The Future of Capitalism?

But there's something odd about Collier's book since he doesn't talk about China, surveillance, debt or climate change. A lot of it seems to be the kind of centrist Labour rubbish of the 90s that helped neoliberalism survive. That or a mixture of nostalgia for reciprocity and 'belonging'

We need: an 'ethical state', 'ethical firms', etc. Well, okay. But a telling line: a state can only be as ethical as the society it represents. Collier is, essentially, an advocate of the status quo. As with others his main emphasis seems to be on how to save capitalism (from what? Itself?). 

Blackburn takes him apart in the NLR:

"The values that family life depends upon—obligation, trustworthiness, commitment—are precisely those that are held to be obsolete in the new capitalism, where work relations are characterized by impermanence and unpredictability; they are systematically undermined by the need for two jobs, travel, relocation."

K-Punk

Mark Fisher's book really is very good. Must get his K-Punk.

One of the main ideas revolves on just how over-bearing and dominant capitalism is in all of its manifestations. An ideological system that pretends it is free of ideology, a culture that is anti-culture since there is only the blank slate and empty desire.."pure desire" or preferences, to use the language of the economists, cannot be opposed because it is "natural" or purely subjective-and therefore nothing to argue over. You go your way, and I go mine.

Desires are not subject to re-vision, to political deliberation or ethical reflection. Anything but an individual ordering his or her preferences is paternalistic, one step away from totalitarianism. 'Freedom to' is really 'freedom from'.

What isn't capital now?

Cultural, social, physical, natural, cognitive, human, affective, infrastructural capital. Just don't talk about capitalism. Everything must be put to work, made productive. Nothing can be allowed to rest, remain idle. Time is money. Everything has an opportunity cost or an implicit/shadow price.

Rituals and practices, formerly embedded in historical and social contexts, stood because of the way in which they helped us find meaning in our lives. Now, ripped out of those contexts they are aesthetic objects which we 'consume' as spectators.

The final victory of nominalism. All that remains are signs that don't point anywhere, the sound and the fury.

The world ended in 1970. Since then we've all been ghosts, rehashing lines and slogans from a previous age, sampling music whose styles have gone out of fashion. Nothing new can happen again. As G. Steiner said, there are no new beginnings.        

The Chicago Boys

It can be said that Mi [Man i] loves Fj [Female J] if her welfare enters his utility function, and perhaps also if Mi values emotional and physical contact with Fj. Clearly, Mi can benefit from a match with Fj, because he could then have a more favorable effect on her welfare - and thereby on his own utility - and because the commodities measuring 'contact' with Fj can be produced more cheaply when they are matched than when Mi has to seek an 'illicit' relationship with Fj."

--G. Becker.

[The "commodity" measuring contact being children].

Here's another cracker from the man:

“In the early stages of my work on crime, I was puzzled by why theft is socially harmful since it appears merely to redistribute resources, usually from wealthier to poorer individuals. I resolved the puzzle (Becker [1968, fn. 3] by recognizing that criminals spend on weapons and on the value of the time in planning and carrying out their crimes, and that such spending is socially unproductive – it is what is now called “rent-seeking..” 

 "From the perspective of capital, what most of us see as tremendous 

ethical and even existential problems literally don’t count." 

Smith

For Smith the possibility of morality depends on reflexivity, inter-subjectivity

and imagination (Brown, 2016). Sympathy, for example, depends on not just

me imagining what you’re feeling in your situation or what I might feel in your

situation; it can also involve a change in person and character so that I imagine

myself as you in your situation. In the latter case I must, to some extent, identify

with the other person to enter his perspective; on the other hand, I can only

reflectively and normatively sympathize with the other and endorse or disapprove

of his feelings/actions if I can maintain the ‘distance’ implied by having my own

perspective. Sympathy in this sense is a bridge which simultaneously allows for

imaginative participation in the life of another while at the same time maintaining

the distance required for judgement. It is hard to see how a preference function

can capture all of these nuances.

In some sense the matter is more complicated since there is no ‘I’ who exists

independently of both the other’s perspective and the sympathetic act. The self

does not exist isolated and fully formed at a particular point in time; instead, any

understanding of who I am depends on an ongoing effort over time to ‘see myself

as you’.

