NARCISSICISM, SELF-REFERENTIALITY, FREUD, AND ME

One of Sigmund Freud's more disturbing insights was the intimate psychodynamic connection between the toddler's manifest pleasure in and fascination with his or her feces and the tendency of creative artists or intellectuals to lavish attention on their own adult cultural and intellectual productions.  Which is my extremely circuitous way of reporting that I have decided to create a series of e-volumes of the occasional posts that have appeared on this blog in the last five years.  My multi-part Tutorials, Mini-Tutorials, Micro-Tutorials, and Appreciations have already been made available as Volume IV of my Collected Published and Unpublished Papers, titled A Head in the Cloud, available on Amazon.com.  It would be disingenuous, not to say downright false, for me to claim that there has been any demand for this new undertaking.  But I am old enough and shameless enough to acknowledge that in re-reading my previous posts [i.e., playing with my feces], I experienced a certain pleasure, and on the off chance that anyone beside myself would like a convenient way to re-visit those old words, I am now undertaking to make a selection from the flood that has poured onto this page.

My plan is to create a series of volumes, each of which is devoted to the selected posts from a single year, in the order in which they appeared.  As each volume is completed, I will archive it on box.net, where it will be available to any and all.  I figure this should keep me out of trouble for a couple of months.

PIKETTY RESPONDS TO GILES

Professor David Auerbach has kindly sent me a link to the response Thomas Piketty has written to the criticisms of Capital in the Twenty-First Century published in the Financial Times.  You can read the response here.  Needless to say, I am not competent to offer a professional judgment on the merits of the criticism and the response, but I have read what Piketty has to say and it sounds eminently sensible to me.  As I have already indicated, the crucial issue -- namely, the grotesque inequality of wealth and income in modern capitalist states -- is really not in dispute between the two authors.  Those of us on the left ought to keep that in mind, and not make the mistake of supposing that somehow capitalism is exonerated if it should turn out that Piketty has overestimated the rate of growth of the inequality.

GIANTS IN THE EARTH

The required reading in our Forest Hills High School English classes in the late '40s was an eclectic mixture of works that someone in the downtown Manhattan headquarters of the Board of Education decided were age appropriate.  They included Edvart Rølvaag's saga of pioneer life, Giants in the Earth, Shakespeare's Julius Caesar, and Lincoln Steffens' Autobiography.  We were required to memorize ten lines from the Shakespeare [any ten lines], and since I have always been simply awful at memorization, I chose the most famous lines, the opening of Marc Antony's speech, "Friends, Romans, and Countrymen/Lend me your ears."  It was all I could do to keep those ten lines in my head for the brief time that we were required to recite them, and today I might at best get through the first four.   I recall watching the Johnny Carson Late Show one night some years later when the great old Canadian actor Walter Pidgeon, who was near the end of his life, was his guest.  Pidgeon turned out to be a total flop as a guest, projecting no personality whatsoever, and Carson labored mightily to keep the segment afloat.  At one point, Pidgeon told Carson that, as a discipline, he had long ago adopted the practice of memorizing a poem every night before going to bed.  The previous evening, he said, he had memorized a little poem about the donkey that Jesus rode into Jerusalem on what Catholics now commemorate as Palm Sunday.  Carson asked him to recite it, and as Pidgeon began, an astonishing transformation came over him.  His face lit up, his voice lowered, and he became WALTER PIDGEON, famous actor.  As soon as he had concluded the poem, the light went out and he again became a boring old man.

At any rate, back to Lincoln Steffens' Autobiography, which is actually the inspiration for this post.  Steffens, for those of you too young to recall, was a great muckraking journalist of the late nineteenth and early twentieth centuries.  In the Autobiography, he tells the story of how he and Jacob Riis, another great muckraker on a competing New York daily, created a crime wave one summer out of a mixture of boredom and competitive spirit.  You can read the entire story here.   In a nutshell, Steffens and Riis, both city reporters, began reporting in their papers every crime on the police blotter as it was recorded, regardless of whether it was especially newsworthy.  The reading public soon became alarmed at the dramatic rise in crime, quite unaware that there had been no change at all in the incidence of crime, only in the incidence of reporting.  Finally, Teddy Roosevelt, who was at the time the President of the Police Board, told Steffens and Riis to cut it out.  Since they were both friends of T. R. they complied, and the public was much gratified that order had been restored to the streets and homes of the city.

I was reminded of this story after I posted that rather dour comment yesterday with the Yeats poem.  One of the side effects of the advent of the Internet is that every ugly thing anyone does or says anywhere gets recorded by someone with a cell phone and in less time than it takes to text OMG goes viral.  Since there is a Gresham's Law of journalism, according to which bad news drives out good, obsessive surfers like me are fed an unrelenting diet of horribles.  No wonder Tiggers turn into Eeyores. 

I shall strive to retain my balance in the future [even while tripping and falling flat on the pavement.]

A BRIEF RESPONSE TO JACOB T. LEVY

Professor Levy of McGill University responded to my thought experiment with this comment:

"This proves too much, doesn't it? The thought experiment as stated doesn't even depend on increasing income inequality. What it seems to show is "*any* income inequality must lead to increasing wealth inequality," since even at static income inequality, the rich will save more than the poor, year after year.

But if things were that simple, presumably we wouldn't have needed Piketty at all.

Of course, there's a lot more to it-- losses as well as gains in the value of stocks or real estate are concentrated at the top; taxes and spending matter; new fortunes aren't typically the result of ordinary savings behavior; etc. But all of that means that, *regardless* of whether income inequality rises or not, it can't be axiomatic that wealth concentration increases.

Krugman's "that can't be right" is, and had better be, based on a sense of what various data have looked like for a generation, not on pre-empirical certainty about what *must* be true."

Thus far, Professor Levy.

In point of fact, my thought experiment was not intended to prove anything, and of course it does not.  [I leave to one side serious thought experiments, like that of Einstein.]  It was intended to explicate Paul Krugman's gut reaction to Giles: "That can't be right."

What Krugman clearly meant was that on the basis of his long experience analyzing macro-economic data, Giles' claim was prima facie implausible, and hence called for some very close examination.  Since I was not sure that everyone would see the manifest implausibility, I decided to spell it out with an elementary arithmetic example, my reason for this being my frequent observation that people can read general remarks and nod agreement without really understanding the quick process of reasoning that underlies them.

Professor Levy is quite right, by the way, that the reasoning in the thought experiment can apply also to situations in  which income inequality is not rising.  That is, put in a polite, politically safe fashion, the central point Marx was making about the way in which the workers, by their labor, create the accumulations of capital that then stand over against them and tyrannize over them.

Krugman's point, I take it is this:  In a stable situation with constant, not rising, income inequality, one would have a constant distribution of accumulated wealth only if the savings proclivities of the rich were the same as those of the poor [adjusting, as Professor Levy suggests, for the vagaries of stock tumbles, profligacy among the rich, and so forth.]  But if income inequality is soaring, as Giles agrees it has been, then a constant distribution of accumulated wealth would require that the ever richer rich actually save a smaller proportion of their income than the poor, and that, as Krugman says, "can't be right."

Let me be clear now, since apparently I was not the first time round.  "Can't" does not mean, in this context, that the case is closed and no further investigation is required.  It means something like "Whoa!  That need some careful looking into.  Let us see what data we have that can throw light on this, and while we are at it, let us look closely at how Giles arrived at his conclusions."

Let me close with some words about the practical problems Piketty, Saez, and others have faced in carrying out their investigations, problems that exist as well for those who wish to check or contradict their findings.  A large national economy is an extraordinarily complex social phenomenon, not to speak of the world economy.  Piketty spends a good deal of time in his book explaining the nature of his data sources and indicating their fragmentary and nationally specific origins and character.  Even statistics as constrained and specific as the monthly employment numbers for the American economy are the product of a complex sampling procedure, carried out by the Bureau of Labor Statistics, that poses all manner of theoretical and practical problems.  [Incidentally, these problems are well understood by the people who generate the numbers, and in their publications they talk about their processes and the limitations of those processes with admirable objectivity, openness, and professionalism.  I have spent some time reading those publications, and I recommend them to you.  They are real eye-openers.]

