J. Bradford DeLong's Blog, page 14

11.2.0. The Neoliberal Turn: Intro Video: Econ 115 F 2020

mmhmm Interactive Video: https://share.mmhmm.app/22a2ade496c94828a170a2910550751f

https://www.icloud.com/keynote/0Iew_EELHLYo1GVrvdtJmpqew

https://github.com/braddelong/public-files/blob/master/econ-115-module-11.2.0-neoliberal-turn-intro-video-16.75.pptx

.#berkeley #highlighted #neoliberalturn #politicaleconomy #slouchingtowardsutopia #tceh #2020-11-23

I have been averaging a little under an hour for these weekly powerpoint slides-with-audio, these files that substitute for the Tuesday lectures that I would be giving live if this class were live. I have been thinking that this allows me to go into greater depth and exceed that hour well it seems reasonable. And I have done so this time. Rather than coming in 30 minutes below the length of a standard hour and a half lecture, this weeks power points with audio come in 10 minutes above that standard length.

I think the reason for this is that I am uncertain about this week���s topic: the neoliberal turn in global north political economy after the mid-1970s and the development of a very strong feeling in the global north that globalization was no longer a friend but an enemy���a source of disruption, uncertainty, and poverty; rather than a source of prosperity, growth, and peace.

And yet the sources of this neoliberal turn and this development of a fear of globalization are largely cloudy to me.

So here let me add another 15 minutes or so of introduction and summary���carrying the total up to two hours���to set out what I see, uncertainly, as the big picture of the global north���s circa-1980 neoliberal turn.

Yes: I see what happened, and how people reacted, but the reaction seems disproportionate ��� the effect seems massively outsized relative to the cause. Yes, there was inflation in the 1970s, about 7% per year for a decade that doubled the price level. But if prices were rising because of inflation, your incomes were rising because of inflation as well. And, yes, inflation was another source of uncertainty and disruption in a confusing world. But it was not as though there was a great depression on, or people were dying by the tens of millions in wars in genocides, or incomes had stopped growing. At least, it was not as if incomes had stopped growing until the consequences of the neoliberal turn made themselves felt, as the neoliberal term created the massive explosion in income inequality that has led to our second gilded age.

In the end, I take refuge in the position that the inflation of the 1970s destabilized the social democratic order of the mixed economy on the grounds that a system that cannot produce stable prices appears to be a system that cannot be working. It needed to be replaced. The only replacement put forward was a rollback of social democracy: a shift back toward classical semi liberalism. But that shift backward did not perform its stated goal of restoring order and growth. And yet the neoliberal turn persisted, as though its failure to accomplish its goals made it only more attractive to public intellectuals and electorates.

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And there was a productivity slowdown in the global north. Since 1973 output per worker as measured by standard statistics in the global north has average not the 3% per year of 1938 to 1973 but rather 1.5% per year. This is still very impressive. But the 30 glorious years had raised the bar. And so, in addition to the inflation of the 1970s, the coming of the productivity slowdown destabilized the social democratic order. Yet somehow the failure of the neoliberal turn to restore rapid overall growth did not rebound to its discredit in the global north. It was after 15 years of Reagan-Bush policies that���save in the absence of annoying inflation���produced less growth and more economic disruption than the Ford-Carter years of the inflationary 70s that Democratic president Bill Clinton was to announce: "the era of big government is over.���

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And so we have the straws in the wind. Reagan, and his denunciation of "welfare queens" with the subtext that even those beneficiaries who were playing by the rules were undeserving. The confidence of Trump voters that he was a bastard but that he was their bastard, and that he would make sure that the right unworthy people suffered. And the puzzlement of Ezekiel Mareno who cannot believe that he is, in Donald Trump's eyes, one of the unworthy recipients of government welfare, and an alien and untrustworthy Mexican as well.

