Setting aside the absurd framing of the TARP bailout scheme at the beginning of the article (i.e. either bailout or do nothing), there are interesting things to say about the Hegelian argument J.M. Bernstein examines in his recent NYTimes article for "The Stone".
But first, let me say why the framing of the issue at the beginning of the article misses the mark. It insinuates that we had only two choices: a) undertake some kind of bailout scheme or other, or b) do nothing and let the "market take care of itself". This is absurd: it rules out so many other things we might have done at the time, especially nationalization. Many commentators, not all of whom were on the Left, considered the possibility of nationalizing some of the banks. Even Bush was entertaining the idea. One of the most emailed NYTimes articles at the time was this. This isn't a far-Left idea, though I wish more of those were on the table. Paul Krugman's proposal was for short-term nationalization, which is a pretty standard procedure in Western Europe. The idea is simple: if the public is going to bailout a bank that has driven itself in the ground, the people who drove it into the ground should be shown the door and the company should be placed under public control (this includes the company's assets). And at some point the company may be re-soled to capitalists and the public coffers see a net gain as a result of this transaction. Yet in the US, our ruling class likes to pretend that we have the distinction of "maintaining private ownership" in cases like this, so such options weren't pursued.
So, setting aside the manifest stupidity of the "do nothing and let markets work their magic" option, there were plenty of non-bailout options on the table that are blotted out of the analysis in this article. Yet, despite all of the other options, Berstein's whole piece is about whether the bailout was good qua bailout (and I agree, that even qua bailout it was a fucking lemon).
This leads us into our first objection to the bit about Hegel. I like very much Bernstein's rather clear and succinct summary of some of Hegel's arguments in the Phenomenology. But his application of these ideas here seems imprecise.
Take Bernstein's own summation of one of Hegel's arguments, and you'll see what I mean: What makes the propounding of virtue illusory — just so much rhetoric — is that there is no world, no interlocking set of practices into which its actions could fit and have traction: propounding peace and love without practical or institutional engagement is delusion, not virtue. Conversely, what makes self-interested individuality effective is not its self-interested motives, but that there is an elaborate system of practices that supports, empowers, and gives enduring significance to the banker’s actions. Actions only succeed as parts of practices that can reproduce themselves over time. To will an action is to will a practical world in which actions of that kind can be satisfied — no corresponding world, no satisfaction. Hence the banker must have a world-interest as the counterpart to his self-interest or his actions would become as illusory as those of the knight of virtue. What bankers do, Hegel is urging, is satisfy a function within a complex system that gives their actions functional significance.
I endorse most all of this. And I endorse the Hegelian claims about practices, the dialectical relationship between agency and institutional structure, the sense in which actions come to have meaning only in certain institutional contexts, etc. But here's the rub: it is not clear that upshot of Hegel's arguments is that we simply need more regulation.
If the problem is the "interlocking set of practices" and institutions that constitute contemporary capitalism, then it is unclear that a modest change within those very institutions could resolve the problems Bernstein draws our attention to. It seems like the obvious inference to draw after reading the summary of Hegel here is that the basic institutional structure of capitalist societies are the problem. And if that's right, then we can't very well accept a putative solution to the problem that begins by accepting the very legitimacy of those institutions.
In fact, the idea that a couple of regulatory tweaks could solve the problems raised by the present crisis seems as delusional as the moralistic "knight of virtue", for similar reasons. The moralist is delusional precisely because she fails grasp that without institutional reconfiguration, her pleas for different practices have no possibility of being effective. But in a similar fashion Bernstein expects a couple of regulatory tweaks to do the trick, without even so much as giving a passing thought to serious institutional reconfiguration of the basic structure of contemporary capitalism. This evinces a misunderstanding of the real upshot of the Hegelian claim here: that as long as we have a set of interlocking institutions and practices that make it rational for capitalists to continue doing what they're doing, we will continue to face instability, crisis, social misery, overproduction, and system-level irrationalities.
