socialist-economics

The Communist Party of the Russian Federation and Socialist China

From L'Humanite [French CP Blog]. I do not know enough of Russian politics to eval this, but it makes some sense, and perhaps shows that the Russian CP is not dead yet.

The Communist Party of the Russian Federation and Socialist China

Translated Thursday 7 January 2021

Let's hope that the French Communist Party, and the French daily L'Humanité, will adopt a similar position!

Official website of the Communist Party of the Russian Federation
Statement by the Presidium of the CC CPRF
The Trump Administration is stepping up its policy of counteracting the development of socialist China. This takes place against the background of the deepening world crisis, the growth of the coronavirus pandemic and approaching Presidential elections in the USA. Measures aimed at undermining the PRC's economic and political stability are multiplying at a feverish pace. "Soft power" instruments have proved to be signally ineffective in the struggle against Beijing. Yet Washington has not embarked on the path of wide-ranging dialogue and cooperation. On the contrary, it is becoming increasingly aggressive in its China policy.

For many years the American strategists have concentrated on attempts to undermine the territorial integrity and weaken China's economy. The USA suffered a series of setbacks in trying to destabilize the situation in the Xingjiang-Uigur and Tibet Autonomous Regions and Ao Ming and Xiangang regions. Washington met with a fitting rebuff during the course of its provocations in Hong Kong. Attempts to undermine China's power by introducing high custom duties contrary to WTO rules have failed. Discrimination against Huawei and other Chinse companies did not help.

At this stage an openly "hawkish" line towards the PRC has prevailed in Washington. Sabre-rattling is growing louder and bellicose statements have become more frequent. The Communist Party of China has been declared to be "one of the main threats" to the existence of the United States.

In its attempts to drag the world into a new Cold War and retain its hegemony the USA leadership is ready for new provocations and adventures. The US Secretary of State and former director of the CIA, Mike Pompeo, openly proclaimed Washington's desire to drag Russia into a confrontation with China. He said this possibility flowed "naturally" from the relationship between Beijing and Moscow. These disingenuous hints should not be underestimated.

In its relations with China the United States follows the same logic as was used to destroy the Soviet Union. Like then, an enemy image is moulded of a country that has become "a mortal threat to the free world." Pompeo's speech at the Richard Nixon presidential library is a carbon copy of Churchill's Fulton speech. Only now the US is calling for a crusade against the PRC.

The head of the US diplomacy declares that "unless the free world changes Communist China Communist China will change us. The free world must prevail over the new tyranny." And Pompeo called for an "alliance of democratic states" and is beginning to pull Russia into it. He said that if Washington and Moscow together responded to major strategic challenges the world would become a safer place.

It is an extremely dangerous and destructive proposal. It aggravates international tensions and intensifies the arms race. At the same time it seeks to drive a wedge into the strategic partnership between the Russian Federation and the People's Republic of China.

The American initiative of building a global alliance against China stems from the fact that the USA cannot overcome China by itself. The rickety NATO structure does not suit that purpose. A number of European countries are actively cooperating with China economically and stand to lose from a confrontation with Beijing. Besides, the course for isolating China is simply impossible without Russia's participation in this criminal alliance.

Of late the US administration has been increasingly revealing its true face disfigured by anti-Communism, Russophobia and anti-China anger. The White House is persistently bringing back its aggressive policy at its worst. The people of the world have no right to forget American imperialism's adventures in Korea and Vietnam, Yugoslavia and Iraq, Afghanistan and Libya. Among the latest victims are the people of Ukraine which has been put at the mercy of the most reactionary forces, and the population of Donbass which is suffering from cruel slaughter and semi-starved existence.

The globalists' growing fury is understandable. China, led by its Communist Party, is successfully building socialism. It is confidently overcoming the aftermath of the coronavirus pandemic. Unlike most major countries, the Chinese economy has reported growth at the end of the year. The Chinese leadership is demonstrating to the whole world how abject poverty can be eliminated and high technology developed. Beijing has every chance to become the leader of the world economy, scientific and technical development and in the innovation sphere.

The model of international relations proposed by China is growing ever more attractive. It has no place for the vices of globalism with its horrifying inequality, sharpening confrontation and worldwide expansion of the new colonizers. The concept of the PRC Chairman Xi Jinping, Community of Shared Destiny for Mankind, articulates highly promising principles of equal cooperation among nations for the common good.

The CPRF welcomes the fact that Russia and China have confidently extended the hand of friendship and close cooperation to each other. Growing trade and large-scale joint projects, shared views on key world historic events, their common victory over German Fascism and Japanese militarism, similar views on events and phenomena in international politics – these are strong bonds between our countries.

