Connect with us

Economy

Freedoms and free-market capitalism beyond utopias and dystopias: A World Without Money revised

Published

on

On 23 January, The Foundation for Economic Education (FEE) published “Is Star Trek’s Dream of a World Without Money Utopian or Dystopian?”, a piece does not serve the cause of Liberty well. Sure, the article is not written in bad faith. But it ends up justifying a parasitic form of capitalism that has less and less to do with entrepreneurship and increasingly colludes with and corrupts regulators and political authorities.

***

Money yes, money no — How to debate pointlessly, and wrongly

The issue of money’s disappearance has long been at the centre of heightened debates. Probably, some familiarised with the idea thanks to the cult sci-fi serial Star Trek. Yet, much earlier than that, classical Greek thinkers like Xenophon, Plato and Aristotle reflected on the function of money. And there are also more recent discussions on this issue: from political theorist Anitra Nelson to industrial designer Jacque Fresco. However, two millennia of debates have not yielded many results or anything resembling a consensus on the function/s money serves.

Against this background, unwarranted claims by eclectic billionaires become the unwitting target of misplaced defences of nowadays monopolistic, crony capitalism. Henceforth, this sort of capitalism – or accumulation regime, as some economists label it – is referred to as “neo-feudalisticcapitalism. Even paradoxically, perhaps, given that the authors of such articles really believe they are defending freedom and individual self-determination. Recently, the Foundation for Economic Education’s (FEE) published a piece titled “Is Star Trek’s Dream of a World Without Money Utopian or Dystopian?”, which is a clear example of such misplaced defence of neo-feudalistic capitalism in the name of an enterprising, freedom-generating capitalism that does not exist.

Namely, the piece samples many of the libertarian field’s weakest talking point and reflects a narrow-minded conception economic theory. First, the text creates a fake equivalence between capitalism as it is now, raising living standards and absolute-poverty reduction without observing the data critically and informing their readers correctly. Secondly, it oversimplifies most counter-arguments ignoring the many problems of neo-feudalistic capitalism and recent findings in behavioural economics.

Instead of merely criticising, deconstructing these arguments offers an occasion to imagine a wider front of liberty defenders. After all, Mises, Keynes, Marx, Sowell and Friedman disagree on the road towards, rather than notion of freedom. Hence, libertarian, conservative and progressive economics ought to reject the current form of predatory capitalism — not to defend it.

Argument 1: Capitalism has been incredibly successful at lifting most of humanity out of poverty

One of libertarians’, neoliberals’, and conservatives’ most-often repeat argument in defence of capitalism’s current form tackles the problem of poverty. In fact, the piece reads that capitalism has been “successful at lifting most of humanity out of poverty”. But, did it?

Indeed, this is true when considering UN data on absolute poverty; or the “severe deprivation of basic human needs”. And the UN lists these “basic needs” as: “food, safe drinking water, sanitation facilities, health, shelter, education and information.” In fact, the authors themselves use Our World in Data’s (OWD) chart showing the reduction in absolute poverty since 1820. In addition, Figure 1 (below) shows also OWD’s chart showing the share of the world population in absolute poverty. Still, it would be worth asking if is it possible for almost 90% of the world population to be extremely poor at any point in time.

Figure 1 Data on extreme poverty, (A) absolute numbers and (B) percentage. All data are before taxes and transfers. (Charts from: Our World in Data)

Looking at the methodological note on OWD’s website, the solution appears related to the definition of absolute poverty. In fact, the charts count the people who “lived in conditions that are similar to the living conditions of the very poorest in the world today”. Therefore, OWD is assessing poverty as if the 20th century’s “basic needs” were universal or trans-epochal. Clearly, logically and rationally this is an econometric and statistical absurd. Conversely, it should be unsurprising that in the 19th century sanitation, education and information were of lower quality.

As a matter of fact, “as countries get richer, the value of what they consider as ‘basic needs’ increases”. If anything, the reason lies in society’s constant evolution, which ingenerates new needs and spurs new technologies — also before modernity. Hence, the real success of an economic system lies in increasing the number of people who can live a decent lifeby their times’ standards. And economists gave a name to this measurement: “relative” or “social” poverty. According World Bank data in Figure 2, the current version of capitalism has achieved little or nothing in this respect. On the contrary: “the total headcount of societal poverty is essentially at the same level it was in 1990 due to the increasing global population.”

