Wednesday, December 30, 2009

The new communism












Sunday, December 27, 2009



Bruce Schneier

The great divide

Robert Reich says,
Indeed. I doubt those at the top will voluntarily give up their income and wealth, nor their privilege to continue concentrating it, no matter how bad life gets for those of us on the bottom. We will, at the end of the day, have to take it from them.

Saturday, December 26, 2009

Capitalism and abstract ownership

Abstract or "absentee" ownership, especially abstract ownership of capital, is an externality to markets: it contradicts a fundamental assumption of "free" market economics. Capital ownership as an externality is largely ignored not just by Randian (Chicago/"freshwater") economists, but also Keynesian ("saltwater") economists. Economists assume that if there's an economic case for the allocation of capital to an endeavor, capital will be allocated to that endeavor. Because the capitalist class is internally competitive, and because they are largely rational (either by intelligence or selection), this assumption is often at least partially met; the externality of ownership is often mostly irrelevant. However, under certain circumstances, the externality dominates economic behavior; in all circumstances, the externality biases economic behavior to some degree.

To understand and justify this assertion, let me first define my terms.

Abstract ownership is ownership is ownership (in the common, intuitive sense) without physical possession and use, in contrast to concrete ownership, ownership with physical possession and use. I physically possess my car (it's in my driveway; I alone have the keys), and I am its sole user. I therefore hold concrete ownership of my car. My landlord, however, does not physically possess my apartment — indeed he cannot usefully physically possess it — therefore his ownership is abstract. Additionally, he borrowed money from the bank; until the loan is paid back, the bank still abstractly owns the money even though my landlord "physically" possesses and uses it; this abstract ownership entitles the bank (and its shareholders) to collect interest. Furthermore, I have deposited money in the bank, which the bank has loaned to my landlord; my abstract ownership of that money obligates the bank to pay interest to me.

Capital is labor time expended in the present instrumentally for a benefit in the future. When Acme construction built my apartment building, labor time had to be expended at that time to collect and fabricate the materials and assemble them into a house. All that labor time had to be paid for at the time the house was built: the workers who built the house needed to eat then, not now (when I myself am deriving benefit from the house), and all the people who worked directly or indirectly to feed those workers needed to be paid to sacrifice their immediate consumption then, not now.

Abstract ownership entitles the owner to collect economic rent for the use of the object owned. In a truly free market (or a market that strongly resembled a truly free market) the rent (price) would fall to the cost of creating, maintaining and reproducing the object owned, including the owner's administrative time. In a truly free market, then, abstract ownership should be just another job. But we know empirically that abstract ownership is not just another job: abstract owners of capital consume or control orders of magnitude more labor hours than they contribute. Indeed it is often the case that abstract owners of capital consume orders of magnitude more labor hours than an ordinary worker while doing no work whatsoever. Therefore we must conclude either that the derivation of our microeconomic conclusion that prices always fall to cost is fallacious, or that one of the assumptions of that derivation is not applicable to the real world. The derivation is not fallacious, so there must be an assumption that does not hold.

It doesn't matter what "natural" (not intentionally imposed by human beings) barriers exist to the abstract ownership of capital. Microeconomic theorems prove only that it will take more or less time to overcome those natural barriers and achieve sufficiently wide distribution of abstract ownership of capital to reduce its price to its cost. Even if that time was on the order of a millennium, we should see over just decades a trend towards wider distribution of abstract ownership of capital and a decrease in the rent collected by its owners. However, the observable trend is (on the whole) towards the concentration of capital into fewer hands, and an increase in the rent collected by its owners.

There is a small short-term, local, and individual selection pressure against saving for capital formation and therefore indirect selection for immediate consumption. This selection pressure is large enough that non-human animals — whose evolution is driven by extremely short-term selection pressures — do not engage is large-scale capital formation; their capital formation is limited to very small-scale endeavors such as beavers' dams or birds' nests, or endeavors that have accumulated over tens or hundreds of millions of years (and very narrow specialization), such as beehives, anthills, and termite mounds.

Human beings, however, by virtue of our big brains, can overcome short-term, local and individual selection in favor of longer-term, global and social selection. We can "think our way past" some selection pressures and away from a local "fitness" maximum to a higher global maximum. The vast and (at an evolutionary time-scale) instantaneous social and economic progress we have made as a species is overwhelming evidence that our ability to overcome local selection pressure is not merely present but enormously powerful. Achieving an optimally efficient distribution of capital ownership — defined as a distribution that causes the price of capital to be at its cost — should be not just possible but inevitable.

Point out any natural (non-human) obstacle to the efficient distribution of capital, and I'll show you a strategy to overcome it. I'm not that smart: if I can do it, anyone else can. Anyone who successfully implements an idea should be able to transmit that idea to everyone: the idea, by virtue of its very success, should become ubiquitous. Take, for instance, economy of scale: owning a small amount of capital isn't very beneficial, but owning a large amount of capital is disproportionally beneficial. This natural barrier is easily overcome by creating a social group that pools its individually small savings into a large enough size to be mutually beneficial to the members of the group. Indeed this is precisely the idea behind the mutual fund.

The only explanation for capital ownership to be distributed not just sub-optimally but the complete opposite of an optimally efficient distribution must be the presence of some externality. Moreover, this externality must not be natural (nature has never shown an ability to out-think human beings) but rather artificial, imposed by human beings.

Abstract ownership requires social coercion. I can physically protect my car by myself, by locking it and holding the key, but my landlord cannot physically protect my apartment: the whole point of renting it to me is to let me use it. (Likewise, Avis cannot physically prevent me from stealing a rental car: their whole business consists of giving me the key and physical possession of the car.) My landlord must necessarily depend on the social construction of law and custom that enables him to demand that the sheriff, who has a gun, to coercively evict me from my apartment if I fail to pay the rent.

The primary means that the capitalist class uses the socially constructed basis of enforcement of abstract ownership is indirect: law and custom in a capitalist society strongly protects the capitalists ownership of capital, but does not protect a worker's ownership of his or her actual labor; it protects only his ownership of his labor power. Without access to socially accumulated capital, an individual worker cannot use his own labor to survive, therefore the pressure of immediate necessity forces him to relinquish physical ownership of his actual labor in return for physical ownership of his labor power. Therefore, possession of actual labor must be guaranteed abstractly, or it doesn't exist. But capitalist governments do not guarantee abstract ownership of labor. The differential enforcement of abstract property rights constitutes a coercive externality on the market for capital ownership, making it un-free.

Does differential enforcement constitute coercion? It seems unobjectionable that some form of coercion is justifiable and socially acceptable in a "free" society: few people — even few anarchists or libertarians — would object to the socially constructed coercive prohibition against one person hitting another on the head and taking his stuff. In other words, physical ownership unobjectionably warrants a degree of supporting abstract ownership. But what if our social construction protects only blue-eyed people against forcible theft? If you have blue eyes and anyone (blue- or brown-eyed) hits you on the head and takes your stuff, the police will, with substantial efficacy, track down the perpetrator, recover your stuff, and discourage the perpetrator from repeating his objectionable behavior. If, however, you have brown eyes and someone hits you on the head and takes your stuff, the police will do nothing. These conditions seem obviously objectionable, but the objectionable behavior of the police here is itself not coercive; we are not arguing that they should not be coercive at all (we do want police protection against theft), we're arguing they do not act coercively when coercion is warranted: it's clearly the differential in differential coercion that's objectionable. This counter-argument renders invalid the argument that non-coercive behavior is by definition never objectionable. There might be other good arguments that the government should not protect a worker's ownership of his own actual labor, but it's invalid to argue that it is never objectionable for a government — even a minarchist government — to refuse to act coercively.

