the liberal myth of the economy as a board game

“Only through the forgetting of this primitive metaphor-world, only through the hardening and rigidifying of the primitive capacities of human fantasy that flowed out originally in a hot stream of images, only through the unbeatable belief, this sun, this window, this table is a truth in itself, in brief only through the fact that man forgets himself as a subject and really as an artfully creative subject, does he live with some rest, certainty and consequence. If he for one moment could escape out of the prison walls of this belief, immediately his self consciousness would be over and done with. Already it costs him some effort to admit to himself that the insect or the bird perceives a whole other world than humans, and that the question, which of both world perceptions is more correct is a completely senseless one, since here we have to measure with the standard of the correct perception, that is, a standard that is not at hand.”

(Nur durch das Vergessen jener primitiven Metapherwelt, nur durch das Hart- und Starr-Werden einer ursprünglichen in hitziger Flüssigkeit aus dem Urvermögen menschlicher Phantasie hervorströmenden Bildermasse, nur durch den unbesiegbaren Glauben, diese Sonne, dieses Fenster, dieser Tisch sei eine Wahrheit an sich, kurz nur dadurch, dass der Mensch sich als Subjekt und zwar als künstlerisch schaffendes Subjekt vergisst, lebt er mit einiger Ruhe, Sicherheit und Consequenz; wenn er einen Augenblick nur aus den Gefängnisswänden dieses Glaubens heraus könnte, so wäre es sofort mit seinem "Selbstbewusstsein" vorbei. Schon dies kostet ihm Mühe, sich einzugestehen, wie das Insekt oder der Vogel eine ganz andere Welt percipiren als der Mensch, und dass die Frage, welche von beiden Weltperceptionen richtiger ist, eine ganz sinnlose ist, da hierzu bereits mit dem Maassstabe der richtigen Perception d. h. mit einem nicht vorhandenen Maassstabe gemessen werden müsste. – Nietzsche.)

The metaphor-world of economics is never more entangled in its antinomies – like a crippled spider in its own web – than when it comes up against the odd question of the distribution of wealth. The neo-classic mainstream exists, in fact, in a world that it only recognizes as an irritant on the way to the utopian moment when the market absorbs all its children in a heavenly rapture – but if it were entirely blind to the fact that the state, that enemy of the good honest corporation and firm, plays a major role in economics, it would face the danger of being merely comic. The liberal solution to the endless differing of market heaven is that the state exists to create a “level playing field”. Mark Thoma, who runs the excellent blog, Economist’s View, just published an article on income inequality that contains a canonical version of this notion:

“I’ve never favored redistributive policies, except to correct distortions in the distribution of income resulting from market failure, political power, bequests and other impediments to fair competition and equal opportunity. I’ve always believed that the best approach is to level the playing field so that everyone has an equal chance. If we can do that – an ideal we are far from presently – then we should accept the outcome as fair. Furthermore, under this approach, people are rewarded according to their contributions, and economic growth is likely to be highest.
But increasingly I am of the view that even if we could level the domestic playing field, it still won’t solve our wage stagnation and inequality problems. Redistribution of income appears to be the only answer.”

I wrote a little response to this paragraph on Mark’s site.

“I've never understood the popularity of this belief in America. It seems a contradiction in terms. How can you "level" the playing field, and at the same time allow any unequal outcome? These are in direct contradiction with one another. Any 'playing field' in which one of the players gains a significant advantage will be vulnerable to that player using some part of his power or wealth to 'unlevel' the playing field to his advantage. There is no rule of any type, there is no power that will prevent this. The problem is thinking of the playing field as a sort of board game. You play monopoly and you accept the outcome as 'fair'. The problem of course is that in life, unlike monopoly, you don't fold up the board after the game is over and begin it all again - in other words, the economy isn't a series of discrete games that are iterated at zero.
Thus, the whole "equality of opportunity" ideology has never made sense. If it succeeds, it will dissolve itself as those who succeed most make sure that we do not go back to zero, and that our idolized 'competition' is limited to those in the lower ranks - for among the wealthiest or the most powerful, the competition is, precisely, to stifle and obstruct competition in as much as it injures wealth or power.
To not understand the latter fact is to understand nothing about the incentive for acquiring wealth or power. It is as if economists truly believe that billionaires are searching for the next billion to spend it on candy, instead of seeing them as political players building a very traditional structure of status that will allow them the greatest possible scope for exercizing power, including helping their allies and family and injuring their enemies.”

