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the full and free development of the personality: a byway

2012-02-02T05:26:00.001-08:00

… for the subject of sleep is not the eye, but the common sense, which once asleep, all eyes must be at rest. – Sir ThomasBrowne

Philoppovich not only has a sense, as an economist, of theintellectual structure of liberalism, but – and this is rare among economists –a sensibility attuned to the discontent liberalism produces. His survey of thetriumph of the policy of free trade, with the ‘consumer’ as the fulcrum ofsociety, does not stop there. He understands why one might question a pictureof society that made it simply a vast tangle of transactions between buyers andsellers (even if he did not question the idea that, indeed, economic life hadturned into a vast tangle of such exchanges, instead of – as Mauss wouldsuggest – a richer tangle of different forms of exchange – and he understandsinequality. Thus, after showing the success of liberal economics, he shows theunexpected result of the creating of vast enterprises and labor marketscomposed of increasingly de-skilled or monoskilled laborers. Thus, Philoppovichends his chapter on liberalism on a note of uncertainty:

“ Economic individualism (liberalism) has not only effectedchanges in external living conditions, but also changes in life’s ideals, for today more than ever ourexistence is oriented to the order of its material basis. But does, therefore,the idea of the liberal economic system remain unchanged, when society achievesthe best order, that being the unhindered pursuit of their interest byindividuals? Experience teaches us thatthis is not the case, that other ideas of the state and society become strong,that with the growth of the political power of liberalism grow other interestsout of the discarded one and out of newly created interests.”

He proceeds to examine the conservative reaction to thedissolution of what, since Burke, had been called the natural order, and to thesocialist reaction that arose as a matter of class interest.

“The exploitation of the worker, that is, the ruthlessutilization of his labor power became, through this economic system, anobjective necessity. This fact, however, came into contradiction with the twoprinciples, which liberalism itself had pronounced, with the principle, that inthe whole domain of life commodities, labor was the producer, the creator, asSmith taught and after him the national economists, and with the principle,that with liberalism from its birth on had struggled for against theprivileged, that all men are by nature equal. In the sentiment of thiscontradiction of their actual situation with the principle of the free andequal personality, which should be recognized in all men, the laborers united,however much they may have differed in their conception of the state, ofsociety, and of life itself.” [53]

Philippovich distinguishes the socialists from the romanticsin the former’s resolute farewell to the society of the natural order, of smallartisans, of a middle class of independent worker-owners. Indeed, it was onlythe giant capitalist concerns that could create and disseminate the productivepower of innovative technologies; as Fourier pointed out in the 1840s, however,the disjunction between social wealth, which capitalism enormously increased,and the enjoyment of that wealth, which was subject to severe and punishinginequality, called for remedies that would enable all to enjoy the wealth andall to enjoy, as well, more leisure. Philippovich is sharp eyed enough to see that in the latter, we get tothe key of the socialist motivation and its own nostalgia, its own connectionto the conservatives.

In this view thegoal that is served by abolishingprivate property and transforming it into social property we recognize theideal of socialism. It is the highest development of the individualpersonality, which the economy subordinates as a mere means. Today, on thecontrary, the higher goal of life is lost in the subordination of all intereststo the material goals of the economy, in which art and science itself onlyserve production.” It is here that Philippovich’s sense of the socialistmovement encompasses not only Marx, but Oscar Wilde – which perhaps takes finde siecle Vienna, the city of the “gay apocalypse”, to see clearly. “To gainfor all men the world of spiritual freedom, of beauty, of research, ofaesthetic enjoyment , to create for them the opportunity of enjoying theirexistence through the unfolding of their personal spiritual talents and forces,that is the ideal that hovers before socialism. It is the last consequence of the recognition of the leveling[gleichwertigkeit] of the human personality.”

The socialist ideal, then, is an existential ideal,which views the economic order as a means, not an end. The idea that theeconomic order has become an existential end, in modernity, survives in KarlPolanyi’s work, where it is redefined in terms of embedding: the ideal of thecapitalist economic order is to embed the social entirely in the economic. By aparadoxical twist, a form of Marxism – associated, now, with Stalin – took upthe ideal of the liberal economic order – at least as read by the 19^thcentury socialists – and transposed it from an analysis of capitalism by way ofits system of production into a social ideal in which all things exist forsocial production, thus effectively shutting down, as bourgeois crap, the wholediscourse of the full development of the person.

A vienna pink: Eugen Philippovich

2012-01-31T00:37:00.000-08:00

In Timm’s biography of Karl Kraus, the most uncompromisinglyshaved prophet in history, there is the following reflection about thepolitical meaning of beards: “In the Vienna of 1848 the student revolutionarieshad worn beards, which became symbols of their political fervour. And after thedefeat of the revolution, it is reported that the authorities forcibly shavedthem off. By the 1880s, those students had become pillar of the Austrianestablishment. Their beards, now grey and venerable, symbolized for theiconoclasts of Kraus’ generation a pompous Victorianism that had to be sweptaway. A study of Wittgenstein puts the matter very clearly: “The rebelliousyoung men who were seeking to achieve consistensy and integrity rejected facialhair along with all bourgeois superfluities. To them, moustaches and sideburnswere mere ostentation, like velvet smoking jackets and fancy neckties.”

By these standards, Eugen von Philippovich, who taughteconomics at the University of Vienna in 1900, was on the side of the fathers.His photographs show a man as bearded as General Grant. Unlike Grant, however,his beard seems kempt, and his fashion style seems, even, modern. A photograph of him from 1910, put on lineby the Austrian National library, describes him as follows: “Eugen Philippovich Freiherr von Philippsberg in a Jacket with asingle row of buttons, a vest with a single row of buttons, striped pants and awhite shirt with a folded collar and tie, with a Filz Trilby hat with a silkbank, a full beard and glasses.” Like Freud, whose fashion sense he shares, heis a man between the world that was formed after the failed 1848 revolution andthe world being formed by the fast pace of techno-cultural and politicalchanges at the turn of the century in Vienna. He is of the liberal generationthat learned its economics from Carl Menger (von Philippovich literally did)and its duties from Kant (like Ulrich’sfather in Robert Musil’s Man WithoutQualities).

Philippovich is not adduced to today –but he did write an adducable book in the year that the photo was taken of himentitled “The development of economic-political ideas in the 19^thcentury.” Perhaps economic-political,today, would be translated ideas of economic policy. The book’s melody issimple: it starts from the fact that the dominant economic tendency of the first part of the 19^thcentury, in Europe, was “economic liberalism” – the overthrow of ancientimpediments to free trade in domestic and world markets – while the economictendencies of the second half of the nineteenth century were in reaction toliberalism – on the one hand, the conservative defense of an “organic order”that preserved aristocratic privilege, and on the other hand a socialist attackon behalf of the working class.

One might think, considering the tiebetween the contemporary image of “Austrian” economics and the hardcoreadvocacy of untrammeled capitalism, that Philoppovich would view the liberaldominance as the golden age and the attacks as the downfall of a beautifulidea. But Austrian economics in Austria, at this time, were not as simple as alatter generation of ideologues – notably Hayek and Mises – made it out to be.In fact, Philippovich was the center of the Austrian Fabians, who, like theirEnglish counterparts, wanted to use the power of the state to make a number ofsocialistic reforms in the economic arrangement of things in the HabsburgEmpire. Philippovich, for instance, investigated working housing in Vienna anddescribed the awful conditions of the tenements – inspiring the Socialist postwar government’s effort to provide decent housing for the workers, according toEva Blau’s The Architecture of Red Vienna. His work here was at theintersection of the liberal-left concerns of the Fabians and the modernity ofarchitects like Loos, who despised the dishonesty of Vienna’s modern buildings,with their historicist facades – the borrowed ornamentation of earlier epochs –and horrid interiors.

Thus, Philippovich’s book is hard onthe vices of liberalism and soft on the vices of socialism – or so it mayappear to an orthodox economist.

The first chapter that describes theformation of the liberal economic policy set and its implementation takes as asort of surveyor’s mark the phrase of the phrase of “Michel Chevalier,who in his report on the Paris World’s Fair of 1867 could write: To have helpedFree trade to triumph will be one of the titles of fame given to the secondhalf of the 19^th century.” In fact, the basis of that triumph, asPhilippovich shows, is based in reforms that occurred in the first half of the19^th century, which followed a certain theory.

“For this change in the postion of the state and theindividual in the economic process of society the economic theory of liberalismdelivered a foundation that was, in its simplicity, clarity and inner certaintyextraordinarily captivating, understandable and through life experiences easilytested. When everyone can produce what he wants, and can trade with all othermembers of society in terms of free contracts, than the reasonable pursuit ofone’s own interest must lead to the state that all economic goods will be producedin the most economic way and in regard to the need of the greatest possiblemunber which is allowed by the limits of the means of production at that time.Because in viewing his self interest the consumer will always be lead to thepoint that there will always be a demand for things which are necessary forsociety. The utility of society consists in the fact that the emergent needs ofits members must be satisfied. This means that their enterprises must besatisfied. It will always be the case that things reflect such uses as aredesired and that their producers are given occasion to sell them. Theseproducers will be lead through their self-interest to produce these things atthe lowest cost, because by complete freedom of trade the consumer will turn hiscustom to those that can most cheaply satisfy his demand. Where the costs aregreater and thus the price required higher than the consumer’s sense of itsvalue, the consumer will pull back. These producers will thus have to eitherlimit their production or give it up, while others will extend it. Accordingly,the prospect of gain will invoke the striving of the producers to produce atthe lowest cost. But not only will consumers and entrepreneurs with fullfreedom act so as to serve their interests best, but also workers will turn tothose businesses, where their labor power is best recompensed, and that isnaturally those in which there is the tendency to extend production, and thusin which there is a stronger social need. Accordingly, in such an economicsystem all will strive after his own advantage, but through this, at the sametime, the socally best distribution of goods and labor power will beimplemented. … Basically the whole of economic life is only a continual buyingand selling. Rent, loans, pacts, in brief all contracts, in which claims toutilities are made and compensation is offered in return, were engaged in anddissolved according to the same principles. Against this free trade the state had nothing other to do than to guardthe person and property of all from violence and deceit, and to compel thefullfillment of freely entered into agreements. In the interest of politicalfreedom and on economic grounds, the state must avoid a positively publicactivity, or business affairs. If the government engages in such enterprises itwill expand its power and influence by controlling a great number of places andcan comand and injure the many interests of private parties and can use themfor political ends. Economically purposive management will be obstructed by thewish of the government to curry favor with influential parts of the population:here the great land owners, there the great industrialists, no again certainregions against others, here the worker and their the small business. Or they willbe forced under the influence of popular movements to make rules, which areuneconomic. Such management will also because of the difficulty of leading aneconomic enterprise through a bureaucratic apparatus work less efficiently, than a private one, whilethe leading personnel has only a weakened interest in success, and thus theenergy of labor will suffer.”

Philippovich’s summary brings out the ideological necessitybehind the sovereign consumer, upon which hinges a system that both needs thecoercive powers of the state and needs to keep the state from interfering, inany way, with the accumulated inequalities that result from the process of freetrade. Philippovich is interested not only in these inequalities, but in the “thinness”of the idea that all of social life is encoded in buying and selling. I’llexamine these two ideas in the next post.

the neo-liberal virus: its not just in the U.S.!

2012-01-29T02:15:00.000-08:00

Le Monde today publishes a long thumbsucker about thesudden collapse of electoral hope in Sarkozy’s camp. It concludes with the manhimself, who was recently consoled by visits from two former Europeanpresidents – Gerhard Schroeder and Felipe Gonzalez. Note, well, that theseconsolers were the leaders of the ‘socialist’ parties in their respectivecountries. That they would form the cortege of Sarkozy’s well wishers tells usa lot about European politics over the last decade – marked by the utter betrayalof the left by the elite within theleftist parties.

I am noting this to preface my take on the recent debatebetween John Quiggin – a leftleaning economist – and Tyler Cowen – arightleaning one – over what Quiggin calls “entrenched inequality.” There havebeen numerous papers lately that demonstrate the ossification of opportunity inthe U.S. The upper class has entrenched its wealth and power, the upper middleclass is stuck, the middle class is downshifting, and the poor are increasing.

Cowen has surveyed the evidence and proposed thatperhaps social mobility – upward mobility for the majority, downward mobilityfor the wealthiest – isn’t such a great thing anyway.

As often happens, the debate plays out as one that pitsthe U.S. against Europe. Frankly, I find this bizarre. The neo-liberal agendathat has aggravated the plutocracy in the U.S. doesn’t stop at Bar Harbor. Ithas, in fact, been disseminated throughout Europe at least since the end ofThatcher’s misrule in the UK. And, as Sarkozy’s friends show, it has been disseminatednot simply through rightwing parties, but through leftwing ones. In fact, by acruel irony, rightwing parties, with their residue of nationalism, often end upopposing ‘liberalization’, and thus, de facto, protecting the social democracyput in place (however spottily) in Europe during the Cold War period.

I think the evidence – at least from the OECD - is that upward social mobility is stalling in all thedeveloped countries. At the same time, as the OECD report for 2011 makes clear,between 1980 and 2008, every OECD country recorded the trend of the top 1percent accruing a growing share of the total income.

Yet both Cowen and Quiggin are content to knead up this matter in the old tired mold of the U.S. versus Europe.

Cowen’s arguments echo the usual conservative rotomontade about “Europe”: forinstance, the idea that in Europe, the public sector is vast and the privatesector small. Here is Cowen on how smart Americans know the action is in theprivate sphere, while “[l]ots of smart Europeans decide to be not so ambitious,to enjoy their public goods, to work for the government, to avoid high marginaltax rates, to travel a lot, and so on. That approach makes more sense in a lotof Europe than here. ”

What could this mean?
The first thing I’d point out is public goods/private goods distinction, uponwhich much of his argument rests, seems to envison the government as somethingthat consists entirely of tax collectors, while the private sector consistswholly of Apple. In fact, governments can do a lot of different work, dependingon what is nationalized and what isn’t. For instance, they can nationalizetrains, or the mail, and provide the same service that private trains andprivate mail companies provide. Profit is a functional difference, but for thepeople working in the institution, it doesn’t really matter.

As importantly, no developed country has a pre-1930spublic workforce. In the U.S., the number of people who work for the governmenton all levels – local, state and federal is 17 percent. Now, that is less than the EU average, but significantlyhigher than the Japanese average of 8 percent. (see paper by J. Handler, here, and it is also a higher percentage than in Germany, the Netherlands or Italy. All of which tends to say that Cowen is using a piece of received wisdom instead of goiing to easily available sources to make his points. This is not economics, but punditry. However, Quiggin does not parry this stroke, since he, too, seems to buy theimage of Europe as the paradise of social democracy.

Another of Cowen’s arguments identifies taxation andredistribution. Now, this is not entirely erroneous. According to the OECD report, “OECD-wide, inequality in incomeafter taxes and transfers, as measured by the Gini

index, was about 25% lower than for income before taxesand transfers in the late 2000s, while poverty measured after taxes andtransfers was 55% lower than before taxes and transfers.” However, the resultsdepend on the tax regimes and government spending. If, for instance, the U.S.taxes and spends that tax money on the military, the redistributive effect isvery low. This is where the EU is very good. According to Handler:

“According to the latest data available (2001), thereare significant differences in the structure of the public sector between theEU and that in Japan and in the US. These differences are highlighted by Figure7. The largest difference, gauged from the social protection figures, is thatthe EU15 redistributed roughly 12% of GDPmore than the US and 8.5% more than Japan. Moreover, the EU15is leading with regard to health expenditures whereas it spends less than halfthe share of GDP on defence than the US does. Finally,the US devotes slightly more public expenditures to education than the EU15 and considerably more than Japan.”

It should be noted that in two areas, the U.S. doesoutstandingly poorly. Its public expenditure is tremendously dedicated tohealthcare, and yet it also spends more privately on healthcare – due to theenormous inefficiencies of a mostly private healthcare system. And the same istrue with education, as the Government decided, long ago, to encourage privateloans for college students, rather than setting up a wholly owned Governmentsubsidiary to do the job. The result has been inflation of debt and anexplosion of expenses in colleges, which are now administered by the same cadreof creeps one finds directing things in banks, private equity firms, orlobbying houses.

That said, the EU has been far from immune to theneo-liberal virus, which is why it is threatened with massive wealth inequalityand the politics that flows out of it – as anybody who looks at the austeritycounter-revolution going on here can see. Developed economies really needhigher levels of public employment – Germany’s is scandalously low, as is theU.S.’s – in order to produce what, at this stage of affluence, developedeconomies really need – more and better public goods. Choking the rich –imposing caps on income and expropriating absurd amounts of wealth – is only atactic in the general movement that we should be seeing to a fairer system thatspreads the benefits of the economic system to all. For instance, the use of theinternet to set information free has shown that the information – in terms oftech and media products – will keep on flowing even if IP laws are changed toradically limit the monopoly power of IP holders. Similarly, healthcare as apublic good is actually easier to do now than it has ever been, and would becheaper if it were treated as a public good – i.e. the state simply inflatingthe population of healthcare workers far above its current level, throwing upclinics with the appropriate technology with abandon, etc. Instead, we aremired in the coils of a dying healthcare system that has elevated the incomesof doctors and dentists to absurd heights and taken no advantage of theadvances in tech and education that would allow much of the work of the GP, forinstance, to be done by an RN. And so we could go through the whole list –lower working hours, less emphasis on the money-merit connection (if you have areal talent, then it is a joy to do it in itself. Money is secondary), and ingeneral the more humane capitalism that we are all very near, and that is beingpissed away to keep our masters in yachts and single malt scotch.

on to the sovereign consumer II

2012-01-28T03:11:00.000-08:00

In 1948, Mary Jean Bowman wrote an article concerning therise and relative decline of the consumer in economic theory: The Consumer inthe History of Economic Doctrine. Phillip Mirowski has shown that the enormouspowers of control systems such as were put into operation by U.S. during WorldWar II had left an impress on the economics profession at that time. It was animpress deepened by the merger of mathematical economics and Keynesian ideasabout demand management in the Anglosphere in the years after the war. Therewas never, in that period, any real threat that the private enterprise systemwould be taken over by the state – but there was enormous confidence in thestate’s ability to direct the economy. Against this background, Bowman’shistory seems to be an exercise in antiquarianism. For readers who haveexperienced the collapse of confidence in the state’s ability to direct theeconomy – at least on the surface of economic thinking – and the dominance ofthe neo-liberal framework, it is the antiquarianism that is antiquated.

Bowman divides into four the approaches to the consumer ineconomics. Her third approach is closest to what would be called the idea ofthe sovereign consumer: “The consumer is viewed as the originative and activeagent in determining the allocation of resources. .. Since the late 19^thcentury the normative stress has been mainly on realizing consumer preferences,but a resource allocation analysis has been applied in other normativecontexts…” (1)

For Bowman, Say was “probably the first economist to becomean unqualified exponent of the normative postion that the satisfaction ofconsumer preferences, whatever those preferences might be, was an end in and ofitself.”

But in Bowman’s history, Say was a little to early to have been able to exploit the subjectiveturn that came about with the marginal utility approach. Furthermore, if Saywere to reach for a physics model of the economy, it would have had to havebeen Laplace – whereas by the late nineteenth century, better statistical toolsand and models of physics gave economists a sense that mechnics could betransferred to the matter of exchange. Wicksteed, for Bowman, is the key figurein this history (which, as she admits, is skewed towards England and America):

“Wicksteed was the first of the British economistsexplicitly to join the utility and cost approaches through opportunity cost.The concept was applied in both the allocution of resources among differentuses and the margin of choice between leisure or idleness of resources andincome. In the former application consumers’ rule was carried back through theeconomy by imputation.”

So Bowman’s history stands as a tale of events unfolding ina particular department of knowledge. The motives, here, are generated, or sowe are to believe, by the structure of science – although it is already aquestion of whether this is the science of discovery, or whether theexperimental and the empirical are being pre-processed in a gesture ofscientific aspiration. The economist’s understanding of themselves asscientists was expressed by Mill, and repeated by Carl Menger, one of theimportant pioneers of the marginalist school, in his Investigations (1883):

‘The will of men are lead by countless and in partcontradictory motives; in this way, any strict law-likeness of human action ingeneral and economic in particular is excluded from the beginning. Only when wethink of man in his economic activity as being continually guided by the samemotive, i.e. his self-utility, does the mmoment of arbitrariness appearexcluded, and every action strictly determined. Only under the abovepresupposition is accordingly the laws of political economics and even nationaleconomics thinkable.” [My translation, 73]

The language of determination leads us into the logic ofeconomic indvidualism, which presents itself firstly as a methodological norm.The individual’s motives may be granted free reign – but as far as theeconomist is concerned, they must be formally enveloped in a modality that willmake them calculable and determinant.

…

Character is never the rubric under which the economist goesabout his business. Rather, at the heart of the subjectivist move was an oddlyvacuous subject – the ‘individual’, or the consumer. In mainstream economics, the decisive rupture with the classicalschool centers on the replacement of the laborer, the producer, by theindividual consumer, the preferer. But this change of focus creates an oddlydysymmetric picture of economic activity, as though individuals existed in someseries, isolated from one another, the realization of their choices cut offfrom any interference one with the other. continually chosing goods and services, an eternal monologue of want.One imagines them as Beckett characters, buried up to their necks in purchases,balancing costs and benefits. Far from being a choice of method, a choice ofconnection within a network of connections as in Simmel, a choice for salvationthat leads to a new life, the choice of believing in the eternal return of thesame that leads to the transcendence of the human, the choice of revolutionthat throws off the yoke of alienation, the choice of the economic agent has acuriously muffled, a passive aggressive nature. It is a choice of, aseconomists like to put it, one bundle of goods over another, with the world ofsupply, of production, of creation, absolutely subservient to choice.

The inversion of the economist’s protagonist – from producerto consumer – follows the logic of individualism in as much as it clears aspace in which economics can be a social physics, or mechanics. The individualshoppinng is a distinct unit. The individual producing, on the other hand, is acollaborator. The steelworker does not make a fleck of steel distinct from thefleck of steel made by his fellow steelworker. The classical economists madegreat strides in abstracting to gain a sense of economic objects as produced,by postulating a fully substitutable abstract labor time – the time that isrepresented in the time card. But Marx revealed that there was an unconscioustotal social fact following upon this way of analysis: producers were exploited within theclass stratified social whole. This would bother few in a world in which theservant/master relationship was assumed, but it did bother a world in whichthat relationship had to be justified. And yet, of course, in a furtherparadox, the first world, by depending on non-liberated labor, could neverbring about the industrial andfinancial system of capitalism –capitalism must free the laborer if the laborer is to be exploited in a propercapitalist manner.

Moreover, the genesis of value, following the classicalroute, created insuperable problems of quantification – and could only beapproximately quantified from surface indices. That this may just be the waythe economy functions was not a good answer for an economics that wanted to benot simply a social science, but the most scientific social science.

Still, the turn in economics from the producer to theconsumer, from labor value to marginal utility, was not received in the socialsciences or among policy makers without skepticism and outright resistance.Among the paths of that resistance was: the sociology that took as its primaryunits certain collectives; the path of therapeutic nihilism; and the positivepather of socialism. The first took collectives to be, at least for thepurposes of explanation, agents –crowds, public opinion, class, etc. The second exploded the notion of the unifiedindividual, with his unified consciousness, from within –a move which wasvariously made by William James, Nietzsche and Freud. This path eventually led,in the twentieth century, to another notion of the person in terms ofsovereigny and abjection. And the third path centered upon the idea that theindividual’s consciousness of himself was always mediated by class, a state ofaffairs that could only be changed by revolution.

the sovereign and the sovereign consumer

2012-01-25T07:40:00.001-08:00

In 1967, Robert Solow wrote a disparaging review of JohnKenneth Galbraith’s New Industrial State, which was a bestseller that year, in the Public Interest, a fairly hot academic journal at the time. Inthe same issue, Galbraith replied. The quarrel spilled over into the next issuein 1968, with an ideological comrade of Galbraith’s, Robert Marris, pitchingin, and Solow finally counter-attacking his two adversaries.

The original review raised the doubt that Galbraith wasusing a scientific method, instead of an ad hoc method of magisterialobservation. Solow felt that Galbraith’s themes were often invalidated bymodern economic theory. And, in particular, he did not think that Galbraithcould be right about one of the theses that had by that time become associatedwith his name: that corporate demand management, that is, marketing, shapedboth production and the market.

At one point, Solow, in responding to a supporter of theGalbraith view, Marris, wrote: “What I said was: … But I should think a casecould be made that much advertising serves only to cancel other advertising,and is therefore merely wasteful.” I should think it obvious that this almosthas to be true – i.e., that much advertising merely cancels other advertising –for otherwise there would be nothing to stop both the cigarette industry andthe detergent industry from expanding their sales to their hearts’ desire andto the limits of consumers’ capacity to carry debt.”

This was written in 1968, when the consumer’s ability tocarry debt was not itself a great matter of advertising. It proved to be so inthe 2000s, and as we have seen, mortgages and credit card debts did expand tothe hearts’ content of banks and financial service companies – until the limitof the consumers’ ability to pay debts was reached. The ghost of Galbraith isentitled to smile about Solow’s naïve idea that debt itself can’t becommodified, advertised and amplified. But more here is on display than Solow’s limited imagination. There is, in Solow’s statements, a classiceconomist’s blindness to the relationship between goods, and indeed, people –to the novelist’s truth that people live in other people’s lives.

Thus, when Solow writes: “It must be harder to influence theconsumer’s choice between purchases of cigarettes and purchases of beer, andmuch harder still to influence his distribution of expenditures among suchbroad categories as food, clothing, automobiles, housing…”, he falls into arather puzzling trap in which the purchase of beer and cigarettes is a one timepurchase with no effects on one’s lifestyle. His dissociation of goods andpeople make it impossible to see the connection of a good like cigarettes and abroad category like housing – a connection that came into view very clearly forthe 300,000 some people who died of lung cancer in 1967. Indeed, 1967 marked thehigh water mark of the increase in cigarette smoking. The next year, thegovernment and private organisations began to feature a massive anti-smokingmarketing campaign. And the incidence of smoking started to fall.

Solow’s notion that advertising countered advertising is,indeed, an observation about the content of some advertising – the comparativesubgenre. However, it was evident even to Solow that this couldn’t account forall advertising. Nor was he happy with the idea that advertising was simply waste,for if that were the case, the government could happily ban advertising withouteconomic damage –and this was not something Solow’s economic ideology wouldallow. At the University of Chicago, a school developed that contended thatadvertising did, indeed, have an economic benefit, by giving consumers – whosepreferences were made through the same act of freewill by which sinners in anevangelical church accept Christ as their Lord and Saviour – with informationthat will help them find their preferred goods and services. Since advertisingdoesn’t look like it is in the business of providing this kind of information,the Chicago school was reduced to saying that advertising signaled bundles ofqualities – such as comfort – even if the information it gave looked more likethe rhetoric of persuasion.

Why were economists so eager to dispatch Galbraith’s idea?Or I should, perhaps, say the idea of the marketers themselves – there havebeen many sociological studies of, say, the internal paper generated by advertisersof tobacco, and it is nothing like the Chicago Economics ideas about whatadvertising does. There is some support for Solow’s other notion, which is thatmostly, advertising produces brand switching, but not a demand for theparticular good. Yet it is unclear what this means – especially as a good likecigarettes was indeed used by more and more consumers in the years from theturn of the century up long past the medical evidence that it caused cancer. Isswitching a brand ontologically different from switching to a good? And what isreally being switched? What goods are really in competition?

Galbraith, in his reply to Solow, pointed out that thereason Solow attempts to dismiss him out of hand is that Solow is protecting acertain ideology, one that is shared among mainstream economists:

“The issue concerns the future of economics in general andof the highly pretigious work with which Professor Solow is associated inparticular. That work is within a highly specific frame…

What is theframe? It is that the best society is the one that best serves the economicneeds of the individual. Wants are original with the individual; the more ofthese that are supplied, the greater the general good. Generally speaking thewants to be supplied are effectively translated by th market to firms maximizingprofits therein. If firms maximize profits they respond to the market andultimately to the sovereign choices of the consumer. Such is the fame and givenits acceptance a myriad of scholarly activities can go on within it. Any numberof blocks can be designed and fitted together in the knowledge that they areappropriate to – that they fit somewhere in – the larger structure. There canbe differences of opinion as to what serves the larger structure. Mathematicaltheorists and model builders can squabble with thos who insist on empiricalmeasurement. But this is a quarrel among friends.”

Galbraith is here describing the flow sheet of mainstream economics since Walras’s time, a narrative with one monological character – the sovereign consumer. I amgoing to go back and look at the oddity of this construct, which arose wheneconomics made a subjectivist move at the end of the 19^th century,in marked contrast to the direction of the other social sciences.

Lamartines (from an old post)

2012-01-20T02:40:00.000-08:00

Last night, I went to a lecture about the supposed father of Amer-Indian studies in France. The woman who gave the lecture made one point clear in her first five minutes: Hamy was not and could never be called one of the founders of 'Americaniste" studies in France. It was all a hoax. Not an intended hoax, but one of those hoaxes that arise in the collective unconscious of an institution - in this case, the institutions of anthropology that dominated in fin de siecle France.
In my terminology, she had found a Lamartine.

Lamartines

Alphone de Lamartine, who knew Joseph de Maistre, described him, after he was dead, as being “large [d’une grande taille,], handsome and male of form and face.” Madame Swetchine, who also knew de Maistre, was taken aback by those lines: “M. de Lamartine says that he saw a lot of M. de Maistre. The number of those meetings makes it all the more surprising that his description of the man was misleading to such a degree. Not one touch was precise or faithful to the original. Count de Maistre was of middling size, and his features were irregular. There was nothing incisive in his eye, to which his short sightedness lent something lost in his gaze. This irregular, and not very brilliant face nevertheless had a majestic radiance.”

The witnesses summoned by the historians are all fed their lines by someone, usually the insatiable self, the vulgarian whose dirty fingers are even in our hot tears. Leaving fingerprints. Lamartine is the biggest goose of French literature, with his tedious lyrics and his lukewarm liberal politics. He is the very type of the sots from whom Baudelaire, later, begged in vain for a break to keep him from slipping into the abyss of want and madness. Madame Swetchine, bless her soul, did not reckon that there was a stye in Lamartine’s eye – his ego. The problem with history is that it is packed with Lamartines. The process is fucked, the jury is packed, the judge is limited by his caseload, his languages, his headache, his faulty hardons.

Any good carpenter knows a rotten two by four. Anyone with a nose for it knows a rotten fact. But we have to build with available materials.

anti-Sopa

2012-01-18T06:06:00.001-08:00

the nervous character: Zeno 4

2012-01-17T08:04:00.001-08:00

The popular stories about the introduction of various formsof using tobacco are always about the military. It is said thatthe habit of cigarette smoking passed from the Spanish soldiers, who hadlearned it from Brazilians, to the French in the 1830s. However, there isanother story that locates the re-invention of cigarettes in the 1850s warsbetween Russia and Turkey. A Turkish soldier, whose pipe was destroyed by abullet, put tobacco in the paper from the envelop of a cartouche, and smokedit. [[Ferland, 2007] And still another claims that it was the French soldiers,arriving with paper and tobacco, who diffused the habit in Russia. Thesedifferent stories could be sorted out by considering that the Brazilians andSpanish may well have used a corn leaf – which is how cigarettes were describedas late as 1864 in G.A. Henrieck’s Du Tabac. There we read that cigarettes arerolled in paper “sans colle”. Indeed, this was the technical difficulty withcigarettes as a commodity: its fragility.

The military is mobile, and at the same time idle, whichhas some effect on the form of drug that is being used. Tolstoy’s letter to hisaunt Tatiana Yergoloskaya in 1851-2, when he was garrisoned in the Cacausus,describe the garrison life very well. Garrisons were foyers for all the products that kill time, from gamblingto smoking to, in recent times, heroin and marijuana. Also for politics andliterature.

Here’s Tolstoy as he starts to settle in the garrison life:

"Iwas at Stariy Yurt. All the officers who were there did nothing but play and atrather high stakes. As it is impossible for us when living in camp not to seeeach other often, I have very often taken part in card-playing, and,notwithstanding the importunity I was subject to, I had stood firm for a month,but one day for fun I placed a small stake: I lost. I began again: I againlost. I was in bad luck; the passion for play had awakened, and in two days Ihad lost all the money I had and that which Nikolay had given me (about 250rubles), and into the bargain 500 rubles for which I gave a promissory notepayable in January, '52.”

Tolstoy, of course, was not a typical officer, and killedtime by writing “Childhood” and reflecting on the world around him. Lucien Leuwen, the hero of Stendhal’s novel,shares some traits with Tolstoy – notably, his wealth and connections andinterior life. But Stendhal’s hero is engaged not in suppressing the Turkicspeaking mountain people on the Russian frontier, but, or so he feared, theFrench speaking people on the class frontier in Nancy – as Stendhal sets hisstory just after the French army had suppressed various worker strikes in Metz.Still, the life of idleness represented by Stendhal – and the contrast with theambitions of the hero – takes on a very similar tone.

If killing time in the garrison corresponded with the use ofdrugs, it was a different kind of time that corresponds to the popular image ofcigarettes by 1900. In a sense, this isthe same problem of weight and mass that is discussed in the preface to “TheTelegraph as a means of commerce” (1857) by Karl Gustav Knies, who compares the‘commodities’ of things, persons, and “information” – Nachricht. Knies was oneof the first economists to recognize that telegrams, by introducing a real timespeed into the diffusion of information, had, as it were, given a premium tothe light and speedy. To come to this conclusion, Knies had to frame forhimself a sense of information that, at the time he wrote, was still lacking.Yet he knew that the Nachricht “is obviously one of the objects in which commercebetween people is represented.” Information (or “report”), unlike thought,requires distance – and even if one presumes to have information from oneself,one is at least metaphorically putting oneself at a distance from oneself. Morenormally, though, communication goes from a sender to a distanced receiver.Knies points out that if we have certain information that seems timeless, or atleast doesn’t lose value in being transported from the sender to the receiver,much of what we communicate has only a passing value – just as any othercommodity has. In other words, there is a shelf-life for reports. At the sametime, there is a double time frame, one in which the immediacy of the need towhich information corresponds may not be the same for the sender and thereceiver. These things are true about letters and oral communications – butwith the telegraph, a whole news temporal order, and a whole shift in thesocial construction of ‘immediacy”, comes about on the mass scale.

In a word, the lightness and quickness of the telegraphicmessage presages a different tempo in the life of human beings, which calls outfor a drug that is both speedy and that suspends speed. That was the cigarette.It needed, however, to be technically changed. The cigarette becomes the objectof certain changes, in manufacture and marketing, that make it an exemplaryproduct of the turn to consumer goods in the later nineteenth century.Famously, the development of the tobacco industry in Russia, in which a skilledgroup of cigarette rollers were trained to produce cigarettes to serve a massmarket, jumpstarted the American cigarette industry, which took its real startwhen James Duke enticed a number of Eastern European Jewish cigarette rollersto move from New York to North Carolina to train a number of Southern factoryworkers. Duke could not find an entrance to the cigar industry, so he chose toenter the tobacco industry by enlarging the production and market forcigarettes. America was famously addicted to cigars and chewing tobacco formost of the nineteenth century: cigarettes were suspiciously European. Dukeintroduced mechanisation, a new packaging method (a hard paper box), andadvertising. Although he never was able to take over the cigar industry, whichwas resistant to the kind of speeded up manufacture that suited cigarettes, hedid establish a strangle hold on cigarettes by 1912.

These are all developments that made cigarettes a symbolicaccessory for the changes in the tempo of life that was being felt by urbanpopulations in the U.S. and Europe by 1900.

The characterological correlate of this tempo was: theneurotic.

the new non-idle rich!

2012-01-15T04:53:00.000-08:00

The NYT, which is caught between a love for the one percent that blooms in its stylemagazine and its business page and a political atmosphere in which the chummyrelationship between liberalism and the one percent is coming apart, unrollsanother of its color pieces about the lifestyles of the rich. It features oneAdam Katz in its first paragraph: “Adam Katz is happy to talk to reporters whenhe is promoting his business, a charter flight company based on Long Islandcalled Talon Air.” So what did the Times reporters ask him?