The effect of differential enforcements of abstract property rights is that under laissez faire capitalism, the ordinary worker has zero surplus to accumulate. Zero multiplied by many years and/or many bodies is zero: ordinary workers simply cannot become capitalists. The "selection pressure" against accumulation is not just short-term and local, it's long-term and global.

But of course the Keynesian "revolution" of the 1940s-1970s overcame this objection: some of workers' ownership of their surplus labor (the difference between their actual labor and the cost of their labor power) was protected by the government. And indeed millions of workers used this surplus to propel themselves and their children into the professional-managerial middle class and in general caused a much wider distribution of capital, actually lowering its price nearer to its cost.

It took the big capitalists almost thirty years to reverse this distribution. Their primary mechanisms were first to "pick off" the smaller accumulations of capital in cyclical downturns. For example, when housing prices fall, the homeowner loses her entire down payment before the bank loses any of its debt: anyone who is forced by circumstances to sell her house in a cyclical low loses all her capital, while the bank loses none.

The second method was outright theft — enabled again by differential enforcement of abstract ownership — of workers' accumulated capital, accumulated mostly in pension plans.

The third method was the creation of consumer debt. Increased consumption was necessary (and desirable) to drive increased production and increased productive efficiency, but there were two primary methods to do so. First, we could have socially created "front loaded" demand: just give individual workers more money, and make that money deflationary to encourage its use in consumption. But instead the capitalist class loaned the workers the money, cheaply at first, until a person's standard of living depended on massive amounts of debt. Once the standard of living is established, the capitalist class (who owns the debt) can raise interest rates to expropriate upper-working and lower-middle class accumulated capital.

Accumulating debt rather than capital is not economically irrational. It is economically and physically reasonable to expect almost endlessly rising income as we continue to make economic production more physically efficient (more goods for fewer hours). Accumulating debt is not even politically irrational: the government was for thirty years willing and able to prevent the capitalist class from manipulating the finance system to use debt to transfer capital; more than a generation of success is reasonable warrant for continued confidence.

Remember: while accumulating debt (to drive the economy in the short term) the working and middle classes were also accumulating capital (to make capital allocation more efficient in the long run). The working and middle classes were acting rationally, both economically and politically, balancing short-term and long-term benefits. While some people (sadly myself included) acted shortsightedly, on the whole we did not fail to accumulate capital, our capital was stolen from us. And it was stolen from us because the capitalist class regained control of the government; they were successful because we underestimated the determination and will of the capitalist class to regain the vast power they controlled before the Great Depression.

Friday, December 25, 2009

Will the health care bill destroy the conservative movement?

Nathan Newman thinks the health care bill will destroy the conservative movement "[b]ecause trying to repeal it will tear the movement apart and it will be the platform to destroy conservative anti-tax politics."


The Randian/Soylent Green faction of the capitalist ruling class hated social security too, and that didn't destroy their movement. The Randian faction doesn't need either social security or universal health care to go away, they need it to not expand, and to the extent that it does expand, the expansion needs to be under the direct control of the capitalists, not the government. They're not sadistic, they're just indifferent to the well-being of the people.

Their primary goal is to preserve and enhance their power and privilege as a ruling class. The health care bill as it exists today does little to diminish their power and privilege, and may (as Robert Reich notes) actually enhance it. Their goal, which is largely complete, is to destroy Keynesian economics (and its advocates in the Democratic party), which supports the economic demand of the working and middle classes.

Liberals and progressives — even smart ones — are just as capable of wishful, magical thinking as any Christian.

Thursday, December 24, 2009

Krugman and health care

Paul Krugman considers health care reform "a disappointing, flawed bill — and that it’s also a progressive triumph."

Krugman is correct at least that we should pass the bill — it's better than nothing, and a smaller-than-expected gain is acceptable in a sense that a smaller-than-expected loss (e.g. the 2006 Iraq war funding debacle) never is. But other than that, it's hardly a progressive "triumph"; it shows merely that progressives are not losing as quickly as they might. It's the fourth quarter, we're down by 14, and we settled for a field goal. Yeah, I won't give up the 3 points, but this is not how to win the game.

The problem isn't that the Democrats tried and failed to get real health care reform, the problem isn't even that they blinked in a tough situation. The problem is that they did not fight. The Democrats didn't get the health care reform they won, they got the health care "reform" the Republican party let them have, "reform" that consolidates the power of the capitalist class to control health care and use it, like profit, rent and interest, to extract surplus value from the population.

What is economics?

Economics is
"intellectual engineering" ... [as] a public relations exercise for the rentier classes criticized by the classical economists: landlords, bankers and monopolists. ...


Professor Michael Hudson

Sunday, December 20, 2009

How bad biology killed the economy

Frans de Waal writes an interesting essay, How bad biology killed the economy (summarized and brought to my attention by Mark Thoma. de Waal has an interesting point, but I have a few criticisms.

The first is a disagreement over terminology: de Waal contrasts self-interest on the one hand and altruism or mutualism on the other hand. However, I maintain that we ought to construe self-interest more broadly, mutualism is itself in the self-interest of people acting for their mutual benefit. Our conclusions are similar, only the political and persuasive characteristics of the rhetoric differ. Randians, Libertarians and others have made enormous strides by stressing that mutualism requires the individual to sacrifice his benefit for the good of society, when in reality mutualism requires the individual to sacrifice only the benefits of exploitation and oppression, losing also the drawbacks of resistance and rebellion.

The unfortunate contrast to self-interest drawn by advocates of mutualism allows critics of communism to attribute the errors of communist governments in the Soviet Union and China directly to mutualism; in reality, these errors were mostly* caused by exploitation of the people by the parties (or, according to some, "bourgeois elements" within the parties) when the parties became yet another ruling class. This contrast also allows critics of communism to simply ignore the substantial benefits — the improved status of women, democratization of health care, improved standards of living for huge numbers of people — brought to Soviet and Communist Chinese society, benefits that are difficult to imagine without an explicit philosophy of mutualism as an essential component of communism.

*Some errors were caused by bad luck, bad circumstances, and well-intentioned errors of judgment, problems that no abstract political system can completely overcome.

More importantly, however, is the tenor of de Waal's piece that false ideas about reality have caused people to act against their objective material self-interest; in other words, people's subjective self-interest has become in conflict with their objective self-interest because they have false ideas about reality and what constitutes their objective self-interest.

Clearly this is partly true: large numbers of working- and middle-class people have — to their own detriment — allowed (to the extent they could have prevented) the destruction of what little mutualist legal, political and social constructions created in the New Deal because they falsely believe that mutualism is objectively wrong. But de Waal seems to ignore (or does not stress) that there is a faction of the ruling class that benefits from this fallacy being widely accepted by ordinary people. This faction has a direct interest in heavily promoting this fallacy among ordinary people, and ordinary people will accept it just because it is heavily promoted regardless of its truth or falsity.

There is a faction of the ruling class for whom mutualism is in every sense contrary to their own self-interest. According to this faction, today's economy is not "ruined" — nor was it "ruined" by the Great Depression in the 1930s — the economy is, rather, being restored after Franklin D. Roosevelt and the Democratic party ruined it in the 1940s.

For this faction, mutualism would require a true sacrifice, the sacrifice of their real material benefits — the benefits they derive from successfully exploiting working people — not just the pseudo-sacrifice of an abstract, theoretical benefit of exploitation they cannot actually effect for the tangible benefit of mutual cooperation. Hence we cannot persuade this faction to give up their power to exploit and the benefits they derive; it must be taken by force. They are not acting against their own self-interest because they have swallowed a lie, they are acting for their self-interest by promoting what they know to be a lie, or do not care one way or another for its truth.