Piketty has been compelled to make a series of judgment calls in order to aggregate data from diverse sources along the way to producing his long-run secular time series and graphs.  He knows that these choices are not inevitable or open-and-shut, and that serious scholars can perfectly well argue for somewhat different choices that in turn generate different results.  One of the ways that macro-economists weigh the defensibility of their choices is by their "robustness," which is to say, the extent to which their overall conclusions remain even when different plausible choices are made regarding which data to use, how to make varied data sets compatible, and so forth.  If a small, reasonable difference in one of those choices generates very large differences in the results, then the results cannot be said to be robust.

Krugman and Piketty [and Giles?  It is not clear] understand this, and recognize that the conclusions of Capital in the Twenty-First Century must be capable of withstanding this sort of critical examination by scholars well-versed in the data sources and techniques of analysis.  I completely lack the knowledge and experience to carry out such a critique, but I think I do understand what is required and what is at stake.

One final word:  There appears to be no disagreement whatsoever about the extreme inequality in the distribution of both income and wealth, however one measures them, although there may be legitimate disagreement [I am not sure] over the trends now manifesting themselves.  From my point of view, that agreed-upon inequality is all that is required to justify and underpin a radical critique of the capitalist system that produces and reproduces it.

THE DOWN SIDE OF BEING EIGHTY

I set out at 5:45 this morning on my daily walk, expecting to spend the time crafting a reply to Jacob T. Levy.  As I crossed the street in front of my building, I looked up at a ledge where a murder of crows [as I have been taught to say] had gathered.  My foot caught the curb and I went sprawling, banging my elbow, knee, and hip and scraping the fingers of my right hand.  No major damage, but enough blood to dissuade me from continuing my walk.  After I had bandaged myself up with the aid of Susie, I went across the street to Starbuck's and had a chocolate croissant.  Past experience suggests that it will all hurt for about a week or more, since old folks like me heal slowly.

Rats.

A MESSAGE CIRCULATED BY WILLIAM POLK

Dear Colleagues and Friends,

                With everyone's attention focused either on the European elections,  President Obama's speech at West Point or the Ukraine, a story by Eric Schmitt in The International New York Times of Tuesday, May 27, 2014 may not have caught your attention.  I believe, however, that it provides an insight into some of the major problems of American foreign policy. 

                What Mr. Schmitt reports is that the US has set up covert programs to train and equip native teams patterned on their instructors, the US Army Delta Force in several African countries.  The program was advocated by Michael A. Sheehan who formerly was in charge of special operations planning in the Department of Defense and is now, according to Mr. Schmitt, holder of the "distinguished chair at West Point's Combating Terrorism Center."  Mr. Schmitt quotes him as saying, "Training indigenous forces to go after threats in their own country is what we need to be doing."   So far allocated to this effort, Mr. Schmitt writes, is $70 million, and the initial efforts will be in Libya, Niger, Mali and Mauritania.

                How to do this, according to the senior US officer in Africa, Major General Patrick J. Donahue II, is complex:  "You have to make sure of who you're training.  It can't be the standard, 'Has the guy been a terrorist or some sort of criminal?' but also, what are his allegiances?  Is he true to the country or is he still bound to his militia?"

                So let me comment on these remarks, on the ideas behind the program, its justification and the history of such efforts.  I begin with a few bits of history  -- Disclosure: I am in the final stages of a book that aims to tell the whole history,  but the whole history is of course much too long for this note.

                Without much of the rhetoric of Mr. Sheehan and General Donahue and on a broader scale, we have undertaken similar programs in a number of countries over the last half century.  Iran, Turkey, Indonesia, Guatemala, Egypt, Iraq, Thailand, Chad, Angola to name just a few.  The results do not add up to a success almost anywhere.  Perhaps the worst (at least for America's reputation) were Chad where the man we trained, equipped and supported, Hissène Habré, is reported to have killed about 40,000 of his fellow citizens.  In Indonesia, General Suharto, with our blessing and with the special forces we also had trained and equipped, initially killed about 60,000 and ultimately caused the deaths of perhaps 200,000.  In Mexico, the casualties have been smaller, but the graduates of our Special Forces program have become the most powerful drug cartel.  They virtually hold the country at ransom.

                Even when casualties were not the result, the military forces we helped to create and usually paid for carried out the more subtle mission of destroying public institutions.  If our intention is to create stability, the promotion of a powerful military force is often not the way to do it.  This is because the result of such emphasis on the military often renders it the only mobile, coherent and centrally directed organization in societies lacking in the balancing forces of an independent judiciary, reasonably open elections, a tradition of civil government and a more or less free press. 

                Our program in pre-1958 Iraq and in pre-1979 Iran certainly played a crucial role in the extension of authoritarian rule in those countries  and in their violent reactions against us.

                General Donahue suggests that we need to distinguish among the native soldiers we train and empower those who are "true to the country."  But how?  We supported Hissène Habré so long that we must have known every detail of his life.  He is now on trial as war criminal.  General Suharto has never been charged (nor have those Americans who gave him a "green light") for his brutal invasion of East Timor.  Both probably believed that they met General Donahue's definition of patriotism.  And in Mali, our carefully trained officers of the Special Forces answered what they thought was both patriotic and religious duty by joining the insurgency against the government we (and we thought they) supported.  We have a poor record of defining other peoples' patriotism. 

                And, in the interest of more urgent objectives, we have been willing to support and fund almost anyone as long as we think he might be of value.  General Manuel Noriega, our man in Panama, went on to spend 22 years in an American prison after we invaded  his country and fought the soldiers we had trained.

                Indeed, we have a poor record of even knowing who the people we train are.  After the Turkish army carried out one of its coups in the 1960s, when I was the member of the Policy Planning Council responsible for the Middle East, I asked the appropriate branch of the Defense Department who were the new leaders.  All of whom had been trained in America, often several times  and during years.    The answer was that no one knew.  Even in army records, they were just Americanized nicknames.

                And, more generally, our sensitivity to the aspirations, hopes and fears of other people is notoriously crude or totally lacking.   Growing out of the Cold War, we thought of many of them as simply our proxies or our enemies.   Thus, we found Chad not as a place with a certain population but just as a piece of the Libyan puzzle, and today we think of Mali in the same way.  Now we are talking to training "carefully selected" Syrian insurgents to overthrow Bashir.  Do we have any sense of what they will overthrow him for? 

                Beyond these, what might be considered "tactical" issues are "strategic," legal and even  moral considerations.  I leave aside the legal and moral issues -- such as what justification we have to determine the fate of other peoples -- as they do not seem very persuasive  among our leaders.  But just focus on the long term or even middle term results of the new policy:  the most obvious is that we meddle in and take some responsibility for the politics of an array of countries in which we have little direct interest.   And often with the obvious danger of a deeper, more expensive and more painful result.  We are close to this commitment in Syria. 

                Less obvious is that our activities, no matter how carefully differentiated, will be seen to add up to an overall policy of militarism,  support of oppressive dictatorships and opposition to popular forces.  They also meld into a policy of opposition to the religion of over a billion people, Islam.    And they do so a great expense to our expressed desires to enable people everywhere, including at home, to live healthier, safer and decent lives.

                I end with a prediction:  in practically every country where Mr. Sheehan's and General Donahue's program is employed, it will later be seen to have led to a military coup d'etat.