Bernstein's argument tacitly assumes that financial regulation (helpful thought it would be as opposed to doing nothing) is all that can be done to curtail the instability of capitalism. But even Hegel, who certainly had lapses in political judgment, gave us reason to think that the deep problems of modernity could not be solved within the liberal state. This thought also emerges in Hegel's Aesthetics, where he rejects early bourgeois societies as "prosaic", non-beautiful, and alienating. Marx drew heavily on these arguments when he wrote some of his most brilliant early works, particularly "On the Jewish Question".
The argument in "On the Jewish Question" is Left-Hegelian through and through. One of the most interesting arguments is that the liberal state is a form of alienation. The argument runs as follows. Human beings are social, and we have lived for most of our history in various kinds of social formations. But in liberal capitalist societies, our social aspects are disavowed, even as they are manipulated and relied upon to make capitalist societies function (i.e. they require elaborate schemes of social cooperation and coordination). In liberal capitalist societies, we bifurcate society into two realms: public and private. We think that the public realm of the state is the realm of the social, of politics, etc. In this realm we are citizens, equal before the law, etc. But in our "private" existence, our actions take shape within the interlocking set of capitalist institutions and practices that Bernstein describes in his article. That is, in our "private" lives we are encouraged to be all the things capitalism encourages us to be: self-interested, competitive, exploitative, etc.
But it turns out, Marx argues, that although this is the way things appear in capitalism, they are really upside down in this picture. In fact, the so-called atomistic private level of our society is the level of our "real existence". The public realm, on the other hand, is the alienated form which our social nature takes in capitalism. That is to say, the State is merely an abstraction, a collective fantasy of sorts. To think that our actions only have political or social weight when acting in our capacity as citizens, in and through the institution of the state, is to radically misunderstand contemporary societies.
To carry forward this critique, Marx draws a distinction between political emancipation and human emancipation. Political emancipation refers to a catalogue of individual rights, that is, a series of legal provisions that weren't applicable to all in feudal societies. But political emancipation, Marx argued, wasn't enough. In short, political emancipation was merely emancipation on paper. Marx didn't think that we could really be emancipated as long as the basic configuration of institutions in capitalism remained as they were. Political power could not be equally distributed unless economic power was equally distributed. Thus, human emancipation meant somethings far stronger than mere political emancipation. Human emancipation means an end to the institutions and objective conditions that produce alienation. It means an end to an irrational system marred by deep internal contradictions.
If the problem is really the basic structure of social institutions in our society, as Bernstein suggests, it is unclear that regulation is the obvious remedy. I am with Marx here in thinking that the basic upshot of the Hegelian setup that Bernstein describes is that we need radical transformation of the basic structure of capitalist societies, rather than superstructural tweaking.
Sunday, October 3, 2010
Bernstein's Hegelian Argument for Regulation Misses Mark
Thursday, July 2, 2009
David Harvey on 1970s New York
I'm currently reading David Harvey's excellent, clear, and politically sharp A Brief History of Neoliberalism (2005: Oxford University Press). I couldn't help but share a little bit of what I'm getting out of the book.
While I might post later on more holistic considerations raised by the text, I'd like to just focus this post on some of the facts and analysis he offers regarding 1970s New York city and the trajectory the city (and many others) have taken since.
To put some background in place, I should mention that (as Harvey notes) the early 1970s were marked by a global economic crisis of capitalist accumulation (i.e. profits were down across the board). Unemployment reached levels not seen since the onset of the Great Depression, and it was clear by the mid 70s that the "long boom" of the post-War era was over. The OPEC oil embargo, and the spike in oil prices, put an exclamation point on all of this.
Now to New York. We must recall that New York had a severe fiscal crisis which arose from "capitalist restructuring and deindustrializaion" which had for several years steadily eroded the economic base of the cit. Moreover, the rapid suburbanization and "white flight" of the 60s had "left a good deal of the city impoverished". The result, unsurprisingly, was social revolt and unrest among marginalized populations in the city in the late 60s.
