Month: April 2017

As I have said before, ends of semesters are always bittersweet. I have done my best to engage with over a hundred students, to equip them to go to the next level. UC Berkeley Economics Department has once again earned a #1 ranking (I would like to believe not in spite of me.) And so, once again, I will be sending my graduates out to the best think tanks, financial houses, and graduate schools in the world.

And, yet, they know — and not only because I have told them — that today’s policy makers do not pay a great deal of attention to what they have learned over the past four years. Did they listen to my students, we could make short work of the economic troubles facing us. On the other hand, did we live in a world where policy makers set policy with the aid of scientific research, these troubles would not seem nearly so daunting. This, evidently, Cambridge economist John Maynard Keynes already knew when he wrote his article “The World’s Economic Outlook” for the May 1932 Atlantic Monthly.

I hope that in the future we shall not adhere to this purist financial attitude, and that we shall be ready to spend on the enterprises of peace what the financial maxims of the past would only allow us to spend on the devastations of war. At any rate, I predict with an assured confidence that the only way out is for us to discover some object which is admitted even by the deadheads to be a legitimate excuse for largely increasing the expenditure of someone on something!

Find a “legitimate excuse” we did. It was called World War II. And it solved the problem almost instantaneously; at a cost of $1T and 80M lives.

Perhaps mastery over economics is not a sufficient answer after all.

Which reminds me. Ann Coulter is speaking on our campus this Thursday. Her topic: immigration. In a better world she would have enjoyed the care and attention she deserved as a young girl; her parents would have spoken to her about the complexity of the world; and when it turned out that she suffered from psychiatric problems that went beyond talk therapy, she would have received all of the care and treatment she deserved. Instead she grew up in a family whose parents hung upon ever word uttered by the alcoholic demagogue from Wisconsin, Joseph McCarthy. They taught her that we live in a dangerous world where the weak should not be coddled, but rather should be disposed of (discretely if possible). And, thanks to the academic freedom that prevails on U.S. university campuses, Ms Coulter found the “Objectivists” at both Cornell and Michigan who reinforced her conviction that the weak deserved to whither away on the vine. She would not be weak. She would be strong, strong like her idol Ayn Rand.

But this is neither here nor there. Psychologically unstable, abused individuals will seek comfort where they can find it. The fact that there are so many smart people who reject her version of the world simply proves that the liberals really are out to get her. Remember: it’s a dangerous world in which only the strong prevail. Right Ann?

The real point is that had U.S. policy makers passed the policies that economic science told them they needed to pass way back in 1947, when the U.S. was standing atop mountains of war-generated capital stock — had they truly universalized the educational franchise; had they implemented single-payer universal healthcare; had they tasked Detroit to build a state-of-the-art high-speed national and urban rail systems; and had they leveraged their post-war economic position on behalf of, instead of against, democratic, post-colonial movements around the globe — the number of souls attracted to Ayn Rand would not even have amounted to a trickle. When, to the contrary, they put their stock in a pay-to-play educational franchise tilted heavily toward the wealthy; when they deep-sixed public and high-speed rail and put their weight behind the private automobile; when they placed our nation’s health in the hands of private insurance providers; and when they put our earth in the hands of an industry that could only make profits by destroying the earth — they created precisely the world that makes Ayn Rand and Ann Coulter seem normal. No, seem virtuous.

My students know — flawlessly — the mechanisms that have generated the kind of world where Ann Coulter’s fear and hate-mongering not only survive, but thrive. They can identify the policies that, eventually, would eliminate Ann Coulter’s audience. In attendance would only be those mentally unstable, abused, tragic misfits who fell through the cracks of an otherwise robust healthcare system.

2017 is our 1932. Rant and rail as he might throughout the 1920s, even Lord Keynes was unable to prevail over the world’s leaders. They had bigger fish to fry. They were “making X [fill in the blank] great again.”

And, so, just as I have every semester I have ever taught, I renew Lord Keynes’ appeal; not to my students, who have already mastered these lessons, but to my students from four, six, eight, ten years ago — who evidently have forgotten them.

Remember? Before you joined the staff of the WTO and World Bank? Remember? Before you joined JP Morgan, Goldman Sachs, Merrill Lynch, and Morgan Stanley? Do you remember what you swore to yourself you would do, and what you would not do?

It is 1932. You are now the decision-maker, the policy-maker. Six years ago you graduated from the No. 1 economics department in the United States. You now live in a home valued at between $1 and $10M. You control assets that are in line with those I told you you would control — four, six, eight, ten years ago. It is 1932. I am asking you to do the right thing.

