From Gary Kasparov:
As always when it comes to stopping dictators, with every delay the price goes up. Western leaders have protested over the potential costs of action Ukraine at every turn only to be faced with the well-established historical fact that the real costs of inaction are always higher. Now the only options left are risky and difficult, and yet they must be tried. The best reason for acting to stop Putin today is brutally simple: It will only get harder tomorrow.
Read more at Garry Kasparov: It’s a War, Stupid! | TIME.
The unanimity of the media commentary about Russia and Ukraine brings to mind this quote from libertarian Murray Rothbard about war:
“War has always been the occasion of a great – and usually permanent – acceleration and intensification of State power of society. War is the great excuse for mobilizing all the energies and resources of the nation, in the name of patriotic rhetoric, under the aegis and dictation of the state apparatus. It is in war that the state really comes into its own: swelling in power, in number, in pride in absolute dominion over the economy and society. Society becomes a herd, seeking to kill its alleged enemies, rooting out and suppressing all dissent from the official war effort, happily betraying truth for the supposed public interest. Society becomes an armed camp, with the values and morals … of an ‘army on the march’.”
The war has not yet escalated to its full potential but it seems society has already reached the “herd” mindset and the western media is complicit and fearful to make any criticism of the west, even in left wing publications. Tony Abbott has received a boost in the polls for his stance and the opposition understands that this could be an election winner for him so Shorten is trying to outdo Abbott with bipartisan support.
The global agenda is even more relevant than domestic politics in the search for motivation to renew the cold war and heat it up.
The ebook “Flashpoint in Ukraine” edited by Stephen Lendman and published before the downing of MH17 counters the approved western narrative:
http://www.claritypress.com/LendmanIII.html
This lengthy review summarises some of the chapters and has detailed information about the economic implications:
http://www.globalresearch.ca/book-review-examining-flashpoints-in-ukraine/5392372
A quote from the review:
“Perhaps the best chapter to analyze the economic implications of the crisis in Ukraine is the one written by Jack Rasmus and titled, “Who Benefits from the Ukraine Economic Crisis?” He notes that the initial bailout package offered by the West totalled $15 billion. It clearly was inferior to the money and huge gas discount offered by Russia. Moreover, Russia did not insist on a 50% reduction in household subsidies for gas, cuts in government employment and pensions, or the privatization of government assets and property.
Nevertheless, on 30 April 2014, Kiev’s coup regime negotiated a $17 billion loan with the IMF. As a prior action, Naftogaz raised its subsidized gas rates to consumers by 50%, effective May 1st. As a prior action, a law was passed that raised property and excise taxes, cut pensions for former government employees by 10% and reduced the number of law enforcement employees.
As a prior action demanded by the IMF, Ukraine’s government implemented a free-floating exchange rate. Certain to spark inflation, the National Bank of Ukraine recently forecast inflation of 12 to 16 percent this year. (A 7 April 2014 article in The Nation by Alec Luhn was the source of the information provided above.)
But, as Professor Rasmus notes, $17 billion was the estimated amount required just to avoid defaulting on payments to banks for debt already incurred. Thus, “the lion’s share” of the IMF loan will go to western banks to pay principal and interest on previous loans. (p.122)
Ukraine, in Rasmus’ view, actually needs a bailout of $50 billion – which it never will receive. Consequently, Ukraine will find itself consistently begging for more loans. And, consequently, Kiev’s coup regime will find itself compelled to “cut services and privatize public assets, selling them to billionaires and western interests at fire sale prices.” (p. 130)
Mr. Rasmus claims that the West wants to get their hands on Ukraine’s nuclear power, shipbuilding, aircraft, automobile, truck and public bus manufacturing industries in order to integrate them into their international corporations. Downsizing and restructuring will follow and will be accompanied by cuts in wages and benefits.
On the website of Professor Michael are several articles about Ukraine.
This is a link to his contribution to “Flashpoint”
http://michael-hudson.com/2014/05/the-new-cold-wars-ukraine-gambit/
This 4/8/14 interview of Michael Hudson updates the progress of the west in achieving what the real objective is- to have Ukraine resources and infrastructure in western control. Vice President Biden’s son is doing very well:
Michael-hudson.com/2014/08/Washington-consensus-encloses-ukraine/
The people in Eastern Ukraine have opposed shale gas from being developed as this is a major agricultural area but the west wants it developed to make Ukraine independent from having to get gas imports from Russia. Then the Ukrainian people can buy their country’s own gas from western corporations. Meanwhile the World Bank is supporting the large scale alienation of agricultural land to foreign investors so they can export food to western Europe. With the dismantling of the Ukrainian economy the Ukrainian people will not be able to afford to buy the food grown on their foreign owned land – a similar model to Ireland in the 19th century.
The western narrative asks us to believe in the existence of an “evil empire” but evidence is that the neo-cons and Wall Street monsters best fit that description.