I am not satisfied that I have spelled out the structural dilemma here. In trying to build an economy with a non-interfering state that only guarantees that the ‘playing field’ is levied, you are building, in reality, a massively interfering state. There is no point at which equality of opportunity will, as it wear, work by itself. This is because the economy does not exist as a chain of discrete states – rather, what happens in time t influences what happens in time t1. The board game metaphor, however, exerts an uncanny influence over thought here. From Rousseau to Rawls, the idea of an original position has, unconsciously, created the idea that society is like a board game. That is, it has beginnings and ends; a whole and continuous game came be played on it; that game will reward people according to their contributions. And so on. Here, classical liberalism still has a grasp on the liberalism that broke with it to develop the social welfare state. Both liberalisms, for instance, can accept that the price of an apple is not ‘earned’ by the apple, but both bridle at thinking the price of a man – his compensation – is not ‘earned’ by the man. It must have some deeper moral implication.
As we have discovered, the liberal hope, in the sixties, that the social welfare system would so arrange the board game of society that equal opportunity is extended to all, and so dissolve – was based on the false premise that the players all recognize a sort of rule in which they would not use their success in making moves to change the rules of the game. But this is to fundamentally misunderstand the incentive in this ‘board game’ – success consists precisely in changing the rules in your favor. It does not consist in getting rewarded for one’s contribution to the aggregate welfare of the players of the game. The billionaire is of a different kind than the saint. And each, to use Spinoza’s phrase, must continue in their being in order to be at all.
The anti-liberalism of the last thirty or forty years is rooted in this liberal blindspot. On the one hand, the liberal allows his rhetoric to be taken hostage by a pro-forma anti-statism – surely we don’t want the corrupt state to reward the lazy and unscrupulous! Thus, social welfare is presented with a wholly utilitarian justification – it exists solely to help the industrious and the respectable. So the liberal concedes that the protector state is a second best arrangement – and slides easily into bemoaning middle class ‘entitlements’, as if surely the middle class should stand on its own. On the other hand, the state engineered by the liberals does keep growing – it keeps growing because the middle class desperately needs it to maintain their life styles, and it keeps growing because the wealthy use it as a reliable annex to acquire various monopoly powers and as a cheap insurance plan.

What the liberal seemingly can’t acknowledge is that a democratic republic, can only afford the ‘board game’ of private enterprise if the state uses its powers not simply to redistribute or to produce, but to limit – that is, to hedge in and countervail the vested influence of the wealthiest. Thus, the democratic state taxes not only to provide income to the state, or to redistribute money to the less ‘worthy’ – it also does so to materially weaken the wealthiest. Otherwise, the wealthiest will rather quickly take over the state and make a mockery of democracy.
Taxation is the guillotine by other means. Joseph de Maistre once wrote that the compact between god and the state is sealed by the blood shed by the hangman. Wrong about god, de Maistre was certainly right that all social contracts are sealed in blood. No democracy can survive if it forgets this fact.

personal myth and character

I have written before about the concept of the personal myth – the use of a ‘well-knit’ self generated autobiography as a screen developed against inconsistencies, neuroses, traumas, or the everyday thorns and pricks – that was developed in a paper by Ernst Kris in the fifties. This is what I said about it in an earlier post:
myths
Ernst Kris was a Viennese art collector, historian, and psychoanalyst who taught Freud to the great Ernst Gombrich. When he died in 1957, he left behind a large reputation. Even in the seventies, when his papers came out, a review came out in the New Republic. One of his papers, from 1956, left a phrase that has been lifted, since, by many - especially Jungian analysts: the personal myth.

“Kris found that certain patients when routinely probed about their pasts were able to respond with detailed, fluent, and highly consistent autobiographies embracing all their past history. Now this is somewhat unusual because most people do not usually have ready access to a well worked out autobiography in which themes of different lifetime periods are highly consistent with one another and smoothly extend across the lifespan. During the process of analysis, Kris determined that these personal myth autobiographies were in fact being employed as part of the process of repression to keep from consciousness other traumatic autobiographical knowledge. For example, in one of his cases he eventually discovered that the myth, which included the patient leaving home when 16 years old, was in fact incorrect and the patient had actually left home when 18 years of age. The missing two years, it later transpired, referred to a period in which a sequence of events had repeated (repressed traumatic events from earlier in childhood and the myth, by editing out the memories of the repeated events, was able to maintain the repression.

