The Emerging Competition for Space Solar Power [feedly]

The Emerging Competition for Space Solar Power
https://www.globalpolicyjournal.com/blog/21/10/2019/emerging-competition-space-solar-power

Morgan Bazilian, Ian Lange, Peter Aaen and Alex Gilbert  argue that space solar power has the potential to provide energy whilst helping to address climate change.

Due to aerospace innovations like usable rocketry and growing international space participation, the global space sector is on the verge of a renaissance. Proposed NewSpace activities, like space tourism, space mining, or orbital manufacturing, seem to come straight from science fiction but could now arrive within a decade. However, the space technology with the biggest potential may be one that benefits all of humanity: production of solar power in outer space for use on Earth.

Space solar power (SSP), involves generating electricity with space-based solar panels and wirelessly beaming the electricity from space to the Earth. In space, there are no issues with the sun being a variable resource like it is on Earth­ (think clouds, rainy days, and nightfall)—in space, it is always shining. For this reason, SSP is an attractive concept for security and defense agencies­—but also for reasons of resilience.  Today, with climate change driving a global need for game-changing, historically inconceivable technologies, like the large-scale direct air capture of CO2, SSP may have finally reached its time in the spotlight.

SSP can help balance renewable-dominated, decarbonized grids while enabling energy access anywhere in the world. The technology could provide round-the-clock clean energy to the world's largest urban centers, as well as those far away from the electricity grid. It is not surprising that, to date, most economic studies have concluded that the cost of power delivered from space is not ready to compete with power generated on Earth. That remains the case but, as with terrestrial panels, costs can fall.

The history of solar power really began in space. Even before the invention of the first solar cell at the storied Bell Labs, a solar powered satellite, Vanguard 1, was launched in 1958. Since then solar panels have been the energy choice of default on almost all satellites. Only recently, with cost declines driven by favorable energy policy and Chinese solar market dominance, has solar power become an economic terrestrial energy source.

First popularized by Isaac Asimov in the 1940s and proposed as an solution to the energy crises of the 1970's by Gerard O'Neill, space solar power has seen interest come and go over the years.  About ten years ago, there was considerable hype, even including a contract issued from Pacific Gas and Electric to a company called Solaren. While the company still appears to be in business, delivering power from space under that contract does not appear to have been achieved.

Today, however, the race for space solar power is heating up as NewSpace activities lower the cost of space access and orbital manufacturing could reduce production costs. The costs in the core elements of SSP are falling dramatically­—consider the rapid advances in photovoltaics (PVs), and in launching satellites in orbit. Crystalline PV (the most common type) prices have fallen by about 80% since 2010, while technological development in other solar types offers efficiencies that can be best taken advantage of in space. The cost of launching a payload into space has come down by a factor of ten in the last 20 years, and is continuing to fall.

With falling costs, China is again eyeing the dominance of global solar markets but this time it is targeting space solar power markets. China is planning on launching a demonstration SSP project within a decade and a commercial plant by 2050 as part of their strategy for global space dominance. Many other countries are also researching SSP, including Japan, Australia, and the US, but more urgency is needed if SSP is to play a serious role in decarbonization during the second half of the 21st century. A concerted strategy for research, development, and commercialization is needed to fully investigate whether SSP can be economic in an era of cheap space access.

Niche Markets

In the short-term, niche markets like islands, rural communities in developing economies, and remote mining operations may be the best place for SSP to be trialed. Military operations, with their highly distributed nature and the high cost of convoys, could also find SSP a resilient solution.

Mineral deposits are spread throughout the world with numerous potential mining sites located far from an electric grid. As an example, a case study for remote mine operations was undertaken to determine its economic feasibility. Such mines use lots of electricity, tend to rely on expensive sources for fuel, and sign long-term agreements to buy their electricity. While the analysis showed the need for prices to come down considerably to be a viable alternative to things like diesel generators, SSP may find a market in feeding multiple mines at the same time.

Much attention has been given to the resilience challenges facing remote island nations in light of devastating weather events. SSP might allow for an island economy, such as Puerto Rico or the Bahamas, who rely heavily on imported petroleum products for electricity, to reduce their emissions and keep costs reasonable. Importantly, as much of the infrastructure is in space, it also could help minimize damages from storms, and help with quicker responses to getting the lights back on.

