My latest article in Environment and Planning D examines the issue of non-capitalist space within the global political economy. Why is this important? A common starting point for radical critiques of our present society is to focus on the dynamics of capitalism. The rationale for this is simple: capitalism remains the dominant mode of production of our epoch and in order to move beyond this system you first have to get people to recognise the nature of its exploitation and contradictions. This argument is perhaps most eloquently framed by Ellen Meikins Wood who stressed that, ‘At a time when a critique of capitalism is more urgent than ever, the dominant theoretical trends on the left are busy conceptualising away the very idea of capitalism’.

However, an alternative view, associated largely with J.K Gibson-Graham and others linked to Rethinking Marxism, argues that focusing our attention solely on the dynamics of capitalism – what is termed ‘capitalocentrism’ – can become a highly disempowering political project. It is this type of thinking that I label ‘the assumption of subsumption’ whereby all forms of political economy, all other forms of cultural life, and all sites of socio-political activity are portrayed as being overwhelmed by – subsumed into – the dynamics of capitalism. No space is left (quite literally) for alternatives. Such capitalocentism elides the fact that multiple forms of economy – and therefore alternative development trajectories – exist contemporaneously with capitalism (and not just in a possible future). Gibson-Graham’s view holds that if theory is to play an emancipatory role in must ‘proliferate possibility, not foreclose it’.

Although recognising the structural power that capital is able to wield, the main focus of my recent article is therefore on the survival and re-creation of non-capitalist spaces within the global political economy.  The example of Oaxaca in southern Mexico is the primary basis for making these claims, linked to fieldwork that was carried out in 2008, 2009 and 2015. Rather than examining how it has been that capitalism has managed to survive, grow and prosper, the article explores how non-capitalist spaces remain and why they should be considered important for transformative activity. This is to ensure that capital does not become the main subject of our inquiry and that subsequently the human beings at the heart of our analysis are not rendered as people without history. Beyond the issue of their mere survival however, I argue that non-capitalist spaces persist and can be learned from. They are thus both figurative and prefigurative spaces offering sites of opening for enacting different kinds of political economy.

A key contention is that the survival and reinvention of non-capitalist social practices and spaces have created a barrier to the further expansion of capital, and are now providing inspiration for alternative developmental trajectories. This has presaged intensified forms of social conflict, notably between the Mexican state and indigenous peoples (as the state claims rights to the subsoil within indigenous territories).

An important intellectual inspiration for this work was Peruvian Marxist José Carlos Mariátegui. He recognised that the driving force of Peru’s development had clearly come from colonisation and then global capitalism. Nevertheless, distinct spaces of economic activity, characterised by diverse social relations of production remained. Moreover, Mariátegui asserted that the survival of certain elements of the Indian communities could provide the basis for revolutionary transformation owing to the existence of what he called ‘practical socialism’. In similar fashion, it is asserted in my article that although Oaxaca is clearly enmeshed, or at least influenced by, the wider capitalist mode of production, distinct forms of non-capitalist social relations remain prevalent, especially within indigenous communities.

In a pamphlet issued by 3 prominent activist NGOs that form the basis of Colectivo Oaxaqueño en Defensa de los Territorios, it is stated that ‘it is precisely in Oaxacan territory where one can observe and study the survival of ancient agrarian structures’. Unlike other regions of Mexico, haciendas never expanded to displace communal property with such force. Unpacking this further, if we examine patterns of land tenure in Oaxaca we can see that over 70% of land to this day remains non-privatised and instead is held as forms of collective property (both ejidos and tierras communales) according to the Instituto Nacional de Estadística y Geografía (INEGI). This matters considerably for the analysis for two interrelated reasons.  Not only does it provide the empirical backdrop of uneven development which capital seeks to exploit, by expanding into this ‘spatial target’ and thereby transforming space and social relations to further the accumulation process, but it also implies that the region has, and continues to maintain a set of alternative institutional arrangements that exist alongside capitalism and that are in the present conjuncture antithetical to capitalist expansion. These communal arrangements include community assemblies, tequios (collective work) and political obligations in the form of cargos (political posts) that community members are expected to participate it.

In recent years the community assembly has been recovered as a vital tool with which to enact a collective form of power over land and reject the advancement of capital. This has been most visibly manifested through opposition to wind farm projects and mining. To focus just on the latter, under the Presidency of Filipe Calderón, mining concessions increased by 53% in Mexico, and in Oaxaca 20% of the surface area of the state has been given over to mining concessions. These concessions have not simply been meekly accepted however. Rather, in numerous cases, the authority of the community assembly has been invoked to challenge not only the legitimacy of the concession (based on the legal appeal to ILO Convention 169) but furthermore the legitimacy of the Mexican state. Communities such as Capulalpam de Méndez and Magdalena Teitipac represent stories of success in restricting mining activities and demonstrating that other paths to development may be possible.

