Juan de Mairena

There is a certain kind of book I love. It doesn’t have a genre label. Some of its authors call their books novels, others fragments, others reflections. Often, the authors are really editors. It extends from the Scratch books of Lichtenberg to the Notices of Ludwig Hohl, and includes Rozanov’s Waste paper books and Pessoa’s Book of Disquiet. A leading theme, here, is the scratching, the hastily scribble gloss, the note one finds in one’s pocket and throws out. Waste paper is paper that has been used and lost its use, and perhaps aggressively wadded up. It is paper on the way to the waste paper basket. That is the social situation of these books – they are caught somewhere between the desk and the garbage. At least, in the imagination.

The waste book has a strong relation with the philosophical novel – and certain of the latter, such as Paul Valery’s M. Teste, go over the line. Perhaps the reason is that ideas in themselves – ideas in their natural setting – have as limited a place in modern life as mice have in modern homes. They are an accidental, corner feature of life. Even in jobs like research scientist or professor, “having ideas” is not in the job description – at best, creativity squeezes in there, but playing well with others, getting good grades, and producing acres of watertreading non-waste articles for journals is what counts, there.

Ideas are for losers.

I’ve just discovered another waste book – Juan de Mairena, by Antonio Machado. It was abridged and translated into English by Ben Belitt back in 1963, but that edition has long gone out of print. I discovered the book while lounging around in the Buffon Bibliotheque last week. The French translation is published by Anatolia: editions du rocher, who also publish the translations of Rozanov. Mairena is one of Machado’s heteronyms. He is a professor in a lycee, and the book consists of stray notes from his conversations and lectures.

Here’s a translation of the French translation of one of them.

“One says that there is no rule without an exception. Is that really the case? Myself, I don’t dare affirm it. In any case, if that confirmation contains a partial truth, it must be a truth of fact, the reason for which can’t be fully satisfied. Every exception, one adds, confirms the rule. This does not seem so evident; however, it is more acceptable, from the logical point of view. For if all exceptions belong to a rule, if there is an exception, there is a rule, and he who thinks exception thinks of a rule. This already constitutes a truth of reason, that is to say, a truism, a simple tautology which teaches us nothing. We can’t be satisfied with stopping here. So, let’s be more subtle in adding a thing that La Palice would never have dreamed of. [Lapallisade, or a truth a La Palice, is one that is absurdly self evident – R.] 

1. If every exception confirms the rule, a rule without an exception would be a non-confirmed rule, by no means a non-rule.

2. A rule with exceptions will always be stronger than a rule without exceptions, which will lack an exception to have itself confirmed.

3. A rule will be more of a rule the richer it is in exceptions.

4. The ideal rule will be composed of nothing but exceptions.”

Production, circulation and the self-organising market

Georges Perec wrote a novel entitled La disparition in which the disappearance in question was as much a matter of form – formally, the novel was written without ever using a word with the most common vowel in French, the e, in it – as of substance.

Marx’s Capital doesn’t quite offer that stylistic coup de force, but one does notice that, in contrast with mainstream economists, one of the central figures is, if not missing, certainly de-centered – the market. Mostly, mainstream economists take it for granted that the market is the central fact of economic life, the place in which the price system does its work and the central economic agent, the sovereign consumer, does his. In a severe case of science envy, certain Marxists in the eighties and nineties fought to establish a ‘micro-foundation’ for Marxism that would reconstitute the sovereign consumer and, thereby, give the market back its central role. This, in my opinion, is an excellent case of missing the point.

For Marx, the market is analytically subordinate to the two great processes of capitalism, production and circulation. Production, of course, has always played the starring role in the Marxist narrative – for obvious political reasons. However, it is important to remember that the entire second book of Capital (albeit edited by Engels) is devoted to the sphere of circulation. Of course, leafing through the second book after the prophetic contact high one gets from the first book is a little bit of a downer – it is as if the book of Isaiah came with an appendix of equations. And not only that, but the text in which these equations float is much less full of those stabs into the dark underbelly of Mr. Moneybags that we all know and enjoy.

