Hollow

She is light as the wing of a bird when you

lift her in a hug—much too thin now, bony-hipped.

One day she has jet-black hair, the next it's blonde—

without that light band of freckles that bridge nose

and cheekbones, you might not recognise her.

She taught you to fly: under the railway bridge

in a lightening downpour, over spear-tipped gates

of municipal cemeteries, decaying playground walls—

high enough to scrape over the semis' rooftops,

not so high as to get caught in the telephone wire.

April 5 2014

Impact of EU free-trade agreement on Ukraine

EU and Russian perspectives on pros and cons of imminent FTA reflect their respective political agendas.

Mid-October 2013

Russia and the EU are Ukraine's leading partners for trade, investment and remittances. In the lead-up to the crucial summit of the EU's Eastern Partnership, at which　an EU-Ukraine free-trade　agreement (FTA)　will probably be signed, the EU and Russia have presented sharply divergent visions of the likely impact on Ukraine, as they each emphasise different stages of the trade-liberalisation process. Also, both leave out aspects of the story inconsistent with their preferred narratives. Ukraine may have more options for dealing with intensified competition than suggested by Russia, but implementation of EU business rules in Ukraine is likely to prove tougher than implied by the EU.

 

Ukraine is set to be admitted to the EU's so-called deep and comprehensive free trade area (DCFTA) at the end of November, after more than five years of negotiations. This is an integral part, and perhaps for Ukraine the key attraction, of the country's fast-developing integration into the EU. There are two main aspects to the deal. The first removes most trade tariffs and quotas for imports and exports between the two sides, while allowing Ukraine a more gradual elimination of trade restrictions in some "sensitive" Ukrainian segments in industry and agriculture to give local producers more time to adapt to the step-up in competition. The second is the reform of commercial laws and regulations to bring them into line with EU norms. Besides these, the DCFTA should chip away at non-tariff barriers, improve food safety and animal welfare, simplify trade administration and develop mechanisms for solving trade disputes. The deal will permit the extension of the liberal trade regime to new businesses and provides for the gradual incorporation of public procurement into the arrangement. These last are among the "unprecedented" measures behind the EU's use of the "deep and comprehensive" label.

 

Divergent visions

While trying to tug Ukraine into their respective economic blocs, the opinions of the EU and Russia differ on what Ukraine might expect from the opening of its markets and harmonisation with EU rules. For the EU, the DCFTA sets a framework for the modernisation of Ukraine's trade and economic development, which will boost real GDP and the population's buying power. It points, for example, to an immediate yearly net gain of €100m for Ukraine from the elimination of trade duties alone. Russia, by contrast, following a recent step-up in its efforts to block the westward drift of a number of former Soviet states, has issued dire warnings about the destructive economic and political impact that the DCFTA will inevitably have on Ukraine, leading　Sergei Glazyev, a Russian presidential aide, to label the step "suicidal". As Ukraine's poor-quality products will fail to compete on EU markets, Russia's argument goes, its exports will fall and its large external deficit expand. With funds scarce and reserves low, this could trigger a currency crisis and macroeconomic destabilisation, leading to financial catastrophe and perhaps even, it has been suggested, the collapse of the Ukrainian state. Russian officials have made it clear that inauguration of the EU FTA may not only lead to a more permanent disruption of Ukrainian exports to Russia, but may also render void their existing border treaties. By highlighting the potential political and social costs for Ukraine, Russia has implied that it might stir up unrest, and perhaps separatist sentiment, in areas of Ukraine dominated by ethnic Russians, such as Crimea and the Donbas.

Under the weather

The Ukrainian economy is certainly in bad shape. Because of this, it remains vulnerable to external shocks and destabilisation. In April-June 2013 real GDP fell year on year for a fourth successive quarter. In July and August, industrial output and exports continued to decline. In these months, the current-account deficit widened markedly, taking it to US$10.2bn in January-August, only a little down from US$10.5bn in the same period of 2012, a year in which the largest imbalance in the post-Soviet era was recorded. Reflecting these developments, the rise in international borrowing costs to emerging markets, following indications in May of a possible wind-down　of the US Fed's bond-buying programme, has been especially sharp for Ukraine. This forced the central bank to use its own reserves to meet a series of substantial debt repayments. By August, foreign-exchange reserves had dropped by US$3.7bn compared with April, to US$19.8bn. This was probably one factor behind a rise in devaluation expectations and an increase in foreign-currency demand among the Ukrainian population, prompting a return to intervention in currency markets in September. As a result, reserves climbed only modestly in that month, despite the receipt of a cheap loan from Russia's Sberbank.

The long and the short of it

Both the EU and Russian narratives about the DCFTA's impact on Ukraine have some truth to them, but look at different time frames. Over the longer term, by encouraging specialisation in areas in which Ukraine is least inefficient compared with the EU, Ukraine should make economic gains—gains maximised by the status of the EU as the world's largest single market. The Ukrainian population should also benefit from a wider range of products of better average quality, lower prices and, eventually, through a degree of wage convergence, higher living standards. Moreover, the quality of the country's own products should increase, sharpening their competitiveness in non-EU markets. The harmonisation of business rules should attract greater levels of foreign investment.

However,　in the short run, as competition diverts resources to stronger sectors, Ukraine could again be subject to another period of disruptive economic adjustment, involving business closures and job losses. In Poland and Croatia, for example, the shipyards were hit under similar circumstances, and many of Latvia's engineering business suffered a similar fate. Further, the groups of people who lose out in the short run may not be the same ones　that benefit eventually, owing to skills mismatches. Finally, greater adherence to EU norms of trade administration, safety and labour conditions is likely to be more costly than　maintaining　the status quo.

 

Off the radar

At the same time, there are important considerations missing from either scenario. Although Russia is keen to emphasise the precariousness of Ukraine's external-trade position, it does not mention that a key reason for this is the high price that it charges Ukraine for gas. Moreover, Ukraine still has the option of currency devaluation, which should discourage imports and boost foreign sales, narrowing the trade gap. On financing, large loans are likely to be forthcoming from Western institutions as long as Ukraine is able to agree—as seems prudent—to a new programme with the IMF. As for the ideal scenario of trade liberalisation on which the EU's promises depend, it is likely to come up against the hard reality of Ukraine's political economy, as it has developed since independence. This has seen a weak state gradually overcome by business-political associations whose typical modus operandi is to sustain profits by preventing market entry of competitors (rent-seeking). In principle, the provisions of the DCFTA on competition, public procurement and　working conditions promise fundamental challenges to this system. It will be interesting over the next few years to see how they fare.

