Corey Robin on "Ron Paul's Two Problems"

See Robin's piece here. His argument is that "Ron Paul has two problems, one his and another ours". By "ours" he means "the Left" (more on that below). The problem "we" have is that our side doesn't "really have a vigorous national spokesperson for the issues of war and peace, an end to empire, a challenge to Israel, and so forth, that Paul has in fact been articulating."

Paul's problem is that he is, well, Ron Paul. Set that aside.

Does Robin have a point regarding the need for a strident anti-imperialist voice on "the Left"? Yes and no, depending on what we mean by "the Left". Robin, to his credit, is quite clear what he means by "the Left": "I mean a left that's social democratic (or welfare state liberal or economically progressive or whatever the hell you want to call it". He doesn't come out and say so, but it's possible he also means to say electoral Left and, more specifically, the Left wing of the Democratic Party. He might also mean to say that he wishes that there were a presidential candidate who was both "Left" (in his sense) and also vociferously anti-imperialist.

Now, there is a sense in which I agree with Robin here. All of the political confusion generated by the 2012 campaigns presents challenges for the Left. Anyone who is against the wars, who is attracted to principled anti-imperialist positions, cannot be satisfied with the bellicose, empire-expanding, drone-loving Democratic Party (or its representative in the White House). Thus, in the context of a media that vastly over-inflates the importance of the Republican primaries, some (otherwise left-leaning) people are attracted to Ron Paul's arguments against the wars. It is a shame that some people—who may not have any contact with the organized Left—may be tempted to conclude that Ron Paul-style hard-Right politics are the only anti-war politics on offer. Robin is also surely correct to say that Paul doesn't oppose war and imperialism for the right reasons. He is coming from a pro-nationalist and pro-isolationist (and, I would add, racist) position that informs his anti-immigrant xenophobia as much as his stance against foreign interventions.

I also agree with Robin that it would be nice if there were a visible "Left" figure who had the opportunity to make principled anti-imperialist arguments to a mass television audience. I wish there were a Left figure of this sort who was given the light of day by the media in order to bludgeon the lousy Democrats from the Left. I've even thought a couple of times recently that it would be nice to have a third-party Left candidate who was able to at least get a critical message out via the Presidential media frenzy (although this strategy has its limitations as well). On this much I can agree with Robin.

But there are several deep problems with his analysis.

First, there already is a principled, intellectually rigorous anti-imperialist Left in the US, although it is marginalized by the two-party system and the media. Moreover, the Occupy movement has adopted generally anti-war positions and has frequently made use of slogans such as "end the wars, tax the rich!" and "money for jobs and education, not for wars and occupations". In Chicago, the Occupy movement joined in marching against the occupation of Afghanistan. But Robin seems less interested in these developments than he is in having a "strong national state" that can "ally" with movements. Set aside the problems with this view about the relationship between movements and the State for the moment (I concede that I not have yet not read Robin's elaborations on this topic on his blog). Robin's main lament here seems to be that there is no visible figure or candidate (in the mold of Ron Paul except left-wing) making anti-imperialist arguments on prime time television. That's not, in the first instance at least, a lament that there's no movement—it's an expression of frustration that there are no electoral candidates making use of the "proper channels" to make anti-imperialist arguments. As far as it goes, I wouldn't mind if there were a Nader-like figure making anti-imperialist and anti-austerity arguments on prime time TV right now. But I hardly think that's the be-all-end-all of politics. I'm far more interested in the promise of Occupy, that is, in the power of strikes, mass demonstrations, workplace actions, occupations, mic checks, community pickets, direct actions, and all the rest of it. What's more, it is no exaggeration to say that the resistance of extra-electoral social movements are the key to explaining virtually all progressive changes in his US history. The Democrats, on the other hand, are a graveyard of progressive social movements, not a force for progressive change. The Democrats started every war that the US was involved in during the 20th century—they've never been and never will be anti-imperialist. Movements are the way forward, and the State and the two-party system are nothing but obstacles.

Second, one answer to Robin's complaint that the liberal Left isn't anti-imperialist would be to say, "well, what does that say about the politics of the liberal Left in the US?" He complains that the "welfare state liberal" Left doesn't have enough staunch anti-imperialists, but I would reply that that simply speaks ill of the liberal Left in the US. Paul Krugman, a liberal if ever there was one, has consistently spoken out against the Iraq War. But he's no principled anti-imperialist and doesn't offer wide-ranging "pungent" critiques of imperialism. Neither do the editorial board of the American Prospect or The Nation. Why might that be? One reason has surely got to be that anti-imperialism is, at least in its classical form, generally anti-capitalist. Imperialism is the violent military form that international economic competition takes in a global capitalist system. It makes little sense to impugn one without criticizing the other, given their intimate relationship.

Third, Robin is wrong about the State and gives generally unconvincing arguments against Paul's "federalism". First off, Ron Paul and "libertarians" are not genuine federalists. To be sure, Robin is right that White Supremacists and other reactionaries have inhabited the language of Federalism when it suits them. But it's window-dressing. They aren't for genuine local-level democratic control of anything—just try asking Ron Paul if he'd allow workers in a company town to democratically run the factory themselves without the boss. Paul, after all, is no fan of democracy. He believes that capitalist markets should determine what our society is like—hence his fundamental distrust of the popular will of the people expressed through democratic self-rule. There is a large sense in which a genuinely democratic society would require a massive decentralization of power compared to really existing US capitalism. That point gets lost in Robin's argument re: the need for a strong national state.

Moreover, "libertarians" like Paul are not anti-State. They love the State. Neither are they anti-intervention. They love intervention as well. Everything depends on what the State does and how it intervenes. When workers refuse to obey the authority of their bosses—Ron Paul says call in the authorities to protect the property of the capitalist class. When workers go on strike—Ron Paul says call in the State's bodies of armed men to break the picket. When masses of black people revolt against police brutality and repression—Ron Paul stands firmly with the racist cops in calling for violence from above. When landless peasants try to occupy the land of colonial elites—Ron Paul and libertarians are for vigorous state intervention to stop the peasants from fighting colonial oppression. When movements arise that challenge the legitimacy of capitalism, you can bet that Ron Paul (and every last "libertarian" on the planet) will be rooting for the coercive power of the State military to put down the uprising by force. The fact is, without a coercive, interventionist State, you simply couldn't have the system—capitalism—that Paul favors. At least Fredrich Hayek and Milton Friedman were honest about this feature of their politics (both, after all, were enthusiastic supporters of the brutal Right-wing Pinochet dictatorship given that it was staunchly neoliberal and anti-socialist). Capitalist property relations require a coercive State that maintains the unequal power of the ruling class.

Of course, when the State is forced—by pressure from below generated by movements—to relent and give concessions to try to undercut challenges to its authority, Ron Paul is against those State interventions. When the labor movement explodes in the 1930s and wins concessions from the State (e.g. Social Security, collective bargaining rights, etc.), Ron Paul is against that kind of State activity. When black people die tearing down Jim Crow and, in the process, win modest gains from the political system, Ron Paul is anti-State. When the womens' movement wins abortion rights and anti-harassment legislation, Paul cries foul and whines of excessive "State interference". When people like Ralph Nader challenge the Big Three and win safety regulations on car corporations, Ron Paul complains of a "tyrannical" State.

What this shows is that he, and other defenders of capitalism, love certain interventions and hate others. They love interventions that protect the privileges and powers of property owners. They hate the interventions that reduce the power and privileges of business—even when these "interventions" vastly increase the freedom of marginalized groups.

The fact is that talk of "limited government" is nothing but rhetoric. Those who extol the virtues of "small government" say one thing and do another—they are all about a government that doesn't limit the freedom of the ruling class but they could give a fuck about the freedom of the rest of us. And when the majority of us get restless, all that "small government" talk is lost in the fray of riot gear, bullets, billy clubs, tear gas, and calls for "law and order". The question of whether government should be "big" or "small" is vacuous. It's far better to ask: who controls the government? Whose interests does it serve? Or: to what extent is our whole society—including the economy—genuinely self-governing? And: to what extent do dominant groups make use of the existing government apparatus to extend and consolidate their power? The talk of "big" and "small" government is nothing but ideological bile. Let's talk about power, who has it, how they use it, and what we need to do to fight back.

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Is the Wealth of the Rich Legitimate? Part 3

In previous posts (here and here) I've examined two stories that the rich tell to explain why their wealth is legitimate. Or, more precisely, I've considered and rejected two arguments meant to show that the wealth of capitalists is legitimate. The first was that capitalists deserve their wealth because their incomes are exactly proportional to their productive contributions to society. The second was that the wealth of capitalists is their reward for taking risks. We saw that neither argument succeeded in showing that wealth of the rich is legitimate. But another important argument, which we have yet to consider, still looms large. That argument is that wealth of capitalists is legitimate because it flows into their hands by way of voluntary market transactions between individuals.

