The problem of inequality

Timothy Noah has one story about inequality. Mine, I think, is a bit different.

According to Noah’s story, while conservatives mostly deny the existence of inequality, liberals tend to focus on the gap between the 1 percent and everyone else and forget about the skills-based gap between those with a college education and those without.

I wonder what people he’s talking about. At least in the discipline of economics, while he’s mostly correct about conservatives (who spend a good bit of their time, when they address the issue of inequality at all, denying it’s a problem), liberal economists are the ones who have focused on the different rewards to different levels of education (which can then be solved by improving schools and encouraging higher levels of education). What conservative and liberal economists share is the idea that, in a market system, everyone gets what they deserve (at least when markets clear and there’s full employment).

As I see it, the idea that we needed to worry about the widening gap between the 99 percent and those at the very top actually came from outside the terms of that conservative-liberal debate—in the empirical work of Thomas Piketty and Emmanuel Saez and in the critique of current economic arrangements posed by the Occupy Wall Street movement. It has represented a challenge to both conservatives (based on the idea that inequality is a real problem) and liberals (since the 1 percent-99 percent gap simply can’t be accounted for by skill-based technical change).

Moreover, focusing on the top 1 percent (and, within that, the top .1 percent and top .01 percent) of the nation’s income distribution raises, in turn, the issue of class, which neither conservative nor liberal economists ever want to discuss.

Nor, as it turns out, does Noah. Until the end, when he finally mentions the divergence between the share of income going to capital (which has been rising) and that going to labor (which has been falling). But focusing on factor shares actually takes us away from skill-based inequality, even when connected to the demise of the union movement, and toward something more fundamental: the growing gap between the vast majority who produce the nation’s wealth and the tiny minority at the top who are able to appropriate a larger and larger share of that wealth.

And solving that problem means going beyond the terms of the conservative-liberal discussion of the problem of inequality and putting class itself on the table.

I guess, in the end, that’s where my story about the problem of inequality differs from the one Noah wants to tell.

“All I know is that I am not a Marxist”

Daniel Little wants to have it both ways: on one hand, he wants to argue that the work of Karl Marx, after being buried for the umpteenth time, is relevant once again; on the other hand, his interpretation of Marx’s theoretical framework is so deterministic it’s a wonder Marx is relevant at all.

If this is Marxist theory, “All I know is that I am not a Marxist.”*

I don’t have the time to go through Little’s interpretation in detail. So, let me choose just his first point: materialism.

Social change is driven by material circumstances, the forces and relations of production. This encompasses the property system and the ensemble of technologies present in a given level of society. Materialism denies that ideas and thought drive social change; so religion, patriotism, nationalism, and ideologies of patriarchy are epiphenomena rather than originating causes.

Here, Little defines materialism as a kind of economic determinism, specifically property ownership and technology. And adds that, in his version of Marxian materialism, ideas and thought play no role.

That certainly is not my interpretation of materialism, which emphasizes historical and social explanation: the idea both that social phenomena emerge historically (and therefore change and develop over time, in a complex and contradictory fashion) and that each and every social event is the conjunctural result of all aspects of society (cultural as well as economic and political). Materialism is therefore counterposed to idealism, which means that social explanation cannot be reduced to an ideal or rational order (such as you get by focusing on the causal primacy of any one order of society like the economy).

In my view, it comes down to a distinction between discursive and causal priority. Marx focuses on the economy—and, within the economy, on class (which, to make a further distinction, is not the same as property)—not as a claim that the economy is the cause of everything else, but instead as a discursive entry point, a way of focusing attention and making a particularly Marxian sense of what is happening in society.

So, there’s a determinist Marx and a nondeterminist Marx, two very different interpretations of Marx’s writings. And Little and I clearly disagree in our interpretations. But that raises a second issue: anyone who puts forward a particular understanding of Marx also has to explain that there’s a large scholarly debate concerning Marx’s method, including a debate between more or less deterministic versions of Marx. Unfortunately, we don’t get any sense of that debate from Little’s list of “key theoretical frameworks.”

All of which leads me to say, if Marxism is reduced without debate to economic determinism, I am not a Marxist.

 

*According to Friedrich Engels, “Just as Marx used to say, commenting on the French “Marxists” of the late [18]70s: ‘All I know is that I am not a Marxist’.”

How’s that austerity stuff workin’ out for ya?

Not so well, eh?

