Author: Michal Rozworski

Categories
Economic history in the present Tax

Economic history in the present: Potlatch and tax

This post inaugurates an occasional series I’m calling, “Economic history in the present”. This series will look at vignettes from global economic history with an eye to current phenomena or particular events. Some will be more speculative, drawing on anthropology and philosophy; some will be more rigorous. Hopefully, both aspects of this approach will produce interesting juxtapositions that illuminate the present via the past. Without further ado, here is the opening salvo…

 ♠   ♣   ♥   ♦

While redistribution is a bit of dirty word today, it has been a key economic activity across human history. As resources move from the periphery of society to its centre through means more or less refined – from robbery and pillage to rents, taxes and tithes – the need arises for mechanisms to move some resources back from the centre to the periphery. Whether to pacify, reward or simply keep from starvation, the powerful have long given part of their take back to the powerless. Over the course of human history, the vehicles for redistribution have varied considerably: from the haphazard to the ritualized, from the simple to the elaborate.

potlatch-ceremony

One oft-cited means of redistribution comes from the lands now occupied by British Columbia. The Pacific Northwest of North America has a rich tradition of the potlatch, a highly complex, formal redistributive process frequently drawn upon by anthropologists. In ceremonies lasting from several hours to several weeks, wealthy and powerful leaders of kinship groups gave away their wealth to guests from the surrounding area that included members of their own group and often entire rival groups. The more that someone gave away, or even destroyed, the more prestige they garnered and the wealthier they became in the eyes of others – despite the fact that a potlatch might leave them temporarily near penniless. Social status was conferred via giving rather than having.

The potlatch with its ironic twist on wealth should not, however, be mistaken for some kind of utopic ritual; the powerful could give away so much precisely because they had the power to obtain it in the first place. Redistribution is fundamentally about restoring a semblance of social balance; the potlatch gift is a counterpoint to the potential and actual exploitation and violence inherent in the prior process of distribution. It points to redistribution as pivotal in keeping social peace and ensuring continued social cohesion and survival.

Continue reading “Economic history in the present: Potlatch and tax”
Categories
Central banking Crisis Ideology

QE: Furthering the habit of privatizing gains and socializing losses

“Privatizing gains and socializing losses” could be the motto for the neoliberal era. Alongside this and “there is no alternative”, few slogans better capture the ideology that has been so successfully diffused throughout the world over the past several decades.

Five years after latest financial crisis, this motto rings true as ever. To say that the losses stemming from the crisis were large is a heroic understatement; indeed, not only were they humongous, their exact size remains a tad fuzzy. Meanwhile, across the world in the aftermath of the crisis, stock markets have rebounded, wealth and income inequalities have grown and corporations and financial institutions have returned to making healthy profits. At the same time, many countries have seen both employment and median incomes either stagnate or fall.

In short, once again, losses were socialized, while gains privatized. Prominent among the means employed by governments to ensure that this be the case were various kinds of asset purchase programs. First, in the immediate aftermath of the crisis, came actions that transferred toxic financial assets into public hands either through direct buybacks (as in the US TARP program) or temporary nationalization/bailout. Since these short-term, more explicit socializations of private loss came to an end, the policy of quantitative easing (QE), through which central banks purchase vast amounts of long-term debt from financial markets, has been their implicit continuation. Unlike the earlier programs, QE is aimed instead at the other end of the equation, privatized gains.

Continue reading “QE: Furthering the habit of privatizing gains and socializing losses”
Categories
Central banking

Myths of central banking

The Bank of Canada has been in the news lately – or, more precisely, the news has been full of other well-placed people telling our central bankers what to do. In an interview on CTV this past weekend, Jim Flaherty made comments (later retracted) that Canada’s central bank will be pressured to raise interest rates sooner rather than later. On Tuesday, the influential, pro-business Conference Board of Canada also came out with some advice. A Globe and Mail editorial written its chief economist suggested, somewhat surprisingly, that the Bank should target a higher level of inflation, up to 4% from the current 2%.

Predictably, these pronouncements, especially Flaherty’s, spawned a chorus of criticism from conservative commentators. They lambasted the Minister of Finance for potentially undermining the central bank’s independence. Such attacks from the right were to be expected; however, even the NDP chimed in, calling the Minister’s comments “inappropriate”.