The idea that economics as a science must, like physics, ultimately rest on a lowest level of laws and smallest elements – particles in the later, individuals in the former – has been challenged even by icons of mainstream economics. Kenneth Arrow wrote an essay in the nineties that begins:

“It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories. I want to argue today that a close examina-tion of even the most standard economic analysis shows that social categories are in fact used in economic analysis all the time and that they appear to be absolute necessi-ties of the analysis, not just figures of speech that can be eliminated if need be. I further argue that the importance of technical in-formation in the economy is an especially significant case of an irreducibly social cate-gory in the explanatory apparatus of eco-nomics.” [Arrow, “Methodological Individualism and Social Knowledge”,1994]

Arrow goes on to consider the Austrians, and the kind of game theory he and Debreu used, in order to show that there are irreducible social entities embedded in these analyses. On Arrow’s account, the pius horror of the economist before the suggestion of a collective agent makes as much sense as the pius horror of the 17^th century natural philospher before the notion of a vacuum [which, it was established by Aristotle, nature abhors].

Myself, I find that the history of capitalist culture over the past two hundred years clears up in remarkable ways once one takes production and circulation as one’s macro analystical fictions, and markets – which, according to liberal historians, are at the center of the story – being secondary. More than this, I think that circulation has not been enough incorporated into the Marxist story to create a materialist, so to speak, account of the dynamic of that culture.  In essence, I’d locate the motives and genesis of much of the modern technostructure of production as originally occuring as a problem or routine in circulation. When, for instance, we see land managers and clerks starting to apply accounting methods under the rule of the great landholders – something that happens in England as early as the 16^th century – what we are seeing is the diffusion of a cost-benefit heuristic for a whole set of routines. We can call this the diffusion of a mentality, but we should be careful not to think of such things in terms of ESP – a matter of ideas transmitted from head to head – since, in fact, without a material medium, this mentality falls apart. New forms of production are also continually hiving off the circulation sphere.

Take, for instance, literature.

The history of 19^th century literature has paid very little attention to a crucial event that occurred in the 1860s, when Gompert Bodenheim, a book printer, patented a machine to fabricate paper sacks. Before Bodenheim – and others who, in that period, were patenting carton machines and the like – packages were made on the premise, much as they are by butchers today, using sheets. The packaging revolution – a revolution in the circulation of commodities – not only was about the production of another commodity, but one that had a very promising affordance – it could cheaply be marked with symbols or text. Bags en masse, or cartons en masse, could become, and did quickly become, part of marketing. Going into a supermarket today may not seem like going into a library or a museum, but in fact it is the same synergy of text and image. We are, in other words, seeing literature – admittedly, of a very low kind. The effect of this on production has been incalculable. Certain brands studied by business historians – say, Campbell’s soup – are, according to those within the enterprise who direct it, as concerned with the packaging as the product. Thus, something Sombart and Simmel both wrote about around 1900 – the increasing determination of production by “fashion” or marketing – has come to pass in a number of branches of industry. This was not because the sovereign consumer, of course, demanded signs on his or her shopping bags or cartons, but because the agents of circulation discovered a means of converting commodities into money through the combination of marketing and packaging. Between the can of bean soup and the bean soup within it, what is the customer buying? The answer to this depends on whom you ask – the execs at Campbell soup or the Mom with the kids.

It isn’t that Marx disallows the market – on the contrary, he is acutely aware of what Smith called the “extension of the market”, which, for Marx, was as well the vector of revolution. It is that Marx does not hold to the idea of an autonomous, or self-organized market. To cover this up is to lose what he is saying.

the full and free development of the personality: a byway

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

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

“ Economic individualism (liberalism) has not only effected changes in external living conditions,  but also changes in life’s ideals, for today more than ever our existence is oriented to the order of its material basis. But does, therefore, the idea of the liberal economic system remain unchanged, when society achieves the best order, that being the unhindered pursuit of their interest by individuals?  Experience teaches us that this 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 interests out of the discarded one and out of newly created interests.”