There are at least two other, very different, areas that have potential for SSP to contribute, namely: rural energy access and shipping. Rural communities in developing countries are urgently looking for ways to effectively power homes, community services, and businesses. Over a billion people currently live without access to electricity. SSP could be well-suited to serving such remote demand.  Maritime emissions of air pollutants are prevalent enough to see from space, and the emissions that occur as the ship gets close to port are a big public health hazard.  Most ships use an oil boiler to generate electricity for propulsion, thus there is potential for SSP with wireless power beaming to help.

Policy Challenges and Next Steps

While there is considerable potential for SSP to provide energy services, there remain regulatory hurdles. As an example, the International Telecommunications Union (ITU) treaty regarding the electromagnetic spectrum does not currently have specific provisions for power beaming. This is a severe impediment to the development of microwave or laser power beaming technology. Policies that would add to the list of acceptable uses might make a big difference.

As the costs of a proposed SSP system are rapidly falling, the regulatory hurdles come into focus. Those hurdles may not be difficult to overcome, but they require priority consideration at places like the ITU, and require international collaboration. It appears that the USA is on the verge of a new space renaissance. The recent Congressional proposal for a Space Research Institute might usefully include the topic of space solar power within its focus areas.

As the urgency of climate change becomes more apparent each day, adding considering and funding new radical solutions makes sense. SSP needs to move from science fiction to focused R&D. Including SSP as a longer-term tool to mitigate climate change allow it federal energy R&D funds, like those from ARPA-E, eventually allowing the private sector to finance it if it proves viable.

 

 

Morgan D. Bazilian is the Director of the Payne Institute and a Professor of public policy at the Colorado School of Mines. Previously, he was lead energy specialist at the World Bank. He has over two decades of experience in the energy sector and is regarded as a leading expert in international affairs, policy and investment. He is a Member of the Council on Foreign Relations.

Image: NASA Goddard Space Flight Center via Flickr (CC BY 2.0)

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CEPR: House Democrats Are Failing to Protect Farmers from Trump [feedly]

While I am not a big fan of dumping on House Dems at the moment, these folks make some important points about farmers and rural communities, the could be opportunities for Dems to improve their fortunes in rural areas.

House Democrats Are Failing to Protect Farmers from Trump
http://cepr.net/publications/op-eds-columns/house-democrats-are-failing-to-protect-farmers-from-trump

House Democrats Are Failing to Protect Farmers from Trump

0 Comments

Jeff Hauser and Eleanor Eagan
Washington Monthly, October 19, 2019

See article on original site

Times are tough for American farmers. Everything from corporate consolidation to falling commodity prices is making it harder to get by. Strange, then, that the person most responsible for safeguarding their wellbeing, Secretary of Agriculture Sonny Perdue, brought the following message to a gathering of Wisconsin dairy farmers: "In America, the big get bigger and the small go out. I don't think in America we, for any small business, we have a guaranteed income or guaranteed profitability." In other words, he was telling the farmers: you're probably screwed and there's nothing you can do about it.

Contrary to Perdue's claims, the deaths of small farms are not a result of natural forces. They are a consequence of explicit policy choices that have allowed for the rampant consolidation and disinvestment that are crushing rural communities. Only two decades ago, there were 600 companies that sold seed. Today, there are only four. It's no wonder that the cost of seeds and plant corn has risen 329 percent in that time period, with similar increases for other crops.

Perdue hasn't just failed to recognize the root causes of farmers' pain; he has actively aided the forces responsible for it. From his first days in office, he has turned the full power of the USDA against farmers and rural communities on behalf of Big Agriculture, betraying one of the constituencies most vital to Trump's 2016 win.

None of this should surprise anyone. What should be genuinely shocking, however, is that Congressman Collin Peterson, a Democrat from Minnesota and the chair of the House Agriculture Committee, has been practically silent about these attacks. Over the past nine months, he has only convened one full committee hearing. And while his panel heard testimony from Perdue in February, Peterson has yet to call him back despite his committing numerous transgressions since, including his continued efforts to impose work requirements on access to food stamps and pressing ahead to relocate the department's research wing out of D.C.

Peterson, who declined our request for comment, has failed to fulfill his obligation to protect farmers and rural communities. That is not only bad on the substance, but it is a missed opportunity for Democrats to win back support among American farmers, who overwhelmingly pulled the lever for Trump in 2016.

