The wartime economy?

In 1935, six years before Pearl Harbor, the US Congress approved the largest peacetime allocation ever, nearly five billion dollars, for unemployment relief. Over the next decade, Congress would throw $350 billion taxpayer dollars into the war effort. Why?

The war to defeat fascism cost the United States 405,000 of its citizens, in four years. Too high a price to defeat the Germany’s and Italy’s fascists and Japan’s nationalists? Would Donald Trump’s white nationalist supporters think so?

Already in less than four months, Covid-19 has claimed over 60,000 lives, one seventh the number lost to European and Asian right wing extremists. In World War II terms, this would be the equivalent of losing 60,000 US lives before January 1942. Covid-19 is a super-killer. But it is also an economic killer.

Over 30M Americans have applied for unemployment benefits so far. That number only includes individuals eligible for apply for unemployment. And we are only in our third month.

If we think of the Coronavirus as a deadly killer, a foreign assailant, the republican-led Congress and White House should be allocating $5 trillion to wipe out this plague. So far, they have allocated less than half that number. Why?

A large part of the problem is ideological. Republicans are, well, anti-republican. They do not believe in res publica, the wealth we hold in common. They do not believe that publics should even exist. So, the very notion of a public entity appropriating and redistributing private wealth is inimical to the (anti-) republicans. Instead, what they believe in is the redistribution of public money into private hands. That is the whole idea behind public debt and why public debt is preferable (for anti-republicans) to taxing wealth. Public debt will have to be paid off, eventually, if in no other form then simply in debt servicing. And guess who will pay for that debt? Hint: the (anti-)republicans just gave their billionaire friends the largest tax break in history.

To put this all in perspective, in 1947, when US taxpayers began paying off their huge $5 trillion dollar war debt, the effective corporate tax rate in the US was close to 50 per cent — yes, corporations were taxed at 50 per cent and the US economy never had it so good. Today it is less than 20 per cent. So, again: who is going to pay off the debt? Working families. That’s who. Which, in effect, means that the (anti-)Republicans are fighting the most significant war since 1941 not only with the bodies of working families, but at the expense of working families. Where the 1938-1941 Congressional appropriations put working Americans back to work and put money in their savings accounts, the 2020 Congressional appropriation is largely aimed at “wealthcare,” caring for the wealthiest among us.

We need a Congress and a White House that once again serves the public interest, not private interest. We need to have the guts to make wealth bear its burden: restore tax burdens to their 1950s levels, Green New Deal, National Health Care (not “wealthcare”).

Globalization and Exchange

Globalization predates capitalism. Nevertheless, it has occasionally been argued that contemporary globalization is no more than the elaboration of the original chance exchange between two communities. In every standard economics textbook published since the eighteenth century, the simple exchange is counted the foundation for globalization. There are gains in trade.

Today critics of globalization, such as right wing white nationalist Steve Bannon, are eager to highlight not the gains, but the costs, from trade. Whenever an individual exchanges a good common in her community for a good rare in hers but common in another community, it is not only a foreign, alien, good that enters her community. In the exchange, she ties the fortunes of her community to the fortunes of the other. And, to this degree, she weds a foreign system of social production to the system of social production in her own community. Each community sacrifices some small quantum of its sovereignty. Each community joins a larger, more abstract, more universal, homogenized community. Globalization is predicated upon exchange.

Right wing white nationalists feel that exchange dilutes their racial and cultural pool. They feel there is a net loss, not gain, in exchange. In exchange, communities lose their particularity, their unique identity.

But right wing white nationalists are not the only political actors to advance this argument. Some individuals on the left take Karl Marx to have advanced a similar argument in volume 1 of Capital, part one, chapter two:

The exchange of commodities begins where communities have their boundaries, at their points of contact with other communities, or with members of the latter. However, as soon as products have become commodities in the external relations of a community, they also, by reaction, become commodities in the internal life of the community. Their quantitative exchange-relation is at first determined purely by chance. They become exchangeable through the mutual desire of their owners to alienate them. In the meantime, the need for others’ objects of utility gradually establishes itself. The constant repetition of exchange makes it a normal social process.

Capital 1.1.2

And we are off to the races, so to speak. That is to say, from the first chance exchange we see an unbroken line leading directly to the universal equivalent (whatever that might be) and, from there, to abstract value.

In the course of time, therefore, at least some part of the products must be produced intentionally for the purpose of exchange. From that moment the distinction between the usefulness of things for direct consumption and their usefulness in exchange becomes firmly established. Their use-value becomes distinguished from their exchange-value. On the other hand, the quantitative proportion in which the things are exchangeable becomes dependent on their production itself.

The particular kind of commodity to which it sticks is at first a matter of accident. Nevertheless there are two circumstances which are by and large decisive. The money-form comes to be attached either to the most important articles of exchange from outside, which are in fact the primitive and spontaneous forms of manifestation of the exchange-value of local products, or to the object of utility which forms the chief element of. indigenous alienable wealth, for example cattle.

It could therefore be argued that the Marxian critique of globalization begins not with labor, but with exchange; and not with exchange within a discrete community, but with exchange between communities. In other words, the exchange of commodities between communities initiates a dialectic that “bursts its local bonds . . . [and] expands more and more into the material embodiment of human labour as such.”