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

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

Philippovich distinguishes the socialists from the romantics in the former’s resolute farewell to the society of the natural order, of small artisans, of a middle class of independent worker-owners. Indeed, it was only the giant capitalist concerns that could create and disseminate the productive power 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 punishing inequality, called for remedies that would enable all to enjoy the wealth and all to enjoy, as well, more leisure.  Philippovich is sharp eyed enough to see that in the latter, we get to the key of the socialist motivation and its own nostalgia, its own connection to the conservatives.

In this view  the goal that is served by  abolishing private property and transforming it into social property we recognize the ideal of socialism. It is the highest development of the individual personality, which the economy subordinates as a mere means. Today, on the contrary, the higher goal of life is lost in the subordination of all interests to the material goals of the economy, in which art and science itself only serve production.” It is here that Philippovich’s sense of the socialist movement encompasses not only Marx, but Oscar Wilde – which perhaps takes fin de siecle Vienna, the city of the “gay apocalypse”, to see clearly. “To gain for all men the world of spiritual freedom, of beauty, of research, of aesthetic enjoyment , to create for them the opportunity of enjoying their existence 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 the economic order has become an existential end, in modernity, survives in Karl Polanyi’s work, where it is redefined in terms of embedding: the ideal of the capitalist economic order is to embed the social entirely in the economic. By a paradoxical twist, a form of Marxism – associated, now, with Stalin – took up the ideal of the liberal economic order – at least as read by the 19^th century socialists – and transposed it from an analysis of capitalism by way of its system of production into a social ideal in which all things exist for social production, thus effectively shutting down, as bourgeois crap, the whole discourse of the full development of the person.

A vienna pink: Eugen Philippovich

In Timm’s biography of Karl Kraus, the most uncompromisingly shaved prophet in history, there is the following reflection about the political meaning of beards: “In the Vienna of 1848 the student revolutionaries had worn beards, which became symbols of their political fervour. And after the defeat of the revolution, it is reported that the authorities forcibly shaved them off. By the 1880s, those students had become pillar of the Austrian establishment. Their beards, now grey and venerable, symbolized for the iconoclasts of Kraus’ generation a pompous Victorianism that had to be swept away. A study of Wittgenstein puts the matter very clearly: “The rebellious young men who were seeking to achieve consistensy and integrity rejected facial hair along with all bourgeois superfluities. To them, moustaches and sideburns were mere ostentation, like velvet smoking jackets and fancy neckties.”

By these standards, Eugen von Philippovich, who taught economics 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 line by the Austrian National library, describes him as follows: “Eugen Philippovich Freiherr von Philippsberg in a Jacket with a single row of buttons, a vest with a single row of buttons, striped pants and a white shirt with a folded collar and tie, with a Filz Trilby hat with a silk bank, a full beard and glasses.” Like Freud, whose fashion sense he shares, he is a man between the world that was formed after the failed 1848 revolution and the world being formed by the fast pace of techno-cultural and political changes at the turn of the century in Vienna. He is of the liberal generation that learned its economics from Carl Menger (von Philippovich literally did) and its duties from Kant (like  Ulrich’s father in  Robert Musil’s Man Without Qualities).

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

One might think, considering the tie between the contemporary image of “Austrian” economics and the hardcore advocacy of untrammeled capitalism, that Philoppovich would view the liberal dominance as the golden age and the attacks as the downfall of a beautiful idea. But Austrian economics in Austria, at this time, were not as simple as a latter generation of ideologues – notably Hayek and Mises – made it out to be. In fact, Philippovich was the center of the Austrian Fabians, who, like their English counterparts, wanted to use the power of the state to make a number of socialistic reforms in the economic arrangement of things in the Habsburg Empire. Philippovich, for instance, investigated working housing in Vienna and described the awful conditions of the tenements – inspiring the Socialist post war government’s effort to provide decent housing for the workers, according to Eva Blau’s The Architecture of Red Vienna. His work here was at the intersection of the liberal-left concerns of the Fabians and the modernity of architects 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 on the vices of liberalism and soft on the vices of socialism – or so it may appear to an orthodox economist.

