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The neoliberal road to autocracy – a response to criticism

Ann Pettifor

In an article The neoliberal road to autocracy, published in April 2017 on the website of International Politics and Society, I wrote this:

Of all these promises, the one that globalisation’s advocates proclaim most strongly is the fall in poverty worldwide. But in fact the decline in absolute poverty is part of a longer trend that has been traced from 1820, according to World Bank data. And much of that fall is not due to open, global markets, but to scientific and especially medical advances. Indeed, the numbers of those living on less than $1 a day fell most rapidly between 1950 and 1970. During the “Keynesian” era, absolute poverty (measured in US$ terms) fell as rapidly as in the neoliberal era.


This was challenged on twitter today by William Winecoff, Assistant Professor of Political Science at Indiana University Bloomington, who – in an exchange with Steve Randy Waldman – argues that:

In % terms, relative poverty fell faster during the Gilded Age than during Trente Glorieuses, & much faster since.. Pettifor; no evidence offered for claim that poverty fell as fast in Keynesian era as in neoliberal era.

The “Trente Glorieuses” refers to the period between 1945 and 1975. I had to search for a definition of the Gilded Age and note that it was Mark Twain’s description of the late 19th century decades: “the period (that) was glittering on the surface but corrupt underneath”. This differs from our current age in which both corruption and glitter are very much on the surface.

I humbly accept that I treated an extremely complex and important subject in a single paragraph of my short article – and that I was incorrect in referring to World Bank data as my source. I had in mind, and should have linked to, the worldindata.org website (produced by Max Roser) which helpfully gives charts and connected data (including from the World Bank) on a range of issues, including poverty and longevity.

However it is also clear that Prof. Winecoff has used Twitter to engage in an ideological argument. He  produced this chart and argued: “Of course there was no poverty reduction at all until global capitalism, so the whole question is kind of weird.”

Screen Shot 2017-08-18 at 21.07.47.png

In other words, Prof. Winecoff insists on narrowing down reductions in poverty to ‘global capitalism’. And in so arguing, he makes my point: that it is “kind of weird” to offer only one correlation. For all that the above chart shows is the very strong correlation between the discovery of fossil fuels (coal and then oil) and the conversion of those fuels into ‘growth’ – at first by Britain’s industrial revolution. To put such growth down to ‘global capitalism’ and to ignore the crucial role that fossil fuels played in powering the global economy, is to adopt a narrow and ideological view of history. He no doubt also assumes, optimistically, that there will be no depletion of the resources that made ‘global capitalism’ possible, and that the macroeconomy of the next two hundred years will mirror those of the last two hundred years.

The ‘Trente Glorieuses’

In my piece I referred to the numbers of those living on less than $1 dollar a day, the traditional measure of extreme poverty, with data from Bourguignon and Morrison (2002), covering the period 1820 to 1992.  This dataset refers to the share (%) of people living below this line, not the numbers (as I had stated).  That said, the share of those living on less than $1 a day fell most rapidly between 1950 and 1970.  The table below, shows the position for the various ‘ages’, starting with the first age of globalisation (the Gilded Age) lasting around 40 years each.

In each era, the share of those in extreme poverty declines, but at an increasing rate. You will see that the average annual reduction percentage per year is just below 1% for the 1950 – 1970 period.

Table 1: Percentage of global population living in extreme poverty i.e. less than $1.00 a day (source: https://ourworldindata.org/extreme-poverty/  Bourguignon & Morrison data 2002)

AP response table 1.png

I have then looked at the figures for those living on less than $2 or $1.90 a day, which covers two different source datasets.  The first, long-run set up to 1992, is also from Bourguignon and Morrison (BM) – they use less than $2 a day.  The second is from the World Bank, and runs through to 2015.  This set refers to less than $1.90 a day. This table also follows similar ‘eras’ of around 40 years each.  This shows a similar pattern, in which the share of those in poverty declines, but at a progressively increasing rate.