Before we look at that argument more closely, let me situate it within the overall context of attempts to justify capitalism. As I see it, there are three main strategies: consequentialist, rights-based and desert-based. We've already seen two desert-based attempts at justification. Desert-based arguments claim that the wealth of capitalists is legitimate because they can be said to deserve it (e.g. because it matches their productive contributions or because proportionally rewards some risky activity that yields a productive contribution). I examined two desert-based arguments already and argued that they were untenable.

Consequentialist arguments, on the other hand, claim that capitalist wealth is justified because it is a means to desirable consequences (e.g. overall economic growth, socially useful innovation, etc.). Most consequentialist arguments for capitalism focus on incentives (not on what we can be said to deserve or have a right to). We have seen at least one consequentialist argument already within the post on risk-taking, namely, that some capitalists need big shares of wealth in order to incentivize or motivate them to take risks to innovate. That particular argument is consequentialist because it says that big cash rewards (for capitalists) are a necessary means to good overall consequences (i.e. generating socially useful innovations). I'll examine consequentialist arguments in more detail in part 4, which will be the final installment of this series on the wealth of the rich. The main focus of this post, however, will be to refute rights-based justifications of capitalism. Rights-based arguments claim that capitalist wealth is legitimate because they acquired it through a series of legitimate, voluntary individual market transactions.

The typical rights-based argument for capitalism goes something like this: Provided that there is "no force or fraud", everything a capitalist can get from the market is legitimately theirs. Or, put another way, because the market is nothing more than a space for free individual exchange, everything that results from it is legitimate. Why should voluntary exchanges between individuals yield legitimate holdings? Because voluntary market exchange, it is argued, tends to exemplify individual freedom. On this view, people are free if they enjoy certain rights of non-interference. But because the market is (allegedly) no more than an aggregation of free, voluntary individual exchanges, it follows that any third party interference with market activity would curtail freedom (and violate the rights) of market participants.

The most famous statement of this argument was given by right-wing philosopher Robert Nozick in his 1974 book Anarchy, State and Utopia. In that book, he puts forward a thought experiment involving Wilt Chamberlain that purports to show that capitalist market distributions are just (and that any interference with them is illegitimate). The gist of it is this. Suppose that lots of people want to see Wilt Chamberlain play basketball. Suppose that they are each more than willing to part with $5 to see him. So, Chamberlain collects a $5 admission fee from each person who wants to come see him play. Each person, let us suppose, is freely and voluntarily making the choice to pay $5 for a ticket to see him play. At the end of the day, Chamberlain has amassed quite a fortune from ticket sales. But it looks as if he's done so in a way that is 100% unobjectionable. After all, hasn't he done no more than transacted with hundreds of individual persons, all of whom were very pleased to pay $5 to see him play?

Nozick's point is two-fold. First, it appears as though any interference with this process would be wrong. After all, would a third-party be justified in paternalistically judging that the fans shouldn't spend $5 on a ticket? Would it be fair if someone prevented Chamberlain from individually interacting with any of the fans who purchase the tickets? Nozick's point is that any interference with this process would be tantamount to "prohibiting capitalist acts between consenting adults." Put more plainly, it would interfere with the freedom (and the right to non-interference) of those involved. Second, it looks as if any redistribution of Chamberlain's earnings would unjustly tinker with his legitimate holdings. After all, if he acquired all of his earnings fair and square, and if each individual transaction freely gave them to him through a market exchange, what gives some third party the right to interfere? Wouldn't any redistribution, or social system that prevented such free exchanges, curtail the freedom of people like Chamberlain and his fans to come together for mutual gain?

Before I show why Nozick's argument doesn't work, let's get even clearer about what it attempts to show. Notice that Nozick is not saying that Wilt Chamberlain deserves the money he receives. Neither is he saying that the fans deserve to see him play. Desert doesn't enter into it. Nozick's own view--and other hard-Right defenders of capitalism are with him on this--is that it would require a lot of third party interference to actually have a society in which we could be sure that everyone got what they "deserved". In other words, he thought there would have to be some agency charged with monitoring whether someone was industrious, thrifty, lazy, etc. in order to see that they got what they deserved. So, unlike many a defender of capitalism, Nozick isn't naive enough to think that capitalism simply gives each what they deserve. What he does think, however, is that capitalism is the only system in which freedom from external interference reigns supreme. The Chamberlain example is supposed to show us that allowing voluntary market exchanges typically produces inequalities of wealth that are fully justified. Any other kind of social system--or any redistribution of Chamberlain's wealth--would, for Nozick, require that we sideline individual freedom for the sake of something else.

There are number of well-known problems with the argument. I make no claims to being original here--a good number of the most convincing criticisms are made by G.A. Cohen in Self-Ownership, Freedom and Equality.

One problem is that it is far from clear that a "voluntary" market exchange is therefore one that is freely entered into. This problem is simply not addressed by the WC parable. Take the case of price-gouging during natural disasters. Now, if I sell you a bottle of water for $100 in the aftermath of hurricane Katrina, and you're really thirsty, there's a sense in which I'm not coercing you to buy the bottle. You could walk away and try to find water somewhere else. So if you buy my $100 bottle of Aquafina, there's a sense in which it is voluntary. But are you free in such a case? Hardly. You are disempowered, desperate and vulnerable to exploitative treatment from people like me. Moreover, I'm in a dominant position with respect to you because I have some crucial thing you need to survive, and I am under no duress to give it to you whereas you are under a lot of pressure to get it. Lots of market exchanges, while not quite as vivid or extreme as this, are very similar. Market transactions between buyer (capitalist) and seller (worker) of labor-power are lopsided. And, of course, the worker is forced (and thereby made unfree) to sell her labor-power to a capitalist on the market because she has no other means to earn a living. Prenuptial agreements are often lopsided in favor of men because they have more bargaining power (maybe because of sexist social norms, maybe because they are the "bread winner", etc.). There are any number of examples here. The point is that market exchanges--from the perspective of freedom alone--look a lot less innocent than the WC example lets on once we examine the real world. Nozick isn't for the greatest overall amount of individual freedom in society. He's simply against certain restrictions on the property rights of owners of property. Accordingly, he rejects redistributing wealth from the 1% to the 99% in order to increase the aggregate amount of freedom in society. As I've noted elsewhere, this is one reason that the epithet "libertarian" simply cannot reasonably apply to those who defend capitalism.

Another problem is the following. The fans in the example are imagined to want nothing more than to see Chamberlain play. But there will surely be a gap between what they think they're getting and what will actually result from their aggregated transactions. The fact that they want to see WC play doesn't mean that they want him to individually amass a huge fortune. Neither does the fact that they're willing to pay $5 to see him play mean that they voluntarily consent to the power over others that a large mass of wealth might grant WC. Holdings in capitalist societies are, after all, not simply means of consumption, but sources of power. Suppose everything is put up for sale on the market, and that someone uses his wealth to purchase what were previously public streets in a particular city (I borrow this example from Elizabeth Anderson's paper "The ethical limitations of the market"). This quite obviously leaves open the door for a great deal of tyranny. When roads are publicly owned, I need not ask anyone for their permission to use them. I am free to move about where I please and I need not bow or scrape before some particular owner. But when the roads are the private property of another person, Nozick thinks the guns of the State must be used to protect whatever arbitrary decisions the owner makes regarding their property. So if, for example, the owner forced everyone to get his explicit permission to use the roads, that would be protected by the coercive power of law. Or, if he only allowed roads to be used on Tuesdays, that would fly as well. Or, he could charge an exorbitant fee. The point is that all the non-owners of the road would be subject to arbitrary restraints on their freedom of movement and association by owners. They would be forced to subject themselves to whatever crazy terms the owners demand. Nozick could have no complaint about any of this. Stronger still, Nozick would staunchly oppose any democratic decision-making process that aimed to regulate or reclaim ownership of the roads. Thus, we see what side he's really on: property owners come first, even if the vast majority is made less free as a result of their actions.

But Nozick wants us to think that the resulting consequences of the market transactions in the WC example are legitimate because each person voluntarily willed them into being. But, in fact, they didn't. All each fan did--from their individual perspective--was consent to pay a small sum to see WC play. They didn't consent to all of the macro-level economic consequences that might follow from allowing one person to amass large sums of wealth. Nor have the explicitly given WC their blessing to buy up public roads (or whatever else WC might do with his holdings).

