Democracy Against Capitalism: Capital In A Fiat Money World

In Democracy Against Capitalism the Marxist scholar Ellen Meiksins Wood says that the driving force of capitalism is the urgent desire to accumulate more capital. As we know, and not just from Marx, capitalist only expends capital in the expectation of profit, and generally can be counted on to invest capital if profit seems likely.

In the US, it has always been the norm that those with access to capital should control every possible avenue that might lead to profit. The government has always been there to provide cash to support capital, with no compensation or justification to the government except maybe new jobs. As an example, the US handed huge tracts of land and direct subsidies to the crooks and cheats who built US railroads. I learned about this from Frank Norris’ book The Octopus, but Railroaded, reviewed here, looks even better. And here’s a sympathetic explanation of this monstrous give-away. There’s an obvious question that no one asks: if railroads were so important, why didn’t the government just build them?

In this post I looked at Wood’s definition of historical materialism and its use in the evolution of the separation of politics and economics starting in the middle ages. The comments add a lot of fascinating detail; thanks to all. What’s missing from Wood’s discussion and from economics generally is the motivation behind this evolution, namely greed and indifference to other humans. As the reviewer of Railroaded, the historian Michael Kazin, says:

The history of American capitalism is stuffed with tales of industries that overbuilt and overpromised and left bankruptcies and distressed ecosystems in their wake: gold and silver mining, oil drilling and nuclear power, to name a few. The railroad barons wielded more power than other businessmen in the Gilded Age. But their behavior revealed a trait they shared with many of their fellow citizens: too much was never enough.

That still true, and governments under both parties are as willing as they ever were to let the capitalists profit and to stuff their pockets with subsidies. As an example, look at the Democrats who run Chicago. In 2008, Chicago leased its parking meters to a group of investors headed by Morgan Stanley; investors today include the wealth fund of Abu Dhabi and other hidden investors. Mayor Richard Daley agreed to a front payment of $1.15 billion to the city.

In the seven years since, the meter company has reported a total of $778.6 million in revenues. It’s on pace to make back what it paid the city by 2020, with more than 60 years of meter money still to come.

There’s the incredible story of the city getting ripped off for hundreds of millions of dollars in derivative transactions. Chicago recently offered Amazon over $2 billion to put its new headquarters here.

That eagerness to coddle capitat has always been part of our culture. Maybe it could be justified in a society hemmed in by commodity money and weak financial markets, where there might be some limitations to the amount of capital available for investment. But there is far more capital looking for profits today than there are plausible investments. We’ve just run a huge real-life experiment. The Republican tax bill gave corporations billions of dollars in tax breaks for money stashed “offshore” to avoid taxes. The brilliant CEOS had no profitable use for it and gave it to their shareholders.

Here’s an example of the amount of capital available to waste, electric rental scooters. Much of that useless capital is employed in various kinds of direct exploitation like payday lending.

Beyond the factual reality of a world awash in capital, we don’t live in a world of limited money. Money is a commodity created by the state. It isn’t pieces of metal, and it isn’t limited by how much of the metal there is in government vaults. Government can create all it wants and needs. The Republicans just passed a bill slashing US revenues for the foreseeable future. Then they passed a bill raising spending. Where is that coming from? Stephanie Kelton explains in a quick and easy introduction to Modern Money Theory.

Returning to the railroads, the government could have built them itself, using a combination of taxes, revenues and borrowing. It might have taken longer; and it would have been corrupt though it would never have been as corrupt as it actually was. Why didn’t that happen?

Or look at oil. In some countries, oil is owned by the State, which employs people directly to drill and refine, or hires private drillers and refiners. We don’t do that. We just let the capitalists take the resources out of public land for a small fee which is rebated in the form of sickening tax breaks like depletion allowances.

There was never any justification for the US system other than the demand of the rich and powerful for greater profits with utter indifference to the rest of us who are left to clean up after the bankruptcies, frauds, toxic spills, nuclear waste and whatever other trash they leave behind. Capitalists won’t make society a better place, because that isn’t profitable. Capitalists believe that they should be able to expropriate all the profits from their investments. The point of making society better is that the benefits from that either can’t be monetized, or we don’t want to lose the benefits to the demand for profit. We don’t need capitalists to make society better and we never did. We just need to be able to control our own government, making it operate for our mutual benefit.

41 replies
  1. sand says:

    Great topic. Successful infrastructure projects are not easy to deliver. Still, there are no news stories with the headline, “Government Delivers Big Project on Budget.” It’s not because it doesn’t happen. It does, but it’s not news.

