Omnibus citation

The melange in this note is nothing short of vertigo-inducing:

Jurgen Habermas, The Structural Formation of the Public Sphere . . . ; among many other influential works, see Michel Foucault, Power/Knowledge . . . ; Clifford Geertz, "Thick Description . . . " in The Interpretation of Culture . . .

Marxist intellectual projects

1. Production of knowledge of direct relevance for political strategy
2. Illumination of issues in political economy more generally
3. Defense of the political-economic perspective in the academy
4. Vindication of even the idea of "materialism"

Yet, whatever one's specialized work, one has an obligation to be capable of analysis of the political and economic conjuncture and able to think critically about strategy.

An analysis of the political conjuncture

(Paraphrased from a talk by Vivek Chibber)

We are in the midst of what is probably the greatest economic crisis of capitalism since the 1930s, and yet the political project of neoliberalism remains ascendant. If anything, the fiscal dimensions of the crisis are being mobilized to push forward with the restructuring of state institutions. There have been pockets of mobilization and resistance, but insofar as they become organized political forces at all, they have been absorbed by the legacy institutions of 20th century social democracy--i.e. the parties and unions. Yet these institutions of the "center left" no less than the their counterparts on the right have long since become committed champions of neoliberalism and, in the current situation, austerity.

The move by the social democratic parties to commit themselves as above all good managers of the capitalist economy has only confirmed a sort of political and above all electoral "confusion"--as large segments of the population become disengaged from the political process or even express outright hostility by voting for far-right parties. Yet this abdication on the part of social democracy on its role as representative of popular interests has not yielded any increased relevance of the self-described radical left. The radical, revolutionary left has clung to its rejection of the "incremental" road to social transformation that is still associated with (although in practice abandoned by) social democracy. However, the "insurrectionary road" that they proclaim as an alternative has no possible of political traction, let alone success.

The irony is that both the mainstream social democratic institutions and the revolutionary factions arrayed on their left flank are children of the Second International. This shared legacy, in fact, plays a large role in the shared ineffectiveness. The organizational inheritance of the Second International is the disciplined, vertically consolidated party and union. However, once an organization is integrated with the bourgeois state, top-down control necessarily produces demobilization and both encourages and enables the marginalization of militants by the leadership.

While it is understandable that marginalized militants would respond by rejecting integration with the the institutions of the capitalist state, in favor of the hope of insurrection and revolution, barring an act of god no advanced capitalist state is going to fall to insurrection. The welfare state, whatever its attenuation in recent decades, has changes the political landscape fundamentally. As a result, even if any future left mobilization would need to start-out with "extra-parliamentary" and even illegal tactics, sooner rather than later it would need to orient itself to the state. The state is simply too closely bound up with the the well-being of every individual in society to be ignored.

Utterly inadequate citation

"On the concept of hegemony, see Antonio Gramsci, The Prison Notebooks: Selections . . . pp. 12-13."

Because Gramsci's use of 'hegemony' is perfectly transparent and uncontroversial.

Deep, deep confusion

Mark Thoma, commenting on an observation by Acemoglu and Robinson that putting up an institutional break against one kind of rent-extraction often only means elites will find some other lever to pull:

Tax cuts seem to be the major extractive tool presently. Despite pledges from Obama and others to stand up to this and undo some of the extraction, it continues. When it comes to raising taxes on the wealthy or cutting benefits for the not so well off to balance the budget, its pretty clear whose interests are likely to prevail.

Not entirely false, but tax cuts aren't an "extractive tool." Tax policy just happens to be the horizon of Thoma's political consciousness. Less-progressive taxation is a problem only because the economy itself is in a certain sense "extractive." Progressive taxation is counterweight to that.

Well put

At the end of a URL: LDdKJZ3Wiscrewy1NQko3g

TED Talks

Random output of the internet: "And it's what bothers me about the prospect/fact of TED attendees currently representing the lefternmost flank of the discourse at the moment. The prospect of a discourse in which vicious billionaire libertarian crumbums who also hate gays are one pole and fatuous techno-futurist libertarians who don't hate gay people are the other is really not a very appetizing prospect."

Greed, or something more?

Krugman has another installment in his never-ending series in defense of the post-war social contract. On this occasion, the issue is whether there was a jolt of economic dynamism beginning in the 1980s, resulting from a stagnant corporate being shook up by the shareholder value revolution and related rise of activist investors, private equity, leveraged buyouts, and so on. This is something that's out there. See, for instance the usually astute Noah Smith taking for granted that there's clear distinction between dynamic u.s. corporations and hide-bound Japanese firms, which is directly related to the impenetrable defenses of corporate ownership in Japan.