It shows, as Mr Winecoff argues, that the current era shows the most rapid decline, going from an average annual reduction of around 0.5 to 0.6% in the 1950-92 period, to around 1% since. (I should point out that there is a sharp break between the two datasets, since the BM set gives 55% below the $1.90 poverty line for 1980, while the World Bank gives 44% for 1981. This reminds us that all these data are subject to interpretation, but the overall pattern is less likely to be wrong).

The data certainly do not bear out Mr Winecoff’s claim that “relative poverty fell faster during the Gilded Age [1870-1910] than during Trente Glorieuses [1950 on].”

Max Roser helpfully breaks out the data from 1981 to 2013 to show the world includingChina, and the world without China. This makes a big difference. The annual percentage reduction without China is around 0.5%, therefore almost identical to the Bretton Woods era. The world including China is shown as just under 1%, i.e. almost identical to the reduction under the Bretton Woods era in the share of those living on less than $1 a day.

Table 2: Percentage of global population living in extreme poverty i.e. less than $2 or $1.90 a day (via https://ourworldindata.org/extreme-poverty/Bourguignon & Morrison data to 1992, and World Bank data from 1981)

Screen Shot 2017-08-18 at 20.43.49.png

Now, China is of course a key part of the global economy and of the process of ‘globalisation’. But the Chinese government is controlled by the Communist Party, and has not signed up to a fully-fledged neoliberal economic programme. To date it has not deregulated its finance sector, large swathes of the economy are still state-owned; and the Bank of China periodically deploys capital controls to advance policy goals.

Of course, in looking at the data in this article, and noting the welcome improvements in the position of the very poor in a global context, we have not referred to the huge upsurge in inequality within countries that accompanied the age of hyper-financialisation from the mis-1980s.  The Gini index of many countries shot up, in particular in the early 2000s, but has flattened or marginally reduced since, according to statistics (which given the growing share taken by the top 1%, plus corruption and off-shoring, almost certainly under-state the level of real inequality). But that is another story. (As is the fact that the price of neoliberal hyper-financialisation has largely been borne by the working classes of the “developed world”, e.g. in US and UK, where real wages have remained stagnant or fallen over many years.)

Conclusion

From all the above, I contend that, though perhaps I was less specific than I might have been, in what was not intended as an academic article, my essential points remain valid. The ‘share’ of those living on less than $1 a day, between 1950 and 1970, fell at around the same annual percentage rate as the share of those living on less than $1.90 between 1981 and 2015.  If we exclude post-1980 China (whose trend to autocracy is not based on neoliberal policy), we find that the average annual reduction in the percentage share of the extremely poor has been reasonably constant since about 1950.

The major point I was trying to make in my article, however, was that the real improvements in poverty reduction, as well as in life expectancy and many other fields, do not depend wholly on  economic policies, but also on the role of fossil fuels, and on scientific, medical and other advances, which, other things being equal, should accelerate in impact across time and space. Hence the fact that the rate of improvement is in the form of a curve, not a purely linear effect. These improvements have taken place under different economic systems, and are not a function of neoliberalism or ‘global markets’.  The  specific ‘achievement’ of neoliberalism, of elevating finance to the role of master not servant of society, has been to undermine confidence in democracy. Populations have turned to autocratic or authoritarian governments for protection from periodic financial crises brought on by unfettered market forces – perceived to be beyond the control of democratically elected governments.

This article first appeared on Prime Economics.

27 Comments

  1. JohnP says:

    Yes, it is a current much used neoliberal apologist’s ideological meme to reply to any criticism of the consequences for most of their citizens of the permanent Austerity Offensive , and globalisation of production, in the old core heartland states of the world economy, ie, Europe, USA, Australia/New Zealand, Japan, that the last 30 years has seen unprecedented numbers elsewhere “lifted out of poverty”, – “so stop complaining you selfish, over-privileged Western working class luddites.”

    Why the working classes of the old capitalist centres should just shrug their shoulders at their ever growing poverty and indebtedness, because globalised capitalism has outsourced production to countries where that global bourgeoisie is so superexploiting this new super oppressed , unorganised, workforce, that, whilst millions of workers (as Ann says mostly in that peculiar, highly state-directed, totalitarian Stalinist/capitalist fusion state ,China) have had an increase in pay, the relative share of world wealth grabbed by the global capitalist classes has rocketed extraordinarily much faster.

