Posts Tagged ‘capitalism’
“Unless we change direction, we are likely to end up where we are headed”*…
… And so, the estimable Cory Doctorow argues in his wonderful blog/newsletter Pluralistic, we’d better make ourselves ready.
Further, in a fashion to last week’s (R)D post on the arrival of authoritarianism in the U.S. (to which your correspondent would have added Garret Graff‘s powerful essay had it landed in time)…
As Trump rails against free trade, demands public ownership stakes in corporations that receive government funds, and (selectively) enforces antitrust law, some (stupid) people are wondering, “Is Trump a communist?”
In The American Prospect, David Dayen writes about the strange case of Trump’s policies, which fly in the face of right wing economic orthodoxy and have the superficial trappings of a leftist economic program.
The problem isn’t that tariffs are always bad, nor is it that demanding state ownership stakes in structurally important companies that depend on public funds is bad policy. The problem is that Trump’s version of these policies sucks, because everything Trump touches dies, and because he governs solely on vibes, half-remembered wisdom imparted by the last person who spoke to him, and the dying phantoms of old memories as they vanish beneath a thick bark of amyloid plaque.
Take Trump’s demand for a 10% stake in Intel (a course of action endorsed by no less than Bernie Sanders). Intel is a company in trouble, whose financialization has left it dependent on other companies (notably TMSC) to make its most advanced chips. The company has hollowed itself out, jettisoning both manufacturing capacity and cash reserves, pissing away the funds thus freed up on stock buybacks and dividends.
Handing Trump a 10% “golden share” does nothing to improve Intel’s serious structural problems. And if you take Trump at his word and accept that securing US access to advanced chips is a national security priority, Trump’s Intel plan does nothing to advance that access. But it gets worse: Trump also says denying China access to these chips is a national security priority, but he greenlit Nvidia’s plan to sell its top-of-the-range silicon to China in exchange for a gaudy statuette and a 15% export tax.
It’s possible to pursue chip manufacturing as a matter of national industrial policy, and it’s even possible to achieve this goal by taking ownership stakes in key firms – because it’s often easier to demand corporate change via a board seat than it is to win the court battles needed to successfully invoke the Defense Production Act. The problem is that Trumpland is uninterested in making any of that happen. They just want a smash and grab and some red meat for the base: “Look, we made Intel squeal!”
Then there’s the Trump tariffs. Writing in Vox EU, Lausanne prof of international business Richard Baldwin writes about the long and checkered history of using tariffs to incubate and nurture domestic production.
The theory of tariffs goes like this: if we make imports more expensive by imposing a tax on them (tariffs are taxes that are paid by consumers, after all), then domestic manufacturers will build factories and start manufacturing the foreign goods we’ve just raised prices on. This is called “import substitution,” and it really has worked, but only in a few cases.
What do those cases have in common? They were part of a comprehensive program of “export discipline, state-directed credit, and careful government–business coordination.”
In other words, tariffs only work to reshore production where there is a lot of careful planning, diligent data-collection, and review. Governments have to provide credit to key firms to get them capitalized, provide incentives, and smack nonperformers around. Basically, this is the stuff that Biden did for renewables with the energy sector, and – to a lesser extent – for silicon with the CHIPS Act.
Trump’s not doing any of that. He’s just winging it. There’s zero follow-through. It’s all about appearances, soundbites, and the libidinal satisfaction of watching corporate titans bend the knee to your cult leader.
This is also how Trump approaches antitrust. When it comes to corporate power, both Trump and Biden’s antitrust enforcers are able to strike terror into the hearts of corporate behemoths. The difference is that the Biden administration prioritized monopolists based on how harmful they were to the American people and the American economy, whereas Trump’s trustbusters target companies based on whether Trump is mad at them.
What’s more, any company willing to hand a million or two to a top Trump enforcer can just walk away from the charges.
In her 2023 book Doppelganger, Naomi Klein introduces the idea of a right-wing “mirror world” that offers a conspiratorial, unhinged version of actual problems that leftists wrestle with.
