Marx2 sources / further reading
The following sources provided the quotes and data used in Marx2:
“23 things they don’t tell you about capitalism”, Ha-Joon Chang
The most readable and insightful economics book you’ll find, providing a short and cheerful summary of what’s wrong with 21st Century capitalism. The final chapter on how to reform the world economy concludes a) economies need active governments and regulation, b) investment needs to shift from finance to building productive industries, c) the world economic system needs to shift in favour of developing nations. Provides a succinct, honest and evidenced review of modern economics and economies. Sample chapters:
Free markets aren’t efficient: Shareholders care more for short term returns than the long term future of companies.
Inflation targets have made the world less stable, not more. Economists’ fixation on policies to constrain inflation has gone hand in hand with a lower priority for employment and wages, and a high priority for capital mobility, benefiting the holders of financial assets.
We do not live in a post-industrial age: Talking up our growing service industries merely hides the fact that rich countries no longer produce much of anything. Productivity gains are harder to achieve in the people-oriented services sector, and there’s little market for exports, so this puts downward pressure on the currency. Imports cost more and the standard of living decreases.
Wealth doesn’t trickle down: Despite rising inequality since the 1980s, investment as a ratio of national output has fallen in all Group of 7 (G7) countries, and most developing countries. Income inequality in America, already the highest in the rich world, rose further. Social mobility is higher in countries with stronger government and access to minimum income education and healthcare.
Free markets hurt poor countries: Contrary to current theoretical orthodoxy, the performance of developing countries under State-led development was better than in the later period of more market reform. With very few exceptions, all of today’s rich countries, including Britain and the US, became rich through policies they advise against for the developed world – protection, subsidies, State-owned enterprises and State support for business.
“A history of women in the world, volume 4”, Marilyn French
Restores women’s perspective to our shared global heritage.
“A Primer on the Euro Breakup: Default, Exit and Devaluation as the Optimal Solution”, Andrew Rose
Reviews the evidence on successful exits from currency unions.
“Boomerang”, Michael Lewis
This “meltdown tour” is a lightweight but well written overview of collapsed post-GFC economies in Iceland, Ireland, Greece, Germany and California. His comparative approach highlights the interplay between national cultures and economic policy. Ireland for example had a massive property crash, but the government spurned write-downs, transferring bank debt into public debt which will drag down its future prospects.
Lewis is the world’s most readable financial journalist and his explanation of the GFC pulls no punches: “the global financial system has become … a tool for maximising the number of encounters between the strong and the weak, so that the one might exploit the other. Extremely smart traders inside Wall Street investment banks devise diabolically complicated bets, and then send their sale forces out to scour the world for some idiot who will take the other side of those bets”.
“Bureaucrats and Bleeding Hearts”, Tess Lea
The best book on the workings of bureaucracy and its pitfalls.
“Crisis Economics”, Nouriel Roubini
Simply the best book on causes of the global financial crisis, written by the most prominent economist to warn about the crisis before it hit. Explains why cycles, monopolies and too-big-to-fail corporations are an inherent part of free market capitalism and the requirements for effective economic regulation.
“China in ten words”, Yu Hua
A writer’s picture of real life in China.
“Currency Wars”, James Rickards
A flawed but revealing insider’s account of the international currency system.
“Extreme money”, Satyajit Das
This large book is a rambling, difficult read but gives the most comprehensive insider’s view of the global economy today. Das is an Australian-based economic consultant who has worked for large corporations, and it shows. His American-focused story runs something like this: A wave of leveraged buyouts began in the 1980s. The buyer acquires a company with solid cashflows, largely funding their purchase with debt, then restructures the company to provide a cash stream which pays off their purchase. The new owners were financial specialists, able to reduce tax liabilities but without the skills to improve the company’s operations. The result was less productive and less innovative companies.
The next big shift was the rise of financial investment, and consequent decline in productive investment. Once the free market story had been sold to the political class, merchant banks were free to develop a range of new “products” which generated higher fees for them, higher profits for investors (in the short term), and sucked investment away from companies which actually made things. First up were the now-infamous mortgage bonds, home debts packaged into large bundles and on-sold to investors. This was largely an American phenomenon; their merchant bankers had no qualms about hiding the risk of default beneath glib jargon – even though American homeowners can walk away from a non-performing loan without liability for any gap between debt and house value. The fees generated a boom in bank and hedge fund profits, and the only way to keep the fees coming was to package more higher-risk loans. The boom and bust cycle had commenced.