    I would also counsel against taking all the statistics with a considerable pinch of salt anyway. This is because a key feature of the expansion of global capitalism , since its earliest creation actually, but especially over the last 30 years, has been to displace the huge numbers of previously peasant subsistence farmers from their land ,to be driven into the cities to become wage workless. (it is only very recently that the waged working class has finally outnumbered the peasantry as a class globally).

    Peasant subsistence farmers interact very little with the money economy, and a lot of the recent mass migration to the cities (as also in 18th and 19th century Britain with the Enclosures and Clearances) was far from voluntary – as capitalist agribusiness seized their land for cash crop production. It is very hard to quantify in crude money terms therefore what the impact on millions of ex peasants – now wage proletarians, has actually been , in terms of quality of life. A crude $ valuation simply doesn’t capture this. It’s no doubt grindingly hard being a subsistence peasant – but so is working for a dollar a day in a sweatshop in Vietnam, or any of the latest economies to “benefit” from globalised outsourcing to ever cheaper labour sources.

  2. if anybody on the left had misused data and statistics in this way they would be drummed out of academia, dis information is one thing and we are used to it with the way that neocons abuse statistics,but this really does leave a bad taste the article also contradicts leading writers of the Chicago school in their interpretation of economic and social history,

  3. Bazza says:

    Yes the apologists avoid the ultimate truth which they can’t change, their Neo-Liberal capitalist masters and mistresses legally nick the surplus labour of the working billions.
    The barbarians like Trump feel cocky but perhaps their days are numbered; read a lovely piece on an international trade union website recently directed at Ivanika who owns clothing factories in the likes of Bangladesh, a woman trade unionist said of Ivanika: “our women make you beautiful but with their wages they barely starve!”
    Hopefully Neo-Liberalism is dying and left wing democratic socialism will bring peaceful and democratic global economic justice!
    Solidarity!

  4. Bazza says:

    Neo-liberal autocracy indeed!
    I once lived in a LA tower block and never liked it but perhaps Grenfell has now put Tory Neo-Liberalism in the dock!
    It took 20 years for Neo-Liberalism to capture the Tory Party and its ideologue MPs and Councillors have since privatised, outsourced, sub-contracted, de-regulated, cost-cut and made local government smaller.
    They have also put housing solutions predominantly in the hands of the private sector including giving tax cuts to private landlords with multiple properties.
    So the key question for the Tories from Grenfell is: is diverse working class life cheap?
    According to The Metro (16/6/17) David Cameron in 2012 said: “A Conservative Govt. would ‘Kill off the health and safety culture’ for good”and “Conservative Ministers ‘Congratulated themselves for cutting fire regulations’ (just months before Grenfell).” (A separate report showed fire inspections for some companies reduced from 6 hours to 45 minutes).
    The move entitled ‘Cutting Red Tape’ was part of Tory plans to abolish “health and safety culture” that they claimed was hurting money-making businesses.
    (2,400 pieces of regulation have been scrapped since ‘Cutting Red Tape’ began).
    Then the infamous urgent nudge email from Grenfell Housing Managers (Independent, 31/6/17) about the price of cladding and how “good costs” had to be found for (Tory) Housing Vice-Chair, Councillor Feilding-Mellen.
    (According to 2014 documents a zinc-based cladding was considered but rejected because of cost (£293,368) so with probably over 100 lives lost we could now perhaps work out the value to Tories of an individual diverse working person’s life?
    Individual Tory Government and Councillors as Neo-Liberal ideologues need holding to account but the worry is Corporate Manslaughter will just mean fines for Corporate bodies.
    Lessons to learn indeed; to value all lives and not just to know the price of everything.
    Justice 4 Grenfell.

  5. David Pavett says:

    This is a strange piece.

    It seems to be assumed that globalisation is the same thing as neo-liberalism. But even if the economic framework and form of the increasing interconnectedness of the world has been largely neo-liberal it is surely a confusion of form and content to equate that interconnectedness with its currently dominant economic form. Can there not be a socialist form of globalisation?