All of this is concealed in Nozick's thought experiment. He asks us to blindly jump from the micro-level ("what could be wrong with parting with $5 to see WC play?") to the macro-level without asking how it is that the decisions within the former should justify consequences in the latter. More often than not, the large-scale consequences of market transactions are opaque to individual actors. And, what's more, often the choices of some market actors curtail the choices of others by impacting supply, demand, employment, investment, etc. So it would be absurd to say that the narrow perspective of the individual consumer lends legitimacy to the macro-consequences of the aggregation of millions of uncoordinated individual actions. When I purchase a can of soup, I may be said to have made some voluntary exchange with the owners of the grocery store. But I haven't freely consented to all of the consequences of that transaction, since I may not even know what they will be (or what they are likely to be). Yet Nozick wants to confer legitimacy on the large-scale outcomes of market transactions by appealing to our free consent in small-scale individual transactions. There's a massive gap in the argument here. Everyone knows that capitalism is arranged in such a way that individually "rational" actions produce collectively irrational outcomes that no particular individual endorses. Why should the individual attractiveness of buying a ticket to see WC for $5 grant legitimacy to those macro-level outcomes, particularly when it's hard to see them from the perspective of an individual consumer? It's almost as if Nozick is simply blotting out any critical analysis of the social system itself, preferring instead to keep us focused on small-scale transactions. The ideological effect of keeping us on the micro-level is profound.

Another problem is the following. Just because I'm willing to pay $5 to see Wilt Chamberlain play doesn't entail that I'm willing to pay Wilt Chamberlain that money. I might be willing to part with $5 to see him play, but I might not want him to acquire a disproportionate share of resources (because that would give him unjustifiable power over others, say). Maybe I'm willing to throw into a public pot to see WC, but I'm unwilling to allow one person to amass all of the earnings. Nozick simply glosses over the difference between these two--which clearly adds to the rhetorical power of his example.

There are deeper problems with the WC parable, however. Nozick wants to generalize the WC example to all of society. But once the market rules all spheres of public (and private) life, there's no space left for democracy at all. This doesn't bother Nozick himself, or many so-called "libertarians", because they aren't fans of democratic self-rule.

But suppose that Nozick had swallowed his disdain for democracy and argued instead that markets are democratic since, as in the WC example, people can "vote with their dollars." Notwithstanding the obvious undemocratic fact that "voting with dollars" means that those with more money get more votes, there are still other more fundamental reasons why markets are not democratic. The trading floor of a stock exchange is not like a public forum for deliberation and debate among equals. The market, as André Gorz describes it, "is a place where huge production and sales oligopolies...encounter a fragmented multiplicity of buyers who, because of their dispersed state, are totally powerless... [the consumer] is only able to choose between a variety of products, but he has no power to bring about the production of other articles, more suited to his needs, in place of those offered to him." The problem here is that markets respond to unreflective individualized wants--consumer preferences--expressed by buying or not buying something. Genuine democracy, however, is not fundamentally about unreflective individual wants. Democracy is about the exchange of public reasons between free and equal citizens about matters of collective concern. We could rephrase this in terms of exit vs. voice, consumer vs. citizen. Markets give the consumer (or the seller) freedom of exit. The buyer can simply walk away without buying, just as the seller can say "take it or leave it". But the consumer has no freedom of voice. That is, consumers have no power to shape the background conditions that structure the choices before them in the marketplace. Moreover, they have no say or voice in decisions about what gets produced, how it gets produced, etc. All they have is the freedom to buy or not buy--as consumers they lack any other means of having a voice in the basic structure of the economy. Notice that workers--if they are not organized--also lack freedom of voice and only have the power to quit their job (but no genuine say in their work conditions, what gets produced, etc.).

Freedom of voice, however, is central to any plausible notion of democracy. Democracy means that we collectively base our decisions on collective reasoned argument, not on unreflective individual consumer preferences. For example, if I'm in a convenience store looking to buy a candy bar, it would be absurd for the store owner to come and criticize, question and debate me about my taste in candy. I would be perfectly justified in saying, "look, I don't have to justify myself to you, I just want the goddamn snickers." But the same is not true of relations between citizens in a self-governing society. Democracy requires that we give public justifications--that others could in principle accept--when we advocate for doing this or that. When we democratically decide what to do, it must be based upon free discussion among equal citizens where nothing but the force of the better argument prevails (e.g. not power, not domination, not threats, etc.). Moreover, democratic processes require that citizens be able to hold one another to account. It wouldn't make sense to say that I "prefer" or merely "want" to cut the Pentagon budget in the same way that I prefer or merely want a snickers bar. Similarly, if you were working in a small group on some project, it would be ridiculous if you said "look, I just want to do X" and then followed all questions from your fellows with "look I just do, OK?". What this makes clear is that there is a profound difference between being a consumer and being a citizen in a self-governing society. Defenders of capitalism often generalize the model of the individual consumer to all spheres of life, thereby eliding more important roles such as that of the citizen.

Let me raise one further objection to the rights-based "entitlement" defense of capitalism. In order to transfer ownership titles through voluntary market exchanges, there have to be things--commodities--that can be bought or sold. But the market cannot create commodities--it is only a mechanism for transfer and exchange. Thus, the rights-based defense of capitalism is incomplete without a story about "just acquisition", that is, a story about how previously unowned things can legitimately become commodities (buyable and sellable on markets). I note, in passing, that any consistent advocate of the rights-based argument for capitalism would have to concede that massive redistributions of wealth and reparations would be necessary to correct for the enslavement, expropriation, violence, colonial domination and oppression that was a central part of how the riches of contemporary capitalism were created. Let us set that inconvenient fact aside, however, and ask a different question: how could unowned things in the world come to be legitimately owned by someone? Rousseau had an answer to this question: "the first man who, having enclosed a piece of land, took it into his head to say, "this is mine", and found people simple enough to believe him, was the true founder of civil society. The human race would have been spared endless crimes, wars, murders and horrors if someone had pulled up the stakes or filled in the ditch and cried out with his fellow men, "Do not listen to this impostor! You are lost if you forget the fruits of the earth belong to everyone, and the earth to no one!". In other words, why wasn't the "original acquisition" of previously unowned parts of the earth not a theft of what should be rightfully held in common? And there are further problems here: aren't some things distorted or degraded if they they are turned into commodities? Take friendship. Friendship, properly understood, may not be bought or sold and still remain friendship. Love is the same way. It also seems wrong to allow (as Nozick does) human beings to be bought and sold as property. Moreover, isn't there something wrong with allowing rights to free speech to be bought and sold on markets? And isn't it wrong to allow people to purchase and sell political influence, justice in the courts, political offices, fire protection, honors (e.g. the Pulitzer Prize), etc.? If this is true--and I think it's obvious that it is--we see quite clearly that generalizing the model of "voluntary market exchange" to all spheres of life makes no sense. It generates irrationalities, unfreedom, lack of democratic voice, and oppression.

So where does this leave us in terms of the rights-based defense of capitalism? What we've seen is that entitlement on the basis of voluntary exchange cannot be generalized to all spheres of life without giving up on the ideals of freedom, equality and democracy. But does that mean that a socialist society would forbid all voluntary exchanges? Of course not. The defining feature of socialism, after all, isn't located within the sphere of exchange or distribution but within production. Socialism has to do with who owns and controls society's means of production. Socialists argue that the people should democratically own and control them; capitalists argue that a small class should own them and all others should be excluded. So, socialists need not deny that there is a role for voluntary exchanges (whether they be in the form of gifts or in the form of market exchanges). What socialists do have to say, however, is that certain goods should not ever be treated like commodities. Political power, access to education, the means of production, human beings, etc. should never be bought and sold through market transactions. Let candy bars be bought and sold, but leave the important features of our shared life together under the jurisdiction of democracy from below.

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Is the Wealth of the Rich Legitimate? Part 1

Is the wealth of the rich in contemporary capitalist societies legitimate? Of course not. But the rich have a vested interest in making sure that the majority of the population --who aren't rich-- think that their wealth is legitimate. It hardly matters whether it's aristocratic privilege, family lineage, racial or sexual supremacy that makes a group dominant. It remains true that dominant groups almost always try to preserve the basis of their own dominance.

Dominant groups typically have two (analytically distinct, but in practice interwoven) means of maintaining dominance. The first is obvious. Dominant groups typically monopolize control of the means of exerting physical repression. If you push too hard against the status quo, dominant groups will always (if possible) push back with physical repression in order to protect their dominant status.

But dominant groups never maintain their dominance through naked violence alone. They have another means at their disposal: ideology. That is, dominant groups stabilize their rule by telling stories about why their rule is legitimate. Think of the "divine right" of Kings, the "positive good" doctrine that purported to justify the dominance of Slave owners, the so-called "civilizing mission" that Colonization attempted to carry out, the supposedly "scientific", technical expertise of bureaucrats. The stories the rich tell about the supposed legitimacy of their wealth are a key part of this long tradition of lying to the masses to protect privilege and power.

What are those stories? The most common one is that the rich deserve their wealth because they work hard to produce it. Because the wealthy (the "job creators"!) make such important productive contributions to society, the story goes, they deserve every cent they earn. Another story is that the rich deserve their wealth because they undertake a great deal of risk when they invest it. Yet another story that is told, perhaps the least plausible of all of them, is that the rich deserve their wealth because they sacrifice more than others (by saving and foregoing consumption). Finally, there is the claim that the wealth of the rich is legitimate because they are legally entitled to it in a regime of private property where ownership titles are distributed by way of voluntary exchanges.