For example, the antivax movement claims that pharma companies operate on the basis of unchecked greed, without regard to the harm their defective products cause to everyday people. When they talk about this, they sound an awful like leftists who are angry that the Sacklers killed a million Americans with their opiods and then walked away with billions of dollars.
Then there are the conspiracy theories about voting machines. Progressives have been sounding the alarm about the security defects in voting machine since the Bush v Gore years, but that doesn’t mean that Venezuelan hackers stole the 2020 election for Biden.
When anti-15-minute-city weirdos warn that automated license-plate cameras are a gift to tyrants both petty and gross, they are repeating a warning that leftists have sounded since the Patriot Act.
The mirror-world is a world where real problems (the rampant sexual abuse of children by powerful people and authortiy figures) are met with fake solutions (shooting up pizza parlors and transferring Ghislaine Maxwell to a country-club prison).
Most of the people stuck in the mirror world are poor and powerless, because desperation makes you an easy mark for grifters peddling conspiracy theories. But Trump’s policies on corporate power are what happens in the mirror world inhabited by the rich and powerful.
Trump is risking the economic future of every person in America (except a few cronies), but that’s not the only risk here. There’s also the risk that reasonable people will come to view industrial policy, government stakes in publicly supported companies, and antitrust as reckless showboating, a tactic exclusively belonging to right wing nutjobs and would-be dictators.
Sociologists have a name for this: they call it “schismogenesis,” when a group defines itself in opposition to its rivals. Schismogenesis is progressives insisting that voting machines and pharma companies are trustworthy and that James Comey is a resistance hero.
After we get rid of Trump, America will be in tatters. We’re going to need big, muscular state action to revive the nation and rebuild its economy. We can’t afford to let Trump poison the well for the very idea of state intervention in corporate activity…
Trump’s mirror-world New Deal: “The capitalism of fools,” from @pluralistic.net.web.brid.gy.
And for a (think tank’s) take on the state of socio-political play: “U.S. Democratic Backsliding in Comparative Perspective.”
* Chinese proverb
###
As we ready ourselves, we might note (per the Garret Graff piece linked above) that…
Just months short of the nation’s 250th birthday, Donald Trump is close to batting a thousand at speed-running the very abuses of power that led the Founders to write the Declaration of Independence in the first place. Does any of this sound familiar:
- He has refused his Assent to Laws, the most wholesome and necessary for the public good.
- For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments
- He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.
- He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.
- He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.
- He has abdicated Government here, by declaring us out of his Protection and waging War against us.
- For cutting off our Trade with all parts of the world
- For imposing Taxes on us without our Consent
- For depriving us in many cases, of the benefits of Trial by Jury
- For transporting us beyond Seas to be tried for pretended offences
And so on…
And we might recall that it was on this date in 1752 that the Liberty Bell was officially placed in the Pennsylvania State House (now Independence Hall) in Philadelphia. In its early years, the bell was used to summon lawmakers to legislative sessions and to alert citizens to public meetings and proclamations. It is likely that the Liberty Bell was among the bells in Philadelphia to ring on July 8, 1776, when the Declaration of Independence was first read to the public, although no contemporary account of the ringing exists.
“Sooner or later everyone sits down to a banquet of consequences”*…
A report issued by International Chamber of Commerce late last year found that extreme weather cost $2tn globally over last decade; the U.S. suffered the greatest losses. As Damian Carrington reports, a leading insurance executive is warning that urgent action is needed to save the conditions under which markets – and civilization itself – can operate…
The climate crisis is on track to destroy capitalism, a top insurer has warned, with the vast cost of extreme weather impacts leaving the financial sector unable to operate.
The world is fast approaching temperature levels where insurers will no longer be able to offer cover for many climate risks, said Günther Thallinger, on the board of Allianz SE, one of the world’s biggest insurance companies. He said that without insurance, which is already being pulled in some places, many other financial services become unviable, from mortgages to investments.
