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Investing in Civilization. Alan Freeman What is economic recovery?. 1929, 1893 Crash after 20 years slow growth Long (10 years) period of high unemployment Political, social upheaval and suffering (war, etc) Long (20 year+) period of growth

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investing in civilization

Investing in Civilization

Alan Freeman

what is economic recovery
What is economic recovery?
  • 1929, 1893
    • Crash after 20 years slow growth
    • Long (10 years) period of high unemployment
    • Political, social upheaval and suffering (war, etc)
    • Long (20 year+) period of growth
    • Working definition of ‘recovery’
recovery starts with war
WarRecovery starts with war
  • Unemployment high
  • Investment low
  • Government replaces investor
  • ‘Fordism’
    • Welfare state
    • New growth
    • New use values
    • New era
what made the profit rate rise
WarWhat made the profit rate rise?

Source: US Bureau of Economic Analysis NIPA tablesC=Fixed Assets table 1.01 (Current-cost net capital stock of private enterprises)L=Output, table 1.9.5, line 2 (output of private enterprises)Accumulation Ratio = L/C

  • State restored the profit rate
  • It ‘used up’ accumulated private capital
  • It substituted for the ‘normal’ function of slump
    • The ‘numerator’ in the profit rate was slashed
    • When the economy was ‘handed back’ to private capital, they obtained a high return
  • It secured the productivity of the economy
    • USA entered postwar with unit costs 1/3 nearest rival
  • Without increasing capital stock
    • Profit rate was highest ever – because capital stock was lowest ever (relative to output)
the dark side
The Dark Side
  • War needed for recovery
  • War leaders were social reformers
  • ‘Universal’ rights confined to victors
  • Small advance, enormous suffering
  • Is there an alternative?

‘Universalist-civilisational’ - ‘Reactionary-Parasitic’

Coexist in same historical processes

the heart of darkness
The Heart of Darkness

“[England] needs new lands from which we can easily obtain raw materials and at the same time exploit the cheap slave labour that is available from the natives of the colonies in order to save the 40 million inhabitants of the United Kingdom from a bloody civil war”

- Cecil Rhodes, founder of Rhodesia (Zimbabwe) and de Beers

  • 1870 Radical Programme (Liberal Unionists)
    • Universal education
    • Social Housing
    • ‘three acres and a cow’
    • -to be financed by colonial revenue

Sources: Bigelow, B.and B. Peterson, Rethinking globalization. P44The Radical Programme – Joseph Chamberlain

the bright side
New consumptionism (car, gadgets)

Which, hitherto, only the rich consumed

The Bright Side

Also new ‘social consumption’

Health, education, jobs, minimum wage, pension

services a silent transition
Services: a silent transition

Share of services in employment

Advanced Countries


the cost illusion
The Cost Illusion
  • “Human Rights” are productive
  • State invested in the labour force
    • Raised productivity (skills, health, reduced costs, etc) of the workforce
    • Reduced the value of labour power – the cost of the wage bill
    • Neoclassical economics resents as a ‘cost’ – actually, it was an asset
    • Typical Canadian auto wage $1500 lower than US: employer does not pay health insurance
  • This is ‘investing in civilization’
the physicalist illusion
The Physicalist Illusion
  • Decisive advances in history raised human capacity
    • Hindu-Arabic numbers
    • The Book
    • Mass Education, numeracy, literacy
  • Assumes productivity only by machinery

Germany recovered twice within 5 years after enormous physical destruction

implications of the service economy
Implications of the service economy
  • Enough material resources to feed the world
    • $6,000 average 2008 = Western average 1950
  • Most production not material
    • 86 per cent work in services
    • Access to advanced services confined to few
    • Art
    • Care (children, education, elderly care, disability)
    • ‘Green’ investment is a middle-class indulgence
  • We have to make these things universal
  • This requires a new declaration of rights
investing in civilization1
Investing in Civilization
  • What is needed?
    • Investing in primal productive force of society – humans
    • New universal rights: ‘right to care, create, and sustain’
    • Reduced material basis, expanded spiritual basis
    • Achieve on a world basis
  • Who? How?
    • All previous solutions: ‘the nation’
      • Universalism for the rich nations
      • at the cost of destitution for most of the world poor
    • Marx: world working class + oppressed and poor
    • “Socialism versus barbarism”
economic ideology today
Physicalism: market allocates things
  • Overestimates machines
  • Underestimates humans
  • In crisis
    • ‘the invisible hand shakes’
    • humans re-appear as agents
Economic Ideology Today

Equilibrium:market is perfect

inequality an unsustainable truth
Inequality: an unsustainable truth

Inequality between Global North and South

leading or crushing
Leading – or crushing?

Sources: World Bank WDI indicators, IMF World Economic Outlook, United Nations TED database