Kris proposed that personal myths constitute a central part of the self but that in the nonpathological individual the myths are constantly changed and updated. (Collins, Theories of Memory, 113)

Of course, in the late eighties, this whole matter of repressed memories of trauma led to mythmaking in the moral panic mode. LI has no patience for that. Leaving aside the dubious claims of the repressed memories crowd, Kris’ notion does seem intuitively right: there are individuals who have the story of themselves down, and there are those who seem oddly unprepared for their own history, as if consisted of information that they hadn’t studied. As a writer, I hugely prefer the former type of person, and have always found the latter puzzling. Of course, as a quasi-pathological type of individual myself, I am ever ready to believe my own lies – but the interesting twist in Collins summary of Kris is that the non-pathological constant changing and updating of myth leads to – well, to those puzzling, inconsistent myths with which we are greeted whenever we look seriously into Greek or Indian or Egyptian or any kind of rich mythological data base. Or, for that matter, even into something as simple as the facts in Jesus’ case, which are shuffled differently in the different gospels.

A recent book by Sophia Heller, The Absence of Myth” takes a self consciously ‘deconstructive’ approach to personal myth:

“Personal myth represents a particular response to the collective loss of myth and religious meaning. Though it may profess otherwise, the personal myth approach does not and cannot seek to remedy this absence because it utterly depends on it. Its philosophy basically says that what the collective has lost, the individual can and should reclaim. And how one reclaims myth and meaning is through knowing and telling one’s personal story. However, what separates a personal myth from a mere autobiography, biography or memoirs is the underlying belief or hope that if a personal story is contextualized within myth, it carries an archetypal and numinous significance and, as such, is elevated and geared to replace the metaphysical void created by the departure and death of the gods.” – Sophie Heller, The Absence of Myth

For Heller, myth is myth – she is unwilling to countenance the metaphorical transfer of myth to a world view that depends on truth claims. “What makes a myth a myth is, in part, the fact that it is absolutely true because it is real.”

…
If we provisionally take it that Heller is right, and that personal myth is a sign of the breakdown of myth, then we have a different angle from which to look at what Engels called the uprooting of a population from ‘apathy’.”
Now that I am thinking about the myth of the homo economicus, I am wondering whether these notions of myth apply – whether, in the same way that the personal myth papers over a repressed memory, the myth of the homo economicus is a way of creating a tight-knit structure that conceals an ancient act of repression.

Kris’ 50s paper was simply one in a series going back to Kris’ days in Vienna as a psychoanalyst and art historian. In particular, the idea that a personal myth takes the place of – substitutes for – memory seems forshadowed in a paper Kris wrote about biography, that was published in Imago in 1935. In this paper, Kris sought a way of penetrating into the idealized picture of a life produced by a biographer by using ‘philology’ – that is, by having a statistical sense of the way certain formula are used by biographers in different biographies. These biographical formulas emerge again and again – and one is tempted to say that they are borrowed, or that there is a sort of fund of formulas to which the biographer returns to fill out his picture of the subject, for “In fact the criticism of sources has long proved that such typical reports – I will call them simply the formulas of the biographer – in ancient times were also put in places when the biographer was not aware of anything about the life of the hero, and couldn’t know anything”:

“Out of this supposition I can effortlessly derive the principle of the investigative method that I am suggesting to you. It deals with the interpretation of biographical formulas without reference to their truth content, although even in this perspective the formulas are instructive; they strive after greater proximity to life and always have the effect of ‘credibility’; one can speak of their ‘plausibility’. As our introductory finding, however, what is solely important for us is the question of their consistent application by the biography.” (1935)

Of course, I am moving, here, from personal to public myth, and from autobiography to biography. This step may seem trivial or neutral, but in fact it is conditioned by a phenomenon Freud writes about in an 1898 paper, On Screen Memories – Ueber Deckerinnerungen – which I’m going to write about next.

Fair, Forum, Market

I have been thinking about Turgot’s entry on the Foire in the Encyclopedie ever since I read Rosanvallon’s analysis of it in his book on the idea of the market, The Capitalist Utopia.

The Turgot text is treated under the heading of the new geography envisioned by the classic economists – a geography defined by prices. This geography does not lend itself to a map listing nation states – with their different colors – but rather to a map of interconnected hubs, which Adam Smith called the ‘extension of the market.”

Rosanvallon locates this historic moment otherwise than, say, Harold Innis, who was similarly fascinated by the penetration of the price system.

