This is my conceptual for a paper in my development course:
Chile offers academics a rare real world example of the liberal democratic market system losing hegemony culminating in the election of Marxist president, Salvador Allende in 1970 with the express objective to replace the capitalist market system. The Allende regime, lasting for about three years, was able to begin a process of democratic socialist transformation via the nationalization of strategic industries, such as copper, and creating the mechanisms for a new technological central planning system distinct from the Soviet GOSPLAN system—cybersyn; nevertheless, still retaining the democratic character of the former liberal regime. The presidential election of 1970, and the net gain in the parliamentary elections of 1973 for the Communist Party—in the midst of the largely, externally induced economic crisis—displayed that socialism as an alternative had growing popular support. However, the Chilean democratic-socialist revolution highlighted the collapse of liberalism and capitalism as a hegemonic, ‘common sense’ force, it also displayed the need for a mass movement to protect the revolution from being subsumed by internal and external threats. Indeed, as Polanyi suggests, capitalism is a system characterized by a ‘double-movement’. The attempt to socialize Chile pushed the Polanyist oscillation—of embedding the economy back to society—to an extreme that invited an equally forceful lurch back to the disembedding of the economy from the society by the capitalist classes.
The coup d’etat staged against the Allende regime on September 11, 1973 was the culmination of not merely a local struggle for hegemony/domination, but was a metaphor for the global struggle for ideological control, which in the 1960s and 1970s reached a fevered pitch. The coup d’etat represented the first salvo in the capitals ‘counter-revolution’ against the ascendant socialist, and hegemonic Keynesian discourse. The golpistas in Chile were supported by a myriad of local and external powers, whose express objective was to reestablish the market system as dominant means to organize society through domination. It was also an attempt to subordinate labour via the co-optation and elimination of society’s defence mechanisms, which included, the cooptation of the independent union movement and civil society. The physical elimination, or ‘cleansing’, from the nation’s body politic the intellectual and cultural vanguard of the socialist/working class movement, which were essential to creating a new hegemonic discourse. Lastly, and most importantly, the ‘counter-revolution’ meant replacing Chile’s developmental, and labour policies with the ‘scientific’, utilitarian, cosmopolitan, capitalist class bias of Friedmanite economic reforms. This meant subordinating Chile’s economy into a renewed neoliberal globalization discourse, subsuming Chile’s economic development for the interests of international accumulation, and reestablishing the classic ‘division of labour’ of the world economy via the liberalization of Chile’s trade and capital accounts after the capture of the state by the ‘Chicago Boys’ in 1975.
By September 11, 2001, twenty-eight years after the destruction of La Moneda by the Chilean Air Force, commanded by ‘market fundamentalists’ in Santiago, the World Trade Centre in New York City, the symbol of neoliberal globalization was brought down by an aerial attack by ‘Islamic fundamentalists’. The supposedly hegemonic neoliberal edifice, built on the triumphalism and mythology of what Francis Fukuyama called the ‘end of the history’ after the collapse of communism in 1989, was itself beginning to crumble. These failures include the failure of neoliberalism to resolve the debt crisis and revamp growth after the 1980s. The robber baron, ‘shock-therapy’ capitalism that characterized the post-communist transitional economies, amplified tense class and ethnic tensions, which proved that China’s gradualist approach under the rubric of authoritarianism was optimal. The exacerbation of the financial and social crisis in East Asia via IMF Structural Adjustment Policies culminating with the coup of Suharto in Indonesia, highlighting that capital controls, as those employed by China and Malaysia were necessary for small, and vulnerable economies. The subsumption of class politics by ethnic and religious identity politics exacerbating ethnic tensions worldwide, for example, the former Yugoslavia, Rwanda, and India. The double-speak of liberal internationalism exemplified by the Kosovo War, helping shift Russia away from liberalism towards nationalism and helping to sow deep cynicism towards international law and its institutions. Lastly, the deep scars left over by the mythologized ‘peaceful and democratic’ implementation of neoliberalism throughout the periphery, i.e. Venezuela 1989, Argentina 1991, Russia 1993, etc. began to erode the legitimacy of neoliberal globalization.
It was during this crisis at the turn of the century, that an initially tempered ‘double movement’ towards the subordination, or embedding, of the market system to democratic forces began to take on serious momentum under Hugo Chavez in Venezuela.
