Tag Archives: Economicismo

Rainy days harm the economy (Science Daily)

Date: January 12, 2022

Source: Potsdam Institute for Climate Impact Research (PIK)

Summary: Economic growth goes down when the number of wet days and days with extreme rainfall go up, a team of scientists finds. The data analysis of more than 1,500 regions over the past 40 years shows a clear connection and suggests that intensified daily rainfall driven by climate-change from burning oil and coal will harm the global economy.

Economic growth goes down when the number of wet days and days with extreme rainfall go up, a team of Potsdam scientists finds. Rich countries are most severely affected and herein the manufacturing and service sectors, according to their study now published as cover story in the journal Nature. The data analysis of more than 1,500 regions over the past 40 years shows a clear connection and suggests that intensified daily rainfall driven by climate-change from burning oil and coal will harm the global economy.

“This is about prosperity, and ultimately about people’s jobs. Economies across the world are slowed down by more wet days and extreme daily rainfall — an important insight that adds to our growing understanding of the true costs of climate change,” says Leonie Wenz from the Potsdam Institute for Climate Impact Research (PIK) and the Mercator Research Institute on Global Commons and Climate Change (MCC) who led the study.

“Macro-economic assessments of climate impacts have so far focused mostly on temperature and considered — if at all — changes in rainfall only across longer time scales such as years or months, thus missing the complete picture,” explains Wenz. “While more annual rainfall is generally good for economies, especially agriculturally dependent ones, the question is also how the rain is distributed across the days of the year. Intensified daily rainfall turns out to be bad, especially for wealthy, industrialized countries like the US, Japan, or Germany.”

A first-of-its-kind global analysis of subnational rainfall effects

“We identify a number of distinct effects on economic production, yet the most important one really is from extreme daily rainfall,” says Maximilian Kotz, first author of the study and also at the Potsdam Institute. “This is because rainfall extremes are where we can already see the influence of climate change most clearly, and because they are intensifying almost everywhere across the world.”

The analysis statistically evaluates data of sub-national economic output for 1554 regions worldwide in the period 1979-2019, collected and made publicly available by MCC and PIK. The scientists combine these with high resolution rainfall data. The combination of ever increasing detail in climatic and economic data is of particular importance in the context of rain, a highly local phenomenon, and revealed the new insights.

“It’s the daily rainfall that poses the threat

By loading the Earth’s atmosphere with greenhouse gases from fossil power plants and cars, humanity is heating the planet. Warming air can hold more water vapour that eventually becomes rain. Although atmospheric dynamics make regional changes in annual averages more complicated, daily rainfall extremes are increasing globally due to this water vapour effect.

“Our study reveals that it’s precisely the fingerprint of global warming in daily rainfall which have hefty economic effects that have not yet been accounted for but are highly relevant,” says co-author Anders Levermann, Head of the Potsdam Institute’s Complexity Science domain, professor at Potsdam University and researcher at Columbia University’s Lamont Doherty Earth Observatory, New York. “Taking a closer look at short time scales instead of annual averages helps to understand what is going on: it’s the daily rainfall which poses the threat. It’s rather the climate shocks from weather extremes that threaten our way of life than the gradual changes. By destabilizing our climate we harm our economies. We have to make sure that our burning of fossil fuels does not destabilize our societies, too.”

Journal Reference:

  1. Maximilian Kotz, Anders Levermann, Leonie Wenz. The effect of rainfall changes on economic production. Nature, 2022; 601 (7892): 223 DOI: 10.1038/s41586-021-04283-8

Number-crunching could lead to unethical choices, says new study (Science Daily)

Date: September 15, 2014

Source: University of Toronto, Rotman School of Management

Summary: Calculating the pros and cons of a potential decision is a way of decision-making. But repeated engagement with numbers-focused calculations, especially those involving money, can have unintended negative consequences.

Calculating the pros and cons of a potential decision is a way of decision-making. But repeated engagement with numbers-focused calculations, especially those involving money, can have unintended negative consequences, including social and moral transgressions, says new study co-authored by a professor at the University of Toronto’s Rotman School of Management.

Based on several experiments, researchers concluded that people in a “calculative mindset” as a result of number-crunching are more likely to analyze non-numerical problems mathematically and not take into account social, moral or interpersonal factors.

“Performing calculations, whether related to money or not, seemed to encourage people to engage in unethical behaviors to better themselves,” says Chen-Bo Zhong, an associate professor of organizational behavior and human resource management at the Rotman School, who co-authored the study with Long Wang of City University of Hong Kong and J. Keith Murnighan from Northwestern University’s Kellogg School of Management.

Participants in a set of experiments displayed significantly more selfish behavior in games where they could opt to promote their self-interest over a stranger’s after exposure to a lesson on a calculative economics concept. Participants who were instead given a history lesson on the industrial revolution were less likely to behave selfishly in the subsequent games. A similar but lesser effect was found when participants were first asked to solve math problems instead of verbal problems before playing the games. Furthermore, the effect could potentially be reduced by making non-numerical values more prominent. The study showed less self-interested behavior when participants were shown pictures of families after calculations.

The results may provide further insight into why economics students have shown more self-interested behavior in previous studies examining whether business or economics education contributes to unethical corporate activity, the researchers wrote.

The study was published in Organizational Behavior and Human Decision Processes.

Journal Reference:

  1. Long Wang, Chen-Bo Zhong, J. Keith Murnighan. The social and ethical consequences of a calculative mindset. Organizational Behavior and Human Decision Processes, 2014; 125 (1): 39 DOI: 10.1016/j.obhdp.2014.05.004

The Compelling Conclusion About Capitalism That Piketty Resists (Truthout)

Thursday, 26 June 2014 00:00

By Fred GuerinTruthout | Op-Ed

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Temporary, like sadness. Temporary, like capitalism. Temporary, like life. (Photo: Dominic Alves / Flickr)

The excesses of capitalism are not simply a question of bad management and a political unwillingness to properly regulate it by imposing the right sort of checks and balances, but symptoms of a fundamentally and irretrievably flawed system that tends toward destruction of human and other life.

