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Tuesday, January 19, 2016


Now that I have completed Lecture Three, I have a bit of time to respond to some of the very interesting comments posted about Lectures One and Two [I am resisting the temptation to post Lecture Three now, because I see that many more people have viewed Lecture One than have viewed Lecture Two, and I am still hoping some of those first-timers will take a look at number two before I lay number three on them.]

Let me begin with a two-part comment by Enoch Lambert.  Dr. Lambert recently completed his doctorate at Harvard and is now a Postdoctoral Fellow in the UNC Chapel Hill Philosophy Department.  Last semester, he made some very valuable contributions to a little study group I conducted on Rawls' A Theory of Justice.  Here are his comments:

" Let me ask about the third criterion for a claim's ideological status. To whom, and under what conditions, must ideological claims be so obviously false? Must they be so on their face? If they are so obviously false, how can they serve to protect the interests they are designed for?
Part of what makes me wonder is that the claims of the economists you mention, backed as they are with the mathematics you mention, do not seem so obviously false on their face. And I dare say I know a number of people smarter than I am, whose good faith I also have every reason to trust, who are absolutely convinced by their arguments.

[He then continues]  I realized I should have said something stronger and clearer about the folks I mention in my last sentence. It's not just that there's no reason to doubt their good faith. There is good reason to think they are not self-deceived (I'm referring to friends who have been economics majors/grad students). If I have any reason to think that I am not self-deceived about my beliefs in other fields that I have received extensive training in, I don't see why such should not extend to them."

There is a great deal to say about Enoch's comments.  I am going to resist the temptation to talk in very general abstract terms, which is the way ideology is usually discussed.  Instead, I will  give one example.  This is a mathematical example, which will speak to Enoch's remarks.  I could lay it all out in precise mathematical detail, but I fear that would alienate most of my readers, so I shall try to do this math-lite.  If anyone really wants the hairy details, just ask and I shall supply them.

Economists frequently seek to explain, or to justify, the wages and salaries paid to employees of firms and the profit earned by the firm by reference to the "marginal product" of the employee or of the capital invested in the firm.  The intuitive non-mathematical notion is this:  If one holds everything else in a firm constant and hires one more worker, then the change in the firm's output that results can be thought of as the "marginal product" of that employee, the amount at  the margin that the employee adds to the firm's output by working at the firm.  If the employee is paid less than the dollar value of his or her marginal product, then hiring that person has benefitted the firm, because the profit, after subtracting that salary, will have gone up.  If the employee is paid more than the dollar value of his or her marginal product, then his or her employment is hurting the firm, because the profit, after subtracting that salary, will have gone down.

A production function of a firm [or of an entire economy] is a function that relates the set of inputs into production with the maximum output attainable with those inputs.  [This is actually a very complex notion that even economics students frequently do not grasp, but that takes us too far into the weeds.]   Assuming that the production function is continuous [a simply enormous, totally unjustified assumption, by the way], the marginal product of one unit of input at some level of production [either a unit of labor or a unit of some non-labor input] is then the partial derivative of the function at that point [i.e., set of inputs] with regard to the variable representing the input in question.

Still with me?

Enter one of the all-time great mathematicians, Leonhard Euler, an eighteenth century Swiss mathematical genius.  Euler proved a very elegant theorem regarding homogenous functions [never mind.]  A century and more later, economists gave it an economic interpretation.  Suffice it to say that if the production function for the entire economy is linear homogeneous [a special case of homogeneous functions], then it follows that the amount of the income of the economy paid to labor as wages in a free competitive marketplace and the amount of the income of the economy paid to capital as profit exactly mathematically equals the dollar value of the marginal product of labor times the total number of units of labor plus the dollar value of the marginal product of capital times the number of units of capital.  And in this case, any attempt to alter the wages [for example by minimum wage laws] will result in inefficiencies and a reduced total output.  So, mathematics tells us that all is for the best in the best of all possible worlds so long as government keeps its grubby hands off wages and profits.

Q. E. D.

Trained economists are forever appealing to this theorem implicitly or explicitly to justify  the inequality in capitalist society.

Except, that their use of the theorem is, to use a technical philosophical term popularized by my old friend Harry Frankfort, bullshit.

It is not hard to prove mathematically that an economy with a linear homogeneous production function is an economy exhibiting constant returns to scale.  It is [same thing, mathematically] an economy in long-run equilibrium.  It is [again, same thing mathematically] an economy with a zero rate of profit [not a zero rate of interest -- that is different.]

Has there ever been a capitalist economy exhibiting constant returns to scale?  Nope.

Has there ever been a capitalist economy in long-run equilibrium with a zero profit rate?  Nope. 

Could there be?  Nope.

How do I know that every professionally trained economist in America knows this?  Because every professionally trained economist in America has taken a graduate course in Microeconomics, and this stuff is part of the standard curriculum.  How do I know this?  Because in 1978 I sat in on the graduate Micro course in the UMass Economics Department.  We used Henderson and Quandt , a standard text then [and still available, Amazon tells me.]

However, this stuff is not taught in standard undergraduate Micro courses, where the professors can con the students into thinking that mathematics has proven Republicans to be right.