Wednesday, December 16, 2009

Fat cat bankers

Brad DeLong notes that Obama must (more or less) necessarily come to the aid of "fat cat bankers": Absent a direct government stimulus, Obama must
persuade the private sector to boost its spending. ... But for indirect government policies to boost spending, they must boost asset prices — especially long-term, risky asset prices. And guess who owns the most long-term, risky assets? Guess who benefits most when those long-term, risky asset prices rise?

Yep. It's fat-cat bankers.
However, it's not necessarily the case that boosting long-term risky asset prices will actually cause the "fat cat bankers" to actually spend more. First of all, supporting long-term asset prices no longer makes them risky, which directly and explicitly increases moral hazard. More importantly, the "carrot" of supporting long-term asset prices must be accompanied by the "stick" of increased regulation and taxation:
The fact that the policies you undertake to avoid persistent mass unemployment also help fat-cat bankers doesn't mean that you can't implement other policies to place burdens on them. Progressive income and wealth taxes, tight capital and regulatory requirements, impositions of enormous risk on financiers in order to remove the possibility that they will retain their wealth even as their organizations go bankrupt these are all policies that make fat-cat bankers' lives less fat and less feline. And I am strongly in favor of enacting all of these long-term structural reforms.
The question, though, is who will bell the cat? It's important to understand the fundamentals of dialectical materialism here: Obama is not enriching the bankers directly because of some abstract principle, he's enriching the bankers because its in his own interest as a politician and would-be statesman to do so. It's obviously not in the fat cat bankers individual interest to submit to additional regulation; Is it in Obama's interest, or the interests of the Democratic party, to impose additional regulation? More precisely, Obama and the Democratic party represent some other interests: precisely whose interest are the (liberal and "centrist") Democrats representing, and is additional regulation in their interest?

They're clearly not representing the people's interest. The people themselves are not sufficiently organized or aroused to directly demand their own interests. Under current circumstances it's clear that all any Democrat must do to get enough votes to be "players" is to be slightly less evil than the Republicans. They're fine so long as they don't actually start producing Soylent Green, or if they at least ensure its production meets minimal health and safety standards. No matter how bad the Democrats get, liberals and progressives will hold their nose and vote for them (not entirely unjustly) because the Republicans are worse. Even if the nominal unemployment rate is still around 10% (and the real unemployment rate around 18-20%), even if people are living in miserable poverty, even if universal health care is little better than the current emergency-room based pseudo-treatment for the increasingly large poor masses, Paul Krugman and every other liberal and progressive will vote for the Democratic party because, hey! at least they're not actually eating the babies of the poor.

Like every other capitalist "democracy", the party and people holding official power represent a faction of the ruling capitalist class, throwing only enough bones to the population to prevent outright revolution. What faction of the capitalist class does Obama and the Democratic pseudo-left represent?

Again, it's clearly not the faction of the capitalist class that the Republicans represent: the faction that explicitly and directly wants to destroy consumer capitalism, that wants to smash the consumer capitalist state as radically, quickly, thoroughly and violently as Lenin and Mao smashed the feudal Russian and Chinese states. Therefore, Obama represents that faction that does not want to radically destroy consumer capitalism.

But that's a pretty broad group, and it necessarily includes those members of the ruling class that would benefit if consumer capitalism were more slowly dismantled, rather than preserved and expanded. Of course dismantling consumer capitalism more slowly is not all that far from the Republican/right-wing agenda; the Republicans can — so long as the Democrats pay along — win by losing.

(There's also the a personal political consideration: president Clinton was profoundly and deeply personally humiliated by the Republicans, and it's certainly the case that president Obama has skeletons in his own closet. So long as the right limits itself to rally-the-base small potatoes like ACORN and the "birther" bullshit, Obama will be hesitant to play his hand more strongly, fearing a deeper and more persistent investigation.)

There is undoubtedly a faction of the capitalist ruling class that would, at least in theory, like to see the preservation and expansion of consumer capitalism: most capitalists are rich precisely because they produce consumer goods. However, actually fighting for the preservation of consumer capitalism is not necessarily in their immediate individual self-interest. First of all, they're already rich — or in the case of higher (CEO/EVP) levels of the professional-managerial middle class beholden to the interests of the already rich. Consumer capitalism requires sacrificing some of the existing financial wealth of the ruling class, and there's no assurance that this sacrifice will be equally shared. Quite the contrary: it's almost certain that some part of the ruling class will take it in the neck and some will emerge relatively unscathed. Better to protect the class as a whole than risk being without a chair when the music stops.

Likewise, if the demand of the working class and the professional-managerial middle is increased, it's almost certain that this demand will not be spread out evenly; indeed it will be the capitalists who most vociferously and effectively demand an exemption to increased worker demand for their own holdings who will in fact receive such exemptions, placing them at a relative advantage over those who must submit to paying their own workers more.

It is probably the case that a majority of the capitalist class would prefer to preserve and expand consumer capitalism. However, it is not in any member's individual interest to preserve and expand consumer capitalism unless all members do so. Without any means to compel dissenters (except the enormously risky means of stirring up populist anger, which risks revolution and the destruction of the entire capitalist class), there's no way for even the majority to act in their mutual self-interest; they must act in their immediate individual self interest and help (or allow) the destruction of consumer capitalism out of sheer survival.

The problem of demand

It is a fundamental assumption of economics that economics is about using markets to allocate scarce resources. This fundamental assumption is very deficient. There is only one primary resource of economic interest — human labor — and that resource has since the beginning of the 19th century been in surplus, not scarcity. Every physical resource, from gold to guns to oil, can be increased mostly without limit by allocating more labor to its production or extraction.

Take oil, for example. Oil is just a means to an end, actually a means to a means to a few ends: Oil is energy, and we use energy to a) power industrial production and b) provide personal transportation. There is, according to Scientific American, about an order of magnitude more energy available in wind and solar power than we would expect to use given pre-depression rates of economic growth for the next fifty years. It will, however, require vast amounts of human labor to build the equipment and infrastructure necessary to capture and distribute this energy. But so what? Right now about one person in six in the most highly industrialized and productive country in the world is un- or under-employed. If there's one thing we have plenty of, it's human labor.

Each and every capitalist economic crisis since the middle of the 19th century has been a failure not of supply but of demand. There has never been a capitalist crisis caused by not producing enough stuff; all capitalists crises are at root caused by not demanding the stuff that we have or can produce.

But what precisely is "demand"?

Demand has two components: what people want and need, and what they "deserve" to have. No matter how much a minimum-wage worker, for example, wants a Ferrari, he cannot demand one. Want and need is more-or-less directly real, actual measurable properties of real human beings. The second, however, is entirely socially constructed; what people "deserve" to have is neither a property of the objective (non-minded) physical world, nor a property of individual human beings. What people "deserve" can be found only in the agreements and social constructions between multiple human beings.

Thus, there are two ways we can have a failure of demand. First, we might be producing things that people simply do not want, or do not want sufficiently to directly or indirectly allocate the labor required for their production. If it takes one hour to produce a shoe, and we are producing so many shoes that people do not want to spend an hour of their labor producing (or earning the money to buy), then we can say that the demand for that many shoes has failed, and we should therefore reduce the supply.

Capitalism, however, handles this sort of "real" demand failure relatively gracefully. The problem comes when the socially constructed form of demand, what people "deserve" to have.

The market for labor is the market for labor power, the ability to produce labor. The cost of labor power is the labor required to provide the worker with the necessities for his or her productivity. The marginal value is the additional productivity generated by the increase in cost. That increasing the cost of labor power produces a greater increase in amount, intensity or quality of labor worked constitutes the natural or ineluctable demand of labor.

But what about the surplus value of labor? The profitability of employing labor is precisely in the difference between the cost of labor power and the amount of labor produced. Under laissez faire capitalism, the worker has no socially constructed demand on his own surplus labor. The only socially constructed demand for this labor, the only people who "deserve" this labor, are the owners of capital, who extract this labor as economic rent.

