Thursday, May 24, 2012

musical chairs in the EU


Marcel Mauss tells a story, in his essay about the techniques of the body, about an incident he observed in WWI.  “In a gesture of collaboration, a British regiment, the Worcester, received permission to incorporate some French drummers and buglers in order to match the French military march. The result, according to Mauss, was a disaster: During almost six months, in the streets of Bailleul, long after the battle of l'Aisne [where the regiment had achieved some success], I often saw the ,following  spectacle: the regiment had conserved its English march and rhythmed it to the French. It even had at its head a small group of French infantrymen who knew how to work the clarions and who sounded the marches better than their men. The unhappy regiment of tall Englishmen could not form. All was discordant in their marching. When they tried to march in time, the music didn’t properly mark their marching. To the point where the Worcester regiment was obliged to suppress the French marching music.”

This moment of unscoring, so to speak, is the collapse of a background experience that, as Heidegger once pointed out, has some epistemological use: for the moment of collapse reveals the intricacy of the background. Heidegger, here, is merely catching up with one of the great kids’ games, musical chairs, in which collapse is an opportunity for a happy scramble, and the consecutive exclusion of the unwary players, until only one player is left.

The European economy is not – yet – World War I, but the law of scoring still applies. There is no one tune to which the nations should all march. That doesn’t mean that one can’t share instruments, but it does mean that sharing instruments does not mean dictating the music. Unfortunately, Germany, which suffered a pretty ragged 90s and an astonishing lack of growth in the last decade up to around 2006, doesn’t understand what any child should know. The German establishment did not grow because it imposed austerity; it grew because it imposed one of the commonest devises of the class war, known as squeezing the “cost” of labor – or excluding labor from the gains of productivity, however you want to put it. What this means is that the German economy is out of step with the rest of Europe. Labor costs there are going up – the working class has had it with the program of mini-jobs and a lack of any raise in wages for ten years. This means, inevitably, that there will be wage driven inflation in Germany, and that Germany will respond by the usual central bank monkeyshines: squeezing credit.
However, this policy is absolute poison for those more healthy EU nations that did not sacrifice their working classes in the 2000s. Luckily for them, in normal circumstances, the German wage  inflation should lead to higher prices in Germany, more competitive prices in Italy, and thus exports into Germany. At the same time, of course, the wage catchup should insure that German goods are not crowded out domestically.

But this isn’t happening. Keynes, supposedly, once asked one of the British bureaucrats who helped build the successful blockade of Germany in WWI why the blockade continued after the German army had laid down its arms. He was told that the bureaucrats and the Navy were so proud of having succeeded in creating the blockade that they just couldn’t bear to see it disappear simply because peace broke out. Change the characters a bit and you have the story of any bureaucracy formed to coerce a social group into agreeing to a certain arrangement.

  


Tuesday, May 22, 2012

The new spoils system


Mark Thoma, on Economist’s View, has posed the question, one he often refers to: why are politicians (American politicians) so indifferent to the employment problem? Meanwhile, Mark Stoller, on Naked Capitalism, has a postabout the present good fortunes of ex President Clinton and our current spoilssystem – which differs from the old spoils system in that the spoils aren’t enjoyed concurrently with one’s stint in office, but afterwards.
 
I think the Stoller post supplies some answer to the Thoma post.