In recent years, consolidated agribusinesses have translated their rising profits into formidable political power. They have successfully weakened or killed many measures that would have limited their control over farmers' lives and livelihoods, including fighting laws that would give farmers the right to repair their own equipment, something that overzealous copyright protections have prevented them from doing. When these and other nasty practices get too much attention, Big Ag wields its considerable weight to silence critics, whether that means getting a newspaper cartoonist fired or suing the Minnesota Pollution Control Agency to close a public comment period on a proposed merger.

Over the past few decades, Democrats have too often either supported the policies that got us here, or fallen short in resisting them. In 2008, Barack Obama made fighting consolidation a feature of his agricultural policy platform. But once in power, he failed to act decisively on those promises. His administration hesitated to enact proposed regulations that would have made it easier for contract farmers to sue packing and processing companies for unfair practices. Then, it found itself unable to move forward once Republicans took the House in 2010.

As with most things, however, the Trump administration has taken a bad problem and made it worse. Earlier this year, the Department of Justice approved a merger between two agricultural industry giants, Monsanto and Bayer, allowing for the creation of a new behemoth. And those Obama-era contracting rules? They were eventually approved in 2016, but Perdue promptly scrapped them after taking power. Worse yet, Perdue's USDA has walked back enforcement of many of the remaining rules to protect contract farmers.

This is all without mentioning what's at the forefront of people's minds when they think about Trump's impact on farmers: trade policy. Yet as these examples should make clear, the harm this administration is inflicting on farmers goes well beyond trade.

Unfortunately, House Democrats have done little to draw attention to Trump's deleterious agricultural policies When they do respond by holding a hearing, like over the decision to move the USDA's Economic Research Service to Kansas City, they fail to confront those responsible for their actions, or take definitive actions to stop them.

Meanwhile, in the same time span that Peterson only convened one full committee hearing, Agriculture's six subcommittees have held a combined 19 hearings, seven of which involved testimony from USDA officials. The Committee has issued zero subpoenas to corporate or governmental actors.

Peterson should reverse course and start from the top. The USDA is a big department with a diverse set of important responsibilities, ranging from protecting farming and rural economies, to ensuring food safety and administering the Supplemental Nutrition Assistance Program (SNAP).

There have been other ways Perdue has materially hurt farmers and others working in the industry. In addition to cancelling the aforementioned Obama era contracting rules, Perdue announced, in 2018, that the USDA would begin to allow poultry processing plants to increase line speeds, putting already vulnerable workers at even greater risk of injury.

Trump has also failed to nominate an undersecretary of rural development almost three years after taking office, meaning there is no dedicated advocate for rural communities empowered to support rural businesses, utilities, housing, broadband, and more in the federal government.

But that's not all. The USDA is also making meat more dangerous for consumers by allowing pork processing plants to perform their own inspections. Indeed, the USDA's chief veterinarian from 2016 to 2018, Pat Basu, refused to sign off on the system and left the agency in protest. Basu recently said, "Look at the FAA. It took a year or so before the crashes happened. This could pass, and everything could be okay for a while, until some disease is missed, and we have an outbreak all over the country." It seems like Basu might make for an interesting witness at a Agriculture Committee hearing.

Democrats need to perform meaningful oversight of the Trump administration's assault on American farmers. Impeachment doesn't obviate the need for skeptical oversight. It underscores it. Oversight is, put simply, a basic fulfillment of Congress' governing obligations. It can uncover abuse, create pressure for change, and facilitate the development of much needed policy alternatives. And, as an added bonus, the political upside seems clear.

This strategy might seem somewhat unorthodox. It contravenes the gospel that Democrats can only win agricultural districts by espousing a quiet, inoffensive centrism. But that would cede control of the political debate to Trump. If Democrats only play on the president's terms, the conversation will always shift away from the real issue.

Democrats must therefore redefine the debate on agriculture policy through rigorous oversight. In rural America, they have to demonstrate their willingness to take on political corruption of all shades, and to challenge corporate America's chokehold over the political process.

Yet Democrats have been surprisingly unwilling to take on one of the most unifying issues across the electorate: how the system is rigged to hurt ordinary people and boost big corporations.

Trump has created an opportunity for Democrats to take up this message in virtually every area of policy, but now especially with farmers. House Democrats have a unique opening to prove to rural voters that they are serious about taking on structural inequities. All they have to do is highlight and push back against the administration's efforts to enrich corporations at the expense of small farmers. In other words, they have to simply do their jobs.

