"Markets" are Confident When They’re Flaunting Moral Hazard

 “In Italy, the key programmatic points were listed last summer in a letter (meant to remain secret!) from the European Central Bank to the Berlusconi government. To restore market ‘confidence’, it was necessary to proceed rapidly down the road of ‘structural reforms’, an expression now used as a synonym for social devastation: in other words, wage cuts, attacks on workers’ rights over hiring and firing, increases in the pension age, and large-scale privatization.” –Marcello Musto, discussing the replacement of elected governments with technocracies, on the occasion of the bank failures. 

“Restore market confidence”–this causal explanation and imperative begs for a new, blistering Marxist critique.

How does an institution “gain confidence”? Well, there actually is a small group of “confidence”-craving humans behind the institution. We’ll call them the Confidence Men. Recall “effective demand,” which means that the market most certainly does not register billions of preferences. The market registers the preferences of whomever holds the majority shares in it, that is, whomever has the most control over the wealth, however this Confidence-man minority commandeered that wealth, which is certainly not by abstaining from any of the following: exploitation, dispossessing others, despoiling nature, maintaining totalitarian work conditions, corrupting politics, and generally abusing power. It is this small group of effectively-sociopathic Confidence Men that demand that their staff in governments reassures them that it’s all for them, by for example, transferring the massive costs of their confidence schemes and failures to the rest of society.

David Harvey on crisis-explanation points from The Enigma of Capital.

What’s the alternative to endlessly pouring money down the black hole of “restoring market confidence”? The state could transfer the task of supplying credit to responsible, accountable institutions, such as cooperative credit unions or national banks.

We are considering undertaking a study of the responses to the initial 2007-2008 financial crisis voiced by prominent members of the North American left, looking not to out poor responders, but to name reliable commentators who had the political literacy to know that in a crisis you forward alternative policies, rather than join the conservative drumbeat for TINA policies (like bailouts). There’s been much recent  handwringing (by leftists trained in econ) about economic illiteracy on the left. Arguably, political-economic illiteracy is the problem we need to be wrestling with.

Richard Peet takes a small stab at it in his article “Contradictions of Finance Capital” (Monthly Review 12/ 2011):

“Finance capitalist agents exercise power by controlling access to the markets through which capital accumulations become investments, directing flows of capital in various forms—as equity purchases, bond sales, direct investment, etc.—to places and users that are approved by the financial analytic structure of the Wall Street and City of London banks and investment firms. 

The gaze of the “investment analyst” representing the “confidence of the market” is the active form taken by the financial capitalist interest, although “investor confidence” is presented as somehow neutral and technical, in the best long-term interest of everyone—“professional economics” is to blame for this misrepresentation

The accumulation of surplus in the relatively few hands of the super-wealthy intensifies the financial component of capitalist growth and increases the power of the financial capitalist class fraction over not just the industrial fraction, but everyone else as well. Control over investment capital and financial technical expertise gives finance capital and its banking representatives tremendous power—over policy making, over economies, over employment and income, over advertising and image-production…over everything. Production, consumption, economy, culture, and the use of environments are subject to a more removed, more abstract calculus of power, in which the ability to contribute to short-term financial profit becomes the main concern” (Peet).

Radicalized Keynesian Paul Krugman has been a great chronicler of the various grotesque, pathetic exploits of the undead Confidence Fairy.

Most recently, from Krugman’s “The Austerity Debacle” (1/29/2012):

“How could the economy thrive when unemployment was already high, and government policies were directly reducing employment even further? Confidence! ‘I firmly believe,’ declared Jean-Claude Trichet — at the time the president of the European Central Bank, and a strong advocate of the doctrine of expansionary austerity — ‘that in the current circumstances confidence-inspiring policies will foster and not hamper economic recovery, because confidence is the key factor today.’

 Such invocations of the confidence fairy were never plausible; researchers at the International Monetary Fund and elsewhere quickly debunked the supposed evidence that spending cuts create jobs. Yet influential people on both sides of the Atlantic heaped praise on the prophets of austerity, Mr. Cameron in particular, because the doctrine of expansionary austerity dovetailed with their ideological agendas” (Krugman, explaining how it came to be that the British conservative government’s obliging extension of capitalist class warfare resulted in that country’s economic decline).

 Don’t be fooled by the cuteness. She’s undead, and she’ll destroy your economy.

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The Revolution Will Not Be Pomo-icized

Why Critics of Economics 
Can Ill-afford the “Postmodern Turn”
Yanis Varoufakis (University of Athens and University of Sydney)
Reposted from Post-autistic Economics Review 2002 Issue 13.