The refuge is that the boss does not know what his bureaucratic underlings are doing, and would fix it if he knew. The echo comes from the story of czarist Russia, where as the cossacks rape, burn, and loot; and the villagers fleet for their lives; the villagers say: ���Oh! If only the czar, if only our Little Father the czar, if only he knew what the cossacks were doing���he would stop this!���

Well, the cossacks work for the czar. The cossacks have always worked for the czar. The czar hired the contacts, and the czar hired these cossacks.

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But "neoliberalism" is not one thing. There is "hard" neoliberalism: restore order and make sure that economic incentives are properly aligned by making the rich richer so they will become job creating agents of creative destruction and economic growth, and make the poor poorer so they can no longer afford to be idle slackers. There is "soft" neoliberalism, which at least tells itself that it is aiming at achieving social democratic egalitarian ends through market friendly and incentive compatible means that actually work. It contrast itself with a social democracy that had acquired too many special interest and bureaucratic barnacles. And there is ���outside" neoliberalism: technocrats and others from the global north fighting kleptocratic and incompetent bureaucratic governments in the global south that are strangling development. In some cents, this goes back to Keynes, and his claim that the left-wing elements of his system would be more effective at securing the prosperity of the bosses in the saviors than the right wing policies they wanted; and also that the right wing elements of the system would give the left wing not only greater prosperity but also freedom, autonomy and choice that they really wanted although they did not quite know it.

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The balance sheet on neoliberalism in the global north it was absolutely horrible for income in equality. How could it have been otherwise? And it was completely unsuccessful at restoring economic growth. In fact, the absence of public investments almost slowed it was already much slower growth than the 30 glorious years. Under neoliberalism in the global north, the top 0.01% became masters of the universe. The rest of the top 1% saw faster growth of their prosperity, but felt uneasy comparing themselves to their plutocratic overlords. The rest of those who called themselves the upper middle class ��� the rest of the top 10% ��� saw their incomes grow as rapidly as during the 30 glorious years. And everyone else was or at least perceive themselves to be treading water. Plus neoliberalism created huge vulnerabilities that would wreak catastrophe after 2007. And yet it persisted.

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For most of the countries in the global south, the idea that you would borrow market discipline and governance from the global north and the international institutions was not a conspicuous success. But China���s and India's turns away from central planning and the bureaucratic license raj were extraordinary successes. Isn't that enough to justify the neoliberal turn in the global south?

Plus there were others that did well. And to China and India the east Asian 5: Japan, Singapore, Hong Kong, Korea, Taiwan. Add to those the other three of the successfully industrializing 6: Indonesia, Thailand, and Poland; and Malaysia and Bangladesh should certainly be added as well to this list that I got from Richard Baldwin. And faster growth especially in China produced resource booms, from which Australia, Brazil, Mexico, and turkey benefited massively. Nigeria ought to have benefited massively, but its political economy once again got in the way. And in Venezuela it was not neoliberalism but rather movements that claimed to be devoted to its overthrow that produced political economic catastrophe.

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One position that I do not endorse but that I do want you to think about is one taken by economist Thomas Piketty in his capital in the 21st-century. In his view, Social democracy is an anomaly: A plutocrat Gilded Age is the rule, even with political democracy

In a capitalist economy, you see, itt is normal for a large proportion of the wealth to be inherited; it is normal for wealth distribution to be highly unequal; it is normal for a plutocratic elite to shape the economy and the polity; and it is normal for this to put a drag on economic growth���that is Piketty���s argument.

To grasp the underlying logic, consider that rapid growth like 1945-1973 requires creative destruction. But one thing destroyed in such creative destruction is the wealth of th elast generation���s plutocrats. So they are unlikely to encourage it.

Thus Piketty���s conclusion: We are likely to see oscillations between periods like 1870-1914, 1914-1945, and 1980-2020. The 1945-1980 social democratic era was a freak anomaly of rapid and equitable growth, one that we are unlikely to see again.

