The 1997 E. Asian financial crisis and world trade

Loomis in a Lawyers Guns & Money post linked to this piece that in turn linked to this piece by Dean Baker.  I was particularly interested in Baker's point that many poorer countries started running large trade surpluses with most of the developed world after the '97 East Asian financial crisis.  Governing elites in the S.E. Asian countries after the crisis felt they needed to build up large foreign exchange reserves (and were also, in effect, told to by the IMF); hence, the need to increase their exports as much as possible to the rich countries.  The U.S., unlike Europe and Japan, was running a trade deficit with these countries before the '97 crisis, but the U.S. trade imbalance with them got larger after that, peaking in 2005.  One result was increased loss of U.S. manufacturing jobs.  Anyway, you can read the links for the details of the argument.

Loomis's rant against economics

Erik Loomis has a post trashing economics, which he says is basically pure ideology.  (The post has attracted more than 200 comments, none of which I've read.  I read the LGM blog only sporadically.  In fact I often end up regretting having gone there at all.)

My two cents on this: Loomis is exaggerating. He's right that economics is not a value-free science, that data is/are not a freestanding avatar of The Truth.  He's right that "free-market fundamentalism" is harmful.  And I agree with him that "we have to find ways to improve the quality of lives of workers in the U.S. and overseas at the same time" (hard to disagree with that).  But to dismiss the entire field of economics as simply capitalist apologetics goes a bit too far.

My father was an economist (in the world outside the academy), and I grew up around economists.  I saw that Western economists in a developing country were people genuinely trying to help, even if in hindsight some of what they were doing might have been misguided.  Intentions don't excuse everything, but in this context they aren't irrelevant either.  Also, economists helped design the New Deal, no doubt a favorite era of Loomis's.  Hasn't he ever heard of Keynes and Keynes's American students and followers?

I took the intro-to-econ course in college and I've never regretted having done that.  I was reading Marx at the same time and it made for an interesting juxtaposition.  I'm not sure the intro-to-econ course taught me much I couldn't have picked up in some other way or that it was essential to reading articles on international political economy, which I had to do then and later, but I don't think it hurt.  It's fine to be skeptical of mainstream economics and keep a critical distance, but Loomis here, as I say, goes a bit too far.  YMMV.

Everything becomes an acronym

I heard, via C-Span radio, part of a briefing session for reporters (conducted by academic or think-tank types) on the Pres.'s upcoming trip for the APEC (Asia-Pacific Economic Cooperation) meeting and the G-20 meeting. One of the speakers, in discussing the G-20 economic agenda, referred to "[tax] base erosion and profit shifting," or as he put it: "'BEPS' in the terminology." With a trillion dollars flowing out of developing countries (broadly defined) each year as a result of tax evasion and other illegal practices, and with corporations always searching for ways to escape paying taxes, BEPS is a serious problem for governments. But I guess everything has to become an acronym, irrespective of its seriousness (or lack thereof).   

A further note on laissez-faire

Another thing: If Repubs are going to oppose Ex-Im Bank on grounds that it is interference with the 'free market', one might think they would have to take on a big chunk of the U.S. economy, where oligopoly reigns (h/t). Unless their position is that oligopoly and monopoly are fine, provided that they arise from 'free-market' competition. If competition leads to one or two or three firms dominating an industry, so be it. But heaven forfend that government should "pick winners and losers." No, we can't have that.

More evidence of "the business-populist split" in the Repub. party

Signing off the computer for the evening, I just ran across this WaPo piece about Tea Party and other right-wing opposition to reauthorization of the U.S. Export-Import Bank. This is a Chamber of Commerce vs. Club for Growth fight, to name two groups on opposite sides. Moreover, the new House majority leader, McCarthy, has announced he is opposed. Another Republican congressman, according to the piece, recently gave a speech at the Heritage Foundation in which he said the party had to come down firmly on the side of "free enterprise" (as opposed to "mercantilism" or "industrial policy"). Does that mean he opposes all government subsidies to business? All provisions of the tax code tilted in a pro-business direction?  There are probably various angles from which one could gloss all this, but I'll let readers provide their own. Btw, the phrase in this post's title that's in quotes is taken from the article.