How have the rest of Eastern Europe fared since falling into the hands of the “evil empire”?
Colin are these GDP graphs a great reference to how much these countries are being ripped off by foreign oligarchs taking and using their resources and assets? Professor Hudson used the analogy of Ireland in the 19th century when British landlords grew cash crops for export while the Irish people suffered the potato famine and either died of starvation or those who could emigrated to America and elsewhere. I suppose they did not do GDP figures then but if they had they might have looked good too on the basis of the export crops.
Professor Hudson’s biography: http://michael-hudson.com/bibliography/
includes from 2006-present: Prof. of Economics and Director of Economic Research at the Riga Graduate School of Law in Latvia. There are articles on his websites from 2010 about Latvia.
Here is a link to the most recent:
http://michael-hudson.com/2013/01/latvias-economic-disaster-as-a-neoliberal-success-story-a-model-for-europe-and-the-us/
I am not a fan of austerity as a response to a banking/financial crisis, but I don’t think this should be blamed on foreign oligarchs — nor equated to the Irish potato famine.
This looks like an objective summary of the famine:
From http://irishpotatofamine.net/
The potato famine of 1845 and the response of the overlords is just an extreme example of what happened to the Irish under “colonisation” as you put it. Conquest would be a more accurate term.
The elites of today are more sophisticated. As Professor Hudson says in:
http://michael-hudson.com/2014/05/the-new-cold-wars-ukraine-gambit/
“Finance in today’s world has become war by non-military means. Its object is the same as that of military conquest: appropriation of land and basic infrastructure, and the rents that can be extracted as tribute. In today’s world this is taken mainly in the form of debt service and privatization.”
The replacement of soviet communism in the manner advised by the West was by “privatization, deindustrialization and a wipeout of domestic personal savings (characterized as an “overhang”) to start by impoverishing the population at large and vesting an overclass with the most unequal distribution of wealth in the Northern Hemisphere.”
And
“Instead of bringing about Western European or American-style industrial capitalism with their heavily subsidized technology and protected agriculture, the effect has been to de-industrialize Russia and other post-Soviet economies, except for East Germany and Poland. In effect, the former Soviet Union was colonized in the world’s largest resource grab since Europe’s conquest of the New World five centuries ago.”
In Ukraine the kleptocrats were refusing to share the loot with the West so were replaced by a coup and western military intervention will follow if it becomes necessary. All so Western investors/oligarchs like Vice-President Biden’s son can gain or maintain a position in the top 0.1% of the world’s wealth distribution.
Obviously I cannot modify your viewpoint but thanks for replying.
If you had to conduct a poll in the Baltic states or Poland would it show average citizens hanker after the “good old days” under the Soviets?
Would they hanker after “the good old days”? In terms of their freedom or prosperity?
The old Soviet Union was a repressive police state with dissenters sent to gulags. The West’s control of public opinion through concentrated media ownership and the dumbing down of debate to slogans and sound bytes is much cheaper and more effective. I have read that in the days of Pravda, Russians were quite cynical about their news source and learnt to read between the lines to get what information they could. Most Westerners are comparatively trusting and will believe what they are told.
What about the West under the neoliberal’s economic policy dominance since the 1980s and the results for Russia in taking up that advice?
Many in the West like the USA’s middle class and its working poor may be hankering after the “good old days”. The UK has 19th century levels of inequality. The GFC resulted in the loss of jobs, homes and retirement savings for millions while the super-elites grew their wealth. The populations of Greece, Ireland, Spain and Italy may well be hankering after the “good old days” too. Nothing has changed to prevent the next boom bust cycle. (Read “The Secret Life of Real Estate and Banking” by Australian geoist Phillip Anderson)
This article is a long and detailed analysis on Russia by Professor Michael Hudson. He mentions Latvia and in general his article would apply to the Baltic states and Poland and indeed all the West in terms of the effect of neoliberal economic policy:
http://michael-hudson.com/2012/11/how-neoliberal-tax-and-financial-policy-impoverishes-russia-needlessly/
It is well worth reading in full but as you may not have time or inclination to read it I will copy in a selection of significant paragraphs that considerably shortens it.
“Neoliberal advisors promised that Russia would become more efficient and affluent by following an almost diametrically opposite path from that which Britain, the United States, Germany, Japan and modern China took to raise themselves to industrial power – the policies that classical 19th-century liberals endorsed to reduce the power of rentiers over the economy and government. Instead, post-Soviet polarization between rich and poor over the past twenty years has seen falling living standards and a dismantling of manufacturing, education and public infrastructure go hand in hand with creation of a new class of instant billionaires at the top of a steeper economic pyramid than exists in Western industrial powers.