Even were Marx himself not critical of globalization (and there is no evidence that he was), contemporary Marxian theorists cannot ignore the implications of Marx’s analysis for “globalization and its discontents.” Is there not, at the very least, an implicit criticism of the destruction of “local bonds” and the impending transition into a “material embodiment of human labor as such”?

I actually don’t think so. First, insofar as Marx’s analysis contemplates working through the contradictions immanent to capitalism, it is not likely that in this instance he was contemplating a Rousseauean/Frankfurtschule restoration of antediluvian isolation. More importantly, if Marx grounded his dialectic of history in the production function — i.e., in the difference between any good’s material form of appearance and its abstract value — then it would be odd for him to revert in this instance to what could only be an uncritical reproduction of GWF Hegel’s Logic. Which is not to say that communities might not generate out of their own practical regimes certain kinds of directional dynamics not grounded in the commodity form’s immanent dialectic. Such directional dynamics, however, would be socially and historically specific, perhaps limited even to single communities. What distinguishes the dialectic immanent to the commodity from these others is the two-fold commodity form itself, which will not make its appearance, at the very earliest, before the fourteenth century.

Marx’s analysis in 1.1.2 points to transient, purely episodic, ephemeral encounters. “The universal equivalent form comes and goes with the momentary social contacts which call it into existence. It is transiently attached to this or that commodity in alternation.” Which distinguishes it qualitatively from capital. Capital acquires its universal, global, validity not in the act of exchange, but in the act of measuring the value of human action marginally, i.e. measuring the marginal product of labor as ΔQ [a change in some quantity] divided by ΔL or ΔK [a change in labor or capital]. Once measured marginally, as the ratio of a change in quantity divided by a change in labor and/or capital, investors are henceforth compelled to maintain or increase that ratio. This compulsion will bring them to cross every boundary, every border, raze every mountain top, fell every tree, and excavate every valley.

Gains in trade, or gains through exchange, therefore, does not merely indicate, as Carl Menger believed, that a good is valued more by one party than another. It means, first, that both parties value the goods they are exchanging in terms of the same abstract substance. But, second, unless the exchange is episodic, ephemeral, and transient, it also means that the communities are members of a social formation that includes both communities. Finally, in commodity societies, the abstract substance in which all goods are valued is the socially generalized, average of the aggregate cost of abstract labor: the cost of bringing any value-bearing good to market and placing it in relationship to other value-bearing goods (or the universal equivalent itself) with which it might be exchanged.

When right wing white nationalists invoke protectionism on goods and labor, they therefore do no more than change the rules by which investors will fleece consumers. A barrier on the southern border (for labor, not capital) will increase the marginal value of labor, which, in this case, is the constrained commodity. It will therefore increase the cost of producing the good dependent on that constrained commodity. Investors are perfectly happy to take advantage of the higher prices. But, even should we throw the borders open, flooding the market with lower-priced labor, lowering prices on goods produced by this labor, the increased volume of goods and lower labor costs will, in this case, attract investors to the higher returns. Protectionism is one way to generate returns. Free trade is another. In neither case, however, is the relationship between abstract value and its material form of appearance altered in any way.

At least where globalization and exchange are concerned, the real problem with extreme right wing white nationalism (and its left-wing cousins) is that both mistake surface forms of appearance for underlying social logics. Under capitalism, investors are as well equipped to value local idiosyncrasies as they are international law. They are masters of the art of arbitrage. Exchanges at borders often yield far higher returns for investors than exchanges where there are no borders. Borders have value. Which is why the one place working families need to go, is the one place extreme right wing nationalism will not take them. Working families need policymakers to decouple value from human action; they need policymakers to restore the public character of wealth: res publica.

To do so would not resolve the problems of globalization. But it would resolve the problem of homogenization and universalization. How? By eliminating the substance that all goods hold in common under capitalism. Once the values of goods are measured not in terms of their marginal product, but in terms of their satisfaction of human desire and need, we could then live into the highly differentiated world that capitalism promises, but never delivers.

Exchange must have appeared very early on the Savanah plains. Capitalism appeared in the fourteenth century at the earliest. We need ways to differentiate between what has happened to human beings over the past 2.4M years and what has happened to them in the last 500 years. Exchange is not the problem. Globalization is a problem, but it is not unique to capitalism. Capitalism is the problem.

Capital I.3.2. as “end time” text

I finished a draft today of “Christianity after capitalism,” which explores how Christianity might cope with the end of capitalism, assuming that it does not in fact go down with the ship. As with most classical texts, I have read Marx’s Capital several times. With each reading I discover something new. Such is the case with the text in volume 1, part 1, chapter 3, part 2:

There is an antithesis, immanent in the commodity, between use-value and value, between private labour which must simultaneously manifest itself as directly social labour, and a particular concrete kind of labour which simultaneously counts as merely abstract universal labour, between the conversion of things into persons and the conversion of persons into things; the antithetical phases of the metamorphosis of the commodity are the developed forms of motion of this immanent contradiction. These forms therefore imply the possibility of crises, though no more than the possibility. For the development of this possibility into a reality a whole series of conditions is required, which do not yet even exist from the standpoint of the simple circulation of commodities.

