Sunday, June 14, 2020

A Green Folkhem


“It is the hallmark of any deep truth that its negation is also a deep truth.”—Neils Bohr

Sweden, around the middle of the 20th century, can safely be declared a socialist paradise. Its generous welfare state offered universal health care, paid parental leave, pensions, preschool care, progressive taxes, and a system of high quality elderly care. But these accomplishments only tell half the story. The small nation of Sweden also developed an impressive array of internationally recognized companies. ABB, Alfa-Laval, Atlas-Copco, Bofors, Bona, Ericsson, Electrolux, H&M, Husquvarna, IKEA, Saab, Sandvik, SAS, Securitas, Skandia, SKF, Tetra Pak and Volvo showcased Sweden as a capitalist paradise.

These achievements materialized in no small part realized by virtue of the Swedish societal concept of Folkhem (People’s Home). Conceived by Socialist Prime Minister Per Albin Hansson, Folkhem emerged in the aftermath of the Great Depression in Sweden. It served as a conceptual guiding principle for political and economic decisions in Sweden from the 1930’s until well into the 1970’s, when increasing worker militarism started destabilized elements of the system.

Folkhem was built upon the bedrock of the 1938’s Saltsjöbaden Agreement3, a non-aggression pact between workers and management. An agreement between Swedish unions and management organizations, the Socialist government helped bring the two sides together by threatening anti-management legislation against a bourgeoisie already living in fear of a rising Marxist tide. Instead of waging a fragmentary class war leading to a one-sided dictatorship of the proletariat, the Swedish socialists conceived society as a whole and built a balanced system. The One (state) holding in interdependent tension the Few (bourgeoisie) and the Many (working classes) for the benefit of the All (Sweden).

Fragmenting Dogma—Unity in Complementary Opposites


“There is unity in the world, but it is a unity formed by the combination of opposites.”
—Bertrand Russell4
Folkhem’s success is yet another confirmation of the wisdom of Sun Tzu’s strategic ideas, which are based on the Chinese philosophy of Yin-Yang. Sun Tzu taught that seemingly opposite forces were more profitably conceived of as naturally complimentary components of the same system. This concept is demonstrated in the etymological origins of “Yin” (dark side of a mountain) and “Yang” (sunny side of a mountain). Some other examples are fire and water, creation and destruction, nature and nurture, supply and demand, predator and prey. The key to a successful strategy is manipulating these complementary forces in ways that achieve Sun Tzu’s overarching goal “victory without conflict.” 5 Folkhem provided a societal framework that suspended opposing forces in complementary tension and interdependence. Both bourgeoisie/proletariat and capitalism/socialism were paired in a dynamic equilibrium that brought out the productive best of each while simultaneously suppressing the other’s more malignant tendencies.

Rejecting other candidates who were promising huge social program build-ups in the US, Democratic primary voters recently chose the fiscally conservative candidate. This choice was motivated in part by cost fears these social programs provoked. Not long after, facing a tough reelection battle, and in response to a gathering, pandemic-fueled economic crisis, President Trump conjured at least $3 trillion of helicopter money out of thin air. It was as if the putative God-Emperor declared "Let there be money" And there was money. Trump saw the money, and it was good. Democratic party elders responded with grave warnings about hyperinflation and wheelbarrow money. Some Democratic voters were dumbfounded by Trump’s display of fiscal magic. How is it possible Trump effortlessly pulling trillions out of his Treasury hat? The memory was still fresh of Democratic party sages shooing their voters away from universal health, tuition-free public universities, and the Green New Deal, due to the allegedly exorbitant fiscal price tags associated.

Analogous to water’s cycle of evaporation and precipitation, carbon dioxide is released into the earth’s atmosphere and is eventually reabsorbed back into the earth’s once plentiful carbon sinks. Much of this carbon is released due to human economic activities. Human history was one of a gentle rise in both population and levels of economic growth and the earth, flush with soil, forests and oceans, gladly reaccepted its prodigal carbon back into these natural reservoirs. The Industrial Revolution combined with discovery of fossil fuels radically changed this growth pattern. Surging ever skyward, as if manned missiles were on an economic mission to occupy infinity. Many decades ago, the earth’s capacity for carbon reabsorption was surpassed, the excess carbon accumulating ever denser under the indefatigable dome of the earth’s atmosphere. A finite earth’s inadequacies were exposing it an unworthy base of operations from which to vanquish infinity. Pandemic lockdowns have exiled on main street, the consumers who produce the bombs and bullets for the economic war on infinity. The economic growth pattern trajectory has turned sharply earthbound. Now in all likelihood for the first time in a lifetime for many, more carbon is reabsorbing back into the earth than is being emitted. The pandemic having provoked, only for the moment, a very slight decline in overall atmospheric carbon levels.

The Fed’s balance sheet balloons as our carbon emissions crater. Today, the ongoing pandemic is focusing attention on two seemingly contradictory schools of thought. Fiscal expansion, full employment, and increased social programs are among the policy goals of Modern Monetary Theory6, a macroeconomic approach that advocates increased government spending. Décroissance (Degrowth)7 is, in contrast, an environmental movement which champions gradually decreasing economic growth, eventually triggering drops in carbon emissions below the earth’s capacity for reabsorption. Given the current reality of political power, the ascendant Few can use MMT to enrich themselves, while deploying décroissance to emasculate the Many with austerity.

Embedding these two complementary working theories within the Folkhem social framework reverses this deleterious dynamic. MMT financing, directed towards ameliorating social inequality, would provide the underpinning required to execute décroissance’s goal of bringing our consumption down to sustainable levels. Thus embedded, the two working theories are placed in a role of mutually tempering the other’s malignant tendencies while simultaneously supporting their many benign elements. The result is a robust conceptual theory for solving the climate crisis, a Green Folkhem.

Meanwhile Wall Street bankers luxate in liquidity of dubious origin while the meeker classes struggle, snaking their gas guzzlers in mile long food queues. A globe sans frontiers is sliced and diced into decreasingly small regions in an effort to compartmentalize a smoldering virus’s relentless search for fresh tinder. Bread is baked, victory gardens planted, long disused sewing supplies are transformed into masks, protective acts of bricolage. Consumers, long accustomed to buying what their grandparents made by hand are seeking elders for DIY counsel.

Foundational Myths--Birth of Civilization and Social Class

Akira Kurosawa’s “Seven Samurai” is a simple and universal cinematographic representation of the birth of civilization. The drama starts with a rough band of roaming bandits cruelly planning a harvest time raid on small and defenseless village. Some villagers overhear the bandits plans. The villagers have a choice. They could ignore the threat hoping the bandits go elsewhere. Or choose to use the months before harvesttime to prepare for the worst. A few lucky survivors of a winter of starvation would face a seedless spring. Preemptive action is taken, and a band of Samurai are tasked with the defense of the village. The loss is immediate for the villagers as the hungry Samurai must be fed, and a shock to the village standard of living is felt. Is the threat real some villagers ask as they see the hungry Samurai gobble up bowls of rice? Yes, the village’s foresight was just enough to defend their way of life when the roaming bandits do arrive for their harvest. A perpetual conflict between productive and parasitic social classes is at the heart of this film. 

Samurai successfully protect the village from the roaming bandit raid. Thus, civilization is born.
Kurosawa's film depicts the village symbolically transitioning from living in what political philosopher Thomas Hobbes called a State of Nature--where life is famously solitary, poor, nasty, brutish, and short--into a Civil Society by engaging in a social contract with the Samurai. It's clear that the roaming bandits represent a parasitical class. The Samurai are functionally now fixed bandits, are also a parasitical class. When given a choice between parasite types, humans prefer a fixed bandit (government) which is intimately tied to and dependent on the host society (productive classes), being limited in their parasitic activities for fear of killing their host. Roaming bandits face no such constraints and will often plunder to the point of destroying the village.

The film closes with a rueful Samurai foreseeing eternal producer class ascendancy, “once again the farmers win”.

Alluvial planes civilization
Civilization was born when elites mastered alluvial flood plains by creating systems of irrigation through canals and sluice gates. A managerial class of priests, administrators, and merchants directed precious water to a peasant class. From the fields, by means of labor, through the grace of human intelligence and apparent mastery of nature, a surplus emerged. Once sent back to the managers, a virtuous cycle of mutual class dependence was created.

Eden was not to last as surpluses are eventually the bane of agrarian paradises. Concentrated abundance attracts microparasites: viruses and blights. It also lures human macroparasites. Either the centralizing draw of not-distant-enough Empires, or the scattered repulsion of raiding Nomads. Humans plants and animals develop and mutate immune system resistance to microparasites. Macro-parasites are eventually absorbed into a society as two parasitical classes, plutocracy and lumpenproletariat, perpetually feeding off their two productive class hosts, the bourgeoisie and working classes. A well-ordered society develops immune system reactions to keep these classes in check. But currently in the US the opposite is happening, an emasculated working class reveres the plutocrats, while an ascendant bourgeoisie indulges an ever-expanding lumpenproletariat. The two parasitic classes divert precious resources to Empire, consumption, and an ever-expanding police state. In reaction, social safety nets contract.

Surpluses
Georges Bataille La Partie Maudit –
study of consumption of surpluses, not of production
Excess energy is the effervescence of life.
Human sacrifice, construction of a church, or the gift of a jewel are no less interesting than the production of wheat.
Freedom of thought, both MMT and decroissance limit their holistic theories as “left wing” movements.
Solutions to political problems deriving from traditional reasoning.
“It is not necessity but its contrary, “luxury” that presents living matter and mankind with their fundamental problems.”
Productive vs nonproductive expenditure -- neither is a pure category.
Keynes bottle metaphor (gold) and Marx chapter 17 surplus value – used in crusades or cathedral building – these surpluses can go to social programs.
Fear and the anxious search for a solution vs freedom of mind exuberance in the search for solutions, free from the anxiety.  Productive vs luxury – the search for solution is luxury, superfluity, and must necessarily be so.
Circumscribe two opposing political methods.
Often "literally" literally means "figuratively"