Added later: If you want to oppose 'corporate welfare', fine. But wrapping oneself in the rhetoric of a pure laissez-faire, free-market system is just political flummery, because there is no such thing. Modern economic systems require some degree of state involvement, and businesses and the state have been intertwined forever, going back at least to the 'long 16th century'. I view these points as being obvious, but sometimes saying the obvious can't hurt.

U.S. food aid and civil conflict

An article (via) in the current American Economic Review finds U.S. food aid "increases the incidence and duration of civil conflicts." A commenter in the thread at the linked blog questions the data analysis. In any case, I think it's true, as the linked post says, that U.S. food aid is generally more concerned with disposing of domestic grain surpluses than anything else. In an overhaul of U.S. development assistance, the food aid program should be one of the first things to be reformed. (Are there political obstacles? Of course. There are obstacles to everything. That's no reason not to raise the issue.)

Loomis on Bangladesh's 'garment capitalists'

In this post E. Loomis criticizes the NYT for focusing on the Bangladeshi middlemen and failing to note that the apparel companies could cut them out of the picture if they wanted. Maybe so; presumably there are reasons the apparel companies find it advantageous not to. Dependency theorists used to talk a good deal about the local classes which benefited from their ties to multinational capital. Maybe dependency theory's not that passé after all.     

Global inequalities and the democratic peace

The observation that "mature" or "consolidated" democracies virtually never fight each other, a/k/a 'the democratic peace', has been linked by some researchers to (among other things) patterns of trade among democracies. However, the democratic peace is not usually connected to the changing global division of labor and global North-South inequalities. Nicholas Lees's article in the June issue of Millennium -- "Structural Inequality, Quasi-rents and the Democratic Peace: A Neo-Ricardian Analysis of International Order" [abstract here] -- explores "the causal connections between global inequality, class formation and the democratic peace" through the lens of the neo-Ricardian idea of quasi-rents (p.492). I won't try to summarize all the details of the article; rather, this post will cover some of the piece's key points while offering some related thoughts.

To begin, it will be helpful to rehearse a bit of recent history. Starting in the early or mid-1970s, 'the Keynesian accommodation' and the Fordist economic model, which together produced several decades of strong economic growth and economically secure working classes in the developed capitalist countries, broke down. In tandem with, among other things, the end of fixed exchange rates, increased capital mobility, and the relocation of manufacturing to parts of the global South, the breakdown of Fordism marked the end of capitalism's 'golden age' (the phrase is from Hobsbawm, The Age of Extremes, who in turn borrowed it from a 1990 book, The Golden Age of Capitalism, edited by Marglin and Schor). The result was increased inequality, wage stagnation, the weakening of organized labor, and a decline, to use the language of Lees's article, in workers' ability to bargain for a share of quasi-rents [for the short definition of quasi-rents, see the note at the end of this post]. As Lees writes: "The defeat of organised labour in much of the advanced industrialised world, combined with the dispersion of productive capacity to the new semi-peripheries, seems to have eroded the quasi-rents of workers in tradeable sectors in the North" (506). 

The end of capitalism's post-1945 golden age was noteworthy, however, not only for what it entailed but for what it did not. First, it did not wipe out the structural advantages enjoyed by the economies and firms of the developed world. A large amount of manufacturing relocated to the semi-periphery (or the 'newly industrializing countries'), but more "sophisticated" activities, involving the interplay of innovative technologies and highly skilled workers, remained concentrated in the North. The global trade regime, as administered by the World Trade Organization, generally continued to favor the richer countries, notably though not exclusively in the area of intellectual property. Moreover, as Lees notes (summarizing Raphael Kaplinsky), buyer-dominated global supply chains allow "large buyers located in the North...to bargain down producers of generic manufactures," such as textiles and furniture (500). Thus, while "within-nation inequality has increased almost worldwide" over the past thirty years, "population-weighted between-nation inequality of purchasing power-adjusted incomes has decreased," but only decreased "slightly -- largely as a result of moderate increases in per capita incomes in China and India" (502; emphasis added).  