Well, we are not far into the article when, breezing pastthe assets – “…an $8 million home, a family real estate company in Manhattanand his passion, 10-year-old Talon Air” … we are assured that, like so many ofthe 1 percent, Talon is a dynamo, a man who makes your average doublejob mom ordad seem like a slacker:

“”Still, they are not necessarily the idle rich. Mr. Katz, who sometimescommutes by amphibious plane and sometimes carries luggage for Talon Airpassengers, likes to say he works “26/9.”

Of course, the NYT – as its Public Editor, Arthur Brisbane, recently put it– isn’t in the business of the “truth”. If a presidential candidate or a richman says something, it is the Times policy to simply print it, and let he whohas an hour to kill and Google find out if it is true or not. Such a comfortingdoctrine! Luckily, I am one of the idle non-rich, and having the time, Igoodled Mr. Katz, and found that, in other interviews, Mr. 26/9 gives adifferent peek at his life. Especially revealing was his interview with OceanHome, which, you will be surprised to hear, does not contain any stories aboutCEO Katz manfully struggling to manipulate a hundred pound suitcase into hisjet’s tight suitcase storage space. Hepaints a different view of his time expenditure – for instance, in response tothe question about what he did when he bought his current mansion in NassauCounty:

“After purchasing it in 2007, I did a $3.5 million gutrenovation, rebuilding it as a six-bedroom smart house, using a Creston systemfor controlling everything from lighting, sound, and temperature control tooperating any of the 20 flat-screen TVs that fold down from the ceilings. Iadded a movie theater, a solarium with a sunken hot tub, a customized gym,outdoor kitchens and fire pits, Jacuzzis, an infinity-edge pool, radiant heatterraces, and a dock for my 135-foot motoryacht and 47-foot Intrepid speedboat, with Ipe (Brazilian Walnut) steps leading to a private beach.”

You might think that all these accoutrements make it even sadder that he isspending 7 days a week away from home. But don’t cry! It turns out that hesometimes his working time is spent amid thesolarium, Jacuzzis and pool:

What do you love most about waterfront living?
I love the privacy of it all, and the views are always spectacular,particularly when the sun sets across Manhattan. Better yet, I can commute tothe city via my speedboat in 15 minutes.
Is one particular room in the house used most?
For me, it’s the 2,000-square-foot master bedroom, mostly because of thewater views and the comfort of relaxing near a wood-burning fireplace. And it’swhere my home office is. Like I said before, because the house was built in theround, it really feels like you’re sleeping on a ship at sea.

Still, “easy living”, as Ocean Home labels the article on aman who works harder than any four man in the bottom 99 percent, doesn’t alwayselude our hero. For instance, asked about the worst element in living in ahouse facing the ocean, Katz said: “Cold temperatures and wind are prettyintolerable during the winter months, which is why we head down to the Bahamasand live and sail around on the yacht.”

Life, on the whole, is hard for the 1 percent: “They worklonger hours, being three times more likely than the 99 percent to work morethan 50 hours a week, and are more likely to be self-employed,” according tounreferenced stats in the NYT article. But I like to think that the fifty hoursof week does have its softer side. I imagine, for instance, there might even betax write-offs involved with working and sailing that yacht around the Bahamas.But these are mysteries the 99 percent know not of.

smoke em if you got em: Svevo 3

2012-01-13T01:53:00.001-08:00

The closer one comes to a material detail in a text, the more distant appears the division between symbol and fact. Symbol and fact are always found in one another's arms, like lovers, and it is not an easy task to separate one from the other. And the person who does attempt to separate them must put on an anerotic mood, and will always feel a bit like a prude, a busybody or a fool. Besides, just as he pries away the fact, undresses it and preps it for the table of statistics, let him turn his back for only a moment - and it is irresistable, this turning of your back on the fact - and when he turns back the fact will have simply embraced another symbol, or worse, the same one.

For example, take the historic facts in the case of tobacco...

William Weaver’s translation of Zeno's Conscience begins by looking at Italo Svevo’s name – “(his real name): Ettore Schmitz. The first half is Italian and, significantly, it is the name of a Greek hero, not of a Catholic saint. The surname is German. Then consider the birthplace: Trieste, a city that has had many masters, from ancient Romans to Austrians to Italians. In 1861, when Ettore Schmitz was born there, Trieste was an Austrian city, a vital one, the great empire’s only seaport and a focus of trade between central Europe and the rest of the world.”

The split Weaver points to in Svevo’s very name is, if we look a little at the history of tobacco, echoed in Zeno’s habit.

A few subtending facts, then.

In December, 1847, Italian nationalists in Milan (which, like Venice, Trieste and other parts of Italy, were under Habsburg rule) decided to imitate the American tea party – just as the Americans boycotted tea to protest British rule, they would boycott tobacco to protest Austrian rule. Tobacco was chosen for good reason: the Austrian state exercized a monopoly on the sale of tobacco. Since the habit of smoking tobacco in cigar form had been “brought” into the German sphere by English soldiers during the Napoleonic war (such, at least, was the myth to which German writers on tobacco subscribed), the Austrian state, like the Prussian state, had reacted by regulating its use. But unlike the Prussian state, the Austrian didn’t only ban smoking in public in the capital – they also devised different regulatory regimes for different regions in the Empire. And they promoted the creation of large tobacco estates in Hungary, which became part of one of the largest industries in the Empire, from cultivation to curing to manufacture of snuff, pipe tobacco, and cigars. [See Wickett, Studien ueber das Österreich Tabakmonopol, 1897]

In Dalmatia, state control of tobacco production was relaxed – in accordance with the liberalization of this area of the Empire that had been inaugurated by Joseph II. Trieste was well known as an entry point for the tobacco smuggling trade. In 1830, when Stendhal was the French consul in Trieste, he had remarked upon the openness of the smuggling trade. The tobacco that came in was, most likely, of Egyptian origin.

In Milan, the Austrian state had no rules about smoking in public. The Milanese liberals, voting to boycott smoking, sparked a nationalist feeling in the populace. On the 2nd and the 3rd, there were disturbances in the street, as cigars were plucked from the mouths of passerbys and thrown into the road.

But who were these smoking passerbys? Here, contemporary accounts differ. According to a French history from 1857, the Austrian government, knowing that the boycott was coming, had distributed 30,000 cigars to the Austrian garrison in the city. Thus, the soldiery was ‘armed’ with smokes, and when the crowds attacked, they took this as a provocation to violence and reacted accordingly. According to a contemporary Italian historian (Giusseppi Ricciardi, 1850), the smoking soldiers were joined by smoking criminals, who had been released from the jails and given cigars by the Austrian authorities to add to the confusion. Like a trick cigar, the situation ludicrously exploded, with rioting that spread to other cities in Italy.

But in Berlin and Austria of that year, the public/private meaning of the cigar was reversed. The laws that were put in place after the Vienna congress had banned cigar smoking in public, and thus made cigar smoking a daring act – or at least an act of symbolic resistance. The progressive smoked cigars – “ a democratic symbol for rabble rousers and agitators’ – while the petit bourgeouis smoked pipes. As the revolution spread, in 1848, from Paris to Berlin and Vienna, one of the demands of the liberals was the freedom to smoke in public – shoulder to shoulder with the freedom of the press.

Against this background, there is not only a split in Schmitz’s pseudonym, Italo Svevo, but even in the meaning of the tobacco addiction that provides the connection in Zeno’s account of his life. Freedom, for the Italian patriots, came via giving up tobacco. Freedom for German patriots meant taking up tobacco. And freedom is at the heart of the habit that Zeno describes, the perpetually renewed freedom of giving up the smoking habit:

"I believe the taste of a cigarette is more intense when it’s your last. The others, too, have a special taste of their own, but less intense. The last one gains flavor from the feeling of victory over oneself and the hope of an imminent future of strength and health. The others have their importance because, in lighting them, you are proclaiming your freedom, while the future of strength and health remains, only moving off a bit."

In Georges Bataille and Roger Caillois’s program for the College of Sociology, they wrote of ‘establishing points of coincidence between the fundamental obsessional tendencies of individual psychology and the directing structures that preside over social organisations and command revolutions.’ Surely we have landed upon one of those points.

And yet – not quite. For what Zeno smokes as a mature man are cigarettes. His brush with cigars, though, was his first brush with tobacco. His father was a cigar smoker (like, it should be remembered, the founder of the psychoanalysis that provides the framework for the story – Freud). His father had a habit of smoking half a cigar, then leaving the butt for later. Zeno had a habit of stealing and smoking those butts.

“My father left some half-smoked Virginia cigars around the house, perched on table edges and armoires. I believed this was how he threw them away, and I believe our old maidservant, Carina, did then fling them out. I carried them off and smoked them in secret. At the very moment I grabbed them I was overcome by a shudder of revulsion, knowing how sick they would make me. Then I smoked them until my brow was drenched in cold sweat and my stomach was in knots. It cannot be said that in my childhood I lacked energy.”

We have not yet reached the moment of the cigarette. However, it is as though Zeno had to wean himself from cigars in order to reach that moment himself.

Svevo's Zeno 2: the croupier's rake

2012-01-08T04:07:00.001-08:00

The individualism ofmethodological individualism is a strange beast. On the one hand, it promises arobust defense of the individual as the ultimate level of social analysis. Allcollectives, go the doctrine, are composed of individual behaviors. There areno collective agents – like a pantomime horse, when you see a collective – astate, a firm, an organization – you are seeing the sheeting over the actorsinside it. And yet, this defense of the individual is, at the same time, anemptying out of the individual. Whatever his or her beliefs, passions, orpromises, in effect the content of the individual consists of an algorithm forcalculating the maximization of his or her advantage. It is thus that thepantomime horse of capitalist organizations gets to its feet and proceeds towalk all over you. Hayek, who was a great believer in individualism, wasconscious of this paradox and explains it in The Counterrevolution inScience. It happens that those who arenot entirely sold on individualism and those who emphasize ‘historicism’ – theinterpretation of social action that does not hold that a universal maximizingprinciple is at the heart of it – are pretty much synonymous. This gives us theparadox that those who emphasize the collective level are also those who opposethe universalism of a conjectural history going back to Smith. Thus,historicists would dispute that, say, price or monopoly as categories developedin contemporary economics could be usefully imposed on social behavior inEgyptian society in 1400 B.C. - the example Hayek uses.

But, according to Hayek: "What this contentionoverlooks is that “price” of “monopoly” are not names for definite “things”,fixed collections of physical attributes which we recognize by some of theseattributes as members of the same class and whose further attributes weascertain by observation; but that they are objects which can be defined onlyin terms of certain relatins between human beings and which cannot possess anyattributes except those which follow from the relations by which they aredefined. They can be recognized by us as prices or monopolies only because, andin so rar as, we can recognize these individual attitudes, and from these aselements compose the structural pattern which we call a price or a monopoly. Ofcourse the ‘whole” situation, or even the “whole of the men who act, willgreatly diiffer from place to place and from time to time. But it is solely ourcapacity to recognize the familiar elements from which the unique situation ismade up which enables us to attach any meaning to the phenomena.” (66)

Hayek’s notion – whichappeals, in the end, to an "us" who is above the wholes of the situation and themen involved – reflects a pattern of social meanings that capitalism introducedinto Western Europe in the 19^th century, and with which, especially,intellectuals caught up in the sphere of circulation wrestled: the seeminglyunbridgeable difference between the individual as an accounting entity and anindividual as an existential mystery. The latter is on the side of ‘experience’– but the former rides mankind. Experience fills in the empty algorithmic unit– the economic individual – with matter that seems, well, beyond the bounds ofhis maximizing reason, or the reduction to individuals that is theoreticallycalled for in analyzing economic action. The money in my pocket passed to mefrom some individual, truly, but the individuals involved in the chain thattouched that money are all, with regards to me, rather empy and automatic – theman who put the money in the ATM machine, the woman who gave me change at thegrocery store, the software engineer who designed paypal, the client who paidme – all are in my life to varying degrees, but their roles, the money, andmyself seem to be bound together by arithematic more than intimacy. “Thetechnical form of commerce creates a ralm of values that is more or lesscommpletely loosened from its subjective – personal substructure,” Simmel says(30)

It is in the conflictbetween the two aspects that is brought to bear on the discourse on freedomthat was passed down from the ancien regime to the increasingly capitalistdissolution of the ancien regime in the nineteenth century. “Commerce always strives – never fully unreal andnever fully realized – towards a stage of development in which things determinetheir value through a self-acting mechanism – unmarked by the queion of howmuch subjective feeling this mechanism has taken into account as itsprecondition or as its matter.” (Simmel, 30)

These conflicting aspects of individualism are very much part of Svevo's novel, Zeno's Conscience - for the conscience is, too, both a peculiar personal thing and a sort of introjection of norms and rules that the individual was never consulted about. At one point Svevo’s narrator, ZenoCostini, who, as the heir of hisfather’s business, has nothing to do – by which we readers understand that hedoes not need to do anything to have money – insists on beinggiven a job with his Olivi, the man to whom Zeno’s father entrusted themanagement of the business. Consequently, Zeno is instructed in accounting - or 'economics':

“Olivi’s son, an elegant, bespectacled young man, erudite in allthe commercial sciences, took over my instruction, and I honestly can’tcomplain about him. He annoyed me a little with his economic science and hislaw of supply and demand, which seemed to me more self-evident than he wouldadmit. But he showed a certain respect for me as the owner, and I was all themore grateful because he couldn’t possibly have learned that from his father.Respect for ownership must have been part of his economic science. He neverscolded me for the mistakes I often made in posting entries; he simply ascribedthem to ignorance and then gave me explanations that were really superfluous.

The trouble came when, what with looking at all thosetransactions, I began to feel like making some of my own. In the ledger, veryclearly, I came to visualize my own pocket, and when I posted a sum under“debit” for our clients, instead of a pen, I seemed to hold in my hand acroupier’s rake, ready to collect the money scattered over the gaming table.” (166)

The croupier’s rake instead of the pen! – one seems magical, a wand that brings us back to the archaic, pre-capitalist world of treasure, while the other seems anything but magical, imprisoning us in double columns. The libido of the sphereof circulation flows into this image, which has urged itself upon theorists andclerks since the days of Law’s system.

On Svevo's Zeno 1

2012-01-07T06:31:00.000-08:00

V.S. Pritchett once wrote about the novelist’s knack of“showing how people live in one another’s lives.” This is not only a conciseway of talking about what novelists do – it also points to a large economicfact, which is that people do live in one another’s lives. Surprisingly,economists are, for the most part, blind, or at least hesitant, about seeingthis fact. They have even systematized this blindness and called it the‘micro-foundations of the economy.’

Unfortunately, all too often novels, when they areconsidered from the aspect of economics, are considered to be free zones overwhich preconceived economic theories and ideas roam. But one can think of twoother relations of the novel to economics – one is as a test of economic ideas,and the other is as a source of economic ideas. It might well be that thesocial interactions involving exchange, the symbolization of value, gifts,scarcity – are rehearsed in asophisticated way in certain novels to the extent that the economist shouldlearn from the novel, rather than the other way around.

I’d like to put these consideration in the background against which I am writing these notesabout Italo Svevo’s novel, Zeno’sConscience.

Let’s begin with the novel’s premise. In a short note by Dr.S., Zeno’s journal is presented to the reader as an act of malice on the partof Dr. S., and a means of ‘catching’ his former partient. In other words, thenovel begins with the breaking of a contract, that of privacy between thedoctor and the patient. It begins outside the law, so to speak. Zeno’s ownnotion is that his memoirs are therapeutic, serving one end: to help him breakthe habit of smoking.

Thus, on the one hand, we have the broken contract to whichthe book owes its existence as a published object – and on the other, we havethe desire to break a habit to which the book owes its existence in the mind ofthe narrator.

Before I begin with the second form of the book’s existence,let’s look at what is implied in Doctor S.’s premise – that a book not only hasan inward side of content, but an outward side that objectifies that content.The book is a product of writing. Writing creates an object. And objects arenot, contra the economist’s grand model, all the same kind of commodity. Ifthey take on the form of the commodity, they take on that form because theiruse value for people living in each other’s lives varies not just in terms ofsome original position in which a preference is expressed, but in the way thatpreference is lived with. For instance, there is addiction. There is routine.

As Svevo’s novel was translated into French, it began to benoticed in Italy. The poet Montale wrote an enthusiastic review that, to anextent, introduced the Italian intelligentsia to Svevo, this half German TriestianJew, whose language, according to his English translator, William Weaver,seemed “flat, unaccented, even opaque.”

Svevo wrote Montale a rather extraordinary letter,expressing his thanks and correcting Montale’s assumption that Svevo was amodernist writer linked to Joyce and the literary schools of Paris. Instead, Svevo took the view that writingwas a form of performance and manufacture – and even a form of bad habit.

“I feel the need to tell you that I don’t believe that thedifference between Conscience and the two preceeding novels should be searchedfor in the influence of the most modern literature. I was very unaware of thatliterature when I was writing, since after the failure of Senilita, I forbademyself literature. I even had a ruse to help myself from falling bak into it: Istudied the violin and I conscretated to it, for twenty years, all my freetime. I read a lot of Italian novels, and among the French, the greatestauthors of our time. I know English, but not enough to easily read Ulysses,which I am now reading slowly with the help of a friend. As to Proust, I am nowhurrying to to acquaint myself when, last year, Larbaud told me that in readingSenilita (which, like you, he loves especially), one thinks of that writer.

“It is true that Conscience is a completely other kind of thing than the preceeding novels. Butjust think that it is an autobiography and not my own. Much less than Senilita.I put three year into writing it in my free moments. And I proceeded in thisway: when I found myself alone, I tried to persuade myself I was Zeno. I walkedlike him, like him I smoked, and I stuck on my past all of thos of hisadventures that resembled my own, for this sole reason: that the evocation of apersonal adventure is a reconstruction that easily becomes an entirely newconstruction, when one succeeds in placing it in a new atmosphere. And itdoesn’t lose so much the taste and value of a memory, no more than its sadness.I am sure that you understand me.” [Translated from Ecritsintimes, essais et lettres trans.by Marco Fusco, 1973]

For a reader of Zeno’sConscience, this is a pretty astonishing letter, since it seems to be both adistancing from Zeno and a usurpation of his style of audacity – the peculiaraudacity of the fool that we can see, as well, in the Jewish jokes that Freudloved, and in Kafka’s never-say-die men, who are continually scheming to getinto the Castle.Remember, Kafka howled with laughter when he read his ownstories to his friends, according to Brod.

In Svevo, that audacitytakes the peculiar form of hypochondria and addiction – which are, in turn,exemplary forms of routine. Svevo even takes writing as an addiction that heprevents himself from falling back into by taking up another routine, one thathe knows he is bad at – just as a recovering alcoholic will take up cigarette smoking, and a cigarette smoker, gum.

This, of course, is awhole other dimension of revealed preference.

TBC

New year predictions for the moronic inferno, version 2012

2012-01-02T02:10:00.001-08:00

Prediction is a doddle. Successful ones usually fall intotwo groups: the easy and the lucky. In human affairs, the easy are usuallyderived from the two great grifter principles: 1. there’s a sucker born everyminute, and 2. never give a sucker an even break. applying these as your two parameters can make you seem like agenius when the subject is a society like America, the con man’s paradise. Asfor the lucky, they are composed of guesses that are driven forward by someunguessed social pulsation. Prediction, in this case, gloms onto a phenomenonwithout glomming on to its cause, and thus loses its intellectual strength.

I think I can rely on the grifter principle to predict that Mitt Romney will defeat Obama, andthat Romney will face a strongly Republican house and a majority Republicansenate. The problem here is that the same principles also give us an Obama win.However, the superstition that lightning never strikes twice in the same placegives the edge to Mitt.

Obama, however, will proudly pass onto Romney a plutocracythat is almost completely intact, save for the odd Maddoff casualty. 16trillion dollars in emergency loans, at 1 percent or below, have saved theupper 1 percent for us all. We are, well, tearfully grateful, of course.

The bankruptcy of hopeyness cannot of course be laidcompletely at the President’s feet. In fact, all liberal-left parties in theWest have rotted from the head. When they work and actually elect a leader, theleader and the party then engage in such clueless policy making as would puzzlethe angels. Except, of course, those fallen angels who have read Marx.

The latter have notice that, in the course of the statesponsored well being spread out over the last sixty to seventy years, a certainpolitical and business class has done extraordinarily well in both conservativeand liberal-left parties. The elite in the latter face a problem that isintimately connected to their ascent to the rarified 1 percent group, for ineffect, as their personal circumstances change, so do their interests.Interests are always a hermeneutic product, but hermeneutics is done on asocial level as well as a subjective one. If the tissue of your social level isconstructed from interactions with fellow citizens in the gated community and thehabits that grow around the perks of great wealth, your relationship to a partybase that is composed of much lesser mortals becomes one of a strainedsympathy. The result of this has been a threefold splintering of left politics.Substantially, the party elite engages in the ‘nudgework’ of slowly unwindingand destroying the progressive legislation and institutions that were gainedover the past one hundred some years. They aren’t elected to do this, of course– quite the opposite. But they do it because it is in their interest to do it,and they simply quietly project their interest upon the population as a wholeand believe, often quite sincerely, that the population as a whole is justliving a little too well and needs discipline. It never occurs to thesedenizens of the 1 percent that they are living too well – this is a thoughtthat simply can’t get through the gate. The gated community is especiallyvigilant in suppressing such ideas.

However, in order to distract their constituencies, theparty elite is ever alert to moral panics and sensational trivialities. This isthe sum of their political art. And thus, as congressmen making ‘regulations’for banks retire to become lobbyists for banks, or tax breaks for thewealthiest are somehow tantalizingly never closed, or emphasis shifts fromimmediate problems – massive and catastrophic levels of unemployment – toproblems involving the tax burden on the 1 percent’s next generation – thatterrible deficit! – massive distraction work is called for. And this involvesthe elite’s third political method, identity politics.

Two recent newspaper stories provide a little glimpse intothe content and soul of the Obama era.

One was the recent contribution by his former economicsadvisor, Christina D. Romer, to a NYT roundup of economists for Year Endreports was a cri de coeur of Obama-ism. It contained this gem:

“On the deficit, the big worry isn’t the current shortfall, which isprojected to decline sharply as the economy recovers. Rather, it’s the long-runoutlook. Over the next 20 to 30 years, rising health care costs and theretirement of the baby boomers are projectedto cause deficits that make the current one look puny. At the rate we’regoing, the United States would almost surely default on its debt one day. Andlike the costs of maintaining a home, the costs of dealing with our budgetproblems will only grow if we wait.
We already have a blueprint for a bipartisan solution. The Bowles-Simpson Commission hashed out asensible plan of spending cuts, entitlement program reforms and revenueincreases that would shave $4 trillion off the deficit over the next decade. Itshares the pain of needed deficit reduction, while protecting the mostvulnerable and maintaining investments in our future productivity. Congress shouldtake up the commission’s recommendation the first day it returns in January."

Notice the bogus analogy to the house. Notice that the deficit is consideredonly from the side of government spending, and no notice is taken of the effecton growth if we ‘sensibly’ shave off the ability of the majority to retire inany type of comfort, educate themselves, receive health care, or even receivestandard government services, which of course are all determinates of growthand affordability. The Bowles-Simpson commission, of course, never made anysuggestions because it couldn’t ultimately agree on its ‘sensible’ cuts, butthe country club set hears what it wants to hear, and what it heard was thejoyous sound of an ultra-right Republican senator giving cover to anultra-connected Democratic lawyer for screwing Democratic constituencies up thewazoo. This is Obama’s vaunted ‘socialism’. Alas, it ain’t socialism. It is ratpoison, and its effects, so far, are predictable: it has killed the beast. Theenthusiasm of the Obama people for Bowles Simpson is not the reason Obama willlose, but it is a symptom of the attitude that will lead to his loss: anastonishing callousness with regard to the biggest slump in employment in twogenerations, a blindness to the American middleclass’s plucking as its housingasset disappears into a murk of bad mortgages and illegal bank finagling, and ageneral disconnect from any issue whose explanation would displease the 1percent, from global warming to the Gulf disaster.
Such, then, is the policy substance that makes President Nudge’s reign acurious mixture of elevated but robotic rhetoric and astonishingly boneheadedreactionary policy, sweetened around the edges with the occasional liberalapproved appointment.
But a political regime doesn’t just live – or die - on policy substance (andsubstance abuse). Politics has a soul. Soul, in America, is the kind of workthat has devolved upon celebrities, since nobody else has time for it. Here,one needs an ear to hear. One needs to read for symbols. And a beautiful symbolcame down the pike this holiday season: the bio-pic of Thatcher, brought to youby the makers of Mamma Mia.
Meryl Streep, who stars as Maggie Thatcher, is giving interviews that aresimply alight with the privileged world view of the 1 percent liberal. This isthe end of one she gave the NYT:
““So did Margaret Thatcher. But that’s understandable. She couldn’t showweakness. Imagine what the men would have said.” She added: “In parts ofEngland now it’s a transgression even to consider her as a human being. She’sthat monster woman, the she-devil. For me the point of the film was to find thehuman side.” And though hardly a Tory, she said she vividly recalled the momentwhen Mrs. Thatcher came to power. “Just as I remember not voting for her, Iremember sitting in my room at university when the radio announced that she hadbeen asked to form a government, and I went ‘Yes!’ It felt like one for ourteam.”
Ms. Streep nodded and said: “I did the same thing. We all thought if it canhappen in England, class bound, socially rigid, homophobic — if they can electa female leader over there, then it’s just seconds away in America.””
Streep is old enough (as am I) to remember the beginning of the feministmovement in the 70s. Back then, the point was to destroy patriarchy. Now, ofcourse, the point is to find women (one from “our team”) who can be leaders –the CEOs of tomorrow! This is a feminism neutered of its original purpose, andremade in the interest of ‘role models’ – that combination of fetishizedhierarchy and moralism that is the wholly owned subsidiary of patriarchy. Whereonce feminists fought corporations on behalf of the millions of women who werevictimized in the system that gave corporations outsized power, they now aresupposed to fight to make sure those corporations are led by women who, in atriumph of the new, new feminism, have broken the glass ceiling and receivingthe stock options and outsized salaries of their male counterparts. Theliberal-left party in the U.S. has always had a bad conscious about class, butas class recedes as an issue that the elite takes at all seriously, it becomeswhat all things become that sink into the unconscious: a ghost. A specter, asMarx might say. Identity politics, haunted by that spector, becomes acompensatory activity, a form of pablum, rather than a revolutionary activity.The center not only holds, it freezes the moment of liberation, stuffs it fullof windy truisms, and wheels it out on all occasions in order to keep the party– the political system that has been so good to the elite - going. This is the way formerly liberal-left ideas,bereft of their former revolutionary context, are effortlessly assimilated tothe great liberal country club that goes on to worry about the deficit and thebad habits of the lower classes. Thus, Maggie Thatcher, who unleashed aHobbesian lifestyle on the majority of British women under the witheredblessing of Hayek and General Pinochet, becomes a role model of femaleleadership.
Jesus (and Susan B. Anthony) wept.
And with that: have a happy new year!

From 2007

2011-12-30T05:31:00.001-08:00

Making the rich less rich is not socialism

I’ve become a reader of Floyd Norris’ blog over at the NYT. I’ve noticed, with some amusement, that any time a vague and distant hint arises that the rich in America might be oh, oh, slightly too… rich, the comments section is reliably flooded by screeds against socialism and for the American way.

It makes me long for a snappy way to point out that capitalism was not abolished in the U.S. in the fifties, nor was the Reagan tax cut on the wealthiest the second coming of Adam Smith in the eighties. What is funny about the rabid defense of the wealthy is that I imagine it often comes from the non-wealthy. It isn’t like billionaires are trolling blogs. But what they are defending is, of course, absolutely against their interests. It is the great American paradox: the almost saintly disinterestedness of the American householder in defense of systematic greed.

There are a number of ways to redistribute wealth down. Imagine, for instance, that unions had been strong enough, back in the eighties, to peg earnings to the ratio between upper management and the lowest paid functionaries in a company. Back then, the ratio was about 70 to 1 – today, it averages something like 300 to 1. If the unions had done this and the CEO level had succeeded in extorting the pay packages they had today, we would be living in a utopia in which the merest entry level receptionist would be taking home 150-200 thou. This would be excellent – except of course that corporations would no longer make profits. Instead, they’d be pouring all their cash into paying their workforce. Still, at the 70 to 1 ratio, upper management’s efforts to increase their compensation packets would have significantly pulled the earnings up of the entire workforce.

Unfortunately, when you don’t have powerful unions, you have to rely on the countervailing powers of the state. You have to work, then, to raise the taxation on the upper tier considerably. You have to do this not only because you need to pay for public investments, but because there is a macro good to great income equality. For one thing, it discourages economic activity that is, in reality, mere churning. Looking at the mortgage mess, one can see more and more clearly how the fantastic, Pirenesian structure of false economic activity has worked since 2001. It has allocated money not to the most productive, but to the most churnful. For another thing, more equality now means more equality latter. As the gap widens between the resources of the rich and the not-rich, it becomes exactly what we socially reproduce. Those non-rich who, for instance, decided that the death tax, otherwise know as the estate tax, was just terribly unfair to their children actually screwed their children terribly, because they are not leaving the kids fortunes, whereas the fortunate few are – thus aggravating the already unfair structure that separates rich from non-rich children. The cost of abolishing the estate tax is borne by the non-rich in such areas as trying to get their kids into top schools and the like.

But what most impresses me about expropriating a good share of the wealth of the wealthy is its environmental impact. As anybody with the eyes to see can see, the last twenty years have been years of great GDP growth in many countries. In fact, the whole Tom Friedman-esque economy is oriented towards steroiding GDP. Why? Because if you are going to have increasing inequality, growth is the way that the middle income sector – the vastly more numerous non-rich – can, at least, maintain their lifestyles. But GDP growth could also be called the Diminishing Environmental Return. DER is the natural result of overexploiting a system that is limited in many ways. Put up a zillion towers for cell phones, and you can say bye bye to songbird populations – make your McMansions of tropical wood, and strew them with the kind of wiring that gives you 24/7 instaconnectoinstamaticinstatubelivegirlsxxxxpronomatic action, and you can say bye bye to the environment of Sumatra. Down the intertubes it goes. It is an incredible waste of resources, which is the total result of the elite decision to grossly exacerbate the wealthiest’s share of the wealth. With a greater equality of income, of course, GDP doesn’t have to grow as fast. The drift of our current society into endless war, endless stupidity, an endlessly degraded public sector, the unwinding of all those hard fought democratic gains of the last one hundred years, is the direct result of a simple arithmetic ratio. To repair this – to go back to the managed capitalism, as Kuttner calls it, of the past – isn’t socialism – it is the self interest of the vast mass of American citizens.

the forest and the address

2011-12-21T06:52:00.002-08:00

Yes I'm lonely
wanna die

About the time Rousseau was meditating on the original menin the forest of St. Germane, in the 1750s, the French government was beginningto assign numbers to buildings in various cities. This was a two-fold process.According to David Garrioch, it was not only about assigning a number, but alsoabout a great loss of names: the names of houses. For before the numberaddress, houses were found by their name on the street:

“In the cities of early modern Europe the houses and shopsalmost all had names and signs. There were red lions and golden suns; names ofships, trees and plants; figures of history and myth; every conceivable saint.”

Garrioch questions a history that sees these names solely interms of identifying marks. Firstly, the names could be, and were, changed;secondly, there was no system to the marks. There was no succession of suns, for example. While they may haveplayed a role in identifying the house or shop, the name or sign played more ofa role in expressing something about the possessor of the house or shop, fromthe owner’s loyalties to the owner’s family:

“Yet the signs and house names, like heraldic symbolism,might have more than individual significance. They might act as links betweengenerations, between the namer of the house or the fhounder of a dynasty andthat person’s descendants. This is exemplified by the arms of Albrecht Duerer,the painter, which bore a door. The sign outside his father’s workshop in latefifteenth century Nuremberg had been an open door, an obvious pun on the familyname, itself a traslation into German of the name of the village the family hadcome from, Atjos, meaning ‘door’ in Hungarian.” (Garrioch 33)

The Ancien Regime, we are learning, did not fall with theFrench Revolution. Even after the system of number addresses – first decreed in“military’ towns in France in 1768 – was normalized all over France, includingParis, in 1805, the house names and signs continued for a while. But thatadvance of numeration had an organizing effect on the city, much like thePrussian method of ‘organizing’ forests by culling certain species, taking outdead wood, creating allies between trees to allow for cutting, etc.

Recent research has shown that the numeration devised by theRevolutionary government had two functions: one was to fix a correspondencebetween the house and taxes, and the other was to fix the house on the streetfor police purposes. In fact, the Ancien Regime attempts at numeration oftenleft the system of numeration as confusing as the system of names. The fatherof the modern system of addresses in France was a certain Ducrest, whosubmitted a memoir on the subject to Fouche, Napoleon’s minister of the police,in 1804. In his memoir, he touted thesystem of numeration (for identity cards, houses, etc.) as an instrument oftotal observation, a police dream: “The objective of the project is ‘to be ableto follow, so to speak, step by step all citizens.”[Quoted in Vincent Denis, Entre Police et demographie, Actesde recherche en science social, 2000]

The great bonfire of the names of the nobles, which hasalways been seen as one of the most important symbolic moments in theRevolution, was paralleled by this other bonfire of the names – a slower one,granted. In Milan, the Parisian system of numeration by the street – instead ofnumeration by the city quarter – did not start until 1857. But the point isthat it did get started.

Evidently, to balance the forest against the address, whichis symbolically pleasing, is not exactly accurate. And yet, it does give us, atleast as far as we use this to understand Rousseau’s sense of the individual, agood starting point for understanding the nature of Rousseau’s great objection to the social. It was, I think, an objectionto its tendency to totality: its non-intermittance.

The thematic that brings this out is solitude. In an essayon the romantic writer as victim, Eric Gans adduces Rousseau as the prototype,quoting his remarks from the Reveries: “Here I am, then, alone in the world,with no longer brother, neighbor, friend, or society other than myself. Themost sociable and the most loving of humans has been excluded from society by aunanimous consent.” Gans is quite right to interpret this as Rousseau’s claimto being a victim: the solitary and the victim are jointed together in onesemantic field in Rousseau’s work, and, in fact, in society at large: to makesolitary, to put in solitary, was, even in the 18^th century, a formof torture inflicted on certain prisoners. At the same time, from Rousseau’sviewpoint, it was characteristic of the corruption of the society that he wroteto ‘improve’ that it could imagine solitude in no other way than as apunishment, even as it was beginning to imagine the individualism thatcorresponded to the private sphere of exchangers.

The thematic of solitude that winds its way throughRousseau’s autobiographical works is, as well, at the heart of the Discourse onInequality.

The first human beings, in fact, are natural solitaries,according to Rousseau. He imagines their state as one in which the natural andthe voluntary are joined in a life form that is pre-social. True, Rousseau’sgrasp on this state goes in and out of focus, just as his periodizations have atendency to become misty or contradictory as he wants to make this or thatobservation about the course of human socialization. Language and othercollaborative human things – religion, for instance, and, importantly, divisionof labor – are absent at this point. The Discourse then provides a sort ofkaleidoscopic analysis of how the social came about, which is equivalent to therupture with the first, natural solitude and the first, natural sense of theself.

Since forests are my theme, here, it is interesting that oneof the aspects of the emergence of the social and of inequality, for Rousseau,comes about with the fall of the forest:

“ So long as men are content with their rustic cabins, solong as they limit themselves to sewing skins together with thorns or withbones, to ornament themselves with shells or feathers, to paint their bodieswith diverse colors, to perfect or embellish their bows and arrows, to carvefishing canoes or awkward instruments of music out of tree trunks withsharpened stones, in a word, as long as they apply themselves to what a singleman can do, and to arts which have no need for the help of several hands, theylive free, healthy, well and happy, as much as their natures allow; and theycontinue to enjoy with each other the sweetness of commerce. But in thatinstant where one man has need of another; in the moment that someone perceivesthat it is useful for one person to have provisions for two, equalitydisappears, property is introduced, work becomes necessary, and vast forestschange into smiling fields that it is necessary to water with the sweat of men,and in which one sees germinate slavery and misery, which grow with theharvest.”