Labour’s “one nation” policies

In short

• To foster key institutions of British social life
• to encourage more people to have a say, so as to make politics more relevant 
• to ensure that the benefits of economic prosperity are more evenly spread. 

1. “An economy that works for working people”

Currently, we have youth unemployment of around 1m, falling incomes, and much higher than planned public borrowing because Tory policy on public debt was misconceived.

Specific Labour economic policies for “jobs and growth”:

• No millionaires' tax cut
• No real cut in tax credit
• Restrain energy and train fare increases
• Bring in a mansion tax, plus a 10p tax for those on low and middle incomes
• Increase government spending on infrastructure, housing and lending to small business to grow (rather than cut) our way out of public debt burden
• Tax on bankers’ bonuses to help tackle youth unemployment.

2. Social responsibility

General Labour social policy: 

• All companies should pay the right British taxes on the money they make here. 
• All who can work, must. 
• Support for key social institutions, such as the NHS, police, state education.

In contrast: Tories are cutting 4,000 nurses, 15,000 police.

Particular Labour policies:

• compulsory jobs guarantee
• enforce the minimum wage
• tackle anti-social behaviour
• address concerns on immigration: teach English, full “transitional controls” for future EU joiners, tackle “foreign only” employment agencies.

3. “Give people more say on the decisions that affect their lives”

Many people are turned off politics, think that it makes no difference and that all politicians are the same.

General Labour policies: 

• Work to make politics more inclusive, collective
• decentralise institutional power
• tackle vested interests.

Particular Labour policies:

• devolve power to councils (eg on establishment of pay-day lenders and on commitment to pay council staff a living wage)
• devolve power within the Labour Party: policy participation: yourbritain.co.uk
• “take on” vested interests in energy, trains, banks, non-tax paying firms.

Questions and criticisms:

•       What overall tax effect?
•       Are some measures more symbolic than substantive?
•       It says nothing about encouraging economic democracy, which would really give people a say over the decisions that affect their lives.
•       “Compulsory” doesn’t sound attractive to me, but might be electorally appealing; same with the stuff on immigration: but how to tackle concerns about the impact of immigration on living standards, and on cultural change, without being reactionary?
•       Also: people are conceived of as passive in official Labour literature: “given” influence rather than taking on things themselves.
•       Overall: fair enough as far it goes, but a bit underwhelming as a response to the greatest crisis in global capitalism for since the 1930s. A bit lacking in inspiring vision of how we could live better.

Medium-term political outlook in Ukraine

The international situation of Ukraine in 2013

Early March 2013

Ukraine finds itself in a tug of war between the countries of the liberal-democratic West and Russia. The geo-political choices made by Ukrainian leaders in 2013 will set the broad course of the country’s political development over the medium term.

The main attraction of closer association with Russia is the prospect of cheaper Russian gas, on which swathes of Ukrainian heavy industry and most Ukrainian households depend. However, this would be offered only in return for joining the Russian-dominated customs union or ceding control of at least some of Ukraine’s gas pipeline network, which connects Russian suppliers with lucrative energy markets in Western Europe. These are both outcomes that most Ukrainian political leaders would resist.

Against this, the pull of closer integration with Western structures is twofold. The first is the prospect of finally ratifying an EU association agreement at the EU’s Eastern Partnership summit in Vilnius, Lithuania, in November 2013, and the “deep and comprehensive” free-trade agreement (FTA) that goes with it. Following the 16th EU-Ukraine summit in Brussels at the end of February, José Manuel Barroso, the president of the European Commission, stressed that a boost to trade, investment and economic modernisation were among the benefits that Ukraine could expect from such a development. In addition, greater integration into the EU’s energy system could shore up Ukraine's energy security. For many of the politically well-connected business groups that dominate Ukrainian politics, this could offer considerable opportunities to expand their business empires by offering privileged access to the single market—the world’s largest in terms of GDP. In addition, in 2013 the government faces sizeable debt repayments, as well as clear signs of mounting domestic financial strains. A second attraction of the West is, therefore, the prospect of a large loan from the IMF. Another visit by the Fund to Ukraine for negotiations on this issue got under way in late March. The agreement of a loan with the IMF would provide the funds needed to address the country’s financial problems directly, while boosting market confidence about the direction of economic policy, and helping to steer the economy away from a full-blown financial crisis. However, from the point of view of Ukraine’s leaders, clinching an association agreement will depend upon addressing EU concerns about the politicisation of the judiciary and the imprisonment of opposition political leaders during Mr Yanukovych’s presidency. If this means having to free Ms Tymoshenko, the most prominent opposition politician, the governing group will be wary of a conflict with their overriding goal of winning re-election for Mr Yanukovych in 2015. In respect to a borrowing deal with the IMF, the Ukrainian administration will be afraid that the economic reforms demanded in return for a loan—especially increasing gas tariffs to the population and easing the fixed exchange rate—will damage the living standards of key political constituencies (thereby further undermining its political support), and exacerbate the strains on public finances and on the banking system. These fears will have been stoked by the recent mass protests against high energy bills that swept Bulgaria in late February, leading to the resignation of the Bulgarian government.

Scenarios for Ukraine’s political development

In this context, a number of political scenarios are possible. The Economist Intelligence Unit’s main scenario is that Ukraine makes a tentative move towards greater integration with the West. However, recent political events have made a second scenario—maintenance of the status quo between Western and Eastern political blocs—an increasing possibility. This nevertheless comes with a high risk of financial destabilisation. It is possible that a financial crisis of this kind could be averted by a turn back towards Russia (the third scenario), but it could easily merge into our fourth scenario, by triggering another outbreak of mass social unrest at home. At the moment, we consider the third and fourth scenarios as less likely than either of the first two.

Main scenario: “Unconditional” Western integration, but with certain conditions

Caught between an urgent desire for external funds to avert an economic crisis and the goal of securing the presidency in 2015, the ruling group around Mr Yanukovych and his PoR tries to pursue a creative middle course.

