Public art of the day

Various and Gould

[who, along with Specter, they have a new show, "Make It Fit," at the Brooklynite Gallery]

How hegemony works

Hegemony was Antonio Gramsci’s way of analyzing how the capitalist state operates through a combination of force and consent. Force is relatively straightforward. The key is to understand how consent works.

Recent posts by Yves Smith and Jim Hightower make important contributions.

Smith contributes an article on the culture of Wall Street (which was published in the December 2009 issue of The Baffler, which is the revival of a magazine of business and culture edited by Thomas Frank that had previously been published from 1988 to 2007). Here’s an excerpt:

the people at the heart of this system, even with the wreckage they created all around them, still fail to acknowledge that the rich pay of recent years was the product of a debt binge. It wasn’t just the makers of the pernicious securities who benefited; all boats in the finance industry rose with the surge of borrowing. Trying to defend the status quo ante shows a willful, self-serving blindness to the proper place of financial markets in a healthy economy.Worse, it bespeaks a dangerous, destructive ideology that has somehow managed to live on, zombie-like, through the crisis. The idea that the needs of the financial sector trump those of the productive sector isn’t just specious; as the crisis so vividly demonstrated, it’s outright dangerous. But its strange persistence as an article of faith among our leadership class, both in government and the media, has yielded inertia and fecklessness where there should be energy and resolve. It seems that before we can confront the challenge of mending our broken financial system, a battle of ideology must be waged and won. And the hour is getting late.

Hightower exposes how the Koch brothers (the owners of Koch Industries, based in Wichita, Kansas, which is  a major producer of toilet paper, paper towels, oil, gas, timber, coal, cattle, asphalt, chemicals, polyethylene plastic, nitrogen fertilizers, cement, lumber products, and much more—70,000 employees in 60 countries, which is America’s second-largest privately owned corporation) have created three Koch Family Foundations through which they fund national and state-level think tanks, Astroturf front groups, academic shills, university centers, political-training programs, fundraising clearinghouses, publications, lobbyists, and various other units that create and disseminate their right-wing agenda. Here’s an excerpt:

It’s not paranoia if they really are out to get you—and they are! “They” are the corporate powers that collect our consumer dollars and then, as hush-hush as possible, use that money to finance their interlocked array of right-wing foundations, think tanks, “scholars,” media sparklies, political personalities, and other fronts. What the Kochs and their ilk are out to get is nothing less than America’s commitment to the Common Good, colluding to kill such egalitarian proposals as Medicare for all, green-energy jobs, workplace democracy, decentralization of capital, and clean elections.

That’s how the consent of hegemony works: by funding “their” intellectuals and be creating an ideology according to which our interests are equated with “theirs”. And that’s why the hard work of unmasking the existing hegemony and of creating an alternative hegemony is so important.

Nuns versus bishops

The U.S. Conference of Catholic Bishops, under increasing right-wing influence, has decided to oppose the health care reform bill. Fortunately, other Catholic leaders—most of them women in religious orders—have picked up the flag of social justice discarded by the bishops’ conference.

E. J. Dionne reports that

a group representing 59,000 Catholic nuns plus more than 50 heads of religious congregations issued a strong statement urging “a life-affirming ‘yes’ vote” in support of the Senate bill. “While it is an imperfect measure, it is a crucial next step in realizing health care for all,” the statement said, adding that the bill’s support for pregnant women represented “the real pro-life stance.”

Sister Carol Keehan, president of the Catholic Health Association, loyally refuses to criticize the bishops but argues that their interpretation of the abortion language is simply wrong. She, too, released a forceful statement in support of the Senate bill.

And while U.S. Catholic bishops are raising their voices in opposition to expanding access to health care, Irish bishops have been trying to cover up the hush money they paid to victims of sexual abuse (and the scandal is spreading to the churches of Switzerland, Austria, and Brazil).

FOLLOW-UP

From Saturday’s NY Times, here’s a gem from Bart Simpson Stupak:

“With all due respect to the nuns, when I deal or am working on right-to-life issues, we don’t call the nuns,” he said on the MSNBC program “Hardball.”

But the nuns hit back:

“When I read the Gospel, where is Jesus? He’s healing the lepers,” Sister Simone said. “It’s because of his Gospel mandate to do likewise that we stand up for health care reform.

“We have a number of nuns in his district, and they’ve been calling him,” said Sister Regina McKillip, a Dominican nun who lives in Washington. “Who’s been on the ground, in the field? Who knows the struggles people have to deal with? It’s the sisters.”

Genres of economists

In the world of the mainstream, there are only two genres of economists: first-best and second-best. That’s how Dani Rodrik sees things (in a 2007 blog posting that is circulating again).

