Cartoon of the day

Special mention

 

Cartoon of the day

Special mention

Public art of the day

The controversial auction of “Slave Labour (Bunting Boy)” [ht: ja], a Banksy mural that disappeared from the wall of a north London shop in mysterious circumstances, was dramatically halted on Saturday just moments before it was due to go under the hammer.

As for the rest of the contemporary art market,

While a few high-profile crimes have brought the most egregious art world misdeeds to light, a whole host of surreptitious or underhand maneuvers – most of which are perfectly legal – remain in shadow. Notoriously unregulated, the American art market has metastasized in recent years, even as the American economy has sputtered.

And for financiers, oligarchs and other “ultra high net worth individuals”, the art world offers a spectacular two-in-one deal. In addition to reliably strong returns on investment at the very top of the market, art offers instant social prestige to people who may have already made their fortunes, sometimes in a manner not in keeping with the art world’s supposed progressive values.

At Art Basel Miami Beach this past December, several dealers publicly lamented the absence of the billionaire hedge fund manager Steven Cohen, once one of their most reliable collectors. Cohen is currently under investigation over allegations related to insider trading. The Justice Department has not pressed charges against Cohen or his firm, SAC Capital Advisors, and Cohen has always maintained that he has acted appropriately. Six employees of SAC have been convicted or pled guilty to insider trading; others have been assisting federal authorities in their investigation. . .

All of this has a direct effect on artists, and on the art they make. “The vast majority of artists are struggling, underpaid, underemployed, and under-recognized,” [artist Andrea] Fraser said. “Like the majority of workers in other fields, they feel like victims of a system over which they have no control.” Her students at UCLA, where she teaches an undergraduate course on the social and economic aspects of art, “find it pretty devastating”.

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.

Why $19.97? or $23,679,531?

Greg Mankiw wants to know why Obama announced a new minimum wage of $9 an hour.

How did they decide that $9 per hour is the right level?  Why not $10 or $12 or $15 or $20?

But, of course, he never asks why the hourly wage (for production and nonsupervisory employees on private nonfarm payrolls) is $19.97.

Why? Because neoclassical economists like Mankiw just presume that $19.97 is the correct, market-determined wage rate—a level of pay that corresponds to given preferences, technology, and resources.

Nor does Mankiw inquire about the income of the average member of the top 0.01 percent, which was $23,679,531 in 2011. That, too, in a neoclassical world is the correct, market-determined amount.

But let’s take Mankiw at his word. Why, indeed, not $10 or $12 or $15 or $20? Because the opposition to ever raising the minimum wage would go even crazier than it has already. And so, even at $9 an hour, minimum-wage workers will still fall below the poverty line.

O Say can you see?

Paul Krugman is right: it’s extraordinary that, in this day and age—in the midst of the Second Great Depression—there are still many economists who invoke something akin to Say’s Law to describe what is going on in the economy.

To those not familiar with the term, the idea, attributed to Jean-Baptiste Say, is that there can never be overproduction or a general glut of commodities—and therefore a crisis of capitalism—because supply creates its own demand. That is, the presumption goes, no one produces except with the intention of either consuming what they produce or purchasing what other people produce. And, as long as free markets are allowed to operate, the result will be full employment.

Anyone who has studied even a bit of Keynesian economics knows such a view makes no sense.

But anyone who has studied even a bit of the history of economic thought knows that Marx criticized Say’s Law long before Keynes wrote the General Theory. It’s right there, in volume 1 of Capital—and, even before that, in Part 2 of Theories of Surplus-Value. In fact, Marx chides David Ricardo for relying on the “childish babble of a Say,” which he considered not “worthy of Ricardo.”

Marx develops his critique of Say’s Law almost at the very beginning, even before introducing capitalist production per se. All he needs is commodity production and the “metamorphosis” of the commodity into money. It’s precisely the introduction of money that, in Marx’s view, both expands and destabilizes exchange, because it is now possible to sell without purchasing (and thus to hold onto the money until the time is right to turn around and make another purchase).

