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John Maynard Keynes: Don’t call it a comeback

Andrew Leonard, Salon
The sudden present-day prominence of John Maynard Keynes, an economist who passed away 60 years ago and whose theories have been mercilessly ridiculed by conservatives for at least three decades, calls to mind the famous 1981 Rolling Stone magazine cover story on the Doors’ Jim Morrison: “He’s Hot, He’s Sexy, and He’s Dead.”

We’ve witnessed quite the turnaround. From at least the 1970s on, Keynes’ star was in eclipse, while Milton Friedman and the free market theorists of the Chicago School of Economics seized the commanding heights of economic discourse. To even mention Keynes was to be dismissed as hopelessly out of touch with state-of-the-art theory. Hadn’t you heard? The government governs best when it governs least!

And yet today, you can’t click your way three links through the econoblogosphere without stumbling into a flame war between reenergized triumphalist Keynesian supporters of government intervention in the economy and bewildered, angry market fundamentalists who have just watched their painstakingly constructed world crumble around them. Just a few years ago the heat of the debate would have been unthinkable — Keynes seemed to have about as much relevance to current economic policymaking as Winston Churchill does for the Middle East peace process.

But global economic crises that obliterate the notion that markets are intrinsically self-correcting and efficient have a way of shaking things up. As the University of Chicago’s Robert Lucas (who most explicitly does not fall in the pro-Keynes camp) said last October, “Well I guess everyone is a Keynesian in a foxhole …” Meaning, basically: When shit happens, people want help. And since Keynes is the most illustrious proponent of the idea that government should help get economies back on track when they ride off the rails, his reputation is on the serious upswing…
(24 Sept 2009)
The book on Wikipedia.

Good Capitalism, Bad Capitalism

Robert S. Becker, countercurrents
Friends, skeptics, countrymen, lend me your ears – but not brickabats. I come not to praise vile, crony capitalism, that unholy offspring of influence peddling, corporate welfare, regulatory stupor, and oversized subsidies making big, bad banks even bigger and badder. “Too big to fail” is now “too big to lend,” thus too big to help millions of paying “customers.” If it weren’t tragic, it would be farce. Rarely have so many trillions done so much for so undeserving an elite – all by design, in support of the status quo. Feh!

Instead, I celebrate healthy, constructive capitalism, and the promising prospects of innovative, widespread, sustainable animal spirits anointed as “conscious capitalism.”

Conscious or karmic capitalism takes much longer term views of “profitability,” vs. rigged, quarterly charades, judging non-sustainable enterprise as bad for everyone, including investors. Obeying Warren Buffett’s dictum, plan to own companies for a century, these visionaries prize relationships (with customers, vendors, employees), brand loyalty, corporate culture, intellectual capital, and low environmental impact. Their motivation, whatever positives accrue, is not selflessness, but forging stronger links between the reality of self-interest and the mandate of community public interest.

Right now, some version of capitalism commands the world’s stage: aside from gravity and family/tribal links, only this business paradigm unifies every country on earth. Thus, to dismiss all capitalism as “evil” not only slights human nature, but fails to distinguish differences and denies inevitable evolution: why would something as powerful, and far-reaching, as world capitalism not evolve to something better, especially when the alternatives are nightmare scenarios for all…
(3 Nov 2009)

Economic growth has let us down. What’s the alternative?

Tim Jackson, the ecologist
Economic growth is supposed to deliver prosperity. Higher incomes should mean better choices, richer lives, an improved quality of life for us all. That at least is the conventional wisdom. But things haven’t always turned out that way.

Growth has delivered its benefits, at best, unequally. A fifth of the world’s population earns just 2 per cent of global income. Inequality is higher in the OECD nations than it was 20 years ago. Far from improving the lives of those who most needed it, growth let much of the world’s population down. Wealth trickled up to the lucky few.