 The dissident’s nightmare 

 It is a sad irony when the activities of dissidents help shore up the establishment they set out to subvert. The point of this piece is to warn the ‘economic’ dissident: Beware the Postmodern Turn! The argument will turn on the thought that postmodern criticisms of economics serve the twin purpose of (a) releasing pent-up frustration with the profession while, at once, (b) reinforcing its ideological backbone.

 Every era has a tendency surreptitiously to guide young dissidents toward a specific ‘umbrella movement’; one that ends up shaping their milieu. Existentialism, structuralism, neo-Marxism, etc. have given their place, in our era of devalued political goods, to Postmodernity and Deconstruction. Without wishing to discuss the ‘postmodern condition’ generally, I shall concentrate entirely on its likely effects on the struggle to ‘civilise’ economics. In this regard, the problem with postmodern thinking is that it stands no chance of success.

 Postmodernity’s criticism of grandiose Theory may be terribly satisfying to those who adopt its grandiose pronouncements. However, the satisfaction at having lambasted all Theory is momentary and the ensuing subversion short-lived. To paraphrase Marx, the subverters will be, eventually, subverted and, tragically, the neoclassical establishment will come out stronger and better equipped to obfuscate social reality than ever before.(2) If I am right, the task of the PAE movement must be to clear the way for radical criticism that avoids the postmodern trap as resolutely as it opposes economic autism. 

Dissidents or the economists’ handmaidens? 

 Modernity marginalised Religion, but retained religious transcendence by worshipping Theory. Economics emerged as the highest form of this secular creed and enchanted all of its practitioners; free-marketeer and protectionist, liberal and Marxist, Keynesian and monetarist. It now seems that some economists are breaking ranks; joining the ‘other’, the postmodern, side which defines itself in anti-theoretical tones that exude an atheist’s anti-religious fervour. The danger is that the legitimate anger of students (which has given rise to the PAE movement) will draw them to an apostasy without a future. For despite its considerable oeuvre, postmodern criticisms of economics are doomed to shrivel and be absorbed by mainstream economics; the predator turning into unsuspecting prey. I risk this prediction for two reasons.

 First, postmodernists allow economics to parade as equally scientific as the natural sciences (albeit on the grounds that no discipline is truly scientific). They are right of course to think that all theory resembles religion, since it also seeks to give meaning to the practices and expectations of whole communities. However some theories are capable of transcending religion and approaching objectivity better than others. Nature’s habit of working independently of our beliefs about it means that the natural scientist can devise experiments which have the power disinterestedly to discard falsity and thus forge knowledge and progress. Society, on the other hand, is corrupted to the very marrow of its bones by our collective beliefs about it, and can therefore provide no objective test of social theory (the latter being part of the very web of beliefs that society is made of). Thus social theory, unlike thermodynamics, is condemned to remain untestable, and stuck in the realm of opinion. Economics valiantly attempts to extricate itself from this fate with a touching commitment to mathematics but, sadly, it only ends up as a religion with equations.

 Postmodernity errs in thinking of this as the inevitable failure of all Modernist enterprises. It lambastes economists’ churlish reliance on an Outer Wall of Algebra and an Inner Wall of Statistics but overlooks their success at never even coming close to the nature and the dynamics of contemporary capitalism, thus shielding the latter from rational criticism. But such is the fate of all idealisms which give language an existence independent of the material conditions of social life and reproduction. If only postmodernist critics understood theology and mathematics a little better! Perhaps they would have recognised in economics the greatest proof that Modernity is saturated with its negation.

 Which brings me to the second part of the argument: Postmodernity not only lets neoclassical economics off the hook but, more worryingly, reinforces it copiously before dissolving into it. Consider what the postmodern rejection of metanarratives means at the individual level: It means the loss of any capacity to scrutinise one’s private urges rationally on the basis of some collectively constructed notion (or metanarrative) of the Good. Stripped of those capacities, the individual fragments into a community of selves, a bundle of ordinal preferences, and ends up with no one self whose preferences those are.

 In this Empire of Ordinal Preference the only possible data that social theory can go to work with are the differences in individual whims and freely-chosen identities. These data are then, courtesy of their ordinal properties, impossible to compare across persons (for this would require a metanarrative) or procure a view of capitalism as a system. Thus in a fully-fledged postmodern schema, social relations are confined to interplay, voluntarism, tolerance and exchange; society is the playground where the latter unfold; and discussions of the General Will, exploitation and developmental freedom make no sense. Does this all sound familiar?