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Jeff Hauser is the founder and executive director of the Revolving Door Project at the Center for Economic and Policy Research. Eleanor Eagan is a Research Assistant at the Revolving Door Project at the Center for Economic and Policy Research.

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China’s Liu Confirms Phase One of U.S. Trade Deal is in Progress [feedly]

Looks like Trump has made some concessions.....we will see.

China's Liu Confirms Phase One of U.S. Trade Deal is in Progress
https://www.bloomberg.com/news/articles/2019-10-19/china-s-liu-confirms-phase-one-of-u-s-trade-deal-is-in-progress

China's top trade negotiator offered positive signals that talks with the U.S. are making progress and both sides are working toward a partial trade deal.

"China and the U.S. have made substantial progress in many aspects, and laid an important foundation for a phase one agreement," Vice Premier Liu He said at a technology conference in Nanchang, Jiangxi, on Saturday. He reiterated that China is "willing to work in concert with the U.S. to address each other's core concerns on the basis of equality and mutual respect."

The comments come as the U.S. and China work toward getting some sort of agreement ready for presidents Donald Trump and Xi Jinping to sign at the Asia-Pacific Economic Cooperation summit next month in Chile. The U.S. has said China will buy as much as $50 billion in U.S. agricultural goods in exchange for the suspension of additional tariffs, though Bloomberg has reported that the Chinese want more talks and would need existing tariffs rolled back in order to reach that amount of imports.

Read More: China Ties Agriculture Binge to Trump Reducing U.S. Tariffs

The "phase one" deal described by Washington may not address many of the larger issues that initiated the trade war which has dragged on for more than a year, such as forced technology transfers and industrial subsidies. The White House is also looking at rolling out a previously agreed currency pact with China, people familiar said earlier. The agreement would be similar to commitments China has already made in accordance with International Monetary Fund standards, they said.

Liu did not address any specifics in his speech, though he reiterated that China would boost intellectual property protection, especially for small and medium enterprises.

U.S. Treasury Secretary Steven Mnuchin said that lower-level talks would take place by phone this week. Chinese officials are working on the text of an agreement on trade in close contact with U.S. negotiators, and have begun discussions on the next stage, Ministry of Commerce spokesman Gao Feng said on Thursday.

China's economic growth slowed further to 6% in the third quarter, according to data released on Friday, increasing pressure on Beijing to put an end to the trade conflict. With a drop-off in exports to the U.S. expected to continue as long as tariffs remain, the economy is likely to keep struggling as deflationary pressures hit company profits.

China is targeting 6% to 6.5% gross domestic product growth this year. Liu said the fundamentals of China's economy remain unchanged, even as it goes through a significant re-balancing, and the nation is "confident" of reaching its economic targets.

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Krugman: Democrats, Avoid the Robot Rabbit Hole [feedly]

Provocative post on automation from PK

Democrats, Avoid the Robot Rabbit Hole

Paul Krugman
https://www.nytimes.com/2019/10/17/opinion/democrats-automation.html

TEXT ONL

One of the less discussed parts of Tuesday's Democratic debate was the exchange that took place over automation and how to deal with it. But it's worth focusing on that exchange, because it was interesting — by which I mean depressing. CNN's Erin Burnett, one of the moderators, asked a bad question, and the debaters by and large — with the perhaps surprising exception of Bernie Sanders — gave pretty bad answers.

So let me make a plea to the Democrats: Please don't go down the robot rabbit hole.

Burnett declared that a recent study shows that "about a quarter of U.S. jobs could be lost to automation in just the next 10 years." What the study actually says is less alarming: It finds that a quarter of U.S. jobs will face "high exposure to automation over the next several decades."

But if you think even that sounds bad, ask yourself the following question: When, in modern history, has something like that statement not been true?

After all, in the late 1940s America had about seven million farmers and around 12 million production workers in manufacturing. Machinery could and did take over much of the work those Americans were doing — and people at the time wondered where the new jobs would come from. If you think that concerns about automation are somehow new, bear in mind that Kurt Vonnegut's novel "Player Piano," envisioning a dystopian future in which machines have taken away all the jobs, was published in … 1952.



Yet the generation that followed was a golden age for American workers, who saw dramatic increases in their income, with many entering a rapidly growing middle class.

You might say that this time is different, because the pace of technological change is so much faster. But that's not what the data say. On the contrary, worker productivity — which is how we measure the extent to which workers are being replaced by machines — has lately been growing much more slowly than in the past; it rose less than half as much from 2007 to 2018 as it did over the previous 11 years.

