone came to use money as special pieces of paper or coins called cash. However two things have changed in the last 50 years. The first change is that most money around the world has become what is called fiat money. This means that it cannot be exchanged for gold or silver. President Richard Nixon made that decision in 1971 for the USA, and most – like Australia - have followed. The second change comes from the introduction of computers into banking. Now most money consists of computer files consisting of '0's and '1's which appear on computer screens as numbers. In the USA they look like '$10.00'. In Australia they look like 'A$10.00'. In the UK they look like '₤10.00'. Fortunately some money is still in the form of notes and coin, but virtually all large financial transactions are made by typing numbers on a computer keyboard.

This means that a large amount of money is not a pile of gold, silver or notes in a bank vault somewhere. As before, however, governments authorise certain files as legal tender = money. So when the government spends money it does not take a quantity of gold or paper and give it to somebody. It increases the numbers in the file which constitutes their account. If they take money from someone in taxes they decrease the numbers in the file which constitutes their account. The amount of money the government puts into or takes out of our accounts makes a huge difference to us and for the economy as a whole. However since they are only changing numbers in a computer file, they cannot ever run out of money. They create money in the desired accounts. They don't take anything from anybody.

So the first point for MMT is that money is not a “thing” that is taken from one person in taxes and given to another. The second point is the even more unusual claim that the government is not like a household. The government creates mSo the first point for MMT is that money is not a “thing” that is taken from one person in taxes and given to another. The second point is the even more unusual claim that the government is not like a household.oney in its jurisdiction, but households do not. Neither do states within a jurisdiction or city councils. They must live within their means like the rest of us. Taxes paid to states or city councils consist in transfers of “money” from our accounts to theirs. When I pay a state tax, the numbers in my account get smaller and the numbers in the account of the government of South Australia get larger. Under MMT it literally makes no sense to say that a federal government must live within its means. It creates its means by “spending” it, that is by increasing the numbers in the file understood to be my account. The central political task of any government is to decide how much “money” to create and into which account the “money” is to be put. Who will get the numbers in their acclount increased (or decreased) and how much should they be changed?


ONE FINAL POINT
MMT is a tool of analysis. It can be used to understand how the economy of a nation works. However MMT on its own does not tell us what to do. What we do with the levers that control the economy is a moral/political choice. MMT in effect revives the old idea of political economy which combines these two. Neo-liberalism has presented their economic theory as a value-free “science” totally independent of any political considerations. No doubt this is why it has produced results in the modern world many see as inhuman. It is inhuman by design. Its values hidden behind a mask of scientific objectivity. "If it is just numbers, it must be objective and not subjective like politics." Many followers of MMT happen to suggest similar policies because of the political values they bring with them. I have different values so I would use the same MMT analysis to suggest different policies. Knowing how something works is one thing. Deciding what to do with it is different. To decide what to do requires being clear about our values.

I cannot explain the entire MMT view here. Rather than attempt this impossible task I have assembled the list of sources given in another article (A Do It Yourself Guide to Modern Money Theory) you can use to begin to understand MMT for yourself.(4) I hope this short introduction has sparked an interest in learning more about MMT. I would encourage you to take this journey but from now on it is up to you. In A Do It Yourself Guide to Modern Money Theory I have collected a range of videos, short articles, podcasts, books, research centres and people to follow on twitter. I have also included three videos on neo-liberalism understood an the hidden ideology, a powerful set of ideas which are never discussed in the mainstream media but are central to the thinking of all politicians in the West.


Footnotes:

1. “There are individual men and women and there are families, and no government can do anything except through people and people look to themselves first. It is our duty to look after ourselves and then after our neighbour … and people have got the entitlements too much in mind without the obligations.”
(https://www.telegraph.co.uk/comment/columnists/charlesmoore/8027552/No-Such-Thing-as-Society-a-good-time-to-ask-what-Margaret-Thatcher-really-meant.html)

2. Ibid

3. Ibid

4. A Do It Yourself Guide to Modern Money Theory (https://australianvoice.livejournal.com/40371.html)

A Do It Yourself Guide to Modern Money Theory
australianvoice
This has been designed as a starting point for anyone wishing to learn more about Modern Money Theory. It is a totally different way of understanding the way a nation's economy actually works compared to both common sense and the “official” way of understanding it used by academics, economic advisers, media commentators and politicians.



Talk about “the economy” dominates political discussion today. Many policies and decisions made by political leaders are justified by the claim they are good for the economy or not good for the economy. Modern Money Theory is important because it challenges the assumptions which lie behind these policies. Its advocates insist that most economics professionals and politicians do not really understand how the economy works and what is good or bad for the economy. At the centre of this debate is the policy known as austerity and the justification given for it.

Professional economists and economics advisers used by politicians insist that what is best for the economy is for the federal government to generate a surplus by cutting expenditure so that more income is derived from taxes than it spends. They also insist that cutting taxes stimulates the economy since businesses have more money to hire workers and invest. The economic theory which lies behind these policies is known as neo-liberalism or the Washington consensus. Over the last 50 years it has come to replace all other views about the economy.


WHAT IS NEO-LIBERALISM?
Neo-liberalism is an economic theory. Most people, including myself, don't know much about economics. It is just a lot of unfamiliar words, big numbers and odd looking charts. However, two of the basic ideas behind neo-liberal economics are not only easy to understand, they are also taken to be an obvious part of common sense.

The first is that money is special pieces of coloured paper or plastic and special bits of metal called coins. Money is fundamentally cash we can put in our wallets and use to buy what we want. The second is that the way a federal government operates is like our own household. It has a source of money, or income, from taxes and it spends this money according to the policies determined by the government.

This household view of the economy helps us to understand the fundamental differences between the modern day left and right. The right, seen as greedy by the left, say that what governments do is take their hard-earned tax dollars and give them to people who have not worked for them. Their money is given to unemployed, the elderly, and used to subsidise health care and rent. The left, seen as do-gooders by the right, say that they are happy for the government to give some of their tax dollars to others in need. So when they argue over taxes and expenditure they argue over who gets taxed, how much they get taxed, and where the tax dollars should go. The key point is that both left and right accept the neo-liberal theory that a surplus is good for the economy.

These days the right keeps reminding the left that in the national economy, if the income is less than the expenditure then the government is in debt and this is bad for the economy. In fact they insist that the government should achieve a surplus, so there is more coming in from taxes than goes out in expenditure. This pressure to cut expenses and “live within our means” is known as austerity and we have been suffering from this for years.


HOW IS MODERN MONEY THEORY DIFFERENT?
First MMT says that seen as a theory about how the economy works neo-liberalism fails. Even many economists now agree that neo-liberalism doesn't seem to describe how the economy works. If neo-liberal economists were seen as car mechanics, nobody would take automobiles to them for repair. Second MMT says that the two assumptions explained above are both false.

MMT is called Modern Money Theory for a reason. 200 years ago money was either pieces of gold or silver or it was special pieces of paper – bank notes – that could be exchanged for gold or silver. Later virtually everyone came to use money as special pieces of paper or coins called cash. However two things have changed in the last 50 years. The first change is that most money around the world has become what is called fiat money. This means that it cannot be exchanged for gold or silver. President Richard Nixon made that decision in 1971 for the USA, and most – like Australia - have followed. The second change comes from the introduction of computers into banking. Now most money consists of computer files consisting of '0's and '1's which appear on computer screens as numbers. In the USA they look like '$10.00'. In Australia they look like 'A$10.00'. In the UK they look like '₤10.00'. Fortunately some money is still in the form of notes and coin, but virtually all large financial transactions are made by typing numbers on a computer keyboard.

This means that a large amount of money is not a pile of gold, silver or notes in a bank vault somewhere. As before, however, governments authorise certain files as legal tender = money. So when the government spends money it does not take a quantity of gold or paper and give it to somebody. It increases the numbers in the file which constitutes their account. If they take money from someone in taxes they decrease the numbers in the file which constitutes their account. The amount of money the government puts into or takes out of our accounts makes a huge difference to us and for the economy as a whole. However since they are only changing numbers in a computer file, they cannot ever run out of money. They create money in the desired accounts. They don't take anything from anybody.

So the first point for MMT is that money is not a “thing” that is taken from one person in taxes and given to another. The second point is the even more unusual claim that the government is not like a household. The government creates money in its jurisdiction, but households do not. Neither do states within a jurisdiction or city councils. They must live within their means like the rest of us. Taxes paid to states or city councils consist in transfers of “money” from our accounts to theirs. When I pay a state tax, the numbers in my account get smaller and the numbers in the account of the government of South Australia get larger. Under MMT it literally makes no sense to say that a federal government must live within its means. It creates its means by “spending” it, that is by increasing the numbers in the file understood to be my account. The central political task of any government is to decide how much “money” to create and into which account the “money” is to be put. Who will get the numbers in their increased (or decreased) and how much should they be changed?


ONE FINAL POINT
MMT is a tool of analysis. It can be used to understand how the economy of a nation works. However MMT on its own does not tell us what to do. What we do with the levers that control the economy is a moral/political choice. MMT in effect revives the old idea of political economy which combines these two. Neo-liberalism has presented their economic theory as a value-free “science” totally independent of any political considerations. No doubt this is why it has produced results in the modern world many see as inhuman. It is inhuman by design. Its values hidden behind a mask of scientific objectivity. "If it is just numbers, it must be objective and not subjective like politics." Many followers of MMT happen to suggest similar policies because of the political values they bring with them. I have different values so I would use the same MMT analysis to suggest different policies. Knowing how something works is one thing. Deciding what to do with it is different. To decide what to do requires being clear about our values.

I cannot explain the entire MMT view here. Rather than attempt this impossible task I have assembled the list of sources given below which you can use to begin to understand MMT for yourself. I hope this short introduction has sparked an interest in learning more about MMT. I would encourage you to take this journey but from now on it is up to you. In what follows I have collected a range of videos, short articles, podcasts, books, research centres and people to follow on twitter. I have also included three videos on neo-liberalism understood an the hidden ideology, a powerful set of ideas which are never discussed in the mainstream media but are central to the thinking of all politicians in the West.


VIDEOS ON MMT

MMT Part 1 – The Basics
In this segment, Amanda chats with Kathleen Tramblay on Modern Monetary Theory.
https://www.youtube.com/watch?v=HPxtIzniOII

MMT Part 2 of the Basics
This is the second half of our first video on MMT - Modern Monetary Theory. Amanda chats with Kathleen Tramblay on MMT.
https://www.youtube.com/watch?v=gXESQDsfHDo

Stephanie Kelton on the Public Purse
As part of the lecture series between UCL Institute for Innovation and Public Purpose (IIPP) and the British Library, Stephanie Kelton speaks on why a government budget should not be looked at in the same way as a household budget.
https://www.youtube.com/watch?v=6IBEoWSiTHc

Warren Mosler: What Modern Monetary Theory Tells Us About Economic Policy
Welcome to our new video series called "New Economic Thinking." The series will feature dozens of conversations with leading economists on the most important issues facing economics and the global economy today. This episode features Warren Mosler, president of the financial services firm Valance Company and one of the founders of Modern Monetary Theory (MMT), speaking about what MMT tells us about economic policy. He explains not only what policy makers can do but also what they should do in the current economic environment. How can MMT help get the economy back on track? Watch the interview to find out!
https://www.youtube.com/watch?v=JGuNpqYBkZk

L. Randall Wray - Modern Money Theory for Beginners
Professor L. Randall Wray, professor of economics at Bard College, discussed "Modern Money Theory for Beginners" on April 6, 2018. His current research focuses on providing a critique of orthodox monetary theory and policy, and the development of an alternative approach. He also publishes extensively in the areas of full employment policy and, more generally, fiscal policy. Wray's most recent book is Why Minsky Matters: An Introduction to the Work of a Maverick Economist (2016). Professor Wray will also talk about the Levy Economics Institute of Bard College MA and MS Programs in Economic Theory and Policy.
https://www.youtube.com/watch?v=E5JTn7GS4oA

Moser and Kelton on Why MMT Has Not Been Embraced by Those in Power
Excerpted from "Why Governments Are Not Households" - http://youtu.be/ba8XdDqZ-Jg
https://www.youtube.com/watch?v=UfW5oI1DvvQ

Understanding MMT with Steve Grumbine
Steve was a guest on the wonderful show "The Progressive Talk!"
https://www.youtube.com/watch?v=3cWjuPKtKI0

How Marxism and Modern Money Theory Go Hand in Hand
In this Majority Report clip, Sam Seder and Professor Richard Wolff discuss how Marxism and modern monetary theory are a match made in heaven.
https://www.youtube.com/watch?v=vQNt-SYatbc

How The Reserve Bank Implements Monetary Policy
Watch Senior Analyst, Katherine Leong, talk about how the Reserve Bank implements monetary policy in this short lecture-style video.
https://www.youtube.com/watch?v=1bBizpkB8dU


PODCASTS

Fadhel Kaboub on Monetary Sovereignty, Colonialism and Independence
Posted on by URPE
Fadhel Kaboub on the meaning and importance of monetary sovereignty, MMT in relation to developing countries, Venezuela, colonialism, Scottish independence, and the MMT Job Guarantee.
https://urpe.wordpress.com/2019/02/07/fadhel-kaboub-on-monetary-sovereignty-colonialism-and-independence/


SHORT ARTICLES

What taxes are for?:
http://neweconomicperspectives.org/2014/05/taxes-mmt-approach.html

Taxpayers don’t fund anything
http://bilbo.economicoutlook.net/blog/?p=9281

Taxes for revenue are obsolete
http://neweconomicperspectives.org/2010/04/fed-chairman-ruml-got-it-right-in-1946.html

7 Deadly Innocent Frauds
by Warren Mosler
http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf

Monetary Sovereignty is the foundation of economics

by Rodger Malcolm Mitchell
https://mythfighter.com/2010/08/13/monetarily-sovereign-the-key-to-understanding-economics/

White Paper: Modern Monetary Theory (MMT) 
DRAFT 5/25/19
The purpose of this white paper is to publicly present the fundamentals of MMT. 
What is MMT?
https://docs.google.com/document/d/1gvDcMU_ko1h5TeVjQL8UMJW9gmKY1x0zcqKIRTZQDAQ/edit

What is Money?
From The Banking Law Journal, May 1913.
By A. Mitchell Innes
http://moslereconomics.com/mandatory-readings/what-is-money/

Reliance on monetary policy is mindless ideological nonsense
Yesterday the RBA decided to cut interest rates to record low levels. The decision won’t save the economy from recession and highlights the sort of desperation that central bankers now face as governments shunt the responsibility of counterstabilisation onto them while claiming that achieving fiscal surpluses is the brief of the treasuries.
http://bilbo.economicoutlook.net/blog/?p=42647

The Facts of Modern Monetary Theory
There are several misconceptions and misunderstandings as to the true meaning of Modern Monetary Theory, writes John Doyle
https://independentaustralia.net/politics/politics-display/the-facts-of-modern-monetary-theory,11889

The budged deficit and the national debt are not the same thing
by Ellis Winningham Feb 2019
http://elliswinningham.net/index.php/2019/02/05/the-budget-deficit-and-the-national-debt-not-the-same-thing/