2/16/09
1/7/09
Credentialism
Here is an excerpt from my Democratic Theory paper, discussing the notion of 'credentialism':
Education is one, if not the most important preconditions that a functioning democracy needs so it can sustain itself by teaching valuable skills for civic participation; these include basic skills such as literacy, numeracy, and social skills. However, one of the most important skills, that is not be prioritized within the educational establishment in North America is critical thinking skills. One reason is due to ‘credentialism’; education has been degraded from a means to teach civically valuable, democratically necessary skills to those geared towards individualistic, opportunistic ends such as employment leading to educational standardization, intellectual subordination, and civic resignation.
However, it was not always like this. As Jacobs argues, during the 1960s one of the reasons that students protested was that they felt they were “shortchanged in education...The students were protesting attempts to transmit culture that omitted acquaintance with personal examples and failed to place them on speaking terms with wisdom” (Jacobs 47). The problem had its origins, Jacobs claims, in the 1950s when “it dawned on university administrators...that modern economic development...depended on a population’s funds of knowledge—a resource that later came to be known as human capital” (61). The term ‘human capital’ has the effect of instrumentalizing, and commodifying education and the intellectual faculties of the individual. By subsuming the intellectual into the interest’s capital, intellectual pursuits were increasingly standardized, and uncritical; critical skills were not valuable to capital whose interest is to mass-produce standardized knowledge, much as nails and bolts are standardized for machines, because they cheaper and easily transmutable. The students recognized this and felt ‘shortchanged’ because they intuitively knew this is not what education is about, and they are not machines.
Nineteen-sixty eight would be the culmination of revolutionary fervor among students from France to Mexico, and it was this intellectual liberation movement that was seen by the elite as subversive to democracy; this is best elucidated in the Trilateral Commission’s infamous 1973 report, The Crisis of Democracy. The report warned,
The development of an "adversary culture" among intellectuals has affected students, scholars, and the media...[these] value-oriented intellectuals who often devote themselves to the derogation of leadership, the challenging of authority, and the unmasking and delegitimation of established institutions, their behavior contrasting with that of the also increasing numbers of technocratic and policy-oriented intellectuals...this development constitutes a challenge to democratic government which is, potentially at least, as serious as those posed in the past by the aristocratic cliques, fascist movements, and communist parties (Huntingon, et al. 6-7).
The solution to this crisis lay in changing education from a liberating experience to one where authority and capitalist values dominated, enter the technocrat—as the aforementioned quote mentioned as the non-subversive element. ‘Credentialism’ is, in part, a reaction to the experiences from the 1960s. Students in the 1960s, at the height of the welfare state, had ample access to state subsidies, and universities were authentically public institutions were well funded. With the rise of neoliberalism and the retrenchment of the state from its educational responsibilities, students and universities were left with the bills. This led to a sea-change in thinking among students, “In another decade, [the 1980s] however, students dropped that cause [educational emancipation], apparently taking it for granted that credentialing is the normal primary business of institutions of higher learning and that its cost is an unavoidable initiation fee into acceptable adulthood” (Jacobs 47). To make sure that students would see their education as a means not as an ends, the increase in student debt acts as a coercive reminder to students that “the only guarantee behind the loan is the valuable credential itself” (Ibid).
Thus, the revolutionary élan of modern students is stunted by debt bondage. The neoliberal, individualist ‘Creative Class’ theorem seems to be a better fit for a generation of students more concerned with paying the bills and individual emancipatory pursuits that can be bought and sold than democratic social change. Instead, students, by necessity, after graduation are more likely to become technocrats than become intellectuals, and today it has become common sense to do so. The problem is that these members are part of the ‘creative class’ and the ‘Creative Class’ is anything but creative.
Jacobs introduces Thomas Kuhn’s notion of ‘paradigms’ when she discusses the credentialed, ‘Creative Class’ agent. She states,
...previously established scientific verities are themselves capable of hampering scientific advancement. He called such verities paradigms and drew attention to the fact that they shape people’s entire worldviews. Most people do not enjoy having their entire worldview discredited; it sets them uncomfortably adrift. Scientists are no exception” (70).
As eluded to before, modern education with its mass production bias, and ‘human capital’ bias does not bring about truly innovative or critical skills out of their students who later go on into the workforce. However, due to their education and status in society become part of the ‘Creative Class’, and even our civic leaders.
Therefore, with weak critical skills, a credential, higher incomes, and a paradigmatic view of the world the ‘Creative Class’ is actually an anti-democratic force for two reasons. Firstly, with their credential they are able to appeal to authority over members of the community who do not have this credential, thereby cutting off democratic discourse. Further, since their education is paradigmatic, but do not realize this, they believe they know the facts of a situation with advanced theoretical knowledge. As Kuhn states, “What were ducks in the scientist’s world before the revolution are rabbits afterwards” (111). Thereby, their problem solving can potentially cause more problems than the initial problem caused.