 If it does, the reason is that neoclassical economics went down that alley decades ago. The asymptotic limit of postmodern fragmentation is the neoclassical general equilibrium economic model. Both Neoclassicism and Postmodernity espouse a radical egalitarianism which is founded on the rejection of any standard or value by which either individual action or the institutions of late capitalism (e.g. the labour and capital markets) can be subjected to rational criticism. In short, whereas the problem with modernist mechanism was that its view of our world excluded value from the outset, the problem with Postmodernity is that it ends up having no view of the world and becomes easy-pickings for a similarly viewless/valueless tradition, one which bears the additional weaponry of intricate mathematics and endless econometric ‘evidence’.

 For Oscar Wilde the supreme vice was shallowness. For Postmodernity it is the New Jerusalem. Its playfulness allowed it to thrive in the friendlier waters of literary and cultural studies at a time when ‘margins’ were becoming central and classical stuffiness was going out of fashion. But now postmodernists have entered shark-infested territory. Neoclassical economics, another purveyor of shallowness, threatens to bend them to its will,(3) gain strength from them and subsequently reinforce hierarchies more oppressive and totalising than those the postmodernists set out initially to dismantle. 

When the IMF dictates its policies to some hapless Third World country, there is a strong whiff of the radical egalitarianism shared equally between general equilibrium and Postmodernity. The same whiff accompanies, and legitimises, the inexorable devaluation of political goods, the vulgar commodification of human bodies and values, the impossibility of conceptualising freedom-from-the-market, the depiction of Central Banks as ‘independent’ only when under the thumb of financial capital, the confusion of liberty with the freedom to exploit and to demean and, above all else, the portrayal of coercion as tâtonnement. Thus Postmodernity unwittingly blows fresh wind in the sails of neoclassicism, the undisputed champion of the deconstructed human agent. While warning us correctly that new authoritarianisms will be born when we get caught up in our own rhetoric, it offers no resistance to the current authoritarianism of neoclassical economics and, more so, the socio-economic system that it serves.

 Conclusion: The dissidents’ dilemma 

 When a fresh wave of criticism is unleashed, it picks up along the way pre-existing discontents, hitherto bopping along hopelessly near the surface, and propels them toward the shores of exposure and respectability. Lonely dissidents suddenly find a new ‘movement’ that will have them. New hope of escaping obscurity is thus born.

 In recent years many dissident voices had to adapt themselves to postmodern-speak in an attempt to be ‘included’ on the postmodern bandwagon. The PAE movement must release such voices from this obligation. Social criticism of economics must reclaim an awareness that to reject the scientific status of economics is not to reject science in general or to espouse postmodernism.

 Indeed irony and ambiguity were utilised, long before Postmodernity, by thinkers eager to come to what a more confident past once knew as the truth. To re-establish irony, ambiguity and indeterminateness in the discourse of economists would be a triumph of the spirit. But it would not be a postmodern turn. For the latter has no monopoly on an appreciation of the radical indeterminacy of social processes (as Hegel would be all to eager to remind us) or the importance of not taking our selves, and our theories, too seriously. On the contrary, Postmodernity undermines itself by offering Modernity’s most awful purveyor another means of extending its dominance.

 So, we have arrived at the dissident’s dilemma. The postmodern kernel within neoclassical economics forces a stark choice: Submit to homo economicus and model our messy world’s dynamic as if a series of suburban disputes between postmodern neighbours. Or, seek an historically-grounded understanding of how systematic patterns of power and economics are the joint products of the continual feedback between technological developments and evolving social formations. The difference between the two options is not theoretical; it is ideological. The postmodern turn will be chosen by pseudo-dissidents whose prime interests lie in acquiring a chic image; one that the self-effacing postmodern criticism is good at imparting. The less-fashionable option of working towards historically-grounded knowledge will appeal to the truly ‘unreasonable’ dissidents; those driven by an unbending commitment to a rational transformation of society.

 Notes
1. Department of Economics, University of Athens, 8 Pesmazoglou Street, Athens 10596 and Department of Economics, University of Sydney, Sydney, Australia. Email: yanisv@econ.uoa.gr
2. Recently, Routledge published a volume on the nexus of Postmodernity with economics edited by Jack Amariglio, Stephen Cullenberg, and David Ruccio (2001). The following thoughts have been extracted from my review of that book (forthcoming in the Journal of Economic Methodology)
3. Courtesy of a more sophisticated take on the same type of philosophical shallowness.
 References
Cullenberg, S., J. Amariglio and D. Ruccio (2001). Postmodernity, Economics and Knoweldge, London and New York: Routledge
Varoufakis, Y. (2002). ‘Deconstructing Homo Economicus?’, Journal of Economic Methodology, forthcoming.

