Oh yes, Ritchie really does want capital controls back

But that idea is wrong: if capital can roam as it will then a state cannot control its currency if it has one. Nor can it be in control of its interest rates. Or its tax revenues. Free roaming capital challenges the right of the state to manage its economy in the interests of those who democratically elected it.

And those who do vote undoubtedly lose out from the impact of free-roaming capital. When capital roams and by and large people don’t the rate of return to capital increases and the rate of return to labour falls. If you want a simple explanation as to why the real wage rate has been frozen, near enough, for more than thirty years (the precise era of capital market freedom) whilst that of bankers, free-riding on the back of capital, has sky-rocketed that is it.

Capital controls are then to be welcomed. They are an essential control on the destructive power of capital.

If there had been capital controls there would have been no Cypriot crisis.

There would have been no banking crisis in 2008.

There would be, at most, a very small tax haven problem.

And I argue the world would be better off because much of the supposed growth in the world that capital freedom gave rise to has benefited a few and not the many, and more than that, it’s helped destroy our environment on the way as anything and everything that can be traded has been.

The markets will say capital controls are a threat. They are right. Capital controls are a threat to the abuse permitted by unregulated markets, but for everyone else today might be a cautious step towards a fairer, more sustainable world.

Oh yes.

Because, you see, if you can move your money out of Ritchie\’s control then Ritchie cannot just take as much of it as Ritchie thinks he should be able to take. Substitute the Curajus State for Ritchie if you prefer.

He really is a fascist: everything in the State and nothing outside the State. And worse, he\’s a nationalist about it too.

He seriously wants to bring back the idea that you have to ask the Bank of England before you take more than £25 out of the country.

33 comments on “Oh yes, Ritchie really does want capital controls back

  1. Can capital really “roam”? The Pound is only legal tender in Britain. So any taken abroad has to come back again to be spent. Isn’t he really arguing against convertibility between currencies? I mean, if some social defector wants to selfishly take

  2. …£100 holidy money she has to convert it to the foreign currency and take that. Right? So, she’s just taking euros or dollars or whatever home, yes?

  3. Entirely tangentially, and a question Tim might want to comment on in more depth, isn’t (at least part of) the story about the share of income going to capital increasing over time while the share of income going to labour decreases over time due to the fact that as time progresses we simply have more capital?

  4. I’d be interested to hear his reasoning on how capital controls lead to a more ‘sustainable’ world.

  5. James V-

    Just a thought, are you conflating “capital” as savings with “capital” as income-as-profits? Normally when Ritchie types rant about the share of capital, they mean income which are accounted as profits rather than as wages.

  6. Rob,

    oh that’s easy: the former Soviet bloc was a paragon of environmental sustainability and clean air.


  7. Yep! Well remember that maximum foreign exchange allowance. And oh boy did we have fun & make money subverting it.
    One thing Richieboy doesn’t get. The punters don’t stand still to be fleeced. It’s that Laffer Curve. You can only have restrictions at a level peeps will put up with. Past that, they start getting creative.
    Oh, more power to Richie’s elbow! Further he drives us towards the black economy, better it gets. Cut the bastard governments off from even more tax revenue. It’s a win-win.

  8. Looks like opposes free trade. Or any trade.

    Everything you own or produce belongs to the Richiestate.

  9. and more than that, it’s helped destroy our environment on the way as anything and everything that can be traded has been.

    Hence the Aral Sea, no doubt.

  10. In my experience the general argument from upper class lefties at this point is that the Soviets erred in copying western industrialism, and they should have instead chosen an agrarian, environmentally appropriate socialism. Like, Pol Pot.

  11. He fails to note the rapid and global growth that
    occurred prior to WW1 when we had free trade in many places, the Gold Standard, telegraphs, expanding communications, etc.

    So he wants the return of Bretton Woods? Good luck with that, matey.

    Logically, his argument could justify the abolition of the division of labour.

  12. Also, this makes clear his hostility to property rights. You don’t own something if you don’t have freedom to transfer it. It is just serfdom

  13. Well, I wouldn’t be surprised if Ritchie, with all his early 20th century progressive ideas, didn’t favour the abolition of job choice, i.e. individuals choosing how to deploy their labour. It was a very popular idea in the 1930s and had a special name, but can’t remember what that was. The idea is that the State examines you and decides what job you should do, and then you have to do that job. Which would be much more efficient than the chaos of the unbridled market. Apparently.

  14. I had a conversation with Ritchie before I was moderated off his blog:

    Me: In the first instance property belongs to the individual; not the state.

    Ritchie: Wrong!

    Yes, he is a fascist. Like all fascists, his analysis is wrong. Nothing else to say really.

  15. Ian, you may mean “Direction of Labour”, which is much what we got in WWII.

    And to make it all “work” you have to take the whole palette of price controls, wage controls and national stagnation.

    I don’t need to be an economist to point that out: I grew to adulthood in the Wilson years.