Capital, volume 1, chapter 3, part 2

Since they are predisposed to interpret Capital through the eyes of a thirty year old, if not a twenty-six year old, Marx, most interpreters of Capital miss many of its subtleties. In all likelihood they will therefore miss the theological dimensions of Marx’s analysis of the commodity. Hint: “immanent” (immanente) is not an economic category.

Perhaps it is not obvious, but religions in general and Christianity in particular are troubled by immanence, by the immediate presence of divine things in earthly things. It is important to note that Islam and Judaism will have nothing of it. God is transcendent. (Except when God is not. But we will not take that up here.) Christianity created a huge, perhaps insurmountable, problem for itself by highlighting not simply the immanence of God, but God’s arrest, incarceration, sentencing, and death.

Contemporary Christianity has overcome this problem by completely isolating Jesus’ material form of appearance (i.e., Jesus) from Jesus’ essence (i.e., Christ). In one among many comical passages in Capital, Marx dispatched this mental tick by crediting it to the commodified character of the contemporary Christian God:

For a society of commodity producers, whose general social relation of production consists in the fact that they treat their products as commodities, hence as values, and in this material form bring their individual, private labour into relation with each other as homogeneous human labour, Christianity with its religious cult of man in the abstract, more particularly in its bourgeois development, i.e. in Protestantism, Deism, etc., is the most fitting form of religion.

Capital, volume 1, chapter 1, part 4

Take that! You disembodied contemporary Christianity! Jesus had a body! Live with it!

Which leads me back to I.3.2.

Let us suppose that we — all of us whose lives are structured around the two-fold commodity form of capital — have grown accustomed to qualitatively differentiating the abstract values of things from their material forms of appearance. And let us suppose that it is around their abstract values that we all coordinate our decisions, judgments, prejudices, and turns of phrase. Since the world is, in fact, embodied and not abstract; since value is in fact substantive and not multivariate and abstract; does it not follow that bodies, real bodies, will find themselves in opposition to the abstractions dealt out by the abstract form of the commodity?

And might we not more accurately grasp this apocalyptic moment as “the end times”?

I do not promote this as a Book-of-Daniel-Revelations-Hal-Lindsey-End-Time-Prophecy. That clearly was not on Marx’s radar. What I am suggesting is that Marx discerned, in much the same way as the author of First Corinthians, that bodies were central to the stories that free people have to tell, and that the abstract value form of the commodity, much like the abstract laws of popular Roman Stoicism, was inadequate.

From this vantage point, the immanent tension between abstract value and its material forms of appearance counts as a kind of apocalyptic wake up call, an indication of the possibility, but no more than the possibility, that bodies might be resurrected after all.

Race and AI

In 1964 University of Chicago economist Milton Friedman faulted civil rights legislation barring discrimination because it was less efficient and less effective reducing discrimination. The example he gave was a restaurant that refused to serve African Americans. Such a restaurant, he argued, would lose the business not only of African Americans, but of civil rights advocates generally and would end up with an ever smaller clientele composed of racists and bigots. Private consumers would vote with their wallets.

A similar argument has been made for gender and race based hiring decisions. A firm that introduces race or gender into its criteria for hiring necessarily devalues the weight it places on criteria that measure competence and skill for the position the firm is trying to fill. In other words, discrimination does not pay.

In light of this free market analysis, some firms have moved entirely to double blind AI for their hiring decisions. Because AI doesn’t care. Or does it?

The assumption upon which this analysis is based is that the market is value neutral. But is it?

As an alternative, let me propose that, as Cornel West reminds us, “race matters.” Let me suggest, moreover, that race is valued differentially. Because, like all surface forms of appearance under capitalism, the differentia among and between things are indications of consumer preference. I like chocolate. You like vanilla.

Only in a market where ALL decisions are made by AI, would such differentia be of no consequence. But the moment private consumer preference is introduced, even as an algorithm, differentia flood back into the analytical frame.

So, for example, let us assume that I am an investor in a firm that sells high end automobiles. Data analysis suggests that consumers are marginally more likely to be white and that they are marginally more likely to purchase a car from a white male. That is to say, the marginal value of a white male sales force is higher than a white female, a black male, or a black female sales force. Were I to include this algorithm in my AI hiring choices, presumably the AI would yield “neutral” racist and misogynist decisions. That is to say, insofar as race has value — race matters — socially, an algorithm that measured value would necessarily give rise to racist outcomes.

But let us say that policy makers count race and gender equality non-negotiable, i.e., not subject to marginal analysis. And let us say, instead, that race and gender were weighted such that the disutility imposed on women and people of color were folded into the algorithm. And the social value of whiteness was discounted.

In effect, this would eliminate the market effect. Abstract value would, in that case, lose its function. It would be replaced by substantive right.

This, in fact, was the proposal against which Professor Friedman was arguing in Capitalism and Freedom. Any interference in the market undermines (market) freedom. Well, yes. By definition. But perhaps some things do not lend themselves to marginal analysis.

More immediately, in a racist and misogynist society, AI cannot but yield “neutral” racist and misogynist results.

Useless Labor

I am repeatedly struck by how poorly scholars, not all of them economists, grasp the most fundamental principles of economics. Even though I am not myself an economist. Let me hazard that one reason for the preponderance of sloppy analysis among economists is that, like children of the rentier, they know how to use the system, but they have little grasp for why it works.