Fairness (or the lack of it) is just one of several reasons to question growth. As the economy expands, so do its ecological impacts. In the last quarter of a century an estimated 60 per cent of the world’s ecosystems have been degraded. Global carbon emissions have risen by 40 per cent since 1990. Significant scarcity in key resources – such as oil – may be less than a decade away.

On the other hand, when growth stalls, as it has done over the past year, things go quickly from bad to worse. Firms go out of business, people lose their jobs and a government that fails to respond appropriately will soon find itself out of office. Dynamics are vital here. Continuous improvements in technology mean that fewer people are needed to produce the same goods from one year to the next. So if output doesn’t expand, there is a downward pressure on employment and a spiral of recession looms. Growth is necessary within this system just to prevent collapse…
(2 Nov 2009)
More information about the book here

The Iron Cheer of Empire

Joe Bageant, Deer Hunting with Jesus
Every afternoon when I knock off from writing, after I suck down a Modelo beer and take an hour nap, I step out onto the 400-year-old cobbled street, with its hap-scatter string of vendors lining both sides. All sorts of vendors — vegetable vendors, vendors of tacos, chicharrones, chenille bedspreads and plucked chickens, cigarros, soft drinks, sopa and suet. Merchants whose business address consists of a card table in front of their casita.

Here in this working class neighborhood on Calle Zaragoza, tourists seldom venture, and the neighborhood merchants’ customers are their neighbors. Their goods are the common fare of daily family life in Mexico. Today, at a table less than two blocks away, I purchased a dozen brown eggs, with the idea of making huevos rancheros…

…These vendors are not poor people or peasants. They own homes, drive cars, watch cable television, send their children to college and do most of the things North Americans do. But their jobs are their livelihoods, not their lives, and every transaction is permeated with the ebb and flow of daily neighborhood and family life. “Is Maria going to graduate after all? Si! But by just by the hair in her nose! Who is going to sell fireworks for the Feast of Saint Andrew?” (Saint Andrew is the patron saint of Ajijic.)

Behind the plastered brick walls along the street mechanics fix cars, dentists pull teeth and teachers cheer preschoolers onward in a chirping Spanish rendition of Eensy Weensy Spider. The entire street is busily, but not hectically, engaged in making a living, most of the people doing so within 50 feet of where they will sleep tonight. But before they sleep they will sit out on the street, or perhaps the tiny neighborhood plaza, gossiping with the same neighbors who’ve been their customers all day. The same families into which their children will marry and whose sick elders they will burn candles for in the ancient stone church, founded as a Spanish colonial mission to civilize the Huichol Indians who’ve since retreated up into the mountains to honor their “god of the opening clouds” in peyote rituals…
(X Sept 2009)

Small Deposits Add Up: Savings, not just loans, factor into microfinance formula

Suzie Boss, Worldchanging
Yak herders in Mongolia may seem like the most unlikely of bank customers. There’s little infrastructure in their largely rural country, making it tough to find a local branch office. But in these sparsely populated steppes, opening a personal savings account is increasingly seen as a first step out of extreme poverty, according to international microfinance leaders.

The Altan Govii Shiree cooperative is located in one of southern Mongolia’s most scenic areas – near the Bayanzag, or Flaming Cliffs. Its tourism business has been supported by Mercy Corps since 2003. The cooperative now has 10 gers that accommodate about 500 tourists each year, raising the fortunes of vulnerable herding families in the area.

Until relatively recently, Mongolia’s poor were among the world’s “unbanked,” overlooked and underserved by formal financial institutions. Without access to credit, those on the margins of the economy struggle to stay a step ahead of the loan sharks and moneylenders. Financial illiteracy often persists for generations.

Microfinance is slowly changing this picture. By offering small, no-collateral loans to rural villagers and the urban poor, microfinance institutions (MFI) enable borrowers with scant resources but smart business ideas to improve their lot in life.

When a dozen microfinance leaders gathered in Portland, Ore., recently, at a global forum sponsored by Mercy Corps, I expected the conversation to focus on loans. So I was surprised to hear the emphasis on savings…
(3 Nov 2009)