BOOKS

Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems
By L. Randall Wray
In a challenge to conventional views on modern monetary and fiscal policy, this book presents a coherent analysis of how money is created, how it functions in global exchange rate regimes, and how the mystification of the nature of money has constrained governments, and prevented states from acting in the public interest. The posts from the MMT Primer series have been collected and organized into Randy’s latest book, Modern Money Theory. It makes for a much more coherent read and is highly recommended for anyone seriously interested in the MMT perspective. (Available from Amazon.com)
http://neweconomicperspectives.org/modern-monetary-theory-primer.html

Macroeconomics
by William Mitchell, L. Randall Wray, Martin Watts
Publisher: Red Globe Press 2019
Pages: 604
William Mitchell is a Professor of Economics at the University of Newcastle, Australia
L. Randall Wray is a Senior Scholar at the Levy Economics Institute of Bard College, USA
Martin Watts is a Professor of Economics at the University of Newcastle, Australia
This groundbreaking new core textbook encourages students to take a more critical approach to the prevalent assumptions around the subject of macroeconomics, by comparing and contrasting heterodox and orthodox approaches to theory and policy. The first such textbook to develop a heterodox model from the ground up, it is based on the principles of Modern Monetary Theory (MMT) as derived from the theories of Keynes, Kalecki, Veblen, Marx, and Minsky, amongst others. The internationally-respected author team offer appropriate fiscal and monetary policy recommendations, explaining how the poor economic performance of most of the wealthy capitalist countries over recent decades could have been avoided, and delivering a well-reasoned practical and philosophical argument for the heterodox MMT approach being advocated.
The book is suitable for both introductory and intermediate courses, offering a thorough overview of the basics, while covering everything needed for more advanced courses. Issues are explained conceptually, with the more technical, mathematical material in chapter appendices, offering greater flexibility of lecturer use.
(Expensive BUT may be the best textbook on the market.)
https://www.macmillanihe.com/page/detail/Macroeconomics/?K=9781137610669


RESEARCH CENTRES

The Centre of Full Employment and Equity
An official research centre at the University of Newcastle.
http://www.fullemployment.net/index.php

The Levy Economics Institute of Bard College
Founded in 1986 through the generous support of Bard College trustee Leon Levy, it is a nonprofit, nonpartisan, public policy research organization.
http://www.levyinstitute.org/about/

The Modern Money Network
Aims to bring accurate and accessible knowledge of monetary and financial systems to the broader public.
https://modernmoneynetwork.org/

Gower Initiative for Modern Money Studies
A brief introduction to Modern Monetary Theory
https://gimms.org.uk/mmtbasics/

Bill Mitchell - Modern Monetary Theory
Macroeconomic research, teaching and advocacy
(Bill Mitchell is a one man research centre. He has a long list of topics he has discussed over the years as well as comments on current issues.)
http://bilbo.economicoutlook.net/blog/


VIDEOS ON NEO-LIBERALISM

This is Neoliberalism – Introducing the Invisible Ideology (Part 1)

If you've ever wanted to understand what neoliberalism is, this is the series for you. Neoliberalism is an economic ideology that exists within the framework of capitalism. Over four decades ago, neoliberalism become the dominant economic paradigm of global society. In this video series, we'll trace the history of neoliberalism, starting with a survey of neoliberal philosophy and research, a historical reconstruction of the movement pushing for neoliberal policy solutions, witnessing the damage that neoliberalism did to its first victims in the developing world, and then charting neoliberalism's infiltration of the political systems of the United States and the United Kingdom. Learn how neoliberalism is generating crises for humanity at an unprecedented rate.
https://www.youtube.com/watch?v=myH3gg5o0t0

This Is Neoliberalism ▶︎ Keynesian Embedded Liberalism (Part 2)
If you've ever wanted to understand what neoliberalism is, this is the series for you. Neoliberalism was a reaction. It was an effort to disassemble a previous vision of society that once held sway over most of the world. In order to understand neoliberalism, it’s important to first understand the world before neoliberalism; the world which neoliberalism considered unacceptable, and in need of urgent reconfiguration. Learn about the world of embedded liberalism.
https://www.youtube.com/watch?v=EkBpqLWFNg4

This Is Neoliberalism ▶︎ Hayek and the Mont Pelerin Society I: 1918 - 1939 (Part 3)

If you've ever wanted to understand what neoliberalism is, this is the series for you. The story of neoliberalism is a story about the power of ideas. Embedded liberalism was in power, but it was not without resistance. Academics and businessmen who opposed the New L RANDEL WRAYDeal and British social democracy were only begrudgingly accepting of the situation at best, or on the warpath against government intervention in the economy at worst. These two factions allied with one another to create an idea so powerful that it would covertly undo their losses to embedded liberalism by supplanting it entirely. This is where the story of neoliberalism begins.
https://www.youtube.com/watch?v=zsgwVz0D6rI


MMT ON TWITTER

Gower Initiative for Modern Money Studies‏
@GowerInitiative

Thomas Fazi
@battleforeurope ‏

Bill Mitchell
@billy_blog ‏

Real Progressives
@RealProgressUS ‏

Ellis Winningham
@elliswinningham ‏

Stephanie Kelton
@StephanieKelton ‏

MMT Podcast (Christian Reilly)
@MMTpodcast ‏

Heterodox
@mmt_rod ‏

Steven Hail
@StevenHailAus ‏

Eric Tymoigne
@tymoignee ‏

Steve Keen
@ProfSteveKeen ‏

STΞPHΞN SARGΞNT #MMT
@JustShowingOff ‏

ModernMoneyTheory UK
@ModernMoneyFact ‏

Deficit Owls  
@DeficitOwls ‏

Austerity is Murder
‏@sdgrumbine

Sara Holland #MMT
@sarahollando552 ‏

Pavlina R Tcherneva
@ptcherneva ‏

Scott Fullwiler
@stf18 ‏

Warren B. Mosler #MMT
@wbmosler ‏

Fadhel Kaboub
@FadhelKaboub 


Please feel free to make comments and suggestions!




Copy of Censored ZeroHedge Article on New Zealand Mosque Shooter
australianvoice
Complete Copy of Censored ZeroHedge Article:

Turkey Claims NZ Mosque Shooter Previously Entered Country For "Assassination" Attempt


By Contributors, www.zerohedge.com
March 17th, 2019
https://www.zerohedge.com/news/2019-03-15/turkey-claims-nz-mosque-shooter-previously-entered-turkey-assassination-attempt

In an apparent attempt to capitalize on the horrific terror attack on two New Zealand mosques which left 49 dead and dozens more wounded, Turkish President Recep Tayyip Erdogan has claimed the gunman, 28-year-old Australian national Brenton Tarrant, had targeted Erdogan, Turkey, and "the whole Muslim world" in a speech on Friday.


“It is clear that the understanding represented by the killer that also targets our country, our people and myself, has started to take over Western societies like cancer,” Erdogan said, as reported by Turkey’s Hurriyet Daily News.

While Erdogan was referring to the gunman's manifesto which had called for the death of the Turkish president by name, state-run media took allegations a big step further on Friday after it was revealed Tarrant had made at least two trips to Turkey in 2016: TRT World cited government officials who said the white supremacist gunman had previously entered Turkey "to carry out a terror attack and/or an assassination."



Turkish media further linked the supposed 2016 "assassination plans" to the newly unearthed manifesto's references to "the assassination of President Recep Tayyip Erdogan".

TRT World, which is the largest state broadcaster run by the Turkish government, claimed the following in its report:


Turkish authorities believe the mosque attacker, who also called for the assassination of President Recep Tayyip Erdogan, came to Turkey "to carry out a terror attack and/or an assassination."

Officials say Tarrant visited Turkey between March 17-20 in 2016, ahead of the July 15 defeated coup, and entered Turkey again on September 13, 2016. He left Turkey on October 25, 2016.

Also interesting is the attempt to vaguely link Tarrant's travels to the "July 15 defeated coup" attempt aimed at forcing Erdogan from power.


Turkish officials believe the New Zealand mosque attacker had plans "to carry out terror attack and/ or an assassination" in Turkey https://t.co/g9hq2OtpZQ

— TRT World (@trtworld) March 15, 2019


Turkish police are currently investigating the New Zealand mosque shooter's 43-day travels inside the country, but it should also be noted that he visited a number of East European and other countries during the same period, which are conducting their own investigations.



Erdogan shows the crowd video of #Christchurch murderer during his election rally in the Turkish city of Tekirdağ, with a title "Terrorist Enemy of Islam and Turks".

He represents the other face of coin in the islamist vs white supremacist fascists' "fight". pic.twitter.com/RFeFpaTrce

— Gilgo (@GforGilgo) March 16, 2019

Meanwhile independent Turkish media outlet Ahval News highlighted the timing of both Erdogan's and state media's sensational claims regarding an "assassination attempt":


Erdoğan went on to link the attack to the local elections on March 31, for which the president has been involved in a furious campaign in recent weeks.

“As Muslims we will not bow our heads, but we will never fall to the level of these villains. Are you ready to send a message to the enemies of Islam and Turkey on March 31?” Erdoğan called out to the crowd in Gaziantep.

State broadcasters in Turkey have also come under fire for airing uncensored footage of the live stream of the New Zealand attacks throughout the day Friday.

Ahval reported further, "The decision to broadcast the footage uncensored drew sharp criticism, as did pro-AKP satirical magazine Misvak’s response to the attack."


In his manifesto, the suspected New Zealand shooter calls for the assassinations of Angela Merkel, Erdogan and Sadiq Khan. He hates Turks more than anything and calls Turkish people “ethnic soldiers within Europe” pic.twitter.com/o6ry0HDFly

— Rania Khalek (@RaniaKhalek) March 15, 2019

In separate statements, Ömer Çelik, the spokesman for the ruling Justice and Development Party (AKP), said: “We’ve warned politicians in Europe and the far-right many times not to base their politics on Islam and racism. We said this would bring the entire world to a terrible place.”

Sickeningly — but entirely to be expected — Erdogan and his AKP loyalists will continue to use both the mass murder and the killer's prior visits to Turkey as political capital for days and weeks to come.

China's“Socialist” Investment in Australia is No Different from that of Other Capitalist Wolves
australianvoice
IF IT WALKS LIKE A DUCK AND QUACKS LIKE A DUCK...
In Australia we have a quaint saying: If it walks like a duck and quacks like a duck, it's a duck. Most of this article consists of an imperfect and incomplete description of Chinese investment in Australia. I defy anyone to explain how Chinese “socialist” investment is any different from investment by the US, UK or Japan.

At the moment China is the fifth largest investor in Australia. It has also recently become the second largest foreign owner of Australian land. It has only 2 million hectares less than the UK. Much of the investment is not by China's State Owned Enterprises (SOEs). These are gradually being turned into privately owned companies as required by the Communist Party of China. While most investors are private individuals or privately owned companies, the investments are guided by government policies, such as the One Belt, One Road Initiative (OBOR). Investments clearly tied to the OBOR policy are the acquisition of the Ports of Newcastle, Melbourne and Darwin. Newcastle is the largest coal port in the world, Melbourne is Australia's largest port, and Darwin is important for animal exports. Other areas of Chinese investment include mining, real estate, infrastructure, and electricity.

It is important to realise that Chinese investors often invest jointly with foreign investors or Australians. In other words, they invest in Australia in the same way as any other foreign capitalist investors. They put money into Australia in order to take money out or use their profits to expand into other areas. Chinese investment is not a socialist swan but a capitalist duck. The discussion of Australia's wine exports to China shows that like most other countries, China's trading relations are connected to broader political concerns.

Investment in Australia:(1)

The following chart shows the pattern of foreign investment in Australia between 2015 and 2017, recorded in A$billion.



For some reason the information from the Australian Department of Foreign Affairs and Trade separates the investment from Honk Kong and the People's Republic of China even though they have been united for years. Adding the two together, the total Chinese investment in Australia is A$181.6 billion, which makes it the fifth largest investor in this country. Between 2012 and 2017 the most rapid increases in investment are 21.6% for China and 17% for Hong Kong. Even though the increase for China is the highest over this three year period, investment fell considerably from 2016 to 2017. According to a recent report by KPMG:

Chinese government regulations which were implemented to address concerns about speculative, irrational global investments and massive capital outflows have impacted the Australia result, as have recent changes to Australia’s foreign investment regulations for strategic infrastructure assets.

Australia remains globally competitive for attracting Chinese investment, retaining its position as the second largest recipient of accumulated Chinese investment – only behind the United States – with just under USD 100 billion since 2008.

Chinese investors continue to be drawn to projects in Australia that relate to growing Chinese consumer demand and Chinese government priority initiatives – health and wellbeing, tourism and lifestyle, real estate, technology, services and a continuing demand for mining commodity resources.

The breakdown of Chinese investment in 2017 and 2016 was:

Mining - 35% (4% in 2016)
Real Estate – 33% (36% in 2016
Healthcare – 12% (9% in 2016)
Food/Agribusiness – 8% (Same in 2016)
Infrastructure – 4%. (28% in 2016 )

Private investors accounted for 83 percent of the Chinese deal volume and 60 percent of deal value in 2017, up from 78 percent in number and 49 percent in volume in 2016. Chinese SOE investment dropped in both the number and value of investments for the first time since 2014.

The breakdown of Chinese investment varies from year to year depending the projects they are interested in. It will be more useful to look at the important areas individually.

Mining:
The mining sector saw 12 deals announced in 2017 totalling AUD 4.6 billion, a rise of 448 percent from 2016. This large increase was mostly driven by the AUD 3.4 billion acquisition of Rio Tinto’s thermal coal assets by Yancoal.

Commercial Real Estate:
This remained an important sector for Chinese investment in 2017, accounting for AUD 4.4 billion of investment, with Australia attracting 11.5 percent of China’s total global overseas real estate investment.

Agricultural land:

Chinese investment in land is very important. In 2017 UK owned the largest amount of land with 16.4 million hectares, followed by China with 14.4 million hectares. By contrast US ownership has fallen to 2.6 million hectares. The rise was largely due to the Australian Outback Beef joint venture between mining magnate Gina Rinehart and Chinese partner Shanghai Cred buying the 10 million hectare S Kidman & Co cattle empire.(2)

Ports:
Ports are a vital component of Australian trade infrastructure, underpinning 20 percent of Australian GDP.
In 2014 the world's biggest coal port, the Port of Newcastle, was sold in a deal worth A$1.75 billion. A consortium made up of Hastings Funds Management and China Merchants made the successful bid for the New South Wales Government asset.(3)
A consortium of global and domestic funds, backed by investors including China Investment Corp, agreed to buy Melbourne, Australia’s busiest port, for A$9.7 billion.(4)
In 2015 the Chinese Landbridge corporation bought a 99 year lease for the Port of Darwin for A$506 million.(5) The Chairman of Landbridge Ye Cheng sees this as part of China's One Belt , One Road initiative.(6) He also bought the Brisbane-based gas producer WestSide Corporation in 2014.(7) Landbridge also paid US$900 million for a port in Panama which fits in the One Belt, One Road plan.(8)

Infrastructure:
Chinese investment in large Australian infrastructure assets continued in 2016 at a record level. Chinese companies with technical expertise and financing capabilities are keen to work with Australian and international partners in infrastructure provision. China’s comprehensive and global "Belt and Road" Initiative ties into their investment activities in Australia. Chinese investment in infrastructure comprised two very large deals with minority shares taken by Chinese investor CIC Capital in Asciano Limited and the Port of Melbourne.