In the 18th and early 19th century, capitalism got a "jump start" because there was tremendous scope for making workers more productive, which (to some extent) improved the subjective quality of life for many workers. The natural demand of workers in addition to the increased demand of the capitalist class created a direct economic incentive to dramatically increase economic production.

The fundamental purpose of New-Deal consumer capitalism and Keynes' General Theory was to "artificially" increase the demand of workers above and beyond that necessary to create their productivity, to socially construct the idea that workers deserved to themselves consume at least some of their surplus labor. For a lot of interesting reasons (which I'll talk about soon), there has been strong dialectical material and social-evolutionary forces which have eroded this social construction.

The present economic depression is no different: the fundamental problem is failure of demand, mostly the demand of the working class and professional-managerial middle class. The steps are simple. First, in the 1990s and early 2000s, demand was socially constructed to derive from rising asset prices (mostly homes) rather than wage income. Furthermore, these rising asset prices were not caused by either increased cost or increased use-value, but were themselves socially constructed. However, these socially constructed rising asset prices were not at all subject to social control or management, not even the minimal social control provided by the capitalist class. It eventually became impossible to ignore that these rising asset prices were neither based in reality nor intentionally and socially managed, and they collapsed.

Second, internal competition within the capitalist class took the form of financial manipulation — mostly Credit Default Swaps and Collateralized Debt Obligations — which created money out of at best nothing and at worst outright lies and fraud. It again eventually became impossible to ignore the lack of actual foundation in reality or intentional social construction for these financial manipulations.

What happened when asset prices and financial bullshit collapsed? People's wants and needs didn't change. The labor available to supply these wants and needs didn't go away. The capital equipment to amplify people's labor is still there. What changed was the socially constructed sense of what people deserve to have, to convert their wants and needs into demand. People don't "deserve" stuff and cannot therefore demand it. Capitalists therefore produce less stuff, and use less labor, causing unemployment and falling wages. Unemployment and falling wages further decrease socially constructed demand: a person with no job does not "deserve" even to live, much less consume any luxury good. Demand and supply are thus locked into a positive feedback loop of decreasing production and consumption, more colloquially known as a "death spiral".

It's critically importance to understand that the reduced consumption and production is absolutely not caused by there being less stuff to consume or by increased true cost of production. It's caused, paradoxically, by there being too much stuff to consume: so much stuff that the capitalist class cannot earn increasing profit on increasing its production.

Of course, this death spiral is extremely bad for the working class and for all but the most elevated (or specialized) levels of the professional-managerial middle class. But it's also bad for many in the capitalist class, perhaps even a majority of them: you cannot appropriate and exploit the surplus value of an unemployed worker. A large number of people at the "bottom" of the capitalist class are being pushed to the upper professional-managerial middle class, and many of them will descend further into the lower middle class or the unemployed class.

The present financial crisis (as well as the Great Depression) is a classic case of the Prisoner's Dilemma writ large. Although it is in the mutual interest of those in the capitalist, middle and working classes to mutually cooperate to maintain consumer capitalism, capitalism has grossly deficient social mechanisms for suppressing individual self-interest in asymmetric betrayal, eventually causing people to choose the "rational" Nash equilibrium of mutual betrayal and the collapse of consumer capitalism.

Monday, December 14, 2009

Obama and the Democratic party

atthew Yglesias' disagrees with Matt Taibbi's critique of president Obama (and Brad DeLong agrees with Yglesias). Yglesias reads Taibbi's critique as "the latest [article] ... claiming everything in the world would be great if only Barack Obama were more left-wing." Yglesias goes on to say that, Taibbi's article "suffers from the same basic conceptual flaw as the vast majority of this literature—it ignores congress." Yglesias and DeLong are, however, missing Taibbi's point.

The point is not that things would be rainbows and unicorns if Obama were more left-wing. The point is that neither Obama nor the Democratic party are putting up a fight against reactionary and obstructionist members of congress. On the one hand, politics is the art of the possible; on the other hand, you don't know what's not presently possible until you try to fight for it and lose.

I think liberals and progressives would have been much happier if we had arrived at what we have now on the economy, jobs, health care, the wars in Iraq and Afghanistan, by losing a vigorous political fight instead of lying down and passively complying with the Ben Nelsons, the Olympia Snowes, and the <spits on floor> Joe Liebermans.

Would we have better bills from congress if the Democrats were actually fighting against the Republicans, if Obama were actually fighting against the Blue Dog Democrats? Perhaps not.

My grandfather used to curse any baseball player who took a called third strike: "We're not paying you to look at the ball!" There's no guarantee you'll get a hit if you take a swing, but you're guaranteed to not get a hit if you don't take a swing. We didn't elect Obama and give him a Democratic majority to look at the ball. Take a few swings, you bastards!

Physics and philosophy



Sunday, December 13, 2009

On anarchism

Anarchism is a curious topic. Its linguistic roots mean literally "no rule". But by these roots no self-described anarchist can impose a definition of anarchism; anarchism means as many different things as there are self-described anarchists.

We can discard one sense of anarchism as vacuous: everyone always, by definition, actually does what she thinks is in her own best individual self-interest, all things considered, including considering how other people will probably act (perhaps coercively) in their own interests.

Taken to the logical extreme of its roots in a non-vacuous sense, anarchism would entail absolutely no coercion whatsoever. The only acceptable means of influencing another person's behavior would be to threaten to or actually withhold active cooperation. Killing or injuring someone in self-defense is obviously coercion. Locking your front door or physically hanging onto your wallet is coercive: you are using physical force to prevent a person from doing what he wants to do.

We could achieve the logical extreme of anarchism if it were physically impossible to coerce another person. Extreme anarchism is also possible if no one ever wants to coerce another person.

It's instructive to read the science fiction of Greg Egan*. In many of his novels and short stories, he envisions a future where coercion is literally impossible. In these stories everyone exists as programs running on very fast, very large computers; it's impossible for one person (program) to coercively influence another. But it's instructive that he has to go "outside" the system, to the operating system of these giant computers, to make coercion impossible. But someone has to write and maintain these operating systems, and there's nothing to prevent one person from creating a new computer with an operating system that does allow him to coerce its inhabitants. Fundamentally, he assumes that no one will want to coerce others.

*I don't mean at all to put Mr. Egan down. He's a brilliant, imaginative writer, one of the best writing today (or ever), and his work has been a source of tremendous inspiration for my own ideas.

But how do we make sure that no one wants to coerce others? Wanting to coerce others, the subjective desire to coerce others, is not materially self-selecting, in the same sense that not wanting to eat food is self-selecting for modern humans. To eliminate the subjective desire to coerce others, you have to either impose artificial selection, or completely eliminate uncorrelated heritable variation in subjective desire. The latter seems sterile — there's no growth without uncorrelated variation — the former is obviously coercive.

So the logical extreme of anarchism seems physically or logically impossible.

Can we adjust the definition of anarchism away from the logical extreme? How far can we adjust the definition before the label itself becomes ridiculous or intellectually dishonest?

We could simply say that anarchism is the absence of punishment. Whatever coercion we apply to each other, we never apply coercion that's intentionally designed to cause subjective harm to a person. We put people in prison to hurt them; we maintain threat of prison to (at best) discourage people from hurting each other; but we're still actively hurting some people. (The notion of prisons as "correctional" facilities goes beyond a polite fiction to an obvious lie.)

I myself would definitely approve of a system without punishment, and such a system seems plausibly realistic. The problem with this definition is that you could still have a ruled/ruling class political-economic system without punishment. Even if the ruling class doesn't punish the ruled class, the presence of a ruling class would seem to make this definition too weak to be called specifically anarchism.