If you have a return to the pre-1929 distribution of industry, and you add to that the shrinking of the unionized part of the labor force to 1910 levels, then you get lack of concern about unemployment.
A good question might be: why should politicians be concerned about unemployment?
The unemployed, I think it is safe to say, don't have the resources to lobby much, or to make available rentseeking opportunities for politicians in the case they are voted out of office, or their families while in office.
In the nineteeth century, the cheapness of the legal/political sector in America was known to every robber baron, and to the population at large. Chapters of Erie, the book by Charles and Henry Adams, has many comic illustrations of the Vanderbilt or the Gould parties buying state legislators and judges as part of the cost of business.
In the twentieth century, countervailing forces created, for a while a set of tacit norms and enforced rules that made this harder. Watergate, for instance, was driven by the fact that CREEP, the committee to re-elect Nixon, had violated these rules and needed to hide it. This would be unthinkable now. Because Creep was so innocent. A vanity candidacy financed solely by a billionaire is now just part of the view out of the window - nobody is shocked.
The two parties exist, for the most part, to raise the price on bribery. They do a very good job for their elites. The journalists, who can have their faces rubbed into a fact and will still not see it, report on this as though the whole system was driven by campaign financing. This is a pretty fiction. It is really driven by massive elite peculation. Sure, to a certain extent, to position yourself for the big money from lobbying or being absorbed into some corporate borg, you do have to get elected. And certain vain or lazy people may even limit their ambition to political office. But, in the main, elected office only gives one a force that can be sold in any number of ways to enrich one's family and friends, and that is what politics is about. Politics reflects the state of the society, and in this society, being wealthy is everything, and the rest are, at best, consumers, and at worst, losers. It is hard, at the millionaire level, to make petty distinctions between the employed and the unemployed loser. And unlike the 19th century, where the face to face dimension of politics spread bribes and actually activated certain figures to fight for an ideal (a hopelessly hokey idea today), we now have a facebook-to-facebook dimension, which has no organized power and distrusts anyone who tries to organize it - after all, that could mean jail or being accused of being a "terrorist" in the press.
Unemployment, as a political issue, is now among the dodos, like the issue of overcapitalized stock and the like. Nobody cares.

Monday, May 21, 2012

Fortune and the market 1


On November 17, 1400,a Florentine merchant named Ardingo de’ Ricci wrote a letter to some associates in Catalonia, assessing his current business activity, and concluding: “For these reasons we have not decided to traffic in these regions… and we have taken the part of navigating in the Levant, in order if possible not to diminish our resources until fortune finishes its course.” Christian Bec, from whose study I extract this long lost instance of the woes of a middleman, has ventured out from the usual pool of well known literary texts into the lesser known and ordinary texts of merchants to fix the significance and meaning of Fortuna and its courses in the early Renaissance; he found that merchants allude to fortune in a number of ways: to signify a storm at sea, an unexpected turn of events in a war, or, as with Ricci, a general commercial state.

What interests me in the latter is that clearly, a Ricci writing a letter to his investors today would use, without thinking, another word for fortune: market.

The referential range of “market” and “fortune” are, of course, not identical. In the current vogue for “markets in everything”, we still don’t see market used as a synonym for hurricane, or for the events of battle. Nor were the courses of fortune specified in terms of the supply and demand of commodities. The meeting of our terms is oblique, but not, I would claim,  insignificant. In Aby Warburg’s  seminal essay, the Last Will and Testament of Francesco Sassetti (1907), Warburg mentions that a commonality shared by lineage of writers on Fortuna in the ‘antique world’ of the Romans (from Cicero to Boethius) and the world of 14th and 15th century Italy (including Ficino) was the set of definitions of fortune in Latin and Italian, which included not only “”accident” and “property”, but also “windstorm”. For the see-venturing businessm, these three divided concepts designated much more only three divided properties of a Storm Fortuna, whose uncanny, unfathomable capacity for transformation from the demon of annihilation to the generously bountiful goddess of wealth evoked the elementary restitution of its originally unified mythic personality under the influence of an old, inherited anthropomorphic pattern of thought.” Americo Castro, in an essay on Don Quixote, spoke of the “unit of consciousness” in which coexist “the spritual and the physical, the abstract and the concrete” – and in this sense, Fortuna signals that kind of concept-in-practice, one that can be divided up for study among different ‘disciplines’ but that, in practice, brings together apparently discrete conceptual moments.

Understanding the overdetermined elements of fortune in the early modern period helps us get clearer about the Fortuna’s wheel – which provided as powerful an image by which to analyse the life of production and trade in the early modern era as the image of equilibrium has done to analyse the life of production and consumption in the modern era. The the wheel of fortune lost its poetic power at some point in the late 17th century, when the first prophets of a new order – William Petty, Pierre Le Pesant de Boisguilbert, and Bernard Mandeville, among others – devised different images, organized around circulation. But the history of units of consciousness is not a history of unilateral continuities and ruptures, any more than the history of a person is the history of his waking life. 