Global carbon emissions are still rising and current policies will result in a rise in global temperature between 2.2C and 3.4C above pre-industrial levels. The damage at 3C will be so great that governments will be unable to provide financial bailouts and it will be impossible to adapt to many climate impacts, said Thallinger, who is also the chair of the German company’s investment board and was previously CEO of Allianz Investment Management.
The core business of the insurance industry is risk management and it has long taken the dangers of global heating very seriously. In recent reports, Aviva said extreme weather damages for the decade to 2023 hit $2tn, while GallagherRE said the figure was $400bn in 2024. Zurich said it was “essential” to hit net zero by 2050.
Thallinger said: “The good news is we already have the technologies to switch from fossil combustion to zero-emission energy. The only thing missing is speed and scale. This is about saving the conditions under which markets, finance, and civilisation itself can continue to operate.”
Nick Robins, the chair of the Just Transition Finance Lab at the London School of Economics, said: “This devastating analysis from a global insurance leader sets out not just the financial but also the civilisational threat posed by climate change. It needs to be the basis for renewed action, particularly in the countries of the global south.”
“The insurance sector is a canary in the coalmine when it comes to climate impacts,” said Janos Pasztor, former UN assistant secretary-general for climate change.
The argument set out by Thallinger in a LinkedIn post begins with the increasingly severe damage being caused by the climate crisis: “Heat and water destroy capital. Flooded homes lose value. Overheated cities become uninhabitable. Entire asset classes are degrading in real time.”
“We are fast approaching temperature levels – 1.5C, 2C, 3C – where insurers will no longer be able to offer coverage for many of these risks,” he said. “The math breaks down: the premiums required exceed what people or companies can pay. This is already happening. Entire regions are becoming uninsurable.” He cited companies ending home insurance in California due to wildfires.
Thallinger said it was a systemic risk “threatening the very foundation of the financial sector”, because a lack of insurance means other financial services become unavailable: “This is a climate-induced credit crunch.”
“This applies not only to housing, but to infrastructure, transportation, agriculture, and industry,” he said. “The economic value of entire regions – coastal, arid, wildfire-prone – will begin to vanish from financial ledgers. Markets will reprice, rapidly and brutally. This is what a climate-driven market failure looks like.”
No governments will realistically be able to cover the damage when multiple high-cost events happen in rapid succession, as climate models predict, Thallinger said. Australia’s disaster recovery spending has already increased sevenfold between 2017 and 2023, he noted.
The idea that billions of people can just adapt to worsening climate impacts is a “false comfort”, he said: “There is no way to ‘adapt’ to temperatures beyond human tolerance … Whole cities built on flood plains cannot simply pick up and move uphill.”
At 3C of global heating, climate damage cannot be insured against, covered by governments, or adapted to, Thallinger said: “That means no more mortgages, no new real estate development, no long-term investment, no financial stability. The financial sector as we know it ceases to function. And with it, capitalism as we know it ceases to be viable.”
The only solution was to cut fossil fuel burning, or capture the emissions, he said, with everything else being a delay or distraction. He said capitalism must solve the crisis, starting with putting its sustainability goals on the same level as financial goals.
Many financial institutions have moved away from climate action after the election of the US president, Donald Trump, who has called such action a “green scam”. Thallinger said in February: “The cost of inaction is higher than the cost of transformation and adaptation. If we succeed in our transition, we will enjoy a more efficient, competitive economy [and] a higher quality of life.”…
It’s time, if not past time, to act: “Climate crisis on track to destroy capitalism, warns top insurer,” from @dpcarrington.bsky.social in @theguardian.com.
Further to the point: “Get ready for several years of killer heat, top weather forecasters warn.”
See also: “Q&A: Kiley Bense on Climate Journalism in a New Information Environment.”