The Communist Party of China spearheads its rapid advance. Loyal to the socialist cause, the CPC correctly assesses the challenges and threats, and comes up with convincing answers to them. The CPRF has always worked towards stronger relations between the two countries. Our links with the CPC are aimed at bringing the two peoples closer together, strengthening security and harmony in international relations. These common aspirations were sealed by the signing of a memorandum of cooperation between our parties in December of 2019.

The path of development of the world civilization proposed by the PRC poses a threat not to the peoples, but to the imperialists with their appetites of exploiters and predators. China's enemies stop at nothing in their aggressive attacks on it. They are launching a slander campaign, waging trade wars, try to foment separatism and cause the PRC to quarrel with its neighbouring countries.

All the signs are that the US strategists seek to assign a special role to our country in these treacherous designs. They will try to provoke discord in the relations between Moscow and Beijing promising that Russia would gain from a change of its geopolitical orientation. The position of Yeltsin's underlings in the top echelons of power, the economy and finance, politics and the mass media are still very strong. Their close links with the "Washington party committee" are evidenced by the massive capital drain, recurrent "offshore scandals" and the multi-billion overseas assets of Russian tightwads. For these people the officially proclaimed "pivot to the East" is but a temporary maneuver. They see their own and their offspring's future in the "Western paradise."

The CPRF comes out for a stronger strategic partnership between Russia and China. We are sure that Washington's sugary promises are but a cover for its dangerous and perfidious plans. To bring about a quarrel between Moscow and Beijing means to defeat us one by one. Our countries are the main obstacles for the globalist elite which is striving to perpetuate its dominance. It will persist in its manic attempts to strangle Russia, with its military potential and vast resources which world capitalism would like to grab. It would gladly destroy China as a rival which is making a massive leap forward becoming the powerhouse of the world economy.

For Washington to put our countries on "opposite sides of the ring" would mean to weaken both of them. It is a means for globalists to implement their ugliest plans. In the event of success, Central Asia may be set ablaze. The Middle East may turn into one large "hot spot." The Far East may become a zone of sharp conflicts… Capital would not stop at any crime to preserve its dominance and its profits.

Russia has its own national interests. The CPRF is sure that they will be served not by the here-and-now handouts from the West but by stronger strategic relations with those who seek peace and social progress. For us the relations of friendship and partnership with China make it possible together to develop the economy and technology, to strengthen peace and security, to uphold our sovereignty in the face of any threats.

We are convinced that the deepening of strategic interaction with Beijing holds out a promise. It is based on economic and political realities and has a solid historical foundation. The strengthening of our ties will take us to a new and unprecedented level of relations and guarantee sovereign development of our two states. We are all extremely interested in an effective struggle against anti-Communism and anti-Sovietism, Russohobia and anti-China hysteria.

Washington strategists are set to pull our country into the infamous "alliance of democracies." To make it happen they are ready to promise anything: from the lifting of sanctions to granting preferences. We cannot rule out that the fact that Pompeo's anti-China speech coincides with the telephone conversation between Putin and Trump is not fortuitous. We hope that President Putin is very mindful of the adventurous nature of these proposals.

The historical experience of the destruction of the Soviet Union shows that the promises from across the ocean should not be believed. It is inconceivable to put these ephemeral pledges on a par with the deepening cooperation between Russia and China, the other BRICS and SCO countries and the strengthening of Eurasian integration. For our country to yield to the blandishments of the US would be tantamount to betraying our own interests. Yet this is precisely the aim of "the fifth column."It does not mind the mass expulsions of Russian diplomats, the seizure of Russian property in the US, the swelling lists of Russian officials and parliament deputies banned from traveling to the West or the hail of all sorts of sanctions.

Russia must not repeat former mistakes and has no right to be a bargaining chip in the geopolitical games of the USA. The Russian, Chinese and all the other peoples have the right to follow the path of sovereign development setting themselves long-term goals and confidently achieving them.

The future of the people is friendship and all-round cooperation!

Gennady Zyuganov,

Chairman of the CC CPRF, Head of the CPRF at the State Duma of the Federal Assembly of the Russian Federation

John Case
Harpers Ferry, WV

WORLD ECONOMY, TRADE AND FINANCE

Branko Milanovic Interview on "Capitalism Alone"

The eeyore Marxist! Always worth reading

By Branko Milanovic - 11 January 2021

This is the text of the interview given to Sega Newspaper at the occasion of the publication of "Capitalism, Alone" in Bulgarian. The text in Bulgarian is here.