Class struggle and solidarity

A theory of class structure and struggle emerges from this foundation myth. Marx's binary model of a bourgeoisie oppressing a proletariat is too simple and leads to misunderstanding. A better model would contain four classes, two parasitical, plutocrats and lumpenproletariat, and two productive, the bourgeoisie and the working class. And from this alignment emerges the preferred class struggle: makers against takers.
       A plutocratic class emerges and is able amass huge fortunes from its links to government power. They recycle that material wealth back into political power in order to defend their wealth and expand opportunities for rent extraction.
       The other parasitical class sits at the bottom of society. Roaming bandits transform themselves into Marx's Lumpenproletariat. A low-level criminal class that feeds on the weak and vulnerable. Think of thieves, pickpockets, grifters, etc. all the way up to Mafias, drug cartels, street gangs, etc. Lumpenproletariat may pose less of a direct threat to society than the looting plutocrats do. The true danger is a society's immune system overreaction to a strong Lumpenproletariat infection. This immune system is manifested in the penitentiary industrial complex, a system of courts, police, jails, and insurance companies. While at least providing employment, this system comes at the opportunity cost of more productive activities. Worse it offers the plutocrats rich rent-seeking opportunities. Viscous circles of parasitic activity start on both the top and bottom layers of society against the productive middle. 
       The productive classes are the farmers from Kurosawa’s masterpiece. The bourgeoisie are the land-owning farmers and the working class, the landless laborers. Today the bourgeoisie is today made up of educated professionals, for example medical doctors. The working class is composed of individuals with lower education attainment and who typically engage in physical work, for example a plumber.
       A sane theory of class struggle would unite the two productive classes against the two parasitical classes. But this takes an explicit agreement, a sort of class non-aggression pact, between the bourgeoisie and the working classes because their class interests are not always the same. For example, a plumber would like to purchase the doctor's services for as cheaply as possible and so he may propose a single payer health care system to help keep the price of medical care down. From her point of view, the doctor wishes to obtain the plumber's services for as cheaply as possible and so she may encourage an abundance of plumbers all competing against each other, keeping their rates low. A plumber would obviously prefer a scarcity of plumbers so that the supply-and-demand curve works to assure him of a higher price for his labor while the doctor prefers a private health system that allows her to keep her income high.
       But is such an agreement possible between the bourgeoisie and the working classes? It's clear the plutocrats would prefer the two productive classes be at each other's throats instead of united and deployed against him. One way the plutocrats keep the two productive classes fighting is to launch emotional culture wars between the productive classes. But history shows such an agreement between classes is possible.

Folkhemmet -- Aspiring to post-WW2 Sweden

With its generous welfare state featuring universal health care, paid parental leave, universal preschool care, and its system of pensions and elderly care, post-war Sweden is often thought of as a socialist paradise. The reality is that it was also a capitalist's paradise. Somehow the tiny nation of Sweden produced a plethora of internationally recognized companies, such as Ericsson, Bona, ABB, Volvo, Saab, Elecrolux, Atlas-Copco, Sandvik, Tetra Pak, Alfa-Laval, SKF, IKEA, Bofors, Skandia, Husquvarna, Securitas, SAS, and H&M. Sweden even managed to produce its own fighter jet; a feat usually reserved for larger nations.
       Folkhemmet—the people's home—was the social concept that directed Swedish success. A national home where the bourgeoisie and working classes lived in relative harmony, almost as a married couple. With a small population, its exceptionally productive economy was constantly hungry for labor, Sweden often faced worker scarcity, a position of power for the working classes. The welfare state functioned as a domestic labor liberator, freeing women from the care of children or elderly. Women were both encouraged to join the work force in large numbers and to have more babies to ensure a growing supply of future labor. The working classes union’s agreed not to take advantage of their strong negotiating position. This was formalized in the Saltsjöbaden Agreement of 1938, which can only be described as a non-aggression pact between the working classes and the bourgeoisie. Peace allowed the two productive classes to turn their combined political guns on both the plutocratic and lumpenproletariat classes.
       There was no culture war in Sweden during this Golden Age of productive class peace. The bourgeoisie in Sweden took their cues from European high culture whilst the working classes preferred American popular culture. In other societies where the bourgeoisie is ascendant, status-anxious working classes tend to blindly ape bourgeois political opinions and culture, often at the expense of their own economic interests. This phenomenon is expressed within center-left political parties which formerly represented the working classes but now serve bourgeois economic interests.
       Globalization and Sweden’s membership in the EU broke the productive class truce—the bourgeoisie has been ascendant for at least the past 25 years. Present-day Denmark is the closest current example of Golden Age post WW2 Sweden.
       Around the same time America developed a sort of class peace.  Fordism was based on the idea that workers would recycle their salaries back to the bourgeoisie by purchasing the commodities they produced. In return the wealthier classes would be able to engage in conspicuous consumption.  This created demand for new products when the working class attempted to ape their betters by consuming simplified versions of luxury items. Admittedly cycle worked well in the good time.  But then the Great Depression struck.  FDR also tried a pale imitation of a Folkhem with his New Deal.  It contained some useful social programs to appease working class anger and to keep them from eying Marxism.  But it did not create class peace and its half measures are apparent today as the US lags Europe on the social front.

Modern Monetary Theory (MMT)


A useful analogy for understanding monetary policy’s relationship to an economy is of a hot air balloon hovering in the sky. The goal is to keep the balloon afloat within a reasonable range of altitude (inflation). Failure occurs when the balloon gets dangerously close to the ground (deflation) or when it sails off into the stratosphere (hyperinflation). The goal is to position the balloon at the right altitude to catch those soft warm southerly winds that blow the balloon northwards -- towards a higher GDP. These winds tend to be stronger at higher altitudes, but the balloon becomes unstable the higher it flies. The economic winds can suddenly shift.
       There are many sorts of ballast that can keep the balloon from zooming up into the ether of hyperinflation: low productivity, a gold standard/strong currency, frequent bond market issues, and balanced budgets (taxes matching spending) or even budget surpluses (taxes higher than spending). The problem is that too much ballast will keep the economy earth bound, stagnated, and tending towards deflation.
       The burner unit is what counteracts the hot air balloon’s ballast, giving buoyancy to an economy. These include high productive capability, deficit government spending, and a weak currency. The goal being to soar high enough to reach those winds of growth but not so high as to reach the upper altitudes which represent the inflation zone. If the balloon soars too high it will reach hyper-inflation, which is a zone of no return and the balloon (monetary system) must be abandoned. This is what happened in the Weimar Republic in Germany during the post WW1 era.
       Winds can shift without warning and out of nowhere a wintery northerly wind can suddenly blow the balloon south into recession and occasionally even depression. In this case policy makers attempt to stimulate the balloon higher by turning the burners up (deficit spending) hoping the winds at higher altitudes are the warm southerly type.
       Classical economics features an ingrained vertigo and prefers the economy to hoover much closer to the ground. MMT has no fear of heights and advocates for policies that will raise the balloon to altitudes where economic growth can be maximized.

***
Deeply indebted intellectually to Maynard Keynes, MMT is a theory of macroeconomics that advocates increased government spending. It is dismissive of the entire concept of a budget deficit and pushes for full employment. They insist a monetarily sovereign issuer of currency, governments that control the printing presses of their currency, faces no necessary link between tax receipts and government spending and cannot be forced to default on loans. MMT holds that issuing bonds is not a necessity. The only limit to government spending is inflation. Some of the leading advocates for MMT include Stephanie Kelton, Randall Wray, Bill Mitchell, and Warren Mosler.
       During the recent Democratic primary contests, several Democrats announced generous social programs. Non-candidate Alexandria Ocasio-Cortez (AOC) had the most ambitious, a Green New Deal (GND) that contained a laundry list of social programs and environmental targets associated with sustainable energy. It contained no limits on economic growth, however. Andrew Yang proposed a Universal Basic Income, proposing to send a $1,000 monthly check to all adult Americans every month. Bernie Sanders presented programs for universal health care and affordable public universities. Democratic primary voters preferred the fiscally conservative candidate Joe Biden.
       Over the past forty years of yin-yang between Republican and Democratic Administrations, a clear pattern emerges. The Republicans run on a platform of fiscal conservativism but end up spending money like drunken sailors. Reagan ballooned the deficit on a huge military buildup and Bush II launched a savage war of imperialism. Labelled the tax and spend party, Democrats run on the idea they will create social programs. But once in office they end up cleaning up the previous Republican’s fiscal mess by cutting spending and increasing taxes. Social programs if they do appear, are weak and compromised, like Obama Care. A universal health care system with a public option would have been the preferred option.
       This systematic under-performance by successive Democratic Administrations is one of two reasons America finds itself in such a compromised social state during the current pandemic.
       Often the reason given for these fiscally conservative actions is that the “Bond Market” forces us to move towards balanced budgets. But is this true? Why does the Bond Market only limit Democratic spending? It seems to go into hibernation once a Republican swears the oath of office.
       The bond market (lowercase) is where nations offer their debt, the form of bonds, for purchase by potential bond holders. The bonds may be short term (1-4 years) or long term 20-30 years). The interest rate for short term bonds would normally be lower (but not always) than for long term bonds since in theory there is more risk with longer term bonds. Bond traders price bonds by looking at variables described by the hot air balloon analogy. The more risk for inflation, the higher the interest rate the bond market will charge. It’s similar to an individual seeking a home loan from a bank. The financial state of this person will be examined. Higher interest rates mean debt service costs increase and could result in less money being available for social or military spending. The fear of skyrocketing interest rates has traditionally been used against Democratic Administrations to keep them on a fiscally conservative path and away from new social programs.
       The lowercase bond market can be reified into the Bond Market, a conceptual tool of plutocratic discipline over Democratic Administrations. MMT as a school of thought lacks respect for the Bond Market. This offers a way fiscal way forward to finally build these social programs.
       After rolling out her Green New Deal proposal to great media fanfare, AOC immediately faced the usual, "How are you going to pay for it?" This kill-shot had already claimed universal health care and any preschool child care proposals, not to mention free public universities during this election cycle. Instead of rolling over and dying as Democrats usually do, AOC's response invoked the heterodox economic theory of MMT: “I think the first thing that we need to do is kind of break the mistaken idea that taxes pay for 100% of government expenditure.”
       AOC cited one of the central ideas of MMT: that taxes are not 100% required for government spending. AOC’s statement is double-edged though and helps expose Donald Trump’s latent MMT tendencies. If taxes are not required for government spending -- and they are not – then Trump’s tax cuts for the wealthy, while economically inefficient and morally deplorable, are not really going to lead the US to economic Armageddon. The truth is, paying for the Green New Deal is really just as simple as paying for America's forever wars. Congress will authorize the necessary spending, and Treasury will spend. AOC has specifically endorsed MMT, saying it needs to be, "a larger part of our conversation."
       Taxes do play a central role in MMT theory. While not being 100% necessary for funding government spending, a sovereign issuer of currency must force her citizen’s to pay taxes exclusively in the local currency. This creates demand among the citizens to take jobs paid in this currency. With the sovereign issuer having a monopoly on issuing this currency, the demand for its currency translates into power for the government, and the ability to spend money. This power imbeds value into its currency, at least within its national borders. According to MMT, the amount of taxes collected is not required to match the amount of government spending and so the constraint of deficits is a false constraint.
       One important aspect, that MMT’ers are reluctant to admit, is that the power of their theory depends greatly on the power of the currency under discussion. As the global reserve currency with no currency rivals on the horizon, the US Dollar is in such a dominant position that MMT theory works very well when describing the greenback. One of the keys tenets of MMT is that a sovereign issuer of currency cannot be forced into default on debts incurred in that currency. Closet-case MMT scholar Donald Trump, in his very unscholarly diction, restated this 2016, starting with an exceedingly important qualifier:

This is the United States government. First of all, you never have to default because you print the money. I hate to tell you. So, there’s never a default.