    I am optimistic that we’ve made *some* progress since the days of the robber barons. I believe most state DOTs run relatively efficiently. I do not think that private industry could deliver the same value at lower cost. Still, there must be a balance. I’m not convinced that governments should build railroads themselves. Governments are set up as owner (operations and maintenance) organizations. The type of organization required for a major capital project is very different, You need to hire (and then release) large numbers of professional and craft personnel over a defined duration. That’s not a business model that suit the government. Government needs to function as a responsible owner/operator, using private industry to bring market forces to bear on its investments. We should be wary of long-term deals (DBFOM = Design, Build, Finance, Operate, and Maintain) that privatize profits and socialize risks. Any deals to sell public assets to private industry like the Chicago parking meter example also merit close scrutiny. They’re probably not always bad, but I have not seen any examples that I really like. Profits are usually private and losses are usually public. Bad deals.

    I am going on and on . . . but I want to make a general comment about Jobs! Jobs! Jobs!

    Governments of all types seem to have found that the people like their promises to “create jobs.” This fascinates me. The creation of work is not helpful, in and of itself. I suppose it’s just too abstract to say that you’ll create value or to ease the creation of value. Jobs sound real. Value sounds like BS. Still, you can create lots of jobs by digging a ditch and filling it back in. We seem too ready to assume that the creation of jobs is a good thing. Creation of jobs is only good to the extent that the jobs produce value.

    Anyway . . . There are lots of good steady hands both in government and in private industry working hard together every day to deliver value to the American people. They are mostly unseen and unheard. On the government side, there are a lot of career folks that get a new boss every four years, and more often than ever, those bosses are not qualified for their jobs. It cannot be easy to meet a new political appointee when you’ve been with an agency for 20+ years.

    Speaking of delivery value to the people . . . TYEW!

    • Ed Walker says:

      How would your road construction apply to railroads Or oil drilling in my scenario? More pointedly, who would own the railroads and the refined petroleum? Who would decide where the railroads go? Where the oil drilling would be done. Etc.

      Why should the capitalists make the decisions instead of a democratically elected government acting in the best interests of society?

      • sand says:

        Certainly the democratically elected government should be making the investment decisions when it comes to public goods. The capitalists, as a mob, would rape and pillage the earth for profit. To me, that’s not because capitalists are all evil, but without rules, those that can privatize the most opportunity/profit while leaving risks/losses to the public will win. That’s a recipe for disaster, and there’s no shortage of examples here or around the world. So, I believe I am in general agreement with your view.

        However, I’ll try to offer a counter-example. Our democratically elected government actually has been trying to build lots of high-speed passenger rail across the country in CA, FL, IL, and elsewhere for the past decade. The economics on these projects appear to be very very very bad. HSR is woefully unsuited for the majority of U.S. travel: 1) because HSR cannot have any grade crossings, meaning the road or train must pass through a bridge or tunnel at EVERY crossing making capital costs incredibly high; 2) because air travel is faster, cheaper, and more flexible than rail as regional jets can economically carry 100 people whereas trains need on the order of 1000 all going to a few points along a line; and 3) because high-speed trains require a sprawling ground-based infrastructure that is highly susceptible to terrorism with a high rate of death from relatively simple vandalism that is hard to prevent or detect.

        Private industry would never invest 100s of billions of dollars in such a boondoggle. No bank would back them. Not so for the U.S. Government. They are susceptible to lobbying. So we are getting CAHSR (or perhaps a piece of it) at will be a likely cost of $200B to connect two cities that have 10 airports between them. This project alone gives me doubt about the wisdom of government decision making in infrastructure investments.

        Here’s a report from CAHSR ( projecting (at the low end!) 33 million annual riders on CAHSR and fares at 50% of airfare rates. That’s 90,000 riders/day over 365 days. Meanwhile, I just priced a RT flight from SF to LA on Monday at $103. There’s no way CAHSR can profitably charge $51.50. This is shameless. I’d recommend the commentary of Bent Flyvberg as one other data point on this topic.

        So, I see a need for a balance of forces between capitalism and government. We need to find a way to bring both public-consciousness and market forces to bear on major infrastructure decisions. That balance is harder to achieve the more plutocrats corrupt government and undermine career employees.

        Yes, corporations will rape and pillage the earth for profit, but some of our current democratically elected officials seem to want to rape and pillage the earth just for the sheer joy of it. Trump wants us to dig up coal that we can’t profitably burn. That is insanity.