The first chapter that describes the formation of the liberal economic policy set and its implementation takes as a sort 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 helped Free trade to triumph will be one of the titles of fame given to the second half of the 19^th century.” In fact, the basis of that triumph, as Philippovich shows, is based in reforms that occurred in the first half of the 19^th century, which followed a certain theory.

“For this change in the postion of the state and the individual in the economic process of society the economic theory of liberalism delivered a foundation that was, in its simplicity, clarity and inner certainty extraordinarily captivating, understandable and through life experiences easily tested. When everyone can produce what he wants, and can trade with all other members of society in terms of free contracts, than the reasonable pursuit of one’s own interest must lead to the state that all economic goods will be produced in the most economic way and in regard to the need of the greatest possible munber 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 the point that there will always be a demand for things which are necessary for society. The utility of society consists in the fact that the emergent needs of its members must be satisfied. This means that their enterprises must be satisfied. It will always be the case that things reflect such uses as are desired and that their producers are given occasion to sell them. These producers will be lead through their self-interest to produce these things at the lowest cost, because by complete freedom of trade the consumer will turn his custom to those that can most cheaply satisfy his demand. Where the costs are greater and thus the price required higher than the consumer’s sense of its value, the consumer will pull back. These producers will thus have to either limit 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 at the lowest cost. But not only will consumers and entrepreneurs with full freedom act so as to serve their interests best, but also workers will turn to those businesses, where their labor power is best recompensed, and that is naturally those in which there is the tendency to extend production, and thus in which there is a stronger social need. Accordingly, in such an economic system all will strive after his own advantage, but through this, at the same time, the socally best distribution of goods and labor power will be implemented. … Basically the whole of economic life is only a continual buying and selling. Rent, loans, pacts, in brief all contracts, in which claims to utilities are made and compensation is offered in return, were engaged in and dissolved according to the same principles.  Against this free trade the state had nothing other to do than to guard the person and property of all from violence and deceit, and to compel the fullfillment of freely entered into agreements. In the interest of political freedom and on economic grounds, the state must avoid a positively public activity, or business affairs. If the government engages in such enterprises it will expand its power and influence by controlling a great number of places and can comand and injure the many interests of private parties and can use them for political ends. Economically purposive management will be obstructed by the wish of the government to curry favor with influential parts of the population: here the great land owners, there the great industrialists, no again certain regions against others, here the worker and their the small business. Or they will be forced under the influence of popular movements to make rules, which are uneconomic. Such management will also because of the difficulty of leading an economic enterprise through a  bureaucratic apparatus work less efficiently, than a private one, while the leading personnel has only a weakened interest in success, and thus the energy of labor will suffer.”

Philippovich’s summary brings out the ideological necessity behind the sovereign consumer, upon which hinges a system that both needs the coercive powers of the state and needs to keep the state from interfering, in any way, with the accumulated inequalities that result from the process of free trade. 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’ll examine these two ideas in the next post.  

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

Le Monde today publishes a long thumbsucker about the sudden collapse of electoral hope in Sarkozy’s camp. It concludes with the man himself, who was recently consoled by visits from two former European presidents – Gerhard Schroeder and Felipe Gonzalez. Note, well, that these consolers were the leaders of the ‘socialist’ parties in their respective countries. That they would form the cortege of Sarkozy’s well wishers tells us a lot about European politics over the last decade – marked by the utter betrayal of the left by  the elite within the leftist parties.

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

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

As often happens, the debate plays out as one that pits the U.S. against Europe. Frankly, I find this bizarre. The neo-liberal agenda that has aggravated the plutocracy in the U.S. doesn’t stop at Bar Harbor. It has, in fact, been disseminated throughout Europe at least since the end of Thatcher’s misrule in the UK. And, as Sarkozy’s friends show, it has been disseminated not simply through rightwing parties, but through leftwing ones. In fact, by a cruel irony, rightwing parties, with their residue of nationalism, often end up opposing ‘liberalization’, and thus, de facto, protecting the social democracy put 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 the developed 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 1 percent 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”: for instance, the idea that in Europe, the public sector is vast and the private sector small. Here is Cowen on how smart Americans know the action is in the private 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 marginal tax rates, to travel a lot, and so on. That approach makes more sense in a lot of Europe than here. ”

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

As importantly, no developed country has a pre-1930s public 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 significantly higher 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 the image of Europe as the paradise of social democracy.