 

                                                                                                          William R.   May 29, 2014

SLOUCHING TOWARD BETHLEHEM

On my walk this morning, I found myself anguishing over the moral ugliness of so much of the world.   Not the statistics of violent deaths and such, which may actually be showing some long-term secular improvement, for all I know, but the evil -- if I may use a theological term -- with which we are confronted as we surf the web.  The gang in Pakistan that bludgeoned to death a woman from their own family because she married a man not of their choosing -- "honor killing," it is called.  The several hundred girls kidnapped in Nigeria.  The deranged young man on the UC Santa Barbara campus.  I am invaded and overwhelmed by cruelty and hatred and wanton violence about which I can do virtually nothing at all.  My mind turns to the immortal poem by William Butler Yates, The Second Coming, with which I am sure all of you are familiar:

 

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand.
The Second Coming! Hardly are those words out
When a vast image out of Spritus Mundi
Troubles my sight: somewhere in the sands of the desert.

A shape with lion body and the head of a man,
A gaze blank and pitiless as the sun,
Is moving its slow thighs, while all about it
Reel shadows of the indignant desert birds.
The darkness drops again; but now I know
That twenty centuries of stony sleep
were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches towards Bethlehem to be born?

FACT-CHECKING PHILOSOPHER STYLE

Somebody named Chris Giles has published a big attack in the Financial Times on Thomas Picketty's data calculations, writing that "unlike what Prof. Piketty claims – wealth concentration among the richest people has been pretty stable for 50 years in both Europe and the US."  Paul Krugman remarks about this criticism, "OK, that can’t be right," and proceeds to get into the weeds a bit further than I am competent to follow.  Why can it not be right?  Using the data I dredged up on income quintiles for my "New Conversation," I carried out a little thought experiment which convinced me that Krugman's reaction is correct.  Thought experiments, I should explain, are what philosophers do when the alternative is actually going out and finding facts.  Thirty years ago, the thought experiment du jour was "brains in a vat," Hilary Putnam's gift to the philosophical world.  The latest thought experiment clogging the journals is "the trolley and the fat man" [don't ask]. 

Let us go back to that breakdown of household income by quintiles.  The upper bound of the lowest quintile, you will recall, was $20,260 in 2011.  That year, there were 121,084,000 households in America, so the lowest quintile was roughly 24 million households, all of which had income that year of $20,260 or less.  I don't know exactly how the actual incomes were spread between zero and $20,260, but let us assume that six million of them [one-fourth] checked in at $20,000 a year.  [Right away, you can see how much easier it is to carry out thought experiments than it is to go looking for data.  By the way, the most famous thought experiment in the history of science was Einstein's gedankenexperiment that led to the Theory of Relativity, so don't knock all thought experiments.]   Simple multiplication tells us that those six million households had total annual income of $120 billion.

Up in the stratosphere at the other end of the income spread, it took roughly $10 million a year in income to shoe horn your way into the top one one-hundredth of one percent of households.  [You can find the figures here].   One one-hundredth of one percent of all households is 12,100 households [division this time, not multiplication].  At ten million apiece, this group of deserving worker bees took in $121 billion, which is just about as much as those six million slacker households down in the pits.

Now, let us think about the saving habits of these two groups.  This will lead us to see why Krugman's immediate response to the Giles claim was, "That can't be right."  How much do we figure a $20,000 a year household saves each year?  My instinctive response is a snort of unbelieving laughter.  Saves?  We might more plausibly ask how much more each $20,000 household goes into debt each year!  Well, don't they put anything away? 

I am reminded of a poignant little vignette from my first year of marriage to Cynthia Griffin, which was 1962-63.  Cynthia's father was then a vice-president of Sears, Roebuck and Co.  Jim Griffin did not like me, so for the first several years of my courtship of Cynthia he did not speak to me at all, but after the wedding -- held in Cambridge, MA because I was a scandal to the faithful in Jim's seriously Catholic circles -- he relented to the extent of giving me occasional pieces of advice, as well as a collection of his old ties [the deeper Freudian significance of which was not lost on me.]  During one of the Griffins' infrequent visits to our small apartment in Hyde Park, where I was teaching at the University of Chicago, Jim took me aside and said, "Bob, let me give you some advice.  Every month, put a little bit away in stocks -- two or three hundred -- and don't touch it.  Over the years it will grow."  I was touched by his solicitude, but unfortunately was unable to take the advice.  At that time, I was making $10,000 a year as an Assistant Professor [no kidding], and "two or three hundred a month" was roughly a quarter of my annual before-tax income.

I am tempted to guess that when increasing credit card debt is balanced against money salted away in a savings account, the typical $20,000 a year household has net savings of zero, but let us give Chris Giles the benefit of the doubt and assume that those 24 million households manage to save 1% of their income each year.  That is $200 per household put into savings rather than spent on food for the children or for the co-pay on medicine that they really should be taking.  Well, $200 isn't much, but when six million households manage to save that much, it adds up -- to $1.2 billion, to be exact.

Now turn your attention to the roughly 12,000 ten million dollar a year households.  How much do you suppose they save?  If Giles is right, they also save, as a group, $1.2 billion, which works out to $100,000 a year for each household.  Is this plausible?  Hardly!  Remember that as these folks pay off their mortgages on their first, second, and third homes [not to mention the car elevator], they are saving an amount equal to the reduction in principal.  Do they have 401(k)s?  Are they buying stock?  Surely they manage to save half a million of the ten million, even in the magical year when they throw a five million dollar wedding for the family daughter.

Well, if they do succeed in paring enough cheese and scrimping on enough necessities to salt away 5% of their income, then at the end of the year they will have saved $6 billion, which means that at the end of the year they will, as a group, have increased their total wealth by $4.8 more than the six million homes at the bottom of the heap.

Over time, this surplus of accumulated wealth really adds up.   As the late unlamented Senator Everett Dirksen of Illinois said during a floor debate about the annual budget, "a billion here, a billion there, and pretty soon you have some real money."

It is transparently obvious that soaring income inequality, which Giles does not dispute, must lead to soaring wealth inequality as well, which was, after all, the central point of Piketty's book.

"I DON'T GET NO RESPECT" -- RODNEY DANGERFIELD

Serious birders are an odd sub-species of home sapiens sapiens.  [Actually, since birders will reproduce with non-birders on occasion, perhaps they should be called a breed rather than a sub-species.],  A while back, Susie and I went on a bird-watching trip organized by the Massachusetts Audubon Society.  The other members of the group were very amiable, but the real birders among them were fanatics.  There are roughly 10,000 species of birds in the world, so far as anyone can tell, and a real birder will keep a personal life-list -- which is to say, a check-list of the species that he or she has actually seen.  Just to put this in perspective, when we lived in a house in the country in western Massachusetts, I kept a mental list of the species of birds that came to our back patio, where the bird feeder was mounted on a pole.  I was pretty impressed with myself for tabulating maybe twenty-seven species of birds [including a flock of wild turkeys and a Northern Harrier that did not actually come to the feeder but did fly overhead.]  Twenty-seven out of ten thousand.  Serious birders will have life-lists on which five or six thousand species have been checked off.

On this trip, a good deal of excitement was generated by sightings of Cisticolas.  There are about 45 species of Cisticolas, and since all but two are native to Africa, American birders do not get to see them very often.  Now here is the thing.  A Cisticola is a small utterly unremarkable bird of no intrinsic interest whatsoever, save that it is relatively rare.  Birders do not seem to get excited when they spot a truly spectacular bird, like an African Fish Eagle, which looks very much like the American Bald Eagle, nor do they ooh and aah over gorgeous birds like Lilac-Breasted Rollers.  These species, and many other magnificent species besides, are fairly common, and get checked off early in a birder's career, after which they seem no longer to hold any interest.