Anarchism might be defined as simply the absence of a ruling class. Again, perhaps desirable and feasible, but the absence of a ruling class doesn't sufficiently distinguish anarchism from democracy (by its roots "rule of the people"); this definition still seems too weak.

We might further restrict the definition of anarchism to a democracy without any violent coercion; we could still lock our doors and hold onto our wallets. This definition seems like the most we can adjust the definition without losing the intellectual validity of the label of anarchism. But, however, this definition begins to pose severe practical difficulties.

Again, we can turn to science fiction for an example of an anarchist democracy in Eric Frank Russell's novella, And Then There Were None. It's notable that Russell has to posit several conditions to make this society seem superficially plausible. The society is isolated: it's enormously expensive (according to the story) to send just a few hundred soldiers to the Gands' world; a full-scale invasion is impossible. The society is homogeneous, and each individual is inculcated to be fanatically resistant to even the hint of coercion, as well as fanatically idiosyncratic. The society is small, and there appears to be no long-range transportation: someone who egregiously abuses the lack of violent coercion (except in immediate self-defense) will be coercively frozen out and starved. The world is underpopulated, and there is no competition for physical resources. Most importantly, the world has inherited technology from Earth. There is no need to create large-scale productive enterprises; all technological production appears to be at a small enough scale for easy voluntary cooperation.

Russell gives us a nice package, but he ignores the fundamental power of dialectical materialism and evolution. There will be variation in individual attitudes, caused by genetics and the variability of childhood indoctrination. People who egregiously abuse the system are selected against, but that's about it; there is scope for variation that's not selected against.

People can subtly abuse the system, continually pushing the limits of how much the system can "push back". A person might, for example, always give back "low value" obs for higher value obs. A person who successfully does so without getting frozen out will have at least a small material advantage over his neighbors, and this propensity can be transmitted to others.

People can also become more conformist. In a system where the good will of one's neighbors is of paramount importance, someone who's not quite so idiosyncratic as his neighbors can have an advantage, and it's hard to disapprove of someone who's not being idiosyncratic enough. One can easily imagine a group of rebellious children all dressing in uniforms just to piss off their idiosyncratic parents! Childish, to be sure, but sometimes childish attitudes become adult beliefs.

It's also possible for people to become submissive. It's hard to retain fanaticism without actual oppression. The founders of the society might be fanatically resistant to coercion, but this very fanaticism will ensure that people don't generally try to coerce others. At first, then, a person a little more submissive won't even be coerced; he can get a "free ride" on his neighbors' resistance to coercion. It's also plausible that even a slightly dominant-submissive relationship might have a local, immediate economic advantage over equalitarian relationships. Even when the communists were fighting the fascists in Spain, communist soldiers were still shot if they didn't follow their officers' orders.

It's impossible to say how Russell's society would evolve even if it could exist, but it's clear that it would evolve away from his democratic anarchism into something very different.

There's also the severe problem of protection for unpopular minorities under any form of democratic anarchism. Either the democratic mechanisms used to influence others actually work, or they do not work. If they don't work, it's hard to see how you can have any form of mutual cooperation where individual betrayal confers an immediate advantage. If they do work, then sooner or later, the majority will get a bug up their ass about some otherwise inoffensive minority: blacks, Jews, women, religious dissenters, redheads, left-handers, people whose favorite color is blue, whatever. It takes a minority with disproportionate power to protect another minority, but a minority with disproportionate power is the very definition of a ruling class.

I have no doubt that we do not today live in the best kind of society that's practically feasible. There is enormous scope for improvement, improvement that's possible with the level of intelligence, philosophy and ethical enlightenment we've already achieved. But we have to achieve this improvement by using rational thought, not Utopian magical thinking*.

*Nor by slandering as a fascist anyone who refuses to adopt one's magical thinking and historical revisionism.

Wednesday, December 09, 2009

Consumer capitalism, then and now

In the 1930s and 40s, Franklin D. Roosevelt and the Democratic party did something profound and difficult: They transformed gilded-age capitalism into New Deal consumer capitalism. There were three main prongs of this transformation:
  1. Raising the cost and reducing the supply of wage-labor
  2. Draconian income taxes on very high levels of income
  3. Severe regulation of finance capital

Taken together, these policies shifted an enormous amount of economic demand to the working class and created the professional-managerial middle class.

Needless to say, the capitalist class was not too happy about this. The hostility of the capitalist class to consumer capitalism is actually somewhat puzzling: the ruling capitalist class — people with enough money to not have to work and live on interest and dividends (profit) — actually increased in size, as did the professional-managerial middle class. (Middle classes are typically supportive of their ruling class, at least until the ruling class starts directly threatening their livelihood.)

(I've been watching Mad Men lately. One of the founders of the advertising agency is a big Ayn Rand fan. Ironic, given that New Deal consumer capitalism — Rand's bête noire — is the foundation of the character's wealth. Indeed consumer capitalism is the only way an advertising agency has any economic purpose.)

Why was FDR successful in establishing consumer capitalism? Why did he even try? How was he able to establish a cohesive faction of the capitalist ruling class to support him? (Populism be damned: had the capitalist ruling class closed ranks against FDR, he would have failed.) Why has the capitalist class turned its efforts for decades in eroding New Deal consumer capitalism?

Most importantly, the liberal capitalists, such as Paul Krugman, want to restore New Deal consumer capitalism. Hardly surprising: morally speaking, consumer capitalism is the best kind of capitalism we can hope for. Can we do so?

To answer this question, we have to compare and contrast the material economic conditions and the political climate then and now. Even before the Great Depression, there was a powerful anti-capitalist labor movement: socialists, progressives, anarchists and communists. The people themselves were becoming organized, focused, disciplined and committed to demanding their interests, and they were willing to fight for them. Even though there were a lot of factions within the labor movement, these factions were relatively cohesive and united against a common enemy: the capitalists. Furthermore, in the wake of the almost-successful socialist revolutions in Western Europe and the successful Bolshevik revolution in Russia (and the failed attempt to oppose it through the Russian Civil War) let a substantial portion of the American capitalist class to realize they were fighting for their lives, and victory was by no means certain.

It's a little harder to see today, especially for middle-class Americans, but in the 19th century market forces for labor power pushed the price of labor power to its true cost: most workers in the 19th century really did make just enough to survive. Every time there was a depression due to lassaiz faire capitalism's inherent cyclical swings (e.g. 1837-1842 and 1873–1879 (and subsequent recessions lasting until 1896)) large numbers of the working class without cushion or safety net were reduced to abject poverty and even starvation. The First Imperialist War also caused tremendous suffering, especially in Europe, to little or no obvious benefit to the working class.

Capitalism was then hit by two hammer blows: the Great Depression and the rise of fascism. The Great Depression is notable because it is the first catastrophic economic failure of Imperialism, finance capitalism plus colonialism at a whole new scale. Finance capitalism made the positive feedback systems in capitalism much faster, and colonialism and the nascent global economy made the catastrophic effects felt world-wide to an unprecedented degree.

It's important to understand that depressions are not in themselves contrary to the class interests of the capitalist class, in just the same sense that losing a battle or even a war was not contrary to the class interests of the feudal aristocracy. In both cases, the position and privileges of the ruling class were not threatened. The only class interest threatened by catastrophe among the ruled classes is social unrest and overthrow of the existing order, a relatively rare occurrence that happens only when the fundamental material economic circumstances have profoundly changed.

The rise of fascism put the American capitalist class in a quandry. On the one hand, they correctly realized that communism was the greatest threat to their class interests, and the chief enemies of the fascists were Stalin in the Soviet Union (vs the Germans) and Mao Zedong (vs the Japanese) in China. The fascists were fundamentally capitalists, and achieved power by appealing to capitalist class interests. On the other hand, both the Germans and Japanese threatened the short term class interests of the American capitalist class. Had the Germans managed to successfully colonize Western Europe and the Slavic states, had the Japanese successfully colonized China and South East Asia, the imperialist ambitions of the United States would have been severely limited, holding only Latin America as colonial possessions.