Therefore, the only world in which Say’s Law might hold is nonmonetary or barter exchange: when, in fact, a sale (on the part of one producer) is also necessarily a purchase (by someone else).* Once money is introduced, Say’s Law no longer holds—and the possibility of crises exists.

What this means is that anyone who, today, holds to Say’s Law must be presuming a world of barter, and thus an economy without money. It’s no wonder, then, that neoclassical economics, based on the “childish babble of a Say,” has nothing to offer in terms of either imagining the possibility of economic crises or suggesting policies that might get us out of the current mess.

 

* And even then Say’s Law might not hold, if someone goes to market with the goods they’ve produced and doesn’t find someone who has what they want and wants what they have.

Public art of the day

Vinz, “Market”

The fetishism of the art commodity

Art as a commodity “appears at first sight an extremely obvious, trivial thing. But its analysis brings out that it is a very strange thing, abounding in metaphysical subtleties and theological niceties.”

Like chandelier bidding (when auctioneers begin a sale by pretending to spot bids in the room, although they are often do nothing more than pointing at the light fixtures), not posting prices in art galleries (thereby violating the “truth in pricing” law), and so on.

In this, art markets are not unlike financial markets, in which financial instruments (like private equity investments, hedge fund, collateralized debt obligations, and credit default swaps) are bought and sold as if they were commodities—and with participants exhibiting a similar aversion to any kind of externally imposed rules.

“The art world feels like the private equity market of the ’80s and the hedge funds of the ’90s,” James R. Hedges IV, a New York collector and financier, said. “It’s got practically no oversight or regulation.” . . .

“Is there any reason to believe that regulating the art market will be any more effective than regulating the financial markets has been?” asked Jonathan Brown, a professor at New York University’s Institute of Fine Arts. “Many of the players are identical.”

In both cases, participants act as if they’re buying and selling commodities like any other but they treat them as something special, with their own bespoke rules and elite status.

Dealers said posting prices on valuable works in an open gallery creates security concerns and disrupts an exhibition’s aesthetics by transforming artworks into commodities.

“We consider it tacky to do that,” Richard L. Feigen, a longtime dealer, said.

Others say posting prices would reduce the market’s elitism. Galleries, experts say, often choose to whom they will sell and favor good customers, especially those whose ownership will add luster to an artist’s market standing.

The fact is, neither works of art nor financial instruments are commodities—although they are bought and sold on markets, generally among the same small group of wealthy investors, who engage in conspicuous consumption and use the portions of society’s surplus they’ve captured to create further claims on that surplus.

Until it all comes tumbling down and we’re made to pay the costs.

The fetishism of art as a commodity, like that of financial instruments, arises not from the social relation of producers to the sum total of labor but, rather, from the social relation of a small elite to the sum total of surplus labor produced by others.

Parts for sale

source*

I always enjoy the conversation with my students about what is and is not a commodity. Generally, they don’t have a problem with buying and selling food, clothing, and shelter but they do draw the line at body parts.

As it turns out, the worlds of science, markets, and capitalist austerity have moved far ahead of them.

“Bioartificial” organs are now being produced and sold as replacements for original body parts and earlier machine parts.

 The work of these new body builders is far different from the efforts that produced artificial hearts decades ago. Those devices, which are still used temporarily by some patients awaiting transplants, are sophisticated machines, but in the end they are only that: machines.

Tissue engineers aim to produce something that is more human. They want to make organs with the cells, blood vessels and nerves to become a living, functioning part of the body. Some, like Dr. Macchiarini, want to go even further — to harness the body’s repair mechanisms so that it can remake a damaged organ on its own.

Researchers are making use of advances in knowledge of stem cells, basic cells that can be transformed into types that are specific to tissues like liver or lung. They are learning more about what they call scaffolds, compounds that act like mortar to hold cells in their proper place and that also play a major role in how cells are recruited for tissue repair.

Tissue engineers caution that the work they are doing is experimental and costly, and that the creation of complex organs is still a long way off. But they are increasingly optimistic about the possibilities.

