Archive for December 24th, 2009

I’m in the Christmas spirit, fresh from decorating the Krafft family tree (pictured above), and I wanted to write something holiday related. As so often happens, though, David Ruccio beats me to the punch, pushing back on the typical counter-intuitive anti-gift argument from mainstream economics. Thankfully I have something to add this time, as you’ll see below. First, here’s David:

It’s Christmas, and therefore the time when one or another neoclassical economist shows up to point out the impossibility of the gift. The basic argument—this year from Joel Waldfogel, courtesy of the Economist—is that gift-giving represents a “deadweight loss,” that is, the difference between the satisfaction people get when they spend money on themselves and when well-meaning gift-givers spend the same amount of money on gifts.

The conclusion: from the perspective of neoclassical theory, gift-giving would be improved by just offering money, and letting people buy their own presents. Thus, in a world of self-interested, utility-maximizing individuals, gift-giving makes no sense. It represents a loss, both on the individual level and the social level.

What neoclassical economists miss is the ethical moment of the gift (whether for Christmas or some other occasion), which is the product of the uncertainty surrounding the gift. The uncertainty runs from the decision to make the offering of a gift (what should the gift be, and when should it be given?) to the debt incurred by the recipient (what should the reciprocal gift be, and when should it be given?). The indeterminacy of the gift, and therefore the social relationship connecting the giver and recipient, creates moments in which ethical decisions need to be made.

It’s that ethical moment of the gift (and, for the matter, any form of exchange other than capitalist commodity exchange) that escapes the work of Waldfogel and neoclassical economists generally.

Of course, there is a deconstructionist perspective that also points out the impossibility of the gift, but relies on a different view of selfishness. For this, we’ll look to Jacques Derrida, whose methodology could not be more different from the neoclassical economist’s:

In his text, Given Time, Derrida suggests that the notion of the gift contains an implicit demand that the genuine gift must reside outside of the oppositional demands of giving and taking, and beyond any mere self-interest or calculative reasoning (GT 30). According to him, however, a gift is also something that cannot appear as such (GD 29), as it is destroyed by anything that proposes equivalence or recompense, as well as by anything that even proposes to know of, or acknowledge it…

The important point is that, for Derrida, a genuine gift requires an anonymity of the giver, such that there is no accrued benefit in giving. The giver cannot even recognise that they are giving, for that would be to reabsorb their gift to the other person as some kind of testimony to the worth of the self – ie. the kind of self-congratulatory logic…

Significantly, however, according to Derrida, the existential force of this demand for an absolute altruism can never be assuaged, and yet equally clearly it can also never be fulfilled, and this ensures that the condition of the possibility of the gift is inextricably associated with its impossibility.

I don’t think I have anything to add, other than that Derrida’s argument is infinitely closer to being right than Waldfogel’s. Shocker, right?


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Should you have 15 minutes to spare this Christmas Eve, go read Chris Hayes’ excellent article on China in The Nation. He delves into a number of the contradictions in China’s society and economy. Here are some key excerpts:

This marginal population freaks out the Chinese authorities because they desperately wish to avoid the experience of so many other developing countries, from Brazil to India, which have seen the growth of massive, ungovernable miserable slums in their largest cities. “We have learned many lessons from other countries, including the so-called Latin American trap during the urbanization process,” said Wen. “The governments didn’t think thoroughly about urbanization. Huge numbers of villagers came to the cities and they couldn’t find a job. That’s why there are so many slums.” […]

Atop the urban-rural divide is a stark class divide as well. Peasants are the original Chinese revolutionary class, hundreds of millions of whom remain chained to a life of crushing preindustrial penury while oligarchs in Shanghai and Beijing live lives that would make even a Goldman Sachs banker blush…

To the Chinese elites we talked with, though, the future is everything. Although Chinese civilization (and administrative bureaucracy) is 5,000 years old, no one seemed interested in talking about anything that occurred before 1978…if the dark side of Chongqing is the triumph of Robert Moses’s vision over that of Jane Jacobs, the silver lining is that–at a technical level, at least–this vision is pursued and executed with what seemed like an impressive degree of mastery…

The Chinese affection for urban planning is closely connected to their belief in the virtues of economic planning. The fable we are told about China, particularly by neoliberals, who hold it up as a model of how capitalism has delivered millions from poverty, is that the market reforms have produced growth and prosperity by throwing off the shackles of state intervention. It’s a deeply incomplete story: the commanding heights of the economy (telecom, energy, transportation and, most important, finance) remain in state control…

Like the Death Star, the corporatist behemoth that is the Chinese economy is intimidating to behold, but it is not without its vulnerabilities. The abominable lack of a social safety net helps produce the high savings rate that most economists say stands as the single biggest obstacle to making the necessary transition to an economy driven more by domestic consumption (not to mention basic justice and security for hundreds of millions of people). This is connected to the much deeper problem of distribution, which presents economic and political challenges, although those two categories bear a strange, sometimes mysterious relationship to each other. “We do worry about equality,” says Shanghai Institutes for International Studies president Yang Jiemian. “We do need to focus on distribution, allocation of rights, taxes, hospitals, healthcare.”

When you raise the issue of distribution with other Chinese officials, they acknowledge the problem (they are nothing if not vigilant about emerging threats to their managerial order) but caution that achieving a more equal society will take time…

China has undoubtedly made some progress on this front: improving rural healthcare, ending taxes on farmers and even passing a labor law with a minimum wage, overtime and other protections (over the objections, I hasten to point out, of the US Chamber of Commerce). But while everything in China on the business side seems to move as fast as Shanghai’s Maglev train, which goes 430 kilometers an hour, the project of equality, justice and social welfare proceeds much more slowly…

The reason that democracy is an obstacle to economic progress, Xu said, is that “the poor people want to divide the property of the rich people…. If we Chinese copied the directly elected situation today, people will say, ‘I want everyone to have a good job.’ Someone will say, ‘I will divide the property of the rich people to poor people,’ and he will be elected. It is useless: parity will not solve the problem of economic development…” […]

But Wang Hui, the lone dissident we spoke with during our time in China, says the state’s attempts to maintain a strong and stark dividing line between legitimate critiques of its economic policy-making and illegitimate critiques of its very foundation doesn’t always work. China’s nominally socialist orientation, Wang argued, has provided many of its citizens with a vocabulary with which to criticize the state. “The paradoxical situation is that many ordinary people can use [Marxism] to defend their own interest because there is a real contradiction between the theoretical claim and what happens in reality.” […]

But after a while I wondered if we aren’t in some way converging with our supposed rival. China has managed the transition from a repressive, authoritarian, impoverished country to an industrial, corporatist oligarchy by allowing a loud and raucous debate while also holding tightly onto power. Perhaps we are moving toward the same end from a democratic direction, the roiling public debate and political polarization obscuring the fact that power and money continue to collect and pool among an elite that increasingly views itself as besieged on all sides by a restive and ungrateful populace…

I may be going out on a limb, but I don’t think either country is going to be able to make this system work.

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