A REPONSE TO MANY COMMENTS

I have found the series of comments on the Israeli situation interesting and helpful. I have not responded to them because I am so upset by what is happening that I can barely watch the news reports of it anymore. Let me make one small observation. There has been talk by Israeli officials and others about how this is an existential threat to the state of Israel. Let us just keep in mind that Israel is the only nation in the region with nuclear weapons and more generally is far and away the most powerful militarily. The attack on October 7, horrific and ugly and sadistic as it was, was no more a threat to Israel's existence then was the attack on the twin towers on September 11 a threat to the existence of the United States.

NIGHT THOUGHTS

I have never felt more keenly the contrast between my ability to articulate grand conceptual schemata and my utter powerlessness to change the world in any but the smallest and least important  fashion.  I sit here safely in my chair, confined by my Parkinson’s, and watch on television as Israel responds to a brutal and sadistic attack by killing more than 8000 Palestinians as it seeks to find and kill those who perpetrated the original attack.

 

I know next to nothing about the Mideast. From this distance, it appears that Hamas has deliberately and soullessly provoked Israel in order to frustrate a prospective rapprochement between Saudi Arabia and Israel.

 

Every time I returned to my meditations on Marx, the world interrupts me with another horror.  And I do not even have the consolations of religion.

WORK FOR THE NEXT GENERATION

In the world of Karl Marx, capital mostly took the form of companies privately owned, companies that were in many cases managed by the individuals who owned them. It was relatively easy to see that the world was divided into landowners, entrepreneurs, capitalists, and workers. And as Marx argued quite persuasively, over a long period of time stretching across several centuries, workers had systematically been deprived of the tools of their labor and also of their skills, which more and more were built into the machines they tended. The wealth of the capitalist class was rapidly expanding as they appropriated the surplus of the productive activities of their workers in the form of money profits.

 

By the early 20^th century, the situation had changed dramatically.  As Berle and Means argued in their classic 1932 work The Modern Corporation and Private Property, ownership of private corporations in America has been substantially divorced from control and management of those corporations. Although technically the owners of shares of stock in a publicly traded corporation are partial owners of that corporation, in reality owning a share of stock in a corporation confers no control at all over its operation.

 

The management of a large publicly traded corporation are in fact employees of the Corporation, and their compensation appears in the accounting of the Corporation along with the other costs, such as raw materials, electricity, and such. To be sure, the managers of America’s great publicly traded corporations tend to be quite rich and frequently own large chunks of stock in the Corporation, but their ownership of stock in the Corporation is a consequence, not a cause, of their role as managers. Rex Tillerson, for example, Trump’s first Secretary of State, ended his private career as the head of Exxon Mobil. He held something like $600 million in Exxon Mobil shares, but that was a result of his career with the oil company, not a condition of his elevation to the presidency of it.

 

The enormous inflation in the compensation of corporate executives in the United States over the past 40 years can I think best be portrayed as systematic theft by the corporate managers from the faceless real owners of the corporations, the shareholders. When the United Auto Workers go toe to toe with the management of the automobile industry, it is not labor confronting capital, it is low-paid workers confronting high paid workers.

 

As the statistical studies of Thomas Picketty and others demonstrate, the enormous inequality in the distribution of income in modern capitalist societies is dwarfed by the vastly more unequal distribution of wealth.

 

In my paper “The Future of Socialism” I presented a little hypothetical example designed to demonstrate that in the modern Corporation it is impossible, according to the canons of cost accounting, to allocate unambiguously the costs of the Corporation to the several divisions producing different commodities. The implication of this fact, I argued, is that decision-making within the Corporation has become, in its logical structure, increasingly like the political decision-making engaged in by government representatives and can no longer be portrayed simply as determined by market forces. My point was, rather simple mindedly, that something akin to socialism was developing within the womb of capitalism.

 

That was simply a thought experiment, a first attempt to get my hands around the peculiar character of modern capitalism. If we are to think our way to a form of economic organization beyond capitalism, it is these sorts of investigations rather than celebration of “Occupy Wall Street” that is required. 

TACTICS

Far be it from me to offer tactical advice about the House of Representatives to Hakiem Jeffries or Nancy Pelosi, but it occurred to me that if the Democrats can live with the candidate who emerges from the Republican caucus meetings as the majority choice of the Republicans, they can put him over the top in the House vote simply by all choosing to vote present. The Republicans would then be in the uncomfortable position of having elected as Speaker the person that a majority of them chose, with no votes from the Democrats.

Just a thought.