(Few at the time were really worried about the moral atrocities of the Germans and Japanese, and besides, Hitler didn't do anything in principle to the Jews that we didn't do the Indians, the only differences were of scale and efficiency. Roosevelt might have been concerned about the plight of the Jews, but he certainly didn't bend Heaven and Earth to save them, while he did bend Heaven and Earth to get in a war with the Japanese.)

In the first half of the 20th century, the capitalist class was still not particularly well internationalized. In the short run (in the long run, we're all dead) the Germans and Japanese — precisely because they themselves were successful capitalists — posed a greater threat to specifically American capitalist interests. Better to first defeat the Germans and Japanese and then turn our attention to the communists of the Soviet Union and China. Which is basically what happened.

The Second Imperialist War caused profound changes in the economic circumstances: direct competition from Western Europe was substantially diminished. More importantly, the colonial competition from Western Europe was completely eliminated: The United States faced only much less severe competition from the Soviet Union and China. Furthermore, the re-industrialization of Western Europe itself provided enormous scope for American economic growth. All of these factors led to a profound labor shortage; thus by internal capitalist competition the price of labor power rose well above its cost.

For about 20-30 years, New Deal consumer capitalism proceeds relatively stably. Strict regulation of finance capital and the power of the Federal Reserve Bank moderates capitalism's worst cyclical positive feedback effects. Given a labor shortage, the material economic interests of the working class (not counting, of course, blacks, women, and most of the residents of our colonial possessions) are more-or-less in harmony with the economic interests of the capitalist class.

In the early 1970s, New Deal consumer capitalism started to unravel, from both economic and political causes.

Economically, we had reached the limits of colonial expansion; American labor became less necessary for capitalizing and industrializing both our colonial holdings as well as Western Europe. Instead of being cheap sources of raw materials for internal industrial manufacturing, our colonies started to build manufacturing capabilities of their own. Slowly but surely, the systemic global shortage of manufacturing labor that characterized the 50s and 60s became a labor glut. Industrial production also achieved steady gains in true efficiency (producing more commodities with less actual labor), also reducing the labor shortage.

The dramatic expansion of the professional-managerial middle class also took away much of the working class's leadership. (I'm an "elitist" in the sense that I think there are profound differences in people's intelligence, wisdom and ambition; I'm an "egalitarian" in the sense that I think stupid, foolish and lazy people deserve human dignity and comfort.) Those members of the working class with intelligence and ambition got "picked off" into the professional-managerial middle class, either directly by obtaining a professional position or indirectly by becoming trade union leaders. As noted above, people in the middle classes predominantly identify with the interests of the ruling class, whom they must appease to keep what privileges they have.

The Civil Rights movement, the Feminist movement and the Anti-War movement had profound economic and political consequences. Economically, the Civil Rights and Feminist movements aimed to remove a class of people, black people and women, from the pool of forced cheap menial labor. No one cleans another person's toilet for peanuts unless the alternative is starvation (or lynching). Gains in true efficiency (washing machines, dishwashers, easier-to-clean dishes and kitchen surfaces) also reduced the labor necessary to maintain a household and raise children: sheer boredom was an important motivation for professional-managerial middle class women's participation in the Feminist movement.

These movements also had profound political consequences. You don't enslave, oppress and exploit a class of people for centuries (blacks) or millennia (women) without developing deep feelings that the oppressed class are profoundly and ineluctably sub-human; giving them the same rights and privileges as real people generates the same feelings of disgust as bestiality. These movements changed the polarization of American society from class lines to moral lines, according to Jonathan Haidt's categorization: the "left-wing", in whom empathy and fairness dominate their moral beliefs, and the "right-wing", where loyalty, authority and purity dominate. Indeed this polarization is actually reducing the effect of alternative components: right-wingers are beginning to see empathy and fairness not just as less important, but actually evil; and left-wingers — perhaps not quite to the same extent — see loyalty, authority and purity as evil. (Being iconoclastic, anti-authoritarian and personally deviant, I have to admit a certain sympathy for the deprecation of the right-wing "virtues".) But left or right, a working or middle class person conditioned to think politically along moral lines will not think and act in his own economic interests.

In the 1930s, we had a strong, disciplined working class movement focused on its economic interests. Today, we do not. In the 1930s working class leaders were forced to stay in and lead the working class. Today most of the potential working-class leaders have been for two generations co-opted into the middle class. In the 1930s, we had the potential for tremendous capitalist/imperialist expansion. Today, we have no such scope for expansion. (Our latest attempt at colonial expansion, the Afghanistan/Iraq wars, have failed miserably even by capitalist standards, in much the same sense that First Imperialist War was both impelled by and a miserable failure of feudal ambition.)

Also, at the detailed level, Republican Herbert Hoover (who would today be a leftist Democrat) presided over the inevitable — and inevitably ineffective — initial half-measures to alleviate the social unrest caused by the Great Depression, and thus linked those failures directly to the capitalist class. Today, however, it is Democratic president Obama who is presiding — almost equally ineffectively — over the initial half-measures to alleviate the present depression. Since we are now polarized along moral lines, Obama's failure will link these failed half-measures not to either the working or capitalist class, but to the "left-wing" moral position giving importance to empathy and fairness. Instead of seeing a backlash against the capitalist class as we did in the 1930s and 40s, we're going to see a backlash against liberal "left-wing" virtues in much the same sense as happened in Germany in the 1920s and 1930s after the failure of the socialist revolution and the relatively liberal capitalist Weimar Republic.

None of the material forces (other than impending material hardship) that caused the creation of New Deal consumer capitalism are present today. Material hardship by itself causes only some sort of radical change: under very similar circumstances in the beginning of the 20th century, material hardship caused New Deal consumer capitalism in the United States, Fascism in Germany and communist revolution in Russia. More importantly, the moral senses of loyalty, authority and purity are more deeply embedded in the human mind — they reach much farther back into our evolutionary history — than the relatively modern virtues of empathy and fairness, which require more abstract reasoning. We can thus expect that in the short and medium term, the right wing will win the political battle, driving the left-wing into a persecuted underground. It will be only after the right-wing virtues, when the limited and relatively sphexish nature of the right-wing virtues collide with complex, abstract economic realities, that the left wing will again have a chance to become resurgent.

The economic basis of climate change denialism




Sunday, December 06, 2009

Dialectical Materialism and evolution, part 2

There are three requirements for dialectical materialism*:
  1. We have to have (at least) two of something
  2. The two somethings have to be material somethings; they must be independently determinable aspects of the physical world
  3. The two somethings have to be fundamentally irreconcilable; they can't just be two ways of talking about the same thing
*I mean 'materialism' in the looser, more general sense, technically philosophical physicalism.

In evolution, the two "somethings" are heritable variation and natural selection. They are material somethings: variation is physically inherited, mostly by DNA, plus some epigenetic factors (also material, mostly methylation and acetylation*). In other words, there's nothing outside evolution, no intelligence, no "absolute ideal", no grand scheme; everything in evolution can be reduced to material causes of genes (and other heritable information) and the natural selection of the material environment. (These material causes appear to be local as well, but locality might no longer be a strict requirement for materialism.)

*Thanks, CPP!

They are fundamentally irreconcilable because all the elements of heritable variation are fundamentally uncorrelated with selection. There are mechanisms of heritable variation that are correlated with selection, as Comrade PhysioProf notes. But these mechanisms themselves are material elements, and the mechanisms themselves evolved by heritable variations that were uncorrelated with selection.