Electricity:
EnergyAustralia is owned by Hong Kong-based China Light and Power.
Cheung Kong Infrastructure/Power Assets owns a 51-per-cent share, on a 200-year lease, in SA Power Networks Electricity Distribution network.
Chinese Government-owned State Grid Corporate has holdings in the following jurisdictions:
In the ACT the government owns 50% of ActewAGL Distribution Ltd. and State Grid Corporate holds a 30 per cent share.
In Victoria State Grid Corporate holds shares in three of the five electricity distributors in that state.
In South Australia, State Grid Corporation has a 46.5 per cent share of ElectraNet, the transmitter in SA.(9)

Australian Wine Exports:
While the focus of this article is on Chinese investment in Australia, this year an interesting conflict has appeared in one area of Australian exports to China, namely wine. In the last few years wine exports to China have rapidly increased to $A1 billion annually. However earlier this year Prime Minister Turnbull complained about Chinese political interference in Australia and took steps to develop tougher laws aimed at cracking down on foreign interference in Australian politics. After this announcement it seems Australian wine now take two months to clear customs in China while wine from other countries only took two weeks. Major exporters such as Treasury Wine Estates and McWilliams Wines as well as Wolf Blass, Penfolds and Rosemont have reported such delays. Global Times, among a few Chinese newspapers, is calling for China to slash Australian imports to teach Australia a lesson.(10)


This article is one part of four articles on Chinese "Socialism"


China's Transition from Socialism to State Controlled Capitalism
https://australianvoice.livejournal.com/39112.html

China's State Controlled Capitalism is Not Very Different From Capitalism in the West
https://australianvoice.livejournal.com/39306.html

The Damage Caused by China's “Socialism” to Workers Around the World
https://australianvoice.livejournal.com/39545.html



Footnotes:

1. Much of the information on Chinese investment in Australia comes from the three sources given below. Where there is another source of information it is given in the other footnotes.
https://dfat.gov.au/trade/resources/investment-statistics/Pages/statistics-on-who-invests-in-australia.aspx;
https://home.kpmg.com/au/en/home/media/press-releases/2018/06/chinese-investment-in-australia-remains-strong-despite-global-outflow-slowdown-12-june-2018.html; and
https://assets.kpmg.com/content/dam/kpmg/au/pdf/2017/demystifying-chinese-investment-in-australia-may-2017.pdf

2. https://www.weeklytimesnow.com.au/agribusiness/decisionag/china-to-become-biggest-foreign-owner-of-australian-farmland/news-story/ba27742491380f55568bc3d5ada296cb

3. http://www.abc.net.au/news/2014-04-30/nsw-government-sells-port-of-newcastle-for-1.75-billion/5421800

4. https://www.reuters.com/article/us-australia-privatisation-ports/australian-port-sold-for-7-3-billion-to-consortium-china-fund-among-backers-idUSKCN11P04O

5. https://www.theguardian.com/australia-news/2016/dec/18/how-the-sale-of-darwin-port-to-the-chinese-sparked-a-geopolitical-brawl

6. https://www.afr.com/news/world/asia/how-landbridges-purchase-of-the-darwin-port-killed-perceived-wisdom-on-china-20170706-gx66r8

7. https://www.theguardian.com/australia-news/2016/dec/18/how-the-sale-of-darwin-port-to-the-chinese-sparked-a-geopolitical-brawl

8. https://www.ft.com/content/b4d35440-5a68-11e7-9bc8-8055f264aa8b

9. http://www.abc.net.au/news/2016-08-21/chinese-investment-in-the-australian-power-grid/7766086

10. https://www.thedrinksbusiness.com/2018/06/pernod-ricard-facing-wine-delays-in-china/; https://www.acbr.com.au/treasury-wine-facing-china-customs-delay-amid-diplomatic-rift; and https://www.smh.com.au/politics/federal/pressure-on-turnbull-as-china-puts-a-cork-in-wine-exports-20180605-p4zjns.html

The Damage Caused by China's “Socialism” to Workers Around the World
australianvoice

Apart from the control exercised by the USSR over Eastern Europe, socialism in the USSR had little direct influence on the jobs of workers around the world.(1) The case of socialist China from Liberation to the death of Mao is the same. Workers gained a powerful demonstration that it was possible to create a society without capitalist exploitation, but the existence of these societies had no impact on the economies of their own countries.

By contrast the rise of the “market socialism” in China during the last 40 years has produced massive changes throughout the world. An ever increasing flow of basic consumer items, electronic equipment, cars, steel, etc. has helped to destroy jobs in all countries in the West and many more in the “developing world”. Marty Hart-Landsberg and Paul Burkett's book China and Socialism looked at this question more than 15 years ago.

"They regard the hypergrowth of the Chinese economy as something that cannot be viewed in isolation from the development requirements of neighboring states. As should be obvious to anybody who lives under capitalism, there can only be winners and losers. If China is "winning" today - even on a highly distorted basis - other nations have to lose. With a race to the bottom, foreign investment will always be persuaded to leave some place like Mexico and flow to China. So, looking at capitalism as a world system, China's gain can only be understood in terms of some other country's loss.


"In Malaysia, for example, 16,000 jobs have disappeared from the country's high tech production hub as new investment flows to China. A J.P Morgan report states that China's growth in high technology has 'eroded' Singapore's status as an electronics exporter. South Korea has found it profitable to relocate in China as well where militant unionized workers are not a problem. Samsung, Daewoo and LG Electronics now make half their goods outside of Korea, many in China.


"Although Japan is often seen as a strategic partner for China, the benefits of such an alliance will be lost no doubt on Japanese workers who will increasingly see their jobs disappear to China. Under newly instituted WTO rules, it will be much easier for Toyota and company to relocate where they can save 10 to 20 percent on manufacturing costs. The World Bank predicts a major contraction of automobile production in Japan, just around the time when a 10 year old slump appears to be ending."(2)


David Harvey also notes that “Mexico lost 200,000 jobs in just two years as China (in spite of NAFTA) overtook it as the major supplier of the US market in consumer goods.” He reports the same trends noted above:

“During the 1990s China began to move up the value-added ladder of production and to compete with South Korea, Japan, Taiwan, Malaysia, and Singapore in spheres such as electronics and machine tools. This occurred in part as corporations in those countries decided to move their production offshore to take advantage of the large pool of low-cost and highly skilled labourers being churned out by the Chinese university system.”
(3)

Call it what you want, socialism or capitalism, the last 40 years of China's history can be seen as a “success” only by using the values of neo-liberal and globalist economics. We saw in a previous article that the level of inequality in China rose rapidly from 1994 to 2010, and has only been changed by abandoning some of the neo-liberal dogmas used to create a giant pool of workers forced to work for very low wages.(4) The neo-liberal/globalist paradigm for the whole world is one giant interconnected system in which the task of each country is to find and/or develop exports which are cheap enough to be competitive in the world market. These commodities and/or services – like call centres – can be bought or used by consumers or companies around the world.

In this neo-liberal utopia a country like China is a perfect model for the rest of the world to follow. But the “world market” has a deeper purpose, to drive down wages everywhere by a combination of shifting work to low wage countries or allowing people from low wage or impoverished countries to have unrestricted access to work in countries which do not have low wages – know as the open borders policy. Whether you want to think of China as socialist or not, the way their economic policies fit into the “world market” is obviously of absolutely no benefit to the workers in the rest of the world. Some of them may have jobs, but they will be jobs which will be at or below subsistence levels, just the sort of jobs capitalists are always looking for. This is why I said the policies of the USSR had virtually no effect on the workers in the rest of the world. They had virtually no effect on workers compared with the effect China's policies have had.

The following passage sums up my central point:

“When confronted by Argentina’s worries about cheap Chinese imports destroying the vestiges of its indigenous textile, shoe, and leather industries that began to revive in 2004, the Chinese advice was simply to let such industries die and concentrate on being a raw material and agricultural commodity producer for the booming China market. It was not lost on the Argentines that this was exactly how Britain had approached its Indian empire in the nineteenth century.”
(5)

So what is new here? The Chinese answer to the question put to them is essentially the globalist strategy explained above. The British wanted to wipe out the domestic manufacture of cotton so they could replace it with their own manufactures. Now in 21st century globalism expects most countries like Australia and Argentina to produce the raw materials the countries like China cannot provide for themselves. Few people seem to realise that globalism dictates to each nation how they are to run their economies without any regard to the impact of these policies on the people living in these countries. Countries must fit into the globalist New World Order. There is no alternative, or so we are told by today's dispensing economic wisdom.

There is another way to look at this question. The workers in China expend their labour power to create commodities for sale in other countries. What that means is that they do not benefit themselves from the fruits of their labour. The benefits are enjoyed by the people in the importing countries. Under Mao's policy of self-reliance, the fruits of the labour of Chinese workers were enjoyed by themselves and other Chinese who could buy and use the products they produced. The income derived from the export of these commodities is divided between the workers, their employers and the middlemen who handle the trade in these commodities.

This show us the real alternative for all countries, even China. There is nothing wrong with international trade, but each nation must be able to plan and carry out its own economic plans which should focus on the well-being of the people who live there.


This article is one part of four articles on Chinese "Socialism"


China's Transition from Socialism to State Controlled Capitalism
https://australianvoice.livejournal.com/39112.html

China's State Controlled Capitalism is Not Very Different From Capitalism in the West
https://australianvoice.livejournal.com/39306.html

China's“Socialist” Investment in Australia is No Different from that of Other Capitalist Wolves
https://australianvoice.livejournal.com/39849.html





Footnotes:

1. Some will say that Soviet policy with respect to Spain and Nazi Germany was in the end detrimental to the working class in Spain, Germany and France. Even if this is true, it is not relevant to the point I wish to make here.

2. Martin Hart-Landsberg and Paul Burkett, "China and Socialism: Introduction", https://monthlyreview.org/2004/07/01/introduction-china-and-socialism/

3. David Harvey, A Brief History of Neoliberalism, Oxford University Press, 2005, https://erenow.com/common/a-brief-history-of-neoliberalism/6.php

4. China's State Controlled Capitalism is Not Very Different From Capitalism in the West,

5. David Harvey, A Brief History of Neoliberalism, https://australianvoice.livejournal.com/39306.html

China's State Controlled Capitalism is Not Very Different From Capitalism in the West
australianvoice


WHAT IS THE NATURE OF THE CONFLICT BETWEEN CHINA AND THE UNITED STATES?
We can all see a growing antagonism between China and the United States. One area of conflict is over the use of the US dollar in world trade. Because the US dollar is essential for payments between nations, giving it the status of the world's reserve currency, the US is able to harm other nations by restricting their use of the US dollar for trade. A current example is the way the US wishes to block Iran's sale of oil and gas to China by not allowing its dollars to facilitate such trade. The EU is trying to find a way out of this problem, and both Russia and China are working to set up a financial system which does not depend on the US dollar. When an alternative system has been established the US will have lost one of its important mechanisms for exercising power over the rest of the world.

Both sides of this conflict would like us to understand it as a conflict between different kinds of economic systems or different sets of important values. The previous article has explained how what once was a genuine socialist system in China has been changed into a powerful neo-liberal state controlled capitalist system.(1) The only difference is the way that the owners of the means of production relate to the state. In the West, the owners of the means of production exercise their ownership and control via a web of interconnected banks and large corporations who select and advise the political leaders in the US, UK, the EU, Australia and many other countries. In China the owners of the large corporations are answerable to the leadership of the Communist Party of China which formulates policy and controls the banking system. In a simplified comparison, we can say that in the West the banks control the state, while in China the state controls the banks.

Anyone who wishes to believe that this difference constitutes a conflict between the capitalist West and socialist China needs to explain the importance of this difference to the workers in Australia who have seen their jobs disappear in the last few decades. They all know that capitalists cannot resist the urge to move their activities to countries with the lowest wage levels. Socialist countries focus their economies on looking after the people living in that country. People before profits.


NEO-LIBERALISM IN THE WEST
There are two important ways that the form of neo-liberalism developed in China is different from the neo-liberalism introduced in the West. When the basic doctrines of neo-liberalism were formulated by the members of the Mont Pelerin society in the late 1940s they took the form of two interrelated themes. Both themes were focused on freedom. The early neo-liberals were reacting to to recent phenomena. The first theme was political freedom, and arose from a reaction against the rise of Nazi Germany, Fascist Italy and the socialist USSR, all of which created powerful states to control their populations. This was feared by the political theorists in the West who wished to see a society with much greater personal and political freedom.

The second theme was economic freedom. This arose arose from a reaction against Keynsian economics and/or state planned economies which had been adopted by most countries in the world after WWII. In the democratic West, including the US, UK and Western Europe, governments adopted measures such as limiting the power of banks, nationalising industries and concentrating their economic policies on creating full employment. Of course in the USSR and Communist China, there was a much stronger form of state control of the economy. Some of these early neo-liberals even claimed that economic freedom helped create and sustain personal and political freedom. We have seen, however, that economic freedom in the West has brought with it the elimination of both the personal and political freedoms once prized in the West.

While a few of the founding fathers of neo-liberalism may have been concerned with personal and political freedom, the real legacy of neo-liberalism in the West today is economic freedom or the “free market”. In fact most sectors of the economy in the West are dominated by cartels. While these are totally at odds with the idea of a “free market”, these cartels are of no more interest to neo-liberals than the powerful snooper states which have developed along side of the cartels. The only economic freedom neo-liberals in the West really care about are “free trade” between countries, where there must be no restrictions on what can be imported into any country, and “free markets” in which there are no restrictions on foreign investment and take-overs. This means large firms can invest in anything anywhere they find profitable and buy out any rivals.


CHINA'S "MARKET SOCIALISM" IS DEBATED AT THE WORLD TRADE ORGANISATION
The by contrast, the CCP places limits both on Chinese investors and foreign investors in violation of the “free market” principles demanded by neo-liberals in the West. If we step beyond the nearly invisible world of the left – invisible at any rate from the tops of our sky-scraper cathedrals to imperialist success – virtually all investors and market analysts in the mainstream neo-liberal press assume China is a de-facto “market economy”. Othewise, why would they think it was a good place to make a profit?

While the nature of the Chinese economy is not debated in the mainstream media, there is actually a significant dispute about this topic going on in the World Trade Organisation (WTO). The problem is that while China has been a member of the WTO for 15 years, it has not been allowed full membership. This can only be granted to countries deemed to be “market economies”. Currently the US and the EU argue that China is not a market economy. According to Forbes:

“They (the US and EU) remain implacably opposed for the simple reason that this would restrict anti-dumping measures against China’s vast export surplus. Equally, China has made no inroads in persuading either the U.S. or the EU that it is, in fact, a market economy, doing almost nothing to ensure EU or U.S. companies actually gain market access to China without endless conditions and habitual delays. Specifically, China continually promises open market access for EU and U.S. exporters, but then frustrates them in practice, demands investment takes place through joint ventures, often with SOEs, and routinely insists upon technology transfer.”
(2)

The Forbes article begins with a rather blunt dismissal of the US/EU claims: “China’s status as a 'market economy' is once again under dispute. Not, of course, by anyone who knows anything about the Chinese economy.” For the US and the EU the Chinese economy is not as open as they would like. There are restrictions on access which they don't face in countries like Australia.


