What does have a light side, a dark side, and grants its users powerful abilities? Capitalism. The dominant economic system of the last two centuries. Some extol its virtues, others make it the root of all evil, all with equal passion. In this week's blog we explore what defines capitalism: the good, the bad, and the ugly truth.
Capital and private property are the yin and the yang of capitalism
At the core of capitalism is the capital, an investment made in pursue of a profit, a gain superior to the original investment. Capital also refers to the means of production: the factories, machines and tools bought with the investors’ contribution. A business is profitable when the sale of a product or service generates more money than it costs to produce. This profit goes back to the owners of the capital because they took the risk of investing in the first place and deserve a reward. Profit can also be reinvested so that the business can increase production or expand its activities.
The second aspect at the core of capitalism is private property. There is no capitalism without private property. Private property is an unnatural concept created by man in order to facilitate trade. This is where the state or government comes into play by guaranteeing private property rights through a legal system financed by taxes. 'Theft is only punished because it violates the right of property, but this right is itself nothing in origin but theft', said radical French Enlightenment writer Marquis de Sade.
Lifting people out of poverty
Before capitalism was feudalism, a rural society where wealth came from the land. The aim of production was consumption, as opposed to accumulation. What was produced went to the workers and the state or church. Transformations in agriculture, advances in the methods of production and trade led to the industrial revolution and capitalism developed in parallel.
Industrialisation and urbanisation have reduced the proportion of the world population living in absolute poverty, that is with less than $2 a day. Today, 8% of people still live in absolute poverty, mainly in rural Africa, and half of the world population is middle class or upper class, according to the World Data Lab.
Capitalism as a medium for democracy and innovation
Capitalism has been a medium for democracy. Economic success gave early capitalists a share of the political power. Workers followed suit and organised themselves politically under trade unions. Trade unions managed to regulate working conditions, increase wages and living standards. With the support of unions, political parties achieved social reforms such as the universal suffrage and helped establish welfare states in most modern capitalist countries.
Competition is what drives businesses to innovate. Most innovations and new technologies have a positive impact on society. This is what Adam Smith, the ‘father’ of modern economics, refers to as the ‘invisible hand’ of capitalism. Yet, in most cases the benefit to society is a consequence of the capital owners' self-interests and their pursue of profits, not their initial objective.
Rising inequalities, the threat to democracy and the worsening of working conditions
The pursue of profit leads to the accumulation of capital. The more capital, the more profit. The first consequence of the accumulation of capital is the uneven distribution of wealth. Uneven distribution of wealth creates inequalities with economic and social implications such as mass migration, limited access to health and education or increase in violent crimes.
The second consequence of the accumulation of capital is the accumulation of power. The more capital one possesses, the more influence one yields over the economic and political institutions that are supposed to reduce inequalities. This contrasts with the democratic principle of one person, one vote, regardless of how much capital one possesses. Ultimately, the pursue of profit encourages the people with capital to challenge democracy when it interferes with their own interests.
In the last 40 years, liberal economic policies have led to monopolies and oligopolies. Living standards are now stagnating, working conditions have deteriorated and workers' bargaining power is extinct. As countries industrialised, people became richer and consumption increased. The result of which is a society based on mass production and mass consumption, and catastrophic environmental damage.
Zero-growth capitalism and workers cooperatives
The capitalist principles of competition and accumulation have pervaded all aspects of everyday life. Similar to investors pursuing the accumulation of capital, people seek the accumulation of material goods. Competition-or the pursuit of performance-starts as early as primary school and continues at work and in our social and personal life.
Some of the features associated with capitalism, such as growth or stock exchanges, are not necessary for it to exist. A growing number of economists are promoting the benefits of 'zero-growth capitalism' or 'steady-state economy'. However, nonconformist theories are voiced out when they challenge the dominant economic ideas. Socialist alternatives are equally met with strong resistance.
