Victory of the Economy over Democracy and the Constitutional State

“The person exists as an end-in-him/herself and not merely as a means… On the other hand, the principle of the worldwide market economy is based on treating persons and their needs as means to the end of profit realization… The belief in the self-healing powers of the market has greatly lost persuasiveness…

The condemnation of states to compensations to international corporations whose profit chances were denied ont he basis of investment protection agreements represents a questioning of democratic rule and not only a turning away from the traditional dogmatics of property protection. Such a strain of state budgets obviously limits the possibilities of constitutional organs for creative interventions in the economy…”

Martin Kutscha is a professor of public and administrative law in Berlin.

to read his article “Victory of the Economy over Democracy and the Constitutional State” published in October 2014, click on



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Learning from Roosevelt and His “New Deal” by Stephan Schulmeister

to read “Learning from Roosevelt: His “New Deal” by the Austrian economic researcher Stephan Schulmeister, click on

In the first phase Roosevelt concentrated in three areas: firstly, the social-psychological side of depression, combating despondency and despair, secondly, the strict regulation of the financial sector and thirdly, the stimulation of the economy by creating jobs and combating deflation and foreclosures.

The Civilian Conservation Corps helped overcome the basic pessimistic mood in society. Within a few months, 500,000 young persons had hope again. The government should intervene in case of an economic emergency (“widespread unemployment and disorganization of industry”)…The Public Works Administration was the largest New Deal organization…The Social Security Act (1935) introduced unemployment and pension insurance and set up additional measures for the socially weak… The National Labor Relations Board sought to prevent intimidation of employees by employers and promote the process of collective bargaining.

Between 1933 and 1937 the real GDP of the US increased 43%… The unemployment rate fell from 25% to 14%

more at,, and

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Austerity Policy as a Momentous Mistake

The IMF’s austerity policy of the last years was misguided. That austerity policy led to intensified growth declines and increasing unemployment and did not reach its goal of permanently calming the financial markets. Public investments could raise economic growth both in the short- and long-term. State expenditures have a considerable influence on employment and growth.

to read the articles by Philipp Heimberger and Sebastian Gechert, click on

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A Post-Keynesian theory of economic policy – filling a void

A Post-Keynesian theory of economic policy – filling a void” by Arne Heise, professor of economics at Hamburg University, 13 pp, March 2008

Arne Heise is a professor of economics at the University of Hamburg. To read “A Post-Keynesian theory of economic policy – filling a void” published in 2008, click on,d.cGU&cad=rja

To sum up: Post Keynesian theory of economic policy emphasizes the need and efficiency of quantitative, interventionist policies, yet does not ignore the limitations to ‘controllability’, i.e. it results in a strong plea for what might be termed ‘constrained feasibility’ between the extremes of Cartesian ‘controllability’ and Hayekian ‘non-decisionism’ – a ‘market participation theory of economic policy’.

And it is this critical knowledge about the limits to policy control on the one hand and the acceptance of a quite different ‘pattern prediction’ as compared to Walrasian and Hayekian economics on the other hand which renders the following critique unfounded:

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Why Austerity Kills by Joachim Kasten

Political-economic decisions decide over the life and death of people. These are the misguided decisions of politicians and managers sacrificing people in the US, Russia, Thailand and Greece. The New Deal stands for an effective debt reduction, not only lower mortality and growing average incomes…

The poorest and weakest persons must always pay the price for misguided political decisions. Germany was active driver of austerity.

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Stop the TTIP!

TTIP stands for “Transatlantic Trade and Investment Partnership” and is also known as TAFTA, Transatlantic Free Trade Agreement. It is a free trade agreement of 800 million that has been secretly negotiated since June 2013. Corporate groups or multinationals dominate the negotiations. Legislators, consumer, environmental and labor groups are denied access and depend on leaks.

Since tariffs are already very low (around 3%), non-wage trade barriers, e.g. labor and environmental regulations, are the main theme of negotiations. Europeans fear that privatization and Americanization could be massively encouraged. Book dealers and public sector workers fear takeovers. If a French university wants to open a branch in Munich, it would be entitled to all the subsidies given to the University of Munich.

The TTIP like TISA (Trade in Services Agreement) threatens the sovereignty and decision-making of community. Corporations can sue states but states cannot sue corporations and decisions are irrevocable. “Foreign investors” are set above labor and environmental groups. Philip Morris is suing Australian and Uruguay for lost profits because of warnings on cigarette packages. A French company is suing for lost profits in its Egyptian waste disposal firm because of higher Egyptian minimum wages. Vattenfall, a Swedish energy conglomerate, is suing Germany for 4 billion Euros for closing two antiquated nuclear power plants. A Canadian firm Lone Pine is suing Quebec through an American subsidiary for lost profits because of its anti-fracking law.