The idea of capitalism as an expression of economic freedom that also secures moral and political freedom of thought, or the notion that “free-market” economies are guided by an impartial mechanism of supply and demand – an “invisible hand” to use Adam Smith’s metaphor – are both powerful indoctrinating notions. As such, they bear little resemblance to actual reality. Smith himself never used the word “capitalism,” preferring to call his economics a “system of natural liberty.” In fact, the inner logic of capitalism can be difficult to get hold of simply because there have been different configurations of capitalism throughout history. In its classic form, before the advent of corporations (when there was still an implicit sense of social responsibility, and insatiable greed was considered a vice), capitalism might have appeared less virulent. Additionally, there is reason to believe that capitalism unfolded differently in different countries with distinct political and legal frameworks.

“There is “capitalism” and then there is “really existing capitalism.” What then is ‘really existing capitalism?'”

All of these contingent factors are worthy of consideration in any assessment of capitalism. However, it is also reasonably clear that once we actually look at history, it is difficult not to conclude that pretty muchevery embodiment of capitalism – classical capitalism, oligarchic or corporate capitalism, casino capitalism, entrepreneurial capitalism – presuppose similar elements: private property, ownership of the means of production, notions of unlimited growth, the maximization of profit, using wealth to create wealth. They also all embody a form of instrumental rationality, the kind of rationality concerned with maximizing profits and minimizing costs. In its globalized corporate form, capitalism has been able to relentlessly realize this form of instrumental reasoning on a large scale – and thereby show itself as one of the most destructive and undemocratic economic system humans have ever come up with.

Unfortunately, neither propaganda nor abstract economic theory can help us to grasp this fact. The reason is primarily that the latter do not really speak to the false theories of human nature capitalism presupposes. Nor do many of them elaborate capitalism’s legitimating normative-moral or political origins. Most crucially, they are often silent regarding the devastating impact that it has had on the environment since it first emerged during the course of the eighteenth and nineteenth centuries. As Chomsky insightfully puts it, “There is “capitalism” and then there is “really existing capitalism.” What then is “really existing capitalism’?

Thomas Piketty’s Capital in the Twenty-First Century gives us a few clues, though not by any means, the whole picture. Replete with startling empirical evidence in the form of charts, graphs, informative statistics, mathematical-logical expressions and astute critical-historical analyses, Piketty’s work draws a number of sobering conclusions about the present dynamics of wealth and income distribution that exposes not merely the dark underside of capitalism but a central contradiction within it. Thus, Piketty concludes “. . . wealth accumulated in the past grows more rapidly than output and wages. This inequality expresses a fundamental logical contradiction. The entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labor. Once constituted, capital reproduces itself faster than output increases. The past devours the future.”

The past devours the future. But, what if the bizarre inverted logic of capitalism has always been its real point? What if, under the rubric of capitalism, the powerful elite are given permission to act as if it simply doesn’t matter whether their ever-expanding wealth might actually devour the future, or “wear the world out faster” to borrow a phrase from Orwell? Do they not often appear to live in an all-consuming present – get what you can for yourself right now, and don’t worry about others, or even about tomorrow? Moreover, is not such an attitude, sanctioned by capitalism, the reason why this particular economic system requires endless cycles of economic crisis?

Perhaps Piketty’s point is that if it doesn’t matter to the elite, it should at least matter to us. But if it does matter, then it is up to the rest of us – including experts like Piketty who grasp the reality of capitalism better than anyone else – to imagine real alternatives to such an economic system, to think outside of the present paradigm of endless development, profit maximization and disastrous austerity measures imposed on whole populations. Despite the apparently glaring “logical” contradiction within capitalism, Piketty still holds to the idea that it can be properly disciplined through a progressive annual tax on wealth. It is not the conclusion he should have reached given his thorough and prescient analysis.

Looking at the history of capitalism, it is difficult not to conclude that growing inequality expresses a fundamental property of and not a contradiction within capitalism.

Of course, Piketty is by no means alone in wanting to save capitalism from itself. Capitalism – no matter what its excesses, or how destructive it is for life or democracy – is invariably held as our default economic system, grudgingly acceded to even by popular left-oriented economists such as Paul Krugman, Nouriel Roubini or Joseph Stiglitz. As Chrystia Freeland unabashedly concludes in Plutocrats, The Rise of the New Global Super-Rich and the Fall of Everyone Else, despite all its faults, we continue to need capitalism because, “very much like democracy,” it is “the best system we’ve figured out so far.” [1] Thus, if capitalism appears to go wrong, this is not because it is grounded on a misreading of history, internal contradictions, false theories about nature or human nature, or misguided moral and political presuppositions. Rather, the excesses of capitalism are simply a question of “bad management’ and a political unwillingness to properly regulate it by imposing the right sort of checks and balances.

In fact, Piketty’s proposed wealth tax solution may do more to obscure than resolve the really existing contradictions of capitalism. Looking at the history of capitalism, it is difficult not to conclude that growing inequality expresses a fundamental property of  and not a contradiction within capitalism. Inequality is built into capitalism. If there is a contradiction here it is a material not a logical one. In other words, it is the contradiction between an economic system that is radically indifferent to the health and well-being of the planet as a whole versus the economic, moral and environmental obligation to preserve and sustain such health and well-being.

