Remora

In these days of shadow war and shadow recession, the Bush administration is suddenly turning on a Keynsian dime -- or is it 120 billion dollars? with a vengeance. Question is: does this mean that the reign of Schumpeter, of creative destruction, was all a big mistake?

The Web, in its wisdom, offers up a digital festschrift in honor of Peter Drucker that contains Drucker's essay, Modern Prophets: Schumpeter and Keynes?

It's a brilliant piece. I disagree with Drucker's summary dismissal of Keynsian economics, which makes especial use of two time periods and, at least as he glides over the 81-82 period, is magisterially unfair; on the other hand, Drucker draws a mean geneology. He does net the connections between Keynes and the whole classical school, and unlike other conservative economists, gives the devil (aka Marx) his due as an economist. But since Drucker's heart is in Schumpeter's differance; the meat of the piece is laying out, with maximum compression, what Schumpeter's work is all about.

Here's two grafs about Schumpeter that are worth reading even if you don't follow my link to the piece (but do -- it is the weekend, right? And there's a 120 billion dollar economics proposal floating around D.C. And, like, that's a chunk of change. It makes, what, four Gates. Which I do believe should be some kind of official metric).

"Classical economics considered innovation to be outside the system, as Keynes did, too. Innovation belonged in the category of "outside catastrophies" like earthquakes, climate, or war, which, everybody knew, have profound influence on the economy but are not part of economics. Schumpeter insisted that, on the contrary, innovation - that is, entrepeneurship that moves resources from old and obsolescent to new and more productive employments - is the very essence of economics and most certainly of a modern economy.


He derived this notion, as he was the first to admit, from Marx. But he used it to disprove Marx. Schumpeter's Economic Development does what neither the classical economists nor Marx nor Keynes was able to do: It makes profit fulfill an economic function. In the economy of change and innovation, profit, in contrast to Marx and his theory, is not a Mehrwert, a "surplus value" stolen from the workers. On the contrary, it is the only source of jobs for workers and of labor income. The theory of economic development shows that no one except the innovator makes a genuine "profit"; and the innovator's profit is always quite short-lived. But innovation in Schumpeter's famous phrase is also "creative destruction." It makes obsolete yesterday's capital equipment and capital investment. The more an economy progresses, the more capital formation will it therefore need. Thus what the classical economists - or the accountant or the stock exchange - considers "profit" is a genuine cost, the cost of staying in business, the cost of a future in which nothing is predictable except that today's profitable business will become tomorrow's white elephant. Thus, capital formation and productivity are needed to maintain the wealth-producing capacity of the economy and, above all, to maintain today's jobs and to create tomnorrow's jobs."

This is the shit. But it's implications for understanding business unfold when one understands that innovation can be tied to multifarious forms of profit-making -- including using the power of the State in various ways, from promoting regulation to using the judicial power, to make money. This simple fact of business life is systematically overlooked by the right and most of the left, who define themselves with regard to a false picture of state-private enterprise interactins.

Drucker goes on to talk about how WWI monetized economies. Read the essay. When the Web offers you stuff like this for free, you have to admit, it is pretty cool.

Remora
Sometimes you come upon a fact that you know has an essayistic depth to it, if you only had the time, or the mental capacity, to write the essay. For instance: last night I read this anecdote about Hans Christian Andersen. Since he lived in fear of awakening in a coffin, "he always carried a card with him saying, "I am not really dead," which he put on the dressing table whenever he stayed at a hotel abroad, to prevent some careless doctor from wrongly declaring him dead." -- Buried Alive, by Jan Bondeson.
Now the Walter Benjamin in me takes that as an image applicable to every modernist artist -- didn't they all carry with them, at least metaphorically, some card saying 'I'm not really dead?' And what kind of sentence is that, anyway? Who, after all, is the speaker? What kind of truth claims can the dead make? There's a good reason that wills begin with a declaration of health -- we only trust the living.

Remora
Did you know that war reporters have their own association? Well, now you do. This link is to an article by Michael Griffin laying out the depressing Afghan specs: a famished country, bickering warlords with onerous pasts, and the Taliban, a far from medieval creation -- as everybody likes to call it. It is, instead, an ultra-modern creation, a faith based militia wrung from the despair of the poor.
Institute for War & Peace Reporting

Griffin's assessment of the Northern alliance sounds alarmingly like those groups that the US propped up to resist Saddam H. in Iraq. They are simply without a vision, or any support beyond the money they can get from somebody to pass around. . Rabanni, one would think, would have learned a few things by being dumped by the Taliban army. Last graf, and one hopes that the US is taking this to heart:

"And they are far from unanimous in supporting Zahir Shah, the former king, as the UN-recognised president, Rabbani, has bluntly dismissed any suggestion that the monarchy should be restored, while the Uzbek, Tajik and Shia have little loyalty to a Pashtun king who has spent the toughest years of the war in an Italian villa."

