From David Ruccio
No, the stock market is not predictable. And no one knows the exact causes of last week’s carnage on Wall Street—with the Dow down 4.2 percent, the S&P 4.1 percent and the Nasdaq 3.7 percent, representing their worst weekly performances since March.
But the precipitous fall in all major indices, which many analysts blamed at least in part on the earnings blackout period, did serve to highlight one of the factors that has been driving the bull market: corporations purchasing their own stock.
As Matt Phillips explained,
When companies have more cash than they believe they can use productively, they typically return it to shareholders either with cash payments—known as dividends—or by repurchasing shares in the market. Buybacks raise demand, putting upward pressure on

From David Ruccio
Two giants of mainstream economics—Joseph Stiglitz and Lawrence Summers—have been engaged in an acrimonious, titanic battle in recent weeks. The question is, what’s it all about? And, even more important, what’s at stake in this debate?
At first glance, the intense, even personal back-and-forth between Stiglitz and Summers seems a bit odd. Both economists are firmly in the liberal wing of mainstream economics and politics—as against, for example, Gene Epstein (an Austrian economist, who accuses Stiglitz of regularly siding with left-wing populists like Hugo Chávez) or John Taylor (a committed supply-sider, who has long been suspicious of “demand-side discretionary stimulus packages”). Both Stiglitz and Summers have pointed out the limitations of monetary policy,

From David Ruccio
Last month, Alexander Beunder, the editor of Socialist Economist, asked a handful of “expert economists from around the world”—including Johanna Bockman, Prabhat Patnaik, Andrew Kliman, and myself—two key questions concerning the problems and prospects for socialism, economics, and the Left in the world today. Beunder requested that we keep our answers to two hundred words.
Our answers are now posted on-line, which can be read by clicking on the links below. Here are mine:
What economic obstacles is the Left facing in the 21st Century? 
The spectacular failures of capitalism in the United States have provided fertile ground for a renewed interest in socialism. These include the punishments meted out by the Second Great Depression, the lopsided nature of the current

From David Ruccio
The warnings about the consequences of global warming are becoming increasingly dire. And with good reason.

Just last month, a report by a multidisciplinary research team published in the Proceedings of the National Academy of Sciences made the case that even fairly modest future carbon dioxide emissions could set off a cascade of catastrophic effects, with melting permafrost releasing methane to ratchet up global temperatures enough to drive much of the Amazon to die off, and so on in a chain reaction around the world that pushes Earth into a terrifying new hothouse state from which there is no return. Civilization as we know it would surely not survive. 
Climate change during the Capitalocene (in its last stage?) has also spawned a new genre of science fiction

From David Ruccio
Everyone, it seems, is writing their version of the lessons to be learned after the crash of 2008. And most of them are getting it wrong.
Here, for the record, are some of the lessons I’ve taken from the crash:
What has changed—and, equally significant, what hasn’t—during the past decade?
Mainstream economists got globalization wrong
The policy consensus on economics has not fundamentally changed
Mainstream economics has fallen in the eyes of the public—and for good reason
Little has changed in terms of the teaching of economics
Mainstream economists reject the new populism, which they helped to create
The normal workings of capitalism created, together and over time, the conditions for the most severe set of crises since the first Great Depression
Mainstream

From David Ruccio

Almost 30 thousand people joined the ranks of the global super-rich last year, as booming global stock markets and corporate profits boosted the fortunes of the already very-rich and bumped them up into the ultra-high-net-worth bracket.
The global population of ultra-high-net-worth people, classed as those with more than $30 million in assets, increased by 12.9 percent last year to a record 255,810 people,  while their combined wealth surged by 16.3 percent to $31.5 trillion, according to a report by research firm Wealth-X.

Not surprisingly, most of the gains were captured by those at the very top of the global wealthy pyramid. While all six tiers recorded double-digit growth in ultra wealthy numbers of between 13 and 15 percent, the fastest- growing tier was

From David Ruccio

I have long argued (e.g., here, here, and here) that capitalism involves a kind of pact with the devil: control over the surplus is reluctantly given over to the boards of directors of corporations in return for certain promises, such as just deserts, economic stability, and wage increases for workers.
In recent years, as so often in the past, we’ve witnessed those at the top sabotaging the pact (simply because they have the means and interest to do so) and now, once again, they’ve undermined their legitimacy to run things.