Suppose there's some epigenetic mechanism that is correlated with selection. For example, when food is scarce, an animal might "turn off" heritable genes that promote the growth of its offspring. It's a variation, it's heritable, but the variation is correlated with selection: the parent correctly "knows" that its offspring will have better selective fitness when food is scarce if they're smaller. This specific mechanism of heritable variation, then, is not in dialectical contradiction with natural selection. However, this specific method evolved by uncorrelated variation: ancestor organisms turned genes on or off at "random" (i.e. uncorrelated with selection), and only the progeny of those ancestors that turned on or off the "correct" genes survived selection pressures.

The principle of irreconcilability or non-correlation does not mean that there's no teleology at all. Human beings are teleological — we can anticipate and plan for the future — and are still subject to dialectical materialistic evolution at many different levels. Even genetic information* is "teleological"; the genetic information "knows" a lot about the future adult organism. The principle of irreconcilability means only that there's if there's any teleology, it's part of the dialectical elements in contraction; there's no teleology outside the elements. (More precisely, at higher levels of abstraction like human social evolution, if there is teleology outside the system, there is something about the elements that is not subject to the outside teleology.) And there's no teleology at all outside the material, physical universe: no God, no Hegelian Absolute Ideal, no Platonic Ideal plane, no abstract truths that cannot ultimately be reduced to truths about the properties of material objects.

*DNA, heritable patterns of gene activation, the biochemical machinery of the blastocyst, the larger environment of the uterus or egg, etc.

Wednesday, December 02, 2009

Dialectical materialism and evolution

If you understand biological evolution, you understand dialectical materialism.

Dialectical materialism appears to go all the way to the "bare metal" of reality: motion is a synthesis of quanta's dialectically opposed material properties of being "smeared in a wavefunction" and "observed as an eigenstate", but quantum mechanics is weird and obscure. Evolution is much more amenable to philosophical study.

The fundamental dialectic of evolution is the opposition of heritable variation and natural selection. Both of these dialectical elements are material: heritable variation is a physical, material, independently observable change in an organism's genotype, an eminently material substance (composed mostly of DNA). Natural selection is also a material process: physical properties of an organism's physical phenotype determine whether it will run faster or slower, have more or less acute vision and hearing, stronger or weaker teeth, etc. Furthermore, an individual organism's reproductive success is directly a material property: The organism has to physically reproduce to be reproductively successful.

Because heritable variation is uncorrelated with natural selection, these two elements are in true dialectical contradiction*. Heritable variation doesn't "care" whether it makes the organism more or less susceptible to adverse selection; selection doesn't "care" whether some heritable variation might be intrinsically good. (For example, it's intrinsically bad that human beings can't internally synthesize vitamin C — whether or not we can eat it, it would be better if we could synthesize it at need — but because our ancestors' diet was abundant in vitamin C, the loss of the ability wasn't selected against.)

*A dialectical contradiction is different from a logical contradiction. The use of the term "contradiction" is mostly historical — Marx's dialectic materialism springs from Hegel's dialectical idealism, where logical contradiction powered the synthesis, but also because while "contradiction" might be too strong the alternatives — conflict, opposition, etc. — seem too weak.
It's instructive to consider Mendelian (established at conception) vs. Lamarkian (acquired during life) variation. It happens to be the case that terrestrial organisms exhibit Mendelian variation, but we might have exhibited Lamarkian variation. If so, there would have to be something uncorrelated with natural selection about how an organism acquired traits for there to be a true dialectical contradiction between Lamarkian variation and natural selection. If this contradiction didn't exist, if an organism deterministically and predictably acquired just those traits that improved its survival, we would not see the pattern of complex, emergent behavior in the long-term development of species.

There are also important dialectical relationships in biological evolution at more abstract levels. A fundamental dialectic is between predator and prey. Again, the elements are material: the predator must physically catch and eat the prey, or the prey must physically escape the predator. And the elements are in true dialectical contradiction: the predator wants to eat the prey, the prey does not want to be eaten. Yet another is the parasite-host dialectic, which often results in symbiosis.

An important consequence of evolution is that it's neither predictable nor random. In my most important quibble with canonical communist terminology, I assert that dialectical relationships and historical factors do not determine the synthesis, they constrain it. There are specific features, for example, that would make predators ineffective: lack of speed, poor vision, poor quality weapons (such as teeth and claws); we will never see a predator with a predominance of features that poorly afford predation in its usual environment. We can predict to some extent where evolution won't go, but we cannot predict where evolution will go, even retrospectively. If we took a snapshot of any historical evolutionary epoch, we could not predict with confidence much of how the contemporaneous species would change.

Indeed the parallels between dialectical materialism and biological evolution are so strong that the following bold conjecture suggests itself: all dialectical material relationships are fundamentally evolutionary: they consist of a dialectical relationship between some form of heritable variation uncorrelated with some form natural selection.

Monday, November 30, 2009

A capitalist's response to Krugman

In his op-ed piece, Krugman calls for an emergency jobs program,
You might think, then, that doing something about the employment situation would be a top policy priority. But now that total financial collapse has been averted, all the urgency seems to have vanished from policy discussion, replaced by a strange passivity. There’s a pervasive sense in Washington that nothing more can or should be done, that we should just wait for the economic recovery to trickle down to workers.

This is wrong and unacceptable. ...


Let me be blunt: Why should I care about the "cruelty" of unemployment? I kind of feel bad in a vague, abstract way, but I can live with that. Besides, suffering builds character, or so I'm told. As far as "short-sighted" goes, didn't Keynes say, "In the long run, we're all dead."

Here's the thing: I'm a big capitalist. I own shares in a lot of companies that produce things that every working person needs to consume (food, clothes, shoes, etc.) and things that the rich want (gold-plated cell-phones). I have enough money in the bank (and thanks, Obama, for protecting that money for me!) so that my family and I can live dripping in luxury for the indefinite future.

Why should I support an emergency jobs program? What's in it for me? Right now, I can get people to work for next to nothing. Sucking millions of people out of the private labor force is going to raise my labor costs. I'm willing to pay my people the bare minimum for immediate survival, and put them on an ice floe when their productivity drops. Raising the general labor cost isn't going to help me, it's only going to help my more sentimental, bleeding-heart competitors. And if I somehow did Grinch-like develop a heart, I'd just be undercut by some competitor who could resist your blandishments. And if millions of people are starving, that just raises the price for my food.

It's been a real grind for us enormously rich capitalists the last 50 years. Do you know how hard it's been to find domestic servants? And finding servants we can control and abuse at will has been literally impossible. This whole situation is a godsend. I can tell you, the next time I abuse and berate my servants for serving me coffee that's taupe instead of beige (Oh! the humanity!), they're not going to quit on me in a huff with generous unemployment benefits. What's the use of power if you can't use it arbitrarily and contrary to the will and well-being of the victim subservient?

You seem to think we're all in this together, that we have a mutual interest in creating a just, fair and equitable society in which every person can live in comfort and dignity. Bullshit. I became a successful capitalist the same way that anyone becomes a successful capitalist, the only way to become a successful capitalist. No matter how much I had, I craved more, I craved it with all my being. If you don't crave more, sooner or later you'll flinch and fall to someone who does. And the only way to get more is to take it from others: from the weak, the slow, the stupid and, most importantly, the sentimental.

Your talk of morality and ethics is laughably quaint and naive. I give my workers the most valuable gift of all: the gift of life. No one deserves to live, and if they can't serve me and my brethren, they won't live. It's not only naive but positively immoral for them to demand more.

Tell you what, I'm a generous man: I'll buy your morality. How does a million bucks sound? I'll even throw in a house in the Hamptons and an opportunity to rub shoulders with the real ruling class at cocktail parties. Not buying? You have principles? No problem. There are tons of people will will happily sell out without a second though, people just as eloquent and persuasive as you. If anyone actually starts listening to you, I'll just use the million to marginalize or discredit you. Above all you are not stupid, and martyrdom is stupid.