If I am right that the inner logic of capitalism inevitably leads to a hegemonic, macro-structural world-system of unequal human social, political and economic relations guided by elite greed that does not reflect the best interests of the majority of people, the common good or indeed the good of the planet itself, then Piketty’s assumption that we could ever regain control over an “endless inegalitarian spiral’ by imposing a progressive tax on capital seems, is at best, rather fanciful. A more fitting conclusion in the aftermath of the 2008 financial crisis and the efforts of the elite to profit from the latter would be to ask the question whether we should continue advocating for a capitalist system that glorifies profit over people or start thinking about how to reorganize our economy around common goods such as the health and well-being of our present world.

Instead, many contemporary economists repeatedly tell us that our only tenable alternative is to tame capitalist excess through regulative initiatives. This has been done before and it can be done again, the argument goes. Thus, it is claimed that we can and did rein-in or mitigate the severity of capitalist exploitation, and the massive wealth and income disparities that followed from it. However, it should now be abundantly clear that the internal and structural logic of exploitation, wealth-income disparities and the profit-oriented colonization of social and political relations can only be regulated for short periods. It can never be fundamentally altered. Indeed, as Piketty has persuasively argued, relentless exploitation, colonization and massive inequality were only temporarily pre-empted by a war economy and FDR’s regulatory initiatives. By the late 1970’s, the internal logic of capitalism had re-established its hegemonic status and all of the built-in excesses of the capitalist economic system once again became normalized and necessary.

What if . . . we are all conditioned to see the world in terms of individual economic self-interest rather than in terms of common human good or planetary limits, health and equilibrium?

What this tells us is that regulatory reform of capitalism will only be allowed for a brief period. In other words, to the extent that it can obscure or prevent us from perceiving the inner logic of a system of structured inequality, or distract us from the most deleterious effects of capitalism on the environment and on human health and well-being, minimal regulation may be deemed necessary by the elite for a short period of time. However, as Naomi Kleinhas convincingly argued, the “collective vertigo’ caused by wars, economic upheaval, environmental or political crisis, environmental disasters can also be exploited as the perfect means through which a capitalist system of greed takes over markets, amasses fabulous fortunes and bankrupts the wealth of the commons.

Perhaps the refusal to ask critical questions about the viability of capitalism might be explained by the fact that even today many economists still hold onto the mythic assumption that the “impartial” self-regulating market is no more than a theoretical expression of the “order of human nature” itself and not, after all, a product of powerful political and moneyed interests. This belief has distant origins in Thomas Hobbes fear-inspired mechanistic account of human beings who in their natural state are war-like and driven by self-interest. Not only does the latter perspective resonate in many manifestations of capitalist theory, it also underscores a desire to replicate in economic theory what nature apparently prescribes – a war-like disposition disciplined through competitive markets based on innate selfishness. But what if the incapacity to imagine alternatives is not because we are naturally selfish, but simply a function of the reality that in capitalist societies we are all conditioned to see the world in terms of individual economic self-interest rather than in terms of common human good or planetary limits, health and equilibrium?

This perfectly predictable inversion, where government becomes a handmaid to moneyed interest, is precisely the “logic of a capitalist system.”

Over time, the promotion of selfishness as a virtue not only changes the way we look at ourselves, it influences the way we relate to each other and to the planet itself. Instead of citizens who define themselves in relation to common goods, we are reduced, under the selfish orientation of capitalism, to aggregates of self-interested atomistic individuals encouraged to believe that we can continue a lifetime of limitless consumption. Those who are entirely left out of the consumer game – the increasing numbers of homeless, stateless refugees, destitute and imprisoned whose day-to-day life is taken up by the fight for mere survival – are the necessary residue of a global capitalist system.

From its inception, capitalist economic theory has pushed the idea that the market would only be able to regulate itself if it were not subject to external and coercive government interference or regulation. However, the reality is that capitalist accumulation was never actually severed from politics or government, but invariably parasitic upon it. It has always been intimately tied to publicly funded government tax-breaks and subsidies, to war, colonial-imperial expansion, and industrial ambitions. What happened is simply that massive capitalist accumulation was allowed to entirely invert the power relation between moneyed interests and government. Thus, an elite class of bankers, financiers and industrialists (eventually expressing itself through corporate ownership) have become so powerful, they are able to coerce governments and states to go along with whatever is in their minority interest. This perfectly predictable inversion, where government becomes a handmaid to moneyed interest, is precisely the “logic of a capitalist system,” which renders any suggestion of government imposed progressive taxation rather fantastical.

Related to this, faith in the promise of capitalism might also have to do with a kind of wilful blindness about the actual origins of capital. As Karl Polyanyi reminds us, many scholars and economists tenaciously hold to Adam Smith’s idea that the division of labor has always been based upon markets of some kind because our “propensity to barter, truck and exchange one thing for another” is simply ingrainedin the natural order of things. But, clearly we do not need capitalism – the privatizing of wealth and the socializing of costs – to show us how to barter, truck or trade goods. Indeed, capitalism is actually inimical to bartering or trading, precisely because it is driven by individual profit and monopolization, not by the fair exchange of goods. The FTA (Free Trade Agreements), NAFTA (North American Free Trade Agreement) and TPP (Trans-Pacific Partnership) are the awful modern exemplars here.

There is nothing impartial about early capitalism’s inextricable relation to colonialism, slavery or plunder for private gain.

Polyani quickly dispels Smith’s historical misreading of the division of labor as structured by capitalism by reminding us that up to Smith’s time such a propensity toward the individual pursuit of unfettered profit based on wage labor “had hardly shown up on a considerable scale in the life of any observed community and had remained, at best, a subordinate feature of economic life . . . “[2]. The historical and anthropological evidence clearly suggests that it was not until the industrial age that the capitalist-inspired “wealth of nations” was realized by a hegemonic economic system guided by self-interested priorities and the exploitation of material goods and human beings in a relentless pursuit of profit for the few. Before this period, our economics were oriented by social, community, tribal and familial concerns that were considered far more important than the private possession and accumulation of goods based wholly on economic self-interest.