This obviously raises an important question about scale. Whilst we may applaud and support the resistance of a community against a powerful TNC, this alone does not challenge the structural power of capital. The conjuncture in 2006 in Oaxaca when the Asamblea Popular de los Pueblos de Oaxaca (APPO) was formed in response to the repressive governorship of Ulises Ruiz Ortiz, demonstrates the limits of action restricted to one particular locale. What I contend rather more modestly in the article, therefore, is that these sites demonstrate the starting points for action, and questions that we need to pose rather than end points in themselves. It would be easy to dismiss them as marginal, but what happens in the periphery does not have to stay peripheral. Highlighting the continuation of non-capitalism offers an opening to reimagining how alternative socio-economic models could develop.

In contrast to what is sometimes the dominant imagery, resistance and transformative action is thereby moved from nowhere to now here.

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Recently I learned that my book The Emotional Logic of Capitalism has been awarded the Transdisciplinary Humanities Book Award, sponsored by the Humanities Research Institute at Arizona State University. The award is given each year to “a non-fiction work that exemplifies transdisciplinary, socially engaged humanities-based scholarship.” The list of previous awardees show the wide range of work considered to fall under this heading, and I am grateful to the Institute’s Director Sally Kitch and the Board for selecting my book. I’m looking forward to visiting the Institute in the fall.

Of course recognition of one’s work is always nice, but there is something particularly gratifying about receiving this award. One reason would be that I did not in fact realize that the book had been nominated (many thanks to my wonderful Stanford editor Emily-Jane Cohen!). More to the point, going down the path that eventually led to the writing of this book has not been free of occasional professional uncertainty. Having been trained as a meat-and-potatoes political economist, and having done most of my early work on the question of power in American finance, The Emotional Logic of Capitalism is a more theoretical work that draws on perspectives and fields that are not usually brought to bear on questions of money and finance – semiotics, psychoanalyis, pragmatism, religious history, among others. Contemporary academia does not always take kindly to interdisciplinary work, so the recognition bestowed on the book by this award is gratefully received.

So what led me to write the book, and why did I feel it was necessary to venture deeply into social theory to make sense of questions of money and finance? Let’s go back for a moment to the financial crisis of 2007-08. Progressively minded commentators immediately took this event as announcing the end of neoliberal capitalism, and they loudly declared an imminent return to Keynesian intervention and public regulation. Such arguments are closely associated with the revival of Polanyi’s work, which sees capitalist history as driven by alternating movements of market disembedding (when the speculative and individualizing logic of the market spirals out of control) and re-embedding, (when society regroups and resubordinates markets to the public good). In the book I take this “double movement” model as emblematic of a highly influential but problematic way of thinking about economic and financial life.

The idea of the double movement has turned out to be a poor guide to the development of capitalism since the financial crisis: instead of a break with the politics of financial expansion, what we got was a neoliberalism recharged. My book is essentially an extended reflection on the deeper – psychological and emotional – sources of resilience that capital can tap into and that have eluded the tendency to understand it in terms of the Polanyian image of market disembedding. To this end, it recovers the moral and theological origins of the concept of “economy,” arguing that our relationship to money is regulated by a complex infrastructure of affectively charged (inter)subjective investments. In this way, the book develops an understanding of economy that is critical but takes seriously the idea that money and markets have self-organizing and self-regulating properties.

The second part of the book traces how, over the course of the twentieth century, progressive thought gradually lost sight of the emotional and theological content of economy. It argues that the turn to a disembedding narrative should be understood as the way progressive thinkers have sought to come to terms with the disappointments of democratic capitalism. To lament the speculative and individualizing character of the market always seems like a promising move in the moment – it offers a way to make a critical point that is relatable and so offers a particular kind of rhetorical traction. But over time it has resulted in a critique that is moralistic and increasingly unable to engage the complex, subterranean ways and often not fully conscious ways in which people are invested in (neoliberal) capitalism.

The book can be read as a way of doing political economy that is different from where it is currently heading in its leading journals – which is characterized by a definite and growing scepticism about the value of theory. That sentiment is no doubt understandable, as one of political economy’s main concerns has always been the “reality-blindness” of the formal models that mainstream economists build. But not doing theory is doing theory by default, and the current sway of the Polanyian model seems to me to be a result of a reluctance to revisit thorny but fundamental conceptual issues.

For interested readers, elsewhere on PPE I have elaborated these points with more specific reference to the question of austerity politics, and this discussion by my colleague Fiona Allon provides an excellent account of the book’s key conceptual moves. The book’s introduction can be read here.

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By giving a small number of relatively well-off Australians a tax cut the Treasurer has undermined revenue and helped contribute to inequality, as detailed in this post that originally appeared on New Matilda.