Having taught this history of economic thought for more than twelve semesters, I have attempted to instruct the next generation of economists why the system works.

As you know, I have been working through Yuval Noah Harari’s three volumes. I took a brief break in order to read GWF Hegel’s Phenomenology and Slovoj Žižek’s Puppet and the Dwarf. But I am now back at it. Overall, Harari is well worth the read, all one thousand or so pages of him. But, along with most scholars, including many economists, Harari has a blind spot: economics. Here is what I mean:

The technological revolution might soon push billions of humans out of the job market and create a massive new “useless class,” leading to social and political upheavals that no existing ideology knows how to handle.

Harari, Yuval Noah. 21 Lessons for the 21st Century (p. 19). Random House Publishing Group. Kindle Edition.

Like most scholars, including most economists, Harari believes that people work in order to produce goods that people need, or, in any case, believe they need. Under capitalism, however, people work because they are part of what every economics textbook calls the Circular Economy. Here is how it works:

There is nothing specially mysterious about this system. People work in order to produce goods, which other people (or firms) purchase in order to generate returns for investors and satisfy consumer (or firm) need/want. The capitalist economy forms what since the 1850s (WS Jevons, K Marx) economists have characterized as a comprehensive, integrated, self-regulating system for distributing abstract value. In practice, what this means is that should any critical “link in the chain” (C Menger) fail, the entire system fails. But — and this is the linchpin — since abstract value is derived marginally, there arise no points within capitalism where any critical link in the chain gives rise to systemic failure.

Let us take Harari’s dire prediction. Machines are better equipped to perform nearly all of the tasks, now including the most sensitive tasks, humans perform. So, for example, Harari calls attention to the loan officer at a bank. The loan officer has access to all of the data that AI has. But, in addition to the data the loan officer enjoys, AI enjoys sensors that are able to detect heart beat, serotonin levels, pupil dilation, perspiration; and, besides, is not inclined to be side-tracked by the bad lunch the loan officer just ate, the fight she had with her girlfriend, the subconscious resentment she bears toward her employer, and so on. Moreover, in a comprehensive, integrated, self-regulating system, AI can simultaneously be purchasing and selling shares in assets that benefit shareholders in the loan-making institution. What is Harari missing?

Harari is missing the marginal value of uselessness. Because, remember, under capitalism, everything enjoys a marginal value. Which brings us to the marginal value of useless labor?

Here is what happened during the Great Depression. So little did human beings come to be valued that they collected and sold cigarette butts, sharpened pencils, earned money from dancing marathons; in short, anything. That is to say, the marginal value of human beings plummeted. But, as John Maynard Keynes pointed out, this was not evidence for market failure. To the contrary, it was evidence that the Circular Economy worked. It sent the value of the least valued goods downward until investors were ready, at a given price, to have their pencil sharpened.

But, of course, this also meant that the human pencil sharpener was purchasing goods only equal to her wage. In fairness, like Lord Keynes, Harari recognizes that capitalism is equipped with a nifty solution to this problem. Because the Circular Economy is not a temporally static system, a dollar today is not worth the same as tomorrow’s dollar. (Indeed, as Gary Becker noted in 1962, taking a page from Alfred Marshall’s 1891 Principles, a dollar here, today, is not worth the same as a dollar elsewhere or in someone else’s pocket today. $1≠$1.) This is because money is always a temporally and spatially constrained value, relative to the aggregate value of all dollars and dependent on questions of where and when. When I borrow $1 from the future to inspire a consumer to spend $1 today, that future dollar may be worth more, it may be worth less, than today’s dollar. But, if the economy is in a trough, then it is reasonable to assume that tomorrow’s dollar is worth more than today’s. How much more? Economists differ. But only marginally. Keynes’ point was that any debt accumulated today sufficient to stimulate economic growth over time greater than its cost is worth the investment.

The temporal and spatial envelope in which value modulates is social in character. This does not make it any less real. Rather does it make this envelope hyper-real. Consider, for example, the condition under which, as in Hunger Games or Drowned Cities, human beings have become little more than cockroaches. Their value reduced to virtually nothing. Their overlords invested with absolute power. There is still, here, a marginal calculation. How much value, if any, do I need to extract from the subject population? How much value do I spend policing the subject population? What is the risk of an uprising? What is the marginal cost of political stability? What die-rate will the subject population tolerate?

The point is, for economists who wish to reflect rigorously, there is absolutely no direct correlation of innovation to job loss. Not in the long run. Because the marginal calculation is a social calculation. Value is always, inevitably, social. But, if I have simply learned the formulas passed down and modified from Jevons to Marshall to Keynes to Krugman to Romer, how would I know that this is only social?

In 2018 the University of California, Berkeley, Department of Economics did three things: (1) they declared Economics a STEM major; (2) they eliminated the History of Economic Thought; and (3) they failed to renew my contract.

Technology, Employment and Abstract Value

I remain utterly baffled with how poorly otherwise highly educated individuals grasp the most basic principles of economics. Scholars persistently, repeatedly, habitually mistakenly think that economics is about things. It is not. Economics is about value.

