“While the bulk of the left has moved on from the days of wanting to nationalise the local chip shop”

Well, I think that’s an unhelpful caricature. No one cares about the local chip shop, but real socialists do still want to nationalise the big enterprises. So are you one of us, or aren’t you?

What sort of big enterprises Chris? All of them?

And what would be your size limit?

Yes Chris. Advocacy of public ownership for major enterprises is still the definition of ‘socialist’ in my book.

May Ed Milibands psoas hold out as he rides the invisible fence parting capitalism and fascism…

But will returning to a commitment to take into public ownership the commanding heights of the economy win seats at the next general election? That is the question.

South of a line from The Wash to the River Severn, Labour has just ten out of 197 parliamentary seats. Numerous counties, from Cornwall to Essex, are Labour-free zones.

Public ownership has been a disaster in the past, so not likely to be much of a vote winner (out Eastern European population may think we’ve gone mad).

One thing to remember is that “public” ownership doesn’t actually happen: nationalisation simply replaces the current owners with an extremely small and immensely powerful clique. And this time, the owners will be backed by the full power of the state.

Credit Lyonnais was the largest bank in France at the beginning of the 1990s and it was state-owned. By the mid 1990s, it had accumulated loses of FFr 100 billion (about $17 billion) according to Strauss-Kahn, the French finance minister at the time:
http://www.prmia.org/pdf/Case_Studies/Credit_Lyonnais_1.pdf

The bank has since been privatised but one way or another, French taxpayers will have to pay off the loses which were hived off into a “bad bank” before the privatisation.

On its road to ruin, at one stage Credit Lyonnais managed to own the MGM studios in Hollywood. Heaven knows how that fitted into French national interests.

“For well over two decades now, the unions have been de facto second class citizens in the party they created and for which they still largely pay.”

Possibly. But compared to the bulk of the working population, who are not union members or public sector ‘workers’, and they have not done badly at all.

This exemplifies your mindset:

“And when business does put its agenda forward, it is not derided as ‘one sectional interest’. The necessity that its concerns be incorporated is taken for granted, often even where they conflict with the legitimate concerns of employees.”

You see to view business as basically a means of ripping workers off. You don’t take into account that businesses are meployers hwo pay people. And the implication behind your piece is that the kind of business you are thinking of is very large companies with boardrooms inhabited by cigar-smoking millionaires. Most private business is nothing like that. Most people in this country are neither pin-striped fat cats nor public sector workers, they are people working for or owning and working for small businesses.

So long as you treat them either like the enemy or basically worthy of being ignored or caicatured, then Labour will indeed be a party of a narrow sectional interest, just as the Tories are arguably a party of another narrow sectional interest, i.e. the big business and bankers you are caricaturing the private sector as comprising.

The last time Britain came out of a recession – in the 90s, it was on the back of small business growth. It wasn’t on the back either of public spending or masters-of-the-universe-bankers.

The folly of Blair and Brown was in thinking that an econmy consists of a financial/big business sector and a public sector. Cameron seems to have inherited that simplistic vision of the economy, it’s just that Blair and Brown tried thought a balance of that inadequate vision would work while Cameron has settled for his banker chums. But none of them are right, and you appear to have as pitifully stunted an awareness of the economy as Labour and Tories alike.

Have you ever worked in small business the private sector, Dave? Ever been involved in the running of a small company that is deseperately trying to fnd ways to keeo its staff on during a recession? Keep telling yourself that the economy is about heroic union public sector workers on one side and fat cats on the other, but for most workers in this country that’s all an irrelevance.

The unions are going to get us out of this economic mess anymore than the bankers or big business are. But you appear to have such a pitifully inadequate awareness of what the working economy in this country consists of that you can’t grasp that – hence your utterly stupid contention that this is a matter of unions against ‘business’.

Try and process this, Dave: no business = no jobs = no unions. That’s how life is for the vast majority of workers outside of the charmed circle of th epublic sector where you can just raise taxes if you want more money.

And beofre you start, I am on less than half the average national wage. I wish I had a fraction of what unions members are whining about. on e of the reasons I don’t have it is because we have a shitty economy partly due to splurging our money into public pay and pensions over the past couple of decades.

Fuck the bankers and fuck the unions.

Sorry for the numerous typos above, but really, that’s such a disappointing article. If, during a long recession, the first thought that comes into your head when the word ‘business’ arises is ‘the enemy of the unions’, then you are not going to be able to prescribe anything constructive, any more than the idiot Osborne is when he thinks ‘tax cuts for my banker chums’.

Is there anyone connected with Labour (or the Tories, for tht matter) who understands that the economy isn’t simply a battle royale between unions and bankers. If you don’t automatically bring small business into the equation, and graps that a huge proportion of small business owners make less than many public sector workers, then you do not have a remotely adequate grasp of the situation.

I apologise if I seem rude above Dave, but please do read and think on the gist of what I am saying.

Nice piece, Dave. It sums up Labour’s dilemma fully. However by referring back to policies such as nationalisation I think you confuse past policies with their intended consequences.

To me, the problem with Labour is that, besides from getting elected, they have really lost sight of their purpose. That’s what you get when you parachute political wonks and careerists into safe seats.

What should Labour’s guiding ideology be? I think the test is whether what they do helps more people live better lives. How to achieve it may involve taking back utilities, for example. It would certainly differentiate them from the Tories with their I’m Alright Jack ideology.

“Advocacy of public ownership for major enterprises is still the definition of ‘socialist’ in my book.”

BTW is “public” here same as “nation state”, or EU as a federal power, or a world government?

Whichever of these it is, I’d be interested to know your plan for how to manage major enterprises, such as BP, AstraZeneca, Google or Amazon. Imperial Tobacco and G4S you would surely just shut down immediately, right?

After hearing your plan I might give some comments about what they would cause to the world economy…

Personally, I think the idea of “public ownership of major enterprises” smells of very early 20th century, coal mines, steel mills and ignorance of the impact of knowledge revolution over the past decades.

Cherub:
“To me, the problem with Labour is that, besides from getting elected, they have really lost sight of their purpose”.

I’d say this was true of all three main parties, and has occurred since the fall of the Berlin Wall. Socialism is dead in the West; the debate should be about how to refine Capitalism.

“How to achieve it may involve taking back utilities, for example”.

I can think of two immediate reasons why this would not be a good idea.

1) It didn’t work before. Why would the current generation of politicians do better? Yikes.

2) Interfere with the nation’s telephones and you’ll have a revolution on your hands.

Jack C, have you heard of the logical fallacy known as Begging the Question? Look it up.

Besides, you have a crude and ill informed understanding of the nationalised utilities compared with the current private companies. But hell, lets not let facts get in the way of any discussion when recycled Daily Mail prejudice will do.

Cherub,
Go on then, give us some facts.

“Fuck the bankers and fuck the unions”

This.

Where do I buy the t-shirt?

Lamia: Try this on business sector employment:

Small and medium-sized enterprises together accounted for more than half of the employment (59.4 per cent) and turnover (50.1 per cent) in the UK

Small enterprises alone (0-49 employees) accounted for 47.9 per cent of employment and 36.5 per cent of turnover.
http://www.hwfisher.co.uk/images/docs/turnaroundservicespresentation250512.pdf

Small and medium enterprises (SMEs) each employ fewer than 250 people.

Lamia / Bob B,
In addition to the points you make, there is the the immeasurable “efficiency” factor.

From my own experience, smaller companies are leaner and more efficient than (often) sclerotic corporations. It is these that need support.

As a side issue, this puts a different slant on the 50p tax debate. I can understand being against it because it makes no money, but it’s hard to believe that “wealth creators” are much affected. If you’re on a salary above 150k you’re probably a highly-valued professional, which is not the same thing (even if you’re in a private sector business).

I agrree with a lot of what Lamia says – none of the political parties has any engagement with small business. Dave is probably right to disparage the “business” people turning up to the Laboutr conference – they will be representatives of the big business barons. Small business people are too busy trying to keep ther heads above water in the recession to have the time to schmooze the politicians.

Certainly the economy is “shitty” – but I don’t think that is down to union wages or public sector pensions – the economy is pretty shit everywhere. Even Chine is on a hiding to nothing – its economic success is based on the presumption thta people somewhere can continue to afford all the stuff it makes, which is looking like a less reliable business model every day.

Jack C/Lamia

The extent to which SMEs make a valued contribution to the economy requires a great deal of research concerning their engagement in R&D, enterprise size and innovations, median employee pay and enterprise size, differtential job creation rates, the burden of regulations upon SMEs and so on.

The issues aren’t simple and straight forward. Sadly, much of the extensive academic and think-tank research hides behind steep subscription barriers which I can’t afford but try OECD on Innovative SMEs and Entrepreneurship for Job Creation and Growth
http://www.oecd.org/cfe/smesandentrepreneurship/46404350.pdf

Big companies start out as small businesses. Microsoft started out as a small business back in 1975.

…in the broadest sense between public and private sector workers. All plebeian in the eyes of the ruling elite and that includes anyone who has the word “manager” in their job title…eg. project manager.

Nothing wrong with private sector workers joining unions other than their egos…

Redundant Northern Rock workers did not fare too badly (other than the loss of shares) from aligning with Len & Co.

@ Jack C

“From my own experience, smaller companies are leaner and more efficient than (often) sclerotic corporations. It is these that need support.”

Yes, they have to be, because just a few hundred pounds can make all the difference one month to the next. Also, money goes through them more quickly and so I think they have a vital role in aiding liquidity in the economy. A change in fortunes for SME’s will have a much quicker beneficial effect than more tax cuts or more public spending.

@ James from Durham

“Dave is probably right to disparage the “business” people turning up to the Laboutr conference – they will be representatives of the big business barons.”

That is a fair enough point. What grates is that Dave seems to assume that they constitute or typify ‘business’ as a whole – hence the hostile attitude to ‘business’ – when as Bob’s figures indicate, they don’t remotely.

@ Bob B

Thanks for those useful figures and links.

“Big companies start out as small businesses. Microsoft started out as a small business back in 1975.”

This. A micro business might be a way of someone getting by and suporting themselves and their family, or it might be the start of something global or anywhere in between. It is frustrating that Labour and Tories alike seem to be indifferent to – even ignorant of – this, the single largest largest sector of the economy ‘the 60%’ of us who work for or run SME’s, and on all sorts of wage levels and with all sorts of political affiliations and socio-economic circumstances. My best friend is a registered childminder and as such is a business owner. She doesn’t make much but she supports herself. She’s her own boss but she’s not bossing anyone else around, and is on far less than a large section of unionised public employees. I want to know why Dave instinctively takes their side over hers. For him they are apparently ‘the workers’while she is ‘business’. I say bullshit to that kind of definition and priority.

Labour made a big mistake last time round when its idea of being friendly to ‘business’ did simply mean palling around with big business and banks. We know how that panned out. If they were to show they were friends of smaller business, then they would be helping support poorer workers and aiding the health of the economy.

The sad fact is that “business” is seen by some as rapacious and profiteering. I know I’d rather call the Vet than the GP surgery (even, perhaps, if it was me who needed the treatment).

Of course, corporatist politicians will always favour corporations (aside from the donations, they’re better able to implement exciting new regulations).

12

Well socialism may not have worked very well when emerging from feudal/unstable economies (that’s pretty much every socialist country) but socialism has never emerged from a mature capitalist country. And as far as trying to refine capitalism, we’ve been trying to do that for over 150years and have never found that magical refinement.

As far as I can see, we either leave the markets to do what they will or we go the whole hog and embrace socialism, either way, the two are not compatible.

Really steveb?

Compare where we were 150 years ago against where we are now. Can you not see the progress made? Or were you hoping for a final perfect solution? This is a bit unlikely given that change will always take place.

As for the “never had socialism from mature capitalism” argument, can you explain what would be different if we did?

Steveb,
Can you not see the progress over the 150 years? There will never be a single “magical” refinement, it’s a process of change (because everything else changes).

As for the “we’ve never had Socialism from a mature capitalist country” argument, please explain what would be different if we did.

I agree that Capitalism and Socialism are not compatible. More importantly though, the former is compatible with Democracy, whilst the latter isn’t.

Do vets treat delusion?

No. Dare I ask why you ask?

It is more accurate to say that some SME generate growth and create employment. Around 5% of them do most of it which is roughly the same percentage of large firms who generate growth and employment.

http://realbusiness.co.uk/news/5-of-smes-are-key-to-uk-economic-growth

It is important not to get carried away fetishing SME. Small firms with less than 50 employees account for 45% of total employment and only 10% of business investment. Therefore, a lot of them are just standing still. Although new SME firms are creating employment they are also at the same time losing jobs from SME firms who go bust at a much faster rate than large firms. Half of the new firms created each year are bust within five years. That churn is a necessary part of the system to see who has what it takes but it does reduce the net gain in jobs.

