25 July 2009

Wind Power is Our Mutual Friend

Bob Crow, whose RMT union is representing the workers occupying the Vestas wind turbine factory on the Isle of Wight, asks with understandable frustration why money can be found to keep RBS afloat when the much smaller sum that would be needed to keep this industry of the future in Britain is denied. The answer is simple if unpalatable: the interests of business prevail over those of the people. We might say that capital is dominant and labour discounted.

From a green economics perspective we might look at this in different terms. Our current economy is dominated by money; a green economy would have energy as its central value. If you remove the distorting lens of a capitalist vision the decision to premit the redundancy of skilled workers who produce machinery that can turn moving air into energy is absurd.

It almost makes you join Bob Crow in yearning for the days when there was political direction over vital areas of public life, whether energy, water, or transport. Certainly, many whose own lives have been dedicated to the political freedom of others have looked enviously at the rapid progress towards a sufficiency economy that Cuba made following the ending of cheap oil imports from the Soviet Union. And China seems best placed to shift its economy rapidly towards a low-carbon future precisely because it does not have to worry about selling these changes to a sceptical electorate.

But the answer is not to sign away from our hard-won right to power over our lives, or to return to the days of public ownership and central planning, it is rather to call for ownership and control at the local level. Vestas offers a perfect example of how a mutual future would achieve the advantages of rapid change without the political opposition that arises when people feel they are powerless pawns in another move that is for the benefit of others.

It seems incredible that the market for wind turbines in the UK is too small to keep the plant in production. The reason is the slow rate of agreement on the siting of these desperately needed energy plants because of local planning opposition. Communities will not agree to having windfarms in their 'view' when the profits are extracted and they gain nothing in return. If the turbines are community owned, research indicates that this opposition evaporates.

And if Vestas central - and how strange it feels that the bad guys in this particular story are Scandinavian - has no need of this plant because it is receiving a better 'green new deal' from President Obama, then it should be passed on to the skilled engineeers and lathe-turners who are the heart of the company. Like the workers at Tower Colliery in South Wales, there is no doubt that they will be able to keep the factory going without the dubious skills of managers and money-men.

There are numerous reasons why capitalism is unsustainable but perhaps the most pressing is that, in pitting the interests of labour against those of capital, it slows the process of change. In a time when a rapid transition to a low-carbon economy is essential this could truly be a fatal flaw. As the new Co-operative advert says, the answer really is blowing in the wind.

23 July 2009

Man Armed with Sausage Roll Arrested by Pigs

No, not an indication that her majesty's finest have taken a vegan turn, but rather a sign of the increasingly desperate nature of policing when the political direction of the country is entirely at odds with the well-being of its citizens.

Early evidence that the police are being used to defend the interests of capital (now frequently called 'business') was widespread at the policing of the G20 demonstrations in London in April. Given the shocking amount of public money that had been given to reckless bankers the level of restraint shown by protestors was admirable. The police failed to live up to this standard.

The latest flashpoint in the struggle between the people and the state is on the famously radical Isle of Wight. The Vestas factory near Newport is the country's only producer of wind turbines. Its closure was made public on the same day that the government announced a fivefold increase in the number wind turbines that would be operating in this country. So much for the Green New Deal. Money can be found for the banks but not for manufacturing.

If ever there was an industry that was worth supporting this has to be it. If we have a future at all it clearly belongs to the renewable generators. These are the skills and the products that will be part of our sustainable economy. But yet again hot air has won the day and there is no action to back it up.

The workers have taken affairs into their own hands and reclaimed the factory. They are being supported by protestors who are resupplying them with food, which the police are preventing them from passing on. Hence the sausage roll incident. The Times reports that the arrested man's custody sheet accused him of being 'armed with supplies of food'. Sausage rolls have now been elevated to the status of casus belli. These are the Climate Change Wars and we may have found the 21st century equivalent of the War of Jenkin's Ear.

A full report is available from Indymedia.

20 July 2009

Time to Account for the Asset Bubble

Opinions may vary as to whether the economics profession was asleep on the job, following Nelson's lead in watching the financial markets with only their blind eye, or engaged in some form of self-reinforcing mass delusion. My money is on the latter. For political reasons, the methods used in neoclassical economics are designed to abstract from reality rather than respond to it. This allows injustice and inefficiency to prevail while careers are made proving mathematically the superiority of capitalism.

But are the accountants doing any better? A paper you can find here (if you are suffering sleep deprivation and are seeking a rapid route to a few zzzzs) concludes that the techniques of following the flow of money through the economy that accountants use identified the problem. Meanwhile the 'equilibrium' models so beloved of neoclassical economists concealed the ballooning asset bubble.

But the accountants are not immune to criticism. Far from the Arthur Pooty stereotype who longed to become a lion-tamer in the Monty Python TV series, today accountants bestride the globe, creating value merely be defining it into existence. When is a liability an asset? It is within an accountant's power to turn one into another and effect a total dislocation of real economic value from accounting value.