Anyways, unsurprisingly, Krugman says this is nonsense and that, no, the only thing financialization achieved was increasing the wealth and income at the top, which he notes is an adequate explanation of why elite discourse all but assumes it was a good thing. In the process, he gives an interesting chart: (jump)

I feel an irrational relief when transparently terrible movies in fact do terribly at the box office

http://artsbeat.blogs.nytimes.com/2012/05/20/battleship-pulls-up-lame-at-box-office/?hp

Honesty is a virtue

Federal Reserve Bank of Dallas President Richard Fisher said the Fed’s recent moves are giving lawmakers an excuse to avoid making hard choices on fiscal policy, the Associated Press reported Tuesday.

“The more we offer accommodative monetary policy, the less incentive they have to pull their socks up and do what’s right for the American people,” Fisher told the news service in an interview.

The U.S. economy is “almost on a knife’s edge” and could end up tripping into “negative territory,” he added, saying that there aren’t enough jobs being created.

However, Fisher said, there is “enormous potential” for job creation despite the recent stagnation. Businesses have “driven cost reduction to the max, and the biggest cost factor’s labor,” he told the AP. “So a lot of them are going to be unable to expand when final sales finally start to pick up without hiring people. And I think that ramp-up could occur rather rapidly.”

Fisher, a self-professed “inflation hawk,” also said he isn’t worried about the current level of inflation. “I’d like to see it a bit lower, but I don’t want to see deflation,” he told the news service.

Like a shark that smells blood in the water. Translation of 1st 2 paragraphs: "All we need to do is push up interest rates a little and social security is ours." Thanks for making that explicit.

The 4th paragraph is funny for a different reason. It's nice to hear that finally the erosion of labor has maxed out, and we're due for the much-promised broad-based economic growth any time now. Question: with employment reduction driven to the max (and especially if he gets his way and tightens monetary policy), where the hell is the expansion in final sales supposed to come from?

Gloating

The authors of this new estimate of GDP growth in Korea during the colonial period are clearly South Korean

Per capita output growth in colonial Korea, 2.3% p.a. from 1911 to 1940, was considerably slower than that occurring in South Korea, 7.9% p.a. from 1960 to 1990. Nevertheless, colonial Korea surpassed the rest of the world in growth performance as did South Korea: Angus Maddison's estimated that the world average per capita output grew 0.93% per year during 1913–1940 and 2.3% per year 1950–1990. In contrast, not only did growth ground to a halt in North Korea, but also the country began to suffer worsening living standards from around 1990, repeating the performance as delivered by late dynastic Korea. The superior performance of northern relatively to southern Korea under Japanese rule indicates that North Korea has only itself to blame for its economic failure.

One policy choice to reverse the fortunes of the two Koreas appeared to concern whether colonial system was allowed to continue to function. Colonial institutions were designed to stimulate investment, rather than to facilitate extraction, the most important example being well-defined land property as introduced by the Cadastral Survey. Replacing such useful institutions with a system of command in North Korea had disastrous consequences, while in the absence of a regime shift South Korea was able to continue to achieve high growth, as Taiwan and Japan were.

This is a starkly revisionist account. Apparently the accepted historical interpretation (at least until relatively recently) was that Korea was experience indigenous economic growth until the Japanese came and ruined it. As this passage implies, recent quantitative reassessments have shown that the exact opposite is true: Korea was in a rather nasty malthusian B phase in the eighteenth and nineteenth century, but from the late 19th c onward (after the Japanese forced the country open to commerce and then colonized it), it experienced rather impressive economic growth both in aggregate and per capita. The magnitude of these results is actually pretty surprising, since Japan only began modern grown a few decades before and didn't achieve a growth rate much higher than that estimated here. After all, colonialism surely cause had some negative economic impact, because if not, why bother with imperial domination at all?

Of course, this only poses as a puzzle what the 2nd paragraph above answers all to blithely: what happened to get this rather sudden transition? Clear title to land probably helps, but it hardly seems to be sufficient, either.

Fred Block settles for fairy tales

Unfortunate.

Krugman effectively demolishes this right-wing version of structuralism. But people naturally gravitate to explanations of great events that invoke some kind of big and powerful causal mechanism. By treating the initial crisis as an anomaly caused by irresponsible financial behavior, Krugman fails to deliver such an explanation and leaves the Right’s story untouched. Without an alternative narrative about what went wrong, their “too-much-borrowing” fairytale will remain hegemonic.

But we do have an alternative big story—and we need Krugman’s megaphone to help get it out. One piece is the argument that Occupy Wall Street has made: when the 1 percent grabs most of the gains from economic growth, as they have over recent years, bad things happen. The 99 percent have to either limit their consumption or increase their borrowing and go further into debt. Either way, effective demand in the economy will ultimately be restricted. At the same time, multi-millionaires think nothing of putting big sums into extremely risky investments that promise high returns because they already have more dollars than they or their children will ever need. But unlike polo or auto racing, this dangerous hobby of the rich can actually blow up the global economy. Thanks to JPMorgan Chase’s huge losses last week, we know that the biggest banks still can’t resist playing this treacherous game, especially when they’re trying to keep up with the richest kids (the hedge funds).