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https://www.bradford-delong.com/2020/11/1120-the-neoliberal-turn-intro-video-econ-115-f-2020.html https://www.typepad.com/site/blogs/6a00e551f08003883400e551f080068834/post/6a00e551f0800388340263e97a1017200b/edit

Let's Make Matt Yglesias's New Weblog a Success!

I very much hope that Matt Yglesias���s new weblog http://slowboring.com becomes the place to see and be seen on the internet.

Not, mind you, that I expect Matt to get everything right. Or that I expect all of his quick takes to be sound takes:

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https://threadreaderapp.com/thread/1330313756522536963.html

Matt--

I find myself more with Tom Scocca here than you. You write https://www.slowboring.com/p/whats-wrong-with-the-media:

The problem here, to me, is not that Walker ought to ���stick to sports.��� It���s that the analysis is bad. But because it���s in a video game console review rather than a policy analysis section and conforms to the predominant ideological fads, it just sails through to our screens...

And then you say:

What actually happened is that starting in March the household savings rate soared.... Middle class people are seeing their homeowners��� equity rise and... their debt payments fall, while cash piles up on their balance sheets���

This makes sense as a criticism of Ian Walker only if you think that when Ian Walker wrote 'I���d be remiss to ignore all the reasons not to be excited for the PlayStation 5...', it was meant to be the start of an argument that the PS5 will not sell very well because of the epidemiological-economic-cultural uproar of the plague year.

https://www.icloud.com/keynote/0HbVeT91VG7G4lI6FMjrekmQw

But I do not think that was what Ian Walker was doing at all. When he wrote 'I���d be remiss to ignore all the reasons not to be excited for the PlayStation 5...', he was doing what Chaucer does at the end of the Canterbury tales���saying: 'OK. You have had a good read and a good laugh. But now I need to remind you of the most important things https://www.gutenberg.org/files/22120/22120-h/22120-h.htm that all his readers join him in praying:

Graunte me grace of verray penitence, confessioun and satisfaccioun to doon in this present lyf; thurgh the benigne grace of him that is king of kinges and preest over alle preestes, that boghte us with the precious blood of his herte; / so that I may been oon of hem at the day of dome that shulle be saved: Qui cum patre, &c.'

Ian Walker is doing something very similar to Geoffrey Chaucer here. Ian Walker is very excited about the PS5 https://kotaku.com/playstation-5-the-kotaku-review-1845588904:

This review has spent 3,000 words talking about the PlayStation 5, which is the most I���ve written about anything. It���s as good a video game console as there has ever been. The combination of ultra high-definition video, increased framerates, high-end graphics techniques like ray tracing, and the lightning-fast SSD make it feel like a real-deal, next-gen successor to the PlayStation 4. And if you���re not ready to give up on the previous console, the PlayStation 5 reliably runs a vast majority of the PlayStation 4 library, with many of those games receiving upgrades to fidelity, framerate, and loading times.

That is the passage that immediately precedes 'But I would be remiss'. What Ian Walker is doing is an act of confession: he is excited about the PS5, but he is letting that excitement crowd the important things out of his soul, and he wants to mark that allowing that to happen is a sin. His idea of sin is very different from Chaucer's: rather than calling to mind his need to 'thanke I oure lord Iesu Crist and his blisful moder, and alle the seintes of hevene...', Ian Walker wants to call to mind the ���covid-19 pandemic��� Americans out of work... that the worst people aren���t going away just because a new old white man is sitting behind the Resolute desk... a lot of people simply won���t be able to buy a PlayStation 5... [his own] privilege... [that he can] simply tune out the world as it burns around you...'

This is not 'analysis [that] is bad���. But because it���s in a video game console review rather than a policy analysis section and conforms to the predominant ideological fads, it just sails through to our screens...'

Ian is not forecasting how the pent-up hoarded cash is going to show itself in spending on consumer electronics next year���that is the thing I am doing, not the thing he does.

What Ian Walker is doing is shifting into Woke Theology Mode.