In negotiations with the IMF, the government underscores the dangers of a "Bulgarian scenario"—that is, of politically destabilising popular protests against increases in fuel prices. As a result, the government achieves compromise deals on key reforms—an agreement to limit the impact on the general population of domestic gas price rises, and to devalue the hryvnya only partly. A deal on programme lending is signed in mid-April. Ahead of the EU’s May deadline for “tangible” evidence of movement on the association agenda, this contributes to the sense that Ukraine is making progress on the necessary economic reforms. The government tries to meet most of the EU’s economic and trade requirements. To address the issue of “selective justice”, some of the less prominent opposition figures are released, perhaps including Mr Lutsenko, a former interior minister in Ms Tymoshenko’s government. Promises are made that the case against Ms Tymoshenko will be reviewed with all possible haste—but that, in view of the seriousness of the charge (she is a suspect in the murder of a business rival in 1996), no country in the world could be expected to dismiss such charges out of hand. The authorities hope that the release of the first few tranches of the IMF loan is enough to get them past the immediate threat of an economic crisis. They bank on achieving sufficient progress in most economic and financial areas to convince the EU to compromise, on the assumption that the EU is eager to demonstrate a definite success story at its Eastern Partnership summit in Lithuania in November, and that it sees Ukraine as too valuable a prize to lose to Russia.

Ukraine signs its EU association agreement in November. However, the case of Ms Tymoshenko is dragged out for as long as possible, perhaps right up until the 2015 presidential election. Meanwhile, the short-term negative economic impact of raising gas tariffs and loosening the hryvnya peg—on consumer spending and bank lending, for example—erodes government support still further. The positive impact of the same measures—in terms of boosting exports and hence economic growth, and taming the signs of macroeconomic destabilisation—occur too late and too weakly to boost the government’s electoral prospects in time for the 2015 presidential vote. The government pulls out all the stops to hold on to the presidency, employing (for example) a mix of administrative resources and intimidation at the local level; heavy propaganda campaigns on the national TV stations owned by pro-government oligarchs; threats of “investigation” by the tax authorities against the business holdings of non-compliant business leaders; large-scale spending sprees on wages and public relations (PR) campaigns; creation of “clone” candidates (either with the same or similar names as opposition candidates, or with a similar policy offering) in order to split and confuse the opposition vote. Some creative new scams are implemented, as yet not invented.

The conduct of the election and its outcome—the re-election of Mr Yanukovych as president—are condemned by international observers as a backward step in democracy. Ukrainian leaders say that they are ready to make amends by moving unconditionally towards democratic norms and against corruption. At the same time—not wishing in practice to be held to their democratic promises—it is made clear that Ukraine remains interested in joining Russian economic structures.

Second scenario: Neither Brussels nor Moscow, but political stagnation and an economic crisis

It proves simply beyond the capacity or inclination of the groups that compose the Yanukovych regime to fulfil the political demands of the IMF and the EU. The regime stays put between political blocs and attempts to “muddle through”. It decides to content itself with plundering the domestic economy, as per usual. However, this has some very serious economic consequences.

Following a high-profile meeting with Mr Yanukovych in Brussels at the end of February, EU leaders called for “tangible progress” from Ukraine in three areas by early May, if the Ukrainian government hopes to proceed with ratification of its EU association agreement this year. The three areas specified are a clarification of electoral rules; implementation of the judicial and economic reforms required for association; and movement on “selective justice”, which alludes to the use of the courts to sideline opposition political leaders. For many observers, the absence of any progress on these criteria since previous high level meetings with the EU in May 2012 or December 2012 strongly favours a “staying put” scenario. Recent supporting evidence for this would include the flawed conduct of the 2012 parliamentary election, as well as the launch in January of a fresh investigation—this time as a suspect in a murder case—against Ms Tymoshenko. The latest move against the jailed former prime minister seems designed to prevent her from running against Mr Yanukovych in the 2015 presidential election, should forthcoming rulings by the European Court of Human Rights make it difficult to keep her locked up on the current charges.

However, in the current difficult economic situation, attempting to keep things as they are—with Ukraine positioned advantageously between rival political blocs, playing them off against one another—is unlikely to be cost-free. From the perspective of the current administration, it could even be more dangerous than the first scenario, because it implies greater risk of a loss of economic control and, perhaps, a more rapid and extensive loss of political support. This is the scenario of a full-blown financial crisis, which could pan out as outlined below.

Ukraine is unable to agree a programme loan with the IMF, but announces that it can go it alone, as it did in 2011-12. However, following an inconclusive election in Italy in late February and the threat in March to expropriate Cypriot bank deposits as part of the country's EU bail-out, this happens just as uncertainty over the fate of the Euro area intensifies again on international financial markets, causing investor sentiment to sour towards emerging markets. Together with clear indications of serious strains in Ukraine’s finances—economic recession, wide budget and current-account deficits, low official reserves, and low levels of foreign direct investment (FDI)—the government’s access to international capital markets is affected. This takes the form of a considerable constriction in access to borrowing and at a higher cost. Concerns grow that the government might be unable to borrow sufficient funds cheaply enough to meet its short-term debt repayment schedule, estimated at around US$9bn for 2013 as a whole. The prospect of a sovereign debt default looms.

Fear that the government might increase taxes to address its poor financial position encourages capital flight. This is the link with a second aspect of the emerging financial crisis, as capital flight greatly increases downward pressure on the hryvnya. However, the fixed exchange rate to the US dollar is maintained by the authorities for fear of increasing the debt burden on public and private holders of foreign loans, in this way exacerbating recession and aggravating the deterioration in public finances. Further unorthodox administrative measures are brought in to try to restrict demand for hard currency and, perhaps, to restrict imports, encouraging the development of a black market and concerns abroad of protectionism. Despite these measures, the deficit on the current account, already at its highest level in the post-Soviet era, continues to deteriorate, increasing downward pressure on the currency and stoking expectations of a devaluation. Official reserves fall to an unsustainable level. In these circumstances, the conduct of an orderly devaluation or depreciation becomes much more tricky, but either this or a disorderly fall in the currency nevertheless ensues. This weighs heavily on banks’ foreign-currency balance sheets, possibly threatening a banking crisis.