This is technically correct even without Trump’s qualifier. But weaker currencies must either accept the valuation of international currency markets. which may not be very flattering or trade commodities for hard currencies in order to purchase imports. So, while MMT may very accurately describe the all-powerful US Dollar and the possibilities US policy makers have. MMT is much less useful in describing a weaker currency such as the Argentinian Peso. which must be converted to US dollars for Argentina to import services and commodities or to get foreign loans. And so, the Bond Market has much more power over these countries. Argentina or Turkey cannot print its way into prosperity. The Bond Market rules these countries with an iron fist. In the US, printing and prosperity do have a relationship. But there are always limits; the primary one being inflation.
       The reason MMT works well for strong currencies can be seen in the hot air balloon analogy. A strong currency acts as ballast, it tends to drive the system downwards towards deflation. A strong currency has little need for those other forms of ballast, balanced budgets or selling bonds. As the global reserve currency, the US dollar can be considered a “hyper-currency”. Global demand for the dollar, according to the Triffin Dilemma, requires deficit spending. The global power and reach of the dollar mean the US hot air balloon has very little chance to getting anywhere near inflation.
       The Swiss France, Euro, and British Pound can be considered “super-currencies”. They have considerable room to ignore the Bond Market but not as much as the US has. On the other hand weaker currencies act to give buoyancy to an economy. These economies require ballast to compensate. Balanced budgets and/or submission to the Bond Market is required for weaker currencies to keep their exchange rates stable with the hyper-currency.
     It must be again emphasized that ever since Reagan, Republican Administrations, with their policies of tax cuts and war spending, have been deploying MMT-like economic policies. At the same time--in a blatant case of projection—have been accusing the Democrats of being the big spenders. This trend continues today with the difference being that Trump’s pandemic splurge is too ostentatious to ignore.

Financing Debt
According to MMT the US has no obligation to issue bonds to finance the so called “deficit.” It’s not necessarily a bad idea to issue bonds, there are many good reasons to do so. But it is a political choice, not an economic necessity. In other words, submitting to the dictates of the Bond Market is a choice. Given the status of the dollar, the Bond Market has no power over US policy makers. MMT advocates see the concept of a deficit is an accounting fiction used by plutocrats to damp down government spending. There are limits to government spending, namely inflation. The true limits are not those imagined by the deficit hawks. While it is nice to see the relationship between money spent by the government and money taken in—the all-encompassing importance given to the US “deficit” is more about politics and less about economic reality. For example, under MMT, neither social programs nor middle-class tax cuts would necessarily need to be "paid for" by tax increases elsewhere.

Full Employment and Reserve Labor Pools
MMT advocates increasing aggregate demand (the total amount of demand for all finished goods and services produced in an economy) to the point that full employment results. This is standard Keynesian theory which is why sometimes MMT is referred as Neo-Keynesian. The problem with Keynesian theory is that deficit spending during the bad times is supposed to be balanced to some extent with surpluses during the boom but this second part of the deal is almost always reneged on. Americans have found a novel way around this. They deficit spend during Republican administrations no matter where they find themselves in the economic cycle. Then the hapless Democrats sacrifice their own spending agendas and concentrate on balancing the budget during their time in office and fail to deliver any new social programs.
       One key flaw in the MMT belief that increasing America’s aggregate demand will lead to full employment is globalization. The US is a leaky bucket for employment. Pour aggregate demand into it and much leaks out and creates employment in other countries due to offshoring, particularly in China. Only a certain percentage of US aggregate demand leads to actual Americans getting jobs at American wages. Capitalism is relentless in its efforts to keep that number as low as possible. MMT’ers will admit this is true but will respond by shifting the goal posts.  They claim its beneficial if the US is able to spread out aggregate demand to the rest of the world. They do have a point up to a limit. For example, in the ‘60s, during the peak of the Cold War, the US strategically exported aggregate demand to non-communist areas of Asia—primarily Japan, Hong Kong, Taiwan, and South Korea—in the form of highly favorable trade arrangements. This led to the creation of strongly committed anti-communist Asian Tigers showcasing the splendors and supposed universality of western capitalism. But this was a calibrated and limited gift of aggregate demand that served geopolitical goals. It balanced the malignant wage impact on US worker salaries with the more benign importation of cheaper consumer goods. Post-Cold War globalization has toppled this equilibrium with a flood of cheap imports combined with the destruction US worker wage growth.
       One way that inflation can arise is if aggregate demand rises faster than the productive capability of an economy. But with the much of the productive capacity of the globe ready and willing to serve US aggregate demand, there is next to no possibility that rising US aggregate demand could lead to inflation. But any increase in aggregate demand does exacerbate the current climate crisis.
       The reason the US does not have full employment is not because the plutocratic class are unaware of the magic of MMT. The US does not have full employment because that would mean the wealthy are losing the class war. Unlike the Swedish model, there is no alliance in the US between the productive classes. Class struggle in the US features all classes constantly at each other's throats. You may see some temporary alliances, but for the most part the Plutocrats are the dominant class and are able to impose their will on the others. But with no peace treaty, the bourgeoisie are skeptical of full employment as well—remember, they want their plumber's services as cheap as possible while keeping the cost of their own services high.
       Full employment, which really means worker scarcity, should indeed be the overarching strategic goal of any political movement that labels itself left. And so MMT on the right track economically and politically in promoting full employment. As we saw in the Swedish example, worker scarcity leads inevitably to worker power, which leads to higher worker salaries, which means lower profits for the wealthier classes. To a limit this means a more just society with a favorable distribution of wealth and plenty of resources for social programs. In short, worker scarcity creates a virtuous circle for the workers but a potentially vicious circle for the wealthy. 
       One problem with worker scarcity is that it could lead to "inflation." This leads to a deeper question as to what is the optimal level of inflation for a society? Plutocrats will want it low, 1-2%. Workers do best with it at around 6-7%. This was the level of inflation in Golden Age Sweden. The bourgeoisie prefer it at 3-4%. This important question is almost never discussed anymore. The definition of "inflation" has by default been set at the level the plutocratic class want. Often inflation is used as an excuse to tamp down worker salaries. A more just principle for limiting inflation would be to relate salaries to rises in productivity. In the US, productivity has risen for years, but salaries have remained flat. As an upper limit most agree inflation over 10% is problematic.
       The wealthy prefer an abundance of labor. Workers competing against each other for the lowest wages. A reserve labor force is summoned. On constant standby, they are ready to be deployed at the first signs of worker scarcity. In the US during the 19th century, the “huddled masses” in Europe were America’s reserve labor force. As American born workers were displaced by the cheaper newly arrived huddled masses, those displaced natives were mobilized to expand the frontier out west. Indigenous land metastasized into an ever-growing imperial tumor. As a new century arrived, immigration was slowed, the frontier had at last reached its temporary boundary of the Pacific Ocean. America was mutating from an agrarian society into an industrial power and its appetite for labor only grew. The reserve labor force of southern blacks was hastened on a Great Migration to curb northern wages. As immigration almost stopped in the 1920’s, worker scarcity loomed, but the Great Depression arrived to create a massive domestic reserve labor pool, the Okies and other Dust Bowl migrants. By the time WW2 broke out, FDR had gotten most of the white men back to work. A reserve labor force of women transformed into Rosie the Riveters, as waves of blacks migrated westward. After the war, women were sent back to the kitchen and blacks were consigned to urban ghettos. In the ‘60s, as the labor market tightened and as the specter of worker scarcity loomed, women were again deployed as a permanent cheap labor force. This exhausted sources of domestic reserve labor and so in a combined Cold War effort to universalize the American Way to all races, Third World huddled masses became America’s new reserve labor force and Hispanics largely replaced blacks as agricultural and domestic labor. Fast forward and today, as a result of the recent pandemic lockdowns, the US is gathering potentially the mother of all reserve labor pools.
       The way many MMT thinkers accommodate the need for a permanent reserve labor force is to explicitly create one through a job guarantee (JG) program. This would be a reserve labor armyl whose soldiers receive a monthly salary. Employers would always have the right to deploy from this low wage brigade, whose salaries would be tethered to the minimum wage. While admittedly the JG idea is a realistic nod towards the class warfare interests of the wealthy, this remains a very controversial proposal and is not per se fundamental to MMT thought. MMT's JG is different from Andrew Yang's Universal Basic Income, which would apply to all Americans and is not necessarily an attempt to create a reserve labor pool. The JG is designed as a tool to tamp down the inflation.
       But what about this constraint of inflation? If the Bond Market’s authority is not respected, will people need wheelbarrows to carry their money down to the corner store to buy a six-pack, just like during the Weimar Republic? How similar were those historic conditions in Germany to the current problems facing the US? What follows is an explanation, in some detail, of how Weimar’s hyper-inflation occurred.