And, Matt, I think you miss his point because you take him to be doing a bad version of the forecasting exercises that I do.

&, by the way, good luck with Slow Boring. I have subscribed.

But how many weblogs-flying-the-jolly-roger-of-Substack-&-costing-$100-a-year am I supposed to subscribe to?

Yours,

Brad DeLong

.#noted #publicsphere #wokeness #2020-11-21

DeLong Debt Memo: 2020-11-17

You asked me to think about long-run downside via fiscal drag and higher required tax rates and revenues in the future, after the economy has returned to full employment, from additional debt-financed COVID depression-fighting stimulus expenditures. You asked me to think in the context of Larry Summers���s and my ���Fiscal Policy in a Depressed Economy��� of a decade ago.

My conclusion: RIGHT NOW THERE IS NO PROSPECT OF ANY FUTURE FISCAL DRAG FROM ADDITIONAL DEBT-FINANCED FISCAL STIMULUS...

https://www.icloud.com/keynote/0UJ2pg4UkvegNtUljgTL-Qhdg

.#coronavirus #fiscalpolicy #highlighted #macro #2020-11-20

The Siren Song of Austerity: Project Syndicate

J. Bradford DeLong: The Siren Song of Austerity https://www.project-syndicate.org/commentary/return-of-austerity-in-us-by-j-bradford-delong-2020-11: ���Among the many lessons of the 2008 financial crisis and its aftermath in the United States is that there is no good reason to start worrying about debt when unemployment remains high and interest rates low. The hasty embrace of austerity derailed the last recovery, and it must not be allowed to do so again: BERKELEY���Ten years and ten months ago, US President Barack Obama announced in his 2010 State of the Union address that it was time for austerity. ���Families across the country are tightening their belts and making tough decisions,��� he explained. ���The federal government should do the same.��� Signaling his willingness to freeze government spending for three years, Obama argued that, ���Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don���t.��� So great was the perceived need for austerity that he even vowed to ���enforce this discipline by veto,��� just in case congressional Democrats had something else in mind���

https://www.icloud.com/keynote/0mfYblEaFhtRC9uF-9OFxB5bw

.#coronavirus #fiscalpolicy #highlighted #macro #projectsyndicate #2020-11-19

DeLongTODAY: Fiscal Policy: MOAR Spend & Borrow Needed

DeLongTODAY: Fiscal Policy: MOAR Spend & Borrow Needed https://www.delongtoday.com/today

https://www.icloud.com/keynote/0jLoT585Rvy3PTrjXO56v8xqw

.#coronavirus #delongtoday #fiscalpolicy #highlighted #macro #2020-11-20

https://www.bradford-delong.com/2020/11/delongtoday-fiscal-policy-moar-spend-borrow-needed.html

https://www.typepad.com/site/blogs/6a00e551f08003883400e551f080068834/post/6a00e551f0800388340263e979425f200b/edit

COVID Extrapolations: As of 2020-11-19

UPDATE: For 2020-11-19: Now headed for 3000 deaths per day average for the week ending December 10. We have so screwed ourselves:

It gives me no pleasure that my simple national model of coronavirus cases���project cases back three weeks from deaths, and then extrapolate case growth out from confirmed case growth and from the number of cases per test���is running dead-on:

I forecast a week ago that we would have 6641 deaths in the seven days ending Th 2020-11-05.
We had 6805 deaths.
The model is now predicting that we will see 12893 deaths in the seven days ending on Thanksgiving: Th 2020-11-26.
And if our current inferred last-three-weeks R=1.24 were to continue, we would have 3,671,728 new cases in the seven days ending on Thanksgiving.

https://www.icloud.com/keynote/0bCYYctIKV9_4ICVqtSe5qItQ

.#covid #forecasting #2020-11-19

https://www.bradford-delong.com/2020/11/covid-extrapolations-as-of-2020-11-06.html

https://www.typepad.com/site/blogs/6a00e551f08003883400e551f080068834/post/6a00e551f080038834026be4214e3b200d/edit

