Commentary on Political Economy

Friday, 6 August 2021


It's not beyond the realm of possibility that we may see this happen in the West. The ingredients that went into the implosion of Lebanon, (less the armed militias, but we have vigilantes in places) are present everywhere in the West now.

 You remember me saying that the media form public opinion. The question of what "forms" the media then becomes eminently political and cannot be privatised and so be delegated, as the absentee fireman State does. With Twitter and Facebook blocking Trump and others, now YouTube blocking SkyNews... Now this. Governments simply cannot ignore this growing pile of flammable materials..

You will recall that Zuckerberg empanelled… do I believe I’m writing this?…empanelled a “Facebook Supreme Court” - a “Supreme Court”! By Facebook! - to adjudicate over the banning of Trump… of the President of the United States…of America!!!

Now, I will put it to anyone with any sense of history and intellectual decency that we have indeed reached the bottom. A State that dares to call itself such, that is utterly incapable to legislate for itself and its constituents the institutional formation of public opinion - such a State is a non-State, it is a failed State! Lebanon beckons…

... incidentally, the ASX continues its climb unperturbed by such minor matters as ... the economy going up in smoke!... It's funny... I've stopped following... Minimum 20% fall before I even bother... heh heh... alea jacta sunt, said Caesar... il dado e' tratto, in Italian... Les dés sont pipés... In French... Or, les jeux sont faits... Two in French because they're gamblers... Heh

Or... I forgot the apocalyptic... rien ne va plus! (The train has left the station!)

Robert Gottliebsen is getting old… you can tell by the fact that he has not the faintest idea of what “technology” means… (I prefer to say “techniques” because, first, there is no such thing as technology or science; they are human practices that need to be verified in practice constantly. And second, because technique puts the emphasis on the practical side of the activity fools call technology or science…

In this article, he con-fuses, fuses together (Confucianism?), two very separate things: the techniques that make algorithms possible - if anything can, this hardware can be called “technology” - and the algorithmic techniques that constitute ONE, ONE AND ONLY ONE “technique”! Which then can have … a squillion applications! But it’s a single technique…

It’s a bit like saying that because I speak English, and I can manipulate, say, 25,000 words in the one language,… I therefore can speak, not just 25,000 “languages”, but also… musical language, mathematical language, engineering language… and so forth…

If apples and bananas are “fruit”, then the winemakers of Bordeaux should have no trouble growing kiwis or mangoes… all of which are one single, undifferentiated, indistinguishable “fruit”…. if it’s all “food”, then we are all cheese-makers!

Big Tech, fin tech and so forth…have next to nothing to do with “technology “… theirs are just the simplest, most goddam mind-numbing “applications “ of a single technique! 

If the West has got to such a state of stupefaction and besottedness to believe that frying eggs is “technology”, then I can explain why the Chinese Communist Party will be able to say verily: “We will bury you!”

It’s the Opium wars in reverse! (I owe this one to Niall Ferguson who made the historical analogy in a recent Bloomberg column.)

Essentially, capitalism is made of two spheres, that of production or valorization where value is created, and that of consumtion or distribution where the value produced is "realised' by market sale. Capitalist distribution can be productive only by speeding up the time between production/valorization and distribution/consumption/realisation.

It is quite evident that the sphere of distribution (where big tech and FinTech and Hollywood come in) is only literally peripheral to capitalism... It's like rearranging deckchairs on the Titanic...

Once capital runs out of produced value for realisation, it literally EXASPERATES the sphere of consumption and distribution by squeezing blood out of social resources (wage suppression, annexation of other markets, debt and asset inflation)...

This phase is what we are witnessing now. Historicaly, the First Industrial Revolution (Britain and France from 1650 to 1900) was one involving production. The Second Industrial Revolution, 1900 onwards, involved primarily distribution and consumption (the New Deal settlement, Roosevelt and Bretton Woods). There are countless works on the Furst. One of the best accounts on the Second is by Alfred P. Sloan, The Visible Hand (as opposed to Adam Smith's "invisible hand" of market capitalism). This is a kind of "steered" capitalism where the State plays a commanding role regulating incomes and thence distribution through welfare and taxation... Call this the Keynesian State... which has now become "the Ponzi State" because, as Hyman Minsky has demonstrated, it relies on the artificial creation of monetary supply and credit to create the illusion of profit... China saved the day for 40 years through "the Great Moderation". But now Wile E. Coyote has run over the cliff... and is staring into... the Abyss!

The difference between production/manufacturing and distribution/consumption is simple to see: production involves non-scalable effort both in physical labour and in material inputs (raw materials, machinery). Distribution instead involves infinitely scalable intellectual inputs or property! The political distinction is astronomical: almost literally, the sky is the limit given that knowledge is immaterial and its production and distribution involves almost no physical resources: it is made of patents, trade marks and copyright! 