The latest occasion for my befuddlement are the works of Israeli historian Yuval Noah Harami. I am now finishing the third of Harami’s trilogy, not a small feat for a severe dyslexic, given the length of each of Harami’s volumes. (I only read books that I have really good reason to believe are significant.) Central to Harami’s dystopic narrative — he also has a positive narrative — is an economic analysis that is as bad, or perhaps worse, than the worst Silicon Valley techno-optimist analysis. It is astonishingly bad. In his defense, it is an analysis that is disturbingly common, although not among economists, to be sure.

If you have followed this blog for any time at all, then you will be familiar with Adam Smith’s story about the fire engine boy.

In the first fire-engines, a boy was constantly employed to open and shut alternately the communication between the boiler and the cylinder, according as the piston either ascended or descended. One of those boys, who loved to play with his companions, observed that, by tying a string from the handle of the valve, which opened this communication, to another part of the machine, the valve would open and shut without his assistance, and leave him at liberty to divert himself with his play-fellows. One of the greatest improvements that has been made upon this machine, since it was first invented, was in this manner the discovery of a boy who wanted to save his own labour.

A Smith, Wealth of Nations, Book 1, Chapter 1 ¶8.

And, just like that, the founder of classical economics reverts to mercantilism. Mercantilism, because the efficiencies generated by the fire engine boy’s innovation, while contributing to the wealth of the nation, far from leaving him “at liberty to divert himself with his play-fellows,” instead leave him out of work and in search of another job. Mercantilism, because the marginal product of his innovation is not any thing, but is value. Mercantilism, because this marginal product does not accrue to the fire engine boy at all, but to investors in the fire engine venture.

In Smith’s defense, his error was repeated by classical economists on up to the 1850s when, among others, Karl Marx showed that the driving impulse behind economic activity in capitalist societies was not any thing, but relative, abstract, universal, homogeneous value.

Consider, for example, GWF Hegel’s equivalent to the Smith’s story about the fire engine boy, told forty-five years later. With Smith, Hegel also notes that the division of labor gives rise to efficiencies; that, as manual tasks are reduced to their simplest components, these tasks lend themselves to mechanization, “until finally man is able to step aside and install machines in his place” (Philosophy of Right §198).

But, clearly, this would only hold true were workers, producers and consumers trading in things, whose volume increases relative to the time (capital, labor, resources) devoted to them. However, the production function does not measure things. It measures a ratio: MPL = ΔQ/ΔL (or ΔK). So fundamental was this principle to neoclassical economic theory, that, at roughly the same time, it poured from the pages not simply of Karl Marx (Grundriße, 1858), but also of William Stanley Jevons (1862), Leon Walras (1874), and John Maynard Keynes’ professor Alfred Marshall (1890). Here, for example, is Jevons: “Value in exchange expresses nothing but a ratio, and the term should not be used in any other sense. To speak simply of the value of an ounce of gold is as absurd as to speak of the ratio of the number seventeen” (78). Walras’ Elements of Pure Economics is a lengthy, dense, tightly argued, demonstration of the multivariate, abstract, universal character of value. For, as Marshall showed, “the value of a thing, though it tends to equal its normal (money) cost of production, does not coincide with it at any particular time, save by accident” (Book V, Chapter 7, §5). Which is to say, the value of all things, including no thing, is relative neither to the cost of the specific labor expended in its composition, nor to the costs of the materials out of which it is composed, but, rather, is relative to the value of the whole. “We must go to the margin to study the action of those forces which govern the value of the whole” (Book V, Chapter 8, §5).

Innovation may lower the costs of production. It may render labor on that specific good obsolete. And it may, therefore, reduce the disposable income of the specific workforce that formerly had produced that specific good without the assistance of that innovation. But, now, let us assume that that redundant workforce also composes the consumers of that good. So, for example, prior to the innovation total costs of production of a good might have been $10. Now they are $5. And let us suppose that the workforce, composed of ten workers, is now reduced to five. Where, without the workforce reduction, ten workers were ready to spend $100, $10 each, purchasing the good in aggregate, they are now ready to spend only $50 in aggregate, which is still $10 each. Which means no marginal gain arises for investors from the innovation. Which means that the investors, in hindsight, should not (and probably would not) adopt the innovation. They would adopt the innovation only if reducing the cost of production increases the market of consumers up to or beyond the $100 the original ten workers were prepared to spend. But, again, if this additional $50 is at the expense of some other sector, then the aggregate market value remains stagnant. Only where innovation generates an increase in “the value of the whole” will an innovation generate aggregate growth.

What Harari imagines is a cascade of innovations that (1) deprives markets of consumers/workers and thus reduces aggregate marginal gains; or (2) relies solely upon investors themselves to consume the products they produce equal to or greater than their aggregate market value; or (3) steadily reduces the value of labor to a point where its value in production is equal to or greater than the marginal returns realized by the innovation.

This is not a speculative problem. In California’s Central Valley, farmers are in a race with human and mechanized pickers in which the value of human pickers must be forced ever lower in order to maintain their value relative to automated pickers. The poverty of the Central Valley is equal to this marginal decline in aggregate wages, which is equal to the spread of minimum wage, no benefit non-agricultural employment in the Valley. But, that is not all. This race between humans and machines finds its way into urban centers in the form of the $2 apple or peach. (A living wage for human pickers would (a) force growers to adopt mechanized pickers; or (b) raise the price of the apple to $10 per apple. In either case, markets would be depressed.) Only under the condition that innovation increases the “value of the whole” will it be adopted.