Brad DeLong & Scott Galloway: CoronaNomics Podcast

Brad DeLong & Scott Galloway: COVID-19, Technology, & Surveillance Capitalism: CoronaNomics 2:4 https://www.youtube.com/watch?v=IEQ8zbEFJbE&feature=youtu.be&t=203 2020-11-16

EconFilms: CoronaNomics https://www.youtube.com/channel/UCGiaO8Jc_UtHJPlKjG9anTw

https://www.icloud.com/keynote/0txwoGyiStINtGNbmuMZlhU2g

2020-11-16

.#coronavirus #highlighted #podcast #riseoftherobots #2020-11-16

Do I Really Need to Say, Again, That Judy Shelton Does Not Belong on the Federal Reserve's Board of Governors? Apparently I Do...

And it looks like even without Trump Republican senators will continue to be orange-haired baboons:

That any Republican senators at all are thinking of voting for Judy Shelton���a woman views whom Milton Friedman dismissed by saying "it would be hard to pack more error into so few words"���for a Fed Governor position reveals an astonishing lack of spine. Yet the Senate Banking Committee chair appears to be attempting to advance her nomination on Tuesday:

Hoisted from the Archives:_ Shelton the Charlatan_ https://www.bradford-delong.com/2020/03/shelton-the-charlatan-project-syndicate.html: In 1994 Milton Friedman wrote about Judy Shelton: "In a recent Wall Street Journal op-ed piece (July 15)... Judy Shelton started her concluding paragraph: ���Until the U.S. begins standing up once more for stable exchange rates as the starting point for free trade...��� It would be hard to pack more error into so few words.... A system of pegged exchange rates, such as the original IMF system or the European Monetary System, is an enemy to free trade. It is no accident that the 1992 collapse of the EMS coincided with the agreement to remove controls on the movement of capital..." https://miltonfriedman.hoover.org/friedman_images/Collections/2016c21/NR_09_12_1994.pdf. To turn monetary policy away from internal balance toward preventing exchange rate movements that market fundamentals wanted to see occur was, in Friedman's view, the road toward disaster. It was simply wrong. And it could be held together only if economies moved from free trade back toward managed trade���and so beggared not just their neighbors but themselves.

Two and a half decades later, today's Judy Shelton seems no freer from error, but to it has added an enormous amount of incoherence. There is no consistent thread of argument in what she says. She is, rather, a weathervane pointing in the direction of whatever political wind she thinks likely to get her her next job. Last year she said that the Federal Reserve should be careful not to do anything to curb stock prices: "More than half of American households are invested through mutual funds or pension funds in this market. I don���t want the Fed to pull the rug out from under them..." https://www.bloomberg.com/news/articles/2019-07-05/trump-fed-pick-shelton-says-central-bank-should-support-markets. But in 2016���when unemployment was higher and the case for easy money stronger���it was the Fed's "appeasing financial markets" that was the thing to be avoided https://www.washingtonpost.com/opinions/yes-trumps-latest-fed-pick-is-that-bad-heres-why/2020/02/10/a13fa1ec-4c44-11ea-9b5c-eac5b16dafaa_story.html. Back then under the Obama administration when there were lots of unemployed workers who could be put to work producing exports, policies to produce a weaker dollar to boost exports were to be shunned: "The obvious quick route to export success for any nation is to depreciate its currency. Dollar depreciation is already being pushed by the Obama administration.... Let's not compromise our currency in a misguided attempt to boost U.S. job growth. America's best future is forged through sound finances and sound money..." https://www.wsj.com/articles/SB10001424052748704698004576104260981772424. These days "compromising the currency" is a plus from the interest-rate cuts she wants to see https://www.marketwatch.com/story/trumps-fed-choice-judy-shelton-says-interest-rate-cut-needed-because-europe-is-set-to-devalue-euro-2019-07-05. Today monetary policy should be made looser "as expeditiously as possible" https://www.washingtonpost.com/business/2019/06/19/fed-meets-trumps-potential-next-pick-wants-see-lower-rates-fast-possible. Back then "loose monetary policy... leads to internal bankruptcy... whole nations have foundered on this path..." https://www.wsj.com/articles/SB123742149749078635.