Wheelbarrow Money -- Hyperinflation during the Weimar Republic 1914-1923

The roots of the Weimar inflation lay in German WW1 financing: war was a speculative endeavor back then. As bitterly as Germans complained about these reparations, had they won the war they would have imposed similarly harsh reparations on Britain and France. At the outbreak of war, the German did not foresee its length or unhappy outcome. They were looking forward to a reparation bounty at the expense of the Entente powers.
       The German Empire emerged from the primordial nation-state soup of multiple principalities which merged with Prussia in 1873. Their currency was the Goldmark until the outbreak of WW1 in 1914. The Goldmark, as its name implies, was linked to a gold standard. Gold gives a currency strength and so if we return to the hot air balloon analogy, the Goldmark could be considered a super-currency and easily able to resist inflation. At the outbreak of the war, to facilitate war financing, the German Empire functionally abandoned the gold standard and switched to a currency called the Papiermark. This was a comparatively weak currency in the age of the gold standard and so gave buoyancy to the monetary system. This was desired by German policy makers to facilitate the rapid growth of their armaments industries to take on the industrial powerhouses England and France.
       In those days the tools available for financing war were taxes, inflation, domestic borrowing, and foreign borrowing. Germany was a young federal nation in 1914 and the weak central government did not have to power to impose an income tax. The current process of European integration strongly resembles the processes that created Germany. Think of the weak EU today trying to finance a fiscal response to a pandemic with no ability to tax. The Germans chose to primarily finance their war effort through domestic bond buying—patriotic Germans were sure their side was going to win and there was a nice payday just down the road. German leaders were well aware that their losses would be limited by inflation since these bonds were in Papiermarks, a currency they could easily print in case of defeat.
       During the war the Germans issued a local currency. Interestingly both the MMT and Décroissance movement champion these small, local currencies. Germany tried to maintain the fiction that the Papiermark was tied to gold for foreign consumption. The German Central Bank counted this local currency as gold and allowed them to print even more Papiermarks. This was clearly inflationary,as the Papiermark weakened by these printing episodes, it was blasting hot buoyant air into the balloon and lifting the system higher into the air. When the US prints it has next to no impact on ballast effect of its hyper-currency although the resulting fiscal expansion would lead to US buoyancy as well. The problem for the Germany Empire is that ballast was the enemy of war production and so they jettisoned much of it.
       There was nothing fundamentally wrong with the ad hoc way the Germans financed their war--France and Britain did similar things--but not quite to the extent the Germans did. While inflation was always going to rise during a war, catastrophic hyperinflation in Germany was not yet inevitable. Germans lost the war and the Entente Powers imposed a huge reparations bill. This fell on center-left Weimar Republic, which took power after the failed communist November Revolution of 1918-19. Not for the first time in history would a center-left government be deployed to clean up a fiscal mess. naturally, the reparations specified that the debt was to be paid back in Goldmarks, their former super-currency that was linked to gold. The German people had their war bonds paid back in soon to be worthless Papiermarks. The profits of war normally go to the rich, the costs of war are always socialized to the masses.
The reparation bill meant the Germans now had a debt in a foreign currency (gold). Determined to deny this reality, Germany stubbornly crashed through all boundaries and increased the printing of Papiermarks. Chimerically printing gold, for a short while they managed to trade these condemned notes to foreigners for hard currency convertible to Goldmarks. Exuberant monetary buoyancy with no limiting ballast skyrocketed into Weimar into hyperinflation. Germany could pay no more. The allies occupied the Rhineland, the industrial heartland of Germany, but this attempt to grab real assets ultimately failed.
       The hyperinflation peaked in summer 1923 with the largest denomination being a 100 trillion mark bill. The Rentenmark was introduces in late 1923 with twelves zeros being cut from prices and the German Central Bank managed to keep its value stable. In 1924 it was replaced by the Reichsmark which continued as Germany’s currency through World War 2. Adopted during Allied occupation, the Deutschmark was Germany’s currency from 1948 until 2002, replaced by the Euro.   
       There are no parallels between Weimar and the situation the US finds themselves in today. The gold standard was jettisoned by Nixon in 1971 after several European nations went on a gold bank run against the US dollar – just another example of Republicans rejecting in the real world the hard money, economic thrifty economic orthodoxy they love to cover themselves with in the rhetorical world. Gold was functionally replaced by the dollar. During a pandemic, the US is desperate for buoyancy, just as the German Empire was. But the hyper-currency status of the dollar acts as a power ballast keeping the US hot air balloon under control even under the most profligate printing sessions in monetary history.

Climate Change


From the point of view of the earth, humans are damaging parasites—not unlike how an outbreak of lice spreads over a human head. The head’s capacity to tolerate lice cannot be increased, there is only so much life blood to suck, while the population and appetites of the lice resist boundaries. But not all lice are created equal and in the earth’s case around 20% of the lice are much plumper and more gluttonous than the other 80%, who are quite lean. These plump few, mostly located in the wealthy industrialized countries, suck much more of the globe’s life blood than the lean lice do. On the national scale of each louse nation, a similar relative ratio exists between plump and lean lice. Are these parasitic lice aware that, like the farmers in Seven Samurai, in the end the earth will win?

***

According to its advocates, Infinite growth on a planet with finite capacities augers the inevitability of décroissance. The choice humankind has is between a serene well-managed voluntary décroissance or a panicked, chaotic and haphazard one. An analogy can be made to military withdrawal. A tactical withdrawal occurs when an army realizes they have advanced too far into enemy territory, that their current situation is untenable, they recognize they surpassed the limits of their capabilities and take their own initiative to organize an orderly retreat back to a defensible (sustainable) position. There is no panic, they maintain contact with the enemy but gradually move back towards safety. When an army refuses to act on the repeated warning signs of dangerous overextension, a rout ensues. Generals refusing to face reality and will promise miraculous silver bullets or even heavenly interventions to save the situation. The rout begins when these miracle fails to materialize, or God has other priorities, and the enemy forces the generals’ hand. Suddenly the retreating soldiers are falling over themselves rushing chaotically back to an ever-elusive safe zone where the more foresighted armies are already lounging in comfort. Large portions of a routed army may be annihilated during a disorganized retreat.
       How did we get to this untenable system of infinite growth? Traditionally societies lived in a sustainable harmony with their environment. Cicero, in Cato Maior De Senectute, wonders why elderly farmers work so hard on tasks they surely know they will never profit from. He quotes Cato, “He plants the trees to serve another age”. Cicero provides the following reason.
      
And if you ask a farmer, however old, for whom he is planting, he will unhesitatingly reply, "For the immortal gods, who have willed not only that I should receive these blessings from my ancestors, but also that I should hand them on to posterity.

Growth was not a priority in traditional society. Generational sustainability requires a caretaker attitude towards the earth’s riches. There was no desire to hand more to their progeny than the received from their ancestors. Stability remained the rule until the Industrial Revolution greatly increased man’s ability to manufacture goods on a large scale. But the lack of portable energy thwarted progress. The exploitation of fossil fuels began in the mid-19th century and cheap and mobile energy broke the final barrier to rapid economic growth. An American Dream evolved that mythologized an ideology of limitless growth, social mobility, and consumerism. But two restraints are increasingly disturbing the dreamers’ still blissful sleep.
       Pollution created as collateral damage from relentless economic growth represents the first restraint. The urgent threat is carbon dioxide accumulating under the domed boundary created by the earth’s atmosphere. In the 150,00O years before the Industrial Revolution, atmospheric CO² levels remained roughly the same at 270 parts per million (ppm). In 1860, given buoyancy by industrial progress, these levels started to gently rise. As giant armies clashed on the steppes on Europe, the mid-20th century saw this increase sharpened. During the Cuban Missile Crisis it was 313ppm. While the Iranian Revolution ignited below, above the level reached 335ppm. During Operation Iraqi freedom it was 375 ppm, today in 2020 it is 416. The earth’s capacity to reabsorb CO² is limited to oceans, soils, and forests. Economic growth is leading to the global destruction of forests, a primary sink for wayward carbon dioxide to return to earth to. Before the industrial revolution, the earth had 5.9 billion hectares (ha) of forest. Today it is down to 4 billion ha with 7 million ha lost every year. So as carbon emissions grow ever higher, the earth’s capacity to reabsorb this wayward carbon decreases every year.
       There is a rigorous correlation between the amount of carbon dioxide in the atmosphere and rising temperatures. Concentrated amounts of carbon dioxide lead to a greenhouse effect, trapping solar energy within the atmosphere by hindering its freedom to escape back towards the great void of space. As temperatures rise, the polar ice caps melt, raising sea levels and threatening to divert critical ocean currents. The Gulf Stream pushes warm southernly air currents over Europe, if this were to change large areas of Europe would have a Siberian climate. Rising temperatures, while aiding farmers in some traditionally cooler climates, overall diminish agricultural output on a global scale. There is a cumulative effect, melting icecaps reflect less solar energy back to the atmosphere. The loss of agricultural lands to drought and desiccation induces deforestation. The earth’s lowered carbon absorption capacity leads to higher temperatures. Forest fires become more prevalent further limiting the earths capacity for carbon absorption. And yet the earth’s population and economic growth continue to climb higher, stubbornly emulating the increasing levels of carbon dioxide in the earth’s atmosphere instead of taking a cue from the diminishing carbon sinks.
       Global economic growth is anchored to an eroding foundation of energy supply.
There is much uncertainty as to what this amount is, and when it will be exhausted. Projections on future prices by the barrel are notoriously unreliable. Fossil fuels are the bedrock from which economic growth soars upwards. Since the Industrial Revolution, humans have consumed between 100-135 billion metric tons of oil, and in doing so releasing carbon dioxide into the atmosphere. Estimates vary as to how much oil remains in the earth. A consensus is growing of roughly a 50 and 75 year supply depending on growth assumptions and types of oil reserves considered. Globally, 80% of energy consumed is fossil fuel based, 10% biomass, 5% nuclear, and 5% renewable (solar, wind, hydro, geothermal). Global economic growth is anchored to an eroding foundation of energy supply.

       The US is the largest consumer of oil, followed by Europe and China. In offshoring industry, the US and Europe have transferred some of their oil consumption to China. The energy reauired to produce and transport commodities consumed in the West are now place in China’s ledger. If consumption drops in the US and Europe, oil consumption should drop in China unless China stimulates their domestic consumption to mitigate the loss of foreign aggregate demand.
       Renewable fuels include biomass, hydroelectric, wind, solar, and geothermal. Biomass requires fossil fuels for its production. Large hydroelectric projects are powerful and efficient providers of energy but can cause environmental damage and the displacement of local populations. Wind is a promising energy source but usually only functions 25% of the time. Solar energy, at least conceptually, comes the closest to an infinite source of energy, at least from the perspective of the relatively tiny earth. But at present solar energy must pass through our atmosphere which is increasingly being filled with carbon dioxide and will potentially hinder efficiencies. Manufacturing solar panels involves the use of caustic chemicals and creates greenhouse gasses. Geothermal is also a promising energy source. The amount of thermal energy stored in the earth, from the human point of view, again approaches an infinite energy source. Up until now its exploitation is largely limited to areas near tectonic plate boundaries such as in Iceland. Cracking through the earth’s mantle could have explosive downsides but these are primarily technological questions.