Secondly, the end of capitalism's golden age was not accompanied by a collapse in the framework of international politics and specifically not by the outbreak of a major war involving the great powers. On the contrary: in the late 1980s and early '90s the Cold War came to a (relatively) peaceful end, while the phenomenon of interstate war went into decline, as did, albeit more unevenly, armed conflict in general. This conjunction might seem surprising: some might have expected a period of considerable economic turmoil in the 'core' states of the system to have led to a breakdown of order in international politics, or at least to have engendered more violent conflict rather than less. But perhaps the decline in armed conflict, of which the democratic peace is the most theorized aspect, is only temporary; perhaps the democratic peace rests on or presupposes a degree of economic security in the 'advanced' countries rooted in the now-vanished political economy of Fordism, which, among other things, afforded workers access to quasi-rents through strong labor organizations. If so, the end of Fordism, and the concomitant decline or disappearance of the relatively widely shared prosperity in the 'advanced' countries that Fordism underwrote, could be expected eventually to erode the democratic peace.

That, at any rate, is a possible implication of Michael Mousseau's argument about (to quote the title of one of his articles) "the social market roots of democratic peace."  In brief, Mousseau's argument, as Lees presents it, is that economic development in 'contract-intensive societies' (i.e. those based mainly on impersonal market exchange rather than patron-client arrangements) produces non-belligerent values that undergird such societies' lack of hostility toward each other (509-510). By contrast, patron-client networks promote "strong in-group identification and hostility to out-groups -- values which Mousseau argues are externalised in the foreign policy of states" organized on clientalist, neo-patrimonial lines (511). 
 
"In the contemporary world, contract-intensive societies have tended to be social market democracies in which the benefits of economic development are distributed fairly widely" (510). However, as these benefits become less widely distributed in developed capitalist economies (see above), the logic of Mousseau's argument suggests that the values supporting the democratic peace could be undermined (512). 'Advanced' democracies have not hesitated to depart from their professed liberal values when such a departure has been deemed necessary "to maintain the global political and economic status quo," and "[i]f the socio-economic foundations of this status quo were to come under more serious strain, actors within the core might actively reject these liberal values" (513). Lees wisely avoids any predictions about a resumption of interstate conflict in the North, however, observing that several factors may work in the opposite direction (513).

Lees makes a strong case that a combination of Mousseau's approach with structuralist theories of class formation and the North-South divide sheds light on the deep foundations of the democratic peace. But if the democratic peace is seen as merely one aspect of the broader decline in armed conflict, Mousseau's perspective may be less helpful. Mousseau's 'social market explanation' of the democratic peace, which roots both democracy and peace in a particular kind of social and economic development, conceivably could be extended to cover the decline of armed conflict in general. But here it might run into problems: perhaps one could show a connection between 'contract-intensive' economic development and the overall decline in armed conflict, but such a connection is not immediately obvious. 

John Mueller's obsolescence-of-major-war argument (see, e.g., here) and/or Douglas Gibler's 'territorial peace' argument (see, e.g., here) might well be better explanations of the overall decline in war. Mueller, in contrast to Mousseau, takes a more constructivist and elite-oriented view, arguing that great-power war has become so normatively unacceptable that it is no longer part of the set of options that decision-makers have in their heads. In Mueller's view, peace among 'developed' countries rests less on the material circumstances of their populations than on most leaders' and publics' conviction that war has none of the positive features that were once attributed to it, especially in the late nineteenth and early twentieth centuries (i.e. pre-1914). In their different ways, Mueller and Gibler view the democratic peace as one part of a larger trend, one that may be strongest in but is not limited to the rich countries of the North, and Mueller does not draw the tight connections Mousseau does between material conditions, liberal values, and peace. (Gibler may not do so either, but I'm less familiar with the details of his work.)  