In the 2000s hedge fund profits started to slide. They had grown too large, leaving a declining pool of new mortgages and candidate companies for buyouts. Again, more financial products were developed, ramping up the funds’ leverage, risk and liabilities. Debt was cheap as the global economy slowed, so funds were borrowed to speculate (“hedge”) against future commodity and currency prices, and the share prices of companies. Just as the cycle was topping out in 2006, banks convinced themselves that they needed a part of the higher leverage and fees, creating their own hedge funds and buying shares in existing funds – then suddenly the party was over.
Global finance closed up shop in 2007 and sought government bailouts. The final play in the deregulation game turned out to have a new role for government, pouring nations’ funds into banks so that bad investments could live on to undermine us another day.
“Factory girls: voices from the heart of modern China”, Leslie T. Chang
Life inside China, told through the stories of women working in the industrial cities of China. An evocative portrait of the largest migration in modern history and the disjointed lives of young people leaving behind country traditions to survive in a harsh new world still under construction.
“Gender gaps in life expectancy: generalized trends and negative associations with development indices in OECD countries”, Yan Liu, Asuna Arai, Koji Kanda , Romeo B. Lee , Jay Glasser , Hiko Tamashiro, The European Journal of Public Health Advance Access published April 28, 2012: Organization for Economic Co-operation and Development (OECD)
The definitive paper on gender differences in life expectancy.
“Globalisation and its discontents”, Joseph Stiglitz
The definitive insiders account of global government as the guarantor of rich countries interests at the cost of the poor, and global economic policy which favoured self interest over evidence.
“Half the Sky: How to Change the World”, Nicholas Kristof and Sheryl WuDunn
The first part of this book sets out the scale of oppression facing women in developing countries and the second part discusses practical ways to create a movement for change.
“Leftover women: the resurgence of gender inequality in China”, Leta Hong Fincher
Provides a mix of statistical analysis, social analysis and personal stories to illustrate the widening wage gap between China’s men and women between 1990 and 2010.
“Of the people, by the people”, Roger Osborne
Provides an historical overview of democracy in all its many forms.
“Is China buying the world”, Peter Nolan
This brief gem will interest serious analysts as it’s full of hard facts drawn from a unique UK survey of global big business conducted annually in 2007, 2008 and 2009. Nolan starts by outlining the new phase of capitalist globalisation after the 1970s, involving privatisations, liberalisation of international trade and capital flows, and opening up the former Communist “planned” economies. Large firms built global production and supply systems and by the early 2000s a handful of giant firms occupied over 50% of the global market. Exports as a share of global GDP increased from 20 to 29% over last two decades, and the proportion of GDP attributable to foreign affiliates of transnational firms rose even faster, from 27 to 52%. The majority of world production is now produced offshore.
In 1990 China’s GDP was just 1.6% of the world total; in 2008 its share was 7.1%. On “purchasing power parity” dollars China’s gross national income is already 54% of the US (World Bank, 2010). On the other hand, China’s Gini coefficient of income distribution has risen from 0.28 in the early 1980s to 0.48 in 2008, similar to the less than admirable inequality in America (the Gini coefficient is commonly used as a measure of inequality of income or wealth. Ed.).China’s expanding need for food and resources has made an important contribution to GDP growth in Africa and Latin America, where its no-nonsense concentration on infrastructure projects rather than foreign-contract “aid” has opened doors. In 2009-10 the Financial Times estimated that the China Development Bank and China Export-Import Bank loaned over $US110 billion to developing country governments and companies, more than the total of loans made by the World Bank in the same period.
However, in answer to the book’s title and question, the answer is a clear. Western governments have vetoed numerous attempts by Chinese State and private companies to make overseas purchases, and China has a large and persistent deficit in foreign direct investment (FDI), $US243 billion in 2009 (United Nations Conference on Trade And Development [UNCTAD]. 2009). Unable to make large investments overseas, China has been forced to exchange cheap loans for resources like oil, which does not develop its own productive sector.
On the incoming side the US, by far the largest contributor to global outwards FDI (27% in 2009), had an estimated $US100 billion FDI in China (China Business Council), accounting for 28% of China’s overall industrial production. Inward foreign direct investment to China in 2009 is still a relatively small part of the global picture, less than one-third that of Latin America and the Caribbean. China does have the largest foreign exchange reserves, $US3, 200 billion in June 2011, but on a per capita basis this is below that of the other Asian powerhouse economies.
These reserves are also small in relation to total funds managed by the West. A total of $US62 trillion was held by the top 500 asset managers in 2009; for comparison, world GDP was $US58.3 trillion in 2008 (World Bank, 2011). Quoting Nolan, “we are inside ‘them’, but ‘they’ are not inside ‘us”. Nolan also notes that China was deeply sceptical of financial deregulation, pursuing a conservative domestic regulatory regime despite criticism from the West before being proved right in 2007. There is a lot more scepticism about the West in China post-GFC.