Rousseau is, perhaps, the first European thinker who cantruly imagine backwards – but he requires a reader who can imagine backwards,too. It is easy to think of the primitive man of his description as aself-conscious individual. But this gets Rousseau’s conjectural history utterlywrong. He is, rather, an unself-conscious solitary. He does not know thecontours of his individuality. His independence is a lack of need, not aprinciple. The individual of modern theory only emerges when the primal state ofsolitude is broken. The individual can be consciously independent, but inhaving that awareness of dependence and the social tie, even in rejecting it,the individual exists in a society which has taken a turn against primal solitude.The new solitude, the touchy solitude that emerges in a society that isorganized according to division of labor, and thus of work, and property, is adifferent kind of human being:

“It is reason which engenders self-love, and reflection thatstrengthens it. This is what folds man back upon himself; that separates himfrom all that discomforts and afflicts him. It is philosophy that isolates him.It is by this means tht he says in secret, at the look of the suffering man: “perishif you want to – I’m safe.”

This, as Rousseau sees, is one of the hidden mottoes ofcivilization, a canon that nobody can afford to ignore – and survive.

file under revolution

2011-12-20T05:56:00.001-08:00

Joseph Stiglitz’s article in the Vanity Fair about the current Big Slump hasbeen picked up and argued about by certain economists – Brad Delong and NickRowe for instance – in terms of whether it deviates from neo-Keynesianism ornot. I'd argue that the more applicable background disagreement is that betweenKeynes and Marx.

Stiglitz's argument, I think, is that the ‘economy’ or the internationalsystem of production is very well able to produce goods and services – but itsincreasing efficiency means that it can’t produce employment or higher wagesfor work. This is a sectoral dysfunction – it happened with agriculture in the20s and 30s, and with manufacturing post 70s (that is, in the U.S.). Theincreasing efficiency over time thus works both to narrow the ability of otherentrants in the field - it shrinks competitiveness - and it diminishes the needfor labor. In other words, there is an asymmetry between this capacity forproduction and the ability of the population to absorb it by – crucially –paying for it. This strikes me as very much like the Keynesian position and theMarxian position vis-à-vis the chronic problem of market clearing faced by ‘freemarkets”, and predicted by equilibrium realists – people like Says, who believethat the market really is self-regulating, rather than booby trapped. Marx,however, says that the increasing efficiency will eventually bite thecapitalist in the ass by lowering his rate of profit. The Keynesian doesn’tthink this is true, and in the short term it certainly isn’t. The capitalistcan benefit in two ways from the current system: he can benefit from theincreased efficiencies all the way down the logistical line that cheapen hislabor cost, and he can benefit from the free insurance given him by thegovernment when a problem with ‘aggregate demand’ happens – free insurance thatcan take many forms, some of which have to do with allowing the tax payer tomake tax free investments – in houses, in 401ks – some of which consists ofguaranteeing monopoly – IP rights – and some of which is simply giving money tothe capitalist on a grand scale as the last resort. For the Keynesian, then,all problems are short term problems and will be solved accordingly. The longterm never arrives. For the Marxian, the long term does arrive occasionally –in true structural crises. The Keynesian being right depends, crucially, on thecapitalist being able to paper over the cracks in the structure caused byefficiency through the government – but that, in turn, depends on the idea thatthese efficiency problems can be isolated within one sector and that thelegitimacy of the government doesn’t come into doubt. Legitimacy doesn’t justmean the confidence of the bond market in the state, but – and this arises onlyin moments of abnormal structural stress – the confidence of the people in thestate.
It strikes me that Stiglitz economic point is joined with the politicalpoint that he has been making a lot - that the confidence problem is notfundamentally in the bond market or upper management, but among the people. Andthis isn't some amorphous problem that one can ignore, economically, for if thepeople turn against the state provided insurance for business, businesses willbe cast into the Marxian hell. Marx’s notion can be put very well in thedystopian proposition that, every once in a while, you can’t avoid the longterm. Which is why the revolutionary part of Marx, which most Marxists nowtamely discard, is, I think, central not just to Marx’s politics, but to hiseconomic analysis.

Orwell and Hitchens

2011-12-18T04:17:00.001-08:00

Hitchens made no bones about idolizing George Orwell. Theresult of that infatuation is that the names Orwell and Hitchens came togetherenough times that – as quantity turns into quality in the black magic of thepress – it became a cliché that Hitchens was like Orwell. That he was ourOrwell, or something.

You don’t have to read very much in the works of eitherwriter to find that Hitchens is not at all like Orwell. Hitchens would havebeen incapable of writing Down and Out in Paris and London because he wouldhave been incapable of being down and out in Paris or London. Orwell’s strengthcame from not only being able to imagine the “common people”, but being,existentially, as close to them as a Public School graduate can get – whereasHitchens had no sense whatsoever for the common people. Hitchens’s sensoriumwas hooked up to the Byzantine elite, whether to despise them or to raise anelbow with them, depending on the various stages of his career.

Last night I went and read the great first chapter of Orwell’s The Lionand the Unicorn: Socialism and the English Genius, the booklet Orwell wrote in1940. The first sentence of the booklet was cited by, among others, KurtVonnegut, who took from it his idea of how to write about war: “As I write, highly civilized human beingsare flying overhead, trying to kill me.” The idea that the universal – the war– is trying to kill the particular – me – gets a workout in Catch 22. Ofcourse, it gets a workout in the literature of war at least since Stendhal, butOrwell’s sentence sharpens it to a point. Even though it was not an anti-warpoint – Orwell was anything but a pacifist. He poured a lot of homophobic scornon pacifists. He was not at his best writing about pacifists. Who is?

However, the sentence I want to take outof that essay comes from the first chapter, which surveys the “English genius”.“But in all societies the common people must live to some extent against the existing order.” This is theOrwellian touch, the premise for his best writing, the insight that makes him,still, a fascinating writer to think with. Hitchens was completely oblivious tothis fact. Hitchens writing, at its best, can help one penetrate the feeling ina novel, or the tone of a ‘set’ of political players, but he had no sense forthe genius of the common people, and when he would set himself up as ageneralizer about nations, regions, politics, etc., he was pretty much at aloss. He made up for this loss of tactile knowledge by moralizing. Whenmoralizing about the doings of his own society, the governing class of thenations in which he prospered enormously, he was often on target. But as hismoralizing took in larger and larger fields, it became less and less valuable.In the end, taking up the whole of the Middle East, he only showed, with anamazing stubbornness, that he knew almost nothing about the Middle East.

Orwell, on the other hand, was veryuncomfortable in the role of ‘regional expert”. Famously, he quit the BBC in1943 because his section, which was concerned with India, and his broadcastsmade him very unhappy. Unhappy about the Churchillian assumption that theBritish empire was moral (Orwell disagreed) and unhappy, I think, that he wassupposed to fabricate pundits knowledge (a sort of identikit knowledge comingfrom hasty reading of newspaper clippings) and spit it out when, of course, hecould imagine India much better than that. He could imagine that Indians heardother things than the BBC, and were moved by other news than that printed in Englishpapers. He even imagined that Indians might have interests that were opposed tohis own, or to his politics. He recognized, in short, the genius of the commonpeople as a different genius from that of the notables.

“The genuinely popular culture of Englandis something that goes on beneath the surface, unofficially and more or lessfrowned on by the authorities. One

thing one notices if one looks directlyat the common people, especially in the big towns, is that they are notpuritanical. They are inveterate gamblers, drink as much beer as their wageswill permit, are devoted to bawdy jokes, and use probably the foulest languagein the world. They have to satisfy these tastes in the face of astonishing,hypocritical laws (licensing laws, lottery acts, etc. etc.) which are designedto interfere with everybody but in practice allow everything to happen. Also,the common people are without definite religious belief, and have been so forcenturies. The Anglican Church never had a real hold on them, it was simply apreserve of the landed gentry, and the Nonconformist sects only influencedminorities. And yet they have retained a deep tinge of Christian feeling, whilealmost forgetting the name of Christ.”

Undoubtedly,Orwell had a jingoistic side where he would forget the doublesidedness ofnational cultures – the official and the common culture. But he at leastrecognized it when his nose was crushed up against it.

Ishould say, too, that in this pamphlet Orwell makes several remarks aboutsocialism and capitalism which, if printed without his name, would be taken tobe by Lenin. For instance, this:

“What this war has demonstrated is thatprivate capitalism -- that is, an economic

system in which land, factories, minesand transport are owned privately and operated solely for profit -- does not work. It cannot deliver the goods. This fact had been known tomillions of people for years past, but nothing ever came of it, because therewas no real urge from below to alterthe system, and those at the top had trained themselves to be impenetrablystupid on just this point. Argument and propaganda got one nowhere. The lordsof property simply sat on their bottoms and proclaimed that all was for thebest.

Hitler's conquest of Europe, however, wasa physical debunking of capitalism. War, for all itsevil, is at any rate an unanswerable test of strength, like a try-your-gripmachine. Great strength returns the penny, and there is no way of faking theresult.”

Orwell would have recognized the economiccrisis we are going through as another test of strength, in which the relianceon private banking with insurance provided – in the trillions of dollars –gratis by the States as another physical debunking of capitalism. His solutionshould be mentioned, too:

Socialism is usually defined as"common ownership of the means of production".

Crudely: the State, representing thewhole nation, owns everything, and everyone is a State employee. This does not mean that people are stripped of privatepossessions such as clothes and furniture, but it does mean that all productive goods, such asland, mines, ships and machinery, are the property of the State. The State isthe sole large-scale producer. It is not certain that Socialism is in all wayssuperior to capitalism, but it is certain that, unlike capitalism, it can solvethe problems of production and consumption.

At normal times a capitalist economy cannever consume all that it produces, so that there is always a wasted surplus(wheat burned in furnaces, herrings dumped back into the sea etc. etc.) andalways unemployment. In time of war, on the other hand, it has difficulty inproducing all that it needs, because nothing is produced unless someone seeshis way to making a profit out of it.

In a Socialist economy these problems donot exist. The State simply calculates

what goods will be needed and does itsbest to produce them. Production is only limited by the amount of labour andraw materials. Money, for internal purposes, ceases to be a mysteriousall-powerful thing and becomes a sort of coupon or ration-ticket, issued insufficient quantities to buy up such consumption goods as may be available atthe moment.”

Try getting those two paragraphs printedin any publication in America that routinely genuflects to the name, Orwell. Asfor this, which could well be applied to the current scene of pharaonicinequalities in the developed countries:

What is wanted is a conscious open revoltby ordinary people against inefficiency,

class privilege and the rule of the old.It is not primarily a question of change of

government. British governments do,broadly speaking, represent the will of the people, and if we alter ourstructure from below we shall get the government we need. Ambassadors,generals, officials and colonial administrators who are senile or pro-Fascistare more dangerous than Cabinet ministers whose follies have to be committed inpublic. Right through our national life we have got to fight against privilege,against the notion that a half-witted public-schoolboy is better for commandthan an intelligent mechanic. Although there are gifted and honest individuals among them, we have got to break the gripof the moneyed class as a whole. England has got to assume its real shape. TheEngland that is only just beneath the surface, in the factories and thenewspaper offices,in the aeroplanes and the submarines, has got to take chargeof its own destiny.”

In England now, of course, both partiesare headed by half witted schoolboys, and the intelligent mechanics have seen theirjobs offshored so that other halfwitted schoolboys could make a killing on thestock market.

But to get back to a comparison of thestyle of the two writers. Here’s a vintage piece of Hitchens’ prose before theapple soured, from a 1998 essay on the teaching of history in America:

“About four years ago I began to ask the teachers of myown children how it came to be that they could not tell Thomas Jefferson fromThomas the Tank Engine. In the preceding sentence, it is unclear whether I meanthat the children didn't know unless I told them, or that the teachers didn'tknow unless I told them. The confusion is intentional. One instructor, at arather costly District of Columbia day school, cheerfully avowed that sheherself "had never been that much of a reader." Others, more candid,announced that history was a bit of a minefield subject and that "goodexamples" (like Pocahontas and, on a good day, Frederick Douglass) werethe thing. Parson Weems himself could hardly have bettered the modern methodwhereby children get good reports in a subject that they have never studied inorder that a tiny pump be applied to the valves of their fledglingself-esteem.”

I think this is very funny. However, it is very funnybecause, one notices, the common people are ignorant – the infant Hitchens’teachers are more akin to the impossible servants of Boot Manor in EvelynWaugh’s Scoop than anything in Orwell – and it has just the nattering tone ofcomplaint of the elites that hints at the turn Hitchens would take to fullyToryism a few years later. The shot, for instance, at the vogue for‘self-esteem’ is blindly conjoined to a tone of an overwhelming self-esteem,which produces an inadvertent comedic moment – a moment when the author losescontrol of the material, which takes behind the scenes control of theauthor.

Of course, the judges are always being judgedthemselves – Jesus, as well as Oscar Wilde, warned about that. Orwell’s humoris not funny in that Waugh like way – it is funny in the classic modernist way.The sentence about civilized men flying overhead trying to kill himde-routinizes war. This is the characteristic Orwell gesture, and the gestureof the great writers of his generation, who had inherited it from the formalistrevolution at the turn of the century.

So, for instance, this is Orwell on the teaching ofhistory:

“When I was a small boy and was taughthistory -- very badly, of course, as nearly

everyone in England is -- I used to thinkof history as a sort of long scroll with thick

blacklines ruled across it at intervals. Each of these lines marked the end of whatwas called a "period", and you were given to understand that whatcame afterwards was completely different from what had gone before. It wasalmost like a clock striking. For instance, in 1499 you were still in theMiddle Ages, with knights in plate armour riding at one another with longlances, and then suddenly the clock struck 1500, and you were in somethingcalled the Renaissance, and everyone wore ruffs and doublets and was busy robbingtreasure ships on the Spanish Main. There was another very thick black linedrawn at the year 1700. After that it was the Eighteenth Century, and peoplesuddenly stopped being Cavaliers and Roundheads and became extraordinarilyelegant gentlemen in knee breeches and three-cornered hats. They all powderedtheir hair, took snuff and talked in exactly balanced sentences, which seemedall the more stilted because for some reason I didn't understand theypronounced most of their S's as F's. The whole of history was like that in mymind -- a series of completely different periods changing abruptly atthe end ofa century, or at any rate at some sharply defined date.”

Inone sense Orwell’s paragraph seems much simpler – Hitchens’ depends, for itsbusiness, on a lot of fancy referential footwork, from Parson Weems (who is apure reference – surely Hitchens has never read Parson Weems biography ofWashington, but he doesn’t have to – it stands in as an exemplar of didactichistory heromaking) to Thomas the Tank Engine. Its texture comes out of acertain association of ideas that makes Hitchens the superior teller – he hasthe references under his fingertips, and the teachers don’t. This relationshipis, purposely, up-ended in Orwell’s paragraph. Although in a parentheticalaside Orwell does tell us history is taught badly in England, he spends therest of the paragraph displaying his own naivete. The references that areassociated with him are cartoonlike, and Orwell himself, at least as a boy,didn’t understand all the references – for as a boy, he mistook a typographythat printed s’s as f’s as reflecting the way people spoke. In other words,Orwell shows himself getting it wrong – he is the butt of his own joke.

Ithink this comparison tells us a lot about the virtues and vices of the essaystyles of Hitchens and Orwell. The people who give us the cliché that Hitchenswas the Orwell of our time have as little knowledge of Orwell as Hitchens hasof Parson Weems – Orwell, here, has been made into a one-dimensional marker.This is a shame, since Orwell truly is a great essayist, the only Englishequivalent I can think of for the great Sprachkritiker on the Continent (Bloy,Peguy, Tucholsky, Kraus, etc.).

Hitchensis simply another kind of writer, from another family tree – the Tory wits. Iwas about to say, crossed with Shaw’s prefaces, but no – that isn’t really so.The Tory wits cultivated a style that had its roots in nursery room humor, whenthe children of the house were under authority figures –the nanny being thegreat target – who, at the same time, were subordinate to them (as they wellknew) in the great scheme of society. Thus, the anti-authoritarianism isdirected most cuttingly against authorities who are really secondary to themoney and power that keep Vanity Fair going – the proxies, those who haveachieved their positions only with a mixture of industry and asslicking. Ofcourse, Hitchens was not to that manor borne, but he made the chameleon’schoice early on to mimic it, and in the end, he had re-created himself as anEnglish nob as well as Waugh re-created himself as a scion of old Catholicnobility.

Apity that the American audience did not, after all, get the references.

Hitchens RIP

2011-12-16T04:09:00.001-08:00

Hitchens once jokingly explained that terrorism, in AmericanGovspeak, is an incoherent term that means anything from combatant to “swarthyopponent of American foreign policy.”

That was in the eighties, when Hitchens had a grasp of thelinguistic cunning that makes for the politics of reaction. In the 00s, whenHitchens became famous, that grasp had slipped. It is not too much of anexaggeration to say that Hitchens ruined his prose when he, too, decided thatterrorism is defined by “swarthy opponent of American foreign policy,” for inthat decision he both rubbished his own ability to understand the nexus ofpower and definition that makes for propaganda, and he became one of thefruitier of the right’s propagandists, an atheist Bob Novak. Slate, at the moment,is in official mourning for Hitchens, who was a columnist there after he jumpedship from the Nation. This is rather like John Wilkes Booth donning mourningfor Abe Lincoln. Slate’s infinitely meretricious reporting-plus-punditrypresented just the sort of gaseous, inside the Beltway conventional wisdom(which, in an audacious P.R. move, the editors dubbed contrarianism) thatkilled Hitchens’ prose. His “Fighting Words” column was written in the samestyle that an owl digests its prey – everything is quickly swallowed, and thenthe bones are spit out. Thus, Hitchens would survey some vast subject that hewas manifestly uninformed about – Iraq, for instance – and he would then emit anumber of parenthesis long bellows, vaguely connected by his personal experience,which was all Lawrence of Arabia without Arabia, the man of action without theaction. The symbol of the contradiction was Hitchens being waterboarded for the celebritymag, Vanity Fair. As a young writer, Hitchens would surely have enjoyed thereduction of the issue of torture to a photo op next to the story about Angelinia Jolie's wonderful bosom; but of course, in the D.C.where Hitchens was most at home, the sensibility that understands the differencebetween photo op and action has long vanished.

That D.C. found its voice in Hitchens. Some of his most stirring columns were, infact, in defense of chicken hawkery among those who, with great sacrifice,guide the foreign policy of the great American empire. One of them, PaulWolfowitz, who, after being wheeled from one job he was incompetent at – in theState Department – to another job he was incompetent at – at the World Bank –was removed from his sinecure after insisting the institution pay for hismistress too, was lamented in truly pitiful tones by Hitchens, who by this timehad imbibed the views of Doctor Strangelove about the need for elite males tohave on had a steady supply of nubile females. But Wolfowitz was only one ofthe indefensibles that Hitchens buddied up to in his last years, a roll callthat includes Kurdish gangsters, lowbrowed Cheneyites from the Hooverinstitute, and, of course, Ahmed Chalabi, the perfect 00s freedom fighter, witha biography that combined instances of Enron-like fraud with instances of peculatingU.S. Government funds to an extent that would have been considered bold by Halliburtan.

Perhaps it was the contradiction between holding himself upas a moral entrepreneur – for Hitchens’ later political columns were rank withhis own virtues – and keeping such evidently immoral company that did in thewriter in Hitchens. There were traces of that writer even in the book onClinton: but the writer definitely died after 9/11. Hitchens survived him andflourished in the moronic inferno of Bush’s America. He succumbs on the daythat America withdraws its troops from Iraq. Surely he would have endorsed hishero, John McCain’s description of that withdrawal as a dark day for Americanforeign policy – it will make it that much harder to march to Teheran.

Merit and dreams

2011-12-15T02:06:00.000-08:00

(from here)

I looked, last night, for a passage in Cioran where, as hediscusses what he sees as the decline of Europe into bourgeois comfort (he iswriting in the fifties), he makes a passing remark that we are all equal in ourdreams. I couldn’t find the exact words, but as I remember the passage, he isspeaking literally: while our waking lives may be structured by numerous andoverwhelming inequalities, there is neither wealth, fame, nor competition indreaming: we dream alone. And in this sense, radical egalitarianism is not apolitical credo so much as a natural historical fact about human beings. A goodthird of our lives, our lives when asleep, are equal.

Cioran does not go any further with this idea; but it seemsto me that it deserves more than to die in that undiscoverable passage, anotherphilosophical “crack” that one forgets. Rather, I think it gives us an angle onthe strange career of egalitarianism in our time.

I would develop the idea by matching it with a passage fromanother great essayist, Roberto Calasso. In an essay on Karl Kraus’ war onpublic opinion, Calasso puts his fingeron another radically equalizing moment in modernity: that of public opinion.

Calasso links the rise of public opinion to theEnlightenment, in line with a recent trend among historians who have found ause for the notion of the public sphere to explain certain traits about the 18^thand 19^th century in Europe and the U.S. Calasso, however, is after atension between the Enlightenment utopia of the tabula rasa, able to “endurethe total abrasion of meaning produced by an all consuming nominalism”, and theemergence of public opinion. If the Republic of the tabula rasa led to aconstant reign of virtuous terror, the epistemological search for the tabularasa led to a contradiction. For in fact, Calasso claims, the public mind isneither blank nor inhabited by Descartes innate ideas – rather it is inhabitedby opinions. And of opinions, the opinion is: “One opinion is as good asanother: The abyss yawns in this commonplace as in every other.”

That particular abyss has been plumbed extensively by thegreat pessimists – Schopenhauer, Nietzsche, Leon Bloy, Kraus - and Calassohimself, who all share the theme first announced in Plato’s dialogues, which isthat opinion is a bad epistemological object. However, I have never beenconvinced by this argument and its arriere pensée, which is a contempt for thepeople. My impulse, on the contrary, is to take hold of another piece of thegreat Platonic whale – the idea that doxa, in the chain of being, is halfwaybetween the real – the ideas – and the unreal – their images, or the physicalworld. That doxa exist only halfway puts them on the same plane as dreams. Inthis way, public opinions are part of the great public dreamlife. Now, one mightobject that opinions aren’t the same as dreams, and I’d agree to an extent. Thedifference is made by waking. However, one should not overestimate waking. In aformal sense, waking is a break with dreaming, but it is so only to the extentthat consciousness succeeds in substituting its strong sense of externality forthe insulation of dreams. In fact, of course, we carry that insulation aboutwith us in our ordinary life, a depthless pocket that we become uneasily awareof when we drop something in it – the typo, the address we forgot, bad luck andfuckups, a whole day’s worth of silent muttering and inattentions.

It is against this psychological and existential backgroundthat one should examine the last instantiation of the Enlightenment utopia,meritocracy. The version current in America is tht disparities of wealth andincome should correspond to disparities in merit. Some students did thehomework and got As, some didn’t and got Fs.

This, it should be said, is a curiously childish way ofseeing the world, and could only have been developed in that Asperger’sparadise of a discipline, economics. To return to Plato again, what this ideadoes is shift the focus entirely from the thing done to the external reward fordoing it. In so doing, the thing done is curiously emptied of all merit on itsown, all glory. The perfect meritocracy would be one in which the thing donerequires a highly developed amount of skill, and is absolutely pointless. Thus,it should be correspondingly awarded with showers of external reward. This isan exact representation of the current financial services sector, at least inits higher reaches.

But if we reverse the values and forces in play, here, wemight find room for both merit and egalitarianism. Or at least that was thedream entertained by the most solitary of men in the forest of Saint Germane in1753.

water pistol Juntas

2011-12-12T01:02:00.001-08:00

When looking at the story of capitalism and the rise of the European powers, it is striking to see forms of organization appear on the periphery before they migrate to the center. For instance, the work discipline of the factory in 19th century England seems to replicate forms of work discipline created for the sugar 'factories' in the West Indies of the 17th century. In 19th century England, the work discipline was imposed on 'free labor', and in Jamaica, it was imposed on slaves. Yet, if we look away from the changes implied by this transformation of the working agent, we see a continuity of form, or at least the production of an organizational form that can be transposed. And, unlike serf labor in Central Europe, for instance, this slave labor is relatively free of the codes that define its rights and hedge in the transmission of property and title by the owners.

A similar movement from the periphery to the center seems to be happening in the counter-revolution that is now occuring in all developed countries. What happened to the LDCs in the 80s - the less developed countries - is now being served up to the Developed Countries. It is an interesting mix of fiction and terror.

The eighties are the 'lost decade' in Latin America because they are the decade in which the program of the Washington Consensus, as it came to be know, were imposed on Latin American counties. The weapon by which they were lashed into this madness was debt - combined of course with the military regimes that had been put in place in the sixties and seventies as part of the U.S.'s cold war strategy. And the result of the WC was a major drop in the living standards of the majority of the population, and an end, almost, to growth. While the 50s and the 60s saw tremendous growth in Latin America, and an uneven but perceptible distribution of more wealth to the wage and working class, in the 80s this stopped dead. What emerged in the nineties were 'good countries', like Mexico, that devoted the government to obeying the banks, notably IMF. The IMF model, however, suffered a severe blow when Argentina refused to go along with the usual medicine in 2000, and the U.S. grip on the region began to loosen.

Well, the Washington consensus has migrated, at last, to the developed world. The whole world is now being held up by bankers holding waterpistols to our head. And this threat without a real weapon - for no developed state really needs to obey the bankers, who after all have no police force to arrest it (unlike the Latin American states, where the U.S. could whip up a junta in a heartbeat) - is, to the general amazement of the non-numb among us, being obeyed to the last tittle and jot.

In the 80s, the police were, in effect, the developed nations. However, beginning, perhaps, with Bush in 2000, the Developed Nations have given birth to the smokeless coup. This coup does not involved armed might - it involves merely taken unelected institutions, such as a court of a central bank, and making them the center of a completely undemocratic seizure of political power, on behalf of the wealthiest people on earth. There aren't, we should remind ourselves, too many wealthy people. And yet the police of every Developed country on earth have been toiling away for wealthy people and locking up demonstrators, cracking down on any demonstration of discontent, and raiding any leaks of information inconvenient to the establishment. The resistence to all of this has been tame beyond reckoning. The self-policing extends all the way up through the discourse - nobody who writes for a major paper or magazine, or who broadcasts, ever couches the new Washington Consensus junta society in terms that would offend your average civics class teacher.

What would such terms be? Well, for instance, we would start saying: who is all this money owed to? And: can't we simply upset those bankers by taking away their money, one two three, without a by your leave. If sovereign debt is such a problem, we could easily raise the money to pay it by slapping, say, one hundred percent taxes on all bond transactions, and we can use that money to buy the bonds. And absurd solution to an absurd political situation - not an economic one. The question of debt is a question of class. The political class and the financial elite are one, united, and they drive our politics in ways that advantage the financial elite, who use money loaned them, by the governments, to loan money back to the governments. Oh, not directly - rather, by propping up the financial service sector's enterprises, we prop up the places where the bodn dealers work and trade.

The debt issue is, then, one of those fictions that bear such weight because they serve the interest of a certain power. It isn't that the establishment doesn't believe in its fiction - much as the Aztec priest definitely believed that it was necessary to cut out the heart of a prisoner to appease the gods and continue the course of the world, the elite believe it is necessary to cut out the heart of the middle class to appease the abstract God of Debt, to whom we owe so much. My solution is the radical one of the Lord's prayer - in which we have prettified and made metaphoric the common sense suggestion that we forgive debt every day. Debt. Which is as material as the feeling of the edge of a coin. Forgiving debt is the heart of civilization. And - in this age of the internet, where all that is money has become bytes - it is divinely easy to do it. It is always the sovereign who actually enforces laws to force debters to pay creditors. When the power of the sovereign is calmly and cooly taken from the hands of the people and invested in the hands of ex employees of Goldman Sachs, they switch sides - from being the borrowers for the people, they become the creditors for the banks.

This is, obviously, going to be a lost decade for the Developed countries. But I'm hopeful that the new Junta order will be, at best, short lived. The arithmatic that counts is not how much debt is owed, but the ratio of the creditor population to the debtor population. I'd keep my eye on the latter, for, given the logic of the counterrevolution we are seeing, the time is approaching when the the banker's water pistol will be jerked out of his hand and turned upon him. And, magically, in that moment it will become a real pistol, with a heft and insistance that will change the power relationship all, all at once.

Jamie Dimon actually thinks he is successful

2011-12-08T13:07:00.001-08:00

James Dimon, CEO of JP Morgan Chase, said in a speech tostockholders yesterday, "Acting like everyone who's been successful is badand that everyone who is rich is bad,” he said. “I just don't get it."

It is hard to know what to respond to first: the fact that he is clueless, or the fact that he thinks he is successful.

Rich, yes he is rich. But rich is not the same as successful. Often, rich is the opposite of successful. Rich is the symptom of a system that has allocated its resources illogically, responding to the kind of power differentials that are at the heart of rentseeking and monopoly. On Dimon's scale, Idi Amin was successful. Even in the narrow field of bank management, Dimon has been anything but successful. As the head of JP Morgan Chase in 2008, Dimon's leadership essentially led the bank to the brink of bankruptcy, and it would have gone over if if the Fed hadn't thoughtfully chosen to 'loan' it emergency money to the amount of 391 billion dollars - at 1 percent interest or below. Here's a nugget from Business Week:

"JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon told shareholders in March 2010 that his bank used the Fed's Term Auction Facility “at the request of the Federal Reserve to help motivate others to use the system.” He didn't say that the New York-based bank's total TAF borrowings were almost twice its cash holdings or that its peak borrowing of $48 billion came more than a year after the program's creation."

In other words, if we judge success by an ability to operate as an insider and a parasite on a national scale, he's successful. If we judge success as, well, running a bank that contributes to the wellbeing of society and the creation of wealth, he is the very opposite of successful. He is rust. He is mold. He is the element that creeps and crawls, bores and bites, and turns wealth into dust. As Jeremiah, who had an eye for the Dimon type, put it: "As the partridge sitteth on eggs, and hatcheth them not; so he that getteth riches, and not by right, shall leave them in the midst of his days, and at his end shall be a fool."

Anyway, let's look into the bones of his comments. He then announced that, according to his calculations – made no doubt with hisfingers crossed behind his back - he is paying 50 percent of his income inincome taxes, state and federal. But one has only to look at his Business week profile – which is different from his Forbes profile, such are the 75ways to see a CEO’s compensation package --to see that his real income is in stock options. According to Forbes, he has acool 58,968,234.00 that are currently exercisable. According to Businessweek, he has 31,089,284. The Forbes profile doesn’t include the happy little bonushe got of 5 million dollars, but both sources agree he did make a milliondollars in salary. What does this mean? Well, remember that it means, firstly,a tax writeoff for JP Morgan – sweetly enough, Congress has decided thatcompanies can write off the expense of stock options they grant to their execsagainst their corporate taxes. How convenient! And then it means that when Dimon wants toexercise his options, and he does it after waiting the approved period, 2years, he will pay an astonishingly low15 percent on the amount. But will hereally pay that amount? Or will he exercise his options in such a way that theyare run through the increasingly popular tax haven system, so as to avoid hitsto the millions and millions for running a bank that exists simply because Lord Bernanke the Lesser looked upon it and decided lo, it was good - and created some money ex nihilo and loaned that money to it.

So mark it down: Dimon, after being bailed out by the government, is complaining that 3 milliondollars (an improbable sum, but lets pretend that his casual remarks correspondto his accountant’s results) is goingto be taken from his six million dollars, and at some date the government willeven take 15 percent from his 20 million in stock options, leaving the poor manwith a mere 21 million + dollars for 2011.

One can not call this phenomenon successful, save in the way that freaks and frauds that beguile a gullible audience are successful. Mark the man for what he is: like a partridge that sits on eggs that will not hatch, he is a fool, a deadbeat, a loser with a bonus, another plutocratic mediocrity.

Here's another observation from Jeremiah about the end of systems in which creatures like Dimon experience success:

Because my people hath forgotten me, they have burned incense to vanity, and they have caused them to stumble in their ways from the ancient paths, to walk in paths, in a way not cast up;

16 To make their land desolate, and a perpetual hissing; every one that passeth thereby shall be astonished, and wag his head.

17 I will scatter them as with an east wind before the enemy; I will shew them the back, and not the face, in the day of their calamity.

The Forest Books

2011-12-07T02:52:00.001-08:00

“All European culture – intellectual not less than material – came out of the woods.” Werner Sombart, Moderne Kapitalismus, Vol. 2

The symbolic key to Rousseau’s Discourse on the Origin of inequality is found in the circumstances of its writing, as Rousseau described them in the Confessions:

“In order to meditate at my ease on this great subject, I made a tripe of seven or eight days to Saint-Germain with Therese, and our hostess, who was a good woman, and one of her friends. I count this excursion among the most agreeable ones of my life. The weather was beautiful. The good women took upon themselves the trip’s expenses and organization. Thérèse enjoyed herself with them, and I, without a care, I spent happy hours at mealtime, and for the rest of the day, plunged into the forest, I searched, I discovered there images of the first time, of which I proudly traced the history. I put my hands on the little lies of men, I dared to strip their nature naked, follow the progress of time and things which defigured them, and comparing man with natural man, show them, the true source of their miseries in their so called perfections. My soul, exalted by these sublime contemplations, was elevated to the side of the Divinity; and seeing from there my likenesses, followed, in the blind route of their prejudices, that of their errors, of their sorrows, of their crimes, I cried aloud to them in a feeble voice that they could not hear. Foolish men, who ceaselessly complain about nature, learn that all your woes come from you yourselves!”

The return to the forest makes the Discourse one of the great European forest books. In the vastness of its scale – that of universal history - Rousseau’s book resembles another book that also begins in a forest: “Midway through the journey of life/I found myself in a dark wood/for the straight way had been lost”. Dante’s story encompasses universal history as well, but it is not seen as such – rather, it is seen as a cosmological story, unfolding the great Biblical, classical and Christian events in the afterlife. In Dante’s beginning, the sign that the straight way had been lost is the dark wood; in Rousseau’s, of course, the sign that the straight way had been lost is outside of the forest of Saint German.

In Charles Olson’s reckoning with Moby Dick, he begins by highlighting the material importance of whale hunting to the economy of the United States in Melville’s time. An exhaustively materialist reading of Rousseau’s Discourse could, perhaps, due with an introductory treatise on the importance of forests to the economies of France and other countries in Europe in the 18th century. As Jean Nicolas’ sweeping history of peasant rebellions in that century makes clear, forest rights were no longer the central issue in village jacqueries – but in the 17th century, they clearly had been. Even so, wood, along with clothing and food, stood at the center of European life in Rousseau’s time. Nor was Rousseau the last of the writer’s of forest books. We think of certain classic American writers as creatures of the wood – Cooper, for instance, and, supremely, Thoreau. But as I have pointed out before, Marx, too, begins his real career by entering a forest – or at least entering into the issues that swirled around forest property rights, as he saw them being reshaped in Köln.

Wood theft, according to the two scholars who have studied it in the German context (Blasius and Mooser) was one of the central crimes against property in the 19th century, from the 1830s to the 1860s – over about a generation. Marx’s five articles about the laws concerning wood theft are not, then, about an eccentric issue. And, as much as wood “theft” is an issue in the history of crime, it is also an issue in the creation of property –which is how it opened Marx’s eyes, as much as they were opened in his classes in property law at the University of Berlin. It is here that we find Marx dealing with the kind of enclosures that were central to Polanyi theory of the Great Transformation. Private property was not, on this account, merely guarded by the state – the still reigning liberal myth. Rather, it was through the state that private property was defined. To separate the state from the private sphere is to move from historic fact to ideological myth. Why that myth is important is another matter. What Marx saw happening was important in the way he came to see understand class, rather than remaining with Stand – a word that is hard to translate. Status, station, estate – those are the English equivalents.