And, of course, there are black markets in “real” body parts, which have been expanding in the austerity-ravaged regions of Europe.

 “When you need to put food on the table, selling a kidney doesn’t seem like much of a sacrifice,” Mr. Mircov said.

Facing grinding poverty, some Europeans are seeking to sell their kidneys, lungs, bone marrow or corneas, experts say. This phenomenon is relatively new in Serbia, a nation that has been battered by war and is grappling with the financial crisis that has swept the Continent. The spread of illegal organ sales into Europe, where they are gaining momentum, has been abetted by the Internet, a global shortage of organs for transplants and, in some cases, unscrupulous traffickers ready to exploit the economic misery.

In Spain, Italy, Greece and Russia, advertisements by people peddling organs — as well as hair, sperm and breast milk — have turned up on the Internet, with asking prices for lungs as high as $250,000. In late May, the Israeli police detained 10 members of an international crime ring suspected of organ trafficking in Europe, European Union law enforcement officials said. The officials said the suspects had targeted impoverished people in Moldova, Kazakhstan, Russia, Ukraine and Belarus.

“Organ trafficking is a growth industry,” said Jonathan Ratel, a European Union special prosecutor who is leading a case against seven people accused of luring poor victims from Turkey and former communist countries to Kosovo to sell their kidneys with false promises of payments of up to $20,000. “Organized criminal groups are preying upon the vulnerable on both sides of the supply chain: people suffering from chronic poverty, and desperate and wealthy patients who will do anything to survive.”

The main supply countries have traditionally been China, India, Brazil and the Philippines. But experts say Europeans are increasingly vulnerable.

I wonder, as they learn about these markets, if my students will continue to draw the line where they do, to the exclusion of body parts—or if they’ll be willing to push the line back in the other direction and rethink their ideas about existing markets in food, clothing, and shelter.

 

*The “info graphic” map, entitled Body Parts: What Are You Worth and designed by Peter Grundy, was nominated at the Information Is Beautiful Awards ceremony at the Institute of Contemporary Arts (ICA)

Market morality

Both Michael Sandel and Deirdre McCloskey treat market morality as a very trivial thing, and easily understood.

For Sandel, market morality is based on the idea that “some of the good things in life are degraded if turned into commodities.” Therefore, “the market” should  be circumscribed and delimited according to community norms and values. McCloskey’s view, per contra, is that “the market” is responsible for tremendous economic growth, and especially for the decline in world poverty. Her version of market morality is to encourage the flourishing of markets, anywhere and everywhere.

The problem is, both market moralists—Sandel and McCloskey—treat markets in an abstract fashion, as “the market.” Neither wants to discuss different kinds of markets: slave markets, capitalist markets, communist markets, and so on. And therefore neither wants to recognize the fact that the different consequences of markets depend, at least in part, on how market commodities are produced.

Once we move beyond the idea of the abstract market—and thus the idea that market morality is a very trivial thing, and easily understood—we can begin to talk about the conditions and consequences of capitalist commodity production. The Sandels of the world would then have to confront the moral consequences of a large part of humanity being forced to have the freedom to sell their ability to work to the tiny minority who appropriate the surplus they produce. And the McCloskeys of the world would have to move beyond their moral defense of the origins of bourgeois virtues to consider the contemporary implications of the buying and selling of “fictitious commodities” such as labor, land, and money.

McCloskey is correct in chiding Sandel for wanting to undo the fundamental “‘unfairness’ of charging for Shakespeare tickets in Central Park.” There certainly is something more important at stake. But McCloskey, for her part, fails to recognize the continued existence of poverty in the midst of plenty—or the fact that those on top, in the name of bourgeois virtue, brought the world economy to the brink of disaster and continue to impose the costs of capitalist recovery on the rest of the population.

No, in contrast to the views of both Sandel and McCloskey, market morality is not a trivial thing, easily understood. To quote that nineteenth-century Moor, “Its analysis shows that it is, in reality, a very queer thing, abounding in metaphysical subtleties and theological niceties.”