One reason for such universal criticism of any perceived meddling in central bank matters is that central banks are some of the most mythologized institutions of contemporary capitalism. They are often the subject of pious reverence on the part of media, politicians and economists. There is broad consensus that central banks should be independent and target low inflation (which, for many economies in the North has meant about 2%). This is why it was particularly odd to hear conservative voices question both of these assumptions: Flaherty, independence, and the Conference Board, low inflation.

In reality, however, both of these assumptions should be open to discussion and questioning. First, take the central bank’s independence. While we have many institutions that should be at arms-length from the government, these are largely bodies that hold government accountable and ensure that it is correctly carrying out its mandate – whether in terms of environmental protection, child welfare or accounting principles. The central bank is, however, not this kind of institution.

Continue reading “Myths of central banking”
Categories
Canada Crisis

Transformations in profit and possibilities of resistance: A reply to Sam Gindin

Several weeks ago, I published a series of blog posts on profitability and investment in Canada since the financial crisis of 2007-8. These were republished as a single long article on Socialist Project and given the title, “Canada’s Profitability and Stagnation Puzzle”.  Since them, Sam Gindin has published a reply to my piece, “Puzzle or Misreading? Stagnation, Austerity and Left Politics”. Gindin challenges me on a number of fronts, most generally for misreading the current predicament in terms of a static formula that treats all capitalist crises ahistorically. This critique has ramifications for how Gindin sees not only my empirical account of present trends, but also my theoretical background and thoughts on strategies for resistance and alternatives.

Despite what appear to be many points of dispute, I think Gindin and I actually agree on a great many things, both in terms of the diagnosis of the current crisis and strategies for overcoming it. There are quibbles about statistics and wording, and I want to deal with a couple of these here, but I think we share much on broader theoretical and strategic matters. I want to primarily focus on the agreements behind our recent Socialist Project-facilitated interaction.

Continue reading “Transformations in profit and possibilities of resistance: A reply to Sam Gindin”
Categories
Class Ideology

Solving Christmas conundrums with New Year’s resolutions

I know I promised to not post until the New Year. Clearly the holidays have gotten the better of me. This, however, will be a short reflection and at once a New Year’s resolution.

Christmas is a time of large get-togethers for my family and this year was no different.  We feasted late into the night on Christmas Eve and again on Christmas Day. Both nights the talk at the table inevitably turned to politics.

The range of economic, social and political problems identified during our meals would make any left-wing activist squirm in her seat with glee. A dearth of good jobs, runaway inequality, corporate control of politics, rampant consumerism, housing unaffordability, environmental degradation, climate change – these and more like them were raised many times over and by different people. Indeed, there was broad agreement at both feast-tables that we are in the midst of a systemic crisis.

At this point, you would expect the token lefty writer and activist (me) to easily leap up onto the table, make a rousing speech and lead a rabble in its Sunday best to take over the nearest bank, corporate office or shopping mall armed with borscht spoons and pierogis…or, at least, to get widespread agreement among those at the table that the only sensible way forward is a strong left-wing program – one best able to address the concerns raised.

Sadly, nothing like the latter took place (nor the former in case you’ve been holding your breath).

Continue reading “Solving Christmas conundrums with New Year’s resolutions”
Categories
Uncategorized

See you in the New Year

After a frenzy of posting to kick off this blog, I’ll be taking a bit of time off from now until the New Year. All the best to you and yours in the meantime; may whatever god(s) you believe in bring joy and light during these darkest nights.

I’ll be back early in the New Year with renewed energy and more of what’s been going on here for the past month. I’ll be writing on the same ramshackle mix of topics held together under the loose banner of political economy. I also have plans for another multi-part series that will be somewhat of a follow up to the first series on profit and investment after the crisis. This time the theme will be how to profit in a low-investment economy.

I’ll still be posting a bit on Twitter @MichalRozworski

Categories
Precarity Unions USA Workers

Precarious workers or satisfied customers: a fine line for giant retailers

This post is an appendix of sorts to my article, “Fired by Walmart for Christmas”, to be published this weekend by Common Dreams. In the article, I describe the stresses and difficulties faced by Walmart workers during the holidays. Overwork, a climate of fear and barely-organized chaos make for taxing shifts at work. Low wages, insufficient hours and inadequate benefits stretch budgets and make it harder to find holiday joy at home. A Walmart Christmas could have easily been written by Dickens.

Here, I want to focus on an aspect of Walmart’s practices that stood out from my interviews with long-time Walmart employees and OUR Walmart organizers: the increased use of temporary workers and the greater degree of precarity experienced by all workers at the retail giant. The workers and organizers I interviewed all described a long-term shift in company culture. From the perspective of veteran employees, the company has gone from one that at least outwardly respects its workers to one solely focused on profit, even at immense cost to worker well-being. My interviewees all claimed this change took place during the transition in management after the death of founder Sam Walton.