The reason why political economists see idealist postmodernism as superficial and epiphenomenal is because there’s no ontological depth to idealism, see the critique in critical realism & Bhaskar.  In a 2-D world of epistemological surface viewed from different points on that surface, liberation looks methodological individualist, methodological instrumentalist, and in methodologically-imposed equilibrium. But that is exactly what bondage looks like in a critical realist, historical materialist world of ontological depth.

A further note to self–explore this hypothesis:
The Kantian rejection of ontology and elevation of epistemology does not solve the problem of human reflexivity, when studying social relations.

Coming attraction:

Though engaging or convincing postmodernists is not germane to my life’s intellectual (or otherwise) projects (I’m simply not in that social location–though I am in that geographic location.), I’ll post notes on Zizek, Badiou & Agamben’s niche efforts to explain leftist traditions to postmodernists. Unlike other leftists, I don’t mind the Z-B-A niche. There’s a real problem in the Anglosphere with superficially-liberatory postmodern misunderstandings and distortions of leftist thought that bolster the hegemony of ideological conservative economics and the adoption and diffusion of neoliberal governance. …Just as there’s the persistent problem of the neocon swerve (from a leftist base) within the Anglo-American Zionist intellectual community. Where there’s network, status- and/or resource-access incentive, humans are great at rationalizing, even if it is ugly; and how they do it, how they are motivated, and the demonstrable telos of those rationalizations are of some interest.

Throwing off the Yoke: CED, currency, credit access

‎”A map of the world that does not include Utopia is not worth even glancing at.” 

Oscar Wilde (1854–1900)

Establishing a local currency, together with taking over credit union boards (to gain access to credit), can provide the complement to Community Economic Development (social enterprises including cooperatives, and social enterprise networks) to fortify the working class against capital strike, blackmail and dysfunction.

Common Good Finance in Ashfield, Massachusetts.

“We need to re-democratize the monetary system, to have a set of alternatives for issuing credit outside the banking oligarchy. Alternative currencies can play a vital role in that”  
Josh Ryan-Collins, the New Economics Foundation.

This Guardian article, “Currency stays close to home,” reviews the successful rise of the local chiemgauer currency in Rosenheim-Traunstein, Germany. The chiemgauer was designed and operates to stimulate spending in the local economy, as well as to provide a work-around (or strategic counter to) financial capital illiquidity.

Yes! Magazine covers local currency innovations in “Dollars with Good Sense: DIY Cash.”

Other promising social movement initiatives that OWS has opened up space for:

Revoke corporate personhood.

Worker occupation of enterprises.

“Long Shadows” by Josh Ritter (video by James Holland)



Note on UK cooperatives:

 There are some quite big co-ops in the UK. They’re not perfect, and still run on similar lines to normal corporations. On the other hand they are far better than corporations, treat their workers better (who after all are technically the owners of some of them – others are owned in theory by shoppers) and tend to take social responsibility quite seriously. Executive pay, while still too high, is far lower than comparable private companies.

 Along similar lines, Building Societies in the UK were owned by customers (so essentially non-profit) and for the most part were run fairly well. They offered a better service, better rates and were fairly conservatively run. They were famirly limited in the activities they were allowed to engage in. They were strictly a consumer financing deal (mostly houses). Most of them were force-privatised by the conservatives, but the remaining ones have mostly weathered the crisis fairly well. In comparison to their private breathren, none of whom now survive. The bank which endured the bank run in the UK, Northern Rock, was an ex building society.

 W. L. Gore and Associates is perhaps an example of an interim culture existing in the US. Far far from perfect, but hints of what might be nonetheless.

Economic Value: A Sociological View

I think one of our problems right now is that we don’t know how to think about value. There is an excess of  hurried, automatic, breathless dismissal of Marx’s classic political-economy theory of value, including by Marxists and other leftists; but I think we ought to stop for a moment, and reconsider the common-sense dismissal we’ve arrived at, at this point in history. It’s blinding us to things we need to think about.

I think we’re missing Marx’s point about value, which perhaps requires a sociological perspective (and, Varoufakis, is not incompatible with theories of value that recognize entrepreneurial activity as the locus of value in an economy). Paul Burkett (Marx and Nature 1999) is one of the clearest contemporary writers on the Marxist understanding of value.

Simply, economic value is a social product, created through creative, reflexive, semi-deterministic/semi-voluntaristic relational, social (human) work upon nature.  Value isn’t something that is made within the capitalist market, when profits are realized in the sphere of circulation. That production-circulation separation is maintained through money, so that value can be controlled by capitalists–but price and value cannot be identical. Value is a product of creative, active human relations. Price is a product of capitalist control of value.

That economic value is produced by creative, active human relations is why capitalists are always trying to privatize, to mine the public and the commons–there’s value in them thar human creations.