(Image above: source)
* Robert Louis Stevenson
###
As we contemplate craziness, we might recall that it was on this date in 2011 that the Wallow Fire started. A wildfire that started in the White Mountains near Alpine, Arizona, it was named for the Bear Wallow Wilderness area where the fire originated.
The fire eventually spread across the stateline into western New Mexico. By the time the fire was contained on July 8, it had consumed 538,049 acres of land, 522,642 acres in Arizona and 15,407 acres in New Mexico. It was the largest wildfire in Arizona history and did an estimated estimated cost was $109 million in damages. Smoke from the Wallow Fires and others in Arizona and New Mexico extended through Texas and Oklahoma up into the Great Lakes region, affecting air quality for large areas east of the Rocky Mountains.
“The violence of positivity does not deprive, it saturates; it does not exclude, it exhausts”*…
Scheduling note: your correspondent is hitting the road again, so regular service will be interrupted; it should resume on Friday the 7th…
Author and psychoanalyst Josh Cohen on Byung-Chul Han’s critiques of digital capitalism…
I came across Byung-Chul Han towards the end of the previous decade, while writing a book about the pleasures and discontents of inactivity. My first researches into our culture of overwork and perpetual stimulation soon turned up Han’s The Burnout Society, first published in German in 2010. Han’s descriptions of neoliberalism’s culture of exhaustion hit me with that rare but unmistakable alloy of gratitude and resentment aroused when someone else’s thinking gives precise and fully formed expression to one’s own fumbling intuitions.
At the heart of Han’s conception of a burnout society (Müdigkeitsgesellschaft) is a new paradigm of domination. The industrial society’s worker internalises the imperative to work harder in the form of superego guilt. Sigmund Freud’s superego, a hostile overseer persecuting us from within, comes into being when the infantile psyche internalises the forbidding parent. In other words, the superego has its origin in figures external to us, so that, when it tells us what to do, it is as though we are hearing an order from someone else. The achievement society of our time, Han argues, runs not on superego guilt but ego-ideal positivity – not from a ‘you must’ but a ‘you can’. The ego-ideal is that image of our own perfection once reflected to our infantile selves by our parents’ adoring gaze. It lives in us not as a persecutory other but as a kind of higher version of oneself, a voice of relentless encouragement to do and be more.
With this triumph of positivity, the roughness of the demanding boss gives way to the smoothness (a key Han term) of the relentlessly encouraging coach. On this view, depression is the definitive malaise of the achievement society: the effect of being always made to feel that we’re running hopelessly behind our own ego-ideal, exhausting ourselves in the process.
The figure of the achievement subject gives rise to some of Han’s most vivid evocations of psychic and bodily debilitation:
The exhausted, depressive achievement-subject grinds itself down … It is tired, exhausted by itself, and at war with itself. Entirely incapable of stepping outward, of standing outside itself, of relying on the Other, on the world, it locks its jaws on itself; paradoxically, this leads the self to hollow and empty out. It wears out in a rat race it runs against itself…
… Han’s critique of contemporary life centres on its fetish of transparency; the compulsion to self-exposure driven by social media and fleeting celebrity culture; the reduction of selfhood to a series of positive data-points; and the accompanying hostility to the opacity and strangeness of the human being…
… Under the rule of digital capitalism, time itself is severed from any ‘narrative or teleological tension’, that is, from any discernible purpose or meaning, and so, like the digital paintings in an immersive show, it ‘disintegrates into points which whizz around without any sense of direction.’ In such a regime of time, there is no possibility of Erfahrung, which depends on a sense of narrative continuum and duration. There is only the proliferation of its pale counterpart Erlebnis: the discrete event that ‘amuses rather than transforms’, as Han would later put it in The Palliative Society…
… Because power so often involves coercion, Han argues, there has been a tendency to see them as inextricable. But it is only when power is poor in mediation, felt as alien to our own lives and interests, that it resorts to threatened or actual violence. Whereas when power is at the ‘highest point of mediation’ – when it seems to speak from a recognition of its subjects’ needs and desires – it is more likely to receive those subjects’ willing consent. One could conceive of a power, therefore, that has no sanctions at its disposal, but which is nonetheless rendered absolute by its subjects’ full identification with it.