A more precise and broad-based historical study would conclude that, in point of fact, there isn’t anything in nature, the human condition, morality or history that necessitates the adoption of capitalism. It would also disclose that there is nothingimpartial about early capitalism’s inextricable relation to colonialism, slavery or plunder for private gain. In point of fact, the historical reality is that market capitalism is intimately tied to a colonial-imperialist political agenda. This imperialist history clearly demonstrates that there is also very little that is “free” about a “free-market” that derives its freedom to accumulate wealth by way of slave labor, slave wages, debt bondage, unjust land confiscation and the expropriation of common lands and resources into private hands. In America, the so-called “free market” wedded private self-interested exploitation of labor with imperialist state interest on a scale that dramatically dwarfed the brutality of old-world Europe. It should not be in the least surprising then that the slave plantation might capture the essence of our modern global capitalist system, insofar as it is built on the premise of extracting maximum labor at minimal cost.

Of course when one looks at history, it is not immediately apparent that the “founding fathers’ of capitalism – John Locke, Adam Smith, David Ricardo – wanted to intentionally construct a system that would entrench massive inequality. The latter figures were highly articulate, systematic, future-oriented thinkers who believed that private property, free trade, competition and laissez-faire capitalism were inherently good, and had an unlimited potential to raise the general welfare of society. However, even here, those who enjoyed the fruits of a capitalist political economy were relatively few – certainly not the working class or slaves. Each of these illustrious thinkers exemplifies in his writings the material contradictions that capitalism represents.

To be fair, from the perspective of the 18th and 19th centuries, the planet did appear to have unlimited potential for growth, not to mention individual and social enrichment.

Moreover, the science of pollution and toxicity of industrial chemicals 200 years ago was nowhere near the advanced state it is now. However, the material contradictions of capitalism are starkly illustrated even in its earliest philosophical foundations. Thus, on the one hand, John Locke’s (1632-1704) political philosophy begins (as against Hobbes’) with the idea that in our “original state of nature,” we are not in a state of war, but in a state of ” ‘perfect freedom’ to order our action, and dispose of our possessions and persons, as we think fit, within the bounds of the law of nature, without asking leave, or depending upon the will of any other man.” This state of nature, Locke believed, is also a state “. . . of equality, wherein all the power and jurisdiction is reciprocal, no one having more than another.” [3]

However, on the other hand, not all people were heir to such “perfect freedom” in their “natural state” or otherwise; nor did they have possessions or reciprocal power. In fact, a good many of them were not even treated as “persons” or individuals, but as mere “savages.” There is nothing fair or equal about the fact that Locke’s tremendous wealth was directly the result of investments in the silk and slave trade. Indeed, he believed that important, moneyed land barons should form “a government of slave-owners” and suggested that children over 3 years of age who were from families on relief should attend “working schools” so they would be “from infancy . . . inured to work” [4]. Appearances notwithstanding, the “sacred and inviolable right to property” that Locke espouses is not something either slaves or the laboring classes were granted. The “perfect freedom” was indeed “perfect servitude” of those who were not white Europeans.

Behind the wonderful talk of liberal values, “increasing the common stock of man through money” and individual rights, Locke put forward an absolutist theory of property that would provide legitimacy to the imperialist ambitions of England and wealthy English landowners in America. The problem is that Locke’s morally grounded theory of the right to private property presupposes the expropriation of ancestral native lands, the existence of slavery and the impoverishment of laboring classes. As Ronald Wright has astutely noted, quoting from Senator Dawes in his Allotment Act, the problem with “Indians” is that they lacked “selfishness, which is the bottom of civilization”![5] What we are compelled to conclude here is that these historical facts are not unpredictable events or anomalies of capitalism, but perspectives and practices intrinsic to the expansion of a capitalist economy.

The unavoidable question is why Smith advocated a “capitalist economic system” that glorified unbridled competition – a practice he intuited would inevitably corrupt our “natural sentiments” and deepen a proclivity toward selfish behaviour?

The Scottish Enlightenment thinker Adam Smith (1723-1790) believed that not only did competition mitigate the ruthlessness of self-interest, but the providential “invisible hand of the market” would ensure that in promoting our self-interest we would be simultaneously promoting the interests of society, whether we intended to do so or not. But, the rational or enlightened self-interest of Smith’s economic man breaks down fairly quickly within the logic of monopolistic capitalism. Smith, like Piketty, is prescient enough to caution about the monopolistic trajectory of capitalism and the potential that industry and business had for influencing politics in their favour over the good of consumers and society as a whole. Moreover, against the logic of unfettered capitalist accumulation, he also thought laborers should be well paid and the rich and indolent taxed for the benefit of the poor.

At the same time, Smith’s “merchant” is not much different than the modern corporate CEO. A merchant he explains “. . . is not necessarily a citizen of any particular country. It is in a great measure indifferent to him from what place he carries on his trade; and a very trifling disgust will make him remove his capital, and together with it all the industry which it supports, from one country to another.” [6]It is not hard to imagine that the “trifling disgust” classical merchants or modern CEOs experience is a consequence of having unions or governments interfere with their profits by demanding workers receive a living wage.

In the end, the unavoidable question is why Smith advocated a “capitalist economic system” that glorified unbridled competition – a practice he intuited would inevitably corrupt our “natural sentiments” and deepen a proclivity toward selfish behaviour? If the answer is that it is the self-correcting, providential “invisible hand” that reconciles selfishness and the general welfare of society, then Smith’s entire economic system rests on a fiction: There just is no such thing as an “invisible hand,” nor has there ever been any such providential or moral self-correcting mechanism within capitalist economics. Given this, it is difficult not to conclude that Smith (again, like Piketty) did, in fact, fully grasp the adverse effects and inherent material contradictions of capitalism. Nevertheless, he held steadfastly to the idea that a phantasmal occult force (the invisible hand) would enable our natural sympathy with the plight of others and our natural self-interested expression of individual freedom to live peacefully together.