People, even leftists, who are overly trained in marginalism and other modern conservative economics get caught up in the price calculation mode, and so sometimes fail to see that people coming together to build alternative economic institutions is creating value, and creating independence from capitalist coercion. Didn’t capitalists once create institutions that afforded them independence from the feudal value system, when the contradictions of that feudal system created crisis?

Keynes: Manage Capitalists Like Domestic Animals

After a tepid political response (overly accommodating to US capital’s corrosive sense of entitlement) and an initial partial recovery from the early 20th century Depression, the US slumped back into economic crisis. In this 1938 letter, Keynes advised FDR on how to more emphatically direct social wealth to the working class in order to get the US out of economic collapse. (David Cay Johnston calls this the ‘circulatory’ understanding of money–If social wealth, like blood, is blocked from getting to the working class, money pools up and rots the system.)

In this advice, Keynes urged FDR to have the confidence to understand and manage capitalists as a species of domestic animals.

There is indication in FDR’s response to Keynes that the capitalist US President understood US prosperity simply as a good in service of outcompeting communism–or at least non-Anglo-centric economies–around the globe. Again this is evidence that, for capitalists (obviously with human lifespans and thereby very time-delimited strategic horizons), economic decline is not perceived as a direct threat to their self-interest–so long as they maintain ownership of a society’s accumulated wealth. That is, capitalists appear to be systematically incapable of understanding economics beyond their own relative advantage. I think that economic inequality (produced by the normal, alienating functioning of capitalism) regularly produces this solipsistic capitalist conceptual error, ensuring economic crisis.

(Thanks to Doug Henwood for posting this link.)

Inequality, Economic Growth & Standards of Living

In this 2011 PERI paper by Thompson & Leight, “Searching for the Supposed Benefits of Higher Inquality,” the authors review the messy literature on the relationship between economic inequality and economic growth. They propose an alternative approach to this research stalemate.

If you are interested in charting the relationship between inequality and economic growth, urban & regional-level data is your best bet. Only in 2006 did Saez & Picketty pull together (fairly) reliable international comparative data on income inequality. See Saez‘s data and analysis on his Berkeley website.

Why are Leftists Today Econ Illiterate?

A response to Nick Srnicek’s Disorder of Things blog post “Has the Left Given up on Economics.” Basically, I agree with Srnicek: 1) There is too much economic illiteracy, 2) There is too little economic innovation, and 3) We need to organize. 


My two cents (argued below) is that we would do well to think about the challenge strategically, keeping in focus class’ impact on social networks and the legitimacy and spread of ideas.





Where have you gone Maynard Keynes? Our nation turns its lonely eyes to you.

Mrs. Robinson, Lemonheads version

It has been argued here that Marxian economics are stalled because Marxists have not done the work needed to capture the Left’s imagination, which is, according to the blog author, designing post-capitalist transitionary structures and “expanding the variables” in its economic models.(*1) I might support the author of that blog in exploring these projects (Again, I’m all for the proliferation of Marxist work, including packaging old wine in lovely, new, well-written bottles.), but I can’t agree that this (more writing, or adding variables and some tiny academic community’s jargon du jour) is all Leftists need to become political-econ literate. (Although if thinking so motivates you to hit the keyboard, good on you!)


Leftists are political-econ illiterate because 1) outside of social democratic countries, there is no union confederation that employs prominent Marxist economists and disseminates political-economic literacy, and 2) there is no social gravitational force making political-econ literacy a normal thing. For example, there’s no critical mass of political-econ literacy, and unlike earlier eras, there are no Leftist economists from capitalist backgrounds today. 


The Left will readily accept the first explanation without controversy, so I will do my best to elaborate here why I think the second point matters.





The Siren Call of The Fancies


The problem I see for the spread of Left political-economic literacy has partially to do with why Keynes is so influential. Keynes is influential not because he was the most imaginative lefty-liberal of the 20th century (though he was an iconoclast and brilliant), but because he was a very centrally-elite independent thinker. (And even then, Keynes’ most important ideas were not implemented in policy, and they were censored in the economics discipline.) Even Marxist  economist Paul Sweezy was revered and could influence government, develop his work, and support the development of Marxist economics partly because he was a super guy, and partly because he was a hegemonic elite male. 


Wait. Do not go fetal on me here. This is not a love song an identity critique.


(OK, Sweezy was a dick to Schumpeter’s wife in “The Future of Capitalism” 1946-47 debate, so it could be an identity critique, but it won’t.)