Not when, as Eurostat [pdf] announced earlier today, Gross Domestic Product fell by 0.2 percent in the euro area (EA17) and by 0.1 percent in the larger EU27 during the first quarter of 2013. Even the United States, four years into the “recovery,” grew by a paltry 0.6 percent compared with the previous quarter (and, when compared with the same quarter of the previous year, GDP rose by only 1.8 percent).

Not when, as Paul Krugman explains, the two major studies invoked by economists and politicians to justify austerity measures have been thoroughly discredited.

So, the question remains, why do many members of the elite in both the United States and in Western Europe continue to impose the Draconian measures that, together, represent economic austerity?

While the “psychology answer”—that deficits represent some kind of moral question—might work in terms of selling austerity (it certainly works on my students), it doesn’t explain why those at the top continue to believe in the need for austerity.* What we need, instead, is a class analysis of the different ways capitalism is configured and reconfigured according to both neoclassical austerity and Keynesian stimulus policies.

To his credit, Krugman does take some initial steps in that direction for the specific case of austerity:

As many observers have noted, the turn away from fiscal and monetary stimulus can be interpreted, if you like, as giving creditors priority over workers. Inflation and low interest rates are bad for creditors even if they promote job creation; slashing government deficits in the face of mass unemployment may deepen a depression, but it increases the certainty of bondholders that they’ll be repaid in full. I don’t think someone like Trichet was consciously, cynically serving class interests at the expense of overall welfare; but it certainly didn’t hurt that his sense of economic morality dovetailed so perfectly with the priorities of creditors.

But that’s just the beginning. We need to do much more in terms of analyzing the class effects of the policies on both sides of the mainstream debate.

And, of course, of what a class alternative looks like—since we know that that austerity stuff is certainly not working out for most of us.

 

*I also don’t buy the idea that the opposite of austerity, Keynesian stimulus, is any less a morality play. The idea that “your spending is my income,” and thus we’re all in this together, is no more technical an idea than cutting deficits as a path to economic growth. Both ideas represent a combination of technique and morality, of how “technical malfunctions” emerge and can be solved and what society can and should look like.

Class struggles

It should come as no surprise that, as reported in the Chronicle of Higher Education [paywall], students on college campuses are struggling over the issue of class.

The situation is particularly difficult for first-generation college students (as I was back in the day), who are cast as subjects of “socioeconomic diversity” within institutions of higher education that are increasingly targeting the sons and daughters of the wealthy in order to increase revenues and move up in the rankings.

The class problem in relation to higher education, of course, is an old one, as Thorstein Veblen discussed in the Theory of the Leisure Class:

Ritualistic survivals and reversions come out in fullest vigor and with the freest air of spontaneity among those seminaries of learning which have to do primarily with the education of the priestly and leisure classes. Accordingly it should appear, and it does pretty plainly appear, on a survey of recent developments in college and university life, that wherever schools founded for the instruction of the lower classes in the immediately useful branches of knowledge grow into institutions of the higher learning, the growth of ritualistic ceremonial and paraphernalia and of elaborate scholastic “functions” goes hand in hand with the transition of the schools in question from the field of homely practicality into the higher, classical sphere. The initial purpose of these schools, and the work with which they have chiefly had to do at the earlier of these two stages of their evolution, has been that of fitting the young of the industrious classes for work. On the higher, classical plane of learning to which they commonly tend, their dominant aim becomes the preparation of the youth of the priestly and the leisure classes—or of an incipient leisure class—for the consumption of goods, material and immaterial, according to a conventionally accepted, reputable scope and method. This happy issue has commonly been the fate of schools founded by “friends of the people” for the aid of struggling young men, and where this transition is made in good form there is commonly, if not invariably, a coincident change to a more ritualistic life in the schools.

And, of course, it’s become much sharper in recent years, with growing inequality in the wider society and soaring debt for those students who are trying to follow the American Dream.

While I’m certainly not against the “dialogues” featured in the Chronicle article, what students in fact need is a clear and rigorous discussion of how class works—in the economy and in the wider society. They need academic courses—in economics and sociology but also in literature and the sciences—that explicitly treat the issue of class, which given students the concepts and methods to understand how class works and how it shapes their lives, before, during, and after their studies.

Otherwise, all we’re doing is participating in the “growth of ritualistic ceremonial and paraphernalia and of elaborate scholastic ‘functions’” and watching students struggle, outside the classroom, with the issue of class.

How’s that Marx-is-mostly-wrong stuff workin’ out for ya?

Yesterday, Brad DeLong confidently posted the text of his 2009 talk on where he thinks Marx went wrong. But, four years hence, even Matt Yglesias—who confidently claims his own identity as “not a Marxist”—has to admit DeLong’s claims look a lot weaker.