First, they broke their promise of just deserts, as the distribution of income has become increasingly (and, to describe it accurately, grotesquely) unequal and the tendency toward high concentrations of wealth has returned, threatening to

From David Ruccio
We’re ten years on from the events the triggered the worst crisis of capitalism since the first Great Depression (although read my caveat here) and centrists—on both sides of the Atlantic—continue to peddle an ahistorical nostalgia.
Fortunately, people aren’t buying it.
As Jack Shenker has explained in the case of Britain,
one of the most darkly humorous features of contemporary British politics (a competitive field) is the ubiquity of parliamentarians, pundits and business titans who wail and gnash at our ceaseless political tumult but appear utterly incurious about the conditions that produced it. . .
Such stalwart defenders of a certain brand of “common sense” capitalism have watched in horror as ill-mannered upstarts — on both the right and the left — build power

From David Ruccio
In a 1999 interview with Fortune, legendary investor Warren Buffett coined the term “economic moats” to sum up the main pillar of his investing strategy. He described it like this:
The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors.
The idea of an economic moat, with Buffett’s endorsement, has picked up steam since the article. Morningstar, an investment research firm, created an index that tracks companies with a wide economic moat in order to see if Buffett’s theory holds

From David Ruccio
The argument I’ve been making during this series on utopia is that the utopian moment of the Marxian alternative to mainstream economics is critique.*
Let me explain. All modern economic theories have a utopian moment. In the case of mainstream economics, that moment is a full-blown utopianism—the idea that there is, or at least in principle can be, a perfectly functioning economic and social order. Such an order is both envisioned as a model within the theory (often by stipulating the minimum set of theoretical requirements) and advanced as the goal of economic policies (which move the economy to, or at least toward, the utopia). In this sense, utopia—of sovereign individuals, free markets, and private property—is the fundamental premise and promise of mainstream

From David Ruccio
American capitalists love immigration. So, as it turns out, should American workers.
The last time I addressed the issue of immigration, I made the argument that
recent waves of immigration have benefited a tiny group of employers at the top, who in turn have managed to shift the costs—through wage reductions and higher taxes—onto workers (both recent immigrants and native-born workers).
In fact, just a couple of weeks ago, American corporate titans used a collegial dinner with Donald Trump to press him on easing immigration restrictions.

As it turns out, Americans have a much more positive view of immigration than they did in 2007—and than Trump and some of his supporters have today. According to a 2017 Gallup poll, a majority of Americans now say immigrants have a

From David Ruccio

Marketplace’s Kai Ryssdal is no class warrior. Far from it. But after Donald Trump’s chief economic adviser Larry Kudlow spent considerable time during a recent interview celebrating the latest statistics about economic growth, jobs, and wages and minimizing the effects of the trade tariffs, Ryssdal was encouraged to challenge him: 
Ryssdal: Look, sir, really with all respect that’s easy for you to say sitting here on the second floor of the West Wing of the White House.
Kudlow: Now, don’t class warfare me or anything like that.
OK, let’s not class warfare him. Let’s just do some simple calculations. In June, hourly wages (for production and nonsupervisory workers in the private sector) rose at an annual rate of 2.7 percent. Prices (as measured by the Consumer Price

From David Ruccio
The liberal establishment continues to mourn the death of truth. Everyone else is moving on.
Every day, it seems, one or another liberal—pundit, columnist, or scholar—issues a warning that, in the age of Donald Trump, we now live in a post-truth world. In their view, we face a fundamental choice: either return to a singular, capital-t truth or suffer the consequences of multiple sets of beliefs, facts, and truths.
For example, just the other day, Keith Kahn-Harris [ht: ja] (in the Guardian) noted the “sheer profusion of voices, the plurality of opinions, the cacophony of the controversy,” which in his view “are enough to make anyone doubt what they should believe.” It’s what he calls “denialism”: the transformation of the “private sickness” of self-deception into the

From David Ruccio
In a recent article, Dan Falk [ht: ja] identifies a fundamental problem in contemporary physics:
many physicists working today have been led astray by mathematics — seduced by equations that might be “beautiful” or “elegant” but which lack obvious connection to the real world.
What struck me is that, if you changed physics and physicists to economics and economists, you’d get the exact same article. And the same set of problems. 
Economists—especially mainstream economists but, truth be told, not a few heterodox economists—are obsessed with mathematics and formal modeling as the only correct methods for achieving capital-t truth. Mathematical modeling for them represents the best, most scientific way of producing, disseminating, and determining the veracity of

From David Ruccio

Most Americans are not loading sixteens tons of coal. But they are, even in the midst of the recovery from the Second Great Depression, sinking deeper and deeper into debt.
According to a recent analysis by Reuters [ht: ja], the bottom 60 percent of income-earners have accounted for most of the rise in consumption spending over the past two years even as their finances have worsened.* The data show the rise in expenditures has outpaced before-tax income for the lower 40 percent of earners in the five years through mid-2017, while the middle 20 percent has just about stayed even. However, the upper 40 percent—especially the top fifth—has increased its financial cushion, deepening income inequality and leaving those at the bottom in an increasingly precarious financial