There are no radical, square-jawed, econ-literate, white-hero elites anymore. They were methodically wiped out by a campaign organized throughout the Anglosphere by conservative economists and their funders. What  we’ve got left are weak-jawed, middle class, econ-literate heroes,(*2) and that means that de facto they’ve got smaller influence networks. So small Srnicek fails (Really, we fail. I’m just being literary there, blaming it on Srnicek.) to notice a lot of them.

We have fantastic political-economic ideas right now and for a long time (including many from Eastern Europe and Scandinavia, etc. that have yet to be translated into English). But their spread is actively suppressed, first by the assault on unions–which can disseminate alternative ideas about how to run society, and second by the assault on non-neoclassical economists, the political economists. 


For one late example, just at the moment that the neoclassical econ emperor was fully exposed as naked and bereft (post-2007), the last dean here, with the support of mobilized conservative econometricians within the department, destroyed the nonorthodox base of this “N.A. Siberia” university’s holdout econ department and loaded the department up with econometricians and other economic servants of capitalist hegemony. Those marxist economists (eg. John Loxley) spent years strategizing, designing and implementing economic alternatives–including nascent social enterprise networks. They have a lot to contribute right now.

Left political-economy is not dead and it’s not irrelevant. Go into an anarchist bookstore (eg. Viva Mondragon in Winnipeg), and there are shelves and shelves of contemporary and historical books describing and proposing alternative economies. They’re just written by insufficiently-connected people. It’s not their individual fault they’re not Weber’s apocryphal charismatic prince.

Moreover, there are still some of us sociologists who (semi-)self-teach political-econ, as well as great non-neoclassical economists who’ve been forced out of economics, to hang their shop sign in sociology, geography and business departments. The Union for Radical Political Economics, for one, is full of them. Monthly Review folks are terribly proud of their political-econ analyzing record.

The problem right now is that while decent job markets have constricted with decades of neoliberal inequality initiatives–including the campaigns to wipe out working class institutional bases such as unions and social citizenship rights, at the same time, we’ve been assaulted by a concerted, coordinated, funded conservative campaign to ferret the non-conservatives out of the paid-ideas market.  Zombie econ and postmodernism are symptoms of that doxa chokehold, not failures we need to take responsibility for. They are the epistemologies over which elites still cast their heartening, radiant blessings.


To address the continuing political-econ literacy and innovation deficit, in and out of paid employment, knowing we have no shining elite knights to grant us courage through the long dark night, we need to be collectively committed to honing the work (that is, in a disciplined way, forgiving temporary missteps, forgoing ego indulgences, and pointing out fruitful paths), connecting to past thinkers, promoting, and celebrating the leftist political-economists who have managed to haul themselves through this hegemonic war period, rather than waiting for another Keynes.

We are not Blaine.



Elites aren’t any greater minds or men than non-elite intellectuals; they make mistakes and develop too; they just have head starts and better PRespecially in a high-inequality era. It’s not a deal breaker that non-elite intellectual contributions tend to have to occur later in life. But we need to make up for no PR–Because relentless exposure to oppositional framing can wear away at individuals’ and communities’ confidence and sense of purpose, undermining development and the adoption and diffusion of ideas. 


Advancing ideas broadly is very hard to do without the grease of money and the protective social networks money forges. But as MR’s John Foster reminded us (but hardly practiced) at UO, feminist successes came with promoting their own institutions and networks. Do we need another White Hope (White Emigration)? Why not recognize the special social challenge of a movement that valorizes and champions the working class within a capitalist milieu, and strive to husband socialist political economics to the very best of our social abilities?

(*2) This statement is tongue-in-cheek. Signals: 1) the context: I am saying that “middle” (working)-class intellectuals contribute good econ work that can be more widely distributed if such intellectuals recognize and strategically act upon the knowledge that they are working without the facilitative social status conveyed elites; and 2) I symmetrically apply the complementary “heroes” trope in this sentence to both left elite intellectuals and left middle class intellectuals. These two constructions should be able to indicate to a good-faith reader that I am not actually critical of working class people’s facial features. If this were a real publication instead of an obscure blog entry, I would probably get rid of it, but it’s not and the phrasing is intended to reinforce my point that working class people are not viewed with as much credit as elites are–a social phenomenon. However, I readily concede that as rhetoric, the tongue-in-cheek phrase’s (“weak chinned”) castrating qualities  probably outweigh its metaphorical utility. 


Further clarification:


Building Credit for Non-elite Political-economic Ideas

The point I was making above is that rather than getting frustrated with leftists for leftie social movements’ current lack of access to economic knowledge, we ought to recognize something sociological–that at this historical juncture there is a lack of political-economic leadership– both a lack of union leadership (due to the decimation of unions), and a deficit of critical mass or elites engaged with left political-economics (Compared to the early 20th century. Because of the lack of legitimate communist threat/alternative.), and because of deliberate conservative organizing as well as neoliberal drift, and this means that the spread of left political-economic ideas in the contemporary era is excessively constrained. Without critical mass or the (capitalist elite) leadership that can jumpstart it (example here), the motivation to economic literacy in the left is dampened.