In particular, DeLong says that Marx the political activist was too pessimistic about the idea that the ruling class would agree to make economic growth pareto optimal within the context of a market economy:

[T]hat even though the ruling class could appease the working class by using the state to redistribute and share the fruits of economic growth it would never do so. They would be trapped by their own ideological legitimations–they really do believe that it is in some sense “unjust” for a factor of production to earn more than its marginal product. Hence social democracy would inevitably collapse before an ideologically-based right-wing assault, income inequality would rise, and the system would collapse or be overthrown. The Wall Street Journal editorial page works day and night 365 days a year to make Marx’s prediction come true. But I think this, too, is wrong.

To me that unquestionably looked wrong as of 2009. But in the interim, those Wall Street Journal editorial page tendencies have grown much stronger. You see a rising tide of Rand-inflected moralism about market outcomes and a reduced emphasis on Friedman-style pragmatism. You also see a sharply reduced emphasis on belief in any kind of macroeconomic stabilization policy, in favor of a “let them eat cake slash move to North Dakota” moralism about unemployment. Last but by no means least, it really has become the conventional wisdom among American elites that the appropriate policy response to fiscal imbalance in a time of high and rising income inequality is to restore balance by reducing the scope and generosity of social insurance programs.

In the end, I guess you just can’t trust those capitalists to prove Marx wrong.

After neoliberalism?

The founding editors of the British journal Soundings—Stuart Hall, Doreen Massey and Michael Rustin—have published an online manifesto in which they argue for disrupting the current neoliberal common sense and challenging the assumptions that organize our twenty-first-century political discourse.

Three ideas are, in my view, particularly important. First, “mainstream political debate simply does not recognise the depth of this crisis, nor the consequent need for radical rethinking.” That indictment is accurate not only for the current political debate but also for mainstream political and economic thought, both liberal and conservative—although there are plenty of intellectuals who are willing to take the “pay to play” in the sandbox of neoliberalism.

Second, neoliberalism has never succeeded in conquering everything. It is, instead, a project, an attempt—not always or everywhere successful—to colonize the world.

It operated within, and created, a world of great diversity and unevenness. Its early – classic – laboratory was Chile, but the rise of South East Asian tigers was, critically, a state-aided development (by no means the official neoliberal recipe). And in spite of the Western triumphalism of 1989, Russia also retains its specificities – a hybrid of oligarchic and state capitalism combined with authoritarianism. China, too, struggles to define a different model; it currently combines centralised party control with openness to foreign investment, and acute internal geographical dislocations and widespread social conflict with break-neck rates of growth and the lifting of hundreds of millions out of poverty. Indeed, conflict has erupted in many parts of the world where the neoliberal orthodoxy has been adopted. India, so frequently lauded for its embrace of the market consensus, exhibits both extraordinary rifts between the new elites and the impoverished, and multiple and persistent conflicts over its current economic strategy. Other major sites of conflict have been the water and gas wars in Bolivia, and the struggle of ‘the poors’ in Thailand. The emerging articulations of progressive governments and grassroots social movements in Latin America are, in varying ways and in varying degrees, responses to the impact of previous neoliberal policies. The alter-globalisation movement has been vocal. This has not been a simple victory.

Third, the shift in economic and social power since the 1970s has not been driven by a simple logic or single motor.

The economic is critical; but it cannot determine everything – even ‘in the last instance’, as Althusser famously argued. Any given conjuncture represents, rather, the fusion ‘into a ruptural unity’ of an ensemble of economic, social, political and ideological factors where ‘dissimilar currents … heterogeneous class interests … contrary political and social strivings’ fuse. What has come together in the current neoliberal conjuncture includes class and other social interests, new institutional arrangements, the exercise of excessive influence by private corporations over democratic processes, political developments such as the recruitment of New Labour to the neoliberal consensus, the effects of legitimising ideologies and a quasi-religious belief in the ‘hidden hand’, and the self- propelling virtues of ‘the market’.

So, there we have it: a neoliberal order in crisis that simply cannot be grasped or contained by mainstream political and economic thought, which has only ever involved an incomplete and always-contested attempt to remake the world, and which represents the contradictory fusion of economic and non-economic processes and events.

That’s a very good start. I look forward to reading the next installments of the Kilburn Manifesto.