    • Watson says:

      ‘You need to hire (and then release) large numbers of professional and craft personnel over a defined duration.’
      A great deal of necessary work is either seasonal, or performed in projects of limited duration; the people who do that work need food and shelter every day.

      • MaxUtil says:

        In most cities, this is handled by contracting the short term construction aspects to a private company and then retaining the administration and maintenance work for the government. This is how Los Angeles is currently building actual railroads (subways) right now. This is typical for large capital projects in cities and states.

        What government entities are typically loath to get in to are projects that are designed to be profitable. There are a variety of good reason for this (one being that once you get governments into profitable enterprises you combine the worst aspects of government control with corporate malfeasance.) But none of that is an argument for privatizing away government revenues which serves to enrich private business at the expense of the public while further insulating the people’s control over their environments.

  2. Alan says:

    Given what you write above you should really read some Tooze, an economic historian at U. of Columbia who has written about the political economy of WWI, WWII, and has a forthcoming book on the 2008 crash. You need to ask how these trans-national corporations and networks of finance relate to the current economic nationalism (Trump, Brexit etc.).

    Framing Crashed II: 2008, the Crisis of the National Macroeconomics and the “Revolution” of Macrofinance.

    See especially the Peter Gowan paper he links to and strongly recommends:

    Read the rest of Gowan’s essay! It is simply jaw-dropping in its prescience….Gowan came from the Marxist left. In the mainstream the emergence of the macrofinancial approach might be described as the moment when economics began to take seriously (a.) the reality that the dominant force in the global economy are no longer national units but giant corporations and (b.) the size and force of global finance, which is clearly gigantic but is far too often “netted out” of conventional macroeconomic analysis.

    At the bottom he links to videos of himself and Mark Blyth. Blyth is an entertaining, plain-speaking, no-nonsense Scotsman who teaches political economy at Brown. If you haven’t listened to him, you should.

  3. earlofhuntingdon says:

    Great discussion, as usual, Ed.

    The railroads are a perfect example of American capitalism. Many of the practices that built them persist today: Massive amounts of capital. Massive government subsidies in cash and in kind. Massive stock manipulations. Hidden shareholdings and monopoly practices. Fraudulent stock manipulations and promotional materials. Fraudulent dealings with those who bought from the RR’s parcels of land gifted to it by the Feds. The latter were in exchange for developing “dead” land expropriated from Native Americans, states and territories. Lavish, illegal bribes to legislators and regulators. Use of the corporation as the dominant form through which to do business.

    The piece de resistance was created by two court cases. It is the precursor to Citizens United. The first was an insertion into a headnote – a summary not part of the opinion – on a Supreme Court opinion in 1882, San Mateo County v. Southern Pacific RR. It baldly stated that a corporation – a legal fiction created by state law as a way to conduct business with limited liability for owners and managers – possessed legal “personhood”.

    Four years later, in Santa Clara County v. Southern Pacific RR, the Court took judicial notice (in a statement also not part of its opinion) of what it unanimously considered obvious: Corporations have legal “personhood” for purposes of the constitution, specifically, the 14th Amendment’s equal protection clause. The irony was profound. The amendment was meant to clarify the rights as citizens of former slaves.

    The Southern Pacific and Central Pacific RRs were part of the complex of RRs ultimately owned and controlled by California’s Big Four: Leland Stanford, Collis Huntington, Mark Hopkins, Charles Crocker. In shorthand, Stanford was Mr. Outside, Huntington Mr. Inside, Hopkins kept the books (several sets of them) and Crocker built the road.

    Stanford managed California and its legislature, ultimately as governor, before his ambitions were stifled and he and his wife “settled” for setting up a private university in Palo Alto that would incorporate their values.

    Huntington managed relations with Congress. He didn’t invent American lobbying. That might have been done by Cornelius Vanderbilt and his peers, who lavished great sums on Albany’s legislators for favorable rulings on transport projects in New York, especially along the Hudson, in New York Harbor and Manhattan. But Huntington refined it.

    He moved from California to DC, still a Southern backwater, learned about Congress and congressmen, and lavished untold sums on them. He kept favorable legislation and federal subsidies flowing – so much land here (always the best, often along scarce rivers), so much per mile of track laid there, loan forgiveness and repayment deferrals galore. His DC grapevine was unparalleled. He was a one-man Koch machine.