Cooperatives or workers' owned businesses reconcile capitalism and democracy. The power of making decisions no longer resides into the private hands of the capital owners. The workers can decide what to produce, how to produce it, at what cost, and what to do with profits. There are currently 2,000 cooperatives and mutual enterprises in Australia.
Nobody gets rich with their own money
Therein lies the paradox of capitalism in its current form: because a business is profitable does not mean its activity is beneficial to society. Inversely, an activity that is beneficial to society may not be profitable. Indicators of economic success alone are not enough to measure the impact of economic activities on society and their benefit to the global community. Lasting economic activities should be the ones that answer a need for society and lead to social progress.
Capitalism is a spectrum and depends on the society within which it evolves. When left to its own devices, capitalism creates inequalities, hinders social progress and silences democracy. Should we fail to acknowledge our current economic system's shortcomings and, most importantly, addressing them, then the shroud of the dark side will inevitably fall upon us all.
As a French national, making fun of Americans is as much a hobby as defending the constitution's second amendment is for them. America is a paradox. A nation of contradictions more so than any other country, equally capable of the greatest deeds such as sending a man to the moon and the worst such as sending children to detention camps. I have lived in Australia for almost a decade. To me, Australia is what the United States should have been: the land of opportunities.
Throughout the course of the 20th century, the United states became the first economic, military and cultural power in the world. They were the first nation with nuclear power and Hollywood became the cultural centre of the world. They were decisive in the two world wars and helped rebuild Europe afterwards. The Marshall Plan, though, was as much about rebuilding Europe as it was about exporting American culture and boosting their own economy.
I feel a great disturbance in the Force
Many tensions in the world today are the results of American politics. US politicians have more influence on international politics than any other countries’. Yet their deep misunderstanding of the world history has led to a succession of political blunders, particularly in the second half of the 20th century. The arbitrary decision by the United States and the Soviet Union to divide Korea in half-without consulting the Koreans-led to the Korean war (1950) and the situation we experience today. Their involvement in the Vietnam civil war-which they had no business in-led to the Vietnam war (1965).
In 1991, the United States rejected Mikhaïl Gorbachev’s plea for help at the London G7 summit, only seeing in Russia the loser of the Cold War. This was the closest America and Russia had ever been to reconciliation. The military interventions in Bosnia and Kosovo in the 1990s have left the two countries in a state of limbo since then. The invasions of Iraq (1993, 2003) or Afghanistan (2001) and the interventions in Libya (2011) and Syria (2014) have shattered the stability in the Middle-East region. The Iranian nuclear deal is the latest example to date. After breaking the Iranian nuclear deal, the American president now threatens to sanction the countries that continue to commerce with Iran.
There's nothing more expensive for an arms dealer than peace
European countries are constantly submitted to America’s blackmail. Defense budgets are a striking example. US politicians keep pushing European countries to increase their defense budgets, using the Russian 'threat' and the ‘war on terrorism’ as excuses. To put things into perspective, Russia’s military budget is equivalent to the budget of France alone and air pollution kills two hundred times more people than terrorism every year, making it a much more serious threat. Who does the ‘war on terror’ or the threat of future conflicts benefit but the world’s largest arms dealer, the United States?
Increasing military exports is one of the American president's pillars for economic growth. Where do half of the weapons the United States export go to? The Middle-East. Bingo. The United States are a mission to defend, or impose-depending on which side of the bomb a population finds itself-their values to the rest of the world. This dates back to the 19th century and the philosophy of the manifest destiny-or American imperialism-and has intensified since the fall of the Soviet Union.
Alice in Blunderland
At home, the United States are a mess: according to the latest census and OECD figures, half a million Americans are homeless and more than 13% live in relative poverty. No universal healthcare system, mass shootings, a 2008 financial crisis they are responsible for and the second largest polluting country in the world. The United States are in no position to give any lessons in foreign or domestic politics.
