THOUGHTS BEYOND THE LIMITS OF MY COMPETENCE

I just read an interesting blog post here by Krugman.  It would take too long to summarize, but the essence of it is that heterodox economists [as he refers to them] are wrong to think that he and other orthodox macro theorists should be kicked to the curb because of the failure of the economics profession to predict the crash of 2008 and other things.  The problem is not with our theory, Krugman says, but with those of us to paid too little attention to the evidence, preferring instead to elaborate elegant mathematical fantasies of perfect rationality and such.

Krugman alludes to people I have not read [and had not heard of, to be honest], and in any case I am not competent to evaluate his claims.  But his remarks raise a question that I find quite interesting, so I will say something about it.  [By the way, Krugman seems to be feeling just a tad defensive in the wake of the Piketty tsunami, even though he has been admirably generous in his praise of the book.]

The point is this.  Any rich and complex economic model of the economy will almost certainly be flexible enough to allow those who use it to discuss almost anything with its aid, but that does not mean that the models are equally valuable.  Each model directs the attention of its users to certain facts and structures in the economy and away from certain others.  Hence the choice of model is important, for all that one can, with some effort, take account in one's own model of anything that people are saying who use other models.

The classical model developed by Smith and Ricardo and brought to its height [in my judgment] by Marx made a series of choices in its formal development that had the deliberate effect of highlighting two questions about the economy:  How is the social product divided among the three great economic classes of society? and What are the conditions of sustained economic growth?  These two issues -- distribution and growth -- are virtually thrust on anyone using the classical model.  If you are doing economics a la Smith, Ricardo, and Marx, it is simply impossible not to notice that the interests of workers and capitalists are opposed, that what goes to one class is taken from the other.  It is also impossible not to notice that luxury consumption detracts from growth.

The neo-classical model pioneered by Walras, Jevons, and Menger highlights two quite different questions:  How are relative prices set in the market, and how do these prices direct producers in their allocation of scarce resources having alternative uses? 

The question of price determination can certainly be studied in the classical model, but that study is simply a means to studying the distribution of the social product.  By the same token, growth and distribution can be studied in the neo-classical model, but that is not its easiest or most natural use, and the model directs attention away from the fact that the interests of the working class and the capitalist class are necessarily opposed.

Heterodox economists who criticize standard economics [and by implication Krugman, although I would be surprised if he were their principal target] are not, I suspect, saying that the standard model is incapable of finding a place within it for inequality and economic instability.  In all likelihood, they are saying [or, at least, they ought to be saying] that the standard model directs attention away from those issues instead of drawing our attention to them.  And that is a legitimate criticism of an economic model, which is, after all, nothing more than an intellectual device for focusing our attention and directing it to what is important.

But of course, what counts as important is a matter of evaluative judgment, which means that Economics cannot be a value-free science.  And that really is a challenge to Krugman as well as to the rest of the Economics profession.

CUT ME A LITTLE SLACK

I am afraid if you are going to read this blog you will just have to come to terms with the fact that I am an incurable optimist.  Cool reason and a little historical awareness caution me to treat the Piketty phenomenon as a passing fad, a blip, a momentary breath of not entirely rancid air, but the Tigger in me keeps wanting it to be something more.  It won't hurt anyone if I die believing the world is about to put paid to capitalism.  At my wake you can sit on the ground and tell sad stories about the death of kings.

PIKETTY, PIKETTY, PIKETTY

As a philosopher, I am trained to view Being sub specie aeternitatis, but as a blogger [even an obscure one] I am expected to have the attention span of a Mayfly, so you will perhaps forgive me if I continue to go on about Piketty.  Today's Op Ed page of the NY TIMES features dueling columns, one [printed on the right] by Paul Krugman, the other, printed on the left, by David Brooks.  [OK, so the compositors at the TIMES have no sense of decorum.]  Brooks' column is, in a small way, a triumph.  It actually manages to make Ross Douthat's column on Piketty sound thoughtful.  Brooks exhibits an insularity so profoundly self-referential as to give narcissistic personality disorder a new lease on life.  His thesis, if I may call it that, is that the popularity of Piketty derives from the envy well-off professionals feel for the much richer.  Here he is describing the life experiences of the mildly lefty young professionals whose admiration he secretly craves but somehow cannot manage to earn.  "If you are a young professional in a major city, you experience inequality firsthand.  But the inequality you experience most acutely is not inequality down toward the poor; it's inequality up, toward the rich.  You go to fundraisers or school functions and there are always hedge fund managers and private equity people around."