Cartoon of the day

Special mention

Capitalism and history

I can’t say I was aware I was participating in an intellectual fad, the history of capitalism, when I decided to teach Seth Rockman’s Scraping By: Wage Labor, Slavery, and Survival in Early Baltimore this semester.

I chose Rockman’s book for my Commodities: The Making of Market Society course because I needed a good study of the commodification of labor, as an alternative to Bruce Laurie’s classic Artisans into Workers: Labor in Nineteenth-Century America. There’s always the danger of assigning books we haven’t yet read (alongside the excitement, of course, of exploring new material). However, I’ve been pleasantly surprised by Rockman’s attempt to tell “the story of the chronically impoverished, often unfree, and generally unequal Americans whose work made the United States arguably the most wealthy, free, and egalitarian society in the Western world” (3). I’m curious to see how the students react over the next couple of weeks.

Apparently, Rockman has changed the name of his course from Capitalism, Slavery and the Economy of Early America to simply Capitalism, which next fall will become Brown’s introductory American history survey.

It shouldn’t really surprise us this area has taken off after the crash of 2007-08.

“Earlier, a lot of these topics would’ve been greeted with a yawn,” said Stephen Mihm, an associate professor of history at the University of Georgia and the author of “A Nation of Counterfeiters: Capitalists, Con Men and the Making of the United States.” “But then the crisis hit, and people started asking, ‘Oh my God, what has Wall Street been doing for the last 100 years?’ ”

What’s interesting about Rockman’s and Mihm’s research and teaching and the growth of this entire area of inquiry, not to mention Harvard’s new Program on the Study of U.S. Capitalism, is the fact that they’re located within history and not economics. As I’ve explained before, the mainstream wing of the discipline of economics has mostly eliminated any consideration of economic history (and, with it, of the history of economic thought), and thus has created an intellectual vacuum concerning the history of capitalist development, classes, and institutions. So, historians have stepped in to fill the gap, thereby demonstrating there’s nothing natural or inevitable about the emergence of capitalism.

Markets and financial institutions “were created by people making particular choices at particular historical moments,” said Julia Ott, an assistant professor in the history of capitalism at the New School (the first person, several scholars said, to be hired under such a title).

The real question, of course, is, will this new work contribute to the project of making capitalism history?

“I told you so”

Back in 2008, in the immediate aftermath of the crash, Karl Marx was hot. Then, as the capitalist recovery faltered and there were fears of another crisis in 2011, Marx was hot again. And now, in 2013, years after the official recovery from the crash of 2008 began, Marx’s “biting critique of capitalism” is hot once again.

The latest admission that Marx’s writings have something important to offer in terms of understanding the current trajectory of capitalism comes from Michael Schuman [ht: eo] (for, of all publications, Time!):

the consequence of this widening inequality is just what Marx had predicted: class struggle is back. Workers of the world are growing angrier and demanding their fair share of the global economy. From the floor of the U.S. Congress to the streets of Athens to the assembly lines of southern China, political and economic events are being shaped by escalating tensions between capital and labor to a degree unseen since the communist revolutions of the 20th century. How this struggle plays out will influence the direction of global economic policy, the future of the welfare state, political stability in China, and who governs from Washington to Rome. What would Marx say today? “Some variation of: ‘I told you so,’” says Richard Wolff, a Marxist economist at the New School in New York. “The income gap is producing a level of tension that I have not seen in my lifetime.”

Class act

Class act refers—sarcastically, of course—to Bill Clinton’s decision during the 1992 campaign to execute a condemned Arkansas prisoner to show he wasn’t “weak on crime.” (That’s one of the major reasons he didn’t get my vote that year.)

It also refers—again, sarcastically—to Clinton’s signing of the Defense of Marriage Act in 1996, whose constitutionality is being debated in the Supreme Court today. (My sense is the Supreme Court is going to try to find a way of sidestepping the issue of gay marriage, even as Americans have quickly moved in support of legalizing gay marriage and offering equal rights to gay couples.)

Finally, it refers to Matt Miller’s observation that, while we may have “evolved” on gay rights, the issue of class itself remains mostly taboo.

When every economic and social class shares in the experience of injustice or intolerable wrongs, things change faster. If only poor people were gay, does anyone think our political leaders would have “evolved” at this pace? Likewise, if we had a draft, does anyone think our wars in Iraq and Afghanistan would have proceeded as they did? . . .

As Martin Luther King Jr. learned near the end, securing legal equality turned out to be the easy part. Nobody had to write a check. Equal opportunity and economic justice are entirely different matters, requiring a nation to take even bigger leaps of empathy and imagination.