“Keynes”, Robert Skidelsky
A great overview of the strengths of Keynes’ ideas and how they relate to current economic problems.
“Maonomics”, Loretta Napoleoni
Napoleoni is a unique economist; her published work began with an analysis of funding behind Italian terrorism and she went on to analyse the global “rogue economy” in all its forms, notably the major shift of illegal business out of the US and into Europe and Russia after post-9/11 financial controls in the US. In this book she outlines the staggering pace of social change which produced “Cheap China”. After Mao’s 1976 death, Deng Xiaoping dismantled inefficient State-owned companies to set the stage for private profit enterprises. After a first phase allowing farmers to sell part of their crop and reduced restrictions on labour mobility, between 1998 and 2005 110 million State employees were reduced to 64 million, while private employees increased by 25 million.
In 1997 I saw what the Asian crisis looked like while travelling through Singapore, Malaysia and Indonesia – towns of half-finished buildings and the forced return of migrant labourers. I can’t begin to imagine the human implications of 56 million lost jobs, and only 25 million new ones. Napoleoni fills in a lot of this story, as industrial employers from Taiwan and Singapore moved into China to exploit the Communist labour they despised. A lot of it’s not pretty, similar to the last industrial dark age in England.
There’s a lot more in this unique book: financial neo-liberalism as predator; globalisation and crime; the rise of Islamic finance; the relationship of China with developing countries, the green transformation of China; and notably, the role China might play in the next stage of our global world. Here are two illustrative quotes: “We’ve seen how crises are confronted: cutting rates so that the banks and financial companies who created the crises are not swept away. This is no passive State simply leaving the market be, but rather an active institution in the service of Western capital… Deregulation offered other countries, like China, unimaginable opportunities. But no one noticed what was happening until 2007, when the recession began”.
“Nickled and Dimed”, Barbara Ehrenreich
The author’s experiences trying to survive in America on the minimum wage; a reminder of how culturally invisible the working class is in rich countries today.
“Nothing to envy”, Barbara Demick
A sobering picture of life in North Korea and how big the gap between political rhetoric and reality can grow under a state elite.
“Only their purpose is mad”, Bruce Jesson
An inspiring story of one city’s regional council, set up to fail as stage one of a privatisation plan. The mix of business and community representatives worked so well together that the businesses were turned around, increasing profits and keeping the council sustainable.
“Price Of Offshore Revisited”, James H Henry/Tax Justice Network
Henry used to be a consultant economist with one of the big financial firms and his Tax Justice Network is regarded as a reliable source on tax avoidance. They estimate the world’s untaxed private finance amounts to between $US21 and $32 trillion, not including assets like real estate, gold and yachts which are harder to quantify.
“Redistribution, inequality and growth”, J Ostry A Berg C Tsangarides
Researchers in the International Monetary Fund reviewed the evidence in 2014 and concluded that countries with higher inequality tend to experience lower and more volatile growth while countries with lower inequality tend to experience higher and less volatile growth, other things being equal. Since they found little if any trade-off between redistribution and growth, the growth benefits of lower inequality are typically greater than the growth costs of redistribution measures (like higher taxes).
“Sexual satisfaction in committed relationships”, Pepper Schwartz
Provides a summary of research findings on sexual satisfaction and relationship satisfaction and durability.
“Terrorism and the economy”, Loretta Napoleoni
Napoleoni specialises in the economics of terrorism. This short book links America’ response to 9/11 to the strengthening of the global “rogue economy”, which shifted its illicit dealing from America to Europe after the Patriot Act clampdown on international transaction in the dollar. The need to regulate the finance sector and pass on losses from risky investment when restructuring failed corporations, the futility of protectionism and mortgage relief, are all covered in Napoleoni’s very original analysis.
“The better angels of our nature: why violence has declined”, Steven Pinker
Pinker presents a large amount of evidence that violence has been in decline over millennia and that the present is probably the most peaceful time in the history of the human species, though he emphasises “The decline, to be sure, has not been smooth; it has not brought violence down to zero; and it is not guaranteed to continue.”
He suggests “The way to explain the decline of violence is to identify the changes in our cultural and material milieu that have given our peaceable motives the upper hand.” Pinker cites five “historical forces” that “have driven the multiple declines in violence”:
The rise of the modern nation-state and judiciary “with a monopoly on the legitimate use of force,” which “can defuse the [individual] temptation of exploitative attack, inhibit the impulse for revenge, and circumvent…self-serving biases.”
The rise of “technological progress [allowing] the exchange of goods and services over longer distances and larger groups of trading partners,” so that “other people become more valuable alive than dead” and “are less likely to become targets of demonization and dehumanization”;
Increasing respect for “the interests and values of women.”