But it is not just birders who have what I consider odd attitudes toward birds.  You might think, a priori, that a bird would be interesting as a consequence of being large or being colorful.  But one of the largest and most colorful birds in Western Massachusetts is the Blue Jay, which everyone dismisses as what we might call a trash bird.  I cannot ever recall anyone rushing up to a gathering and blurting out, "I have just seen a Blue Jay."  But people will go gaga over Evening Grosbeaks, which are quite uninteresting [although Rose Breasted Grosbeaks are rather beautiful], and a sighting of a Downy Woodpecker is considered worth a mention.

Another large impressive-looking bird is the crow.  Here in Chapel Hill, we have quite a few crows.  Sometimes as many as fifteen or twenty will gather on the roof ledges and trees near our condo building.  Crows are rather menacing, in their way, a fact that Alfred Hitchcock put to good use.  And Pigeons are large, colorful birds as well.  But although old folks like to feed pigeons, the general run of birdwatcher will not even consider them worth a turn of the head.

Blue Jays, crows, and pigeons don't get no respect.

A NEW CONVERSATION -- CODA

Sheryl Mitchell wrote a long and very valuable comment on the three-part little essay I posted under the title "A New Conversation."  Since I am not sure whether visitors to this blog can be counted on to read the comments, I will reproduce it here before replying to it.  Here is what Sheryl Mitchell said:

"I have followed these posts with interest. This is a very important topic. I am surprised though that in your analysis there is no mention of a guaranteed annual income as a means of addressing inequality. I think this idea deserves more attention than it gets and that it compares favourably with unions as a solution to the problem.

"The chief problem that I see with unions is that they are hostage to market forces at various levels. At the level of the industry or specific plant, they are hostage to the cycles that affect that industry. When business is booming you may get a better deal than you do when things are slow, and when a nice long strike might be quite welcome as far as the bosses are concerned. But where is the justice in that? At a more macro level there is only so far that you can push wages for certain kinds of unskilled or low skilled labour before you start to affect employment, either because the employer passes through the higher cost, reducing demand, or goes offshore, or sees profits reduced to the point where the business shuts down in whole or in part. (Of course, small gains, like the one that you were proposing for employees at McDonalds, are unlikely to have this effect. But that’s the point, your proposed salary is hardly a princely income, especially for a family with kids.)

"Your example of McDonalds is instructive. The firm is highly profitable, they are probably as capital intensive as they can be right now (therefore, few ways to replace front end staff with machines), and they can't send the front end jobs to India or some other low wage venue. This is as good as it gets. So, it is probably true that McDonalds workers can appropriate some of the return on capital for themselves, without really affecting employment or demand. But I stress: this is only good for MCDONALDS workers and for workers at firms like McDonalds. What if the firm is not so profitable, or what if there is a lot more room to replace American workers with machines or with low wage workers offshore?

"This points to an aspect of unions that is often overlooked. An effective union has a monopoly on the supply of labour to the firm. This creates a kind of partial property right, or claim, on the capital of the firm. The higher union wage can be seen, as in your example, as the workers being given "a piece of the action." I think that this explains why the great union success stories of the past were all in monopolistic or oligopolistic industries, like automobiles or steel: there was plenty of profit to go around, and smart employers bought peace by paying their workers middle class wages. But as those industries faced greater competition, well...we see the result. Today, only government offers unionised workers the kind of monopoly position that seems to be necessary to deliver a middle class lifestyle. (Although as you point out in an earlier post, with your school teacher and policeman, what we think of as middle class and the reality are two very different things. These are such simple insights, but so rarely made. I wonder how many tenured Marxist professors have ever made this calculation or ever realised that they are in the 5%!)

"To sum up, my concern with unions as a solution to the problem are that they are too hostage to market forces and, where they are successful, it is usually because they are simply sharing in monopoly profits--an unsavoury prospect to say the least.

"I am running out of time and probably space, but I do see the guaranteed annual income as a better solution, far less subject to market forces and benefiting from the ability to average out costs and benefits across the entire economy."

This is a splendid comment, absolutely spot on, and rather better articulated than my original essay, if I may say so.  I agree with it completely.  A guaranteed annual income is certainly the better solution to income inequality.  Indeed, if I may with some embarrassment confess to my less elevated secret thoughts, quite often during my morning walks I amuse myself by imagining that I have been granted magical powers of one sort or another which I then use to correct all the evils in the world.  One of the things I do with these magical powers is to enforce a guaranteed minimum income on the American economy by stealing vast sums from the very rich and distributing it to the very poor.  [I think of this as my Robin Hood day dream.]  My off the cuff guess is that to accomplish what I wish I would have to steal between one and one and a half trillion dollars a year from the top 1%.  [There are complications in this fantasy occasioned by the fact that not all of the money of the very rich is in cash, but needless to say my fertile imagination solves those problems as I stride along.]

Well, I can barely conceive of a practical way to get the Congress to raise the minimum wage from starvation level to poverty level.  It is beyond even my powers of fantasy to conceive of a realistic political path to the enactment of a guaranteed minimum income funded by an annual redistribution of more than a trillion dollars from the rich to the poor.

Sheryl Mitchell is absolutely correct that as things now stand, the ability of even militant labor unions to capture a portion of profits in the form of higher wages is severely limited, but I simply don't see any alternative that holds out even a whisper of hope.

Now, Mitchell or others might object that since I am not a union organizer [and never have been, save in an extremely minor way when the faculty of the University of Massachusetts successfully unionized], perhaps my time would be better spent theorizing about genuine solutions rather than making compromises even in my speculations.  There is a good deal to be said for that argument.  Perhaps the only contribution someone like me can make to the struggle for a decent life is to try to bring real solutions into the public conversation through such media as this blog, so that at least the idea of a guaranteed annual income is once again part of that conversation. 

At any rate, I thank Sheryl Mitchell for what lit crit types call the "intervention."  It was extremely useful.

 

DABBAWALLAS

The Lunch Box is built around the extraordinary tradition, in Mumbai, of an elaborate network of delivery men -- dabbawallas -- who each day pick up multi-tiered lunchboxes filled by wives and grandmothers with homecooked delicacies and deliver them to the desks of office workers in the sprawling city's commercial districts.  Without ever having heard of this institution before, I nonetheless inferred, correctly, that it is real, and not a concoction of a film-maker's fancy.  My old friend, Professor Emeritus Alan Wertheimer [all my old friends seem to be emeriti these days] sent me an email with links to several stories about the dabbawallas, as they are called.  Here is a NY TIMES story from seven years ago.  I consider it nothing short of miraculous that tens of thousands of lunchboxes reach their intended targets each day and return home that afternoon to be filled for tomorrow's lunch.

In his email message, Alan noted that I made no mention of the funniest joke in the movie.  I shall refrain from repeating it.

By the way, the movie seems to me to have taken its central idea from that fine old film, 84 Charing Cross Road, starring Anne Bancroft and Anthony Hopkins, but maybe not.

THE LUNCH BOX

You would think that a man who has a doctorate in philosophy from Harvard and has published twenty-one erudite books on a wide variety of arcane subjects would not have to be dragged kicking and screaming to a good film, but the simple truth is that were it not for the minatory guidance of my wife, I might never get beyond the latest version of Mission Impossible and re-runs of Arnold Schwarzenegger movies.

Earlier today, at Susie's insistence, we went to see the quiet, lovely, thoughtful, touching Indian film, The Lunch Box.  I shan't try to review it for you.  Suffice it to say that it repays a visit to your local small indi/art film theater.  As has happened so often before, I was glad Susie had persevered.  But I rather suspect I will not learn from the experience.  The next time a quality movie comes along, I will resist, look for an action film showing at the same time in a neighboring cineplex, and finally go along grumpily and grudgingly, only to be surprised once again that quality can actually be enjoyable.