1. How do you think the fact that you grew up in Yugoslavia and received your doctorate in the Belgrade University has affected your worldview and your work?

I think it affected me mostly through Yugoslavia non-aligned foreign policy. Among other things that were ideologically motivated and were taught in school was also the emphasis on non-alignment, namely on anti-imperialism and anti-hegemony (which was a shorthand for the Soviet Union). This opened up our minds and interest towards non-European parts of the world. It might not have produced the same effect on everyone, but even in my teenage years I was very political and very "Tiermondiste". I often regret that the same attitude is not, as far as I know, present now in the schools in Serbia and in the rest of the former Yugoslavia. Eurocentrism, in the form of the European Union, is dominant now and is stifling other interests.

2. You are most famous for your work on income inequality. How does "Capitalism, Alone" – with its broader scope – fit into it?

You are right that "Capitalism, Alone" is much broader and more political. It is a combination of my long-standing interest and work on income inequality with my also longer-term (but less visible) interest in Marxism, the meaning of communism, and global issues (as I partly explained in the previous question). So for me it was nothing new, it was just a natural evolution. "Capitalism, Alone" was very easy to write. But for many who did not know much about my interest in broader political and social issues it came as a novelty.

Let me also say that any important work on inequality has to go together with social and political analysis. Piketty I think illustrates that very well.

3. One of the main points of your book is that the global domination of capitalism has led us to a new "schism" – between the liberal capitalism of the West and the political capitalism, best exemplified by China. What sets them apart?

In very general terms, history set them apart. This is one of the reasons why in my book I do not simply contrast US and China; many other books do just that. I try, in the first part of the chapter on political capitalism and China (which may also be one of the most important parts of the book) to explain the genesis of China's political capitalism by defining what I think was the global historical role of communism.

Or more abstractly, what I think sets liberal and political capitalisms apart is the fact that human history is too rich and complicated to accommodate only one political system. We may all, as the dominion of capitalism shows, understand the language of profit and financial gain, but I do not think that we would ever have exactly the same attitude towards political power.

4. Where do you think the Balkans are situated in the global economy and in the light of the division between the liberal and the political capitalism? Is the region doomed to be always chasing behind and always late?

The Balkans were historically a periphery. They were that during the Roman Empire, Byzantium, the Ottoman Empire, the Industrial Revolution and today. I do not think that this is likely to change. But there are many peripheries in the world, and often, by looking at the center from a different angle, the periphery can illuminate and see things that the center overlooks. The Balkans are at the intersection of Western Europe, Mediterranean civilization, and the Muslim world. These are significant advantages, if one knows how to use them well. Also, being a periphery does not mean that one cannot become rich. Surely, Australia and New Zealand are historically and today, the periphery too, but they are rich.

There are some Balkan countries that seem today to be rather close to political capitalism. I have in mind Turkey, Montenegro, and Serbia. But note that I do not establish a hierarchy such as believing that political capitalism is inferior to liberal capitalism in all domains. There are circumstances where it can do better than liberal capitalism.

5. Your book "Capitalism, Alone" came out just as the world was about to learn about the coronavirus. After all that followed, if the book was about to be released tomorrow, would you add or change something to it?

No, would not except possibly in one area. I was quite critical about the feasibility of Universal Basic Income in rich countries. I still believe the arguments I gave in "Capitalism, Alone". But I do recognize that in emergency conditions like the ones we experience today, having a stable guaranteed income for the entire population (even if it is rather low) would be helpful and would dispense with the need to make constant political decisions about new wage-support packages. The automatism of the Universal Basic Income would be an advantage.

6. In your book you assert that the so-called "carrying capacity of the earth" is a fallacy. Do you really think that there is no danger of the modern capitalism leading us to a massive planetary ecologic crisis?

I am what is called a "techno-optimist". I believe that with a right combination of incentives and "punishments", subsidies and taxes, we can curb pollution and CO2 emissions and change the dominant technology to be much more ecologically friendly. So I do not think that anything other than the usual economic tools is needed. The question is whether there would be sufficient political support to enact such policies.

7. In one of your latest articles you called Trump "the Ultimate Triumph of Neoliberalism". How could you summarize your assessment of his presidency?

If you define" neoliberalism" to be a ideology where commercialization of all activities, including politics, is legitimate, then Trump is a perfect and full embodiment of that view. He regards political office as any other job where the job-holder's main interest (and duty) is to maximize own income. Indeed, he behaved as the President of the United States as he behaved as the head of the Trump conglomerate. He made money. He treated citizens as his employees. It is in that sense that he is the triumph of neoliberalism.