Figure 2 World Bank data on relative poverty between 1990 and 2015.
(Data source: Jolliffe and Prydz 2017; Chart: Author’s elaboration)

Table 1 Data on relative poverty from Jolliffe and Prydz (2017).

Argument 2: Fiat money circulating in Free markets creates free people

The second argument supporting the unquestionability of money derives from Ayn Rand’s Atlas Shrugged:

Money rests on the axiom that every man is the owner of his mind and his effort. […] Money permits no deals except those to mutual benefit by the unforced judgment of the traders.

For anyone with an up-to-date understanding of economic theory this is straightforward naivety. In other words, there should be is nothing in a monetary transaction besides the free will of the participants.

Yet, there are enormous conditionings that weight on the result of any transaction beyond one’s free will. For instance, there may be regulations prohibiting the provision of certain services to specific individuals (e.g., international sanctions). Again, rules can fix certain goods’ and services’ minimum or maximum price (e.g., the US Office of Price Administration). More, indirect taxes, surcharges and subsidies alter prices leading some people not to buy and other to buy more. Finally, laws can impose a transaction (e.g., US law mandated covid-19 tests, but either employers or employees had to pay).

Even assuming no State intervention, one cannot disregard the power relations in the economic sphere — mention one. In fact, neo-feudalistic capitalism is full of monopolies and oligopolies with stratospheric margins that dictate unreasonable prices and lobby regulators. Moreover, major corporations tend to develop “predatory” traits and annihilate any competition at first sight — or even in the cradle. Additionally, behavioural economics shows that advertising and other practices alter preferences and behaviours surreptitiously, with the potential to generate inefficiencies.

Clearly, contrary statements prove that Kurt W. Rothschild was right when he wrote “power is neglected in contemporary economic theory”. Furthermore, they lead to a completely false reading of economic history. In fact, the authors’ strenuous critique of Marx and Marxism goes as far as saying that “workers chose industrial jobs because they paid better than those in agriculture” in 19th century England. Really, this reconstruction may appear ‘rational’ to a libertarian but, as Karl Polanyi wrote, it is simply false. In fact, wealthy individuals began “enclosing” previously common plots of land, forced poor farmers out into the towns. And once there, disorientation, hunger, and other desperate peoples’ competition of dissipated any semblance of fair wage negotiations.

Argument 3: Instead of a conclusion: A call to action

Admittedly, the aim of this article is not to prove that the abolition of money would create a utopia. Nor to support the authors’ claim that it would almost certainly lead to a dystopia. In reality, money is not a guarantee of freedom — but neither is its abolition.  Meanwhile, given that nowadays’ societies are already on the brink of a dystopic tomorrow, talented libertarians like the authors should refrain from pursuing counter-productive critiques of far-fetched speculations like a money-less society. Indeed, neo-feudalistic capitalism seems even unable to abolish cash — let alone money itself.

Instead, it is high time for libertarians, conservatives and progressive to join forces to protect civil and economic freedoms. Each of these groups can contribute with a different, and differentiated, analysis of today’s deep crisis. Yet, only forming a united front can they stop neo-feudalistic capitalism’s mania for social control, monopoly and state capture. Essentially, no one supports an embryonic social-credit system, the death of small and medium businesses and reckless monetary policy. Yet, this is the direction in which neo-feudalistic capitalism is leading humanity at an accelerating speed.

Once this formidable adversary is no more, there will be plenty of time for libertarians to criticise some risk-prone progressives. As well as to serve an uppercut to some conservative’s cultural traditionalism. But until then, everyone’s attention should be on stopping the current drift before it is too late.

Fabio A. Telarico was born in Naples, Southern Italy. Since 2018 he has been publishing on websites and magazines about the culture, society and politics of South Eastern Europe and the former USSR in Italian, English, Bulgarian and French. As of 2021, he has edited two volumes and is the author of contributions in collective works. He combines his activity as author and researcher with that of regular participant to international conferences on Europe’s periphery, Russia and everything in between. For more information, visit the Author’s website (in English and Bulgarian).

Continue Reading
Comments

Economy

Reskilling Revolution: Leaders Preparing 1 Billion People for Tomorrow’s Economy

Published

on

Investing broadly in the skills of the future for both today’s and tomorrow’s next-generation workforce could add an additional $8.3 trillion in increased productivity to the global economy by 2030.

The Reskilling Revolution initiative, a coalition of 50 CEOs, 25 ministers and 350 organizations committed to realizing these gains for their economies, societies and organizations, marked two years of progress at the World Economic Forum Annual Meeting 2022 in Davos today. Their work will benefit over 100 million workers on their journey towards reaching 1 billion people by 2030 with better education, skills and economic opportunity.