Politically, the multiple financial crises damage Ukraine’s already poor prospects for economic growth and therefore also the government’s electoral support. Following the high cost to exports and private investment of maintaining the fixed exchange rate, the spectre of a debt crisis dampens private investment still further. The fixed exchange rate has already hit livelihoods in the government’s heartland in eastern Ukraine. The rapid boost to inflation from soaring import prices undermines them still further. An invigorated anti-government popular mood boosts the public support and optimism of the opposition. Key business leaders who have been alienated from the regime step in with finances, media campaigns and political networks to back a credible candidate of the unified opposition in the 2015 election. The chances of Mr Yanukovych being re-elected, even with the enormous state and financial resources that he has at his disposal, become ever slimmer. It is possible that an intensification of political conflict along these lines is faced down by the regime using a mix of political and security measures—more or less as in the first scenario, but with more force. The stark choice of a decisive move back towards democracy or towards outright authoritarianism again presents itself.

Other scenarios

Other possibilities are that the situation is resolved before it gets out of hand by resorting to closer ties to Russia in return for economic relief (the third scenario), or that it escalates from a political into a social crisis, of large-scale popular unrest, which tests the oligarchic political system (the fourth scenario). At the moment, however, a return to the Russian fold does not seem likely, because Ukrainian oligarchs do not want to see Russian businesses with strong political backing enter the Ukrainian market as their competitors. Neither do they want to see what happened to their Russian counterparts under the current Russian president, Vladimir Putin—a re-subordination of the oligarchs to the state, as symbolised by the incarceration of the head of the giant Yukos oil firm, Mikhail Khodorkovsky, in 2005—happen to them. Also, an outbreak of spontaneous nationwide anti-government protests, in the manner of those that swept Bulgaria in late February, does not seem to be on the cards. This is because, with the broad failure of the Orange Revolution of 2005-10 still a recent memory, the population will probably be wary of backing a similar movement again so soon. In addition, the organised opposition is weak. The networks and resources that it would need to channel and promote such an episode of unrest have been systematically chipped away under the Yanukovych administration.

On dialectics

1. What follows is a summary of Kolakowski’s historical outline of the philosophical and theological development of dialectical modes of thinking (“The Origins of Dialectic” in Main Currents of Marxism).

2. I’ve always been at my happiest in libraries, and I first read this in the John Ryland’s Library in Manchester 25 years ago. It seemed to me inconceivably strange and esoteric. But it stayed with me, niggling at the back of my brain on and off ever since. So I’ve always wanted to pin down: What is dialectics? How did it help to inform Marx’s social scientific approach? Is there anything to it, anything useful about it other than that? Or is it just an interesting way of thinking, a kind of literary presentation with no particular appeal or power from the point of view of generating practical, political knowledge and advice?

3. The dialectical outlook before Marx finds its roots in the romantic reaction against the Enlightenment; the Enlightenment its origins in the reaction against Christianity, by which it is nevertheless defined; and Christian theology through its absorption of elements of ancient Greek thought.

4. A focus and stimulus of Greek philosophy was contemplation of the human condition: in particular, that we are subject to time and decay, to non-existence before we were born and to death at some point afterwards. For Aristotle, it is a quintessential feature of humans that it is possible for them not to exist (in contrast, the Divine can neither come into existence nor exit from it). For Plato, the most tell-tale marker of human life is the gap between our knowledge from experience that our lives are subject to short time spans and the innate knowledge that we come from and belong to the eternal, which is built into the soul: we experience this gap as a nagging sense of incompleteness, unease, of alienation, angst, ennui. 

But if god is complete and self-sufficient, never changes and is outside the vicissitudes of time, for what reason does he create human beings, who are subject to both?

These views of the human-divine relation and this last question strongly influenced Christian theology (medieval and then north European Protestant mysticism). However, before that, we must first look at how the relationship between mankind and the eternal was handled by Plotinus, one of Plato’s followers.

5. For those plagued by a sense of incompleteness and separation from the eternal, Plotinus has an explanation of how this came about and advice on how to address or solve it.

Humans are partial creatures, and only get a glimpse of the possibility of their wholeness by remembering their past and anticipating their future, even though they only actually exist in the moment; whereas the One is all of a piece, undifferentiated, homogenous, outside time.

Nonetheless, Plotinus reasons, to get from the complete, timeless unity of the One to the flawed reality of human society and life, there must have been a process of degradation, first from unity to division (this is the development of intellect, of the self recognising the self, so that it becomes both the perceiving mind and the thing perceived, the subject and the object, divided, split); then from eternity to time (this is the same as the contamination of the soul by contact with physical reality, with the consequent possibility of evil, ie of death); finally, from stasis to movement with our entanglement and domination by matter (from the immobile self-sufficiency of the One to dependency, lack of self-determination).

For Plotinus, souls have created time by deigning to concern themselves with sensuous objects. Therefore, he recommends withdrawal from the physical world and the world of ideas as a way of reducing distraction from contemplation of the authentic within us that contains the knowledge that could lead back to the path of reunification with the One, a return home.

From the point of view of the influence on (early?) Marx, the important bit is the movement through degradation and fragmentation, followed by a return to completeness and authenticity.

The key to all mythologies

Getting a bit disorganised again: overworked and spreading myself too thin: time to plan. What would you like to do? What can you do in the time? What's most important interesting?
Books to read/ study
i) Sperber’s Marx biog: plus a short review: by end of April 2013
Main Currents of Marxism, broken down into manageable bits
> Simple summary of pre-Marx dialects from Plotinus to the Young Hegelians by May
Old Greek philosophy
Capitalism and Modern Social Theory
The Violence of Abstraction
KMTH
On the Jewish Question, Paris Manuscripts
The German Ideology, 18th Brumaire
The Grundrisse, Capital I
Varieties of Social Explanation
Modern Marxism and international relations
Marxist theories of imperialism

ii) Class in Britain read and summary by end of June
Labour party pamphlet on "One Nation"