I think that many people who fail to see that aspect are bound to misunderstand his presidency by using terms that do not apply to it ("fascist", "populist" etc.)

8. You expressed your mistrust with the so called "return to normalcy" in the USA, popular now that the Trump era is coming to an end. Why?

I think that Biden might wish to return to "normalcy", understood as a Clinton-Obama type of government. But one has to realize that such presidencies, especially under Clinton, were synonymous with the roll-back of the welfare state, decline of the middle class, and rising economic and political power of the top 1 percent. This in turn would bring back the very conditions that have given rise to Trump. A much cleaner break with the past is, I think, necessary. But the issue is whether the new administration will be willing to do it and perhaps even more whether the Congress would let it do it. American presidents, looked on from abroad, seem like elected kings because their power in some foreign policy aspects is indeed great. But in domestic policies they are much more constrained. So I am not very optimistic.

John Case
Harpers Ferry, WV

ASSA 2021 – part one: the mainstream dilemma

Saturday, January 9, 2021

Mike Roberts: ASSA 2021 – part one: the mainstream dilemma

-- The annual conference of the American Economic Association (ASSA 2021) was unusual this year, for obvious reasons. Instead of 13,000 academic and professional economists descending on an American city to present and discuss hundreds of submitted papers over a few days, because of the COVID-19 pandemic, ASSA 2021 was virtual. Despite that, there were a host of papers presented, along with plenaries of the great and good in mainstream economics and economic policy.

Every year, there is an issue that tends to dominate among the mainstream presentations. In previous years that has been the economics of rising inequality and last year it was the economics of climate change. Not surprisingly, this year it was the economic impact of COVID-19 and what policies to deal with the pandemic slump.

There were two large panel presentations on the economic impact. The first was on what was happening to the US economy and where it was going. Former central bank governor of India, Raghuram Rajan, now back at his neoclassical base at the University of Chicago, raised the risk of rising corporate debt turning into 'corporate distress'. He reckoned that the current monetary and fiscal support offered to small and large corporations "will have to end eventually" and "at that point, the true extent of the distress will emerge". Rajan reckoned it was time for 'targeted support' to reduce debt accumulation and so avoid future bad debts on the banking system – a banker's policy as recently advocated by the so-called Group of Thirty bankers.

Carmen Reinhart, recently appointed as chief economist of the World Bank andjoint author with Kenneth Rogoff of the huge (and controversial) book on the history of public debt, also echoed Rajan's worry about rising debt, not only among corporates in the US but particularly in the so-called emerging economies. In the Great Recession, the US dollar appreciated sharply against other currencies as it was seen as a 'safe haven' for cash and assets. But in this COVID-19 pandemic slump, the dollar has depreciated significantly because it seems investors fear that US fiscal spending is too large while dollar interest rates have plunged. But what happens to the ability of emerging economies to service their dollar debt, if the dollar should start to rise again?

Lawrence Summers, the guru of secular stagnation, reckoned that the pandemic slump has only increased the length of stagnation in advanced economies. Interest rates had dropped into negative territory and fiscal stimulus had been raised to new heights. But that would not end stagnation unless "there are structural policies adopted". He did not spell out what these were, but instead argued against untargeted fiscal spending like the proposed $2000 per person check to all Americans, which he saw as just adding to the incomes of those who had actually increased their incomes during the COVID. Summers has been attacked for his rejection of the $2000 payment from the left. But what it shows is that the mainstream is increasingly worried that fiscal and monetary stimulus is creating uncontrolled debt levels (despite low interest costs) that will have to be reined it at some point – and also that Federal Reserve largesse has mostly ended up in boosting the stock market and the better-off.

Liberal left economist and 'Nobel' laureate, Joseph Stiglitz called for a resetting of the US economy when the pandemic ends. He wanted to reverse the tax cuts to the corporations and better off implemented by Trump; increase environmental regulations; break the power of the tech monopolies and make productive public investments. What is the likelihood of any of this under the Biden administration over the next four years?

In contrast, right-wing orthodox John Taylor of Stanford University wanted the Fed to stop its emergency COVID bond purchases and other credit facilities as soon as possible, and for the new Biden administration to be cautious on more public spending. You see, for Taylor, the market system was innovative and works. During COVID, internet businesses and purchases had rocketed and this was the way forward, replacing the old ways with the new. But that needs not more regulation, but less regulation of businesses like Uber or Amazon.

Perhaps the most interesting paper in this session was that by Janice Eberly of NorthWestern University who showed that during the COVID slump, companies had saved huge amounts of capital spending on offices, travel and other physical equipment as staff worked from home (at their own expense). This provided an opportunity for business to boost the productivity of the workforce without extra capital spending and less labour – a way out for capitalism after the pandemic?