Dope.
Let's talk about airport security.
Not a hot issue for yours truly, until recent unpleasant events sort of put it right under my nose. And yours. We all got a deep whiff of it.

I interviewed Adam Gopnick yesterday, for a Chronicle profile. In the course of the interview, we agreed that one of the ironies of the WTC assault was that it might signal the end of privatization. The irony, here, is that will to privatize is reaching its limit, and perhaps retreating, under a president who is more committed to privatizing the commons than any president we have ever had. Or at least any president since Herbert Hoover.

Economists are peculiarly prone to hubris. The Keynsian school in the sixties were vocal in their claim that they could micro-manage the national economy with little more than a slide rule (remember slide rules?) and up until 1969 this looked to be the case. The neo-liberal school of the nineties were making the same claim of mastery. This time the idea was confining political intervention in the economy to whatever Alan Greenspan decided was the case. And privatize electricity, water, transport, prisons, and just, hell, all government services. In both cases, what broke the back of the claim was the neglected political side of political economies. As the stock market slips away from the New Economy dream of Dow 30,000! - ah, James Glassman's bestseller, a true nineties monument! -- we have two great events in the field -- the California Power Crisis and the hijacking of four planes -- which seem to mark a moment.

But the politics of each event is confusing. In the case of the hijackings, the kneejerk reaction of the Bush Whitehouse -- the plan to shuffle money to the airlines -- is starting to have, I think, a subliminal political effect, because it is an extension of the 90s exception to the party line that free markets are self-regulating, in line with Greenspan's doctrine of "too big to fail." While the airlines throw their employees out the window without parachutes (reserving the golden parachutes for their management), Washington has been throwing public money at the airlines. So what does the public get in return? Does it get safety, at least?

No. The short answer is no. The long answer is that the security at airports and on airlines is still in the hands of the cheapest solution -- the temp guards, and the absurd proposition that pilots not only do the flying, but operate as tackles for any passenger problem as well.

Here's the NYT story:
Bush Differs With Bill Over U.S. Role in Screening

Two grafs that limn the politics of the thing:
"The federalization bill was drafted by Senators Ernest F. Hollings of South Carolina, chairman of the Committee on Commerce, Science and Transportation, and John McCain of Arizona, the committee's senior Republican. Mr. Hollings said today that he was not likely to back down.
"When the president privatizes the Border Patrol, air traffic controllers and the F.B.I.," the senator said, "then I will privatize screeners."

But in its draft, the administration argues that federalizing all or most passenger and baggage screeners would require the government to create a "new federal entity, in excess of 20,000 employees." The Senate legislation "would create insurmountable transitional difficulties that would further threaten and possibly ground the aviation system," the proposal says."

Now, Senator Hollings is being rather hypocritical, since he was the New Democrat's new democrat, and has never before made a fuss about, say, privatizing prisons -- which is at least as dangerous as privatizing "the FBI" (and the record of the FBI is such that I wouldn't hold it up as a shining example of a successful government organization). But the emotion, which had never before been injected into the issue, except by the Free Marketeers, is now present on the other side.
For the best article on the shabby state of airport security, see this New York magazine piece, by Robert Kolker.

Remora
Interesting article about the fall of SwissAir from a Swiss point of view:
Largeur.com [ Article - ATTACK ON SWITZERLAND - Les banques et la fin de Swissair ]

Last graf, explaining that Swiss banks, even though profitable, decided to pull the plug on their nation's airline, sounds an interesting premonitory note:

A la place des banques (grandes et petites, al�maniques ou genevoises), je ne me r�jouirais pas trop. Le flinguage de Swissair �tait pratiquement achev� quand est intervenue la catastrophe du 11 septembre. On sait qu'elle a d�clench� chez les Am�ricains une crise de phobie du secret bancaire. On a vu vendredi le Conseil de s�curit� de l'ONU voter au pas de course et � l'unanimit� une r�solution demandant la transparence des op�rations bancaires pour lutter contre le terrorisme. Si cette fureur inquisitoriale ne retombe pas comme un souffl� � ce qui est possible �, la banque suisse sera appel�e � vivre des heures tr�s sombres.