    The Big Four’s supporters are many, often monopolize the academic debate, and strongly deny these characterizations. The Octopus earned their special ire. These supporters lavish praise on their development of the corporation and corporate finance, the development and settling of “vacant” lands, enabling the delivery grains, meats and minerals anywhere a track could be laid. They ignore, minimize, or admit without comment the many harms to people and the environment, even to investors, their practices and legacy generated.

    A good summary on the development of the corporation is here:

    • earlofhuntingdon says:

      The Octopus’s novelized history is dated.  A short book about its facts, personalities, and authors, Ambrose Bierce and Frank Norris, is 2008’s, The Great American Railroad War, by Dennis Drabelle.

      A detailed history of the building of the transcontinental railroad is David Haward Bain’s 1999, Empire Express.

      A quicker read about the Big Four – Stanford, Huntington, Hopkins, and Crocker – uses the term they preferred for themselves, 2008’s The Associates, by Richard Rayner.

      While critical of its subjects, Rayner leans toward the standard form of corporate history made famous by Harvard Business School’s Alfred Chandler.  Chandlerian histories focus on the entrepreneurial spirit, developments in corporate organization and finance, and the technical accomplishments of middle management in orchestrating large, complex, capital intensive industries that, in fact, reshaped America.

      Its drawbacks include lack of social context and often severe discounting of the financial, environmental, and human costs born by others.  The form commonly ignores the sometimes spectacular achievements of disfavored groups.

      Chinese laborers, for example, formed a large part of the Central Pacific’s workforce.  They performed dangerous and prodigious feats of rock climbing, hard rock blasting and tunneling, chasm bridging, and earth and snow moving.  They protected themselves from frequent harassment by whites and survived in an unwelcome society, in physical terrain that varied from the snow-covered Sierra Nevadas to the Nevada deserts.

      They organized a supply chain – starting with their peers in San Francisco – of nutritious versions of familiar foods that were far healthier than fare typically eaten by their western counterparts.  They survived without women, who were barred from entry.  Luckily, they, in turn, were barred from the liquor, gambling, and prostitution tents that moved along with the railhead, where RR magnates earned back the wages they paid.

      The Big Four started off, after all, as merchants in Sacramento selling $5 shovels for $50 to the long lines of men headed for the American River and a fortune in gold.  They bought the shovels back for a song when the would be miners went bust, then sold them again.  A much surer way to wealth – indeed, it was the wealth eventually used to start the Central Pacific – than panning for gold in a mountain wilderness, which is all that American capitalism concerns itself with.

  4. Frank Probst says:

    Off-topic, but news about Paul Manafort:

    Here’s the headline:
    Manafort Kept in Solitary 23 Hours a Day to ‘Guarantee His Safety,’ Lawyer Says

    And this is from Paragraph 1.  See if you can spot the not-even-remotely-subtle difference:

    “He is locked in his cell for at least 23 hours per day (excluding visits from his attorneys),” defense attorney Kevin Downing wrote.

  5. lex says:

    I’ve come to the conclusion that the whole country was founded and built for the purpose of capitalism, not democracy. When you look at the wary histories of the founders you see land speculators far and wide; Washington being the biggest and most corrupt of them all. You also see slave holders, the type of people who see human beings as capital.

    And even our constitution, the timing of which is strongly correlated to the payment of bonds. Not bonds to the French or other nations, but “merchants” (which is 18th century English for banker). Who held those bonds? The founders, the officer class, and the merchants. Who got the right to vote and run a government? The bondholder class.

    We haven’t run afoul of the founders’ intentions at all. Not the robber barons, the oil men, the trump’s, or the Wall Street bankers. It was always intended to be their country, and perhaps that’s why we’ve never been good at reconciling democracy with capitalism.

  6. Cort Youngen Greene says:

    Interesting article and discussion, as a Marxist I am into more of Alan Woods and Ted Grant analysis but great to see and hear of others.

  7. cfost says:

    Mina laughed scornfully.

    I? Oh, I’VE GONE TO HELL. It was either that or starvation.

    (from The Octopus)

    That passage has stayed with me since I wrote a report on Norris’ novel in high school. That book was a real eye opener for me at 17 yrs old. And, according to some of my Arky and Oky forebears, Norris and Steinbeck had a profound emotional resonance with them, as they were the cheap farm labor up until WWII.

  8. SpaceLifeForm says:

    [2017-10-16, Marcy wrote]

    On September 28, the Senate Judiciary Committee approved on a party line vote the nomination of Brian Benczkowski to be the head of the Justice Department’s criminal division. The vote put President Donald Trump one step closer to installing a potential mole at the department, with the ability to inform him of any wiretaps or significant developments in special counsel Robert Mueller’s grand jury investigation into the possible ties between Russia and the Trump campaign.