What matter the most to whether a SME becomes one of the high growth 5% or one of the bust is access to capital and entrepreneurship, which is roughly the same thing as innovation. The innovation of the SME is three times more important than the sexy stuff such as R&D which is really not that important to SME success. Access to capital is off the scale in importance compared to the other two. Many decent SME go bust just through a lack of working capital. Entrepreneurship/innovation is negatively correlated to the tax burden on SME. Reduce their tax burden and innovation increases generating growth and creating employment.

http://admin.bvca.co.uk/library/documents/SMEs_Entrepreneurs_%28June_2011.pdf

@ steveb,

“As far as I can see, we either leave the markets to do what they will or we go the whole hog and embrace socialism, either way, the two are not compatible.”

Well said. I hope you will earnestly consider which of these choices is right.

23. steveb

Well socialism may not have worked very well when emerging from feudal/unstable economies (that’s pretty much every socialist country) but socialism has never emerged from a mature capitalist country. And as far as trying to refine capitalism, we’ve been trying to do that for over 150years and have never found that magical refinement.

So just to re-cap those unfamiliar with Steveb’s unusual point of view – we have tried socialism, it has always failed, but that is no reason not to keep trying. After all, capitalism has made us all rich and healthy and free, but that is still not as good as putting Steve in power and allowing him to play Stalin.

As far as I can see, we either leave the markets to do what they will or we go the whole hog and embrace socialism, either way, the two are not compatible.

Socialism being, in this case, a figment of Steve’s own imagination that has never been “really” tried and so which can never fail.

But I agree, there is a contradiction between freedom, which is all capitalism really is, and giving Steveb totalitarian control over Britain.

Public sector jobs:

My local LibDem controlled council has been advertising two new jobs at £38,961 – £41,610 per annum each with the following job descriptions:

“It’s been an inspiring summer with the Olympics and Paralympics raising all of our expectations and levels of attainment. Here at the London Borough of Sutton in South West London we are already leading the race for gold with our One Planet programme and we’re a contender too in education, with some of the best performing schools in the country.

“We want you to work with us now to become a pace-maker for neighbourhood and locality working across the country and as a model for others to follow.
“We have two roles for innovative managers with a passion for delivering a range of services more locally, and who can help us achieve excellence and transform our ambitions into the highest possible standards.

“Based in our new Environment and Neighbourhood Directorate you will be working with council colleagues, residents and partner organisations to commission services locally. You will be adept at engaging and involving residents and working with them so they have more of a say. Working with local councillors you will break new ground with our local committees, bring the very best practice into neighbourhood and locality working and help to create increased opportunities for residents to take part and take pride in the life of the borough.”

Clear enough? Naturally in these hard times, it is necessary to economise elsewhere. Not to worry:

50 care workers looking after vulnerable London Borough of Sutton residents/clients with learning difficulties (previously known as mental handicap). employed by MCCH (a registered charity) are facing the prospect of a 40% cut in their pay, equivalent to £10,000 per annum.

As they say, politics is a matter of priorities.

25, 29,

The difference between socialism emerging from a capitalist economy and a feudal economy can be answered in a metaphor, it is the difference between building a house on quick sand and one on concrete, the environment is everything.

However, SMFS, I was actually suggesting that we either embrace laissez-faire or, as the existing state wields so much control over all areas of economic activity, we become state-socialist. And you’ve been away for so long I’d forgotten your propensity to misquote and build straw men.

You clearly feel that capitalism has made us all rich and healthy and free, but this was not the result of laissez-faire, maybe that’s the magical refinement which solves the current crisis.

“The difference between socialism emerging from a capitalist economy and a feudal economy can be answered in a metaphor, it is the difference between building a house on quick sand and one on concrete, the environment is everything”.

a) So how do we know when we’re ready? It’s always a mistake to believe that the present is some sort of pinnacle. We’ll look a pretty odd to those living in 2112.

b) The metaphor doesn’t cover it. So we go for full Socialism now. What are the mechanics? Why is the economy going to be run differently to the Soviet Union?

I’m unclear about where a complete state of laissez-faire existed in a capitalist market economy.

In Britain, which pioneered industrialisation, laws protected property rights and factory acts to control employmnet contracts started as early as 1802.

True enough, schooling was left to charities and the churches but Parliament intervened in 1870 to create structures to raise finance for universal primary education. Ten years on, universal primary education up to 12 was made compulsory.

Elizabethan poor laws provided means to care for the poor and needy.

As for state-socialism, I think we have to clarify what that means.

31. steveb

The difference between socialism emerging from a capitalist economy and a feudal economy can be answered in a metaphor, it is the difference between building a house on quick sand and one on concrete, the environment is everything.

Of course it has to be answered with a metaphor. Because it cannot be answered with facts, evidence or logic. What is it that makes one attempt at socialism fail and another succeed? Steveb can’t say. But he knows if he is given God-like power it will work.

However, SMFS, I was actually suggesting that we either embrace laissez-faire or, as the existing state wields so much control over all areas of economic activity, we become state-socialist. And you’ve been away for so long I’d forgotten your propensity to misquote and build straw men.

I know what you were suggesting. And it is nonsense. Unfortunately we will not move closer to laissez-faire. But we will probably keep a reasonable distance from State Socialism – whatever that is and you don’t know either – for another generation or two. The system we have works. There is no sane alternative.

You clearly feel that capitalism has made us all rich and healthy and free, but this was not the result of laissez-faire, maybe that’s the magical refinement which solves the current crisis.

Actually it probably was – although laissez-faire is an ideal never reached. It was certainly a result of the present freedom we enjoy, or what is left of it. Not of socialism.

@ Bob B.

““We have two roles for innovative managers with a passion for delivering a range of services more locally, and who can help us achieve excellence and transform our ambitions into the highest possible standards.”"

My heart sinks when I read that kind of thing. If all they want is a couple of jargon-spewing robots, why do they have to pay them £38,000-41,000 per year? Surely all they need is a bit of oil and replacement batteries now and then?

Sad sense of priorities, I agree. Squeeze out the useful, lwer paid public workers and bring in more well-paid useless robots. And unfortunately I don’t see any party siding with the former as opposed to the latter.

34

Of course it has to be a metaphor because socialism has never emerged from a capitalist economy, we know that the emergence of socialism from feudal economies doesn’t work very well.

I would agree that we are unlikely to move to laissez-faire capitalism, those pro-marketeers don’t really like the idea and government would lose corporate involvement. There’s too much at state for a poweful minority/

32

I cannot predict when we (as a society) will be ready for socialism, most socialists are ready now.
The metaphor is needed because we have no example of socialism being built on a highly technical and scientific economy. I was pointing-out that like for like comparisons should be used and when we build something on one environment we cannot extrapolate the outcome of building the same thing in a different environment.

36. steveb

Of course it has to be a metaphor because socialism has never emerged from a capitalist economy, we know that the emergence of socialism from feudal economies doesn’t work very well.

And what you stubbornly refuse to admit is that your whole plan is built on wishful thinking. We know that socialism does not work well every time it is tried. So much so that most people who experienced it welcomed the Nazis as the lesser of two evils when they got a chance. You claim that it was because Russia and China were feudal. Which we know they were not. But that is more or less irrelevant. Because what it means is that you have no idea how well socialism will work if it ever does emerge from a capitalist country. You just have undying faith that all will be well. Like people who await the Rapture.

I cannot predict when we (as a society) will be ready for socialism, most socialists are ready now.

Sure. Jesus is coming! Be prepared. Of course most socialists are just dying to get Stalin’s power. That does not mean we will ever be ready for “socialism” as you define it. It just means your cause attracts sociopaths. But then we knew that didn’t we?

The metaphor is needed because we have no example of socialism being built on a highly technical and scientific economy.

Indeed. And so all your ideas are wishful thinking. You have no idea. Just Faith. And some matches for heretics and witches.

I was pointing-out that like for like comparisons should be used and when we build something on one environment we cannot extrapolate the outcome of building the same thing in a different environment.

Or as I would say, your belief requires you to rationalise away all the failures of the past. So you point to whatever trivial exceptions existed in Russia (they drank vodka, not beer!) as a reason why it did not work. And you pretend that this time it will. Hallelujah!

@36,
That’s a pretty massive gamble you’re willing to take then.

Come to think of it, Nazism has never emerged from a culturally diverse society with strong protections for minorities. Shall we give that another go?

I believe the answer to our problems is Cosialism.

Mind you, I don’t know what it is or how it works but I do know it is wonderful and better than market capitalism.

” My heart sinks when I read that kind of thing. If all they want is a couple of jargon-spewing robots, why do they have to pay them £38,000-41,000 per year? Surely all they need is a bit of oil and replacement batteries now and then? ”

What exactly, are you talking about? And by the way, what are your qualifications and job title?

@ Blah

“What exactly, are you talking about?”

Go back, read, and think. I am talking about the mechanical, cliched language which goes with mechanical, cliched thinking in many public sector and business jobs. I seem to have touched a nerve.

“And by the way, what are your qualifications and job title?”

What relevance is that, and what business is it of yours?

@ 42 Lamia

Pretty sure that Blah’s point is that you’re using a completely made-up claim about these roles being for “jargon-spewing robots” as an excuse to give yourself something to complain about. Unless you know more than you’re letting on about these specific jobs, that was just a rather mindless and kneejerk response. Might as well follow it with “And I bet they go to black disabled lesbians too!”

39

Nazism has never emerged from anything other than a liberal society so we have a fairly good idea of what would happen if it emerged in the UK for example. What has never emerged in the UK is laissez-faire or socialism. But despite what SMFS says, I would be happy to try either, but the rather strange thing is, that all of those who have in the past quoted Adam Smith on countless occasions are seemingly quiet about following his theory.

http://www.taxpayersalliance.com/waste/2012/09/nonjob-week-77.html

A non-job and a nonsensical waste of money. I wouldn’t mind so much if it was some lower paid role, but someone seems to think that such ‘jobs’ deserve around £40,000. That’s obscene; the money could be spent on workers who do something vital, such as the mental health workers Bob B refers to.

“Might as well follow it with “And I bet they go to black disabled lesbians too!””

No, I doubt that it would especially. But I wouldn’t be surprised at all if it goes to someone who knows someone on the council pretty well.

I tried to get more information but the page on Sutton Council Website said:

“Error

Job does not exist”

Which seems apt enough having read the job ‘description’.

@ 45 Lamia

Um, you realise that the TPA is about as reliable a source of information as the prophecies of Nostradamus, right?

So what you’ve got is a article written by someone who thinks that “not everyone does it, so it’s a bad idea!” is an argument, an admittedly pompous job ad that doesn’t actually provide you with any basis for your claims, and the idea that it’s overpaid. Well, you might be right there. But given that your source itself admits it knows next to nothing about what the job actually entails, I’m not sure how you think you actually know this.

“No, I doubt that it would especially. But I wouldn’t be surprised at all if it goes to someone who knows someone on the council pretty well.”

Ooh, you really socked it to ‘em with your random conjecture!

Look, whatever your job is, I could write it up into meaningless purple prose like that job ad, simply by wittering about irrelevancies rather than discussing the actual role. Would that suddenly make you a waste of space? Or is ignorant condemnation only for other people?

44

“Nazism has never emerged from anything other than a liberal society so we have a fairly good idea of what would happen if it emerged in the UK for example.”

That seriously understates the depressed state of the German economy in the 1930s and the extent of unemployment with all the ramifications those factors had.

In January 1932, a year before Hitler became Reich Chancellor, Keynes visited Hamburg to give a lecture there. On his return, he wrote in the New Statesman: “Germany today is in the grips of the most powerful deflation any nation has experienced.” [DE Moggridge: Maynard Keynes (1992) p.539].

In the last free elections in Germany’s Weimar Republic in November 1932, the Communists attracted the second largest total vote after the Nazis – the National Socialist German Workers’ Party.

From desperation, Germany’s electorate was evidently looking to authoritarian solutions for their plight. Adopting a public works programme to create jobs, the Nazis in government attracted wide popular support, as evinced by the massive majorities in the plebiscites of November 1933 and August 1934. The first established a one-party state and second approved combining the functions of the Reich Presidency and Chancellor in the person of the Fuhrer. Those plebiscite outcomes were hardly characteristic of liberal sentiments.

Steveb,
“but the rather strange thing is, that all of those who have in the past quoted Adam Smith on countless occasions are seemingly quiet about following his theory”.

Can you explain what you mean by this?

48

Germany was a liberal country in all senses of the word, and it had a liberal democracy. The Jews were happy to adopt it as their own country, changing their Hebrew names to German sounding ones. It was on this foundation that Nazism was spawned. Hitler, btw, hated capitalism but never actually attempted to get rid of it, indeed, the increased demand in state spending, which he initiated, certainly attracted the votes of the commercial middle-class and the working-class.

49

I don’t know how long you have been posting on LC, but we have several regulars here who have quoted Adam Smith on many occasions to illustrate a particular point of debate. So you would expect that a suggestion of actually trying out laissez-faire or a real free-market would be met with support, but there is a strange silence other than SMFS calling me Stalin.

@ steveb,

“Germany was a liberal country in all senses of the word, and it had a liberal democracy.”

Absolutely not. Liberal values did not take root in Germany and central/eastern Europe, for one reason amongst others because of the issue of nationality. The Austrian Empire could not allow democracy, as this would have led to it breaking up, which eventually happened.