And for those of my students who are walking this Spring? I have talked with all of you. You are receiving a bachelors degree from the No. 1 program in the United States. Congratulations! You are moving on, some of you to prized internships; some to financial houses; some to graduate schools. Congratulations!

But, it is 1932. And I am begging you to think clearly about where you are and where you are going. My former graduates? They are kind of locked in. They are terrified by their choices. They have clients. They have responsibilities. They want to do the right thing.

It is 1932.

I don’t know about you, but I always feel that Easter is premature; you know, kind of “if-this-is-resurrection-you-can-keep-it” premature. Good Friday? Now there’s a liturgy a can drink down whole to the last drop.

And, yet, there is one passage that for me links these two dimensions of the Triduum. It is Saint Paul’s discussion of new birth in Romans 8:

For I consider that the sufferings of this present time are not worthy to be compared with the glory that is to be revealed to us. For the anxious longing of the creation waits eagerly for the revealing of the sons of God. For the creation was subjected to futility, not willingly, but because of Him who subjected it, in hope that the creation itself also will be set free from its slavery to corruption into the freedom of the glory of the children of God. For we know that the whole creation groans and suffers the pains of childbirth together until now. And not only this, but also we ourselves, having the first fruits of the Spirit, even we ourselves groan within ourselves, waiting eagerly for our adoption as sons, the redemption of our body. For in hope we have been saved, but hope that is seen is not hope; for who hopes for what he already sees? But if we hope for what we do not see, with perseverance we wait eagerly for it (18-25).

In my experience, Evangelical Christianity invites us to an Easter without bodies, without creation, without groaning and without pain. It is Easter from the vantage point of every man: knock me up, knock me out, full epidural, wake me up when its all over. “Wasn’t that easy!” Well, “no.” That would be a “no.”

A full-throated Easter would entail groaning and pain; it would not leave creation behind to fend for itself; it would not be Easter “in my heart,” “in my soul,” “by faith.” This kind of disembodied Easter is the perfect counterpart to the “speculative Good Friday,” where the Palestinian Jew only seems to undergo death. Except that in the “speculative Easter,” all of creation does not even appear to be made new. We can have Easter and trash creation. We can have Easter and deny human beings the basic dignity they deserve. Easter without any evidence at all.

Yes, yes. “Who hopes for what he already sees? But if we hope for what we do not see, with perseverance we wait eagerly for it.” Have faith! As though faith and hope were indistinguishable. “I hope for resurrection, for new life, for Easter. And, so I have it!” No pain or groaning required.

Full epidural? More like full lobotomy. Good Friday reminds us of the only path to Easter.

After a long hiatus, we finally reviewed PRESENTATION 31 today. PRESENTATION 31 covers chapters 7 and 8 of Moishe Postone’s Time, Labor, and Social Domination: A Reinterpretation of Marx’s Critical Theory (NY: Cambridge University Press, 1991). Immediately following the lecture a student texted “Your lecture today made me feel like a beautiful soul. I mean that in a complimentary way.” And so there is hope (in theory).

The problem raised by Presentation 31 is how capitalism might give rise — not politically by way of political intervention, but internally out of its own social logic — to its own supercession. This K Marx finds in the expanding gulf between material wealth and abstract value. Material wealth is the things we make and consume, however frivolous or necessary, “material” or “intellectual” or “aesthetic.” Material wealth is the “substance” of what we make and consume. Abstract value, by contrast, is the substance that relates all factors of production to one another, e.g., human capital to the commodities produced to the fixed capital used to produce these products to the finance capital leveraged to finance production, etc. Abstract value, by definition, lacks specificity. It is, simply, capital. It is for “abstract value” that anything is produced at all under capitalism. No marginal benefit, no product; it is that simple.

Yet, since it is the aim of every producer to reduce the cost of production, by reducing factor costs, there is an implicit compulsion to replace human labor with robotics, cybernetics, mechanization. That is to say, there is an implicit, systemic rationality to produce wealth in order to maximize value. The only problem is that whenever any innovation becomes socially generalized, it sets the “value meter” back to zeros. The good news is that this intrinsic capitalist logic has generated immense material wealth. Graphically, we need to imagine two lines that begin on the left at zero, but from there diverge, the top line climbing more steeply than the bottom line which cannot climb any more rapidly than the population of actual workers wealth over labor time = productivity. The bad news is that with every innovative plateau, the value of labor returns to zeros across the board.