Never mind the rest of the column.  You can read it here if you have a mind to.  What mesmerizes me is Brooks' casual assumption that the world in which he travels is the world of "young professionals" -- which is to say, medical techies, adjunct college instructors, and high school teachers [yes, they really are "young professionals," at least if they are young] -- very few of whom, I venture to say, run into hedge fund managers when they go to parents' night at their child's public elementary school.

Let me quote Brooks' concluding paragraph.  "The reaction to Piketty is an amazing cultural phenomenon.  But it says more about class rivalry within the educated classes than it does about how to really expand opportunity.  Of course, this perspective could just be my own prejudice.  When it comes to cultural analysis, I, like Piketty, am quasi-Marxist."

Now, if you can stop gagging on those last five words, pause for a moment to reflect on what a victory this is for those of us who are genuinely on the left.  When the David Brooks' of this world feel that they must lay claim to quasi-Marxism in order to get some street cred, I begin to think there is hope for us yet.

Quick responses to some comments.  Tom Llewellyn suggests that "Eminent professors (and talking heads) are surely in the top 10%, and maybe in the top 1%."  He is quite right.  In 2012, $114,000 a year would get you into the top 10%.  $161,000 got you into the top 5%, which includes virtually all the senior professors at elite universities and many at lesser schools.  You needed $394,000 to make the top 1%, which certainly includes "talking heads" on Television, and the best paid professors as well [never mind speaking fees and book royalties.]  In case anyone is wondering, my pensions and social security and royalties put me comfortably in the top 10%, and in a really good year I might sneak into the top 5%.  I am what in the good old days was referred to as a "class traitor."

Ian J. Seda Irizarry, who was trained in the best Marxist Economics Department in America [by some of my old colleagues at UMass], offers this comment:  "A dear friend had the following description of all that is happening and I agree: "piketty not the first to notice basic story. he is the first person to have noticed AND be noticed by liberal wonks"

Ian and his friend are of course correct.  I take this as a victory.  When the liberals start plagiarizing the ideas of the Marxists and claiming them for their own, we have won!  I share the desire to wave my hands and yell "Hey, Hey!  We have been saying this for years!!"  But sufficient unto the day. 

And let us remember, Piketty does not just take a page or two from Marx's playbook, he adds a massive accumulation of data, elegantly analyzed.  That really does pay homage to old Marx.  It was Marx who chose, in his hauptwerk, his magnum opus, to devote more than a hundred pages to a detailed description of life in the new capitalist factories, drawn from his years in the British Museum reading the Reports of the Parliamentary Factory Inspectors.  Piketty has done exactly what Marx would have recommended he do, and if Piketty needs to ritually separate himself from Marx in the process, so be it.

THE LINK

Mike G. sent me the link to a YouTube video of the CUNY affair I blogged about.  Many thanks.

Here it is.

AND EVEN MORE ABOUT PIKETTY

I just watched the video, online, of an event at the City University of New York at which Piketty spoke and then Stiglitz, Krugman, and several others commented.  I thought Krugman was the most coherent of the commentators, by the way.  As I watched, something struck me that I wanted to say a few words about.  [I managed to lose the URL.  Can anyone supply it in a comment?]

To put it as simply as I can, nobody was angry.  I mean, Piketty's data are simply appalling.  I observed at length on this obscure blog [as Bjorn calls it] that according to Piketty the bottom half of the population of all modern capitalist societies has no net wealth at all, and the concentration of increasingly inherited wealth at the very, very top is appalling and grows steadily worse.  Yet not a single voice at this session was raised in anger.  Indeed, not a single voice was raised in anything.  All was witty, amused, relaxed, casual.  The speakers were comfortable in their skins and were talking to an audience of people equally comfortable.  Everything in the format and atmospherics of the event communicated quite clearly that anger would be considered very much out of place.

That is just awful!  I have every reason to believe that Stiglitz and Krugman have their hearts in the right place when it comes to evaluations of the desirability of this sort of inequality, but both of these gentlemen, accomplished as they are, seem to have lost the capacity for simple outrage.

This is one of the things I don't like about what the academic world has become.

A COMMENT ON A COMMENT ON A COMMENT

In response to my apologetic response to JD's thoughtful reaction to my snark at Ross Douthat [so much for provenance, as they say in the art world], JD himself and Bill Glenn, Jr. posted thoughtful and rather moving comments about what we might call true, as opposed to faux, conservatism.  Together, these comments raise very important issues about which I have tried on occasion to write on this blog, though not, I think, with great success.  Rather than react to the latest Supreme Court decision or to a Ukrainian situation that I genuinely do not understand, I thought I would try today to expand on what JD and Bill Glenn, Jr. said.  My deeper purpose is to address once again what most concerns me, namely how, if at all, we can mobilize an effort to derail the disaster of American capitalism.