Catherine Rampell https://www.washingtonpost.com/opinions/yes-trumps-latest-fed-pick-is-that-bad-heres-why/2020/02/10/a13fa1ec-4c44-11ea-9b5c-eac5b16dafaa_story.html earlier this month correctly called Judy Shelton "an opportunist and a quack", and reported that Republican senators think she is not qualified.

Kevin Cramer (R-ND) said: "I wouldn't want five [Fed Board] members like her".

Thom Tillis (R-NC) said that her views on the gold standard do not matter because return to the gold standard is off the table.

Tim Scott (R-SC) agreed with Tillis, stating that "controversial statements" were "not relevant".

Pat Toomey (R-PA) worried about the "very, very dangerous path to go down" she advocated. Richard Shelby (R-AL) was "concerned".

John Kennedy (R-LA) said: "Nobody wants anybody on the Federal Reserve that has a fatal attraction to nutty ideas" https://www.wsj.com/articles/republican-senator-raises-concerns-over-sheltons-fed-candidacy-11581608467?mod=hp_major_pos1.

But the Wall Street Journal editorial board has decided to back Judy Shelton's "more error packed into so so few words" over Milton Friedman by praising her as a believer that "monetary policies that ignore exchange-rate stability wreak political and economic havoc". Trump wants Judy Shelton on the Fed Board so he can threaten to���and possibly actually���replace Jay Powell with her as chair. If we have learned anything over the past three years, it is that furrowed brows of concern from Republican senators are worth precisely nothing. John Kennedy (R-LA) followed his furrowed brow by saying "I���m not saying that���s the case here". Mike Crapo (R-ID) praised her "deep knowledge of democracy, economic theory and monetary policy", and denounced the "war on Judy Shelton".

If Republican senators are going to save the country from yet another Trump misstep that makes America less great, first core Republican supporters have to step up and give their senators 53 spine transplants.

Maskell & Rybicki: Counting Electoral Votes: An Overview of Procedures at the Joint Session

Note to Self: I very much hope that Pelosi and Schumer are already talking to Collins, Murkowski, Romney, Sasse, and company: the potential for an absolute dog���s breakfast on January 6, 2021 is already remarkably high, and may well increase in probability as things get crazier and crazier over the next two months.

It is also not too early for the House of Representatives to be thinking hard about how to maintain their own security���both on the U.S. Capitol grounds, and for members in transit to the Capitol itself.

The argument that Trump is not trying to gain support among the Republicans for a coup, and that Republicans are not egging one another one to see if they dare to do it, but rather doing something else seems to me to be overhasty and overconfident. Yes, Trump might be trying to establish an extradition-free bolthole for himself in Abu Dhabi. Yes, Trump might be trying to destroy as much evidence linking him to criminality as he can. Yes, Trump might be trying to show that he can disrupt the system so that he can then strike a deal that will leave him confident he will remain out of jail next year. Yes, Trump might simply be confused.

