Kenyan Socialism is my grand unified theory on progressive macroeconomics and political economy. In my dreams I write an ebook on the subject.
What policies would we* Kenyan Socialists enact to help ameliorate economic conditions? One way to think of it is to consider what we don't want. In recent decades, gains during boom times have flown to the top whereas labor's hand is weakened and concessions extracted during recessions. We would reverse this.
We would focus on two areas. One, the bargaining power of workers. We want tight labor markets with labor sharing in productivity gains. (This happened in the late 90s) This means adequate counter-cyclical policy, like Federal aid to the states. Also, we advocate work-sharing during downturns, something Japan and Germany have done well. This means good currency policy. Ideally this would entail a World Trade Organization that would rule against trade surplus nations like China and Germany who export their unemployment and demand diminishing policies to other nations with large consumer markets like the United States. China does this by buying up large amounts of dollars in order to prop up its value against their own currencies. Or the US could act unilaterly instead of via the WTO. Or Congress could enact policies to boost employment regardless of the currency manipulation of other countries.
Two, we focus on debt. We want an adequate amount of credit in the system so that NGDP growth is at sustainable trend levels. We want growth without runaway inflation. Obviously bubbles and unsustainable, overleveraged bad debt of the kind we saw in the previous decade should be regulated out of existence. This means a Consumer Financial Produciton Bureau on stereoids and a systemic regulator like the Federal Reserve which does its job. A healthy amount of level-headed credit in the system is good. Bubbles are not. So we are against tight money-cross of gold politics, but we are in favor of a regulated financial sector where banking is treated like a public utility.
Ideally we wouldn't need so much debt if the Federal government helped supply demand during downturns. And then during boom times the government would try to run surpluses as good Keynesians argue.
The Elite Sells Out (or bye, bye Noblesse Oblige)
Looking at the macroeconomy holistically we would note the insight that Steve Randy Waldman recently blogged about:
that World War II hit the "reset" button on inequality of the preceding decades. Krugman has also suggested the parallel idea that something happens in political culture analogous to Minskys' views on credit/debt in the economy. At the Bretton Woods anniversary conference in response to a question from Martin Wolf, Larry Summers said that pre-Great Recession regulators had become complacent. People get complacent and lose sight as the good times continue. People forget the painful lessons of the past. The elite becomes increasingly insular and solipsistic as inequality increases. A vicious feedback loop occurs wherein inequality corrupts the political process with ever increasing amounts of money flowing towards proponents of policies which increase inequality. Maybe this is just the way it is with humanity in late capitalism: a variation on the
Kondratiev wave.
We Kenyan Socialists look back to the past. After the industrial revolution, "socialist" policies were enacted which helped get working-class men the vote, provided land reform and had government running key industries and investing in infrastructure like canals and in human capital with public education. Then you had the Gilded age and the Progressive Era with many worthwhile reforms like the creation of a central bank and regulation of trusts and corporations. Then there was the roaring 20s and Great Depression followed by the Social Democratic Post-War period and golden age of 50s-60s.
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* Myself and my one follower, an elderly pensioner in Halifax, Canada.
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