“The Jews were happy to adopt it as their own country”

As democracy would have meant petty nationalism and persecution of local minorities, the Jews fared better under autocratic centralisation from Berlin and Vienna.

“Hitler, btw, hated capitalism but never actually attempted to get rid of it”

He certainly hated capitalism. Although the Nazis didn’t adopt the Bolshevik model of state socialism, they certainly did control and plan production. If you think a factory owner in Nazi Germany could produce what he wanted, and pay his staff what he wanted, or even to distribute profits as he wanted, you are wrong.

“So you would expect that a suggestion of actually trying out laissez-faire or a real free-market would be met with support”

See my comment @ 29.

Steveb,
I don’t think there’s any more support for full laissez-faire than there is for socialism.

Somehow, “socialism” has avoided the stigma attached to nazism, and (incredibly) is regarded by some as “progressive”.

The debate that matters is how much or how little involvement the government should have in our lives and our economy.

50

“I don’t know how long you have been posting on LC, but we have several regulars here who have quoted Adam Smith on many occasions to illustrate a particular point of debate.”

As someone who has often quoted Adam Smith, that was to underpin several issues:

- his seminal insight that profit seeking and markets will allocate resources without government intervention

- that government intervention through trade protection and grants of monopoly could reduce welfare

- that businessmen are apt to meet to rig markets to raise prices in order to increase profits

- that governments might need to support socially worthwhile projects which were not otherwise sufficiently profitable for business.

By a wide consensus, Adam Smith is regarded as the founder of modern economics but few believe he said all that there was to be said on the subject. There are those who say that the four greatest economists in their respective times were Smith, Ricardo, Marshall and Keynes but I couldn’t possibly comment expect to remark that nowadays the first and last tend to be cited more often than the other two.

“There are those who say that the four greatest economists in their respective times were Smith, Ricardo, Marshall and Keynes”

Far be it from me to interfere with this orgy of Anglo-centrism, but Johnny Foreigner had a few economists too.

Hmm, I read lets move back to the 70′s and let union activities drive business out of the UK.

We need businesses(ordinary people driving for success from corporates through hauliers to sweet shops, plumbers and chimney sweeps ) to drive the economy forward, they employ people these people pay taxes, taxes fund the government, government funds benefit. Without business where does the revenue come from ?; and as they are so important why should they not have a say in government policy, with an intelligent limiting factor controlled by the government.

Unions on the other hand, are a complete destroyer of the economy and need to be banned, what good have any unions done in the laat 30 years.

53

That markets might need to support socially worthwhile projects, so what would these be – tax credits possibly?
And there is no-one this site who quotes Smith more than you, perhaps Worstall.

55

Is this post directed at me – if so, when in the 70s did we see free markets or a socialist economy?

51

Would have to disagree Richard, the Jews adopted Germany because it was liberal, most of Europe, including Austria, were anti-semite, particularly at the end of the 19th century. It had a market economy and a liberal democracy, which, incidently, voted for its’ own end.

Hitler planned the economy in the same way as Britain and Germany did during WW1, he used existing suppliers, I suspect that Keynes took his theory from the consequences of this increased state spending.
Certainly Lenin copied this model in the aftermath of the October Revolution.

52
I certainly agree that there is no more support for laissez-faire than there is for capitalism, despite your remark @6 you clearly dislike nationalized companies and the public sector, but when it gets down to the line, you balk at getting rid of them, but don’t panic, those in power will not let go of the existing model until they are forced to, they will add on further ‘refinements’ until the next crisis. But those same people will, when asked to increase welfare payments quote the market model, fake economic liberals are everywhere.

Nazism and the Soviet Union were both fascist governments but don’t confuse the two. The murder of the unwanted in Germany was facilitated by the existing industrial capitalist model of mass production.

Steveb,
I think you may be making stuff up.

I don’t “clearly” dislike the public sector, nor have I said so. Nationalised industries are another matter entirely.

“Mass Production” is an operational model, not a Capitalist one. The Soviets also used it. (Oh, and the “murder of the unwanted” was mainly facilitated by WW2, slaughter on that scale would not have been possible in peace time).

@ steveb,

“the Jews adopted Germany because it was liberal, most of Europe, including Austria, were anti-semite, particularly at the end of the 19th century. ”

I don’t doubt that Germany was less anti-semitic compared to further east, but I think an important factor in this was the relationship between the German-speakers and the other nationalities who were under their control. As these nations became more nationalistic, the Jews, who were excluded from these latter, became more germanised, as they fared better under an autocratic system of centralised German control (German meaning either from Berlin or Vienna) than they would have under a democratic system, where the local non-Germans would have treated them as outsiders.

I also think you’re being a bit cavalier with the word ‘liberal’. I don’t think Bismarck’s Germany could be called liberal, nor would I apply that moniker to the Keiser’s Germany. Hitler’s view on liberal democracy was not very different than that of these two predecessors – nor, for that matter the KPD’s.

Steveb: “That markets might need to support socially worthwhile projects, so what would these be – tax credits possibly?”

C’mon – bridges over rivers, built initially at public expense, go back centuries. The Romans built aquaducts to transport water to cities. In imperial Rome, bread and circuses were considered the appropriate imperial policy for keeping the plebs content. Much later, Jules Dupuit, a French engineer, set out a way of calculating the optimal toll for a public bridge:
http://en.wikipedia.org/wiki/Jules_Dupuit

57

Mass production was the product of an industrial capitalist society,it certainly did not exist in Imperial Russia, which was the foundation for the emergence of the Soviet Union. The foundation for the Holocaust was the Nuremberg address in 1933 and Dachau was built in March 1933. This was the same year as the dissolution of the Weimar Republic, WW2 started in 1939, some six years later. Perhaps a further reading of history might be a good idea if you are going to debate the subject of Nazism in Germany.

58

There is a good wiki piece on the Weimar Republic, indeed it was much more democratic than the UK and there was private ownership of the means of production. The film ‘Cabaret’ is a pretty good representation of a particular art form which existed, of course the Nazis hated it.

This begs the question of why you are calling me ‘cavalier’ when describing pre-Nazi Germany as ‘liberal’
Btw, The Frankfurt Parliament voted for a representative democracy and a constitutional monarch for the initial unification of Germany in the 19th century.

Certainly, Hitler’s dislike of liberalism won him support from the old German aristocracy, it’s a paradox that it was a liberal democracy which handed him the leadership of an authoritarian state.

Steveb: “This begs the question of why you are calling me ‘cavalier’ when describing pre-Nazi Germany as ‘liberal’”

In the elections in Weimar Germany in November 1932, which were inconclusive but which led to Hitler being offered the Reich Chancellorship in January 1933 with support of Conservative factions in the Reichstag, the second largest total vote went to the Communists. In those November elections, the Nazi vote had gone down from the previous elections in August but the Communist vote was rising. That motivated the Conservative factions in the Reichstag to support the offer of the Chancellorship to Hitler for fear that another round of elections in 1933 would result in a Communist government.

In the light of Keynes’s reported observation in 1932 quoted @48 that “Germany today is in the grips of the most powerful deflation any nation has experienced,” it seems that the electorate had given up on the democratic, liberal politics of the Weimar Republic.

By a public works programme contrary to the conventional policy wisdom at the time – recall the British Treasury’s stance at the time that public spending “crowded out” equivalent private spending – the incoming Nazi government was immensely successful in reducing unemployment ” . . from 6 million in October 1933 to 4.1 million a year later, 2.8 million in February 1935, 2.5 million in February 1936, and 1.2 million in February 1937.” [CP Kindleberger: The World in Depression 1929-1939 (Allen Lane, 1973) p.240]

Sadly, little wonder then at the massive majorities in the German plebiscites in November 1933 and in August 1934, respectively endorsing the creation of a one-party state and the merging of the functions of the Reich Presidency and Reich Chancellory in the person of the Fuhrer. By 1932/33, political sentiments in Germany were anything but “liberal”. The election results in 1932 explain why the Nazis moved to rounded-up known Communist and Social Democrat supporters in 1933 and put them into the new concentration camps.

To put this into an illuminating historical context, recall that the Ukraine famine of 1932/33, created through the collectivisation of Soviet agriculture, had killed an estimated 7 million. Stalin had announced the policy of “eliminating the kulaks as a class” in a speech made in December 1929. Killing by category was the fashion of those times.

“The murder of the unwanted in Germany was facilitated by the existing industrial capitalist model of mass production”

Oh right, so it was the fault of capitalism?

@ steveb,

“This begs the question of why you are calling me ‘cavalier’ when describing pre-Nazi Germany as ‘liberal’”

Could you decide where you’re putting the goalposts, so I can take a shot? If you are merely talking about the letter of the constitution of the Weimar Republic, you can argue that it was liberal, but you said @ 56:

“the Jews adopted Germany because it was liberal, most of Europe, including Austria, were anti-semite, particularly at the end of the 19th century. It had a market economy and a liberal democracy”.

You also said earlier than this @ 50:

“Germany was a liberal country in all senses of the word, and it had a liberal democracy. The Jews were happy to adopt it as their own country, changing their Hebrew names to German sounding ones. It was on this foundation that Nazism was spawned. ”

My comment “I also think you’re being a bit cavalier with the word ‘liberal’. I don’t think Bismarck’s Germany could be called liberal, nor would I apply that moniker to the Keiser’s Germany” quite clearly refers to before the Weimar Republic, which was only a short, unstable period, and I would suggest that one of the reasons for its failure was that liberalism had never taken root in Germany, in part because the two most important states, the Habsburg Empire and Prussia could not democratise without being torn apart by nationalistic rivalries.

62

Strawman alert

63
Yes, I did read your posts and I know what I have written in reply. My original point was that Nazism emerged from within a liberal country eg Germany. I know that many of the old aristocracy did not like liberalism, I think you might find quite a lot of existing English aristocracy and older c/Conservatives who don’t like liberalism. But can you tell me how this refutes that pre-Nazi Germany wasn,t liberal unless you are using a totally novel definition of ‘liberalism’?

61
Can’t really work-out why you have made the comments for my attention.

59
What have public works got to do with tax credits?

“I would suggest that one of the reasons for its failure was that liberalism had never taken root in Germany”

Whether that is true or not, the government of Weimar Germany had demonstrated that it had no effective solutions for economic depression and mass unemployment. It’s hardly surprising that the electorate had become desperate and was looking towards solutions created by authoritarian political parties. The Nazis and the Communists were both promising jobs created by a proactive state.

This is not just my take:

“The Nazi Party leaders were savvy enough to realise that pure racial anti-semitism would not set the party apart from the pack of racist, anti-semitic, and ultranationalist groups that abounded in post-1918 Germany. Instead, I would suggest, the Nazi success can be attributed largely to the economic proposals found in the party’s programs, which in an uncanny fashion integrated elements of 18th and 19th century nationalist-etatist philosophy with Keynesian economics. Nationalist etatism is an ideology that rejects economic liberalism and promotes the right of the state to intervene in all spheres of life including the economy.”
W Brustein: The Logic of Evil – The Social Origins of the Nazi Party 1925-33 (Yale UP, 1996), p.51

Btw authoritarian or not, as Reich Chancellor, Bismarck can lay valid claim to have created in the 1880s the foundations for the European Social Model with a state pension scheme and a social insurance scheme to cover personal healthcare costs.

65

Just a small correction, although the electorate were desperate about the economic situation and wanted solutions, they did not vote for an authoritarian state

50. steveb

” Germany was a liberal country in all senses of the word, and it had a liberal democracy. The Jews were happy to adopt it as their own country, changing their Hebrew names to German sounding ones. It was on this foundation that Nazism was spawned. Hitler, btw, hated capitalism but never actually attempted to get rid of it, indeed, the increased demand in state spending, which he initiated, certainly attracted the votes of the commercial middle-class and the working-class. ”

The type of fascism that culminated in Nazism could only happen in Germany because only Germany had the unique ” Sonderweg ” that gave it a context.
http://en.wikipedia.org/wiki/Sonderweg
Nazism is not something that just happened to Germany. It was the unique path of German cultural history and reactionary conservative institutional development that created the Nazis. The failure of liberalism to dominate and guide their development meant that the path of their development led inexorably to Auschwitz. The Nazis and their crimes would still have occurred even if the person of Adolph Hitler had never existed.

Liberalism traces its heritage from the European Enlightenment. Nazism and all the other European fascism’s are children of European Romanticism, the counter-enlightenment. The Nazis merged the conservative Völkisch movement that Romanticism had spawned with the existing widespread anti-semitism that was already ingrained in German culture. The Nazis did not create the anti-semitism, they exploited what was already there. The so-called international Jew who was supposed to be pulling all the strings in capitalism was a contemporary paranoia that was popular at the time and not unique to Germany. Their initial success was through engaging in anti-big business, anti-middle class, and anti-capitalist populist rhetoric. Almost sounds familiar. Who was supposed to behind big business, the Jews. Who was supposed to be pulling the strings in the financial system, the Jews. Who then were the capitalists, the Jews.