Here’s his explanation:

You can tell what kind of an economist someone is by the nature of the response s/he offers when confronted with a policy issue. The gut instinct of the members of the first group is to apply a simple supply-demand framework to the question at hand. In this world, every tax has an economic deadweight loss, every restriction on individual behavior reduces the size of the economic pie, distribution and efficiency can be neatly separated, market failures are presumed non-existent unless proved otherwise (and to be addressed only by the appropriate Pigovian tax or subsidy), people are rational and forward-looking to the first order of approximation, demand curves always slope down (and supply curves up), and general-equilibrium interactions do not overturn partial-equilibrium logic.  The First Fundamental Theorem of Welfare Economics is proof that unfettered markets work best.  No matter how technical, complex, and full of surprises these economists’ own research might be, their take on the issues of the day are driven by a straightforward, almost knee-jerk logic.

Those in the second group are inclined to see all kinds of complications, which make the textbook answers inappropriate. In their world, the economy is full of market imperfections (going well beyond environmental spillovers), distribution and efficiency cannot be neatly separated, people do not always behave rationally and they over-discount the future, some otherwise undesirable policy interventions can generate positive outcomes, and general-equilibrium complications render partial-equilibrium reasoning suspect. The First Fundamental Theorem of Welfare Economics is proof, in view of its long list of prerequisites, that market outcome can be improved by well-designed interventions. Since they have given up on the textbook model, members of this group have an almost-infinite variety of “models” to choose from as they think of public-policy issues.

The problem is, many economists don’t fit into either group. We see class, power, history, culture, contingency, discourse, and many other phenomena that don’t fit into the logic of either supply and demand or of market imperfections. Which is often why our approaches get defined out of economics—out of the standard curriculum, out of the leading journals, and out of the research funding.

The idea of two—and only two—genres of economists is precisely what serves to enforce the disciplinarity of economics (and, of course, to punish those who have the temerity of not obeying the disciplinary rules).

The center cannot hold

Each spring in New York City, the Left Forum gathers intellectuals and activists from around the world to address the burning issues of our times. The theme for 2010 is “The Center Cannot Hold: Rekindling the Radical Imagination.”

Here is the theme of the conference:

The ongoing capitalist crisis generated high hopes that the parties and social movements of the Left, both in the U.S. and elsewhere in the world, would be re-energized. So far this has not happened. The Left remains fractured and confused, drifting away from its labor base, while the Right seems to have emerged as the stronger or at least the more strident force. The result is that unemployment remains high, wages low, and insecurity grows. In the U.S., the Obama administration negotiates from the center, and concedes more and more to business interests and political conservatives. Can this be turned around? Can the hardships and opportunities generated by the capitalist crisis yet become the trigger for the revival of a transformative Left?

The conference will be held this weekend, 19-21 March, at Pace University. The schedule includes an opening plenary with Jesse Jackson and a closing address by Noam Chomsky. The remainder of the schedule can be found here.

I will be participating in 2 sessions (both on Saturday):

• Cooperatives, Class, and Value Theory
• Envisioning Real Utopias

Economists and inequality

Mainstream economists just can’t help themselves. Or so it seems. The more glaring is the evidence that the distribution of income has become increasingly unequal, the more they try to find ways of showing things are really not as bad as we think.

That’s what Richard V. Burkhauser and Kosali I. Simon try to do in their latest NBER paper:

A substantial part of the inequality literature in the United States has focused on yearly levels and trends in income and its distribution over time. Recent findings in that literature show that median income appears to be stagnating with income growth primarily coming at higher income levels. But the value of health insurance is an important and growing source of economic well being for American households that is missed by focusing solely on income. In this paper we take estimates of the value of different types of health insurance received by households and add them to usual pre tax post transfer measures of income from the Current Population Survey’s March Annual Demographic Supplement for income years 1995-2008 to investigate their impact on levels and trends in measured inequality. We show that ignoring the value of health insurance coverage will substantially understate the level of economic well being of Americans and its upward trend and overstate the level of inequality and its upward trend. As an application of our fuller measure of income, we consider how two provisions of current health reform proposals to expand health insurance affect the level and distribution of economic well being.

There’s only one problem: as the Economist notes, insurance coverage is highly correlated with income.

That is, according to the Census, about 8% of households with greater than $75,000 in annual income lack insurance. About 15% of households with between $50,000 and $75,000 in income lack insurance. And nearly a quarter of households with incomes below $50,000 do not have insurance coverage. So if failure to consider health insurance coverage is leading to understatements of wage growth, it would seem to be happening more for households with higher levels of income. Which obviously complicates the argument that inequality isn’t as bad as it looks once insurance is taken into account.

Oops! Well, I’m sure Burkhauser, Simon, and their mainstream colleagues will work hard to find other ways of “proving” current levels of inequality just aren’t that bad.

