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Archive for March, 2010

This post has literally nothing to do with economics.

For basketball fans, however, Christmas has arrived. Even better, the Notre Dame Fighting Irish are in the tournament and are playing this afternoon. Go Irish! Beat Monarchs!

Below are my picks…

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Via Meteor Blades, Guernica has an article about how the social division of labor arose and how we might move beyond it as we recover from the current economic crisis.

Instead of putting forward, as so many of our elected officials, policy analysts, pundits, and journalists predictably do, a picture of our world that is essentially the same, except that it is somehow “green” and somehow peopled with college-educated or better “trained” workers, we need to focus our attention on the more pressing and more basic question of what kinds of work people should be expected to devote their lives to doing. The last time this question—the question of meaningful, satisfying, dignified labor—got a public hearing was in the nineteen sixties and seventies, with Harry Braverman’s Labor and Monopoly Capital being the intellectual high-water mark. What Braverman convincingly demonstrated is that there is nothing natural or inevitable about our system of labor; that it came about through conscious decisions made by industrial capitalists in the name of profit for them alone…

Rochelle Gurstein, the author, makes an explicit connection with this division and the beginning of environmental issues:

We must also keep sight of the historical fact that not only did monopoly capital and the division of labor emerge together in the last decades of the nineteenth century, but so, too, did those alarming “plague clouds” and a sun that was “blanched” rather than “reddened”—those first unmistakable signs of industrial pollution that John Ruskin decried in a lecture entitled “The Storm-Cloud of the Nineteenth Century” (1884). To address one of these historical developments without the other two is to ensure that we will never move beyond the narrow confines of current thinking…

The problem, however, is that our current way of thinking about jobs is deeply ingrained:

It is worth recalling the profusion of skilled practices that once existed…Over the last century and a half, however, the social division of labor penetrated ever more dimensions of daily life…Thus it has become increasingly difficult to imagine how to revive what has vanished both from practice and from memory, let alone how a world might come into being where the greater number of things we use or, better yet—to suggest the enormous change in consciousness that is required—things we enjoy using in our daily life are made by people who enjoy making them.

Is the organic and local food movement a good analogy for a way out?

It seems to me that a good starting point for how to bring about a similar revolution in thinking and practice when it comes to work is the principle that just as monoculture is disastrous for our health and security when it comes to food, lack of variety in work is just as disastrous for our well-being and happiness. The ideology of ceaseless economic growth, made possible by the division of labor that has filled our world with ugly things from the Styrofoam cup to smog in our skies, has always been vapid and destructive. Now, with the implosion of the global financial system, the American way of life as model for global expansion stands exposed as unsustainable as well.

There really are limits to our vision of what the world can look like in the future. It’s relatively easy to imagine what our world might look like in 5 years, but 50 years off is an entirely different story. Most people, myself included, get a headache when confronted with the issues presented by “futurists.” However, as cheesy as this sounds, (and copying from a World Social Forum’s slogan), another world is possible. Perhaps the co-op movement, which I am very excited about, holds some promise for a rethinking of the social division. Worker-led appropriation and distribution of surplus is radical enough, but what if the role of “worker” is rethought entirely as well? I’m not just talking about rotating folks through different assembly-piece jobs, but something deeper.

In this regard, I’m reminded of a recent episode of The Office, which has unintentionally uncovered a number of deep truths about work throughout its run. In this particular instance, a warehouse worker (the head of the warehouse), makes a suggestion about how to implement a new inventory system, including a sketch of how it would work. His boss scoffs (there’s also a racial tension, as the boss is white, but the warehouse worker is black), but the boss’ new boss is impressed and gives the warehouse head an office upstairs.

It’s a trite example, but it underscores the improtance of subsidiarity, that those closest to the impact of a decision should be involved in making it. In fact, deeper principles like subsidiarity or sustainability might provide the way forward for this rethinking. We don’t know what the world will look like in 50 years, but we do know the basic principles around which it should be structured. Better yet, we can apply these principles in a citizen-led movement that doesn’t require government policy, which Gurstein points out is quite tone-deaf to these concerns. That gives me some hope.