Now, in practice these legitimating narratives are often run together and interwoven. The war of ideas is never as clear cut and organized as academic discourse aims to be. But for our purposes --that is, for the purpose of showing that all of these stories are pure fiction-- we'll examine them each separately in a series of blog posts (of which this is the first). In examining each, I'll follow closely along the lines of the arguments put forward in David Schweickart's excellent book Against Capitalism. Anyone interested in seeing a detailed, rigorous refutation of every familiar argument in favor of capitalism would do well to pick up a copy. In what follows, we'll just examine the first. The other stories will be taken up in subsequent blog posts.

The first story says that the wealth of the rich is legitimate because it is their reward for making productive contributions to society. A more technical way to say this would be the following: in a "purely competitive free market" what the wealthy earn directly corresponds to their marginal productive contribution in the economy. In neoclassical economic theory --which is little more than an elaborate way of cheerleading for (rather than critically analyzing) capitalism-- this is called the "marginal productivity theory of distribution." As an early defender of this view puts it, "the natural effect of capitalist competition is... to give each producer the amount of wealth that he specifically brings into existence."

Before we show why capitalism is not a system in which each receives according to what each produces, we need to do a bit of table setting. In order to produce anything at all, two things are required: labor and means of production (e.g. factory equipment, instruments, technical knowledge, land, space, etc.). It is a fact about capitalist societies that the vast majority of those who labor for a living do not own the means of production they use at work. The owners of the means of production are usually distinct from the group uses those means. Up to this point we've been talking about "the rich" or "the wealthy" --but to be more precise we're actually interested in capitalists (i.e. that group who earns a living by owning, rather than using, the means of production).

Now, everyone knows that those who labor (by using means of production) to produce goods make productive contributions to society. Auto workers, for example, use their own two hands to build cars that wouldn't have existed if they hadn't built them. Their productive contribution is clear, and so it is with all workers in society. But what we want to know is whether capitalists actually make any productive contributions to society in order to receive their income. If they did, and if capitalism rewarded their productive contributions proportionately, it would look like their wealth was pretty legitimate.

But what is the productive contribution of capitalists in our economy? Notice that we can't just define their productive contribution in terms of what they receive from the market, since that is circular. We want to know whether the market actually gives each what they deserve. So we can't very well say that what people deserve is what the market gives them --that begs the question. What we're trying to figure out is whether the market actually distributes according to productive contribution.

Some will say that the contribution capitalists is their entrepreneurial spirit and innovating attitude. Others will say that capitalists do a lot of work co-ordinating and managing the productive process. No doubt ingenuity and creativity are required to make a capitalist firm successful. Even a socialist society would require ingenuity, innovation and "entrepreneurial" spirit of some kind or other. Likewise, co-ordination and workplace organization are essential. But notice that capitalists can simply pay someone else to do all of the innovating, all of the managing, and all of the co-ordinating. And they often do. If I'm a capitalist, I can hire a management consultant, an industrial engineer, and a research and development team to do all of the managing, organizing and innovating. But I'm still a capitalist --and I'll still earn handsome sums of cash for myself (indeed, I'm in a position to earn far more than anyone else in the entire firm even though I don't do any real work). So in this case, where's the productive contribution that supposedly legitimizes my massive sums of wealth?

Some will say that what I'm doing is "providing capital". After all, we said that two things --means of production and labor-- were needed to produce goods. We know that workers make contributions by laboring to produce things. But it is, of course, true that the means of production (e.g. capital, the factory space, instruments, etc.) add value to the final product. And capitalists, by definition, own and control the means of production. So aren't they performing an essential productive function by providing it? Couldn't we say, then, that this is productive contribution that justifies capitalist wealth?

But let's think about this for a moment. What exactly is going on when a capitalist provides capital? They are doing nothing more than "allowing it to be used". They are doing no more than granting permission to make use of an already existing material thing --e.g. factory equipment, raw materials, etc. But, as Schweickart points out:

...an act of granting permission, in and of itself, is not a productive activity. If laborers cease to labor, production ceases in any society. But if owners cease to grant permission, production is affected only if their authority over the means of production is respected. If it is not, then production need not diminish at all. Workers can continue doing exactly what they were doing before --producing corn and bread and steel and machine tools and all the other commodities required by their society. Whatever the owners are doing when they grant permission for their assets to be used, it should not be called 'productive activity'.

To drive the point home, consider the following example.

Suppose a government suddenly nationalizes the means of production, then does nothing else but charge workers a tax to make use of it. We wouldn't say, would we, that the government is engaging in productive activity, or that the tax is a return for the government's productive contribution? Not even if the tax rate is exactly equal to the marginal product of the productive labor.

But some will reply here that there's a difference between providing physical means of production (e.g. raw materials, tools, factory equipment, etc.) and providing capital investment funds to finance a productive endeavor. Surely providing an already existing material thing --whether it be factory tools, land, etc.-- is not a productive activity. It is no more than granting permission. But isn't financing production by lending capital a productive activity that takes a great deal of skill? Schweickart gives us an excellent example here: "Consider a person with a chest full of cash, eager to invest. How he acquired it need not concern us. We want to understand how his disposal of it will increase production. To produce something, there must be brought together equipment, raw materials, and laborers. Let our investor lend his money to an entrepreneur who purchases these necessaries. The laborers are set to work with the machinery and raw materials, and soon goods are produced. It is all quite simple. But notice, this is also a matter of granting permission. The workers, the raw materials, and the machinery already exist. The workers could begin production themselves, except that property rights intervene. They cannot gain access to the machinery and raw materials, for these things are the property of others. To use them, one must have permission, which the entrepreneur secures by means of her borrowed capital." But permission is only needed if one respects the authority of the legal titles to ownership of the things needed to produce. So the workers could produce just as well without permission if they didn't respect that authority. It follows, then, that permission is in no way a productive contribution.

Take another of Schweickart's examples:

Suppose, instead of relying on our friend with the chest full of money, the government simply rolled out its presses to produce the same quantity of crisp bills and gave them to our entrepreneur. Exactly the same production would result. But would we want to call the printing of the money a productive activity? That would surely be misleading, perhaps dangerously so, tempting officials to believe that rolling the presses longer and longer would miraculously generate wealth.

The point of all of this is that "providing capital" is not a productive activity. But if that's true, then we are forced to conclude that capitalists, qua capitalists, make zero productive contributions even though the market gives them the lion's share of the surplus created by society. As even John Kenneth Galbraith put it,

No grant of feudal privilege has ever equaled, for effortless return, that of the grandparent who bought and endowed his descendent's with a thousand shares of General Motors or General Electric. The beneficiaries of this foresight have become and remain rich by no exercise or intelligence beyond the decision to do nothing, embracing as it did the decision not to sell.

Or, if you'd like another example, examine a graph showing real wages for workers and worker productivity from 1973 to the present. What you'll notice is that productivity goes way up whereas wages stagnate. Someone reaped all of the difference and got filthy rich, but it wasn't the workers who were producing more and more each year. Again, we see that market distributions don't reflect productive contributions.

So what explains the fact that capitalists own the vast majority of wealth in our society? They don't receive this wealth as a result of any productive contribution they make. When they earn interest or dividends on their invested wealth, they need not do anything productive at all. When they make millions from arbitrage, they haven't done anything productive whatsoever. So in virtue of what do they earn such vast sums of wealth? In virtue of their ownership. Whereas the vast majority of us have no choice but to earn a living from the work that we do, capitalists earn their riches merely by owning things. But if the vast majority --the 99%-- does 100% of the productive activities in society, how could be legitimate that the unproductive 1% owns and controls the lion's share of the wealth produced? Good question.

So, what I've shown is that a certain argument, i.e. that capitalism distributes wealth according to productive contributions, is false. In a series of upcoming posts, we'll look at other fairy tales told by the rich to protect their wealth and power.

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On "Efficiency"

(Neo-classical) economists love to talk about efficiency. Markets, we're told, are nothing if not efficient. Businesses that succeed, supposedly do so because they're efficient. Talk to an economist, and you'll hear a lot about "efficient allocations" of resources, and "maximizing efficiency", and so on. What does all this talk mean? Why is it billed as such an important criterion for evaluating social institutions and public policy?

It's worth noting that economists themselves haven't always taken "efficiency" to be the most important goal of policy. As Andrew Levine notes: "For economists who came of age during the Great Depression and their students, unemployment was the major theoretical and practical concern. Nowadays, efficiency has taken its place." Levine is correct. It hardly needs to be said that full employment has long since ceased to be even a rhetorical goal of public policy. But if the old demand for full employment was concrete and easy to endorse, the new lingo of "efficiency" is abstract and unconnected with the needs and interests of working people. Again, as Levine puts it, "it is hard, at least for strangers to the economics profession, to understand why economists today focus so doggedly on a structural property of economic systems that represents real world concerns in only the most indirect and attenuated fashion."