From David Ruccio
In international human rights law, a “forced disappearance” occurs when a person is secretly abducted or imprisoned by a state or political organization (or by a third party with the authorization, support, or acquiescence of a state or political organization), followed by a refusal to acknowledge the person’s fate and whereabouts, with the intent of placing the victim outside the protection of the law.
The most infamous forced disappearances have occurred in Spain (during and after the Civil War), Chile (after the coup by General Pinochet in 1973), Argentina (during the so-called Dirty War from 1976 to 1983), and the United States (as part of the so-called War on Terror).
Now, Donald Trump’s Council of Economic Advisers (pdf) is attempting to carry out a forced

From David Ruccio
Back in June, Neil Irwin wrote that he couldn’t find enough synonyms for “good” in an online thesaurus to describe the jobs numbers adequately.
I have the opposite problem. I’ve tried every word I could come up with—including “lopsided,” “highly skewed,” and “grotesquely unequal“—to describe how “bad” this recovery has been, especially for workers.

Maybe readers can come up with their own adjectives to illustrate the plight of Americans workers since the Second Great Depression began—something that captures the precipitous decline in the labor share during the past decade (from 103.3 in the first quarter of 2008 to 97.1 in the first quarter of 2018, with 2009 equal to 100).
But perhaps there’s a different approach. Just run the numbers and report the results. That’s

From David Ruccio
Nicola Headlam is, I think, right with respect to “how the rules of the economy are set”:
“Somehow, someone, somewhere made these rules up. They aren’t laws of nature.” And they determine “who’s got what and where and why”.
The question is, how do we teach economics so that that message gets through?
Aditya Chakrabortty [ht: ja] reports on one way of doing it—a makeshift classroom in a converted church, with nine “lay people” and two facilitators (Headlam and Anne Hines, who are donating their time), in the Levenshulme area of Manchester, England.
Part of what makes the course interesting, at least to me, are the participants:
Those doing the Levenshulme crash course don’t look like your typical seminar room attendees. Not only are they decades older; all but one is a

From David Ruccio
Ambassador Nikki Haley’s decision last week to withdraw the United States from the United Nations Human Rights Councilis remarkable. The United States is the first nation in the body’s 12-year history to voluntarily remove itself from membership in the council while serving as a member.
Some have alleged that the timing of Haley’s decision is conspicuous. “The move,” read the second paragraph of a CNN report on Haley’s decision, “came down one day after the Office of the U.N. High Commissioner for Human Rights slammed the separation of children from their parents at the US-Mexico border as ‘unconscionable.’”
It’s true the Trump administration has been threatening to leave the Council for much of the past year. And the condemnation of the administration’s policy of

From David Ruccio

The premise and promise of the Republican tax cuts—officially, the Tax Cuts and Jobs Act—are that lower corporate taxes would lead to increased investment and thus more jobs and higher wages for American workers.
We all knew at the time that the logic was a sham. As I explained last August, one of the likely outcomes of the kind of corporate tax cuts Donald Trump and his fellow Republicans supported—and, as we saw, eventually rammed through—would be an increase in inequality. That’s because, since corporations aren’t facing any kind constraint in profits or their ability to borrow beyond their current profits, we likely wouldn’t see more investment, but instead some combination of more mergers and acquisitions, more payouts to shareholders, and more distributions of

From David Ruccio

The goal of mainstream economists is to get everybody to work. As a result, they celebrate capitalism for creating full employment—and worry that capitalism will falter if not enough people are working.
The utopian premise and promise of mainstream economic theory are that capitalism generates an efficient allocation of resources, including labor. Thus, underlying all mainstream economic models is a labor market characterized by full employment.

Thus, for example, in a typical mainstream macroeconomic model, an equilibrium wage rate in the the labor market (Wf, in the lower left quadrant) is characterized by full employment (the supply of and demand for labor are equal, at Lf), which in turn generates a level of full-employment output (Yf, via the production

From David Ruccio

Liberals like to talk about all kinds of social ills and identity-laden tensions—but not class struggle. That’s their persistent and enduring blindspot.
Except, it seems, when it comes to Donald Trump. 
Thomas B. Edsall is a good example. Over the years, he’s produced a series of solid, insightful surveys of liberal research and analysis on a wide variety of economic and political topics. But he hasn’t written much if anything about class—until his latest, titled “The Class Struggle According to Donald Trump.”
And, to give him credit, Edsall is right about one thing:
Trump campaigned as the ally of the white working class, but any notion that he would take its side as it faces off against employers is a gross misjudgment.
But his view of class struggle is sorely

From David Ruccio
Forget Bitcoin. It’s the underlying technology, blockchain, that is generating the most excitement. Even utopia!
Bitcoin is a digital currency that was invented in 2009 by a person (or group) who called himself Satoshi Nakamoto. His stated goal was to create “a new electronic cash system” that was “completely decentralized with no server or central authority.” After cultivating the concept and technology, in 2011, Nakamoto turned over the source code and domains to others in the bitcoin community, and subsequently vanished.