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This image should provide a nice response to any friends or otherwise who claim that this winter is evidence against global warming (not that intelligent people need further evidence). It shows departures from average surface temperatures from December, 2009 through February, 2010.

(Photo is from NASA GISS via the Washington Post)

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If The Onion had a very wonky economics section, then I would hope the above headline would make the cut, at least for an article about the following paper (h/t Thoma) by Richard Suen of UC Riverside. Here’s the abstract:

This paper presents a dynamic competitive equilibrium model with heterogeneous time preferences that can account for the observed patterns of wealth and income inequality in the United States. This model generalizes the standard neoclassical growth model by including (i) a demand for status by the consumers and (ii) human capital formation. The first feature prevents the wealth distribution from collapsing into a degenerate distribution. The second feature generates a strong positive correlation between earnings and wealth across agents. A calibrated version of this model succeeds in replicating the wealth and income distributions of the United States.

The person who posted this at the NEP-DGE blog then asks,

It is surprisingly difficult to replicate the distribution of wealth. One way to do it is by assuming heterogeneous preferences, but this requires more heterogeneity than what would be reasonable. Richard Suen gets here increasing returns to heterogeneity by adding human capital formation (richer people can get even richer) and wealth in the utility function (people want to hold wealth, not just consume it). Are these reasonable assumptions?

I suppose it says something about the discipline of economics that it is so wedded to simplistic assumptions that one even needs to ask whether the innovations that Suen makes are reasonable. Of course they are reasonable. I have no familiarity with this literature, but did it really take us this long to derive inequality in a neoclassical model? My headline should not be read as ripping on Suen; kudos to him for showing that even using the neoclassical’s toys, we can still obtain a result that reflects the real world and causes us to think about conditions that are otherwise ignored.

Of course, I’m sure there are other types of models that could obtain this result, perhaps ones that consider power or exploitation. However, those don’t get published in mainstream journals.

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Friday Links

Serious Links

David Ruccio follows up on “Rawls on Marx” with some helpful points (Anti-capitalism)

Rick Wolff on “Capitalism and the Useful Nation State”- (MRZine)

Mark Weisbrot talks about Greenspan’s dreamy nightmare- (RWER)

More on land grabbing, this time in Latin America- (GRAIN)

Chris Hayes on elites, institutional failure, and the prospect of change from below (Time)

IRIN on “gray literature” and climate change- (MRZine)

Are seed monopolies causing price increases? (Perhaps a reason to be weary of GMO initiatives)- (NYT)

Hoarding of emissions permits in Europe- (Guardian)

Daniel Little probes whence moral sentiments arise- (Understanding Society)

This analysis of Arthur Bentley’s pluralism makes it seem quite Alinskyian- (New Yorker)

Diversions

Enjoy watching middle school children sing popular songs? Look no further- here’s Phoenix’s Lisztomania:

Speaking of children, watch Jon Stewart shred Glenn Beck.

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It’s always a good morning when I wake up to the new edition of the Real World Economics Review in my inbox. This issue may be of particular interest for readers of this blog, who recall my review of David Westbrook’s excellent book, Out of Crisis: Rethinking Financial Markets. You should still read the book, but in the meantime, Westbrook has condensed his thoughts into a 12 page article, ” Tragedy, law, and rethinking our financial markets.” The general ideas are similar, although there are a few Marx references peppered in. I’m excerpting below the fold, so as to encourage you to read the whole thing.