This runaway speculation is a sign of how our financial system has failed to direct capital in productive directions. As environmentalists have been arguing for forty years, an economic growth path based on cheap oil and coal and urban sprawl is no longer sustainable. But entrenched interests and a dysfunctional financial system have blocked the huge public and private investments in resource-conserving technologies—renewable energy, mass-transit systems, and less wasteful patterns of land use—that would generate durable and sustainable growth.

Comments:

1. The resilience of right-wing descriptions and prescriptions for the crisis is just that people "naturally" like a "big and powerful" story? So we need an "alternative big story"--or fairy tale, as it were?
2. To wit: underconsumptionism plus idle wealth => financial speculation => instability. In other words, financialization is like "polo and auto racing." Every step of that story is dubious.
3. And how do you get to that from environmentalism? What basis is there for assuming that resource conversation "generate durable and sustainable growth"? It would certainly produce a more sustainable economy, in an environmental sense, which is probably a good in itself. To promise that this would yield the kind growth that's been lacking in recent history is just too much.

Mark Thoma makes progress

Someone should throw the guy a party. It would be a party where everyone drank weak beer, but still. It's not really like anyone else has much of an idea of what sort of institutional "countervailing power" could be built, once they've realized it's necessary. The secret, of course, is that's it's not just about the unemployed, but instead about the working and living conditions of the majority of the population, which, if they haven't deteriorated (though in some ways they arguably have), absolutely haven't enjoyed the benefits of improved productivity in the economy as a whole.

The Need for Countervailing Power:

Like Brad DeLong, before the recession started I could not have imagined that policymakers would fail to put the unemployed first and foremost in all policy decisions. I was sure the unemployed would come before inflation, before banks, before debt reduction and contrived fights over the debt ceiling. How could we possibly turn our backs on millions of struggling households, especially when doing so creates so many additional long-run problems for individual households and for the economy as a whole? Nothing else would be more important than putting people back to work, and we would, of course, come together and mobilize in a national war against high unemployment.

But I forgot something. With the decline in unions in recent decades, the working class has lost both economic and political power. And at the same time, those at the top end of the income scale have gained power both relatively and absolutely. So why would I have ever thought that the unemployed would come first when they have so little organized political power? Is it any surprise that policy has paid most attention to the issues that just happen to be the things those with the most political power care the most about? What was I thinking?

I suppose I was thinking that politicians were honorable, that money wouldn't trump principle. Silly me. In any case, the question is how to change the balance of power. We could get the money out of politics, but that will never be fully possible. Even with the best of effort, loopholes, bypasses, and the like will always be sought out, found, and exploited too circumvent the rules. That doesn't mean we shouldn't try -- whatever constraints can be imposed are helpful -- but this probably isn't the full answer. We could hope for better politicians, people who represent everyone equally, including the powerless, but I'm certainly not going to count on that either. Finally, we could try to provide (or at least not discourage) a countervailing force, something that replaces the role that unions played for the working class. I'm not completely sure what form this institution should take, workers lack both economic power in wage negotiations and political power to shape legislation in their favor, or how it could happen short of fed up workers finally demanding change. But workers need to have their interests better represented, and the need for a new institution of some sort is clear.

Spanish weirdness

This is just strange. The economic crisis in Spain is much more like that in U.S. than what happened to Greece--the bursting of a housing bubble left an immense black hole on the balance sheets of banks, leading to contracting of lending, thus investment, and of consumption because of the burden of underwater loans on borrowers, exacerbated by unemployment--with the key difference that the bond market isn't letting the government cover the losses for free as it is in the U.S. There's an additional wrinkle to the story that the Spanish government failed to actually get all of the garbage off of bank balance sheets, and the banks have been limping along in part pretending the assets are still good when they're not. To cover their losses, the banks (when they haven't been bailed out) have apparently been borrowing from the ECB and (as in the U.S.) buying up Spanish government debt. The idea is that the income stream from government paper is a relatively sure thing, and so if (as with the recent ECB lending program) the bank is guaranteed funding for a set period at a certain rate (3 years, I think in this case), as long as that rate is lower than the return on bonds, it's a guaranteed income stream. One problem, though. Unlike treasuries, spanish government debt is not exactly a safe asset these days. This has set up the delightful situation (described in the link above) of Spanish banks owning an increasingly large share of Spanish government debt, such that if the Spanish government tried to reschedule those debts, it would pretty much kill the banks outright, requiring a bailout, which the government couldn't afford.