       AOC’s Green New Deal (GND) contains many worthy proposals to support the development of renewable sources of energy, along with a useful expansion of social programs. But in its acquiescence to continued economic growth, the GND falls short of a viable solution in a similar manner that the original New Deal fell short of Folkhemmet, or to Obama Care falling short of Medicare-for-All. Renewable energy sources may indeed in the future turn out to be the silver bullet required to save the concept of perpetual economic growth. Funding should be generously allocated for continued research. This is a primary goal of the Green New Deal and it is certainly worth the effort. But what if technological breakthroughs do not materialize. If no solutions are found, the decision to maintain perpetual growth will turn out to be mankind’s Army Detachment Steiner.
       Previously an obscure reference that only military history buffs would understand. Army Detachment Steiner became part of popular culture in the past few years though the viral videos featuring Hitler in his bunker. These parodies depicted the moment the Führer realized that Army Detachment Steiner was totally insufficient to stop the Soviet invasion and that suicide is now his only option.
       Army Detachment Steiner consisted of a small ragtag group of soldier assigned to SS-Obergruppenführer Felix Steiner and given the mission to save Germany during the Battle of Berlin by stopping the implacable Red Army lava flow that erupted from the cauldron of Stalingrad. Hitler inflated Steiner’s very limited military capacity by labelling battalion into an army detachment. This is not dissimilar to the magical thinking required to imagine renewable energy sources will one day have the capacity to fuel implacable economic growth. In the end Steiner refused to attack the advancing Soviets. The moment of Hitler’s fateful meeting with reality is at the center of these parody videos.  But by this point is was already years too late to execute an orderly withdrawal.  Complete annihilation was the only outcome possible.
       We are not at the Battle of Berlin stage of the climate crisis. A stubborn insistence on perpetual growth based on miraculous renewable fuel silver bullets is the best way to get ourselves there.
       Décroissance would be rendered as Degrowth in English, but this sounds clunky and ugly. There are active semantic debates within the décroissance movement about rhetorical strategies and labels. For example Noam Chomsky disapproves of the “degrowth” appellation because of its negative connotations. Aesthetically “degrowth” is a clashing of a Latin prefix on an Anglo-Saxon root. The French word croissance is derived from the Latin crescere, which signifies a coming to life. So décroissance provides the ballast contained in the prefix “de” to the blossoming of life. In France they often try to turn the rhetorical tables by labeling infinite growth as “surcroissance”. Here the prefix “sur” imparts buoyancy. The fundamental argument of the décroissance movement is that given the current climate crisis, ecological ballast is required to gravitate back into harmony with our terrestrial host. MMT on the other hand argues that economic buoyancy will boost us towards a just society.  If this economic buoyancy can be directed towards a secure safety net, towards productive class peace, and away from consumption, then the conditions are set for a socially serene décroissance.
       Décroissance is rooted intellectually in the ideas of sociologist Emile Durkheim, anthropologist Karl Polanyi, and psychoanalyst Erich Fromm. It has been profoundly influenced by several social polemists from the 60’s including sociologist Jacques Ellul, whose best known work, Propaganda, studies the interaction between information and propaganda. Ivan Illich wrote De-School, a polemic against the harmful impacts mass education on children. Militant critic of the society of consumption, Michel Clouscard is the author of the Neofascism and Ideology of Desire. Another source was the anti-development movement in France in the late 60’s and early 70’s that saw the Western impetus to economically “develop” the Third World as simply a continuation of colonialism in a different name.
       The primary advocate of décroissance in France is economist Serge Latouche. Phiosopher Alain de Benoist has also written a book advocating décroissance. The tired binary left/right political spectrum is falling out of favor in France but Latouche could be considered a left populist while de Benoist, a populist from the right. This matches MMT’s wide populist appeal, with AOC supporting it from the left, and Donald Trump implicitly but Marine Le Pen explicitly supporting it from the right. Décroissance has recently caught some traction in the US, clearly influencing the recent Michael Moore movie, “Planet of the Humans.” The décroissance movement often turns its rhetorical guns on the “sustainable development” movement. Claiming that its true goal is to “sustain” multinational profit margins, advocates of décroissance argue there is nothing sustainable about perpetual economic growth. They cynically see the “sustainability” movement as part of a corporate greenwashing public relations campaign.
       In describing a virtuous circle of a serene décroissance, Serge Latouche resorts to a slightly cringy eight R’s formula: Reevaluate, Reconceptualize, Restructure, Redistribute, Relocate, Reduce, Reuse, Recycle. By Relocate, he is referring to a process of regionalization, a preference for the local. As in think globally, act locally. A fundamental strategic goal of décroissance is having citizens strive for political innovation and economic autonomy at the local level. Latouche exhorts communities to launch projects that are rooted in the spirit of place. He suggests taking local control over food distribution, establishing local micro-currencies, in a wider attempt at local autonomy. Eager to opt out as much as possible from the larger society by changing values at the local level, he acknowledges there are limits.
       The problem agrarian utopias always run up against is the threat posed by roaming bandits, as demonstrated in Seven Samurai. There is a dialectic relationship between the power of the state (One) and the political maneuvering room possible on the local level (Other). In theory, the more powerful the One is, the more secure and prosperous the resulting environment will be, and the more freedom the Other can be accorded. But having a powerful and competent One is a rare event. Since it doesn’t often exist, humans have often found it necessary to invent One: an all knowing, all powerful, benevolent One.

Regionalization

Ideas are not enough—an appropriate ecosystem is where they will flourish. But the size and political structure of the US is increasingly creating a sterile political soil sowed with salt, where progress and new ideas are easily thwarted by either side. This current US internal power structure and globally dominant position is like that in China at the end of its Medieval period. A powerful empire at that time, China was just becoming aware of stirrings in the far away land of Europe. A couple centuries later, large swaths of the Celestial Empire were under Europeans control. How could this have happened?
       Starting with Montesquieu, many commentators have pointed out that Europe’s great strength, its rich and fertile soil for innovation, was its political fragmentation: its everchanging labyrinth of frontiers and nodes of power. This becomes clear if we compare China and Europe after the year 1400. China had at this point already developed the printing press, gunpowder and long-distance shipping while Europe was more or less still in the Dark Ages. But because China was a single political unit dominated by an oppressive, despotic, and heavily burdensome elite it never took advantage of these inventions since they were threats to status quo power. Divided Europe, on the other hand, was living in a Darwinian primordial-state stew where disperse elites were competing. It was only because of this decentralization that new ideas, the same that were a threat to the Chinese elite, were seen as seeds of opportunity that could blossom into tools of power in the struggle for European domination. This laboratory-of-power provided a rich ecosystem for new innovations that, when they turn out to be successful, would be adopted by all the others in an effort to keep up. This is how Europe evolved the technical and ideological power that enabled it to dominate the rest of the world in the 19th century. In contrast, the centralized Chinese Empire imploded into the 20th century only to finally collapse upon itself in no small part due to humiliation brought on by Europeans. Starting in the second half of the 20th, under the auspices the Communist Party, a novel ideological version of “One”, China has restarted the process of imperial centralization and the concentration of power. China’s tiny remaining residual areas of fragmentation are creating increasing tension but also give hope as places where better societal seeds can take root.
       Meanwhile in mid-20th century Europe, with the rise of mechanized total war, Europe’s endemic power struggles crossed the threshold of allowing constructive innovation into assuring collective destructive annihilation. In the wake of this catastrophe, a weak form of the One, the EU, was created as a way to diminish this destructive competition and divert it towards more healthy competitive avenues towards progress. But today Europe is staining under the contradictions of centralization towards a weak center and the current pandemic is forcing a rapid return to regionalization. 
       With the current pandemic, we are also seeing stirrings of regionalization in the US, as like-minded groups of states band together to pursue policy. In California there have even been calls for independence. With its huge population and powerful economy there is no doubt California is a viable nation-state. The problem will be the Currency Question. In Scotland's recent bid for independence, they simply ignored the crucial question of whether they would keep the Pound (but with no ability to printing it), adopt the Euro (as we will see again, no printing), or create their own currency which they would be able to print and therefore be fiscally independent.
       Given the power of the US dollar, and the spending opportunities the Treasury Department gives, the best strategy would be to push for as much devolution of power from the Federal level towards the states while stopping short of full independence and thus losing the dollar.
       Human history is a pendulum swinging between imperialistic centralizing forces that result in larger and more powerful universalist political entities. Inevitably these imperial entities compress and concentrate so much mass that similar to the Big Bang, they destabilize and explode the centrifugal particularist forces of nationalism and regionalization. Particularism in its turn reaches an outer boundary. As the decrease in size and power, political units become vulnerable to raiding by roaming bandits or incorporation into stronger neighboring fixed bandits. One of the newly fragmented regions can start acting as a new core, drawing neighbors into its gravitational field by the power of an innovative organizational principle. This yoyo-like process of retraction and expansion gives hope that a world ever deeply addicted to consumption could soon metamorphosize into an ecologically aware society living serenely within the earth’s limits. The other process would be a deep ideological conversion by the One, currently mired in addiction to consumption. Something along the lines of Constantine’s conversion to Christianity.
       Pandemics have historically twice been the trigger of major imperial retrenchments. Launched by the strategic brilliance of Genghis Khan, the Mongol Empire connected China to Europe during the 13th and 14th centuries and represented the first case of Eurasian globalization. Mongol military might—Pax Mongolica--ensured trade routes such as the Silk Way stayed open and safe. These very same routes became the passage ways of disease and pestilence that had previously been sequestered and isolated deep in the eastern Eurasian steppe. The resulting Black Death devasted Europe with a dose of spontaneous décroissance, both demographically and economically. The resulting labor shortages did wonders for peasant salaries and standard of living during the following century.
       From 1870 to 1918 British naval supremacy powered another Globalization episode which featured massive migrations of European populations and pollical power towards a non-European periphery. But this centralizing tendency from multiple nodes of power inevitably crossed each other and clashes ensured. WW1 was a veritable battle of the empires—British, French, German, Austro-Hungarian, Russian, and Ottoman. Vulnerable human tinder, weakened by wartime deprivations, allowed the Spanish Flu to scorch much of the globe. Pax Britannica was ending. Woodrow Wilson’s 14-Points spelt particularist doom to these exhausted empires by unleashing the centrifugal powers of self-determination and nationalism. And not just the many new European nations spawned by the breakup of the Austro-Hunganian and Ottoman empires at the end of WW1. This centrifugal anti-imperialist wave also included Indian independence, the ensuing global anti-colonial movement, culminating finally with the victory of Nelson Mandela’s African National Conference. And in launching this wave, the US became a powerful node of global power. Will the current pandemic impel a similar fate for Pax Americana and its global empire of consumption and infinite economic growth?  Today, the décroissance movement seeks to harness these centrifugal forces to propel the world in the direction of localism. But where will the new node of power arise?