Education is one, if not the most important preconditions that a functioning democracy needs so it can sustain itself by teaching valuable skills for civic participation; these include basic skills such as literacy, numeracy, and social skills. However, one of the most important skills, that is not be prioritized within the educational establishment in North America is critical thinking skills. One reason is due to ‘credentialism’; education has been degraded from a means to teach civically valuable, democratically necessary skills to those geared towards individualistic, opportunistic ends such as employment leading to educational standardization, intellectual subordination, and civic resignation.
However, it was not always like this. As Jacobs argues, during the 1960s one of the reasons that students protested was that they felt they were “shortchanged in education...The students were protesting attempts to transmit culture that omitted acquaintance with personal examples and failed to place them on speaking terms with wisdom” (Jacobs 47). The problem had its origins, Jacobs claims, in the 1950s when “it dawned on university administrators...that modern economic development...depended on a population’s funds of knowledge—a resource that later came to be known as human capital” (61). The term ‘human capital’ has the effect of instrumentalizing, and commodifying education and the intellectual faculties of the individual. By subsuming the intellectual into the interest’s capital, intellectual pursuits were increasingly standardized, and uncritical; critical skills were not valuable to capital whose interest is to mass-produce standardized knowledge, much as nails and bolts are standardized for machines, because they cheaper and easily transmutable. The students recognized this and felt ‘shortchanged’ because they intuitively knew this is not what education is about, and they are not machines.
Nineteen-sixty eight would be the culmination of revolutionary fervor among students from France to Mexico, and it was this intellectual liberation movement that was seen by the elite as subversive to democracy; this is best elucidated in the Trilateral Commission’s infamous 1973 report, The Crisis of Democracy. The report warned,
The development of an "adversary culture" among intellectuals has affected students, scholars, and the media...[these] value-oriented intellectuals who often devote themselves to the derogation of leadership, the challenging of authority, and the unmasking and delegitimation of established institutions, their behavior contrasting with that of the also increasing numbers of technocratic and policy-oriented intellectuals...this development constitutes a challenge to democratic government which is, potentially at least, as serious as those posed in the past by the aristocratic cliques, fascist movements, and communist parties (Huntingon, et al. 6-7).
The solution to this crisis lay in changing education from a liberating experience to one where authority and capitalist values dominated, enter the technocrat—as the aforementioned quote mentioned as the non-subversive element. ‘Credentialism’ is, in part, a reaction to the experiences from the 1960s. Students in the 1960s, at the height of the welfare state, had ample access to state subsidies, and universities were authentically public institutions were well funded. With the rise of neoliberalism and the retrenchment of the state from its educational responsibilities, students and universities were left with the bills. This led to a sea-change in thinking among students, “In another decade, [the 1980s] however, students dropped that cause [educational emancipation], apparently taking it for granted that credentialing is the normal primary business of institutions of higher learning and that its cost is an unavoidable initiation fee into acceptable adulthood” (Jacobs 47). To make sure that students would see their education as a means not as an ends, the increase in student debt acts as a coercive reminder to students that “the only guarantee behind the loan is the valuable credential itself” (Ibid).
Thus, the revolutionary élan of modern students is stunted by debt bondage. The neoliberal, individualist ‘Creative Class’ theorem seems to be a better fit for a generation of students more concerned with paying the bills and individual emancipatory pursuits that can be bought and sold than democratic social change. Instead, students, by necessity, after graduation are more likely to become technocrats than become intellectuals, and today it has become common sense to do so. The problem is that these members are part of the ‘creative class’ and the ‘Creative Class’ is anything but creative.
Jacobs introduces Thomas Kuhn’s notion of ‘paradigms’ when she discusses the credentialed, ‘Creative Class’ agent. She states,
...previously established scientific verities are themselves capable of hampering scientific advancement. He called such verities paradigms and drew attention to the fact that they shape people’s entire worldviews. Most people do not enjoy having their entire worldview discredited; it sets them uncomfortably adrift. Scientists are no exception” (70).
As eluded to before, modern education with its mass production bias, and ‘human capital’ bias does not bring about truly innovative or critical skills out of their students who later go on into the workforce. However, due to their education and status in society become part of the ‘Creative Class’, and even our civic leaders.
Therefore, with weak critical skills, a credential, higher incomes, and a paradigmatic view of the world the ‘Creative Class’ is actually an anti-democratic force for two reasons. Firstly, with their credential they are able to appeal to authority over members of the community who do not have this credential, thereby cutting off democratic discourse. Further, since their education is paradigmatic, but do not realize this, they believe they know the facts of a situation with advanced theoretical knowledge. As Kuhn states, “What were ducks in the scientist’s world before the revolution are rabbits afterwards” (111). Thereby, their problem solving can potentially cause more problems than the initial problem caused.