Successfully insulated from critical evaluation

Apparently Hamid Dabashi has written a book on the Arab Spring. If this excerpt is any indication, he has succeeded in writing so unclearly it's impossible to determine whether there's anything to criticize in it.

The spectre of that emerging state will keep the democratic muscles of these revolutionary uprisings flexing - for a very long time, and for a very simple reason. The world we have inherited is mystified (Marx's term) by the force fields of power that have at once held it together and distorted it. Fighting the military and economic might of counter-revolutionaries goes hand in hand with deciphering the transformed consciousness that must promise and deliver the emerging world. The colonial subject (now revolting beyond the mirage of the postcolonial state) was formed, forced, and framed as the object of European imperial domination, with multivariate modes of governmentality that extended from the heart of "the West" to the edges of "the Rest". Europe colonised the Arab and Muslim world from one end to the other precisely according to the model of power by which it was itself being colonised by the self-fetishising logic of capital. It was, by way of partaking in the making of the fetishised commodity, being alienated from itself as it was forcing that massive alienation on the colonial world. Postcolonialism was instrumental in conceptually fetishising colonialism as something other than the abuse of labour by capital writ large. It is not, and never has been.

The postcolonial subject, which was none other than the colonial subject multiplied by the illusion of emancipation, was thus released into the force field of that very same colonial history on a wild goose chase of ideological certainty before and after political convictions. For more than two hundred years - the 19th and 20th centuries - colonialism begat postcolonial ideological formations: socialism, nationalism, nativism (Islamism); one metanarrative after another, ostensibly to combat, but effectively to embrace and exacerbate, its consequences. As these postcolonial ideological formations began epistemically to exhaust themselves, the position of "subalternity" travelled from South Asia and became a North American academic fanfare, before it was politically neutered and soon turned into the literary trope of a "native informant". Thus colonialism and postcoloniality combined to place the Arab and the Muslim (as its supreme and absolute other) outside the self-universalising tropes of European metaphysics, where the non-Western (thus branded) was never in the purview of full subjection, of full historical agency.

Where to even begin?

1. Is it really necessary to paranthetically note 'mystified' as "Marx's term"?
2. "Multivariate modes of governmentality". I see.
3. I appreciate the attempt to link the logic of capitalism to colonial domination, but equating colonialism with "the abuse of labour by capital writ large" seems a bit overambitious. Also I don't think commodity fetishism is a sufficiently sturdy concept to bear quite that much weight.
4. How exactly is a 'subject' 'multiplied' by an 'illusion'?
5. As for the last 2 or 3 sentences, it's actually possible I agree with them (what passes for radicalism in "post-colonial" and "subaltern" is decidedly not, which is what he might be saying here), but I just can't be sure.

Reading failure

I just can't do it. I can't make myself read John A. Hall's Powers and Liberties. No one gives a shit about his "philosophical history" anymore, if they ever did. Maybe this is more of a thing among British sociologists (I think it might be, I feel like these I've caught whiffs of this kind of pseudo-universality before), but I've certainly never felt any pressure to engage with it from teachers or based on citations in the work I read. His acknowledgements and preface reveal that this work was gestating in the same milieu as Michael Mann's History of Social Power--and it shows. Both share the same just-so story about congenital European dynamism--which is just utterly false. I think it might be because I'm inclined towards theoretical approaches that are often accused of Eurocentrism that I have a severe allergic reaction to the real thing.

Jack Goldstone is delusional

In response to JP Morgan's announcement that it lost $2B recently.

Let’s not fool ourselves that any rules will be a perfect solution — traders will always be looking for new instruments and methods to increase their profits.  But at least we should start with the presumption that certain rules for the safety of bankers and their clients are in everyone’s interests, and we need to find sensible bargains on rules.  Without that presumption — if the starting point is that no rules at all are best — we will swing from one extreme to the other, from inadequate regulation that leads to crises to over-reactions that burden companies with too much regulation and red tape.

We are in that over-reaction phase now, with Sarbanes-Oxley (in reaction to Enron’s fraud and collapse) and the Volker rule (in reaction to the Lehman collapse) burdening or threatening corporate action.  Yet the reaction of the business community has been to push all the way back to the “no regulation is best” and decry “job-killing regulations.”   Actually, it is the absence of regulation that is job-killing in the same manner that running an Indy 500 with no rules or caution flags, or a championship football match with no referees, would lead to efforts to win that result in people being killed – or in financial markets, in major companies going bust.

Because obviously all the years S-O has been in place have been a time of excessive financial conservatism. Oh, wait, no.