The Bond Market and the Euro

The Eurozone provides a real time petri dish to better understand the intersection of monetary policy and regionalization--to study the interplay between centralizing and centrifugal tendencies. During this pandemic, the echoes of Weimar are impeding Europe from addressing the resulting economic fallout. The balance between centralization and regionalization has suddenly been lost in favor of the smaller political entities. The old continent is teetering precariously towards fragmentation, caused by the weakness of its center.
       For a contextual grounding, following the Second World War, the various European nations moved towards the Folkhem model in creating socially democratic institutions such as universal health care, affordable pre-schools and universities, and pension systems for the elderly. The European social efforts easily surpassed those created by the US’ New Deal. But they never reached Swedish levels because peace between the two productive classes was never an explicit part of these European efforts.
       Towards the end of WW2, the German Question was posed. How to keep Germany from ever doing this again? The Morganthau Plan was one response, it sought to impose a drastic form of punitive décroissance by deindustrializing Germany. According to Goebbels the plan was to turn Germany into a giant potato patch. This inspired many German soldiers to fight on until the bitter end. By 1948, the better angels of noblesse oblige had won the day, and as the nascent global One, the US instituted the Marshall Plan. The reindustrialization of Europe had begun, with MMT-style fiscal stimulus provided by the now global reserve currency, the US dollar. An elderly old continent Europe that had once ruled the world, now lay dead in the ashes of the two world wars. A new Europe was reborn, but only to some extent in the image of their American cousins, one of two new global hegemons.
       The new social programs and Marshall plan were both responses to the rise of Soviet power, the other node of global power. The wealthy classes of both the US and Europe discerned this looming threat on the horizon and took positive actions to deal with it.
       Up until the Second World War the pound sterling had been the global reserve currency. Late in WW2, a conference took place at Bretton Woods, New Hampshire. On the agenda was the architecture of post war monetary system. Two visions of the new world order were debated. America at the time was in a similar position globally as China finds itself today. The US was the world’s great exporter and the as a result, world’s great creditor nation. The US goal was to cement the concept of free trade and at the same time limit their trading partner’s ability to manipulate their currencies. A strong currency is an exporting nation’s greatest burden. Manufacturing as efficiently as possible, driving worker wages as low as possible, but always vulnerable to importing nations’ limits imposed by protective currency depreciations, or worse tariffs. The US main strategic goal at Bretton Woods was to put an end to these restrictive polices and to ensure the free movement of trade. The very same restrictive policies deployed when the US was a burgeoning industrial power in the 19th century. US industry had grown strong behind a protective phalanx of protectionist legislation.
       Two visions of a new world order were presented at Bretton Woods. The US position was a universalist position which would cement the unilateral power of the One. Maynard Keynes presented a more particularist plan, favoring a multilateral approach in favor of the Few. No one at the conference ever presented any plans that sought to protect the interests of the Many.
       In lieu of dollar hegemony, Keynes proposed the Bancor, a supranational currency used for international exchange as a unit of account but not as an actual currency.  The Bancor value would be tied to a basket of currencies and gold. He also proposed an institution to help manage international trade imbalances. Looking back, most economist see the wisdom in Keynes’ proposals. However, the US won the day, an International Monetary Fund, based in Washington DC was established to manage the new global monetary order. The Soviet Union refused to acquiesce to dollar hegemony and a Cold War had begun.
       Due to their postwar industrial strength and sound monetary policies, it only took Germany a few decades to rise to the position of regional financial hegemon in Europe. In those days, each European country featured their own currency. Attempts were constantly being made to stabilize exchange rates between nations. Some currencies were powerful super-currencies, such as the Deutschmark and French Franc. Others were weaker, for example the Greek Drachma and the Italian Lira. Weakness could come as a result of less stringent monetary policies or weak manufacturing bases. Countries like Greece and Italy could protect their domestic industries through increased fiscal spending and/or by devaluing their currencies. European nations sold their debt on the bond market. The interest rates charged varied greatly. Nations with super-currencies got low rates while those with weaker currencies were charged higher rates, which limited their ability to spend fiscally. Thus the discipline of the Bond Market was felt by the weaker currencies.
       If the Greek Drachma depreciated, products manufactured in Germany became more expensive. Bad for German industry, better for Greek industry. As reviously mentioned, currency devaluations could serve as a very imperfect form of protectionism. Manufacturing powerhouse Germany did not appreciate this, so gradually, over the years as its manufacturing base flourished, it adopted the natural ideology of the industrial powerful: free trade.
       Germany faced the same problem that the US did after WW2, and that China faces today. Global manufacturing powerhouses naturally adopt a free trade ideology. With China, “free trade” is a one-way street. Chinese industry is still developing. On the domestic front, similar to 19th century American, China imposed trade boundaries by pursuing protectionist measures against imports. But on the external front, China pursues 20th century American ideas of free trade, trying to convince other nations to open their nations to steady flow of low priced Chinese products. But cheap labor + strong currency = economic ruin for China’s current model. Therefore, China locks its currency at an artificially low value.
       The power and efficiency of German industry meant there was no need to pursue explicit protectionist measures to keep discerning, quality-conscience German consumers from purchasing cheaper Greek products. But Germany did recognize that the growing strength of their currency was becoming a serious problem.
       Germany tried a similar exchange rate strategy to that the US deployed in Bretton Woods. The European Exchange Rate Mechanism (ERM) was established. It was sold as a way for the more monetarily profligate nations to get a stern dose of sober German monetary discipline by basically tying themselves to the sage whims of the German Central Bank. The reason to do so from the German point of view was to keep these less fiscally disciplined countries from devaluing their currencies and thus blocking the flow of superior German goods. But when Germany, always paranoid about inflation, hiked their interest rates in the wake of German reunification, all hell broke loose and eventually parasitic plutocratic speculators like George Soros gravely damaged the ERM on Black Wednesday, and in doing so extracted a fortune from Europe.
       The need to keep German goods flowing unimpeded by potential currency manipulations did not go away and so eventually the Euro was devised. The beauty of the Euro from the German point of view is that by joining their strong currency to weaker currencies such as the Drachma or Lira, the overall strength of the new Euro would less powerful than the D-mark. This would help them in exporting to the rest of the world in addition to locking in European exchange rates once and for all.
       While Germany benefited from the bouyancy created by the amalgamation of their strong D-mark with the currencies of economically weaker nations, it refused to give these nations any sort of control over the printing presses of this new currency. Yes, perhaps Germany could allow a form of Potemkin control—create a fictional European Central Bank, for example—but real monetary power must always stay in German hands. Eurozone nations became the equivalent of US states, they were required to relegate their printing presses to museums as the price of entrance into the Eurozone. The only way they could spend money was through taxes, or by borrowing on the bond market. Politically, given certain historical unpleasantries, Germany did not want to serve the public role of monetary disciplinarian in Europe. By forcing European nations to raise money on the real bond markets, Germany hoped the dreaded Bond Market would act to temper the more proliferate monetary tendencies of some European nations.
       The Euro system explicitly increased the risk of default: as Trump and MMT advocates state, a monetarily sovereign nation cannot be forced to default on debts issued in their own currency because they can print this currency. But take away the printing presses and now European nations could indeed default. But the ever-wise Bond Market saw through this ruse. The Bond Market assumed that Germany, due to certain historical unpleasantries, would be forced to step in to bail out a European nation on the brink of default and so the Bond Market encouraged the real bond market to price their interest rates accordingly. Nations like Greece, who the Bond Market had previously treated as if they were Greeks, charging them high interest rates (over 10% at times) for loans, suddenly found themselves, in a blink of the eye, with nice low German interest rates (less than 2%). This was basically free money to the Greeks—and they didn’t even have to print it! Productivity in the Greek economy had not improved. With their newfound wealth it was quite the opposite. Suddenly the profligate Greeks and other economically weaker European nations were able to live a plump German lifestyle. Germany did not mind too much; German manufactured goods were increasingly flowing into the suddenly plump Greece and to other previously marginal European nations.
       This German–Greek dynamic closely mirrors Chimerica, the integration of the Chinese and American economies. Americans performs conspicuous gluttony while diligent worker bee China supply them with a never-ending supply of goods to consume. All the while the planet suffers. Carbon is launched into the sky from the dirty factories in China, where environmental protections are frowned upon. Fossil fuels burning day and night to manufacture commodities and in transporting them to their final end consumer on the other side of an exasperated globe.
       One difference is that America anyone else’s central banker to achieve something close to free money; Americans are proud possessors of the global reserve currency’s printing presses which fuel their plump American lifestyles. But to China even this was not enough. In the early 2000’s, China started recycling large amounts of money into the US real estate markets, helping trigger a speculative bubble that for a short time had Americans living even plumper as they took out second mortgages on their now hugely inflated home equity. All this extra disposable income was now available to buy even more Chinese products. Carbon dioxide accumulating ever denser under what is supposed to be a protective atmospheric dome.
       Perhaps there were a few wise Germans who realized these Eurozone dynamics were unsustainable, but their voices would have been silenced by the manufacturers getting rich and the European integration enthusiasts preaching a thousand-year EU Reich of perpetual peace and free trade. But in the end the Bond Market failed its duty to discipline the Greeks and German Chancellor Angela Merkel was forced to step in. Interestingly, in an echo of the Democrat’s role in the US, a far-left Greek Government was brought in to impose Bond Market austerity on a monetarily rambunctious Greek population after years of a center-right government presiding a beggar’s banquet. Austerity is a malignant form of décroissance. Austerity is applied in a rough ratio of 80% to the working classes with only 20% to the bourgeoisie. This type of décroissance must be explicitly avoided in attempting to ameliorate the infinite economic growth paradigm. The climate crisis cannot be solved on the backs of the working classes as EU leaders are attempting to do with the debt crisis in Greece.
       There is historic precedent for this paradoxical reversal of roles—for the supposed tax-and-spend Democrats being the ones to impose economic sobriety while the supposedly austere Republicans start throwing money around as soon as they get their hands onto power. Otto von Bismarck always held that parties should take the helm to carry out policies which they opposed:

If reactionary measures are to be carried, the Liberal party takes the rudder, from the correct assumption that it will not overstep the necessary limits; if liberal measures are to be carried, the Conservative party takes office in its turn from the same consideration.

This is the “only Nixon could go to China” idea, which recently, somewhat optimistically if not outright delusionary, this has become “Only Trump could do Universal Health.”
       During the Greek debt crisis, other weaker European economies started to groan under the weight of a suddenly reinvigorated Bond Market. The real bond market started increasing the interest rates charged on Italian bonds. Instead of paying under 2%, suddenly Italy was only able to sell its bonds for over 6% with no stop in sight for this vertiginous trajectory. The Bond Market suddenly stopped being an imaginary plutocratic constraint and instead was seriously threatening to destabilize the entire Italian banking system. During the Greek crisis, the Italian government refused to accept any similar austerity linked bailouts. Italian leaders understood well that if their banking system collapsed, so would Germany’s.
       A crisis ensued. According to MMT advocates, the solution was to de facto print money by having the ECB buy an unlimited quantity of Italian bonds. And after some hesitation, no doubt of German origin, this is exactly what the ECB did. MMT also pushed for mutualizing European debt through the issuing of Eurobonds. Germany blocked this measure. The Euro is a supercurrency and the only thing stopping beneficial printing of Euros was German paranoia over Weimar.
       And then there was the pandemic.