In 1858, in the preface to the Contribution to a Critique of Political Economics, Marx wrote: “My major was jurisprudence, that I nonetheless only took up as a subordinate discipline near philosophy and history. In 1842-1843, as the editor of the "Rheinischen Zeitung", I was embarrassed for the first time to have to discuss so called material interests. The Rheinische Landtag’s treatment of Wood theft and the parceling out of land properties, which opened up an official polemic between Herr von Schaper, at that time the president of Rhein province, and the Rheinischen Zeitung over the situation of the grapegrowers, debates finally about free trade and tarrifs, gave me a first occasion to deal with economic questions. On the other hand the good will to go further into this further made up for a lot of special expertise, and a weak philosophically colored echo of French socialism and communism could be heard in the Rheinischen Zeitung.”

I find it significant that these three European writers, setting out to write, on the broadest of scales, the history of human civilization, begin in the forest. Surely this must be an intersigne, an exchange happening in the basement below universal history, where all the dealers in codexes are busy cutting them up and mashing them back together. One way to look at Capital – a bleak way, granted – is that it is the first European book to envision a world completely out of the woods, a human world which has put the woods behind it.

a note on perfection - Foigny, Rousseau

2011-11-28T08:06:00.001-08:00

Foigny’s Terre Austral is a utopian Robinsinade before Robinson was conceived. Like Cyrano de Bergerac’s Voyage to the Moon, it mixes satire with libertine philosophy – of a kind – in such a way that text continually questions its own register. The narrator, Sadeur, who has the bad fortune to have been born a hermaphrodite in Europe, saves himself from shipwreck and lands in Australia – the land that is the polar opposite of Europe – only to discover a society of hermaphrodites who strangle those children that are born abnormally – that is, with one sex only. Somehow, these hermaphrodites have also perfected a form of parthenogenesis, which has the effect that every member of the society can enjoy a perfect solitude, save for the love they bestow upon their children. All, in this society, are equal. All are also naked.

The narrator is, of course, shocked at these things, and in turn shocks the Australians by wearing clothes. All of which leads to threat to put him to do, and a series of dialogues between him and one of the wisest Australians about society, sexuality, and … perfection.

The perfect has long been meditated in Europe, and assimilated into the Christian religion. As Foigny was writing in Geneva, Leibniz was publishing philosophical texts that used the idea of perfection to explain the order among all possible worlds. Foigny’s text is, in one register, a similar exploration of perfection, and in another register, a satire of it.

Thus, the wise Australian at one point explains the emotional customs of the Australians with reference to their sexual autarky as follows:

“As for us, we are total human beings, and there is none among us who does not show all the parties of our nature with all its perfections: this is the reason we live without these animal ardors one for the other, and we cannot even listen to talk about it. This is the reason, again, that we can live alone, as though having need of nothing. Ultimately, this is the reason that we are happy [contents] and that our loves have nothing charnel about them.”

The two semantic extremes at work here are the animal and the perfect. Human perfection, according to the Australians, is wrapped up in distancing the human in all things from the animal. Which reminds the narrator of Western theology: “I couldn’t hear the worlds of this man without being reminded about what our theology teaches of the production of the second person of the holy trinity, and of all the effects outside of the Divine. I had ceaselessly meditated on the great principles of our philosophy, “that the more perfect a being is, the less it has need to act.” In this case, the less it had need to feel.

The perfection of the Australians is a sort of mirror of the idea of perfection in European philosophy, but what that mirror shows is a society that is the opposite of the European, and that is, for the European reader, horrifying.

I have no evidence that Rousseau read Foigny, but certainly the renegade preacher was known to Bayle. In history, the ludicrous invariably shadows the serious, so it is not really that surprising that as Leibniz built the great baroque structure of the theodyssey, in which perfection is used a kind of cosmological rule to reconcile all possibilities and realizations, in a shabbier intellectual neighborhood, the discourse of perfection was used to discuss sex and shitting among the hermaphrodite Australians.

In the Discourse on Inequality, perfection becomes a verb – to perfect – in the best enlightenment manner. It is one of Rousseau’s chief conceptual instruments for creating his own conjectural history of the foundation of society. But to take the term as a synonym for progress, or to take it as having a wholly favorable meaning, is no doubt a mistake, one that leads inevitably to much exegetical anguish.

Another day, another crisis

2011-11-28T07:13:00.001-08:00

According to this NYT article, the OECD is playing its usual neo-liberal role in urging austerity on Europe.

This, of course, is the end game of a long history of reaction going back to the seventies, when policy elites and the generation of 68 turned their back on 'socialism' and began the long work of demoralizing populations and installing financial regimes that deflated wages, raised credit limits to cover their unpopular policies, and inflated the compensation of the investor and managerial class to a Gilded Age level.

Here's the deal: There's no such thing as an unsustainable government debt. The banks, of course, depend on the governments to enforce debt obligations, plus they depend on the governments to either give them money or loan them money at such low interest rates that it is the same (the U.S. 'capitalized" U.S. and foreign banks, hedge funds and the financial centers of corporations to the tune of 16 trillion dollars from 20008 to 2010 without anybody batting an eyelash). So, what army does Goldman have?

It is too bad that we live in a world in which bank debts are paid by practically free loans by governments, and government debts are paid by - crushing the middle class. Eventually, our debt serfs are going to look up and ask: who, exactly, do we owe this money to? The relatively paltry investment class, which includes about a million to two million people world wide? Sorry, I see no reason that countries should go down the hole just so these people can continue to enjoy their three vacation homes and the corporate jet.

If Spain, Portugal, Italy and Greece were smart, they'd band together and simply say no. If the EU central bank won't print the money this group needs to fund a bank and buy their own debt - a very easy thing to do - they should do it themselves, make up a Southern Euro. It would immediately deflate, and reverse Germany's export advantage in Europe. I see no reason that they shouldn't do this - except for the fact that the neo-lib colonies among the elites in those Southern countries would be horrified.

the naked and the busy: Rousseau2

2011-11-25T03:19:00.001-08:00

In Kleist's essay, On the Marionette Theater, Kleist presents a dialogue between himself and a marionette master concerning theater and the relation of the marionette to the human actor. The master voices the idea that even human actors display their souls not in their voices but in the bodies and their movements.

"Just look at that girl who dances Daphne", he went on. "Pursued by Apollo, she turns to look at him. At this moment her soul appears to be in the small of her back. As she bends, she look as if she's going to break, like a naiad after the school of Bernini. Or take that young fellow who dances Paris when he's standing among the three goddesses and offering the apple to Venus. His soul is in fact located (and it's a frightful thing to see) in his elbow."

These examples are not neutral - they gather and explode in his next passage:

" Misconceptions like this are unavoidable," he said, " now that we've eaten of the tree of knowledge. But Paradise is locked and bolted, and the cherubim stands behind us. We have to go on and make the journey round the world to see if it is perhaps open somewhere at the back."

That methodological circumnavigation, in search of the back door to paradise, is how I intend to pursue this investigation of Rousseau - and in fact, ultimately, all investigations. A paradisial truth that comes by way of the serpent's path, that is what is going on here.

In that spirit, let's take up one of Rousseau's predecessors in the European tradition of imagining the other.

Gabriel Foigny was an underground man of the classical age – a drunk, a lech, an ex-priest. He fled from a monastery in France, where the bonds of chastity were evidently too tight for him, to the Protestant freedom of Geneva, in the 1660s. There he found a job as a teacher – his attempt to go on preaching under the new dispensation was discouraged when he appeared in church drunk – and married a low class slut who proceeded to cheat on him. Being an educated man, he turned his hand to the market for reading matter. First, he created playing cards of a kind, on which there were prayers – or perhaps Tarot signs. Then, in 1676, he published a manuscript he had been ‘given”, La Terre Ausrale. Later on, he admitted that he wrote it himself – by this time he was on the hop again, leaving behind a pregnant maidservant and a set of angry Genevan ministers. The TA is an account of a colonial Sinbad the sailor who ends up, after various adventures in Africa and Portugal, cast up on the Australian shore. Australia, here, is not to be confused with the continent of that name – it was more like More’s Utopia than Van Dieman’s discovery. The account of the naturals of Australia is accompanied by a dialogue between the protagonist and one of their sages. Through this sage, Foigny expressed, as Geoffrey Atkinson put it, his “open and secret revolt against society and its institutions.” [39]

Such a revolt, to be radical, must go back to the very root of society. That, of course, is paradise. Society begins in the annihilation of paradise, as readers of Genesis know. Or I should say, its annihilation for humans – for it is part of the magic of the story that the Garden of Eden is not abolished by the Lord. It exists, but it exists, now, outside of human existence. It is barred. Thus, no sentence in human history has had the effect of Adam’s communication to God that he and Eve are naked. For, as God immediately replies, “who told thee that thou wast naked?” It is one of those moments for which Joyce, in Finnegan’s Wake, devised his long sentence-words, dividing one Viconian epoch from another: “The fall (bababadalgharaghtakamminarronnkonnbronntonneronntuonnthunntrovarrhounawnskawntoohoohoordenenthurnuk!) of a once wallstrait oldparr”.

But if we go around the world, as Kleist’s dramaturge suggests, perhaps we can get in the back way. Foigny’s sage-sauvage is, as Atkinson writes, ‘filled with horror at the idea of wearing clothes”. He cannot be persuaded that clothing is an aid to morality – comparing the Europeans to “little children who no longer know an object as soon as it is covered with a veil.” [63] As without, so within. The colonial process – or the civilizing process – puts into relief superstition as its privileged target, while its subjects, the subjected, gaze with disbelief at the superstitions of the civilizers. Ultimately, what was this, for the Europeans, but the rejection of that peculiar moment in Genesis, when God, for once, stops being a politician or a magician – when he makes clothing of skin for his creatures. As he once made Adam of clay, the act of a worldmaker, so he now clothes them, the act of a colonizer – but colonizer in the most intimate sense. There is no more intimate act ever attributed to Yahweh than this: ‘Unto Adam also and to his wife did the Lord God make coats of skin, and clothed them.” As though Adam’s announcement made the seals fall from God’s eyes, too. The intimacy in this act is in its superfluity: after all, having condemned humans to labor – and the sexes to division of labor – there’s no reason that Adam and Eve could not have made their own clothes. What kind of divine necessity is on display, here? What kind of cosmic discomfort? We know that the Gods, other Gods, can be moved by human nakedness – can be stirred to desire. Per Ganymede, per Leda, per Daphne, per every metamorphosis, ever skin that goes on and every skin that comes off.

If we are to understand the world of the primitive man of Rousseau's Discours on Inequality, we have to look through the eye of the needle of the European man that Rousseau saw all around him - a man whose chief economic industry lay in making clothes or textiles. Nudity, which is characteristic of that early man, is also characteristic of a certain kind of leisure. And it is with this symbol that we may as well start.

In which an Icelandic prole shocks a member of the 1 percent...

2011-11-23T10:25:00.001-08:00

John Lancaster’s review of Michael Lewis’s book is as disastrous as, alas, Michael Lewis’s book. Lancaster is very impressed by nominal debt. He is very clueless about wealth inequality. And he is a classic upper class type. His first story is about an Icelandic waitress he meets in Rejkavik. Now, the first thing to notice about this meeting is that Lancaster is in Iceland. He apparently finds that harmless and decent, since he apparently finds his position in the top 1 percent worldwide just a fact of natural history. But this waitress! Why, during the boom, she tells him, she used to go and fly to Milan and shop.

Now, how often the waitress flew to Milan and shopped is anybody’s guess. After hearing from the serf, no doubt after being served his meal, Lancaster is all agog. The story is exactly worth what he paid to find out if it is true. Zero.

But given a mindset so blind to the system that puts the herring in his belly, Lancaster is all set up for Lewis’s book, which strings together stories of proles spending money they don’t have (shamefully!) and governments with the gall to, well, have the kind of social services that were agreed upon in the fifties.

Lewis’s book, of which I’ve only read the articles in Vanity Fair, is, alas, not one of Lewis’s more insightful outings. For instance, he takes his cues on California’s situation from Schwarzenegger. Not once, in the VF article, does Lewis show the least awareness that Schwarzenegger was elected against Gray Davis on a Bushian economics ticket of cutting taxes for the wealthy and businesses. Not once does Lewis show any awareness that Schwarzenegger accomplished this shabby feat by simply borrowing shitloads of money. Using Schwarzenegger as his guide to the California economic crisis is like being taught fire prevention by a pyromaniac.

As for Lancaster, the blind snobbery of his piece is equivalent to the ignorance with which it is loaded. Telling us that the world owes 195 trillion dollars is as meaningless as telling us that the world is rich because, in 2007, the world had accumulated 60 trillion dollars in derivatives.

The question that leaps to mind is: who does the world owe this money to?
And the answer is pretty simple: it is owed to a relatively small handful of investors. Worldwide, they compose perhaps 1 percent of the population – perhaps less. And guess what? They can be ripped off without any consequences. What Lancaster didn’t seem to notice in his dinner in Rekjavik is that the waitress didn’t really care. Why should she? Iceland didn’t back its banks. When the banks collapsed, according to Lancaster, they left debts the equivalent of 330,000 dollars for every Icelander. And, it turns out, those debts went to heaven. Big deal.

What is obviously needed at the moment world wide is a change in the disproportion between the wealth of the wealthiest and the rest. And this is a political question that will come when, as is likely, people wake up, like Icelanders, and realize: no, they don’t owe that money. Because they have the power simply to cancel the debt. Just as the governments have the money and have used the money to back the banks, because backing the banks was in the interest of the elites, the people can, and will, once the issue is represented, be backed by the government too. The U.S. government that loaned out 16 trillion dollars at 1 percent interest or below to hundreds of banks and hedge funds around the world could, actually, do the same thing to the people. It would be terrible, John Lancaster’s sherry would go down his throat the wrong way at just the thought of waitresses from Iceland shopping in Milan, but it is, you know, more than possible.

Solving all our problems before lunch (U.S. edition)

2011-11-23T01:51:00.001-08:00

Okay, okay. It’s time to solve the deficit problem, in one paragraph. Here goes: restore Clinton’s tax rates, save for capital gains (raise it to 45 percent), and the marginal rate on top earners (those making 500 thousand or more), which should slide between 50 and 70 percent. Shrink defense expenditures in total to 100 billion dollars a year. Stir, wait a decade, bingo.

Of course, many would disagree with this course of action – including myself. I think EITC should be raised to 50,000 per year, thus pretty much knocking out the lower 50 percent from any income tax, and I think all corporate loopholes should be closed and the corporate income tax should remain the same. In the meantime, I think the U.S. should transform the post office into a post office bank, with which people could open up tax free savings accounts for retirement, education and health that would take the place of 401ks. And I think the money so generated could be used, for one thing, to buy U.S. T notes. In the end, we should work to take sovereign debt out of the hands of the private financial institutions.

Now that all this is clear, let’s discuss the real deficit we should be attacking. The political illuminati (as Marx called them) have created a vast hallucination, which goes like this: the social insurance system created in the developed economies in the 30s-60s are such that “we” are no longer able to afford them. The reality, however, is that “we” were much, much poorer in the 30s through the 60s. After generations of toil, after factoring in productivity gains and Solow’s residual, we find that we are infinitely richer than our grandparents or great grandparents. So how is it that we ended up poorer?

Here’s how we get to the real deficit, the equality deficit. In the last thirty years, the political illuminati have operated under the hallucination that the political structure set up to allow the social insurance system, which progressively shrank wealth inequality, could be ‘reformed’ by encouraging the kind of growth that increases wealth inequality by leaps and bounds. In fact, there is a reason that the Gilded Age and the New Deal are antithetical: in the former, ‘we’ do become relatively poorer – in relation to the national wealth – even if we become, in absolute terms, richer – although not much. Eventually, the equality deficit is going to kick in and that means it is going to kick out all the struts that have underpinned the middle class for the last sixty years. We’ve reached this point. Absurdly, “we” are told, in the country of Fortune 500 fortunes, that we are too poor to retire, to be educated, or to go to the doctor.

This is the story as told by our political illuminati, and it is a fairy tale. In reality, we are wealthy enough to work less (35 hours per week should be the legal norm), to retire well, and to luxuriate in universal health care and universal access to education up to and including college.

How do we obtain this ‘utopian’ vision? By looking at reality. Rather than contending with the mind-forged fantasies beloved by the pundits, we look at the society made by all, and we begin to repair the equality deficit. We operate, in other words, as free human beings. Marx, one hundred fifty years ago, called for the workers to break their chains. The chains, now, have long been broken. We have simply to walk out of them. And in so doing, we can start to pay attention to what is really important, such as reconstructing our technological infrastructure so it is green and Gaia friendly. And writing poetry, painting pictures, singing songs, dreaming involved dreams, making love, etc., etc.

Rousseau, the solitary: 1

2011-11-21T02:54:00.001-08:00

Let’s jot down a highly speculative suggestion concerning the different angle of vision that separates Hume from Rousseau, and – more generally – separates the culture of Britain and its white colonies from the ‘Continent’.

The difference between Hume and Rousseau is found, textually, in the way each envisions the present in which they are writing. Hume, as we have seen, envisions that present as an endpoint along a line of intellectual and, in general, cultural progress, from which it is possible to look back and judge the past. Rousseau, on the other hand, does not see the present in terms of historical ‘success’ – and he does not see the past in terms of one unilateral progress. Famously, with Rousseau, the notion of rupture enters history. A historical region – say, the region encompassing ‘primitive man’ – can be described, outlined, and even phenomenologically analyzed – but the total social fact that counts, in that region, is not whether it tends towards the present. The present becomes a much more tricky thing, in Rousseau’s hands – much more malleable, much less describable under general terms.

The harried barbarian of Hume’s account of religion feels the steps of an invisible power through the events of his life and makes his limited speculations on what to do to manipulate that power. Hume’s middling class of man, his ideal avatar of common sense and sentiments, can look back from his present, holding Newton’s Principia in his hand, and see what the barbarian doesn’t: that the real invisible power is held by the designer of the universe, whose design has been revealed in the course of civilization to the scientist. The middling man, however, turns away from the monstrous discovery of the young Hume, which is that the invisible course of intellectual progress has not brought him any nearer to explaining cause itself.

Rousseau shares something of Hume’s idea of intellectual progress. As he makes clear in the Discourse on Inequality, human perfectability is not just a fact of history, but of natural history – it is what distinguishes the human animal. But Rousseau, much like Darwin later, tends to erase the teleological import of this idea.

Which leads us to another difference between Rousseau and Hume, and I think I can say, generalizing madly, between the cultural assumptions of their separate semiospheres: on the existential plane, where Hume sees the middling man – the individual – as the hero of the historical present, Rousseau sees the solitary.

Continuing this line of thought – the individual of individualism is necessarily heroic. And tends, necessarily, to be ‘self-made’. Even the dullest textbook of mainstream economics bears traces of the fairy dust of this mythic character. His self-madeness makes him much like Prajapati in the Golden Egg, a product of his own desire, his own father, son and mother.

The solitary of Rousseau’s more dire account of history is, on the other hand, anti-heroic, and his solitude is existentially conditioned by his break with myth. The Rousseau of the Confessions is not simply the progenitor of the anti-heros of the literature of solitude – the Raskolnikovs, Leverkuhns and Mersaults – but also marks a certain incoherence that will come to trouble all politics in that cultural semiotic. The self-made man is a political creature, whereas the solitary has a more difficult time inserting himself into the discourse of rights. The right to solitude is not founded on property. It is threatened by a society of unleashed individualism.

scandal in the U.S. and France

2011-11-18T07:04:00.001-08:00

While America has the Kardashian divorce, which brings together so many American traditions – a little Horatio Alger, a little Daisy Miller, a little Debbie does Dallas – France, too, is hosting a scandal that brings together those two great French things: psychoanalysis and grammar. I’m talking, of course, of the wonderful libel trial going on right now that pits one of Lacan’s daughter, Judith Miller, against Elizabeth Elisabeth Roudinesco. Miller is suing over a paragraph in Roudinesco’s Lacan, envers et contre tout (Seuil, 2011) (and Roudinesco is countersuing Miller). The paragraph goes like this:

:
« Lacan mourut sous un faux nom, le 9 septembre 1981, à la clinique Hartmann des suites d’un cancer du colon qu’il n’avait jamais voulu soigner. Bien qu’il eût émis le vœu de finir ses jours en Italie, à Rome ou à Venise, et qu’il eût souhaité des funérailles catholiques, il fut enterré sans cérémonie et dans l’intimité au cimetière de Guitrancourt. »
Or: “Lacan died under a false name on September 9, 1981, at the Hartmenn clinic due to the effects of a colon cancer that he never wanted to treat. Although he had emited the wish to finish his days in Italy, in Rome or in Venise, and he would have wished for a catholic funeral, he was buried without ceremony in the intimacy of the Guitrancourt cemetery.”

My translation is to the French what a mut is to a pure breed greyhound – but such is the fate of translation. In any case, the day of the hearing was packed. All the Lacanians were there. And of course, the whole case came down to how to interpret qu’il eût souhaité… The lawyers fell into a controversy about this that must have brought all those in the courtroom back to their school days – for what kind of verb tense are we talking about here? Maitre Kierjman, in a brilliant summary of the evidence of the case, appealed to the heart and soul of all present by plunging into this issue:

« Le plus-que-parfait du subjonctif marque généralement une proposition à valeur conditionnelle. Son emploi est dicté par la conjonction « bien que » (« bien qu’il eût souhaité »), qui introduit une proposition dite « concessive » qui peut être lue comme ayant valeur indicative ou conventionnelle. Mais, ce qui doit être souligné ici, c’est la concordance des temps et le fait que le plus-que-parfait vient marquer une action révolue et antérieure à celle de la proposition principale »

Well, that settles that! However, Assoulline’s numerous commenters (his article received a Kardashianistic 325 responses) plunged as Frenchly as possible in disputing this interpretation:

“Débat grammatical qui rappelle « Le barbier de Séville » mais Me Kiejman possède moins bien sa langue que Beaumarchais. « Bien que » introduit une concession, c’est à dire une opposition, pas une condition (confusion avec le conditionnel passé 2 ?). D’autre part il s’agit dans le choix du temps, « eût souhaité » et non pas » souhaitât », de logique et non de concordance des temps : « souhaitât » eût marqué (valeur conditionnelle) une simultanéité impossible puisqu’on l’enterrait à ce moment là.”

For those who’ve fought their way through the French conditional and subjunctive, having only English – the language of servants! - as their guide, it is good news that the French themselves have a hard time understanding how they are using it.

Kierjman also told the jury that he had consulted Poe’s Purloined Letter and Lacan’s essay on it in composing her defense. Miller is of course defending herself like an Antigone who just happened to defy her brother’s wishes – or did she know those wishes better than Roudinesco? The Millerian faction is claiming that Roudinesco is suffering from the delusion that she is somehow related to Lacan – maybe the true daughter! – which, such is the work of the unconscious in the courtroom, was symbolized by Kierjman’s slip when he called his client « Mme Lacan”.

I predict that this case will be of the kind that Freud called Interminable analysis.

The nature in the Natural History of Religion: 4

2011-11-17T03:57:00.001-08:00

Within the circles of the New Learning in the 17th century, a relatively new word was bandied about to take the place of what their ancestors would have called paganism or idolatry: polytheism. (Schmidt, 1985). When, in 1639, Edward Herbert sat down to write De Religione Gentilium, translated as ‘The antient religion of the gentiles” by a Mr. W. Lewis in 1705, he used “polytheism” to broaden the humanist notion of non-Christian religions. Herbert, who may not have been a deist himself, was certainly looked as a precursor by eighteenth century deists, who adopted his history of religion. It went like this: in the beginning, men worshipped one supreme God – the thought of whom was written on their hearts – but they had an unclear view of the difference between the universe and the creator of the universe. Over time, priests and then ‘imposters’ arose, who exploited the people’s awe before the sky, the sun, the moon and the stars to make these the objects of adoration. Always, of course, the people had a notion of the one Supreme God, but as these objects were adored, they gradually acquired the status of sub-gods, of separate intelligences.

The deists of the 18th century thus were rooted in the kind of thinking that, at least partly, John Locke tried to destroy: the kind of thinking that goes back to innate ideas. However, the deists used a rhetoric that was peculiarly suited to the 18th century views of the philosophes, with their emphasis on the adoration of one God, rather than the multiple cults to saints, the virgin, and the criminal who claimed to be God’s son in long ago Judea.

Hume was inclined to see Locke’s side of things, as far as the roots of our knowledge go; and he was also inclined to take the Presbyterian side in constructing the history of religion. Calvin, who used the word idolatry, poured scorn on the idea that the first humans were monotheists. If, as Scripture shows, they were filled with lust, disobedient, and murderers at the slightest provocation, why should we credit them with the virtue of worshipping the one true God?

Thus, in one way, Hume’s Natural History of Religion – which may seem to the modern reader to be a blow against Christianity – can as well be read a conservative counter-blow to deist nonsense, inserted into Hume’s larger project of clarifying the sources of our knowledge.

But this is a text that is definitely over-determined. Calvin’s view of history was essentially static – notwithstanding the extra-historical event of Christ’s birth and death. Hume’s was not. As he makes clear from the beginning, he fully accepts the enlightenment view of progress, and in fact, in a twist, he uses the deists language to describe it: from our current spiritual knowledge, derived from understanding that the perfect design of the universe implies a perfect designer, we can establish a footing in scientific reality, so to speak, by which to go back and survey the history that led up to us – us middling men, us common sense clerks, us the enlightened. It is with religion as it is with the other human arts and sciences: “ We may as reasonably imagine that men inhabited palaces before huts or cottages, or studied geometry before agriculture, as assert that the Deity appeared to them a pure spirit, omniscient, omnipotent and omnipresent, before he was apprehended to be a powerful, though limited being, with human passions and appetites, limbs and organs.” (4)

Hume doesn’t just aim to reverse the order that the deists establish: putting polytheism before monotheism. He also wants to account for religion itself. Thus, the historical problem becomes a psychological and metaphysical one – as it was for Herbert as well. Having eliminated the idea that the barbarous, necessitous animal, man, had the innate idea of God inscribed on his heart, Hume next looks at the seemingly empirical explanation: that man looked around at the heavens, the earth, the sky, the moon and the stars, and was so overawed by their splendor that he elevated them to the status of Gods. Herbert’s argument was that the religion of the pagans could not be understood outside of the symbols that formed, as it were, a language underneath the language of the cults. The symbols were necessitated by the great fact that the supreme God was invisible: invisibility is a great motive force and determinant of religion in Herbert as well as Hume. Herbert attached himself to the ancient explanation that the sun was worshipped at first as the natural symbol of the great invisible power, and then, gradually, in a sort of eclipse of the symbolic function, as the God himself.

Hume disputes that this could possibly be the case, as it would entail a sense of metaphor and, beyond that, of generalities that the vulgar could not have had, or could not have been interested in. Their leisure and work was all, in Hume’s view, taken up by local matters, not the framing of general hypotheses. Out of this view comes, perhaps, the most interesting and influential idea in the Natural History. Instead of deist’s insistence on awe – the philosophical sensation – Hume insists on the mediation of the passions:

“We may conclude, therefore, that in all nations which have embraced polytheism, the first idea of religion arose not from a contemplation of the works of nature, but from a concern with regard to the events of life, and from the incessant hopes and fears which actuate the human mind.”

Tossing out contemplation is consistent with tossing out indolence of a certain type. For Hume, the round of little life for the mass is a total thing. And yet, outside of the Natural History, he certainly recognizes that contemplation or awe arises in ordinary life. In a letter to a friend about the time in which he is composing the Natural History, Hume promotes a now forgotten Scottish poet named Wilkie (Hume was always a great promoter of Scots literature, against the ‘criticklings’ of London) and relates the following anecdote:

“You know he is a farmer’s son, in the neighbourhood of this town, where there are a great number of pigeon-houses. The farmers are very much infested with the pigeons, and Wilkie’s father planted him often as a scarecrow (an office for which is well qualified) in the midst of his fields of wheat. It is in this situation that he confessed he first conceived the design of his epic poem, and even executed part of it. He carried out his Homer with him, together with a table, and pen and ink, and a great rusty gun. He composed and wrote two or three lines, till a flock of pigeons settled in the field, then rose up, ran towards them, and fired at them; returned again to his former station and added a rhyme or two more, till he met with a fresh interruption.”

It is a humorous image. In the movie Jude, which is taken from Jude the Obscure, Michael Winterbottom creates a harsher version of a boy being employed as a scarecrow – put out in long, lonely fields with a noisemaker. The boy is Jude, who we know will fight, in vain, against the class rigidity of Victorian England to have himself accepted as a scholar. Hume’s friend, however, is already the son of a farmer and on his way to the ministry. Still, the image and its uses are striking.

Yet in the Natural History, Hume sticks to the idea that the vulgar, its mind still mostly too blank, or two written over by the common business of life, to produce any epic concept, produces an epic concept – God – only, as it were, by accident. Out of the intersection of the local forces of nature (which give us not the serene sense of design, but a bumpy sense of chance and change, wrapped around the continuities of season, sunrise and sunset), man produces supernatural powers: “But what passion shall we here have recourse to, for explaining an effect of such mighty consequence? Not speculative curiosity surely, or the pure love of truth. That motive is too refined for such gross apprehensions; and would lead men into apprehensions of the whole frame of nature; a subject too large and comprehensive for their narrow capacities. No passions, therefore, can be supposed to work upon such barbarians but the ordinary affections of human life; the anxious concern for happiness, the dread of future misery, the terror of death, the thirst of revenge, the appetite for food and other necessities.”

Nature, then, is read through the constituents of human life. Out of feeling, we project – a magic word, not used by Hume but surely signaled, here – upon the storm anger, and upon the sunlight mercy.

John Farrell, in Freud’s Paranoid Quest: psychoanalysis and modern suspicion, has noticed that Hume’s epistemology seems to tie in very well with Freud’s notion of projection.

“Such ‘projections’ of the empirical subject onto the data of experience are, for Freud, a normal, unavoidable part of life: “For when we refer causes of certain sensations ot the external world, instead of looking for them, as in other cases, within, this normal proceeding is projection.” Or, as Hume would have it, ‘If we believe, that fire warms, or water refreshes, ‘tis only because it costs us too much pains to think otherwise.”

Interestingly, this edifice depends for its credibility upon a class distinction – between the barbarian and the man who has reached the shore of civilization. Hume’s very tone, in the Natural History, tells us that he is such a man. But he is also the man who, younger, found himself unable to reach that shore at all as he contemplated the notion of cause, and saw the world fall apart in his mind as he could not comprehend nor justify it through reason. What holds the two figures together, I think, is that common sense is returned to – and in that return, is made the subject of a certain irony that makes it hard to know, in the end, how to take Hume’s paen to the designer of a universe in which things fit so perfectly. It is more than a paen – it is our footing in the reality of the present that allows us to go back and reconstruct the past. If there is no spiritual progress, that reconstruction is epistemologically equal to the constructs of the past, and even, dare one say it, to those made up by the barbarian scarecrow in the wheatfield, the child abandoned by a class system that, to him, looks like barbarity in its final state, the parts all neatly designed to exclude thought and crush all passions that are not of use to it.

Larry Summers and Inequality

2011-11-16T08:38:00.001-08:00

Felix Salmon wrote a very thoughtful account of the Larry Summers/Paul Krugman debate that occurred in Toronto on earlier this week. The account made me wonder, for the thousandth time, about Larry Summers – genius or cretin?

Here’s the passage that made me press my vote for the latter:

Summers also tried to defend inequality, at least in part, by saying that “suppose the United States had 30 more people like Steve Jobs” — that, he said, would be a good thing even as it increased inequality. “So we do need to recognize that a component of this inequality is the other side of successful entrepreneurship; that is surely something we want to encourage.” This might have been received better had Summers not earlier praised America, while pointing to Bremmer, as “the only country in the world where you can raise your first $100 million before you buy your first suit and tie”.
Bremmer is undoubtedly a rich and successful entrepreneur — and one who never wears a tie, to boot — but he’s making money entirely from the 0.1%, and at heart Eurasia Group’s business model is one which does better as the ultra-rich get richer. In the context of a debate about how to rescue the economy for the other 99% of us, it doesn’t much help to point to One Percenters like Jobs and Bremmer who have managed to do well for themselves in an otherwise stagnant economy.”
Salmon’s problem with Summers claim doesn’t seem, well, systematic enough, but at least it touches on the randomness of Summers’ claim. In fact, the Steve Jobs example falls squarely in the realm of pundit science, in which one uses some random example that has a sentimental hold on the audience to make a general point that is wholly lacking in other empirical support.
Summers notion that we would not have technological innovation, or at least diffusion, is really a matter that has been researched. In fact, it can be investigated in a number of ways. We can ask whether wealth inequality is really, throughout history, the only driver of innovation. We can ask if other kinds of inequality will work as well – for instance, being honored for merit. We can ask if inequality is even necessary – for instance, does a kind of non-monetary, non-honorific ideal also work to induce technological breakthrough. And we can ask, more narrowly, whether there is a metric by which we can measure business innovation and compare periods when there was less wealth inequality and periods when there were more as to groundbreaking technological breakthroughs.
If we want to have a coarse measure of the technology/inequality relation, we could look to eras where inequality was lessening and eras were it was increasing in the 20th century and ask if the eras of inequality increase correspond to technology breakthroughs. I think Summers would be disappointed: the major technology breakthroughs of the twentieth century, in chemicals, communication, medicine, computing, and agriculture all cluster in the 30s to 70s period. Well, to be fair, not all – transportation and radio were certainly transformed in the high inequality twenties. But the roots of the technologies in play were certainly due to state intervention and progressive programs in the 10s – the American car industry, for instance, was birthed by an almost prohibitive tariff congress let fall on foreign automobiles.
What you do find in the high inequality periods is a more intense diffusion of innovation. This, it must be said, seems to have come to an end, in America, in the 2000s, which was a dead zone in terms of major innovation. Whether a lesser inequality would have impeded the diffusion of technological products is an interesting question. Certainly, to an extent, the chance for profit – and hence, for some inequality – has helped inject innovations into the mainstream of so
Penicillin – its discovery, diffusion and patenting – is a classic case of the question of money vs. the social ideal. As is well known, neither Fleming, who discovered penicillin, nor Ernest Chain or Howard Florey, the Oxford chemists who re-discovered Fleming’s work in 1940, wanted to patent the drug. They couldn’t even see that it was the kind of thing that was patentable. The myth is that when penicillin was taken to America, Americans had a much different sentiment, and stole penicillin from the British. In a paper surveying this history, however, Robert Bud (2008) shows that the Americans were very hesitant about allowing private companies to patent materials or processes for which public research money had been granted.
“In the USA, similarly, the benefits of publicly-funded research were reviewed. A three
volume study of federal regulations was published in 1946 with a view to standardizing the
diverse regulations which had emerged across the public sector.56 Some agencies allowed exclusive
licenses to private contractors – essentially assigning them the patents, others permitted only
non-exclusive licenses. The report came down firmly on the side of the latter. Research funded
from federal funds was kept in the public domain. It was not as if the turbulent wartime years had
never been. The number of university owned patents increased from a handful during the 1930s
to about a 100 in 1950, but they did not keep multiplying, and did not exceed 150 until the end of
the 1960s.57 Penicillin development had disrupted the old world, rather than leading directly to
the new.
Even US pharmaceutical companies experienced the fruits of ambivalence about patenting.
In the 1950s the price of penicillin collapsed as new entrants piled into the industry, whose product
had not been patented. However there was a determination that the newer antibiotics, such as
the tetracyclines, should be much more closely controlled by US patents and their price was kept
from collapse. During the late 1950s the patent and profit mindedness of the industry was challenged
by both the Federal Trade Commission and the Senate as prewar concerns were brought
to bear on the newly booming pharmaceutical industry. Campaigners who in the 1930s had seen
patenting as a cause of the Great Depression continued their struggles through the 1950s, particularly
deploying Senate support.58 Gradually, however, the emphasis moved from a concern with
patents to anxieties about safety. Although the outcome would be the strengthening of the Food
and Drug Administration as the guardian of the public interest, the right to patent was untouched.”