The demonising of one particular ethnic group was necessary because engaging in anti-big business, anti-bourgeois, and anti-capitalist rhetoric was just as likely to turn the workers towards Bolsheviks as it was to Nazism. Except the forces behind the Bolsheviks were also supposed to be the Jews. To co-opt reactionary conservative groups and business they downplayed the earlier rhetoric and became popular with them through their anti-communism. Building a Volksgemeinschaft ( peoples community ) without Jewry or Bolsheviks then became something that was genuinely popular. What on earth could go wrong.

The structure of their 2 million membership when they took power is an indication of their popularity. 7% belonged to the upper class, another 7% were peasants, 35% were industrial workers and 51% were what can be described as middle class.

Specifically because Germany had not had a liberal development is what allowed Nazism to flourish when all the other forces coalesced in the 1930s.

@ Bob B,

I don’t see any of that as a contradiction to my point. In fact is draws attention to the connections between the Nazis and Bismarck’s Germany. As the quote you give says: “Nationalist etatism is an ideology that rejects economic liberalism and promotes the right of the state to intervene in all spheres of life including the economy.”

The only problem I have with your comment is that you seem to think that the Nazis gained power *only* because of the economic crisis in Weimar Germany. The point I’m making is that it goes deeper than that.

@ steveb,

” My original point was that Nazism emerged from within a liberal country eg Germany. I know that many of the old aristocracy did not like liberalism”

I know your original point, that is what I am attempting to refute, and it wasn’t just the ‘old aristocracy’ who didn’t like liberalism. As Bob B has pointed out, the KPD were next biggest party, and after that were a bunch of other parties amongst which liberalism was not the dominant philosophy.

Steveb: “Just a small correction, although the electorate were desperate about the economic situation and wanted solutions, they did not vote for an authoritarian state”

In the November 1932 elections, a chunk of the electorate voted for the Nazis and the Communists instead of parties committed to democracy and the Weimar Republic. In the plebiscites in November 1933 and August 1934, there were massive popular majorities for the esential features of an authoritarian state – a one-party state and the pre-eminence of the Fuhrer. After the vote in the August 1934 plebiscite, personnel in the armed forces took an oath of personal allegiance to the Fuhrer, not to the German state, the Reichstag or to the German people.

We need to look into the economics of the Nazi state to better understand how it created jobs. Btw rearmament in Germany didn’t take off until 1936 so it was public spending on autobahns, sports stadiums and government offices which generated the jobs up to then. The obvious question is whether we can have job creation programmes at times of mass unemployment without resorting to an authoritarian state. The burden of Hayek’s book: The Road to Serfdom (1944) is that we can’t.

Keynesians disagree but there’s no doubt that the Nazi economy was highly dirigiste with extensive state controls over prices and wages, business investment, trade and foreign exchange transactions, partly to contain inflationary pressures created by public spending on the job creation programme.

68

Don’t misquote and split hairs, I said Nazism emerged from a liberal country, and if the Weimar Republic was not liberal what was it?
Of course not all citizens liked liberalism, that’s not what is being debated, there are a lot of British people who don’t like it either, but that doesn’t change the fact that the UK is a liberal country. Nazism was a mix of neo-paganism (the romanticism to which you refer) and pseudo-Darwinism, which appealed to the old aristocracy, however, the middle and working-classes supported Hitler because of the economic benefits promoted by government spending. The urge for survival is paramount and that enabled the Nazis to get-away with their final solution, but, I do agree, that the Volkish appeal also helped.

69

The liberal government voted for an authoritarian state not the voters, by the time the authoritarian state emerged it was too late to change it.
I did not mention rearmenant, although after 1936 it created a massive demand (no doubt re-enforcing to all that Hitler was the right choice.)

As for the Nazi state keeping control over much of the economic activity, well it doesn’t sound so different to the current position of the UK state.

68

Another dimension identified as facilitating the rise of the Nazis was Germany’s defeat in WW1. Although the severe economic impositions placed on Germany were a large contribution to the existing depression in the 1930s, there was another psychological consequence, and that was the collective feelings of failure after defeat. This has also been recognized as affecting the US population, immediately post-Vietnam.

Could this happen again, well possibly, but maybe not on the same scale. It can be noted that in times of economic depression certain groups are highlighted as being the cause, asylum seekers are currently a good target. There is a history of scapegoating, long before liberalism emerged, the Jewish Pogroms in Imperial Russia usually followed periods of economic depression.

@ steveb,

“Don’t misquote and split hairs”

I don’t think I have done either.

“I said Nazism emerged from a liberal country, and if the Weimar Republic was not liberal what was it?”

You’ve subtly shifted from ‘Germany’ to ‘Weimar Republic’, but leaving that aside, what Weimar Germany was, rather than a liberal country, a short (historically speaking), turbulent period between the collapse of the Keiser’s regime to the rise of a totalitarian state, during which there was hyper-inflation and various violent attempts to overthrow the government. The period before Weimar was not liberal, liberalism was not established in Germany for reasons including that which I have already mentioned. Therefore it is, in my view, incorrect, or at least very misleading to say what you said @ 44 “Nazism has never emerged from anything other than a liberal society”, and the subsequent things you’ve said to back it up. I accept that you can point to various bits of evidence, such as artists and writers and ‘Cabaret’, but this must go into the balance against all the Frei Korps and commies running around killing each other.

72

I didn’t think that I was being subtle I used Weimar Republic to signify that Germany was a republic which was liberal. I am not going to get into a debate about the period before Weimar because my assertion was that Nazism emerged from a liberal country and Germany was a liberal country. An interesting fact about the Weimar constitution was that it was the work of Hugo Preuss, a German Jew.

By denying the Weimar Republic, You are dismissing an entire political and cultural period, it’s tantamount to me saying that the stoneage was followed by the enlightenment, which is, of course, true, but is a totally meaningless assertion. And what do you mean by ‘not liberal liberalism’, it’s a strange concept.

Perhaps you mean that there was a strata of the German population (mainly the aristocracy) which did not embrace liberal values. But, on the other hand, the commercial class were happy to become involved within the market economy and the working class sold their labour in the private markets. Thousands of Jews, mainly peasant and working-class, descended upon Germany even before the emergence of the Weimar Republic.

Hitler’s rise was due to him being able to appeal to all classes, the aristocracy for ideological reasons associated with the romanticism which you have made reference to. But the commercial middle class and the working class supported him for his successful economic policies, he was certainly an evil genius.

@ 67 Richard W,

I won’t argue with the overall point, but I don’t think we can say the whole Nazi business was inevitable.

68 Richard Carey: “The only problem I have with your comment is that you seem to think that the Nazis gained power *only* because of the economic crisis in Weimar Germany. The point I’m making is that it goes deeper than that.”

That amounts to an assertion without supporting evidence when we do know that the German economy was in desperate straights by 1932 and the Nazis hadn’t been doing well in German national elections until the Reichstag elections in 1930.

The Nazis went from a fringe party attracting 810,000 votes and gaining 12 seats at the elections in 1928 to attracting 6,409,000 votes in the elections on 14 September 1930, making the Nazis the second largest party in the Reichstag, reportedly even to the surprise of Hitler. Over those two elections, the Communist vote increased from 3,265,000 to 4,592,000. The surge in the Nazi vote coincided with the onset of the depression. [Source: William Shirer: The Rise and Fall of the Third Reich]

70 Steveb; “As for the Nazi state keeping control over much of the economic activity, well it doesn’t sound so different to the current position of the UK state.”

You are way out. We don’t have extensive government controls over prices, wages, business investment, trade and foreign exchange transactions. The Nazi government maintained the gold parity of the Reich Mark whereas the exchange rate of the Pound floats.

Apologies Richard, I attributed post@67 to you when it was, in fact, Richard W.

67

I have already replied to this but I feel that I should further comment directly to you;- the idea that history is some kind of juggernaut is very seductive, and the history of the Nazis is a prime example of where this is often found as an analysis. But there is never a singular causal path, most events are a culmination of accidental events and opposing and overlapping circumstances. As I have already mentioned, the disposal of the unwanted relied on the capitalist model of mass production, but clearly that model didn’t cause the holocaust but it certainly shaped the method.

75

State involvement within the UK economy is vast, from the NHS, the Welfare state, education, fiscal policy, monopolies commission, governing bodies etc. It’s probably less visible but it’s there. And that’s why I made my point way back about central planning and state socialism.

Steveb

State controls over the economy were pervasive in Nazi Germany and they needed to be to curb inflation in the face of the fast reducation in unemployment by the job creation programmes and to maintain the gold parity of the Reichsmark.

The Nazis destroyed the trade union movement in Germany, not least by putting trade union leaders and activists in concentration camps. There really is no comparison with here and now in Britain. Btw according to recent press reports, while there have been public sector job cuts, NHS jobs have increased:

Unemployment figures reveal slowdown in public sector job cuts – Number of civil servants declined by 5,000 in quarter, and number of health workers is higher than three years ago [September 2012]
http://www.guardian.co.uk/business/2012/sep/12/unemployment-figures-public-sector-cuts

@67. Richard W: “The structure of their 2 million membership when they took power is an indication of their popularity. 7% belonged to the upper class, another 7% were peasants, 35% were industrial workers and 51% were what can be described as middle class.

Specifically because Germany had not had a liberal development is what allowed Nazism to flourish when all the other forces coalesced in the 1930s.”

Give me a hand, Richard W. Your argument is that most Germans in c. 1933 were insufficiently exposed to Enlightenment, making them more susceptible to bollocks. That is a scary story.

Liberalism had few followers in the 1930s. It was not fashionable in the UK. German politics did not have a liberal middle. Spain and Italy were controlled by Fascists. France had French politics.

Somewhat tiresomely returning to the OP from Dave Osler: “So while several hundred business people have eagerly converged on Manchester, discretely to lobby Labour politicos at endless tedious champagne receptions, rather fewer attendees will be pushing for the interests of NEETs or minimum wage workers.”

Or to the title: “Labour should prioritise unions over business:”.

I have to ask the question about when we stopped thinking about people? Perhaps Labour should prioritise people over unions and business?

In Reichstag elections, the Nazis were a fringe party until the election in September 1930 when the total Nazi vote surged to 6,409,000 and overtook that of the Communists.

I don’t buy this story that the German electorate was inherently averse to democratic process. There is far more truth in the alternative narrative that the electoral system with multiple parties in the Weimar Republic was incapable of producing conclusive results leading to strong governments and successive Weimar governments were bedevilled by the Versailles Treaty commitment to pay punitive reparations for WW1.

As Keynes had pointed out, the reparations could only be paid from Germany’s net exports and the victor countries in WW1 were hardly disposed to allow German industry to earn persistent trade surpluses in the home markets of the victor countries.

The Nazis didn’t win the elections in November 1932 but they were the largest single party. Hindenburg, the president, prevaricated over offering the Chancellorship to Hitler but finally did so in January 1933 with support from Conservative factions in the Reichstag who were fearful about the prospect of the Communists gaining power if there had to be another round of elections.

With Hitler installed as Chancellor, the Nazis rapidly exploited the situation by staging the Reichstag fire and rounding up Communists and Social Democrats for “security reasons”.

The job creation programmes for autobahns, stadiums and government offices bought popularity when unemployment was running at 6 millions in 1933. The huge majorities in the plebiscites of November 1933 and August 1934 endorsed the creation of the totalitarian Nazi state. By the account of Kershaw, internal security was not a problem up to WW2 and the establishment size of the Gestapo was small. See the BBC series on DVD and YouTube: The Nazis – a warning from history.

The problem with saying that Germany was a liberal democracy just because of the Weimar Republic period ignores the wider context. In some respects, it is like contemporary neo-con thinking. The neo-cons think that one can just add on a liberal democracy in states where there has been no history of liberalism. Trying to impose a liberal democracy on those societies will fail for the same reason the Weimar Republic failed because they have not gone through a process leading to that outcome. One can’t just look at a government in isolation without considering the wider context of the society where that government exists. Two millennium of historical events shaped the context that the current UK government exists within. One could not have had the present system of government in 1630 because there was still a process to go through to reach our current state.

Much of German cultural and institutional society was reactionary conservative and that led to a persistent weakness in the Weimar Republic. It was almost an alien form of government that had been imposed and why the emergence of a ‘ strong man ‘ to offer certainty was welcomed by many. Only the complete and utter defeat of that old Germany in WW2 allowed the development of a new Germany.

The reparations being too harsh on Germany was a thesis pushed by Keynes and completely wrong. Sure it sounded a lot if you expressed it in terms of gold. Reparations were the equivalent of 100,000 tonnes of gold. That was the equivalent of 50% of all the gold ever mined. However, the reparations were divided into A, B, and C bonds. The A and B bonds consisted of 50 billion marks. The C bonds another 82 billion marks. However, the C bonds were never expected to be paid and were only there so Georges Clemenceau could convince French public opinion that the Germans were being harshly treated. So reparations were effectively only 50 billion marks and the Germans on their own account had offered to pay 51 billion marks.

