First of all, as we all know, it is another typical – perhaps defining – feature of slavery that slaves can be bought or sold. In this case, absolute debt becomes (in another context, that of the market) no longer absolute. In fact, it can be precisely quantified. There is good reason to believe that it was just this operation that made it possible to create something like our contemporary form of money to begin with, since what anthropologists used to refer to as "primitive money", the kind that one finds in stateless societies (Solomon Island feather money, Iroquois wampum), was mostly used to arrange marriages, resolve blood feuds, and fiddle with other sorts of relations between people, rather than to buy and sell commodities. For instance, if slavery is debt, then debt can lead to slavery. A Babylonian peasant might have paid a handy sum in silver to his wife's parents to officialise the marriage, but he in no sense owned her. He certainly couldn't buy or sell the mother of his children. But all that would change if he took out a loan. Were he to default, his creditors could first remove his sheep and furniture, then his house, fields and orchards, and finally take his wife, children, and even himself as debt peons until the matter was settled (which, as his resources vanished, of course became increasingly difficult to do). Debt was the hinge that made it possible to imagine money in anything like the modern sense, and therefore, also, to produce what we like to call the market: an arena where anything can be bought and sold, because all objects are (like slaves) disembedded from their former social relations and exist only in relation to money.Full article is from Eurozine; it can be found here
Friday, April 30, 2010
Wednesday, April 28, 2010
In the case of the village cited above where 'outsiders' and 'insiders' did not get on, it was 'recounting of suffering' which initially brought the problem of the poor treatment of 'outsiders' into the open. During a village 'recounting of suffering' session, an 'insider', Mr Bach, was telling how poor he had been. His father, who had finally died of starvation, had been a village guard and had to sit on the ground in the communal house. 'We suffered as much as "outsiders".' At this point, the meeting went very quiet, for he had let the cat out of the bag: he had revealed to the outside cadres that whereas 'insiders' sat on the raised wooden floor in the dinh, the 'outsiders' sat on the ground. Finally a poor peasant 'insider' broke the ice with the comment, 'happiness does not come from sitting on the wooden floor'.This led to a number of insiders telling of their sufferings. An old woman recounted that her father died when she was a young child and her mother sold her to the canton chief for money to buy a coffin. She had to work for the canton chief for 12 years as a servant without wages. The old woman wept as she told of the sufferings of the little servant girl that was her former self, and so did the listeners. According to the Nhan Dan report, outsiders realised that poor insiders had a terrible life.
Tuesday, April 27, 2010
The work of Miliband, Poulantzas and other Marxists from the 1960s and early 70s examined the relationship between the state and capitalist society. Their work was motivated by the desire to explain why capitalism was still, in the 1970s, the dominant economic system, given Marx's predictions of its certain collapse.
Block, Przeworski, and Wallerstein (later 1970s and 1980s) were also motivated by a central question. They aimed to explain how labor was able to make such significant advances in terms of wages, and working conditions, and collective bargaining institutions more generally since the late nineteenth century, all of which were strong indicators of the development of the welfare state model of capitalism.
Both groups of theories trying to explain the exact same period (and arguably, depending on your notion of objectivity, the exact same phenomenon), and the difference in how the question is framed makes all the difference in the outcomes of the theories...
Saturday, April 24, 2010
It must have been due to a complex of suitabilities in the doctrine to the environment into which [classical economics] was projected. That it reached conclusions quite different from what the ordinary uninstructed person would expect added, I suppose, to its intellectual prestige. That its teaching, translated into practice, was austere and often unpalatable, lent it virtue. That it was adapted to carry a vast and logical superstructure, gave it beauty. That it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely on the whole to do more harm than good, commended it to authority. That it afforded a measure of justification to the free activities of the individual capitalist, attracted to it the support of the dominant social force behind authority.
Thursday, April 22, 2010
The implication is that private owners will do a better job of caring for the environment because they want to preserve the value of their assets. In reality, scholars and activists have documented scores of cases in which the division and privatization of communally managed lands had disastrous results. Privatizing the commons has repeatedly led to deforestation, soil erosion and depletion, overuse of fertilizers and pesticides, and the ruin of ecosystems.
Tuesday, April 20, 2010
Here is some more recent coverage and my thoughts on the points made:
Crooked Timber post
This post nicely describes some of the contradictions inherent in the mainstream approach to economics education -- the difference between what is taught and what is experienced. The mainstream identifies efficiency as the goal of free markets, when in reality markets are distorted consistently through, as the Crooked Timber post notes, "monopolistic rent-seeking and regulatory collusion". Garth Brazelton has a nice discussion of this principle. In the comments section of that post, I note that students won't understand the alternative paradigm until they see it in action. Recent discussions over decommodifying healthcare is one such example. The brief period in Spring 2009 when nationalization of banks was on the table, is another. In other words, relationship between the real world and the text is one of the most important motivations behind our work.