We (Americans, Leftists, scholars) hate to think of ourselves as impressed with elite leadership; but it’s time to face it. We’re human. We’re social. We respond (not necessarily happily or healthily) to social status. Frankly, we are not living in an intelligence meritocracy, and as brilliant as they are, the contemporary editors of Monthly Review don’t have enough capitalist gravitas to impress even Leftists into becoming literate in political-economics. This is a social problem that can’t be beat by simply doodling a bit more upon a gigantic, diverse body of elaborate theory and observation.


Yes. This is quite a conundrum for the Left. It’s a strategic challenge to take seriously.

If we analyze the political-economics literacy deficit and strategize how to combat it, which I agree is important, I suggest what we need is some creative thinking about what to do about the smaller social networks, and especially-contested legitimacy accompanying good work by non-elite intellectuals. 



Screw it. Our work is good. And the only instance in which  a liberal or conservative is going to acknowledge that is for divide-and-conquer purposes. Fuck ’em. Hold up your head and don’t apologize for another Leftist’s work, even if apologizing is an oblique way to flatter your own doubtlessly-, comparatively-superior work, you easily-manipulated psychological weakling.


Discourse, communication is far from simple. Intention is difficult to discern without being able to grant people a certain amount of credit; the elite sense of entitlement and elite social networks help a lot with that. Does the Left have social strategy that can compensate for a lack of elite leadership?


Obviously, we need to organize working-class unions as a long-term strategy. As well, movements such as OWS can help develop the credit needed for sowing political economic ideas and literacy. 



My simple suggestion was that we ought to consider as well whether political-econ leftists could be better disciplined to support each other–to simulate the credit that people give over to elites, which allows ideas and influence to develop and spread. 


A war of position is going on around us. Capitalist conservatives, their conservative managers and hegemonists, and their multiple layers of publicly-funded police are one obvious bloc opposing Left community and ideas development. As well, capitalist conservatives’ ally, liberals (including North American unions, which are not by, of and for the working class) will continue to counter the non-elite credit conditions for the spread of political-economic literacy. 


A bit on their back foot right now, liberals will, for one, simply lie about the content of left or Marxist political economics. Brad DeLong does this. Today he claimed that because of the labor theory of value, Marx opposed Keynesian monetary policy. Yeah, um, WTF? For two, they may invoke Magical Rectitude, reasserting the traditional, elite-sanctioned, pomo de-valorization of political-economic literacy, which in the present case may be boiled down to, “This [Occupy movement] is trivial. Who cares how ‘white Americans’ (contemporary global elite code for ‘working class’) are faring? They’re a mob of assholes. Won’t someone please think of the [insert identity group].” 

The liberals’ Helen Lovejoy strategy



To foster the credit conditions needed to improve Left political-economic literacy, the Left needs to keep liberals on their back foot, by not engaging their opposition directly, but recognizing their identities and cultural contributions, while continuing to build and assert an inclusive working class praxis


The Left has to take a page out of Corey Robin’s analysis of conservatism, successful Occupy mobilizations, Marx’s “Communist Manifesto” model, and Barbara Ehrenreich’s Dancing in the Streets analysis, and create a privileged space for passion–writing with passion, speeches with passion, singing and dancing with passion–and figure out how to link it to economic literacy. Most (though not all) people who live in unequal societies are mobilized with passion. The sign that our own minds have become colonized and crippled by the opposition is when we’re incapable of expressing ourselves with passion. People read (masculine) passion as confidence, and we need confidence in our political economic literacy.


Have and build confidence in our capacity for solidarity. Have and build confidence in our capacity for political-economic literacy. Have and build confidence in our capacity to disrupt the system and, if not overcome it at this moment, at least modify its components.



(*1) The blogger appears to be a student of Alan Freeman and Radhika Desai. His post is interesting in that if you follow comments and links you will find out part of what Alan Freeman is up to intellectually, which I’ve personally found impossible to pry out of him in polite conversation; and you’ll find out that Radhika and Alan are part of an effort to publish a series (including their own writing as well as works by Marx, Keynes, & Perry Anderson) on “The Future World of Capitalism.” 