What is startling is not how different, but how similar the speculative capitalist mindset has always been. The early 19th century economist, broker and speculator David Ricardo “. . . made the bulk of his fortune as a result of speculation on the outcome of the Battle of Waterloo, using methods that today would result in prosecution for insider trading and market manipulation.”[7] It is not a great leap from insider trading (which Milton Friedman, much later, enthusiastically endorsed) to securities fraud, negligent subprime mortgage lending, unregulated credit default swaps and so on. But it is also evidently true that wealth is  power – power cashed out at the political level. Ricardo, who was able to use his largesse to buy a seat in the UK Parliament, would probably not have had any problem with the Supreme CourtCitizens United decision to remove limits on corporate political donations. Perhaps we have here one of the earliest exemplars of how moneyed interest, power and political ambition are easily woven together in a capitalist political economy. At any rate, it is clear that the very visible hand of the elite class inevitably renders government “by and for the people’ pretty much irrelevant – or better, invisible.

As for economic theory, Ricardo’s assumption that with social progress, the price of labor is “dear when it is scarce and cheap when it is plentiful” might explain why today the superrich have “stopped worrying and learned to love unemployment and under-employment.” As the rich have become even richer since the 2007 financial crisis, the global unemployment rate has steadily increased such that by 2015, 205 million people will be out of work – and this doesn’t even touch those who have given up looking for a job. Of course, Ricardo, like Marx after him, was clever enough to recognize that the interests of wealthy landowners were often in direct opposition to the good of society and would inevitably create tension and upheaval. This did not, however, prevent him from advocating for the abolition of the Poor Law which, he believed, encouraged people to be lazy and irresponsible – “are there no prisons? . . . are there no workhouses?”

Despite some indications to the contrary, Hobbes’ theory of human nature is unambiguously presupposed in Locke, Smith and Ricardo’s elaboration of capitalist political economy. All are essentially in agreement with the idea that we are “by nature” selfish creatures. Perhaps it is only in this sense we can be said to be “equals” – we are all equally selfish. However, such a presupposition, by any objective measure, is simply false. We know today, from abundant empirical, sociological, psychological, genetic, archaeological and anthropological evidence, that Hobbes’ theory of human nature as intrinsically “selfish” is deeply flawed. We are not “naturally” selfish – though we can, indeed, learn to be so. In other words, within a capitalist system it can become trueover over the course of time that an elite few will be chiefly oriented by greed, narcissism or selfishness – and some of the latter not so very far from the “squeezing, wrenching, grasping, scraping, clutching, covetous old sinners!” Dickens describes Mr. “Scrooge” as in A Christmas Carol. Of course, today the latter are no longer viewed as “sinners.” The real problem is that in our present world they are the “glorified masters” of our economies and governments. They are continuously praised, deferred to, considered “above the laws of the land” and allowed to live in a world of unabashed opulence entirely walled off from the rabble of mankind. Succinctly put, in capitalism, the greedy of the world have discovered their ideal legitimating cover: the promotion of a self-serving economics that turns the vice of selfishness into the highest virtue human beings can realize! [8]

History aside, from our own contemporary perspective, we can get a sense of “really existing capitalism’ by virtue of the following thought-experiment, which reveals the latter in its unadorned state. Imagine that we were able, right now, to ask the 7 or so billion people living on the planet whether they would choose an economic system that would inevitably lead to massive wealth and income inequalities, that would severely limit equal opportunity, that would force whole populations to live under perpetual economic austerity, that would erode any possibility of meaningful and democratic political participation, that would devastate the health of the planet and the human body while externalizing the costs of such destruction onto everyone, with the exception of a very privileged few.

Now . . . how many people do you think would actually opt for such an arrangement? Honest answer: Almost no one! The only people who would agree to such a set of conditions would be an infinitesimally small group whose present privileged economic status would be protected and furthered by maintaining the status quo. The fact is that though there are many manifestations of the capitalist system, the intentional logic of capitalism always was, and still is, the same: to protect and perpetuate the power, status and privilege of the few, while impoverishing everyone else.

Given this, you might think that we would seriously question anyone who asserts that capitalism best captures or reflects the essential capabilities, wants, desires or needs of human beings – or that it, in any way, helps to preserve or sustain the resources of the planet for future generations. If anything, capitalism has become the medium where what is worst in us is magnified and given legitimacy – materialism, greed, indifference to the suffering of others, deceitfulness and hubris – while diminishing the importance of justice, benevolence and environmental stewardship. Hopefully, Piketty’s book will be a wake-up call – not a call to fix capitalism, but to overcome it. The fact is that even if a tax on wealth could somehow reconcile the logical contradiction within capitalism, it will do nothing to prevent corporations from their “race to exploit what is left” [9]; it will not stop them from moving us closer to ecological disaster by extracting oil from bituminous sands or minerals from impoverished third world countries; it will not deter the Wall Street mega banks like Goldman Sachs, the “vampire squid wrapped around the face of humanity” (to borrow Matt Taibbi’s startling and vivid description) from sucking the life out of national economies; it will not impede the chemical industry from polluting the environment and using whole populations as unwitting research objects for profit; it will not avert the continuing dissolution of democracy by the superrich Koch brothers . . . and on and on.

Notwithstanding all that has been said, it is still conceivable that we could reverse our present “conditioning” by thinking and acting in different ways – by recognizing that, progressively, with the help of others, we could cultivate radically different perspectives and practices (economic and otherwise). But any such effort must assume that we are also acutely aware of the ubiquity and the powerful force of capitalist propaganda. As Henry Giroux reminds us “dominant power works relentlessly through its major cultural apparatuses to hide, mischaracterize or lampoon resistance, dissent and critically engaged social movements. This is done, in part, by sanitizing public memory and erasing critical knowledge and oppositional struggles from newspapers, radio, television, film and all those cultural institutions that engage in systemic forms of education and memory work.”[10]

Above all, the possibility of alternative economic visions, perspectives and practices have to be grounded in the reality that we share a limited world, and that we are and have always been capable of creating an economic system and public policies that preserve the health and well-being of the planet and all of the creatures that inhabit it.