So what is that economists mean by "efficiency"? For all their talk about being a rigorous science, conventional economists are actually quite unclear about what their favored criterion means. As Levine points out, "sometimes it is used loosely as a synonym for productivity...sometimes it invokes a cluster of non-technical ideas- delivering the goods, avoiding waste (of time, effort and resources), running smoothly, and so on." But in more technical contexts, it means "Pareto optimum". In the reigning jargon, an allocation of "resources" is "efficient" if it is "Pareto optimum", that is, "if any change would make someone worse off (holding technologies, preferences and the (initial) distribution of resources constant)." Or, put another way, a "Pareto optimum" or "Pareto efficient" allocation is one in which no individual can be made better off by redistributing resources without making another worse off.

Now, I want to draw your attention to two things at this point. First off, take note of the fact that the ordinary, non-technical uses of "efficiency" do not necessarily coincide with the technical definition embodied in the idea of "Pareto efficiency". That is, there is a substantial gap between our ordinary understanding of the word "efficiency" and the way that the term is used in technical contexts in neo-classical economics.

Second, note that "Pareto efficiency" isn't necessarily always a good thing. As Levine points out, "the most vile situations can be Pareto-optimal if a change would make someone worse off". That is, Pareto-efficiency is compatible with any degree of equality or inequality. Thus, an extremely unequal distribution could be Pareto-efficient just in case it is not possible to make one person better off without making another person worse off. Pareto efficiency also fulfills a subtle ideological role in justifying capitalism, often being invoked as a theoretical tool for justifying the dogma of "trickle down". It can be used to argue against re-distributive taxation on grounds that huge increases in the wealth of the rich (and thus huge increases in overall economic inequality) either increase or have no effect on the welfare of the worst off.

It's also worth pointing out that the way mainstream economists interpret "better off/worse off" is problematic. They're supposed to be measuring human well-being, but they use problematic surrogates such as possession of money or the satisfaction of "revealed preferences". And individual's "preferences", according to economists, are "revealed" in market transactions. It is assumed that these preferences are fixed and to be taken as given. But in reality, individual "preferences" are shaped by and formed within social conditions. Moreover, they are open to rational criticism and democratic debate; surely no critical approach to understanding society can take preferences as mere givens. So, the economist's metric for measuring how "well off" a person is is deeply flawed. Contrast it with the Marxist/Aristotelian view of human well-being, where a person is well-off to the extent that she is able to develop and exercise her talents and natural powers (e.g. creative faculties, physical capabilities, capacity to form meaningful relationships, intellectual powers, etc.). The juxtaposition makes clear that mainstream economists work within a framework for understanding human welfare that is thoroughly pro-capitalist, in that it contorts the definition of human well-being to fit the structural needs of the capitalist economy. It has the ideological effect of leaving us unable to articulate grievances or unmet needs, because it defines our needs and welfare in terms friendly to market society.

So much for Pareto efficiency. But what about the "ordinary" conception of efficiency? Why shouldn't that be the fundamental measuring stick by which we evaluate economic and political institutions?

Because "efficiency" in the ordinary sense is of merely instrumental value. It has no intrinsic value. Doing some task efficiently is good, but only insofar as the task is itself a good one. So, if the goal of some institution is to treat human illness, then doing so efficiently would appear to be a good thing. Efficiency, in this case, would be instrumentally valuable for achieving the goal of treating human illness. But the metric of efficiency doesn't tell us whether or not treating human illness is a good or bad thing. This is made clear by way of another example. Suppose the goal of some institution, imagine a colonial military venture, was to oppress some group of people. We can, of course, imagine the goal of oppression being carried out more or less efficiently. And we wouldn't want to say that efficiency is a good thing in this case, because the goal that is being efficiently achieved is abhorrent. So what we come to see is that the metric of efficiency tells us nothing of the worthiness of the goals of some process or institution. But the overall goal or end that some process aims at is crucial, indeed far more important than whether it is efficient. Because if the goal is unworthy, it doesn't matter whether its efficient.

So the fetishism of efficiency has the effect of obscuring the goals of certain social processes or institutions. Within the idiom of efficiency, in fact, we can't even have a discussion about what the goals are; they are taken as given. Thus, if you think that the function or goal of the health care system should be to treat sickness and ill health, you'll quickly find that there is no space for you to express such a position within a narrow debate about whether the present for-profit health care system is "efficient" or not. The same could be said of public transportation. It is sometimes said that public transit is not "efficient" because it doesn't run the way that a for-profit firm runs (e.g. fare prices are set lower than their market value, services are allocated more according to need than effective demand, etc.). But that judgment typically smuggles in and ascribes irrational goals/functions to public transit systems. The basic function or goal of public transit should be to create a maximally accessible system that helps everyone get where they need to go in a safe, comprehensive way. But if that's so, it hardly makes sense to complain that it doesn't produce profits. That's not the point of it! So, to ask whether it is efficient or not would really be to ask whether or not it fulfilled its function well. But more often than not, talk about "efficiency" smuggles in tacit goals and preferred functions. Thus, public transit can be attacked as "inefficient", where the thing it doesn't do efficiently is accumulate surpluses.

So where does this leave us? Efficiency, in the ordinary sense, clearly matters. For whatever it is that we're doing, it would be irrational for us to want it to be done inefficiently. Even if we're aiming to lay about on the couch and veg out, there are more or less efficient ways of doing it (e.g. it wouldn't make sense to do sixteen jumping jacks every 10 minutes in order to achieve the goal of laying on couch). But efficiency is not, as we've seen, intrinsically valuable. It is only valuable insofar as what we're doing is valuable. So what really matters is the choice of goals or ends. And that holds both for individual goals (e.g. how to live one's life, what sorts of relationships to cultivate, what career path to choose, etc.) as well as collective/social goals (e.g. what should the basic goal of social institutions be? what kind of life do we want to live together? what forms of association do we want to enter into with one another?, etc.). All of this drops out of discussions about mere efficiency. In order to know what goals are worthy of our assent, we need robust democratic debate between free and equal citizens. But, as economists will quickly point out, such a radical democratic vision is not compatible with structuring social life around market forces. Economists take this to be a problem with democracy; but socialists see things precisely the other way around. That is, socialists see that as a reason to reject the fetishism of the market as the central organizing structure of society.

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On the Insanity of Mainstream Economics

Quoted from David McNally's excellent Global Slump (which I'll be posting about soon):

• "The central problem of depression-prevention has been solved" announced Nobel Laureate Robert Lucas, in his 2003 presidential address to the American Economic Association. Meanwhile, the originator of the Efficient Market Hypothesis, Eugene Fama, haughtily dismissed those who predicted a financial crisis, telling an interviewer "The word 'bubble' drives me nuts" -just as one of the greatest financial bubbles in history was exploding.
• One defining feature of every capitalist boom is the absurd outbreak of triumphalism that accompanies it. We live in a "new economy", pundits proclaim, a perpetual motion machine of ever-expanding economic activity. Recessions are a thing of the past... Just as such voices were heard repeatedly prior to the meltdown of 2008, so they bleated out their convictions on the eve of the Great Crash of 1929. Capitalism had "mitigated" its "childhood diseases", opined economist Alvin Hansen at the time. Not to be outdone, the month of the Great Crash, October 1929, economics luminary Irving Fisher declared, "I expect to see the stock market a good deal higher than it is today within a few months." Fisher was ever so slightly off the mark: it would be over twenty-five years before stock market prices reached those heights.
  
• Mainstream economics has no inherent capacity to make sense of full-fledged breakdowns in equilibrium. Radical political economy, on the other hand, expects economic crises. But this is because it does not expect markets to be inherently stable, efficient and rational. However, mainstream economics and its quantitative analysis ("quants") refuse to acknowledge the possibility of phenomena that violate the predictions their equilibrium generate. Indeed, after the stock market crash of 1987, two quants offered a proof that it was statistically impossible -i.e. that what had happened could not have happened!
  
• In 1998, for instance, world markets were rocked b the collapse of Long Term Capital Management (LCTM), a multi-billion dollar hedge fund that was run by two Nobel Prize winners, Myron Scholes and Robert Merton. Using Scholes's celebrated formula for derivatives pricing, LCTM made a massive bet that blew up in August 1998 when the firm lost a staggering $1.9 billion in a single month.

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Of the 1%, by the 1%...

Stiglitz has a piece in Vanity Fair (here) blasting neoliberalism. It's worth reading. Here's an excerpt, blasting the bullshit marginal-productivity theory of distribution:

Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin. The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses.

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What Vulgar Economists Do

"The vulgar economist does practically no more than translate the singular concepts of the capitalists, who are in the thrall of competition, into a seemingly more theoretical and generalized language". -Karl Marx, Capital (Vol. III), p.817

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IMF Reviews Praised Libya

Less than two weeks ago, the International Monetary Fund’s executive board, its highest authority, assessed a North African country’s economy and commended its government for its “ambitious reform agenda.” The I.M.F. also welcomed its “strong macroeconomic performance and the progress on enhancing the role of the private sector,” and “encouraged” the authorities to continue on that promising path.