[Anyone who thinks the capitalist ruling class will draw back its hand when dealing with its enemies might want to have a conversation with Salvador Allende, Mohammed Mosaddeq or Huey Long, just to name a few - Ed]

Mr. Obama also knows where his self-interest is. He got to the White House on my money, and when he leaves the White House he'll live on my money. And if he's smart, he'll use my money to push his children into the real ruling class, so they can own the next president. Obama is no chump: He knows the Democratic party is there to take the fall for the ruling class when we make a mistake, to flim-flam the voters during a time of crisis and distract them from their real interests. And he's doing a magnificent job; we'll take good care of him when he's out of office, don't you worry.

Dr. Krugman, you'll never in a million years persuade me to give up my power voluntarily or stand idly by when my government, bought and paid for, tries to take it away from me. Moral arguments are useless: all morality comes from self-interest, and I know where my self-interest is. Do you? The masses of people can have sufficiency, comfort and dignity only by picking my pocket. They'll have dignity when they take power, and they will take power over my dead body, and the bodies of my well-armed, disciplined soldiers and police, who also know where their self-interest lies.

Rational self-interest and the capitalist class

Robert Reich complains about Wall Street:

But if Wall Street doesn't have any shame, why should Congress and the Obama administration have any?

Reich is correct: Only political muscle and courage will work. But it has to be the political muscle and courage of the people, not the faction of the capitalist class that Obama represents.

In What is to be Done?, Lenin makes a fundamental point, a point ignored by most modern progressives: The government does not stand outside society, imposing some "Kantian" morality. The government is part of society, subject to all the same pressures of economic and political self-interest as the rest of society. It is just as delusional as belief in God to believe that the government can do what's "right" independently of the self-interest of its members.

Thus the progressives' dilemma: If the masses of people were organized and disciplined sufficiently to exercise political muscle and courage, there is no way they would tolerate the private ownership of capital: it is in the self-interest of the people to take away the economic rent that capital affords for the individual benefit of its private owners and appropriate it for social uses.

The appropriate of capital for social use is the essence of communism; everything else is the "how". If the people have sufficient political power to "regulate" capitalism, they have sufficient power to eliminate capitalism, and it is in their rational self-interest to do so.

"But," a person like Paul Krugman might argue, "we successfully regulated capitalism in the 1950's and 60's, to the mutual benefit of both the capitalists and the people."

Indeed we did, at least if we define "successful" and "mutual benefit" loosely enough to exclude black US citizens, to exclude women, and to exclude most of the rest of the world subject to our economic imperialism. (Keep in mind that the Civil Rights movement, the Feminist movement and the rebellion of middle-class youth directly against the Vietnam war and indirectly against the stultifying social conformity of the era marked the beginning of the end for New-Deal capitalism.) New-Deal capitalism was an improvement over Gilded-Age capitalism only because the latter set such a low bar.

But New-Deal capitalism is, as we have seen, not an evolutionary improvement. The sine qua non of an evolutionary improvement is that the it persists and becomes the new baseline. An improvement that eventually regresses to the status quo ante is not an evolutionary improvement. It might seem better, but it does not actually respond better to the only thing that matters in evolution: selection pressure. It is plainly apparent that New-Deal capitalism has been regressing to Gilded-Age capitalism since the 1970's.

Fundamentally, the New-Deal era resulted not from a fight between the working class and the capitalist class. It resulted from a fight between factions of the capitalist class; Roosevelt's faction successfully co-opted the political will of the people. The difference is subtle but important. The New-Deal era did not result in more power for the people themselves, it resulted in more power for a faction of the capitalist class, a faction that can be described only as somewhat less hostile to the interests of the people than their opponents.

Our "democracy" is structured to include only factions of the ruling class. We vest power in elected representatives for a period of years, which insulates their day-to-day decisions from political consequences. Supposedly, we do vest power to ensure representatives can "do the right thing" even when it's unpopular, but there's no such thing as the objectively right thing; the effect is to do what's in the interest of the capitalist ruling class when this interest is opposed to the people's interest.

Elected representatives have a standard of living greatly in excess of the ordinary person. This standard of living is not their own (we pay the President a paltry $200k modest (by capitalist standards) $400k/year); representatives achieve this standard of living through their office during their term, and after their term as a reward from the capitalist class in the form of speaking and publishing fees and directors of corporate boards.

The people are fundamentally alienated from their representatives. How often does the ordinary person actually interact with any of their representatives about public policy, even at the local level? All the communication between the people and their representatives is through institutional channels: the commercial media and polls. The only "voice" the ordinary person has is the vote, an extraordinarily low-bandwidth channel.

The effect of all of these factors is that the people have been trained for generations not to seize and hold political power for themselves, but rather to give their loyalty to some faction of the capitalist ruling class.

The interests of the capitalist class on the one hand and on the other the working and (today much more important than in the 19th and 20th century) the unemployed classes are fundamentally irreconcilable. There is only one finite, limited pie worth fighting for — the surplus labor of the working class — and there is no long-term meta-stable distribution of this pie. All the economic, social, and political feedback mechanisms lead eventually to either pure laissez-faire libertarian capitalism or communism.

A meta-stable distribution must have a robust mechanism for negative feedback: a successful attempt to increase an individual's share of workers' surplus labor would automatically create pressure to decrease that share. In much the same sense, tipping a roly-poly toy changes the distribution of forces in such a way as to push the toy upright again.

However, in capitalism, when an individual capitalist successfully increases his share of surplus labor, he has more power to affect the economic, social, and political systems to continue to increase his share. Microsoft and Bill Gates continues to be successful precisely because they have been successful in the past, not because they are inherently better at creating software (<cough> Windows Vista). We have only chance and providence to thank that Mr. Gates is predisposed to be more-or-less politically liberal rather than a gung-ho Randian.

Indeed the positive feedback mechanisms are whole point of capitalism, what caused its survival under the economic selection pressures in the 18th and 19th centuries during the struggle against feudalism. Capitalism causes exponential economic growth, which is possible only when positive feedback dominates without countervailing negative feedback. A substantial part of the political and social changes that capitalism effected were removing the negative economic feedback systems that evolved under feudalism. In Marx and Engels' words,




But no positive feedback system can go on forever. At some point nature will impose its draconian limits. We are human beings, we can foresee and respond to those limits, it is our choice whether we intelligently respect those limitations, or let nature impose them catastrophically.

All the mechanisms of capitalism concentrate wealth into the hands of owners of capital, regardless of the social and moral predispositions of the individual capitalists. A capitalist who forswears unlimited accumulation will eventually be defeated or absorbed by another who pursues unlimited accumulation. All the mechanisms of capitalism concentrate labor into the production of commodities, objects or services that can be exchanged for profit. But eventually we must turn our labor to the general good, to create conditions that cannot be commoditized: clean air, good health, leisure and actual happiness and satisfaction (unlike the transient pseudo-happiness of pure material accumulation, which trades a momentary rush for a greater emotional crash).

It is an open question whether capitalism represents an advance in any sense over feudalism; it may be that capitalism's only claim to success — vastly increased material productivity — affords only the opportunity for a proportionally larger population to live at the edge of starvation. But there's no going back; even if capitalism is an advance over feudalism, and even if capitalism does regress, it will regress into something very different from 17th century feudalism. But our task today is not to look backwards with regret.

Our task today is to take what we actually have — a mighty engine of material productivity — and choose to employ it in the benefit of the people. And the only way to do so is for the people themselves to decisively seize and hold economic, social political power, and forever destroy the power of the capitalist class. If we do not take up this task, we have nothing to look forward to but an ever-decreasing standard of living and eventually literal enslavement.