Myth of the market

There are two ways of responding to the myth of the neoclassical market.

One is to argue that there is no such thing as “the market.” There are only different markets—in the plural. There are capitalist markets and slave markets and communist markets and so on. And, of course, there is no guarantee either that a particular market will come into existence when it is called for or that a market, once it exists, will continue to exist over time. In other words, markets are not self-organizing or self-regulating activities; they are always being broken up and need to be created anew. They are, in this sense, socially constructed institutions.*

The other is to argue that references to the market implicate the entire economic system, and leave the entire system open to criticism. As Richard Wolff explains in his interview with Bill Moyers,

BILL MOYERS: When you say that there’s no economic argument that people should be kept at the– should not share in the gains of economic growth, the response is, “Well, that’s what the market bears.”

RICHARD WOLFF: Well, you know, in the history of economics, which is my profession, it’s a standard play on words. Instead of talking about how the economy is shaped by the actions of consumers in one way, workers in another way, corporate executives in another way, we abstract from all of that and we create a myth or a mystique. It’s called the market.

That way you’re absolving everybody from responsibility. It isn’t that you’re doing this, making that decision in this way, it’s rather this thing called the market that makes things happen. Well, every corporate executive I know, knows that half of his or her job is to tweak, manipulate, shift, and change the market.

No corporate executive takes the market as given. That may happen in the classroom, but not in the world of real business. That’s what advertising is. You try to create the demand, if there isn’t enough of it to make money without doing that. You change everything you can. So the reference to a market, I think, is an evasion.

It’s an attempt to make abstract the real workings of the economy so nobody can question what this one or that one is doing. But let me take it another way. To say that it’s the market is another way of saying, “It’s our economic system that works that way.” That is a very dangerous defense move to take.

BILL MOYERS: Why?

RICHARD WOLFF: Because it plays into the hands of those like me who are critical of the system. If indeed it isn’t this one or that one, it isn’t this company’s strategy or that product’s maneuver, but it is the market, the totality of the system, that is producing unconscionable results, multi-million-dollar apartments next door to abject poverty, then you’re saying that the system is at fault for these results.

I agree with that. But I’m not sure that those who push this notion of “the market makes it happen,” have thought through where the logic of that defense makes them very vulnerable to a much more profound critique than they will be comfortable with.

 

*This is an argument Jack Amariglio and I make in chapter 6 of Postmodern Moments in Modern Economics.

Krugman is no communist

Back in 2008, I responded to accusations that Obama is a socialist.

Permit me a similar response now to CNBC host Joe Kernen’s accusation that Paul Krugman is a communist. Paraphrasing one of the most memorable lines from an earlier presidential campaign, “I have served with communists; I know communists; communists are friends of mine. Paul Krugman is no communist.”*

Nor is the bailout of Wall Street by the Bush and Obama administrations. Communism is not about more government regulation and spending, and thus attempting to save capitalism from the capitalists, but expanding the possibilities of a different, more just economy and society. It means creating the conditions—political, cultural, and economic—in which the workers who produce the surplus that makes society possible determine how much surplus there will be and what to do with it. That’s the aim of communism, to make the kinds of changes in the existing economy and society that move us in the direction of economic and social justice, that create more democratic ways of producing and distributing the goods and services we need to live on.

To call Paul Krugman (or, for that matter, Dean Baker) a communist is the worst kind of red-baiting reminiscent of McCarthyism and J. Edgar Hoover’s FBI. It’s the sign of a desperate political and economic campaign, which refuses to recognize that the United States now suffers from the worst levels of economic and social inequality since the Gilded Age. There is no communism in the economic theories of Krugman or in the plans and campaign promises of the Obama-Biden ticket. Communists welcome the calls for looser monetary policy and more stimulus spending proposed by Krugman and the promises to put people back to work of the Obama campaign, because they are much better than the policies of both right-wing neoclassical economists and the Romney-Ryan campaign, but they’re not enough. Communists don’t want just to fix the current economic and social system; they want to work with others to challenge the injustices of capitalism and create a fundamentally different economic and social system.

*For younger readers, here’s the reference.

 

After virtue, communism

Apparently (according to John Cornwell), Alasdair MacIntyre is now preaching communism as the antidote to global financial capitalism. That’s because a system based on trading money and creating debt does not encourage virtues and cannot be made ethical.

When it comes to the money-men, MacIntyre applies his metaphysical approach with unrelenting rigour. There are skills, he argues, like being a good burglar, that are inimical to the virtues. Those engaged in finance—particularly money trading—are, in MacIntyre’s view, like good burglars. Teaching ethics to traders is as pointless as reading Aristotle to your dog. The better the trader, the more morally despicable. . .

This rift between economics and ethics, says MacIntyre, stems from the failure of our culture “to think coherently about money.” Instead, we should think like Aristotle and Aquinas, who saw the value of money “to be no more, no less than the value of the goods which can be exchanged, so there’s no reason for anyone to want money other than for the goods they buy.” Money affords more choices and choice is good. But when they are imposed by others whose interest is in getting us to spend, then money becomes the sole measure of human flourishing. “Goods are to be made and supplied, insofar as they can be turned into money… ultimately, money becomes the measure of all things, including itself.” Money can now be made “from the exchange of money for money… and trading in derivatives and in derivatives of derivatives.” And so those who work in the financial sector have become dislocated from the uses of money in everyday life. One symptom of this, MacIntyre contends, is gross inequality. In 2009, for instance, the chief executives of Britain’s 100 largest companies earned on average 81 times more than the average pay of a full-time worker. . .