For someone who piously bemoans an “us versus them” mentality in political culture, Treasurer Scott Morrison certainly drove a deep wedge into the social fabric with one of the centrepieces of his budget. There are four thresholds in the personal income tax system; Morrison chose to increase one of them, supposedly to offset the insidious effects of “bracket creep.” The third threshold will be raised from $80,000 to $87,000.

Other thresholds don’t change. Taxpayers making over $80,000 will thus get a small saving ($6 per week at most). Those who make less, get nothing.

It’s not the most expensive tax cut in the budget. It will cost an estimated $800 million in the first year – barely half the $1.5 billion lost annually by cancelling the deficit repair levy on incomes over $180,000, and far less than the ultimate cost of Morrison’s company tax cuts. But it is the most transparent and easy to understand of all the budget’s tax measures. And it will spark the most gossip around the water-cooler. Who makes over $80,000 per year, anyway? And who makes less? It’s hard to imagine a more “us versus them” tax policy.

The Treasurer’s own rhetoric reinforces this schism: he says it will “reward hard working Australians,” encourage them to work overtime, take more shifts, and accept a promotion. The clear implication is that people making less than $80,000 are not interested in working more hours or taking promotions. Indeed, they aren’t even “hard working” in the Treasurer’s terms, and hence don’t merit protection from “creeping” taxes.

The Treasurer tried, but failed, to define the measure as one that benefits “average” wage-earners. Mean annual earnings for a full-time worker employed year-round are indeed near $80,000. But this does not remotely describe the typical Australian. First off, the mathematical “average” is skewed upward by super-high incomes at the top of the income ladder; the median full-time wage (received by the full-time worker in the exact middle of the distribution) is $10,000 lower than the average, and well below the threshold. Likewise, women (even those employed full-time year-round) earn $10,000 less than the mathematical mean.

Federal Treasurer Scott Morrison delivering his first budget, in 2016.

But the bigger problem is that a shrinking share of Australians have full-time permanent jobs to start with. Part-time work now accounts for almost one in three jobs – the highest on record.  And labour hire, temporary contract, and other forms of precarious work are increasingly the norm. Very few of those workers earn anywhere near $80,000. At most about one in four Australian workers (and perhaps 15 per cent of all tax-filers) will get the full $6 per week saving.

The whole concept of “bracket creep” is itself as misleading as Morrison’s maths. He says taxpayers are “pushed” into higher tax brackets by rising incomes, constituting a punitive and underhanded tax grab. But this description merits some careful second thought.

There are two different reasons why a worker’s income might rise. One is pure inflation, experienced across all wages and prices. In that case, nothing “real” changes, and a higher tax rate might seem unfair (although we should remember that the cost of many government programs also grows with inflation, and someone has to pay for that).

Alternatively, it might be changes in a worker’s real income that qualify them for the next bracket. If they worked more hours or took a promotion (as the Treasurer urges), then their real income rises, and so does their tax. That’s not bracket creep, and there’s nothing “underhanded” about it. In fact, that is the whole point of a personal income tax system in which tax rates depend on income.

Moral panic over bracket creep is all the more ironic given the unprecedented stagnation in Australian wages, reflecting sustained weakness in the job market. Average weekly earnings in the private sector are growing at their slowest pace in history: under 1 per cent per year (slower than inflation). The budget itself acknowledged this is badly hurting Commonwealth revenues. With wages going nowhere fast, this is hardly the time in history to make a mountain out of a bracket creep molehill.

If the government truly wanted to prevent inflation from distorting taxes, it could simply index all parameters in the tax code to consumer prices (as other countries, like the U.S. and Canada, have done). Then all thresholds, not just the one cherry-picked by Morrison, would rise 1.3 per cent this year, the same as year-over-year inflation. But that would depoliticise the whole process, hardly acceptable in a year when every single clause of the budget is focused on getting the government re-elected. So Morrison picked one politically-potent threshold, lifted it seven times faster than inflation, and left everyone else to get “creeped.”

Previous ad-hoc increases to thresholds have lifted them far faster than inflation. In fact, with this latest increase, the third tax threshold will have risen twice as much as inflation since 2003. Combined with rate reductions also targeted at top brackets during that time, government revenues have been undermined badly, and the upward redistribution of after-tax income has been exacerbated.

In short, the politics of Morrison’s over/under game are hard to understand. He will deliver a tiny benefit to less than one in four employed workers, and barely one in seven tax-filers. Most Australians won’t get a cent. But the economics are even worse. His divisive and false anti-tax narrative undermines the long-run stability of the government’s revenue base, damages public services, and reinforces inequality.

***

This post was originally posted on New Matilda (11 May 2016).