In 2014, former Australian Prime Minister Malcolm Fraser raised the alarm in his book Dangerous Allies. Blindly following the United States has cost Australia hundreds of lives in the Korea, Vietnam and Afghanistan wars. The Australian governments that agreed to take part in the conflicts at the time bear the entire responsibility of these deaths. 'Political outcomes can rarely be achieved by military means.'
A bull in a china shop
The 21st century will be China's, for better or worse. Xi Jinping doesn't hide his ambitions. America no longer is the great benevolent power it once was. Its influence has become toxic and threatens global peace and diplomacy. The trade war underway between the United States and China might trigger a new economic crisis. Australia could find itself caught in the middle unless the question of its strategic independence is put back on the agenda. I will conclude with a quote from American stand up comedian Rich Hall: ‘Never underestimate America’s ability to make the wrong choice at the right time.’
In this week’s blog, we’re going to answer one of humanity’s most existential questions: where do treadmills come from? And I don’t mean from the shops. I mean what is the history of the treadmill?
The treadmill was discovered by Spanish conqueror Hernan Cortes in the 16th century. Cortes was sent to Mexico by the king of Spain to convert the Aztec civilisation to weight training. Cortes offered to trade their solar-powered treadmills against European iron-cast dumbbells. The Aztecs invented the treadmill because its was too dangerous to run in the forest due to snakes and spiders. Upon refusal from the Aztecs, Cortes and his men, much bigger in size thanks to their dumbbell training, decimated them all and brought the treadmills home.
Origin and etymology
The author of this article may have taken certain liberties with the historical accuracy of the story above. The reality is a little bit less exotic. The word treadmill is made up of the verb ‘tread’ and the noun ‘mill’. Treading means walking, stepping or running. A mill is a piece of equipment or a building equipped with machines that grind grain. That's the boring stuff out of the way.
The ancestor of the treadmill is the treadwheel. The treadwheel was an animal or human powered mechanical device that was used in farming and construction to transport water, move heavy objects or to grind grain. The treadwheel dates back to Ancient Greece and was used until the invention of the first fossil-fueled machines.
Pain but no gain
At the beginning of the 19th century, a British engineer named William Cubitt thought it would be a good idea to put prisoners’ energy to good use and have them walk on treadmills as a form of labour. The monotonous aspect of walking on a treadmill soon became a source of punishment for prisoners.
In the 20th century, treadmills started to be used in the medical field to monitor patient’s heart health. Today, treadmills are the number one selling piece of exercise equipment. Treadmills are everywhere. There’s even one inside the International Space Station. Maybe they'll bring a bench and a squat rack next.
I enjoy running a lot because in addition to improving my cardio, running allows me to clear my head and refocus on my goals. That said, I can’t stand spending more than a minute on a treadmill. I feel like a hamster on a wheel, no offense to those cheeky little fur balls. Nothing beats the feeling of soft grass or hard sand under my feet with the warm sun on my face.
Treadmills can be extremely handy in environments where running outside can be difficult or when the weather is really bad. I travelled to Tokyo, Japan a few years ago (there's actually another place named Tokyo in Papua New Guinea). Running in Tokyo wasn't practical as it was raining forever and I would have definitely got lost in the city.
Now that you know where the treadmill comes from, you can show off your newfound knowledge at the gym, bore your friends to death or stop random strangers on the street to tell them.
Everybody likes a good deal on their gym membership. Everybody likes a good deal on anything they buy, let's be honest. Joining a gym is a serious financial commitment. Parting away with your hard-earned cash can be a daunting experience. Yet there are ways to shave off big dollars of your membership if you are ready to shop around and be patient.
Do your homework
First you want to find the best gym for you. There's a gym in almost every street in Australia, so once you find a couple of contenders, it's time to compare what they offer and decide which one fits your bill, Bill. Location is paramount: the nearer your gym is, the more likely you are to actually go there. Look up the opening hours, the variety of classes available, parking facilities and any other services you may be interested in such as a swimming pool or a creche for your kids.