Accelerating the Reskilling Revolution

Global inequities in lifelong learning and childhood education, a pandemic that closed schools and workplaces and rapid technological change are highlighting the need to double down on reskilling, upskilling and the future of learning. The Reskilling Revolution initiative, launched at the World Economic Forum’s 50th Annual Meeting in January 2020, is working to provide 1 billion people with better education, skills and economic opportunity by 2030.

At its heart is a commitment from over 50 CEOs to inspire global business leadership on the upskilling, reskilling and human capital investment agenda. By working together with a growing network of national-level country accelerators launched to date in 12 countries – Bahrain, Bangladesh, Brazil, Cambodia, Georgia, Greece, India, Oman, Pakistan, South Africa, Turkey and the United Arab Emirates, with knowledge support from Denmark, Finland, Singapore and Switzerland – the Reskilling Revolution has mobilized a multistakeholder community of over 350 organizations across 12 countries and is on track to benefit 100 million people on its journey towards 1 billion.

“In an era of multiple disruptions to the labour market – the pandemic, supply chain changes, the green transition, technological transformation – the one ‘no regret’ investment all governments and business can make is in education, reskilling and upskilling. It is the best pathway to expanding opportunity, enhancing social mobility and accelerating future growth,” said Saadia Zahidi, Managing Director, World Economic Forum.

Enabling Education 4.0

Two years into its work the initiative will expand beyond adult reskilling and upskilling and integrate a focus on education for children and youth. These efforts will be taken forward by a new Education 4.0 Alliance, bringing together 20 leading education organizations at the Forum’s Annual Meeting 2022.

A new report from the project, Catalysing Education 4.0 Investing in the Future of Learning for a Human-Centric Recovery, focuses on preparing today’s generation of school-age children with better collaborative problem-solving that could add $2.54 trillion – over $3,000 per school-age child – from this one skill alone.

The report, developed with support from the LEGO Foundation and in consultation with leading education experts from the public, private and educational sectors, finds that investment in the skills of the future for primary and secondary school learners would create an additional $489 billion in Europe, $458 billion in South Asia, $333 billion in East Asia, $332 billion in Latin America, $266 billion in the Middle East, $235 billion in North America, $179 billion in sub-Saharan Africa, and $163 billion in Central Asia.

Meanwhile, China ($356 billion), the United States ($218 billion), Brazil ($143 billion), Mexico ($80 billion) and Italy ($72 billion) are the five countries standing to gain the most, while the benefits relative to the size of their economies today would be greatest in sub-Saharan Africa and Latin America.

To unlock this education transformation, the Education 4.0 initiative will focus on three key investment areas: new assessment mechanisms; adoption of new learning technologies; and empowerment of the teaching workforce.

Expanding the Accelerator network

Complementing the Skills Accelerators, the World Economic Forum’s Annual Meeting also featured the official launch of the first school-age focused Education 4.0 Accelerator, a national-level public-private collaboration platform for action. The Education Accelerators – complementing a network of successful Closing the Skills Gap Accelerators – aim to mainstream technology-enhanced learning experiences, implement new measurement mechanisms, empower educators and mobilize investment in the sector.

Bangladesh will be the first country to pioneer this new model in Asia. Dipu Moni, Minister of Education, Bangladesh, said: “Bangladesh is committed to ensuring high-quality education for all children and youth. We are delighted to partner with the World Economic Forum to launch the first Education Accelerator in South Asia and to be part of this global network to advance the Education 4.0 agenda.”

Continue Reading

Economy

Sanctions against Russia: do they have any point?

Published

on

It’s hard to recall a day since the beginning of the conflict in Ukraine when there was no mentioning about new sanctions being imposed against Russia. On May 9th, the EU announced that it had almost finished preparations for the sixth package of sanctions, and rumors on the Internet are already mentioning the seventh.

What are sanctions?

In brief, sanctions are a list of political and economic decisions applied by states and organizations in order to protect national interests, international law, and defense from threats to international peace and security. As a rule, they are temporary and are removed when the cause/threat has been eliminated.