But here's the thing, if it really was better for "bankers and their clients" that there be clear guidelines on financial, why aren't either the former or the latter (including institutional investors and major corporations who don't lack the resources to influence law- and rule-making) pushing for them? The contemporary finance industry isn't an alien colony: it has grown into its current form in the political-economic environment of the past few decades, and so it is probably a best initial hypothesis that it is in some way adapted to that environment. If that form is crisis-prone, it shouldn't be taken for granted that this is not a necessary condition of its adaptation.

A slightly more comprehensive interpretation of the crisis in Europe

This includes centrality of bank solvency to fiscal crisis (esp. in Spain and Ireland, though it only mentions the former), as well as the long-term background of the way in which German labor market "reforms" in the 2000s substantially relied on relative price rises in its Eurozone trading partners. By the way, other than its success at price competition, why is it that Germany has become the new chief representative for neoliberalism? If they get what they want, are we going to be talking about a "Berlin consensus"?

So, here we have it: Spain is being screwed into the ground so as to, supposedly, impress upon it the ‘precarious state of its public finances’. What claptrap! Spain had a surplus in its budget in 2008 and has had a debt-to-GDP rate less than Germany’s. Behind Mr Weidmann’s subterfuge hides an unfathomable truth: Having gutted the rest of the eurozone for years, by squeezing German price and wage inflation below agreed limits, German policy makers are misrepresenting the cause of the Periphery’s woes. Rather than acknowledging the need to europeanise banking supervision, and a part of the eurozone’s public debt, they are offering trinkets in the form of an above average inflation rate. Why trinkets? Because, in view of the deflation that is coming to the deficit countries, having German inflation rise above average is as inevitable as it is useless.

Cultural turn checklist

An abstract from the Journal of Historical Sociology.

• Meaningless wordplay (roots? routes?) - CHECK
• Non sequitors posing as definitions ("shared (i.e., social)") - CHECK
• Not so much about historical events as about their representation (or the "experience" of them) - CHECK
• Totally implausible (or else trivially obvious) claim for relevance ("potential for explosive conflicts") - CHECK

All it's missing is a heavy does of jargon and neologisms (though bonus points for the obscure noun form 'traumata'). This is not my historical sociology.

This contribution focuses on the Indian experience of the Partition. The personal and shared (i.e., social) memories regarding the history of India and Pakistan will inform the examination of the temporal dimension of the Partition, i.e., its “roots”. Tracing the re-established and new interconnections in terms of trade, travel, transportation, and communication between India and Pakistan along historical lines gives insight into the spatial dimension of the Partition's aftermath, i.e. its “routes”. The main argument of this analysis is that the traumata resulting from the Partition are still not overcome and contain the potential for explosive conflicts in the future.

Everything is history

Not even French in general, but from Normandy in particular.

DEPICTIONS OF BRAZILIANS ON FRENCH MAPS, 1542–1555

SUREKHA DAVIES

 Birkbeck, University of London

ABSTRACT

This article explores the impulse behind the outpouring of extraordinarily ornate maps representing the inhabitants of Brazil that emanated from Normandy in the mid-sixteenth century. It aims to understand the reasons behind the iconography of Brazil, a region of particular commercial interest for the French. Whereas maps produced elsewhere in this period emphasize the presence of fierce cannibals in Brazil, Norman examples highlight peaceful relations, particularly the dyewood trade. By analysing the maps in comparison with extant maps from other centres of production (particularly Portugal and the German lands), travel accounts, and wider visual culture, this article explores their relationship to possible sources and considers the extent to which their iconography had a basis in experience. By investigating the use of these maps as gifts to French kings, it suggests that the mapmakers’ selective use of trading imagery also played a persuasive role in the Norman maritime world's disputes with the Portuguese crown over the extent of Portugal's Atlantic empire.

conservative fatalism * inclusive neoliberalism = ?????

The econoblogosphere is abuzz with a resurgence of "what we need is not short-term stimulus but instead long-term reform," predictably pissing of the Keynesian and being warmly praised by their opponents. Peter Frase reads two specimens of the species and observes:

Philosophically, the Brooks and Rajan essays are interesting for the way they awkwardly combine an old-fashioned style of conservatism (the poor will always be with us, accept your lot) with a more modern form of inclusive neoliberalism (accept deregulation, and you too can be rich!) By itself, the first style of argument is simply intolerable to modern sensibilities, but the crisis has rendered the second increasingly implausible. Together, however, the two arguments add up to nonsense.

Sure, it's nonsense, but I don't think it's particularly distinctive nonsense. That is to say, neoliberalism has always combined both elements: criticism of the "rigidity" of labor market controls and welfare state protections that are pushing against the necessary tide of market competition, and the promise of increased prosperity in the long-term from the efficiency promoted by the market. If there's a relatively recent twist, it's a slight muting of the promise by reference to secular changes in the economy (Rajan cites Tyler Cowen's Great Stagnation), which only serves to highlight the ostensible hard realism of the claim that we need to accept the costs of adjustment.

