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September 15, 2015

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Igor Belanov

"I suspect, therefore that Labour will eventually revert to type, being a moderate successful social democratic party"

Social democracy is practically dead. Its ideological, social, economic and organisational bases are disappearing, and organised labour has long ago been driven away from a position as a 'progressive' wing of the establishment.

That is why there is such a crisis in the Labour Party. The decision that has to be faced is whether the Labour Party continues to try and progress further into the establishment or if it rejects the tactic of appeasing the powerful and privileged. The anti-establishment wing has achieved an important victory but, should it ultimately fail, Labour will not revert to social democracy but to a more thoroughgoing neo-liberalism.

Bob

"One is the danger of capital flight. Any government which tries to raise anything like £120bn from companies - some estimates of the "tax gap" - would see investment collapse; £120bn is equivalent to 30% of UK corporate profits. This greatly limits how much Corbyn can tax firms: in fairness to him, Richard Murphy recognises this."
Which then is spent and becomes corporate profits again.
Look up the Kalecki profits equation.

Bob

http://www.nakedcapitalism.com/2011/08/philip-pilkington-profits-in-a-capitalist-economy-%E2%80%93-where-do-they-come-from-where-do-they-go.html

From Arse To Elbow

You start by suggesting that leaders have limited impact, and then suggest that parties suffer the same shortcoming: the first because of institutional constraints, the second because of socio-economic constraints.

Perhaps what we need is not so much "to question the ideology of leadershipitis" (which has clearly been waning for some time now), but to ask: just how much, and through what mechanisms, parties can change society?

In other words, is democratic politics possible under neoliberal constraints? In their different ways, Occupy, Syriza and Corbyn are all asking that same question.

Brett

Assuming Corbyn became PM in 2020 (no idea on how probable that is), my guess is that he'd pull a Mitterand in the face of capital flight. That could be good in some ways, though, since Mitterand did eventually put all of the nationalized industries through aggressive restructuring efforts to make them profitable and more efficient again (with varying degrees of success). Maybe a Corbyn government could do the same.

What he's getting at is that companies have organizational capital - cultures and ways of doing things - which are very difficult to change.

That's why you need churn, new firms rising up to drive out or absorb the old ones.

Bob

Chris Dillow needs to realise that you can't do capital flight in a sovereign currency. You always have to sell what you have to somebody else.

If you put the corporation tax rate up on a firm, and you make the capital allowances generous then unsurprisingly firms start spending on investment rather than hoarding profits and paying the tax charge.

So you actually increase investment by putting tax rates up.

Stop the pointless FUD.

Bob

"my guess is that he'd pull a Mitterand in the face of capital flight."
Ah. The Mitterand Myth. Read:
http://bilbo.economicoutlook.net/blog/?p=31631

Bob

"In other words, is democratic politics possible under neoliberal constraints?"
Yes. Absolutely. Enough people vote for a left wing party and then win and carry out their programme.
Syriza are in the Eurozone and should have exited. The UK is not. They could have exited the EU and the Eurozone but Tspiras is a European Nationalist and really, really believes in it!
Occupy are a bunch of hippies.
There are no wardrobe monsters. Corbyn can and will get elected if he can convince enough of the electorate to vote for him.

chris

@ Bob: I'm well aware of Kalecki's profits equation but I don't see how it helps in this case. If the govt does tax cos by an extra £120bn and then spends the £120bn (contrary to the impression given that the deficit can be closed by taxing cos!) some of that money will go to wages or imports, so firms won't recoup the cash, except perhaps through 2nd. 3rd round multiplier effects - which might not be big enough. And individual firms might well fear that they won't get the cash back, and so might well cut investment.
You're right that capital flight takes the form of someone selling to someone else. But if say share prices have to fall to find that seller, the govt will lose tax revenues (though I had in mind an investment strike - loss of physical capital - as much as the flight of financial capital.)
I take the point that capitalists tend to exaggerate these risks, but they are nevertheless real, and it's a brave govt that totally ignores them.
You might be right that a higher tax rate and higher capital allowances might raise investment. I'd welcome evidence as to how much this might happen.