“With the great discoveries, the occidental world is exteriorized. The establishment of colonies was one of the principle forms taken by this exteriorization. In the 18th century, liberalism was translated principally, in contrast, by a sort of return to the interior. Stewart is the economist who best understood how to philosophically express this.” And Rosanvallon lists the three stage theory of Stewart: 1., the birth of commerce, in response to local needs – such as food; 2., foreign commerce, in which the nation is exteriorized, which is characteristic of the occident from the 13th to 18th centuries; and finally 3, domestic commerce. “The nation pulls itself together from the point of its exteriorization in the world in order to return into itself. This return can’t be effected except at the cost of a internal differentiation; thus, there is a parallel operation of differentiation and cohesion that comes about. The nation has to discover an organic form in the bodies of the state and the professions.” (95)

It is within this framework that Rosanvallon wants to put the essay by Turgot on fairs. Myself, I translate what Rosanvallon is driving at here into an old thematic in LI and in the Human Limit – that what happened, so to speak, on the frontier of the Occident – in the colonies, particularly in the Trans-Atlantic world – mirrored processes happening in the internal culture of the Occident. The equivalent of the savage and the peasant allowed for this mirroring – although one should, perhaps, remember that mirrors do not always aim at exact representation – they deform, and one mirror, in telescopy, must correct the other. While the priests in small towns in the Pyrenees region where Lahontan came from were persecuting booksellers who sold forbidden science books, Jesuits on the other side of the world, in Quebec, were impressing the Hurons with the science of Christendom – notably, Galileo.

TBC.

AMIE

This is the worst thing I'll have to write on this blog...

I’ve been debating with myself this week about this post. In the end, I need to say something.

Amie, who contributed to LI and whose friendship over the last four years has been one of the important things in my life – Amie died in September.

I learned this at the beginning of the week, and I am still in shock. Supposedly you can tell the weather of centuries ago by sawing down a tree and examining the tree rings – they register all the disasters. I feel like some similar organic disturbance has happened in me since I received word of her death. If you saw me in half fifty years from now and examined the innards, surely some mark, some trace – Amie would love the word trace – will make it obvious that something happened Christmas week, 2010.

I can’t accept her death. Not when, after all the storms she had passed through, she was finally entering into the sweetness of life. I can’t accept this flaw in the structure of the universe. There’s a moment in The Man Who Was Thursday when the hero, Syme, describes the strange sensation of being in a world where everything is not quite right – where the tree seems, somehow, like the back of a tree, and the sky like the back of the sky – when we see that the world really is seen through a glass, darkly. Some people never experience these moments, I think – and some forget them quickly. Amie’s death has opened up that world to me this week, because I think that it is impossible that this could be the world in which Amie died. I do recognize this world. But I don’t accept it – I want to chew it up and spit it out of my mouth.

My friendship with her was impossible. I think we started writing to each other in 2006. I have perhaps 200 emails from her of varying lengths, all written with her mixture of elegance and utter intensity – Amie always pressed as hard as she could against life, like she was trying to force a jammed door. For me, she was an almost perfect email partner – I felt that we were collaborators on a vast intellectual enterprise, for which I really do not have a name. Perhaps it is merely the enterprise to tear down all the blinders between the simple act of putting on a sock and poetry. And we both felt strongly that we were struggling in an evident wreck of a culture that has tried to purge poetry from every pore of its being in preference not to the sock, for that would be simply one of the masks of poetry – but to making it on the cheap and selling it at a profit and skipping the whole experience of putting on a sock. In the infinite web of badly made socks and the human drain of 10 hour days, the world is clearly damned unless of course there are crazy corner souls to save it.

I came to Paris to live with A., in September of this year. I came for A. alone - whether Paris or Nome, I didn't care. However, I fully expected to meet Amie at last. I was so close to her, and yet I don’t even know what Amie looked like – I never asked her for a photograph. I liked our ‘blind’ friendship, I liked being compagnon de route in the night, so to speak. She did too, I think. And when she ceased emailing me, I didn’t know what to think. Amie was never afraid of the large things – but could she have been afraid of meeting me at last in the flesh? That is what I thought.

It never occurred to me to think that she was dead. How could I ever think that?

Two quotes for Amie. One is from a letter she wrote to me. In it, she quoted a favorite passage in Cixous and added a comment:

”’L'orange est un instant. Ne pas oublier l'orange est une chose. Rappeler l'orange est une autre chose. La rejoindre en est une autre. Il faut au moins trois temps pour commencer à comprendre l'immensité infinie de l'instant.”

I remember leaving a hospital in Paris, sitting in a park and eating an orange, the joy.”

The second is from The Man who was Thursday:

“Why does each thing on the earth war against each other thing? Why does each small thing in the world have to fight against the world itself? Why does a fly have to fight the whole universe? Why does a dandelion have to fight the whole universe? … So that each thing that obeys law may have the glory and isolation of the anarchist. So that each man fighting for order may be as brave and good a man as the dynamiter.”