    [2018-07-05 Senator Dick Durbin wrote]

    Remember Brian Benczkowski? He represented Russia’s Alfa Bank and was a top staffer to then-Senator Sessions. Senate Republicans plan to vote next week to confirm him to head the DOJ Criminal Division.


    [This ties to the Jonathan Kravis role now.   The braindead, corrupt, blackmailed republican fascists are looking at all angles to stop the investigations into the conspiracy that they are complicit in.  Well, complicit at best.  Some are definite co-conspirators]





  9. Watson says:

    ‘The republicans just passed a bill slashing US revenues for the foreseeable future. Then they passed a bill raising spending.’

    Trump recently proposed a new military branch to be called the ‘space force’. As with tax cuts, bank bail-outs, or other right-wing schemes (but unlike with progressive proposals such as universal health care), he was not met with a chorus of derisive cynicism from the SCLM: ‘How are you going to pay for it?’

  10. SpaceLifeForm says:

    So why did these non-patriot US Republican bozos go to Russia instead of being in US on July 4th?

    #Russia’s state TV:
    “GOP lawmakers sounded tough on Russia when speaking from Washington, but changed their rhetoric upon arriving to Moscow.”

    @SenJohnKennedy (LA)
    @SenShelby (AL)
    @SteveDaines (MT)
    @SenJohnHoeven (ND)
    @SenJohnThune (SD)
    @JerryMoran (KS)
    @RepKayGranger (TX)

    Apparently, left of the list

    @SenRonJohnson (WI)

  11. Thomasa says:

    E of H, good treatise on Stanford, Crocker et al and Citizens United. That may yet prove to be the most ruinous bit of irony yet. I note that Crocker was also a banker.

    We shouldn’t neglect the impact of Jay Gould who a decade or so before SPRR v. San Mateo County at least helped to precipitate the panic of 1873 by dumping or attempting to dump millions in northern pacific railroad bonds. Gould, a railroad entrepreneur and banker went under spectacularly, resulting in the closing of the New York Stock exchange for ten days and ushering in a nine-year depression.

    The resulting crash in railroad construction and land prices were incentive for my great uncles and 2nd great grandfather to set off for Oregon arriving at Cascade Locks just as construction was to begin. They acquired a workboat and joined in the construction effort.

    Over the next twenty years their fortunes improved and along the way met F. Agustus Heinz, a Butte MT copper miner who became a New York banker. Heintz’ tale is fascinating but for another day. Anyway Heinz lent my uncles, the Ballaine brothers several million to begin construction of a railway from Seward AK to Anchorage.

    Heintz had bested the Rockefeller and Morgan interest in a mining deal forcing them to buy him out for a princely sum [See Sarah Mc Nellis; “Copper Kings at War,” 1956. U of MT press]. Morgan never forgot. In 1907 as the Ballaines needed more money John Ballaine traveled to NYC and in a letter dated August IIRC he wrote to his sister, my GGM, that they had secured an additional half million.

    Heintz and his brother, still copper kings at heart in 1907 attempted to corner the copper market and failed. Morgan took advantage of the situation and managed to break Heintz. In stark contrast to NYT reports of the day, Morgan did not ride to the rescue of Knickerbocker Trust but according to both McNellis and the Minnesota Fed insured Knickerbocker’s demise triggering the Panic of 1907. Needless to say my great uncles did not get their money, couldn’t make payroll and went bust.

    But wait there’s more. In poking around in some family history I was able to corroborate a story that the Morgan/Rockefeller syndicate was moving beyond the planning stages for a railroad from Valdez Ak to Anchorage in 1907. So it appears that in precipitating the Panic of 1907 they got a twofer, Heintz and the Ballaines. So goes American capitalism.

  12. Watson says:

    Timothy Geithner’s name surfaced recently with the revelation that his company controls a particularly odious predatory lender. Geithner’s defenders promptly repeated the claim that the financial sector bailout that he orchestrated produced a profit for the American people.

    It takes some dubious assumptions to conclude that ‘the American people’ profited from maintaining the reign of JPMorgan, Goldman, and Citigroup. And ownership of a tollbooth on the world’s major financial highway is a very profitable business model. It took some colossal greed and criminality by the people who controlled those too-big-to-fail/jail firms to have put them in the red.

  13. Ed Walker says:

    @sand It would be difficult to build high-speed railroads today. But the cost of airplane travel isn’t just the price of the ticket. You have to go to the airport, stand in line, wait hours, then fight your way out of the airport and to somewhere else for the next stage of your journey. That’s that the case with trains.