FORWARD

The session with the Harvard students was a great success, at least for me. I enjoyed it enormously and out of it came the possibility of an informal study group next semester of faculty and students under my direction to read the entire volume 1 of Capital.    That is the ideal situation for me – spend the semester with bright people talking about Marx and no papers to grade😀.

Meanwhile, the world is falling apart and I am so disturbed by it that I cannot sleep well at night.

A COMMENT WHILE I WAIT

Later this morning, I shall do a one hour zoom meeting with two dozen Social Studies students at Harvard.  The session was originally called “Bagels with Bob Wolff” but I have just been told that it has been switched to quiche and pastries. I shall not make the obvious comment.

 

While waiting, I should like to make one small observation about something that Joe Biden has said several times. In urging the Israelis to exercise restraint, Biden has said that after 9/11 Americans were so upset that they made “certain mistakes.” He appears to be referring to the war in Iraq.

 

I do not think that was a “mistake.” I think it was one of the most successful bait–and–switch operations in recent American political history. Sixteen Saudls hijacked four planes and flew them into into the Twin Towers and the Pentagon and tried unsuccessfully to fly one into Congress or the White House. In response, the Bush administration temporarily closed all commercial air travel in the United States, save for one plane that was permitted to carry Saudi diplomats back to Saudi Arabia. Bush and Cheney then used the deliberately misleading notion of WMD to launch an unprovoked attack on Iraq. The war did not turn out in quite the way they hoped, but getting into it was no “mistake.”

ROLLING MY TUB

 

My favorite short passage in the entire corpus of philosophical writings is the two and a half page preface to Kierkegaard’s Philosophical Fragments. At one point Kierkegaard writes, “when Philip threatened to lay siege to the city of Corinth, and all its inhabitants hastily bestirred themselves in defense, some polishing weapons, some gathering stones, some repairing the walls, Diogenes seeing all this hurriedly folded his mantle about him and began to roll his tub zealously back and forth through the streets. When he was asked why he did this he replied that he wished to be busy like all the rest, and rolled his tub lest he should be the only idler among so many industrious citizens.”

 

I am so disturbed by the blowing up of a hospital in Gaza and so utterly unable to do anything at all about that or all the other terrible things happening, that I decided to fold my mantle about me and write something more about the modern re-examination of classical economic theories.  I am under no illusion that the world needs these words at this terrible time, but perhaps at the very least you will not consider me an idler.

 

Early in his writing, Ricardo explored the idea of a corn sector in which corn is the only input in addition to labor – no tools, no implements of any sort from others sectors. He observed that if this were the case, the analysis of labor values and prices would be elementary and no theoretical problems would arise. The profit rate would be identical the rate of growth in the amount of corn produced in each cycle, and so forth.

 

Now consider an economy with only one sector producing not corn but traditional men’s suits – each suit of clothes consisting of a jacket, a vest, and two pairs of pants. Since economic theory bears no relation to reality, we may suppose that the workers in this sector consume suits of clothes, use suits of clothes as tools, work on suits of clothes as input, and produce suits of clothes as output. Clearly, Ricardo’s analysis of a corn sector producing only corn as output will apply equally to the fanciful case of an economy with a single sector producing men’s suits.

 

Now suppose that in the suits economy, there are three sectors, not one: a jacket sector that uses jackets, pants, and vests as input and produces jackets; a vest sector that uses jackets, pants, and vests as input and produces vests; and a pants sector that uses jackets, vests, and pants as input and produces pants as output. So long as the pants sector produces twice as many pairs of pants as the jackets and vests sectors produce jackets and vests, the economy should function in exactly the same fashion as the economy with a single suits sector, assuming that by the higgling and jiggling of the marketplace the appropriate balance of sector sizes comes into existence and can be maintained.

 

Now imagine a real economy producing hundreds of different kinds of goods, in which all of the output is reinvested to expand the level of production cycle by cycle. If there were some way in which the size of the various sectors could be balanced so that there was no excess output from any sector, then presumably we could define an imaginary complex commodity – what Piero Sraffa called the Standard Commodity – whose components were all of the inputs into the various sectors in precisely the proportions required for the economy to grow at a steady rate without wastage or shortages or any other inefficiencies.

 

The great Hungarian-American economist and mathematician John Von Neumann, in an elegant theorem in neoclassical growth theory, demonstrated that in an economy with no luxury sector growing at the maximum rate possible, there would always be a balanced growth path with the various sectors in just the required proportions, and that the economy would find its way to this balanced growth path through the natural seeking of maximum profits by entrepreneurs in the various sectors.

 

This theorem has no more applicability to the real world than any of neoclassical economics’ other elegant theorems, but it is a really lovely elaboration and confirmation of Ricardo’s early intuitions.