Too many notes - on the edge of crankitood

Rewriting and expanding the last post:

How does a heuristic fiction to become, at last, a policy norm? What are the existential consequences of an economic system based on the eventually substitutability of all things, relations and people? These are the questions that guide me with the uncertain light of a flickering torch as I go down into the undergrounds of history.

I am taking as a point d’appui the idea that something happened at the beginning of the modern era – something described, felicitously, by Adam Smith as a revolution of public happiness – and yet it is a revolution that happened, so to speak, behind the back of the revolutionaries, and indeed, of all actors:

“A revolution of the greatest importance to the public happiness was in this manner brought about by two different orders of people who had not the least intention to serve the public. To gratify the most childish vanity was the sole motive of the great proprietors. The merchants and artificers, much less ridiculous, acted merely from a view to their own interest, and in pursuit of their own pedlar principle of turning a penny wherever a penny was to be got. Neither of them had either knowledge or foresight of that great revolution which the folly of the one, and the industry of the other, was gradually bringing about.” WoN, Book 3, Chapter IV)

This citation comes from Smith’s chapter concerning the relations of the city to the country – another twist in the contrast between the great and little traditions with which we are setting out. Smith is describing this from a post-revolutionary position, in which the ridiculous – vanity – is contrasted with the much less ridiculous (acting merely from a view to their own interest). We have not yet reached the point at which the pedlar principle has become the basis of human rationality. We have certainly reached the point at which the system contains something above and beyond the intentions and views of its agents. This is an important and paradoxical point – for try as the classical economist will to reduce society to the individual, something doesn’t reduce here – call it progress, call it the market, there is an emergent, here, which is only honorifically attributed to ‘individuals’. This is in Marx’s mind when he writes:
“The secret of the commodity form thus consists simply in the fact that it projects back to Man the social character of his own work as the objective character of the product of labor itself, as a social natural property of this thing, and derivatively the social relationships of the producers to the collective labor as an social relationship of objects existing externally to them.”

What Harold Innis called –from the standpoint of neo-classical economics – the “penetrative power of the price system” was at its work of ‘eating’ the older system of status, to use Henry Maine’s terminology. The revolution in public happiness, of course, has its victims – how to separate the washerwoman’s enjoyment of tea in her sugar from the tortures of the slaves who grew and milled it is one of those finer moral questions that will haunt the West – but that revolution there was was certainly a fact that swam within the awareness of the Enlightenment philosophes. August Ludwig Schlözer, an eighteenth century German historian, celebrated Erfindung – invention – in his Weltgeschichte over war or monarchy. Erfindung, for Schlözer, reaches into the very nature of man, who is “by nature nothing” and becomes everything through ‘conjunctions”. “If he comes into the wilderness and grows up among sheep, he will become a sheep, eat the herbs sheep eat, and bleat like a sheep. If he comes into situations in which he meets the image of his creator, that is, where his reason is awakened, he will move away from the step on which he has up till now stood near the beasts and will either climb outwards and ennoble himself or will sink down and abase himself.” (58) For Schlözer, telling the true story of history – a story that is, indeed, the story of the Wealth of Nations – is itself a matter of awakening the public “out of a slumber in which our education has rocked us’ – “since we regard coldly a piece of bread, a printed page of paper, a pocket watch, a correspondence, a map of the globe, and a thousand other things whose current perfection demanded an uninterrupted progress of the human spirit from discovery to discovery over many centuries, and whose sum contains the ground of the actual culture of European human history, simply because we have seen it from childhood on, and enjoy its daily consequences.” That awakening is to the power of the revolution of public happiness that is immanent in history – a history that is officially written as if it were about kings and battles, the ‘death games’ of humans, when in actuality these are merely the “hooks” to which we hang history’s chronology. For Schlözer, true history would trace the advent of, for instance, ‘brandy [and] the potato in our part of the world”; these commodities – and others like tea, chocolate, coffee and sugar – made a tremendous difference between the man as sheep of savage times and modernity.
I will quote an earlier post at this point:

"Addiction is an illness of exposure. By and large, those who have access to junk become addicts." - William Burroughs, With William Burroughs: a report from the bunker [109]

In Sweetness and Power, Sidney Mintz tracks sugar from the cane plantations in Sicily and Egypt in the fourteenth century to the Canary and Azores islands (where the Spanish and Portugese developed the prototype of intensive sugar production with a mix of slave and free labor) to the Caribbean. Sugar cane was brought by Columbus, that divine, diabolical harbinger, to the Caribbean on his second voyage. The Spanish attempts to grow and process the sugar cane were not very successful, especially compared to what the Portugese did in Brazil. But the suggestion was, as it were, in the air; it was taken up by the Dutch and the English in the mid seventeenth century, long after the Caribs had vanished, the way blood, bones and skin massively vanishes – pushed into the vanishing act by the European magicians with their white magic.

