Abstract: |
Profit is two things. It is an economic cost, like wages. As a cost, the rate of profit is determined by the interest rate. Thus firms are required to pay high capitalist profit to shareholders when interest rates are high. Together, profits and interest are a very large economic cost. Profit is also a residual, or surplus. Entrepreneurial profit is an uncertain amount paid to entrepreneurs, who hire capital from capitalists and wage labour from wage workers. Thus profit as a residual is more likely to be high when profit as a cost - the cost of hiring capital - is low. The creation of non-profit enterprises doesn't eliminate profit as a cost. Rather, profits are allocated in a different way; e.g. as customer price cuts. Failure to account for profits doesn't mean the absence of profits. A move to more explicit and more general profit accounting makes it easier to develop the concept of social profit, whereby the public owners of the public estate get a return on the resources that they are responsible for. Because the public side of the economy is treated as a nonprofit enterprise, at present the social profit passes by default to the consumers rather than the owners of the public estate. Ownership should be thought of in a modern sense, as equating to being responsible for something, rather than in the more private sense of having exclusive legal control over that thing. |
|
| Richard Douthwaite on the Instability of the Global Marketplace. |
Abstract: |
The emphasis on development at the national and especially local levels represents a belief in stabilisation through compartmentalisation, "delinking communities from the world system". Protection - import controls, exchange controls, and local currencies - acts as a set of firewalls that prevent global financial crises from spreading into real local economies. Douthwaite's theme of "shortcircuiting" is one in which local "circular flows" generate local activity while maintaining a constructive twoway relationship with the larger national and international flows. One example given by Douthwaite was that of the Danish wind turbine industry, which grew from a local cooperative into a major export industry. At the national level, recognising that international capital flows are the most destabilising part of the world system, Douthwaite floated the idea that the capital and current accounts of the balance of payments should be required to balance separately, with capital payments subject to one exchange rate while imports and exports would be subject to a different rate, much as the Sterling Bloc of countries used to balance their payments with the rest of the world in the 1950s and 1960. |
Abstract: |
Wallerstein sees the next halfcentury or so as being one of "transition" or "bifurcation" for the global socioeconomic system, comparable to the transition from feudalism to capitalism. As such he sees the period as one in which revolutionary action can make a big difference to future outcomes. He painted two future paths: one leading to more privilege and more corruption, the other leading to genuine democracy. Democracy means something quite distinct from the liberal state system of the twentieth century. Among other things, democracy means internalising social costs. The owners of private capital should be required to pay for the public resources that they consume, giving the owners of public capital a return. That's a necessary part of the way out of the transitional "whirlpool". |
|
Abstract: |
Social class defines persons by their predominant source of income. People seek policies that favour their predominant source of income. A policy package that gives high interest rates, low wages and low taxes represents the political strategy of the social class known as "capitalists". In a democracy, the sovereign is the people. People whose predominant source of income is from the public fund identify with the sovereign, as the proprietor of the public estate. The modern sovereign class - as a social class - comprises most of those whom the statisticians call "not in the labour force". Political class represents a person's political ideals, which may or may not be linked to their predominant source of income. It seems to me that the radical vigour next century must come from the sovereign political class, promoting the economic rights of the sovereign; that means, the economic rights of citizens as citizens, to an economic return on public property. More sovereignty means a bigger public fund which means higher taxes. |
|
Abstract: |
Wallerstein's basic model, as I understand it, is that each world revolution brings a new force into the global economic polity, and brings the previously radical force into the centre, losing its radicalism as it does so. If 1968 is indeed as important a year as Wallerstein suggests, then the years from the late 1960s to the early 1990s should represent the transition from one order to the next. Thinking across centuries of history - past and future - I believe that there is a stable structure of three political classes that reinvent themselves every century or so: a proprietorial class, an entrepreneurial class, and a labouring class. If this is so, then the configuration which will dominate the first half of the 21st century is already in place. It contains a radical proprietorial class on the left (the welfare community, which will come to draw much of its initial energy from retired baby-boomers, and will emphasise economic sovereignty and the social wage), a conservative labouring class in the centre, and a liberal technocratic class on the right. |
