Investing in
Civilization
Alan Freeman
radicaldemon.org
What is economic recovery?
1929, 1893
1989
1979
1969
1959
1949
1939
1929
1919
1909
1899
1889
1879
1869
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
Government spending + private investment
Government spending (% of GDP)
Gross private investment (% of GDP)
Unemployment (% of workforce)
60%
War
50%
40%
30%
20%
10%
1950
1947
1944
1941
1938
1935
1932
1929
0%
Sources: GDP components, Bureau of Economic Analysis
Unemployment rate: Bureau of Labour Statistics and John T. Dunlop and
Walter Galenson, eds., Labor in the Twentieth Century (New York,
Academic Press, 1978), p. 30.
• Unemployment high
• Investment low
• Government replaces
investor
• ‘Fordism’
• Welfare state
• New growth
• New use values
• New era
What made the profit rate rise?
War
50%
45%
40%
35%
30%
25%
20%
2004
1999
1994
1989
1984
1979
1974
1969
1964
1959
1954
1949
1944
1939
1934
1929
Source: US Bureau of Economic Analysis www.bea.gov. NIPA tables
C=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
Value
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
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
“[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. P44
The Radical Programme – Joseph Chamberlain
The Bright Side
New consumptionism (car, gadgets)
Which, hitherto, only the rich consumed
Also new ‘social consumption’
Health, education, jobs, minimum wage, pension
What the state actually invested in
80%
70%
60%
50%
40%
30%
20%
UK
US
Japan
Germany
0%
Jobs in major economic sectors as proportion of total
Advanced Countries
90%
80%
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
10%
1948
1952
1956
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
2004
employee jobs in services as percent of total employee jobs
Services: a silent transition
Share of services in employment
China
90%
Agriculture
Services
Manufacturing
70%
60%
50%
40%
30%
20%
10%
0%
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
Assumes productivity only by machinery
Decisive advances in history raised
human capacity
Hindu-Arabic numbers
The Book
Mass Education, numeracy, literacy
Germany recovered twice within 5 years
after enormous physical destruction
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 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
Equilibrium:market is perfect
Physicalism: market allocates things
Overestimates machines
Underestimates humans
In crisis
‘the invisible hand shakes’
humans re-appear as agents
GDP per capita as share of GDP per
capita in Advanced Countries
Inequality: an unsustainable truth
12%
Inequality between Global North and South
10%
8%
6%
4%
1960 1966 1972 1978 1984 1990 1996 2002 2008
Source: International Comparison Project (ICP), World Economic Outlook,
German statistical office
Shares of World GDP 1950-2006
70%
60%
50%
US
Europe
Advanced East Asia
Rest without China
Rest with China
40%
30%
20%
10%
0%
Break in series - China data available from
1970
19
50
19
53
19
56
19
59
19
62
19
65
19
68
19
71
19
74
19
77
19
80
19
83
19
86
19
89
19
92
19
95
19
98
20
01
20
04
GDP as share of total, MEPP dollars (Current dollars at
Market Exchange Rates)
Leading – or crushing?
Sources: World Bank WDI indicators, IMF World Economic Outlook,
United Nations TED database