28 November 2008

Domesday survey to avert doomsday

I've just spent a sublime half hour in Tewkesbury Abbey for choral evensong. There were another four people enjoying the transcendently beautiful singing, from the men's voices of the Schola Cantorum, who outnumbered us by about two to one. This tradition of singing evening prayers has been going on in our cathedrals for around a thousand years, kept alive by the dedication of those who value the ethereal rather than the financial. Once might say the same about our Gloucestershire apple varieties and old spot pigs. In these days of crisis and rapid change I find these traditions deeply comforting.

The Abbey building dates back to 1121, before the Medieval architects discovered the flying buttress, or whatever else it was that allowed them to build enormous height without the support of hefty pillars. Its style, therefore, is sold, stocky and reassuring. It was built just thirty-five years after the Domesday Book was first published.

The domesday survey was compiled by William the Conquerer so that he could assess the exact value of the land he had just invaded. This was to be his source of power and wealth so he needed to know, virtually down to the last chicken, exactly how much he had to bribe the barons with and to extort taxes from. I doubt if there has been such a thorough survey of our natural resources since that time.

The name 'domesday book' did not come into usage until the late 12th century and I wonder whether it was a statement on the devastating effect on the lives of the English people caused by the shift from the essentially egalitarian Saxon farming system--based on strip farming and common rights to land use--to the fedual system. Under feudalism the king owned all land, which he could give to barons who would then live without having to work. Their tenants owed them both farmwork and war-work.

1066 is remembered as an important date because of the battles that were fought in that year. The fundamental shift in economic structure and power is rarely taught in schools. Yet it was at this time that the focus of the economy changed to be about the financial rather than subsistence value of land. As we move towards an economy that is more self-sufficient in food we need to have similarly detailed knowledge of the land that is available to us and what purposes it could serve in terms of grazing land, arable land, forestry and so on. The land that we discover should be once again a common treasury for the people of Britain to feed themselves from. It is about time we reversed nearly a thousand years of feudal servitude.

24 November 2008

Ooh, give me some more pain, darling

I enjoy discussing a conspiracy theory over a pint as much as the next person and, given the shallow and irrelevant nature of most media chat on issues of importance, one can only gain a sense of what is really afoot from trying to read the clues. I would condemn this as undemocratic and unaccountable government in normal times, but just now I am seriously hoping that what we see is not going to be what we actually get.

Apart from the concern about paying the money back, it seems a strategy that is highly likely to fail in its own terms. How many of us feel inclined towards a pre-Christmas splurge this year? Isn't it much more likely that we'll save the money? Rather than encouraging consumption, investment in a low-carbon economy a la Green New Deal would be a strategy worth getting into debt for.

The only justification for racking up spending at the rate we are expecting this afternoon is to keep an unsalvageable system on track for long enough to put something better in its place. The media tidbits about higher income taxes in the future are window, meant to conceal and to impress those amongst the electorate who have longed to see new Labour give some indication that it still represents the have-nots more than the haves. The level of revenue it is likely to accrue for future spending is a pathetic £2bn. and can make no difference to the big picture.

As I blogged previously, what happened in Washington ten days ago was equally meaningless. In this case window-dressing to impress the punters that the big players were talking to each other, and were agreeing, and that they could really make a difference. Hence the Nuremberg-style backdrop: negotiation to impress rather than to make any serious plans.

But I really hope serious plans are being made somewhere. Given the dire situation we are in even a completely undemocratic and secretive policy-making process would be better than the economic freefall and possible social breakdown that is threatening. Gordon Brown might be the person to lead this debate - a politician with a good grasp of economics is valuable in such a crisis. If we see other governments following a similar finger-in-the-dyke strategy to our own Darling's after today then I think we can assume that this is the case. We can hope that a longer-term plan is being assembled and we can do our best to democratise that process by debating our own plans for a steady-state and sustainable economy in pubs, on buses and in any media to which we have access.

22 November 2008

Gordon is Not a Moron

On Monday Alastair Darling will announce his plans for borrowing. He will be quite explicit in his hypocrisy. All the ideological ranting we have listened to for the past 40 years about how spending would destroy the economy has suddenly been abandoned. Was it wrong for all those years? Or is our economy so close to collapse that all the rules we have lived by can be gleefully abandoned?