  16. Re-Interested

    Absolutely – in the same way that all the electronic surveillance is to end privacy.

    They are paving the way to a total dictatorship…

  17. I also note how Murphy trots out the line about how real wages have been frozen, while returns to capital have risen, over the past 30 years. Like most of his assertions, it needs to be tested.

    For instance: http://online.wsj.com/article/SB10001424127887323468604578249723138161566.html

    The more I read this article by Murphy, the more appalling it is. For example, he’s basically saying to anyone who doesn’t consume all his/her earnings that this saved money is somehow no longer theirs, but falls back into the common pool. How he justifies this switch is not clear. One can only assume that he says that even if you are paid for what you earn, what you earn is still not really “yours”. I think some of us crazy libertarians have pointed out that, on this logic, a physically disabled person should be able to use State force to compel someone to, say, give them a kidney.

    I wonder if some of the Tax Justice Network people are happy with Murphy, because his agenda is so starkly statist, so mind-numbingly terrible, that he gives the game away. He could have dressed up his hatred of ownership and transfer of property rights in some sort of soothing, post-modernist bullshit, but no, he goes straight for the full, Stalinist line.

  18. Johnathan, I think the “justification” if you can call it that is conceptual; people like Teh Murph see all property as naturally in common, so “ownership” is simply a temporary license to use something under conditions set by the Collective, or by the representative of the Collective, which would be Richard Murphy then.

    He’s then mashing that up with a cod-Keynesian derived idea that money saved is money “not consumed” and so detrimental to the Common Good. Hence the modern Bourgeois Left’s cognitive dissonance that, on the one hand, the economy can only be saved by Keynesian consumption, but on the other hand consumption is evil because it is unsustainable, destroys the planet, bad for the “consumer’s” moral fibre, etc. Hence they tend to end up with trying to force up prices everywhere, so we can “consume” without actually getting much to consume for our money, so we just consume wholesome basics rather than morally corrupting fripperies. (I do remember Murph specifically saying that everything not provided by the State is just fripperies that nobody “needs”).

  19. Re Johnathan and Ian B, a particularly common left wing argument is that the notion of property is defined in law (and property rights enforced) by the State. Ergo, without the State there is no property. The State should take advantage of this and define rights over property in a way that supports certain social policy objectives. Generally this means making property less “private” and more subject to social control.

  20. I don’t think Murphy actually ‘believes’ any of the rubbish he writes. I think he’s drunk on the thrill of it all, of having his name bandied about, getting to speak on telly and at conferences, being ‘retweeted’ by idiots.

    I think that he could easily have gone the other way and turned into Peter Hitchens; the problem with that is he can’t write, unlike Hitchens (who may be bonkers in many ways, but can turn a phrase).

    Writing for the left, clarity is a negative, hence that’s the road he took.

  21. That’s one aspect of this that has been ignored during Comments on Ritchie’s take on this whole issue – It would seem however kleptocratic, corrupt or confiscatory the state is, to try and get your money out of it is anathema.

    One can only speculate that he is unaware (or more concerning, unaffected) by what this implies his position is- the contemporary Russian state, effectively a bastard successor of the most bloodthirsty tyranny the Globe has ever seen, is in his eyes, entirely entitled to impose penal rates of taxation, and any citizens enterprising (or well off )enough to say ‘Sorry, I think my money would earn better returns elsewhere’ simply have to lump it.

    The logical next step is to control movement of people (which is exactly why I think the ‘Courageous State’ is the spiritual successor to the USSR)

    absolutely extraordinary – superlatives quite literally fail me….

  22. Ian B (#13), I wonder what job the State would allocate to Murphy?

    Of course Murphy will assume that he or his chums will be doing the allocating (is that Kip’s Law?), so he would be given the task of designing our new progressive tax system and a marble-columned garden shed to do it in. But things don’t always work out how we’d like them to…

  23. Richard,

    Lord High Tax Denouncer, of course.

    There probably needs to be a knighthood thrown in as well. Given his demands that we return to the days of the British Empire, in terms of legal reach if nothing else, I would suggest a GCMG?

  24. When you’re on the libertarian right, it behoves one to be careful about throwing around words like ‘Stalinist’, because a) hyperbole reduces the power of your arguments and b) that’s the sort of thing sixth-form lefties do (“Nazi!” “Fascist!”).

    But Murphy really is, isn’t he?

  25. Sam,

    Not sure about that – I think he may actually be some form of deviant Trotskyite rather than a Stalinist. Although the distinction is purely taxonomic and irrelevant in terms of his potential to cause severe harm if allowed anywhere near the reins of power. Or, in his case, the reign of power.

  26. If anyone out there–some Russian gangster maybe–has a couple of million quid spare, it would be very interesting to offer it to Ritchie to change sides 100%. Just to see how “courageous” he is. I’d make a side bet that he’d take the money. An ego-trip sucking up to leftist scum is one thing, but cold,hard cash is another.

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