---K.M.

At a certain age

At a certain age you look back on your life, your work, and ask, what has it all been about? Perhaps you reassess the fundamental assumptions in your life (the things you held to be true without questioning them), the way you look at life, or what you think is important. I don't know. Maybe a lot of people don't- or can't: the sheer weight of the past incapacitates us. Creatures of habit, it takes a tremendous effort to stay open to the world as we grow older. 

It's interesting to note the economists who, after working for their whole professional lives as bread and butter economists, suddenly and almost miraculously pontificate about how economics is brilliant and useful and rigorous but... And that 'but' usually means; it needs to become a more humanistic discipline, incorporate ethics or the insights of other disciplines. It needs to be more historically informed, less abstract, more mathematical and complex, less certain, more contextualized (add what you will). The point is; these 'moves' are rarely ever made during their professional careers. 

Tirole, a Nobel-prize winning economist, writes in the FT (Jan. 10th, 2019) about how economics needs to become more "multi-disciplinary". One hears that kind of language quite a lot in academia but I'm not sure what it actually means. Here are some examples (from Tirole's article): 

"Researchers there publish papers on issues such as the ethics of self-driving cars, age-related diseases, biases in judges’ decision-making and co-operation in indigenous communities in the Amazon. "

Well, yes. I suppose that gives us some indication of how seriously Toulouse takes "multi-disciplinarity" ! 

How can economics enter into a dialogue with other subjects when it is some committed to methodological individualism? It would have to jettison its whole outlook. That is simply not possible as long as it sits firmly embedded within liberalism and capitalism. A radical critique of economics would require a fundamental metaphysical reconstruction of the individual; it would need to understand our relation to other people and nature and objects of beauty in a different way; it would have to understand time and desire in a different way; and it would have to reconsider what is meant by 'science'.

I don't think Tirole or others like him are really being that reflective. At a certain age there's a tendency to try and justify-perhaps against your better instincts- all that you've sowed. Economists are in a bind and it's one they've sleepwalked into. In fact, they've helped perpetuate delusions, distortions to the idea of what it is to truly be a human being. And those false ideas have had, and continue to have, profound implications for the way in which we live. At a certain age, I suggest, one has to be honest with oneself and take responsibility.

Galbraith anticipated the evolution of today’s capitalism. Rather than conceive of it as operating on the same “ market-force” principles as a medieval fair or Middle Eastern souk, where buyers and sellers interact to find prices that reflect preferences and scarcities, he thought of markets as cockpits for the interplay of concentrations of private corporate power. Prices would, of course, be manipulated; consumers and governments would be hoodwinked; employees could expect a raw deal.

What keeps executives, owners and politicians honest are embedded and strong institutions representing other forces – unions, strong consumer groups, independent regulators, checks and balances within companies and effective political parties as alternative governments-in-waiting.

Galbraith would not have been surprised at the degeneration of corporate culture worldwide: too much indulgence of greed as a market “incentive” and too much indulgence of market power dressed up as “wealth generation”. Investment banking (witness the latest fraud allegations against Goldman Sachs) is a particular cesspit. The institutions of countervailing power have been dismantled to allow “market forces” better to operate

It's amazing how far you can get with a bit of cut & paste. I'm not sure if there's an original sentence in the whole damned thing, but I did manage an okay job at stitching the whole thing together. Like a clerk, or Pessoa looking out onto the street from the high windows in his top story office, I sat and wrote, not knowing much about anything real.

How many millions of words are written each day? You begin to wonder if the difference between academic and non-academic really matters in the end. Everyone pontificating on the dire state of the world, on capitalism, or something. What have you added here? A thing without beauty.