The second big session was on the world economy. By any measure, the panellists agreed that the COVID-19 slump was the worst in the history of capitalism. But even worse, it could take some time for economies to return to their pre-pandemic levels, if ever at all. On current projections, the OECD reckons that won't happen until 2022 and even then, world GDP will behind the pre-pandemic trajectory.

The impact on world trade has been even more damaging. According to the World Trade Organisation, world trade growth will never return to its previous trajectory.

And as it was argued in the US economic session, global debt levels are at record levels.

Dale Jorgenson of Harvard University is an expert on global productivity growthand its constituents. In his presentation, he reckoned that the differentials of growth in output and output per worker between the G7 economies and the 'emerging economies' of China and India would be resumed. "Growth in the advanced economies will recover from the financial and economic crisis of the past decade, but a longer-term trend toward slower economic growth will be re-established." Interestingly, he argued that the consensus view that China's economic growth will slow because its working-age population is falling may not be right, if China can raise the quality of its labour force through education and extend the working age. That could deliver an annual growth rate closer to 6% than the 4-5% forecast by many.

The other half of the Rogoff-Reinhart history of debt team, Kenneth Rogoff again presented his current view that the level of global debt is near a tipping point. Yes, interest rates are very low making debt servicing sustainable. But economic growth is also low and if interest costs (r) start to exceed growth (g), then a debt crisis could ensue. So the problem of fiscal sustainability has not gone away, as many argue. Of course, Rogoff only talks about public sector debt (graph), when the problem of record high corporate debt is much more worrying for the sustainability of future economic growth in capitalist economies.

Joseph Stiglitz's answer to a post-pandemic global debt crisis was to cancel the debts of the poorest countries. This should be done by "creating an international framework facilitating this in an orderly way". What chance of this being agreed and implemented by the IMF and World Bank, let alone all the private creditors like the banks and hedge funds?

My overall impression from these panels is that the mainstream is fairly pessimistic about a sufficient economic recovery from the pandemic, both in the US and globally. But the great and good are torn between the obvious requirement to maintain monetary and fiscal stimulus to avoid a meltdown in the world economy and financial assets; and the impending need to end that stimulus to avoid unsustainable debt levels and a new financial crisis. It's a dilemma for capitalist economics.

That dilemma also led to some papers by mainstream economists looking for ways to forecast future financial crashes. One paper reminded us that during the depth of Great Recession, the Queen of England visited the London School of Economics. As she was shown graphs emphasising the scale of imbalances in the financial system, she asked a simple question: "Why didn't anybody notice?" It took several months before she got an official reply from the economists. They blamed the lack of foresight of the crisis on the "psychology of denial". There was a "failure to foresee the timing, extent and severity of the crisis and to head it off." The causes of the Great Recession Now in this paper, the authors attempt to deal with this lack of foresight with machine learning. Using these modern techniques, they reckon that they can now predict systemic financial crises 12 quarters ahead. AnsweringTheQueen_MachineLearningAn_preview They go further in suggesting that the empirical work can offer 'precious hints' on why there are regular and recurring financial crises in modern economies – although I could not see what they were.

In another paper, the authors looked at five large financial crises over the last 200 years of capitalism to see what policies were most effective in recovering from crises.TwoHundredYearsOfRareDisasters_Fin_powerpoint They found that crises had "persistent effects both on financial markets and on economic activity". Surprise! However, they also found that since the end of the dollar-gold standard "downturns in economic activity following a crisis in the financial center continue to be quite protracted, the effects on financial markets are far less persistent." In other words, monetary injections by central banks under floating fiat currencies can preserve the value of financial assets but not help productive assets. Just as we have seen during the COVID slump.

The other worry about the impact of COVID for the mainstream was the possible collapse of trade and 'global value chains'. One paper found clearly that international trade wars and reducing the optimum distribution of international suppliers for political reasons was damaging. CuttingGlobalValueChainsToSafeguard_preview (1) It would reduce US GDP by 1.6% "but barely change U.S. exposure to a foreign shock".

The impact of COVID-19 was not the only issue that concentrated the minds of the mainstream. The economics of climate change was not ignored. Yet another paper showed that mainstream economics market solutions to global warming were failing. Carbon pricing was not working. Perhaps it is time to phase out mainstream economics itself. One paper raised the possibility that artificial intelligence could replace economists soon and do all the calculations that humans do now. WillArtificialIntelligenceReplaceCom_powerpoint

The next post will review the presentations by the radical wing of economics at ASSA 2021.

John Case
Harpers Ferry, WV