The rise of forces such as literacy, mobility, and mass media, which “can prompt people to take the perspectives of people unlike themselves and to expand their circle of sympathy to embrace them”;
An “intensifying application of knowledge and rationality to human affairs,” which “can force people to recognize the futility of cycles of violence, to ramp down the privileging of their own interests over others’, and to reframe violence as a problem to be solved rather than a contest to be won.
“The 86 biggest lies on Wall Street”, John R Talbott
A clear eyed view of business today which cuts through economic mythology to explain the nature and scale of our global problems in plain language and leave little doubt about the dangers ahead. Talbott wrote two books predicting the 2008 derivatives crisis, in 2003 and 2006.
“The big short”, Michael Lewis
Real life stories showing how the subprime mortgage market worked, following a small number of investors who saw the 2008 crash coming and bet against it. One of the new financial strategies was called long-short, where the investor buys something they expect to go up, and shorts (agrees to buy at a future date) something they expect to go down. Credit default swaps (CDS) were developed as the down-side investment in mortgage bonds. If mortgage default rates exceeded a threshold, the price of a CDS would rise. Conceived as yet another financial product to generate fees, they came back to bite hedge funds in the 2008 crash.
“The dialectic of sex”, Shulamith Firestone
A feminist classic with a clear structural approach to the causes of gender inequality. Unfortunately, borrows too heavily from Karl Marx’s complex language and concepts.
“The end of cheap China”, Shaun Rein
It sometimes seems that everything is made in China today, but Rein argues that the end of China’s extreme annual growth rates is near. Having pulled nearly all of China’s skilled workforce into its factories, wages and worker mobility are on the rise. Most firms in his consultancy’s annual survey had annual staff turnover rates above 30%, and 21 of China’s 31 provinces raised the minimum wage by 22% in 2011 in response to labour shortages. Many companies had to consider shifting low-skill production to cheaper countries like Vietnam and Indonesia.
After the 1960s & 70s’ Cultural Revolution, one of the foundation changes to encourage profit-based production was to increase gender equality and draw women into the workforce, even though men dominate business management, central and local government in China. Wages for many women are now higher than men, because in China’s tight labour market women’s skills and work ethic were being rewarded in the market. Housing in China suffers from similar problems to the West – too much top end housing built as stimulus spending, too little affordable workers housing. Rein also expects China’s growing wealth to have an upward impact on global food prices, a sobering thought as the West heads into a difficult future.
“The governance structure of shadow banking”, Steven Schwarcz
Recommends removing limited liability for shadow banking since it encourages investor-managers to take risks for personal profits at the cost of greatly increased systemic risk.
“The Hite report”, Shere Hite
A ground-breaking and unique report which uses non-random sampling but provides the only in-depth research on how we live our sexual lives.
“The island in the wind”, Elizabeth Colbert/The New Yorker
Explores what the world would look like if we all used the daily energy equivalent of 2000 watts. The average American currently use 12,000, the average Indian 1000 watts.
“The plundered planet”, Paul Collier
Reviews the evidence on successful models for development in poor countries, outlines the most effective approaches to incentivise resource search and extraction, advocates for better national and international governance.
“The whistle-blower: sex trafficking, military contractors, and one woman’s fight for justice”, Kathryn Bolkovac and Cari Lynn
A grim reminder of how corrupt privileged global institutions can become.
“Thinking, fast and slow”, Daniel Kahneman
Daniel Kahneman is a leading researcher human behaviour today, including how the brain manages complexity. He concludes that humans become experts – people who can manage complexity – by structuring their knowledge and learning to reliably weight the relative importance of each element.
“Use of National Currencies for Trade Settlement in East Asia: A Proposal”, ll Houng Lee and Yung Chul Park, Asian Development Bank Institute Working Paper No. 474 April 2014
Considers the costs and benefits of developing a multilateral currency system where national currencies are used for trade settlements in East Asia.
“What sexual scientists know about gender differences and similarities in sexuality”, Terri Fisher
A good short summary of sexuality research.
Fiction and film
“Food Inc”, Robert Kenner (film)
Shows you how large scale industrial food works and presents examples of local alternatives.
“Half of a yellow sun”, Chimamanda Ngozi Adichie (novel)
A gripping novel which brings home the complicity of radical oppositions in the hardships of war, particularly the impacts on women and children.
“I will not be silenced” (film)
The story of a women’s struggle for justice after a rape in Kenya, and the improvements in justice and policing systems which followed.
“Salvador”, Oliver Stone (film)
After watching this film you’ll know what it feels like to live under a dictatorship and its neighbourhood goon squads.
“Zinky Boys”, Svetlana Alexievich (oral history)
Soviet voices from the Afghanistan war, unforgettable and troubling stories from soldiers and their families.