This story, rather than some random reference to St. Steven Jobs, has much more relevance to the question of the benefits of inequality. And it completely fails to validate Summers idea that if a man can’t be a billionaire, well technology will grind to a halt and our skyscrapers will fall.
Like so much of what Summers utters, his argument is bogus from the get go. But he continues to wow the rubes, including the ones at 1200 Pennsylvania Ave.

A more portable occupy wall street?

2011-11-15T02:34:00.001-08:00

Occupy Wall Street seems to have adapted the tactic of the 30s Hoovervilles, and to have evoked a response from the governing class in the U.S. that is identical, almost to the letter, to that of Hoover to the veterans in D.C. But there is another tactic that the protestors in Hoover’s time did not possess: that “real time” link that comes with the web. Watching the police beat up Berkeley students and professors in the videos (such as here) means that the lies of the media can almost immediately be found out by the interested cybernaut.
The question is, how much does the interested cybernaut count?

I have been reflecting, from this apartment in Paris, about the difficult winter that lies ahead for these American troops, these soldiers of the 99 percent. My suggestion is that the Occupy movement become temporarily portable. That is, it will switch between on-site occupations and media occupations. I don’t really believe that the movement will die because the establishment press, having failed at mockery, is now trying to tabloid the movement to death, with fake concerns about violence and drug use. The tabloiding will, however, cause the support for OWS to fall in the polls. It is at this point that ever new tactics have to be used to fight back. To my mind, the teach in and ‘hearings’ may be the best method. The OWS can and should issue ‘subpoenas’ to, say, those who received golden parachutes from Bank of America and those who were just laid off with the usual kurtness to investigate unemployment in America, and how it works. Would the golden parachuters come?Of course not. But it would be easy to represent them – any grad economics student could fill in their place. By such devises, the ows people can really take the debate out of the hands of the establishment media.

The occupation movement, so far, has been brilliant at bringing imagination back to the political process. Un autre effort, messieurs et madams, si vous voulez etre libre!

Marie Antoinette's neoliberalism

2011-11-13T06:11:00.001-08:00

The story of the economic crisis in Europe, as in the Anglosphere, is actually simple at the root. Two pages into Maurizio Franzini’s article, Why Europe Needs a Policy on Inequality, the reader trips over this paragraph:

“The proportion of the European workforce with a labour compensation per hour (wages plus social contributions) declining in real terms was 16.5% in the years 1996-1999 and 33% in 2003-2006. Moreover, 48% of the workforce during 1996-1999 and 61% during 2003-2006 saw their labour compensation per hour growing, on average, less than their labour productivity per hour. In the latter period, 23% of the workforce faced declining compensation with increasing labour productivity in their industry.”

There is a specter haunting the developed countries – the specter of the increase of exploitation. Wages are continuing to fall below the increase in productivity, and this means (sound the trumpets, please): you get one of those garden variety shortfalls of demand, and oversupply of goods, that so puzzles your elite capitalist type. He scratches his head, and then he dreams up his solution to the problem: why not reward the rich even more money, and take away the package of compensation (in the form of public goods) from the rest of the population? Somehow, a solution in which the elites engross even more of the collective wealth goes over well with the elites. They start writing grave articles about it. And sometimes they just throw together a mishmash of contradictions and claim that it is a program for the ages – thus, the current fad for expansionary contraction, which, like virgin births and perpetual motion machines, is proof that the verbal is triumphantly infinite, while the material is sadly limited to what can actually happen.

The poetic origin of the expansionary contraction comes from that mythical phrase of Marie Antoinette’s, let them eat cake. The EU bureaucrats have iced that phrase nicely with econo-speak, but strip off the icing and it’s the same old cake.

Here’s another passage from Franzini that should poke a hole in the American myth of Europe as a land of socialist equality:

“According to one study inequality in the EU is quite high but lower than in the USA: the Gini index is (with reference to data around 2000) 0.33 in the EU25, while it
was 0.37 in USA.

A more recent estimate based on a different methodology and on more recent data (2005) concludes that inequality in Europe is significantly higher, and not uch different from that of the USA: the EU-wide Gini coefficient is 0.369, not very far from the US level of
0.372.”

When people refer to Gini coefficients, it loses the great mass of people. But it actually does give us a way of thinking back through our recent cycle of exploitation. And interesting experiment in this vein was made by Stephen Adair, a professor in Connecticut. He took the Census’s Gini coefficient, that is, the measure of inequality, and he adjusted it back to its former levels in Connecticut and played the tape of inequality, so to speak, forward.

First, some back data: “Between 1970 and 2010, every state in the U.S. experienced an increase in inequality, but non greater than Connecticut, which went from the 36th most unequal state to the 2nd most unequal.”

Adair keeps the size of the income pool the same in one scenario, but adjusts the Gini coefficient down to the 1970 level. In Scenario b, he projects a neo-liberal distribution pattern by growing the size of the income pool, and retaining current levels of inequality. This is what he gets in Scenario A:

“…. a Connecticut in which the overall size of the income pool is the same, while hundreds of thousands of people experience significant upward mobility. This upward mobility is “achieved” by lowering the average value of those making over $200,000 from $387,650 to $235,000. It is not mathematically possible to keep the average household income the same and reduce the Gini to .337 without lowering this value. Scenario A illustrates a zero-sum game in which a decline in the incomes of the richest 8 percent “pay” for upward mobility for others.”

Here’s the neo-liberal scenario:

”Scenario B … maintains the Gini coefficient of 2010, but imagines a 10 percent increase in income levels by raising the household mean income to just over $102,290. Given the current distribution nearly half of the new income went to the top 10 percent, such the average income of households making over $200,000 went from $387,650 to $440,400.

Scenario B yields small increases in the number of households in each category above $45,000 and some small decreases in the lower income categories. There are, however, significantly greater reductions in the low income categories in Scenario A than in B, and greater increases in most of the upper income categories. .

Well over ninety percent of households in Connecticut would be more likely to experience an improved economic condition by returning to the rates of inequality in 1970 with no economic growth than they would with a 10 percent overall increase in the income pool with no change in the degree of inequality.”

We are drifting towards the wreck of the plutocracy. Scenario B is not going to happen – rather, we are going to have an overall shrinkage of the income pool, and an overall increase in inequality, given current tendencies. It is over, in the EU and the U.S., in the UK and Canada, with the fiction that we can join together a gilded age economy and a New Deal social welfare system. The plutocrats are fighting for the former, and nobody is fighting for the latter.

Humean anthropology and indolence: 3

2011-11-11T02:08:00.001-08:00

Hume’s Natural History of Religion is, as its very title shows, something different than a mere history. History and natural history differ in their object: in the former, the object is the chronicle of human action, and in the later, of the development of living forms in nature. By shifting religion to the realm of nature, Hume was following through on the logic of a division that he articulates in the very first paragraph between reason and human nature. Already this division speaks to a certain incoherence in the pretence that man is, ontologically, on an equal level with ‘nature’. In other words, an incoherence of ontological scope. This incoherence haunts social science like a Cartesian demon, casting doubt on all attempts to ground a social science on the opposition between culture and nature, while at the same time making it impossible to simply combine the two without destroying the very meaning and savor of both categories. In the twentieth century, Levy-Strauss made of that opposition one of the founding social structures, the study of which is the object of anthropology, at least insofar as the society studied lacks a system of writing. I mention Levy-Strauss to signal a certain textual destiny that can assigned to Hume’s natural history. Although the essay is not shaped by the protocols of what we would call anthropology – it evidences no fieldwork whatsoever – it is, on the other hand, an argument about a certain product of human nature, religion, that is almost – Hume is very clear about the ‘almost’ – universal. And in as much as it appears in most societies, Hume feels that we can understand it as a system of beliefs by asking what qualities of human nature are expressed in it.

However, in posing the question in this way, we already suppose that it is not a product of human reason. Reason, here, will be regarded not as an expression of human nature, but as a mechanism that transcends human nature. Reason is a machinery that allows for a two-fold operation, beginning firstly with citation – breaking a certain phenomenon out of its context or situation – and secondly with analysis, breaking it down according to the rules of either deduction or induction. Hume thinks that the operation of reason, abstraction, contemplation, etc. is so little a product of human nature that most humans do it badly, if they do it at all. In a sense, Hume’s whole essay is at the polar opposite of one of Wittgenstein’s comments about Frazer’s Golden Bough (which is itself very much a descendent of Hume’s Natural History of Religion):

“Already the idea of wanting to explain the practice – for instance, the killing of the priest king – seems to me to miss the mark. All that Frazer does is make it plausible to men who think as he does. It is very remarkable that all these practices are finally so to speak portrayed as stupidities.

But it will never be plausible that people did all this out of stupidity.

When he explains to us that the King must be killed in his blood, because after the ideas of the savages, otherwise his soul will not be fresh, one can only say: where this practice and this idea go together, the practice does not spring from the idea, but they are both simply there. “

Hume, on the other hand, thinks it will never be plausible that religion – in his survey of it – comes from anything but stupidity. The “ignorant”, the “vulgar”, and the “ignorant vulgar” play a very strong role in Hume’s account, and help us understand another of the determinations of his initial separation of human nature and reason: it is from the standpoint of reason, which deduces the truth about God, that the historian can understand the history of religion, which unfolds as a series of misperceptions of God. Importantly, for Hume, as for Frazer, God is a phenomenon of belief, molded in the form of the God that is worshipped in the Christian church. When Hume finds, not unnaturally, that this concept of God cannot really be imposed on many of the religious phenomena he finds in the past, he attributes this to a primitive intellectual equipment.

It is in explaining that primitive intellectual equipment that we come upon a certain unarticulated primal supposition in Hume, concerning primitive man. Hume, while never fully spelling this out in his essay, evidently assumes Hobbes. He assumes, that is, that the primitive state was one of man against man, or perpetual and complete war. It is characteristic of that state that people are harried – they have no time for contemplation. The temporal/material condition for reasoning – indolence – is lacking. And this original lack impedes the habit of inquiry; for inquiry, like all human phenomena in Hume, is eventually founded in habit and habit’s social cousin, custom.

“Adam rising at once in Paradise, and in the full perfection of his his faculties, would naturally, as represented by Milton, be astonished at the glorious appearances of nature, the heavens, the air, the earth, his own organs and members ; and would be led to ask, whence this wonderful scene arose: but a barbarous, necessitous animal (such as a man is on the first origin of society), pressed by such numerous wants and passions, has no leisure to admire the regular face of nature, or make inquiries concerning the cause of those objects to which, from his infancy, he has been gradually accustomed. On the contrary, the more regular and uniform, that is, the more perfect nature appears, the more is he familiarized to it, and the less inclined to scrutinize and examine it. A monstrous birth excites his curiosity, and is deemed a prodigy. It alarms him from its novelty,and immediately sets him a-trembling, and sacrificing, and praying. But an animal, complete in all its limbs and organs, is to him an ordinary spectacle, and produces no religions opinion or affection. Ask him
whence that animal arose? hewill tell you, from the copulation of its parents. And these, whence? From the copulation of theirs. A few removes satisfy his curiosity, and set the objects at such a distance, that he entirely loses sight of them. Imagine not that he will so much as start the question, whence the first animal,much less whence the whole system or united fabric of the universe arose.”

This is interestingly wrong. It was even known to be wrong in Hume’s time: there was, by 1750, two centuries of material gathered and published by Europeans that showed, contrary to Hume, a deep fascination with how the whole system of the fabric of the universe arose, and even how animals arose. Hume was probably aware of Lafitau, if not the numerous Spanish works on the belief systems of the Indios. And of course since Hume’s time we are more and more aware that, whatever else interested Paleolithic humans, they were absolutely fascinated and even obsessed by an animal complete in its limbs and organs. But Hume’s Hobbesianism disallows at least one reading of the evidence. And, interestingly, sets the stage for one of Hume’s most ingenious suppositions, which will prove to have a long life in the 19th and 20th centuries.

comment on the NYT Stephen Roach piece at Room for Debate

2011-11-09T06:15:00.001-08:00

Stephen Roach, the well named financial analyst, was asked about the crisis in savings in Japan and the United States in the NYT’s Room for Debate the other day. His response was essentially to knock the American middle class for living beyond its means (which used to be the bright side – remember the Ownership society? Remember ‘its your money’? Ah, the Bushisms of yesteryear). Anyway, I wrote a comment which, for some reason, the NYT chose not to publish, although I can’t see that it violated any policy of theirs. So, in the interest of keeping this comment around so that I can use it later, rather than flushing it into the cybervoid, here’s a link to Roach’s article and here’s my comment.

"Nice to see Roach talk his book - let's shove more money into Wall Street via IRAs and 401Ks. - Or, lets strip them of their tax deductibility and set up government retirement and education accounts which would be tax free and offer a modest but guaranteed return of 3 percent annually, as suggested by Teresa Ghilarducci. As Jim Mosquera in ‘Escaping Oz’ puts it: “At the last major stock market bottom in 1982, American households were not that interested in owning stocks. The growth of the stock industry was aided by the creation of IRA accounts (1974) and 401(k) plans (1980). IRA accounts came during the stock market bottom of 1974 and 401k plans arrived just before the major stock market bottom of 1982. Stock ownership comprised barely 12 percent of all household financial assets in 1982, where not 2/3 of investors have half their financial assets in mutual funds. Stocks litter IRA and 401k accounts, the most precious of saving vehicles. Fifty-four percent (54%) of households own stock mutual funds and 37% own individual stocks in their IRA accounts.” In 1982, retirement was much more secure than it is now. Our experiment with stock ownership has failed. It is time to admit it, and to shrink the funds Wall Street has to play with. This will re-set Wall Street so that it becomes of use, rather than what it is now - a wasteful casino that allocates capital with maximum inefficiency - and would actually help finance the operation of the government without tax increases for the 99 percent - although of course we need to hike the 1 percent tax rate to Eisenhower levels."

Hume and Rousseau on indolence: 2

2011-11-07T12:27:00.000-08:00

Han Joachim Voth, in his essay, Time Use in Eighteenth century London: some evidence from Old Bailey (1997) cleverly figured out a way to quantify over time use in 18th century Britain by using the accounts of witnesses at trials. The question of whether and how much time discipline intensified among urban laborers (and agricultural workers) has been much disputed, as the Marxist claim that was backed up in the E.P. Thompson’s The Making of the English Working Class has been tugged at here and statistically stiffed there. Voth concluded that the evidence points not to longer working days, but instead, to longer working weeks. The sixteenth and seventeenth century holidays were being cut down. St. Monday was assassinated. Another study of the decline of Saint Monday (the day that workers would sometimes take off to have a day of drinking and music) in 18th and 19th century Birmingham found that the Saint was not martyred all at once, but bit by bit.

The evidence, then, points to an increase in the working time of the laboring class in Britain in the 18th century. And yet, at the same time, one discovers a new sense of leisure among the ‘middling men’ – the bourgeoisie – both in the later start in life by bourgeois children, who were educated for much longer than laborer’s children, and in soft work and hard leisure – a certain non-differentiation of the two spheres. Gambling could be leisure, but for many it really did pay the bills. And the question of intellectual labor was still not wholly defined at this time. Research could be a hobby from, say, preaching.

What is important is that leisure and labor carry strong class colorations. As Joan-Lluís Marfany puts it in “The invention of labour in Early Modern Europe”:

…take the question of boredom, the history of which [Peter Burke] invites us to write. This is not, as it may seem, strictly an upper- class problem, but here too there is one important distinction to be made. The leisured classes get bored because they are idle; their problem, as Burke, quoting Henry Fielding, points out, is how to kill time. For the workers, the source of boredom is work. They too devise ways of passing the time, only in their case it is working time that needs to be passed. In conservative, idealizing literature, peasants are portrayed as people who like to keep always busy, to the extent that even in the long winter evenings when they get together to while away the time by telling stories, singing songs and playing games, they still manage to combine these activities with some useful task, such as, for instance in northern Catalonia, peeling or shelling corn cobs, or sifting Yet we might just as well look at it from the opposite angle. The cobs had to be peeled and shelled; the seeds had to be sifted; the stamens to be carefully plucked for saffron; the wool or the flax had to be spun: all tedious, repetitive tasks. Doing the work together to the accompaniment of stories, songs or games was a way of alleviating the mind-numbing boredom of the chores.”

These are quick glimpses of a deep and complex historical event, but they pose a question: how could Hume have gotten it so wrong? That is, how could he, and other European intellectuals of the time, have thought that they were living in the golden age of leisure?

Hume and Rousseau on indolence: a backwards glance 1

2011-11-06T05:24:00.000-08:00

Indolence and leisure have long been outlier themes in philosophy and the social sciences. And yet, as I hope to show, they are connected by every family tie to the grander themes of reason, progress and culture, as these were articulated among the Enlightenment intellectuals of the eighteenth century.

Let’s start this inquiry with a conference held in 1966 when Marshall Sahlins surveyed the ethnographic evidence concerning the use of time by hunter gatherers, such as the !Kung and Australian aborigines, and used it as evidence for what he called the “original affluence”. Sahlins wrote: “A fair case can be made that hunters often work much less than we do, and rather than a grind the food quest is intermittent, leisure is abundant, and there is more sleep in the daytime per capita than in any other condition of society (1968 – quoted by Winterhalder (1993). Windterhalder’s essay, which advocates a neo-classical framework to explain the “original affluence” thesis instead of Sahlins’ own Zen economics, introduces the problematic with a clever comparison to the myth of the busy bee:

“More than ninety years ago entomologist Professor C.F. Hodge marked individ- ual honey bees to study their activities. He observed that between sunrise and sunset no bee worked more than three and one-half hours (see Hubbell 1988: 78). Compare this observation with the commonly held belief captured in the phrase, 'busy as a bee'. In popular wisdom the honeybee stands for bustling productive effort, its labours those of nearly ceaseless toil. Only the beaver equals its reputation as an icon of industriousness.1 But Hodge is right. Bees spend a lot of time doing nothing or wandering through the hive appearing to do nothing in particular. Only intermittently do they work hard (Seeley 1989). Beavers too are active foragers only a small percentage of the time (Belovsky 1984).”

The bee, the leisurely hunter, and sleep will all figure in one way or another in a backward glance at Hume and Rousseau’s conjectural histories of original man. Neither Hume or Rousseau are ‘typical’ Enlightenment figures, but their different philosophical anthropologies did influence two different lines of thought in the Occident.
…

Hume’s essays on economics and social theory were written, according to James Buchan, under Hume’s strategic impulse to introduce himself a second time into the world of the learned, or at least the Edinburgh part of that world, after his first foray, A Treatise of Human Nature, fell stillborn from the press – at least in Hume’s own, retrospective account. Hume wrote the essays while living in his mother’s house, Ninewells, outside of the village of Chirnside. Although Hume’s afterlife has been more lively in metaphysics, his essays certainly gave him a fair place in the prehistory of economics and political theory.

One essay in the second volume, On refinement in the arts, takes up the defense of luxury. The Enlightenment inversion of the values of Christendom made a special case of luxury. Denounced by the Church as a vice, and subject to various taxes, luxury was not only praised by Mandeville and the French libertine school, but praised, specifically, for its social utility. Mandeville’s argument (made in The Fable of the Bees, for that insect's folkloric properties can be made to serve enlightened ends) that private vices can be public virtues, gave a radical foundation to the separation of the secular and the sacred: if we grant, as the New Philosophers held, that government exists to promote the happiness of the people, than giving the sacred secular tools to pursue private vice snuffs out the public benefit – the commerce – deriving from them.

By the time that Hume came to write the essays in 1741, Mandeville’s wicked creed had diffused itself into the circles of the advanced thinkers. Myself, I want to look at Hume’s essay not so much for the defense of luxury as for his characterization of the human happiness that is the essence of public virtue, because it is subtended by what one might call a speculative anthropology – a conjectural history – that is more abundantly expressed in the Natural History of Religion. Against one of the powerful but under-recognized themes of that anthropology – the theme of indolence – I’d like to pit Rousseau’s anthropological conjecture in the Discourse on Inequality.

Here, then, is Hume’s analysis of human happiness:

“Human happiness, according to the most received notions, seems to consist in three ingredients; action,
pleasure, and indolence : And though these ingredients ought to be mixed in different proportions, according
to the particular disposition of the person ; yet no one ingredient can be entirely wanting, without destroying,
in some measure, the relish of the whole composition. Indolence or repose, indeed, seems not of itself to contribute much to our enjoyment; but, like sleep, is requisite as an indulgence, to the weakness of human nature, which cannot support an uninterrupted course of business or pleasure. That quick march of the spirits, which takes a man from himself, and chiefly gives satisfaction, does in the end exhaust the mind, and requires some intervals of repose, which, though agreeable for a moment, yet, if prolonged, beget a languor and lethargy, that destroy all enjoyment.”

One should note that, though the structural place of this remark in his essay is directed towards building a case for further sociological observation, in fact, the natural history of the ‘quick march of the spirit’, and the exhaustion attendent upon it that requires leisure and play, has already, in Hume’s Treatise, been given a certain metaphysical, or perhaps I should say, anti-metaphysical, value in a passage highlighted by Buchan:

“But what have I here said, that reflections very refined and metaphysical have little or no influence upon us? This opinion I can scarce forbear retracting, and condemning from my present feeling and experience. The intense view of these manifold contradictions and imperfections in human reason has so wrought upon me, and heated my brain, that I am ready to reject all belief and reasoning, and can look upon no opinion even as more probable or likely than another. Where am I, or what? From what causes do I derive my existence, and to what condition shall I return? Whose favour shall I court, and whose anger must I dread? What beings surround me? and on whom have, I any influence, or who have any influence on me? I am confounded with all these questions, and begin to fancy myself in the most deplorable condition imaginable, environed with the deepest darkness, and utterly deprived of the use of every member and faculty.
Most fortunately it happens that, since reason is incapable of dispelling these clouds, nature herself suffices to that purpose, and cures me of this philosophical melancholy and delirium, either by relaxing this bent of mind, or by some avocation, and lively impression of my senses, which obliterate all these chimeras. I dine, I play a game of backgammon, I converse, and am merry with my friends; and when after three or four hours’ amusement, I would return to these speculations, they appear so cold, and strained, and ridiculous, that I cannot find in my heart to enter into them any farther.”
Play and amusement are ‘cures’ to the tangle of reasoning that has made Hume a monster to himself and – projectively – to others. Hume’s fall into monstrosity is imagined as a sort of foundering on an island –that is, it is a fall away from sociability,into what one might call primitive state of being, a Robinson Crusoe-like solitude. I will come back to that image later.
However, if in the Treatise the relaxation of the mind is a sort of film director’s cut that ends the curious metaphysical narrative, in the Natural History of Religion, relaxation – what I will call indolence – assumes a very different historical shape.

Another lizard-like Smeeding: making poverty disappear in our plutocratic era

2011-11-04T02:53:00.000-07:00

When you are dealing with a fire, the experts involved are firefighters. When you are dealing with scuba diving, the experts are scuba divers.

But a funny thing happened to expertise on the way to D.C. The experts on poverty are – upper class. Thus, it is no big shock that under the plutocracy beloved by Obamacrats and Republicans, we are getting a new survey of poverty that, well, tweaks it. And, abracadabra, makes it disappear! Via the New York Times report on poverty spindled and mutilated through the hands of experts, we get things like this:

“One explanation can be found in programs the official count ignores: food stamps and tax credits. Combined the two programs delivered $221 billion across the country last year, according to the Center on Budget and Policy Priorities, more than doubling since 2006.
In Charlotte, Angelique Melton was among the beneficiaries. A divorced mother of two, Ms. Melton, 42, had worked her way up to a $39,000 a year position at a construction management firm. But as building halted in 2009, Ms. Melton lost her job.
Struggling to pay the rent and keep the family adequately fed, she took the only job she could find: a part-time position at Wal-Mart that paid less than half her former salary. With an annual income of about $7,500 — well below the poverty line of $17,400 for a family of three — Ms. Melton was officially poor.
Unofficially she was not.
After trying to stretch her shrunken income, Ms. Melton signed up for $3,600 a year in food stamps and received $1,800 in nutritional supplements from the Women, Infants and Children program. And her small salary qualified her for large tax credits, which arrive in the form of an annual check — in her case for about $4,000.
Along with housing aid, those subsidies gave her an annual income of nearly $18,800 — no one’s idea of rich, but by the new count not poor.”

Ah, the new count! The new count in inflation in the 90s – by the magic of hedonics! – broke the back of inflation by counting it otherwise. The new count of the unemployed – by ignoring the long term unemployed and not counting pesky populations like the millions in prison and such – gives us a great employment rate we can wave at the social democratic countries and say, ha! And now the ‘new count” in poverty means that three people living on $18,000 per year are not poor!
The heartening stories, here, should stop the socialist stampede dead in its tracks. On the one hand, we ask people –productive, caring people – like Goldman Sachs CEOs and hedgefund traders to pay millions – millions of dollars! In taxes on their billions of dollars. They can barely come up with the incentive to work, many of them. And on the other hand, we have the so called poor rolling in the dough. Look at another of the newly minted middle class in the NYT article:

“Such is the case for John William Springs, 69, a retired city worker in Charlotte who gets nearly $12,000 a year in Social Security and disability checks. That leaves him about $1,300 above the poverty threshold for a single adult his age — officially not poor. Then again, Mr. Springs had a heart attack last summer and struggles with lung disease. Factor in the $2,500 a year that he estimates he spends on medicine, and Mr. Springs crosses the statistical line into poverty.
An upbeat survivor of a lifetime of need, Mr. Springs fills his prescriptions in partial amounts and argues the poverty counters got him right the first time.
“I ain’t poor,” he said. “I eat. I got a roof over my head.”

Now, let’s turn to the experts! I won't waste time over the Heritage empty suit who is quoted in order to even out NYT's quota of "rightwing pointyheads" and please the publisher. Lets' turn to the supposedly non-partisan experts. Let's turn to the man bearing the brilliantly Dickensian name of Timothy Smeeding - his parents missed a real opportunity by not naming him Uriah Heep Smeeding - who is an economist in Wisconsin . This Smeeding did a ‘study’ of poverty that is cited with an appropriate hush in the NYT article:
“Virtually every effort to take a fuller view — counting more income and more expenses — shows poverty rising more slowly in the recession than the official data suggests. That is true of localized studies in New York City and Wisconsin and at least four different national data sets that the Census Bureau publishes. While the official national measure shows a rise of 9.8 million people, the fuller census measures show a range from 4.5 million to 4.8 million.
“That’s a big difference,” said Timothy Smeeding, an economist at the University of Wisconsin who oversaw the study in that state. “It’s about time we started counting the programs we use to fight poverty.”

So who is this Smeeding? More importantly, on the basis that the deep diving scuba diver is our expert, how far has Smeeding dived into poverty?

Well, Timothy Smeeding is not doing badly. He collects two salaries at the University of Wisconsin, according to the salary database, one for being a prof, one for being the head of an institute studying poverty. And he thus receives a grand total of $244,444 dollars a year from Wisconsin. But lets also include his other compensations, shall we? Since apparently in the whole new world of counting compensation, if you get a deduction on your mortgage, that becomes part of your real compensation, and if you get a tax credit, that, too, goes into your income. How fun! If you get medical insurance from the Wisconsin employee system, that, too, becomes part of your compensation. If we are upping the ante on who is poor in America, it is funny that we aren’t pushing the 244,444 dollar type into another tax bracket – say, the marginal rate above 250,000 dollars. I’m sure Timothy Smeeding, then, would concede he was rich. Too bad he hasn’t been asked how a rich man like him has become an expert on poverty.
Hegel compared Kant’s critique of philosophy to trying to learn to swim on dry ground. Smeeding seems to have succeeded amply in this field, since he seemingly knows just how a woman with two children is going to survive with 18,000 dollars per year – in her total compensation package, including inkind support – without being poor. I have to congratulate him on a job well done.
In other words, we have, here, another lizard-like predator, another intellectual gangsta, who is going to make Mr. Springs' life, and Ms. Melton’s, that much harder.
One hopes that Smeeding will someday have an opportunity to fully experience Mr. Spring's life. To become an expert in deed as well as an expert on a plus +250,000 on poverty. One really really does.

Uncle Sam's 600 billion dollar gift to the wealthy

2011-11-01T10:38:00.001-07:00

Liberals (and here I will be generous and even include the center right krewe at the New Republic) have a weakness for the idea that income distributes wealth downwards. In this takedown of the conservative claim that income inequality hasn’t increased in the past thirty years, Matt O’brien writes:

“Pethokoukis [the AEI economist} thinks that a more thorough accounting for taxes and benefits like healthcare or pensions yield a different picture of inequality. And that is somewhat true. After-tax inequality is certainly smaller than pre-tax inequality. But it is not as true as it used to be. The CBO recently confirmed that federal taxes and transfers are less redistributive now than they were in 1979. The same is true for benefits.”

Into this picture, ladies and gentlemen, let me present two very simple concepts. One is the monopoly premium granted to corporations by that wonderful invention called intellectual property rights. The other is that equally wonderful invention called government guarantees for the financial and big business sector. It has slipped our minds, perhaps, that the Fed spread out loans totaling 16 trillion dollars at one percent and below to our high flying investors, lending a helping hand to hundreds of hedge funds, banks, and businesses. Now, to get that kind of loan normally, the charge, in the 2008-2010 period, would have been probably 4 points higher on those loans, and in many cases the price would have soared to the interest charged on Greek bonds. So, let’s see, handy calculator please: if we are talking four percentage points, 16 trillion, that’s, scribble scribble, about 600 billion dollars. Wow, nice, eh? I’d jack that up a bit, considering the collateral that was offered. So 600 billion to 800 billion was pocketed by the wealthiest in 2 years – hey, really sweet!

I suspect that there is not a fortune among the upper 1 percent that has not gained an extra million or ten from the government’s wonderful largesse in these troubled times.

So please, spare me the tales of the downward distribution of money by Uncle Sam. That is the myth.

Michael Lewis's sci fi fantasy

2011-11-01T02:07:00.000-07:00

I’m a big fan of Michael Lewis. Coming home on the train from Amboise, I finally got to his article on Californin in Vanity Fair. And that's when I had my fan crash moment. Say it ain't so, Michael!

Business Insider dubbed the article a ‘love letter’ to Arnold Schwarzenegger – and unfortunately, this is true. Lewis’s Schwarzenegger bears an odd relation to the real Schwarzenegger, who, spectators of the first decade of the Bush era will recall, was the man who rode to power against Gray Davis by promising tax cuts for business and a tres Bushian solution to California’s debt problem, which I’ve commented on before:

“And now, of course, the bills for the fun filled political vacation come due. When Schwarzenegger was elected governor of California, the first thing he did was Charge IT! – to a round of cheers from those scrimpin and savin’ burgermen, working all day, thinking of Jesus Christ all night. After all, why pay for the structures you need every day when – as Mr. Magician said in that beautiful Christmas Classic, It’s a Wonderful Reagan-y Kinda Life, – the magic of the marketplace makes lower taxes bring in more revenue! We owe it to ourselves! We can’t surrender to terrorists! We can’t return to the days of tax and spend! Class warfare! As the man says:

Quelli che son dentro la merda fin qui, oh yeah
Quelli che con una bella dormita passa tutto anche il cancro, oh yeah
Quelli che, quelli che non possono crederci anche adesso che la terra e’ rotonda, oh yeah, oh yeah
Quelli che hanno paura del aeroplano, oh yeah
Quelli che non hanno mai avuto un incidente mortale, oh yeah
Quelli che non ci sentiamo
Quelli che a un certo punto della vita ci vorrebbe una arma segreta, ostia, oh yeah”

Or, in plain English, Gray Davis was dumped by voters who couldn’t stand that oatmeal-soul suit, and in his place Schwarzenegger played the part of a muscle toned Father Christmas, as outlined in a NYT article from 2005:

“The governor's budget relies on continued borrowing, using some of the proceeds of a $15 billion bond issue that Mr. Schwarzenegger won voter approval for last year. Although the bond proceeds helped to get the state through a severe fiscal crisis, the borrowing will have long-term consequences, said Fred Silva, a budget expert at the Public Policy Institute of California and a former fiscal aide in the state Legislature.
"The amount of borrowed money is going to be a budget overhang for many years," Mr. Silva said.
In years past, he said, state policy makers tried to keep the cost of debt service below 4 percent of state revenues. "Now it's going to be twice that," Mr. Silva said. "That's real money."

Hmm, a 15 billion dollar bond issue? And to think... the topic never came up in Michael Lewis’ article about our Good Gubernorator fighting the special interests to bring financial sanity to California. the topic of taxes, the taxes to, well, pay for things like increases in the cost of running the state, the taxes that Schwarzenegger ran against – these, too, never came up. The fact that Schwarzenegger was running against the Governor who wanted to actually pay for the goodies with taxes never came up.

Instead, Lewis’s idea is that the people, the grubby vulgarians whose income, over the 2000-2010 period, went down, somehow became addicted to all the good things of life and became… well, irresponsible.Not the good serfs of yore! Because the brain has a reptilian core, apparently, and can’t handle opulence. He's actually serious:

"The road out of Vallejo passes directly through the office of Dr. Peter Whybrow, a British neuroscientist at U.C.L.A. with a theory about American life. He thinks the dysfunction in America’s society is a by-product of America’s success. In academic papers and a popular book, American Mania, Whybrow argues, in effect, that human beings are neurologically ill-designed to be modern Americans. The human brain evolved over hundreds of thousands of years in an environment defined by scarcity. It was not designed, at least originally, for an environment of extreme abundance. “Human beings are wandering around with brains that are fabulously limited,” he says cheerfully. “We’ve got the core of the average lizard.” Wrapped around this reptilian core, he explains, is a mammalian layer (associated with maternal concern and social interaction), and around that is wrapped a third layer, which enables feats of memory and the capacity for abstract thought. “The only problem,” he says, “is our passions are still driven by the lizard core. We are set up to acquire as much as we can of things we perceive as scarce, particularly sex, safety, and food.”

Even a person on a diet who sensibly avoids coming face-to-face with a piece of chocolate cake will find it hard to control himself if the chocolate cake somehow finds him. Every pastry chef in America understands this, and now neuroscience does, too. “When faced with abundance, the brain’s ancient reward pathways are difficult to suppress,” says Whybrow. “In that moment the value of eating the chocolate cake exceeds the value of the diet. We cannot think down the road when we are faced with the chocolate cake.”

The richest society the world has ever seen has grown rich by devising better and better ways to give people what they want. The effect on the brain of lots of instant gratification is something like the effect on the right hand of cutting off the left: the more the lizard core is used the more dominant it becomes. “What we’re doing is minimizing the use of the part of the brain that lizards don’t have,” says Whybrow. “We’ve created physiological dysfunction. We have lost the ability to self-regulate, at all levels of the society. The $5 million you get paid at Goldman Sachs if you do whatever they ask you to do—that is the chocolate cake upgraded.”

So it goes. It used to be, in the roaring 2000s, that it is your money - and now it turns out that it is your debt, you little rat fuck with the reptilian brain? Oh, and that debt is so tasty!

The idea that the American people went on a terrible shopping spree that ruined the economy has now been so inscribed in the reptilian core of the elite brain that it has erased, well, 2001-2008. Remember remember - but it is so hard to remember! Still, as I dimly recall, we took care of the 2001 recession because householders could be just like big companies and unlock the liquidity in their houses through a variety of new and puppy friendly loans! Of course, remembering the giant sucking sound of a tax cut happy elite going for seconds by getting that little extra helping of interest and then happily slicing, dicing and giving themselves bonuses for securitized debt – why that requires such a big memory capacity that the poor reptilian core of the brain starts to pant and gives up. Instead, it wants to see the giant ex-Governor of California in his latest action epic, Mr. Fiscal Responsibility – you know, the one in which new memory is implanted into the old brain so that a certain history didn’t happen, and a certain governor didn’t solve a certain crisis by going for the 15 billion dollar bond issue.