    France built its own train system, and laid in the roads on top of that system. So, when France decided to build high-speed trains, the system was in place, and only comparatively minor changes were needed. I recently went from Paris to Saint Malo on the TGV at an amazing speed, with just three short stops. Last year I went from Paris to Rheims on the TGV in 45 minutes. The trip from my apartment to the station took about 25 minutes walking and Metro, and I waited about 30 minutes for the train but that was to make my wife happy. That’s about 140 km. Try that in a car or a plane.

    I can get to the train station in Chicago on the bus in 25 minutes in sane traffic. We went to Milwaukee on the train; about 90 miles. It took forever. We could have driven up faster. Why? That track has been there forever, and could be made a high speed train with little difficulty. You could fly to Milwaukee, but I’m there on a slow train before I’d leave the ground from Midway.

    We’ve made political decisions about who gets to decide whether trains are economically feasible. The capitalists made terrible decisions that have made our lives worse than they could have been.

    • sand says:

      I spent a few years in Milwaukee and worked on the second floor of the train station when its renovation started in 2004. When Midwest Airlines started to cut service (before disappearing in 2009), I started flying to Chicago or through Chicago to get to Milwaukee. So I’ve done trains, planes, and automobiles between the cities many times.

      For distances like this, there’s no question that the train is the way to travel. (Amtrak is actually looking to increase Hiawatha Service. It’s moving through public review now.) The same is true along the northeast corridor, where Amtrak makes the vast majority of its revenue. I support additional investment where it makes sense.

      I would not say that HSR is ever easy though. There are vast differences between operating a train at 79 mph and 125 mph or more, and the infrastructure requirements are vastly different. HSR needs positive train control and grade separation to be safe. I don’t think most Americans are aware of the number of train accidents we have every year ( More than 2,000 train/vehicle collisions with 274 fatalities in 2017. Thankfully, this is down 50% from the 90s. However, total train-related deaths in the U.S. hit a peak with almost 900 in 2017. ( Most of those deaths are trespassers, but some are passengers, like in this major Amtrak derailment in D.C. in December ( In fact, the U.S. averages around one significant train accident every single day. So, there’s a cost not included in the ticket price. Meanwhile, there were zero commercial airline caused fatalities for the past four years.

      Doing trains right means making them safe, which means spending big money. We have a long way to go, and it will definitely not be easy to get to any real HSR service that I would consider acceptably safe.

      I don’t blame capitalists for tricking us into not building lots more inter-city rail. In fact, the capitalists were pushing for exactly that, and they got it in the 1800s. After the rise of air travel, most long-distance passenger rail travel in the U.S. started to make a lot less sense. Rail is great up to about 150 miles. Beyond that, it’s more economical to fly.

      Of course, rail dominates freight transport in the U.S. over long distances. It is the most economical solution. Interestingly, the airlines and most rail infrastructure are privately owned. So, if the capitalists wanted to run more passengers to rail, they could try to do it.

      Our transport options may be far from perfect, but I believe they’ve been driven more by real long-term economic forces than by any grand capitalist design.

      Thanks again for the great discussion. Here’s some rough breakdown of U.S. infrastructure ownership that could generate more:

      Roads – public (minimal private and PPP examples)
      Passenger rail – public (sometimes on private infrastructure)
      Freight rail – private (sometimes on public infra.)
      Passenger/freight Air – private (with public or quasi-public infra.)
      Pipelines – private (a massive infrastructure where public ownership could make a lot of sense)
      Power generation – mostly private, mostly now deregulated, some public like TVA and municipal utilities with generation
      Power T&D – mostly private but regulated as a monopoly
      Communications – almost entirely private

      Capitalists are always working an angle, but each of these industries has 100 years of factors that influence the current ownership. Either way, no one gets to tell us what is economically feasible. There are objective criteria. Unfortunately, most of these assets have life cycles of 50-100 years, so we have to work with estimates that are subjected to unintentional and intentional bias.

      As far as the trains are concerned, I’d trade CAHSR for improvements to Hiawatha and the northeast corridor. I’d spend the balance fixing our most dangerous road bridges.

  14. Ed Walker says:

    @ Watson

    That’s a great illustration. The complaints originate in mainstream economics, and  arguing about budgets is so much easier than arguing about the wisdom of a political choice.