Check with your workplace or your insurance provider if you are eligible for any discounts at the gyms you like. Look up their websites, Facebook pages and Google reviews. Some gyms offer free trials so you can get a feel before you sign up. What's the atmosphere like? How clean are the facilities? How busy is the gym at peak hours? You can also sign up for Groupon and, if you're not in a hurry, you can wait for seasonal offers such as New Year’s or summer deals.
Cash is king
Wether I'm paying for my gym membership, my fitness equipment or my mechanic bill, I always pay cash. Cash works better with smaller family-owned gyms. You can bargain for an extra month free or a cheaper price than the gym's cheapest advertised price. Big chain gyms are less likely to bargain much since they already offer cheap-as-chips memberships.
Above all, paying cash allows you to stay away from gym contracts, meaning no sharing of your bank details, no cancellation fees and no hassle when your membership is over. The downside is that you won't be able to get a refund should you leave the gym unexpectedly. You also need to have enough savings to pay for your membership in one go.
Bribe your way in
When I lived in Scotland, I used to train at a small independent gym only minutes from Glasgow. I trained there twice a week and I soon became friend with the manager. When I returned from a trip to my home country of France, I brought him a bottle of Cabernet Sauvignon wine (for the connoisseurs) and a smoked salami. He was so pleased he let me in for free every single time after that.
This may not be the most entertaining of stories but the takeaway here is that showing appreciation for the staff pays dividends. Remember that everything has a price. Gyms are a bit like coffee. You can get a $1 coffee from any petrol station in the country, but if it tastes like engine oil, that's not really a bargain, is it? At the end of the day, you want to find a gym that you like at a fair price.
'Work' refers to an activity that is performed in order to produce a result and that generally contributes to the good of society. Work can be creative, artistic or done on a voluntary basis. The term ‘employment’ dates back to the Middle-Ages and refers to work that is done in exchange of a wage. Employment is paid work. The difference, beyond semantics, is that employment is disappearing while there will always be work.
In 2015, a report from the Committee for Economic Development of Australia (CEDA) forecast that more than 5 million jobs would disappear in the next 10 to 15 years. In 2018, research from the Australian Institute’s Centre for Future Work revealed that less than half of Australian workers had a permanent full-time job. I wrote about underemployment a while ago. In brief, underemployment is creeping up, casual is the new normal and an increasing number of workers are only a couple of bills away from poverty.
The situation we experience today is the result of advances in automation and technology as well as neoliberal economic policies pushing towards work casualisation. Nobody is safe, from the bottom of the working pool to the most qualified workers. Our current system has reached its limits: economic growth doesn't equate to employment growth anymore. It’s not all doom and gloom though.
There will always be people to feed, roads to repair and things to build or fix. Employment will never completely disappear. Certain jobs simply can’t be replaced by robots. I'm thinking of jobs that require human physical interaction such as nurses or physiotherapists. The remaining jobs, however, will be precarious, highly competitive and will leave many people behind.
In order to produce the article you are reading, I have to research, write a draft then edit it. You can argue that writing a blog is a leisure activity, it is a lot of work nonetheless. Stay at home mums may not be employed either, yet they work hard to raise and look after their children so they can be healthy and educated. Volunteering is working too. Volunteers feed the poor, clean the environment or look after the elderly - all of which are the government's responsibilities by the way. Meaningful work also contributes to boost workers’ self-esteem and feeling of contributing to society.
Any work that contributes to the overall good of society should be compensated. Another avenue worth exploring is the concept of universal basic income. A universal basic income is a government allowance granted to every resident of a country so they can meet their basic needs such as food, health and accommodation. The idea appeared in the early 20th century and was supported by Australia’s Labor Party’s Barry Jones in the 1980's before it was dropped by the Bob Hawke Labor government. More on universal basic income in another blog.
A word to the wise
For Ancient Greece philosopher Aristotle, work is a means to an end. For 19th century German philosopher Karl Marx, work is the essence of man but hard labour is alienation. As for me, I think there needs to be a discussion about the place of work in our society today and how to prepare for the future before it is too late.