Belarus, a perpetual borderland
Aslund’s book on Ukrainian economy
Economic history of a) world in 20th C b) UK in 20th century

iii) Emerging market economies: read more on May hol
Langdana A week off in May: what’s practically useful
Evolution of Macroeconomics
LSE undergrad text
Penguin History of Economic Thought: read on May hol

iv) Statistics with Excel
Maths: textbook plus winecon
Manual on Excel, Word, Power Point

v) Russian & French
vi) Shakespeare, poetry, novels
vii) broad history, esp of europe
Topics/question/ subjects to look into
Is there anything still useful in dialectics, except in helping to understand Marx? What is useful? Outline on own words by end July
Is there anything still useful in Marx’s political economy? The approach? Any content?
Is there anything still politically useful in historical materialism?
Is the pay of chief execs etc justified by the small pool of management "talent", or is it ideological rent seeking, linked to social connections?
What is the relationship between the institution of private productive property and workplace arbitrary power structures, "workplace tyranny"?
Is there a tendency of the rate of profit to fall long term and how might this tie in with the current ongoing global economic crisis ala Brenner’s "consumption Keynesianism"/ endless monetary boosts/phases of QE either stuck in liquidity traps or leading to new phases of SAP bubbles??
In lieu of the labour theory of value not holding, does any other theory of value hold? What implications for the justice or otherwise of social distribution of the economic surplus? Eg does the "intellectual propery" argument hold if the "mixing my labour" argument doesn’t? What is the justification for my making an eternal living from a single invention, because my intellectual labour is being continually "mixed" with material, eg is certain kinds of micro chips or pharmaceutical; from the past (but still going/): "cats eyes"?

Practical criticism assessment, but constructive, of "One Nation" Labour; a more positive, less defensive but practical/sellable left programme than tired 70s Old Labour nostalgists like, say, Owen Jones; one that gives away less to the "neo-liberal" hegemony (why should we/ there’s no need to since it’s more or less intellectually damaged/defeated, if not in practice)

Work related
Main tipics for each country, to keep coverage focused
A list of issues/ arguments/ main theoretical connections/mechanisms by:
econ pol,
fiscal [govt spend and tax changes],
monetary [change growth of Ms],
GDP [G, C (related to disposable income, IRs, employment, wages, economic/jobs/labour market outlook) I (related to IRs, econ growth/firm profitability, econ outlook for product sales and profitability) and net exports (related to foreign and domestic income, real exchange rate)
inflation (cost push, demand pull, SAP bubbles, price administration)
exchange rate (related to demand for foreign elative to domestic currency, which is related to policy regime, domestic relative to international IRs, the outlook for the economy, the size of key financial variables (budget deficit, current account), credibility of govt policy, which is influenced by international backing, size of reserves, 
Work out: who is audience? Why would they read it? Work out this and more detailed outline/ proposal. By July 2013.

Classy

Marxist philosophy and social analysis are inseparable. For instance, at an abstract level, individuals experience the subjectivity of others, their personality and will, as an external force, as objective. But from the perspective of Marx's materialism, an individual’s subjectivity is conditioned by their (objective) position within a (constantly developing) social structure. Individuals in the social group bring different aspects of the group experience to its collective subjectivity, in this way enriching it, concretising it, producing diversity within unity. At the same time, the group’s sense of itself, borne of objective socio-economic conditions, is reinforced, as if from the outside, by active social, economic and political differences with the groups whose position in the socio-economic structure, whose economic and political interests, whose class subjectivity put them in opposition to the first. This isn’t just the picture at the macro level, but also within classes—explaining, for example, the unity and divergence of the interests of industrial and financial capital, depending on the circumstances.

But Marxist philosophy isn’t everyone’s cup of tea—not least because its origins in a peculiar type of north European mysticism must render it pretty difficult to grasp without specialist training. Marx’s main, strictly philosophical innovation was probably his fusion of Hegelian dialectics with the mechanical materialism of the Enlightenment, via Feuerbach. From the 1850s his main innovation in social science was probably an adaptation of this to some of the most useful methods and approaches of positivism, while at the same time keeping a strong critical distance to it. But after about 1845, his thought, although evolving, bore the stamp of "materialist dialectics" right up until the end. This approach allows Marx to be both a propagandist for the working class and to try to take a scientific (that is, systematic) approach. An attempt at “objective study” does not rule out consideration of objective and subjective social factors in looking at the outcome of an historical or political process, which is the basic method of any historical materialist analysis. By "objective study", in this context, KM probably means “disinterested, unemotional, detached, unsentimental”. How else could the cause of the working class, which for him was the same as the cause of human liberation, hope to progress otherwise?

One reason that socialists have tended to be keen on philosophy is in order to help to avoid muddle-headed, misfiring arguments. Another reason is that we are interested on the search for the truth about the nature of human life. One aspects of historical materialism, which has built into it an understanding of the social and material limitations and potential of group political action–seeing their inter-relation as a process that takes place at multiple levels of social reality, from the macro down to the micro–is that both the limitations on social development and the potential for social development (and also so socialism) are constantly being reproduced, augmented and extended by capitalist economic processes. However, it never conceives  social progress as automatic, but always as an active political process by which the rising class prepares itself with the skills for future political rule. That is, it has clear objective and subjective aspects, which are relational categories, so that something that is a subjective factor in one context, seen from another perspective, in another relation,  is best understood as objective force or factor.

What should we do?

A quick tour of the history of socialism and its relevance today.

What is socialism?

There are lots of political movements and strains of political thought that can be grouped under the heading of "socialism". In Britain, we've had Diggers, Levellers, Luddites, Chartists, co-operative Owenites and Christian socialists; also Fabians, Labourites and guild socialists. In France, the conspiracy of equals and the Paris communards, the syndicalists' revolutionary unionism. In Russia, Prince Peter Kropotkin's anarcho-communism, and the writings of Nikolai Chernyshevsky, including What is to be Done?, a classic novel of social propaganda that inspired both the peasant populists and Lenin. In America, the Knights of Labour, Eugene Debs and the Wobblies. Not forgetting Marxism in its 57 varieties.

The main distinctive idea that runs through them is probably egalitarianism, the striving for equality in social, economic and political life. In this, it should be—but has not always been in practice—unswervingly democratic and anti-elitist, in favour of the maximum possible popular control, not only of political power, but also of social and economic power. I would say it is also inescapably a philosophy of freedom, because it recognises that the fates of individuals, their room to manoeuvre and to develop, are inseparably intertwined with the kinds of societies that they live in.

So socialism aims to contribute to the political, cultural and institutional changes that might help to equip the majority working population with the self-confidence, skills and opportunities to shape the outcomes of their own lives, individually and together. But it aims to do this not only in Britain, or in Europe, but everywhere. This is another impulse that is usually considered to be essential to socialism: internationalism. The well being of people in China, Poland or Angola is not less important to me than that of people in Britain. On the other hand, neither is it more important.