You can find a nice summary of the paper on Steve Keen's blog. As one commentator there notes, 'I can’t help but feel capitalism needs this ignorance to function, if people knew the game no one would play.'

*Thanks to Paul Nollen for sending this paper.

17 July 2009

Ten Ways to Challenge Capitalism That Wouldn't Frighten Your Grandmother

It appears that the salesmen of capitalism have not been entirely successful. Despite the many years of propaganda we have not abandoned care for our fellow man or woman. We still overwhelmingly support a health service paid for from taxation and would rather a decent pension for all was organized along the same lines than be left to the wolves of the financial markets.

Money is at the heart of the economic system that is not called 'capitalism' by accident, and this is the place where you can begin to extract your own life from that destructive and damaging system. It has also been most conspicuously displaying the tendency towards inequality that is the beating heart of capitalism in the past year.

Below I list some further ideas for challenging capitalism in your everyday life in practical ways. It is important not to be daunted and to maintain your awareness that, as you extract your energy and money, along with millions of others, you are weakening the system. From my perspective everyday actions against capitalism, aside from being less risky and more morally acceptable, are far more threatening than violent revolution.

Those who oppose capitalism have the advantages of creativity and imagination, as well as mutual support. It will always be impractical to oppose capitalism by taking on the state with violence, since the state will always be far better equipped in that department than we are. Such action will actually give energy to the growth dynamic, through policing and medical care of the injured, not to mention sales of weaponry.

So here are ten ideas in domestic subversion. Start today and within a year you can be in the clear for a large part of your daily life.

1. Arrange to buy your vegetables through the nearest organic box scheme
2. Switch all your bank accounts to the Nationwide or Co-op/Smile Bank
3. Shop at the Cooperativebetter still, join your local coop.
4. If you work in the private sector, cut your hours of work at least by half
5. Cook more at home, for yourself and your friends
6. Don’t vote, unless the party you vote for has stated anti-capitalist economic policies
7. Whenever you are talking to somebody involved in business, ask them if their business is a cooperative, and have something to back yourself up if they ask why you asked this question
8. Get an allotment
9. Cut down on your coffee intake, and make sure that what you do buy has been fairly traded
10. Before you buy anything ask yourself how much you know about who made it and how, and move towards products where you have more information and closer ties

14 July 2009

Mr. Bean to Explain Quantitative Easing Policy

This is one of those moments - like when Tom Lehrer gave up satire to commemorate the award of the Nobel Peace Prize to Henry Kissinger - when you feel that all comedians should retire because the whole universe has been created by an almighty stand-up comedian. Not so much intelligent designer as cosmic joker.

Yes, the deputy-director of the bank of England is really called Mr. Bean and he really is undertaking a national tour to convince us of the seriousness of the policy of Quantitative Easing. The BBC managed to post an online story about this with every sign of a straight face:

'Mr Bean is in Leeds on the first leg of a tour of the UK, attempting to explain what the Bank calls its "conventional unconventional" measure to counter the recession. Armed with a box of explanatory pamphlets, optimistically entitled Quantitative Easing Explained, he is on a single-handed mission to the world of gilt yields, money velocity and commercial paper to the people.'

Excuse me - I am loving this so much I can't type straight for fits of hysterical laughing.

It is good enough that the bank have admitted that money was always created from thin air, that the whole time they have been creating money as debt - at huge cost to citizens and the planet - it was completely unncessary. That has given me great satisfaction. But that they leave the task of explaining this policy in the hands of Mr Bean is just a delight too far.

Indications are that the public are unconvinced - questioning why the money is not reaching the small businesses it was apparently created for. The explanation is simple: the vast majority of the thin-air money has been used to buy up national and corporate debt and not sent to small businesses that are strapped for ready cash.

According to the BBC, 'Mr Bean hopes to work out if the bank's policy of pumping billions into the economy is beginning to ease the severity of the recession.' It's just as well they only have Mr. Bean on the case. Anybody with a slightly straighter picture of reality would quickly grasp that this was never the intention. Bankers and corporations have seen their share of the cash; businesspeople and taxpayers will just be paying the tab.

Russian Orthodox Economist Runs Amok

I spent the weekend at a proper economics conference, one where people had different views which they discussed heatedly over coffee, where we used the phrase 'crisis of capitalism' rather than 'credit crunch' and where I saw barely any equations. Most economics conferences are halls packed full of socially dysfunctional people who generally sleep through each other's presentation which are incomprehensible and address irrelevant subjects through the medium of mathematics. So much for the neoclassical paradigm.

At the Association of Heterdox Economics conference you find Marxists and Austrians (followers of Hayek) discussing sustainability over lunch, while elsewhere institutionalists (followers of the North American economists who had the temerity to introduce social understanding into economic theories) and Keynsians consider how best to deal with the banks.

In other words there is debate, diversity and a sharing of views. There is exchange and learning. This is not how economics usually functions. Academic economics is not a discipline, far less the science it yearns to be. It is much more akin to a religion, a system of beliefs that are imposed with totalitarian strictness. You may not advance through their hiearchy unless you undergo the scourge of crucifixon by regression.