In the opening of The Age of Empire, published in 1987, Eric Hobsbawm wrote that "the question of the origins of the First World War...has remained alive, because the problem of the origins of world wars has unfortunately refused to go away since 1914" (p.6). Although the upcoming hundredth anniversary of the outbreak of WW1 has occasioned a renewed flurry of interest in its origins, one wonders whether, from the standpoint of 2013, the origins of world wars is an issue of anything more than purely historical concern. It has been argued that with each further year of great-power peace it becomes more likely (not certain, but more likely) that the two world wars of the twentieth century represent a phenomenon -- i.e., 'hegemonic' or great-power war -- which has now ceased to exist. If that turns out to be correct, future historians looking back probably will see the end of hegemonic war as the main development, beside which the democratic peace may figure as little more than a footnote. 

This leads to the speculation that the research program on the democratic peace may have run its course. Scholars of international security will continue to find things to write about, and one can expect an ongoing stream of publications on civil war, terrorism, nuclear proliferation, enduring rivalries, R2P, and other matters. Increasingly, though, it appears that the most serious threats to planetary survival will not come directly from these war-and-peace issues, important as they are, but from the environmental and economic problems and crises that the capitalist world economy continues to generate. Admittedly, whether those economic forces will result in a resumption of great-power conflict, or whether the decline of interstate war is a phenomenon basically independent of trends in the global political economy, remains an open question. In any case, Lees's article deserves attention for, among other things, the thoughtful way in which it links issues and literatures that are not usually considered together.
----
Note: Rent "refers to an economic return on a resource greater than the opportunity cost of the use of that resource," and quasi-rents "are temporary rents which arise where the supply of a resource [such as technology] is fixed over the short term but not over the long term" (495).

Peter Hall on the Eurozone's woes

A quite good analysis.

May Day link

Since it's May Day, I'm linking this Boston Review forum on global labor standards (h/t), even though I haven't had a chance to read it yet.

The fiscal crisis of the state

Listening just now, on the radio version of the PBS NewsHour, to Shields and Brooks bemoaning the country's inability and/or unwillingness to make difficult choices on spending and taxes, I was reminded that a leftist scholar named James O'Connor wrote a book many years ago called The Fiscal Crisis of the State. Never read it; one of the many things I probably should have read and never did. First published in 1973, the book was reissued in 2001, according to a glance at Amazon, by Transaction (a publisher not at all known for leftism but known for reissuing important works of social science).

Albert Hirschman on "the intended but unrealized effects of social decisions"

Note: I altered the title of this post slightly on 4/2/21. It's otherwise unchanged.

The death of Albert Hirschman prompts me to interrupt the break to quote a couple of passages from his The Passions and the Interests. First, from p.117:

In an old and well-known Jewish story, the rabbi of Krakow interrupted his prayers one day with a wail to announce that he had just seen the death of the rabbi of Warsaw two hundred miles away. The Krakow congregation, though saddened, was of course much impressed with the visionary powers of their rabbi. A few days later some Jews from Krakow traveled to Warsaw and, to their surprise, saw the old rabbi there officiate in what seemed to be tolerable health. Upon their return they confided the news to the faithful and there was incipient snickering. Then a few undaunted disciples came to the defense of their rabbi; admitting that he may have been wrong on the specifics, they exclaimed: "Nevertheless, what vision!"

Ostensibly this story pours ridicule on the human ability to rationalize belief in the face of contrary evidence. But at a deeper level it defends and celebrates visionary and speculative thought no matter if such thought goes astray. It is this interpretation that makes the story so pertinent to the episode in intellectual history that has been related here. The Montesquieu-Steuart speculations about the salutary political consequences of economic expansion were a feat of imagination in the realm of political economy, a feat that remains magnificent even though history may have proven wrong the substance of those speculations.

I wish I could quote the ensuing discussion in toto. There is a bit on pp.130-31, however, that is too good not to quote. Here Hirschman contrasts the "unintended effects of human actions," for which social scientists are often on the lookout, with intended effects that never occur:

Curiously, the intended but unrealized effects of social decisions stand in need of being discovered even more than those effects that were unintended but turn out to be all too real: the latter are at least there, whereas the intended but unrealized effects are only to be found in the expressed expectations of social actors at a certain, often fleeting, moment of time.