While Bitcoin (and other so-called cryptocurrencies, such as Ethereum, Ripple, and the other 1500 or so other such currencies) have generated a great deal of media attention (for their novelty, their ability to permit transactions beyond

From David Ruccio

The premise and promise of capitalism, going back to Adam Smith, have been that global wealth would increase and serve as a benefit to all of humanity.* But the experience of recent decades has challenged those claims: while global wealth has indeed grown, most of the increase has been captured by a small group at the top. The result is that an obscenely unequal distribution of the world’s wealth has become even more unequal—and, if business as usual continues, it will turn out to be even more grotesquely unequal in the decades ahead. 
The alarm was most recently sounded by Michael Savage, in the Guardian, who cited a projection produced by the House of Commons library to the effect that, if trends seen since the 2008 financial crash were to continue, then the top 1%

From David Ruccio

First there was the Great Gatsby curve. Then there was the Proust index. Now, thanks to Neil Irwin, we have the Marx ratio.
Each, in their different way, attempts to capture the ravages of contemporary capitalism. But the Marx ratio is a bit different. It was published in the New York Times. Its aim is to capture one of the underlying determinants of the obscene levels of inequality in the United States today—not class mobility or the number of years of national income growth lost to the global financial crash. And, of course, it takes its name from that ruthless nineteenth-century critic of mainstream economics and capitalism itself.

Now, to be clear, there are lots of ratios than can be found in Marx’s critique of political economy—for example, the rate of

From David Ruccio
The majority of government expenditures in the United States go towards social insurance and means-tested transfers.* And the good news is, they work.
According to recent report by Bruce D. Meyer and Derek Wu, Social Security cuts the poverty rate by a third—more than twice the combined effect of the five means-tested transfers. Among those transfers, the Earned-Income Tax Credit and food stamps (officially, the Supplemental Food Assistance Program) are most effective. All programs except for the tax credit sharply reduce deep poverty (below 50 percent of the poverty line), while the impact of the tax credit is more pronounced at 150 percent of the poverty line. For the elderly, Social Security single-handedly slashes poverty by 75 percent, more than 20 times the

From David Ruccio

Maarten Vanden Eynde, The Invisible Hand (2015)*

We hear it all the time. On a regular basis. Having to do with pretty much everything.
Why is the price of gasoline so high? Mainstream economists respond, “it’s the market.” Or if you think you deserve a pay raise, the answer again is, “go get another offer and we’ll see if you’re worth it according to ‘the market’.”

Alternatively, if you want to solve a particularly pressing problem—such as climate change, widespread unemployment, or Third World poverty—mainstream economists’ usual answer is “let markets handle it.”**

Markets have a magical, quasi-mystical status within mainstream economics. They are both the original starting-point and far-reaching conclusion of mainstream economic theory. What I mean, first,

From David Ruccio

The usual suspects have attacked Bernie Sanders’s proposal for the federal government to guarantee a job paying $15 an hour and health-care benefits to every American worker “who wants or needs one.” 
According to Robert J. Samuelson, “The proposal would add to already swollen federal budget deficits. . .Then there’s inflation. The extra spending and higher wages might push prices upward.”
After listing a number of other “unavoidable” problems, Samuelson concludes:
Americans are suckers for great crusades that make the world safe for the pursuit of happiness. In this context, Sanders’s job guarantee seems a masterstroke. The chronically unemployed need jobs; and states and localities have large unmet needs for public and quasi-public services. It’s a bargain made in

From David Ruccio

From the very beginning, the area of mainstream economics devoted to Third World development has been imbued with a utopian impulse. The basic idea has been that traditional societies need to be transformed in order to pass through the various stages of growth and, if successful, they will eventually climb the ladder of progress and achieve modern economic and social development.
Perhaps the most famous theory of the stages of growth was elaborated by Walt Whitman Rostow in 1960, as an answer to the following questions: 
Under what impulses did traditional, agricultural societies begin the process of their modernization? When and how did regular growth become a built-in feature of each society? What forces drove the process of sustained growth along and determined

From David Ruccio

Does anyone really need any additional evidence of the lopsided nature of the current recovery? 
Employers certainly don’t. They’re managing to hire additional workers, thus lowering the unemployment rate. But they don’t have to pay the workers they hire much more than they were getting before, with wages barely staying ahead of the rate of inflation. As a result, corporate profits continue to grow.
Clearly, what we’re seeing remains a one-sided recovery: employers are getting ahead—and their workers are still being left behind.
According to the latest report from the Bureau of Labor Statistics, total nonfarm payroll employment increased by 164,000 in April, thus reducing the headline unemployment rate to 3.9 percent and the expanded or U6 unemployment rate (which