If I were in the banks' place (the small ones and the great ones, german or genevan), I wouldn't be celebrating. The wasting of Swissaire had practically been achieved when the catastrophe of the 11th September happened. As we all know, that launched, among the Americans, a veritable phobic reaction to banking secrecy. Friday the UN Security council voted as an agreed upon item, unanimously, a resolution demanding transparency in banking operations for fighting against terrorism. If this inquisitorial furor doesn't pass like a breath of air -- which is possible -- the swiss banking establishment will be called upon to lives some pretty dark hours.

Remora

Lately my friend Don has been driving me mildly crazy by praising some articles I've written. Why would this drive me crazy? Because the more he praises them, the more I seem to hear him saying, I stink as a writer, but these articles he likes are an exception. Probably paranoia on my part, but Don likes to refer to the habit I have of multifariously referring -- which the implication here, folks, is that I cultivate an arcane set of names and facts that nobody knows. And why don't they know them? because, really, they are unimportant.

Now, I'm a belles lettres type of guy, I admit. And I like to think my writing is in communication with the great works of the past. It is what Breton meant by vases communicants, right? Oh oh, I'm doing it again, aren't I? Maybe I just don't get out enough. Anyway, I was raised in late eighties academe, where intertextuality was groovy, and that stuck with me. Actually, I like to think that I write the way Joseph Cornell did his boxes -- out of his intense loneliness, out of the garbageheap of Western culture, he produced these odd little worlds of pingponging signifiers. In any case, Don has emphasized that he liked my article on terrorism in the Statesman because it was very clear. He emphasized clear. The usual Gathman murkiness, thick as squid ink, was absent.

Talking about esoteric references -- there is a big storm around the Net about the W3C, the governing body (somehow) for the www, changing its rules on standards. I've read several articles on this topic, and have not the faintest idea what they are talking about. That doesn't mean have no opinion; of course I have an opinion. Ignorance has never stopped me from sticking my nose in other people's business. The issue is, apparently, that the big guns like Microsoft are after the W3C to allow the standards to subserve patent law. What that means, concretely, I can't imagine. But I know that if Microsoft is for it, and it means extending our rotten intellectual property laws in another domain, IT MUST BE A BAD IDEA.

Remora

While all eyes are clapped on the Persian Gulf region right now, there are events brewing in the Caspian Region. Olivier Roy claims that the Caspian is set to become the world's second largest supplier of petroleum. I recommend Crude Maneuvers, his (pre-WCT) article detailing the strategies at play in getting the oil out of the Caspian region. There is one bit I found particularly piquant: the importance of the semantics of the term, Sea.

"Russia and Iran have some interests in common. The first concerns the legal status of the Caspian. For Moscow and Tehran, it is a lake while Azerbaijan, strongly supported by the USA and more discreetly by Turkmenistan, regards it is an inland sea. The stakes are clear: if the Caspian is a lake, then its resources would have to be divided equally among the surrounding states, whatever the extent of their territorial waters. If it is a sea, its resources would be divided according to a state's territorial waters, which are determined by projecting the length of a nation's littoral out into the Caspian.

For obvious reasons Russia and Iran, which occupy the two narrow ends of the great rectangle which is the Caspian, argue in favour of a lake; Azerbaijan is for marine status, which would give it the bulk of the offshore reserves. Kazakhstan and Turkmenistan are instinctively pro-sea but, for political reasons, have been forced into the pro-lake camp. On 12 November 1996 Russia, Iran, Turkmenistan and Kazakhstan signed a protocol in Ashgabat affirming that the territorial waters of the Caspian states extended only 45 miles into the Caspian waters, the remainder of which would be exploited in a consortium. Azerbaijan has refused to sign. "

Ah, regional ontology meets geography in a Smackdown of epic proportions! Here's a game for you analytic philosophers out there -- analyze 'sea' as an intensional object. The winner gets a couple trillion dollars.

The objection to relativism, and its near cousin, nominalism, is that there are facts beyond our conventions upon which those conventions are ultimately based. I think that must be true in one sense; but in another sense, the "beyond" in which the facts are located is obscure, and spelling it out has always deepened, rather than clarified, that obscurity. To paraphrase Hegel, it has painted gray in black. Perhaps a better way of looking at the duality between 'fact/event' and description is to acknowledge that facts are weak things. They don't impinge on us so clearly as to exclude the possibility of dispute about any single fact. At the same time, disputes can't do without a lot of facts -- a whole pattern of them. Which implies, does it not, that there might not be any single fact, but that facts come in patterns.

I wonder if this is ever going to come before some International Court. And I wonder how I can volunteer to be an expert witness.