The European Union as we know it today started almost 70 years ago as a cartel of coal and steel producers from Belgium, France, Germany, Italy, Luxembourg and the Netherlands. There have been different names over the years and twenty-two countries have joined the European Union since its creation. The single market was created to allow capital, goods, services and people to move freely and the common Euro currency was introduced to stabilise prices in the Eurozone.
The 7 crystal balls
The European Union is made up of 7 institutions: the European Council, the European Commission, the European Parliament, the Council of the European Union, the European Court of Justice, the European Central Bank and the European Court of Auditors. The only European institution whose members are democratically elected is the European Parliament. Elections take place every 5 years, however turnout has been historically low at less than 50% for the last 20 years.
The main role of any parliament is to make laws. Yet the European Parliament does not have such power. Legislative power - the power to make laws - is in the hands of the European Commission. The European Parliament is a parliament in name only. Members of the other European institutions are designated by their respective governments and approved by the Parliament, except for the European Council whose members are the heads of states or governments.
One ring to rule them all
Over time, the European Union took over the national sovereignty of its member countries through the cunning use of treaties. The Maastricht Treaty (1992) took away the right of member countries to borrow money directly from their central banks at a low or nil rate and imposed neoliberal policies to all member countries. Other treaties such as the Stability and Growth Pact (1998) or the Fiscal Compact (2012) imposed European economic directives to all members and gave the European Union the power to veto any fiscal policies of any member country.
One-way democracy is not democracy
There is no way for ordinary people to vote against European policies. Yet, when a country disagrees with the European Union, their decision is systematically overturned. The examples of the French, Dutch, Greek and British referendums speak for themselves. ‘There can be no democratic choice against European treaties’ said Jean-Claude Juncker, the president of the European Commission, following the result of the Greek referendum about the EU's proposed bailout plan. The Greeks voted against Brussels' austerity measures and ended up with an even harsher deal than what they were negotiating before the referendum.
In 2005, France and the Netherlands rejected by referendum the proposal of a European Constitution. Two years later, the Treaty of Lisbon - a rebadged European Constitution - was signed by both countries. Other countries such as Denmark (1992) or Ireland (2008) held referendums twice until the result was is favour of the European Union. Democratic decisions are OK as long as they don’t interfere with the EU’s agenda. The European Union crucified Greece as a warning to the other countries and is trying to do the same with the United Kingdom.
Something is rotten in the state of Europe
In addition to an absence of democracy, there is a lack of transparency and non-accountability from the European institutions. The Eurogroup, a shadow institution of finance ministers, meet behind closed doors to discuss trade deals that undermine safety and environmental standards such as the Comprehensive Economic and Trade Agreement (CETA) or the Transatlantic Trade and Investment Partnership (TTIP).
There's also the question of the EU's imperial ambitions behind the creation of a European army and its interference in foreign countries' political affairs such as Venezuela's. Last but not least, the European Union - via its Central Bank - has proven its incompetence in managing the Euro debt crisis. To put it into the words of Yanis Varoufakis, Greece’s former finance minister: ‘The European Central Bank lent the biggest amount of money in the history of capitalism to the most bankrupt state in Europe.’ I couldn’t have said it better.
The European Union is on the brink of disintegration, as can be seen with the rise of nationalism and far-right political groups or the Brexit in the UK and the yellow vests movement in France. I wrote about the yellow vests a few months ago. The main demand of the protesters is citizens' initiated referendums, which is a means of direct democracy. French citizens could submit or repeal a law proposal, modify the constitution or remove any politician from office.
French President Emmanuel Macron said during an interview on the BBC that French people would probably vote to leave the EU as well if there was a referendum. This is precisely why he won't grant the yellow vests the means to make democratic choices that would endanger the European Union further. The definition of a democracy is governance of the people, by the people, for the people. A definition that clearly does not apply to the European Union.