This polarization was implicit in the policy advice outlined in 1990, a year before the Soviet Union dissolved, at meetings with the International Monetary Fund, World Bank and other inter-governmental organizations in Houston, Texas.
[1] It is part of the worldwide dynamic of financialization centralizing planning in the banking sector – a combination of debt leveraging, privatization and dismantling government’s traditional role.”
“Russia’s economic warping and emigration was unnecessary. The economy was self-sufficient in 1990, with a solvent (although inefficient) public sector. Russia started its conversion to neoliberal policy with one of the world’s most highly educated populations, above all in engineering and technology, computer science and other key skills. Families were secure in their housing (admittedly cramped). And most important, the economy was free of foreign debt, mortgage debt, education debt, credit card debt, corporate debt, urban and other public debt overhead, and. There was no rentier class to support – no absentee owners living off interest, dividends or property rents.”
“Russia’s Achilles heel proved to be a lack of understanding of how financialization already was untracking Western industrial capitalism (having warped economies throughout the Third World). Russia’s leaders had lost faith in the Communist State without realizing that every economy is planned. There is more than one mode of planning – depending on which sectors control the state. Replacing the old state bureaucracy did not solve the problem of bad planning. It merely changed its character, shifting it to the banking sector and the new oligarchs most favored by their Western sponsors.”
“So when post-Soviet Russia started with a clean slate in 1991 – with no debt, and with ownership passing into private hands at perhaps 1 percent of real value – the benefit of being debt-free and rent-free was not used as the basis of a Russian industrial renaissance. The nation’s vast resources and their potential income were transferred to Western investors at a fraction of their value – giving a profit to Russian sellers but still leaving enough room to enable the shares to soar in dollarized markets as Russia refrained from taxing the windfall.
Neoliberals applaud this as a success story. It has indeed been a success for the West. But Russia’s economy has received only a small portion of the value of the assets it relinquished. The policy has made many Russian billionaires, as the Forbes list documents each year. But much of the economy remains in poverty.”
“So we find ourselves with two opposing ideas of what constitutes a free market. The classical idea is to grow by avoiding extractive forms of wealth seeking at society’s expense. The neoliberal alternative to centralized planning is to dismantle the government’s ability to regulate markets to steer growth and shape markets in the national interest. The effect of this dismantling is to centralize planning in the hands of bankers – primarily those of Wall Street and the City of London, followed by financial interests in satellite economies.”
“The post-classical break occurred mainly over the treatment of all income and wealth as deemed to be “earned.” There is no recognition of unearned wealth achieved at other peoples’ expense, as what technically is merely a transfer function. It is in this spirit that the neoliberal Chicago economist Milton Friedman claimed that: “There is no such thing as a free lunch.” This “value-free” logic rejects not only Marx but also Adam Smith, John Stuart Mill and other classical economists. Every way of getting rich is deemed to be “productive” in proportion to the wealth it creates at the top of the economic pyramid.”
Alex,
I don’t think you will find any country in Eastern Europe that wants to return to socialism.
Socialism doesn’t work. Capitalism does. Warts and all.
Crony capitalism and fractional-reserve banking are corruptions of capitalism and need to be tightly controlled, but that does not make it a worse system than socialism which has its own aberrations.
To me the essential element is a democracy with strong direct representation. Let the people choose….. They have long memories.
Capitalism (as currently practised) and socialism are not separate entities:- the first needs the second. Capitalism has never completely been free market, industrial capitalism unhindered by economic rent extraction but with the triumph of neoliberal economic policy it is now ever more extractive than productive. Socialism is the Roman “bread and circuses” that keeps it stable, otherwise the impoverishment of the masses just might lead to rebellion. Not much socialism available to Americans though and there is no organised civil unrest, just unemployment, crime and degenerate neighbourhoods.
Rent extraction even masquerades as socialism as this article about Obamacare shows:
http://www.paulcraigroberts.org/2013/10/01/obamacare-another-private-sector-rip-americans/
Unfortunately for democracy, scapegoating always works. The voters’ anger can be pointed at many targets such as dole recipients or boat people. Other voters turn to independents who mostly are populists without answers.
“Capitalism…with the triumph of neoliberal economic policy it is now ever more extractive than productive.”
Only two companies in the Dow (30), Exxon and Chevron, could be classed as extractive. Eight in the S&P 100.
We are not using the same criteria for “extractive”. I am referring to the privatisation of the economic rents of land and other natural resources and government created monopolies whose value is created by the community. They could be efficient and hard to avoid tax bases, instead of taxing the wages and business of individuals for community funds. For elaboration of this concept I refer you back to Hudson’s article at its concluding paragraphs.
Also to the several articles at Macrobusiness by Catherine Cashmore. A link to one:
http://www.macrobusiness.com.au/2014/06/capitalism-democracy-and-land/
Also the Prosper Australia report “Total Resource Rents of Australia”:
http://www.prosper.org.au/2013/12/03/harnessing-monopoly-to-finance-government/
“I am referring to the privatisation of the economic rents of land and other natural resources and government created monopolies whose value is created by the community.”