 

Precursors, emergence and split

Some of the main elements of socialist thinking can be traced back to the distant past. An example from the 16th century would be Thomas More's Utopia, a word he invented meaning "nowhere". (As a tie-in with our constituency, that's why William Morris's socialist novel of the 19th century is called News from Nowhere.) In the blurb, More (or his publicist!) describes the work modestly as "A pamphlet truly golden, no less beneficial than enjoyable concerning the republic's best state". He argues for the abolition of private property, because he thinks that the uneven distribution of wealth that it produces is unjust. For him, a more equal distribution of wealth would do away with two equally objectionable social outcomes: the idleness of the rich and the excessive work load of the poor. That's the upside. On the downside, the "good" society he imagines is rigidly regimented, and its rulers are selected from a "gifted" group—an idea reminiscent of Plato's philosopher kings that, unfortunately, has tended to crop up periodically in various guises in the history of the socialist movement.

So there are precursors to socialist ideas before the modern era. But socialism really only starts to develop as a social and political force with the industrialisation and urbanisation that were part and parcel of the development and spread of capitalism. (The distinctive economic purpose under capitalism is to produce goods and services that can be sold above cost. In contrast, in pre-capitalist agrarian economies—in Europe, usually called feudalism—production of crops and small manufactures was for use by those who produced them (the peasants or serfs), minus the tribute ceded to the feudal lord in return for military "protection".) This is because the intensification of competition between businesses under early capitalism triggered fluctuations in wages and working conditions that encouraged the establishment by workers and artisans of their own organisations in order to protect and educate themselves.

Other important schools of thought feeding into socialist ideas, both at the start and ever since, are Renaissance humanism, which puts people at the centre of things, and the European Enlightenment, which emphasises reason, evidence and the possibility of social improvement.

 

A chance for reconciliation?

Of these broader trends, probably the most important distinction has been (a little confusingly) between social democracy and socialism. In the 19th century, these terms were more or less interchangeable, but today the differences between them are conventionally summarised as accommodation or hostility to private property, capitalism and business; an emphasis on gradual versus rapid political and social change, of reform versus revolution; of democratic as against authoritarian methods, acceptance of parliamentary democracy versus the rejection of it. This difference, although present earlier, was crystallised by the Bolshevik Revolution in Russia in 1917. However, in the wake of the collapse of the Soviet Union in 1991, and now the severe and ongoing crisis of global capitalism since 2007—especially in the advanced capitalist countries, like ours—the social and political conditions that sustained this split no longer exist. There may therefore be some grounds for believing that the hard and fast divisions between the socialist and social democratic approaches are, in places, starting to dissolve. For me, this is a good thing, as it should allow us to be a bit more eclectic in our thinking about the future, a bit less rivalrous, a bit more free-wheelin', a bit more pick-'n-mix.

Social democracy

• The main line of social democratic belief is in the amelioration of the worst social and economic effects of capitalism through evolutionary reforms, using the existing political system. It is characterised by gradualism, as well as accommodation or even partnership with capitalism, and at least parts of the capitalist class.

In this sense, the writings of the early 19th century of Henri de Saint-Simon can be seen as foreshadowing the social democratic approach. Saint-Simon was a slightly mad aristocrat with a fondness for grandiose schemes, but who fought for the republic in the French revolution. He thought it was in the interests of workers and peasants to join with industrialists to sweep away the power of the "unproductive" land owners and their hangers on in the clergy. But he was not wholly a democrat. With the "parasites" (the landowners and the clergy) tamed politically, and their social and economic power checked, he imagined business leaders and intellectuals using industry and science gradually to raise the incomes and the educational-cultural level of the working population, who might in this way eventually rule themselves. (Again, this is a bit similar to Plato and Thomas More; also, arguably, to Leninism.)

In Britain, the Chartists' campaign for parliamentary reform is almost a case study of proto-social democratic politics. Chartism was a working class movement that rose in the 1830s in response to the Corn Laws, which restricted grain imports and so put up the price of food, hitting the livelihoods to the working class and the urban poor in particular. It had a list of political demands, or a charter, to change the workings of parliament as follows:

• universal male suffrage;
• a secret ballot;
• constituencies of equal size;
• abolition of property qualification for MPs;
• pay for MPs; and
• an annual parliament.

It took until 1918 to achieve five of the six demands, or around 80 years. The sixth demand, for an annually chosen parliament, has remained elusive.

Continental social democracy and British Labourism can be linked through the association of Eduard Bernstein with the Fabians in the 1880s. There is more than an inkling of reformism in the socialism of Ferdinand Lassalle, the great rival of Karl Marx for the leadership of the early German socialist movement. I especially like his idea of producer (rather than consumer) co-operatives which, supported by state funds, might provide a way for the working class to become its own collective employer, and of countering the "inevitability" of falling wages (a standard assumption of 19th century economics). But the case for reformism was most cogently and dramatically set out by Eduard Bernstein.

In contrast to the middle class Marx and Engels, whose fathers were a lawyer and a cotton manufacturer, respectively, Bernstein's dad was a train driver. Starting off as a bank clerk, Bernstein educated himself through his involvement in the budding socialist movement in Germany. He was instrumental in helping to create a unified German workers' party in Gotha 1875, and in 1891 wrote the second "practical" part of its political programme (the Erfurt programme). Following Bismarck's anti-socialist laws of the late 1870s, he left Germany and eventually ended up in Britain, where he became friends with Marx's great collaborator, Friedrich Engels, and, after his death, the executor of Engels's literary estate. Bernstein edited the newspaper of the German socialist party for ten years and became, alongside Karl Kautsky, one of its two most well-known thinkers.

It was because of this position as the virtual inheritor of the political mantle of Marx and Engels that Bernstein's open and systematic profession of reformism in The Prerequisites for Socialism (known in English as Evolutionary Socialism) made such waves in European socialist circles at the end of the 1890s. This was known as "the revisionist controversy". In particular he:

• rejected the ideas that the collapse of capitalism was inevitable and that class struggle was essential to realise socialism;
• thought capitalism, through state intervention, was capable of overcoming its worst tendencies regarding unemployment, distribution and overproduction;
• thought parliamentary democracy could pave the way to socialism through promotion of workers' rights, as well as by co-operation with both peasants and dissatisfied elements of the middle class; and
• emphasised the moral case for socialism: it wasn't inevitable, but "ought to be". 