Actually, over the weeks, I’ve come to disagree a little bit with the “economics-ignorant Left” formulation of the problem. As Nancy Fraser discusses in “The Cunning of History,” 1970s anti-economism met neoliberalism and devolved into excessive mass disengagement with political economy. But that is not all. Economics promoted itself as a capital-serving profession by becoming proudly divorced from, contemptuous of, and unaccountable to Left constituencies and intellectual perspectives. It has been personally hardest on the Left economists, and they are due respect for their monk-like perseverance. For the Left it was a tragedy of separation and cloistering that cannot be resolved quickly with simple exhortations for everyone to submit to the economists. While I argue above for confidence, I think economists could stand to recognize that their oftentimes-prohibitive competitiveness and lack of cooperative humility extend from their deep socialization and  identity within a social-professional group that crippled its own critical capacity.

Well, I’m accustomed to the smooth ride. 
Or maybe I’m a dog that’s lost its bite.
I don’t expect to be treated like a fool no more. 
I don’t expect to sleep through the night.

Varoufakis: Today’s Economists Can’t Comprehend the Economy

“(The) Nobel Memorial Prize has been established for the wrong discipline: the discipline of economics, which, by design, subverts even the best intention to serve humanity” (Yanis Varoufakis, “They Don’t Make Them Like They Used To!“).

The Tragedy of Paul Samuelson

Paul Samuelson was “the man who brought Keynes to America by subsuming him under a formalist logic which effaced everything that Keynes had actually said.”

“Keynes’ greatest contribution was to alert us to a disarmingly simple truth: in a complex, financialized capitalist economy, it is impossible (rather than just hard) to derive, by analytical reasoning, the well defined mathematical expectations which one needs to “close” a macroeconomic model. Drop this insight, and you have lost all that matters in Keynes’ analysis of the Great Depression in particular and, more generally, of capitalism’s tendency to stumble and fall on its face.”

Samuelson contributed to economics in the 1940s (in Varoufakis’ words) the formalist approach:

1) Identify all the endogenous variables connected to the phenomenon at hand.
2) Minimize the number of exogenous variables that explain the endogenous variables.
3) Model the determination of the endogenous variables in the context of some constrained optimization problem, which enables the analyst to perform comparative static analysis by means of the calculus of variations (in the manner of 1930s thermodynamics).

Samuelson sold Keynsianism encased in economic formalism to a US elite audience “seeking truth in mathematics (as opposed to using mathematics as a mere tool).” This economic formalism “exuded the confidence that economics is reducible to ‘closed’ mathematical models which leave nothing (except preferences) for history, philosophy, or the rest of social sciences to explain; and (in Samuelson’s hands) was sufficiently ‘liberal’ to pass for a non-ideological, impartial manual successfully incorporating (something resembling) Keynes’ thought within its mathematics.”

Introduced by Nash, Debreu, and Arrow in 1950, economic formalism involved three moves consistent with Samuelson’s approach:

1) Set aside the engineering approach according to which mathematics is used in order to model some actually occurring dynamic.
2) Focus instead on general theorems that prove the existence of states of rest (or equilibria) on the basis of given axioms.
3) Treat the proven theorems as the uniquely legitimate source of economic wisdom.

“Surely against his own intentions, Samuelson helped formalism establish a beachhead from which, soon after, the final assault on logical, humanist political economics would be launched with deadly precision,” states Varoufakis, who explains why and how. To make his mathematical General Equilibrium model work, Samuelson had to deny what Keynes observed. Where Keynes said that in a recessionary environment, a fall in the wage (interest rate) will not boost employment (investment), Samuelson’s mathematical model asserted the opposite as an axiom: both investment and employment will rise, ceteris paribus, if wages and interest rates fall. “The moment the post-war miracle hit a bump (caused by falling profitability and by the USA’s slide into threatening twin deficits, courtesy of the Vietnam War and LBJ’s Great Society),” economic formalism ditched any relationship with Keynesian liberalism and went conservative.

“From that moment onwards, economics was dominated by the unbearable lightness of the euphemistically named “rational expectations” hypothesis, the risible “efficient market” hypothesis, and all their derivative drivel. What was remarkable, and exquisitely saddening, was how quickly Samuelson’s former disciples discarded the great man’s single most searing memory of his youth: that unfettered capitalism produces crises that economists must tame, rather than assume away,” explains Varoufakis.

In related news, Dean Baker offers a hilarious joke I recommend for the office water cooler: “How many economists does it take to see an $8 trillion housing bubble?
Berkeley economist J. Bradford DeLong was and likely still is a virulent anticommunist liberal. But he’s found some new sources of ire as of late. Perhaps the small virtue of the present age is to disaggregate the left-liberals from the right-liberals. Here’s DeLong’s piece on what he’s learned over the past 3 years. Hint: “Macroeconomics should be banned.”