K Marx invites us to think about this divergence of material wealth from the labor necessary to create that wealth as an “immanent contradiction” within capitalism. It is immanent — as opposed to external — because the contradiction arises within capitalism itself. So, for example, we can think of the shortening of the working day and the working week as evidence that we are creating more with less; which is the definition of productivity. But this also suggests that material wealth is growing increasingly independent from labor. Labor is becoming increasingly obsolete.

Neo-classical economists — left, right, and center — view this as a disaster. We need full employment. Why? Because value arises out of labor. Should unemployment rise to unacceptable levels this would place downward pressures on consumption, leave inventories unconsumed on shelves, place downward pressures on prices, and, therefore, place downward pressures on wages. Left, right, and center, neoclassical economists agree — unemployment is bad.

According to M Postone, K Marx invites us to think about this gap between material wealth and abstract value differently. This gap clearly shows that wealth is not dependent on labor. This is not bad news. It is good news.

The bad news is that our society is mediated by labor. All of our laws, regulations, and institutions are bent to accommodate a society where labor (implicitly) is the source of value, and where value (not wealth), is the driving impulse behind innovation and efficiency. At the very moment that abstract value is becoming increasingly obsolete — because of innovation, mechanization, cybernetics, robotics, AI — we are politically, legally, structurally making sure that cannot walk away. Why? Not because labor is the source of material wealth. Evidently it is not. But because it is the source of abstract value.

In my summarization of M Postone’s work, this growing gap between wealth and value is leading to several social pathologies:

• A  shrinking industrial sector; this is widely viewed as bad by neoclassical economists while, in fact, in should be viewed as a good;
• The expansion of the low-skill, low-wage service sector; these are jobs that could easily be mechanized or self-managed (as with self-check-out), but for which we often employ human capital to lower cost — there are some tasks that even machines will not perform
• The pursuit of abstract value at the expense of the conditions that make it possible; this is perhaps the most serious pathology. Our material world is screaming that it cannot sustain further depredations to produce increasing returns on investment — and, yet, abstract value is so central a determinant in our social formation that we will destroy the world in order to maintain the forced relationship between wealth and abstract value
• Finally, although the production of wealth no longer requires such massive amounts of human labor, we are willing to expand our carcéral, policing, and military apparatus in order to fix the relationship between wealth and labor, wealth and abstract value. Humans who are no longer needed for the production of wealth, instead of being employed as artists, musicians, naturalists, fathers, mothers, caretakers, citizens are instead herded into prisons or into wars to preserve the relationship of wealth to value.

But, the point — the hopeful point — is that, thanks to capitalism, we now enjoy a compressive, integrated grasp of how the entire system works. We now see it as a total system. And so we also appreciate why it cannot take us to the next stage. On its own terms, capitalism will degrade human beings. It will destroy the environment. It will deliver ever larger segments of the population to ever more meaningless and dangerous occupations, simply to produce more abstract value — because we feel that this is required by natural law, by the way things work, naturally.

The most pressing task for economists today is to carefully think through the next phase. What happens when labor is not necessary? Or when minimal labor is necessary? We have mastered the world. We know how it works. We now know what is necessary. What now?

In the Preface to his Philosophy of Right, GWF Hegel pens a curious observation:

When philosophy paints its grey in grey,
then has a shape of life grown old.
By philosophy’s grey in grey it cannot be rejuvenated but only understood.
The owl of Minerva spreads its wings
only with the falling of dusk.

One way to interpret this observation is to note that we now really do understand our world. But understanding the world does not tell us where we go from here. Minerva has spread her wings. She has flown. We need to understand where she might alight next. I am guessing that it is in a world no longer governed by the necessary relationship between labor and value.

Perhaps that is hopeful thinking.

What is it with Noam Chomsky and Russia?

Professor Chomsky and I are two generations removed. When he was beginning his starred career at MIT, I was just a boy, the son of a mid-level State Department director under John Kennedy. After leaving the State Department, my dad would go on to make his name as “the radical professor” and “faculty advisor to SDS,” Students for a Democratic Society, indicted for “inciting riot” in the aftermath of the Kent State Massacre. Neither my dad nor his family were in any sense hostile to the Soviet Union; we were inclined, like Professor Chomsky, to treat unfavorable headlines as mere propaganda. Fifty years later, teaching Economics at UC Berkeley, I am still inclined to treat unfavorable headlines as mere propaganda. Some things never change.