Which makes you wonder what Andrew Yang is talking about. Yang has based his whole campaign on the premise that automation is destroying jobs en masse and that the answer is to give everyone a stipend — one that would fall far short of what decent jobs pay. As far as I can tell, he's offering an inadequate solution to an imaginary problem, which is in a way kind of impressive.

Let me also give a shout-out to Joe Biden, who echoed Yang's talk about a "fourth industrial revolution." More on that in a minute.

[For an even deeper look at what's on Paul Krugman's mind, sign up for his weekly newsletter.]

Elizabeth Warren questioned Burnett's premise, saying that the principal reason we're losing jobs is trade policy that has encouraged jobs to move overseas. This claim was slammed by the fact-checkers at The Associated Press, who declared that automation was the "primary culprit" in manufacturing job loss between 2000 and 2010. As it happens, Warren was more right than the supposed fact-checkers; reasonable estimates say that trade was responsible for a large share of manufacturing job loss in the decade before the Great Recession.



Warren was surely wrong to suggest, however, that changing trade policy would do much to bring good jobs back. She got onto much sounder footing when she moved on to her wider agenda of tackling inequality and the power of the wealthy.

The best answer, as I said, came from Sanders. No, I don't support his proposed job guarantee, which probably isn't workable. But he was right to say that there's plenty of work to do in America, and right to call for large-scale public investment, which even mainstream economists have been advocating as a response to persistent economic weakness.

Why? Because the persistent weakness — yes, we have low unemployment at the moment, but thanks only to extremely low interest rates, and we're very poorly prepared for the next recession — isn't about automation; it's about inadequate private spending.

So what's with the fixation on automation? It may be inevitable that many tech guys like Yang believe that what they and their friends are doing is epochal, unprecedented and changes everything, even if history begs to differ. But more broadly, as I've argued in the past, for a significant part of the political and media establishment, robot-talk — i.e., technological determinism — is in effect a diversionary tactic.

That is, blaming robots for our problems is both an easy way to sound trendy and forward-looking (hence Biden talking about the fourth industrial revolution) and an excuse for not supporting policies that would address the real causes of weak growth and soaring inequality.

So harping on the dangers of automation, while it may sound tough-minded, is in practice a sort of escapist fantasy for centrists who don't want to confront truly hard questions. And progressives like Warren and Sanders who reject technological determinism and face up to the political roots of our problems are, on this issue at least, the actual hardheaded realists in the room.

Other Democrats should follow their lead. They should focus on the real issues, and not get sidetracked by the pseudo-issue of automation.

The Times is committed to publishing a diversity of letters to the editor. We'd like to hear what you think about this or any of our articles. Here are some tips. And here's our email: letters@nytimes.com.

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Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman
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Piketty: Towards a circular economy [feedly]

A  compelling graphic picture of the real story behind growth and progressive taxation....and a discomforting correlation that confirm "long wavers" theories about tech financial cycles deeper than supply and demand in capitalism.

Thomas Piketty: Towards a circular economy
https://www.lemonde.fr/blog/piketty/2019/10/15/towards-a-circular-economy/

The idea of the circular economy frequently brings to mind issues of recycling waste and materials and making moderate use of natural resources. But if a new system is to emerge which is sustainable and equitable the whole economic model will have to be re-thought. With the differences in wealth which exist at the moment, no ecological ambition is possible.  Energy saving can only come from economic and social restraint and not from excessive fortunes and life-syles. We will have to construct new norms of social, educational, fiscal and climate justice through democratic discussion. These norms will have to say no to the present hyper concentration of economic power. On the contrary, the economy of the 21^st century must be based on the permanent circulation of power, wealth and knowledge.

It is the spread of property ownership and education which enabled social and human progress to become a reality in the 20^th century. A powerful movement of reduction in social inequality and increased mobility  (the first intellectual signs of which were already visible in the 18^th and 19^th centuries) gained momentum from 1900-1910 and into the years 1970-1980, thanks to an unprecedented level of investment in education. A new equilibrium was established with the rights of shareholders being matched by those of the wage-earners (particularly in Northern Europe) – the circulation of incomes and wealth was accompanied by progressive taxation (in particular in the USA), and so on.