12/22/08
Krugman: The Madoff Economy -- The Economy of Parasite
An amazing op-ed article by the Nobel Prize winning economist, Paul Krugman explaining how the financial industry, and the neoliberal economy was basically built on a massive fraud perpetrated on investors and the public at large. The strange, self-serving incentives on Wall Street, and other financial markets have destroyed a once productive economy. Today we face total debt in the hundreds of trillions, we have allowed major corporations to become so big that they have essentially socialized our economy in the worst possible way with private benefits and public costs (bailouts), 50% of the world's market capitalization has been wiped off, millions of jobs have been erased off the payrolls, and we aren't done yet.
How bad does it have to get for people to seriously consider viable alternatives? The stock markets are hyper-inefficient at allocating capital (as we have seen), the free market is never free, and the credit-card economy had reached a brick wall. The solutions are simple, but politically hard. Redistribute income, impose income caps, increase the minimum wage and tie it to inflation, increase taxes on non-productive/parasitic sectors (FIRE), increase taxes on the super-rich who have been the ones who have dis-saved NOT the poor who have saved--running contrary to that beautiful notion of "common sense", and the nationalization of the financial industry, or at least heavy regulation. If we ignore the lessons of this crisis our entire society will suffer a hole deeper than we can ever hope to dig ourselves out of. Quoting Keynes, "When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill done." (Keynes 193)
Oh and Merry Christmas!
http://www.nytimes.com/2008/12/19/opinion/19krugman.html?pagewanted=print
The Madoff Economy
By PAUL KRUGMAN
The revelation that Bernard Madoff — brilliant investor (or so almost everyone thought), philanthropist, pillar of the community — was a phony has shocked the world, and understandably so. The scale of his alleged $50 billion Ponzi scheme is hard to comprehend.
Yet surely I’m not the only person to ask the obvious question: How different, really, is Mr. Madoff’s tale from the story of the investment industry as a whole?
The financial services industry has claimed an ever-growing share of the nation’s income over the past generation, making the people who run the industry incredibly rich. Yet, at this point, it looks as if much of the industry has been destroying value, not creating it. And it’s not just a matter of money: the vast riches achieved by those who managed other people’s money have had a corrupting effect on our society as a whole.
Let’s start with those paychecks. Last year, the average salary of employees in “securities, commodity contracts, and investments” was more than four times the average salary in the rest of the economy. Earning a million dollars was nothing special, and even incomes of $20 million or more were fairly common. The incomes of the richest Americans have exploded over the past generation, even as wages of ordinary workers have stagnated; high pay on Wall Street was a major cause of that divergence.
But surely those financial superstars must have been earning their millions, right? No, not necessarily. The pay system on Wall Street lavishly rewards the appearance of profit, even if that appearance later turns out to have been an illusion.
Consider the hypothetical example of a money manager who leverages up his clients’ money with lots of debt, then invests the bulked-up total in high-yielding but risky assets, such as dubious mortgage-backed securities. For a while — say, as long as a housing bubble continues to inflate — he (it’s almost always a he) will make big profits and receive big bonuses. Then, when the bubble bursts and his investments turn into toxic waste, his investors will lose big — but he’ll keep those bonuses.
O.K., maybe my example wasn’t hypothetical after all.
So, how different is what Wall Street in general did from the Madoff affair? Well, Mr. Madoff allegedly skipped a few steps, simply stealing his clients’ money rather than collecting big fees while exposing investors to risks they didn’t understand. And while Mr. Madoff was apparently a self-conscious fraud, many people on Wall Street believed their own hype. Still, the end result was the same (except for the house arrest): the money managers got rich; the investors saw their money disappear.
We’re talking about a lot of money here. In recent years the finance sector accounted for 8 percent of America’s G.D.P., up from less than 5 percent a generation earlier. If that extra 3 percent was money for nothing — and it probably was — we’re talking about $400 billion a year in waste, fraud and abuse.
But the costs of America’s Ponzi era surely went beyond the direct waste of dollars and cents.
At the crudest level, Wall Street’s ill-gotten gains corrupted and continue to corrupt politics, in a nicely bipartisan way. From Bush administration officials like Christopher Cox, chairman of the Securities and Exchange Commission, who looked the other way as evidence of financial fraud mounted, to Democrats who still haven’t closed the outrageous tax loophole that benefits executives at hedge funds and private equity firms (hello, Senator Schumer), politicians have walked when money talked.