The question is, adjustment to what? Sure, the Germans and Northern European "flexsecurity" welfare states crammed down their wage costs in the 2000s and began to eat everyone else's lunch in the export market. Will this really look like such a promising model when everyone else lowers their wages to match? As Frase says, it's somewhat galling that these people have appropriated for themselves the label 'structural,' as in "structural unemployment" or "structural reform."

Paper writing

An idea always seems most beautiful in the moment before it is written out.

An alternative, more pretentious title: A Model of the Composition of the Public Sphere in U.S. Late Capitalism

This post at Gin and Tacos is titled "Red Meat," which is straightforward, if uninventive. Leaving out the parts about the particular piece of trash posted on a blog at the Chronicle for Higher Education, which does not deserve to be any further discussed:

. . .

I am increasingly annoyed by the extent to which no-name hack writers and peripheral media personalities have taken to relying on shock value to draw attention to themselves and advance their careers to some level beyond complete obscurity. We see the anonymous guests on Fox News trying to say the most ridiculously outlandish things they can imagine – "Maybe I'll be the next Glenn Beck!" – and legions of fourth-rate Free Republic commenters filling blogs with as much vitriol as possible to attract attention. Basically anyone who can figure out how to use Blogger is trying to one-up the herd. There are Regnery book deals to be had, after all. And the situation is only exacerbated by highly trafficked, even mainstream media outlets giving a platform to these voices due to the same need to stand out and get attention.
. . .
There are two ways to make it as a writer, and one of them – having some combination of talent, creativity, or intellectual merit – is unavailable to this author. So she does what every other unknown, unaccomplished hack toiling away in obscurity realizes is his or her only chance to be noticed. She sits down and basically writes a 500 word version of "HAHAHA NIGGERS AMIRITE? LOL!" and waits for the call to appear as a guest on O'Reilly. Maybe she'll even get booted from the Chronicle and become the latest right wing martyr to get a speaking tour and book deal. "I was ostracized by the Liberal Establishment!"

I am going to puke blood the next time I have to watch, listen to, or read these blatant attempts by failures to throw a bunch of red meat into the public sphere and kick back and wait for that call from Fox or the Daily Caller. In truth she and her drivel are hardly worth our attention – and the Chronicle goddamn well knows it – yet here we are. Congratulations, Naomi. You've got our attention now. Too bad writers like you (i.e., shitty ones) are a dime a dozen, or else your plan might have worked.

Basically, there are institutions for material support for writers from certain perspectives. There are far more people who want to make a living as an "intellectual" than there are sufficient space in the ecosystem, if you will. The result is an intense competition that selects for not just orthodoxy but even fanaticism. How much output of journalism and commentary would this model account for?

Bismarck and Roosevelt?

Jack Goldstone:

The successful capitalism of Bismarck and Roosevelt remembered that it had to provide for workers too, and limit the excessive accumulation of the rich; they therefore engaged in building social support, unions, and enough regulation to ensure vigorous competition but without companies overrunning workers.

Today, it seems that capitalists have forgotten that they cannot extract unlimited wealth from economies whose ordinary workers are suffering long-term stagnation, unemployment, and loss of their savings and assets, and expect the workers to accept it for very long.

With house values, salary, and unemployment now ticking along at recession-levels for the fifth year in most countries, patience with austerity programs or giving more to the rich in the hope that they would lift others is running out.

Watch out, conservative parties and wealthy elites:  far right wing populists as well as left-socialists are out to bring you down to earth.  Either support policies that quickly give some benefits and relief to ordinary workers, or they will turn on you and the capitalist system that they believe is benefiting you, and only you.

Three points: first, this is the good old center-left argument-from-threat-of-radicalism. This is going to convince no "conservative parties and wealthy elites," because they've learned to call the bluff. Second, "successful capitalism of Bismarck and Roosevelt"? Ok, New Deal, fine, but paternalistic welfare programs and repression of the Social Democrats, even if ultimately futile? Also, Roosevelt didn't so much "remember" this as have it forced upon him by probably the largest wave of mobilization in U.S. history. Third, are "far right wing populists" really out to bring capital down to earth? Last time around, they adopted some anti-capitalist rhetoric while out in the wilderness but dropped it post-haste when they had a shot at power. On a much smaller scale the whole Tea Party thing showed a similar pattern.

By virtue of the transitive property . . .

If a = b and a = c, then b = c. Unintentionally truthful words from the nyt:

. . . Mayor Michael R. Bloomberg of New York, whose name is all but synonymous with Wall Street clout and nonpartisan politics.