Sunday, May 20, 2012

More socialist revolutionary propaganda - free!


The giant corporation and the state owned enterprise are cut from the same cloth. Victor Berger, the Milwaukee politician who was the first Socialist representative ever elected to the House, tried to get the Sherman Anti-Trust law overthrown in 1912. The reason was simple: according to the logic of the dominant socialist economic policy of the time, the more a corporation became a monopoly, the more it carved out a form that could be used when the state took it over. There was a natural evolution between monopoly and state ownership.

This logic was not only a powerful argument in socialist circles. John Kenneth Galbraith, one of the great radical liberals in twentieth century America, also believed that the  monopoly form of the corporation rid itself of the pernicious, profit-seeking behaviors that made capitalism a bain to the common man, and promoted scientific progress and peace between labor and capital.

I understand the logic, but I believe Victor Berger and Galbraith were wrong.

This may seem irrelevant to this week’s news about the Facebook IPO, but I think events that transpired in 1911 and 1912 have a strong bearing on the 21st century’s corporate mindset.

The facebook IPO was a public relations triumph for billionaires, certainly. While Trayvon Martin, as every rightwing commentator knows, was righteously killed because he wore a hoodie, the hoodie of Mark Zuckerman, the son of a rich dentist who has become a Forbes Magazine icon, is just an adorable sign of the clean American whiz kid. Don’t we all I-Love  him?

But the IPO was also your typical political economic disaster. The price of the stock was put at an incredible 105 times earnings. The New Economy of the nineties names, really, a ratio – that is, the rise in the ratio between price and earnings. In an early era – in the Progressive era – this had another name: overcapitalization. And instead of celebrating an economic mechanism whereby speculators are allowed and encouraged to treat themselves to stunning windfalls, the Progessives justly saw overcapitalization as waste and fraud.

Lawrence Mitchell, in The Speculation Economy, has, I think correctly, seen the first two decades of the 20th century in America as the period in which the limits of American progressive politics – and by extension, the limits of anti-corporationism in the West – were drawn and hardened. By 1920, the attempt to reform the stock market from the root had failed.

The high point of the reform effort came in 1911. In that year, the House of Representatives passed a bill a bill that was narrowly turned down in the Senate, S. 232. 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)

Martin Sklar, in The Corporate Reconstruction of American Capitalism, summarized the spirit of the drafts prepared during Theodore Roosevelt’s administration that stood in the background of the bill’s eventual configuration  in this way: ‘whenever the amount of outstanding stock should exceed the value of assets, the secretary would require the corporation to call in all stock 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.”

I’ve already manifested my manifesto for a new Soviet version of 21st century capitalism – one that destroys the corporate form and replaces  it with hundreds of thousands of small scale enterprises in flexible cooperative structures. It does not overturn capitalism, but it does radically turn capitalism around. The limitation of both the corporation and the state is a kind of capitalism with a human face – which is much more radical than where ‘socialism’ is at the moment. For this kind of harmony of opposites, of cooperation and competition, to really work, the speculative economy would have to be radically subordinated to production. The pleasure palace of the oligarchs, the four hundred trillion dollar derivatives structure that burdens the earth (even as it actually does not exist – truly, an extreme case of economic neuroses), will have to be burnt to the ground.

The Facebook IPO is a monument to the folly of our contemporary economic arrangements. These arrangements are undergoing a systematic change that will produce an environment in which the middle class, that compromise formation of 20th century capitalism, has a dodo’s chance of survival. Revolution from the middle class in the 20th century usually resulted in fascism. In the 21st century, however, the speculative and rent-seeking echelon, by steadily increasing the divide between it and everyone else, is creating a new fusion between the middle class and its erstwhile enemies, marginals  of every type, as well as the working class. We will see what comes of it all.

Du Bellay meets Hank Williams Sr. in the Coliseum

I like it when a critic pulls some philological razzle dazzle out of his pocket and makes me see a poem I think I know in a whole new light....