So what sectors or stocks would you class as extractive? I would imagine that most have some form of competitive advantage (or “moat”) that protects them from effective competition. That doesn’t make them extractive.
I was not referring to particular stocks, but a tax base. In a fully geoist resource rent tax system (achievable only with a long transition period) those big global corporations that often legally pay no tax, would not have income or company tax to avoid. Instead they would pay resource rent tax on for example, the sites they may own in CBDs and elsewhere. There are other forms of resource rent. The Prosper Australia report names 27 of them. Another example apart from land would be resource rent for using the public airways. This could be in the form of the companies that use the airwaves, providing time to political parties for election campaigning. This would remove the incentive for corruption from campaign donations, a very relevant issue in view of ICAC findings.
In such a system a property trust for example would pay its taxes via the land it used, not in the form of company tax.
A quick search on the term “rentier” turned up this interesting statement:
“Marxist thought perceives capitalism as inherently ‘rentier’, or usury-based, which would lead eventually to its demise…”
Capitalism thrives on investment, where investors receive a return in exchange for risking their capital. Anyone who thinks that an economy can thrive without investment either believes in the tooth fairy or, even worse, a centrally planned socialist economy. Whether the capital invested rightfully belongs to the investor or is the proceeds of a crime or some other injustice is a completely separate issue.
Tax shapes investment behaviour. Our tax system directs investment into property and it is the land component of property that provides the capital gain or economic rent that the investor seeks. The government by tax breaks and subsidies like negative gearing and the CGT discount and little or no taxes on land promotes speculation. We know that over 90% of negatively geared funds go into existing housing so the tax breaks do not provide more accommodation, they just turn would be home buyers into renters and as demand side stimuli elevate prices. Which means more private mortgage debt and consumers have less money to spend in businesses so they can employ fewer people. To have a site is also a fixed cost of business. To sustain their mortgages or rent, workers’ wages have to be high making Australia uncompetitive internationally.
It doesn’t have to be like that. That bastion of Marxism, Texas USA, has high property taxes and lower taxes on labour and business. In the GFC there was no housing bust there because there had been no housing boom. This macrobusiness Cashmore article refers to it towards the end:
http://www.macrobusiness.com.au/2014/04/australian-property-through-foreign-eyes/
Karl Marx was God’s gift to rentiers, in that like neoclassical economics he merged “capital’ into “land”. Marx (1818-1883) was a contemporary of Henry George (1839-1897). Marx and George were severe critics of each other. George followed on from the ideas of Adam Smith, David Ricardo and John Stuart Mill.The tax advice of Adam Smith is in this article by a director of The Adam Smith Club Sydney:
http://www.prosper.org.au/2007/11/07/adam-smiths-recommendations/
Smith recommended “ground rent” and tax on “luxury consumables” with the emphasis on luxury. Henry George campaigned very actively for his “single tax on land” to the extent that he ran for office as Mayor of New York and toured Britain and Ireland, and Australia in 1890. In that tour the then conservative premier of Qld Samuel Griffith accompanied him. He was extremely influential in his time. Winston Churchill and the British Liberal Party were advised by him and got legislation for LVT through the Commons over 100 times but it was always blocked by the House of Lords which resulted in a constitutional crisis in 1909. That and WW1 was the end of the attempt at reform.
Marx and neoclassical economics, in dropping “land” ie all natural resources, out of the picture have left labour and capital in a mathematical ether. Since then all economic debate, certainly as far as the public is concerned, is focussed on conflict between workers and employers, wages and business, when the real problem is that all increased productivity of labour and business finishes up in the land values, depressing real wages and business profits. USA economics professor Mason Gaffney says neoclassical economics was developed in USA universities built and funded by the resource, banking and railroad barons (Rockefeller, JP Morgan, etc) in the late 1800s to counter Henry George with the social and economic consequences we have today:
http://homepage.ntlworld.com/janusg/coe/!index.htm
I am not opposed to land taxes, but it seems unfair to single out rights to land and ignore other exclusive rights.
Of course, just land is the most important because it effects everyone and therefore the one to refer to within the limits of a comment.
Land can also be taken in the broader sense of all the natural resources of the planet.The report “Total Resource Rents of Australia” lists 27 sources of economic rent on the first page.
http://www.prosper.org.au/2013/12/03/harnessing-monopoly-to-finance-government/
There are probably more. eg the human breast cancer gene recently subject to a court challenge which has been lost. Maybe it is through a resource rent on the gene that a balance could be found between the return for the private company that researched it and recognition that it was a discovery not an invention.
The principle is to be taxed for what you hold or take rather than what you make or do. In slogan form “tax land, not man”.