THE WEST HAS A NEO-LIBERAL STATE WHILE CHINA HAS STATE NEO-LIBERALISM
The basis of the US/EU objection to China joining the WTO is the role of the state in the Chinese economy. In the West, neo-liberals demand the state be small with little or no role in the economy. In practice this means that the giant corporations themselves control the economy and the government. Politicians are “democratically elected” puppets of the largest banks and cartels. In China the Communist Party has gone to great lengths to stop the newly formed capitalist class in China from controlling economic and political decisions. This means that foreign corporations cannot control economic and political decisions either. There is one element of Marxist theory the Chinese have not abandoned: either the state controls large corporations or the large corporations control the state. This is an unstable situation, but the Chinese leadership are all too well aware of the way foreign corporations politically control most countries in the world.

Just as the Chinese state is not a typical neo-liberal state, its economy does not follow all of the policies demanded by the neo-liberals in the West. While the state in China is working to minimise its ownership of all enterprises, the CCP still maintains control over major investment decisions and lending by banks. For the neo-liberals in the West this is perhaps the worst economic sin a government can commit. Another difference is that the Chinese state has used a Keynesian strategy to deal with the unemployment caused by disbanding the rural communes and the collapse of many SOEs as they were privatised. Since 1998 the CCP had sought to confront their unemployment problem through debt-financed investments in huge mega-projects to transform physical infrastructures. For neo-liberal economists in the West this is seen as the sin of "deficit spending". China has undertaken very ambitious projects like the Three Gorges Dam to divert water from the Yangtze to the Yellow River. Astonishing rates of urbanization (no fewer than forty-two cities have expanded beyond the 1 million population mark since 1992) require huge investments of fixed capital.

New subway systems and highways are being built in major cities, and 8,500 miles of new railroad are proposed to link the interior to the economically dynamic coastal zone, including a high-speed link between Shanghai and Beijing and a link into Tibet. The Olympic Games also prompted heavy investment in Beijing. Furthermore, China is planning to build an interstate highway system more extensive than that in the US, and practically every large city is building or has just completed a big new airport. At last count, China had more than 15,000 highway projects in the works, which will add 162,000 kilometres of road to the country, enough to circle the planet at the equator four times.(3)

Alvin Y. So and Yin-wah Chu give an account of how other neo-liberal policies have been abandoned after 2006. If these policies look like “socialism” to people today, it is only because they were born after the changes forced on the capitalists after WWII were dismantled. Chinese capitalism is adopting the concessions used by capitalists in the West to revive their system at the war's end.

“In contrast to the neoliberal doctrine which calls for the dismantling of the welfare state, the Chinese party-state under Hu/Wen leadership has recently presented a new policy of building a new socialist countryside and a harmonious society in 2006 . The above policy is significant because it could signal a change of ideological orientation of the Chinese state. Whereas the pre-2006 Chinese party-state adopted a neoliberal orientation, it is now moving toward a more balanced one between economic growth and social development. While market reforms would continue, this new policy indicates that the state would play a more active role in moderating the negative impacts of marketization. In the new policy, the state will need to include ―the people and environment in its developmental plan, and not just focus narrowly on GNP indicators and economic growth.

“Thus the new policy advocates a transfer of resources from the state to strengthen the fiscal foundation of the countryside. Not only was the agricultural tax abolished to help relieve the burden on farmers, but the state increased its rural expenditure by 15 percent (to $15 billion) to bankroll guaranteed minimum living allowances for farmers, and an 87 percent hike (to $4 billion) for the health-care budget. These policies indicate a massive infusion of funding from the state onto the peasants and rural areas. In addition, there is a de-commodification of human services. Rural residents would no longer have to pay many miscellaneous charges levied by schools; fees at primary schools will be abolished as part of a nationwide campaign to eliminate them in the countryside for the first nine years of education. The state will also increase the subsidies for rural health cooperatives that will be available in 80 percent of the rural counties by 2008. For now, rural residents have to pay market rates at the villages‘ private clinics and most of them do not even have medical insurance and spend more than 80 percent of their cash on health care. Furthermore, the new policy is aimed at reducing social inequality, especially the widening gap between the countryside and the city. Thus, pensions are to be made available for everyone, not just those enjoying a privileged status as registered urban residents. Over the past two years, the state has also been promoting the spread of Minimum Living Standard Assistance for the rural population. This is potentially a highly significant development, opening up for the first time the real possibility of instituting a social safety net that covers the whole of the population, whether urban or rural”(4)

Noting that China's economy under neo-liberalism has been far more successful than in the West, Alvin Y. So and Yin-wah Chu have concluded that “China has pursued a different mode of neo-liberalism – what we called state neo-liberalism – from the mainstream neo-liberalism that is promoted in the Washington Consensus model.”(5) With state neo-liberalism, the state “interferes” in the economy by controling major investment projects and deficit spending, while adopting all the other neo-liberal policies.

The following chart gives us an interesting way to look at the Chinese economy in a global perspective.(6)



In 2017 the Chinese debt to income (=gross domestic product (GDP)) ratio rose to 266 percent.(7) We can also see that Australia and many of the major NATO countries have debt to income=GDP ratios as large or larger than China. The difference is that while the absolute size of the Chinese debt is small, it has the same size relative to its income as many major Western economies. In contrast, China has the same per capita income as Brazil, South Africa and Indonesia, but has the same debt to income level as the major Western countries. In other words, it is unique in having a low per capita income and a high ratio of debt to income, just as Saudi Arabia is unique with its very high per capita income and its low debt to income level.


WHY CCP MANAGEMENT OF LOANS AND INVESTMENT IS NOT SOCIALISM

Some might be tempted to believe that the significant role played by the CCP in the economy show that China is after all socialist. As we saw in the previous article: “A share of stock is merely a title of ownership to a corresponding portion of the surplus-value to be realised by it.”(8) The Chinese state does not own the newly liberated State Owned Enterprises (SOEs). They are owned by their stockholders. Some of the people who own stock in these SOE may be members of the CCP and as individuals have a role in state decisions, but the state itself does not own the means of production.

Oddly, much the same situation can be seen in the US today. It is well known that leaders in banking and other sectors of the economy occupy powerful positions in the state apparatus of the US. There is a “revolving door” between the largest companies and the highest offices. Clearly these individuals have almost total control the US government foreign and domestic policy, but the US state does not own these giant corporations. So if anyone thinks the dual role of CCP members in the state economy and the stocks they hold as individuals or families shows China is socialist, they same must be said for the US itself.


CHINA'S GINI MYSTERY
An admittedly imperfect but widely used measure of social inequality is called the Gini coefficient. Here is a graph of the changes in China's gini coefficient from 1994 to 2013. Remember that the higher the number the higher the level of inequality.(9)



There are an number of calculations of China's Gini coefficient. Because of these differences I will not compare China's rating with other countries. Here I have relied on only one study which is based on the following research paper: BOFIT Discussion Paper, Ravi Kanbur, Yue Wang and Xiaobo Zhang, The great Chinese inequality turnaround.(10)

China's Gini mystery is this: How can a socialist country generate almost two decades (or more) of increasing social inequality? My answer of course is that China has been dismantling its formerly socialist relations of production for the last 40 years. The purpose of neo-liberal policies where ever they are introduced is to concentrate wealth in the hands of those with the most wealth. Even in 1994, China's inequality as measured by the Gini coefficient was much better than it is now. It has a long way to go to attain the level of inequality it had 25 years ago.

Perhaps it is useful to cite the conclusion of Ravi Kanbur, Yue Wang and Xiaobo Zhang, authors of a 20 page study of income inequality in China:

“We have argued in this paper that the long period of inequality increase in China is coming to an end. The data, seen from different perspectives, seem to indicate a turnaround towards the latter part of the 2000s. The explanations for this turnaround need to be explored further, but there is prima facie evidence of economic forces and government policy tightening labor markets in rural areas, together with government transfers and social policy mitigating inequality in urban and rural areas, which may explain the observed trends. This of course, raises the further question of why government policy changed over a 20-year period from allowing inequality to increase to mitigating it. The political economy of the Chinese state (Wong, 2011) may provide an explanation, but that takes us beyond our present remit. Although China’s inequality has come to a turnaround, the level is still rather high compared with many countries. More efforts are still needed to keep the momentum.”(11)

The authors ask “why government policy changed over a 20-year period from allowing inequality to increase to mitigating it.” I would speculate that the CCP realised their neo-liberal policies were producing a level of unrest that might threaten social stability and and with it their rule. This forced them to depart from the hard-line neo-liberal policies they introduced since 1979. The policies explained by Alvin Y. So and Yin-wah Chu in a previous section explain how the growing inequality was reversed.

In contrast to the leaders of the CCP, who have broadcast their "reforms" in well publicized policy announcements, the leaders of the developed economies of the West have introduced neo-liberal policies more slowly, carefully and secretly. In this way most of the population fail to appreciate that their current situation has come from many unnoticed changes. These changes have created a class of super-rich who are now on the way to controlling the whole world under the policy of globalisation. This policy removes all national sovereignty and the ability of people to use the power of their government to stop giant banks and corporations from doing anything they want to in pursuit of maximising their profits.


This article is one part of four articles on Chinese "Socialism"

China's Transition from Socialism to State Controlled Capitalism
https://australianvoice.livejournal.com/39112.html

The Damage Caused by China's “Socialism” to Workers Around the World
https://australianvoice.livejournal.com/39545.html

China's“Socialist” Investment in Australia is No Different from that of Other Capitalist Wolves
https://australianvoice.livejournal.com/39849.html




Footnotes:

1. China's Transition from Socialism to State Controlled Capitalism, https://australianvoice.livejournal.com/39112.html

2. https://www.forbes.com/sites/douglasbulloch/2017/12/08/china-is-not-a-market-economy-and-the-wto-wont-survive-recognising-it-as-such/#2aa0877e37fc

3. David Harvey, A Brief History of Neoliberalism, Oxford University Press, 2005, https://erenow.com/common/a-brief-history-of-neoliberalism/6.php

4. Alvin Y. So and Yin-wah Chu, "The transition from Neoliberalism to State Neoliberalism in China at the turn of the 21st Century", https://www.researchgate.net/publication/304795946_The_Transition_from_Neoliberalism_to_State_Neoliberalism_in_China_at_the_Turn_of_the_Twenty-First_Century

5. Ibid.

6. https://www.bloomberg.com/news/articles/2018-02-08/sizing-up-china-s-debt-bubble-bloomberg-economics

7. https://www.bloomberg.com/quicktake/chinas-debt-bomb

8. Karl Marx, Capital, Vol III, Part V, Ch XXIX.

9. https://qz.com/937137/chinas-extreme-income-inequality-appears-to-be-improving-after-decades-of-deterioration/

10. BOFIT Discussion Paper, Ravi Kanbur, Yue Wang and Xiaobo Zhang, The great Chinese inequality turnaround. Pdf available here: https://helda.helsinki.fi/bof/bitstream/handle/123456789/14667/dp0617.pdf;jsessionid=4F2E45518BA4A14CB84E84F7A9A72726?sequence=1

11. Ibid.

China's Transition from Socialism to State Controlled Capitalism
australianvoice
Marxism 1894


Marxism 1994


After the changes introduced by Deng Xiaoping, China has continued to resist control by the US Empire and has increased the living standards of the Chinese people. China can now challenge the West in advanced technology and, unlike the application of neo-liberal policies in Russia, the Chinese Communist Party has maintained its political control. Many admire this success in the last 40 years, but is China still a socialist country?

This article will discuss the changes in China's relations of production and its ideology in the last 40 years. We will see how China's recent economic development is a shining example of neo-liberal capitalism, not socialism. As Harvey explains: “By taking its own peculiar path towards ‘socialism with Chinese characteristics’ or, as some now prefer to call it, ‘privatisation with Chinese characteristics’, it managed to construct a form of state-manipulated market economy.”(1)


BACKGROUND: CHINA'S “SUCCESS” IS BASED ON NEO-LIBERALISM IN BOTH THE WEST AND CHINA
China's success is usually measured in capitalist and neo-liberal terms: China's GDP has grown rapidly and it has an ever increasing volume of exports to the rest of the world. It can now begin to rival the West in advanced technology. Many are in awe of the giant skyscrapers and traffic jams typical of major cities in the West. These “achievements” are the result of a subtle implementation of essentially the same neo-liberal policies forced on Chile in 1973 and most of the world including the US, UK, and Australia.

David Harvey has pointed out there is what he calls a “remarkable coincidence” between the application of neo-liberal policies in the West and in China:

“These reforms would not have assumed the significance we now accord to them, nor would China’s extraordinary subsequent economic evolution have taken the path and registered the achievements it did, had there not been significant and seemingly unrelated parallel shifts in the advanced capitalist world with respect to how the world market worked. The gathering strength of neo-liberal policies on international trade during the 1980s opened up the whole world to transformative market and financial forces. In so doing it opened up a space for China’s tumultuous entry and incorporation into the world market in ways that would not have been possible under the Bretton Woods system. The spectacular emergence of China as a global economic power after 1980 was in part an unintended consequence of the neoliberal turn in the advanced capitalist world.”(2)

Those who realise the super-rich have worked for decades to create a globalised system in which giant banks and multi-nationals control the economic development of the world would be reluctant to accept that these changes are just an interesting coincidence in world history. China's amazing success simply could not have happened if its rush headlong into an export-oriented economy had not been accommodated by the rest of the world adopting neo-liberal “free trade” policies which welcome cheap imported products instead of restricting them by tariffs or other means.

Neo-liberalism and globalism are two sides of the same coin. This system has created permanent unemployment - called post-industrial society - in the West and a vast army of cheap labour in China. After the death of Mao, there must have been an agreement between the leaders of the Chinese Communist Party (CCP) and the representatives of the super-rich in the West. The goal of the super-rich was to implement neo-liberal policies everywhere they could. The goal of the CCP was to use these same neo-liberal policies to dismantle the socialist relations of production in China and create the necessary pool of cheap labour needed to undercut the better wages and conditions achieved by workers in the West after WWII. What follows will focus on the steps taken by the CCP to carefully reverse all the socialist relations of production and related policies like the “iron rice bowl” created after China's liberation.


FIRST PHASE: NEO-LIBERAL POLICIES APPLIED TO THE RURAL SECTOR

Privatisation of agricultural communes.
Land formerly owned and worked in common was divided into separate plots and allocated to peasant families. They were then responsible for their own success or failure They were also encouraged to sell their products to rural markets, engage in rural industries, and seek work in nearby township enterprises. Eventually peasants could lease or rent land as well a hire labour. Still they did not have full ownership of their land, which was held by the newly constituted local government bodies that replaced the communes.