So alas: although Lewis’s concentration on our pension problem is half right, it is a one-eyed correctness: the pension problem was in the end a tax problem. If you don’t want to tax businesses, which is where the money traditionally is, and the wealthy for your social services, and you hire people to staff things like schools and hospitals with low salaries but high future benefits, eventually, you are so fucked. By nice people in business suits, and by Hollywood stars. …
Incidentally, for those of us old enough to remember the California election, Schwarzenneger’s anti-tax and pro-charge it policy was endorsed by ... Warren Buffett.

ps - what the hell! Might as well stretch this post out. The public pension plans that Lewis is writing about are victims of the same investment strategies by which the upper 1 percent has been looting the bottom 99 for years. This is from that now forgetten decade, the 00s - in fact, I wrote this a tremendous six years ago. Wow, that is way too long to remember anything!

I have seen the future, and it is United
Anyone interested in what Bush’s reformed Social Security would look like should look at the NYT article about United Airline’s pension fund today. It is a fun article. Here's how the movie goes: Wall Street persuades a viable pension fund to redo its safe strategy of investing for a much more groovy strategy of growth growth growth in equities. Big money is made by everybody on the Street as the pension fund shrinks, disappears, goes into a black hole. Everybody is very sorry that the beneficiaries of the fund have nothing left, but everybody also points out – the beneficiaries are scum. Mere workers. Pilots, for god’s sakes. Imagine, some stewardess somewhere is bawling cause her measely 200 thou went to some really nice Manhattan bistros. As if she deserved it. The best and the brightest, in the new Hobbesian Randian world, feast upon such little lambs.

Bush’s plan has those advantages too. By targeting middle America’s vast wealth and accelerating the burgling of it, in a record amount of time the top 10 percent income percentile can capture even more of America’s wealth. This money will be used much more efficiently. For instance, many retiring congressmen will be able to find lobbying jobs that will launch them into the higher regions of financial security when the theft is completed. Meanwhile, in a blow against the French, Americans will work harder. They will have to, as their retirement will be approximately equal, in value, to the price you can get for confetti that’s been cleaned off of streets and sidewalks after the parade is over.

The first three grafs of the article map a strategy that is almost a perfect parallel of the Bush reforms:

“HAD anyone listened to Doug Wilsman, tens of thousands of United Airlines employees would not be facing big cuts in their pensions. And the federal agency that guarantees pensions might not be struggling with its biggest losses ever.

So who is Doug Wilsman? He is a retired pilot and a former fiduciary of United's pension plan for pilots, and in 1987 he discovered that the company had abandoned its older, tried-and-true approach of investing retirees' money in bonds timed to pay when the pensions came due. Instead, it had bought into the promises of Wall Street that it could put less money into the plan - and take out more later - if it just put most of the assets into the stock market.

Mr. Wilsman was skeptical of such promises, and soon after learning of the change in strategy, he filed a grievance with his union, the Air Line Pilots Association. "Hey, you guys are really building yourselves a trap," he recalled warning them at the time. "Someday, at the worst possible moment, when the bottom falls out of the stock market, the plan is going to have to come up with new money, and it's going to be enough to kill the company."

Wilsman has got to be a traitor, and one hopes he will be roundly denounced on the rightwing media circuit. More voices like his would blow the perfect caper. He obviously wasn’t clued in that DJ 36,000 was just around the corner.

As even the article admits, the result of the Bush-like investment strategy proved highly satisfactory:

“While the money managers and other pension professionals who ran United's pension plan walked away from the wreck unscathed - indeed, they collected about $125 million in fees over the last five years alone, records show - the ones who will have to pick up the bill for the advisers' collective failure will be the airline's 130,000 employees and pensioners, the federal pension guarantor and probably, someday, the taxpayers.”

Million dollar payouts for high level failure have become America’s secret weapon for achieving true greatness. As for the employees – they merely work for a living. Piss on em, as the old Wall Street saying goes. Also, the federal government has proven that almost any problem can be solved if you have a gigantic enough credit card. Put those pensions on the card and have the Chinese buy more of our dollars, as they say in the corridors of the Treasury department.
Here’s a nice window into what Social Security is gonna look like once we get it all licked into shape:
“United is far from unique. Lifting the lid on how most pension funds are invested might raise an outcry if the 44 million Americans covered by company plans knew these things:
Pension investing is largely unregulated, even though the federal government effectively covers the investment losses when a defined-benefit plan fails. At United, this freewheeling approach gave rise to investments in junk bonds, dot-coms and even what appears to be an energy venture in Albania.
The Securities and Exchange Commission recently said that more than half of the consultants who help pension funds invest their money have outside business relationships that could taint their advice.”
I, for one, am totally psyched.
Three more irresistible grafs. Your congress at work!

"While the federal agency tries to pinpoint its obligations, apparently no one in an official capacity is pausing to ask who the plans' outside investment professionals were, much less how they made their decisions and how they responded as the airline's fortunes faded.

"It's just a nonstarter," said Richard A. Ippolito, the pension agency's former chief economist, who is now retired. A few years ago, he recalled, a director of the federal pension agency appeared before Congress and suggested that if companies wanted to invest their pension funds in stocks, they should pay more for their pension insurance coverage.
"I could politely say that he was vilified," he said. "They basically accused him of being un-American because he was asking companies to pay for the privilege of investing in stocks. He just dropped that idea."

Hume and the political philosopher 1

2011-10-28T01:30:00.001-07:00

There is a famous dispute, among the intellectual historians of the early American Republic, about the extent to which Madison borrowed from Hume. The dispute may, on the surface, be about ‘borrowing’ ideas, but underneath it is about the mechanisms by which nations are formed, and the place of ‘ideas’ in history, one of the great arguments in the White Mythology.

It was Douglass Adair who gave the dispute its modern form by emphasizing, against the economicist views of Charles Beard, the effect of intellectual history on the shaping of the Constitution. Adair pointed to the borrowings from Hume in the Federalist 10. Adair pictured Madison with a book of Hume’s essays, opened to “Idea of a Perfect Commonwealth”, in which Hume wrote:

“Though it is more difficult to form a republican government in an extensive country than in a city; there is more facility, when once it is formed, of preserving it steady and uniform, without tumult and faction.”

Hume goes on to suggest a two fold process, in which the people, including the lowest, vote, followed by the work of the highest magistrates, presumably the representatives of the people, who then do something like forming a government – which is exactly how the American Senate was first instituted.

Edward Morgan, coming after Adair, admitted the intertext, but debated the inference: to him, Hume’s passage was about a community without faction, whereas Madison, reaching back to his Montesquieu, advocated a community in which party would block party. This, Morgan claimed, was a trope of a different color. [I take this general history from Mark Spencer’s “Madison and Hume on Faction (2002)]

I’m going to leave behind the argument about Hume’s influence on Madison and focus on Hume’s very negative image of the political intellectual. This type seems to function in two incompatible ways in Hume’s thinking – on the one hand, we cannot credit the political theorist with forming the commonwealth – all Platonic Republics are born and die in the heads of their creators – because the commonwealth is the result of the struggles of the interest and passions of different parts of the population. But if the philospher cannot positively shape the commonwealth according to his ideas, he can, on the other hand, introduce factional strife into the commonwealth.

This sums up a sense of the intellectual that is very much part of the Anglo culture.

James Buchan, in Crowded with Genius, summed up Hume’s dissent from Whig historiography as follows:

“In essays such as ‘Of the Liberty of the Press’, he portrayed Britain as a precarious equilibrium of often disreputable forces – Court patronage, parliamentary corruption, a free press,commercial competition – that were the residue of the violent political conflicts of the seventeenth century. For all his Scottish origins and friendships, he had no time for Whig or indeed any ideology: there was rarely, he later wrote, any ‘philosophical origin to government’.3 The British constitution was for Hume the
product of violence, and its form was both unintended and precarious.It was also, as might have been expected, civilian: a creation, as he also later wrote, of ‘that middling rank of men, who are the best and firmest basis of public liberty’.(86)

Hume anticipates Burke’s acidic view of the ‘theory men’ who, in his view, were dissolving the organic order of France in order to institute a structure unfounded in custom or piety – one that could only legitimate itself by the appeal to raw economic self-interest. But Hume moves in a different direction than Burke later did, and his eyes were on a story that Burke would have preferred be shrouded in reverent obscurity: that of the rise of Christianity and the fall of Rome.

The Lockian subject in Lilliput

2011-10-26T03:07:00.000-07:00

I'm recycling this post from 2005. It is certainly pertinent to my character under capitalism theme.
...

There’s a tradition in the literature about Gulliver’s Travel that extracts the Lockean Gull in Gulliver. The argument goes back to a very fine essay by W. B. Carnochan entitled, Gulliver’s Travels: An Essay on the Human Understanding?

Carnochan’s argument is straightforward: “Lemuel Gulliver, like the mad projector of the Modest Proposal, appears to be a version of the Lockean man.” Carnochan is probably on solid ground in thinking that the perceptual changes on which Swift plays like a jazz xylophonist are suggested by Locke’s theory that the human mind is shaped by sensation – ideas themselves being the end product of an experience that begins
externally (mysterious as that beginning may be) with the encounter of a sense instrument and an object. As is well known, this theory leads elsewhere in the empirical tradition – that moment of non-experience hardening into a thing that can’t be, logically, experienced, meaning that the perceived object must be usurped by the philosopher and put in the mind – some mind. Berkeley suggested God’s. This is a theory that a writer like Swift is bound to squeeze all the absurdities out of. Which is why Denis Donoghue takes the Lockean suggestion one step further,
and claims that what we are seeing, in Gulliver’s Travels, is how easily the Lockean subject falls prey to the Stockholm syndrome. He is continually captured, and continually acclimated so to the point of view of his captors that he begins to adopt it. Historically, there's also warrant for this -
Swift lived in a time when English men and women were always getting captured, by Moors, Indians and other heathen, and were continually shocking their countrymen by converting to pagan or Islamic ways.
In other words, Gulliver’s typical peripeteia is that of a man who goes from one ‘brainwashing” to another – and he gets to it by going through funk, animal fear, and his own tradesman’s capacity for fawning, with the power of the mind, here, being wholly in the power of the powers that be.

Donoghue’s thesis seems to explain a larger pattern in Gulliver’s Travels, until one notices that Gulliver seems much too aware of his brainwashing to be merely one of the brainwashed. At least in the Lilliput section, where Gulliver is critical enough of thread dancing and the like. He is not, however, critical of titles – and no matter how small the Liliputians are, the emperor carries a title as big as Louis XIV’s.

To my mind, the way to get a-hold of Gulliver is to see him as the double of M.B. Drapier.

In the first Drapier letter, the narrator (who is, after all, a fiction) says this:

“I will therefore first tell you the plain story of the fact; and then I will lay before you how you ought to act in common prudence, and according to the laws of your country.”

This is in the clear as water style of Gulliver himself. And yet, Drapier’s
letters are all warnings, and the satire runs to that point. Whereas what is
Gulliver writing for? In the letter from Captain Gulliver that prefaces the
book, he does claim that the book is intended as a warning:

“I do in the next Place complain of my own great Want of Judgment, in being prevailed upon by the Intreaties and false Reasonings of you and some others, very much against mine own Opinion, to suffer my Travels to be published.

Pray bring to your Mind how often I desired you to consider, when you
insisted on the Motive of publick good; that the Yahoos were a species
of Animals utterly incapable of Amendment by Precepts or Examples: And so it hath proved; for instead of seeing a full Stop put to all Abuses and
Corruptions, at least in this little Island, as I had Reason to expect:
Behold, after above six Months Warning, I cannot learn that my Book hath
produced one single Effect according to mine Intentions: I desired you
would let me know by a Letter, when Party and Faction were extinguished;
Judges learned and upright; Pleaders honest and modest, with some Tincture of common Sense; and Smithfield blazing with Pyramids of Law-Books; the young Nobility's Education entirely changed; the Physicians banished; the female Yahoos abounding in Virtue, Honour, Truth and good Sense; Courts and Levees of great Ministers thoroughly weeded and swept; Wit, Merit and Learning rewarded; all Disgracers of the Press in Prose and Verse condemned to eat nothing but their own Cotten, and quench their Thirst with their own Ink. These, and a Thousand other Reformations, I firmly counted upon by your Encouragement; as indeed they were plainly deducible from the Precepts delivered in my Book.”

This is a mixture of the satirist’s targets since Aristophanes and Swift’s
fictitious creatures, the Yahoos and the Houyhnhnms, who are very close to making any system of virtue and vice absurd by embodying it in impossible extremities of the disgusting and ... well, it is hard to find one term to describe the Houyhnhnms, although the idea of these equine stoics is both alarming and funny. It is like the most impossibly inbred English aristocracy. And Swift adds a sentence that seems pointed at his own self: “And, it must be owned that seven Months were a sufficient Time to correct every Vice and Folly to which Yahoos are subject, if their Natures had been capable of the least Disposition to Virtue or Wisdom.”

Is this Gulliver sticking out his tongue at Mr. Drapier?
And is Mr. Drapier Jonathan Swift as tradesman?

The satirist needs a preliminary sketch, acquaintance with the primogenitive caricature. And that caricature happens to be the self.

But Mr. Drapier, too, exists – in fact, his fictiveness is oddly blurred by his entrance into the all too real exploitation of Ireland, which is forever locked in Swift’s unwavering field of vision, a thing to see, a raree show of instituted vice. He feels about it … well, as LI feels about Bush’s America. Bush’s America degrades my mockery by casting itself into forms of such pitiful tastelessness, hypocrisies that have been exposed for so long that the exposures are growing moss, bluster that wouldn’t frighten a sheep, that mockery has to seek restraint – has to seek other tangents to make indignation feel-able. If not to reform the Yahoos, at least to relieve the writer's own spleen.

Mr. Drapier’s way is simply to tell the plain story of fact.
The meta-story is that the British Prime Minister, out of every venal motive, conspires to allow William Wood the right to coin money for use
in Ireland. The contract costs Wood money, and he proposes to make up
that money and make a profit by chiseling on the composition of the coin
– in other words, creating half pence on the cheap, which could be exchanged for good coin. This was at a time when the matter of the coin
was important – a penny should contain a penny’s worth of metal. A gold coin should contain an amount of gold equal to the worth of the coin.
Of course, the coins were routinely shaved, by everybody. But to coin them
pre-shaved, so to speak, was to go one step beyond. The intro to the edition of the Drapier’s Letters on the Gutenberg site says this:

“The patent was really granted to the King's mistress, the Duchess of Kendal, who sold it to William Wood for the sum of £10,000, and (as it was reported with, probably, much truth) for a share in the profits of the coining. The job was alluded to by Swift when he wrote:

"When late a feminine magician,
Join'd with a brazen politician,
Expos'd, to blind a nation's eyes,
A parchment of prodigious size."

Coxe [a Swift commentator] endeavors to exonerate Walpole from the disgrace attached to this business, by expatiating on Carteret's opposition to Walpole, an opposition which went so far as to attempt to injure the financial minister's reputation by fomenting jealousies and using the Wood patent agitation to arouse against him the popular indignation; but this does not explain away the fact itself. He lays some blame for the agitation on Wood's indiscretion in flaunting his rights and publicly boasting of what the great minister would do for him. At the same time he takes care to censure the government for its misconduct in not consulting with the Lord Lieutenant and his Privy Council before granting the patent. His censure, however, is founded on the consideration that this want of attention was injudicious and was the cause of the spread of exaggerated rumours of the patent's evil tendency. He has nothing to say of the rights and liberties of a people which had thereby been infringed and ignored.”

If you have not read the Drapier’s letter, go to the intro to get some sense of the controversy, and then go to the fourth letter. That’s the hair-raising letter – a blow against the colonial system, a cry against the infamy, a rush at the system that’s truly in rare company. I suppose Martin Luther King’s Letter from the Birmingham Jail is the American counterpart, except that King is never bitter. Swift’s letter begins like this:

“Having already written three letters upon so disagreeable a subject as
Mr. Wood and his halfpence; I conceived my task was at an end: But I
find, that cordials must be frequently applied to weak constitutions,
political as well as natural. A people long used to hardships, lose by
degrees the very notions of liberty, they look upon themselves as
creatures at mercy, and that all impositions laid on them by a stronger
hand, are, in the phrase of the Report, legal and obligatory. Hence
proceeds that poverty and lowness of spirit, to which a kingdom may
be subject as well as a particular person. And when Esau came fainting from the field at the point to die, it is no wonder that he sold his
birthright for a mess of pottage.”

Every blow in this letter lands. Gulliver’s Travels – with its Gull for a mockery – plays a double game with its moral points, making them and denying them in the same gesture. One remembers that the point is the wholesale reformation of Yahoo nature in seven months time. This is Jonah waiting for the fire to consume Ninevah, and being bitterly disappointed that it never comes. Or rather, this is taking that spirit of Jonah and both inhabiting the prophet’s disgust and taking up a position outside it to observe with clinical precision the prophet’s vanity. But Drapier is a character who has been transported beyond vanity. In a passage that was considered treasonable, Swift considers that Ireland is no ‘depending kingdom’ with England, but equal in its freedoms. This casts doubt on the charnel foundation of colonialism, which is currently being implemented in Iraq on just the ground that the Iraqis are incorrigible children and the Americans are paragons to be mimicked. Ireland, after all, was the template for all English colonial ventures to follow. This is the Drapier at his most intense. One wants to say that this is the crescendo of the letter, but the rhythm, here, disallows crescendos:

“For in reason, all government without the consent of the governed is the
very definition of slavery: But in fact, eleven men well armed will certainly
subdue one single man in his shirt. But I have done. For those who have used power to cramp liberty have gone so far as to resent even the liberty
of complaining, although a man upon the rack was never known to be refused the liberty of roaring as loud as he thought fit.”

Ladies and gentlemen, a round of applause for the Holocene!

2011-10-25T04:26:00.000-07:00

In his nobel prize speech, Faulkner, at his most Polonian, said that man will ‘not only endure. He will prevail…” This may have made some sense at the dawn of the nuclear bomb age, and perhaps these words have to be set as a sort of defiant humanism against a global war that killed 50 million people.

However, the hope of man prevailing has steadily lost altitude over the last couple of decades, and will, I think, continue to seem more and more the long shot. Man prevailing has meant man creating a treadmill of production and a treadmill of consumption that now seems both unstoppable and disastrous. Parents, today, calmly expect the fish to disappear from the oceans by the time their children have achieved middle age. The elephant, the tiger, and the rain forest are all marked down to be remembered as theme park accessories.

As man prevails, he destroys the Holocene in which he was born, nourished and flourished, and he does this with the calm lack of attention with which a person, say, cleans the lint and old tickets out of his coat pocket. After all, the Holocene might go, but at least BP is back and ready for business – and has purchased its first new lease in the Gulf, thanks to the anti-Holocene Obama administration. Which, as we know, will be succeeded by the anti-Holocene Romney administration, which will basically pursue the same policies.

Thoughts of the Holocene have been with me since last night, when A. and I traveled up to the Cinema St. Michel by bus, forked over an amazing 10.5 Euros each, picked up two clunky dark glasses, and plunged, 3-d-ily, into the depths of the Chauvet cave. I’ve been looking forward to seeing the Herzog film since I first read about it, since I am a big fan of caves. One of my favorite interviews, when I still interviewed – ever since interviewing Gregory Curtis, the ex editor of Texas Monthly who wrote a fascinating book on the subject after having immersed himself in the literature (which is, by all accounts, oddly polemical – every generation seems to have a dominant theories about the Paleolithic people that are then overturned, with maximum contempt, by the next generation) and gone and visited the caves, or those he could. Oh, to go from cave to cave! What a blissful idea.

Here’s what I wrote after reading Curtis, back in 2006:

Reading it, we were struck like by 100 000 volts that during the Upper Paleolithic – that wonderful time when there were, max, 150 000 people in Europe, and life was good for around twenty thousand years - the cave artists generally didn’t draw or paint or engrave people. There were your stray vulvas, the masked bird man, many hand prints, but generally – no people. Instead, there were mammoths. There were lions. There were rhinos and horses. Oddly, much fewer reindeer, even though reindeer meat was the spam of the Paleolithic – it was always poached reindeer for breakfast, fricasseed reindeer for lunch, and reindeer pudding for dinner. We are often told how to evolution stories about this or that human habit, but in reality, the way those how to stories are formed is that evo psychologists extrapolate back from ‘primitive people’ of today to those wandering around 200,000 years ago. However, this habit is in serious disconnect from archeologists, who have long held that ethnography of people today, in no matter what state of society they live in, is essentially unhelpful when trying to reconstruct the way the inhabits of the Eurasia 30,000 years ago lived. It is impossible not to imagine back using our PBS/National Geographic images, but what tribe do we know of that doesn’t draw people? Deleuze and Guattari talk of the special faciality of the West – this seems right, on all accounts – but to show so little interest in people when one has mastered perspective, and the expressive character of animals? That seems quite significant. But of what? Well, this is where speculation is dumb, but irresistible.”

My speculative position is that the cave art of 30,000 years ago, with its absence of the human, marks the time when – just perhaps – humans did not assume they would prevail. They did not even assume they were superior, since of course they knew – the horse was superior for speed, the lion and tiger and bear was superior for strength, the bird for flight, and so on.
There wasn’t - I would speculate, in this scene still dotted with other hominid candidates for most likely to survive - the sense that homo sapiens was superior in any department at all.

Given this sense of an overwhelmingly un-human world, the Chauvet paintings are all the more incredible. But I watched not just for the painting, but for something Curtis’s book had mentioned, which is also mentioned in Judith Thurman’s account of Chauvet:
“Twenty-six thousand years ago (six millennia after the first paintings were created), a lone adolescent left his footprints and torch swipes in the furthest reaches of the western horn, the Gallery of the Crosshatching.”

I don’t know why this stray detail effects me so much, but it does. When Herzog finally showed the footprints, I got dreadfully tearful.

notes on the treason of the clerks

2011-10-23T02:54:00.001-07:00

Let’s make a square:

Eternal ---------- Partial

Contemporary-------- Universal

These are the parameters of Benda’s conception of the clerk, or the intellectual, in the 20th century. They also fit, to a degree, Gramsci’s reflection on organic intellectuals – which runs counter to Benda’s notion of the clerk - and Mann’s 1919 idea of the Non-political intellectual.

Mann’s non-political intellectual is the most complex case, because Mann’s irony creates odd combinations, linking the partial (German values) to the eternal (transcendent cultural values), which is an inherently unstable pairing – irony, here, is not simply a rhetorical trope, but a shy conceptual synthesis, one that never quite gets made.

In fact, from the point of view of the contemporary (say, the engaged Intellectual against which Benda fought), it is rather easy to ‘unmask’ the eternal and the universal. After all, these two categories are identified, in the end, very much with a locale and a history. They are identified with the “West”, that semi-region that really designates the continual process of Westernization – a process that operates on the agricultural populations of France as well as on the Nahuatl speaking populations of Mexico.

And yet, when the contemporary critique has done its unmasking, one can, from the point of view of the eternal, unmask the unmasker – for what is this unmasking done in the name of? It is not made outside of universal history- it is, on the contrary, an event within universal history, within modernism, and is inseperable from the development of the world market. It, too, is a carrier of Westernization.

From the Marxist point of view, the contemporary develops its sense of the eternal in the concept of revolution, which is paired with a new universal – one that is made after the World market has created, indeed, a world. This would be the universal working class, which is the only class with a real interest in abolishing class – in, that is, the revolution. Again, these are uneasy pairings.

I don’t mean to imprison the topic of the ‘intellectual’ or clerk in a structural cage: but rather to show the broad semantic elements of the narrative of the intellectual as it was put together in the nineteenth and twentieth century, and its disappointments.

insurance for the wealthy, bandaids for the rest

2011-10-22T01:31:00.000-07:00

Over at Crooked Timber, there is a short but clarifying post about the cause of the 2008 crash, put in the form of a reply to Brad Delong, who has maintained that what I will call the inequality view of the crash is not true - that is, it isn't true that “we are in a recession basically because of the disppearance of a huge amount of household sector wealth”.

The Crooked Timber post arms itself with an arresting statistic from, I suppose, the Census, recycled through Nate Silver's column in the NYT: "The median American’s non-household wealth declined by 14% between 2001 and 2007. So when household wealth evaporated, guess what happened?"

Although Brian doesn't go into it in depth, he does use this statistic to point out that the 'boom' in the 2000s covered a bust - the bust in income. Which should lead us to some reflection about the policies that were and are being pursued that contributed to that bust.

I have urged the view that it is wrong to view the housing bubble solely as an accident or a disaster - a point of view fatally colored by the bubble's bust. The housing bubble, far from being an accident, was a necessity – that is, if we were to pursue the remedies to the solution to the recession of 2000-2001 suggested by Bush, and that are being recycled, in a more pernicious form, by both Obama and the Republicans in this round. The tax cuts – the most important of which may well have been the cut to capital gains taxes – and the deficit financial policy that was enacted via war spending, an enormous increase in Medicare due to the new drug supplement package, are important factors here. The third leg of the political economy of the 2000s was Fed policy. Famously, the interest rate was used by the Fed not as an index reflecting the real state of the American economy, but increasingly as a tool to maintain financial security wealth - in fact, Bernanke became so obsessed with trying to maintain stock market values, as we saw in 2007, that he pursued an utterly bizarre policy, dictated solely by an attempt to keep the stock market from sliding. All three parts of this policy were responses to the long range crisis, which was squarely and simply one of wealth inequality. That is at the very basis of these crises, and that will continue to be at the basis of the crises as the Reps and the Dems do everything they can to ignore it. Unfortunately, this inequality crisis can only be solved politically – and no political player on the horizon even sees it.

Thus, to understand the recession of 2008, you have to understand the effects of the solution to the recession of 2001. I don’t think the name for the sum of those solutions is “Bush” – the Democrats made no attempt to make inequality an issue, because they had neutered themselves on that front in the 90s. Let’s call it, instead, neo-liberalism. The neo-liberal model is always going to lead, is structurally dedicated to, increasing wealth inequality – for which it uses the government as a backstop, as we saw in the Treasury-Fed program of feeding trillions of dollars to Wall Street in the form of 1 percent or below loans, and as a dispensor of band-aids, as we saw with the marginal increases in EITC.
French political scientists around Foucault liked to talk about l’etat providence – the welfare state, if you like. Neoliberalism does not, as its proponents like to say, break with l’etat providence – they simply change its focus. The state now operates as a Wallfare state – redistributing upwards.

Are the clerks on the barricades this time?

2011-10-21T04:34:00.001-07:00

One day Tolstoy, who was at that time an officer in the army, confronted a fellow officer who he had seen whipping a peasant and asked him: Have you never read the New Testament? The officer replied with a question of his own: ‘have you never read the army’s rules and regulations? Julien Benda put this story as an emblem at the beginning of La Trahison des Clercs, a pamphlet that became famous in the late twenties, because to Benda, Tolstoy’s question was central to what it used to mean to be a clerk – that is, an educated person who defends humanistic values. And the nameless officer’s reply, Benda thought, was what it meant to be a clerk, as the intellectuals abandoned the side of the eternal for the side of pure doxa. The clerk now serves a political passion, and speaks for the interests of a temporal and limited group, whether economic, national, or party. The clerk now sides with the army’s rules and regulations.

I, too, am interested in the clerk as a figure, although I betray humanity, in Benda’s eyes, by thinking of the clerk as, primordially, in the Great Transformation to an industrial and market economy, an agent of circulation. On the other hand, the clerk is dialectically riven – both the promoter of those routines that, in the countryside, the factory, and the store, generated a capitalist mentality, and the first responders to the elevation of the level of alienation this entailed. The clerks are the poets of the routinized world.

It is in this sense that Benda’s fight for eternal and against the engaged ‘intellectual’ is not, as it would seem to be at first glance, simply a reactionary gesture, a Christian nostalgia.

Benda started writing for the dreyfusard part of the press – he was published in Peguy’s Cahiers – and his career lasted well into the era of the existentialists, against which he took aim with furious quotations in his long second preface to The Betrayal of the Clerks, when it was reissued after WWII.

So: I want to look at Benda, Thomas Mann’s Reflections of an Non-political Man, and Russell Jacoby’s book on the last intellectuals – all in the light of the Occupy Wall Street movement – in some upcoming posts.

Don't let the Fed enact another quiet bailout!

2011-10-19T04:13:00.000-07:00

Suggestion for a Occupy Wall Street Sign: Stop Bank of America from Getting FREE US INSURANCE on ITS DERIVATIVES!

And here's today's story:

Ben Bernanke apparently used a rear entrance in Boston, yesterday, to avoid the Occupy Boston protestors.
That's par for the course, as Bernanke and his Fed are masters of the rear entrance.
For example, take the Bank of America announcement of its 6 + billion dollars in profits for this quarter. Doesn't that mean that bailing out the banks worked? Our 16 trillion in loans for the behemoths can be criticized on many levels, but surely we can't criticize the techno genius that resulted in a solvent bank system, eh?
Well, apparently not. This is what is happening before our eyes, from the Economic populist site:

"It appears Bank of America moved Merrill Lynch derivatives to a FDIC insured subsidiary. Bloomberg:

Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.

The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.

By moving toxic assets, i.e. derivatives, into a FDIC insured subsidiary, gives BoA's Merrill derivative holdings indirect access to the Federal Reserve discount window and also if the bank fails where the derivatives are now located, the FDIC is required to pay depositors through their insurance guarantee. It appears from Bloomberg's report that $53 trillion of BoA's derivatives are being tied into depositors*, which implies the Federal Reserve and the U.S. taxpayer have the potential to be on the hook.

Bank of America’s holding company -- the parent of both the retail bank and the Merrill Lynch securities unit -- held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades.

Nice huh? Bank of America just transferred risk to the taxpayer with no approval by regulators, Congress and of course the public."

I'm reminded of the scene in Chinatown in which Jack Nicholson discovers that the city has been dumping water during a drought - in the service of a land development scheme, as it turns out. He goes to the water department and talks with the head of it, a man beaufitully named Yelburton, yed there, who tells him:

"Wait -- please sit down, Mr. Gittes.
We're... well, we're not anxious
for this to get around, but we have
been diverting a little water
to irrigate avocado and walnut
groves in the northwest
valley. As you know, the farmers
there have no legal right to our
water, and since the drought we've
had to cut them off -- the city
comes first, naturally. But,
well, we've been trying to help
some of them out, keep them from
going under. Naturally when you
divert water -- you get a little
runoff."

A little runoff. That is what the 99 percent is living through! But the Fed has a beautiful system all in place to help the people who really count.

http://www.economicpopulist.org/content/bank-americas-socialize-risk-and-reap-reward-business-model

destruction is the ultimate luxury

2011-10-18T13:12:00.000-07:00

I'm dredging this up from a post I wrote in 2002, because I think it is relevant to the psychology of the Occupy Wall Street movement. And to the psychology of the academic and policy elite who criticize the movement.

In 2002, two British professors, Andrew Oswald and Daniel Zizzo, reported on an experiment in which various subjects were gathered together and given cash, distributed – by arbitrary gift and betting – in such a way that some got more and some got less. Then, subjects were allowed to anonymously burn other people’s money – only, however, if they were willing to reduce their own.

62% of those tested chose to destroy part of other test subjects' cash, and half of all the cash was destroyed by other subjects.

A story about this experiment on the site Mindpixel contains this summing up of the burners:

"The researchers found that those who gained the most additional money at the betting stage burned poor and rich alike, while disadvantaged laboratory subjects mainly targeted those subjects they saw getting what they perceived as undeserved financial windfalls."

The libertarian magazine Reason reported on Oswald and Zizzo's experiment, too, under the headline, Burn the Rich. This is, in fact, not so far from the way Oswald and Zizzo presented their results themselves. Curiously, what the experiment clearly shows is that the rich also burned the poor and the rich. The difference is that the poor showed solidarity – they burned only those with higher amounts of cash – while the rich did not.
That the rich burned the poor and the rich seems not to have impressed itself on Reason, even though, as they correctly reported:
"Zizzo and Oswald found that nearly two-thirds of players happily paid for the privilege of impoverishing their fellow participants. Even as the price of burning went up, the percentage of people who chose to burn other players did not fall substantially."

Z. and O. had labels for two classes of burnings, depending on the rank of the burner. One they call rank egalitarianism. Most of the burners who were poorer sacrificed to burn the rich. The other they call reciprocity. Their thesis is that the rich burners were simply responding to being burned.

"In the case of our money burning experiment, advantaged and disadvantaged subjects may,
because of the existence of the advantage, perceive the game differently. This different game
perception implies that subjects prime differently two social categories, one based on deservingness and one on reciprocity. For disadvantaged subjects, what matters is the fact that advantaged subjects got the advantage undeservedly, and they did not. Advantaged subjects may think not only in terms of deservingness, but also in a different light, namely, in the light of the fact that disadvantaged subjects will burn them. They may then want to reciprocate the favour.'"

But how does this explain their earlier result, that the rich burn the rich? Moreover, hidden in the paper is an interesting paragraph about the behavior of the "undeserving" rich -- those who accrued money arbitrarily (in the experiment, money could be made by betting, but money was also randomly allocated at intervals, thus randomly favoring certain individuals).

"In the twin experiment run in Oxford, Zizzo (1999) crossed advantage and deservingness in a factorial design, and found that deservingness mattered. More specifically, he found significantly more negative interdependent preferences in sessions where the advantage was induced unfairly than when it was induced according to a relatively fair procedure. Moreover, in one condition of that experiment, stealing was possible. Zizzo then found that there was substantially more stealing by advantaged subjects if they had got the advantage undeservedly. One possible interpretation of this interaction effect was that undeservedly advantaged subjects expected themselves to be stolen or burnt significantly more, and behaved using a reciprocity logic, in defending their own gains significantly more."

It is interesting how neoclassical models and ‘rational’ choice has bent the minds of academics, which is the only reason I can think of for calling the rich burning the poor or each other a reciprocity hypothesis. After all, O. and Z. assumes that the rich are the very epitome of rationality. They are profit maximizers. Thus, they couldn’t be burning because, well, they could get away with it. Oswald and Zizzo accord the egalitarian strategy a sequential primacy that exists psychologically, even if it doesn't exist empirically. That is, the rich could be striking in the expectation that they will be struck.
However, one should notice -- or an old deconstructive veteran like myself notices -- the binary which is operating here. While the rich are operating on "intention" -- that is cognitively -- the poor are operating on "passion" -- the envy aroused by riches. Why, actually, don't we think that the poor are striking pre-emptively, like the rich? Especially as Zizzo's earlier experiment shows that the perception of the "unfair" accrual of wealth, which is prevalant among its benificiaries as well as among its victims, prompts further "unfair" action among its benificiaries. I.e., the undeserving rich steal. The unconscious bias of the experimenter consists in this: poverty denies one a full sense of self-interest. Thus, we interpret the actions of the poor, sacrificing to burn the rich, as envy, while we accord a sense of intellectual strategy to the wealthy who do the same thing. Oswald and Zizzo show themselves to be the worthy heirs of those nineteenth century economists who saw the laboring classes as so much betail, so much dangerous animality. An entity to be organized by the police, always liable to filch from the fortunate.

To put this another way -- we think the reciprocal thesis explains too much, is bounded by a circular definition, and is ultimately inseparable from passion itself. This passion expresses itself in the wealthy burning the wealthy -- surely, here, we aren't seeing a response to rank egalitarianism, but the play of pure power. Let's suggest to Z. and O. a most non-Anglo explanation for their findings, one explored by Mauss in his classic essai sur la don: one of the attributes of being rich is the ability to destroy. Destruction is the ultimate luxury. This is as true among Manhattanites as among the Kwaikutl. Zizzo and Oswald might want to reference such classics, in this vein, as various Beverly Hillbilly episodes, the tv show Dallas, and the dot com parties of 1999.
It is such power that the Occupy Wall Street people are protesting. Nobody gets wealthy just to continue getting wealthy – the miser is an obsolete figure. More and more wealth is needed to reinforce another passion, the cruel and relentless passion for power. At the heart of power is the power to destroy. Far from simply being envious, the poor are wise enough not to be deluded by the veil of rationality. The same can’t be said for many social scientists.

my own humble attempt at tax simplification

2011-10-16T11:55:00.000-07:00

Simplifying the tax system on the 9-9-9 system (which, fans of the Book will notice, is 6-6-6 upside down) is all the rage right now.