LOGORRHEA

On June 1, 2009 I began blogging regularly.  The Philosopher's Stone was actually created two years earlier, but I did not begin posting regular comments then.  Today is the day before Memorial Day, which means that by rights it ought to be May 29th, but in fact it is only May 25th, thanks to the insatiable American desire for three day holidays.  On the actual May 31st, this coming Saturday, I will have been blogging for exactly five years, which is to say 1826 days [including one Leap Day.]  This little commemoration is my 1821st post, so it seems quite likely that when five years rolls around next Saturday, I will have put up on this blog an average of one post a day!  Included in those blog posts are an 800 page autobiography, posted seriatim, and another roughly two hundred fifty thousand words of tutorials, mini-tutorials, micro-tutorials, and appreciations, as well as an enormous number of quibbles, cavils, celebrations, and curiosities.  None of which includes the book-length exposition of Formal Methods in Political Philosophy that constitutes the material of my other blog.  I think I can say, without fear of contradiction, that I have a raging and incurable case of logorrhea.

When I finished writing my doctoral dissertation in the early Spring of 1957, I was seized by the terrible fear that I would never write anything again.  Each time I completed another book and sent it off to the publisher, I experienced a return of that primal anxiety.  When I write for this blog, a variant of that fear haunts me.  "Will I find something, anything, to say tomorrow?" I ask myself.  You might think that after one thousand eight hundred twenty-one posts, I would develop a certain confident expectation, but alas, it is not so.  If I am fortunate enough to be granted a moment's awareness of the onset of my death, I rather imagine that my last conscious thought will be, "Well, I shan't have to post anything tomorrow."

A NEW CONVERSATION -- CONCLUSION

If poverty were a consequence of the character defects of the poor, then we [which is to say, we who are affluent or downright rich, and therefore manifestly do not have those debilitating character defects] could have an enlightening, self-satisfied conversation among ourselves about just what steps the undeserving poor ought to take to clean up their act and enter the great Middle Class.  And if poverty were a consequence of the failure of the poor to acquire the appropriate educational credentials,  then we [which is to say we who have those educational credentials] could have an uplifting, self-satisfied conversation among ourselves about how to persuade the poor to stay in school, gather up degrees, and waltz into the great Middle Class.

But a lack of character is not the explanation for the poverty of the poor, and a lack of degrees is not the explanation for the poverty of the poor.  The explanation is that there are not enough jobs that pay well enough to allow the people who hold those jobs to live decent lives -- never mind about getting into the Middle Class.  What on earth can be done about that? 

Well, after long study and deep cogitation, I have discovered the answer.  It is, I am aware, too complicated for most commentators in the public sphere to grasp, requiring as it does a profound conceptual transformation -- an entirely new weltanschauung, one might say.  Fortunately, however, the answer can be stated in ten words, only two of which have more than one syllable.  Here it is:

Pay poor people more money for the jobs they have.

You see, if you pay someone $8.89 an hour for making burgers at McDonald's, then he or she will only make $18,491.20 in a year, working fifty-two weeks, forty hours a week.  And those are poverty wages.  But if you pay the same person $15 an hour for the same work, then that person will make $31,200 a year, and that is enough to get by, if not to buy anything that most of us would recognize as a middle class life.

But how on earth can you pay someone fifteen dollars an hour for doing exactly the same work he or she was doing for less than nine dollars an hour?  The money has to come from somewhere, so it looks as though it is going to have to come out of the profits of the McDonald Corporation.  Can McDonald's afford that?  Well, it is a little hard to come by exact numbers, but here is an example of an attempt to work out the calculations.  It looks as though that sort of  corporation-wide salary raise might cost the company half of its annual profits.

What on earth would persuade any corporation to raise the wages of its employees so much that its profits are cut in half?  The answer is as obvious as the question:  a debilitating strike by a labor union of its employees.  This is not rocket science, folks.  It is not even advanced economics.  Absolutely all of the current discussions about how to end poverty in America proceed from the unacknowledged refusal to consider this answer.  Do America's corporations make enough profit each year to fund an economy-wide rise in the wages paid to America's poorest workers?  Yup.  Will they do so if not compelled?  Nope. 

This is so simple that I feel like an idiot repeating myself, but we really need to keep certain elementary facts clearly in mind.  McDonald's pays poverty wages to a great many of the 300,000 or so men and women who work for the corporation or for one of its franchisees.  Most of those people do not have college degrees [some do, of course].  If by some miracle -- a Great Religious Awakening, perhaps -- every single McDonald's employee somehow managed to earn a Bachelor's Degree, McDonald would still employ 300,000 people, and the same number would still earn poverty wages.  Even if all of those newly minted college grads went off and snagged better jobs, thereby displacing an equal number of people from those better jobs, McDonald's would still be paying poverty wages to the same number of people.  Economy-wide, while the nametags on the workers would change, the distribution of low, middle, and high wage jobs would remain absolutely unchanged.

There is more than enough money being earned in profits each year to pay all of America's low-wage workers significantly better wages.  The solution to poverty is what it has always been:

Organize.

 

 

A NEW CONVERSATION PART TWO

On Wednesday, I started talking about economic inequality in America by assembling some statistics to clarify the situation of those at the bottom of the economic hierarchy.  My principal goal in that preliminary discussion was to establish that Americans are much poorer than most participants in mainstream public discussions acknowledge or perhaps even recognize.  As many as a hundred million Americans are living in very straitened circumstances in a society that generates vast accumulations of wealth.

Today, I continue my discussion by defending the thesis that the economic condition of the poorest Americans is structural, not characterological.  What do I mean by this?  I mean quite simply that the impoverishment of scores of millions of Americans is built into the organization of our economy and cannot be altered by changing the personal characteristics of the poor.  Poverty is not a consequence of sloth, of wastefulness, of drugs, or of "broken homes," and it is also not a consequence of the relatively low formal educational attainments of the poor.  It is a direct consequence of the fact that there are a great many low-wage jobs and relatively fewer high-wage jobs. 

There is no doubt at all that if a slug-a-bed drug-and-alcohol-addled lowlife ghetto dweller straightens up, flies right, gets clean, puts on a tie, goes back to school and earns a doctorate in engineering, his chances of getting a good job with great pay and benefits will improve [although these days not as much as in days gone by, alas].  But in making a total success of his life, he will simply displace some other poor slob who doesn't have quite so compelling a personal story.  His accomplishments, admirable though they might be, will not increase the number of good jobs in the economy.

Put this way, the truth of my thesis is obvious, but since virtually everything said by both Democrats and Republicans is in stark contradiction to what I am urging, it may be useful, even on this blog, to explain the point once more.

Let us begin by thinking of the economy as a complex structure of jobs, not of employees.  That is, after all, the way anyone will experience the economy who goes looking for a job.  If I am offered a position as a bank clerk, it will do me no good to point out that my qualifications match those for a bank manager.  The reply will be [assuming I am not thrown out on my ear], "No doubt, but we are not hiring bank managers today.  Do you want the bank clerk job or not?"

Let us suppose that applicants for jobs at the bank with the qualifications to be bank managers are uncommonly thick on the ground.  Will the Personnel Office respond by converting all the bank clerk jobs into bank manager jobs with appropriate adjustments in salary and benefits?  Of course not.  Each bank branch, we may suppose, has been determined by senior management to need one bank manager, and once that position is filled, no one else hired at that branch will be offered a managership.

"Ah," you will respond, "but the presence of a superfluity of qualified potential bank managers will cause the bank's senior directors to shift to a new form of bank organization in which there are many fewer bank clerks and many more bank managers."  That, after all, is the implicit lesson of neo-classical economic theories about production functions and elasticities of substitution.  Now there is no doubt that some changes in the organization of production are, over time, introduced in response to the improved educational and other credentials of workers in the labor force.  But these changes, which are an on-going feature of an advanced industrial or post-industrial economy, do not have the macroeconomic effect one might imagine.