Is this just a con, or have the economists drunk their own Kool Aid?  I rather suspect the latter not the former.

Just sayin...




Jerry Fresia said...

And they drink their own Kool-Aid because they have material interests that cloud their otherwise bright minds?

Robert Paul Wolff said...

Yes, and because their entire world view, which they have absorbed from their class position and education, closes off any possibility of questioning what is right in front of their eyes.

In the case of economists, it is also their fascination with and seduction by mathematics. The only way to have any hope of disabusing them of their fantasies is to learmn the math and turn it against them, I believe. One of the great jokes is that it is really just undergraduate math, not that big a deal, but in the world of the Humanists, it looms large.

s. wallerstein said...

There are psychological mechanisms by which otherwise bright people fail to see what does not suit their interests, just as the otherwise bright people in the South African restaurant failed to see that the black people serving them were not only politically aware observers of their conversations, but also likely to be African National Congress sympathizers. Those mechanisms are probably stronger than usual in members of those groups which consider themselves to have superior or higher knowledge, such as academic economists, since their blindness is constantly reinforced by other group members.

In any case, I want to thank you, Professor Wolff, for these interesting lectures. I'm looking forward to listening to the other lectures and I'm happy to see that your teenage trips from Queens to Manhattan to learn the violin were fruitful, as I see that in your personal description you note that you play the violin.

Wallace Stevens said...

I think that you are a bit too loose with the words "explain" and "justify". They are not the same. Neoclassical theory attempts to explain the distribution of income under certain assumptions: if markets are perfectly competitive (including no unions or minimum wage), if we have continuous returns to scale, etc., etc. then one can expect the distribution of total income between capital and labour to be equal to their respective marginal products. Now, one can legitimately challenge that the assumptions are simply too starkly at odds with reality for the theory and its results to be of any use. And one could propose more realistic assumptions and build a more plausible model, based on those assumptions, that might point to some different conclusion about the distribution of income. But one would still have "justified" nothing. One would simply have offered what might be a superior explanation (this is what, in my albeit limited understanding, I see Piketty doing). It would be a great, and unwarranted, leap to go from there to saying that you have justified something or that all is for the best in the best of all possible worlds (certainly, that is not what Piketty concluded).

There is no question that the conclusions of neoclassical economics can, and have, been used for ideological purposes as Mannheim would define "ideological." But I feel that this is a bit like Darwin being hijacked by social Darwinism, or, for that matter, Marx being hijacked by the Soviets. For fun, the next time you meet one of these ideologues, ask them what impact the original distribution of capital has on the theory and its conclusions (Answer: None). Then suggest that it is indeed all for the best in the best of all possible worlds, with the modest proposal that we transfer all of the ownership of capital from the plutocrats to a giant public pension fund that invests for their retirement on behalf of the workers. The whole, mathematically elegant neoclassical machinery—regardless of whether you think it is realistic or not—runs just the same and points to exactly the same conclusions, independent of who owns the capital.

Also, it is worth remembering that Marx's methodological approach, although less mathematical, was not that different from the neoclassicals in its use of simplifying assumptions like perfect competition. And all theorizing involves some degree of reduction.

Finally, what does neoclassical economics tell us about the minimum wage? It says that if you impose a minimum wage above the current market rate, then, like anything that goes up in price, you risk causing a drop in demand, meaning, in this case, unemployment. Now, some convincing empirical studies for the US have shown that, in small doses, there is no such effect, or that employment actually appeared to increase after the minimum wage was raised. Neoclassical theory is actually able to accommodate this kind of result—even first year students learn about pure price effects and versus income effects and how the latter can overwhelm the former. But I don't think anyone really disagrees with the prediction that, if the minimum wage were raised, say, to $1,000 per hour, employment would go down. And so really the only point of debate is at what point will it NOT have this effect. My sense is that it is far below what most people would think of as a living wage--particularly for anyone with dependents. But just because neoclassical economics tells us this, it does not mean that this must, necessarily, be the end of the story. We can for example have a guaranteed annual income that "end runs" the market. The theory explains and predicts what will happen in the context of a labour market. We ignore that warning at our peril. But it doesn't mean that we then have to conclude that there is nothing to be done, the poor will always be with us, etc. We just have to look elsewhere for solutions.

Michael Llenos said...