1. Chrystia Freeland, Plutocrats, The Rise of the New Global Super-Rich and the Fall of Everyone Else. Anchor Canada 2012. p. xvi. Freeland is likely drawing from Churchill’s oft-quoted conclusion that “Democracy is the worst form of government, except for all the others.”

2. Karl Polanyi, The Great Transformation, The Political and Economic Origins of Our Time, Beacon Press 1957 pp. 45-58

3. John Locke, “The Second Treatise of Government”, in Princeton Readings in Political Thought, edited by Mitchell Cohen and Nicole Fermon. Princeton University Press, 1996. pp. 243-4

4. See Howard Zinn, A People’s History of the United States, Harper Perennial Modern Classics 2005. pp. 73-75

5. Ronald Wright, What is America: A Short History of the New World Order, Vintage Canada, 2009. p. 116

6. To really understand the tension within Smith’s thought it is helpful to read both An Inquiry into the Nature and Causes of the Wealth of Nations and The Theory of Moral Sentiments.

7. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations Book III, Chapter IV.

8. You can find Ayn Rand’s and Nathaniel Branden’s The virtue of Selfishness: A New Concept of Egoism.

9. See Michael Klare’s The Race for What’s Left: The Global Scramble for the World’s Last Resources, Picador, 2012

10. Henry Giroux, “Hope in the Age of Looming Authoritarianism,” Truthout.

Flap Over Study Linking Poverty to Biology Exposes Gulfs Among Disciplines (Chronicle of Higher Education)

February 1, 2013

Flap Over Study Linking Poverty to Biology Exposes Gulfs Among Disciplines 1

 Photo: iStock.

A study by two economists that used genetic diversity as a proxy for ethnic and cultural diversity has drawn fierce rebuttals from anthropologists and geneticists.

By Paul Voosen

Oded Galor and Quamrul Ashraf once thought their research into the causes of societal wealth would be seen as a celebration of diversity. However it has been described, though, it has certainly not been celebrated. Instead, it has sparked a dispute among scholars in several disciplines, many of whom are dubious of any work linking societal behavior to genetics. In the latest installment of the debate, 18 Harvard University scientists have called their work “seriously flawed on both factual and methodological grounds.”

Mr. Galor and Mr. Ashraf, economists at Brown University and Williams College, respectively, have long been fascinated by the historical roots of poverty. Six years ago, they began to wonder if a society’s diversity, in any way, could explain its wealth. They probed tracts of interdisciplinary data and decided they could use records of genetic diversity as a proxy for ethnic and cultural diversity. And after doing so, they found that, yes, a bit of genetic diversity did seem to help a society’s economic growth.

Since last fall, when the pair’s work began to filter out into the broader scientific world, their study has exposed deep rifts in how economists, anthropologists, and geneticists talk—and think. It has provoked calls for caution in how economists use genetic data, and calls of persecution in response. And all of this happened before the study was finally published, in the American Economic Review this month.

“Through this analysis, we’re getting a better understanding of how the world operates in order to alleviate poverty,” Mr. Ashraf said. Any other characterization, he added, is a “gross misunderstanding.”

‘Ethical Quagmires’

A barrage of criticism has been aimed at the study since last fall by a team of anthropologists and geneticists at Harvard. The critique began with a short, stern letter, followed by a rejoinder from the economists; now an expanded version of the Harvard critique will appear in February inCurrent Anthropology.

Fundamentally, the dispute comes down to issues of data selection and statistical power. The paper is a case of “garbage in, garbage out,” the Harvard group says. The indicators of genetic diversity that the economists use stem from only four or five independent points. All the regression analysis in the world can’t change that, said Nick Patterson, a computational biologist at Harvard and MIT’s Broad Institute.

“The data just won’t stand for what you’re claiming,” Mr. Patterson said. “Technical statistical analysis can only do so much for you. … I will bet you that they can’t find a single geneticist in the world who will tell them what they did was right.”

In some respects, the study has become an exemplar for how the nascent field of “genoeconomics,” a discipline that seeks to twin the power of gene sequencing and economics, can go awry. Connections between behavior and genetics rightly need to clear high bars of evidence, said Daniel Benjamin, an economist at Cornell University and a leader in the field who has frequently called for improved rigor.

“It’s an area that’s fraught with an unfortunate history and ethical quagmires,” he said. Mr. Galor and Mr. Ashraf had a creative idea, he added, even if all their analysis doesn’t pass muster.

“I’d like to see more data before I’m convinced that their [theory] is true,” said Mr. Benjamin, who was not affiliated with the study or the critique. The Harvard critics make all sorts of complaints, many of which are valid, he said. “But fundamentally the issue is that there’s just not that much independent data.”

Claims of ‘Outsiders’

The dispute also exposes issues inside anthropology, added Carl Lipo, an anthropologist at California State University at Long Beach who is known for his study of Easter Island. “Anthropologists have long tried to walk the line whereby we argue that there are biological origins to much of what makes us human, without putting much weight that any particular attribute has its origins in genetics [or] biology,” he said.

The debate often erupts in lower-profile ways and ends with a flurry of anthropologists’ putting down claims by “outsiders,” Mr. Lipo said. (Mr. Ashraf and Mr. Galor are “out on a limb” with their conclusions, he added.) The angry reaction speaks to the limits of anthropology, which has been unable to delineate how genetics reaches up through the idiosyncratic circumstances of culture and history to influence human behavior, he said.