    Like John P I am doubtful about the statistical argument claiming a greater reduction in poverty for that or that period of capitalist production. There are just too many definitional problems and too much diversity in the periods compared for the claims to be clear and convincing.

    What is more the claims do not stand well with Ann P’s other line of argument that reductions in poverty rely more on the discovery of fossil fuels and advances in science and medicine than they do on the dynamics of capitalism.

    And that claim too is suspect. Ann P points to a correlation between the discovery of fossil fuels and reductions in poverty. She seems to think that capitalist growth in production has its roots in such discoveries rather than seeing it the other way round: it is the development of capitalist production that is the basis for the discoveries and especially for their exploitation. The same point applies to scientific and medical advance.

    1. JohnP says:

      Yes indeed, David. There is a regular claim being made now by a range of pundits that “global capitalism” itself is essentially a direct product of the cheap energy made possible via the mass exploitation of fossil fuels , ie, coal, but particularly oil . And that somehow Marx “failed to grasp this deep causal truth” .

      This is utter historical nonsense of course, and just a reflection of the attempt by the non-socialist Green Movement to shift the agenda away from and an understanding of what “capitalism” is, and what the basis of the current global capitalist crisis is about, to a wooly de-politicised Green environmentalist narrative , which simply takes capitalism as a “given” , but seeks to make it more environmentally friendly.

      Ann unfortunately seems to be buying into this nonsense. But Capitalism as a dominant mode of production actually developed, historically as the dynamic underminer of inefficient feudal (and subsistence peasant) modes of production , in Britain, and Europe, particularly from the 18th century onwards , on the basis of wind and water power (on a primitive accumulation of capital base derived from ruthless exploitation of the indigenous populations, the slave trade, genocidal exploitation by British and other European rising early capitalist powers like Spain and Holland, of the Americas and India).

      As you say, the mass use of coal (for coke) , and then oil, was a vital energy source for capitalism’s constant global expansion, but it is NOT in any way the core causal factor in the rise of capitalism as the now dominant global mode of production.

      This may seem to some to be a nit-picking academic point – but in fact it is ideologically important . Capitalism has USED the abundant cheap energy of fossil fuels to grow from its wind and water and waged labour power (and always slave labour power too – even today, with 24 million slaves globally according to the UN) origins. But it is the specific money (profit seeking)and capitalist market driven class based nature of capitalism that actually drives the system, not its current or past energy sources.

  6. JohnP says:

    In hindsight I may be doing Ann a disservice in lumping her in so crudely with the Green “capitalism is essentially about the historically temporary cheap energy fossil fuel revolution” narrative. Nevertheless , as David has stated, it is not the availability of cheap, easily accessed fossil fuels that has driven capitalism, but the intrinsic dynamics of the market-based , profit-seeking money-based, worker/capitalist class system of capitalism that has driven this mode of production, inventing and discovering more efficient energy sources and medical , public health means of keeping the working classes healthy for exploitation.

    And throughout this expansion those working masses have fought back through mass organisation ( eg,trades union, but also riots) to win the gains in wages and rights that have enabled the mass of the exploited to raise their living standards above the default setting of capitalism , ie, “that minimum income required to enable workers to provide their labour power each day, and reproduce the next generation of workers”.

  7. C MacMackin says:

    Some interesting points here about capitalism and fossil fuels. David and John are certainly right that the abundant, cheap, and above all dispatchable energy of fossil fuels is not what caused capitalism, still less what define capitalism. However, without it, capitalism couldn’t have brought anywhere near the ammount of economic growth it did. It’s an interesting question whether steam power could have been developed outside of capitalism. The orthodox Marxist answer would presumably be that it couldn’t, but ultimately we’ll never know.

    I agree with John that there are a number of people on the “Left” these days (I’m looking at you, Naomi Klein) who seem to conflate fossil fuel use and capitalism. They simultaneously blame all environmental degradation on capitalism/neoliberalism and most of capitalism’s shortcomings on “extractivism” and growth (rather than relationships of production). The way I read this article, it seemed like Ann was highlighting the good which fossil fuel use has done us in reducing poverty, etc. That’s something the Left needs to remember. Environmental degradation has not just been the result of some evil bogeyman capitalists raping the Earth for profit, but also of a legitimate desire to use natural resources to improve our quality of life.