Both JD and Bill Glenn, Jr. give expression to a powerful sense of loss.  JD puts it this way:  "personally I feel doomed to wander a world cut off from my ancestors, which is thereby in a certain way stale, lacking dimension, left to feasting in a crowd where the only song we all know by heart is likely to be "The Bohemian Rhapsody." " Bill Glenn, Jr. adds:  "The completely amoral capitalism that reemerged under Reagan drove out the last vestiges of the post-war capitalism that was at least partially constrained by moral and social norms and did contain some of the communal values JD recognizes we now lack."

I think both of them are right.  Let me begin my meditation on their voiced discontent by referring to a movie I saw maybe ten years ago.  It is called Seabiscuit, a rather saccharine account of the Depression-era successes of an unlikely race horse by that name, whose come-from-behind victories on the race track captured the imagination of a nation struggling with poverty and historic levels of unemployment.  I could as easily pin my thoughts to the much, much finer movie, The Grapes of Wrath, the Henry Fonda vehicle made from John Steinbeck's great novel.  But in Seabiscuit, the director Gary Ross made the inspired decision to intercut the conventional Technicolor sequences with grainy black-and-white stills from the Depression itself  of striking workers, bread lines, soup kitchens, and street scenes of ordinary working men and women.  I am not much for racing, whether it is horses or cars, and I would rather watch the weather channel than a NASCAR event, but I wept openly at those pictures of the Depression.  I wept not because of the poverty and misery they showed, but for the lost fellowship, the comradeship, the community of those whose response to hard times was to band together and form labor unions, who saw poverty not as a shameful condition to be hidden from view, but as an evil inflicted on good men and women by the toffs wearing the fancy clothes and driving the fancy cars.

America during the Depression and World War II, and into the early years of the Post-War era, was a society in which the objectively real class divisions found immediate surface expression in such things as the clothes people wore.  Go back and watch some of the films -- the Fred Astaire/Ginger Rogers classics, the endless comedies of life among the rich, the Edward Arnold vehicles in which that wonderful old actor strutted his villainous best.   The rich wear evening clothes to dinner or a nightclub, they drive cars that look different from the cars driven by ordinary people.  Their voices are different, they look different, and you know with a visceral certainty that if smellovision had ever caught on, they would have smelled different.

Remember, that was a time when almost no one went to college, when most jobs were blue collar, not white collar, when working men wore caps, men in the lower middle class wore fedoras, and the rich wore top hats.  You could place a man or a woman economically and socially at fifty paces.   This was the heyday of the American labor movement.  A few statistics tell the story.  In 1954, union membership peaked at 35% of the labor force.  By 1983, three years into the Reagan disaster, this had declined to 20.1%.  Today the figure stands at 11.3%, with more than a third of public employees in unions and only 6.7% of workers in the private sector in labor unions. 

The very term "working class" has disappeared from public discourse.   Politicians on the left as well as the right cannot stop talking about "Middle Class America," even though, by any rational definition of Sociological or Economic categories, most Americans are Working Class, not Middle Class.  Why this terminological obfuscation?  The short answer is race.  "Middle Class" in today's political discourse carries the unspoken but inescapable meaning "not Black or Hispanic."  White people earning the minimum wage and qualifying for food stamps refuse to self-identity as Working Class, let alone Poor, for fear they will be mistaken for light-skinned colored folks.

What happened?   Why did two-thirds of unionized workers leave the only collective organizations committed to fighting for their interests?  And how did it come about that clear class lines, visible to the naked eye, dissolved, so that the rich could pass as jes' folks, despite their trust funds and gated communities and private clubs?

The answer is complicated, and only a suitably nuanced answer can begin to capture the historical and social reality.   The first factor was the transformation of the American economy into a post-industrial economy with an ever-expanding Service sector, a shrinking industrial sector, and a vanishing agricultural sector.  This transformation was accelerated by the outsourcing of production jobs as corporate managers went in search of ever cheaper labor unfettered by health and safety regulations.  A second factor was the dramatic expansion of post-secondary education, raising the proportion of the adult population holding a Bachelor's Degree from 5% shortly after World War Two to 35% or so today.  These two changes sundered the intergenerational solidarity between fathers and sons, mothers and daughters.  The old dream was for the father to arrange for his son to apprentice in a craft job and gain membership in the father's labor union.  The new dream was for the father to underwrite his son's college education, thereby gaining for him an escape from hard manual labor, however well-paid and protected by union contracts.