The Fabian Society was started by a small group of middle class intellectuals (boo!) in the 1880s. Their goal was to create a democratically elected, centralised socialist state, bestriding a network of public enterprises, including nationalised monopolies. They hoped to achieve this through gradual political and legal change, underpinned and driven by a sort of slow cultural revolution. (The clue is in the name: Fabius Maxiumus, "the delayer", was a Roman general known for his tactic of postponing battle until the enemy had been worn down by the chase.) That's why education, and the production and dissemination of social research, was at the core of their strategy. For example, it was the Fabians who set up the London School of Economics (LSE) in the mid-1890s to study poverty.

Socialism

Marxism is the most profound and wide-ranging of the recognisable bodies of socialist thought, but it is also the most problematic. It has had the most impact, intellectually and historically, but a great deal of this has been tremendously destructive and negative. (There are plenty of non-Marxist strands of socialist thought, too, such as syndicalism, and the British and US democratic socialists.)

• The main line of Marxist thinking is that the amelioration of the worst effects of capitalism merely serves to lengthen the lifespan of an unjust economic system, but cannot prevent its eventual decline. This is because of inherent degenerative flaws within the system, and because the interests of the vast majority of society—the working class—are incompatible with those of the capitalist class over the long run.

The envisaged pattern of social development, from earliest times into the future

An outline of the structure of society and the dynamics of economic and political change under capitalism according to classical Marxism looks like this:

• In an unforgiving natural world, people club together to make a living. But only some ways of organising work to do this are compatible with the kinds of tools and equipment available.
• These distinctive ways of organising work shape the kinds of social and political institutions, as well as the ideas and perceptions, that are compatible them, that grow out of them and support them as part of the same living, integrated social whole.
• One benefit of co-operation is social and technological improvement: ie better tools and/or social organisation to make better use of those tools.
• At some point, these improvements lead to the production of more goods than is needed for mere survival. With this comes the possibility of one social group living from the labour of others (classes), as well as the separation of intellectual and physical work.
• Conflict between classes over who gets what from the emerging surplus is the great motive force of social and political change throughout history.
• Under capitalism, market competition is an additional force driving forward rapid economic, social and especially technological change, conditioning the political and social landscape on which the struggle between classes takes place, putting limits on what is possible, but also creating new opportunities.
• Just like the series of socio-economic systems before it, capitalism is an ensemble of interlocking social, political and economic institutions put together by people because they suited a characteristic  way of making a living from the natural world and distributing the spoils. Centrally, this is based on the employment of workers by owners to work machines and equipment in return for a wage, with a view to selling the goods and services for more than they cost to produce. This relationship between owners of capital and owners of labour is the "general light" in which the other main socio-economic institutions bathe.
• As capitalist development spreads within and across countries, it produces an expanding section of the population—the working class—whose awareness of their common interests in opposition to capitalism, as well as their capacity to pursue these interests politically, is fostered by socio-economic processes within the system. So, the factory—the classic example—disciplines workers in time management and exposes them to a similar kinds of exploitative experiences. But it also brings them into close proximity, allowing for comparison and discussion of these experiences, and so for the development of common strategies to address them. It gives them some of the tools—ideas of how to organise, and the educational basics needed to run complex production and administrative processes—that will help them to articulate and defend their own interests.
• In contrast, the inner workings of the capitalist system tend to produce economic breakdowns of increasing severity. The short-term peaks and troughs of each business cycle tend to rise more weakly and fall more steeply around a general, economy-wide tendency for profitability to decline.
• Why does profitability tend to decline? First, this is because labour is assumed to be the only source of new production value. At the same time, capitalist competition forces firms to innovate and invest on pain of extinction (which is the secret of its dynamism), so that investment rises at ever-faster rates. This results in a steady drop in the ratio of workers employed to capital invested. This is the same as saying there is a tendency to decline in the ratio of new value (from labour power) to capital investment. Which is the same as saying that there is a tendency for the rate of profit to fall.
• As the economic mechanisms that hold capitalism together begin to malfunction in this way ever more widely, the institutional mechanisms needed to stabilise capitalist property ownership become less automatic and require more coercion. Political repression and state violence are practical proof that the state apparatus developed within capitalism—its parliaments, judiciaries, legal systems, bureaucracies, police forces and armies—is not neutral between economic systems, and so between classes, but is necessary for keeping the existing system going.
• However, enduring economic weakness eventually undermines capitalism's stabilising institutions too. At some point, therefore, workers' organisations are strong enough, and those of the capitalist economy and state weak enough, for the existing order to be overthrown.
• To be replaced with what? Probably socialism. Why? Because a more thoroughgoing development of equality and democracy—encompassing the economy and working life, as well as social policy and politics—reflects in a systematic way the common interests of the working class as they have developed within capitalism, in opposition to it.
• The pivotal role of workers' organisations in the struggle against the previous, recently defeated economic system puts them in a unique position, in terms of political experience and legitimacy, to begin to set up the new economic, social and political institutions that reflect the collective interests of the working class, just as the institutions of capitalism did so for the capitalist class. The difference is that the collective interests or workers, and the social and political values they had developed in embryo under capitalism, are also more of less universal human interests and values, the interests and values of humanity in general.

 

Some criticisms of Marxism

Not all criticisms of Marxism are worth bothering with, because they are often based on caricatures of what it says. But here are some questions that are worth thinking about:

• Does capitalism have a tendency towards self-destruction? Profits may be lower in advanced capitalist economies than in immature ones, but evidence for a continuous long-term tendency towards a dwindling of profits on global scale has been harder to track down.
• Is labour really the only source of value? Marx's labour theory of value says that the special quality of the commodity that the worker sells (labour power) is that it is worth more than its value (the cost of reproducing the worker), and that this is the source of all value, and so profits, in a capitalist economy. But this doesn't seem convincing, even to many modern Marxists. "The value of commodities should be thought of as determined by the amount of scarce resources of all sorts that are embodied in their production, not just labour" (Erik Olin-Wright, a contemporary American Marxist). And if there is no reason to think that labour power is the sole source of value, then there is no need expect that the drive to invest, spurred on by market competition, will eventually bring about general decline in profitability—which is supposed to be the main mechanism by which the ability of capitalist economic structures to reproduce themselves is systematically undermined.
• Is there a tendency towards polarisation and simplification of classes? It seems more the case that, at least in the advanced capitalist West, working class structures have become more complex and stratified. As a result, the common experience of working life that is supposed to build collective values and political organisations may be absent. Also, capitalist democracies have offered real opportunities and some political space for working people to organise to improve their lives within capitalism, through compromise and co-operation between classes, in this way offsetting the development and attraction of anti-system ideas and political groups.
• Violence and democracy. Is the aftermath of a violent political revolution really the best political terrain on which to conduct extensive and probably very lengthy experiments in democratic social and economic institution building? Revolutionary parties may be effective in some conditions in toppling states, but not in developing egalitarian democratic ones.