    Frankly, it really sucks that we have to stop using fossil fuels. They’ve provided us with cheap, convenient, reliable energy which has lifted billions out of poverty. The alternatives will, at least initially, not be as convenient (according to normal accounting they won’t be as cheap either, although reduced air pollution will save a lot of money in healthcare). There is no quick replacement for fossil fuels for shipping or aviation and any of the possibilities will cost a lot more. This will put a damper on trade and globalisation. It will also make steel and cement production more difficult, both of which are very important building materials. High power machinary used in in construction and mining requires liquid fuels, which we don’t have an obvious low-carbon candidate for. All of this will make a pro-worker program that much more difficult to implement. The left shouldn’t be spouting any of this nonsense about climate change being an “opportunity”. Dealing with it will be a challenge, and a truly massive one, for any government whether capitalist or socialist. However, at least a socialist government could be able to deal with it in a way which won’t immiserate workers.

    1. JohnP says:

      There is an argument that only global socialism will provide the vast quantities of research and material resources which will finally perfect that “holy technological Grail” of sustainable energy production, fusion power. However I suspect that as the oil runs out (rather than the planet choking on its own industrial pollution – capitalism doesn’t care) even capitalism will push the huge resources into this technology that will be required to bring it on stream.

      Of course fusion power may be a technological impossibility pipedream – after 60 years or so of trying – but laser-based technology is currently showing promise. This wouldn’t escape the need for the petrochemical based plastics etc, etc, that our society is also built on – but very cheap, clean, pretty much unlimited, fusion powered energy , would escape the rather large problem that the collapse/overthrow of capitalism occurs just as the cheap energy (oil/coal) runs out, and/or is too polluting to use !

      However, although most Greens simply aren’t interested in research into either Thorium cycle reactors or fusion power, because it offers an escape route from the “back to the soil/anti industrialism” that these middle class luddites pontificate about on their high tech laptops, it needs to be said that even a system run using sustainable , clean, fusion power would STILL be capitalism without a massive change in wealth and power ownership and control , and the replacement the rule of the capitalist market by democratic comprehensive planning.

      1. C MacMackin says:

        I’ve heard that argument before. One thing in its favour was that the USSR (not that I consider it socialist) was more succesful in its fusion research than the USA. My suspicion, though, is that while individual private companies won’t be able to develop fusion, it will still be possible for capitalists states to do so (assuming the physics works). Certainly current fusion research is conducted in public universities and laboratories. ITER, which is being build in France, is expected to produce fusion (in the 2030s), but it will have taken 50 years and tens of billions of dollars since the initial agreement between Reagan and Gorbachev to collaborate. Obviously there is no way a capitalist enterprise could have seen that investment through. It will probably also be true that fusion reactors would be too big and expensive to build without government support. However, all of this was also true of fission; reactors were developed initially by governments, later sometimes privately with government support, and were built by public utilities or privately with pulbic assistance. There are currently a number of small private companies working on thorium reactors and other innovataive fission concepts, but I can’t see them coming to anything without government backing (which, incidentally, they tend to seek after). In principle, all of the work to go off fossil fuels can be done by the state within capitalism. In the near term, though, I can’t see capital tolerating a public works program of this magnitude unless its power has been severely limited by a radical left wing government.

  8. David Pavett says:

    One of the problems in discussing articles like this is that Ann Pettifor, like all neo-Keynesian economists, thinks that the post-WWII period of 25 years or so was a golden age of managed capitalism to which we can and should return. The problems of our economy, they think, are basically simple technical issues of understanding how money is produced and how that production should be regulated. In other words they believes that capitalism can be managed without crises and that there is no need to consider an alternative non-capitalist form of society. As Ann Pettifor puts in in her latest book

    As to the policies need to subdue finance capital, these are known … We do not have to reinvent the wheel. We do not need a social revolution. We simply have to reclaim the knowledge and understanding of money and finance – knowledge that has been available to society for many centuries.