By unfortunate timing, that country was Libya.

Read the rest here (via NYTimes).

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On the Ideological Character of "Revealed Preferences"

Neoclassical economists purport to be able to give rigorous and accurate explanations of human behavior. But to explain actions, you have to have an idea of what it is that agents are doing. It used to be that early economists, who were utilitarians, held the view that what we're doing when we act is trying to maximize utility (construed as felt or experienced pleasure). But insofar as pleasure is difficult to quantify and measure, economists decided they needed a more easily quantified view about what agents are doing. Reality must simpler than that, they thought, because otherwise how could it fit into clean formal models? Moreover, some economists bought the argument that social science could be "value free", and they worried that utility (pleasure) was too value-laden and tendentious. At first, economists went with "desire-satisfaction" instead of felt pleasure, but then the problem arises as to how economists can describe what desires people have. The resting consensus today is that economists should just talk in terms of an agent's "preferences" and whether or not such preferences are being "satisfied".

But how do economists know what an agent's preferences are? According to contemporary orthodoxy, an agent "reveals" her preferences in certain behaviors. We look at what she in fact does (e.g. buys a coffee) and infer her preferences from that. It's actually a bit narrower than that: the only behaviors where agents reveal their preferences is in market transactions (and, maybe voting), and the measure of how to rank one's preferences is given by the amount of money they're willing to pay for some thing. When I buy a coffee everyday for a year, economists hold, it is reasonable to say that I have "revealed" a certain preference. It is in this way that economists think that they can explain everything about us that matters.

There are tons of things wrong with this whole setup. I just want to point out one glaring problem.

First, take the problem of environmental degradation. Now, it should be pointed out that neoclassicals are falling all over themselves in trying to explain how their enterprise, which essentially adopts the perspective of the capitalist and spells out what it's "rational" for capitalists to do, can account for the obvious problem of environmental degradation. At first glance, their approach seems to either say that the environment is not of value, or that it only has value insofar as it can be commodified and traded on markets. Contemporary economists are aware that this is a problem. So they are scrambling to try to re-package the same old game in order to fend off some recent criticisms of their discipline.

As is well known, one obvious problem with capitalism is that it encourages investors and capitalists to take a very narrow, short-run perspective. Big profits this quarter are often all that matters. Among it's many problems, this narrow perspective obviously clashes with the long-term perspective we would need to even begin to seriously address the problem of environmental degradation. So what do economists say about this?

Well, according to them, if we care about anything at all, it can be modeled by "revealed preference theory". We all place different emphasis on the value of the future, they'll say, so we all have different preferences regarding the importance of the future (as opposed to the present). How do we know what different preferences people have regarding the future? Look at how they're "revealed" in market activity.

Do capitalists then have a very low preference ranking for the future, and a high preference ranking for short-run profits? Capitalists, it turns out, "reveal" such preferences all the time. And insofar as capitalists are merely satisfying their preferences like the rest of us, they aren't doing anything wrong. Economics, in this way, is "neutral".

But here's the rub. This behaviorist setup is circular. It says that what people want, indeed what it would be rational for them to do, is basically just what they're already doing. That is extremely conservative. It suggests that we couldn't fall short of what we want, that we couldn't fail to be rational. It suggests that what we want just is what we're already doing. On what basis could someone, then, want to change anything? Could I have a "preference" for radically changing society? It seems not, since I'd have to actually change it in order to "reveal" such a preference. This setup is ideological because it suggests that there is no gap between the way we think things should be and the way that they are. It leaves us without very language we'd need to articulate what's wrong with existing states of affairs.

In the case of the narrow-minded capitalist chasing down short-run profits, it seems like the thing we'd want to say is this: she is acting irrationally. By her own lights, she is undermining the possibility of continuing her own enterprise in the long run. More strongly, she's undermining the possibility of doing much of anything at all in the not-so-distant future. But we cannot say this on the "revealed preference" model. For that model says that her preferences regarding the future are simply "revealed" by what she is presently doing. Thus, she's just satisfying her revealed preferences for the present, so there is no self-undermining problem. The theory forces us to say that she is acting rationally after all.

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Robert Pollin: "Back to Full Employment"

Read his generally excellent Boston Review article here.

This is a much-needed corrective to the consensus among Democrats and Republicans regarding the "need" for austerity and tax gifts for the rich. Pollin also does nice job of ridiculing the heinously flawed neoclassical analysis of employment (e.g. the neoclassical view that "it is a fundamental posit of our theory that all unemployment is necessarily voluntary").

But there are problems. He rightly notes that the obstacles to full-employment aren't merely technical or economic, but political. That is, he rightly says that the class compromise needed to make Keynesian social-democracy work is politically unstable, because capital eventually gets upset and breaks the pact as the political and economic confidence of workers increases.

For me, this is the single most important objection to social democratic politics. Yet, having made this important point, Pollin strays from it and suggests elsewhere that "healthy profits can be made" under such an arrangement. There is a question of how to read this claim: is he merely making certain kinds of moves to try to win over those who aren't yet ready for the claim that capitalism as such is the problem?

He is also a bit naive about Sweden I think. He basically gets things right, but underestimates the role of capital in thwarting the class compromise and he misses a more general point. That point is this: an inherently unstable system that only functions when capital is happy with it's rate of profit is a recipe for disaster. Even if capital continues to play nice for a while and maintain the class compromise, there are other sources of instability that threaten to upset capital. Inflation is only one example. To be sure, Pollin does point to the global political pressure on Sweden to adopt a neoliberal model, but the fact that such a move looked reasonable to Swedish policy makers speaks to an unjust configuration of class power on the one hand, and the contradictions of premising all economic well-being on decent profits for capital on the other. In other words, Pollin appears to have an unduly sanguine picture of what's possible within the confines of the capitalist state on the one hand, and doesn't take seriously enough the internal contradictions of capitalism as a system on the other.

Still, this is the kind of debate I'm happy to see in public as compared with what we usually have to stomach (e.g. Democrats asking each other "how much should we screw workers and cut services?"). We should be having more debates like this: between Keynesian left-liberals and more radical critics of capitalism. So it is more than a little frustrating that the "forum" put together by Boston Review to discuss Pollin's argument appears to have no serious Left critics at all. Though Pollin spends time discussing Marx and the left-wing arguments against achieving full-employment under capitalism, it doesn't appear that any of the participants in the forum will be defending such a position. This is a shame.

The Right response to the Pollin piece is nauseating and not even worth responding to. Reihan Salam's response is typical neo-classical garbage. He begins by acting skeptical about the idea "neoliberalism" suggesting that it is not a real historical phenomenon but a bit of a left-wing boogey-man. He is so far off-base in understanding how the world works, it's hardly worth reading what he thinks should be done to fix it. His argument seems to be that we need to "remove barriers" so that workers will get up off their "lazy" butts and go get a job. I don't really know what to say to that. Where does one begin? I sort of just want to ask Salam if he's ever heard of this place called "earth". Seriously, how many times over does this tripe have to be refuted and discredited before we stop wasting our time. To put it in a slightly klunky Marxist way, the only reason it still gets a hearing is because of its functional utility in maintaining unequal relations of power.

Thus, the best way to make sense of the neoclassical stuff is not to take it as a set of serious arguments, because in many ways that's not what it is. The best way to make sense of it is to understand it as an ideology, in the Marxist sense. There are numerous dimensions in which such an approach is fruitful: from remarks in the Grundrisse regarding ideological types of abstraction, to arguments to the effect that neoclassical economics merely expresses the point of view of the capitalist, i.e. that neoclassical economics is merely a commentary on a capitalist firm's financial accounting practices. Allowing the neoclassical view to assert itself as a "reasonable" participant in the debate is a bit like tolerating "intelligent designers" in scientific discussions.

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The apologetics roll in

See here.

The basic argument is that the ruling against the mandate is part of one "tradition" of views about U.S. economy, whereas the defense of the mandate represents another. The first "tradition" is laissez faire. The second is a reformist and progressive. The author of the article would have us believe that ObamaCare is part of the reformist tradition of ideas that lend support to Medicare and Social Security.

The facts suggest otherwise. ObamaCare is not a reformist push against the entrenched power of elites... it is a further entrenchment of the power of those very elites. Rather than tampering with capitalism, ObamaCare expands and institutionalizes the for-profit insurance industry and, at the same time, mandates that all Americans purchase their products or face a penalty. Medicare, on the other hand, is an ambitious program that actually displaced private interests for the public good by guaranteeing seniors access to health care.

So, it is just false that we must either defend the individual mandate put into law by ObamaCare, on the one hand, or concede defeat to the laissez faire lunatics on the Right. Putting the point that way obscures what's at stake by making Obama appear as a progressive facing down conservative opposition. In reality, he's basically a conservative defending a conservative idea against conservative opportunists that happen to be in a different faction of the single pro-business party which monopolizes the political process.