Bob

"some of that money will go to wages or imports,"
If it goes to wages it is spent, except for Worker's Saving.
The interesting thing in the equation is that DIVIDENDS add to profits, they are counted as
"contrary to the impression given that the deficit can be closed by taxing cos!"
That depends if there is saving in the spending chain.
The govt will get ALL its money back if there is no saving in the spending chain, even with 0.5% tax rate and massive amount of spending.
Simple maths progression. Some is spent, that is taxed, some is spent...
That money will generate tax due to the extra real activity that happens. Breath in. Breath out.
Of course too low tax and too high spending outstrips the real capacity of the economy.
Think of the financial circuit (money changing hands) inducing money in the real activity circuit.
I repeat, deficits are not under control of the govt.

Bob

Sorry was busy editing the bottom forgot the dividends bit.
Dividends are distributed profits.
See:
http://www.pragcap.com/dividends-the-secret-sauce-in-corporate-profits/

Bob

"You're right that capital flight takes the form of someone selling to someone else. "
Ah. I meant in the forex market.
No conversion, floating currencies is an exchange.

BCFG

Maybe Chris simply wasn't listening to Corbyn when he repeatedly said that his would be an inclusive party, where the leader DOES NOT HAVE ALL THE ANSWERS.

Corbyn has repeatedly said he wants party policies to be developed collectively and that he doesn't believe in the fetish of the leader.

To be honest, the more I read you the more convinced I am that you are trapped in the bubble you keep banging on about.

Igor - Labour were headed in the Neo-Liberal direction anyway, if Corbyn is driven out of office by the establishment lackeys they will just carry on the same path, just with far fewer members and a decimated electoral base. Come to think of it, maybe that will force them a little to the left (at least the odd token tit-bit? Stange you think the opposite will happen.

Igor Belanov

BCFG:

Sorry, I think you have misinterpreted me somewhat. I was arguing that the Labour Party had already moved from social democracy to neoliberalism, and if Corbyn's radical shift fails, it will revert to neoliberalism, only of an even more virulent kind than before.

BCFG

"I was arguing that the Labour Party had already moved from social democracy to neoliberalism, and if Corbyn's radical shift fails, it will revert to neoliberalism, only of an even more virulent kind than before."

No, that is what I thought you said!

So the above still stands. Isn't it more likely that in the worst case scenario Corbyn, and his supporters, will force Labour ever so slightly to the left in order to stand any chance of keeping the party from blowing apart?

I do think it will ensure that no left winger will ever be in a position to challenge the PLP.

I do think we should show a bit more optimism though (Igor - you remind me of Marvin off hitch-hikers. "What if it all goes wrong and we have even worse policies than before and we will all die anyway").

While leaders may not be able to change much, movements can move mountains.

Igor Belanov

I'm merely suggesting that the movement will have to be vigilant and make sure that backsliding doesn't happen.

Phil

If the SDP had been elected in 1983 they were going to go through with the privatisation of BT and then stop there, leaving all the other utilities in public hands (not to mention British Coal and British Steel). New Labour was far to the Right of their programme - and today's 'Blairites' are arguing in favour of dismantling some of the achievements of New Labour!

What does a return to "moderate social democracy" mean in this context?

aragon

Jeremy Corbyn does not understand macro-economics, John McDonnell does not understand macro-economics, as opposed to accountancy, ditto David Cameron, and George Osborne. This is self-evident.

Quoting Bill Mitchell, that austerity is a choice, is not a sufficient appreciation of MMT or macro-economics. They are at least aware of MMT now.

In the case of Amazon, Apple, Microsoft et al, profits are been moved offshore (tax havens) avoiding most of the tax due. They are then trying to persuade President Obama to allow them to repatriate profits without incurring American Taxes.

Amazon's threats are meaningless, they are extracting money from the UK, while avoiding their legal tax liabilities. If Amazon do not sell us books and CD's, someone else will.

Tax avoiders by avoiding tax gain an unfair advantage over companies that pay tax.

Brett

@Bob
"Ah. The Mitterand Myth. Read:"

What is this, the No True Leftist argument? Mitterand had a staunchly leftist program, which he implemented - and then went back on when the cost of keeping the program became too much and would have required a very politically difficult break with the EMC. He was at least as leftist as Tsipras in Syriza, and as far left as any in France who wasn't a member of the French Communist Party.

aragon

It is not about been leftist, or right wing, or utopian/dystopian.

Jeremy Corbyn, Lisa Nandy (Jeremy Corbyns heir apparent), the Brownites/Blairites, will all fail the people because they don't have the first clue how the systems work, and yes the myths and processes that sustain it.

This is a prerequisite but not sufficient on it's own (change management etc) for change.

In the absence of comprehension, all they will do is rage against the system. At the best they will make changes at the margin. They will fail the public, like their predecessors.