The European Commission suspended the secret TTIP negotiations for four months to get citizen consultation on the Investor-State Dispute Settlement provision. This proposed parallel system with 3-person arbitration courts allows corporations to sue for lost profits and decisions are irrevocable.
What a scandal to set “foreign investors” above labor and the environment!

Stop the TTIP!
authors: D Haufler, S Wagenknecht and F Roetzer

A recent 29-page study from Tufts University (October 2014) warns that the Trans-Atlantic Trade and Investment Partnership could cause European disintegration, unemployment and instability:

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The Myth of the Unexpected Crisis and Security by Tobias Straumann and Georg Seesslen

Many knew the rise of housing prices for years had to end some time or other..
Four theses explain why the Fed was not active during the real estate boom: power of lobbyists, market ideology, trust in abstract academic models and inflation targeting…
The only security guaranteed us…is that nothing will change, nothing in the basic hierarchy of power…

to read the translated articles by Tobias Straumann and Georg Seesslen, click on

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Rethinking Prosperity

Rethinking Prosperity

Maybe our thinking about prosperity needs radical reconfiguration. The Gross Domestic Product measures everything but what makes life worthwhile said Bobby Kennedy.

Unlike a chair, an idea can be shared by a whole people. Time for alternative economics, reducing working hours and work fetishism, exchanging roles and redefining work and for time sovereignty and resisting instrumental rationality normalizing the absurd (cf. Jurgen Habermas).

Harry Kravitz as a “buyout artist” gained $35 million a year or $100K a day for selling off parts of businesses and of course paid no tax. Elizabeth Warren and Joseph Stiglitz are teaching the nation that Warren Buffet should pay more tax than his secretary. Hedge fund and buyout artists are enjoying a guaranteed basic income – thanks to system myths, profit-making blindness and enforced conformity. Time for system change; the slow ones now will later be fast. changes life into an open door if we are not overwhelmed by anxiety.

Posted in Bob Dylan, Political Theory, Reducing Inequality/ Redistribution, Reducing Working Hours | Leave a comment

No Redistribution Without the Social State and Distribution Debate Picks Up Speed

to read the translated articles by Norman Wagner and Matthais Schnetzer, visit

In Austria, 30% of the gross domestic product is spent on social services (not including education spending)… Since the 1990s, social security has been increasingly discussed as a financial burden and less as a social achievement… The irony is that the social state is the target of austerity measures in times of economic insecurity with high unemployment and rising poverty although it is then urgently necessary, The social state ensures that the income of persons impacted by a crisis like the current one will not fall enormously and purchasing power will not collapse. Expanding – not cutting – the social system is urgently necessary in the present situation.

With his book “Capital in the 21st Century,” Thomas Piketty has aroused a great international discussion on neoliberalism as an inequality machine and the dangers of patrimonial capitalism.

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The Inheritance of Inequality and Rethinking Growth

The economy exists for people, not vice versa. The economy should be a part of life, not a steamroller crushing self-determination and creativity. The economy should be embedded in society; society should not be embedded in the economy. Social and ecological reality should not be externalized or factored out but included in discussion and future planning. Thomas Piketty and alternative economics emphasize inequality and mass unemployment as dangers in late stage capitalism.

As lessons from the 2008 financial crisis, the financial sector must be shriveled and the public sector expanded. Market failure and state failure must be identified and confessed so errors are not repeated in the future. Profit and shareholder interest must be supplemented by sustainability and stakeholder interest. Quantitative growth must give way to qualitative growth, excess must yield to access and more to enough.

to read the translated articles “The Inheritance of Inequality and Rethinking Growth,” click on

Comment by drc2 on

What I noticed even in the midst of CAPITAL was the way the yarnball was being pulled apart by threads that could not just be trimmed to keep what we have going.

The Social State is really democracy. It requires wealth to serve the economy that serves a democracy rather than running a plutocracy over us in the name of ‘freedom.’ What it takes to get the wealth glut punctured so we can have our money back is not a reform, it is a revolution.

The fact that this establishment of encrusted wealth and power must yield has been denied by those inside it for a long time. They have had loads of clever theories to prove that more for them would result in some more for us so we should be grateful rather than resentful of them. And, as the established encrusted of the past, they have presumed a right to feast while others starve and to live while others die in a society, much less one that pretends to be about “liberty and justice, for all.”

The incentives within the bubble to believe in the bubble are as strong as ever, but the signs of wear and tear or downright delusion are showing up inside the bubble and not just from outside “the ideology.” We shall see, of course, because we are in this larger boat and have been working on our swimming skills for a while.

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