Keynes in his The Economic Consequences of the Peace paper claiming Germany would be unable to pay got every forecast wrong. He got German iron output wrong, steel wrong, coal wrong, German exports wrong and the German savings rate wrong. Germany could pay reparations but they did not want to pay because they did not believe they had been defeated. The stab-in-the-back myth that it was all Jews, communists and socialists who caused Germany not to win grew from that belief that they had not been defeated. Moreover, the Germans resented not without good reason that they were entirely to blame for the biggest family squabble in history. The hyperinflation period was a deliberate act by the Weimar government to wreck the economy after the French invaded the Ruhr in response to default on the bonds. Could pay but did not want to pay is the modern view on reparations. Incidentally, reparation payments recommenced after reunification and the last bonds were repaid just two years ago.

74. Richard Carey

” I won’t argue with the overall point, but I don’t think we can say the whole Nazi business was inevitable ”

Maybe inevitable would be stretching it too far. However, I tend to think fascism of the Nazi variety could only have developed in Germany. The UK at the time had their own fascists, they also had Jew haters. However, it is difficult to imagine how Nazism could ever have developed to become the totalitarian state ideology in the UK, unless it was imposed through invasion. The ideology would have been an alien concept in ways that it was not alien in 1930s Germany.

The only way Germany made WW1 reparations payments was by borrowing the funds from other countries.

Keynes may have got his forecasts wrong but he was correct about saying that Germany had to export more than it imported in order to earn a trade surplus from which to make reparations payments.

I just don’t buy the story that Germans were incapable of running a democratic state. The Weimar Republic ran an electoral system in which multiple parties could contend for votes. The result was a Reichstag where governments had to depend on shifting coalitions, hence successive elections in vain attempts to get conclusive results. By the 1930s, governments of the Weimar Republic had demonstrably failed to deal with mass unemployment – hence the surge in the Nazi vote at the Reichstag elections in September 1930.

Dr Schacht, the banker, who was the Nazi economics guru, was initially wedded to the conventional economic orthodoxies of his time – public spending crowded out equivalent private spending so there was nothing much that could be done about mass unemployment except to cut wages and balance the state budget – on this, see Avaraham Barkai: The Nazi Economics (Berg).

Keynes’s lecture in Hamburg in January 1932 seems to have induced a conversion to keynesian remedies for mass unemployment. After all, he had co-authored a pamphlet for the Liberal Party for the 1929 general election in Britain (Can Lloyd George do it?) setting out the case for a public works programme to create jobs.

The Nazis in government applied that policy with demonstrable success. Internal inflation was contained by price and wage controls and trade restrictions and foreign exchange controls constrained leakages into imports.

78. Charlieman

” Give me a hand, Richard W. Your argument is that most Germans in c. 1933 were insufficiently exposed to Enlightenment, making them more susceptible to bollocks. That is a scary story.

Liberalism had few followers in the 1930s. It was not fashionable in the UK. German politics did not have a liberal middle. Spain and Italy were controlled by Fascists. France had French politics. ”

It is not just what people are exposed to that determines cultural directions of travel. The institutions of a society are an expression of the ideas that dominate that society. Nearly every coherent society on earth have diversity of views. However, the same ideas will not gain dominance in every society. Liberalism gradually gained dominance in the UK throughout the 19th century in ways that just did not happen in Germany. AS Emmanuel Todd argues:

Todd: I would be cautious in that regard. Democratic movements can take on highly different forms, as we can see with the example of Eastern Europe after 1990. (Russian Prime Minister Vladimir) Putin undoubtedly has the support of the majority of the Russian people, but does that make Russia a flawless democracy?

SPIEGEL: Where do you draw the boundary of the West?

Todd: In fact, only Great Britain, France and the United States, in that historic order, constitute the core of the West. But not Germany.

SPIEGEL: Are you serious?

Todd: Oh, it’s fun to provoke a representative of “the German news magazine.” What I’m saying is that Germany contributed nothing to the liberal democratic movement in Europe.

SPIEGEL: What about the Hambach Festival in 1832, the March Revolution in 1848, the national assembly in St. Paul’s Church in Frankfurt, the 1918 November Revolution, the establishment of the Federal Republic of Germany in 1949, (former Chancellor Konrad) Adenauer’s integration with the West and the opening of the Berlin Wall in November 1989 brought about peacefully by the people?

Todd: Okay, the postwar history is all very well and good, but it had to be put into motion by the Western Allies. Everything that happened earlier failed. Authoritarian government systems consistently prevailed, while democratic conditions had already predominated in England, America and France for a long time. Germany produced the two worst totalitarian ideologies of the 20th century. Even the greatest philosophers, like Kant and Hegel, were, unlike David Hume in England or Voltaire in France, not exactly beacons of political liberalism. No, Germany’s immense contribution to European cultural history is something completely different.

http://www.spiegel.de/international/world/rising-literacy-and-a-shrinking-birth-rate-a-look-at-the-root-causes-of-the-arab-revolution-a-763537.html

Spain and Italy had fascist regimes that had roots in European Romanticism, but they were a different form to the Nazi version where the entire state apparatus became a genocidal killing machine.

Richard W: “but they were a different form to the Nazi version where the entire state apparatus became a genocidal killing machine.”

It did become that but compare what happened in the Ukraine as a consequence of the famine in 1932/33 brought on by Stalin’s policy of collectivising Soviet agriculture:
http://en.wikipedia.org/wiki/Holodomor

For instructive reasons the Nazi Holocaust is well publicised but the Ukraine famine isn’t. I wonder why that is?

Prior to the Holocaust policy, the Nazi government successfully cut unemployment in Germany through a public works programme – and it also created a state enterprise to manufacture a people’s car: VolksWagen, which is still going.

84. Bob B

” For instructive reasons the Nazi Holocaust is well publicised but the Ukraine famine isn’t. I wonder why that is? ”

Hobsbawm would say their deaths were a price worth paying. Apparently there is a hierarchy of genocides and some deaths do not count if the ideology fits.

83

There was certainly a death of liberalism as a guiding philosophy by the 1930s, in the UK for example, it was government action which caused its’ demise, basically not acting liberal, it happened in the USA too. But you are looking at history from top down, and from the perspective of the elites, in everyday life, liberal values guided.

As far as the difference between the Nazis and the Soviet Union, as I have already argued, they were totally different environments. The Soviet Union was built on the tail of a war that ravaged the nation followed by two revolutions and complete chaos, and the population consisted of around 90% peasantry The Tsar had most certainly shielded that population from liberalism. On the other hand, Germany was an advanced, scientific, industrial capitalist country.

France certainly had more exposure to liberalism, its’ revolution was in 1789 but it was far more anti-semite than Germany, indeed if the Holocaust had occured in France, it would have been less surprising. And if we want to look at liberal philosophers, what about Rousseau and Thomas Paine, who had to flee from the UK because of his pro-revolutionary stance, we can all be selective with our evidence.

85

I have read all Hobsbawn’s Ages of, and he probably does give the Soviet Union some soft analysis, as a Jew he points-out that it was socialism which came to the aid of capitalism against a common enemy.

@86

Just re-read this post, I wasn’t implying that Thomas Paine was French, rather, that the UK also had a propensity for illiberal action.

@56, no wasn’t directed at you, just stating my concern of too much focus on Unions. The 70′s where all socialist upto 1979 when the tories won.

Richard W: “Hobsbawm would say their deaths were a price worth paying. Apparently there is a hierarchy of genocides and some deaths do not count if the ideology fits.”

By these estimates, the toll of civilan deaths, other than war dead, due to Soviet repression was about three times that of the Nazis, admittedly over a longer period, but we don’t read or hear about that very often:
http://www.hawaii.edu/powerkills/20TH.HTM

Economic historians – like Peter Temin, Charles Feinstein, CP Kindleberger and Avraham Barkai – plus sociologists, like Brustein, have assessed the Nazi experiment with job creation programmes to see how successful these were in cutting socially intolerable unemployment.

None of that whitewashes the Holocaust. Besides that, the Nazi experiment with joc creation stands in marked contrast to the policies of Britain’s government in those times – abandon the Gold Standard so the Pound depreciated by 25pc against Gold, cut interest rates, introduce imperial preference in trade but no public works programme because of the crowding out thesis.

The way in which the Nazis turned the German economy around greatly impressed some. In August 1936, Lloyd George went to Bertesgarten to meet Herr Hitler. On his return to Britain, he wrote a piece for the Daily Express on 17 November 1936:

“I have just returned from a visit to Germany. In so short time one can only form impressions or at least check impressions which years of distant observation through the telescope of the Press and constant inquiry from those who have seen things at a closer range had already made on one’s mind. I have now seen the famous German Leader and also something of the great change he has effected. Whatever one may think of his methods – and they are certainly not those of a parliamentary country – there can be no doubt that he has achieved a marvellous transformation in the spirit of the people, in their attitude towards each other, and in their social and economic outlook. . .

“What Hitler said at Nuremberg is true. The Germans will resist to the death every invader at their own country, but they have no longer the desire themselves to invade any other land. . .

“The establishment of a German hegemony in Europe which was the aim and dream of the old pre-war militarism, is not even on the horizon of Nazism. …”

89

Another statistic that isn’t often quoted by liberals is the 41,594 executed in France between 1793 – 1794, in the struggle for liberty.

Steveb,
“I have read all Hobsbawn’s Ages of, and he probably does give the Soviet Union some soft analysis, as a Jew he points-out that it was socialism which came to the aid of capitalism against a common enemy”.

When did that happen?

91

About ten years ago,

He pointed it out 10 years ago, or it happened 10 years ago? I don’t recall socialism coming to the aid of capitalism, though the reverse has happened quite often.

Labour should prioritise unions over business

Given we have a representative democracy this is a fair stance, big business is ably represented by the Tories and the Lib Dems should hopefully represent some part of society’s interests, so it stands to reason that party formed by the unions should represent their interests and by extension the interests of other workers too.

93

I finished reading ‘The Age of Extremes’ 10 years ago.

90

“Another statistic that isn’t often quoted by liberals is the 41,594 executed in France between 1793 – 1794, in the struggle for liberty.”

The question is how many of those executions were essential to improve the liberty of the citizens of France in those times.

For comparison from a seminal text on hanging in Britain: Gatrell: The Hanging Tree – Execution and the English People 1770-1868 (OUP 1996)

“Some thirty-five thousand people were condemned to death in England and Wales between 1770 and 1830, and seven thousand were ultimately executed, the majority convicted of crimes such as burglary, horse theft, or forgery. Mostly poor trades people, these terrified men and women would suffer excruciating death before large and excited crowds.”
http://www.oup.com/us/catalog/general/subject/HistoryWorld/British/19thC/?view=usa&ci=9780192853325

Btw total casualties, that’s killed and wounded from both sides, at the Battle of Waterloo in June 1815 amounted to 63,000, which works out at about 6,100 per hour of battle. I believe most historians would agree that the future of Europe in the 19th century would have been very different had the outcome of that battle gone the other way.

@83. Richard W: “Todd: In fact, only Great Britain, France and the United States, in that historic order, constitute the core of the West. But not Germany.”

That’s a great interview, and I assume that Emmanuel Todd is summarising his argument. He doesn’t mention developed UK former colonies (Australia, Canada) or perhaps Czechoslovakia after WW1. Czechoslovakia fascinates me: it was a tiddly country with a great engineering economy and a fairly liberal society; somehow out of the Austro-Hungarian empire, an advanced country was born.

@86. steveb: “France certainly had more exposure to liberalism, its revolution was in 1789 but it was far more anti-semite than Germany, indeed if the Holocaust had occured in France, it would have been less surprising.”

I don’t think that French chauvinism and anti-semitism would result in genocide. History records that French chauvinism resulted in complicity, rather than participation. Fascist Italy and Spain, again complicit, did not participate. There were exceptional events when French, Italian and Spanish officials or politicians participated in genocide, but genocide was not government policy.

96

The problem with your second paragraph is that it could have been written by Stalin or Hitler, just remove ‘France’ and ‘liberty’ and you have the justification used by both for the betterment of the nation.

89, 96.

I’ve just got my copy of ‘Age of Extremes’ from the loft, I forgot how well Hobsbawm paints history, from page 177, ‘Against the Common Enemy’

‘Never has the face of the globe and human life been so dramatically transformed as in the era which began under the mushroom clouds of Hiroshima and Nagasaki. But as always history took only marginal notice of human intentions, even those of the national decision-makers. The real social transformation was neither intended nor planned. And in any case, the first contingency they had to face was the almost immediate breakdown of the great anti-fascist alliance. As soon as there was no longer a fascism to unite against, capitalism and communism again got ready to face each other as one another’s mortal enemies’

97

Point taken, although I didn’t assert that genocide was the government policy of the French, I was really signifying the extent of anti-semitism in France as against Germany and perhaps indicate that exposure to liberalism isn’t a strong enough argument to explain Nazism.

100

Or indeed lack of exposure to liberalism.

98

“The problem with your second paragraph is that it could have been written by Stalin or Hitler, just remove ‘France’ and ‘liberty’ and you have the justification used by both for the betterment of the nation.”

I don’t follow your reasoning. My point was to question the justification for the numbers executed in France during the course of the French revolution, not to justify the numbers.