That is why Big Tech and Fin Tech and Show Biz resemble … “er cavaliere nero”…

“Si, ,mi pare di aver capito. Ma… la morale?”

“E la morale e’ che er cavaliere nero ci ha rotto er ca…!”

Peta Credlin in The Australian:

“I was the broadcasting policy adviser and later chief of staff to two communications ministers in the Howard government, so I appreciate the need to regulate a sector as important as the media.

Sky News is both a subscription service and free-to-air on regional TV, so it is rightly subject to several codes plus broader Australian law such as defamation. All of these, though, are set in Australia, by Australians, based on our values and norms, and allow for natural justice.

Not so this decision to cancel Sky News for a week. It’s arbitrary, subjective, opaque and foreign. In this case, it’s a tech behemoth based in the San Francisco Bay Area deciding what passes for allowable debate in this country. If YouTube were Chinese or Russian-owned, I suspect the outcry might be greater; but free speech is a vital principle to be upheld at all times, not just when the speaker is someone we support and the censor is someone we oppose.”

Quite simply, all the conflicts that neoliberalist ideology had hoped “to privatise” by way of “technological disruption and innovation” and remove from political oversight are coming back to haunt the “night watchman” or “fireman” State. The cracks can’t be papered over anymore…

Intellectual property is the most authoritarian, autocratic property right the members of a society can claim - because it is like bottling air! People can relate to non-scalable effort… but once 5,000 fuckwits in Harvard turn into nearly 3 billion morons overnight (Facebook), once the deepest capital markets in the US turn a loss-making companies from Amazon to Tesla into trillion dollar tyrants devastating entire economies and reducing manufacturing workers into distribution warehouse (“performance centres”…PERFORMANCE CENTRES! Wow!) purely by undercutting everyone one else… you can fool some of the people, some of… but not all of the people, all of the time! Something does have to give!

Sorry, that was even worse…”FULFILMENT CENTRES”!

When Steve Ballmer (Gates’s cofounder at Microsoft) asked, “What is it that IBM do?” I could tell this fat prick that they make physical computers, whereas his ilk “make” Windows software that is pathetic for its inadequacy, that has flaws on all sides, leaks like a sieve, and was built into a trillion dollar company by stealing Apple’s intellectual property and by buying all competitors out and smothering the rest by suing their pants off! All with the connivance of the US government and countless venture funds! … Fulfilment, indeed! What is it exactly that Amazon… fulfils?!

"The “domestic” US politicians are now engaged in is occurring at a vulnerable moment for the US and global economies, given the new threats to the world’s largest economy posed by the spread of the Delta version of the coronavirus. Signs are the developed world is already past the peak in the recovery from the economic effects of the pandemic.

Yellen has said that a failure to increase the debt limit would have “absolutely catastrophic economic consequences” and could ignite a financial crisis.

Hopefully sanity will prevail - but in the Trump era of US politics and with a Republican party whose make-up is very different to its predecessors, nothing can be taken for granted."

Edward Luce at the FT has taken up Walter Russell Mead’s theses in the WSJ article I linked and discussed briefly the other day. It’s not plagiarism, but an acknowledgment of Mead’s prior and almost identical positions would have done Luce’s intellectual integrity no or less harm, assuming that perhaps some self-inflicted harm has been done. As I summarised, and Mead first, now Luce, point out, capitalism doesn’t do foresight, it doesn’t do planning and, worse still, in a crisis, it certainly does conflict and division. Here is the difference: Mead stops at the fact that “capitalism” provided the best response to the Wuhan virus, because it gives free rein to “talented boys” (as Luce calls them, forgetting to add “and girls”), whereas Luce rightly objects that “talented boys” and girls are unlikely to know their limits. Unrestrained striving for material success, which is supposedly the motive and motor of capitalist enterprise, engenders and sharpens those very conflicts and divisions that can be lethal in times of crisis. Mead fails to see the nexus: he praises capitalist enterprise but fails to blame its excesses and lack of foresight. Luce provides a more balanced and accurate view. Here is Luce:

Covid has shown up western democracy’s childish tendencies

Governments are too easily sidetracked by instant gratification to see where real interests lie

A Colombian police officer guards Covid vaccines donated by the US government

A Colombian police officer guards Covid vaccines donated by the US government © Leonardo Munoz/AFP/Getty


August 5, 2021 1:15 pm by Edward Luce

Democracy’s ultimate boast is that societies do best when people take responsibility for their lives. Covid-19 has been putting that theory to the test. Every few months the west pops the proverbial champagne to celebrate the end of the pandemic. The hangover is worse for its predictability. The fact that western democracies are rarely able to think more than one step ahead augurs badly for their ability to fight global warming — or plan for the next pandemic.