  15. sanford sklansky says:

    Interesting article.  I did not read the comments. Just way too many.  But I do wonder how many of you read Capital by Marx.   I listen to Richard Wolff’s podcast Economic Update.  It was an hour show now 30 minutes. You can listen to the rest on Patreon for 3 dollars if you want to hear the rest. He is a Marxist economist.  He is in his 70’s.  As you can see he went to some schools. Every so often he talks about how none of the schools he went to taught Marx or just barely mentioned him.  He taught himself for the most part.   You can catch his talks and other videos on You Tube.  You can even watch David Harvey or Steven Resnicks lectures on Capital on You Tube, if none of you have read Capital.  I think Wolff is interesting if some what repetitive at times.  He talks about what is going on in the economy and then usually has an interesting guest. I think he is worth listening to.

    • bmaz says:

      Really? I just did it in four minutes or less. While eating a sandwich. Don’t be lazy.

    • Watson says:

      I hesitate to speak for another commenter, but my sense is that sanford sklansky is not being trollish; rather that he is sincerely questioning why a discussion like this doesn’t make more specific reference to the analysis of Karl Marx, the foremost authority on the ethical shortcomings of capitalism.
      My answer is that, in the 170 years since Marx wrote the Communist Manifesto, the ‘greed is good’ crowd has spent so many trillions of dollars stigmatizing everything associated with Marx that we need to develop a contemporary vocabulary to critique the economic status quo.
      * I would use the term ‘employers and employees’ rather than ‘bourgeois and proletarians’.
      * Rather than saying that we must ‘nationalize the means of production’, I would say that we need a ‘robust public sector with the means and the mandate to optimize the standard of living’.
      * And while I think that ‘the commanding heights of the economy’ is still a very useful term, I would welcome a suitable synonym for ‘lumpenproletariat’.

  16. earlofhuntingdon says:

    Marx has been thoroughly demonized in the US for 150 years, especially after each world war. In the conformist, FBI-surveilled fifties, reading him could rapidly land you in the unemployment line, if not worse. State service to capital and all that. The claim that capital is independent of the state is one of the great howlers in stand-up comedy

    David Harvey’s is probably the easiest introduction to Marx’s Capital. He is an English geographer who spent much of his career at Johns Hopkins.  That he’s English, went to university in the fifties, and taught there in the sixties is important.  He could study such things there and in depth without torching his academic career.

    That Harvey is a geographer is important because its study includes the physical distribution of people and resources, why, and in whose interest that reality exists.  (Gray Brechin at Berkeley is another.  His Imperial San Francisco is a study of how the wealth of SFO was extracted from its extended environs and at what massive cost.)

    In the US, geography is infantilized, restricted to a few maps, a few cities, rivers, mountains, and place names.  Its serious study is restricted to the Ivies, private and public, and near Ivies.  Hoi polloi are not meant to know how their physical lives came to be, as a matter of political and economic choice rather than destiny.

    David Harvey’s website is here.  His video lectures are available free online here.  The book on which these are based, Companion to Marx’s Capital, is worth slogging through.  For a taste, the introductory chapter (.pdf) is here.

    • earlofhuntingdon says:

      David Harvey’s short study, Paris, Capital of Modernity, is a good read.  A factoid I found useful.

      The wedding cake architecture of the Basilica of Sacre-Couer sits on the butte of Montmartre.  The mountain of martyrs was the redoubt of socialist rebels of the failed Paris Commune in 1871, because it commands the heights of Paris.

      The walls of Pere Lachaise cemetery still show the bullet holes that mark the end of the last socialist rebels.  The basilica, however, hides the cultural bones of men and cannon, a monument to a conservative church and a conservative moral order.

      Two decades earlier, Haussmann had begun his renovations of the rest of Paris.  His grand boulevards, built on demolished medieval neighborhoods, were a gift to developers, commerce and the easy transport of soldiers throughout the city.

  17. gezzerx says:

    What will matter will be how pissed off Republicans & Democrats vote,but especially how independent voters vote, they will be the ones who decide who will be the wining candidates, during the midterm elections ! !

    So the solution for voters will be NOT to vote for Democrats or Republicans but to VOTE for Independent candidates @ all levels come election time .  Send them a message they can’t ignore & will understand !

    “We cannot solve our problems with the same thinking we used when we created them.”   Albert Einstein

    “The difference between stupidity and genius is that genius has its limits.”  Albert Einstein

    “Insanity: doing the same thing over and over again and expecting different results.” Albert Einstein

    “Freedom of speech is a principal pillar of a free government; when this support is taken away, the constitution of a free society is dissolved, and tyranny is erected on its ruins.”
    Benjamin Franklin

    Come November the choice will be yours, Freedom or Fascism !