(more…)

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This set of notes is very interesting- in fact, given the internet’s system of information production and distribution, I think it would be a grave injustice to excerpt it. On that note, here’s Daniel Little:

John Rawls taught a course on the history of political philosophy throughout much of his career at Harvard University. The course contained his description and analysis of the most important figures in modern political philosophy, including Mill, Locke, Rousseau, Kant, and Marx. The course evolved over time; the final version from 1994 is edited in Samuel Freeman’s Lectures on the History of Political Philosophy. I served as graduate assistant in Rawls’s lectures on this subject in fall 1973, and recently reread my notes of the course. Here are my notes of a particularly important lecture towards the end of the course: Rawls’s treatment of Marx’s ideas about economic justice. This lecture demonstrates Rawls’s understanding of the fundamentals of Marx’s economic theories and the labor theory of value. (I am inclined to think that Joseph Schumpeter’s History of Economic Analysis (1954) was an important source for Rawls on the history of economic thought, including Marx’s economics, though I can’t at this moment confirm this.) This lecture is particularly significant in that it is roughly simultaneous with the emergence of “analytical Marxism” announced by the publication of an important article by Allen Wood, “The Marxian Critique of Justice” in Philosophy and Public Affairs in 1972 (link).

MARX’S ATTITUDE TOWARDS THE THEORY OF JUSTICE

John Rawls, History of Political Philosophy, Phil 171, fall 1973
Notes from lecture, December 11, 1973
[notes taken by Daniel Little; intended to capture Rawls’s formulations of the main points presented in the lecture]

[Quoting Rawls:]

Capital seems to be a description of an unjust society. The owners of the means of production live in relative abundance and idleness at the expense of the ever-growing class of wretched laborers. But Marx doesn’t make any attempt to present an argument that capitalism is unjust, nor any concept of justice which would back up such an argument. Moreover, we have vitriolic criticisms of utopian socialists who did condemn capitalism on the grounds of justice. Marx asserts on the contrary, that capitalism is perfectly fair, perfectly just. Why so?

(a) It is not enough to say Marx is averse to preaching or moralizing. He is so averse; but judgments of justice can be reasoned and hence not properly described as “preaching”.

(b) It is not enough to say that he didn’t want the critique of capitalism to rest on some social ideal. He does reject the utopian socialists’ program; but that would not prevent him from stating his own opinion. And he doesn’t do that either. He reproaches the utopians for not realizing that some major social change must precede an adjustment along moral lines.

Here is my conjecture as to why Marx didn’t judge capitalism unjust. He thinks of justice as a political and juridical conception which is associated with a particular conception of the state and society; so it belongs to the prehistory of mankind. Given his picture of human society, these political and juridical institutions belong to the superstructure, and reflect the workings of the mode of production. For each mode of production there is a conception of justice appropriate to it, at least in prehistory. A further qualification: It is worthwhile to distinguish between the high time of a form and its low period — where the form is a progressive force and where it stands in contradiction to the mode of production.

Here is a brief discussion of justice in Capital III:

To speak here of natural justice, as Gilbart does, is nonsense. The justice of the transactions between agents of production rests on the fact that these arise as natural consequences out of the production relationships. The juristic forms in which these economic transactions appear as wilful acts of the parties concerned, as expressions of their common will and as contracts that may be enforced by law against some individual party, cannot, being mere forms, determine this content. They merely express it. This content is just whenever it corresponds, is appropriate to the mode of production. It is unjust whenever it contradics that mode. Slavery on the basis of capitalist production is unjust; likewise fraud in the quality of commodities. (Capital III, 339-40)Here Marx conceives of justice in terms of adequacy to the mode of production. (1) The justice of legal forms cannot be discovered on the basis of those forms alone. Rather it depends upon their adequacy to the mode of production. The juridical institution is formal; to give it content we must look to the way of life and its requirements. A consequence: There is no universal theory of justice which allows us to evaluate generally the social institutions of any society. There is no general principle like “slavery is always unjust.” There are thus no general rules of natural rights, no universal justice. (2) This adjustment of justice to the mode of production doesn’t mean there are no injustices. Slavery is unjust under capitalism; wage labor is just under capitalism, provided that the worker is paid the value of his labor power.

This view seems to suggest a sort of relativism; but this would be a faulty conclusion. We have a theory matching theories of justice with modes of production, and we might at some time find a function systematically linking them.