Meanwhile, how much has our nation’s future been damaged by the magnetic pull of quick personal wealth, which for years has drawn many of our best and brightest young people into investment banking, at the expense of science, public service and just about everything else?
Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.
Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.
After all, that’s why so many people trusted Mr. Madoff.
Now, as we survey the wreckage and try to understand how things can have gone so wrong, so fast, the answer is actually quite simple: What we’re looking at now are the consequences of a world gone Madoff.
How bad does it have to get for people to seriously consider viable alternatives? The stock markets are hyper-inefficient at allocating capital (as we have seen), the free market is never free, and the credit-card economy had reached a brick wall. The solutions are simple, but politically hard. Redistribute income, impose income caps, increase the minimum wage and tie it to inflation, increase taxes on non-productive/parasitic sectors (FIRE), increase taxes on the super-rich who have been the ones who have dis-saved NOT the poor who have saved--running contrary to that beautiful notion of "common sense", and the nationalization of the financial industry, or at least heavy regulation. If we ignore the lessons of this crisis our entire society will suffer a hole deeper than we can ever hope to dig ourselves out of. Quoting Keynes, "When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill done." (Keynes 193)
Oh and Merry Christmas!
http://www.nytimes.com/2008/12/19/opinion/19krugman.html?pagewanted=print
The Madoff Economy
By PAUL KRUGMAN
The revelation that Bernard Madoff — brilliant investor (or so almost everyone thought), philanthropist, pillar of the community — was a phony has shocked the world, and understandably so. The scale of his alleged $50 billion Ponzi scheme is hard to comprehend.
Yet surely I’m not the only person to ask the obvious question: How different, really, is Mr. Madoff’s tale from the story of the investment industry as a whole?
The financial services industry has claimed an ever-growing share of the nation’s income over the past generation, making the people who run the industry incredibly rich. Yet, at this point, it looks as if much of the industry has been destroying value, not creating it. And it’s not just a matter of money: the vast riches achieved by those who managed other people’s money have had a corrupting effect on our society as a whole.
Let’s start with those paychecks. Last year, the average salary of employees in “securities, commodity contracts, and investments” was more than four times the average salary in the rest of the economy. Earning a million dollars was nothing special, and even incomes of $20 million or more were fairly common. The incomes of the richest Americans have exploded over the past generation, even as wages of ordinary workers have stagnated; high pay on Wall Street was a major cause of that divergence.
But surely those financial superstars must have been earning their millions, right? No, not necessarily. The pay system on Wall Street lavishly rewards the appearance of profit, even if that appearance later turns out to have been an illusion.
Consider the hypothetical example of a money manager who leverages up his clients’ money with lots of debt, then invests the bulked-up total in high-yielding but risky assets, such as dubious mortgage-backed securities. For a while — say, as long as a housing bubble continues to inflate — he (it’s almost always a he) will make big profits and receive big bonuses. Then, when the bubble bursts and his investments turn into toxic waste, his investors will lose big — but he’ll keep those bonuses.
O.K., maybe my example wasn’t hypothetical after all.
So, how different is what Wall Street in general did from the Madoff affair? Well, Mr. Madoff allegedly skipped a few steps, simply stealing his clients’ money rather than collecting big fees while exposing investors to risks they didn’t understand. And while Mr. Madoff was apparently a self-conscious fraud, many people on Wall Street believed their own hype. Still, the end result was the same (except for the house arrest): the money managers got rich; the investors saw their money disappear.
We’re talking about a lot of money here. In recent years the finance sector accounted for 8 percent of America’s G.D.P., up from less than 5 percent a generation earlier. If that extra 3 percent was money for nothing — and it probably was — we’re talking about $400 billion a year in waste, fraud and abuse.
But the costs of America’s Ponzi era surely went beyond the direct waste of dollars and cents.
At the crudest level, Wall Street’s ill-gotten gains corrupted and continue to corrupt politics, in a nicely bipartisan way. From Bush administration officials like Christopher Cox, chairman of the Securities and Exchange Commission, who looked the other way as evidence of financial fraud mounted, to Democrats who still haven’t closed the outrageous tax loophole that benefits executives at hedge funds and private equity firms (hello, Senator Schumer), politicians have walked when money talked.
Meanwhile, how much has our nation’s future been damaged by the magnetic pull of quick personal wealth, which for years has drawn many of our best and brightest young people into investment banking, at the expense of science, public service and just about everything else?
Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.
Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.
After all, that’s why so many people trusted Mr. Madoff.
Now, as we survey the wreckage and try to understand how things can have gone so wrong, so fast, the answer is actually quite simple: What we’re looking at now are the consequences of a world gone Madoff.
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