The scale of borrowing is set to exceed $100bn., which is three times more than the government predicted. What are we to make of this? How can we possibly take any more of those projections - neat lines of exactly 45 degrees on x-y axes - seriously ever again? It is quite clear that the government economists are not in control and don't know what they are doing.

So what are the economic rules for? One begins to suspect they may be made up to find excuses for not doing what the people in the democracy demand. Want a new hospital funded from government spending? Sorry, we can't possibly borrow more than 40% of GDP. Could we have more investment in the railways so that people have a serious alternative to driving? Can't do that because we can only borrow to invest.

It all turned out to be nonsense. Because when it looks like a situation might arise where really radical economic change is called for, any amount of money can be borrowed to ensure this doesn't happen.

When this level of borrowing was first mooted I remember waxing biblical and wailing about the debt hanging around our descendants necks unto the tenth generation. I thought I was being rhetorical, but the size of debt we're talking about raises questions of intergenerational equity in financial, not just planetary, terms.

What is our chuckling ex-chancellor thinking about all of this? I have a sneaking suspicion that he may have been expecting it just like I was. Is it just possible that he is deliberately provoking this massive indebtedness to force us towards the grand jubilee, the wiping out of all national debts, and the road to the New Jerusalem?

16 November 2008

G20: Some Achievement!

I am impressed by the results of the so-called global negotiation that took place in Washington in just one day. It is a remarkable achievement to have been able to agree solutions diametrically opposed to those that would serve people and planet and to be so spectacularly wrong on all points!

Cut taxes and increase public spending: in a world of open economies and free movement of capital this will vastly increase national government debt across the world but is not guaranteed to achieve anything for national economies. Public spending directed specifically at green objectives and politically managed would be a preferable option.

Stabilisation of national financial systems: without a negotiation between countries about reasonable exchange rates and a political agreement to reinstitute exchange controls this can provide no guarantee against future destabilising speculation in currencies.

Economic growth and more global trade: both will only increase inequality within and between nations and force a further damaging exploitation of natural and human resources.

The expansion of G8 to G20 is something to be celebrated, but not much consolation if you are in Lesotho or Papua New Guinea. Without the poorer nations of the world being included in the negotiations how can we expect to end the desperate global inequality that scars our world?

The absurdity of attempting to negotiate anything in one day and without the world's most powerful player was obvious from the start. The lengthy negotiation towards a just and sustainable financial structure should begin as soon as possible. It should begin with the loss of the dollar's role as global currency and end with the cancellation of trade and debt surpluses. Nothing less radical can provide a genuine solution to the economic and environmental crises facing us.

15 November 2008

Dreaming the New Economy

I had an exciting experience on Monday, at a meeting of the Executive of the UK Society for Co-operative Studies. This seems an unlikely setting for an epiphany, but perhaps not when you recall I was amongst friends who had not only been expecting the failure of capitalism but working steadfastly as part of a saner and just alternative for most of their lives.

For half the people in the room the end of a capitalism was already a known reality, and the more I thought about this the more I realised that they were right. Had governments not intervened, the financial sector and then the real economies of the leading capitalist nations would have collapsed over the past couple of months. We the people are now supporting the economy - and also owning large parts of it. That is not capitalism according to any definition I can think of.

Sharing this thrilling news with others can be an interesting experience. When I spoke at a public meeting in Lancaster on Tuesday a couple of people had violent physical reactions to the news - as if they had received significant voltages of unexpected electricity. Others warily pointed to the adaptability of the system in the face of past crises and collapses.

This is a good lesson to remember, but what it tells us is not that we are wrong to think that capitalism is finished but rather that now is the crucial time to argue for the utopia we want to put in its place. We have to have the courage right now to dream the future we want to see, to demand it, and to build it together.

When I used the phrase 'building the post-capitalist economy' as the subtitle for my book Market, Schmarket in 2006 it felt like whistling in the dark, singing songs of hope in the face of the juggernaut of globalisation. But the power of capitalism was always more apparent than real, always the power of the conjuror. Let's not be mesmerised now: now is the time to create the better future we have all dreamed of.