    On this basis she says

    I have long believed that an alliance between labour and industry is important if finance is to be successfully challenged. The interests of both would be served by subordinating finance to its proper role as servant not master of the real productive economy.

    Both quotes are from Chapter 8 of The Production of Money (Verso, 2017). Ann Pettifor is sufficiently confident of this view that this chapter is almost entirely a direct lift (without indicating) from chapter seven of her earlier book Just Money (Commonwealth Publishing, 2014).

    All of which prompts the question “Is a return to ‘The Spirit of ’45” really the limit of the social ambitions of the Labour left?”. All the indications I know of seem to indicate that a strong “yes” is the response. My view is that economic policy based on the idea of a return to 1945-type management of the economy is so out of tune with the nature of the increasingly limited powers of the nation state caught in the workings of global capitalism that it can only end in tears. Capitalism has proved to be stronger and more resilient that most socialists in the past imagined it could be. So now the left needs to get down to serious economic debate and to consider just what capitalism can now be expected to deliver in the short, medium and long term along with what international political forms would be required to meet the challenge. For that, my view is that, for all their claims of a radical critique of economic orthodoxy, the neo-Keynesians will not have much to say.

    1. Jeffrey Lucas says:

      A number of serious thinkers , eg Wolfgang Streek, are predicting that it will be Artificial intelligence (make large numbers of the middle class redundant) that will spell the end of capitalism, rather than the socialist revolution. Should we therefore welcome the rise of the robots?

      1. JohnP says:

        When true artificial intelligence is invented I volunteer to eat my hat Jeffrey. Current forms of computer are absolutely nowhere near genuine artificial intelligence ( meeting the Turing Test criteria for instance). All current “the robots are coming hype”is drivel. All we are seeing is continued developments in automation – not the same thing as artificial intelligence at all. And if this automation was really going to abolish human labour , it is strange that the UK economy is drawing in ever greater labour supplies from the EU and worldwide every year !

        1. David Pavett says:

          The phrase “true artificial intelligence” has no clear meaning so neither does your point. There is strong AI and weak/standard AI. The aim of the latter is to replace action hitherto reqiring human judgement. This is clearly a reality and is too well known to require explanation. Strong AI, on the other hand is the quest to make machines that not only can replace human judgement in specific area but can actually think for themselves. Arguments continue about whether this is even plausible let alone feasible. However even standard AI can pass the Turing Test in specific circumstances.

          I agree with in rejecting ‘the robots are coming’ talk although I might be more inclinedvto say that it is wrong rather than to dismiss it as “drivel”.

          1. JohnP says:

            “True artificial intelligence” has a well understood meaning – and the claim that we are “nearly there” with is development is now a regular “end of the human days as top species” hype across the mass media – even from serious thinkers like Stephen Hawking. So, no , David , NOT a meaningless term at all.

            In fact No claimed AI has EVER passed a truly rigorous application of the Turing Test. A recent international competition for the claimed best global AI was well covered in the international press, and journalists had no trouble at all in “interviewing ” the competing AI programmes and exposing the distinctly non genuine AI behind the clever programming. Or does this real world test situation not meet your “special circumstances ” condition ?

            Rather than more automation per se actually posing an existential threat to UK capitalism, it is precisely the current and long term investment strike of UK businesses that lie behind our disastrous productivity stats compared to major competitors . Automation ,( the use of the term “AI” for me simply over dramatizes an ever more highly developed key technological feature of the entire post 1945 Long Wave capitalist cycle) obviously poses a threat to many job sectors , and with its current capabilities even to middle class jobs like journalism. But the UK’s boundless appetite for extra labour resources over the last 15 years in particular reveals clearly that we are a long way from “the end of human work” – which is so often used to justify the introduction of that neoliberal con trick of the “Citizens Income”. On that we even seem to agree , David. Maybe that should have been the point of your post, rather than petty, point-scoring, quibbling about AI.

          2. C MacMackin says:

            The term AI is often used rather sloppily in the popular culture. On the one hand, people describe (relatively) simple things like computerised players in video games. On the other hand, the original meaning (one we still often see used) is a general, thinking computer akin to HAL 9000. The latter is more correctly referred to as “strong AI”. I take it this is what you mean, John, by “true artificial intelligence”.