But let us suppose that the value of human labor is isolated from the right to a quality life. That is to say, let us suppose that the marginal product is distributed socially up to a predetermined level. This is actually how social democracies work. The social distribution of this marginal product places downward pressure across the board on the marginal returns investors might enjoy. In this case, innovation might take the form of leisure time. The more the innovation, the more leisure time. Moreover, if the value of the admittedly reduced marginal product is still measured abstractly, we could say that its socially distributed portion is measured both (a) as a fraction of the total abstract marginal product; and (b) in terms of the goods — health, education, leisure, housing, art, music, nature — it purchases; things that might still be abstract, but that are isolated from the abstract value of the whole.

In this case, making the human population redundant, rather than a cruel judgment, might instead be cast as release from the compulsion to work for a living.

For nearly 2.4M years, human beings worked out of necessity, but not out of compulsion. Yes. Human beings must change the world they find around them to make it usable, up to the margin. But, where value is abstract, humans have no reasonable way to measure when they have sufficient value. Is $50K enough? Is $200K? Is $1.5M? Is $1B? How much is enough?

If I were to translate this into personal pairs of shoes, most of us would say that two, or five, or maybe 20 pairs of shoes are enough. The problem with abstract value, however, is that it knows no ceiling. And, this, precisely is where Harari also becomes a mercantilist. He reverts to thinking about value as some thing. But, where there is no upward limit, neither is there a limit on employment, even if that employment is simply digging up bottles of cash buried precisely in order to be dug up (the example John Maynard Keynes uses in his General Theory), so deeply ingrained is the compulsion to work. In other words, we are working not out of necessity, but out of compulsion.

Technological innovation, under capitalism, cannot lead to unemployment. That is the bad news.

Mitch McConnell, the Keynesian

In 1971, after taking the US dollar off the gold standard, President Richard Nixon is said to have famously quipped, “I am now a Keynesian in economics” (NYT Jan 4, 1971). A half century later, it would appear, the entire Republican delegation is ready to make the same confession.

In his General Theory (1935), Lord Keynes told the story:

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal-mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.

Chapter 10, “The Marginal Propensity to Consume”

The US Congress is currently preparing to do precisely what Lord Keynes jokingly advised. It are preparing “to fill old bottles with banknotes, bury them at suitable depths in disused coal-mines . . . and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again.” Because the fact is, whenever a capitalist economy is performing at below industrial capacity, borrowing from tomorrow’s healthier economy to jump-start today’s sick economy is always a good bet. And, while “it would, indeed, be more sensible to build houses and the like,” so long as digging up the bottled bank-notes creates jobs and stimulates spending, “it would” — still — “be better than nothing.”

But now let’s say, hypothetically, that Donald J. Trump were an African American Democrat. And let us say that the United States had just experienced the largest drop in value since the Great Depression. I am sure that Mitch and his buddies would ignore the fact that Donald J. Trump is an African American. I am sure they would ignore the fact that he is a Democrat. And, yet, faced with this choice in 2008, Mitch and his buddies unilaterally placed race and party ahead of nation (see “Death of an Omnibus”). Why? Because economists — all economists — had assured Congress that it would take $1.2T to restore the US economy. And because Mitch and his friends knew that an African American Democratic President would receive all of the credit. Instead, the approved a paltry $800M, which proved enough, but only enough, to set the economy on track to realize the so-called “Trump Boom.”

Twelve years later, Mitch is back at it. But now he and his buddies are now all Keynesians, in economics. Not that any of them would say so publicly. Instead, they will say that, beyond the pocket change they will toss to working families, the lion’s share of the money must be allocated to sectors that will invest it most wisely: private industry, finance, and banking. That is to say, banknote filled bottles. What is more, it is likely that consumers will begin to feel the effects of this boondoggle sometime in late September or early October, just in time for the Presidential election. (Assuming the election has not been called off.) Sure. It would be better “more sensible to build houses and the like.” But, however spent, $1.2T will restore stability to global markets.

But that’s not all. That $1.2T does not come out of thin air. It comes in the form of bonds; bonds which, when mature, will be paid for out of taxpayers wages. Does it matter where the money Congress appropriates tomorrow is spent? It might be spent on a Green New Deal which would employ working families saving the futures of their children and our planet; or, it might be spent giving tuition relief to countless millions of college students, money that could be better spent creating a new generation of workers, researchers, and innovators; or, it might be spent giving real relief to overtaxed healthcare workers and extending real, universal single-payer healthcare — the same healthcare Mitch and his buddies enjoy — to every American. All of which would be “more sensible.” And all of which would place American taxpayers in a better position to settle the debt incurred by the sale of bonds when they come due.

But Mitch and his buddies are not idiots. They know they can have their cake and eat it too. They can fleece future taxpayers to pay for Donal J. Trump’s reelection campaign. But, can they count on the support of Nancy and her cronies? You can bet on it.

Stoicism: A Heresy for the Ages

“So the law is holy, and the commandment is holy and just and good” (Romans 7:12). And, yet, as every Christian knows, not only is the law insufficient. It actually points us in precisely the opposite direction. How can this be?