This was why I put in a comparison with the numbers hanged in England and Wales during what is regarded as a high point of judicial hanging that was intended to deter even trivial offences in that age of revolution. The reaction of juries in England and Wales to the scale of hanging was to increasingly refuse to convict. A succession of Acts of Parliament, starting in 1802, reduced the scope of capital punishment and a law in 1832 reduced the number of capital crimes by two-thirds.

It follows that I question even more so the justifications for the massive scales of slaughter inflicted by the Soviet and Nazi regimes.

I put in the casualty figures for the Battle of Waterloo to illuminate the horrific scale of slaughter in those battles of the Napoleonic wars compared with the reported numbers of daily casualties from current areas of conflict.

102

The point I am making is how easy it is to argue that there is a justification eg you state ‘how many of these executions were essential to improve the liberty..’ Clearly you value liberty, therefore you see executions within a liberal revolution as being possibly an ‘essential’ But both the Nazis and the Soviets displayed that type of thinking and liberalism isn’t quite as innocent as it often proposes.

Take Vietnam – an estimated 5 million people died, taking into account suicides and deaths from nepalm.
Hiroshima – 90,000 – 120,000 Nagasaki 60,000 – 80,000 Killed instantly
Hiroshima – 20000 – 30000 Nagasaki – 110,000 – 201,000 from radiation.

This is not a personal attack it merely illustrates how extreme conditions such as economic depression or even fear of another force taking over can affect how we perceive violent actions.

99 Quoting Hobsbawn: “Never has the face of the globe and human life been so dramatically transformed as in the era which began under the mushroom clouds of Hiroshima and Nagasaki.”

I question the justification for that hyperbole. The scale of casualties at Hiroshima and Nagaski, horrific as that scale was, was about the same as the scale of casualties inflicted by a few 1000 bomber raids on Hamburg in the summer months of 1943 or the Anglo/American bombing raid on Dresden in February 1945 or the American incendary bombing raids on Tokyo in March 1945.

Hobsbawn was simply pushing the regular Soviet propaganda line directed againt the only effective potential NATO response to the threat of a Soviet blitzkrieg attack across the north German plain when the Warsaw Pact countries had overwhelming superiority in tanks and other armoured vehicles compared with NATO forces.

There was a serious defence debate in the west during the late 1970s about whether to plant a line of nuclear anti-tank mines across west Germany to counter the prospect of a Soviet britzkrieg attack – perhaps to liberate striking workers. West German governments (understandably) vetoed the strategy in NATO. The fact is that without nuclear weapons, NATO would have had to rely on fewer but more sophisticated tanks and air power to deter a Soviet blitzkrieg attack. Such was the era of Mutual Assured Destruction.

Recall that Prof Vic Allen, the under-cover Stasi agent, tried to get himself elected to the council of CND.

104

Your response is a good example of entirely missing the point, I used that particular quote because a)@91 inquired about when the socialist/capitalist alliance took place with regard to Hobsbawm), and b)pointing out that great atrocities have been carried out in the name of all political ideologies.

Stalin’s reasoning for fast industrialization was the threat of German attack, so it was a justification to punish uncooperative peasants and other dissidents (including Trotsky). Hitler’s rationale for the Holocaust and the war on the USSR was Germanic blood and land together with a communist threat. The US and Vietnam, another communist threat against liberalism, and Hiroshima and Nagasaki the limitation of further threats to democracy.

It isn’t about numbers, it’s about the easy justifications which sound so reasonable made from certain political positions. Or to put simply, Dylan’s lyrics ‘I come from a country with God on it’s side).

105: “pointing out that great atrocities have been carried out in the name of all political ideologies.”

All ideologies? That’s delusional. I can’t recall Edmund Burke or JS Mill – to name but a few of the outstanding political theorists writing in the English language – advocating mass executions. Disraeli didn’t propose executing Liberals and Gladstone didn’t propose exterminating Consertaives.

@106. Bob B: “I can’t recall Edmund Burke or JS Mill – to name but a few of the outstanding political theorists writing in the English language – advocating mass executions.”

Advocation of genocide is extraordinary by political thinkers or philosophers. If we extend that definition to include Hitler or Stalin, they are outsiders. Genocide or complaisant acceptance of death in the field is wierd.

106

I said ‘in the name of all political ideologies’, do keep up.

Steveb: “I said ‘in the name of all political ideologies’, do keep up.”

C’mon. That claim looks like implicit theorising. By their lights, Edmund Burke and JS Mill were expounding ideologies and they were not advocating the elimination of any who disagreed with them, let alone complete classes or races, like Stalin and Hitler.

We need to be careful about this since slavery was evidently acceptable to John Locke and Thomas Hobbes famously envisaged a state of nature as being “nasty, brutish and short” so sovereign government – the Leviathan – could resort to almost anything to prevent revertion to that.

British governments have not been averse to the execution of subversives, often by painful means – whether William Wallace, Thomas Moore, Alexander Briant, Guy Fawkes, or John Amery. But we tend to overlook that Marx and family, hounded out of mainlandland Europe in 1848, sought asylum in Britain, the capitalist superpower of his time, where he spent his years researching his subversive texts living off subventions from Friedrich Engels, who ran a commercially successful textile business in Manchester and lived in London on Primrose Hill.

“The founder of the world’s first socialist state, Vladimir Il’ich Lenin, visited London six times between 1902 and 1911, and on at least five of these occasions found the time to call into the British Museum whose Library collections were in his view unparalleled. At the time of his 1907 visit he said:

“‘It is a remarkable institution, especially that exceptional reference section. Ask them any question, and in the very shortest space of time they’ll tell you where to look to find the material that interests you. ..Let me tell you, there is no better library than the British Museum. Here there are fewer gaps in the collections than in any other library.’”
http://www.bl.uk/reshelp/findhelpsubject/history/history/lenin/lenin.html

95. steveb – “I finished reading ‘The Age of Extremes’ 10 years ago.”

When did you start? 1963?

105. steveb

b)pointing out that great atrocities have been carried out in the name of all political ideologies.

A claim you often like to make, but one that you have been called out on before and which you have not been able to prove. The fact that a natural disaster hits a country does not prove the governing class planned it.

Stalin’s reasoning for fast industrialization was the threat of German attack, so it was a justification to punish uncooperative peasants and other dissidents (including Trotsky).

That would be interesting if there was a single reason for thinking it was true. Given Stalin’s forced industrialisation policy long pre-dated any threat from the Germans. And mass murder of peasants and dissidents started on the day the Communists came to power.

steveb
“b)pointing out that great atrocities have been carried out in the name of all political ideologies”.

Well possibly, but I’m not sure what atrocities have been carried out in the name of liberalism.

Anyway, “in the name of” is irrelevant, as anyone can make that claim. In authoritarian ideologies, such as socialism, atrocities are a necessary feature as dissent cannot be allowed. This is the key difference.

111

Vietnam was rationalized as liberalism against communism (of course it wasn’t really) but for me, the worst atrocity surrounding Vietnam was the shooting of 4 students at Kent State University in 1971 by the National Guard, because of their dissent. Of course Bob B and SMFS think in terms of numbers, which apparently justifies such acts if it’s less than the worst known. If you want larger numbers of murder in the name of a particular ideology, try The French (liberal) Revolution, but atrocity isn’t about numbers.

109

If I had meant that all political ideologies suggested atrocious acts and eliminating dissidents, that’s what I would have said. You are the one who calls out posters for their lack of precision or evidence and now when it suits, you call it ‘implicit theorizing’, I’ll remember that one.
And, with reference to J S Mill, he was actually in favour of imperialism, not very liberal.
Hitler was unique, if he did draw on any particular theory, it was a pseudo-Darwinism which, of course, justified the aggressive imperialism of the west from the last quarter of the 19th century, as you state, there are many illiberal acts carried-out by liberal states.
Stalin drew on a very distorted marxism, and I would be very interested if you can find any reference in Marx to mass elimination (death) of anyone. As we speak, there is currently a distorted version of Islam being used to radicalize young Muslims.

110

And finally, SMFS, oh dear, ‘Age of Extremes’ was published in 1994 but, as usual, let’s not allow facts get in the way of debate. That’s why it very difficult to debate with you, unless it’s fairy stories. As for the imperative for fast industrialization in Soviet Russia, the absolute chaos left in 1918 may also have been a factor. There is never one catalyst, but certainly, the fear of Germany, a modern industrial country did pose a threat to the once mighty Russia whose main military defence in 1918 was peasants with pop-pop guns.

Steveb

Marx had absolutely nothing constructive to say of any practical use about how to run a Communist (or Socialist) state of affairs except to say it was where each contributed accoding to his ability and each took according to his need, which raised many transparently obvious but unanawered questions.

Marx was fixated by his realisation that while purchasers sought to buy at low prices, producers sought to sell at high prices and believed this inevitable conflict of interests between buyers and suppliers could be resolved by Communism. Lenin had to fill in the yawning gap left by Marx’s naive insight, which Lenin duly did in: The State and the Revolution (1917).
http://www.marxists.org/archive/lenin/works/1917/staterev/

Lenin, of course, had no compunction about applying force to further his cause. As he said: You can’t make an omelette without breaking eggs. It was in Lenin’s time that Dzerzhinsky set up the Cheka, the ultimate ancestor of the notorious KGB.

113

There sure was a load of eggs broken in the name of Marx.

Famously, the French Communist Party was the most Stalinist minded this side of the Iron Curtain. When Georges Marchais, Secretary General of the Party in France (1972-94), was pressed for comment on the crumbling Soviet empire c.1990, he replied: “I tell you, they didn’t arrest enough. They didn’t imprison enough. If they had been tougher and more vigilant, they wouldn’t have got into the situation they are in now.” [Jonathan Fenby: France on the Brink (1999)]

We are apt to forget what Communist Parties were really like. Marx may have been a kindly, if deluded loon, but that guarantees nothing about the conduct of those claiming to promote his cause.

As I minor footnote, whatever the failings or glitches of mainstream economics, IMO Marxist economics is useless for analysing real world problems.

How does it help us to figure out what is happening to GDP and jobs in this age of austerity? Bankers have been ripping off both the customers of banks as well as the shareholders who nominally own the banks. Suggestions from free marketeers that the banks would do better if deregulated just beggar belief but not because of anything Marx wrote.

How does Marx’s labour theory of value help the DfT to assess which railway company should operate the West Coast Rail franchise? Nicholas Ridley, who was Mrs T’s guru on privatisation, opposed privatisation of the railways because he thought that the railways would always run at a loss and that was better managed in the public sector with accountability to Parliament.

112. steveb

Vietnam was rationalized as liberalism against communism (of course it wasn’t really)

Well yes and no. It was rationalised as a battle against evil. Which it was. But there were no crimes committed there of note except those committed by Communists. No massacres. No mass murder.

but for me, the worst atrocity surrounding Vietnam was the shooting of 4 students at Kent State University in 1971 by the National Guard, because of their dissent.

Of course the death of four white Leftists is more important to you than the death of three million peasants murdered by Communism. No surprise there. You shoot at the National Guard, they may shoot back. Not intentional though so not really an atrocity.

And, with reference to J S Mill, he was actually in favour of imperialism, not very liberal.

Imperialism can be and often was perfectly liberal.

Hitler was unique, if he did draw on any particular theory, it was a pseudo-Darwinism which

Nothing pseudo about it at all. Social Darwinism is just what the Left calls the bits of Darwinism they don’t like.

of course, justified the aggressive imperialism of the west from the last quarter of the 19th century, as you state, there are many illiberal acts carried-out by liberal states.

The lack of any logical argument connecting these is impressive. Maybe Darwin was used by some in the West. You’re a socialist. Pol Pot was a socialist. Doesn’t mean you are the same as Pol Pot.

Stalin drew on a very distorted marxism, and I would be very interested if you can find any reference in Marx to mass elimination (death) of anyone.

Marx said repeatedly that with Revolution one class swept the older dominant classes into the wastepaper basket of history. It is built on the notion of mass murder. He also said the only way to minimise the process is through Revolutionary Terror.

As we speak, there is currently a distorted version of Islam being used to radicalize young Muslims.

“Distorted” meaning whatever Steve doesn’t agree with. Islam is what Muslims say it is. Not what some Trot does.

As for the imperative for fast industrialization in Soviet Russia, the absolute chaos left in 1918 may also have been a factor.

So the Soviet Union created a massive problem and then that justified their mass murder? Is that what you’re saying?

There is never one catalyst, but certainly, the fear of Germany, a modern industrial country did pose a threat to the once mighty Russia whose main military defence in 1918 was peasants with pop-pop guns.

They made peace with Germany. And then the West created a buffer of protective states to keep the Soviets away from Germany. The Communist’s response was to try to destroy Poland to clear the way for their Army to invade Western Europe. In 1920 and then in 1939. You make all sorts of sh!t up but this is bizarre. From 1919 to 1939 – the peak murder years – the Germans couldn’t have invaded even if they wanted to.

115

There is also quite a lot of negative rhetoric spoken from the mouths of people from all parts of the political spectrum, but that does not change the fact that, there is nowhere in Marx or any other socialist theorist which supports the elimination of dissidents by violence. Of course you know this because you have taken to casting ad homs about Marx, never a good debating style. In fact, you have come up with one of daftest question yet, how do you think Marx would respond to the problems caused by capitalism?