No light at the end of the tunnel
There’s a crisis of democracy, or lack thereof, in the way the European Union is run and the way it operates, which leans more towards that of a mafia than a democracy. The European Union restricts the freedom and liberties of its member countries at the expense of the people. Competition between member countries associated with privatisation and austerity policies have resulted in more social injustice and the impoverishment of the people.
Reforming the European Union is impossible. The probability of 28 governments from all sides of the political spectrum agreeing to reform the European Union couldn't be closer to zero. Take it apart and rebuild as new. I will conclude with a quote from British political economy professor Mark Blyth: 'At the end of the day, if the European Union is not improving the lives of the majority of the people, what is it for?'
This blog follows my previous one about the yellow vests movement in France. If you haven’t read it yet, I invite you to do so as it is clear and complete. One idea broadly supported by the yellow vests movement is citizens’ initiated referendums. Public referendums are a means of direct democracy. I thought I should elaborate on democracy before moving on.
Direct democracy versus representative democracy
Direct democracy is a form of government in which people vote directly on the laws of a country. They can submit proposals to public referendums and revoke their representatives when they cease to act in the general interest. Direct democracy works best in smaller countries or at a local level. Representative democracy is a form of government in which people elect representatives who will legislate on their behalf. All democracies today are representative. This form of government is preferred in countries where the great number of people makes direct democracy difficult to implement.
The social contract and the drift towards authoritarianism
The social contract is a philosophical and political theory that is the basis for representative democracy. People accept to give up some of their rights to their representatives - or government, who will legislate on their behalf in order to guarantee their rights and liberties. John Locke, a 17th century English philosopher whose ideas influenced the Enlightenment period, was one of the pioneers of the social contract theory.
When the government and elected representatives can no longer guarantee people’s rights and liberties, the social contract is broken. When democracy fades away, we drift into ‘soft’ authoritarianism. John Locke argues that when this happens, people are no longer bound to the social contract and have the right to take action to replace the representatives or the government in power.
The example of the Athenian democracy
The Greek city-state of Athens became the first democracy in the 5th century BC. Citizens - which didn’t include slaves, women, and men who hadn’t accomplished their military service - were allowed to take part to popular assemblies during which they could debate and vote on every single issue affecting the city. Athens’ direct form of democracy was groundbreaking in the sense that it involved ‘normal people’ in the decision-making process of their city. Unfortunately Athens’ democracy was short-lived and the city fell under Macedonian rule less than 200 years later.
Democracy needs education to work
There was however one limitation to Athenian democracy: education, or lack thereof. Many officials in Athens managed to talk their way into positions of power without the proper knowledge to perform their duties. Socrates, a Greek philosopher who experienced Athenian democracy, criticised and exposed some of these demagogues in public. He would be sentenced to death for it.
Democracy without education leads to populism. This is one of the reasons why we are seeing extreme political groups gaining popularity across the world. Education is the cure for society’s ills and it should be the priority of any government that claims to act in the interest of its citizens. One can argue that most governments today are better off with a dumbed down population.
You may disagree with my following statement but to me, voting should be a privilege, not a right. Giving voting rights to uneducated or uninformed people is like playing Russian roulette. Some thinkers have formulated the idea of a voting licence, similar to driving. While I'm not entirely sold on the idea, I do think we need to open the debate on the importance of education for democracy.
The example of workers cooperatives
A workers’ cooperative is a business that is owned and controlled by its employees. No more middlemen, or stakeholders, to pull the workers' strings. Workers cooperatives are true democratic workplaces. Employees decide on their working conditions, what they produce and how they produce it. They decide what to do with profits, they elect their leaders and they have the power to revoke them.
The side effects of having a business owned by its workers is that better working conditions produce happier workers, which in turn drives productivity up. So far, the data available has shown that workers’ cooperatives are beneficial for local economies, have a higher success rate than standard business structures and are less affected by economic downturns.
I hope you now have a better understanding of the origins of democracy, its different forms and why it is worth fighting for. I welcome any comments or ideas and if you made it to this final sentence, I greatly appreciate your taking the time to read my work.