The less it relies on the threat of punitive measures to back it up, the more power maximises itself. ‘An absolute power,’ writes Han, ‘would be one that never became apparent, never pointed to itself, one that rather blended completely into what goes without saying.’ This is precisely what happens in digital capitalism’s burnout society, where the power of capital consists not in its power to oppress but in the voluntary surrender of its subjects to their own exploitation.
Han draws on the German-American theologian Paul Tillich’s conception of power as ipsocentric, that is, as Han puts it, centred around ‘a self whose intentionality consists of willing-itself’, cultivating and bolstering its own status. God is the ultimate embodiment of power because, in the words of G W F Hegel, ‘he is the power to be Himself’. This will to persist in one’s own existence, to cling to one’s own selfhood, is the basic premise of the Western mode of being. We can discern it at work in the empty narcissism of social media and the culture of self-display in which we’re all enjoined to participate. Self-exploitation is, in a sense, a twisted variant on the Cartesian cogito: I am seen therefore I am. In making myself perpetually visible, I may empty myself out, lose the last vestiges of my interiority. But, in cleaving to the bare bones of a self-image, some form of my existence survives.
The fundamental basis of this erosion of meaningful experience, argues Han, is felt at the level of temporality. The accelerated time of digital capitalism effectively abolishes the practice of ‘contemplative lingering’. Life is felt not as a temporal continuum but as a discontinuous pile-up of sensations crowding in on each other. One of the more egregious consequences of this new temporal regime is the atomisation of social relations, as other people are reduced to interchangeable specks in the same sensory pile-up. Trust between people, grounded in both the assumption of mutual continuity and reliability, and in a sense of knowing the other as singular and distinct, is inexorably corroded: ‘Social practices such as promising, fidelity or commitment, which are temporal practices in the sense that they commit to a future and thus limit the horizon of the future, thus founding duration, are losing all their importance.’…
Consumer culture, with its compulsion for novelty and perpetual stimulation, likewise erodes the bonds of shared experience that engender meaningful narratives. The fire around which human beings would once have gathered to hear stories has been displaced by the digital screen, ‘which separates people as individual consumers.’ Time, love, art, work, narrative; these are the key zones of experience hollowed out by the disintegrative logic of digital capitalism. Each is a rich store of transformative encounter, or Ehrfahrung, which the ‘non-time’ of the present has reduced to empty instances of Erlebnis…
How the “suffocating system” of digital capital creates hollowed-out lives: “The winter of civilization,” the thought of @byungchulhan.bsky.social in @aeon.co. Eminently worth reading in full.
* Byung-Chul Han, The Burnout Society
###
As we analyze ambition, we might send careful birthday greeting to Charles Ponzi; he was born on this date in 1882. A con artist, he swindled his way across Canada and the U.S. in the early 1920s, promising clients a 50% profit within 45 days or 100% profit within 90 days, by buying discounted postal reply coupons in other countries and redeeming them at face value in the U.S. as a form of arbitrage. In reality, Ponzi was paying earlier investors using the investments of later investors. While this type of fraudulent investment scheme wasn’t invented by Ponzi, it became so identified with him that it now is referred to as a “Ponzi scheme“. The scam for which he’s known ran for over a year before it collapsed, costing his “investors” $20 million (over $300 million at current value).
Ponzi schemes have grown since Ponzi’s time (Bernie Madoff‘s version is estimated to have totalled around $65 billion) and are alive and well in the U.S.