What's more, the original expectations that are not borne out are 

likely to be not only forgotten but actively repressed. This is...essential if the succeeding power holders are to be assured of the legitimacy of the new order: what social order could long survive the dual awareness that it was adopted with the firm expectation that it would solve certain problems, and that it clearly and abysmally fails to do so?

And there is a further consideration here. Writing in 1977*, Hirschman noted that "no twentieth-century observer" (p. 118) could maintain that the Montesquieu-Steuart view -- i.e., that commerce would have a peace-inducing, "gentling" effect on politics within and among nation-states, a view by the way that Marx (predictably) ridiculed (see p.62) -- had been vindicated by events, although Hirschman added that "the failure of the [Montesquieu-Steuart] vision may well have been less than total" (p.118). Fast forward to 2012. How does the Montesquieu-Steuart position look now? Perhaps somewhat better than it did thirty-five years ago? Or perhaps not.
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*[note added 12/15/12, edited 1/26/16]: The book was published in '77 so the words were actually written earlier, and in the acknowledgments Hirschman says he wrote a first draft of the book in 1972-73. But nothing of consequence turns on precisely when in the 1970s the passages were composed, at least as far as this post is concerned.     

Romney's latest howler; or, he's no Reagan

Update: Turns out the Romney people cut off the last sentence of the Obama quote in question.

So now Romney is picking on Obama's 1998 remarks about "redistribution," claiming that redistribution has "never characterized America" (paraphrased). Ye gods. One has to be either profoundly ignorant or profoundly stupid (or both) to say such a thing. I guess I'll go with profoundly ignorant.

This is just more of the same old tired ploy of trying to portray Obama as a socialist. I know some socialists. Believe me, Obama is not one. And that will remain true no matter how often Romney repeats that he, Romney, is for a "free society" as opposed to a "government-centered" society, that he (Romney) knows that "redistribution" is so un-American, blah blah blah.

Ever since Reagan's election in 1980 Republicans have been trying to bottle the Reagan magic by repeating his bromides. But Reagan didn't win because of his bromides. He won because he projected an image of confidence and optimism. He was an actor by profession whose favorite recreation was to ride horses and split logs. Romney does not, as far as I know, split logs (although his wife does like horses). As a youth, Reagan was a lifeguard. Romney by contrast carried the hockey team's sticks and helped cut off a kid's hair because he thought it was too long. Romney's efforts to channel Reagan by repeating all this garbage about redistribution will fail. It's really a sign of desperation.

Added later (to cross the t's and dot the i's): Virtually every country's public policies are redistributive, both upward and downward, to one extent or another. That there is less redistribution, particularly less downward redistribution, in the U.S. than in certain other countries does not mean there is no redistribution at all or that the notion of redistribution is alien to the U.S.
Romney is interested in contrasting European domestic policies on redistribution to U.S. policies but this is a contrast that easily can be overdrawn. Of course, for political reasons Romney has an incentive to overdraw it, or at least he thinks he does.

The mantra of growth; or, Bhagwati vs. Pogge

Given the nature of the news cycle, the debate sparked by Pres. Obama's (successful) nomination of Jim Yong Kim to head the World Bank has long since been eclipsed by a spate of fresher stories. But I wanted to write this post before the Kim story faded into complete oblivion, because the debate over Kim raised again some fundamental questions about economic growth, inequality, and poverty.

In a column published last month criticizing the choice of Kim, Jagdish Bhagwati asserted that the Obama administration has the wrong view of development. He wrote:

...perhaps the most compelling factor in Obama’s choice [of Kim] seems to have been a fundamental misunderstanding of what "development" requires. Micro-level policies such as health care, which the Obama administration seems to believe is what "development" policy ought to be, can only go so far. But macro-level policies, such as liberalization of trade and investment, privatization, and so forth, are powerful engines of poverty reduction; indeed, they are among the key components of the reforms that countries like India and China embraced in the mid-1980’s and early 1990’s....

[I]t is the rapid acceleration of economic growth in the major emerging countries that has reduced poverty, not only directly, through jobs and higher incomes, but also by generating the revenues governments need to undertake the public-health, education, and other programs that sustain poverty reduction – and growth – in the long term.