It was after the mass cultivation of sugar cane on Barbados and Jamaica and – by the French – on St. Domingue that sugar became more than a medicine or a luxury good in Europe. As Mintz puts it, it became the first “exotic necessity” “… by 1750, the poorest English farm labourer’s wife took sugar in her tea,” as R.J. Davis wrote [quoted in Mintz, 45]

David Courtwright, in Forces of Habit, includes sugar with tea, tobacco, coffee and chocolate as the commodities that produced what he calls the ‘psychoactive revolution” of the eighteenth century. All operated, in one way or another, to alter moods. These exotics were intermingled with each other as well – as for instance, tea and chocolate with sugar. For Europeans, they produced, over a hundred and fifty year period, a radically altered physiological environment. Courtwright surveys the impressive statistics of sugar use in England, always the main consumer: “The demand for sugar was phenomenal. During the eighteenth century, the annual growth rate rose to 7 percent, and during the nineteenth century, when beet sugar roduction also became a factor, to 20 percent. The British possessed Europe’s sweetest tooth – and perhaps the continent’s worst teeth. Their per cappita consumption rose from 4 pounds in 1700 to 18 pounds in 1800 to about 90 pounds in the decade before 1900.” [28]

I like to think, here, about De Quincey. The incident that led De Quincey to opium was a tooth ache. He calls it a rheumatic tooth ache, which I think is De Quincey laying it on thick. But could it be the tooth ache of a boy of privilege, who, indeed, enjoyed that new environment of sugar products? De Quincey’s father was a merchant, and once, in a bout of virtue (for he seems to have been a good man), he forbade sugar at the table, in sympathy with the Evangelical crusade against slavery. This was in the 1780s – but man is as grass, as we all know, and bends with the wind, and the De Quincey’s did live in high style, and Thomas’s father did, after all, do a lot of trading with the West Indies.

Mintz, in his analysis of the double triangle of the trade in sweetness (slave labor to sugar to England back with goods sent back to Jamaica, and commodities from England to Africa for slaves to the West Indies for sugar production), argued that we should look to the sugar plantations, rather than to Europe, for the development of the first factories. This, of course, contradicts an old account, by the Marxists and Weberians, that free labor was a condition for the development of the factory. According to Mintz, the sugar plantations worked under extreme time constraints, and divided the labor into a sort of assembly line, with the slaves cutting the cane and other slaves assigned semi-skilled tasks boiling the cane and refining the sugar. This required a certain number of skilled supervisors. It was horrendously hard labor, and proved to be a man-eater: “From 1710 to 1810, Barbados, a mere 166 miles in area, received 252,000 African slaves. Jamaica, which in 1655 had been invaded by the British, followed the same pattern of ‘economic development’; in the same 109 years, it received 662,00 slaves.”

The plantation owners fretted about their kidnapped and abused stock, always dying on them. Unlike the less work intensive tobacco estates in the Southern U.S., this slave population never fully reproduced itself. It would fail to until the slaves were liberated, in fact. Thus the giant trade in human blood and flesh, those white lips and sharp fangs on Africa’s throat. As one model of work is developed for Europe, another model of transport and labor is developed for Africa – which will, in its time, be emplaced in Europe. Hypnogogy on the periphery, creeping in.

The sweetness, the drugs – oh, we don’t have to dig deep to find, under the surface of the artificial paradise, the piles of bones. But it is important to see that the paradise a-building in the sugar stats is not only what comes to surround us, but what we come to be. The Mordspiel is at work deep in the interior. And, as in a cartoon of a robber hiding in a cartoon cave, the cops are soon to follow. The commodities are now in motion. What only the Gods could once pluck is now cut, harvested, tapped, boiled and barged across the entire face of the godless globe.

Which only goes to show that hophead history is not merely a suburb of universal history. Hopheads have witnessed, with all the sorrows of young Werther and every suicidal lover, that their accept no substitutes passion was doomed in the accept all substitutes world.

New pains, new pleasures, new worlds, new cravings. The catchers of men are learning about the bodies of men.