The stream of well meaning, and populist, political idiots is endless and self selecting...

nick ford

Actually Chris, I don't think that was what Buffett quite meant. I think he was referring to the economics of industries, such as textiles and garment manufacturing in the USA, and was saying that some such markets are so difficult, no matter how good the management is, it will never be possible to make decent profits.
I would argue that it is relevant to Corbyn, though. For a political party, if the policy program is fundamentally bad, no matter how good the presentational skills are, or how good the party management, it will still fail.
That is Corbyn's problem. He has some good ideas, for example about foreign policy, and council house building. However, his basic philosophy is wrong and a proven failure, the world over. As a consequence, he will go down, and deserves to.
Too many people think Blair moved Labour to the right simply as a matter of political positioning. He actually moved Labour to more free market policy positions because he and his colleagues understood these were actually the correct policies.

chris

@BCFG - I was listening. I'm just waiting for those words to be translated into concrete and significant practice. If they are, I'll applaud.
I find it a little odd that when Liz Kendall talked about decentralizing power few on the left believed here whilst they are keen to believe Corbyn's words.

Phil

My argument that Corbynism is the closest thing on offer to "moderate social democracy" gets some support from James Bloodworth, surprisingly enough ("for today's Labour pragmatists even the most progressive achievements of New Labour are suddenly considered too left-wing and 'spendthrift'.")
http://www.ibtimes.co.uk/blame-blairites-rise-new-labour-leader-jeremy-corbyn-1519627

e

@ chris We’re all incorrigible cynics it seems, who or what is to blame?

Igor Belanov

@chris

"I find it a little odd that when Liz Kendall talked about decentralizing power few on the left believed here whilst they are keen to believe Corbyn's words."

Well there is something to be said for past behaviour and the allies you keep. Corbyn has been an MP for 32 years and has consistently supported anti-establishment causes. Kendall has allied herself with, and was supported by, the very figures in the Labour Party who have consistently appeased the privileged and powerful. It's not difficult to know who to believe.

Igor Belanov

"It is not about been leftist, or right wing, or utopian/dystopian.

Jeremy Corbyn, Lisa Nandy (Jeremy Corbyns heir apparent), the Brownites/Blairites, will all fail the people because they don't have the first clue how the systems work, and yes the myths and processes that sustain it."

Vote Aragon for Supreme Leader! He has all the answers. Forget politics as well, because we just need the person who understands exactly 'how the systems work'.

BCFG

Chris,

I don’t know if you have ever been a trade unionist or attended a TUC conference but I think Corbyn’s position is obvious. The TUC will debate many things and develop policy positions during the conference. These policies are not top down ideas from leaders but practical policies from the experience of members in the workplace. This is where they spring from. Those ideas are then debated.

I think this is the model Corbyn has in mind, but extending it to all the members of the party.

So am puzzled to what you are waiting for?

Bob

"What is this, the No True Leftist argument? Mitterand had a staunchly leftist program, which he implemented - and then went back on when the cost of keeping the program became too much and would have required a very politically difficult break with the EMC"
Mixed comment.
I actually consider myself near the centre of the spectrum.
I don't support loony left ideas like basic income (let's give free money to everyone! Yeah!) and unlimited immigration.
Read the article I linked. It is a popular myth.
It didn't "cost too much."
As to the EMC, yes that was the reason, totally correct.

Blissex

«Labour will eventually revert to type, being a moderate successful social democratic party»

A different opinion from P Mandelson quoted (my usual quote) from Lance Price's diary,
1999-10-19:

«Philip Gould analysed our problem very clearly. We don’t know what we are. Gordon wants us to be a radical progressive, movement, but wants us to keep our heads down on Europe.
Peter [Mandelson] thinks that we are a quasi-Conservative Party but that we should stick our necks out on Europe.
Philip didn’t say this, but I think TB either can’t make up his mind or wants to be both at the same time.»

The problem with Labour is that its moderate social demcratic voters are mostly in the North, and concentrated, and the swing voters that matter to winning elections are rabid rentiers, and scattered enough that they matter a lot. Elections are won under FPTP, and that has consequences.

Such that winning national elections means always pushing up property prices in the South and holding or pushing down wages, and benefits in the North.

iain CAMPBELL

On the £120bn, unless we believe it is all being squirreled away offshore in tax havens, for the Govt to get it they have to withdraw £120bn already being spent.
So, unless its spending generates more activity than the tax dodgers, that £120bn is not additional to the economy?

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