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

index, was about 25% lower than for income before taxes and transfers in the late 2000s, while poverty measured after taxes and transfers was 55% lower than before taxes and transfers.” However, the results depend 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 is very low. This is where the EU is very good. According to Handler:

“According to the latest data available (2001), there are significant differences in the structure of the public sector between the EU and that in Japan and in the US. These differences are highlighted by Figure 7. The largest difference, gauged from the social protection figures, is that the EU15 redistributed roughly 12% of GDP more than the US and 8.5% more than Japan. Moreover, the EU15 is leading with regard to health expenditures whereas it spends less than half the 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. does outstandingly poorly. Its public expenditure is tremendously dedicated to healthcare, and yet it also spends more privately on healthcare – due to the enormous inefficiencies of a mostly private healthcare system. And the same is true with education, as the Government decided, long ago, to encourage private loans for college students, rather than setting up a wholly owned Government subsidiary to do the job. The result has been inflation of debt and an explosion of expenses in colleges, which are now administered by the same cadre of creeps one finds directing things in banks, private equity firms, or lobbying houses.  

That said, the EU has been far from immune to the neo-liberal virus, which is why it is threatened with massive wealth inequality and the politics that flows out of it – as anybody who looks at the austerity counter-revolution going on here can see. Developed economies really need higher levels of public employment – Germany’s is scandalously low, as is the U.S.’s – in order to produce what, at this stage of affluence, developed economies really need – more and better public goods. Choking the rich – imposing caps on income and expropriating absurd amounts of wealth – is only a tactic in the general movement that we should be seeing to a fairer system that spreads the benefits of the economic system to all. For instance, the use of the internet to set information free has shown that the information – in terms of tech and media products – will keep on flowing even if IP laws are changed to radically limit the monopoly power of IP holders. Similarly, healthcare as a public good is actually easier to do now than it has ever been, and would be cheaper if it were treated as a public good – i.e. the state simply inflating the population of healthcare workers far above its current level, throwing up clinics with the appropriate technology with abandon, etc. Instead, we are mired in the coils of a dying healthcare system that has elevated the incomes of doctors and dentists to absurd heights and taken no advantage of the advances in tech and education that would allow much of the work of the GP, for instance, 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 a real talent, then it is a joy to do it in itself. Money is secondary), and in general the more humane capitalism that we are all very near, and that is being pissed away to keep our masters in yachts and single malt scotch.

on to the sovereign consumer II

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

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

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

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

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

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

‘The will of men are lead by countless and in part contradictory motives; in this way, any strict law-likeness of human action in general and economic in particular is excluded from the beginning. Only when we think of man in his economic activity as being continually guided by the same motive, i.e. his self-utility, does the mmoment of arbitrariness appear excluded, and every action strictly determined. Only under the above presupposition is accordingly the laws of political economics and even national economics thinkable.” [My translation, 73]

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

…

Character is never the rubric under which the economist goes about his business. Rather, at the heart of the subjectivist move was an oddly vacuous subject – the ‘individual’, or the consumer.  In mainstream economics, the decisive rupture with the classical school centers on the replacement of the laborer, the producer, by the individual consumer, the preferer. But this change of focus creates an oddly dysymmetric picture of economic activity, as though individuals existed in some series, isolated from one another, the realization of their choices cut off from 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 of connection within a network of connections as in Simmel, a choice for salvation that leads to a new life, the choice of believing in the eternal return of the same that leads to the transcendence of the human, the choice of revolution that throws off the yoke of alienation, the choice of the economic agent has a curiously muffled, a passive aggressive nature. It is a choice of, as economists like to put it, one bundle of goods over another, with the world of supply, of production, of creation, absolutely subservient to choice.