Why Tyler Cowen is my favorite bourgeois economist

It actually surprising how hard it is to describe why something like this tickles me so much at the same time as it annoys me. Here's an attempt: it's the way we musters rhetorical turns of self-conscious sophistication--"multiple equilibria," "quality of institutions," "rebuilding trust," "classes beyond 101," "empirics of public choice"--that are more typical of critics of neoclassical economics in order to argue for mostly orthodox (even, as Marx would say, vulgar) neo-liberal positions. He is like a walking disproof of the types who think the way to argue against economists' policy positions is to attack their oversimplifications of social life and human behavior. It doesn't hurt that his criticisms of left-of-center bourgeois economists are not entirely off-the-mark: there very well might not be a politically neutral, technical solution; that is to say, employment and income might not be pushed into self-sustaining growth simply by adding more aggregate demand, no matter where it comes from.

Yet here again, Cowen's sophistication is in the service of vulgarity, because it enables him to simply ignore the systemic irrationality that Keynesianism claims to provide a technical solution for. That is this: there seems simultaneously to be over 10% of the American population that wants to work but is unable to find employment and an immense quantity of money that should in principle be available for investment piling up on corporate balance sheets and in the financial system (as seen, for instance, in rising stock prices and rock-bottom interest rates on U.S. treasuries). If the two could somehow be brought together, then the overall level of economic activity would be higher and everyone would be better off. The Keynesian (and in a different vein, the monetarist) position is that this "failure of markets to clear" can be overcome by preventing large drops (or even extended stagnation) in the overall quantity of spending in the economy.

The problem with this argument is that it is far from clear that the models on which it is based are actually sufficiently accurate descriptions of the economy to make strong predictions. Instead, it often seems like models are chosen because they can possibly express some stylized fact such as the failure of labor markets to clear, regardless of whether or not the mechanism they use to get that (empirically real) result reflect the causes at work in the economy. Such for instance is the talk of sticky wages: labor markets fail to clear because the prevailing wage is too high, and everyone is reluctant to bid down the nominal rate of wages. The absurdity comes out when the left-of-center Keynesian immediately denies the obvious conclusion to cram wages down on the basis of some vague hand-waving.

The hand-waving is necessary because the conclusion is so clearly perverse to the left-of-center Keynesian: businesses are wary about investing so everyone else needs to take a pay-cut. Cowen's genius is that he embraces the perversity. So, as he liked to say for a while, it's probably the case that some significant proportion of the unemployed workforce is "zero marginal product" (ZMP). ZMP workers cannot, in any job, contribute more to the economy than it would cost to pay the overheard costs and their wages. On one level, this is trivially true in any decent model of the capitalist economy: if employing them could yield additional net revenue to any existing business, they would probably be hired by it. But this is precisely the perversity: they shouldn't (and even in our degraded age, can't really) be "fired" from the society as a whole. Just because they can't generate any marginal product profit for a capitalist firm, why shouldn't they be allowed to contribute whatever they can to economic life? After all, it's not like there isn't enough food, shelter, clothing, entertainment, and so on to provide decent lives for them.

Admittedly, the argument is more complicated than this, but Cowen doesn't address it at all. He doesn't have to. To paraphrase the introductory monologue of The Big Lebowksi, "Sometimes there's a man--I won't say a hero, 'cause what's a hero?--sometimes there's a man who, well, he's the man for his time and place, he fits right in there--and that's Tyler Cowen in the twilight of neoliberalism." He doesn't have to address the argument because he lives--we all live--in a political world in which there is no force that demands it be addressed, that can say in response to the idea that wages are too high or that the "marginal product" of employing the unemployed is less than zero that, no, it's the "wages" earned by the bosses that are too high and it's the owners whose existence doesn't contribute anything to society.

Ironically, sometimes left-of-center bourgeois economists will nostalgically warn that if their advice is ignored, such a force will reappear, and its arguments will be much less civil than those of the economists. The economistic right wing--of which Cowen is a preeminent member, not least because his impeccable sophistication separates him from so much of the rest of it--exists to eternally call their bluff, and so far they've been right.