This movement was interrupted in the decade 1980-1990 following the change in direction in the wake of the post-communist disillusion and lapse into the Reagan approach. Post-communism then became hyper-capitalism's best ally. Natural resources were over-exploited and privatised to the advantage of a minority, legal systems were systematically circumvented via fiscal paradises, any form of progressive taxation was completely eliminated. In Poutine's Russia, income tax is 13% whether your income is 1000 roubles or one billion roubles. The same excesses can be seen in China, where those close to those in power, have carved out empires for themselves which they transmit to their heirs with no inheritance tax. Hong Kong is thus an astonishing example of a country which has become even more unequal b submitting to the authority of a supposedly communist regime.

The Reagan approach in the 1980s was less radical: it lowered the rate of taxation applied to the wealthiest from 70% to 30%. Reagan intended to put an end to what he exposed as excessive redistribution and egalitarianism resulting from the New Deal and which, in his opinion, had weakened America's entrepreneurial spirit and anti-communist crusade. By liberating the energies of the entrepreneur, Reagan promised a new phase of unprecedented growth. Of course, the inequalities were going to increase, the number of millionaires would rise and they would be wealthier but all that would provide a degree of innovation which would benefit the masses meaning that everyone would gain thereby. In fact, the hold of billionaires over the American economy has grown considerably since the 1980s, with a concentration of property in the approaching the levels witnessed in Europe at the beginning of the 20^th century.

The problem is that the dynamic increase in growth has not taken place: the national per capita income has witnessed its progression divided by two (2.2% per annum between 1980 and 1990, 1.1% between 1990 and 2020). Salaries have stagnated and a growing percentage of the population are beginning to doubt the benefits of globalisation. The hardening of Trump's nationalism is directly linked to this failure in Reaganism: since economic liberalism is not enough, the Mexicans and the Chinese are now accused of stealing the hard labour of white America.

In reality, the failure of Reaganism mainly demonstrates that the hyper-concentration of property and power does not correspond to the requirements of a modern and circular economy. It is not because a person has made a fortune at the age of  30 that they should continue to concentrate power as a shareholder at the age of 50, 70 or 90 years. The decrease in growth is also explained by a worrying stagnation in educational investment since the 1990s as well as by the immense inequalities in access to education and training in both the United States and in Europe.

The challenge of global warming and the international awareness of the growing inequalities do act as leverage for change but we are still far from the goal. The OECD projects for the taxation of the profits of multinationals only concerns a small fraction of the latter and the scale of the contribution proposed is much more favourable to the rich countries than to the poor ones (as is demonstrated by the work of ICRICT. The Triumph of  Injustice, a book published this week in the United States by Emmanuel Saez and Gabriel Zucman, demonstrates that there are more ambitious solutions  with the key element being financial transparency and the return to fiscal progressivity in order to finance health and education for all, and the ecological transition.  The success of these ideas amongst the American democrats (in particular Warren and Sanders) does allow for optimism.

But Europe cannot simply stand by and wait for change to come from America. If we are to go beyond merely taking a stance, and finally give substance to the Green New Deal, it is urgent that strong measures for social and fiscal justice be taken in Europe. This may also be the price to pay for the hope of bringing the British Labour Party back into the European orbit and avoiding a disastrous Conservative victory in the forthcoming elections. Thirty years after the fall of the Berlin Wall, it is time for the march towards equality, the circular economy and participatory socialism to get back on track.

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IMF: The World Economy: Synchronized Slowdown, Precarious Outlook [feedly]

IMF Cuts growth estimates  from declines in mfg and trade.

The World Economy: Synchronized Slowdown, Precarious Outlook
https://blogs.imf.org/2019/10/15/the-world-economy-synchronized-slowdown-precarious-outlook/

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Branko Milanovic: Why it is Not the Crisis of Capitalism [feedly]

Why it is Not the Crisis of Capitalism
Branko Milanovic ( https://stonecenter.gc.cuny.edu/people/milanovic-branko/ ) is a bit like the Eeyore of the economist Left.  He is conversant with the classics of socialism, and a heavy hitter in the world of real policy and real inequality as well. Compared to some on the Left, however, he is not impressed with the "anti-capitalist", "crisis of capitalism" screeds. Below is his slightly downer (for some) take on what exactly is, and is not, in crisis.  One might lighten the downer the downer effect by amending the apparently objective and external expansion of capitalist relations with the different but nonetheless compelling examples of Norway and China as arguments for "socialist-led" over "billionaire led" market relations. :)

https://www.globalpolicyjournal.com/blog/16/10/2019/why-it-not-crisis-capitalism

Branko Milanovic on why the 'crisis of capitalism' is really about its own rapid expansion. 