World’s richest

The new Forbes list of the world’s richest people is out. Here’s the top 10:

Rank	Name	Citizenship	Age	Net Worth ($bil)	Residence
1	Carlos Slim Helú & family	Mexico	70	53.5	Mexico
2	William Gates III	United States	54	53.0	United States
3	Warren Buffett	United States	79	47.0	United States
4	Mukesh Ambani	India	52	29.0	India
5	Lakshmi Mittal	India	59	28.7	United Kingdom
6	Lawrence Ellison	United States	65	28.0	United States
7	Bernard Arnault	France	61	27.5	France
8	Eike Batista	Brazil	53	27.0	Brazil
9	Amancio Ortega	Spain	74	25.0	Spain
10	Karl Albrecht	Germany	90	23.5	Germany

Not many changes from last year: Helú jumped to the top spot (his fortunes are up $18.5 billion for the past 12 months) while Gates dropped to second (even though his wealth is up $13 billion from a year ago). As it turns out, the fortunes of most of the world’s billionaires soared during the past year. So much for the crises of capitalism!

According to Forbes,

This year the World’s Billionaires have an average net worth of $3.5 billion, up $500 million in 12 months. The world has 1,011 10-figure titans, up from 793 a year ago but still shy of the record 1,125 in 2008. Of those billionaires on last year’s list, only 12% saw their fortunes decline.

U.S. billionaires still dominate the ranks—but their grip is slipping. Americans account for 40% of the world’s billionaires, down from 45% a year ago.

The U.S. commands 38% of the collective $3.6 trillion net worth of the world’s richest, down from 44% a year ago.

Of the 97 new members of the list, only 16% are from the U.S. By contrast, Asia made big gains. The region added 104 moguls and now has just 14 fewer than Europe, thanks to several large public offerings and swelling stock markets.

Meanwhile, according to the World Bank, at least 80 percent of the world’s people live on less than $10 a day. Was there ever a more telling indictment of capitalism?

Corporations are people, too

Following on the recent Supreme Court decision striking down limits on corporate free speech, Murray Hill Incorporated is taking the next step: running for Congress (in Virginia’s 10th District).

Until now, corporate interests had to rely on campaign contributions and influence-peddling to achieve their goals in Washington. But thanks to an enlightened Supreme Court, now we can eliminate the middle-man and run for office ourselves.

The corporate candidate already has its own Web site, a Facebook page with 2,600 fans and an online ad on YouTube that has drawn more than 172,000 hits.

Capitalist accounting

Apparently, Lehman Brothers played fast and loose with accounting conventions, its own version of Three Card Monty. According to the report compiled by bank examiner Anton R. Valukas (as presented by the NY Times), Lehman used “materially misleading” accounting gimmicks to mask the perilous state of its finances.

According to the report, Lehman used what amounted to financial engineering to temporarily shuffle $50 billion of troubled assets off its books in the months before its collapse in September 2008 to conceal its dependence on leverage, or borrowed money. Senior Lehman executives, as well as the bank’s accountants at Ernst & Young, were aware of the moves, according to Mr. Valukas, the chairman of the law firm Jenner & Block and a former federal prosecutor, who filed the report in connection with Lehman’s bankruptcy case.

This is a real problem for capitalism—because, on one hand, it relies on an accepted set of accounting standards (so that calculation can take place across the economic space) but, on the other hand, it has cultivated a kind of “financial engineering” designed to move toward (and in many cases beyond) the limits imposed by existing accounting practices. Each enterprise pushes the limits while capitalism, as a system, needs some well-defined limits. Otherwise, one large firm, like Lehman Brothers, can threaten to bring the entire system down.

But that’s accounting as the capitalists see it (always, of course, a bit too late). The larger issue is what role accounting discourses and practices—what Peter Miller once called “the vast machine of economic calculation that is accounting”—play in representing (and, of course, misrepresenting) capitalist reality. The “critical accounting” literature that first appeared in the 1980s (and can now be found in such journals as Accounting, Organizations, and Society and Critical Perspectives On Accounting) borrowed from Foucault, Marx, and others to critically interrogate accounting’s role in creating the conditions to calculate, administer, and discipline within and across the capitalist commodity space (a good introduction is Accounting as Social and Institutional Practice, ed. Anthony G. Hopwood and  Miller).

That’s the work that needs to be done: to examine the nature and role of accounting practices, not only when the standards are contravened by the likes of Lehman (or Enron or thousands of other enterprises) but when they are working normally. Because, as Marx recognized (in the first chapter of volume 1 of Capital), accounting goes back at least to Robinson Crusoe:

This our friend Robinson soon learns by experience, and having rescued a watch, ledger, and pen and ink from the wreck, commences, like a true-born Briton, to keep a set of books. His stock-book contains a list of the objects of utility that belong to him, of the operations necessary for their production; and lastly, of the labour time that definite quantities of those objects have, on an average, cost him. All the relations between Robinson and the objects that form this wealth of his own creation, are here so simple and clear as to be intelligible without exertion, even to Mr. Sedley Taylor.

Public art of the day

[ht: stickerthing]