Health and education in rural areas had been provided by the commune system When they were taken over by the local government bodies these benefits disappeared. These services were replaced by a standard neo-liberal “user pays” systems which required an up-front fee for access to education and heath care. Public health-care covered 90 percent of the population in 1978, but only covered 4 percent in 1997.(3) These changes helped to create a giant floating workforce which had been previously kept out of urban areas by a system of residency.

Creation of small capitalist enterprises:

The new organisations operating on capitalist principles created by the reforms were called township and village enterprises (TVEs). They were set up by the local government bodies from assets which were in effect privatised from the agricultural communes. They operated in an open labour market with no regulations for wages or conditions and no job security. In such an unregulated labour market, there was little opportunity to bargain for increased wages or better conditions. By 1993, these enterprises numbered 25 million and employed over 123 million workers.(4) According to Harvey:

“Accounts as to what these TVEs were about vary greatly. Some cite evidence that they were private operations ‘in all but name’, exploiting dirt-cheap rural or migrant labour—particularly young women—and operating outside of all forms of regulation. The TVEs often paid dismally low wages and offered no benefits and no legal protections. But some TVEs provided limited welfare and pension benefits as well as legal protections. In the chaos of transition, all manner of differences emerged, and these frequently had marked local and regional manifestations.”(5)

These changes put peasants into essentially the same system which was replaced by the introduction of the communes 30 years earlier. Some peasant families could do well by selling extra produce, and hire other peasants as labourers. Members of families who could not produce an adequate surplus to feed themselves or sell on the open market could work for those who could afford their wages or they could work for the TVEs.

Contract labour introduced:
Another development was that workers began to be hired on a contract basis with no social protections and limited tenure. This replaced the older policy called the “iron rice bowl' which involved lifetime employment together with housing, schools, health care and pensions paid by the state owned enterprises (SOEs). By April 1987, the state-owned enterprises were using 7.5 million contract workers, about 8 percent of the industrial workforce.(6) SOEs were also given the ability to hire and fire workers in the name of enhancing productivity and efficiency, another policy requirement of neo-liberalism. During this period price controls were also removed, another standard neo-liberal policy.

Privatisation of “human services”:
In the socialist system created after liberation housing, health care, welfare, education and pensions were provided free of charge to all who needed them by the SOEs, rural communes or the state. Starting in the late 1970s one of the key neo-liberal policies introduced by the Communist Party was to force people to pay for these basic necessities. Now workers must find their own housing in the newly emerged private housing markets. Needless to say the unemployed found themselves homeless. This explains why the workers building the giant office towers and apartments in Chinese cities live in these construction sites. Their housing is provided in a neo-liberal way by their employers. Now workers must also pay a part of the costs for services in most welfare fields and social insurance, such as pensions, medical care, unemployment insurance and higher education,

Foreign investment introduced:
Another policy change allowed foreign investors to manufacture commodities for export using Chinese workers. It began with the establishment of four special economic zones in 1979. Later 14 coastal cities and Hainan Island were opened to foreign investment in 1984, and the policy extended to three delta areas (Pearl River Delta, Yangtze River Delta, and Yellow River Delta) in 1985. After the Revolution Chinese workers had been protected from both foreign and domestic exploitation in which surplus value is taken by private firms rather than used by the state for the benefit of the workers and the rest of the population. Foreign investment and the expanding role of the TVEs provided work for the millions of unemployed who left their villages or who were no longer employed in the SOEs.

These vast social changes removed many of the protections provided by the liberation of China in 1949 and created significant problems for ordinary people. In addition to the very high levels of unemployment, lower wages and new expenses for education and health care, there was inflation as price controls were removed and more pressure on workers as “reforms” began to exert tighter control over work schedule and raise work quotas. People were also angered by corruption and tax evasion by the new capitalists similar to trends in the deregulated neo-liberal West.

According to Alvin Y. So and Yin-Wah Chu these problems helped to fuel the pro-democracy movement which mounted a protest at Tiananmen Square:

“In the late 1980s, economic problems and social grievances had triggered a democracy movement that led to a confrontation between the protesters and the party-state in the Tiananmen Square. The Tiananmen Incident was a first major challenge to the Chinese communist party-state during the Post-Mao era.”(7)

This protest was put down by the leadership allied with Deng who wished to continue introducing neo-liberal policies, and later more changes were introduced.


SECOND PHASE: PRIVATISATION OF SOEs AND CREATION OF A STOCK MARKET

“In the first wave of neoliberal reforms in the 1980s, the reform policies were aimed mostly to expand the private sector; they had left the public sector largely intact. Thus the reformers in the 1980s used the term 'market socialism' to stress that China was still socialist because it had a dominant public sector and the party-state was still in control of the strategic sector (or the commanding height) of the Chinese economy. However, (in the second wave) the party-state turned to the public sector.”(8)

Privatisation of state owned enterprises:
In the 1990s most of the SOEs were no longer funded by the state and had to operate independently in the market. In effect the SOEs were expected to run like an independent private profit- making enterprise. They could go bankrupt if they were losing money. The SOEs were allowed to layoff workers, to increase work intensity and to cut worker‘s benefits to remain competitive in the market. In the late 1990s millions of state workers became unemployed or their benefits were reduced.

Then in 2003 with a new leadership team in place a significant change in policy was decided:

“On Oct. 14, the Central Committee passed a resolution that quietly called on the party to push ahead with privatisation and cleared the way for the sale of medium and large state-owned enterprises. For the first time, the party said it would "vigorously develop a mixed economy" with stock ownership playing a dominant role. "Before the policy was 'Grasp the Large, Release the Small,' but now the large enterprises can be released too," said Zhang Wenkui, a researcher at the State Council Development Research Center, which advises the leadership. He said the resolution also opened the door for the state to sell majority stakes in strategic industries.”(9)

The number of SOEs fell from 100,000 to 60,000 between 1995 through 1999. From 1996 to 2001, some 36 million state-enterprise workers were laid off; over the same period collective farms let go of 17 million workers. By the end of the 1990s, SOEs employed only 83 million people, which is just 12 percent of the total employment and only 1/3 of urban employment. As of 2001, state enterprises accounted for only 15 percent of total manufacturing and less than 10 percent of employment in domestic trade.(10)

Increased role for banks:
Initially the TVEs were funded by assets from the communes. Many failed but successful ones were able to grow through connections with overseas Chinese who could find export markets for their products. Eventually both TVEs and SOEs could gain access to foreign capital and loans from Chinese banks:

“The state-owned banking system expanded during the 1980s and gradually substituted for the central state in providing lines of credit to the SOEs, the TVEs, and the private sector. These different sectors did not evolve independently of each other. The TVEs drew their initial finance from the agrarian sector and provided markets for outputs or furnished intermediate inputs to the SOEs. Foreign capital integrated into the TVEs and the SOEs as time went on, and the private sector became much more significant both directly (in the form of owners) and indirectly (in the form of stockholders). When the SOEs became less profitable they received cheap credit from the banks. As the market sector gained in strength and significance, so the whole economy moved towards a neoliberal structure.”
(11)



Chinese stock exchange reappears:
The Shanghai Stock Exchange was closed in 1949. It was reopened in November 1990. Stocks, bonds and shares in mutual funds are traded in a system divided into type A or Type B. Financial instruments of type A are denominated in renminbi, while those traded in US dollars are of type B. Initially trades involving type A financial instruments could only made by domestic investors. However, after 2001 financial instruments pf type B were open to both domestic and foreign investors. In 2003 a Qualified Foreign Institutional Investor (QFII) program was introduced in which foreign investors were allowed limited access to trading type A financial instruments.(12) Now, in 2018, there are 287 overseas institutions in the QFII system with quotas amounting to $99.5 billion.(13)

SOEs to be fully privatised:
In August 2015 the Central Committee of the Chinese Communist Party released a document entitled: “Guiding Opinions of the CPC Central Committee and the State Council on Deepening the Reform of State-owned Enterprises”. The report was summarised by Xinhua news service. Here are the main points:

“China will modernize SOEs, enhance state assets management, promote mixed ownership and prevent the erosion of state assets, according to the guideline released by the Communist Party of China Central Committee and the State Council. The government will improve the competence of SOEs and turn them into fully independent market entities.
“The government plans to achieve major reforms in key areas by 2020, when SOEs are expected to be more robust and influential and have greater ability to avoid risks. The government should nurture a group of SOEs that are creative and can face international rivals by that time.
“According to the guideline, China's SOEs will be divided into two categories, for-profit entities and those dedicated to public welfare. The former will be market-based and stick to commercial operations and should aim to increase state-owned assets and boost the economy, while the latter will exist to improve people's quality of life and provide public goods and services.
“In terms of mixed-ownership reforms, the government should introduce multiple types of investors so SOEs can achieve mixed ownership and encourage them to go public, the guideline said.”
(14)

While the policy separates commercial enterprises from those which provide public goods and services, since the state will not be contributing to the provision of these goods and services, they must operate on the neo-liberal “user pays” principle. If the state no longer contributes to the provision of these goods and services, they will either go bankrupt or the fees they charge must cover the cost of delivering these goods and services



CHINA'S NEW IDEOLOGY: BACK TO CONFUCIANISM

Alvin Y. So and Yin-wah Chu focus most of their discussion on China's economic transformation, but they do make a brief comment on China's ideological changes:

“In the post-reform era, China was experiencing an ideological vacuum since the state could no longer be legitimized by Marxism or communism. Thus, nationalism became the state‘s only hope to get the support of the Chinese masses. The Chinese state seems to believe that the best response is to build a strong sense of national cohesiveness based on cultural heritage and tradition rather than to develop a nationalism based solely on hostility toward the outside world.”(15)

So and Chu themselves would know exactly what the Chinese “cultural heritage and tradition” consists of, but those who have only lived in the West might need to have it explained:

“The last several years have seen an official revival of Confucianism in China. President Hu Jintao has developed the idea of a 'Harmonious Socialist Society,' drawing on Confucian ideas. The government has set up a network of cultural Confucius Institutes around the world. And earlier this year, a statue of Confucius was erected in Tiananmen Square.”
(16)

The last time I visited our local university I was surprised to find a Centre of Confucian Studies had been established there.

Sadly I have thrown out most of the books I owned during my life, but there is one small pamphlet I have kept for over 40 years. It is entitled Confucius - “Sage" of the Reactionary Classes by Yang Jung-kuo. It was published by the Foreign Languages Press in “Peking” in 1974. It is perhaps the best assessment of the way an ideology works to maintain class rule I have ever read. Appendix I gives a few extracts.

In the first chapters Yang sets the historical stage as background for Confucius' life and actions. He explains that during the Spring and Autumn Period when Confucius lived there was a wide-spread class struggle taking place between advocates of two different modes of production. The older mode of production was based on private ownership of the land worked by slave labour, similar to the system which prevailed at the time of the Greek city-states and the Roman Empire. The new system was also based on private ownership of the land, but the land was to be rented to free peasants who would work the land and pay the owner in kind. This is similar to the feudal system which appeared in Europe around the time of Charlemagne (742 - 814). Eventually the slave-owning system disappeared, but the important fact about Confucius was his implacable opposition to this change.

Like Plato, who attacked the limited democratic system in Athens, Confucius did not influence events by political action but through his writings in which he developed a reactionary ideology calculated to reinforce class rule of the slave owners. The irony of Confucius' efforts is that his ideology was later adopted by the feudal land-owners to defend their own system from change. In another similarity with Plato, Confucius distinguished between “superior men” and “mean men”. Superior men were “broad minded (Shu Erh) and need not concern themselves with the necessities of life. Their sole concern was the so-called tao or Way.” By contrast, the mean men “led an animal existenced, miserable to the core and burdened with cares, the leisure and contentment of the superior men was unknown to them. They worried all day long about their livelihood.”(17)

Just as the feudal landholders could use the Confucian ideology to defend their rule, it is easy to see how the new rulers of China in the CCP can do the same. They are the new superior men, and we all know who the mean men are, don't we? They are the millions of workers trying to survive in the neo-liberal heaven created in the People's Republic of China since the death of Mao.


This article is one part of four articles on Chinese "Socialism"


China's State Controlled Capitalism is Not Very Different From Capitalism in the West
https://australianvoice.livejournal.com/39306.html

The Damage Caused by China's “Socialism” to Workers Around the World
https://australianvoice.livejournal.com/39545.html

China's“Socialist” Investment in Australia is No Different from that of Other Capitalist Wolves
https://australianvoice.livejournal.com/39849.html




APPENDIX I:

SOME EXTRACTS FROM CONFUCIUS - “SAGE” OF THE REACTIONARY CLASSES

Confucius lived at the end of the Spring and Autumn Period, at a time when the tribal-slave-holding state of Chou Dynasty was collapsing.(p.1)
Under tribal slavery, the slaves not only lived worse than beasts of burden, but their very lives were in the hands of the slave-owners, who could put them to death at will. When a slave-owner died, many slaves were killed as human sacrifice, the number sometimes reaching several hundred at one time.(p. 2)
Where there is oppression, there is bound to be resistance. Whether in the Yin or Chou Dynasty, under the ruthless rule of tribal slave-owners the slaves continuously put up resistance. (p. 3)
By the time of the Spring and Autumn period, not only had the Chou kings become rulers in name only as result of the slaves' continual escapes and revolts, but the rule in the various vassal states was also quite unstable.(p.5)
(Yang then explains that senior officials began to introduce a new system because of the anarchy caused by slave revolts and killing of slave-owners. Some, such as the house of Chu of Lu state, changed its methods to respond to the new conditions.)
In dealing with the (land) holdings he received, Chi Sun acted according to the new situation and freed the slaves allotted to him, renting land to them to till as tenants.(p. 6)
The slaves were rebelling, and the new rising feudal land-lord forces were taking the offensive. Pounded by the tide of history in the stream of great social change, the slave owning aristocrats were in desperate straits and on their way out.(p. 7)
Confucius entered officialdom in the state of Lu, not however becoming a senior official until he was 52, when he presided over justice and acted in the capacity of prime minister. But Confucius' ecstacy in his official career was short-lived, for he held the position only three months.(p.10-11)
As justice official for the state of Lu, Confucius modelled himself in every action after Duke Chou, who was a harsh and vicious official. After only seven days in office as acting prime minister he had Shaocheng Mao, a reformer in the state, executed.
How did Confucius justify this verdict against Shaocheng Mao? According to him, anyone guilty of the following “crimes” should be put to death:
Understanding the changes of things and launching out on venturesome acts.
Not following the orthodox ways prescribed by the slave system, but stubbornly taking the path of so-called reform.
Talking glibly about the reasons for such reform.
Knowing too much about the decadent and unstable phenomena occurring under the rule of the slave-owners.
Using stern, just words to describe why the slave system should be opposed.(p. 11)


APPENDIX II

PEOPLE WHO FOLLOWED AND SUPPORTED THE CHINESE REVOLUTION COULD SEE SOCIALIST POLICIES WERE ABANDONED BY MAO'S SUCCESSORS

People may not realise that in the 1960s and 1970s during the anti-Vietnam war period, there was a considerable interest on the left in the recent Chinese Revolution. One widely read book about China was Fanshen by William Hinton (1919-2004), published in 1966. In 1948 Hinton was working for the United Nations as a tractor-technician, providing training in modern agricultural methods in rural China.