13 November 2008

Green New Deal: What's the Deal? And How Green Is It?

Chatter about this mind-catching proposal is everywhere in green circles. My hearty congratulations to the authors who have managed to capture the imagination and direct it towards economics. I've been trying to do that for some time and know how challenging it can be.

It is fairly inevitable in a recession that the government will become a more significant part of our economy. If nothing else, as the economy as a whole shrinks, the public sector grows relative to the private sector, where jobs are dependent on immediate spending. Add to this that, in a civilised society, we pay something to those who are out of work and the balance is bound to shift towards government spending.

This means our money - either now or in the future - and therefore we have a democratic right to decide how it is spent. Some of the proposals for this spending from Labour and the Tories are very far from green - such as the building of more roads and other vast infrastructure projects. We need to think big but also think local: this would be the heart of a truly green new deal.

For me the priorities for spending would be local green banks, preferably organised as mutuals, which could lend money to small, local businesses according to strict criteria about their sustainability. This would underpin the growth of the local green economy and ensure that we emerged from the recession with a much greener economy.

And more important than money, we should be thinking about food and energy. As the pound sinks on the foreign exchanges we will realise the foolishness of government statements that food security is of no strategic importance. As we negotiate in international markets from a position of weakness we will regret the fact that our main export is financial services. Who will buy? Hardly anybody at all I would have thought.

7 November 2008

Capitalist rollercoaster

Generally in economics 'long-term trends' are anything but. I was recently in a supervision session with a colleague who was describing an econometrics method used to 'explain' the behaviour of stock-market investors. It works with long data series, but these are minutes of investment decisions! So in a day you can create a really long-term trend!

For a discipline that makes great play of the differences between short, medium and long terms, economics is remarkably poor at analysing the long run. Perhaps that is because, as Keynes so eloquently noted, in the long run we are all dead. This is not a very helpful attitude for our grandchildren or the planet they hope to inherit.

In view of this prevalent short-termism what joy it was to find the long-term trend of UK (English) interest rates on the Guardian website. I would be interested to hear others' interpretations of what we can learn from these.

What immediately captures attention is that in the early phase of the life of the Bank of England interest rates are almost completely static. Is this an image we should hold in mind when thinking of the steady-state economy? A stable long-term interest rate suggests a lasting agreement about the return that the holders of capital may demand. This seems to suggest that, prior to 1800, there was little evidence of struggle over the value in the economy.

The trend becomes increasingly haywire from 1800 onwards, as industrial capitalism began in England and conquered the world. For the past 200 years we have been living on this rollercoaster with its endless economic and social conflict. The solution is not to return to the earlier phase of stable interest rates relying on an agreement that the rich man should stay in his castle and the poor man at his gate.

Surely a more fruitful solution would be to challenge the concept of interest itself. What gives a rich person the right to become richer merely because they have wealth to begin with? Removing the ability of money to store value through time would radically change the way we behave as economic actors--it is surely a prerequisite for any steady-state economy.

4 November 2008

No Sustainability Without Equity

Things have gone very quiet on the finance front. My general conclusion is: no news is bad news. We can only hope to read between the news and try to work up what is being stitched up behind closed doors. Mandelsohn's recent visit to Russia is a case in point.

When the Realpolitik begins we are in a fairly well-protected position relative to our sisters and brothers in the South. Because we sit at the high table of corporate capitalism, we can expect an acceptable deal. It will include a lifetime of servitude to pay off recently acquired mega-debts but is unlikely to include starvation and war - at least in the immediate future.

This unjust and inequitable settlement has severe implications for the planet. While the world's powerful nations ensure for themselves a share that is far more than those in the South, it is also far more than the planet can sustain. The figure illustrates the differences in the size of ecological footprints in different countries. It is the rich of the world who are trashing the planet.

The table below illustrates the same information in a different way, giving rates of consumption of various items by region of the world (from Jules Pretty's latest book The Earth Only Endures). Rather than trying to maintain over-consumption we should be lobbying our politicians to steer the country towards the 'prosperous way down' to a low-carbon convivial economy that is our only hope for survival as a species.