We’ve lived so long under the spell of hierarchy—from god-kings to feudal lords to party bosses—that only recently have we awakened to see not only that “regular” citizens have the capacity for self-governance, but that without their engagement our huge global crises cannot be addressed. The changes needed for human society simply to survive, let alone thrive, are so profound that the only way we will move toward them is if we ourselves, regular citizens, feel meaningful ownership of solutions through direct engagement. Our problems are too big, interrelated, and pervasive to yield to directives from on high.
—Frances Moore Lappé, excerpt from Time for Progressives to Grow Up

Tuesday, November 6, 2012

Why natural disasters are good for capitalism

Click here to access article by Jim Stanford from Real-World Economics Review Blog.

This is a classic example of analysis by a left-liberal economist who, while appearing to offer a radical analysis, actually serves to keep people thinking within acceptable limits of capitalist ideology. Let's examine his basic argument:
How do we understand the potentially positive economic impact of a very negative, life-destroying event? The irony is rooted in a fundamental feature of capitalism: what is produced, depends on what somebody is willing to pay for. With very rare exceptions, in other words, output is limited by demand: not the inherent need for something, but by the ability and willingness to pay for it (Keynes called this “effective demand”). That’s why at any point in time (including right now), vast productive capacity sits around the economy un-used: because no agent is willing to pay for what those agents can produce.
But, doesn't his argument beg the question of why "no agent is willing to pay for what those agents can produce?" The careful wording of his argument serves to disguise the fact that under capitalism nothing gets produced, regardless of the need, if it can't produce profits for capitalists. He meekly ends up by making a vague argument that appears to be mostly moral in nature:
...it requires a fundamental change in the decision-making process that guides our economy. We would start doing things because they are useful and needed, not because someone decided to pay for them.
It seems to me that if one accepts the "economy", that is, the existing economic arrangements or system, then one must accept the "decision-making process" that logically follows. It appears to me that he is leading us down the path of Keynesian capitalist thought which states that government could step in to supply the "effective demand".  According to conventional thinking, of course it could. But, this rests on the false assumption that government in a capitalist society is an independent agent.