“When the communist party liberated the province in which he was working in 1948, he asked to join the university-staffed land reform work team in the village of Long Bow on the outskirts of Changzhi. By 1948, his then-wife Bertha Sneck had also joined him in China. Hinton spent eight months working in the fields in the day and attending land reform meetings both day and night, and during this time he took careful notes on the land reform process.”
(18)

When Hinton returned to the US in 1953 his papers were seized, he was hounded by the FBI, and blacklisted from any employment. In the end he turned to farming a plot of land he acquired by inheritance. When he finally won a legal battle to recover his papers he began writing his book Fanshen. It was

“a documentary account of the land reform in Long Bow village in which he had been both observer and participant. After many mainstream U.S. publishers had turned it down, it was published in 1966 by Monthly Review Press and was a success, selling hundreds of thousands of copies, with translations in ten languages. In the book, Hinton examines the revolutionary experience of the Long Bow village, painting a complex picture of conflict, contradiction and cooperation in rural China. After the death of Edgar Snow, Hinton became the most famous American sympathetic to the People's Republic of China, and he served as the first national chairman of the US China Peoples Friendship Association from 1974-1976.”(19)

Like many on the left at the time he rejected the “reforms” introduced by the Communist Party after the death of Mao.

“Hinton cooled toward official policy as market reforms under Deng Xiaoping moved away from the type of socialism originally associated with Mao Zedong. Eventually he wrote Shenfan (read as the opposite of Fanshen) and The Great Reversal, and became an outspoken opponent of the socialist market economy ("socialism with Chinese characteristics") and Chinese economic reform that the CPC continues today.“(20)

In case people do not realise the extent of his writing on China, I will reproduce a list of his works from Wikipedia:

1966, Fanshen: A Documentary of Revolution in a Chinese Village, Monthly Review Press.
1970. Iron Oxen; a Documentary of Revolution in Chinese Farming. New York: Monthly Review Press.
1969. "Fanshen" Re-Examined in the Light of the Cultural Revolution. Boston, MA: New England Free Press.
1972, Hundred Day War: The Cultural Revolution at Tsinghua University, Monthly Review Press.
1972, Turning Point in China: An Essay on the Cultural Revolution, Monthly Review Press.
1984, Shenfan, Vintage.
1989, The Great Reversal: The Privatization of China, 1978-1989, Monthly Review Press.
1995, Ninth Heaven to Ninth Hell: The History of a Noble Chinese Experiment (with Qin Huailu and Dusanka Miscevic), Barricade Books.
2003, "Background Notes to Fanshen", Monthly Review. 55.
2006, Through a Glass Darkly: American Views of the Chinese Revolution, Monthly Review Press.

In 2004 Martin Hart-Landsberg and Paul Burkett wrote a book entitled China and Socialism: Market Reforms and Class Struggle, which they summarised in an article “Introduction: China and Socialism” published by Monthly Review. They summarised their conclusion in the book as follows:

“As we will argue in this book, it is our position that China’s market reforms have led not to socialist renewal but rather to full-fledged capitalist restoration, including growing foreign economic domination. Significantly, this outcome was driven by more than simple greed and class interest. Once the path of pro-market reforms was embarked upon, each subsequent step in the reform process was largely driven by tensions and contradictions generated by the reforms themselves. The weakening of central planning led to ever more reliance on market and profit incentives, which in turn encouraged the privileging of private enterprises over state enterprises and, increasingly, of foreign enterprises and markets over domestic ones.”(21)

At the end of their article they produced a list of six authors who, like William Hinton, were critical of developments in China from a Marxist perspective. The list is reproduced below.

Questions about the economic system or relations of production in China cannot be settled by counting books and articles on each side of the debate. Rather my point is to show that serious doubts about the direction of the post-Mao reforms existed virtually from day one by people who were well acquainted with events in China and sympathetic with the Chinese Revolution up to that time. In the 21st century, where we are encouraged to live in the moment and think that the past does not exist, people can overlook the fact that it still might have some merit when it considers issues we still care about today. This question is not new. Intellectual history is the story of reinventing the wheel with new treads each time it comes around.


List of six authors who were critical of developments in China from a Marxist perspective:

Maurice Meisner, The Deng Xiaoping Era: An Inquiry into the Fate of Chinese Socialism, 1978–1994 (New York: Hill and Wang, 1996)
Robert Weil, Red Cat, White Cat: China and the Contradictions of “Market Socialism” (New York: Monthly Review Press, 1996)
Gerard Greenfield and Apo Leong, “China’s Communist Capitalism: The Real World of Market Socialism,” in Leo Panitch (ed.), Socialist Register 1997: Ruthless Criticism of All That Exists (New York: Monthly Review Press, 1997)
Barbara Foley, “From Situational Dialectics to Pseudo-Dialectics: Mao, Jiang, and Capitalist Transition,” Cultural Logic (2002), http://eserver.org/clogic/2002
Liu Yufan, “A Preliminary Report on China’s Capitalist Restoration,” Links, No. 21 (May–August 2002)
Richard Smith “Creative Destruction: Capitalist Development and China’s Environment,” New Left Review 222 (March–April 1997)
Eva Cheng, “China: Is Capitalist Restoration Inevitable?,” Links 11 (January–April 1999).


FOOTNOTES:

1. David Harvey, A Brief History of Neoliberalism, Chapter 5 "Neoliberalism ‘with Chinese Characteristics’", Oxford University Press, 2007, https://erenow.com/common/a-brief-history-of-neoliberalism/6.php

2. Ibid.

3. Martin Hart-Landsberg and Paul Burkett, "China and Socialism: Introduction", https://monthlyreview.org/2004/07/01/introduction-china-and-socialism/

4. Ibid.

5. David Harvey, A Brief History of Neoliberalism.

6. Martin Hart-Landsberg and Paul Burkett, "China and Socialism: Introduction".

7. Alvin Y. So and Yin-wah Chu, "The transition from Neoliberalism to State Neoliberalism in China at the turn of the 21st Century", https://www.researchgate.net/publication/304795946_The_Transition_from_Neoliberalism_to_State_Neoliberalism_in_China_at_the_Turn_of_the_Twenty-First_Century

8. Ibid.

9. Phillip Pan, "China Accelerates Privatization, Continuing Shift from Doctrine", https://www.globalpolicy.org/component/content/article/213/45729.html

10. Martin Hart-Landsberg and Paul Burkett, "China and Socialism: Introduction".

11. David Harvey, A Brief History of Neoliberalism.

12. "Shanghai Stock Exchange", https://en.wikipedia.org/wiki/Shanghai_Stock_Exchange.

13. "China QFII quota hits $99.5b", http://www.chinadaily.com.cn/a/201804/25/WS5ae09330a3105cdcf651a7ad.htmlhttp://www.xinhuanet.com/english/2015-09/13/c_134620039.htm

14. "China issues guideline to deepen SOE reforms", http://www.xinhuanet.com/english/2015-09/13/c_134620039.htm

15. Alvin Y. So and Yin-wah Chu, "The transition from Neoliberalism to State Neoliberalism in China at the turn of the 21st Century".

16. "Confucianism in China Today", https://berkleycenter.georgetown.edu/events/confucianism-in-china-today

17. Yang Jung-kuo: Confucius -“Sage” of the Reactionary Classes, Peking, Foreign Languages Press, 1974. (p.16-17) Available online: https://www.marxists.org/history/erol/china/confucius-1.pdf

18. "William H. Hinton", https://en.wikipedia.org/wiki/William_H._Hinton

19. Ibid.

20. Ibid.

21. Martin Hart-Landsberg and Paul Burkett, "China and Socialism: Introduction".

22. Ibid

Is WikiLeaks REALLY a Rothschild Operation?
australianvoice
This post will examine the claim that WikiLeaks is a “Rothschild operation” made in an article entitled “Wikileaks Is A Rothschild Operation: Rothschilds Use Wikileaks To Wound Rival Bank, Julian Assange’s Bail Posted By Rothschilds’ Sister-in-law, Many Other Links”.(1)



WHAT IS THE ROTHSCHILDS' MOTIVE FOR SUPPORTING WIKILEAKS?
On the face of it this is a bizarre claim. The Rothschilds are one of the most prominent families in the super-rich elite behind globalisation, the New World Order, the coups and invasions carried out by the US, NATO and coalitions of the willing. WikiLeaks releases documentary evidence of crime and corruption by the corporations and governments controlled by these same super-rich individuals. Why would the Rothschilds support a loose cannon like Julian Assange releasing dirt on the crimes and corruption of the super-rich? The article provides an answer:

“At first blush, it is incredulous that the The Economist, the pinnacle of the establishment, would give their award to Assange knowing full well that he was releasing classified government documents and being overly aware of the havoc this will create in the world. The Rothschilds’ oft-stated goal (over the centuries) is for a One World Government (i.e. The New World Order). To this end they engineer conflict between nations, to create crises that will then be utilized to increase the power of international entities – the UN, World Bank, IMF, etc. For example, they (and other closely-related families like the Schiffs) financed the Bolsheviks. In the past, the Rothschild empire have profited by bankrolling both sides of war. (…)
“Most people seem to believe that current events just happen, that events in the news are chain reactions of accidents, and that people with money and power sit idly by, watching events unfold. However, the Rothschilds thrive on manipulating the markets by having insider information while propagating contrary misinformation. In this way, they make huge profits. (...) Wikileaks is an invaluable tool for the Rothschilds to manipulate the financial markets, the whole monetary system, the future of nations, and the public.
“The information (or misinformation) from Wikileaks also serves the Rothschild’s aim to increase conflict among nations in order to further their goal of One World Government.”


Here we see a significant error slipped into the last sentence. The author writes that WikiLeaks provides “information (or misinformation)”. This is the most important error in the whole article. Here the author hides the fact that WikiLeaks actually has a 100% record for presenting accurate, reliable information. Its great claim to fame is that everything it publishes is a true and correct account of a genuine document. It provides copies of authentic documents and NONE OF THEM has ever been shown to be bogus or fake. If the Rothschilds want to manipulate the world with misinformation then WikiLeaks is not going to do it for them. The will need to stick to the mainstream media they own for presenting misinformation and falsehoods.

Apart from this explanation of alleged the motives of the Rothschilds, evidence is presented to show that WikiLeaks is more or less run by the Rothschilds. Now it is time to look at this.


ROTHSCHILDS ALLEGEDLY USE WIKILEAKS TO UNDERMINE A RIVAL

The story goes like this: In 2008 WikiLeaks disclosed material provided by Rudolf Elmer, a former employee of Bank Julius Baer, which named ten clients who had engaged in tax evasion. At that point Julius Baer got an injunction in California, where the server was located, which shut WikiLeaks down. At this point the law firm Fox Rothschild represented Wikileaks, got the injunction overturned and Wikileaks got back on line. All this is alleged to be relevant to the Rothschilds' banking interests in Switzerland. Julius Baer was their rival for elite customers who wanted to evade tax. As a result of these disclosures Julius Baer shares lost 60% of their value and the 52 year old owner died about the same time. Later, in January 2011, Julian Assange held a press conference where Rudolf Elmer gave WikiLeaks more private files from the Julius Baer's Cayman Islands’ operation.

While it is possible information revealed by WikiLeaks may have played a role in undermining a banking rival of the Rothschilds, the article provides no information about the links between Rudolf Elmer and the Rothschilds. In wishing to expose tax evasion, he may have inadvertently encouraged customers to move from Julius Baer to a Rothschilds' bank. However this on its own does not show the Rothschilds had a hand in releasing this information. We find an allegation of collusion between WikiLeaks, Rudolf Elmer and the Rothschilds, but no evidence of collusion except the coincidence that losses at Julius Baer might well have been gains for the Rothschilds. In the courts this would be called circumstantial evidence, which is a long way from definite proof. There is a “link” here, but is it more than coincidence?

But there is more (circumstantial) evidence consisting of other “links” to the Rothschilds:

1. The Economist (a Rothschild magazine) gave Assange its New Media Award in 2008,
2.The Guardian and The New York Times, two of Assange’s media partners, are linked to the Rothschilds,
3. The owner of the mansion where Assange was eventually put under house arrest has links to Rothschilds.
4. Assange’s lawyer is also a Rothschilds’ lawyer,
5. US Senator Joe Lieberman who was ultimately responsible for making Assange the largest media personality of the decade, is a member of the Council On Foreign Relations (a Rothschild organization),
6. A sister-in-law and second cousin of the Rothschilds posted bail for Julian Assange,



1. THE NEW MEDIA AWARD MADE BY THE ECONOMIST
The Economist is seen as a Rothschild publication. The article gives clear evidence of Rothschilds' influence over the Economist:

“Sir Evelyn Robert Adrian de Rothschild was chairman of The Economist from 1972 to 1989. His wife Lynn Forester de Rothschild currently sits on The Economist’s board. The Rothschild family also has a large shareholder interest in The Economist.”


The Rothschilds may have influenced the Economist to make the award to WikiLeaks, but how does this show the Rothschilds have influence over Wikileaks? The difficulty for the author of the article in PUPPET99 is this: How does this “link” establish influence or control? Is there a threat behind it? Behave yourself or we will take the award off you?


2. TWO OF WIKILEAKS MEDIA PARTNERS ARE LINKED TO THE ROTHSCHILDS
The author of this article does not seem to be aware that there are many publications around the world who have used information from WikiLeaks, perhaps over 100 in all. Each publication must make their own decision to use this material. Are they all “linked” to the Rothschilds? WikiLeaks offers material on a take it or leave it basis. How does the use of WikiLeaks material by a Rothschild publication show that they or any other publication has influence over WikiLeaks?

Let's have a further look at the Guardian.

“The Guardian has been infiltrated by Rothschilds. The Guardian is controlled by Guardian Media Group whose chairman is Paul Myners a past employee of N. M. Rothschild Limited & Sons Limited. Guardian Media Group is owned by Scott Trust which became a limited private company in 2008 with all trustees becoming directors of the Scott Trust. Anthony Salz was appointed as a trustee of Scott Trust in 2009: He is currently executive vice-chairman of the investment Bank Rothschild.”

While the Rothschilds clearly have influence over the Guardian, the author of the article at fails to realise this publication has been an implacable enemy of WikiLeaks and Julian Assange. I have followed WikiLeaks since 2010 and seen Guardian journalists attack them again and again. If the Rothschilds' control of the Guardian shows anything, it is that a Rothschild influenced publication was not “influencing” or controlling WikiLeaks but undermining it every step of the way. This “link” proves just the opposite of what is claimed, namely that a Rothschild publication has done its utmost to destroy the reputation of Julian Assange and WikiLeaks.


3. OWNER OF JULIAN ASSANGE'S HOUSE ARREST MANSION LINKED TO THE ROTHSCHILDS
The owner of the mansion where Assange was eventually put under house arrest has links to Rothschilds.