According to the EU’s official website, “Restrictive measures (sanctions) are an essential tool in the EU’s common foreign and security policy (CFSP), through which the EU can intervene where necessary to prevent conflict or respond to emerging or current crises. In spite of their colloquial name ‘sanctions’, EU restrictive measures are not punitive. They are intended to bring about a change in policy or activity by targeting non-EU countries, as well as entities and individuals, responsible for the malign behaviour at stake.”[1]

How many sanctions have been imposed against Russia in total?

On May 8th, the Chairman of the State Duma of the Russian Federation Vyacheslav Volodin shared a post on his Telegram channel that “10 128 sanctions have been imposed against our country. More than against any other state in the entire history of their existence.”[2] From this number, 2,754 were introduced in the period from 2014 (the Crimean issue) and before the beginning of the special operation in Ukraine.[3] The rest – more than seven thousand – were introduced in a short three-month period. According to The Castellum.AI, a service which takes a record of sanctions and updates weekly, as of May 9, their number has already exceeded 7,600, making Russia the state with the largest number of sanctions imposed. For comparison: 3,161 sanctions have been imposed against Iran, 2,608 – against Syria, and 2,077 – against North Korea.[4] Other states can “boast” with the list containing less than 1,000 sanctions. Thus, in a short period of time, Russia not only got on the list of sanctioned countries, but also topped it.

The sanctions have affected almost every sector of Russia – from individuals, which list already counts numbers in the hundreds, to the spheres of energy, economy, trade… The enumeration can go on for a long time. It can be said that there is practically not a single area left that wasn’t affected by sanctions: for example, one of the articles published by the Atlantic Council had the heading “What’s left to sanction in Russia?” And yet, at almost all the examples given, it is mentioned that sanctions have already been imposed in this area.[5]

So is there anything else that can be included in the sanctions lists? The question itself is good, but alas – it will take quite a long time to search for the answer: sanctions are already everywhere.

So is there any point in sanctions?

This is quite an interesting question, although in this situation it would be more accurate to say that sanctions have not only a point, but also consequences.

As it was mentioned above, sanctions are usually temporary, but Russia has been living with almost 3,000 sanctions imposed against it for more than 8 years. Has it brought any tangible results in influencing Russia? No. Have those who introduced them achieved the result what they had introduced those sanctions for? No. Have these sanctions been lifted? No. Therefore, is there any point in imposing them on Russia? The answer is still the same – no, because as it can be observed,  these sanctions are in the list of existing ones, and Russia still continues to exist, quite successfully adapting to them. And there are a lot of sanctions – 2,754 (for the period before the Ukrainian issue), but the thing is that the country against which they were introduced does not complain about its size and capabilities either.

There is a point in sanctions, and first of all – for Russia.

Following numerous bans on the export of various kinds of products, as well as the departure of many companies operating in various fields, the Russian government introduced a number of measures to support different areas, and which have already started to show positive results. According to Rosstat, several sectors of the Russian economy showed positive dynamics as soon as measures were introduced (compare to the same period of 2021): the mining industry grew by 7.8%, energy, heat and gas supply – by 1.5%, water supply and waste disposal – by 7.2%.[6] There is also an increase in the food sector – by 1.1%, and medical production increased by as much as 46.8% compared to March 2021, and turned out to be 9.1% higher than in February 2022. As Rosstat data shows, according to a preliminary estimate of the country’s GDP for the 1st quarter 2022, there is a positive growth of 103.5% compared to the same period last year.[7] The Economist noted that “as imports slide and exports hold up, Russia is running a record trade surplus.”[8] The Institute of International Finance estimates that “in 2022 the current-account surplus, which includes trade and some financial flows, could come in at $250bn (15% of last year’s gdp), more than double the $120bn recorded in 2021”. As a result, the world sees that rather than damaging Russia, sanctions are contributing to its strengthening. [9]

The consequences of the sanctions, however, were faced not only by Russia and Belarus (which also got quite an amount of them because of good relations with Russia), but also by the rest of the world, including even the part that had nothing to do with this issue. And the consequences of those 7 thousand+ recently imposed sanctions are especially severe.

Some countries are already complaining about food shortages, as their supplies have been seriously reduced due to sanctions. People are dissatisfied with the increase of prices for various products and goods, but this is caused by the increase of fuel prices – which people are also dissatisfied with. Shocks and turmoil in the social and economic sectors started to affect the political situation both within countries and their international policies, as they have to choose whether to join the sanctions or try to stay away.

Why “try”?