“There’s class warfare all right, but it’s my class, the rich class, that’s making war, and we’re winning”*…
Trevor Jackson on Martin Wolf‘s new book, The Crisis in Democratic Capitalism, and a fundamental question it raises: if globalization has allowed elites to remove themselves from democratic accountability and regulation, is there any path toward a just economy?…
Something has gone terribly wrong. In his 2004 book Why Globalization Works, the economics journalist Martin Wolf wrote that “liberal democracy is the only political and economic system capable of generating sustained prosperity and political stability.” He was articulating the elite consensus of the time, a belief that liberal democratic capitalism was not only a coherent form of social organization but in fact the best one, as demonstrated by the West’s victory in the cold war. He went on to argue that critics who “complain that markets encourage immorality and have socially immoral consequences, not least gross inequality,” were “largely mistaken,” and he concluded that a market economy was the only means for “giving individual human beings the opportunity to seek what they desire in life.”
Wolf wrote those words midway through a four-decade global expansion of markets. Throughout the 1980s in Britain, the United States, and France, governments led by Margaret Thatcher, Ronald Reagan, and François Mitterrand set about privatizing public assets and services, cutting welfare state provisions, and deregulating markets. At the same time, a set of ten policies known as the “Washington Consensus” (because they were shared by the International Monetary Fund, the World Bank, and the US Treasury) brought privatization, liberalization, and globalization to Latin America following a series of sovereign debt crises. In the 1990s a similar set of policies, then known as “shock therapy,” suddenly converted the formerly Communist economies of Eastern Europe and the Soviet Union to free markets. Around the Global South, and especially in the rapidly industrializing countries of East Asia after the 1997 financial crisis, “structural adjustment” policies that were conditions for IMF bailouts again brought liberalization, privatization, and fiscal discipline. The same policies were enforced on the European periphery after 2009, in Portugal, Ireland, Italy, Greece, and Spain, again, either as conditions for bailouts or through EU fiscal restrictions and restrictive European Central Bank policy. Today there are far more markets in far more aspects of human life than ever before.
But the sustained prosperity and political stability that these policies were meant to create have proved elusive. The global economy since the 1980s has been riven by repeated financial crises. Latin America endured a “lost decade” of economic growth. The 1990s in Russia were worse than the Great Depression had been in Germany and the United States. The austerity and high-interest-rate policies after the 1997 East Asia crisis restored financial stability but at the cost of domestic recessions, and contributed to political instability and the repudiation of incumbent parties in Indonesia, the Philippines, and South Korea, as they did again across Europe after 2009–2010. Global economic growth rates in the era of globalization have been about half what they were in the less globalized postwar decades. Around the world, violent racist demagogues keep winning elections, and although they all seem very happy with the idea of private property, they are openly hostile to the rule of law, political liberalism, individual freedom, and other ostensible preconditions and cultural accompaniments to market economies. Both democracy and globalization seem to be in retreat in practice as well as in ideological popularity. Or, as Wolf writes in his new book, The Crisis of Democratic Capitalism:
Our economy has destabilized our politics and vice versa. We are no longer able to combine the operations of the market economy with stable liberal democracy. A big part of the reason for this is that the economy is not delivering the security and widely shared prosperity expected by large parts of our societies. One symptom of this disappointment is a widespread loss of confidence in elites.
What happened?
Martin Wolf is probably the most influential economics commentator in the English-speaking world. He has been chief editorial writer for the Financial Times since 1987 and their lead economics analyst since 1996. Before that he trained in economics at Oxford and worked at the World Bank starting in 1971, including three years as senior economist and a year spent working on the first World Development Report in 1978. This is his fifth book since moving to the Financial Times. The blurbs and acknowledgments are stuffed with central bankers, financiers, Nobel laureates, and celebrity academics. The bibliography contains ninety-six references to the author himself.
Wolf’s diagnosis is impossible to dispute: “Neither politics nor the economy will function without a substantial degree of honesty, trustworthiness, self-restraint, truthfulness, and loyalty to shared political, legal, and other institutions.” But, he observes, those values have run into crisis all over the world, and, especially since about 2008,
…people feel even more than before that the country is not being governed for them, but for a narrow segment of well-connected insiders who reap most of the gains and, when things go wrong, are not just shielded from loss but impose massive costs on everybody else…
He describes in detail the mistaken policies of austerity in the US and Europe, the rise of a wasteful and extractive financial sector, the atomization and immiseration of formerly unionized workers, the pervasiveness of tax avoidance and evasion, and the general accumulation of decades of elite failure…
Read on for Wolf’s proposed remedies and Jacksons critiques: “Never Too Much,” from @nybooks.com.