Helicopter Money -- Pandemic Monetary Policy

Pandemic monetary policy is pure MMT: in countries with hyper or super-currencies, central banks rent heavy duty helicopters and start raining money upon the startled heads of their citizens! This is an extreme form of fiscal stimulus; conceived to ward off depressions.  More modest forms of stimulus are applied during recessions. The helicopter money concept started as a tongue-in-cheek parable by Milton Friedman but over the years is an often discussed proposal in theoretical discussions and is now becoming a reality in the pandemic stricken US. This being America, those heavy-duty helicopters are showering liquidity upon sticky-fingered bankers on Wall Street, but a few lesser helicopters are sprinkling cash on lockdown Americans, exiled in their homes on main street.
       In nations with weak currencies such as Turkey, helicopter money is not an option due to its potential negative impact on fragile international exchange rates. So instead of showering his citizens with Lira, President Erdoğan has opened a bank account and is imploring the Turkish people to send him money! 
       The Germans look on this American monetary spectacle with skepticism. The EU has not had a great pandemic given the centrifugal forces towards borders, barriers and regionalization. Germany sees this chaos as an opportunity to reassert control over the ECB. Germany is aware there will be Europeans calling for ECB helicopters. The specter of Weimar still looms large in the minds of Germans. So, a constitutional court in Germany has committed a case of lèse-majesté by ordering a European court to review a two year old decision that rubber stamped the ECB’s bond buying policies. Germany implicitly threatened to not participate in future ECB bond purchases. This is the equivalent of the US threatening to not participate in NATO activities.  Cynics saw this as Germany creating a strong bargaining position over the question of helicopter money in Europe.
       In late May, EU president Ursula von der Leyen announced a 750 million Euro pandemic recovery fund that would be borrowed by the EU Commission from bond markets, backed mutually by the 27 member nations of the EU. This is historic in being the first time the members of the EU have mutualized in any fashion their debts. Some were calling this a Hamilton moment, recalling in 1790 when Alexander Hamilton convinced the US congress to create a federal debt, transforming what had been a confederacy of states into a unified federal state. What is interesting are the various options given as to how these debts will be repaid. Either the member states will have their contributions increased, or the EU will reduce their payments back.  Far more likely is that the EU will be given the authority to collect taxes to pay these bonds back starting in 2028. The EU current impotence to raise taxes recalls that of the weak federal German state at the start of WW1.
       This was a good compromise for Germany as it relieves pressure for more drastic ECB measures and it potentially allows them more control as they will no doubt want to add conditions to the member states who receive these funds. The method of financing this relatively modest fund is conservative, a vanilla loan from the bond market. This satisfies the more fiscally frugal members of the bloc. The idea of mutualizing EU debt pleases the partisans of further EU union. And crucially for Germany, ECB helicopters stayed glued to the ground.
       From the point of view of décroissance, this tepid European fiscal response to the economic fallout of the pandemic does have positive aspects. Given Europe’s social protections, the economic pain caused by the pandemic could be less than that felt in the US. Europe, with its anemic growth rates, in a large part due to the transfer of its industry to China, has been flirting with décroissance for the past two decades. The problem is the fallout from the pandemic and the weak growth rates push the burden unfairly on the working classes. The bourgeoisie as a class have benefited from globalization and are far more likely to be able to telework than a bricklayer during the pandemic.

A Green Folkhem

Ten thousand years ago, emerging from under his forest’s tenebrific canopy, newly civilized man, lying on his back to rest from the labor of his freshly ploughed fields, was at last face to face with his new rival; the startling immensity of the open sky. Tempests, droughts, and worst of all, lightning replaced the beasts and shadows of his former life amongst the trees. With the nature of his relationship to this pale blue antagonist hanging in the balance, man made a fateful choice. Whether directly or through appointed deities, with all the audacity he could muster, our ancestor declared himself sovereign over the forces of nature.
       How terrifying the annual ritual of the winter solstice must have been to our distant forbearers. Ever shortening days, the seemingly imminent victory of darkness -- the more mathematically inclined of them may have even calculated to the day the eventual total disappearance of the sun and mankind’s descent into perpetual night. The tales of their heroic efforts to stave off disaster are lost to us forever. 
       In taking on the climate change challenge one sees what is most noble in man. Standing before a realm, he declares sovereignty; faced with a threat, he takes the initiative. Laugh as we may at our progeny for their strange rituals which succeeded in warding off the disappearance of the sun so many centuries ago. It is man’s will to rise to the challenges posed by nature, it is the beast’s fate to not.

***
The condition sine qua non in the US for comprehensively addressing climate change is a peace treaty between the two productive classes, which will take concrete form in a social pact. In the US this can be financed in part from transfers from the bourgeoisie towards the working classes but also by extracting overvaluation of the hegemonic dollar through the application of MMT. Call it a Green Folkhem. Think of this dollar overvalue as a sort of oil reservoir and MMT policies as oil wells which bore down to this pool of wealth and pump it back to the surface for exploitation by the productive classes. A veritable dollar hegemony dividend. What is vital to understand is that the overvaluation accumulated due to dollar hegemony is NOT a renewable resource and once it is all pumped to the surface, the US dollar will lose its reserve currency privileges. It will decline from being a hyper-currency to a super-currency. This precious fiscal resource should not be wasted on mindless consumption but must be directed towards building the Green Folkhem. To be sure the Dollar will still be a powerful currency, the rules of MMT would still apply, only less so than they do with a global reserve currency.
       Some of key social features of a Green Folkhem would be a secure universal health care system. Andrew Yang’s Universal Basic Income would also be a vital component. This assures people of a hard floor to their standard of living as well as promoting internal migration in the US away from expensive nodes of urban affluence and towards less expensive rural-based towns in the US. Other important programs would be affordable access to higher education and job training programs.
       The strategic goal of this Green Folkhem is a socially protected vessel ready to enter a sustained period of controlled décroissance. A target of –3% annual GDP contraction would be set. As a society grows wealthy, its birth rates naturally decline to below replacement, creating population décroissance. It is vital that this natural process be allowed to occur and not be vetoed by immigration policies. Americans have an average Ecological Footprint of 8.3 and Guatemalans 1.8. Décroissance would encourage migration from the plump countries towards the lean.
       The producer class alliance built in stone by the Green Folkhem empowers a war of attrition against the parasitical classes. The plutocratic hordes of wealth can now be clearly seen for what they are, stashes of precious standard of living, created by the productive classes, but hijacked and held hostage in plutocratic vaults. These fortunes must be liberated in the name of décroissance. On the margins of society, the criminality and social friction caused by the Lumpenproletariat is also diverting precious resources away from productive class standard of living and must be minimized.
       Economic efficiency would veer sharply away from the goal of maximizing shareholder profit, and instead ensure the maximum extraction of positive standard of living from each dollar of GDP. An ironclad link must be established between production and consumption. The plump nations have the highest capacity for relatively clean manufacturing and so it is vital that production return to the fields of consumption. Autarky is impossible and ideal ratio would be, as always, 80% domestic production to 20% imports.
       The green reindustrialization of the US must be protectionist—of the climate. Constructed in an incremental fashion, it would take a certain time. Chimerica was likewise not built in a day. Green tariffs, gently climbing each year would give the impetus. Encouraging a race to the top, these tariffs would be calibrated to reward producer nations with stronger environmental policies. Currently globalization encourages an environmental race to the bottom by boasting multinational profits for those located in producer nations with the worst environmental policies. With the advent of automation, the urge to arbitrage on labor differences between the first and third world diminishes. One variable of control in a regime of décroissance would be to adjust workweek hours. Necessarily commodity prices will rise and in response consumption will fall. This is the purpose of décroissance. Capitalism functioned swimmingly in Sweden’s restrictive Folkhem, there is no reason to think, given stern government guidance and financial support in limited cases, that capitalism will do any worse in a Green Folkhem. Just as children thrive once boundaries are set, so does Capitalism.
       Agricultural policy in a Green Folkhem would need to drastically evolve. There is something deeply repugnant about a society that gorges itself with food but mostly refuses to have anything to do with growing it. One mitigating factor is admittedly the incongruity between dreams of healthful bucolic paradise and the pesticide ridden poisonous reality of chemically strewn fields. Local organic agriculture must replace hazardous Big Food in a Green Folkhem.
       In the late 60’s, Alice Waters visited France with dreams of small local farmers producing the high quality food France is famous for. She was disappointed to find out that while these do exist in isolated corners, France’s agriculture is just as industrialized as the US’ was. She returned to the Bay Area and using the gourmet aggregate demand created by her famous restaurant, she launched the Gourmet Industrial Complex, an ironic name for the chain of high quality, small producers who supplied her restaurant with edible matériel of excellent quality.  The producers were often of working class origins, the consumers were exclusively bourgeois. But the local food scene has been expanding across the United States, joined by micro-breweries in examples of small scale, high quality production. Americans in albeit limited numbers are willing to participate in this type of agriculture.
       In Flanders, greenhouses provide high quality produce all year round. Tomatoes in a Brussels’ market in February can be very close to the quality of those imported from Italy in August. There are limits though and it will be some time before Flanders is producing high quality olive oil, coffee beans, or bananas and so in a Green Folkhem there will always be agricultural trade between nations in different climatic regions.
       The recent pandemic has once again proven the ancient maxim that cheap labor will block technological progress. US meatpacking plants rely on abundant cheap and docile labor.  The owners of these plants have no interest in investing in technology to make these plants, cleaner, safer, and more efficient.  Conditions are pushed right to the limit of being unsafe under normal conditions.  During a pandemic these plants collapsed as workers perished and the virus flourished.  Contrast meatpacking in Denmark, where labor is well paid.  Their plants are highly automated.  Workers have a clean and safe environment to do their jobs in.  There was no disruption in the meatpacking industry in Denmark during the pandemic.
       It is vitally important that the citizens of a Green Folkhem have an ever-blossoming relationship with agriculture. A year of agricultural service could help resolve labor shortages that appear in the current situation. Home gardens and schools growing their own lunch crops with labor provided by students are some of the many ways to achieve this.
       A Green Folkhem experiencing décroissance will have little need to build new buildings, which despite green building rhetoric, even in the best cases, cause considerable environmental damage. Architects would instead concentrate on renovating existing building stock. A decreasing population means the cost of housing should generally decline. The current phenomenon is of urban nodes acting as magnets, densely concentrating wealth and housing demand through their near monopoly on the most sought-after jobs. This will be alleviated by the UBI and its tendency to disperse people, liberated from having a fixed place of employment, towards areas with lower standards of living.
       Europe with its anemic growth rates, and only slightly tattered welfare states, is not all that far from being a functional Green Folkhem. This fact helps substantiate the feasibility of the concept. Most recent growth in Europe can be tied to population increases due to immigration and correspondingly most social problems are linked to the same source. The parasitic power of Europe’s plutocratic and lumpenprolatariat classes is weaker than in the US. There remain two main tasks for Europe to move towards a Green Folkhem. First is a truce in the admittedly low-grade producer class war. The bourgeoisie must make a financial gesture to ensure the climate crisis is not resolved on the backs of the working class. Second, Europe must relocate manufacturing back to the old continent. Chineurope is less integrated than Chimerica is. The process of once again intertwining production and consumption in Europe should be less complicated than in the US. Europe’s indigenous population has for a number of decades reproduced at below replacement levels. If this natural population reduction of plump lice is allowed to occur, global décroissance remains viable even with the predicted demographic expansion of lean lice in other areas of the globe.
       China is facing a grave international crisis as a result of the pandemic. The global economic system they have ridden to a point where they could imagine world domination in the future is now collapsing before their eyes. The benefit of globalization to US elites was its ability to drive down wages—it gave them access to an exquisite global reserve labor pool. But the coronavirus and its associated lockdowns is pushing the US into deep wage deflation. With a soon to be 50 million unemployed Americans, Wall Street elites no longer need Chinese wage slaves to increase their profit margins. But worse for the Chinese, the lockdowns are inducing demand destruction: the US consumer will very soon not be able to perform her duty as the world’s glutton of last resort, leaving supertankers full of shiny Chinese trinkets rotting on docks in China.
       With the US facing an extreme bout of pandemic induced décroissance—great for the climate terrible for China’s global ambitions—the only card the Chinese have left to play is to pump up consumption in their domestic economy, resisting décroissance with croissance à outrance? Lean lice about to get a bit plumper? This process, if combined with increased social programs, a Sino Folkhem, will be a healthy development. China must also collocate consumption to their production and consumption. The huge foreign currency reserves China has built up as a result of globalization can be reinvested domestically in social programs and in support of increased domestic consumption. China will necessarily go through décroissance as a result of industry moving back to the US and Europe and so this can be compensated for, but not fully, by increased domestic consumption.