The post Bracket Creep Is A Phoney Menace appeared first on Progress in Political Economy (PPE).

My book starts from the observation that the Margaret Thatcher and John Major governments sought to systematically constrain organised labour. Thatcher’s mentor and close ally Keith Joseph published a pamphlet in February 1979 entitled Solving the Union Problem is The Key to Britain’s Recovery. Once Thatcher had become Prime Minister, what followed was the stepwise tightening of trade union law, the careful preparation for a confrontation with the organisation spearheading militant trade unionism in Britain at the time, the National Union of Mineworkers (NUM), and an economic and monetary policy accelerating the decline of British industry.

The 1984–5 Miners’ Strike, the key instance of the confrontation between the government and the unions, was the longest mass strike in British history. It cost approximately £28bn. But this is just one of many fiercely fought industrial disputes in the Thatcherite era in which the government had a stake – either because they took place in the public sector, or because political decisions and legal changes had paved the way for employer attacks. The labour scholar John Kelly provides an apt description of the situation under which unions operated in the Thatcherite era.

Unions were unable to stem a flood of closures and redundancies, they failed to prevent real wages falling in the depths of the recession, they could not prevent changes in working practices and they suffered a number of spectacular strike defeats: railways 1982, mining 1985, printing 1986, TV-AM 1987, teachers 1987, P & O ferries 1989.

Taking seriously the substantial changes in labour relations, I arrive at the key observation of my book: I contend that Thatcherism’s success and novelty, indeed its unity as a political project, lie in the fact that Thatcher and her associates profoundly shifted class relations in Britain in favour of capital and profoundly restructured the institutions underpinning class domination in the country. My key theoretical intervention is to propose that in the first instance, capitalist class domination consists in the extraction of surplus labour in the process of production. It follows that political leaders will always intervene in the sphere of production in some way.

In line with my emphasis on production, my book contains a case study analysing four policy papers on labour relations commissioned by the Conservative leadership during the Callaghan era. Among them is the ‘Final Report of the Nationalised Industries Policy Group’ in the Conservative Party, which is only mentioned in passing in much of the literature on Thatcherism. This report, written in 1977 by Nicolas Ridley, an ally of Thatcher, laid out how a future Conservative government would deal with the nationalised industries. The annex to the report contains a detailed plan aimed at smashing militant trade unionism, which shows that leading circles in the Conservative Party were already preparing for a direct confrontation with organised labour before there was a Thatcher government. As my chapter on British class politics between 1979 and 1984 demonstrates, the Thatcher governments stuck to this course and followed the recommendations of the report closely. In a nutshell, my analysis is concerned with establishing the articulation between direct attacks of the Thatcher governments on militant workers and Thatcherite economic policy in a broader sense, not just with the effects of their economic policy on class relations.

My key analytical distinction reflects this concern. In my view, there are two modes of ‘top-down’ politics under capitalist conditions:

• class politics, that is, political activities aimed directly at securing the extraction of surplus value; and
• economic order politics, that is, interventions primarily aimed at establishing and securing the preconditions for economic growth, which affect class domination only indirectly.

Against this backdrop, I contend that Thatcher and her associates implemented both a new class political arrangement and a new economic-political order. The class political arrangement combined a repressive approach to labour relations with the attempt to divide the working class by co-opting certain fractions. The economic-political order centred on the notion of the ‘free market’. Thatcherite interventions aimed at inducing growth through market liberalisation, which was achieved partly with the help of authoritarian modes of decision-making. As a result, the British economy was exposed, to a much stronger degree than before, to competition in the world market. The class political arrangement and the economic-political order were fully compatible with each other. I thus speak of an overarching neoliberal regime.

The analytical value-added of these distinctions may not be immediately apparent. It lies in elucidating the uneven temporality of political developments during the Thatcherite era and beyond. Whereas the New Labour governments broke with the Thatcherite class political arrangement, they broadly retained the economic-political order established by their predecessors. Correspondingly, the terms Thatcherism and Blairism should be reserved for the respective class political arrangements. A key finding of my analysis is that the continuities and discontinuities of neoliberalism can be accounted for by distinguishing between class politics and economic order politics.

I propose to further elucidate this by taking up some of the terminology developed by the state theorist Nicos Poulantzas. Accordingly, I describe Thatcherism and Blairism as offensive and consolidating steps of the capitalist class in class struggle. In other words, Thatcherism reasserted capitalist class domination by orchestrating a successful offensive against the working class, and Blairism managed to protect this advance. At this point, two further findings of my analysis come into sight: The failure of organised labour to successfully counter the Thatcherite onslaught is a result of its inability to understand the offensive nature of Thatcherism; and the long erosion of Thatcherism in the 1990s reflects the political inability of Thatcher et al. to make the transition from an offensive to a consolidating step in class struggle.

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