I have an even simpler plan. It is based on a phrase used over and over by the anti-tax (the rich) crowd. The phrase is simple – taxes take dollars from your pocketbook. Or your wallet.

My plan takes this phrase very seriously, because it gives us a nice way to visualize money. The anthropologist, George Marcus, has theorized, from his ethnographic research among the rich, that one of the salient characteristics of fortune is its invisibility. That invisibility has many semiotic effects: one of them is obviously to reverse the marginal disutility thesis, which would make it seem like the millionaire of the billionaire would discount the added dollar. Invisibility melds together all money as one thing – which means that the 4.9 billion dollars made by hedgefund manager John Paulson (the man who, in conjunction with Goldman Sachs, shorted mortgage backed securities while Goldman sold its suckers, er, clients, mortgage backed security ) is to him one unified thing. Not perhaps in all instances. Paulson could well chip off a bit of that 4.9 billion for a coupla yachts, or a home. For instance, a nice 25 million dollar ranch in Aspen. The 3 million dollar Olympic tower “pad”. But when it comes to taxes, every invisible bit needs defending.

This is where my tax plan comes in. It is called the envision the wealth tax plan, and it is pretty simple. It uses a standard – the Tommy Hilfinger Men’s Tilton Front Pocket Wallet. According to the specs, it is made of Soft Polished Lamb, and features 4 credit card pockets, an ID window, and a metal hinged moneyclip – just the kind of wallet that the rightwing pundit wants to conjure up with the government taking dollars out of it!

So, here’s the scheme. It is pretty easy to assess how many Tommy Hilfinger Tilton Front Pocket Wallets would be needed to contain 4.9 billion dollars. A bill has a width of around .005 inches. You need to stuff 49 million of them in the wallets. The capacity of those wallets is, at best, able to accommodate, say, 50 one hundred dollar bills, or 5,000 dollars. That gives us nine hundred eighty thousand Tommy Hilfinger Tilton Front Pocket Wallets. Now, lets compare this to, say, the janitor who works in thePaulson and company building. The average salary for a janitor in NYC comes to a whopping 21,000 per year, which is the equivalent of four THFP wallets, and a little change. So we have four of these wallets, and we line them up against nine hundred eighty thousand THTFP wallets, and we ask – is it fair that the four wallet guy didn’t pay the same percentage tax as the guy with nine hundred eighty thousand THTFP wallets?

And then we hit ourselves on the head and go, dude, are you on acid?
And then we do our tax reform! Which is simple – no tax for the janitor. No tax for even people who have 20 THTFP wallets. No, make it 40. After that, the government starts seriously collecting your THTFP wallets. After you reach 100 hundred, it really gets down to business, going with the 90 percent marginal rate that was common in good king Dwight D. Eisenhower’s day.
See how simple this is? It is called the visualize their fuckin’ fortunes tax. It is beautiful, and will save the country a load of grief from self pitying people who have done nothing world historical, or even necessary, to earn nine hundred eighty thousand THTFP wallets stuffed to the gills with 100 dollar bills.

pascalian peasant economics

2011-10-15T06:43:00.001-07:00

Paul Warde makes useful distinction (in Subsistence and Sales: the peasant economy of Württemberg in the early seventeenth century, Economic History Review, 2006) between a school of the economic historiography of peasant economies that emphasized Ricardian decreasing returns and Malthusian limits to resources, and a school that emphasized a Smithian growth approach, in which the peasant’s natural inclination to barter and trade and maximize profit is merely hindered by rent seeking and anachronistic guild like institutions. One of the star representatives of the latter approach, Sheilagh Ogilvie, attacks any theory that holds that the peasant economy is somehow special, because, according to her, such a theory is founded on the idea that peasants are irrational. Her reading, then, of Polanyi style analysis is that it is deeply patronizing to peasants and blind to the way peasants were struggling to become capitalists against the dead weight of feudal institutions:

“But whether 'irrational' or 'differently rational', peasants lack the conventional economic concepts of wages, capital, interest, rent, and profit. [Ogilvie here is criticizing non-Smithian approaches] Consequently they can neither minimize costs nor maximize profits; instead, they minimize risks and seek to 'satisfice' culturally defined consumption targets.9 These theories regard peasant minimization of risk as excluding 'capitalist' maximization of profit, a distinction puz-zling to mainstream economics, which regards all economic agents as seeking to obtain the lowest possible risk for the highest possible return.”

If this were an accurate criticism of what is the dominant anthropological paradigm of peasant economies, Ogilvie has chosen the right method to smash it – finding records of peasants minimizing costs, making profits, trading, using money, etc.

But as Ward points out, this pushes the non-Smithian approach into absurdities it never articulates. Far from thinking that peasants have no conception of opportunity costs, as Ogilvie puts it, the school she attacks most harshly bases its whole analysis on the peasant’s awareness of opportunity costs.

Ward is, I think, correct here:

“Historians have not recently argued, at least for central and western Europe, that peasants did not understand profit generally. They have argued that they were not profit maximizers , or primarily motivated by profitability, a rather different position, although it is in truth rather difficult to establish if, or indeed how, peasants might have conceptualized profit or loss across a range of activities over any given period of time.”

Ogilvie, in other words, is using the evidence from the record, which amply demonstrates trading, quantifying, and wage labor, as something that demonstrates a collective social tendency on the part of the peasants to conform their economic activity to these kinds of proto-capitalist features. But she actually shows nothing of the kind, since she thinks it is sufficient to show trading in order to show all the institutionally driven activities that result from the circulation of commodities. In fact, the peasants in her example often show exactly the kind of limited good mentality that would make investment and profit maximization not only institutionally difficult, but culturally suspect.

…
How capitalism arrives is a question that is wrapped up with how the capitalist character is formed. It seems, in a sense, that capitalism, with its double aspect – of a certain form of production and a certain form of circulation – is boobytrapped. One must understand the mentality of the agents of circulation in order to understand the condition of the agents of production, and one must understand the limits imposed on the agents of production in order to understand the possibility of circulation. One must, then, understand not only technology, but ideology.

Mainstream economics is proud of its methodological individualism, but it doesn’t believe it. The individual, as the economists understand, does not spontaneously produce his acts. The man in an office, or behind a plow, or behind a gun, did not find his places by inventing his scene. The idea that the individual invents society is, evidently, an act that has never attributed to any individual. So the mainstream economist has come up with a wonderful concept saver: the individual, in their terms, is essentially a chooser. Goethe’s Faust cried out that in the beginning was the act – but the economist’s homo economicus counters that in the beginning was the choice. The cosmology of the preference wraps the societal world in a mystery – for one never seems to come to acts, only to choices. Every blade of wheat, every board of wood, every drop of ink, is not what it seems to be, but is instead an agglomeration of atomic choices. By some inexplicable accident, these choices also seem to be matter, and have weight and chemistry. The only thing that isn’t chosen is choice itself.

This is a rich cosmology, but not necessarily a believable one. So it is reinforced by the time honored method of scolding. If we don’t hold to individualism, all responsibility is lost, and anarchy and concentration camps are loosed upon the world.

The origin of this cosmology is surely to be found in the period between around 1650 and 1789. And it did not arise among the peasant masses, yearning to profit maximize, but among a varied assortment of clerks and policymakers. Intellectuals in Edinburgh universities and ministers at Louis XVI’s court, as well as slave traders and sugar merchants were all starting to put it together.

By the late twentieth century, the capitalist operation had become so dominant – at least among intellectuals – that historians could not believe the cosmos had ever been different. Thus, in the spirit of conquest, the historians went back to pre-capitalist societies and attempted to rescue them for capitalism. Thus, theorems of market equilibrium, or of public choice, are imposed as the real language of rationality that the peasants were, as it were, articulating in mime.

My own sense is that the peasant economies were not irrational, nor are the rational capitalist economies non-peasant – the rational economic institutions are colonized by non-equilibrium, non-growth, non-maximizing kinds of behavior, and peasant economies surely involved calculations to some end. However, instead of the models that Ward and Ogilvie use to understand rationality of peasant economics, I think one should turn to contemporaries, like Blaise Pascal, for the vocabulary of what was afoot. Pascal’s three forms of the spirit – l’esprit geometrique, l’esprit de finesse, and l’esprit juste give us a much deeper sense of what was in question, in the maintenance of the household, the community, and the person in peasant economies, than we are going to get from Ogilivie’s grid. yet historians in the 21st century, who don't yet face a powerful alternative to capitalism, are unlikely to give up the project of conquering the past with the models of the present, even if the rules they are using predict a much different past than the one that we have. Actually, they also predict a much different present, which must be adjusted, nudged, and jammed to fit into the mainstream economist's rational formats. But the present is malleable, while the past, ah, the past - the problem is that the past can't be fired.
More's the pity.

I'm gonna tell you how its gonna be...

2011-10-14T04:17:00.001-07:00

At the moment, I presume that on inauguration day, January 19th, 2012, President Obama will hand the reins to President Romney. Romney will have a brilliant political prospect: he’ll be dealing with a Senate and House of Representatives that will be solidly Republican.

But what of the quality of life of the American public? That will have declined precipitously during Obama’s four years. The African-American community will have declined, economically, to where it was in 1990. The American middle class will have continued to lose asset wealth and income, returning to the 1995 point. The housing market will be in deep freeze. Unemployment will be around 9 percent, but in terms of labor participation, the number of Americans working will be in the 1980s levels. The environment, in the meantime, will be starting to show the first signs of its crash. We know its coming, but we don’t know how it will manifest itself – although we know that the government will respond to it in the truly clueless way that it responded to the Gulf Oil disaster, which, I have read, will result in ‘millions’ of fines for BP – instead of the billion plus that BP would owe if the Obama administration had chosen to, well, enforce the law. Perhaps the environmental collapse will be represented by a small thing – for instance, Obama’s FDA has approved sea food from the Gulf in spite of the fact that they have made a much smaller and narrower investigation of the toxins released in the Gulf than George Bush I’s FDA made after the Valdez disaster. That may mean cancers, but cancers a long way down the road. Maybe a series of birth defects, though, or something equally mediagenic. My outside bet, though, is on a negative flood: that we will have the first drought incident soon – some town, say Reno, in the West will simply run out of water. The kind of thing that the townspeople will actually have to flee.

Quality of life for the 20-29 set will, of course, continue to be grim, except for those who are the children of the wealthy. Unemployment in that demo is now at 33 percent, and it isn’t going to go down. As for the mortgage cramdown, that has been an utter failure. Luckily, Obama’s Justice department has failed so far in creating a ‘compromise’ that will let banks off the robo-signer fraud hook. Here, the weakness of the administration has actually created a vacuum that is being exploited for good – a rare instance.

Under President Romney, I think it is safe to say, some big banks will fail again. The Fed, perhaps under the same leadership, and the Treasury – under a Geithner like figure – will save the banks through massive welfare, disguised as a loan. What was broached under Bush and Obama was obviously a template for the next phase of neo-liberalism, which – in its first phase - was never about ‘shrinking the government’, and always about cementing an alliance between newly assertive plutocrats and policymaking elites. The second phase is not going to find money in some interest bearing scheme, as the debt slaves have been tapped, so the new scheme will be to use the powers of the government to create and issue money at an amazingly low price for the use of the speculators.

No man can see into the next minute, much less the next five years. But if the spirit of Christmas future is any guide, Romney, too, is destined to failure and a single term.

Radical idea: let's stop kissing the ass of the rich

2011-10-13T03:19:00.000-07:00

In its story about a trader going to jail for inside trading, the NYT injected an explanation of the trader's status that is, well, a sort of thermostat reading of the temperature of this here plutocracy.

"Though Mr. Kimelman lived comfortably, he was hardly a Wall Street titan. In his best year, Mr. Kimelman said he earned about $400,000 and never had more than $1 million in the bank."

I love it when the plutocratic libido scratches a hole in the placid news discourse that tries to normalize it.

Compare this to Heritage Foundation's recent study of the poor, showing the American poor really have nothing whatsoever to bitch about. Here's the rundown from a Bill O'Reilly show:

"O'REILLY: The Census Bureau reports that 43 million Americans are currently living in poverty. The bureau defines poverty as a family of four earning less than $22,000 a year. But the conservative Heritage Foundation says that many poor American families have lots of stuff. Here now to analyze, Fox Business anchor Lou Dobbs.

[...]

O'REILLY: Eight-two percent have a microwave. This is 82 percent of American poor families. Seventy-eight percent have air conditioning. More than one television, 65 percent. Cable or satellite TV, 64 percent -- thank God.

DOBBS: Amen, brother.

O'REILLY: Cell phones, 55 percent. Personal computer, 39 percent."

Wow, heady stuff for the poor, there. In fact, the conservative case for the poor being rich poses the question: why aren't the rich lucky enough to be poor? One would think that the logical next step would be Eisenhower era taxation, since the rich, too, I have heard, have air conditioning, tv, personal computers, and - a sad note - often only a million in a bank account at any one time.

But all mocking aside - one demand I think the 99 percent can and should agree on is: the rich should no longer expect us to continually kiss their ass.

age of the bark beetles

2011-10-12T02:42:00.000-07:00

Photo by Josh Haner, NYT

“When I go see things with my children, I let them know they might not be around when they’re older,” he said. “‘Go enjoy these beautiful forests before they disappear. Go enjoy the glaciers in these parks because they won’t be around.’ It’s basically taking note of what we have, and appreciating it, and saying goodbye to it.” – Ralph Keeling, Scripps Institution of Oceanography

In 1975, two years before he was tortured and murdered, Pasolini wrote a column in the Corriere della serra entitled “on the fireflies’. He begins with a question much debated on the Italian left at the time – how fascist was the ruling order in Italy? – but he quickly left the usual pro and contra behind, instead moving to a new view of Italy’s history by pointing to an unremarked moment, an unnoticed threshold. This threshold was not unique to Italy, but could be extrapolated to the the history of any capitalist or industrial country:

‘Since I am a writer and I polemicize, or at least I discuss with other writers, permit me to give a definition of a poetic-literary character to this phenomenon, which has intervened in the Italy of our times…

In the beginning of the sixties, because of air pollution and, chiefly in the countryside, because of water pollution (azure streams and limpid ditches), the fireflies began to disappear.”

Pasolini’s poetic-literary approach brings together natural and human history in one enormous stroke. The disappearance of the fireflies is not simply a fact of concern for naturalists – it is a fact that has a bearing on memory, on the bonds of one generation to the other, and even on the enormous invisible losses that come with ‘creative destruction’ and that refuse to be registered by the political forces that express themselves day after day, and now minute after minute, in the media. By noticing the fireflies, Pasolini breaks out of the parochial discourse of blame and offense in which both the hegemonic party and the oppositional movements in Italy were stuck, like flies to flypaper.

Pasolini’s words became famous, but the signal he sent out died. Nobody ever formed a firefly party. The machine did not stop. The treadmill of production and consumption continued to roll over the planet, producing the routines that make it really impossible to notice that there are no fireflies, that you can’t see the stars at night, that the elms are disappearing, that there are no bluebirds in the garden. Making it impossible to see where you live and what has changed.

Perhaps just as the disappearance of the fireflies marked a cut in the Holocene humanness of Italy, the appearance of the bark beetles mark a cut in the Holocene humanness of Americans. And perhaps, or so I, ever the exaggerator, hope, the appearance of the OWS movement marks an awareness that the treadmill is now running us into the ground.

The bark beetle has a pretty simple lifecycle. The adult beetles dig into the bark of trees, and lay eggs there, as well using the cover of the bark to survive the cold weather. Many of the pupae that hatch from the eggs die off, due to cold temperatures. Some, however, survive, enough that another generation of pine beetles will again lay its eggs.

This simple lifecycle has been sped up by the last Conquista – the conquest of the atmosphere. In terms of the lifecycle of the European movement outward, the first conquest was that of the Americas, the second the partial conquest of Asia, and the third that of Africa. The fourth seizure is of uninhabited atmosphere, which is “free”, and which has been laid claim to by Western industry and now global industry. Just as the conquest of the Americas was accompanied and made possible by a mass dying – the mass dying of the Amerindians, due to the diseases carried by the Europeans – the conquest of the atmosphere is also leading to a mass dying, from which the descendents of the Europeans are averting their eyes.

“From the mountainous Southwest deep into Texas, wildfires raced across parched landscapes this summer, burning millions more acres. In Colorado, at least 15 percent of that state’s spectacular aspen forests have gone into decline because of a lack of water.
The devastation extends worldwide. The great euphorbia trees of southern Africa are succumbing to heat and water stress. So are the Atlas cedars of northern Algeria. Fires fed by hot, dry weather are killing enormous stretches of Siberian forest. Eucalyptus trees are succumbing on a large scale to a heat blast in Australia, and the Amazon recently suffered two “once a century” droughts just five years apart, killing many large trees.”
The natural history of the Americas and the political history of the moment are, it seems, joined in ways that are a mystery – or rather, that are made a mystery. We actually register these things, but out of the corner of our eye.

And this is the political party we need to form: a corner of the eye party. A firefly party. An aspen party. The treadmill of production is deafening, but perhaps we can plug our ears enough to look around. Look around and recognize that the unemployment we face and the massive inequality of wealth that has seized the developed world with the implacable and mechanical force of a bark beetle infestation and that infestation itself are all parts of one thing: the politics of the Holocene. These are the stakes. And if we lose the Holocene to the hedge funders or the coal plants or BP, we lose everything.

“But for the natives…God’s hand hath so pursued them as, for three hundred mile’s space, the greatest part of them are swept away by smallpox, which still continues amongst them. So as God hath hereby cleared our title to this place…” John Winthrop

smash the revolving door - another demand for the OWS crowd!

2011-10-11T00:58:00.000-07:00

The Democratic party is supposedly divided between a rightwing faction and a liberal faction. In reality, the Democratic party, like the GOP, is in thrall to the revolving door faction. The revolving door Dems found their emblem and hero in Peter Orszag, the Obama advisor who, going from strength to strength, helped plan Obama’s “pivot” to the issue of the deficit before launching a career for himself in the financial world that Obama’s Treasury and Obama’s appointee to the head of the Federal Reserve so amply supported with 16 trillion dollars in loans over the last three years.

Orszag, though, is easy pickings, an amoral DLC-er who pathetically wowed the kids hired to fluff for Obama in the press – people like Ezra Klein – because he had that shark vibe and was reportedly good with the babes – wow! How neat! It is hard to take the likes of him seriously, given the likes of those who take him seriously.

The revolving door is a term that helps us understand the government/corporation complex as one big building. It involves SEC enforcers who go on to become Goldman Sachs shills, and then sometimes even go back to the SEC, where they become ever more valuable by diverting or blocking enforcement until they go out again. It involves Congressmen, Senators, and their aids, who go from legislating energy policy to shilling for Nukes. The revolving door zone is the shadow government that operates much like shadow finance – it is where all the disgusting bits are stuffed. You as the voter want the Public Option, and vote for the candidate who promises it? Tom Daschle, as the big Pharma lobbyists, tweaks your desire and out comes – crap mandatory private insurance accounts for the middle class!

The on and on goes on and on, we can rock this way to the break of dawn…

So lets examine a bit of the career of Rob Cogorno, a true poster boy of the Obama era. As his peppy bio tells us at the Elmerdorf/Ryan site:

“With experience at the center of the major public policy fights in Congress over the last fifteen years, Rob Cogorno brings an unparalleled expertise in the legislative process to Elmendorf | Ryan. In particular, Cogorno offers clients a singular understanding of the complex dynam- ics in the House of Representatives and the House Democratic Caucus that ultimately shape legislative decisions for the two parties on both sides of the Capitol.”

Bringing experience – how delightful! What is this entity to which he has brought his experience in ‘shaping legislative decisions”?

Here’s a little hint, from a Reuters story:

“Expert network firm Gerson Lehrman Group has hired a Washington lobby firm with close ties to the Democratic party as it braces for fallout from a U.S. insider trading investigation, according to two people familiar with the matter.
Gerson Lehrman, the largest of a group of firms that specialize in matching hedge funds with industry consultants, began interviewing lobbying firms a few weeks ago and selected Elmendorf Ryan in the past few days, said these people, who asked not to be named because they were not authorized to disclose the information to the media.
The hiring of Elmendorf Ryan comes as federal prosecutors in New York have charged at least eight people associated with a rival expert network firm with giving confidential corporate information to traders and analysts with hedge funds.
The unfolding investigation has caused some hedge funds to scale back their use of expert network firms.”
The strong ties with the Democratic party are the result of the firms close association with some of the sterling losers of the past twenty years. You remember the clueless opposition that, during the Bush years, proved that the worm doesn’t necessarily turn? This is where they ended up! The firm is headed by Dick Gephardt’s former top aid, Steven Elmendorf. And as you’d suspect, Rob Cogorno also used to work for Gephardt. You see, times have changed since old soldier’s fade away – now they fade into fat jobs with lobbying firms, and so do retired or defeated Congressmen. Congress is now something like a prep school for the real money –a fact well known to all Congressmen and their staffers. Thus, even before you make the leap for the revolving door, you want to show that you are a player. This is the ‘experience’ you can bring to K street.

Interestingly, while campaign finance reform has a strong claque among editors, who love to opine about it partly because it is a freebie – nothing is ever going to get done, as everybody knows – the revolving door culture is never discussed in terms of ‘reform’. So in 2008, the Politico could put in this announcement about Rob Cogorno and everybody in the know politely applauded:

“Cogorno joins Elmendorf
House Majority Leader Steny H. Hoyer (D-Md.) has shuffled his staff a lot lately, starting with Rob Cogorno.
Most recently, Cogorno was the floor director to Hoyer in both his majority leader and Democratic whip offices, until Cogorno recently joined Elmendorf Strategies.
Prior to working with Hoyer, Cogorno was the research director and appropriations policy adviser to then-House Democratic Leader Richard Gephardt (Mo.), where he developed floor strategy for the consideration of all appropriations bills and was Gephardt’s chief liaison to the House Appropriations Committee.
“As a counselor to House Democratic Leaders Steny Hoyer and Dick Gephardt, Rob has been at the center of every major public policy fight in Congress over the last 15 years,” said Steve Elmendorf, founder and president of the firm. “Rob brings an unparalleled expertise in legislative process to Elmendorf Strategies, offering our clients a singular understanding of the complex dynamics in the House of Representatives and the House Democratic caucus. Those dynamics ultimately shape legislative decisions for the two parties on both sides of the Capitol.”
Elmendorf’s prose here has all the charm of the smell of a nasty aftershave lotion clinging to a cheap suit. More interesting is the fact that such parasites on the Republic can strut their stuff as though this were normal business. It isn’t. It can be changed. There is no way the ‘singular understanding’ of a Rob Cogorno should be used to help Gerson Lehrman skate around an investigation. We would be up in arms if suspected bank robbers were able to make donations to the Judge Retirement Fund before trial, but we let such stinky business transpire in the supposed halls of power. Our halls of power. We shouldn’t. No top aid should be able to work for a lobbying firm for a goodly period of time – say five years – after he leaves the aid business. And for Congress folk, the period should be longer – ten years at least. Election to public office shouldn’t be a preface to gorging on the gravy train.

Let's pour rat poison in the gravy train. And if that means we can't get 'qualified' people to advise us on legislative policy - if that means the plutocrats don't have their clawprints all over the legislation meant to rein them in - all the better. .

What is the natural economy

2011-10-10T09:44:00.001-07:00

Historians who try to describe the rupture between capitalism and pre-capitalist modes of production face a dilemma. The predominant narrative that describes this rupture places capitalism in a teleological position vis-à-vis what came before it, and this makes it hard to describe pre-capitalistic economies in their own terms. This is especially true in as much as the clerks who existed in these pre-capitalist economies did not conceptualize the economy in the same way that economists conceptualize economies. The grounding condition for economics as a science is a recognition of economics as a social fact – and this conditions indissolubly binds together economics and capitalism.

Even anti-capitalist economics, given its most systematic form by Marx, often falls prey to the teleological assumption that history slouches, inevitably, towards capitalism – although Marx backed away from that interpretation, as is clear from the letters he exchanged with Russian populists, where he confines the history he sketches in Capital to Western Europe, and declines to provide a ‘general philosophico-historical’ theory – in other words, Marx quits the universal history business. But universal history, disguised as the World Market, had by this time has armed itself with gunboats and penetrated into Chinese ports and taken up machetes and gone into Congolese jungles. The world market, celebrated in the Communist Manifesto, was not giving a-capitalist societies much choice in the matter.

In Germany, the attempt to find terms with which to conceptualize pre-capitalist systems revolved around the idea of the “natural economy.” This would be an economy dependent on in kind exchange – barter. It was an economy in which credit was not developed, and money was treated with suspicion. It was an economy, moreover, pervaded by a non-individualistic mentality. The latter is what makes it natural, because it takes the dynamics of the household – whose “naturalness” was assumed by Aristotle, but of which the wild varieties of form were known to the 19th century sociologists – and projects it upon the world.

The natural economy is associated with the historical school in Germany, but in the contemporary study of peasant societies, it is associated with theory of A.V. Chayanov, the economist who wrote a very influential book about peasant economies that was re-discovered in the 1960s – although Chayanov himself was not, for by that time his bones had long decayed in some Gulag camp. Chayanov infused it, as well, with suggestions from Rousseau’s brilliant reconstruction of the primitive economy in the Discourse on Inequality. Rousseau’s keen sense of the function – the necessary function – of idleness, revery and sleep in the existence of his primitives finds its economic language in Chayanov’s thesis. This is how how Charles Perrings, in “The Natural Economy Revisited”, describes it:

“He proposed … that the objectives of the head of such a household are qualitatively different from those of a capitalist enterprise, in that the former seeks not to maximize either output or profits but to balance the marginal utility of income and the marginal disutility (the drudgery) of the work of all members of the household. In general, he claimed, the intensity of labor expended by members of the household is inversely related to its productive capability, implying a sharply declining marginal utility of income in excess of that deemed
"necessary."

On the other hand, there is a line of French anthropological thought that dismisses the concept of the natural economy. Marcel Mauss, for instance, in his essay on the gift, writes that this category deforms the notion of the gift and counter-gift that forms the economic background, in his view, of not only primitive, but also modern societies. From the German historicists to Chayanov, there is an insistence on the supreme value of utility as the basis of all calculation, even if these calculations are not made with well defined units.

Mauss summed up his comparisons and analyses of various rites and customs of gift and counter gift in a last chapter that reads like a blast at utilitarian economic thinking and its projection upon all forms of human activity:

“These facts respond as well to a crowd of questions concerning the forms and reasons that one names so inappropriately exchange, the barter, the permutatio of useful things, that following the prudent Latins, who were following themselves Aristotle, a economic history puts at the base of the division of labor. It is something other than the useful that circulates in these societies of all types, the most of which have already been illuminated. Clans, ages and generally sexs – due to the multiple relations to which contacts give rise – are in a state of perpetual economic effervescence and this excitement is itself very little material; it is much less prosaic than our sales and purchases, then our wages of service or our plays on the stock market.”

Mauss, I think, is approaching economics not through the calculation of advantage as the economists see it, which is even prevalent in the historical school’s nostalgia for a natural economy, but instead as a form of life in which advantage encloses qualities and adventures that quantity does not cover.

It is against this background that I’d like to look at a controversy in the historiography of ‘peasant economies’ and proto-industrialisation in an upcoming post.

the golden bullet proof golf shirt

2011-10-10T02:18:00.000-07:00

In the 1990s, Thomas Friedman wrote a book that, in a sense, was the founding document of neo-smarm – a pundit style for the end of history crowd. It was called the Lexus and the Olive Tree, or something like that, and it was littered with phrases that are instantly bullet point-able - amply demonstrating the difference between the art of the epigram and the banality of the sound byte. Neo-smarm is neo-liberalism that has kicked off its shoes, and Friedman is its master.

I mention this not to attack the latest Friedman column – who cares about the latest Friedman column, or the one before that, or the one before that? Rather, it is to borrow a phrase from his book that struck me at the time. Friedman coined the phrase ‘golden strait-jacket’ to refer to the ‘de-politicizing’ of economic decisions. By de-politicizing, he really means the segregating of political decisions from the will of the people, as evidenced in elections and other such Christmas ornaments. . Not that Friedman was opposed to democracy, now – he loved the use of democratization. For him, day trading ‘democratizes’ the stock market. In fact, any popular consumerist fad immediately gets the “democratizing” label from Friedman, who’d like the producers of wealth to confine their politics to the consumption of brands. Meanwhile, the smart guys in the room, in Treasury, the Fed, and the board rooms of the great and good banks, make all the macro economic decisions for us. Cause they have the models, you see.

Since Friedman’s paen to the end of the business cycle, we’ve had – the business cycle. The first one whipped the butt of NASDAQ, and the second one whipped the butt of about every American corporation, including the business of shopping malls, from which Friedman’s wife, and Friedman, derived their considerable wealth.

And yet, the golden strait-jacket survives and flourishes. Its biggest fan is the President. And its effects are strewn across the Great Recession. What other democratic society would look at the destruction of the wealth of the middle class – the destruction of 12 trillion dollars in their assets – and decide to loan, at less than one percent, 16 trillion dollars to the investor class? The answer is no democracy would do that. For that, we need a golden straight jacket.

It has taken some time, but the rest of the populace, it now appears, understands that golden strait jackets are really made of another material – one excreted, I believe, by mammals.

And so, as the golden straitjacket evolved, so did the bullet proof golf shirt. Via a fascinating article on couture for the plutocrats in the New Yorker by David Owen, it appears that Colombians, after having to undergo the violent wars of the 80s and 90s that pitted a pathological guerilla left against a pathological paramilitary right and both against a pathological network of cocaine cartels, have emerged from that din and casualty count with some innovative ideas about safety. Just as Big Pharma learned from the dime drug dealer how to market its anti-depressants and other various pills, so, too, from the world of kidnapping and drive-bys has emerged a cottage industry for protecting the plutocratic gut from the hollow tipped bullet.

The man the article centers on is a designer named Manuel Cabellero, who demonstrates his product by shooting the visitor: “the founder and chief executive of a company that makes "specialized personal protection," and when he shot me I was wearing one of his products, a black suede jacket with lightweight bulletproof panels in the lining. The company, which is called Miguel Caballero, makes fashion-oriented body armor, and sells it mainly to executives, celebrities, political figures, and others who have security concerns but don't want to dress like members of a SWAT team.

Popular items include a three-button blazer, a V-necked wool sweater, a Nehru vest (for customers in the subcontinent and, conceivably, for anxious idolizers of Sammy Davis, Jr.), and a polo shirt, which, because of its extra bulk, may usefully promote a compact golf swing. Caballero also makes bulletproof camouflaged hunting clothes, to protect hunters from misdirected shots fired by their companions--an eventuality that he referred to as "a Dick Cheney accident."

Are we all seeing ‘growth industry” here? We should be. As from the American ashes there begins to grow an American third world culture, I do not think the plutocrats are going to be able to do without the third world billionaire’s accessories, among which are the four car squadron (which I have seen, negotiating the streets of Mexico City), the bodyguards and bodyguards of bodyguards (the latter selected to stop the first line of bodyguard if, as it sometimes turns out, the first line gets the idea to kidnap the body they are guarding) and the appropriate security procedures. The age of the golden bulletproof polo shirt is definitely here.

“When he started making bulletproof garments, nineteen years ago, his customers were almost exclusively Colombian--a reflection both of the small scale of his original enterprise and of the turmoil in the country at the time. Today, ninety-eight per cent of his production is for export. He has dealers in two dozen countries and customers in more than fifty, and he has a retail boutique in Harrods, where some of his golf shirts sell for the equivalent of about twelve thousand dollars.”

Twelve thousand dollars is a significant sum. How significant? According to a recent probe into the underbelly of the wondrous neo-liberal age prophecied by Tom Friedman: From Andy Kroll in Tom's Dispatch

“According to Census data, between 2009 and 2010 alone the black poverty rate jumped from 25% to 27%. For Hispanics, it climbed from 25% to 26%, and for whites, from 9.4% to 9.9%. At 16.4 million, more children now live in poverty than at any time since 1962. Put another way, 22% of kids currently live below the poverty line, a 17-year record.

America’s lost decade also did a remarkable job of destroying the wealth of nonwhite families, the Pew Research Center reported in July. Between 2005 and 2009, the household wealth of a typical black family dropped off a cliff, plunging by a whopping 53%; for a typical Hispanic family, it was even worse, at 66%. For white middle-class households, losses on average totaled “only” 16%.
Here's a more eye-opening way to look at it: in 2009, the median wealth for a white family was $113,149, for a black family $5,677, and for a Hispanic family $6,325. The second half of the lost decade, in other words, laid ruin to whatever wealth was possessed by blacks and Hispanics -- largely home ownership devastated by the popping of the housing bubble.”

So, we can evaluate the golf shirt as double the wealth of a median Hispanic family. Fun, eh?

“I had heard that President Obama, during his Inauguration, wore clothing made by Caballero. Neither Ballesteros nor Caballero would say anything about that, but they did tell me that the company's customers include King Abdullah II of Jordan, the Prince of Asturias, a Thai princess, and the leaders of El Salvador, Guatemala, Honduras, Paraguay, Panama, and Malaysia.”

History lesson for Occupy Wall Street: smash the stock market

2011-10-07T23:42:00.000-07:00

In the election of 1910, Democrats took control of the House of Representatives. The economy still hadn’t recovered from the bust of 1907. The original impetus for the progressive legislation that had received support and scorn in equal measure from Teddy Roosevelt – America’s most bipolar president – had not died out, which is why President Taft couldn’t block the amendment to the Constitution instituting a federal income tax. Unfortunately, the move to force corporations to incorporate federally, instead of in the states, failed.

There was, back in those days, a burning issue that has flamed out so much since that the very word brings an eery blank to the mind: overcapitalization. The reason this figured so heavily as a scare word among the progressives is that the era from the turn of the century to the establishment of the Interstate Commerce Commission, in 1914 – which is generally taken to bookend the progressive moment – saw the instantiation of what Lawrence Mitchell, in The Speculation Economy, claims is the founding moment of modern American capitalism: the subjugation of industry to finance. This was a moment that expressed itself on several fronts – for instance, the Courts finally cleared up the confusion about how property law applied to corporations – creating a new form of property, defined by John Commons this way: [the old common law definition] … is Property, the other is Business. The one is property in the sense of Things owned, the other is property in the sense of exchange-value of things. One is physical objects, the other is marketable assets.” [quoted by Sklar, page 50]

One of the results of this legal change, or rather, one of the reasons it came about, was that the notion of a corporation as a body issuing stock was changing. And that change brought up the charge of overcapitalization – that a corporation, instead of finding its raison d’etre in using its assets to produce a good or service on which it made a profit, was now an entity wrapped up entirely in the market for its stocks.

In 1911, a bill was voted through the House of Representatives and narrowly turned down in the Senate that would have smashed this legal structure. S. 232 built on legislative ideas already crafted during Roosevelt’s term (remember, Roosevelt was in the wings in 1911, and would run in 1912, thus ruining Taft’s chance at a second term). S. 232 would not only have required federal incorporation of all interstate businesses. Here’s Mitchell’s description of it:

“It would have replaced traditional state corporate finance law by preventing companies from issuing “new stock” for more than the cash value of their assets, addressing both traditional antitrust concerns and newer worries about the stability of the stock market by preventing overcapitalization. But it would have done much more.

S. 232 was designed to restore industry to its primary role in American business, subjugating finance to its service. It would have directed the proceeds of securities issues to industrial progress by preventing corporations from issuing stock except “for the purpose of enlarging or extending the business of such corporation or for improvements or betterments”, and only with the permission of the Secretary of Commerce and Labor. Corporations would only be permitted to issue stock to finance revenue-generating industrial activities rather than finance the ambitions of sellers and promoters. … S. 232 would have restored the industrial business model to American corporate capitalism and prevented the spread of the finance combination from continuing it dominance of American industry.” (137) In Sklar’s account of the Roosevelt era draft, ‘whenever the amount of outstanding stock should exceed the value of assets, the secretary would require the corporation to call in all staock and issue new stock in lieu thereof in an amount not exceeding the value of assets, and each stockholder would be required to surrender the old stock and receive the new issue in an amount proportionate to the old holdings.”