    “Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power.”
    Benito Mussolini

    Democrats & Republicans are two sides of the same fascist coin .

    I’m afraid, based on my own experience, that fascism will come to America in the name of national security. Jim Garrison

    “Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.” — George Washington

    Half a truth is often a great lie. Benjamin Franklin

    The strictest law sometimes becomes the severest injustice. Benjamin Franklin

    Tyranny is defined as that which is legal for the government but illegal for the citizenry.” Thomas Jefferson.

    Experience hath shewn, that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny. Thomas Jefferson

    C O R R U P T   ! !

    Of the rich, by the rich, for the rich at the expense of the middle class and the poor !


    • earlofhuntingdon says:

      If they had an interest, anybody here could read your random selection of authors.  If you yourself have something to say, let’s hear it.  But the all caps crap – the blog equivalent of shouting at the moon – suggests your anxiety exceeds your grasp or that you’re a troll.  Say something useful or say it somewhere else.

  18. thomasa says:

    I’m not a student of Marx, having been intimidated away from him during my college days. We still remembered HUAC; and COINTELPRO was still an active FBI program. But I did take a history of economics class from a rather pink professor who used Henry Spiegel’s  “Growth of Economic Thought” which I have kept all these years. Marx got three chapters out of 28: Socialism before Marx; Marx; and Socialism after Marx. Clearly, he was an important figure in the history of economic thought.

    What I find more interesting at the moment is the return to the Mercantilist thought of the 17th and 18th centuries and the resumption of economic warfare. This will come to a bad end. I am reading Adam Tooze’s website and what is startling to me is the apparent level of ignorance among policymakers returning to Mercantilist warfare. If the financial meltdown of 2008 taught anything it is that the global financial system is not a set of discrete islands in a zero-sum game but an interlocking web of essentially international banks despite their nominal national registries.

    Trump’s trade warfare is terribly ill conceived and his pandering to his base threatens the global economy. His baloney about balance of trade deficits as a threat to America predates Adam Smith who wrote that Mercantilism was a fraud on the public perpetrated by the merchant class. In my limited understanding of present-day currency flows, a balance of trade deficit is the price the US pays for the Dollar’s role as the world’s reserve currency.

    The real threat to world economic stability in my view is unrestrained banks in a scheme of fiat currency and fractional reserve banking. Theoretically, national money supply is constrained by the reserve requirement on banks imposed by the various central banks. In our case that is a privately owned institution primarily controlled by New York money center banks who obviously have a profit motive. One of Adam Smith’s three functions of government is the regulation of paper money. In our day, I would think paper money should include the assorted derivatives of debt but they seem to have escaped into the realm of shadow banking and opaque price discovery.

    Some years ago I read J.K. Galbraith’s (the elder) 1975 Book “Money Whence if Came, Where it Went.”  It is a history of central banking and in the process examines the development of fiat money, which he believes should not be controlled by a private institution. In his view central banking has not worked out well. I don’t remember if he offered an alternative.

    On holiday one summer, while waiting for a train in Trieste, I struck up a conversation with a fellow cyclist who turned out to be an economist working for the Slovenian central bank. He introduced me to the notion that their are really three economies: the primary economy of trade in goods; the secondary economy of banking, which facilitates the primary economy; and the tertiary economy, where money exists only to create more money in the shadow-banking world of derivatives. The tertiary economy has grown, he said, to many orders of magnitude greater than needed to facilitate trade or represent capital wealth. That has the potential to completely upend the real economy. He was not pleased that Slovenia had adopted the Euro which he said locked them into a monetary scheme over which they had no control and that they would end up paying for the Greek’s excesses. That was summer 2007, the rest of that story is now history.

    I believe it is the unlimited growth of fiat money that has enabled the exponential growth of financial inequality. And when coupled with corporate personhood has rendered any meaningful control of and restraint on corporations moot. In their Princeton Papers, Gilens and Page argue that in America, policy changes are made because elites want them made and the democratic process effects change mostly when aligned with elites’ desires and seldom otherwise. [See Gilens and Page “Testing Theories of American Politics: Elites, Interest Groups and Average Citizens”  American Political Science Association; Perspectives on Politics. Vol 12/no. 3 Sept, 2014. ]

    A return to Mercantilism? It seems so quaint. What next? Feudalism? I hope there are people smarter than I who have solutions to this mess we find our selves in.

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