The inversion of the economist’s protagonist – from producer to consumer – follows the logic of individualism in as much as it clears a space in which economics can be a social physics, or mechanics. The individual shoppinng is a distinct unit. The individual producing, on the other hand, is a collaborator. The steelworker does not make a fleck of steel distinct from the fleck of steel made by his fellow steelworker. The classical economists made great strides in abstracting to gain a sense of economic objects as produced, by postulating a fully substitutable abstract labor time – the time that is represented in the time card. But Marx revealed that there was an unconscious total social fact following upon this way of analysis: producers were exploited within the class stratified social whole. This would bother few in a world in which the servant/master relationship was assumed, but it did bother a world in which that relationship had to be justified. And yet, of course, in a further paradox, the first world, by depending on non-liberated labor, could never bring about the  industrial and financial system  of capitalism – capitalism must free the laborer if the laborer is to be exploited in a proper capitalist manner.

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

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

the sovereign and the sovereign consumer

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

The original review raised the doubt that Galbraith was using a scientific method, instead of an ad hoc method of magisterial observation. Solow felt that Galbraith’s themes were often invalidated by modern economic theory. And, in particular, he did not think that Galbraith could be right about one of the theses that had by that time become associated with his name: that corporate demand management, that is, marketing, shaped both production and the market.

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

This was written in 1968, when the consumer’s ability to carry debt was not itself a great matter of advertising. It proved to be so in the 2000s, and as we have seen, mortgages and credit card debts did expand to the hearts’ content of banks and financial service companies – until the limit of the consumers’ ability to pay debts was reached. The ghost of Galbraith is entitled to smile about Solow’s naïve idea that debt itself can’t be commodified, advertised and amplified.  But more here is on display than  Solow’s limited imagination. There is, in Solow’s statements, a classic economist’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 the consumer’s choice between purchases of cigarettes and purchases of beer, and much harder still to influence his distribution of expenditures among such broad categories as food, clothing, automobiles, housing…”, he falls into a rather puzzling trap in which the purchase of beer and cigarettes is a one time purchase with no effects on one’s lifestyle. His dissociation of goods and people make it impossible to see the connection of a good like cigarettes and a broad category like housing – a connection that came into view very clearly for the 300,000 some people who died of lung cancer in 1967. Indeed, 1967 marked the high water mark of the increase in cigarette smoking. The next year, the government and private organisations began to feature a massive anti-smoking marketing 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 comparative subgenre. However, it was evident even to Solow that this couldn’t account for all 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 without economic damage –and this was not something Solow’s economic ideology would allow. At the University of Chicago, a school developed that contended that advertising did, indeed, have an economic benefit, by giving consumers – whose preferences were made through the same act of freewill by which sinners in an evangelical church accept Christ as their Lord and Saviour – with information that will help them find their preferred goods and services. Since advertising doesn’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 of qualities – such as comfort – even if the information it gave looked more like the 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 have been many sociological studies of, say, the internal paper generated by advertisers of tobacco, and it is nothing like the Chicago Economics ideas about what advertising does. There is some support for Solow’s other notion, which is that mostly, advertising produces brand switching, but not a demand for the particular good. Yet it is unclear what this means – especially as a good like cigarettes was indeed used by more and more consumers in the years from the turn of the century up long past the medical evidence that it caused cancer. Is switching a brand ontologically different from switching to a good? And what is really being switched? What goods are really in competition?

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

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

            What is the frame? It is that the best society is the one that best serves the economic needs of the individual. Wants are original with the individual; the more of these that are supplied, the greater the general good. Generally speaking the wants to be supplied are effectively translated by th market to firms maximizing profits therein. If firms maximize profits they respond to the market and ultimately to the sovereign choices of the consumer. Such is the fame and given its acceptance a myriad of scholarly activities can go on within it. Any number of blocks can be designed and fitted together in the knowledge that they are appropriate to – that they fit somewhere in – the larger structure. There can be differences of opinion as to what serves the larger structure. Mathematical theorists and model builders can squabble with thos who insist on empirical measurement. 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 am going to go back and look at the oddity of this construct, which arose when economics made a subjectivist move at the end of the 19^th century, in marked contrast to the direction of the other social sciences.