Some aspects of the conference were disappointingly predictable. Questioners, especially in plenaries, reconfirmed what I call the Cato Inverse Law of Verbosity: the longer it takes you to ask your question the less insightful the question is. I also learned the concept of the 'Microsoft moment' which I've found invaluable since. Analogous to a 'senior moment' it helps to identify the near-clinical sickness of the software we are forced to rely on - and provides an excellent metaphor for the state of the economics profession as a whole.

Green economics is one strand amongst the heterodox, who would do better to call themselves pluralists. In what other discipline do you have to define yourself as heterodox just for daring to ask questions and challenge orthodoxy? It reminds me of an email I received recently letting me know that my book called, unconfusingly, Green Economics, is to be found in the geography rather than economics section of Waterstones.

At one level this introverted, autistic behaviour by economists can provide a source for humour, but it is also desperately serious. The narrow and misguided focus of neoclassical economics has allowed the collapse of the world economy and the destruction of the earth. The call for a public enquiry into the economics profession that was made at the conference should become a campaign to demand that the public money that pays for research into this most important area of life should no be controlled by the cartel of market maniacs.

7 July 2009

Public Service

My musings on the value of public goods were enhanced by a recent trip to Scotland. It is a noticeably more public-spirited country than England, whether you measure this in terms of public space, public transport or even public toilets. Ok, I was in Edinburgh, Scotland's wealthiest city, and it was beautiful weather, but the state of care for buildings and parks really struck home - not to mention the fact that everything was free.

I was in Edinburgh to see my son graduate, a delightful event which involved him being tapped over the head with a hat made from a pair of John Knox's trousers - as legend has it - and which took place in the McEwan Hall. I was planning to write a blog contrasting the continued commitment to erudition of Scotland's universities with the money-grubbing that has sadly tarnished by own Alma Mater where, if I were to study today, I would find myself in the Said Business School.

But of course the Mr. McEwan who funded the hall is the same man who is responsible for generations of drunken Glaswegians, just as Bristol University was funded by the Wills family who destroyed the lungs of several generations of working people. But am I too deluded to think that their attitude towards the university would have been one of deferential respect? And that this would be in stark contrast to Mr. Said, who probably condescended to donate his millions merely to buy some PR?

Since HE became swallowed up into the business brief (when we moved in the Department for Innovation, Universities and Skills which was later merged into the Department for Business, Innovation and Skills, making clear our key role as provider of creative thinkers for business), it has been clear that the government's view of universities is simply a training institution for corporations. Our role now is to teach 'academic skills for business' and the closer we are to an out-sourced training institution the happier are our paymasters. This is a disaster for our academic freedom, but also for the country. Since our research is now held within the straitjacket of business thinking, we cannot solve the problems of the world if those solutions might (and let's face it they usually do) result from the activities of said businesses.

2 July 2009

Commons Sense and Market Mayhem

As must have become clear by now I am not a loyal aficionado of the school of holy writ when it comes to economic theory. However, I am interested to see the UK economy proving one of the central principles of market theory that the theorists themselves appear to have forgotten: the limitations of the market when it comes to public goods.

The theory says that 'public goods' cannot be provided efficiently by the market. The rather grainy image below shows why this is the case by setting up a simplistic four-dimensional division of goods between different categories according to whether you can exclude other people from them and whether you compete with other people to obtain them.

So-called 'club goods' are provided to those who sign up, so they are not individual but you can be excluded from them. Rival and excludable goods are the things you buy in shops. Commons resources are the sort of aspects of life that are of especial interest to a green economist, such as nature and the blackboard outside my local pub which has an amusing quotation to lift your spirits every morning. (If they run out of inspiration it defaults to 'Up the Workers!'). The strict public-private division leaves no space for co-operative or mutual solutions, but we'll leave that discussion for another day.

Today the focus is on the final category: public goods. Theory says it makes sense to provide these as a community, paid for from taxation, because you cannot exclude people from them and they benefit everybody in the community. This is a recognition that education or a decent postal service are not personal services but important components of the sort of society we all want to live in. Some of us will pay more for them than others, and we will use them more or less at different points in our lives. They are services we share and therefore should be in the public sector.

I need hardly point out that, following hard on the heels of our lesson about the very public nature of banking, the theory has been proved this week in the case of both railways and post offices - they simply will not work in the private sector. When bits of them are privatised profits are made by corporations and their shareholders, the service declines, and when profits are no longer available we still have to fund them from taxation because they are too fundamental to do without. This is not a radical old-Labour conclusion; it is the obvious conclusion from any (even a market-orientated) examination of how the economy works.

So why have we struggled for years with disastrous and declining rail and post systems? The megalomania of the market makers has outstripped even their own dubious theory. Their mantra that the market is always best was used to extract all possible value from some of our most precious public goods, leaving us with near-worthless husks that we will now have to resuscitate.