MacIntyre argues that those committed to the Aristotelian-Thomistic tradition of the common good must begin again. This involves “capturing the double aspect of the globalising economy and its financial sector, so that we understand it both as an engine of growth and as such a source of benefits, but equally as a perpetrator of great harms and continuing injustices.” Apologists for globalisation, he argues, treat it as a source of benefits, and only accidentally and incidentally a source of harms. Hence, the view that “to be for or against globalisation is in some ways like being for or against the weather.”

MacIntyre maintains, however, that the system must be understood in terms of its vices—in particular debt. The owners and managers of capital always want to keep wages and other costs as low as possible. “But, insofar as they succeed, they create a recurrent problem for themselves. For workers are also consumers and capitalism requires consumers with the purchasing power to buy its products. So there is tension between the need to keep wages low and the need to keep consumption high.” Capitalism has solved this dilemma, MacIntyre says, by bringing future consumption into the present by dramatic extensions of credit.

This expansion of credit, he goes on, has been accompanied by a distribution of risk that exposed to ruin millions of people who were unaware of their exposure. So when capitalism once again overextended itself, massive credit was transformed into even more massive debt, “into loss of jobs and loss of wages, into bankruptcies of firms and foreclosures of homes, into one sort of ruin for Ireland, another for Iceland, and a third for California and Illinois.” Not only does capitalism impose the costs of growth or lack of it on those least able to bear them, but much of that debt is unjust. And the “engineers of this debt,” who had already benefited disproportionately, “have been allowed to exempt themselves from the consequences of their delinquent actions.” The imposition of unjust debt is a symptom of the “moral condition of the economic system of advanced modernity, and is in its most basic forms an expression of the vices of intemperateness, and injustice, and imprudence.”

And what is MacIntyre’s solution? Virtuous risk-taking, such as

the 18th-century Guaraní Indians (depicted in the film The Mission) who chose a collectivised future under “proto-Leninist” Jesuits rather than slavery; the early founders of the kibbutzim at odds with competing visions of collectivisation; the Kerala leaders of the Marxist Communist party of India in 1957, who placated landowners and government while helping the poor; and the small farmers of Donegal in the 1960s who chose to establish a co-operative that sustained their Gaelic-speaking community rather than emigrate.

Thus, in MacIntyre’s view, a critique of the ethics of global capitalist finance leads to communism.

A Communist Christmas

[ht: ac]

Socialism or communism

According to Slavoj Zizek, “Capitalism as we knew it cannot survive. . .it can get worse.”

Reuters has a short video of Zizek speaking on the crises of capitalism and the choice between socialism (an “organic, corporate order”) and communism (a “radical, egalitarian, emancipatory way”).

Red-baiting

Clearly, two decades after the end of the Cold War, red-baiting has not disappeared.

Not in the United States, with claims of socialist healthcare reform and the Republican National Committee’s campaign to devise a set of “core principles” in opposition to Obama’s “socialist agenda.”

And not in Great Britain, with the Economist’s attempt to besmirch the reputation of Catherine Ashton, the EU’s new foreign minister, for her membership in—of all things—the Campaign for a Nuclear Disarmament.

 

To each. . ., from each. . .

So, now we have a growing discussion of the Critique of the Gotha Programme, focused on Marx’s famous definition of communist justice, “From each according to his ability, to each according to his needs.” Robert Waldman, Brad Delong, and James Wimberley have chimed in.

For Waldman, the phrase is a nasty inside joke, a critique of the Lassallean program as an impossible Christian fantasy. DeLong, for his part, adheres to the traditional interpretation, that it refers to a distant “higher phase of communism society.” While Wimberley views it as referring to a “fundamentally self-contradictory” way of conceiving of an optimal allocation of consumer goods and a criterion of efficient production.

I must admit, I am pleasantly surprised (as I have written in previous posts) to see various aspects of Marx’s writings and Marxian theory being discussed and debated these days. Ah, the contradictions of capitalism! But it is also the case that few of these people—certainly not Waldman, DeLong, or Wimberley—ever refer to the wealth of scholarship on these questions.

They certainly haven’t read George DeMartino’s excellent article, “Realizing Class Justice,” published in the January 2003 issue of Rethinking Marxism (vol. 15, no. 1, pp. 1-31).

According to DeMartino, the famous maxim refers to 2 moments of class justice: productive class justice (“fairness in the allocation of the work of
producing the social surplus”) and distributive justice (“fairness in the
processes by which the social surplus is divided among society’s members
(and, perhaps, other people) for their personal use, and in the ultimate
distributive patterns that emerge from these processes”). Together with appropriative class justice (“fairness in the processes by which some
individuals and/or groups in society receive the social surplus produced by
themselves or by others”), they form the Marxian notion of class justice.

Finally, DeMartino argues that “class justice is a legitimate and compelling standard for evaluating policy regimes”—in the here and now, not in some distant future or fantasy.

Cultivating a desire for class justice, then, might be a bit simpler than it appeared a moment ago. It might require making visible what is largely suppressed in hegemonic discourses that refuse the legitimacy of class—and even in Marxian discourses that ignore the prevalence of class diversity in contemporary society—so that people can recognize that they already experience class justice. Not in all their workplaces (though there are many exceptions), perhaps, but in virtually all their civic organizations and churches and families and neighborhoods. And it may require demonstrating that class justice can be affirming, empowering, compassionate, nurturing and indeed enjoyable when compared to the class injustice that obtains in other aspects of their lives. Such a demonstration might go some way toward restoring the normative force of Marxian theory while strengthening local
and global movements for economic justice.