Now, there's no question that economic growth in India and especially in China has enabled millions of people to improve their living standards and leave the ranks of the extremely poor. And it's also true that economic growth generates revenues that governments, if they have wise priorities and some administrative resources, can use for public-health, education, and similar purposes. But Bhagwati failed to ask an important question: Could 'emerging countries' have reduced poverty even more by following a different, more equitable growth path?

A 2008 article by Thomas Pogge suggests that the answer is yes.* Pogge used China to illustrate his case. He argued that although poverty in China has gone down substantially, "it is likely that more equitable growth," i.e., growth accompanied by less income inequality, "would have been much better for the Chinese poor." Pogge pointed out that although China's gross national income (GNI) increased dramatically from 1990 to 2004, the relative income share of the bottom ten percent (decile) of China's population decreased from 30.8% in 1990 to 16.0% in 2004. This decrease in its relative share meant that the absolute income of the poorest decile increased "by only 75 percent" at a time when China's GNI was going up by a whopping 236 percent (see section 5.3 of the article as reprinted in Pogge's Politics as Usual, pp.100ff.).

What if China had preserved the income distribution as it existed in 1990, even if that meant sacrificing some growth? Pogge assumed, for the sake of argument, that preserving the existing income shares would have cost China 2.3 percentage points in per capita GNI growth from 1990 to 2004. Under this assumption, the poorest decile "would have done much better..., ending the period [in 2004] at an average income of $715, rather than $500, thus with a gain of 150 rather than 75 percent." (p.101) Slower, more equitable growth also would have caused less environmental degradation, a consideration that, coupled with equity, suggests that "all countries should conceive growth much more from the standpoint of their poorer population segments" (p.102, italics in original). He also pointed out that economic inequality is much easier to create (or generate) than to reverse, because the better-off are able to change the relevant rules in their favor (ibid.). There are, in other words, lock-in effects (though Pogge does not use that phrase).

Pogge also highlighted the growth in global income inequality from 1988 to 2002, with the relative share of "the poorest 30 percent of humanity" down by about 20 percent during that period, "from 1.52 to 1.22 percent of global household income" (p.106). Again, inequality translates into differential influence over the rules that shape the distribution of global income and wealth (p.107).

These are the sorts of considerations one should keep in mind when reading the celebratory assertions of Bhagwati and others about rapid economic growth in 'the emerging countries' and its effect on poverty. Of course such growth has reduced poverty, in some cases substantially, but poverty would have been reduced even more if that growth had been more equitable, even if less rapid. Neoliberal globalization, heralded by its supporters for reducing poverty, has likely not reduced poverty as much as a more equitable form of globalization would have, and it has perpetuated the unequal structure of influence in global institutions. The appointment of Kim to the Bank will obviously not drastically change this, since no single appointment could have such an effect and the institution will no doubt exert its organizational pull over any leader. But Kim's critical stance toward neoliberal globalization -- or what was his critical stance some years ago, at any rate -- perhaps offers a bit of hope. In any event, Bhagwati's critique was completely off the mark.

-----
*T. Pogge, "Growth and Inequality: Understanding Recent Trends and Political Choices," Dissent (Winter 2008), reprinted (in slightly different form) in his Politics as Usual: What Lies Behind the Pro-Poor Rhetoric (Polity Press, 2010), pp.93-109.

The our-grandchildren-will-have-to-pay-off-the-deficit myth

A quick post, as I'm pressed for time. I just caught the tail end of Marketplace on NPR. A commentator, a community banker from Pa. named Liz Herman (if I recall correctly), was saying, among other things, that the deficit worried her because she didn't want to stick her children and grandchildren with the bill (I'm paraphrasing).