What has changed is my views toward Russia. In 2013-2014 I spent a year in Bosnia and Herzegovina conducting in-depth research on the conditions that precipitated the latest Bosnian War and its aftermath. Prominent in the literature was Professor Chomsky’s and Project Censored’s “double-blind” defense of Serbia, less as an independent nation than as a satellite of Russia; “double-blind” in the sense that what appeared most to matter to Professor Chomsky and to Project Censored was that the US — eventually — came to the defense of Bosnia, which, in the hagiography of Professor Chomsky and Project Censored, made Bosnia’s enemy a prime candidate for western misinformation campaigns. “Double-blind” in the sense that, having found evidence among Bosnian information channels of less than fully accurate reporting, this established for Professor Chomsky and Project Censored reasonable doubt sufficient to question whether Bosnia had ever been the victim of genocide.

Never mind the bones and mass graves. Never mind the countless cities I visited up and down the eastern border of Bosnia and Herzegovina that still bear the traces of genocide: there are no men, no men, no men anywhere to be seen. For Professor Chomsky and Project Censored it is sufficient that the US was once the enemy of the Soviet Union, that it staged and supported a coup on behalf of Boris Yeltsin, and that any enemy of my friend is necessarily my enemy. End of story.

There are eery echoes of Professor Chomsky’s genocide denials in his response to Syria’s Bashar Al-Assad’s genocidal war against his own people. Since Al-Assad is an ally of Russia and since Russia is an enemy of the US, this must mean than Al-Assad is the victim of western propaganda.

There is something unmistakably Manichean to Professor Chomsky’s and Project Censored’s narrative; a kind of “children of light” “children of darkness” script. To which I must object. My condemnation of Al-Assad is not a defense of the US. My condemnation of Bosnian genocide is not a defense of the US. Professor Chomsky’s and Project Censored’s narrative appears inflected through a Cold War prism. This prism refracts light in ways that render actual events on the ground, and actual suffering, irrelevant, mere pawns in a game of ideological warfare. Which is a shame because Professor Chomsky and Project Censored — of which my father was a contributing editor — are capable of so much more.

Seattle Times columnist Danny Westneat published a piece on Wednesday last that offers chilling insights into fake news. His piece, titled “UW professor: The information war is real, and we’re losing it,” summarizes the research of University of Washington Assistant Professor Kate Starbird.

“Your brain tells you ‘Hey, I got this from three different sources,’ ” she says. “But you don’t realize it all traces back to the same place, and might have even reached you via bots posing as real people. If we think of this as a virus, I wouldn’t know how to vaccinate for it.”

Starbird says she’s concluded, provocatively, that we may be headed toward “the menace of unreality — which is that nobody believes anything anymore.” Alex Jones, she says, is “a kind of prophet. There really is an information war for your mind. And we’re losing it.”

Professor Starbird goes on to confess, “I used to be a techno-utopian. Now I can’t believe that I’m sitting here talking to you about all this.”

For my students and for others who follow this blog, Professor Starbird’s confession might sound an awful lot like Thucydides’ observations about late classical Athens.

People of violent views won automatic credence, and any opposing them were suspect. To lay a plot and succeed was clever: smarter still to detect another’s plot. Anyone whose own plot was to remove the need for any plotting was thought to be subverting the party and scared by the opposition. In short, the currency of approval was damage done — either the pre-emptive strike before an opponent could do his own intended damage, or the instigation of those who otherwise had no thought of doing harm. And indeed family became less close a tie than party, as partisans were more prepared to do the deeds without question. Such associations had no sanction in the established laws, but were formed in defiance of the laws for purposes of self-interest. The partisans’ pledges of loyalty to one another were cemented not by divine law but by partnership in some lawless act. Any fair proposals made by the other side were accepted by the stronger party only after precautionary action, and in no generous spirit. Revenge was more important than avoidance of the original injury. If ever there were any sworn reconciliations, the oaths on either side were offered simply to meet some current difficulty and had only temporary force, while one side or the other was without support from elsewhere. But when opportunity presented, the first to take bold advantage of an enemy caught off guard relished this perfidious attack yet more than open reprisal: into his reckoning came both his own safety and the accolade he would also win for intelligence shown in achieving gain through bad faith. Most people would rather be called clever rogues than stupid saints, feeling shame at the latter and taking pride in the former.

The cause of all this was the pursuit of power driven by greed and ambition, leading in turn to the passions of the party rivalries thus established (Pelopponesian War 3.82.4-8).

In his text, Thucydides makes clear where he feels blame lies for Athens’ descent into chaos. When public office stipulated strict qualifications, prior to the rise of Pericles; when office holders held one another in check; and when citizens held office holders in check with the threat of ostracism, there was less risk that equally qualified, equally powerful office holders could “pull a fast one” over on their peers. Cynically, Pericles eliminated all qualifications for office holding, inviting anyone and everyone to hold office. So long as he believe he could manipulate their decisions and thereby determine policy outcomes in his favor, it hardly mattered what their qualifications were. The trick worked. Pericles became immensely popular precisely among those whom he manipulated.