You read statements such as, "Even if reason removed God from the picture, human spirituality remained intact" and you ask yourself, "says who?" You can say what you want, and everything has been said. Here's another one: "Human being isn't static." Well, maybe it is. I don't know. It seems pretty static for a lot of us. 

~~~

Today in the frail morning light I saw a single crow serenely sipping from the only puddle in the entire field. As I walked on, another older bird, greying with age, held its wings closely to itself, ready to die, you suspect. The sun has entered a phase of decline, following an arc that it knows well. All things under the sun are moments in its life. Nothing new under the sun. Right now the brilliance of the human mind doesn't move me that much.

       

    

The anti-economy

A

It is a strange thing to contemplate, but does an excess of freedom (or, more accurately, a particular kind of freedom) lead to a form of thought-slavery? And is that formal freedom (in exchange) actually based on co-ercion, exploitation? The underlying power structure, the social relations in production, remain. Quite simply: I have time, an education, capital; you have your increasingly redundant physical labour, are time-bound, debt-ridden. Stephen Marglin's question from his classic paper gets to the heart of things: What Do Bosses Do?

We do not exchange with one another on an equal basis and in production there are people with power to make decisions while the rest of us simply obey (as wage slaves and as slaves to the notion that ever-greater consumption will bring us fulfillment). More than that, the lifestyles of the rich are based on a whole army of unseen workers-either in the host country or, increasingly, from the "third world"- who live in appalling conditions. The whole system has always depended on the "availability" of cheap inputs from non-market sectors: natural resources, the affective (and unpaid) work of women, the labour of slaves, the resources from colonized countries. No, let's stick to the idea of free trade! Let's keep the old Edgeworth model of exchange: I've got some wheat, you've got some potatoes, y'know... 

If freedom is autonomy then what control do we actually have over the kind of life we want to live? The more radical critiques of capitalism (back in the early 19th c) looked at issues of the meaning and purpose of work and its products (and not just the distribution of a 'given' pie). The uncomfortable fact may be that, actually, democracy and capitalism are not ultimately compatible. Economic democracy, for instance, is diametrically opposed to the vast inequalities generated by capitalism (and economic theory is not actually concerned about equality per se).

What role does the 'thin' theory of the individual play in all this? This is the atomistic-universal-disengaged individual who has no nature to speak of, no essence..a man with no qualities whose formal freedom resides in the fact that he eludes all social and metaphysical determinations. A veritable Robinson Crusoe living just enough for the city. 

I am determined and willing to be a commodity that fulfills everyone's fantasies.

--Sasha Grey, porn star.

d. bank

Scandals have proliferated at Deutsche Bank. Since 2008, it has paid more than nine billion dollars in fines and settlements for such improprieties as conspiring to manipulate the price of gold and silver, defrauding mortgage companies, and violating U.S. sanctions by trading in Iran, Syria, Libya, Myanmar, and Sudan. Last year, Deutsche Bank was ordered to pay regulators in the U.S. and the U.K. two and a half billion dollars, and to dismiss seven employees, for its role in manipulating the London Interbank Offered Rate, or libor, which is the interest rate banks charge one another.

The U.S. Justice Department wants to fine Deutsche Bank fourteen billion dollars for its role in underwriting and issuing risky residential-mortgage-backed securities (or R.M.B.S.) from 2005 to 2007.

---Ed Caesar, The New Yorker.

Apart from the world of finance, think about: the arms trade, oil, the big pharmaceutical companies, illicit trades (drugs, women), the lobbying of governments, the manipulation of data/evidence (tobacco), the sugar industry, the power of the media to influence the markets, all the money ploughed into advertising to convince us that we really do need all that crap after all, the concentration of economic power in the multinationals,..now, what was that story about how markets work again...I've got some wheat, you've got some wine, la de da, la de da. 

Take out power, culture, time, money and uncertainty and you're left with Edgeworth. Brilliant! A natural propensity to barter, said the man, without a jot of supporting evidence. 

First there was Krugman, then there was Buiter but this, my dear, was something special. Romer, one of the true "insiders," turning on his own in a devastating critique of macroeconomics. For thirty years the subject has been going backwards. It's not even been concerned with, you know, that bizarre little fellow, "the Truth" or with science; instead, it's been about creating artificial models. Realistic assumptions? Pfft! Apres moi, le deluge. This, folks, is post-real macro.

Of course, the chump has to wait until he's out of academia before he can muster the courage to take a stab at Lucas and the whole rotten edifice. But still...  

~

Update:

"The one reaction that puzzles me goes something like this: “Romer’s critique of RBC models is dated; we’ve known all along that those models make no sense.”

If we know that the RBC model makes no sense, why was it left as the core of the DSGE model? Those phlogiston shocks are still there. Now they are mixed together with a bunch of other made-up shocks."

--Romer.

Blanchard has also got into the act, writing about the limitations of the models. The response here has been to shrug the shoulders or, at best, rely on Friedman's cop out: the "as if" argument. We know the assumptions aren't "true" (or, more accurately, we don't care if they're true or not) since the model(s) give us predictions. That's what science is about: how things work, not why they work.

Are friends electric?

I prefer to use the term theory..[as] something that can be put ina computer and run..the construction of a mechanical artificial world populated by interacting robots that economics typically studies."

--Lucas.

The common view that economics focuses too much on a narrow, egotistic individual with no consideration for other people or nature misses the point. There is no individual. Walras had said as much over 100 years ago!

A Theory of Prostitution

I quite like Skidelsky's writing-the bits I've read at least. Some chapters on Keynes and his book, How Much is Enough? Thoughtful and well-written. But stumbled across his latest article and was taken aback by just how poor it was. Two statements give a flavour of the casual thinking: 

Ultimately, all arguments against prostitution based on notions of inequality and coercion are superficial. This is incredibly pig-headed, especially when so much prostitution depends on co-ercion and inequalities.

The view of those who seek to ban the purchase of sex is as constricted as that of the economists. As St. Augustine put it, "If you do away with harlots, the world will be convulsed with lust."

Really?

In the article there is reference to a certain Lena Edlund (associate professor at Columbia). In her article (co-written with Evelyn Korn) she states:

"The key to the puzzle is that a woman cannot be both a prostitute and a wife."

"Combine this with the fact that marriage can be an important source of income for women, and it follows that prostitution must pay better than other jobs to compensate for the opportunity cost of foregone marriage market earnings."   

"But a prostitute cannot simply be a woman who sells her body since that is done every day by women who become wives in order to gain a home and a livelihood."

Then this nugget: "Humans not only mate but marry." So insightful!

"The Economist reported that Arabic women could make $2,000 a night.."

Arabic?

~

Where to start? Do economists even realize how pathetic they sound to ordinary human beings? 

It is a mistake, you think, to believe that poets or academics or intellectuals have any great understanding of life. On the part of those who cannot be bothered to live a life of their own there is a kind of reverence for all kinds of experts. But, in reality, it is forgotten that theoria is not a theory of everything, but of higher 'objects'. The theoretic impulse, when separated from ordinary life and the common sense of other people, can become a monstrous force that serves the powerful. There are various kinds of prostitution.  

A science that does not take the scale of human understanding and perception seriously, a mode of thinking that consigns religion and the soul to the category of fiction, and a form of knowledge that pretends to be timeless is not, when all has been said and done, worth that much. 

In the grand scheme of things the history of human beings clearly indicates that we managed to live meaningful lives without so much theory and abstraction. It is worth reminding ourselves that a formal kind of intelligence is quite consistent with all sorts of aberrations of the soul.  

Gold, Man.

Goldman Sachs gets a 5 billion dollar 'fine' (or is it a settlement?). In reality the figure will probably end up being less than the headline figure. But it's worth thinking about all the "fines" that the big players have had to cough up (or, more realistically, that they've been happy to settle for).

Now, of course, you can keep on talking about how great markets are (I've got some wheat, you've got some cheese; let's trade! What's there not to like?! We're both better off, aren't we?).

But for heaven's sake let's stick to such examples and not talk or think about the vast power of corporations, the military-industrial complex, the financial industry and the media. Phishing for fools, as Akerlof would say. 


When you get away from the textbooks you see that actual real world markets are full of imperfections (of information), incomplete contracts, transaction costs, uncertainty, social norms, asymmetric power relations, and various motivations beyond simple self-interest.

David Harvey might be closer to the mark when he writes,

[t]here is a vast array of what we would now consider extra-legal activities, such as robbery, thievery, swindling, corruption, usury, predation, violence and co-ercion, along with a range of suspicious and shady practices in the market (monoplisation, manipulation, market cornering, price fixing, Ponzi schemes etc.)

Here's a simple question I ask my students:

If you're in a one-off game (or a situation in which you're only transacting with someone on a one-time basis) then what should you optimally do? Should you, for instance, cheat the other person (e.g. default)? If students have been well trained they'll think of the incentive compatibility constraint. In simple terms: let me look at the benefit of cheating and let me look at the costs of doing so. If I can get away with cheating (low probability of detection, small fines) and if the benefits are large then why not! There are no future consequences, remember (even if this was a finitely repeated game you might get the same result through "backward induction").

So, you cheat. You're not constrained by morality but simply following your self-interest. And that's supposed to be a good thing, isn't it? Your actions are imposing a cost on the other person (who could be someone in the future,a s in the environmental problem) but why should you care about that? Especially if it's legal (Or, to take a more general case, if the following of your self-interest hurts other people but you do not intend them harm).

It gets worse! Not only is the maximization of my self-interested preferences what I 'ought to' do; it is the rational thing to do (since rationality is usually conflated with self-interest). 

If I can corner the market, exploit informational asymmetries, swindle you, gain from your trust in me, exploit workers to cream off all of the surplus value they create for myself, then why not? Well, other people have rights, don't they? But who allocates those rights? The market? Once you start to ask that question you're in the territory of G.A. Cohen. Does the market itself determine the distribution of property rights?

Where are the counteracting forces? Not just against industry-wide concentration of power but within the firm as well? If, on efficiency grounds, it doesn't matter if capital hires labour or labour hires capital why do we typically see bosses/managers with tremendous amounts of power and labour with very little? (You won't see questions of power discussed in Econ 101!). 

Are the only balancing forces the state and unions? Regulation, labour standards, anti-monopoly legislation, "fines"? Or are the unions, or what's left of them, just trying to get a better share of the pie without questioning-as an older left tradition might have and, actually, did-the processes involved in the production of the 'pie'. And to what end? One cannot divorce production from consumption.

An interesting quote from Marglin's fascinating paper. Old, but not dated.

'First of all they [trade unions] would have to break their pattern of not thinking about work, the nature of work, their relationship to work, and what they can do about work..But do they ever say: Hey, the whole concept of production of an automobile on a line stinks; the whole thing is wrong; what we ought to be doing is figuring out new ways of looking at the problem of work? No, these are questions from which every union withdraws.'   

The Seer

Wendell Berry is, like Merton, one of those writers, 'thinkers', who writes and speaks with a profound simplicity, getting to the heart of things because in the final analysis there is no analysis (which means to 'break down') and only sound thought, an approach that requires a clear heart and not a sharp mind. 

'Oversimplified moral certainties-always requiring hostility, always potentially violent-isolate us from mercy..'

That is not a case against moral certainties per se but most definitely one against the hubris that results from a lack of humility. 

It hasn't escaped your attention that the world is full of missionaries: everyone thinks they've got the answer and that the world's problems would be solved once and for all if you simply toe their line. Other people's truth will always set you free.

Wendell Berry is spot on in connecting freedom to attachments to the local (a paradox to modern ears since how can a limited perspective afford more autonomy? Yet, it is precisely this stance that another brilliant thinker took over thirty years ago: Ivan Illich).

In opposition to that is the 'private government' of the corporations. This is one thing you simply won't study in economics (possibly in IO but not mainstream, core courses). How is it that the firm is a centralized, hierarchical organization when capitalism is supposed to promote autonomy? In short, why isn't there economic democracy and why are so many people wage slaves, living under the spectre of uselessness? 

Precarious and flexible labour: temporary contracts, job insecurity, inequalities in (bargaining) power, exploitation, a lack of creativity and autonomy, and the meaningless of work. All of that would have been part and parcel of a critique by the old left. 

Based on an 18th century of exchange it is assumed that there is formal equality between contracting parties. The Brewer, the Baker of Adam Smith all a million miles away from the satanic mills he couldn't have foreseen and the huge corporations with unbelievable economic and political power. In a word: big business. And that's, precisely, what is not taught at the university. Instead, we have the black box of 'the firm' or stylized examples of competitive wheat producers. Note: in the Edgeworth analysis of exchange there is no money, no debt relations, no uncertainty and no transaction costs. Again, an outdated, 19th century idea that still finds its way into mainstream economics textbooks.

~

Alpha Territory