Dr. Wolff,
The Kool Aid is needed. But that same Kool Aid is not needed if capitalist countries obey The Torah's 'Second Law' commandment of every 7th Year a total Relaxation of Debts (Deuteronomy 15:1-6). This, of course, will not happen without a single Kaiser to rule the Roman (or western) world--through a Maudhi, annointed person, etc.. Julius Caesar was in favor of a 'total relaxation of debts' for Rome, but he had strong detractors like Marcus Cicero that famous orator, etc., and Caesar was murdered before he could enforce such a law for the Roman people. Alexander the Great and the Persian monarchs (since Cyrus) came close but no cigar (if you believe Josephus) when they gave the Jewish people in Jerusalem every 7th year a relaxation from taxation--although, it wasn't continued after Alexander's death. I assume the 7th year total relaxation from Debts would follow under John Nash's 'Game Theory' for modern economies as opposed to Adam Smith's economic theory. Imagine what it would be like if you had your credit cards and other loan balances automatically paid off every 7th year by the U.S. Government? With the addition of computer technology, abstract economics makes a 7th Year Relaxation of Debt more feasible. However, it would probably take more gold and silver bullion that has ever been mined in the world to do this if done honestly. Unless the U.S. Congress followed the example of Augustus Caesar and burned the debt records of every citizen of Rome around the time of the Epiphany. I guess, in abstract economics, if you accumulated a large loan debt, every 7th year your debt would go back to a zero balance and the banks would, by governmental fiat, have added to their computer ledgers everything owed to them. This Mosaic Law ordinance was never adopted by the Jewish people except perhaps in the plenty of Solomon's time. Though, that has not been recorded.

Ted Talbot said...

The patent falsity of the claims in question may not be a necessary condition for their being ideological. If the claims in question are normative, then their truth or falsehood is after all not a straightforward empirical matter. But Raymond Geuss notes that a form of consciousness may be considered ideological (or ‘false’) because of its functional or genetic properties, so that “...if I were to come to know something about the functional properties of this form of consciousness, I would no longer retain it. The form of consciousness qualifies as ‘false’ or a delusion because my retaining it depends in some way on my being in ignorance of or having false beliefs about its functional properties.” (Geuss, The Idea of Critical Theory: Habermas & the Frankfurt School (Cambridge, 1981), p. 19.)

Ted Talbot said...

Anyway, Mannheim tries to steer clear of the issue of the „objective“ falsehood of the ideological beliefs, etc. making up false consciousness by advocating a pragmatic/therapeutic approach to ideological critique: “We have a case of ideological distortion, therefore, when we try to resolve conflicts and anxieties by having recourse to absolutes, according to which it is no longer possible to live” (p. 96). So it may not be the “class-unattached” intelligentsia per se who provide us with guidance, but therapy (stimulating self-reflection) with all its non-discursive aspects. Which of course takes us to the issue of the class interests of the therapists.

Jerry Fresia said...

Might it be safe to say that your lectures are about "woke?" Or perhaps I should say you, Professor, are woke!

I just became aware of that concept (woke) yesterday when activist (BLM) DeRay McKesson, on the Colbert show, said that
BeyoncĂ© is “more woke than people give her credit for.” I think the term derives from the notion that one awakens as in one woke up.

This from google:

"The phenomenon of being woke is a cultural push to challenge problematic norms, systemic injustices and the overall status quo through complete awareness. Being woke refers to a person being aware of the theoretical ins and outs of the world they inhabit. Becoming woke, or staying woke, is the acknowledgment that everything we’ve been taught is a lie (kind of/mostly)."

So to be woke is to grasp ideological critiques? Who knew? (And if I'm not mistaken, I recall the Professor having a word the
new use of language!) I like it. It's a simple way of pointing to ideology.

Chris said...

I have a question about Lecture 1. I've ordered Mannheim's text and plan to read it soon, but until then I'm hoping this question can be addressed. I completely see, and agree with, your ideological claim regarding economic mathematics. And I agree Marx was right to point this out. I would put more emphasis on labor-time and labor-power as his ideological critique, but that's not so important.

However, what about analytic philosophy and the tools of analytic philosophy (formal and informal logic, and variations of syllogistic reasoning)? You gave the standard mortal Socrates example from phi 101. Are these also tools, like mathematics, used to disguise some position of power, and thwart alternative knowledge claims (e.g., dialectics, partially kidding), or are they good tools, which ideological people use nefariously? It seems like they may be 'modes of thought' as Mannheim is concerned with, and then the questions becomes, are there good/bad modes, good/bad tools, or is it just good/bad people?

Ted Talbot said...

Sartre once spoke of the "murderous gaze of analytical reason" directed at dialectical thought, for example. I'm also reminded of RPW's remarks (in his biography published on this blog) on the "But that's not philosophy" argument analytical philosophers employ to evade interesting issues.

Chris said...

I sometimes agree with Sartre on that point. The only reason I got into philosophy was Socrates' Apology, where he's tried for supposedly corrupting the youth, challenging the state, and questioning the gods. I always presumed that was the role of the philosophy. The further I go in academic philosophy the more I find the narrower and narrower corridors of analytic thought have absolutely nothing to do with the initial Socratic philosophical undertaking I was interested in. But that's all an aside I suppose. Or a personal problem.

formerly a wage slave said...

Steve Keen made an argument along the same lines in his "Debunking Economics". That is, he argued that there are articles in mainstream economics journals that undermine most of what's taught (at undergraduate levels) as Economics and also that the same refuted doctrines influence policy. Keen suggests those articles are either ignored by Economists, or it is assumed that the details of the math. is someone else's job. In Ha Joon Chang's remarks about Neo-Classical Economics in his "Economics; a User's Guide" he says something along the lines that it's not the overwhelming evidence on the side of the theory which has made Neo-Classical economics dominant....(It's too bad I can't find the sentence to quote it; and it was made with a certain amount of healthy irony and under-statement.)