Even at the first weeks of the conflict, the United States were seen trying to put pressure on states to either join the sort of “sanctions coalition” or stay away, preventing any attempts to help Russia. As it turned out, one of these countries was China: back in April 2022, the US Deputy Secretary of State Wendy Sherman said that the sanctions imposed against Russia should give China (and President Xi personally) an idea of the consequences that it could face in case of providing assistance to Russia: “<it> gives President Xi, I think, a pretty good understanding of what might come his way should he, in fact, support Putin in any material fashion.”[10] If there was an attempt to put pressure on China, which is far from being the last figure in the international arena, then what can be said about other states – especially European ones?

Hungary is now becoming one of the stumbling blocks, as it refuses to support sanctions with regard to the embargo on fuel imports. According to Prime Minister Viktor Orban, it will be equal to an atomic bomb dropped on the Hungarian economy, since it simply will not have time to adapt – it will take at least five years and a large number of investments. Nevertheless, he noted that Hungary is ready for negotiations – if the proposals are consistent with the interests of the state.[11] However, according to information, a video conference between Ursula von der Leyen and Viktor Orban, held on Monday last week, did not lead to a compromise, thus delaying the adoption of the sixth – the heaviest, according to EU representatives – package of sanctions.[12] Against this background, Polish Prime Minister Mateusz Morawiecki expressed the opinion that the sixth package of sanctions could be adopted in a reduced form, since “we must observe unity in the EU.”[13]

So…what can be expected in the future?


[1] https://ec.europa.eu/info/business-economy-euro/banking-and-finance/international-relations/restrictive-measures-sanctions/overview-sanctions-and-related-tools_en

[2] https://t.me/vv_volodin/427

[3] https://ec.europa.eu/info/business-economy-euro/banking-and-finance/international-relations/restrictive-measures-sanctions/sanctions-adopted-following-russias-military-aggression-against-ukraine_en

[4] https://www.castellum.ai/russia-sanctions-dashboard

[5] https://www.atlanticcouncil.org/blogs/new-atlanticist/whats-left-to-sanction-in-russia-wallets-stocks-and-foreign-investments/

[6] https://rosstat.gov.ru/folder/313/document/163079

[7] https://rosstat.gov.ru/folder/313/document/165370

[8] https://www.economist.com/finance-and-economics/2022/05/13/russia-is-on-track-for-a-record-trade-surplus

[9] https://www.economist.com/finance-and-economics/2022/05/13/russia-is-on-track-for-a-record-trade-surplus

[10] https://www.reuters.com/world/us-says-china-could-face-sanctions-if-it-supports-russias-war-ukraine-2022-04-06/

[11] https://www.reuters.com/world/europe/hungary-cannot-support-new-eu-sanctions-against-russia-present-form-pm-orban-2022-05-06/

[12] https://www.ft.com/content/abba000b-992a-45a3-941a-3616e335ccc5

[13] https://tass.ru/mezhdunarodnaya-panorama/14676015?utm_source=yandex.ru&utm_medium=organic&utm_campaign=yandex.ru&utm_referrer=yandex.ru

Continue Reading

Economy

Anglo-American Axis Needs Common Market, not Common Alliance

Published

on

With the eruption of the war in Ukraine, and considering the post-war situation, the alliance system in the West and its future should be something worthy of concern.

Anglo-American Axis is a concept that I proposed well before Brexit, and such an axis has already been fully formed today. With Brexit, the United Kingdom is now no longer part of the continental European alliance. It has instead re-aligned with the United States, and reverted to being a maritime nation that it used to be.

Such an axis would not be moved by the independence inclination of France, the wish of Germany to become the leader, nor the ambition of Turkey to be a regional hegemon. It cares even less about countries like Israel, Iran, and India. What the Anglo-American Axis focuses is to control the high ground of fundamental values, so that it can win the historic future as long as civilization continues to progress. Wars in other regions do not carry much significance to it. For NATO to play a role, it must negotiate conditions with the United States. It is not the Anglo-American Axis that needs NATO, but that NATO needs the Anglo-American Axis.

The United States, Canada, Australia, and New Zealand, the former members of the Commonwealth, have formed the largest single market in the world, with a coordinated monetary policy for the U.S. dollar and British pound. Such a market can consider certain African and South American countries, as long as they remain stable, and this usually means some “friendly dictatorships with open economies”, similar to Chile in the past.

Civilization is a dynamic force. Although many have studied monetary issues and finance, they fail to link these with civilization. In fact, these are appendages of civilization, and they are products of it. Humanity will inevitably move towards civilization.

Continue Reading

Publications

Latest

Trending