It hardly needs to be said that this notion of "two traditions of thought" is basically bullshit for at least two different reasons. First of all, from the perspective of pure intellectual history, these two "traditions" are neither perennially competing nor coherent paradigms unto themselves. The notion of "laissez faire" obscures more than it explains in the real world. It is mere ideology (in the pejorative sense). It is but one idea, marshaled in certain circumstances when others weren't so effective, used to legitimate certain unjust social arrangements. Capitalist economies have never really operated on the basis of "laissez faire", nor could they. Defenders of the inequalities of capitalism have been far more creative and dynamic than the facile idea of a "tradition of laissez faire" suggests. And the supposedly competing "progressive" paradigm is no better. Speaking purely in terms of ideas, views as different as the technocratic reformism of Keynesian economics, the agrarian radicalism of the populists, and the socialist egalitarianism of the early labor movement could all potentially be the referent of such a "paradigm". It is no help to subsume them all under one heading and claim that they were all after a "social minimum" or "safety net".

Second, it's unclear that we should think of the political struggles over reforms in purely ideational terms. We must also talk about material conditions, unexpected historical or economic shifts, organization and struggle, changes in configurations of power, etc. etc. In short, it won't do us any good to talk about the historical change a series of passages from one idea to the next. We forget at our own peril that the dominant ideas in a capitalist society are not the outcome of a free rational discussion open to all; they are often the congealed effects of a certain configuration of power. Marx's sociological way of putting the point is that the ideas of the ruling class are often the ruling ideas. That means that if you control the means of production and distribution of information, you're likely to have a strong impact on the currency of ideas.

Thus, the entire framework of analysis posited in this article is obfuscatory and ideological. Even worse, it misapplies it's own ideological framework and attempts to incorporate ObamaCare into a contrived paradigm to which ObamaCare does not belong.

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"Libertarian" Wisdom

From Rand Paul, who was asked about repeal of the Bush tax cuts for households making $250,000 or more:

"There are no rich, there are no middle class, there are no poor; we all are
interconnected in the economy.

"You remember a few years ago when they tried to tax the yachts. That didn't
work. You know who lost their jobs? The people making the boats, the guys
making $50,000 and $60,000 a year lost their jobs.

"We all either work for rich people or we sell stuff to rich people, so just
punishing rich people is as bad for the economy as punishing anyone.

"Let's not punish anyone. Let's keep taxes low and let's cut spending."

Hmmm. So there just aren't any rich. But then it turns out that we "all either work for rich people or we sell stuff to rich people". And we shouldn't punish them, because they're holding all the cards. That's not being interconnected, bud. That's called dependence: one party is subordinated to another more powerful party who determines the terms of their interaction. I would have thought that such relationships were to the detriment of the subordinate party's freedom, autonomy, equality, etc.

But though we should tip-toe around upsetting the rich and powerful, we should ruthlessly slash public spending, thus punishing massive numbers of people and creating more unemployment. That means shredding schools, higher education, roads, bridges, public transit, libraries, parks, social services of various sorts, public workers' jobs, what measly public health institutions we have, etc. etc. If that's not punishing, I don't know what is.

Yet Paul wants to make it sound like he cares about unemployment by claiming that taxes on the rich might create layoffs, which is quite obviously false if you know even the most basic of things about economics. But even if we grant this claim, Paul's purported concern about employment seems flatly incompatible with slashing and burning the public sector, which is quite obviously the most sure-fire way to greatly expand the ranks of the unemployed.

This guy is a fucking joke. If this clip is any indication of how he operates, he's sitting at an average of like 3 contradictions every 10-seconds. That's something like an average of 18 contradictions per minute. Come to think of it, Paul should think twice about operating heavy machinery with stats like this.

I can't imagine a more confused, facile, sophistic set of political ideas than what passes as "libertarianism" in the U.S. Actually I take that back, I can. But certainly the brand of sophists coalescing around Ron Paul, et al. are particularly bone-headed.

And before anyone thinks of blaming Kentucky as a backward, Right-wing place, etc. etc. just remember that something like a third of Kentuckyeans actually turned out yesterday. Perhaps if 2/3 of the state felt that they actually had a real choice, they might have showed up at the polls. But as things stand, who can blame them?

Also- I stand by my previously made claim that the confused, right-wing Hayekians in the US that dare to call themselves "libertarians" have no real claim to the mantle. They care nothing for freedom or liberation- their fundamental fetish is capitalist property relations. Everywhere else in the world the epithet "libertarian" actually has an association with politics committed to freedom and liberation- that is to say, it is associated with some variety or other of left wing politics.

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"Free" Market Fire Protection Services

Here. Didn't someone once write something about how capitalism tends to erode the relations between human beings to the point at which there is no bond between them other than cold cash payment?

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Richard Seymour on the Appearance of Capital

Capital represents itself to us principally through its advertising. Its presence is rendered in strictly non-materialist terms. Idealist, magical, or even downright theological thinking is at the heart of capitalist ideology - Smith's 'hidden hand', the religious mandate for 'improvement' of the earth in Lockean property theory, the 'reward-for-abstinence' theory of profits, and the 'golden egg' theory of investments and savings. So when capital represents itself to us, it is not as a set of material processes but as a benign Geist, a bearer of anthropomorphically enlarged humane values, an atmosphere of well-being, etc.

Read the rest here.

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Markets are not democratic

Individuals influence the provision and exchange of commodities mainly through "exit" not "voice" (Hirschman 1970). The counterpart to the customer's freedom to exit a trading relationship is the owner's freedom to say "take it or leave it". The customer has no voice, no right to directly participate in the design of the product or to determine how it is marketed. Where the good being sold is embodied in the person, voice may be alienated to the buyer. Employment contracts in capitalist firms that are unmediated by union negotiation or professional standards place the worker in the same voiceless position as the customer.

[...]

Fraternal activities express a valuation of participants as equals engaged in a common cooperative project. In the democratic tradition this project is collective self rule. The political freedom of a citizen is the freedom to participate equally with fellow citizens in deciding the laws and policies that govern them all. This freedom demands that citizens have the goods they need, such as education, to participate effectively in self-government...The ideal of democratic freedom conflicts with market norms. First, citizens exercise their freedom in a democracy through voice, not just exit. Their freedom is the power to take the initiative in shaping the background conditions of their interactions and the content of the goods they provide in common. It is a freedom to participate in democratic activities, not just to leave the country if they disagree with the government. Second, an ideal democracy distributes goods in accordance with public principles, not in accordance with unexamined wants [e.g. consumer preferences]. Decisions must be justified in publicly acceptable terms. Third, the goods provided by the public are provided on a non-exclusive basis. Everyone, not just those who pay, has access to them.

-Elizabeth Anderson, from her excellent Value in Ethics and Economics (HUP)

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Ideological State Apparatuses

Question: "How do oppressive social/political systems maintain and reproduce themselves over time?"

Answer: Like this.

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Distortions in the health care "debate"

In the past, I've written on this blog about the discourse of "soaring prices" in the health care debate. These ideas about "soaring prices" are again circulating in the discourse as people in California are hit hard by steep increase in premiums.

Absurdly, Paul Krugman (who certainly knows better) claims that "we need comprehensive, guaranteed coverage — which is exactly what Democrats are trying to accomplish". Of course he's right that we need comprehensive reforms and universal, guaranteed coverage. But even the left-liberal reader of Krugman's own columns should be well aware that this is not what is on offer in the Democrat bill in Congress.

The entire way that this "issue" is thought about and discussed in mainstream outlets reeks of deeply-seated ideological distortions. The most obvious example of this distortion lies in the fact that we are continually prodded to think of ourselves primarily as consumers. In the health care "debate", we are asked to assume the role of consumer, and then to think about what creative institutional reforms we could implement that might help make our object of consumption, health care, less expensive. In this way, the entire debate is reduced to technocratic price tinkering.

We are continually encouraged to focus our attention solely on consumption; but we never reflect back on the conditions of production. Thus, the realm of circulation rather than the control of the means of production are the subject of scrutiny. The result is the sterile debate about how to remedy "soaring health care prices", where the real underlying economic issues are not even considered. The basic configuration of power in our current system remains uncriticized.

The crucial question here (which is frozen out of the discussion altogether) is whether we should accept as legitimate the entire idea that health care is a mere commodity, and that health and well-being is merely a consumer preference. To drive the point home: why should we think that the best way of organizing health care institutions is along the axes of consumption, markets, and capitalist enterprises at all? Is a "preference" for health really analogous to a "preference" for Gucci?

My view is that the above ways of organizing health care institutions is ludicrous. This way of configuring the health care system is only attractive from the narrow perspective of investors and stakeholders in the (extremely lucrative) for-profit firms that dominate the "industry".

Think about it this way. With the exception of the top 1% of earners, nobody in the contemporary United States can afford to pay out of pocket for all of their medical needs. Even the very-well off (those making, say, $350,000/yr) would quickly find themselves bankrupt if they had to pay entirely out of pocket for cancer treatment.