One hears this all the time. It's nonsense. Yes, there are good reasons to reduce the deficit, especially over the long term and after what appears to be the start of a slow recovery gathers steam, but "oh noes! our grandchildren will be stuck with the bill" is not one of those reasons. As I remarked on a recent Crooked Timber thread, a government not facing a Greece-like crisis can continue to incur debt indefinitely, and as others added, this is particularly so if the economy grows faster than the government debt does. In any event, no one is going to knock on the door of Ms. Herman's grandson or granddaughter and say "pay up". This children-and-grandchildren-will-be-stuck-with-the-bill line is a myth devised by conservatives in search of catchy, understandable rationales for reducing government spending on programs they don't like. It's catchy, all right. It's also complete BS.

The new European treaty vs. social democracy

C. Bertram:

The Euro treaty..., assuming it goes ahead as planned and is enforced, mandates balanced budgets and empowers the Eurocrats to vet national budgets and punish offenders. Social democracy is thereby effectively rendered illegal in the Eurozone in both its “social” and “democracy” aspects.

Whole post here.

'Familial capitalism' in France

Via the French Politics blog, a brief book notice in Le Monde. Of the 200 biggest French businesses in 2008, 76 were under "family control," up from 62 twenty years earlier. "Family control" could mean a couple of different things I suppose, but the gist is clear enough.

293 comments on Marx, several of them quite annoying

I'm neither an economist nor an expert on Marx (though I have read some Marx, mostly the parts that social scientists who are not economists have to read in the course of their schooling, including large chunks of Capital v.1 but not vols. 2 and 3). Nor do I really know anything about the controversies involving Sraffa's economics. So I didn't understand some of the 293 comments attached to John Quiggin's post on "Marxism without Revolution: Capital." But of the comments I did look at and understand or partly understand, several were quite annoying in tone, especially those by john c. halasz (he uses the lower case). Halasz's (or halasz's) contributions were mostly long, pompous lectures consisting largely of (1) assertions which he didn't bother to support, textually or otherwise, and (2) rehashes of standard Marxian points (do we really need to be told for the umpteenth time about the contradiction(s) between the relations of production and the forces of production?). Though much of his commenting was given over to the rather, imo, thankless and close-to-impossible task of defending Marx's labor theory of value (an effort in which he was joined by some other commenters), halasz did toward the end offer some critical remarks, e.g. that Marx could be faulted for not having "provide[d] an account of the state and the political domain...." Actually Marx does have an "account of the political domain" -- he may not treat it as (very) autonomous from economics, but that's a somewhat different point. Maybe halasz should start his own blog rather than lecturing so much at CT.

Vague 'lessons' from the German model

Steven Rattner's For. Aff. piece "The Secrets of Germany's Success," subtitled "What Europe's Manufacturing Powerhouse Can Teach America," purports to draw lessons for the U.S. from the recent German experience. However, with one exception, the lessons are so general that they don't require an appeal to the German example. Distilled from the end of the essay, the lessons are:

1. Exploit the U.S.'s comparative advantage (e.g. in entertainment, technology, and finance)

2. Improve technical training

3. Encourage new industries (e.g. alternative energy)

4. Foster an export orientation

The only "lesson" that draws with more specificity on Germany is that the U.S. "should work to ameliorate" high unemployment along the lines of what Gerhard Schröder did in 2005 with the Agenda 2010 program whereby the government agreed to cover a portion of the salaries lost when workers' hours were reduced, thus allowing firms to keep workers on rather than fire them. In return, unions agreed to moderate wage increases. In the current U.S. budget climate the idea, though perhaps a good one, is probably not transplantable.

But the piece is informative even if the "lessons" are a bit disappointing.

See also a recent blogpost by Charles Lane at WaPo (link to be added later).

The dignity of labor

The 150th anniversary of the start of the Civil War, which occurred last month, has occasioned much reflection about the war’s legacy. While many of the specific antebellum debates about slavery may seem somewhat remote, the persistence of race and racial inequality as issues in American life means that the collective ear is still primed, from time to time, to pick up certain echoes of those debates. Many other echoes, however, have grown very faint; for instance, few non-historians today recall the antebellum controversy over ‘free labor’ versus slavery.