At a critical moment in this transformation, Republicans launched an assault on the labor unions themselves, symbolized by Reagan's successful effort to break the Air Traffic Controller's union.  A raft of "Right to Work" laws undermined the ability of labor unions to organize, and the comfortable, established, well-paid condition of the union leadership drained the movement of its revolutionary and liberatory potential.

All of this went hand in hand with a quite striking cultural transformation.  It started [if I may be shamelessly superficial] with Jack Kennedy's decision not to wear a hat on his inaugural walk from the Capitol to the White House.  That sartorial quirk, a showman's demonstration of his youthful vigor, overnight killed the haberdashery industry.  Men stopped wearing hats!  In 1958, in an unsuccessful effort to look older than I was when going to teach a class, I affected a fedora.  By 1960, when my hat was stolen from the University Luncheonette on Mass Ave while I was having coffee, it seemed pointless to replace it and thereafter I went bareheaded.  At first, in the sixties, the rebellious young started wearing their hair grow long and substituting jeans for dress slacks or dirndl skirts.  You could still tell someone's politics, if not his or her social class, at fifty paces.  Ten years later, everyone was wearing jeans, and facial hair had made a comeback not seen since Edwardian days.  Endlessly inventive, albeit lacking any really distinctive politics, the young started piercing various body parts and getting tats, until they too became upscale fashion accessories.

Music too underwent a de-politicization.  In the old days, Black people had jazz, white people had syrupy ballads, and radicals had folk songs.  Grown-ups and the young listened to entirely different music.  Then the Beatles came to town, and it all changed.  I was, as you might imagine, considerably behind the times, for all that I had seen Hard Day's Night in Trafalgar Square in 1964.  Even in the 80's, when my older son was a teen-ager, I did not know whether Hall and Oates was a breakfast cereal or a singing group.

Where have all the flowers gone? as Pete Seeger asked in 1955.  JD and Bill Glenn Jr. really are right.  Things have changed, for all that new clothes and songs have come along to replace the old. 

Well, now I have managed to make myself sound like a cranky old geezer, so I shall pause and leave it to younger and livelier souls to comment.

 

 

A CHASTENED RESPONSE TO JD

On Sunday last, I posted some sarcastic remarks about the NY TIMES Op Ed column by Ross Douthat.  Rather than respond in kind, JD penned a thoughtful defense of Douthat that rather put my cheap shots to shame.  I think JD deserves a serious response.  Let me begin by reprinting JD's comment, which, in my opinion, makes a better case for Douthat than Douthat made for himself.  Herewith JD:

"It seems like a rather coherent column to me; a form is readily discernible. I'm not equipped to comment on the issue he takes with Piketty's economic analysis– his criticism is brief, and it's likely you could answer it much better than I can say whether it is true or false.

However, his point is clear. In fact, his point is only a suggestion (a suggestion, however, that he clearly takes to be the case): a neglected victim of capitalism's destruction has been the cultural and spiritual resources which past generations have relied on and which are counted as some of the dearest fruits of civilized societies. He is suggesting that these goods are more imminently threatened than even economic equality and that the left, due to a neglect of questions of spiritual care and the importance of shared culture, has failed to see this and so even presently fails to have a clear view of the crisis of our times. He is suggesting not just a crisis of means but a crisis of values, ethos and community sustaining mythos. He is chalking up some of the right's recent successes to its ability (if only in rhetoric) to tap into these insecurities and fears that we are losing, or have mostly lost, the spiritual and cultural goods which give money and means more than their base, sub-human value."

 

This is an eloquent statement of an old, familiar, and honorable tradition in political theory, a tradition that has a right to claim for itself the adjective "conservative."  The Myth of the Golden Past is, of course, as old as Western Civilization, but the particular form of it that JD invokes was born in the late eighteenth century as a reaction to the rise of what eventually became known as capitalism.  Marx correctly observed that capitalism is the most revolutionary force ever unleashed on the world.  In eighteenth and nineteenth century England, and a bit later on the Continent, it undermined the authority and the wealth of the Roman Catholic Church, transformed London and the other great cities of England, ate away at and finally destroyed the age-old division between city and countryside, and threw up a class of New Men who, in a single generation, without family  connections or landed estates, became unimaginably wealthy.

Speaking broadly, there were three thoughtful responses to this phenomenon.  The first was the response of those who were called Liberals, writers who celebrated the changes and wrote confidently that the manifest evils of the young capitalism -- urban slums, brutal factory work, an economic cycle of booms and busts -- were merely the growing pains of a brave new world,  soon to be replaced by a stable order of endless growth.  The second response was that of the Socialists, who welcomed the destruction of the old order but insisted that the chaos of capitalism must be replaced by rational management for the common good.  Marx was not the first to voice this vision.  He was simply the most brilliant and the most penetrating in his anatomization of the inner exploitative structure of capitalism.