Let’s now try out this suggestion on the conception of surplus value. The utopians argued that workers ought to be paid the value of their contribution to the firm. Since they are not, capitalism is unjust. Marx rejects this view. It makes the appropriation of surplus value appear accidental — as if the capitalists could act differently. Marx required a theory of value which made the appropriation of surplus value a necessary part of the capitalist system. On the theory of value every commodity is exchanged for a strict equivalent.

Marx distinguishes between the product of labor and labor power. The worker is given the value of his labor power, not his product. It is on this ground that he is fairly treated. Thus he is undercutting the Ricardian socialist position by rejecting and replacing the principle of contribution. It is the system itself which brings about surplus value, not the behavior of individuals who violate moral principles. Surplus value is an intrinsic part of the working of the social institutions of capitalism.

Consider the description of the production of surplus value in Capital

Every condition of the problem is satisfied, while the laws that regulate the exchange of commodities, have been in no way violated. Equivalent has been exchanged for equivalent. For the capitalist as buyer paid for each commodity, for the cotton, the spindle and the labour-power, its full value. He then did what is done by every purchaser of commodities; he consumed their use-value. … This metamorphosis, this conversion of money into capital, takes place both within the sphere of circulation and also outside it; within the circulation because it is conditioned by the purchase of the labour-power in the market; outside the circulation, because what is done within it is only a stepping-stone to the production of surplus value. (Capital I, p. 194)The fact that surplus value arises is a piece of good fortune for the buyer, but no injustice to the seller.

Marx thus rejects the Ricardian principle of contribution. He finds it a bourgeois notion, basing property rights on one’s labor.

Summing up. (1) Marx views the notion of justice as a virtue of legal forms and institutions, and thus perhaps it is a notion which belongs to prehistory. The state depends upon the mode of production. (2) Marx doesn’t deny that the various conceptions of justice have formal features in common — exchange of equivalents for equivalents — but the notion of what is equivalent is determined in different ways. Marx would be prepared to admit that capitalism in its high period is just. One reason he rejects the utopian’s argument is that it is misleading. It rests on a misapprehension of where the essential problem lies: not in the superstructure, but in the mode of production. He felt that the key enterprise is to give a scientific theory of the mode of production.

A second point: justice is a distributive notion. The appeal to justice suggests that we can separate the mode of distribution from the mode of production. This is for Marx incorrect. Appeals to justice are thus supposed to be superficial. Moreover, appeal to justice suggests that important social change can be achieved by legislation.

The essence of these ideas were taught to me in my class on Marxian Economic Theory, albeit with a slightly different tenor. We did learn that capitalist’s were merely doing what one would expect given the economic system. However, I never felt as if I shouldn’t interpret the system as unjust. In fact, much of my anger and thought about our economic system has revolved around notions of social justice (shocking, I know, coming from a Catholic Social Teaching minor). Who could read Marx’s line about capital sucking the blood of workers and not move to thought of injustice.

So forgive me if after reading these notes on Rawls, I’m a bit confused; if the system (or super-structure) of production is set up in a way that produces unjust results, then who cares if we deem the actors as behaving justly. Why wouldn’t we deem the system unjust, and then as Marx argues, seek to replace it? I suppose this issue ultimately goes to semantics, at least in Rawls’ conception (or Little’s interpretation thereof). The quote, “Marx views the notion of justice as a virtue of legal forms and institutions, and thus perhaps it is a notion which belongs to prehistory. The state depends upon the mode of production,” strikes me as most relevant to this point. Nevertheless, in our current linguistic structure, it strikes me that calling capitalism unjust is perfectly appropriate because it transmits the meaning I want it to transmit: that capitalism inherently results in extremely bad (or unfair, or whatever) outcomes, such as poverty and alienation.

I am glad, though, that Marx is being discussed in a genuine manner, rather than merely dismissed because of the conclusions of his analysis that some find unsavory.

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