Taking a long view is instructive.  Over the past century, there has been a dramatic increase in the acquisition of formal educational credentials in the United States.  When my father was a teenager, back on 1914, relatively few young men and even fewer young women graduated from high school.  Only a tiny handful went on to college.  By the time I was fourteen, in 1948, half of young adults had high school degrees and five to six percent had four year college degrees.  Today, more than eighty percent of adult Americans have high school degrees and roughly thirty percent have four year college degrees.  And yet, during that century of educational progress, the shape of the income pyramid has hardly altered.  To be sure, the nation as a whole is much wealthier, but the inequality of distribution is basically the same.  The principal differences are first, that the richest of the rich are collecting a much larger share of what there is, and those at the very bottom [i.e., the last decile, or lowest tenth] are actually getting a smaller share of the national income than they were a century ago.  [I was first made aware of this astonishing fact by reading Gabriel Kolko's first book, Wealth and Power in America.]

Stop and think for a moment just how astonishing this fact is.  In the past century, America has gone from an expanding industrial economy with a very large agricultural sector to an industrial economy with a small agricultural sector and a nascent service sector to a post-industrial economy with a very large service sector, a shrinking industrial sector, and a miniscule agricultural sector.  During that time, formal educational credentials beyond elementary school have gone from being very rare indeed to being almost universal, and college degrees, once the proud boast of a tiny fraction of the adult population, are now the possession of almost one third of adults.  And yet, the basic shape of the income distribution among the ten deciles of the population has, if anything, grown somewhat more unequal.

Clearly, this is not at all what popular discussions of income inequality would lead us to expect.  Again and again and again, everyone who talks about income inequality says that the secret of bringing everyone into the "middle class" is more education.  But that can only be true if the presence of a more highly educated workforce leads to a shift in the organization of work that features a higher percentage of high-wage jobs and a lower percentage of low-wage jobs.  And for one hundred years, that shift has not been taking place.

What in fact would result in the substitution of higher for lower wage jobs in America?  Let us talk about that tomorrow.

GIVING CREDIT WHERE CREDIT IS DUE

I believe strongly in giving credit where credit is due.  Paul Krugman posted the following on his blog.  I am deeply sympathetic with the sentiment that animates it:

"1. How can we incentivize students to stop using “impact” as a verb?

2. How can we impact their writing in a way that stops them from using the word “incentivize”?

3. Can we make it a principal principle of writing that “principle” and “principal” mean different things, and you have to know which is which?

That is all."

IDLE THOUGHTS WHILE CROSSING THE STREET

As I was crossing West Barbee Chapel Road, which divides our local Starbucks from my condo building, a young woman turned and started across the road in the other direction.  She was talking on her cellphone as she walked [nothing unusual there] and I caught just a few words -- in a language completely unknown to me.  I was reminded of walking across the campus of the University of Durban-Westville in South Africa and hearing students conversing in fascinating, beautiful click languages.

I reflected that I am charmed by the polyglot character of America, a feature of this country that goes as far back as the seventeenth century.  But there are a great many people who feel deeply threatened by the mere existence of Americans for whom English is a second or third language.  Did you know that in the 1780's there was a vigorous debate about what should be the national language of the new nation coming into existence, with German a strong favorite in some communities?  When my grandfather gave Socialist Party speeches from the back of a flatbed truck in Brooklyn in the early years of the twentieth century, it was standard practice for the Party to field speakers in several immigrant languages.  My grandfather on occasion spoke in "Jewish," which is to say Yiddish.  For a long time, there were Catholic churches in Italian, Polish, or German neighborhoods in America's big cities in which the sermons were routinely delivered in the language of the old country.

I mused on the fact that there is a very deep cultural [and hence political] divide between those of us who welcome the diversity, in much the way that we welcome the array of restaurants with ethnic or national cuisines, and those of us who hate that diversity and experience it as a falling away from the old virtues, a threat to our core existence.  My old University of Chicago colleague, David Bakan, did some fascinating work analyzing the statistics used by early behaviorist psychology journals to evaluate submissions, and combining that with a study of the social origins of the early behavioral theorists.  He put forward the thesis that Behaviorism in America was the intellectual product of a generation of psychologists who were brought up in small, homogeneous predominantly Protestant towns and experienced a devastating culture shock when they moved to the big city [typically Chicago], where they found themselves in ethnically, culturally, religiously pluralistic surroundings.  Behaviorism was their way of coping with the unsettling experience.  His statistical analyses showed that Behavioral Psychology journals frequently rejected submissions on the grounds that the authors had not repeated their experiments enough times, even though the results were statistically significant!  To the editors, the repetition of experiments many times was a sign of good works, an evidence of the secular equivalent of divine election.

It is not a very wide street, and that is about all that went through my mind before I was on the other side.

IN MEMORIAM

Jerry Fresia sent me a copy of a great letter written by Gabriel Kolko to REASON magazine.  Gabe and Joyce Kolko and I were friends back in 1959-61 when we were all at Harvard, part of a little group of lefties who called ourselves The New Left Club of Cambridge [see my Autobiography.]  I went to Google to find out where he was so that I could send him a note, and discovered, to my great sadness, that he passed away just three days ago at his home in Amsterdam.  Gabe was one year older than I.  A good comrade, and, judging from the letter Jerry sent to me, true to our beliefs to the end, unlike certain other members of that little group.   I shall miss him.

A NEW CONVERSATION

My strenuous engagement with Thomas Piketty is a thing of the past, my extended debate with Professors Kliman and Freeman has been concluded, I have been to Seattle and back -- it is time to turn to other topics on this blog.  I shall start with some observations on a subject that is intimately related to both Piketty and to Kliman and Freeman -- economic inequality.  My focus, however, shall not be on the accumulations of wealth in the stratospheric reaches of American society, nor on debates about the proper way to interpret Karl Marx's anatomy of capitalism.  Rather, I shall write for a bit about the men, women, and children near the bottom of the income distribution in America.  Those who have followed this blog faithfully for years [if indeed this is not the null set] will recognize themes that I have struck here several times.  As Callicles complains in the Gorgias, "Socrates, you always keep saying the same thing over and over again!" to which Socrates replies, in one of the most poignant lines in any of the Dialogues, "Not only that, Callicles, but on the same subjects, too."

Some facts first.  According to the U. S. Census Bureau in conjunction with the Bureau of Labor Statistics, in 2011 [the latest figures I could find -- nothing very much has changed], there were about 121 million plus households in America.  Two thirds were family households, one third non-family households.  The latter category includes POSSLQ's.  A POSSLQ, for those who are unfamiliar with the term, is a household consisting of "Persons of Opposite Sex Sharing Living Quarters" who are not related by birth or marriage.  Nowadays, we would want to expand that category to include POOSSSLQ's, which is to say "Persons of Opposite Or the Same Sex Sharing Living Quarters" who are not related by birth or marriage.  This has nothing at all to do with what I shall be writing about today, but I very rarely get to use the lovely acronym POSSLQ, and I take every chance that comes along.

The Census Bureau divides these one hundred twenty-one million households into quintiles [fifths], and then gives the lower limit of annual household income for each quintile.  The lower limit of the bottom quintile in 2011 was of course zero [there are some households with no income at all.]  The lower limit of the second quintile was $20,260.  That means that one-fifth of all the households in the United States, in 2011, had annual income below $20,260.  How many people are we talking about?  Well, in 2011, the population of the United States was about 310 million, but single-person households and households with only two members are over-represented in the lowest quintile [for various obvious reasons], so that quintile comprises something less than a fifth of the population.  One-fifth of 310 million is 62 million.  Let us guess that the lowest quintile in 2011 had fifty million people in it.  Fifty million people living in households with less -- in many cases much less -- than $20,000 a year.  The next quintile -- maybe another fifty-five million people -- comprises households living on less than $38,500 a year.  That is well over one hundred million people who by any calculation are either desperately poor or are living in very, very straitened circumstances. 