The third response, which appeared in England and France as early as the end of the eighteenth century, was that of Conservatives.  There were many observers of the passing scene who looked with horror on the destruction wrought by capitalism, seeing it not as a force for growth and liberation but rather as the enemy of all they held dear.  I do not think I will elicit much protest from my brethren on the right if I say that greatest among these voices was that of Edmund Burke.  In 1797, Burke wrote an impassioned response to the events in France under the title Reflections on the Revolution in France.  Let  me quote at length the most famous passage from that seminal work, for it says eloquently what Douthat was reaching for and what JD very nicely summarized.  Here is Burke, answering the claims of the social contract theorists of his day.  I have highlighted the portion of the passage that is most often quoted:

"Society is indeed a contract. Subordinate contracts for objects of mere occasional interest may be dissolved at pleasure—but the state ought not to be considered as nothing better than a partnership agreement in a trade of pepper and coffee, calico or tobacco, or some other such low concern, to be taken up for a little temporary interest, and to be dissolved by the fancy of the parties. It is to be looked on with other reverence; because it is not a partnership in things subservient only to the gross animal existence of a temporary and perishable nature. It is a partnership in all science; a partnership in all art; a partnership in every virtue, and in all perfection. As the ends of such a partnership cannot be obtained in many generations, it becomes a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born. Each contract of each particular state is but a clause in the great primæval contract of eternal society, linking the lower with the higher natures, connecting the visible and invisible world, according to a fixed compact sanctioned by the inviolable oath which holds all physical and all moral natures, each in their appointed place. This law is not subject to the will of those, who by an obligation above them, and infinitely superior, are bound to submit their will to that law. The municipal corporations of that universal kingdom are not morally at liberty at their pleasure, and on their speculations of a contingent improvement, wholly to separate and tear asunder the bands of their subordinate community, and to dissolve it into an unsocial, uncivil, unconnected chaos of elementary principles. It is the first and supreme necessity only, a necessity that is not chosen, but chooses, a necessity paramount to deliberation, that admits no discussion, and demands no evidence, which alone can justify a resort to anarchy. This necessity is no exception to the rule; because this necessity itself is a part too of that moral and physical disposition of things, to which man must be obedient by consent or force; but if that which is only submission to necessity should be made the object of choice, the law is broken, nature is disobeyed, and the rebellious are outlawed, cast forth, and exiled, from this world of reason, and order, and peace, and virtue, and fruitful penitence, into the antagonist world of madness, discord, vice, confusion, and unavailing sorrow."

The England whose loss Burke was lamenting was in fact a land of servitude and grinding poverty for the many and inherited wealth, leisure, elegance, and culture for the few.  But that was not an image worthy of Burke's eloquent invocation.  It was at roughly at this time that there was born the fantasy of Merrie Old England, a time of maypole dances and madrigals, of soft summers and manageable winters, of simple pleasures blessed by a benevolent Church.  [Not by Burke, by the way!]

This is the sensibility to which Douthat is appealing, and in his column, it is thoroughly disingenuous and dishonest.  First of all, Douthat is not harking back to medieval England, or even Colonial America.  His Golden Age transparently is the Fifties, a world in which the  Roman Catholic Mass was still celebrated in Latin and Rosie the Riveter had turned her tools over to returning servicemen and had gone back to the kitchen, a world in which June and Ward Cleaver slept in separate beds and had sex only the requisite two times to produce Wally and The Beaver.  It happens also to be a time, as Piketty shows us, in which wealth was, temporarily, less unequally distributed than it had been earlier and would be later, a time of rapid economic growth to replace what had been lost in the depression and war years.

But of course Douthat's American version of Merrie Old England was also a time of quasi-slavery for African-Americans, of back street abortions and stifled ambitions for the female half of the population, a time of the closet for gay and lesbian men and women.  Douthat neither cares about nor bothers to recall these unpleasant facts, and I rather imagine does not even consider  them truly unpleasant.

When all is said and done, what is Douthat's column really about?  Quite simply, he is worried that Piketty might encourage people to take away some of the great wealth concentrated in the hands of the few and spread it around to those whose labor actually created it.  And along the way, they might once again take notice of the role played by the Church in blessing and sanctifying the exploitation of working men and women.

That, or something like it, is what was in my mind when I penned my cheap shots at Douthat.  I apologize to JD for not taking the time to spell it all out, and I thank him or her for recalling me to my better self.