The Positional economy

 I’m the doddering child of French theory. From Derrida to Deleuze and back, those were my peeps when I was in grad school. I even gave shout outs back then to Francois Laruelle, even as back then and still today I don’t understand what he is fucking on about. I trust him, though.

But I drew the line at Bourdieu. I had a class back then centered around Distinction, and I kept thinking, isn’t this just Vance Packard with some Marx thrown into it?

Now I appreciate Bourdieu’s politics, his testimony as the French elite embraced neoliberalism on their way to embracing Le Penism, but I think that I’ll still stick with Thorstein Veblen and his disciples on the issue of status contests.

Among those disciples – Veblen’s, not Bourdieu’s – in the seventies was a man named Fred Hirsch. Who, I regret to say, I discovered long after my college salad days. He wrote a tract reflecting the decade and its mores entitled The Social Limits to Growth.

Now the thing to do, in the Reagan years and after, is to a, say limiting growth is a lunkish and reactionary stance, and b., point to China and India. And my hat is off to China and India. But Growth is a big term, and though undoubtedly we are blessed its many wonders to behold, the last word about growth can’t be “good”. It has to be when, how, and where. Because, of course, since the seventies we laid claim to another piece of the earth, the atmosphere, to go with our fine collection of the Americas, the oceans, and the all the fresh water and we are seeing some bad shit now and in the future coming out of that decision. Bye bye Aral Sea, bye-bye Ogallala Acquifer, bye-bye Bangladesh, bye-bye Los Angeles, etc., etc.

Oh, and did I mention the growth of cryptocurrency and crypto-culture, the latter disguised as that multiple thing, AI?

Hirsch’s idea of positional goods. It is an idea that has its ancestry in institutional economics and Veblen, but Hirsch was a post-World War II economist, a quantifier, and he wanted a more specific way to talk about a certain kind of social good and service.

He posed what he considered three interrelated problems in the developed economies: the paradox of affluence (made famous by Galbraith – the diminishing satisfaction as affluence is reached), the distributional compulsion (the rejection of the socialist notion of seizing the means of production for the distribution of a part of the surplus of production) and reluctant collectivism (the assumption, by the state, of the final agent of welfare, both for capital and for labor).

To describe how these things intersect, Hirsch distinguishes two economies: a Material Economy, producing goods and services (“as output amenable to continued increase in productivity per unit of labor input: it is Harrod’s democratic wealth. The material economy embraces production of physical goods as well as such services as are receptive to mechanization or technological innovation without deterioration in quality as it appears to the consumer) and a positional economy, which is just as important, but hides in plain sight. This is not a matter of some innate instinct for status composition – it is inherent in the material economy as a global incentive. “The structural characteristic in question is that as the level of average consumption rises, an increasing portion of consumption takes on a social as well as an individual aspect. That is to say, the satisfaction that individuals derive from goods and services depends in increasing measure not only on their own consumption but on consumption by others as well.”

This seems an almost platitudinous statement, and yet, in an economics founded on the “sovereign consumer”, this is total heresy.

“The range of private consumption that contains a social element in the sense described is much wider than is generally recognized. In textbooks on economics, public goods are discussed in the context of goods and facilities that can be provided only, or most economically, on a collective basis, open to all and financed by all. City parks and streets and national defense are prominent examples. In addition, elements of public goods are recognized in side effects of private transactions such as pollution and congestion… But a more general public goods element can be attributed to a wide range of private expenditures. … The satisfaction derived from an auto or a country cottage depends on the conditions in which they can be used, which will be strongly influenced by how many other people are using them. This factor, which is social in origin, may be a more important influence on my satisfaction than the characteristics of these items as "private" goods (on the speed of the auto, the spaciousness of the cottage, and so forth).

The material economy is that one familiar to neo-classicals and Marxists. it is deined On the other hand, you have Harrod’s “oligarchic wealth”: it “relates to all aspects of goods, services, work positions and other social relationships that are either (1) scarce in some absolute or socially imposed sense or (2) subject to congestion or crowding through extensive use.” The question posed by Hirsch is: “What happens when the material pie grows while the positional economy remains confined to a fixed state?”

In a sense, this problem is all around us now. The fact that so many questions seem to resolve into fights about social media – which, from a more distant point of view, seems a trivial issue – shows the real importance of struggles over positional goods. Hirsch had the foresight to see that the economy in the developed world was tending towards positional competition. On the one hand, unless there was robust economic growth, there would be increasing privation. On the other hand, the concomitant to growth would be increasing inequality, which would re-define the terms of affluence. To give one of a number of examples: take a social good such as education. On the one hand, for a democratic, capitalist society to continue, it must invest in human capital – it must educate. On the other hand, positional competition imposes on that education its logic – in order to be rewarded within the educational system, it isn’t enough that a person actually be educated, but it is also important that others be less certified – that others be excluded from certain institutions of education and the like, what Hirsch calls a “competition by people for place, rather than competition for performance.” Hirsch discusses a number of sectors – real estate, education, jobs – and then makes a fine, although dense, summary:

‘… material growth intensifies what may be termed positional competition. By positional competition is meant competition that is fundamentally for a higher place within some explicit or implicit hierarchy and that thereby yields gains for some only by dint of losses for others. Positional competition, in the language of game theory, is a zero-sum game: what winners win, losers lose. The contrast is with competition that improves performance or enjoyment all round, so that winners gain more than losers lose, and all may come out winners – the positive sum game.”

And – an important point – positional competition is about scarcity: "… competition in the positional sector serves as a general filtering device through which excessive demand has to be matched to available supply. This aspect – which I seek to isolate by the term positional competition – at best yields no net benefit and usually involves additional resource costs, so that positional competition itself is liable to be a negative sum game. Competition in the positional sector, however, may still yield net benefits if its contributions to individual efficiency and allocation of resources outweigh additions to resource costs and misallocation. But this cannot be judged from the conventional measures of economic output, since these measures gloss over the negative or deadweight elements of positional competition.”

Now, here’s a leap for you – one that I would defend at 500 page length, but I’ll never live that long. So, I’ll shrink it into a paragraph…

If you take the positional economy as the lens through which you view the history of the early modern era, Foucault’s L’age classique, one possible interpretation leaps to mind – or to a mind ready to catch the larger leapers. In the early modern era, the great bourgeois project was to liberate the positional market, as it were. Much of the work of the enlightened philosophers was to that end. At the same time, by one of those fateful pieces of dialectical luck, their identity as philosophers was undermined by their success at this task. In other words, the philosopher as a type was tied to a certain kind of positional market – a highly rigid one. Far into the 18th century, the philosopher as a type really had a strong influence on the real philosopher, be he Locke or Condorcet. This figure was a sage. As a sage, he was bound to the ascetic ethos that developed a sort of hole in the rigid positional economy – proposed a way out of it. Renounced it. And here’s where the dialectical luck comes in – the culminating point for the liberation of the positional market was encoded in Jefferson’s phrase, the pursuit of happiness.

It turns out that pursuit has a shadow side. This is Hirsch’s topic, these are the internal structural drivers of growth, undermined by their situationally negative or deadweight aspects. One sees the glimmer, here, of the coming billionaire-celebrity complex, as it crashes through all our defences and the fragile system built around them - the destruction of justice and even the impulse to seek justice, our sense that self-expression is what education, culture and the God of our praying fathers were seeking for us all, our aesthetic sphere of sensory satisfaction, our larger sense of solidarity (awe, fear, ecstasy) with the earth and its creatures and forces, are all to be sacrificed for… for nothing. For nobody’s happiness, save for the grim happiness of revenge, enacted over and over.