capitalism

Fiddling with taxes won’t fix the economy

philmullan capitalism, Economic growth, Economic policy, Investment, Politics

Britain’s grim combination of record indebtedness and anaemic economic growth is desperately calling out for a vigorous government response to shake up and restructure the economy. Unfortunately, the two lightweight contenders for Britain’s next Conservative Party leader and prime minister have not heeded this call.

Instead, all Rishi Sunak or Liz Truss have been able to offer is a choice between tax cuts now versus tax cuts a bit later. The media may claim that this shows an ‘enormous’ gap between the candidates’ economic policies, but that is just empty hype. Both Sunak and Truss share the same illusions about taxation’s ability to revive or depress the economy.

But recent economic history confirms that tax reductions have no determinate effect on business investment and therefore do not contribute to improved productivity performance and economic growth. If the government is serious about tackling our dismal economic situation, it needs to drop its fixation on taxation. And it needs to lead with a genuine plan for economic transformation to drive productivity growth and lift living standards. Anything else is just fiddling while the economic crisis deepens.

Read the full article here.

Shutdown: the end of an economic era?

philmullan capitalism, Covid-19, Debt, Green agenda, Politics

Particular crises rarely change everything by themselves, but they can amplify what was already underway. This is how economic historian Adam Tooze approaches the Covid crisis in Shutdown: How Covid Shook the World’s Economy. He presents it as an event that brought pre-existing trends to the surface.

Shutdown is one of the first extended economic histories of the pandemic. It covers a single year, from Chinese president Xi Jinping’s public acknowledgment of the outbreak of a novel coronavirus in January 2020 to US president Joe Biden’s inauguration exactly 12 months later. The bulk of Shutdown is a comprehensive month-by-month commentary on the progression of the pandemic, the varied government responses to it and the economic, financial and political fallout.

Read the full review here of Adam Tooze’s new book Shutdown: How Covid Shook the World’s Economy.

Please, Rishi, stop evading the problem

philmullan capitalism, Debt, Economic policy, State intervention

There is an animated debate going on about post-pandemic economic policies. Centred in the US, the discussion has implications for the forthcoming Budget in Britain and for decision-making across other advanced economies. As he prepares for the 3 March Budget, chancellor Rishi Sunak needs to get real about Britain’s economic torpor.

Read the full article here.

After the pandemic: whither capitalism?

philmullan capitalism, Covid-19, State intervention, The longest depression

To understand what will happen to capitalism after this crisis, one needs to understand capitalism before it.

One of the catchphrases of the pandemic so far is that ‘crises change everything’. Of course, lots will change because of the precipitous economic disruption of the shutdown. Thousands of smaller businesses are already going under and may not return, and this could rise to hundreds of thousands unless the government acts immediately to deliver on its business-support pledges. If the government fails to support businesses and workers, in the same way it has been failing with virus testing and health workers’ protective equipment, millions of individuals and families will endure great hardship. Many may not get their old jobs back. Over the medium term, this can be a bad or a good change, depending on the quantity and especially the quality of new post-recession job opportunities.

However, despite the changes brought about by the economic dislocations, at this stage it is likely that much economic policymaking from the past will endure. This is because crises tend to change things only to the extent to which they draw extant socio-economic features to the surface and speed up pre-existing trends.

Read the full articel here.

Fully Automated Vulgar Marxism

philmullan capitalism, Marxism, technology

Aaron Bastani’s much-hyped Fully Automated Luxury Communism: A Manifesto (FALC) woefully misunderstands Marx, capitalism and class struggle.

The immediate impression one is left with after reading FALC is that it appears to have had two authors. One is a techno-optimist; the other is autocratic, with firm views both about which technologies should be developed and which should be avoided – and also, more tellingly, about how people should live under them. Parts of the book anticipate a brave and exciting new world enabled by technological developments, while other parts are imbued with today’s illiberal and constraining zeitgeist. One author emphasises that the future is not determined, but can be shaped by politics, while the other sees capitalism as following a predetermined process of collapsing under its own contradictions. One pays homage to the ideas of the Enlightenment. The other’s prescriptions negate the Enlightenment ideals of liberty and risk-taking.

Read the full review here.