And for an interview with Jackson that elaborates on his thoughts and their historical context, see here.
* Warren Buffett
###
As we assess systems, we might send provocative birthday grretings to Founding Father Thomas Paine; he was born on this date in 1736 (O.S.; on February 9, 1737 per N.S., which accrued in Britain and its colonies in 1752). He is best known for Common Sense and The American Crisis, two influential pamphlets that helped to inspire colonial era American patriots in 1776 to declare independence from Great Britain.
But relevantly to the article above, in 1797 (after witnessing the birth and early years of the U.S. and spending time in France) he wrote Agrarian Justice, in which he proposed remedies for several of the (then nascent) ills discussed by Wolf and Jackson…
In response to the private sale of royal (or common) lands, Paine proposed a detailed plan to tax land owners [the “capitalists” of their day] once per generation to pay for the needs of those who have no land. Some consider this a precursor to the modern idea of citizen’s dividend or basic income. The money would be raised by taxing all direct inheritances at 10%, and “indirect” inheritances, those not going to close relations, at a somewhat higher rate. He estimated that to raise around £5,700,000 per year.
Around two-thirds of the fund would be spent on pension payments of £10 per year to every person over the age of 50, which Paine had taken as his average adult life expectancy.
Most of the remainder would be used to make fixed payments of £15 to every man and woman on reaching the age of 21, then the age of legal majority.
The small remainder of the money raised that was still unused would be used for paying pensions to “the lame and blind.”
For context, the average weekly wage of an agricultural labourer was around 9 shillings, which would mean an annual income of about £23 for an able-bodied man working throughout the year.
Paine’s proposal presaged the social safety net of later eras and governments, proposing seven entitlements to protect the poorest citizens from the ravages of market capitalism:
- Grants to subsidize schooling of 4 pounds per annum
- One-time payments to adults on reaching maturity
- One-time payments to newly married couples and new parents
- Eliminate taxes on working poor
- Back-to-work schemes
- Pensions for seniors
- Burial benefits to surviving spouses
and also provided a scheme of how to pay for them.
– source
“It’s easier to imagine the end of the world than the end of capitalism”*…
… so it’s useful to contemplate its beginning. David Rooney, in an excerpt from his book About Time…
Ömer Aga stood in the middle of Amsterdam’s Dam Square surrounded by his nineteen-strong party of advisers, interpreters and hosts, and gazed toward the huge new trading exchange that straddled the mighty Rokin canal, just to the south of the square. The year was 1614, and Aga was on a fact-finding mission to the Dutch Republic as the Ottoman Empire’s newest diplomatic emissary. Top of his list of must-see sights was this bold new building, completed just three years earlier. It was hard to miss, as it was the size of a soccer field and could accommodate thousands of traders in its 200-by-115-foot enclosed inner courtyard, but what Aga really noticed was the four-sided clock tower that loomed over the vast structure and the streets and canals all around, as well as the booming sound of its bell when they rang out the hours and then, at noon, tolled repeatedly for a few minutes before falling silent. Little did they realize it, but Omar Aga and his retinue were listening to one of the most significant clocks ever made. It was fitted to the world’s first stock exchange and sounded the birth of modern capitalism.