However, to turn the wheel one last time, it's not just that the threat of political unrest is a bluff. It cannot be taken for granted that even if the threat were real--or if the bluff was fallen for--that everything would go as promised. So far in the history of capitalism, there have been four periods of prolonged economic depression, and none of them have been solved by a waving of the aggregate-demand wand to produce full employment and rising wages. The first, in the 1870s, falls suspiciously at the opening of a period of international competition among the industrial states, which carved up the world into empires and ended only in the fire of the Great War. The second, in the 1930s, continued until WWII, in which the U.S. economy was converted to a war machine and the the industrial base--along with a significant chunk of the population--was all but totally destroyed in Europe and Japan. It is true that this was also the period of the birth of the institutions that shaped the broad-based prosperity of the postwar era, in which a stable income and "middle class lifestyle" could be enjoyed by most of the working population. However, this does not mean that the institutions that enabled that trajectory of development in the context of an overall boom that was set off by and for the reconstruction of the civilian economy were themselves contributors to that boom, or even necessary conditions for it. Indeed, those very institutions were perfectly consistent--and at the very least were blamed for--the onset of the third great period of depressed growth, in the 1970s. This time, many of the post-war era's constraints on business activity and the labor market were sacrificed on the altar of "reform" meant to restore profit, and hence the incentive to invest and from that, growth. Over three decades later, probably 4/5ths of us have nothing to show for this, and now we seem to be back in another depression. The left-of-center bourgeois economists would have us believe that there is, this time, a way to restore growth and the broad-based prosperity that has been missing for decades.

Among radicals, one of the deadliest accusations has, historically, been "reformist!" This amounts to the charge of "getting in bed" with the center-left promise of a mutually fruitful capitalism. Yet, the implication of the weight of this accusation is that there is a strange intellectual infinity between the radical left and the staunchly bourgeois right. The two agree in dismissing the promises of the center-left as wishful thinking in the world as it exists; the capitalist economy is, they would both say, a harsh mistress. The left-of-center economists' vision of a rationally managed capitalism is a distraction from what the other two see as the real question: is the harshness (and the irrationality, and the perversity) part of that "realm of the necessary" that human beings have no choice but to adapt themselves to? As has been so often pointed out, this was once--at least into the middle of the twentieth century--a question of active debate, so much so that even a figure like John Stuart Mill felt obligated to concede, for instance, the principle that property rights were a construct of social convenience. Yet, now, outside academic departments--philosophy, sociology, perhaps anthropology and political science, rarely economics--it is no live question at all, so much so that a movement of at most a few tens of thousands that succeeded only in putting the mere fact of economic inequality briefly back into the newspapers and the fulminations of intellectuals and pundits is hailed as an historic achievement.

In a world like this, who can begrudge Tyler Cowen his smugly sophisticated vulgarity?

From the comments, on downturns, fiscal policy, and multiple equilibria:
From Tall Dave:

We were less wealthy than we thought we were.

Call me an AD-denier, but I still think the basic issue here is that you can’t consume more than you produce. Production exists to satisfy demand, but at the same time demand is limited by production. We had a long boom built on the notion we could boost demand and thus supply and thus demand again in a virtuous cycle, and now we are seeing the cycle work in reverse as demand/supply seek their natural levels.

One way to justify this model is in terms of multiple equilibria, and that we have been walking (bouncing our heads?) back down the escalator.  Arguably for the United States this downward bouncing is over.  Along the way we are sending signals about the quality of our institutions and thus shaping the course of the future.

In this model there is still a useful role for fiscal policy.  For one thing, fiscal policy can smooth that ride down the escalator, by spreading the losses out over time, at the cost of future debt of course.  This may be needed if only to make the political economy of decline less bitter; see Spain and Greece.   Nonetheless fiscal policy cannot make up for the output losses at will.  We are not standing in an IS-LM diagram where the difference between “what we have” and “what we could have” is thwarted only by some supposed Austerians who won’t shift the proper curve and yet somehow have taken over some of the biggest spending social democratic, insider-leaning governments in world history.  The IS-LM approach fits in nicely with the view that policy improvement is all about yakking about the obstructionists.  Instead, policy is also about rebuilding trust, not just maintaining ngdp on a decent keel.

There is another possible role for fiscal policy, as there usually is in models of multiple equilibria.  If you ran some super-duper fiscal policy, and invented the flying car, a cure for cancer, and other marvels, the market might suddenly latch its expectations on to a much more positive scenario.  There could be a significant upward bounce to a much higher equilibrium of output and employment.  In any case, the quality of fiscal policy matters, and Keynesian ditch digging probably doesn’t do much for inferences about institutional quality and for the selection of multiple equilibria.  “Spend the money, anywhere” is in my view a deeply pernicious attitude, somewhat akin to thinking you can create a good NBA team, with a strong ethic for quality and work, by tanking for better draft picks at the end of every season.  But no, the internal ethic matters and cannot be first destroyed and then recreated at will.  Good teams don’t usually work that way, and neither do good fiscal policies.

Right now we Americans are building back up to better equilibria, slowly, by showing that our economic institutions are not totally crummy.  This process can take a good while, but in fact our recovery is going better than many people believe.  The eurozone is far — very far — from being on that kind of rebuilding track.

There is plenty of talk about various commentators don’t understand the lessons of Econ 101.  There is a reason why we teach classes beyond 101, and why we spend so much time studying institutions and the theory and empirics of public choice.