Certainly, that reaction has been painful for the newest pair of outsiders.

Mr. Galor is well known for studying the connections between history and economic development. And like much scientific work, his recent research began in reaction to claims made by Jared Diamond, the famed geographer at the University of California at Los Angeles, that the development of agriculture gave some societies a head start. What other factors could help explain that distribution of wealth? Mr. Galor wondered.

Since records of ethnic or cultural diversity do not exist for the distant past, they chose to use genetic diversity as a proxy. (There is little evidence that it can, or can’t, serve as such a proxy, however.) Teasing out the connection to economics was difficult—diversity could follow growth, or vice versa—but they gave it a shot, Mr. Galor said.

“We had to find some root causes of the [economic] diversity we see across the globe,” he said.

They were acquainted with the “Out of Africa” hypothesis, which explains how modern human beings migrated from Africa in several waves to Asia and, eventually, the Americas. Due to simple genetic laws, those serial waves meant that people in Africa have a higher genetic diversity than those in the Americas. It’s an idea that found support in genetic sequencing of native populations, if only at the continental scale.

Combining the genetics with population-density estimates—data the Harvard group says are outdated—along with deep statistical analysis, the economists found that the low and high diversity found among Native Americans and Africans, respectively, was detrimental to development. Meanwhile, they found a sweet spot of diversity in Europe and Asia. And they stated the link in sometimes strong, causal language, prompting another bitter discussion with the Harvard group over correlation and causation.

An ‘Artifact’ of the Data?

The list of flaws found by the Harvard group is long, but it boils down to the fact that no one has ever made a solid connection between genes and poverty before, even if genetics are used only as a proxy, said Jade d’Alpoim Guedes, a graduate student in anthropology at Harvard and the critique’s lead author.

“If my research comes up with findings that change everything we know,” Ms. d’Alpoim Guedes said, “I’d really check all of my input sources. … Can I honestly say that this pattern that I see is true and not an artifact of the input data?”

Mr. Ashraf and Mr. Galor found the response to their study, which they had previewed many times over the years to other economists, to be puzzling and emotionally charged. Their critics refused to engage, they said. They would have loved to present their work to a lecture hall full of anthropologists at Harvard. (Mr. Ashraf, who’s married to an anthropologist, is a visiting scholar this year at Harvard’s Kennedy School.) Their gestures were spurned, they said.

“We really felt like it was an inquisition,” Mr. Galor said. “The tone and level of these arguments were really so unscientific.”

Mr. Patterson, the computational biologist, doesn’t quite agree. The conflict has many roots but derives in large part from differing standards for publication. Submit the same paper to a leading genetics journal, he said, and it would not have even reached review.

“They’d laugh at you,” Mr. Patterson said. “This doesn’t even remotely meet the cut.”

In the end, it’s unfortunate the economists chose genetic diversity as their proxy for ethnic diversity, added Mr. Benjamin, the Cornell economist. They’re trying to get at an interesting point. “The genetics is really secondary, and not really that important,” he said. “It’s just something that they’re using as a measure of the amount of ethnic diversity.”

Mr. Benjamin also wishes they had used more care in their language and presentation.

“It’s not enough to be careful in the way we use genetic data,” he said. “We need to bend over backwards being careful in the way we talk about what the data means; how we interpret findings that relate to genetic data; and how we communicate those findings to readers and the public.”

Mr. Ashraf and Mr. Galor have not decided whether to respond to the Harvard critique. They say they can, point by point, but that ultimately, the American Economic Review’s decision to publish the paper as its lead study validates their work. They want to push forward on their research. They’ve just released a draft study that probes deeper into the connections between genetic diversity and cultural fragmentation, Mr. Ashraf said.

“There is much more to learn from this data,” he said. “It is certainly not the final word.”

Brasil maior exportador de riquezas naturais (CarbonoBrasil)

15/10/2012 – 10h41

por Edélcio Vigna, do INESC

a52 Brasil maior exportador de riquezas naturaisO Brasil não se reconhece como um país minerador, apesar de exportar um volume de minérios maior que a Bolívia e o Peru.

A maioria da população brasileira não tem a menor noção da quantidade de minérios ou de grãos que são exportados a preços irrisórios. Não estamos exportando apenas produtos, mas recursos naturais e, principalmente, água. Ao associar a República da Banana com a República do Minério o Brasil aprofunda a “vocação” como o maior país exportador de produtos primários. Melhor, como o país mais explorado em suas e riquezas naturais.

O Brasil não se reconhece como um país minerador, apesar de exportar um volume de minérios maior que a Bolívia e o Peru. O Plano Nacional de Mineração identifica que o “segmento da mineração é o mais dinâmico nessa nova etapa, com crescimento médio anual de 10%, devido à intensidade das exportações”. A sociedade só reserva da mineração uma lembrança histórica dos séculos XVII e XVIII.

O senso comum comprou a ideia que o Brasil é o “celeiro do mundo”. Que a vocação nacional é a agricultura. A monocultura do café, da República Velha, imprimiu uma visão de mundo dos coronéis que ainda está em vigor na vida social e política da Nação. Os modernos ciclos agrários, com o retorno da cultura do açúcar/etanol e o da soja, a velha ideologia se travestiu e se apresenta no discurso dos ruralistas com o nome de agronegócio ou agribusiness.

A pauta de exportação brasileira, mesmo diversificada, ainda se concentra em grãos e minérios. O ferro, por exemplo, representa cerca de 90% dos bens minerais exportados. Assim, a “vocação” de país exportador de bens primários vai sendo degradando as terras férteis e impactando sobre todas as dimensões da vida das comunidades locais e regionais.