 

There has recently been an avalanche of articles and books about the ¨crisis of capitalism" predicting its demise or depassement. For those old enough to remember the 1990s, there is a strange similarity with the then literature arguing that the Hegelian end of history has arrived. The latter literature was proven wrong. The former, I believe, is factually wrong and misdiagnoses the problem.

 

The facts show not the crisis, but on the contrary, the greatest strength of capitalism ever, both in terms of its geographical span and the expansion to the areas (like leisure time, or social media) where it has created entirely new markets and commodified things that historically were never objects of transaction.

 

Geographically, capitalism is now the dominant (or even the only) mode of production all over the world whether in Sweden where the private sector employs more than 70% the labor force, the United States where it employs 85% or in China where the (capitalistically-organized) private sector produces 80% of the value added.[1] This was obviously not the case before the fall of communism in Eastern Europe and Russia, nor before China embarked on what is euphemistically called "transformation" but was in reality replacement of socialism by capitalist relations of productions.

 

In addition, thanks to globalization and technological revolutions, a number od new, hitherto non-existent markets have been created: a huge market for personal data, rental markets for own cars and homes (neither of which was capital until Uber, Lyft, Airbnb etc. were created), market for housing of self-employed individuals (which did not exist before WeWork) and a number of other markets such as those for taking care of the elderly, of children, or pets, market for cooking and delivery of food, market for shopping chores etc.

 

The social importance of these new markets is that they create new capital, and by placing a price on things that had none before transform mere goods (use-value) into commodities (exchange value). This capitalist expansion is not fundamentally different from the expansion of capitalism in the 18th and 19th century Europe, the one discussed both by Adam Smith and Karl Marx. Once new markets are created, there is a shadow value placed on all these goods or activities. This does not mean that we would all immediately run to rent our homes or drive our cars as taxis, but it means that we are aware of the financial loss that we make by not doing so. For many of us, once the price is right (whether because our circumstances change or the relative price increases), we shall join the new markets and thus reinforce them.

 

These new markets are fragmented, in the sense that they seldom requite a sustained full-day of work. Thus commodification goes together with gig economy. In a gig economy we are both suppliers of services (we can deliver pizza in the afternoons), and purchasers of many services that used to be non-monetized (the already mentioned: cleaning, cooking, nursing). This in turn makes it possible for individuals to satisfy all their needs on  the market and in the longer term raises big issues such as the usefulness and survival of the family.

 

But if capitalism has spread so much in all directions, why do we speak of its crisis? Because the malaise which is limited to rich Western countries is supposed to afflict the entire world. But this is not the case. And the reason why this is not the case is because the Western malaise is the product of uneven distribution of the gains from globalization, an outcome not dissimilar to what happened in the 19th century globalization when the gains were however disproportionally reaped by the Europeans.

 

When this new bout of globalization began, it was politically "sold" in the West, especially as it came on the heels of "the end of history", on the premise that it will benefit disproportionately rich countries and their populations. The outcome was the opposite. It benefited especially Asia, populous countries like China, India, Vietnam, Indonesia. It is the gap between the expectations entertained by the Western middle classes and their low income growth, as well as their slide in the global income position, that fuels dissatisfaction with globalization. This is wrongly diagnosed as dissatisfaction with capitalism.

 

There is also another issue. The expansion of market-like approach to societies in all (or almost all) of their activities, which is indeed a feature of advanced capitalism, has also transformed politics into a business activity. In principle, politics, no more than our leisure time, was not regarded as an area of market transaction. But both have become so. This has made politics more corrupt. It is now considered like any other activity, where even if one does not engage in explicit corruption during his political tenure, one uses the connections and knowledge acquired in politics to make money afterwards. That type of commodification has created widespread cynicism and disenchantment with mainstream politics and politicians.

 

Thus the crisis is not of capitalism per se, but is the crisis brought about by the uneven effects of globalization and by capitalist expansion to the areas that were traditionally not considered apt for commercialization. In other words, capitalism has become too powerful and has in some cases come into collision with strongly held beliefs. It will either continue with its conquest of more, yet non-commercialized, spheres, or it would have to be controlled and its "field of action" reduced to what it used to be. 

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