And @116 comes in on cue with his/her fairy stories and good example of the rhetoric of liberalism ‘Imperialism is and often perfectly liberal’, no point even addressing this, perhaps we could have a debate about the Grimm brothers on the open thread.

Marx, btw did uphold the elimination of one class by reorganizing the mode of production, perhaps a difficult concept for you to understand. And Hitler’s theory was based on the often mistaken concept of ‘the survival of the fittest’. (strongest)

Russia made peace with Germany because the population was being slaughtered by an industrial force against peasants with pop-pop guns. Indeed the February Revolution wasn’t Bolshevik. Stalin was actually proved right, imagine what would have happened if a slow industrial process had occurred, Hitler would have taken Russia with no problems, instead they were in a position to fight as allies of capitalism.

Steveb: “that does not change the fact that, there is nowhere in Marx or any other socialist theorist which supports the elimination of dissidents by violence.”

C’mon. The source of the official Soviet ideology was ascribed to Marx, Engels, Lenin and Stalin. Their images were regularly depicted together on banners at May Day celebrations and the like in the Soviet Union.

The Soviet Communist Party’s policy leading to the terrible outcome of the Ukraine famine 1932/33 was clearly set out by Stalin in a speech he made on 27 December 1929 with the daunting title of: “Concerning Questions of Agrarian Policy in the USSR”, the text of which was published in Pravda and subsequently in his collected works:
http://www.marx2mao.com/Stalin/QAP29.html

This was the speech which included that chilling passage: “To launch an offensive against the kulaks means that we must smash the kulaks, eliminate them as a class.”

Recall that as per the prescription in Lenin’s The State and the Revolution, the Soviet Union in its constitution claimed to be in a state of Socialism – from each according to his ability, to each according to his work. (Soviet Constitution 1936). Communism was to be attained at some unspecified future time.

Recall also the Moscow show trials of 1936 when die-hard Communists, who had participated in the October 1917 revolution, confessed to unspeakable crimes against the state were convicted and duly shot.

Recall too that Orwell, who had fought on the Republican side in Spain’s civil war, escaped with his wife into France just ahead of a general arrest warrant issued by the Republican government. Decades later, a Spanish researcher looking through Spain’s national archives found that notice of the arrest warrant had been copied through to Moscow (see: Peter Davison: Orwell – A Life in Letters). On the scale of executions perpetrated by the Republican side in Spain on its own, see Orwell: Homage to Catalonia. Apparently, the model for this and the Moscow show trials was the Reign of Terror during the French Revolution when the revolutionaries devoured their own.

118

‘The source of the official Soviet ideology was ascribed to Marx’

The source of the pyramids has been ascribed to aliens.

The first statement can be checked for accuracy, the second less so, we can compare the Soviet ideology and Marx’s writings and know whether the first statement is correct. It is correct insofar as the Soviet Ideology is ascribed to Marx, but it is incorrect to ascribe it to him; firstly, Marx stated that socialism can only emerge from mature capitalism, absolutely not the condition of Imperial Russia. Secondly, the emergence of socialism from capitalism was more of an evolution due to mature capitalism being one of monopoly and would require little or no force to take over.

The notion that violence and death of dissidents is a justification for the ends is pure Machiavelli not Marx, the only similarity is the first letter of their names.

119

The challenging fact is that Marx had absolutely nothing practical to predict or recommend about how to run a Communist state of affairs following “the inevitable social revolution” so Lenin stepped in to fill the gap with: The State and the Revolution.

At least he was dealing with real situations in Russia during WW1 and not just theorising in the comfort of the reading room of the British Museum Library. Marx had died in 1883, before the rise of America and Germany as industrial powers and long before WW1. Marxist economics is useless for analysing real world situations.

As the premier capitalist country at the time Marx was doing his researching in the British Museum Library, presumably the inevitable social revolution should have transpired here first. But it didn’t.

Whatever else, we need to recognise that Marxism and Socialism have been used to justify murderous tyrannies on the basis that the proletariat would benefit from the overthrow of the established order so dissidents could be exterminated to expedite the transition to the new order.

Like the Soviet Union, China has had the exterminations but the current state of affairs there bears little resemblance to the painted visions of either Socialism or Communism.

Whatever else, we need to recognise that Marxism and Socialism have been used to justify murderous tyrannies on the basis that the proletariat would benefit from the overthrow of the established order so dissidents could be exterminated to expedite the transition to the new order.

Far as I can tell steveb hasn’t actually been disputing this, merely pointing out that this occurs for any political ideology you care to name. Hell since we’re so keen on attacking economists for theorising in educational environments perhaps we should extend the same mercy to Milton Friedman and the implementation of his theories by the Chicago boys in Pinochet Chile.
It’s well worth noting that in his book Capitalism and Freedom he drove home the argument that only classical economic liberalism can support political democracy, then upon Chile demonstrating the opposite he amazingly managed to disentangle economics from politics when the economic theories he advocated coincided with an absolute restriction of every type of democratic freedom. He also said the “Chilean economy did very well, but more important, in the end the central government, the military junta, was replaced by a democratic society. So the really important thing about the Chilean business is that free markets did work their way in bringing about a free society.”, while presumably forgetting that the Chilean central government was a democratic society prior to the Junta taking over to implement his reforms.

Cylux,
The question steveb keeps ducking is this: why would socialism work in the future, when it hasn’t before? His answer has been that it hasn’t emerged from “mature capitalism”, which ignores two things:

1) What is the definition of “mature”?
2) How does this mitigate the fundamental flaws in socialism?

The first casualty would be democracy, as it and socialism are mutually exclusive. The next problem is that “common ownership” would not mean what steveb would hope. It means ownership by the ruling elite, a very much smaller group than in western democracies. And, of course, dissent cannot be allowed.

No one denies, or shouldn’t, that democratic governments can commit criminal or inhuman or immoral acts. However, these are a bug in the system; in socialist and other authoritarian ideologies this sort of thing is a feature.

1) What is the definition of “mature”?

Mature capitalist economies tend towards stagnation. What happens, is that the rate of return on investment begins to dwindle as overcapacity builds. That causes declining profits which lead to belt-tightening, rising unemployment and falling demand. As investment drops off further, growth slows correspondingly and the economy dips into a protracted slump. This corrosive stagnation is the challenge that all advanced capitalist economies face.

2) How does this mitigate the fundamental flaws in socialism?

The first casualty would be democracy, as it and socialism are mutually exclusive.

Hard to say that, whenever socialism looked likely to emerge naturally and democratically the ideology of anti-communism demanded a military coup and junta, and it got them.

I’d agree that advanced capitalist economies face challenges, not least because growth will inevitably flatten out. However, Marx may have had a very different view of what constitutes “mature”. Things have moved on, and will continue to do so.

You missed the point about socialism and democracy: whilst the former could be established via a democratic vote, democracy would have to be outlawed thereafter.

Why? There’s plenty of political scope for disputes as to the best way to operate under capitalism, the same holds true for socialism.

We have scope for dispute because we have democracy.

And what basis do you have that democracy would have to be suspended upon socialism occurring via democratic means?

The evidence of history is pretty heavy. It should really be up to socialists to explain why it wouldn’t happen next time.

On a practical level, you can’t really have state-control unless the new constitution is permanent. Political parties would have to be socialist, which would mean a one-party state. Of course, in theory, there could be more than one party, and elections could be held. But how likely do you think this is really?

Given the horrific history of socialist government, why take the risk? Would you really gamble the nation’s future on the slim possibility that it just might work out this time?

Perhaps, deep-down, proponents of authoritarian solutions believe they’ll be on the inside and protected. Again, this seems quite a gamble to me. In all likelihood, the new socialist bosses will be the same as the old bosses.

The evidence of history is that when a nation moves toward socialism via democratic means, the US pays a General to instigate a coup and begin terrorising the populace, so yes, I suppose it is up to socialists to figure out why this won’t happen again.

Are you suggesting that socialist government has always been avoided then? Surely not.

Anyway, take the many examples where it didn’t happen, such as Russia, China, etc.

@Jack C

The real problem is that you have entered a debate based on prejudice and misunderstanding of socialism as a social and economic system. A lot of time has been wasted explaining concepts which you should have researched yourself, ‘mature capitalism’ represents the condition of monopoly when markets are allowed to exist, or laissez-faire (let it be) If you had a small grasp of social change, you would understand that existing conditions will strongly influence how and what the change creates. That’s why the hunter-gatherer societies could never have evolved into industrial societies, and that’s why Marx was clear about the evolution of capitalism to socialism, it needed the right conditions. ‘Revolution’ means fast social change not a bloody battle or death. Political parties presently operate in a capitalist society, so all parties which are democratically elected create policies which reflect the capitalist mode of production, so it would be unreasonable to expect that policies within a socialist society wouldn’t reflect socialism. And I have outlined quite extensively why we cannot judge the forced systems of bloody revolutions and the massacre of dissidents to Marx/socialism/any other socialist model.

While I can understand that you believe that the USSR and China reflect socialism (as per Marx), due to your failure to familiarize yourself with information, Bob B doesn’t have your excuse. @120, after various posts of totally irrelevant content, he now agrees with my original assertion – that Marxism and Socialism have been used to justify murderous tyrannies.

Just as an aside, why would you think that anyone would want to return to the conditions of post-revolutionary Russia or create the conditions of China in the west?

121 Cylux: “Hell since we’re so keen on attacking economists for theorising in educational environments perhaps we should extend the same mercy to Milton Friedman and the implementation of his theories by the Chicago boys in Pinochet Chile.”

In a famous interview with Milton Friedman in the Financial Times on 23 June 2003: “The use of quantity of money as a target has not been a success,” concedes the grand old man of conservative economics. “I’m not sure I would as of today push it as hard as I once did.”

The really curious thing is that on retiring from Chicago University, Friedman moved to settle in San Francisco, which is widely regarded in American media as the most “liberal” place in the country by a margin since registered Democrats there outnumber registered Republicans 5 to 1. But then Businessweek recently ranked San Fancisco as the best city in America to live and work.

The latest hot issue of public policy debate there is a proposed ordinance which would ban public nudity: “Our town square [is] becoming an ad-hoc nudist colony,” the proposer has said, adding that on a slow day there are two to four nudists at the plaza, and on a busy day, upward of 10 to 12.” As the city’s anthem goes: If you’re going to San Francisco be sure to wear some flowers in your hair.

The Chicago economist and Nobel Laureate who wrote what is probably the most influential fundamentalist text on the economics of education is not Friedman but Gary Becker: Investment in Human Capital – A Theoretical Analysis
http://vanpelt.sonoma.edu/users/c/cuellar/econ421/humancapital.pdf

Steveb: “Bob B doesn’t have your excuse. @120, after various posts of totally irrelevant content, he now agrees with my original assertion – that Marxism and Socialism have been used to justify murderous tyrannies.”

Quite so. The important and obvious lesson we need to draw is that we should beware of those advocating Socialism least they too have murderous intentions for all we can tell.

132

The lesson we need to learn is that anything can be said to justify all political ideologies, let’s take our lead from that great imperialist, JS Mill.

It seems more than a coincidence that that the three greatest murdering despotisms of the 20th century – the Soviet Union, Nazi Germany and Mao’s PRC – were each officially claiming to be introducing some variety of Socialism. How can we distinguish between varieties of Socialism with homicidal intentions from those without?

134

Socialism has no less problems than liberalism, remember, the Nazis were facilitated by a liberal democracy. Probably the lack of violence might be a good indicator but as I have discussed in the past, Schumpeter believed that socialism will emerge when the middle-class become pissed-off with capitalism. I do not know when the right time will come, I would guess that there are still a few ‘refinements’ left to appease the crowd.

135

“Socialism has no less problems than liberalism, remember, the Nazis were facilitated by a liberal democracy.”

To be more specific, the rise of the Nazis to power was because the Weimar Republic, a liberal democracy, completely failed to deal with the depression and 6 millions unemployed in Germany.

As already reported in this thread, Nazis were nothing more than a fringe party, with 12 members in the Reichstag, until the Weimar Republic elections of September 1930 when the vote for the Nazis – reportedly even to the surprise of Hitler – surged to 6,409,000, up from only 810,000 votes in the elections of 1928. [William Shirer: The rise and fall of the Third Reich]

In the elections of November 1932 – the last elections before Hitler was offered the Chancellorship by President Hindenburg in January 1933 – the Communists attracted the second largest total vote after the Nazis showing that Germany’s electorate had given up on the ‘liberal democratic’ parties and were supporting authoritarian parties.

One of the lessons to be drawn are about whether liberal democracy can survive deep economic depressions with persisting mass unemployment. The worrying implication from today’s Conference news is that the mass unemployment was evidently attributable to a sudden epidemic of scrounging on the part of the German population. Of course, quite why the German population was afflicted by that epidemic of scrounging in 1930, following the Wall St crash of 1929, is an unfathomable mystery.

In the event, the Nazis in government from January 1933 were immensely successful in reducing unemployment by a public works programme, along with extensive state controls over prices, wages, business investment, foreign trade and foreign exchange transactions.