Some southern apologists for slavery argued, among other things, that free labor in the North amounted to ‘wage slavery’ and that northern factory workers and hired hands were actually worse off than African-American slaves in the South. In this respect these defenders of slavery, notably George Fitzhugh, "seemed to speak in Marxist accents," as Dennis Wrong notes.[1] But other defenders of slavery evinced a very un-Marxist contempt for manual labor in general. James McPherson draws attention to some revealing quotations (italics in original):

"The great evil of Northern free society," insisted a South Carolina journal, "is that it is burdened with a servile class of mechanics and laborers, unfit for self-government, yet clothed with the attributes and powers of citizens." A Georgia newspaper was even more emphatic in its distaste. "Free Society! We sicken at the name. What is it but a conglomeration of greasy mechanics, filthy operatives, small-fisted farmers, and moon-struck theorists?... The prevailing class one meets with [in the North] is that of mechanics struggling to be genteel, and small farmers who do their own drudgery, and yet are hardly fit for association with a Southern gentleman’s body servant." [2]

Abraham Lincoln and the new Republican Party of the time responded with a vigorous defense of free labor. However, as Eric Foner observes, Lincoln saw wage labor as a stepping stone that young men would take en route to becoming independent artisans, shopkeepers or entrepreneurs, rather than as a permanent feature of the American economy, though it was already becoming that in many cities in the mid-19th century, a process that would intensify after the Civil War.[3] The notion that work has an inherent dignity and overarching societal purpose–that, as William Seward said, "the free-labor system…brings into the highest possible activity all the physical, moral and social energies of the whole State"[4] – fit most comfortably with the world of Lincoln’s youth and young adulthood. It was more difficult to reconcile that notion with the working conditions and standardized production methods of mass manufacturing.

What of the dignity-of-labor ideal in ‘post-industrial’ societies? In an economy dominated by services in which a relatively small proportion of the population is engaged in direct production of tangible goods, it is still possible to speak of people taking pride in their work, irrespective of its nature, even irrespective of whether it is remunerated. But the ideal of the dignity of labor has slipped out of public discussion. Competitiveness is the lodestar of contemporary political-economic discussion in the U.S., along with debt and deficits. Attention is paid to the high unemployment rate, but as much for electoral considerations as any others. An attack by a right-wing governor on the right to collective bargaining sent thousands of people into the streets in Wisconsin, but that action was framed (quite understandably) as a defense of rights rather than primarily as a defense of the dignity of labor. And all sides use the discourse of rights. Thus laws restricting the prerogatives of unions are called right-to-work laws, and states where they are in force are known as right-to-work states -- as if the primary motive of such laws were to guarantee rights rather than to weaken unions. Ultimately, the meaning of 'rights' is determined by political struggles. As Samuel Bowles and Herbert Gintis put it: "Elements of a political lexicon – such as the discourse of rights – do not…have essential meanings…. Making history is often a matter of making language. But discourses are more often borrowed or stolen than created de novo. Faced with a restricted political vocabulary, political actors appropriate and transform tools that even hostile forces have labored to develop." [5]

Once slavery ceased to exist in the U.S., free labor had no polar antithesis to give it luster by comparison, and it tended to become, at best, just a fact rather than something to be widely celebrated. Critics of wage labor as exploitation could pursue their critique, secure in the knowledge that the surface similarities of their position to that of a George Fitzhugh probably would no longer be flung in their faces. This liberation, so to speak, of the critics of industrial capitalism arguably counts as one of the Civil War’s less-noticed consequences.

P.s. I had intended this post to have a broader, less U.S.-centric focus, but that proved beyond my capacities at the moment.

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Notes

1. Dennis H. Wrong, The Problem of Order (1994), p.32.
2. James M. McPherson, Battle Cry of Freedom (1988), p.197.
3. Eric Foner, The Fiery Trial (2010), pp.115-16.
4. Quoted in McPherson, p.198.
5. Samuel Bowles and Herbert Gintis, Democracy and Capitalism (1986), pp.161-62.
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See also two books by Jonathan A. Glickstein: American Exceptionalism, American Anxiety: Wages, Competition, and Degraded Labor in the Antebellum United States (2002) and Concepts of Free Labor in Antebellum America (1991).