The real wealth and power of global capital is expressed in the compliance of politicians who have come to act as ushers and butlers to the wealthy...

"London now has a reputation for being the money-laundering capital of the world."

..

[Karen] Clark added that London had become the prime location for family offices, not only because of the high concentration of financial and luxury lifestyles available to meet the needs of the global super-rich but also because it offered a safe haven for those from Russia, China and the Middle East, and a more favourable tax and regulatory environment than its chief rival, New York.

--David Batty, The Observer.

~~

England: the crumbling of its empire, to the crumbling of its industrial cities, to the current crumbling of its welfare state.

It's hard to believe that England is, allegedly, the fifth richest country in the world. Perhaps it's a case of being privately rich, publicly poor. I know there are quite a few wannabe fascists who want to blame all of this on immigrants but that's because they don't want to address the more important perspective of class differences and the economic and political system which are perpetuating them. 

It's both interesting and shocking to see the growth in the number of butlers and family offices (managers of a family's private wealth). Of course, you immediately thought of Walser (but also of your friend who is, in fact, one of those managers (for a super-rich Yemeni family)). Such a nice kid as well. 

The working class 'entirely stripped of any sense of community, neighbourhood, or working solidarity by decades of right-wing social engineering.' It is precisely these people, you suspect, that have turned to the right-wing, anti-immigration, anti-Europe UKIP.

There is a loutish strain to British life (Alan Bennett, more or less, from Writing Home). Of course, some perspective would be useful: maybe England has always, since Gin Lane, been thuggish. D.H.L. may well be right: England has never had public spaces/places. This may account, in part, for the lack of civility. No, it's there on the surface, mind you (one must always keep up appearances), but you only have to scratch the surface to see a rather petty and nasty mentality rear its ugly head.

What Thatcher managed to do so successfully was give full rein to these more raw, crass and brutish tendencies, to somehow make knavish behaviour morally acceptable (greed in the city and in the suburbs was a sign, in some warped Calvinist way, that you were a free and independent person. That is, or so the myth would have it, what this country was all about: Liberty!).

So, in the Anglo-Saxon world neo-liberalsim marshalled in the transition from solidarity and equality as political ideals to the freedom, autonomy and unbounded choice of the market. But this freedom could never be an expression of a way of life since that would choke the whole project. Freedom, from then on, has became a vacuous concept, to be filled in in any way one desires or can care to think of. The only freedom worth talking about (or, more realistically, that one was permitted to talk about) was the ability to be 'free from'. And in this there was only really a childish and infantile striking out against any notion of limitation. Not as part of a modernist project to change reality since reality was now passe, a concept that had served its time. Screw reality, this was the era of 24/7 shopping/t.v., unlimited access, instant porn, trance and rave, chilling out in Ibiza, war as a spectacle.."the situation is fluid," a phrase that captured the moment, except there was no "capturing".

'To be poor now means to be endlessly assessed, monitored, and surveyed, and invariably found wanting.' But this is nothing new: when haven't the poor been counted? Isn't the birth of modern political economy contemporaneous with the birth of statistics (Foucault)? Isn't poverty in some sense created by the drawing of a poverty line and making people (feel) dependent on commodities as a way of satisfying their desires? Also, the growth of the audit culture from 1979 onward (Onora O'Neill).

How could such total, lock-step defiance of reality be maintained in a country with a formally free press and highly educated population?

Graeber is really getting to the heart of it here. That is one of the most troubling questions one could be asked. If you still believe in democracy when the economy, educational, media and cultural industries as well as the war machine are all geared to point you in a different direction then you will obviously be perturbed by the question (assuming you can still think straight). 

A subservient working-class population who, drawing on centuries of tradition, know exactly how to be butlers.

In the end, all the Blairites managed to produce was a world-class marketing sector.

Mainstream economics doesn't deal with the central problems of our times. It is still trying to solve a 19th century problem: how to allocate scarce resources in such a way as to optimize productivity.

The real problems, one feels, are far removed from this technique (for that is what it is, ultimately). Why, you might want to ask, has mainstream economics said so little about inequality or the climate? Or, if you look at a standard development economics textbook you will see very little discussion of the role of the state. Instead, you have the familiar line: the pattern of underdevelopment can be explained by some sort of market failure.