NOTES ON HOMO OECONOMICUS

My next section, in my intro, should focus on the question of the relation of what was developed, at first, as a heuristic fiction to become, at last, a policy norm. That is, there is a historical moment, here, that is described, felicitously, by Adam Smith as a revolution of public happiness – and yet it is a revolution that happened, so to speak, behind the back of the revolutionaries, and indeed, of all actors:

“A revolution of the greatest importance to the public happiness was in this manner brought about by two different orders of people who had not the least intention to serve the public. To gratify the most childish vanity was the sole motive of the great proprietors. The merchants and artificers, much less ridiculous, acted merely from a view to their own interest, and in pursuit of their own pedlar principle of turning a penny wherever a penny was to be got. Neither of them had either knowledge or foresight of that great revolution which the folly of the one, and the industry of the other, was gradually bringing about.” WoN, Book 3, Chapter IV)

This citation comes from Smith’s chapter concerning the relations of the city to the country – another twist in the contrast between the great and little traditions with which we are setting out. Smith is describing this from a post-revolutionary position, in which the ridiculous – vanity – is contrasted with the much less ridiculous (acting merely from a view to their own interest). We have not yet reached the point at which the pedlar principle has become the basis of human rationality. We have certainly reached the point at which the system contains something above and beyond the intentions and views of its agents. This is an important and paradoxical point – for try as the classical economist will to reduce society to the individual, something doesn’t reduce here – call it progress, call it the market, there is an emergent, here, which is only honorifically attributed to ‘individuals’. This is in Marx’s mind when he writes:
“The secret of the commodity form thus consists simply in the fact that it projects back to Man the social character of his own work as the objective character of the product of labor itself, as a social natural property of this thing, and derivatively the social relationships of the producers to the collective labor as an social relationship of objects existing externally to them.”

What Harold Innis called –from the standpoint of neo-classical economics – the “penetrative power of the price system” is ‘eating’ the older system of status. The revolution in public happiness, of course, has its victims – how to separate the washerwoman’s enjoyment of tea in her sugar from the tortures of the slaves who grew and milled it is one of those finer moral questions that will haunt the West – but that revolution there was was certainly in the awareness of the Enlightenment philosophes.

TBC

Costs of the bank bailout

Japan was the first of the industrial economies to emerge from the Great Depression. This was due to many factors: getting off the Gold standard, Keynesian-like government policies to drive up private demand, and of course the expansion of the Japanese Imperial Military, which combined with the industrial cartels – the zaibatsu – to revamp Japan’s industrial base.

Of course, these Japanese policies had a cost: war in China, millions dead, the war in the Pacific, the bombing of Japan, Hiroshima, Nagasaki, etc.

But the technocrat and his followers simply bracket the paltry negative externalities.

I thought about those externalities reading John Cassidy’s assessment of Lawrence Summers stint as Obama’s economic guru in the New Yorker. Now, I like John Cassidy, but here he gives vent to the sort of praise for ‘saving the system’ that, of course, takes it as unquestioned that the system should be saved. More, that is blind to the consequences of saving the system.

You can tell the apologetics are going to start when we are told – as the liberal venders of Obama’s dog food love to tell us – that TARP will make a profit. This, of course, is like saying I can make a profit by lending you, with one hand, a thousand dollars at five percent interest, and with the other hand, lending you one hundred thousand dollars at zero percent interest. We know why TARP was repaid – basically, the Fed took 3 to 6 trillion dollars and injected it at superlow interest rates into the financial system.

John Cassidy himself knows this. But he doesn’t know how much it cost the system – the system of democratic governance – to operate in the highhanded, semi-legal, and plutocratic way that “saved’ us from Depression. In fact, he doesn’t consider it. This is the way he defends Summers – long quote:

“Let’s be honest, though. Back in late 2008, President Obama didn’t bring in Summers for his television face or his ability to make nice with David Brooks and George Will. With the credit markets frozen and the economy in free-fall, the President-elect ignored the counsel of some of his campaign advisers and hired the controversial professor to guide him in the right policy direction. Did Larry do that? Ultimately, this is the criterion on which he deserved to be judged.
With the unemployment rate still close to ten per cent, the consensus view, as reflected in the results of the midterms, is that President Obama’s economic policies have failed. But think back to the collapse of Lehman Brothers, and what could have happened. Between September, 2008, and April, 2009, the stock market fell more sharply than in the six months after Black Tuesday in 1929. Global trade declined more rapidly than in the first year of the Great Depression. Companies were shedding jobs at a rate of seven hundred thousand a month.

Summers, to his eternal credit, was one of the first mainstream economists to understand what was happening. The carnage on Wall Street had unleashed a series of vicious cycles, which were wreaking havoc throughout the economy. In the financial markets, falling asset prices were leading to margin calls and more forced selling. In the housing market, the rush of foreclosures meant there were more unsold homes on the market, which was putting more downward pressure on prices. And on Main Street, ordinary Americans, shocked at the sight of Wall Street imploding, were spending less and saving more, which, in turn, was prompting firms to lay off more workers.