“Assange was 'imprisoned' in a countryside mansion at the home of Vaughan Smith, the owner of Frontline Trust, a news organization that seeks to influence TV journalists. Frontline is funded by George Soros’ organization, Open Society Institute, and George Soros is intimately intertwined with the Rothschilds. George Soros has been a frequent business partner with James Goldsmith (father of Jemima Khan and cousin of the Rothschilds). The director of Soros’ Open Society Institute, Richard Katz was director of N M Rothschild & Sons for 16 years. Other board members like Nils Taube also hold positions in Rothschild banks, etcetera.”

Even if the Soros and the Rothschilds asked or ordered Vaughan Smith to provide safety for Julian Assange, how does this offer show they control or influence WikiLeaks? You need to assume that Julian accepted this accommodation only on the promise to ever after protect the Rothschilds' interests. ("We will provide this accommodation only if you promise...") Any evidence of such a promise? An offer of assistance is not the usual way to make someone do what you want them to.

This allegation also backfires on the author. The articled explains:

“The Economist is the voice of Britain’s establishment (led by the British Rothschilds) which has, for example, on balance, supported Britain’s involvement in the Iraq war. Sir Evelyn Robert Adrian de Rothschild was chairman of The Economist from 1972 to 1989.”


So would the Rothschilds been happy when a Rothschild operation like WikiLeaks released “Collateral Murder” and the “Iraq War Logs”? Or did they encourage their release in order “increase conflict among nations in order to further their goal of One World Government”?

The same applies to any alleged Soros influence coming from Vaughan Smith and the Frontline Trust. Everyone should know by now that the Democratic party in the US is REALLY IS a Soros Operation and he is a prominent supporter of Hilary Clinton. So if Soros had any influence over WikiLeaks why did he allow them to publish the leaked Democratic National Committee emails?? To me this is shows that if WikiLweaks had support from Soros and the Rothschilds at some point, they have no control over WikiLeaks.


4. JULIAN ASSANGE'S LAWYER IS ALSO A ROTHSCHILD'S LAWYER

“Julian Assange’s lawyer is Mark Stephens of Finers Stephens Innocent, a major London elite law firm. They are the legal adviser to the Rothschild’s prestigious Waddesdon Trust.”

Julian Assange has many lawyers and legal supporters. Do the Rothschilds “own” every lawyer and law firm that works for them? We can safely assume they employ the best lawyers, and Julian would want to do the same. This point might have significance if the only lawyers who would dare to work for Julian Assange and Wikileaks were ALL Rothschild lawyers encouraged by the family to support freedom of speech and the press. I can find no evidence of this in the article. And how do lawyers influence or control a person such as Julian Assange? I always thought that if you don't like the advice of your lawyers, you simply sack them and find some others. Julian's lawyers are working for Julian. They are hardly going to influence the policies of WikiLeaks and remain on the job.


5. SENATOR JOE LIEBERMAN, CONNECTED TO THE ROTHSCHILDS, MADE JULIAN ASSANGE WORLD FAMOUS
The article claims it was US Senator Joe Lieberman, a member of a Rothschild organization, who was ultimately responsible for making Assange the biggest media personality of the decade. I would like to quote this claim in full just to show I have not distorted it:

“US senator Joe Lieberman is the Rothschild’s point man in America. During the last presidential election, he took his friend, Republican candidate John McCain to Jacob Rothschild’s house for a fund-raiser for McCain. Lieberman is a member of the Council on Foreign Relations (a Rothschild cabal which is essentially the shadow government of the US). Lieberman’s recent actions resulted in cutting off the money supply of Wikileaks: Paypal, Mastercard, Visa, stopped accepting donations for Wikileaks. Lieberman publicly took credit for censoring Wikileaks’ website by pressuring Amazon to stop hosting the website. The result was that Anonymous hactivists launched attacks on the websites of companies (above) which had discontinued service to Wikileaks. Lieberman’s campaign against Wikileaks had the effect of increasing the martyrdom and hence the popularity of Assange and Wikileaks. Lieberman made Assange a star, nearly becoming Time magazine’s Man of The Year.”


I believe this bit of information is somewhat distorted. If Senator Lieberman, a Rothschild fellow-traveller, acted to get PayPal, Mastercard and Visa to cut off WikiLeaks money supply, I would say that a Rothschild agent cut the funds of WikiLeaks because the Rothschilds were now unhappy with the organisation they once gave a New Media Award. The way they tell the story, Lieberman was not acting against the interest of WikiLeaks but doing this only to enhance its reputation. Considering the actual damage the actions of PayPal and others caused, this looks very much like twisting the facts to fit into the preset agenda: Rothschilds are bad and because of his “links” to the Rothschilds, Julian Assange cannot be trusted.


6. A PERSON RELATED TO THE ROTHSCHILDS POSTED BAIL FOR JULIAN ASSANGE
Jemima Khan (nee Goldsmith) posted $32,000 for the bail of Julian Assange after his arrest in London. Here is the background of Jemima Kahn:

“Socialite, heiress Jemima Khan (nee Goldsmith) posted 20 000 pounds ($32 000) for the bail of Wikileaks’ leader Julian Assange. She’s genetically related to the Rothschilds and she is a sister-in-law (Daily Mail Online, 10 May 2010). Her father, the late James Goldsmith—British banker, publisher–is a cousin to the Rothschilds. James’ grandfather Adolphe Goldschmidt came to London as a multi-millionaire in 1895 and changed the family name from the German Goldschmidt to the English Goldsmith. The Goldschmidts, like their neighbors and relatives the Rothschilds, had been prosperous merchant bankers in Frankfurt Germany since the 16th century (Wikipedia).”

It should be noted that the total amount of bail posted for Julian Assange was $375,000, so her contribution was less than 10%. For a Rothschild this is just petty cash. But this is not the whole story. She was also the executive producer for the documentary (?) film We Steal Secrets: The Story of WikiLeaks by Alex Gibney, released in 2013.(2)

The author of the PUPPET99 article probably does not realise that this film is seen by supporters of WikiLeaks as complete fabrication designed to slander Julian Assange. The title itself proclaims the lie that Julian Assange steals secret document. In fact the documents are given to WikiLeaks by other parties who usually have authorised access to them but feel that they should be released to the public because they demonstrate crime or corruption. By posting Julian's bail Jemima would get street-cred from the lefty elite in the UK and put her in a perfect position to make this film by a “friend” of WikiLeaks. In my view the connection of Jemima Kahn with WikiLeaks can be seen as Rothschild malice against WikiLeaks just like the Joe Lieberman story does. Here again the facts have been twisted to make Rothschilds' opposition to WikiLeaks look like support or even control.


CONCLUSION
My conclusion is that the case for Rothschilds' influence on WikiLeaks is hardly proved. Some of the “links” provide no basis for the allegation of influence or control, while at least three of them seem to show that people and organisations linked to the Rothschilds have worked to undermine trust in Wikileaks, just as this article does. We may speculate that whatever they first thought, the Rothschilds, like the rest of the super-rich, want to shut WikiLeaks down. They don't like the documents he provides to the press and other interested parties. Just for information I should point out that WikiLeaks documents are cited in more than 28 thousands academic papers, US court documents and Formal documents from the UN, the European Court of Human Rights and the UK courts. There are many important people who don't want these documents to see the light of day, and I would be very surprised if the Rothschilds are not among them.


Footnotes:

1. http://puppet99.com/p/1

2. https://en.wikipedia.org/wiki/Jemima_Goldsmith

Why is Julian Assange a Hunted Man?
australianvoice
Wikileaks, founded by Julian Assange, is an organisation which accepts and publishes documents that expose lies used by our media to hide the truth about our society. Governments and corporations work behind a curtain of secrecy for one reason: If we knew about their illegal or corrupt behaviour we would work to stop them. The media is a bodyguard of liars working at computer keyboards to provide protection for governments and corporations. They don't print the truth, they print what they are told to print.
 
WikiLeaks cannot be ordered, bribed or coerced not to publish documents others want to be hidden. This means that Julian Assange and WikiLeaks has many powerful enemies. The reaction of governments to WikiLeaks' revelations is to consider exposing a crime to be a crime. This is the only “crime” for which we can say Julian Assange is “guilty”.
 

 
MEDIA MANIPULATES US WITH LIES TO PROTECT THE SUPER-RICH
We can understand nothing about WikiLeaks and Julian Assange until we realise that virtually everything we have heard about them from the mainstream media is a lie or distortion. Why is he attacked and slandered by the media? Because WikiLeaks releases copies of documents given to them anonymously. Generally the media will not release these documents because they expose illegal or corrupt activity by governments, individuals and large corporations.
 
Why does the media not report these illegal activities? The media is owned by a handful of  very wealthy individuals like Rupert Murdoch who have significant investments in many corporations. Furthermore the super-rich direct governments to act on their behalf. They are determined to make their investments as profitable as possible. They seek to control the governments of most countries to insure that politicians never do anything to interfere with their profits.
 
As a result, the media does not reveal the truth about what is going on and explain why governments do what they do. Instead the role of the media is to fabricate a picture, an image of our society which hides from us the inner workings of the super-rich, their corporations and the governments they control. This is particularly clear in the coverage of the many illegal wars we have seen in the last two decades.
 
It is said the US and its allies invaded Iraq, Libya and Syria to remove evil dictators and bring democracy to these countries. The media will never discuss the fate of the hundreds of thousands of ordinary people killed or wounded in these illegal wars.  In fact they were intended to remove leaders opposed the policies of the US government and the corporations which control it. These illegal wars have also created a refugee crisis as great as that after WWII. However no media outlet will connect the dots between the suffering of the refugees and the illegal wars initiated by the US.
 
In the same way the media will insist our giant banks and corporations are essential to economic growth. However no media outlet will explain that our falling living standards, increased homelessness and unemployment are a direct result of dangerous austerity policies to cut government spending and decrease taxes on these same corporations.
 
 
HOW DOES WIKILEAKS DESCRIBE ITSELF?
The three central principles of WikiLeaks are truth, transparency and justice. These are essential to any democracy. They also provide the basis for prosecuting illegal activity. Although no organisation can hope to have a perfect record forever, thus far WikiLeaks has never made a mistake in document authentication and has always resisted censorship attempts.
 
WikiLeaks specialises in the analysis and publication of large datasets of censored or otherwise restricted official materials involving war, spying and corruption. It has so far published more than 10 million documents and associated analyses. WikiLeaks is a giant library of the world’s most persecuted documents. We give asylum to these documents, we analyse them, we promote them and we obtain more.
 
 
WIKILEAKS IS NOT A JOURNALISTIC OUTCAST
Julian Assange is not a hacker. He is a publisher of documents given to him by others just like the New York Times. WikiLeaks has contractual relationships and secure communications paths to more than 100 major media organisations from around the world. This gives WikiLeaks sources negotiating power, impact and technical protections that would otherwise be difficult or impossible to achieve. WikiLeaks, its publisher and its journalists have won 17 awards, including:
 
TIME Magazine Person of the Year, People’s Choice (2010)
Sam Adams Award for Integrity (2010)
Sydney Peace Foundation Gold Medal (2011)
Martha Gellhorn Prize for Journalism (2011)
Walkley Award for Most Outstanding Contribution to Journalism (2011)
Voltaire Award for Free Speech (2011)
 
We need to keep this in mind when seeing the way Julian Assange and WikiLeaks are described by journalists. MOST OF THEM do not have EVEN ONE of these journalistic awards. Many are jealous of Julian Assange because he does what they cannot: report the truth. Any journalist who investigates events, rather than just reporting what governments and corporations have said, will find themselves driving taxis.
 
 
MYTH-BUSTING
No charges were ever laid in Sweden against Julian Assange.
Under Swedish law a person can be arrested for questioning without being charged with anything.
Standard police practice in Sweden was ignored in the case of Julian Assange:
1.       One of the women interviewed was a personal friend of the interviewing officer.
2.       On 20 August 2010, the two women alleging rape were interviewed together, not separately.
3.       The interview was not video-taped as required by law. Only a written record was made.
Interviewing officer was instructed by the prosecutor Maria Kjellstrand to interview the woman known as SW under the presumption of  “rape”.
Neither woman alleged rape. The police and prosecutor did.
During the interview of SW the arrest order for Julian Assange was authorised and confirmed by the prosecutor.
4.       The first on-duty prosecutor disclosed Julian Assange’s identity and the allegations against him to the press only hours after the interview was held.
Assange was described as a ’double rapist’ that same evening in the tabloid Expressen.
It is illegal in Sweden to disclose such information to the press under any circumstances.
On 21 August the arrest warrant for Julian Assange was withdrawn. Prosecutor Eva Finne said there appeared to be insufficient evidence for allegation of rape or any other crime.
On 31 August Swedish police question Julian Assange, who denied the allegations.
On 1 September, one day after questioning Julian Assange,  Sweden’s director of prosecutions, Marianne Ny, reopened rape investigation.
On 27 September - Julian Assange departed Sweden for Britain.
On 18 November, a Stockholm court approved a request to detain Julian Assange for questioning and two days later Swedish police issued international arrest warrant for him, even though he had not been charged with anything.
 
 

Modern Monetary Theory, Unemployment, and the European Left
australianvoice
This post is a reprint - with minor alterations - from an article by Professor Bill Mitchell "The abdication of the Left – redux – Part 2" (http://bilbo.economicoutlook.net/blog/?p=39846) It begins with a short introduction about Modern Monetary Theory - MMT. This is the perspective he uses to argue his case in his article "The abdication of the Left" which I have retitled:
"WHY THE "LEFT" IN THE EU HAS ABANDONED THE TRADITIONAL VALUES OF SOCIAL DEMOCRACY."



WHAT IS MODERN MONETARY THEORY (MMT)?

I have stated this point often but it still seems to escape the attention of many critics. MMT is not a regime that you ‘apply’ or ‘switch to’ or ‘introduce’. Rather, MMT is a lens which allows us to see the true (intrinsic) workings of the fiat monetary system. It helps us better understand the choices available to a currency-issuing government. It is not a regime but an accurate perspective on reality. It lifts the veil imposed by neo-liberal ideology and forces the real questions and choices out in the open.

In that sense, MMT is neither right-wing nor left-wing – liberal or non-liberal – or whatever other description of value-systems that you care to deploy. I mean by that, that while MMT provides a clear lens for viewing the system, to advance specific policy platforms, one has impose a value system (an ideology) onto that understanding.

For the Labour advisor to talk about “MMT’s prescriptions” reveals he hasn’t fully understood that distinction. The point is that MMT is what is. Britain’s monetary system is governed and operates under the principles outlined by MMT. It is not a matter of moving to MMT. The MMT lens allows us to tease out and more accurately predict the consequences of such a policy choice. But there are no ‘non-MMT’ policy options. So when the Labour advisor talks about a state where MMT policy prescriptions are being chosen he is revealing his ignorance of these distinctions. What he is actually referring to are specific policy proposals that have been advanced.



WHY THE "LEFT" IN THE EU HAS ABANDONED THE TRADITIONAL VALUES OF SOCIAL DEMOCRACY


In this article Bill Mitchell is disputing a claim by Stuart Holland that the social democratic left in the EU (Jacques Delors, António Guterres, and Yanis Varoufakis) has not abandoned the social democratic tradition of 50s and 60s in which a central policy of good government was to maintain full employment. Holland wants to say that these people are just as “progressive” as the politicians were in the past. Mitchell argues that their “new” policies are all totally within the neo-liberal economic framework which aims to limit debt, cut spending on social services, deregulate and privatise the economy.