The story doesn’t just end at the correct claim that the liberal democratic Weimar Republic preceded the rise of the Nazis to power. The question is why did that happen?

136

Again you write a post which is full of detail but essentially does not address what has been said. In fact the very aggressive imperialism from about 1870 in the west emerged directly from liberal countries, no excuse that an authoritarian state had taken over. Maybe it was based on the writings of JS Mill!

Liberalism is a very fragile state and is easily put aside when problems emerge, certainly economic depression can be one catalyst, as you suggest. The Marshall Plan certainly reflects the lessons from history, and Golding’s ‘Lord of the Flies’ was based on the writer’s observations from his naval service.

Of course, neither Marx or Smith can deal with the current crisis of capitalism, Schumpeter is nearer the mark, not a socialist. Habermas explores the problems of state intervention (such as Keynesian economics) in his excellent ‘Legitimation Crisis’.

My money is on Schumpeter.

137

“Maybe it was based on the writings of JS Mill!”

So what? “For words are wise men’s counters; they do but reckon by them: but they are the money of fools, that value them by the authority of an Aristotle, a Cicero, or a Thomas, or any other doctor whatsoever” [Leviathan Bk.1 Chp.4] Disraeli described colonies as “a millstone around our neck”.

“My money is on Schumpeter”

That figures. Schumpeter had little to say that was original. His best known book: Capitalism, Socialism and Democracy might find a place, if at all, in fresher reading lists.

His much quoted notion of “a gale of creative destruction” in that was anticipated by a passage in The Communist Manifesto (1848), which aptly described the rapid pace of technological change during the 19th century which carried through into the 1920s, with the automotive industry, electrification, industrial machines and domestic appliances pretty evident by then. Schumpeter never quite came to terms with the Keynesian Revolution of the late 1930s. Insights that markets could fail had already been developed by Pigou: The economics of welfare, and theories of imperfect competition, which can be traced back to Cournot (1838), were in the academic mainstream by the 1930s. Nowadays, highly competitive markets are regarded as something of an exception: ‘industrial organisation’ is the label given to the economics of business structures and concentration – on this, see John Sutton: Market Structure – Theory and Evidence (2006)
http://personal.lse.ac.uk/sutton/market_structure_theory_evidence.pdf

The influence of games theory is pervasive. The influence of Schumpeter has long since been overtaken.

138

Disraeli wasn’t referring to the aggressive imperialism which was the mark of late 19th and early 20th century was he?
And what have you contributed to the issue of the mass unemployment within liberal democracies, Keynes? well very original. Like all the little refinements of capitalism, it only works for a certain time, the medicine has much less efficacy the more it’s taken.

As I have already suggested, perhaps you should read Habermas, if you are able to suspend your prejudices.
‘Insight that markets can fail’, it became clear long before 1930 when the state had long since placed itself as a permanent fixture in the economic base of all western, capitalist countries.

And quoting Sutton (2006) with regard to the recognition that highly competative markets have become an exception is priceless, Schumpeter had recognized this decades ago.

Steveb

“And what have you contributed to the issue of the mass unemployment within liberal democracies, Keynes? well very original.”

Keynes developed original insights which are still relevant now and which conservative voices are still intent on rejecting – as in the recent Conservative Conference. Try Martin Wolf in Wednesday’s FT on: Lessons from history on public debt
http://www.ft.com/cms/s/0/e26e46ae-1138-11e2-8d5f-00144feabdc0.html#axzz28u8jnn8k

Schumpter had little new to add to our understanding of the pervasive extent of imperfect competition beyond what had been written by Smith, Cournot, Marx, Joan Robinson and Edward Chamberlin.

The link to John Sutton on market structures shows that economic analysis of markets and business behaviour in imperfectly competitive markets has developed a great deal since then, particularly through applications of games theory. To claim that is all in Schumpeter is just laughable.

140

Most theorists build-on previous works, Schumpeter drew on Marx who drew on Hegel, neo-Darwinism draws on Darwin ect.
And I don’t believe that Keynes was hit with divine inspiration, it was clear in WW1 that increased government spending stimulated the economy.

And as far as I can remember, Schumpeter was of the opinion that imperfect markets were more efficient, since that was over 50 years ago, it’s no surprise that since there have been extensive technological changes, theories have been adapted to reflect this.

141

“And I don’t believe that Keynes was hit with divine inspiration”

Few, not including Keynes, supposed that he was and others – notably Tinbergen and Kalecki – had also reached the insight that an economy in the short term was driven by aggregate demand for goods and services. The policy implications of what they were saying were very different from the orthodoxies of their time, namely: to reduce unemployment, cut wages, balance budgets, and no public works programme to create jobs because extra public spending “crowds out” equivalent private spending. But there are politicians now who are trying to re-establish those same old orthodoxies.

The economic analysis of imperfectly competitive markets has advanced a great deal since Schumpeter died in 1950. The contribution of Cournot, writing in 1838 on a theory of imperfect competition, is now taken a great deal more seriously than Schumpeter
http://nd.edu/~tgresik/IO/Cournot.pdf

Cournot looks remarkably modern. Schumpeter just looks wordy.

142

So you don’t like Schumpeter but that is quite different from a proper critique of his theory.

You often cite Keynes but he based his demand management theory on the conditions of the 1930s when in some areas there was around 90% unemployment and welfare benefits were negligible. Today, welfare benefit claimants are much better off, indeed, one of the major arguments about benefits is that they are more generous than the wages people would expect to receive. Put simply, welfare benefit claimants are given money, which we know gets put back into the economy, totally different to the hardship of the 30s. Keynes was good for his period, just as Marx and Smith.

I still hold with Schumpeter’s assertion that socialism will emerge, not as a revolution against capitalism, but a revulsion, and the crisis of capitalism continues even if the detail is slightly different.

143

“So you don’t like Schumpeter but that is quite different from a proper critique of his theory.”

IMO Schumpeter didn’t have anything particularly novel or interesting to say and economics has moved on a great deal since then.

“You often cite Keynes but he based his demand management theory on the conditions of the 1930s when in some areas there was around 90% unemployment . . ”

That misstates what the Keynesian Revolution was about. Keynes was attempting to develop a theory that could account for how a capitalist market economy could settle at a relatively high level of unemployment for years when received theories had that this was some tempoarary and aberrant departure from an equilibrium with full employment. Hence Keynes’s dismissive comment: In the long run we are all dead.

He produced a collection of criticisms of received theory: Wages cuts would reduce demand. What if the aggregate amount of saving planned at full employment income would only be invested by business at negative interest rates – meaning that investment would need to be subsidised? Why was a monetary policy stimulus in a depression like pushing on a piece of string?

Almost all the regular econometric models we now have to forecast GDP and employment etc attempt to forecast the components of aggregate demand: consumption spending, investment, exports and imports.

In that sense, these models have a characteristically Keynesian flavour but Keynes had a very simple consumption function and few economists would go along with that now, while models for other components of aggregate demand are more complex than Keynes had supposed.

However, almost all current macroeconomic texts follow the Keynesian spirit. The revolution has had a pervasive influence on the way most economists think about what drives an economy. Claiming that Keynes was simply a man of his time shows a complete misunderstanding of what the Keynesian revolution was about and how it altered the way we analyse changes in an economy. Standard texts, like Olivier Balnchard’s Macroeconomics (Financial Times), have a recognisable Keynesian flavour with a focus on the factors determining aggregate demand and aggregate supply.

“I still hold with Schumpeter’s assertion that socialism will emerge”

We still have little insight into what the “socialism” would amount to. Most of us are focused on how best to adapt and reform capitalist market economies. “Socialism” is just a label with unknown connotations.

144

So how does Keynes translate into the here and now, you have quoted the theory, what form would policies take in order to address the existing problems?

145

“So how does Keynes translate into the here and now, you have quoted the theory, what form would policies take in order to address the existing problems?”

For starters, try the link @140 to Martin Wolf on: Lessons from history on public debt.

Try also Chris Giles’s dissection of the just-out IMF World Economic Outlook for October 2012:

IMF forecast leaves Chancellor in a fix
http://www.ft.com/cms/s/0/7c825870-121a-11e2-bbfd-00144feabdc0.html#axzz290OA04Us

Crucial to this is the estimated size of the multiplier. If a cut in public spending of £100m results in GDP falling by more than £100m, the Chancellor is in a real bind because spending cuts will increase the budget deficit (since tax revenues will automatically go down with the fall in GDP) and raise government borrowing – which is what has been happening for the last five months. GDP is running some 4pc below what it was in the spring of 2008.

Putting the question: “Will net exports, business investment and consumer spending rise sufficiently to offset the cuts in public spending?” is a very keynesian way of assessing the situation.

Just cutting public spending intending to cut the budgetary deficit so as to reduce government borrowing regardless of what that does to GDP is the antithesis of the keynesian way. The ways in which Cameron and Osborne present the issues shows us that they really don’t understand keynesian economics.

I’ve actually experienced a local Conservative quoting Dickens’s Micawber at me as the essential principle for the government’s economic policy. If so, the whole keynesian revolution was a waste of time and the previous orthodoxies still prevail.

146

But this is about government spending, which has always been central to Keynes, withdrawing any government subsidy has far reaching effects, those of us who experienced the massive pit closures do not need an academic knowledge of Keynes, or indeed, economics to know this.

But we are already subsidizing employment to a tune of around £31billion and another £16billion goes in HB for both employed and unemployed and as I stated @143, welfare benefits paid to the unemployed/disabled/pensioners create a massive input into the economy. Having a predictive value is fine providing we can utilize those predictions but really we cannot, the Keynesian revolution of the 50s and 60s, is another country, it worked because of the particular conditions of the UK.

147

“Having a predictive value is fine providing we can utilize those predictions but really we cannot, the Keynesian revolution of the 50s and 60s, is another country, it worked because of the particular conditions of the UK.”

The assessment of JCR Dow: Management of the British Economy 1945-60 (Cambridge UP) was that the practice of demand management had probably destabilised the post-war economy overall – partly through forecasting and diagnostic errors and policy timing lags, partly because demand management creates expectations that government will inevitably intervene to maintain “a high and stable level of employment” almost regardless of what that does for inflationary expectations.

In 1976, Callaghan delivered an obituary on demand management policies: “We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step.” [BBC website]

But I did say that what Keynes was attempting was to construct a theory which could provide – contrary to the received orthodoxy of his time – an explanation of how a national economy could settle at a persisting level of relatively high unemployment. The important insight was that an economy was driven in the short run by aggregate demand for goods and services.

The theory was never intended to account for the record stockpiling of coal which preceded the 1984/85 mining strike or the persistence of relatively high regional unemployment in Merseyside or the North East.

Keynesian economics has yielded far more illuminating insights into the causes of and remedies for our present predicament – and to the international transmission of depressive pressures – than does Micawber economics with its over-riding imperative to cut the national budget deficit regardless.

148

I already understand what you state about predictive value, I’m not arguing with that, and even Marx predicted that when markets fail, the state is likely to intervene.

I am asking how Keynes economics can be used in today’s environment, as well as the welfare benefits paid as per @147, we have the NHS, for example, which is the biggest employer in the country.

‘The theory was never intended to account for the record stock-piling of coal’. And it was never intended to address the existing conditions of the economic base, as I have already indicated, most people now know that a decrease in any state provided individual finance, be it be jobs or welfare benefits, will result in less spending power. And going back to my original assertion, why don’t we go the full hog into state socialism or reject the whole thing and allow free-markets to prevail.

149

“I am asking how Keynes economics can be used in today’s environment, as well as the welfare benefits paid as per @147, we have the NHS, for example, which is the biggest employer in the country.”

The focus in Keynesian economics on what is happening to aggregate demand for goods and services – and the components of aggregate demand – is crucial for understanding why Britain’s economy is recessed and the remedial policy options. In the news, try this and the links there to comments by Robert Preston, the BBC’s business editor:

The head of the Financial Services Authority has suggested that it may be time for more unconventional policies to revive Britain’s stagnant economy.
Lord Turner said reducing private, business and government debt following the financial crisis could impact economic growth for many years.
http://www.bbc.co.uk/news/business-19917480

The rationale there is to reduce pressures on the government to cut spending by writing off the increased public debt incurred through Quantitative Easing. In other words, if the government need set aside less to repay public debt, there is less pressure on the government to cut public spending on goods, services and welfare payments. Turner is also suggesting a temporary relaxation of regulatory pressures on the banks to increase their capital requirements so as enable the banks to increase bank lending.

Those proposals are intended to increase aggregate demand, which is a very keynesian way of addressing the recessed state of Britain’s economy. In a tactful way, the proposals are far removed from the government’s declared fixation with cutting the budget deficit regardless of what happens to aggregate demand as public spending is cut and taxes are raised.

Keynesian economics was never intended to specifically deal with who gets welfare benefits or with the management of the NHS but that doesn’t mean it has nothing to say about the government’s fiscal policies when the economy is recessed. The links posted @140 and @146 also relate to the policy issue of what to do about Britain’s recessed economy given the inevitable pressure upon government to address the budget deficit for fear the budget deficit will otherwise force up borrowing costs by depressing the prices of government bonds.