|
Abstract: |
In another 1995 Horizon documentary "Liar", the key theme was about the importance of strategy and deception in the creation of social life. Just as our genes use deceptive strategies in order to get the better of rival genes, individuals in private life and groups in public life use deceptive strategies to get their way. These strategies drive the process of human and political evolution. With respect to political evolution, the Left should concentrate on countering the deception of the Right, rather than relying on moral outrage, as a means of serving the interests of the people. As such, they should seek to manipulate the Right into supporting policies that the Right intuitively regard as not being in the interests of their supporters. |
|
Abstract: |
A typical person aged 25-34 in the top 10% of income earners for that age group in 1987 will have gained an increase of income of 115% if he kept his head. And, so long as he avoided spending too much money on positional goods such as exclusive real estate, the prices of the goods and services he consumed will have risen by less than the 37% average. |
|
Abstract: |
That most influential community, organised business, are the most vehement opposers of MMP. They hate coalition government because it limits their influence over the ruling executive. They want "economic leadership": they want the government to rule, not to serve, they want tax cuts, and they want to privatise large chunks of public revenue. Among other things, democracy is about holding our legislators to account, not by prematurely replacing them, but by getting them to hear the people. More than accountability, however, democracy is about service. The ultimate victory of democracy takes place when our politicians know they are in Parliament to serve, and not to rule. The government is the agent of Parliament, and not the other way around. |
|
Abstract: |
Quite unlike 1930 and 1931, the years 1988 and 1989 were boom years in the international economy. With the exception of New Zealand, the world's central banks created the cash necessary to resolve the drama. Indeed the international sharemarket "correction" actually facilitated a growth boom in the leading capitalist economies. |
|
Abstract: |
Before 1 July 1996, workers on above-average incomes received tax concessions of $2,779 per annum; tax concessions that fit the criteria of "social dividend". The social dividend increased to $3,933 in 1996 and will increase again in 1998 to $5,130, yielding annual growth dividends of $1,154 ($3,933 minus $2,779) and $1,197 ($5,130 minus $3,933). Minister of Finance Bill Birch has suggested (Sunday Star-Times, 5 October) that the 33% tax rate be cut to 25%. And, in the same newspaper, Roger Kerr argues for a flat rate income tax of 20%. Lowering the top rate of tax amounts to privatising the social dividend. A flat tax of the type advocated by Kerr amounts to a complete privatisation, with huge gains for those on higher incomes. There is nothing wrong with a flat rate of income tax, per se. It is just that a flat tax needs to be accompanied by a separate and explicit social dividend, a cash payment paid in full to all adults. Increases in such a social dividend would constitute true growth dividends. |
|
Abstract: |
It has since become a central feature of public policy in New Zealand to generate a net inflow of foreign capital. This became the policy despite the fact that the rationale for floating the exchange rate depends crucially on there being no net inflow of foreign capital. From mid-1994 to early 1997, the Reserve Bank has quite explicitly pursued a high interest rate policy, with the full intention of a capital account surplus pushing up the exchange rate and reducing import prices. The current account deficit could do nothing but increase under such policy conditions. |
|
Abstract: |
In an interdependent world, it is virtually impossible to assess every person's individual contribution to the economic wellbeing of the nation, let alone to the wellbeing of the planet. So a universal means of attributing value to contributions is appropriate; a means that errs in favour of the proposition that everyone makes a contribution, or at least wishes to. |
|
Abstract: |
Social democrats have to remake the case for higher taxes. I believe that the tax issue is central to the concept of economic sovereignty. The reassertion of the role of the sovereign (ie the people) as a public "agent of production" - as a provider of public goods and as the landlord of the public domain - may be a prerequisite to the turning rather than just the stemming of the commercialist tide. Income taxes represent one half of the fiscal contract; a contract that is an implicit social contract. A social wage represents the other half. Social democrats - all who are suspicious of the drive to a system of small powerful governments - should be getting behind the concept of the social wage as the income of the sovereign. As such, they need to openly acknowledge that a less intrusive government overseeing the distribution of a larger social wage needs to levy higher taxes. |
|
Rankin File | 1997 Titles | Previous Month's Archive
© 1997 Keith Rankin