From the moment the Amsterdam exchange building first opened its doors in August 1611, traders were forbidden from trading anywhere else in the city. But the exchange did not just put spatial boundaries on trade. It concentrated traders in time, too. A few days before the new facility opened, the city council had issued a bylaw proclaiming that trading could only take place between the hours of 11 a.m. and noon, Monday to Saturday. At noon, the clock installed in the tower high above the exchange building would toll a bell for seven and a half minutes. If any traders were still in the exchange, or in the streets nearby, they would be fined. Additionally, trading was allowed between 6:30 p.m. and 7:30 p.m. during the summer months between May and August, and in winter evening trading took place for a thirty-minute period marked by a tolling bell at the city’s gates. At the end of evening trading, the exchange clock would again sound for seven and a half minutes and fines were issued for anyone caught trading after the bells fell silent.
Why were such strict limits placed on trading at the Amsterdam exchange? There were several reasons. One was a practical problem familiar to anybody involved with trade in a busy city center: time limits reduced congestion and disruption in the streets nearby. Another was that clocks made trading more efficient. Short, fixed trading hours concentrated buyers and sellers together, making it easier for each to find enough of the other. This increased the volume of trade, which was good for traders and for the city council collecting taxes on transactions. But clocks also helped prices to remain fair, as they could be used to regulate the people who occupied intermediate roles in the functioning of a market.
Some of the earliest references to mechanical clocks being used in towns and cities, in the Middle Ages and soon after, related to market restrictions. The first urban markets brought producers of food, cloth and so on into direct contact with the consumers of their wares. But as towns and cities grew, this model started to break down. It stopped making sense for every producer in the countryside to make the journey all the way to the center of towns. So, ‘intermediate trading’ emerged, whereby third parties might buy up the goods from several small producers somewhere on the edge of town, before bringing them in and selling them themselves at the market. Soon, a whole range of intermediate roles sprang up. Wholesalers, merchants, shopkeepers and peddlers were some, but intermediates also included financiers who advanced funds, and those speculating on the future in the hope of offsetting risk (whether because of bad harvests or other unpredictable events) and making more money. Some people occupied more than one role.
As populations grew and moved in increasing numbers to towns and cities, and markets began to sell more and more products, the rise of intermediate roles in market-based trade was inexorable, creating a new stratum of people who neither produced goods nor consumed them, but traded, speculated, brokered, hoarded, flipped and financed. Some market authorities feared intermediates would drive up prices or limit supplies and turned to clocks to control their involvement. Clocks meant that different groups could be treated differently at the market. In a sixteenth-century grain market, for instance, the first hours of trade could be restricted to residents, before bakers of bread could get in, and then the pastry bakers could enter. Only after several hours were wholesalers and other intermediate traders allowed in. But as societies and their market trading became ever more complex, the role of intermediates like brokers and financiers became increasingly important in keeping the flow of trading running smoothly. And, before long, finance became something that could be traded in its own right, and clocks took on a new regulatory role.
Amsterdam’s was not the first trading exchange. Antwerp and London had had exchanges since the sixteenth century where goods and money were traded, but Amsterdam was the first of a new kind of exchange: what became the modern securities exchange. As well as being a place to trade in commodities like salt or hides, people could also buy and sell financial assets. It started out as a place to buy and sell shares in the Dutch East India Company, an early joint-stock company and the first with freely tradable shares, but soon was used to trade other company shares, futures contracts and insurance policies as well as becoming the place to go for information about the state of the markets. The financial market had arrived, but its products, and the prices paid for them, which were time-dependent. The time at which each securities transaction was made, or would be enacted in the future, was central to this new type of trading to work fairly, everybody had to agree what time this was. In other words, trading needed time stamps, which is where the exchange clock came into its own. Clocks were no longer about excluding intermediates from the market. In the new exchanges, intermediates were the market — with the clock watching carefully over the whole thing…
The birth of modern capitalism and the role that timekeeping played in its nascence: The Amsterdam Stock Exchange, from @rooneyvision, via the invaluable @delanceyplace.
* Fredric Jameson (also sometimes attributed to Slavoj Žižek)
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As we examine enterprise, we might recall that it was on this date in 1937 that Sylvan Goldman introduced the first shopping cart in his Humpty Dumpty grocery store in Oklahoma City.
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