Lúcio Flávio Pinto afirma que a Serra de Carajás poderá ser consumida em 80 anos. O trem de Carajás faz 24 viagens de ida e volta entre a mina de Carajás e o porto da Ponta da Madeira, no litoral do Maranhão, com 300 vagões, que transporta por dia “576 mil toneladas do melhor minério de ferro do mundo, com pureza de mais de 65% de hematita, sem igual na crosta terrestre” (http://www.justicanostrilhos.org/nota/1084).

Favorecidas pela invisibilidade as grandes empresas multinacionais e multilatinas, como a Vale, prosseguem exportando montanhas de minérios, em especial para a China, e afetando a vida das comunidades. Para facilitar esse saque legalizado a e a Advocacia Geral da União (AGU) publica uma portaria (303), que retira os direitos dos povos indígenas em dispor livremente do uso e dos benefícios de suas terras e o Congresso Nacional aprova um Código Florestal que estimula o desmatamento.

Essas medidas são uma série de procedimentos jurídicos e legislativos que compõem um mosaico de leis que flexibilizam a exploração predatória do solo e do subsolo nacional. Nã
o importa que no inciso XI, do art. 20, da Constituição Federal, esteja escrito que nas terras ocupadas pelos índios são asseguradas a “participação no resultado da exploração de petróleo ou gás natural, de recursos hídricos para fins de geração de energia elétrica e de outros recursos minerais no respectivo território (…)”. Ou que o § 2º, do art. 231, garanta que as “terras tradicionalmente ocupadas pelos índios destinam-se a sua posse permanente, cabendo-lhes o usufruto exclusivo das riquezas do solo, dos rios e dos lagos nelas existentes”. Como disse Getúlio Vargas, “Lei! Ora a Lei!”.

Os povos indígenas estão sobre o solo e o pragmatismo capitalista exige que a área seja desobstruída. É, por isso, que o povo Guajajara interditou o quilômetro 289 da Estrada de Ferro Carajás a 340 quilômetros de São Luís/MA. Esse povo, que é parte original da identidade brasileira, não está somente protestando contra a Portaria 303, da AGU, mas porque também sofrem os impactos negativos da Estrada de Ferro Carajás e da exportação de minérios.

Apesar dessas resistências sociais e políticas grande parte da população continua repetindo que o Brasil é um país agrícola. Com vocação agrícola. Que somos o celeiro do mundo.

Enquanto se olham para as monoculturas de grãos não veem as montanhas de minérios desaparecendo sobre os trilhos de Carajás.

* Publicado originalmente no site CarbonoBrasil.

What is a carbon price and why do we need one? (The Guardian)

This Q&A is part of the Guardian’s Ultimate climate change FAQ

Grantham Research Institute and 
guardian.co.uk, Monday 16 July 2012 10.38 BST
Parliament House during a pro-carbon tax rally in Canberra, Australia

A pro-carbon tax rally in Canberra, Australia, October 2011. Photograph: Alan Porritt/AFP/Getty Images

A carbon price is a cost applied to carbon pollution to encourage polluters to reduce the amount of greenhouse gas they emit into the atmosphere. Economists widely agree that introducing a carbon price is the single most effective way for countries to reduce their emissions.

Climate change is considered a market failure by economists, because it imposes huge costs and risks on future generations who will suffer the consequences of climate change, without these costs and risks normally being reflected in market prices. To overcome this market failure, they argue, we need to internalise the costs of future environmental damage by putting a price on the thing that causes it – namely carbon emissions.

carbon price not only has the effect of encouraging lower-carbon behaviour (eg using a bike rather than driving a car), but also raises money that can be used in part to finance a clean-up of “dirty” activities (eg investment in research into fuel cells to help cars pollute less). With a carbon price in place, the costs of stopping climate change are distributed across generations rather than being borne overwhelmingly by future generations.

There are two main ways to establish a carbon price. First, a government can levy a carbon tax on the distribution, sale or use of fossil fuels, based on their carbon content. This has the effect of increasing the cost of those fuels and the goods or services created with them, encouraging business and people to switch to greener production and consumption. Typically the government will decide how to use the revenue, though in one version, the so-called fee-and-dividend model – the tax revenues are distributed in their entirety directly back to the population.

The second approach is a quota system called cap-and-trade. In this model, the total allowable emissions in a country or region are set in advance (“capped”). Permits to pollute are created for the allowable emissions budget and either allocated or auctioned to companies. The companies can trade permits between one another, introducing a market for pollution that should ensure that the carbon savings are made as cheaply as possible.

To serve its purpose, the carbon price set by a tax or cap-and-trade scheme must be sufficiently high to encourage polluters to change behaviour and reduce pollution in accordance with national targets. For example, the UK has a target to reduce carbon emissions by 80% by 2050, compared with 1990 levels, with various intermediate targets along the way. The government’s independent advisers, the Committee on Climate Change, estimates that a carbon price of £30 per tonne of carbon dioxide in 2020 and £70 in 2030 would be required to meet these goals.

Currently, many large UK companies pay a price for the carbon they emit through the EU’s emissions trading scheme. However, the price of carbon through the scheme is considered by many economists to be too low to help the UK to meet its targets, so the Treasury plans to make all companies covered by the scheme pay a minimum of £16 per tonne of carbon emitted from April 2013.

Ideally, there should be a uniform carbon price across the world, reflecting the fact that a tonne of carbon dioxide does the same amount of damage over time wherever it is emitted. Uniform pricing would also remove the risk that polluting businesses flee to so-called “pollution havens”‘ – countries where a lack of environmental regulation enables them to continue to pollute unrestrained. At the moment, carbon pricing is far from uniform but a growing number of countries and regions have, or plan to have, carbon pricing schemes in place, whether through cap-and-trade or carbon taxes. These include the European Union, Australia, South Korea, South Africa, parts of China and California.

• This article was written by Alex Bowen of the Grantham Research Institute on Climate Change and the Environment at LSE in collaboration with the Guardian