 

Marx's schematic presentation in his own words

"In the social production of their life, men enter into definite relations that are indispensable and independent of their will, relations of production which correspond to a definite stage of development of their material productive forces. The sum total of these relations of production constitutes the economic structure of society, the real foundation, on which rises a legal and political superstructure and to which correspond definite forms of social consciousness. The mode of production of material life conditions the social, political and intellectual life process in general. It is not the consciousness of men that determines their being, but, on the contrary, their social being that determines their consciousness. At a certain stage of their development, the material productive forces of society come in conflict with the existing relations of production, or - what is but a legal expression for the same thing - with the property relations within which they have been at work hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an epoch of social revolution. With the change of the economic foundation the entire immense superstructure is more or less rapidly transformed. In considering such transformations a distinction should always be made between the material transformation of the economic conditions of production, which can be determined with the precision of natural science, and the legal, political, religious, aesthetic or philosophic - in short, ideological forms in which men become conscious of this conflict and fight it out. Just as our opinion of an individual is not based on what he thinks of himself, so can we not judge of such a period of transformation by its own consciousness; on the contrary, this consciousness must be explained rather from the contradictions of material life, from the existing conflict between the social productive forces and the relations of production. No social order ever perishes before all the productive forces for which there is room in it have developed; and new, higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society itself. Therefore mankind always sets itself only such tasks as it can solve; since, looking at the matter more closely, it will always be found that the tasks itself arises only when the material conditions of its solution already exist or are at least in the process of formation. In broad outlines Asiatic, ancient, feudal, and modern bourgeois modes of production can be designated as progressive epochs in the economic formation of society. The bourgeois relations of production are the last antagonistic form of the social process of production - antagonistic not in the sense of individual antagonisms, but of one arising from the social conditions of life of the individuals; at the same time the productive forces developing in the womb of bourgeois society create the material conditions for the solution of that antagonism. This social formation brings, therefore, the prehistory of society to a close."

Why bother?

The main purpose of Labour politics is to help to develop social, economic, political and legal changes that give people a better chance to make the most of their lives. First, this means getting Labour candidates elected to public office, where they have the authority and resources to deal with both the grand overarching issues and the local nitty-gritty ones, from fixing the drains on Abbey Road or the parking in Nuxley Village to the great questions of national economy or foreign policy of the day. But it is also crucial that Labour members equip themselves with the ideas and skills so that the party becomes a self-renewing and effective organisation, a political force suited to society as it is now, in a drastically changed and continually changing global and ideological context.

 

What is the changed context?

The great crisis in global capitalism that had been bubbling up beneath the boom of the early 2000s—the greatest economic boom in human history—first surfaced in 2007 as a series of spectacular crashes in property markets around the world.

The scale of the wave of panic that ripped through world financial markets became too destructive to ignore just over a year later with the fall of several of the "ancient pillars" of investment banking—most visibly, the spectacular collapse of the US Lehman Brothers in September 2008. This led to a fall of around $10trn in equity values internationally, the large-scale withdrawal of investment across borders, the plummeting of national currencies, a steep contraction of demand, a boost to inflation and rising unemployment.

The lurch of the euro zone towards crisis in late 2011 was directly linked to the earlier great recession because of the legacy of debt that it left banks, businesses, households and governments. While these institutions are weighed down by debt, their spending or lending tends to be restrained, depressing both business investment and demand for household goods. In the early months of 2012, vast loans from the European Central Bank (ECB) to the European banks, valued at more or less the size of everything made in the British economy in a year, seemed to pull the euro area back from collapse. Such a collapse would probably have triggered a depression across the world at least on the scale—and with all the associated unpredictable social and political outcomes—of the disastrous socioeconomic convulsions that tore Europe to pieces in the 1930s.

But the fundamental issues that face European institutions—that they hold together a collection of economies with different structures, at different levels of development, with different business cycles and policy needs, with a wide spectrum of political cultures—have not been solved. And until they are, nervous financial markets could send the situation spinning out of control at any time—as in April 2012, when concerns rose again about Spanish budget policy and debt, or again in May following the elections in France and Greece.

 

Our political tasks

There is no escape for anyone from the consequences of these events, but, as it turns out, reports on the death of history—which is the same as saying the final and everlasting triumph of liberal capitalist democracy—have been greatly exaggerated.

What the Labour Party needs to do, what individual party members needs to do, is adapt to this enormous change of the international context in which British economic and political life takes place. We must always periodically, personally and as a political party, question and reinvent our political beliefs. We need both to adapt and to learn from the past, but not wholesale or uncritically from pre-existing models of socialism or social democracy—which is the essence of the mostly pointless skirmishes between Old and New Labours. Because this is not 1997, not least for the very positive reason that we no longer find ourselves submerged beneath the ideology that in Britain took the name of Thatcherism, but in Europe and the West more generally signalled a fight-back by owners against the infringements on property rights by the post-war welfare or social democratic consensus. This ideology finds itself in retreat—yet keeps going, zombie-like, in part from habit, and in part because of a lack of imagination on our side over what could plausibly be put in its place. That is, just as it is not 1997, we should also be aware that it is not 1945, marking the onset of the short-lived post-war social democratic consensus. Still less is it 1917.

Sometimes the lofty language and abstract concerns of political philosophy and political economy can seem a long way from everyday, practical issues. So why bother with any grand political ideas from the past? One answer is that by working out your own political goals and values, you can develop the confidence and the reference points to be able to weigh up—and so better tackle—unfamiliar political and social questions as they arise. This is especially important in our own times as, once more, eternal certainties about the way we live have begun to melt away. It should also improve the chances of making more coherent, and so more effective, policy.