            Most AI research focuses on “weak AI”. This involves systems designed to learn and process complex problems, but capable only of specific tasks. Examples include competitors in video games, image recognition software, and “expert systems” which use large volumes of stored knowledge to come to conclusions about new data. While these systems will never evolve into strong AI on their own, they nonetheless are extremely dynamic fields of research and could have many applications in coming years. For example, we are already seeing the development of expert systems which can help diagnose illnesses. Based on what we now know about artificial intelligence, it is entirely conceivable we develop an AI which can pass the Turing Test but do nothing else.

            The fact that there is no sign of strong AI on the horizon does not, in itself, invalidate the idea of impending joblessness due to automation. Weak AI is certainly capable of replacing many jobs, especially in administration. The reasons why this is unlikely to cause mass unemployment are twofold. One is that there are no signs of it being applied at the rate suggested. A weak labour movement and substantial levels of unemployment mean that human labour is cheaper than developing new technologies. Second, even if there were substantial automation, that doesn’t mean new jobs won’t be created at an equal rate that they are destroyed. These are the reasons why automation won’t bring the end of employment (let alone capitalism), not lack of progress on strong AI.

          3. JohnP says:

            I don’t think we are actually in disagreement, C.Mack, as the overall content of my posts I think demonstrates.

          4. David Pavett says:

            @JohnP (August 31, 2017 at 10:46 am)

            John, you say that “True AI” has a well understood meaning I think that a brief Internet search shows otherwise. Even AI doesn’t have a well understood meaning. In fact even “intelligence” doesn’t have a well understood meaning. This whole area is a minefield of fuzzy debate in analogies, metaphors and wild claims about sentience and consciousness abound. I remember Marvin Minsky, one of the founders of AI, responding to the question “Can machines have feelings” by saying “Sure, a thermostat has rudimentary feelings about temperature”, or words to that effect. The arguments about Searle’s Chinese Room continue with no general resolution.

            What is perhaps more to the point is that the original comment to which you responded was about AI and did not use the expression “true AI”.

            Of course I agree with you about the wild claims about computers displacing humans as the top species etc., etc. But I don’t think John Lucus aluded to that. It is reasonable to assume that he was referring to (weak)AI in its capacity of designing machines that replace what hitherto required human cognitive functions. In an age in which highly skilled jobs, for example in the car industry, have been massively replaced by robots this is clearly a significant matter. Developments like that of driverless cars highlight the wide range of possibilities. I take it that this was what John L, and by extension Wolfgang Streek, was referring to. I think that there are real issues, as there are in general from all automation. So I still don’t think that all the talk of big social consequences of AI is just “drivel”.

            Another source of confusion is the Turing test. I am with Searle’s Chinese Room argument on that. All sorts of claims are in fact made about machines passing the test e.g. here and here but there is a lack of any critical analysis of what exactly is being tested. Again see Searle on this.

            I agree with you that a lot of AI talk treats as radically new something that was already underway. In fact one could argue that James Watt’s rotating governor regulating speed by feedback was an early information system. (I had an applied maths teacher who used to like speaking about “Watt’s rotating balls”.) I agree also about the talk of an end to human work and I am not a fan of UBI either.

            P.S. I am not given to “petty point scoring” and I am not aware of having indulged in it in my response to you. If I felt I had done so I would apologise since I really dislike that sort of thing, but I don’t think I did.

          5. David Pavett says:

            @C MacMackin (August 31, 2017 at 11:50 am).

            I agree with all your points. I would add only that it is not only in popular culture that the term AI is used sloppily. My dictionary of computing has this “AI. A branch of computer science that …[seeks] … to make computers think more like humans”. More like!?

      2. David Pavett says:

        All major advances in productive technology change our relation to machines and our productive relations to each other. Therefore increased application of AI will pose various problems for capitalism. In the absence of political pressure for non-capitalist solutions capitalism will develop its own ones. The idea that capitalism will grind to a halt by itself because of new technology has no basis beyond wishful thinking. Another version of this is Paul Mason’s zero-cost machines desroying capitalist profit. There is no substitute for proper social analysis and technology is never going to deliver social change on a plate and with no need for political struggle.