This may well be the most radical legislation every considered by Congress. Think of it – the stock market as we know it today simply wouldn’t exist. Instead of being a legal fiction, the stock holders would literally own the company, and their profits would be limited to the profits of the company. The price to earnings index would level out so that the stock price would only hover marginally above earnings.

Needless to say, America did not go down this path, and the powers that be found the experience so traumatic that it dropped out of any account of our history. We accept the equities market as it is as an expression of American capitalism. It is really an expression of changes in the physiology of American capitalism that came about during this era – almost overnight, in Mitchell’s view.

Changes can be changed. Incorporating all companies nationally, with the Commerce department, instead of this bogus crosspatch of state incorporations, would be one radical change we could make to take control of our economy. Another would be to get rid of a market based on P/E, and make it a market based on P/A - for Price to Assets.

to be buried naked

2011-10-06T13:35:00.000-07:00

For Mr. T.

I am fascinated and mystified by Chinese history. I am always coming across stories that are on the edge of allegory – but unlike allegory, don’t seem to reference any larger exterior abstraction. Rather, they seem to allegorize concepts I have never thought, and which I suspect have not been thought, at least not yet. Allegories of the virtual, quoi.

Which is my preface to this passage I found in an essay by a French sinonolgue, Jacques Gernet, entitled: To be buried Naked. From 300 B.C. to 100 BC, Chinese nobles engaged in a status contest of more and more luxuriant funeral ceremonies. It was not enough to be buried in one coffin – one coffin was put in another, all made of different and rare substances. It was not enough to be buried with ceremonial robes, but the finest jewelry had to be added. It got to the point that families ruined themselves to bury their dead.

Gernet notes: “It was thus necessary to be an original to go against practices that had imposed on all of society such powerful motifs, and to want to be buried nude, like a certain Wang Yangsun to which the History of the Han consecrated the following notice:

Yang Wangun was a man of the epoch of the Emperor Xioaowu. He studied the techniques of Huangdi and of Lao Tze. Very rich, he had given himself without counting to cost to various longevity practices. Being sick and on the point of dying, he addressed his sons as follows: “I want to be buried naked in order to make a return to my true nature. Don’t change my wishes the slightest jot: when I am dead, make a canvas sack, put my body in it, and dig a hole seven meters deep. When he put me in it, pull the sack off me from the direction of my feet, in order that my body might be in contact with the earth.” His sons, discovering that it was difficult not to obey his orders and insupportable to obey them, went to see his friend, the marquis of Qi (K’I), who wrote him this letter: “Although you are suffering, I have to accompany the emperor to Yong for the sacrifices and cannot come to see you. I am praying that you remain alive. Don’t worry, take your medicines and you will be properly sustained. I learned that your last wish was to be buried naked. If the dead are unconscious, there would be nothing to say about that. But if they are conscious, you would inflict a cruel torment on your cadaver underground; and you will be going to present yourself naked to your ancestors. This is something that, in your interest, I cannot accept. Moreover, doesn’t the Classic of Filial Piety say: “They will make him a first and a second coffin, as well as a suit and a winding sheet? “ These are the rules that have been handed down to us from the saints. How can one be so stubborn and act individually, following one’s own knowledge?” To which Yang Wangsun responded: “I have heard that the sainted kings of old instituted the funeral rites, because men at that time did not have any regard for their deceased parents. But, in our days, we go too far. This is why I am having myself buried naked in order to redress the customs of my age. Sumptuous funerals are really of no use to the dead, and yet everyone tries to surpass his neighbor; this results in an unfettered waste of wealth, which will decay under the earth. What is put in the earth today is sometimes dug up tomorrow [by the pillagers of tombs]. But besides, death is only the final transformation and the return of all beings. When this return is accomplished and the transformation is perfect, beings return to their true nature. This return to the obscure indistinct which has neither form nor voice is the union with the Dao. The display of luxury aims to blind the crowd, but sumptuary funerals keep the dead from returning to their true nature. To act in such a way that the return cannot happen and the transformation cannot come to its destined end is to deprive beings of their natural place. But I have also heard that the spirit belongs to heaven and the body to the earth. When the spirit quits the body, each of them returns to their true nature. This is why one speaks of gui [the revenant]; gui means return. How can the cadaver, which remains as alone as a brute thing, be conscious? However, one wraps it in silks, one isolates it in two coffins, one ties up its limbs and its body in ribbons, one puts jade in its mouth, and in order that the transformation cannot happen, one mummifies it. It is only a thousand years later, when the coffins have decayed, that the dead can at last return to the earth and find their true home. By this logic, what good is it to be a guest of the earth for so long? In the past, in the time of King Yao, in high antiquity, in order to bury the dead, one scooped out a tree in the form of a coffin and one made cords from bamboo. One never dug too deeply, in order not to trouble the springs of water, but deep enough that the miasmas could not escape outside. The sainted kings loved simplicity above everything in life as in death. They never bothered with useless things and did not spend their goods on them. The great sums we now spend on burials retard the return and prevent the destined end. The dead have no consciousness of what is done in their honor, and the living don’t find any value in it either. It is a double fraud. And this, I will not do.” The maquis of Qi approved these words, and Yang Wangsun was thus buried nude.”

Wallfare around the world! and my definition of democracy

2011-10-05T13:52:00.000-07:00

The case of the Arab Banking Corp.

Among the banks that got TALF money from the Fed was a certain entity called Arab Banking Corp. Arab Banking Corp has a New York Branch and, when the ‘window’ of TALF was opened during the bad, bad financial blizzard of 2008, the Fed, in the best spirit of American hospitality, gave the bank emergency loans – on which interest ranged from 05 to 1 percent! to a bank that is partly owned and controlled by the Central Bank of Libya. Gadhafi’s bank.

According to Bloomberg, which broke the story -- -- the bank got five billion in loans. We, the people of the US, decided in our infinite wisdom, as routed of course through the ouija board that Ben Bernanke uses to decide these things, to loan the bank five billion dollars. And do you know that the bank paid it all back? That was so sweet. Of course, if I was given 72 rounds of money at one percent interest or below, I might be able to pay it back with interest and… even make a profit!

The Arab Banking Corp apparently made a wonderful impression on the Fed, on the Treasury, and on the Obama administration overall! Read the last paragraph of this passage from the Bloomberg story:

“The bank, then 29 percent-owned by the Libyan state, had aggregate borrowings in that period of $35 billion -- while the largest single loan amount outstanding was $1.2 billion in July 2009, according to Fed data released yesterday. In October 2008, when lending to financial institutions by the central bank’s so- called discount window peaked at $111 billion, Arab Banking took repeated loans totaling more than $2 billion.

Fed officials say all the discount window loans made during the worst financial crisis since the 1930s have been repaid with interest.

The U.S. government has frozen assets linked to the regime of Libyan ruler Muammar Qaddafi and engaged in air strikes against his military forces, which are battling a rebel uprising in the North African country. Arab Banking got an exemption that allows the firm to continue operating while barring it from engaging in any transactions with the Libyan government, according to the U.S. Treasury Department.”

Oh, those banks! The way the government treats them, it makes you dream… Dream the utopian dream of a government that treats its citizens the same way it treats international banks! I believe that dream is called democracy, and one day we will certainly have it.

From the files of Wallfare: Yorkville associates, come on down!

2011-10-05T01:40:00.000-07:00

In a series meant to probe that underappreciated beast, the toiling trader, Joris Luyendjik interviewed one pathological specimen in a high frequency trading joint who, after describing what he did – basically using a computer to poach micropoint, icrosecond advantages, which must be the reductio ad absurdam of the ‘market’ as an in any way useful social entity – regaled the readers of the Guardian with his philosophy, a sort of autistic egotism wrapped in Darwinian slogans that were exploded by my grandpa’s grandpa. However, the sad soul of the trader, and the sad state of an economy that hasn’t regulated him into extinction, is not the point of this post. The point was a bit of lore he spouted, that is now the common currency not only of the City, but of the Street.

“Some of the commenters [on the Guardian] figured out that I work for a hedge fund, meaning we use money given to us by clients. Hedge funds did not receive any bailout money. They also seem to think that these traders effectively trade with a safety net because of these bailouts. Clearly since no bailout money is given to hedge funds, they don't have this safety net.”

Of course, the trader is as wrong about his own business as he is about Darwin. Not that I blame the poor pathetic rascal: the amnesia about what the U.S. government did is miles deep on the Street. Wallfare has been so normalized that the traders and the high salarymen cannot even see it, now.

Here’s the story of one hedgefund that did get Wallfare:

“A Jersey City, N.J., hedge fund under Securities and Exchange Commission investigation received more than $230 million in federal loans as part of a government bailout program.

Yorkville Advisors has been part of the Term Asset-Backed Securities Loan Facility Program since last year. Under TALF, the Federal Reserve Bank of New York has up to $1 billion to lend as part of an effort to inject liquidity into the ABS market.
Yorkville received some $233 million of that financing, using it to buy $253 million in securities last year for its flagship, YA Global Investments. The TALF deals were made via a subsidiary of the fund, New Earthshell Corp., and placed with a special-purpose entity called YA TALF Holdings, Forbes reports. The hedge fund still owes the Fed $162 million.”

This is of course a pennyante amount. You, my friend, may not be able to get one cent from the Fed even if you write them and ask pretty please and include pics of your starving kids, but to other of the higher players in the Wallfare world, that loan is pocket change.
Since it isn’t pocket change to me, though (if I and one thousand of my clones worked one thousand years at the rate in which I make money, we would not have collected anything near 230 million dollars), I figure that it might be a good idea to poke around Yorkville Associates, and see what they are about.

So what does Yorkville do, and why would we want to loan it money?

Here’s a good summary of one of Yorkville’s big money makers:

“Yorkville Advisors, founded by 38-year-old Mark Angelo in 2001, is one of the largest hedge fund firms specializing in investing in thinly-traded and often illiquid outfits by making private investments in public equities, also known as PIPEs. The hedge fund firm reported nearly $1 billion in assets as recently as 2008. Angelo’s variation on PIPEs is a structured product called a standby equity distribution agreement, which like most PIPEs often causes the stock of the company receiving the investment to drop because it results in Yorkville’s funds collecting discounted shares.

A report prepared by Sagient Research’s PlacementTracker shows that Yorkville has entered into $762 million in PIPE deals since 2001, causing the underlying stocks to drop 38% on average in the first year. Most of those investments were made by Yorkville’s Cornell Capital Partners, which later changed its name to YA Global Investments.
YA Global Investments reported a total return of 6.04% in 2009 and 6.22% in 2008, its financial statements say. It reported a net investment loss of 0.09% in 2009 and net investment income of 5.43% in 2008.

According to the one-page independent auditor’s report prepared on August 13 by McGladrey & Pullen, YA Global Investments’ consolidated financial statements include investments valued at $804 million, representing 94% of its partners’ capital plus the amounts due to certain Yorkville special purpose vehicles, “whose fair values have been estimated” by Yorkville Advisors “in the absence of readily ascertainable fair values.”

Now, that seems a bit curious. We gave this outfit money so that it could use the money to mount a play to make selected stock prices drop, which made it money.

Hmm, how is this possible? Well, here’s an explanation of PIPE action as it pertains to another fund, the NIR group, written by Matthew Goldstein at Reuters:

"But what’s surprising to me is why the SEC is just looking into the NIR funds now, given that it has been a dominant player in so-called “death spiral” convertible market. These securities have gotten a bad rap over the years because they include a trigger that permits bonds to be converted into common shares whenever there is a precipitous drop in the prices of a company’s stock.

Back in 2004, the SEC launched a sweeping probe into the market for these and other so-called PIPEs–private investments in public equity. Most PIPEs are a form of a convertible bond, mainly sold by small-cap companies, with terms highly favorable to hedge fund investors.
The shorts love PIPEs because the flood of stock in these highly-illiquid small cap companies invariably pushes the share prices lower. Not surprisingly, death spirals are real popular with short sellers.

The SEC probe led to a number of actions against hedge funds charged with improper short selling. Many of the hedge funds nabbed by the SEC were found to be shorting companies doing PIPES in advance of the offering–in effect trying to game the deal.
When I worked at TheStreet.com I did a lot of reporting on PIPE abuses and the SEC investigation. NIR was never charged with any wrongoing by the SEC during that long-running investigation. And it’s very well possible that NIR did nothing wrong in the death spirals it invested in–just as it is possible Ribotsky’s firm has done nothing improper this time around either.
But in 2006, I wrote a story for TheStreet.com about the surprising return of the death spiral, and in it I noted that NIR was one of the biggest players in this kind of PIPE deal. Back then I reported that there were no allegations of wrongdoing by NIR, but the firm did report having “some stellar annual returns.””

Well, okay. The Federal Government can’t exactly loan money to the deadbeat homeowner. What would he use it for? Paying off his mortgage? The Fed just chuckles about such obvious inefficient wastes of money. The Government will, indirectly, loan to students, but not at one percent interest – cause that would barely cover the penthouses of the CEOs of the lending companies. As for poor children’s health care – who is gonna pay any loan there back? Forget about it. As Mr. O. and his Republican opponents are agreed, we just have to cut back entitlements to the non-value crowd.

But in the case of Mr. Angelo’s death spiral fund, different criteria apply. We need to loan to Mr. Angelo’s death spiral fund because we want to prevent Depression. We want to prevent catastrophe. We want to preserve civilization.

The death spiral fund is the kind of thing the government pats on the head. It is the kind of thing it loans 230 million dollars to.

Now, one of the arguments made in comments sections of blogs and newspaper stories about Occupy Wall Street is that the financial section is flailing. It is not racking up the profits. This argument is apparently oriented towards getting us to pity this sector, but it raises the question: you mean we loaned out 16 trillion dollars and the financial sector is still rotten?
In miniature, this seems to be the problem with Yorkville. Thus, the headline in Forbes earlier this year:
“New Jersey Hedge Fund Posts Its First Down Year In A Decade”

Turns out that the company has problems stemming from 2008 that it still can’t cope with. And even as the stock market recovered, a poor little fund that depends on a complicated mechanism to pull stock prices lower and benefit from the short side can’t seem to get no traction.

“The hedge fund firm, which reported nearly $1 billion in assets as recently as 2008, specializes in a structured product called a standby equity distribution agreement. In connection with investor redemptions it could not meet in 2008, however, Yorkville Advisors restructured its hedge fund operations, creating special purpose vehicles and giving redeeming investors the option of receiving securities in-kind or ownership in the SPVs. The SPVs were distributed pro-rata participation interests in YA Global Investments’ securities. The plan has been for the SPVs to get cash distributions as YA Global Investments liquidates its assets and for the SPVs to pay out its members.”

Ahh, financial gobbledy gook! In plain English, the fund resorted towards various shifts to cover up a money losing strategy, and lost money anyway.

Still, given these facts, our loan saved the company from bankruptcy, and so surely contributed to the greater good. Which brings up the question: what kind of greater good has Yorkville been generating over the past decade?

Looking up the company’s history, one discovers that it lies in a profusion of nomenclature and ‘vehicles’, which make it a little difficult to follow in any linear fashion. But one thing at least is clear. Yorkville is a legal entity created as part of something called Cornell Capital. And Cornell Capital, and Mr. Angelo, certainly have some interesting associates!

In 2007, an investor group named sleuthshares ran an investigation of a number of New Jersey companies that had two things in common: their directors had records for fraud, and they were connected to Cornell Capital.

“Sharesleuth’s investigation uncovered a daisy-chain of dealmaking that has provided millions in hedge fund money to small, struggling companies and has generated millions in stock and cash for consultants, promoters and other financial middlemen
Sharesleuth will outline those connections in a series of articles over the next few weeks.
At the center of the deal making is Robert D. Press, who a decade ago was president of a company that ran a boiler-room brokerage called PCM Securities Ltd. He was in his early 30s at the time.
Federal prosecutors charged in 1999 that PCM and several related brokerages were infiltrated by organized crime and became part of a vast “pump and dump’ scheme that cheated investors out of more than $150 million.
More than 50 people connected to PCM and three other firms – Hanover Sterling & Co., Norfolk Securities Corp. and Capital Planning Associates Inc. -- either pleaded guilty or were found guilty of racketeering or fraud charges.
Press was not among those indicted.
Press more recently has been a presence at several firms that provided money or consulting services to small public companies, including Cargo Connection and others listed in the New Jersey court documents.
From November 2004 until late 2006, Press also was co-portfolio manager for one of Cornell’s affiliated funds, Montgomery Equity Partners Ltd.
Yorkville Advisors LLC is the general partner of Cornell Capital, and also was general partner of two other funds, Montgomery Equity Partners and Highgate House Funds Ltd. The latter two funds have been consolidated into Cornell.
Mark A. Angelo, the managing member of Yorkville Advisors and president of Cornell, was the co-portfolio manager of all three funds.
Cornell said it no longer has any association with Press, noting that “it didn’t work out, so we parted ways.’’ However, Press still has an active telephone extension that is reachable through the hedge fund’s main switchboard.
Sharesleuth’s investigation shows that Press and the Cornell family of funds participated in at least two financing deals alongside Robert H. Pozner, who was one of the original defendants indicted in the New Jersey fraud case in 2005.
Pozner, a former stock broker and trader, has signed a plea agreement that calls for a maximum of five years in prison. He previously pleaded guilty to securities fraud and perjury charges in another stock manipulation case and served three months in prison.”

Well, heavens, what the internet turns up! It is hard to believe that a little blogger, moi, could find this out and the Federal Reserve couldn’t. So I suppose we must conclude that a death spiral fund with a shaky history - the kind of fund that engineers drops in share prices and has associates that have been fingered for pump and dump kind of operations in the past - is just the kind of thing that we must prop up so as to not suffer from Depression and other horrendous events. And now that we have propped up this financial services sector, we shouldn’t go around taxing its CEOs too onerously – poor babies had quite enough scares for one decade!
But we should righteously cut the entitlements that the wage class uses to pursue its frivolous lifestyle.
Ask an economist, and this is the answer he’ll give you.
Of course, we could give them all the raspberry and occupy Wallfare Street.

the fed dole: hartford insurance, come on down!

2011-10-04T04:37:00.000-07:00

Spotlighting Wall Street's Welfare companies

I've been loving the Occupy Wall Street group. And their newly published newspaper, the Occupy Wall Street Journal. So far it is only four pages. I'd suggest that the paper feature spotlights - easily assembled bits of new analysis about the entities on Wall Street that the Federal Reserve helped out, in a friendly way, with its 16 tril. in emergency loans.

So, without further ado, let's go on to one of them: Hartford Financial Services, which is of course more famous as Hartford Insurance. The Hartford took a heady flyer in the 00s, and alas, due to its CDS biz with AIG and its role in the sub-prime market biz, it was gonna have to go bankrupt when AIG had to go bankrupt. But luckily, Uncle Sam arrived! According to the Inspector General’s report on TARP:

“The Hartford Financial Services Group, Inc, which received 3.4 billion, reported that it invested 3.2 billion (94 percent) in high quality short-term investments or money market funds. This allowed the company to issue additional insurance policies. Hartford also provided $195 million (6 percent) in TARP funds to Federal Trust Bank…”

Now you might think, gee, isn’t it just sweet of Uncle Sam to loan out money to businesses who can then “invest’ them in short term money markets, i.e. put a couple billion down on a crap table? Why it is sweet. In fact, perhaps you should write your congressman suggesting that Uncle Sam loan you 3.4 billion dollars to invest in short term money markets. You can assure Uncle that you, too, will do something ultra virtuous with the profits.

But then, you might not have the pull Hartford has. Let’s look at their stellar CEOs!

The CEO in 2008, when Hartford needed just that pinch of help from Uncle, was a guy named Ramani Ayer. Now, you might think a CEO who steered the company near bankruptcy would be suffering at least a bit of a salary cut. You’d be right! According to Forbes, Ayer went from being the 76th on the list of CEO salaries all the way down to 151st. His total compensation was only 9.8 million, and that plummeted the figure for his five year compensation down to a mere 77.86 million. A man can barely buy a good cheeseburger (and a small town in Maine) for such a paltry sum.

Well, Ayer had generally a good run. The usual bumlicking profiles were issued about him in the 00s. He had the touch! He superbly managed the company - and how about that stock price. All the way up to when everything blew up on him. When he received criticism like this:

“The company and its stock price have taken such a battering that a retiree of The Hartford asked Ayer at the annual meeting when he would resign.

"Congratulations on driving The Hartford into the ground," Justin Winthrop, 88, of West Hartford, told Ayer. "You've destroyed the image, reputation and the name of The Hartford. When may we expect your resignation?"

Winthrop said he has been a stockholder since the 1940s, retired from The Hartford in 1982 after more than 30 years, and had been a secretary of the company — an officer level below vice president. He told Ayer if he didn't step down, the company's directors, who have "had their heads in the sand," should consider firing him.

Ayer, in response at the shareholder meeting, said nothing about resigning but said he understood it has been a traumatic time for shareholders and that he and the company are trying hard to restore its image.

In the interview, he added, "I feel we are in a very good place now with all the actions we have taken, the strategic thinking we have done. I really for now am focused on making sure we just continue that work."

In Connecticut, where the company had 12,500 employees at year-end, Ayer said the life and annuity operations "will certainly be impacted" by layoffs — the variable annuity business is being scaled back — and he expects property-casualty operations "would not be impacted anywhere near the same extent."

Now, to be fair, in response to the crisis and getting a little allowance from the Fed, Ayer’s compensation, as we pointed out, did go way down. And in due course he was canned, and the new CEO came in with an inflation adjusted salary – times are tough, and we can’t blame the new CEO, Liam McGee, for taking a bit more – he was given a mere 4. 8 million in cash and 7.26 million in stock.

He is not, of course, the only millionaire working in the upper management of Hartford. The Courier ran a nice article about the upper management compensation of Hartford last year, that should make us all proud that we helped these guys out:

"By any measure, 2010 was a significant turn-around year for The Hartford," said company spokeswoman Shannon Lapierre. "We reported $1.7 billion in net income versus a net loss of more than $888 million in the prior year."

Chief Financial Officer Christopher Swift received $2.1 million last year in salary, incentive pay, change in pension value, stocks vested and other compensation. Additionally, he received stock awards valued at $1.79 million when they were granted which will vest at a later date.

Swift, a former AIG life insurance executive, took over as chief financial officer in February 2010.

Lizabeth Zlatkus, the former chief financial officer and current chief risk officer, received $4.89 million in salary, incentive pay, change in pension value, stocks vested and other compensation. She also received stock awards valued at $2.67 million when they were granted and will vest later.

David Levenson, president of the company's wealth management division, was compensated $3.2 million, not including $1.3 million in stock awards that vest later.

Gregory McGreevey, chief investment officer and president of Hartford Investment Management Co., was compensated $2.55 million, not including $1.2 million in stock awards that vest later.

Andrew Pinkes, executive vice president of claims and head of commercial markets, was compensated $2.26 million, not including $782,617 in stock awards that vest later.

Former Chief Operating Officer John Walters received $5.37 million in salary, stocks vested, severance and other compensation, which doesn't include $1.77 million in stock awards that vest later. Walters left in July to "pursue other opportunities."

I particularly liked the fact that Hartford could cough up so many bucks for Walters when, apparently, he only worked at the company half a year. Good job! I'm sure that the money bought very valuable intangible good will from Walters, whereever his other opportunities lead him.

Among the comments to thsi Hartford Courier article, we especially like this one:

“Been with this company since coming out of college about 10 yrs ago. I do have a degree and several certifications. Upper mgmt lowered most employess tiers (demotion) because they wanted to restructure our career paths. Pay is low for someone who starts at the bottom and a typical annual increase is 2.5% of your salary. Work here only out of desperation.”

Well, times change, and Hartford changes with the times, too! After the Fed bailouts, Congress, pretending to care, passed a package of regulatory changes that especially impacted on systematically important financial players. Now, one definition of that is a player who is an insurance company who gets 3.2 billion dollars to ‘invest’ in the short term money markets from Uncle Sam. But apparently, it is no longer going to do that stuff, no sir! According to a recent NYT article, with which I’ll end this spotlight:

“A few big insurers have sheared off businesses that would land them under the Federal Reserve’s thumb.
In May, the Hartford Financial Services Group sold off a thrift it bought in 2009 to secure billions of dollars of bailout funds designated for banks. In February, the Allstate Corporation sold a similar bank that had made it eligible for aid, though it decided not to accept the cash.
Now, both Hartford and Allstate are arguing that they should not be deemed systemically important — a claim raising eyebrows in financial policymaking circles.
“You would want to be particularly attentive to firms that got themselves into trouble during the crisis, needed government assistance, and now that they are subject to real supervision at the federal level, are hoping to escape additional regulation,” said Michael S. Barr, who recently stepped down as the assistant Treasury secretary for financial institutions to return to the University of Michigan law school.
A Hartford Financial spokesman, David Snowden, said the sale was part of a broader strategy of “focusing our resources on our core business and insurance operations.” Allstate, in a statement, said its decision was partly due to concerns that the new financial legislation would impose rules that the company “did not consider beneficial given the limited role of the Allstate Bank in our overall strategic plans.”

be realistic, demand the impossible

2011-10-03T05:11:00.000-07:00

Another note for Occupy Wall Street.
One of the problems with the rhetoric of populism is that it has a tendency to lead one to the individual malfactor - which has its uses, but often masks the larger structure that normalized malfeasance. And so it is with the charge that the bankers are greedy. Well, they are. However, it has two bad side effects: it can be used to trivialize the protest, and it displaces the real focus, which should be on the banks themselves. I don't really care whether individual bankers are greedy - I care that the system in which they operate doesn't constrain their greed, as it should. Thus, greed becomes not a personal trait, but a standard operating procedure incorporated impersonally into the way business has to be conducted.

Long ago, at the very beginning of the capitalist mentality, Mandeville wrote about the fact that private vices can be public virtues. Greed and envy can very well motivate moneymaking as well as the sense of justice among individual players. But their effects are secondary to the systems in which these passions are allowed to operate. Or, in less muckity muck wording, greed and envy can operate for the general good, as long as constraints are in place to keep them from becoming perverse incentives. It is the general good that counts, and that fills the charge of greed with a political content.

It is the systematic will to power of the investor class - however motivated - that needs to be counter-acted. It is impossible to predict whether a protest movement will actually generate a real and successful antidote to our general ills. Most protests do fail. Some succeed. I doubt that the roots of success or failure can be predicted outside of the particular situation of the protest. But one of the things we can do is use the protest and the attention space it takes up to propose the most radical changes to the system possible.
There as a slogan in 1968, be realistic, demand the impossible. I think that slogan may once again come into play in the current situation.

Defund Wall Street!

2011-10-02T04:38:00.000-07:00

The Occupy Wall Street people are definitely making me feel high on solidarity this morning. The press keeps telling us that the aims of the group are ‘uncertain’ or ‘unrealistic’ – and this is what one would expect from a press that has been supine for the last decade, and still has not lifted a finger to examine the 16 trillion dollars in ‘emergency loans’ that the Fed made available to the banks in the last three years. The GAO report has still not even been mentioned in the NYT, as far as I can tell.

Uncertain and unrealistic are the hallmarks of the great task that lies ahead. The model, here, should be the French revolution, when the whole country made their complaints known in a survey that had quasi-governmental approval. Now we have bloggers instead of peasants and clerks. Here’s one bloggers suggestion:
Defund Wall Street.

In the 70s and 80s, we took the first step towards the domination by the financial sector in this country. We took it via a bi-partisan program to get the populace to invest in the stock market. The government made such investments, by IRA and latter the 401k, attractive by giving them special tax status.

As Jim Mosquera in ‘Escaping Oz’ puts it: “At the last major stock market bottom in 1982, American households were not that interested in owning stocks. The growth of the stock industry was aided by the creation of IRA accounts (1974) and 401(k) plans (1980). IRA accounts came during the stock market bottom of 1974 and 401k plans arrived just before the major stock market bottom of 1982. Stock ownership comprised barely 12 percent of all household financial assets in 1982, where not 2/3 of investors have half their financial assets in mutual funds. Stocks litter IRA and 401k accounts, the most precious of saving vehicles. Fifty-four percent (54%) of households own stock mutual funds and 37% own individual stocks in their IRA accounts.”

Stock mutual funds currently amount to some 5 trillion dollars in assets.

It is time to reverse the flow. This can happen in two easy steps. Step one is to make available government savings vehicles that guarantee a 3 percent return per year, as has been outlined by Teresa Ghilarducci in her book, When I’m sixty four – the plot against pensions… The great experiment in getting the population to invest in its own immiseration has finally reached the logical point of no return. Unfortunately, that logical point is also an existential trap – millions cannot afford to cut off Wall Street. When the trillions went into the banks, the snake oil merchants (the Larry Summers type) would fan out to assure all and sundry that in saving the banks, we were saving ourselves. In reality, ‘banks’ named all the wealthy investor class, for that is the sum total of what our political elite represents. However, it is also true that, as housing values crashed, the mass of middle americans had to hope that their mutual funds survived. Thus, the protest against the grotesque misallocation of government funds was muted. And as the welfare was disguised as “loans” [a disguise that wore perilously thin as the interest on loans went down in many cases to .01 percent], the pretense was maintained that the government wasn’t doing what it was doing: putting out the dole for the wealthiest.

It is necessary to de-fund the whole machinery that makes it impossible for the wage class to actually find a politics that reflects its advantage. And the way to do that is simple. The same government that loaned its 16 trillion could, well, do it again to a much larger spectrum of people – the vast majority of the U.S. population. We could, in effect, liquidate the loans people have – from student loans to credit card debt to mortgages – by a policy using a government modality like the post office (which one had a bank capability) and simply make loans at much lower interest available to all citizens. We could use the interest from those loans to capitalize a government savings program that would be tax free, and phase in taxes on the other savings programs which, besides being designed to sluice money to wall street, have not served their purpose – they have not provided anything like the advantage conferred by the old system of pensions.

Defund Wall Street. Shrink em all, and let God sort em out.

instructions pour gens d'affaires 1

2011-10-01T01:27:00.001-07:00

The double change brought about under capitalism – the creation of wage labor under the regime of industrialization and the introduction of a revamped and quantitatively huge sphere of circulation under the regime of consumerism – is one that particularly effects the place of the clerk. The fictional commodities of land and labor, and the international trade in everyday household and psychoactive commodities – sugar, chocolate, alcohol, coffee - that underlay the great transformation required a new system of description and calculation that opened up a new vocational form – and into that form came the clerk. When Marx speaks of the way the bourgeois economists invert the processes that constitute the nature of the commodity so that it seems like the commodity comes first and constitutes the unsurpassable horizon of the world, what he is really talking about is the codification of the economy from the point of view of its managers in the sphere of circulation – for them, gazing at the world through their maps, spread sheets, instructions, and sales, the exterior world really does seem to be a price-driven market system, a great dualism between demand and supply.

In 1770, a Bordeaux lawyer named Joseph Rousselle published a how to book on management: “Instructions pour les seigneurs et leurs gens d'affaires”. The book divides into what the seigneur should look for in a manager – a gen d’affair – and what the manager should do. Among the latter, listed in the table of contents, is: “state of the domestics, properties and officials on the lands; archives of the seigneur and the state of his property; debts and charges; general knowledge of the lands; archives of the lands; active and passive transfers concerning the fiefs”; etc.
Rousselle begins the book by sounding a note of urgency: “Prudence demands that they [the seigneurs] found their principle existence on their patrimonial properties; yet the greater part of these properties are so badly guided, so badly administered, there reigns such abuses, that the Seigneurs lose considerably, be it by infidelity, be it by the incapacity of their agents.” (3)
What Rousselle is complaining about here has a long reach: we see this among the reformers in England and the novelists in Russia in the 19th century. Eventually, this story is about the end of the ancien regime – but as Thomas Mann puts it in Doctor Faustus, that regime didn’t wholly end until 1917 – until World War I.

In Rousselle’s time, certain among the corps of gens d’affaires were philosophes – including perhaps the most influential, Rousseau.

...
One can too easily make it seem that production and circulation are spheres that do not intersect because they are spheres that must be separated analytically and have different structures. In reality, these spheres interpenetrate: from the factory to the fashion show, production and circulation are interlocking parts of one whole. It is that interpenetration which gives to class its everyday value as something performed in routines – while everyday class differences are then registered in income differentials, and social positioning. In effect, one of the narratives Marx unfolds, in the Grundrisse and then in Capital, concerns the production of different forms of rationality that correspond to class strategies that dominate in the sphere of circulation and in the sphere of production.

There’s a striking passage in Plutarch’s essay on the Fortune of the Romans in which he considers the meaning of the fact that the Romans built a temple to Fortune centuries before they built a temple to any of the virtues. In a sense, this is a metaphor for the whole pre-capitalist economy in Europe from the time of the Romans to the early modern age. All the virtues – the province of the philosopher, the scientist, the clerk – were subordinate to the warrior class, who saw in Fortune the rationality of the system of war. However, the warriors couldn’t actually live on war – they lived on treasure, they lived on the slavery of those planted on the lands they conquered or were rewarded. Fortune, which provided that final margin which balanced the battle, sealed the alliance of the warrior caste and the Gods. The slave – the man who ‘owed’ his life to his conqueror, redeeming that debt, as David Graeber shows in his Debt: the first 5,000 years, by dedicating his life to enriching the man who spared it. Not, of course, that the slave volunteered for this fate, but along with physically direct coercion there came a morale of defeat.

It would be a huge mistake to equate the slave economy of the Ancients and the economy of the Middle Ages. The Christians, for good reason, fought against Fortune, and it wasn’t simply because Fortune was diabolic – it was because Fortune pitted itself, at the deepest level, against the virtues.

our debt problem

2011-09-29T01:00:00.000-07:00

In important ways, the D.C. drone drone drone about deficits and debt is right. Unfortunately, they have targeted the wrong debt. It isn't the government's debt that is the problem: it is the people's debt.

Unfortunately, the government could have chosen to do something radical about debt in 2009 and it didn't. No, I don't mean that we could have balanced the budget in D.C. - we could have helped balance the budget in the U.S.

Instead of loaning, at 1 percent, 16 trillion dollars to the American people, which would have effectively re-liquidated every American household, this is what the Federal Reserve - which is the government - did: it chose to loan that 16 trillion to the banks in the 2008-2010 period. What was the beneficial effect of this policy? It saved the banks. What does that mean? The government loans money to banks at 1 percent or below, so the banks can loan money to businesses, people and the government at from 2 percent to 14 percent (for you lucky credit card holders).
What does this mean? It means that the investment class was given a free ride, while the vast majority of people - for whom the economy exists - were given an elbow in the mouth.
Here is what debt politics should be about: our debts. A combination of policies to radically crush private debt while creating a large enough deficit to counter-act the private sector's collapse of demand for labor - for instance, by simply hiring every unemployed person - would have taken us out of the Great Recession by now.

As I have pointed out, will point out, and will probably mumble on my deathbed, the policies and politics of our epoch are determined by the curious fact that we have left the wealth of the wealthy out of the equation. We pretend that we can't afford to do things that we could do in the fifties or sixties, when we were much poorer. We actually can. However, to do so we would cut deeply into the wealth of the wealthiest, who are the investor class who massively benefited by the Government's welfare for banks scheme, and who would not benefit from liquidated the debt bondage in which the mass of Americans are held - quite the contrary.

Let's not end on an exasperated note. Let's end as one ends a love letter. This love letter is to the Occupy Wall Street people. You are right. Think big. Operating in the interests of the majority, you will either win now or win later, but you will win. The elites, the pluto-parties that monopolize our politics at the moment, are not so different from the horrific and racist parties that dominated the political scene in America in 1900. Don't worry that we are too senile as a nation, have filled our veins too full of shit and our heads too full of trivia, to live. That old nation will die, in fact is in its death throes, but a new one will arise.