Make no mistake: Walmart was always focused on cost-cutting. However, through a shrewd mix of charisma and good business sense, Walton was able to maintain a sense of community amongst his employees. He knew what he needed to do to keep costs down, but he also knew how to do it in a way that did not completely alienate and break his own employees.

In the two decades since his passing, Walmart has changed. Without Walton’s calculated approach to cost savings, working conditions have deteriorated. Wages, benefits and hours have all been reduced.  In addition, without Walton’s charisma, not even a veneer of respect for workers remains. Today’s Walmart employees are not only tired, poor and often on social assistance; they are also deeply disheartened and afraid.

Continue reading “Precarious workers or satisfied customers: a fine line for giant retailers”
Categories
Canada Pensions Privatization

The in-and-out trick: Thoughts on Canada Post, CPP and your child’s breakfast

The past few days have not been great for public services in Canada. Canada Post will be phasing out home delivery of mail. Expansion of the Canada Pension Plan was scuttled at the finance ministers’ meeting. In the grand scheme of things, however, these are not extreme cutbacks. It’s not as if Canada Post is to be dismantled completely or our public pension fund to run completely dry. This government has long brought us death by a thousand paper cuts and those from the past days are just a continuation of the strategy.

There is a particular common thread that runs through all such small cutbacks. Corey Robin’s recent article in Jacobin, “Socialism: Converting Hysterical Misery into Ordinary Unhappiness”, helped greatly in seeing and naming it. Let us call it insourcing.

This kind of insourcing refers to taking a collective public service and making it into an individual responsibility. Perhaps James Moore recently summed up the insourcing philosophy best, “Certainly we want to make sure that kids go to school full bellied, but is that always the government’s job to be there to serve people their breakfast?” Serve your own breakfast, get your own mail, don’t wait too long to die.

Continue reading “The in-and-out trick: Thoughts on Canada Post, CPP and your child’s breakfast”
Categories
Minimum wage Workers

Legislating a real raise: Minimum wages and real earnings growth

In a recent post titled, “What happened to the distribution of real earnings during the recession?”, Stephen Gordon presents a graphs that shows some significant growth in real (adjust for inflation) earnings in Canada between 2007 and 2012. In addition, plotting average annual growth rates in real earnings against the distribution of earnings, the graph has a U shape. That is, the growth rates of real earnings are higher for those at or near the bottom and those at or near the top of the earnings distribution, with a “hollowed-out” middle.

Figure 1. Stephen Gordon’s graph showing a U-shape in real earnings growth 2007-2012 (black line). Source: Worthwhile Canadian Initiative.

This graph, as well as several others presented by Gordon in this post and a previous article that show some sustained general growth in real earnings, goes against the received wisdom that real earnings have been stagnant, in Canada and across the world, for the past 30 or 40 years – especially so for low earners. What is behind the discrepancy between this new data and the long-standing trend? Gordon claims it is lower-than-expected inflation and, if not the active, then at least the passive policy of the Conservative government. I take issue with these claims.

Continue reading “Legislating a real raise: Minimum wages and real earnings growth”
Categories
Canada Economic theory Pensions

Notes on pensions and risk

Canada’s finance ministers are meeting this weekend and a proposal to expand the CPP is at the top of the agenda. If implemented, this proposal would bolster an important public program at a time when public programs are under attack and the public sector as whole is shrinking. There are many good arguments in favour of strong public pensions, but I want to focus on one not often discussed: revitalized public programs are a counter to forces that aim to make us accustomed to taking on more and more (potentially disastrous) financial risk.

In yesterday’s post, I noted that austerity is not only a strategy to maintain business profitability, but also part of a broader agenda that can be neatly summed up by the phrase, “privatize gains, socialize losses”. From bailouts to public-private partnerships to the outright privatization of public services, the aim of much right-wing economic policy is to allow the private sector to capture economic gains, at the same time ensuring that society absorbs the costs of something going wrong. This removes financial risks from the private sector and distributes them throughout society.

Effecting such an agenda, however, requires more than just the appropriate policies – it also requires a fundamental change in attitudes towards risk. People have to become habituated to taking on ever-greater individual risks, especially in areas where risks were previously low. Pensions are a prime example of a policy area that can impact on attitudes toward risk.

Continue reading “Notes on pensions and risk”