  9. JohnP says:

    excellent post, David. So Ann Pettifor believes that the last 30 years of deregulated, financialised, capitalism , was simply a “mistaken direction taken” by deluded Hayekian enthusiasts. And all that is needed is return to neo Keynsianism with its regulatory frameworks, and all will be well for global capitalism !

    The depths of this delusion is of course breathtaking. Neoliberalism was not a “free” choice for the global bourgeoisie, but a “rational” decision , to maintain profit rates, as the post 1945 long boom started reach its mature, declining, phase. Today, Left Keynsian statist management can to a degree restrain the utterly out of control financial sector, feeding off fictitious profits that are asset stripping productive industry, and its associated globalisation which is rapidly impoverishing the stilll massively priviliged working classes of the old capitalist heartland states. But, Left neo Keynsianism cannot set UK or global capitalism back on a prolonged new stable growth – not without a cluster of new dynamic profitable, technologies,as yet unknown, to commence a new Long Wave comparable to post 1945.

    To get to the post 1945 Long Wave of growth took fascism, WW2, and widespread destruction of productive and social infrastructure, and tens of millions of dead . Socialism alone can spare us from this once again, not Keynsian tinkering. Unfortunately Ann’s deluded opinion is undoubtedly that of most of Left social democracy too.

  10. Thank you John, David et al. The return to the spirit of 45 is made impossible by the transformation of the mode of production from tangible good (both industrial and agricultural) production to intangible service creation, which employs more than 90 per cent in advanced economies. The first problem is that intangibles, lacking a physical characteristic, can’t be managed in the way coal, steel, wheat etc can. Second, recognising the difficulty of controlling intangible good creation but focussing on controlling people is both ineffective and inhuman (key factor behind the failure of the
    Soviet Union as it attempted to deal with the rise of intangible creation in its own economy. this will also prove fatal to the EU, the contemporary expression of the concept of socialism in one country) The third and most important issue is that more than 90 per cent of the capital on the balance sheets of top FTSE companies is in a non-tangible form. It is possible of course to introduce regulations to bank, security and other finance markets, but this is what lay behind the 2008 financial crisis (either they didn’t work or actually encouraged delinquent behaviour as employees of banks, brokerages and insurance firms gamed the system). The truth is you can only actually control physical things which suggests that action should be taken to force/encourage corporations to hold at least half their balance sheet assets either in tangibles (buildings, stocks, equipment) or in government infrastructure bonds. This would reduce the extent to which intangible capital can subvert government policies, regulations and controls. And by nailing capital down, it would also stimulate tangible goods industries (building for example). Making capital less mobile by forcing owners to hold it in a physical form can also help reduce pressure for workers to leave communities in search of employment since physical capital can be directed (you can only encourage intangible capital to move as required, and usually at very high cost in the form of tax concessions etc, Social control of all physical capital that supports value-creation would also be made easier. But the revolution has already happened in the mode of production and this allows parliamentary legislation that will replace the government of persons by the administration of things.

  11. Sam Kelly says:

    Just a quick comment about the “huge upsurge in inequality” that you lament, Ann. It’s a consequence of arithmetic. A is earning £10k per year and scraping by. B is on £100k and doing nicely (boo!). Inequality: £90k. Globalisation and capitalism produce economic growth and a decade later A earns £20k and B £200k. Inequality has risen to £180k but A is substantially better off! Hooray!

    1. C MacMackin says:

      Um, no, that’s not how inequality is measured. The most common measure, the Gini Coefficient, is normalised so that increases in overall wealth don’t affect it.

      1. David Pavett says:

        Thanks Chris, I was about to say the same thing.

        Inequality on the Gini coefficient rose significantly in the Thatcher years and, despite a reduction following the crash, has never returned to anything like its pre-Thatcher level.

        1. Sam Kelly says:

          Thank you, David, I’ll look up the Gini Coefficient.

      2. Sam Kelly says:

        Thank you, C, I’ll look up the Gini Coefficient.

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