Monday, April 19, 2010
I rummaged around on the high bookshelves and, lo, there was an aged paperback copy of Anti-Samuelson, Vol. 2. (No idea where Volume 1 went. Object lesson in why it is time to get rid of the books that no one will ever open again, and save future generations the trouble.) I realize that this makes me seem (i) truly econo-geeky in all the wrong ways, (ii) chomskyesque and intellectual radical-chic, but then I am the product of a passage from left to right, (iii) a middle aged academic bitterly clinging to the truths of the 1970s.
Except that I never actually read it. My problem was, I came very late to economics from philosophy — it was not until law school that I took any economics, so I hadn’t read Samuelson and couldn’t understand three sentences of Anti-Samuelson, either the economics or the radical critique. It just sat on a shelf in my library looking chic and radical, until it started looking aged and bitter.
Today, the correct answer to almost every undergraduate economics exam question either is or depends on the deduction of what maximizes utility with respect to a given set of parameters. And the unspoken assumption (otherwise this is all a bunch of mental masturbation) is that this is somehow “right,” that this condition makes things “better,” without any reconsideration of modern economics’ first principles – precisely the ones Adam Smith dismissed in his day. These answers are “optimal.” They identify “bliss points.” What effect does it have on a generation of minds when the correct answer, exam after exam, semester after semester, is “maximimze utility?”
Sunday, April 18, 2010
His Economics: An Introductory Analysis, first published in 1948, has become the best selling economics textbook of all time. The textbook has sold more than a million copies and has been translated into French, German, Italian, Hungarian, Polish, Korean, Portuguese, Spanish and Arabic. It is now in its fifth edition. "The book's emphasis on different themes has changed with the changing of the nation's economic problems," wrote Business Week in 1959. "The first edition was dominated by the end-of-the-war worry that widespread unemployment would return... later editions put growing stress on fiscal and monetary controls over inflation. In the later editions Samuelson has worked toward what he calls a 'neoclassical synthesis' of ancient and modern economic findings. Briefly, his synthesis is that nations today can successfully control either depression or inflation by fiscal and monetary policies... Some economists feel that Samuelson's book... is really his greatest contribution. It has gone a long way toward giving the world a common economic language." (Source: http://nobelprize.org/nobel_prizes/economics/laureates/1970/samuelson-bio.html)
Friday, April 16, 2010
FDIC offers banks an explicit safety net. Several large institutions also enjoy an implicit safety net because they are “too big to fail” (TBTF). This safety net allows them to borrow money (other than insured deposits) at a lower interest rate than would otherwise be the case because lenders know that the government will back up the institutions’ loans if necessary.The argument is weak because it assumes the "escape net" role of the government in the first place. No argument is given for why the government acts as it does, it is simply assumed to be so. And thus, we may easily arrive at the kinds of conclusions that Baker arrives at in the above quote: it is not about the actual structure of the financial system, it is simply about the size of the relevant players in this system.
Competitive banking is no less an evil, because the problem actually revolves around the scope of these financial institutions. Competition, as Schumpeter argued, will inevitably lead to monopolistic economic units through such processes as creative destruction. To be clearer: an inherent aspect of capitalism is its continual requirement for innovation and technological growth. This necessarily leads to the creation of massive rents for those who do succeed, and leads to the bankruptcy of thousands of others who fail. The means of protection of those rents explains both why capitalism is successful and also why so many fail (i.e., why it contains the possibility of being vary volatile).
Here's another quote that explains Baker's position quite well:
Suppose the state of Nevada waived the 6.75 percent tax on gambling revenues for
one casino in Las Vegas. That casino could promise better odds than its
competitors and still have a larger profit margin. Wall Street financial
institutions essentially enjoy this kind of advantage: they can profit from
gambling opportunities unencumbered by the taxes paid on other forms of
For Baker, it's not about changing the field, it's about levelling the playing field so that the rules are the same for everyone. This is a fundamental misconception about the consequences of macro dynamics in a capitalist economy.