This is the second and final part in my response to the Social Europe article by Stuart Holland (July 11, 2018) – "Not An Abdication By The Left" – where he attacks various writers who have dared to suggest that the “social democratic Left in Europe … has run out of ideas” or that “there has been an intellectual abdication by the Left”. He uses his experience as an advisor to Harold Wilson in the 1960s and to Jacques Delors in the early 1990s as an ‘authority’ for his rejection of the claims that the Left has abandoned its social democratic remit of full employment.

As part of his claim for progressive credentials but also more generally to claim that the likes of Jacques Delors and the privatising António Guterres were part of the grand social democratic Left tradition throughout their working lives, Stuart Holland refers to the Delors White paper – Growth, competitiveness, employment: The challenges and ways forward into the 21st century – which was published on December 5, 1993 as the European Commission’s response to mass unemployment.


WHAT CAUSES UNEMPLOYMENT?

The graph below shows unemployment rates in 1993 (red triangles) and 1994 (blue bars) for a selection of nations, mostly comprised on what would become the Eurozone.



The data is from the OECD and while the Euro area was not yet in operation the OECD provided estimates post Maastricht of that bloc in addition to the entire OECD membership. I included Japan and the USA for comparative purposes. The point is that mass unemployment was at very high levels in many European nations and was rising between 1993 and 1994 in most. It coincided with a major recession in the early 1990s, which impacted on most nations. However, while, for example, the US began growth again in 1993 and Japan endured its massive property crash at the time, Europe stayed mired in stagnation with elevated unemployment rates.

At that point it was obvious that aggregate spending was insufficient and output gaps were large, as the next graph shows.



A lot of my own research at the time clearly demonstrated that the rising unemployment was driven by the insufficient aggregate spending.

However, that view conflicted with the growing Monetarist (neo-liberal) orthodoxy at the time, which was intent on denying the relationship between spending and output and unemployment.
(This is an important part of neo-liberal spin. They want to deny that cutting government spending – their goal – actually causes unemployment in order to make their plans seem acceptable.) This was the period where neo-liberal supply-side propaganda began to dominate. Where mass unemployment was no longer constructed as a sign of a systemic failure of economies to generate enough work but, rather, as a sign that the unemployed, themselves, were deficient in one way or another – lazy, not prepared, not willing, priced out by trade unions and minimum wages, and all the rest of it. (Once you abandon the idea that there is unemployment because there is not enough spending you need to search for some other explanation that has nothing to do with the economic policies of the government – which they don't want to change.)

For example, the late Franco Modigliani, seriously reconsidered his position. He wrote in 2000 (pages 3 and 5):

Unemployment is primarily due to lack of aggregate demand. This is mainly the outcome of erroneous macroeconomic policies … [the decisions of Central Banks] … inspired by an obsessive fear of inflation, … coupled with a benign neglect for unemployment … have resulted in systematically over tight monetary policy decisions, apparently based on an objectionable use of the so-called NAIRU approach. The contractive effects of these policies have been reinforced by common, very tight fiscal policies …
Everywhere unemployment has risen because of a large shrinkage in the number of positions needed to satisfy existing demand.
(1)

The Delors White Paper was one of two major statements in the period on mass unemployment and its solutions, the other being the OECD Jobs Study, which was published in 1994. The OECD Jobs Study agenda has become the principle policy framework since the early 1990s among Western government and promoted privatisation, deregulation and massive welfare changes all aimed at weakening trade unions and making the most disadvantaged workers more desperate. The OECD followed the publication of the Jobs Study with almost constant pressure on governments to abandon the hard-won labour protections which provide job security and fair pay and working conditions for citizens.

Their endorsement of inflation-first macroeconomic policies where monetary policy plays the prominent role and uses unemployment to discipline the inflation generating process left a legacy of persistently weak growth, entrenched high unemployment and rising underemployment. The war on the victims of this folly in macroeconomic policy – the millions of unemployed – gathered pace through the 1980s and culminated in the OECD Jobs Study, which became the bible for those intent on ignoring the fact that the unemployed cannot search for jobs that are not there.

The problem is that experience has actually taught us that mass unemployment is a fairly easy thing to solve – you just have to create jobs. And if the private sector is not going to create sufficient jobs, then guess what, the public sector has to create them. Experience teaches us that once the private sector’s spending and saving decisions are taken, if there is mass unemployment then it reflects a choice made by government.

As MIT economist Michael Piore wrote in his 1979 book – Unemployment and inflation, institutionalist and structuralist views (page 10):

Presumably, there is an irreducible residual level of unemployment composed of people who don’t want to work, who are moving between jobs, or who are unqualified. If there is in fact some such residual level of unemployment, it is not one we have encountered in the United States. Never in the post war period has the government been unsuccessful when it has made a sustained effort to reduce unemployment.

It also tells us that if national governments are hell bent on running fiscal surpluses or restricting their deficits below some arbitrary rule that restricts their ability to adequately respond to private spending fluctuations then mass unemployment will usually be the result. There was no surprise when unemployment in France skyrocketed after Delors hacked into net public spending in 1982 and again in 1983. Real GDP growth 1.6 per cent per annum in 1992 and by 1993 it had fallen to minus 0.613 per cent. There was nothing structural about that. And if one tracks movements in aggregate spending they bear a very close correspondence with the dynamics of employment growth (in a positive way) and unemployment (in a negative way).

The Delors Report largely denied this reality, with only a fleeting mention to cyclical unemployment as being an issue. Instead, its main analysis was how Europe could extend the “single market”, make it easier for “small and medium-sized enterprises” to enjoy less regulation, and to construct “trans-European infrastructure networks” by deregulation, private investment in transport and energy. On Page 16, we read that:… "growth is not in itself the solution to unemployment". That is denying the obvious link between growth and employment. Instead, we read that the problem is “inflexibility of the labour market … which is responsible for a large part of Europe’s structural unemployment”. The party line being rehearsed. And, as the supply-side approach always leads:
1. More training.
2. “greater flexibility in businesses”.
3. “reduction in the relative cost of low-qualified work” – aka wage cuts. We read “on the demand side there is the problem of price” (that is, Delors claimed wages were too high).
4. “on the supply side there is reticence to take jobs” – so workers choose unemployment over “unskilled or semi-skilled work”.
and the rest of it.

UK academic, the late John Grieve Smith, who wrote in the old Keynesian tradition, produced a review of the Delors White Paper in in the International Review of Applied Economic. He wrote:

That the Commission and ministers should at last address themselves seriously to this critical problem is encouraging – although it is noticeable that they do not even pay lip service to re-establishing full employment as a goal … the document …. provides disappointingly little indication that governments are likely to take effective action to tackle unemployment. (2)

The White Paper considered the mass unemployment to be structural, which meant that it cannot be reduced by increasing aggregate demand. Grieve Smith said that “This assertion is untenable. At current levels of unemployment there can be little doubt that demand would have to rise a long way before the reduction of unemployment began to be affected by the emergence of ‘structural’ problems …." He summed up in this way:

The major weakness of the White Paper is that it fails to recognise that the key problems at the present time are those of demand management and that the immediate questions in tackling unemployment are thus macroeconomic ones. Instead, the report concentrates on what it calls ‘rigidities in the labour market’, which seem to provide a pretext for attacking all forms of legislation or agreements to protect labour, combined with a general call to cut labour costs. (3)

The summary of all that is that the Delors White Paper was neo-liberal central. It reflected an abandonment to the progressive Left commitment to full employment. It reflected an abandonment of the idea that governments should create sufficient work for all after the private sector has made its choices. It reflected the idea that the unemployed were largely to blame for their own circumstances or that government regulations, minimum wages, and income support schemes were to blame or a mix of the two. It represents the intellectual poverty of our neol-liberal time. A progressive Left person would never refer to this Report in any favourable light.


THE MODEST PROPOSAL BY YANIS VAROUFAKIS
Finally, Stuart Holland believes that the claims that the conduct of Syriza during the bailout crises and after is symptomatic of the abdication of the Left are unwarranted. He argues that he, and the then Finance Minister Yanis Varoufakis (later to be joined by James Galbraith) published several versions of what they called the “Modest Proposal” as a solution to Greece’s problems, which were evidence of a progressive Left approach to the problems. Holland writes:

A key claim of the Modest Proposal has been the case endorsed by Delors that a Eurobond-funded recovery in the EU on the model of the US New Deal is feasible without Treaty revisions, without fiscal transfers between member states and therefore also without ‘ever closer union’ …
A share of the national debt of all member states over the 60% Maastricht limit could be mutualised in the sense of a Eurozone equivalent of a deposit account, which could be serviced by the member states but not drawn on for credit, and therefore would not be liable to downgrading by credit agencies.


Note the reference to Delors again – as if he understood all along the folly that the Eurozone became even though he was overseeing and driving the process. By way of background, the ‘Modest Proposal’ is a variant of another debt-mutualisation scheme that emerged in 2010 called the Blue Bond Proposal (BBP) under the guise of Jacques Delpla and Jakob von Weizsäcker. At the time, as the crisis deepened in the Eurozone, these debt-mutualisation schemes started jumping out of the woodwork as if there was no tomorrow.

The essence of all these schemes is that a Member State’s public debt would be split into a “Blue Bond” component with “joint and several liability” (under the BBP up to 60 per cent of debt, that is, the allowable maximum under the Stability and Growth Pact, would be pooled in this way) and a “Red debt” remainder, which would be subordinated to the Blue Bonds. In theory, this is meant to lower the funding costs of the Blue component and push up the borrowing costs in the Red component, which the authors claim would provide incentives for Member States to reduce their debt to conform with the Maastricht threshold.

Further rules were proposed to tie down governments participating in the scheme, all of which would reduce the options available to Member States and reinforce the austerity straitjacket. For example, the proposal might allow nations such as Germany to add the full 60 per cent of its debt to the pool while nations such as Greece would be restricted to borrowing much lower proportions. Given the immediate problem was (and is) mainly one of default risk, the proposal’s perverse incentives (punish those most at risk) would not seem to be part of any viable solution.

The underlying bias in the proposals is that the authors considered that all debt above the Maastricht threshold are due to the pursuit of unsustainable fiscal policies. The BBP authors, for example, claimed that the financial markets failed Greece by “continuing to provide cheap funding while fiscal policy was reckless” (page 2). It was difficult to square this view against the situations of Spain and Ireland, which were models of fiscal rectitude leading up the crisis?

Moreover, imagine that the current slowdown in China intensifies and the world is plunged into a further economic spending crisis or that Donald Trump’s trade war results in recession. Under current arrangements, Eurozone public debt levels and fiscal deficits will rise sharply again, even though the governments are locked into the austerity mentality. It is likely that many nations would go beyond the 60 per cent debt threshold given the elevated debt levels already in place following the GFC.

The proponents of the BBP stated that the 60 per cent threshold is the “debt level deemed sustainable for any EU member state according to the Maastricht Treaty” (p.6). But in the event of a sequence of slowdowns, exacerbated by the austerity bias, the BBP proposal would punish many nations, even if they were following the mindless fiscal path specified by the Treaty. It is hard to see how that could ever represent a viable solution. All these schemes implicitly deny that the Eurozone is biased towards crisis.

And then we come to the so-called “Modest Proposal”, put out by economists Yanis Varoufakis and Stuart Holland, which is just a variant of the BBP scheme. As I wrote in my 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale – one recalls Jonathan Swift’s satire of the same name, published in 1729, where Irish parents were encouraged to ease their economic travails by selling their children as food to provide culinary pleasure to the rich.

The aim of the ‘Modest Proposal’ was to address four “interrelated” problems: a banking crisis, involving banks that are the responsibility of the national governments, who do not have the currency capacity to guarantee deposits; a debt crisis where nations cannot borrow from private bond markets; an investment crisis, where both the level of investment has fallen sharply and the imbalance between the trade surplus and deficit nations has widened; and a social crisis, with high unemployment, rising homelessness and poverty, and falling incomes.

Like all the ‘hybrid’ schemes, they are motivated by the assertion is that “a Eurozone breakup would destroy the European Union, except perhaps in name” which would pose a “global danger” (Varoufakis et. al., 2013: 2). Dramatics aside, when assessing the proposal it was hard to see how a scheme that involves no fiscal transfers or changes to the Treaty can provide a lasting solution to the mess. The proposal would never have solved the inherent problems within the Eurozone, which are defined by the very political constraints that the authors recognise force them to adopt these ‘modest’ proposals, in lieu of more effective and lasting solutions. Their debt manipulation proposal was similar to the BBP, outlined above.

The obvious question is why bother? The ECB has through its QE programs demonstrated that they can deal the private bond investors out of the equation when it came to setting yields on government bonds. The ECB can effectively set yields at any level it desires including zero, which means that a Member State can only run out of money if the ECB refuses to exercise its power to buy unlimited volumes of the government’s debt. The SMP program kept the Eurozone together, but by imposing austerity as a pre-condition for participation, it failed to address the core problem that Southern Europe is in depression and the only way out is for fiscal deficits to expand. The most direct way forward would have been for the ECB to invoke its OMT facility and facilitate increased government spending.

Varoufakis, Holland and Galbraith (2013: 5) acknowledged that the OMT program “has succeeded in taming interest rate spreads within the euro-zone” but conclude that the implicit threat against bond markets, described above, is “non-credible”. Allegedly, bond dealers will eventually call the ECB’s bluff and expose the OMT program as a paper tiger. This criticism is without foundation. How exactly can the private bond markets “test the ECB’s resolve”? (p.5). The ECB has unlimited euro capacity to purchase all the secondary market bonds it desires. To think otherwise is hardly progressive or Left. The belief that the bond markets have the power over the state is core neoliberal thinking.

It was also difficult to see the ‘Modest Proposal’ as being consistent with Article 104 of the Treaty if a Member State failed to make payments as agreed. In that case the ECB would have to fund the deficiency, which would be equivalent to offering the prohibited ‘overdraft facility’ to the state. The ‘Modest Proposal’ would also probably promote perverse bond market behaviour and deliver massive corporate welfare to the investment banks. The debt policy would see the ECB take bank reserves out of the system in return for ECB-bonds. It wouldn’t take long for the bond markets to work out that they could ask for a premium on the ECB-bonds and the ECB would be under pressure to concede. With interest rates low, the private banks could then borrow from the ECB to buy the bonds, which would pay a return higher than the short-term cash.

CONCLUSION
I felt the need to respond to the Stuart Holland article because it is a good example of how the progressive, social democratic Left has lost itself in the woods of denial, historical revisionism and plain stupidity. I know the Europhile Left will be tweeting it and feeling good about it because it provides validation for their own cognitive dissonance. But as a view of what has happened over the last 40 or so years within the political Left it definitive – completely losing track of reality.


Footnotes:

1. Modigliani, Franco (2000), “Europe’s Economic Problems”, Carpe Oeconomiam Papers in Economics, 3rd Monetary and Finance Lecture, Freiburg, April 6.

2. 1994, Volume 8, Issue 3.

3. Ibid.