Saturday, February 28, 2015

Saving Capitalism From Itself


The American economist  Richard Wolf maintains that capitalism contains the seeds of its own destruction. Unchecked, it produces greater and greater inequality, until it collapses upon itself. Tom Walkom agrees:

Experts may tie themselves up in knots over the precise trajectory of inequality, depending in part on what is measured and when.
But the general point is beyond dispute: On its own, the free market is providing increasingly less equal rewards.
That inequality, in turn, hampers the very forces that favour the free market.

Thus, those who wish to preserve capitalism should protect capitalism from itself. Those protections include public pensions, public healthcare, unemployment insurance and public employment.

After the Second World War, business and labour reached a grand bargain, which included these four safety valves. But things changed:

Jean Chrétien’s Liberal government began the job of dismantling the so-called welfare state. Stephen Harper’s Conservatives are finishing it.
But the factors that really killed the old bargain were globalization and the changing nature of work.

The old welfare state was built for a world where much of the workforce laboured in big factories.
Now, big factories are passé. The new normal is part-time work and alleged self-employment.

Rather than responding to changed circumstances, our politicians have been deer in the headlights. Walkom  has some suggestions about what they should do:

Build a national pharmacare program. This would continue the process, begun in the 1960s, of socializing the costs needed to keep workers healthy.

Reform the employment insurance system. The aim here should be to ensure that all who are involuntarily unemployed, including part-timers and the self-employed, have full access to EI.

Rebuild the entire collective bargaining system. Developed in the 1930s and ’40s, the current one was premised on a world of factory production. A new arrangement would have to take into account the dramatic new changes in work.

The Harper government has no such plans. But a new government -- if pushed -- might.


Lorne said...

All good idea, Owen. Expect our political 'leaders' to ignore them.

Owen Gray said...

It's not that we lack for solutions, Lorne. What we lack is the courage to pursue them.

Toby said...

When the first communications satellite went up Globalization became inevitable. Our present problems are a postscript to chicken politicians who allowed corporations to define Globalization without improving standards for labour, health, the environment and local needs. To the contrary, these chicken politicians joined forces with the corporate world to sabotage civil society, to rape, pillage and plunder the world. The chicken politicians even subsidize the very worst corporate behaviour.

Owen, you and I and several of your regular respondents could write Global trade deals that address labour, health, the environment and local needs. If we had our way, the corporate world would either change or fail. Carbon industries no longer receiving subsidies and carte blanche would find it uneconomical to make the kind of mess we find in their sacrifice zones. If we had our way, banks would become boringly responsible; junk bonds would disappear and governments would borrow from national banks at 0%.

If I had my way, Naomi Kline's book, This Changes Everything, would be required reading for all.

Owen Gray said...

Klein has had her finger on what is happening for a long time, Toby.

Unfortunately, the people in power don't bother to read her.

The Mound of Sound said...

There are several avenues for reforming our economy yet our leaders have our economy in lockstep with the Americans'. We're stuck in the GDP growth paradigm which is akin to expecting a 3-pack a day smoker with a bad heart to hit the treadmill non-stop.

I despair at times over economists who pronounce our path to salvation and yet never factor in the environment, a course that is futile if not self-destructive.

Owen Gray said...

The folks who have been setting economic policy, Mound, have not cottoned on to the fact that, under the present paradigm, economic collapse and environmental collapse follow as night follows day.

Anonymous said...

Also James Rickards writes in his book "The Death Of Money" subtitled "The Coming Collapse Of The International Monetary System"...

If you measure a football stadium you use what? A yardstick. So to measure currency what is the yardstick? Gold because a pound of gold would buy the same property in the 1930's as a pound of gold will today. So gold is the yardstick to measure currency not the other way around.

It is currency that fluctuates relative to the value of gold. So if gold is priced high currency paper dollars have lost their value gold has not changed. Gold is the yardstick for paper money or stocks or bonds always has and always will be so.


Owen Gray said...

Richards argument is controversial, Mogs. There are economists who argue that it was a good idea to abandon the gold standard.