Toward the middle-to-end of the article, Baker shifts his focus from debates over financial competition vs. "too big to fail", to a focus on the benefits of long- vs. short-term investment. In this more Keynesian style of the piece, Baker argues that the short term nature of most investment encourages speculation and a lack of care about public welfare of investment:
If the government sought to level the playing field across casinos, it could
impose a modest tax on each financial transaction. Such a tax would
disproportionately affect noise trading, since short-term traders make more
transactions than long-term investors. And it could lead to more efficient
markets. Not only would fewer resources be wasted in carrying through the
financial transactions that support the real economy, but we might see prices
that more closely reflect the fundamentals of the market.
I'm not sure what to make of this, except that Baker is making an explicit link between government actions and capitalism's health that I do not think exists. Surely capitalists argue as if their system were efficient, but this efficiency is a construct of capitalism's value system. Efficiency arises in financial markets when "fundamentals" are reflected in stock prices. In other words, efficiency means financial conditions reflect the health of the real sector -- which includes industrial profits and other indicators of firm's future profit-making abilities. Baker argues that this can happen with a combination of long-term investments and smaller banks. Baker doesn't explain two things: 1. how competition can be effectively deterred in order to reduce the tendency of all financial institutions to grow; 2. and how how this will reduce the need for a safety net for the firms in the more important industries.
And why hasn't he explained 1 or 2? Simple: by this point in the article (indeed for the rest of it), Baker still hasn't given us an explanatory framework for understanding why the government takes the actions is does. This is very very important to be clear about. The government is not an a priori neutral institution. Many political economists since Adam Smith have argued that laws and state systems are at least partly designed by the dominant and wealthy classes, for the interests of these groups. Therefore the more important issue is how the state itself operates -- will it be a neutral body, or controlled by some employers and other industry interests?
By the way -- What's this mean?
In many cases customers were either not aware of the fees or they did not
realize how damaging they would be. Customers are frequently charged fees about
which they have never been clearly notified. For example, it is now standard
practice for banks to provide overdraft protection on debit cards, whereby the
bank will cover the cost of a purchase even if it exceeds the money available in
the customer’s account. The fee is typically six to ten dollars, so debit-card
users may find themselves paying a six-dollar overdraft fee to buy a two-dollar
cup of coffee.
Hyperbole. The reader has idea how realistic this claim is. It's just another example Baker can use for how the "government helps business" -- how convenient of an argument, especially when you don't have to explain how the help arises!
And to finish, to feed my summary:
The debate must be returned to appropriate grounds: a question of how best to
structure regulation. Which regulations structure the financial industry so that
it will serve the larger economy? This means providing incentives for the
industry to better serve consumers and investors, rather than providing
incentives to prey on them. There should not be large returns for writing
deceptive contracts. Nor should short-term speculation be the most effective way
to get rich.
Dean Baker operates under the conception that the state plays a passive role in the operation of any economy. To the contrary, state institutions, especially regulatory frameworks, play extremely active roles in the success (and failure) of economic trajectories. Without a reliable theory of why government provides the kind of regulations it does, Baker doesn't go far enough in his policy prescriptions of the economy. We are left with a situation where the carrots and sticks are rearranged while the environment itself is left untouched.
Tuesday, April 13, 2010
Marc Linder, legal labor historian at University of Iowa law school, has written about this history extensively. Here is a snippet of some of the questions addressed by Linder to an OSHA director:
Question: Do you have some sense of what the effect of the interpretationThe full report is here.
has been? Has it produced greater compliance by employers? More complaints by
workers? More citations issued by OSHA? Or are there other ways of determining
what the effect has been?
Response: Within the first year after issuing the interpretation, articles
appeared in several newspapers around the country, and OSHA's office in
Washington, DC received calls from various employer and employee groups asking
questions about the interpretation. We believe that the interpretation has
produced a greater awareness and sensitivity about this issue among the employer
community, as well as providing direction to OSHA staff in responding to
complaints and questions regarding this issue.
Since we have not asked our area offices to keep track of employee
complaints regarding §1910.141(c)(1)(i) and employee access to toilet
facilities, we have no way of knowing if the interpretation itself has produced
more complaints. But, we asked our area offices to send copies of all citations
issued to employers for failure to allow employee access to toilet facilities.
By the end of 2002, OSHA had issued only about twelve such citations.
In discussions with our area offices, we have found that the interpretation
has helped the OSHA Area Directors and compliance officers encourage agreements
between employers and workers on how to provide needed access to toilet
facilities. Issuing a citation does not in itself resolve the problem.
Therefore, the Area Directors and compliance officers first encourage employers
and employees to work together to see how they can resolve their differences and
create a system/procedure that will work in that particular workplace for that
specific employer and employee(s).