Thus, for the vast majority of people (99% of us) insurance of some kind is required in a society such as ours. All of the talk of "just you and your doctor" is pure fantasy. Some kind of collective financing (i.e. insurance) for health care is unavoidable for everyone except for the super-rich. And we should not forget that insurance, by its very nature, is necessarily collective. Risks, costs, and so on are always weighed and calculated in large, collective contexts. Every premium, co-pay, deductible and so on is indexed to a host of collective considerations that the insurance company has.

So given that insurance is a necessity in a capitalist society such as ours, the question then becomes: what kind of insurance do we (as a society) want?

The obvious answer is that we (i.e. everyone) would want the most extensive, efficient, stable and guaranteed access to health care that is possible.

Now, nobody claims that institutions of this kind are "free", so a question then arises about how to best collect the necessary funds from a highly unequal society to pay for it. The answer to this question is simple: people should be required to pay according to their means. We should not ask people making $20,000/yr to pay the same flat rate as those earning $220,000/yr. That would not make any sense.

The simplest, least bureaucratic way of collecting these funds is by simply increasing the marginal tax rate. Notice that this would mean no more premiums, no more deductibles, no more copays. As long as you'd paid your taxes for the year, you would therefore have already paid every single health bill as well.

Notice also that simply increasing marginal taxation as a way of collecting funds means that we wouldn't need any new health insurance paperwork. We could just use existing paperwork. That is to say, this would entirely eliminate all of the atrocious wasteful bureaucracy associated with filing claims and determining patient eligibility. Under the current for-profit insurance regime, most doctors, for example, have to pay full-time staff whose only job is to sort through the labyrinth of different complicated forms associated with thousands of different insurance plans. Our current system is a bureaucratic nightmare whose fragmented, tangled mess of plans, policies, deductibles and copays are a constant source of frustration. This need not be so.

Notice also that this needless bureaucracy and billing is a waste of social resources: we should be spending that money on covering more people, building more hospitals, and training more doctors and nurses. We should not waste important dollars of our insurance payments on needless bureaucracy, advertising and silver lining for investors.

What we need is one large institution, one set of forms, and one huge collective pool of people in order to streamline paperwork and spread risk as widely across the population as possible. Everybody in, nobody out.

But the way current institutions are organized, all of the criteria above are subordinated to the demands of profit maximization. For instance, the person in need of medical attention is simply not recognized as a person in need at all: they are a merely unit of production from whom profits may or may not be effectively extracted. They are numbers on a screen. This is the reality of health care organizations whose operating principles are indexed to profits rather than to human needs.

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Why the Marginal Productivity Theory of Distribution is False

First of all, what is the "Marginal Productivity Theory of Distribution"? Before explaining what it says, I should mention briefly who it is that puts it forward and what they take it to justify.

Those on the Right (e.g. neoclassical types as well as the deceptively self-anointed folks that call themselves "libertarians") often claim that if we have markets that are "free" and competitive enough, then the distribution of wealth and income they generate will be just. The marginal productivity theory was developed by neoclassical economists who had this view, and most thought that the theory was a good reason to think that "laissez-faire" capitalism is the most just social formation.

Now here's what the theory says (the account that follows tracks the summary given by John Rawls in his lectures on the history of political philosophy). Very roughly speaking, the theory claims that the main factors of production (land, labor and capital) contribute a share in producing the total social output. And given that this is the case, the theory is then taken to imply that "it is just that those who contribute their land and capital should share in the output along with labor". In other words, capitalists, landlords and laborers should all get to share in the social output according to their contribution.

There are many problems with this picture. The first is that the three members (capitalists, landlords and laborers) in this "economic trinity" (as Marx put it) appear in the above as "three co-equal partners in the process of production... as co-equal partners each of whom receive their share of the out according to their contribution". In other words, this formula pretends that each of the three factors of production are "on a par", i.e. that they are "uniform and symmetrical".

But Marx's claim here is that if we understand exactly how a capitalist economy actually works, then we'll notice that landowners, capitalists and wage-laborers are clearly not on a par. What does this mean?

Capitalism is a society in which the ownership of the means of production is concentrated in a small fraction of the population's hands. The majority of people in capitalism do not have large amounts of capital or land that they could invest for a profit; the only important productive asset most people have is their ability to labor. Now this means that those who own the means of production are in a strategic position vis-a-vis others in that society, and thus they are in a position "to demand returns in the form of profit, interest, and rent". Since most people aren't strategically placed in this way, they are not in a position of economic power such that they may extract profit, interest and rent from others.

Let me say a bit more about this to drive the point home. Marx is not claiming that capitalists and landowners never derive any income from, say, improvements to their land or labor they expend managing their firms. What fraction of income landlords and capitalist receive as a result of their labor is not, strictly speaking, what angers Marxists. What Marxists see as problematic is that fraction of income that capitalists and landlords receive, just because they are owners of capital or land. Their complaint is about "money making more money" in a society in which most don't have such a luxury and must work for every dollar they earn.

In Capitalism, land (resources) and capital are scarce factors of production (relative to labor, which is more abundant), and this is why those who happen to own land or capital are in a strategic position of power in a competitive market such that they may command an income just for being in their position. As Rawls describes it, since Mother Nature is not around to collect her share of the productive contributions of natural resources... the landlord comes to claim it in her stead.

Notice that the above is not true of people who earn their income from working a job: all of working peoples' wages owe, in the last instance, to work they do. Since they do not have the same economic bargaining power as capitalists or landlords in a market economy, they are not able to draw an income just for being laborers. But notice here that it is just for being the owner of something that capitalists are able to draw the lion's share of their incomes. Thus it is hardly the case that those who own major productive assets are on equal footing, even in an ideally "free" and competitive market, with those who do not.

Another problem with the marginal productivity picture is that it implicitly suggests that the economic structure of capitalism is somehow natural, having "existed since time immemorial". Marx's project was in part to show why this illusion is perpetuated by the methodology of neoclassical economics. That is, by means of an accurate analysis of the way capitalism actually works, Marx wanted to show that what traditional economists take for granted as "natural" is in fact a contingent arrangement that owes to the actions of certain concrete economic agents. This means that we could arrange economic institutions differently, such that it would not be the case that some were strategically placed with respect to the means of production while other were not.

For Marxists, "all members of society have an equal claim to full access to and the use of society's means of production and natural resources." The reason why is that, even in capitalism, all wealth is socially produced by means of a complicated network of social coordination and cooperation. Nothing in contemporary societies is produced by one individual alone. Now, if we didn't live in societies built around social cooperation, then perhaps the issues of justice raised by Marxism wouldn't be relevant. If someone really were to produce something entirely in abstraction and isolation from all social labor, perhaps there would be no just re-distributive claim on that product. But as long as we participate in a massive system of cooperation and coordination to socially produce wealth, we should accord to everyone that is part of that system of cooperation an equal right of access to ownership of the means of production.

We already think this has got to be true of certain public institutions. We don't think, for example, that something like roads or sidewalks (given that everyone has to use them no matter what they do) should be the sorts of things that one person could purchase and own as private property. Why? Because that person would be in a position to exploit their strategic placement by demanding that everyone pay them tribute for something that everyone needs to use.

Now, those on the Right will sometimes respond here that the sidewalk case above is a special case, since it describes a monopoly. If there were more competition, they'll point out, perhaps the prices on sidewalk use might fall and the situation might be optimal.

This reply misses the point. First of all, certain kinds of infrastructure like roads and railroads, are not the sorts of things that competition can reasonably be expected to make more efficient. Railroads are a natural monopoly, given the sort of technological, physical thing that they are.

But the bigger picture here, is that even if there were several capitalists, rather than just one, owning the sidewalks and roads, this wouldn't change the fact that every non-sidewalk owner would still be forced to purchase their sidewalk use from a capitalist. They may be able to choose between two or three different capitalists, true, but they are still forced to transact with a capitalist. (Think here of recent healthcare debates: does it much matter that Aetna and Cigna compete with one another if, at the end of the day, I'm forced to choose between capitalist A and capitalist B? As Adorno put it, "freedom wouldn't be to choose between black and white, but to abjure such prescribed choices".)

Moreover, it will still be the case that some groups, because of their strategic position as owners of means of production, are in a position of power vis-a-vis everyone else such that they can exploit and draw income from the fact that they occupy this position. Thus it remains to be seen why this asymmetrical relation of power, generated by unequal ownership of the means of production, is justified. And it is worth point out that most "libertarians" or neoclassical-types don't have an answer here, because this isn't a question they think critically about. Far more often, they merely assume that the institutional "rules of the game" in capitalism are quasi-natural laws, and for good reason. Because if most ordinary people (who work for a living) were asked if they thought it was just that some people are able to get paid just for, as it were, already being rich... it's hard to imagine them unequivocally saying "yes".

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