I was again reminded of this heresy — for that is what it is — by Attorney General William Barr’s invocation of God’s so-called “moral order.” Christians will be familiar with this moral order primarily from the Apostle Paul’s Letter to the Romans, where the Apostle lays out the grounds for God’s condemnation of “the nations,” i.e., peoples to whom God did not deliver Torah. What is less often noticed is that the Apostle places the “natural order” on a par with Torah. Both Torah and natural law are sufficient only to condemn, not to redeem. Nowhere is this parity clearer than where the Apostle claims that Nero and his Empire are “servants of God,” whom God has sent to administer justice. Therefore ought “all people” to obey the authorities whom God has established (Romans 13:1-7).

Paul’s counsel was inspired by the universally acclaimed ground of first century Roman jurisprudence. If Jews and non-Jews could agree upon anything it was the well-ordered, moral character of the natural world, which, of course, included the political world. It especially was natural.

Yet, the warrants Paul set forth in Romans were not particularly Christian. Indeed, they were not particularly Jewish. They were pagan. In fact, they were Stoic. But before we fault Paul for drawing upon pagan authorities, we might bear in mind that for first century Romans, Stoicism was the equivalent of contemporary science. It did no more, but also no less than accurately describe how the universe worked.

And, how does the universe work? The universe is composed of being. Literally, the universe is composed of ουσίες, beings. Each being, each ουσία, enjoys power. If a being enjoys no power it does not exist. Of course, the being that enjoys the greatest power is God. Do you want to know why beings influence one another? It is because they exist. They have being. Do you want to know why one is subordinate to and another is superior to another? It is because they possess greater and lesser being.

And it is precisely here that Attorney General Barr’s heresy fits. These relationships of subordination and domination also characterize the moral order. Here is how Paul put it in his Letter to the Romans:

Let every person be subject to the governing authorities; for there is no authority except from God, and those authorities that exist have been instituted by God. Therefore whoever resists authority resists what God has appointed, and those who resist will incur judgment. For rulers are not a terror to good conduct, but to bad. Do you wish to have no fear of the authority? Then do what is good, and you will receive their approval; for they are God’s servants for your good.

Romans 13:1-4a

Did God establish this “natural order”? That seems clear. Is it specially moral or Christian? Ideally, yes. But, as the Apostle had already noted, the natural order was fundamentally distorted. “What then should we say? That the law is sin? By no means” (Romans 7:7)! “Did what is good, then, bring death to me? By no means” (Romans 7:13)!

No. No. No. But the relationships of domination and subordination visible from creation are therefore an unreliable guide. Or, to be more accurate, they can be relied on for condemnation, but not for redemption.

Stoicism held good, everywhere, except in communities of faith:

Consider your own call, brothers and sisters: not many of you were wise by human standards, not many were powerful, not many were of noble birth. But God chose what is foolish in the world to shame the wise; God chose what is weak in the world to shame the strong; God chose what is low and despised in the world, things that are not, to reduce to nothing things that are, so that no oned might boast in the presence of God.

I Corinthians 1:26-30

In communities of faith a different order rules, not the order of domination and submission, but of service and care. And had the natural order understood this other order, history might have looked very different. “None of the rulers of this age understood this; for if they had, they would not have crucified the Lord of glory” (I Corinthians 2:8).

Nevertheless, the early church folded Stoicism into its theological foundations, baptizing the orders of domination and submission that, for purely heuristic purposes, the Apostle Paul had invoked in his Letter to the Romans. Tragically, the Apostle’s endorsement of Stoicism was perceived by non-diaspora Jews — the Jerusalem community — as an olive branch extended in peace to Christians who still observed ritual purity. This clearly lies behind the Apostle Peter’s backhanded complement:

So also our beloved brother Paul wrote to you according to the wisdom given him, speaking of this as he does in all his letters. There are some things in them hard to understand, which the ignorant and unstable twist to their own destruction, as they do the other scriptures

II Peter 3:15b-16

“Hard to understand” is, of course, a euphemism. Peter, a Jerusalem Jew, had very little truck with the liberties taken by Pharisees such as Saul — or “Paul,” as he was now calling himself. But, yes, “the ignorant and unstable” were, in Peter’s view, twisting Paul’s words “to their own destruction.”

By the fourth century, this deep divide had been completely papered over by Luke-Acts, enabling Stoicism to establish itself firmly at the foundation of Christian theology and moral teaching.

Bob Barr, the Roman Catholic Attorney General, is an heir to this dubious legacy. But, ask yourself, does Bob Barr bear a closer resemblance to Jesus or to Nero? Just asking.

Cold Warriors Still

I get it. In 1989 we should have enjoyed a peace dividend. The Cold War was over. The End of History had arrived ahead of schedule. It followed that there was significantly less demand for the gadgets and toys Pentagon brass demand and the military industrial complex is only too happy to supply. All, of course, at taxpayer expense.

I get it. The former Soviet Bloc was supposed to blossom into a family of Benelux-type social democracies. Gone were the days when KGB and Stasi agents monitored the behavior of citizens eager to enjoy their freedoms to speech, press, and association.

I get it. Precisely with the heavy-handed help of World Bank and IMF “experts,” gangster capitalism — which looked a whole lot like Soviet era socialism — the Eastern Bloc and Russia instead seamlessly transitioned into the dystopic oligarchies so familiar in the Americas and Southeast Asia.