But he might not. And while Giuliani is clearly neither his G��ring, his Himmler, or his Heydrich, that does not mean that nobody else is:

Jack Maskell & Elizabeth Rybicki: Counting Electoral Votes: An Overview of Procedures at the Joint Session, Including Objections by Members of Congress https://fas.org/sgp/crs/misc/RL32717.pdf: ���Basis for Objections: The general grounds for an objection to the counting of an electoral vote or votes would appear from the federal statute and from historical sources to be that such vote was not ���regularly given��� by an elector, and/or that the elector was not ���lawfully certified���...

https://www.icloud.com/keynote/0r5Pt_jJe95PxqqyIbfHlMvPg

https://www.bradford-delong.com/2020/11/maskell-rybicki-counting-electoral-votes-an-overview-of-procedures-at-the-joint-session.html

2020-11-10

���In the case of the so-called ���faithless elector��� in 1969, described above, the elector was apparently ���lawfully certified��� by the state, but the objection raised was that the vote was not ���regularly given��� by such elector. In the above-described 2005 case, the objection was also based on the grounds that the electoral votes ���were not, under all of the known circumstances, regularly given.���...

Congress was particularly concerned in the statute of 1887 with the case of two lists of electors and votes being presented to Congress from the same state.... In the first instance, two lists... [with] only one list... from electors who were determined to be appointed pursuant to the state election contest statute... only those electors should be counted. In the second case... two lists... from two different state authorities who arguably made determinations... the question of which state authority is ���the lawful tribunal of such State��� to make the decision (and thus the acceptance of those electors��� votes) shall be decided only upon the concurrent agreement of both houses....

The two chambers must agree concurrently to accept the votes of one set of electors; but the two chambers may also concurrently agree not to accept the votes of electors from that state. When the two houses disagree, then the statute states that the votes of the electors whose appointment was certified by the governor of the state shall be counted. It is not precisely clear....

Precedent subsequent to... 1887 has been sparse.... In 1961... the governor of the state of Hawaii first certified the electors of Vice President Richard M. Nixon... and then, due to a subsequent recount... certified Senator Kennedy as the winner. Both slates... cast their votes for President and Vice President, and transmitted them.... The President of the Senate, Vice President Nixon, suggested ���without the intent of establishing a precedent��� that the latter and more recent certification of Senator Kennedy be accepted so as ���not to delay the further count of electoral votes.��� This was agreed to by unanimous consent...

https://fas.org/sgp/crs/misc/RL32717.pdf

2020-11-10

.#noted #notetoself #2020-11-10

Frost: Entrepreneurial Transformation of Socialist China���Noted

Adam Frost: Entrepreneurial Transformation of Socialist China https://ysi.ineteconomics.org/project/5f316897689c756fb5c52785/event/5f6b2b94a21037043d0c1458: ���Generations of scholars argued that beginning with the Communist���s victory over the Nationalists in 1949 and culminating until the establishment of collective economic institutions in 1957, private entrepreneurship was effectively purged from the Chinese economy.... [But] capitalist entrepreneurship was an enduring feature of the modern Chinese economy.... 2,600 cases of ���speculation and profiteering��� that were prosecuted by local government agencies in the 1960s and 1970s...

https://www.icloud.com/keynote/0z0Btdoy-vo9Rm1GKFxXBwoBw

Adam Frost: Entrepreneurial Transformation of Socialist China https://ysi.ineteconomics.org/project/5f316897689c756fb5c52785/event/5f6b2b94a21037043d0c1458: ���China���s socialist era (1957���1980) is often described as having been void of entrepreneurial activity. Generations of scholars argued that beginning with the Communist���s victory over the Nationalists in 1949 and culminating until the establishment of collective economic institutions in 1957, private entrepreneurship was effectively purged from the Chinese economy. It was only with the introduction of market-oriented reforms in the early 1980s, that Chinese entrepreneurs began to reemerge....

[But] capitalist entrepreneurship was an enduring feature of the modern Chinese economy.... 2,600 cases of ���speculation and profiteering��� that were prosecuted by local government agencies in the 1960s and 1970s.... Private entrepreneurial activity... was far greater in scale and scope than previous scholarship leads us to believe. Of the millions of entrepreneurs who were prosecuted by the socialist state, the mean individual was engaged in the production and exchange of goods whose value represented years��� of income for the median worker....