What about those at the top?  It would seem reasonable to consider the top fifth of the households the Upper Middle Class, comfortably fixed, affluent.  The top fifth is the people who have made it, as we say -- not rich, perhaps, but really well off.  Who fits into that category in modern America?  Well, all politics are local, as Tip O'Neill used to say, so I Googled a bit and came up with some salary ranges here in Chapel Hill, NC, where I live.  Consider a married couple just turning fifty.  The wife teaches third grade in the Rashkis Elementary School located at the north end of Meadowmont, the community in which I live.  Her salary is set by the state, not the city.  Her husband is a Police Patrol Officer.  He never made Sergeant, but he has soldiered on, and his salary has crept up with the years.

This couple form a household that fell in the top quintile of income in 2011.  What?  A third grade teacher and a policeman not your idea of the upper middle class?  Well, those are the facts, regardless of what you have seen on television.  By the way, the family of a senior professor at an elite college or university were in the top 5% even if he or she was the only wage earner in the family.  A married couple both of whom have tenure at the local state university were also probably in the top 5%.  By any reasonable use of the term, they are rich, but those aren't the people we think of when we talk about "the rich," are they?

Note, by the way, that one must have at least a Bachelor's Degree to get a job as a third grade teacher.  But not to be a police officer in Chapel Hill.  There are apparently about seventy-five Police Departments around the country for which a Bachelor's degree is a prerequisite, but Chapel Hill is not one of them.  [But of course you do need a BA to be an FBI agent.]  As I have often pointed out on this blog, only about one-third of adults 25 years and older in the United States have Bachelor's Degrees, which means that two-thirds of adult Americans cannot even aspire to be elementary school teachers.  Nor do they have much chance of ever becoming Walmart store managers, but that is a job that will put you in the top income fifth even if your spouse does not work, so perhaps we should not be surprised.

What is the point of these facts and figures, interesting as they may be?  Very simply, the point is that Americans are not nearly so well off as one might imagine just from watching television or listening to politicians.  Almost everyone who has a speaking role on television is in at least the top quintile of income and probably in the top 5% or 2% or 1%  -- reporters, commentators, anchormen and women, meteorologists, terrorism experts, the lawyers, doctors, police sergeants, FBI agents, models, and spies who populate the prime time shows, the professors who are interviewed, and of course the politicians themselves, the Senators, Governors, Members of the House of Representatives.  Even the working poor who turn up as characters on some TV shows are represented as living in apartments or houses and eating dinners that the real people in the lowest fifth could never afford.  When was the last time you saw a character in a prime time show trying to decide whether to fill a desperately needed medical prescription or eat dinner. it not being an option to do both?

This is enough to get us started.  Tomorrow, we can begin to talk about the causes of the severe income inequality in America [and elsewhere, of course], and what could be done to change it.

 

 

HOME AGAIN

I returned late last evening from Seattle, where Susie and I were attending the bar mitzvah of her grandson, Aram.  On the way home we flew from SeaTac to Denver, and then from Denver to Raleigh-Durham.  I am old enough still to be genuinely awed by the experience of flying all the way across the continent.  Although I have done it now many, many times, I always reflect as I soar at thirty-nine thousand feet on the trials of the early settlers who would leave by wagon train for The West as soon as the Spring thaw arrived, hoping to reach their new land there in time to get a crop in and build a sod house before the onset of Winter.

These days airports are almost indistinguishable one from the other, but at the restaurant in Denver where we had an early dinner between flights, elk medallions were featured on the menu.  One doesn't see that too often in the Boston/Washington corridor.

There was a pile of mail crammed in our box when we got back, even though we were only away for four days.  Among the bills and political appeals and catalogues was the latest copy of the New York Review of Books.  I always find the NYRB depressing.  Every issue features long, detailed articles, masquerading as book reviews, on subjects about which I know absolutely nothing.  Keeping up with it all, let alone getting on top of it, is really impossible.  I did manage to make some sense out of a long article on the James Bond novels.  I have actually read a couple of those.  My most vivid encounter with an Ian Fleming ouevre occurred in 1965.  I was flying over the Alps on my way to a conference in Italy, reading a scene in which a plane crashes in the Alps.  Below me, unnervingly close, were the tips of the peaks, covered in snow.  Just as I reached the passage in which the plane in the novel plunges, we hit some rough air and the plane I was in began to buck and pitch.  It was a bad couple of minutes.

The Tigger in me is making a comeback.  I am beginning to think the Democrats may not lose control of the Senate.  Things here in North Carolina are just as awful as you might suppose from the news reports.  It is a measure of my desperation that I am hoping against hope for Kay Hagen to squeak through.  It is a measure of my irrepressible optimism that I think she just might.

In the days ahead, I shall do my best to find something more elevated to blog about. 

 

BI-COASTAL

I am off to Seattle Washington for a family event.  I shall return late Sunday evening, and with any luck, I shall be back here to respond to comments next Monday.  In the meanwhile, as Bob and Ray used to say on the radio back when I was a boy, write if you get work and hang by your thumbs [you had to have been there.]

LAST ONE, I PROMISE

Well, I said our last exchange was the final one, but here we are again.   This one really is the last one.  I think I at least am finally clear where Andrew and Alan Freeman and I part company, and since it at the initial stage of basic premises, there is really nothing more to be said.

May 13, 2014

Dear Bob,

Thanks for another very quick reply.

I agree that I am focusing on the restriction you have imposed, that there is never a negative physical surplus (or negative net output) of any produced commodity, not even momentarily. And I agree that this is probably not “what separates us.” I am not focusing on the restriction in order to pinpoint or discuss what separates us. I am focusing on it in order to make clear that

(a)    the “death spiral” justification for the restriction is untenable: economies can and do physically reproduce themselves when the restriction does not hold true;

(b)   the physicalist analytical framework implies that there can be positive surplus X-value but negative profit, and vice-versa, if this restriction is not imposed; and

(c)    it follows from (b) that it has not been and cannot be proven, within the physicalist analytical framework, that exploitation of workers (positive surplus X-value) is the exclusive source of profit.

As far as I can see, your latest reply does not address any of these points. I hope we can reach agreement on them, so that we can then move on.

To explain what I think separates us, I will begin by rephrasing a passage near the end of your reply in a form that we—Alan Freeman and I, and perhaps Chris Byron as well—can accept:

Let me repeat.  I do not think that Marx contradicted himself.  Quite to the contrary, I think when we cast what we take to be his claims in the particular mathematical form that the physicalist analytical framework requires––that is, when per-unit prices and “values” of outputs are constrained to equal per-unit prices and “values” of inputs, and prices and “values” are determined wholly independently––we can demonstrate that many of them [not all, to be sure] are correct compatible with the implications of the physicalist models. The problem is, all of the same claims, without exception, are also true of compatible with the implications of the physicalist models when one replaces so-called “labor-values” with iron-values, corn-values, and so forth.

So it really does not matter to me whether you construct models with net negative output for some input, because whatever you prove thereby to be an implication of the physicalist models when the “values” are iron-values, corn-values, and so forth can be replicated for physicalist “labor-values” simply by adjusting the example and the notation appropriately.  Thus, the supposed contradictions between Marx’s conclusions and the implications of the physicalist models you generate can be generated as well, under the same assumptions, for physicalist “labor-values.”

When recast in this neutral manner—such that it does not presuppose that Marx has been interpreted correctly or that compatibility with the physicalist analytical framework is tantamount to truth––what this passage says is basically what we said in our co-authored reply of a few days ago:

The above argument has demonstrated that, if one wishes to argue that “capital rests on the exploitation of the working class,” it is not possible do so validly by means of Wolff’s version of the physicalist model. Freeman and Kliman’s previous demonstrations have shown that it is also not possible to do so validly by means of physicalist versions of “the labor theory of value.”