To anybody running a business or managing a Wall Street trading desk (or anybody who knew their Keynes), the downward spiral was glaringly obvious. But many academic economists couldn’t or wouldn’t see it. They remained committed to the view of the economy as a self-equilibrating mechanism that would rebound of its own accord. Some economists criticized the Fed and the Treasury Department for doing too much to help Wall Street. Others argued against an aggressive stimulus program, saying it was unnecessary. In his column in the Financial Times, and later, in internal Administration debates, Summers vigorously supported both of these policies, which did, eventually, halt the downward spiral.

“Had it not been for President Obama’s willingness to support a sufficiently aggressive response—from the late stage of the presidential campaign to his first days and months in office—I have little doubt that we would be looking at a vastly different world today,” Summers said in his remarks to the Economic Policy Institute. “His stalwart advocacy of efforts to support the economy through the Recovery Act, to rescue the financial system, to ensure the health of key industries, and to maintain stability in the global system halted the vicious cycles in less time and at less cost than virtually anyone thought possible.”

Yes, these remarks were self-serving. As far as I can see, though, they are an accurate statement of the historical record. The blanket government guarantee to the financial sector stemmed the panic selling on Wall Street. Rock-bottom mortgage rates and various anti-foreclosure programs put something of a bottom on house prices. And the $787 billion federal stimulus program helped offset falls in spending on the part of consumers, corporations, and state and local governments. Yes, we can argue about the precise impact of the stimulus on spending and jobs, but it defies the laws of arithmetic to argue, as some prominent conservative economists do, that it had no effect at all. (As for the critique from the left—that the stimulus program was too small—in retrospect, it may well be correct. But I doubt a few hundred billion dollars of extra spending over three years would have made much difference to the economy’s overall path.)

And what was the cost of these policies? The hated TARP bailout will almost certainly turn a small profit for the taxpayer. The stimulus program raised the deficit, but not by as much as many people think. The recession caused most of the increase: spending on unemployment benefits and other social programs increased, and tax revenues plummeted. (Perhaps the biggest cost of the monetary and fiscal rescue packages is a largely invisible one related to the Fed’s emergency lending programs. In extending cash to to virtually anybody and everybody at near-zero interest rates during the height of the financial crisis, the Fed has created the expectation that it will do the same thing next time around—an expectation that is sure to influence behavior in the years ahead.)”

We can start with a sentence in the last paragraph to find the error in this analysis – “in extending cash to virtually anybody and everybody…” No, that should read – “in extending cash exclusively to the biggest banks and the heart of the financial casino industry…’ For the government somehow missed extending loans at 0.07 percent to, say, 80 percent of the American public. In reality, doing so would have allowed them to exchange their old debts – at whacked out interest – for new ones at such low interest that they could breath, maybe save the house, maybe stay in college, etc.

This did not happen. And the system that was ‘saved’ is the system as Bushonomics created it, circa 2007 – poorly regulated, one of the most ghastly inefficient ways to transfer capital to socially valuable investment ever created, a monster that only a rentseeker could love. Politically, these moves set back ‘progressive’ politics – the kind of hopy-changyness that seem to hover like tinkerbell over Obama’s rhetoric – for a generation. Instead of a gamechanging moment in which we could reverse the vicious corruption of politics and the dynamic of income and wealth inequality that is squeezing the American public to death, we … had the Summers sit on our face.

The inability to see the larger damage of the government’s urge, in 2008-2009, to save the very richest people in the world is the inability to see beyond the economic order, such as it was, in 2007. Japan’s policies that got them out of the depression gave them a good ten years – which were harsh on millions of Chinese, of course. But eventually these policies had other negative effects – the death of millions of Japanese and the destruction of all Japanese cities. Sometimes, cleverly saving the system so that the numbers are shiny – look at that commercial paper unfreezing! – is not really clever at all.

I’m not sure where the bottom on housing prices is leading us, incidentally. Surely Cassidy is being a tad optimistic. Summers presided over an economic policy that has resulted in a once in a generation loss of wealth to most American families, which Edward Wolff estimates at 36 percent – meanwhile, the upper one percent income bracket dropped 11 percent. In other words, Summersian policy was more than 3 times beneficial to the wealthiest than to the rest of the country.
But the numbers only indicate a great cultural disaster. The dropping of all pretences about who is worthy and who is unworthy in the U.S. can’t simply be wished away by those looking at how the place is governed, how everyday life goes on, the amount of real liberty people have. At these qualitative costs will eventually tell.