But his success was ephemeral since government by deceit and manipulation rewards precisely those qualities through which corruption spreads and empires fall. When Philip of Macedon grew weary of the civil wars to his south, he found it relatively easy to conquer this corrupt and corrupting so-called “civilization” of Athens.

Athens’ loss was Aristotle’s gain. Where once he was forbidden to establish a school — he was, after all, a Macedonian — he suddenly saw doors open. His instructor, Plato, had believed that statecraft could be saved only by the secret collaboration of those who were wise, who knew themselves to be wise, and who also accepted the corruptibility and corruption of those in power. The “guardians” would govern secretly “behind the scenes,” manipulating governors and governed alike “for their own good.”

Aristotle disagreed. Virtuous institutions are inseparable from virtuous citizens. Republics needed therefore to focus all of their resources on cultivating and preserving the conditions that make for virtuous citizens. Corruption and deceit by rulers cannot be undone by philosopher kings whose equally deceitful (if less corrupt) methods differed little from those in power. For such deceit, in Aristotle’s view, leads to precisely the conditions observed by Professor Starbird: “the menace of unreality — which is that nobody believes anything anymore.” So, what did Aristotle recommend?

Many commentators on the current crisis over “fake news” (mistakenly in my view) focus on the news itself instead of on the conditions that enable us to make reasonably good sense out of the barrage of information that comes our way. To be sure, just as there is value in professional standards for doctors, psychiatrists, engineers, architects, and pharmacists, so there is value in professional standards for journalists and information. But, unless we expect information consumers to vet every piece of information that comes their way, we must leave the ultimate vetting to the good, albeit rough, “common sense” of those who consume news. This is because, as Professor Starbird’s research suggests, our brains are hardwired to make sense out of all of these pieces of news that come our way, often not knowing that they come from the same compromised source. You don’t know what you don’t know.

And it was for this reason that Aristotle recommended that we begin at the other end of this knot. Individuals are deceived because they need to be deceived; and deceivers deceive them because they win rewards from doing so. If I am not well fed, well clothed, and not in particularly good health; if I feel insecure, threatened, and ill-equipped to master all of the questions that come my way, then I have an interest in believing that my shortcomings and fears can be resolved by, say, building a wall or getting tough on crime. Need provokes a need to be without need. Need is an absolute precondition for charlatans. Some examples:

If I enjoy good health and good healthcare, if I eat well and exercise often — if I feel good about my body and my self — I am much less susceptible to snake-oil peddlers who are selling just what I need to make me feel good. If I am reasonable well off, not wealthy, but not in need, and am happy in my occupation, which offers real opportunities for performance-based advancement, I am not looking elsewhere to explain why I am not well off, why I am poor and in need, unhappy and unfulfilled.

More than perhaps anything else, the New Deal and Great Society, by placing the good life within reach of ever expanding groups of individuals, shifted our focus away from the immediate causes of our pain and suffering — our need — and gave us the luxury to focus instead on the blessings we already enjoyed and the opportunities that lay ahead.

Fake news feeds on suffering, pain, and discontent. My need is like a flashing neon sign inviting the attention of every fake news outlet. Why do I fall for every piece of left-leaning, but imperfectly vetted, news? “Trump Resignation Immanent, sources report.” One reason is that I so desperately want — need — to see some ray of light, of hope.

According to Aristotle, what I really should be focusing on is making sure that an ever-expanding circle of citizens enjoys good health, good education, security, and sufficient leisure time to grow and mature and participate. Charlatans there will always be. The Peloponnesian War unleashed such pain, fear, and hopelessness — such need — that Athenians grasped at any piece of information that offered solace. It would have been nothing short of miraculous had Ohio, Michigan, Wisconsin, and Pennsylvania not voted for Trump. Ironically, their voting patterns vindicates the validity of our model.

Put differently, what we know (or think we know) has everything to do with where we come from and where we think we are going. The most sure antidote to “fake news” may therefore be to do all in our power to make sure that where people are is safe, secure, affirming, and healthy. So, while we often portray health, education, and welfare as though these were matters of equity (which, of course, they are), it might be more helpful to think of them as the very conditions that make for a robust republic.

This throws the burden back in our laps, I know. We are the change we seek. Yet, this, it strikes me, offers a far more realistic portrayal of the conditions that make for good information than epistemological hand-wringing over the conditions that make for accurate coverage, reporting, or dissemination of news.