What I don’t get is why my fellow lefty friends feel obligated to defend the oligarchic, expansionist, militarist, homophobic, ultra-nationalist, misogynist, anti-democratic former Soviet Bloc nations who are a spitting image of the oligarchic, expansionist, militarist, homophobic, ultra-nationalist, misogynist, anti-democratic western nations they have no problems laying into daily, hourly, on social media.

It strikes me that this might be the perfect moment to take Russia and its extensive worldwide intelligence community as a perfect illustration of how free market capitalism reshaped (and didn’t reshape) the former Soviet Bloc. Instead, much of the left appears to have taken the bait. They end up defending the indefensible (Putin and Russia) so as not to give the appearance of defending the indefensible (Trump and the USA).

It is deja vu all over again. 1968. We are cold warriors still.

A Commodified Earth

As a young thinker and activist, circa 1844, Karl Marx saw in the industrial working class universal humanity and saw in industrial production the means through which humanity would fulfill its highest aspirations of prosperity and freedom. Over the course of the 1850s, Marx came to question “the standpoint of the industrial proletariat,” taking up instead the value form of the commodity as the vantage point of his critique. Yet, as far as I can tell, he never explicitly called into question industrial production as the principle means for achieving the efficiencies upon which, he believed, “freedom from labor” could eventually be realized.

This deficiency is odd. In mainstream neoclassical economic thinking, labor remains bound to the production process through its contribution to the marginal product. This is because the marginal product of labor is equal to the ratio Δ Q/ Δ L, where Q represents some quantity of anything (or no thing) and where L represents some quantity of labor. Productivity arises whenever the change in Q is greater than the change in L: whenever more is produced for less. On its face, this appears to show why, eventually, the contribution of labor must become negligible when compared to a volume of goods. Obviously, however, since we are considering a ratio and not a quantity, it is just as reasonable to suppose that the quantity increases exponentially while the contribution credited to labor holds constant or, perhaps, even increases. This would be the case whenever the marginal product is distributed to an ever smaller portion of the population: to individuals at the very top of the income hierarchy. When therefore economists show that western European social democracies perform less efficiently than Great Britain or the United States, they are simply pointing out that the marginal product is distributed far less equally in Great Britain and the United States; i.e., that investors are credited with far more of the marginal product than working families.

While agreeing broadly with this analysis, Marx showed why, on its face, it meant that working families might never enjoy the benefits arising from their increased productivity. In order for working families to benefit from increasing productivity, the value of workers’ labor would have to be completely separated from the marginal product: Δ L would have to be eliminated from the formula for marginal productivity; leaving, e.g., ΔQ/ΔT, where T represents time and/or technology, but not actual labor. Did this hold true, then the goal of industrial production would no longer be coordinated with labor time. But, in that case, labor time expended would no longer mediate social relations.

Assuming that ΔQ was no longer correlated to labor, we might then wonder how investors would earn ever higher returns. Put bluntly, if the increase in goods were not relative to a change in labor, with what would consumers purchase the marginal product? Or, more generally, how would we value their contribution to the marginal product — and thereby compensate them — were their contribution no longer a factor in its production? In other words, what would mediate social relations under conditions where labor was factored out of the marginal product?

These questions strike at the heart of catastrophic climate change for the following reasons. While consumers purchase, trade, and consume what Marx called a commodity’s “surface form of appearance,” surface forms of appearance are valued differentially in terms of their contribution to the aggregate, i.e., gross, domestic product. We could say that consumer demand is the engine of production; i.e., that production, innovation, and investment are no more than responses to consumer demand. Or, in the alternative, we could say that for investors to realize ever increasing returns on their investments, they must generate ever increasing consumer demand for products produced ever more efficiently.

This might appear to be a “chicken-and-egg” argument: which is the driver and which the destination? Do we produce in order to consume? Do we produce in order to realize returns?

But the answer is clear. Were we able to produce without counting ΔL, the system would collapse. It would collapse because either L would acquire the means of consumption apart from its contribution to goods; or it would collapse because absent the ever increasing marginal returns they win from the marginal efficiency of labor, investors would no longer invest. But, in either case, it is the marginal profit investors win from labor that accounts for economic growth.

From this vantage point, the Earth in all its complexity can be seen as the surface form of appearance of a comprehensively integrated and commodified ecosystem and its subsystems. The Earth exists in order to win returns for investors. Or, in Marx’s terms, the Earth’s “surface forms of appearance” are mediated by abstract value.

This also means, however, that the Earth’s surface forms of appearance could be understood as a “fetish,” a social form whose “natural” powers and meanings are masked and overridden by the social power granted to the abstract value form of the commodity. Their fetishized form means that we cannot even recognize in these surface forms of appearance what they could possibly even be for — what their meanings might be — apart from their contribution to the marginal product. So that, even when we attempt to “balance” the Earth’s “non-economic value” against its “economic value” we cannot do so without reverting to marginal analysis.

The virus that has infected the Earth — that has hacked into and overridden its codes — is the commodity form and, in particular, the abstract value of this form. To restore the original code would require that we eliminate the ΔL from our model.

To this extent, Marx’s critique of the capitalist social form offers us a valuable insight into the reason why addressing merely surface forms of appearance — insurance schemes, tax schemes, regulatory schemes — without addressing the underlying model of economic expansion may not prove sufficient to prevent the impending climate change catastrophe.