The original version of your passage seems to suggest that Marx’s conclusion that surplus labor is the exclusive source of profit is simply incorrect. It’s not correct when we use corn-values, etc., but neither is it correct when we use “labor-values.” My amended version suggests something quite different, precisely because it does not presuppose that Marx has been interpreted correctly or that compatibility with the physicalist analytical framework is tantamount to truth.

If these presuppositions are incorrect, then it is possible that a non-physicalist interpretation and formalization of Marx’s arguments replicates the conclusions of his that the physicalist models cannot replicate—“under the same assumptions.” And it is further possible that this non-physicalist interpretation and formalization interprets Marx correctly. It follows that it is possible that the arguments of Marx that have been declared logically invalid (since his conclusions, it is alleged, are not deducible from his premises) are in fact logically valid.

We contend, and we think we have demonstrated beyond reasonable doubt, that these things are not only possibly true but actually true as well. This is what we contend regarding all of the alleged internal inconsistencies in the quantitative dimension of Marx’s value theory, including the inconsistency that allegedly renders untenable his own, original version of his exploitation theory of profit. Thus, as we said in our co-authored reply,

if one wishes to argue that “capital rests on the exploitation of the working class,” … there is a valid way to make such an argument––Marx’s way.

But Marx’s argument is logically valid only if it is interpreted properly, not misinterpreted in the physicalist manner. On the basis of the non-physicalist interpretation of which we are proponents, the temporal single-system interpretation of Marx’s value theory (TSSI), it does indeed follow validly that surplus labor is the exclusive source of (real) profit.^[[1]] A decade of debate confirmed this result beyond reasonable doubt.^[[2]]

This isn’t the place to set out the details of the TSSI or to place to reproduce all the proofs and our defenses of them, which is why I’ve included the footnotes to the passage just quoted. What I can do here is illustrate a key difference between physicalist interpretations and the TSSI. The question I will address is, “Does it matter which specific value-forming substance we ‘choose’?” We agree that it doesn’t matter within the physicalist framework. I want to show that it does matter within a non-physicalist and temporalist (i.e., dynamic) framework.

Consider a corn model in which returns to scale are constant. Corn is produced by means of seed corn and labor. Let A be the quantity of seed corn that is planted at the start of the year, L be the quantity of labor performed during the year, and X be the quantity of corn output harvested at the end of the year. Also, let V_c(s) and V_c(e) be the per-unit values of corn at the start and end of the year, respectively, and let V_L be the value added by each unit of labor.

The general form of the value-determination equation is

V_c(s)A + V_LL = V_c(e)X

 In the physicalist framework, the per-unit value of the output is constrained to equal the per-unit values of the seed-corn input. Thus, V_c(s) = V_c(e) = V*, and the value-determination equation becomes 

V*A + V_LL = V*X

so that

V*/ V_L  = L/(X – A)

This is the case whether we choose corn, or whether we choose labor, as the value-forming substance.

In a temporalist framework, there is no constraint that V_c(s) must equal V_c(e). However, if corn is the value-forming substance, then V_c(s) = 1 and V_c(e) = 1, so the value-determination equation becomes

A + V_LL = X

So that

V_{L =} (X – A)/L

and thus

                            V_c(e) /V_L = L/(X – A)             (since V_c(e) = 1)

Thus, in a temporalist framework in which corn is the value-forming substance, the relative per-unit values of corn and labor are the same as those of the physicalist framework.

But what about a temporalist framework in which labor is the value-forming substance? In this case, V_L = 1, so the value-determination equation becomes

V_c(s)A + L = V_c(e)X

and thus

V_c(e) /V_L  =  _­(V_c(s)A + L)/X

Now, the right-hand side of this last equation does not generally equal L/(X – A). Hence, in a temporalist framework in which labor is the value-forming substance, the relative per-unit values of corn and labor are, in general, not equal to

(a)     the relative physicalist per-unit values; or 

(b)   the relative temporalist per-unit values when corn is the value-forming substance.

It follows from (a) that, if Marx did not constrain output values to equal input values, then the results of physicalist models cannot properly be assumed to be the actual implications of his theory.

It follows from (b) that the specific value-forming substance does matter within a non-physicalist and temporalist framework.

Best wishes,

Andrew

---

[1] See Kliman (2001), chap. 10 of Kliman (2007), and Kliman and Freeman (2006, 2008, 2009).

[2] See Kliman and Freeman (2008) and Freeman and Kliman (2009).

 

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Dear Andrew,

I am rushing to write this while preparing to leave for Seattle where, on Saturday, my wife's grandson will be bar mitzvah'd.  As I am sure you will understand, this event takes precedence over merely settling the fate of capitalism.

Let me pass over your re-writing of some of what I have written and come directly to the eight lines of equations in the second half of your message.  You introduce what you call the temporalist framework  by distinguishing between the value of a unit of corn at the start of the year [which I take it means as input] from the value of a unit of corn at the end of the year [which, again, I assume means as output.]  The key to your analysis is your insistence that corn and other commodities that are both inputs into and outputs of production may have values as inputs that differs from their values as outputs.

However, in your fourth equation, which you say represents the situation, in a temporalist framework, where corn is the "value-forming substance," there is only a term for labor [represented in the equation by the letter L], not a term for labor at the start of the year and another term for labor at the end of the year.  If there were such terms, then the temporalist framework representations of a labor-value and corn-value analysis would be identical.

But, you may object, there is no labor industry;  labor is not a produced commodity.  So the distinction between the value of labor at the start and at the end of the production process makes no sense.

And suddenly it dawned on me why we have been unable to come to an agreement.  To put it simply, you and the Sraffians agree that labor is, as economists like to say, exogenous to the system.  It is given, it is not produced.  I, on the other hand, think that the only way to capture Marx's brilliant insight into the real nature of capitalism is to treat labor as a produced commodity. 

Well, you may once more object, if labor is a produced commodity, why doesn't the labor-producing industry earn the economy-wide rate of profit?  But that is not an objection to my analysis.  It is the whole point of my analysis!  Let me explain.  As I read Capital, Marx sees capitalism as thoroughgoingly mystified, precisely in order to conceal from view the fact that it rests on exploitation.  One aspect of this mystification is capitalism's treatment of the worker. In the marketplace, that "very Eden of the rights of man," as Marx puts it with brilliant irony, the worker stands "as owner of the commodity 'labour-power' face to face with other owners of commodities, dealer against dealer."  But of course this is a delusion, a mystification, as Marx goes on to show us, for as soon as he steps into the factory he is no longer treated as the producer of commodities, but as a wage-slave, chained to the machine.

The point of my effort to model labor as a produced commodity which yet does not earn a profit when it is sold was to find some way of capturing, in the equations, the anomalous status of labor in a capitalist economy.  I freely acknowledge that  I may have failed, but that is what I was trying to do.

From my point of view, you and the Sraffians against whom you argue agree on the one premise that I reject -- you both assume that labor is exogenously given.  Thirty years ago and more, when I was working on these ideas, Sraffa and his followers were the only game in town, or so I thought [I was unaware of your work -- perhaps you had not then begun to publish it].  Consequently, I directed my arguments against their modern reformulation of Marx's critique of capitalism.  Now that we have had this interesting series of exchanges, I finally realize that you share with Sraffa the very assumption that I rejected.  Not surprisingly, therefore, I am no more able to come to an agreement with you than I was with them.

In light of this fundamental difference between us about the premises of our alternative analyses of capitalism, I do not think there is any further we can go, so I am going to call it a tie and leave the field of battle.  I wish you good fortune in your on-going struggle with the Sraffians.  Perhaps if you and I are more fortunate than we have any right to expect, there will be barricades where may meet and join forces.

All the best,

Bob