This is what Washington called the "urban crisis" at the time, which afflicted nearly all major US cities in the late 60s/early 70s. As Harvey points out, "the expansion of public employment and public provision -facilitated through generous federal spending- was seen as the solution". But when the crisis of the early 70s hit, tax revenues dropped sharply and with it Federal aid.
Now this is where the deep fiscal crisis in New York emerged from. Due to the above, "the gap between reveunes and outlays in the NYC budget (already large because of profligate borrowing over many years) increased". The city was tanking.
But in the midst of this crisis there emerged a cabal of NY investment bankers and leaders of major financial institutions (led by Walter Wriston of Citibank) who refused to roll over the city's rising debt. This, as intended by the leaders of finance, forced the city into technical bankruptcy.
In the wake of the crisis and the subsequent bailout that was required to upright the capsized city budget, entirely new institutions were set up that attempted to blot out the sediments of social struggles that had shaped the old.
The financial elites now in control of city finances "had first claim on city tax revenues in order to first pay off bondholders: whatever was left over went to essential services". The effect, Harvey argues, "was to curb the aspriations of the city's powerful municipal unions, to implement wage freezes and cutbacks in public employment and social provision (education, public health, transportation), and to impose user fees (tuition was introduced into the CUNY system for the first time). "
Now I dont think Harvey is out of line when he suggests that this development represented a "coup by the financial institutions against the democratically elected government of New York City, and it was every bit as effective as the military coup that had occured earlier in Chile".
Meanwhile, Gerald Ford's Tresury Secretary, William Simon (a supporter of the military coup against Allende in Chile, and later a head of the super-conservative "Olin Foundation") strongly advised the president to withhold federal support to the deep fiscal crisis in New York City. ("Ford to City: Drop Dead, was the headline in the New York Daily News"). The idea here was that if any bailout of the city should occur, it should be seized upon as a political opportunity to restructure it in ways amenable to those who were appalled by the gains made by social movements in the city throughout the 20th century. Thus, any bailout must be made "so punitive, the overall experience so painful, that no city, no political subdivision would ever be tempted to go down the same road".
The result was that "within a few years, many of the historic acheivements of the New York working class were undone" and much of the city infrastructure (e.g. the subway system) "deteriorated markedly for lack of investment or even maintenance". Thus life in New York became "gruelling and the civic atmosphere turned mean". "Working-class and immigrant New York was thrust into the shadows, to be ravaged by racism and a crack cocaine epidemic of epic proportions in the 1980s that left many young people either dead, incarcerated, or homeless, only to be bludgeoned by the AIDS epidemic that carried over into the 1990s."
Thus, "redistribution through criminal violence became one of the few serious options for the poor, and the authorities responded by criminalizing whole communities of impoverished and marginalized populations".
"The victims were blamed, and Giuliani was to claim fame by taking revenge on behalf of an incresingly affluent Manhattan bourgeoisie tired of having to confront the effects of such devastation on their own doorsteps".
Of course, conventional wisdom has it that "(non-white) criminals took over New York in the 1970s" and the righteous Mayor Giuliani came in and "cleaned the city up". Of course, no one will dispute that the economic climate changed drasitically in New York from 1979 to 1999, but this is not tantamount to 'progress' in some holistic sense. The change from 1979 to 2009 perfectly exemplifies the contradictions internal to the logic of gentrification. Certain concrete features of the city improved (infrastructure, tax revenues, saftey, investment, etc.), this cannot be denied. But the condition of this resuscitation of the city was that poor and marginalized populations would be displaced and forced elsewhere, that city political and economic institutions would be restructured to the liking of capitalists (i.e. "to make a good business climate in the city"), that much of the city was evacuated of 'undesirables' to make room for a new set of professionals, fianncial technocrats, capitalists, and others able to afford preposterous rents and costs of living.