The socialist state was not unified in its suppression of private entrepreneurial activity. A statistical analysis of the punishments in ���speculation and profiteering��� case demonstrates that local government officials did not faithfully execute central directives. Rather, they adopted overtly protectionist strategies, sheltering entrepreneurs who were engaged in large-scale pursuits or activities that they viewed as more productive in the local economy. Collectively, these findings overturn longstanding ideas about the evolution of the modern Chinese economy and the historical antecedents of China���s market-oriented reforms���

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John Maynard Keynes (1925): Soviet Russia I https://newrepublic.com/article/77318/soviet-russiai: ���This system does not mean a complete leveling down of incomes���at least at the present stage. A clever and successful person in Soviet Russia has a bigger income and a better time than other people. The Commissar with $25 a week (plus sundry free services, a motor-car, a flat, a box at the ballet, etc., etc.) lives well enough, but not in the least like a rich man in London. The successful Professor or Civil Servant with $30 or $35 a week (minus sundry impositions) has, perhaps, a real income three times that of the proletarian worker, and six times those of the poorer peasants.

Some peasants are three or four times as rich as others. A man who is out of work receives half pay, not full pay. But no one can afford on these incomes, with high Russian prices and stiff progressive taxes, to save anything worth saving; it is hard enough to live day by day. The progressive taxation and the mode of assessing rents and other charges are such that it is actually disadvantageous to have an acknowledged income exceeding $40 to $50 a week. Nor is there any possibility of large gains except by taking the same sort of risks as attach to bribery and embezzlement elsewhere���not that bribery and embezzlement have disappeared in Russia or are even rare, but anyone whose extravagance or whose instincts drive him to such courses runs serious risk of detection and penalties which include death.

Nor, at the present stage, does the system involve the actual prohibition of buying and selling at a profit. The policy is not to forbid these professions, but to render them precarious and disgraceful. The private trader is a sort of permitted outlaw, without privileges or protection, like the Jew in the Middle Ages���an outlet for those who have overwhelming instincts in this direction, but not a natural or agreeable job for the normal man.

The ��effect of the��social changes has been, I think, to make a real change in the predominant attitude towards money, and will probably make a far greater change when a new generation has grown up which has known nothing else. A small, characteristic example of the way in which the true Communist endeavors to influence public opinion towards money is given by the campaign which is going on about the waiters in communal restaurants accepting tips. There is a strong propaganda to the effect that to give or to receive tips is disgusting: tip in a public way, and a not unknown thing for a tip to be refused!

Now all this may prove Utopian, or destructive of true welfare, though, perhaps, not so Utopian, pursued in an intense religious spirit, as it would be if it were pursued in a matter-of-fact way. But is it appropriate to assume, as almost the whole of the English and American press do assume, and the public also, that it is insincere or that it is abominably wicked?

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DeLong���s Questions:

John Maynard Keynes in 1925 wrote of the post-War Communism Soviet Union of the NEPmen: ���The private trader is a sort of permitted outlaw, without privileges or protection, like the Jew in the Middle Ages���an outlet for those who have overwhelming instincts in this direction, but not a natural or agreeable job for the normal man������

How different was Maoist China���s attitude in those districts were the government was relatively tolerant?

 

As I understand how the centrally-planned economies worked, they controlled a few hundred key commodities and their flows through material balances under imposed semi-military discipline. But that was only a small part of the economy. The rest of it? The center made that factory managers��� an commune directors problem. Hence they had to beg, borrow, buy, barter, blatt, and steal all resources other than those that were tracked by material balances and that they could command by fiat and pointing to the plan.

Highly inefficient, highly corrupt���

But exchange, beggary, barter, blat, and plan���understood as a desire to accomplish the organization���s primary goals���in a mixture is not that different from the internal workings of a capitalist corporation in a market economy. How different is what the NEPmen in the USSR in the 1920s and the profiteers in the 1970s in China were doing different from what people were doing who were simply trying to fulfill their places in the plan?

.#china #noted #really-existing-socialism #2020-11-10