***
On the global and ideological levels, there must also be a major ideological shift in mindset:

The flow of the two last millennium’s history is that of a slow rise of uniformity, which starts with Monotheism. The affirmation of one God necessitates in effect the unity of the human family, no longer just as a biological species, but from the spiritual point of view. To say there is only one God, is to at the same the same time say that humans form but one sole family and to disqualify all the other gods. This amounts to establishing a system of truth where otherness becomes a source of falsehood and error. “One was the characteristic of first Judeo-Christian and then Modern culture”, wrote Michael Maffesoli. One excludes the Other, which threatens its exclusivity. The Other can therefore be in good conscience eliminated. In the course of Western history, the obsession with One never ceased to function as the guiding principle. Driver of intolerance, exclusion, separation, and then atomization, it has fueled all inquisitions, and justified all attempts to eliminate otherness.
Alain de Benoist – L’idéologie de genre

The current viral strain of One jumped ideological species in Ford’s auto factories. It lay semi-dormant during the Great Depression and Second World War. As American power rose in the aftermath of WW2, it slowly spread to the “free” world with the help of the then altruistic and far-sighted Marshall Plan and the Asian Tigers policies. At that point no one imagined that dangers of the contagion of hyper-consumption. The Fall of the Berlin Wall released One from its Cold War quarantine and it was free to infect most of the globe. The End of History was prematurely declared.
       Globalization, at its handmaiden Imperialism, are the delivery mechanisms fueling the current culture of hyper-consumption. The entire globe is encouraged to converge towards the One, this being the American Dream of infinite consumption. Décroissance necessarily entails a gradual dismantling of globalization, the admittedly highly efficient regime of cheap production which maximizes both consumption and the destruction of the earth. Part and parcel of this will be décroissance in the US’ Imperial capacity. Reducing military spending is a vital component of décroissance. As global long-distance trade declines, the imperial burden of patrolling the high seas loses pertinence and in turn lessens global tensions. The schizophrenic policy of Invade the World/Invite the World, where US armies invade or regime change foreign lands and then within the midst of the ensuing chaos, generously offer to share the American Dream with a few survivors, must end.
       One possible objection to the Green Folkhem is that in parts it is just a clever “Green” restatement of Trumpism. There is truth in this statement. But taking this idea further, the Green Folkhem is much more accurately described as a restatement of 2015 Sanderism. Bernie was strongly anti-free trade and anit-cheap labor immigration. But contrary to Trump, Sanders consistently pushed for huge increases in social programs. Such an audacious plan will only be implemented with widespread approval so the fact that Trump supporters can see benefits within the Green Folkhem is a feature and not a bug.
       Décroissance starts with the plump lice but the lean lice must adapt to climate realities as well. French economist Serge Latouche has written passionately about the third world’s need to reject the Western concept of “development” and to instead look inward towards their own cultural and economic traditions. He writes:

The global economy, with the help of global institutions emanating from Bretton Woods, has evicted millions and millions of people from the countryside. It has destroyed their ancestral way of life, erased their means of subsistence, and crammed them into third world slums and suburban ghettos. These are the “castaways of development”. These left behinds are condemned by the dominant paradigm to disappear, they have no choice than to organize themselves around an-other logic. They must innovate, and many of them will invent an-other system, an-other way of life.
Serge Latouche, Survivre au développement

Latouche goes on the label this embracing of the other, a Vernacular Society. This rally cry to the Third world holds much wisdom for the First as well. Humans must move being merch-hungry marionettes in the pursuit of One: the infinite expansion of production and consumption. Embracing the other is the first step towards finding a mode of living in harmony with the natural limits of our terrestrial host.

The Grand Inquisitor – Politics of a Green Folkhem


Is liberal democracy the political vessel best able to deliver a Green Folkhem?  Many liberal democracies have not cloaked themselves in glory during the ongoing pandemic.  Authoritarian systems like those in China eventual rose to the challenge but only after they attempted to use their state power to crush the virus by denying its existence.
Benevolent Authoritarian.
The problem is locking in the benevolent part.
Dostoevsky’s The Grand Inquisitor.
Idealism vs realism
Freedom of choice – political coercion
Free will – interested choice
Man's need for freedom – man's need for shackles
Burning heretics on the stake
Abstract world of ideas – herding men towards a goal
Earthly bread – spiritual bread
Start with an ecofriendly reader identifying with the idealism of Christ and seeing the Inquisitor as Trump.  Slowly transition so that by the end it is a Eco Inquisitor tempted to burn deplorable eco-heretics on the stake.
End with the gentle kiss from Idealism of the lips of earthly realism.
Idealism always wins, a gentle kiss on the lips of power.
Idealism is the farmers, realism is the Samurai.

Under Construction

Coda

In his final lectures at the Collège de France, “The Courage of Truth” (1983–1984), Michel Foucault explored in detail the ancient philosophical tradition of the Cynics, emphasizing one of their key principles of life. The Cynics urged their followers to change society’s values, to change society’ currency.  
       The Cynics preached a philosophy of other-worldliness, a precursor to Christianity. They spoke to the decline of Athenian power in the wake of the Macedonian Alexander's conquest and absorption of Athens into his growing Empire. Athenian glory days were over and for the next 2,300 years, Greece would be a trophy province for a series of empires: Roman, Byzantine, Ottoman, and eventually the EU. In its glory days, Greek philosophers were more concerned about how to build the best city-state than how to build an empire. A culture in decline reacts in frustration to any system it views as rendering the politically wise impotent. Cut off from access to the power to change the collective, they turned inward, attempting to achieve internal salvation, virtue, and most importantly, self-knowledge. The goal of this introspection was to allow one to know oneself.
       The Cynics were proletarian philosophers. To the workers, the poor, and the uneducated crowds, they preached their doctrine of self-sufficiency and rejection of nomos (current societal values). They pushed their audiences to strive to live in harmony with nature and to reject wealth, power, fame, and possessions; to live instead a simple life focused on challenging conventional values and living a pure life of noble austerity. They were the forerunners of the décroissance movement.
       Michel Foucault was dying of AIDS when he gave his last series of lectures. It is no accident that he chose the Cynics’ philosophy of decline as a way to exhort his students to live lives striving to change the values of their society. In a highly metaphoric way, MMT also shares the Cynics’ concern to change the currency of society. According to one (of many different) traditions, Diogenes of Sinope, the son of a money changer, was ordered by an oracle to parakharattein to nomisma (deface the current coin). He took a chisel and defaced enough coin that archaeological finds include many defaced coins from that period. For his act of changing the value of the currency of coin in Sinope, Diogenes was charged with counterfeiting and exiled to an Athens in decline.
       The injunction to change the value of the currency does contain some ambiguity. A more literal and perhaps conservative approach to changing currency values would be to carefully survey the money supply and then “deface” or “stamp out” false foreign, barbarian coin in order to maintain the “true” value of the currency. This approach can be seen as an ancient precursor to today’s Bond Market. But surely this was not Foucault’s point.
       The Cynics’ injunction to change a society’s currency can very easily be conceptually expanded to a Nietzschean-type “revaluation of all values” by fundamentally changing society’s values. If we adapt to current climate realities, for example, the value of our coin will change, as well. Like the Cynics, MMT demands that we cast aside current economic values. It opens a theoretical way to give society the material means—the wherewithal—for radical change, for a Green Folkhem. But this will be a one-off, as any truly radical revaluation of American values will ultimately mean the demise of the US dollar as the global reserve currency. But there is justice here, as US dollar hegemony leads to over-consumption in the US and over-production in much of the rest of the world. While there is no rival currency in sight, there is the dark horse of the Bancor. MMT opens the possibility to radical revaluation of society but only at the acceptable cost of bringing the US dollar down to the level of a still powerful supercurrency.

Kevin Batcho is a Brussels-based writer on economic and political issues.



Précis


A study of the dialectic between limits and infinity. To become healthy, a disordered society must change. Reordering its societal labyrinth, hedges must be displaced, and new paths paved.  An amorphous state of nature takes form in bounded Civilization and begets an array of social classes.  Correctly ordering these classes leads an exemplary Golden Age welfare state in Sweden. Modern Monetary Theory, which eschews traditional economic limits, provides the material means for a bountiful coupling of the working class and bourgeoisie. Décroissance proposes strict environmental boundaries to ensure this class bliss can be sustained. Expanding empires reach their apogee while roaming bandits impose a nadir on rebounding localities. The One and the Other struggle in an eternal recurrence. As paradigms shift, the One must adapt or be replaced by a rising Other. But how is it possible to impose humane limits to an environmental crisis caused by an all too human population’s disrespect for boundaries? The wise application of ballast and buoyancy is one solution. “The fundamental argument of the décroissance movement is that given the current climate crisis, ecological ballast is required to gravitate back into harmony with our terrestrial host. MMT on the other hand argues that economic buoyancy will boost us towards a just society. If this economic buoyancy can be directed towards a secure safety net, towards productive class peace, and away from consumption, then the conditions are set for a socially serene décroissance. A Green Folkhem is born.










// posted by Kevin @ 08:35

This page is powered by Blogger. Isn't yours?

Subscribe to Posts [Atom]