Instant gratification is a trait usually associated with children. In the 1960s, a Stanford University scholar devised the famous marshmallow test that rewarded young children who could resist eating one marshmallow for several minutes by giving them two. The “cool” kids — those who resisted temptation — went on to do better in life than those with “hot” ways of thinking who could not wait.

This will ring familiar to anyone observing the west’s handling of coronavirus. Data and anecdote leave little doubt that democracies are the worst-governed societies in the world, apart from all the others. Strongmen are no panacea. Since democracies have what academics call “system legitimacy” they are better insulated from having to pander to the masses than autocracies, which rely on “performance legitimacy”, as well as intimidation. China’s leaders, in other words, should fear an angry population more than America’s.

It is no consolation that democracy is still the least bad option available. Any system ultimately sinks or swims by two measures. Is it capable of protecting its interests? Does it learn from its mistakes? The west’s response to Covid gives troubling answers to both. The world’s increasing vulnerability to a pandemic has been broadcast for many years. Low-cost measures, such as data-sharing systems, and stockpiling essential equipment were repeatedly recommended. Governments did nothing.

The fiscal cost of this pandemic so far has been $10tn of public debt, which is 700 times the annual cost of creating a modest global fund to prepare for such a disaster. They say an ounce of prevention is worth a pound of cure. In this case that would come to 43.8 pounds. The parallel to climate change does not need spelling out. That is without adding the human tragedy of the 4m lives lost to Covid — or about 10m based on excess deaths.

The real test of the west’s learning curve is whether it is acting on the knowledge that this virus knows no borders. There is no such thing as herd immunity in one country. Western democracies are nevertheless acting as though domestic vaccination is their finishing line. The rest of the world is basically viewed as an object of western charity. This is badly misconceived.

The US has a pipeline of hundreds of millions of vaccines that its roughly 90m-strong vaccine-hesitant population is refusing to take. Rather than let the shots expire, America’s obvious step would be to ship them to countries that will put them into people’s arms, or mandate unvaccinated Americans to take them. Preferably both. Unfortunately, Joe Biden’s administration is stymied from taking either step by its fear of provoking an emotional backlash. Imposing a mandate would increase its battle with those who think that vaccines and masks are an attack on their “freedom”. Sending supplies abroad would prompt accusations that Biden cares more for foreigners than Americans.

The west’s next phase will be to offer booster shots to the already vaccinated. As the World Health Organization’s head Tedros Adhanom Ghebreyesus, pointed out this week such a step would widen the gap between the high-income countries, which have administered 100 doses per 100 people, and the low-income ones, where the rate is 1.5 shots for every 100 people. The latter’s immunity is as important to the west’s health as its own. Epidemiologists warn that the virus is only a few mutations from defeating the vaccines. Then we could be back to square one.

The west’s silver lining is the speed with which its scientists delivered effective vaccines. Our democracies may exhibit childish qualities but these kids are gifted. There is something to that. But as any teacher knows, talented children have a poor grasp of their limits. If Biden is serious about the contest between democracy and autocracy, he should move beyond gauzy talk about shared values. Democracy ought to do more showing and less telling. The west needs to understand the benefits of sharing its marshmallows.

Who is talking about "debate"? Soon we'll talk "civil war"... That's where all this is leading!

Three stories in The Atlantic point that way:

The main flaw in the analysis of the first two pieces is that it wrongly identifies "the new aristocracy" as the "productive" stratum (it's not a "class" as such and the writers do not call it so).

As I have argued, strenuously, that is far from the truth! Productivity and real production are still in manufacturing! That is where things get DONE and get MADE! The rest is just "tertiary services" bullshit of no "useful" purpose whatsoever!

It is the growing disparity between the "useful/essential" and the "woke soap opera" that is exploding Western societies... And what the Chinese Party-State is desperately and quite rightly trying to avoid!

What is called "technology" is in reality mere "lifestyle influencing"... Which the true productive classes resent as discrimination and virtue-signalling"...

Production involves quantifiable, non-scalable effort or labour. If I want to make something, I know exactly the equipment, materials and labour power I need. "Technology" involves first creating an artificial need (Steve Jobs, "We give you what you didn't know you needed"), and second "effortlessly scaling" that "need" by extracting the income generated from the "doing and making" of the productive classes!

We are regressing to "the Three Orders" of feudalism: the orators (priests and monks dictating values and lifestyles), the fighters (executives, police, military)... and the "laboratores" or workers who DO services and MAKE goods - all the "useful/essential" THINGS, NOT NETFLIX BULLSHIT!

The Three Orders is the title of a classic work on feudalism by Georges Duby (French historian). The orders are the oratores (preachers), the bellatores (princes, knights, soldiers)... and the laboratores... labourers, obviously.

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