Utopia and the critique of political economy

I’m honored to have been invited to deliver the 9th Annual E. L. Wheelwright Memorial Lecture at the University of Sydney in October.

The title of my lecture will be “Utopia and the Critique of Political Economy”:

In my 2016 E. L. Wheelwright Memorial Lecture paper, I want to present for discussion the thesis that Karl Marx and Friedrich Engels had a much more positive assessment and appreciation of “utopian socialism,” especially the work of Robert Owen, than we find in traditional, “scientific” interpretations of Marxism (emanating from both inside and outside the Marxian tradition).

I also intend to connect that debate over utopian socialism to the rich, long history of intentional communities in Australia, beginning with Herrnhut in 1853. Finally, I plan to argue that, while Marxian theory is not a utopianism (unlike, for example, neoclassical economics), it does have what I consider to be a “utopian moment,” which is based on the idea of ruthless criticism.

In my view, it is the twofold critique of political economy—the critique of capitalism and of mainstream economic theory—that needs to be recaptured and rethought, since it is particularly relevant to the debate about the causes and consequences of the crash of 2007-08 and the ongoing crises of capitalism in the world today.

United States, Puerto Rico, and the vulture creditors

Next week, after the Memorial Day recess, the entire House is expected to take up the bill, which last week was approved (by a vote of 29-10) within the House Natural Resources Committee, with support from the White House, to handle the Puerto Rico debt crisis.

The folks at the Wall Street Journal couldn’t be happier.

The bill offers debt relief to Puerto Rico in return for a mechanism to overrule the territory’s feckless current government and impose reform. The legislation explicitly pre-empts conflicting laws and regulations passed by the commonwealth. It also stipulates that legal challenges will be heard in federal rather than commonwealth court.

The key to the reform is a seven-person control board modeled after the board that pulled the District of Columbia out of a debt spiral in the 1990s. The President would select the board from nominations by the House Speaker (two), Senate Majority Leader (two), House Minority Leader (one) and Senate Minority Leader (one). The President has sole discretion to choose the seventh. The appointments must be made by Dec. 1, and the terms last three years, so the GOP majority’s choices will steer the board’s crucial early decisions. . .

After ensuring that financial audits and a fiscal plan have been completed, the board would propose a plan of adjustment that is fair and equitable. The legislation explicitly requires that the plan respect creditor priorities and liens and be “in the best interest of creditors.” So if Democrats later control the board, they couldn’t subordinate general obligation bondholders to pensioners.

As we know, similar programs elsewhere—in Europe (e.g., Greece) and in the United States (e.g., Detroit and Flint)—have proven disastrous, at least for the majority of the population. They have only helped the “vulture creditors,” who have already profited enormously from extending high-interest loans and purchasing tax-privileged bonds. In each case, the possibility of real debt relief was scuttled in favor of repaying the creditors and imposing the kinds of economic and political “reforms” elites both inside and outside have long wanted to implement.

Last August, Joseph Stiglitz and Mark Medish warned that Puerto Rico “can’t pay its debts today, and with short-term debt financing at the high interest rates demanded by creditors, it will be even less able to pay its debts tomorrow.” As for the United States, it needs to

take responsibility for its imperialist past and neocolonial present. Washington owes Puerto Ricans a future based on democratic legitimacy and a financially and socially viable development strategy—a development strategy that is more than a set of tax breaks for profitable U.S. corporations.

The new deal is exactly the opposite of taking that responsibility, since (as Erik Levitz [ht: sm] explains) it means establishing “a pseudo-colonial shadow government tasked with trading debt haircuts for austerity measures.”

It should come as no surprise, then, that Bernie Sanders, in the midst of his own presidential campaign, is strenuously campaigning against the bipartisan Puerto Rico deal.

In my view, we must never give an unelected control board the power to make life and death decisions for the people of Puerto Rico without any meaningful input from them at all. We must not balance Puerto Rico’s budget on the backs of children, senior citizens, the sick and the most vulnerable people in Puerto Rico.

Moreover, this legislation requires that any restructuring of Puerto Rico’s debt must be “in the best interests of creditors,” not in the best interests of the 3.5 million U.S. citizens living in Puerto Rico.

“Not in the best interests of 3.5 million U.S. citizens living in Puerto Rico”—who may soon find themselves in the same position as the citizens of Greece, Detroit, and Flint.

Too big to jail—or even prosecute

The Wall Street banks responsible for the spectacular crash of 2007-08 have mostly been let off the hook.

According to a review conducted by the Wall Street Journal, which examined 156 criminal and civil cases brought by the Justice Department, Securities and Exchange Commission, and Commodity Futures Trading Commission against 10 of the largest Wall Street banks since 2009,

In 81% of those cases, individual employees were neither identified nor charged. A total of 47 bank employees were charged in relation to the cases. One was a boardroom-level executive . .

Most of the bankers who were charged pleaded guilty to criminal counts or agreed to settle a civil case, with those facing civil charges paying a median penalty of $61,000. Of the 11 people who went to trial or a hearing and had a ruling on their case, six were found not liable or had the case dismissed. That left a total of five bank employees at any level against whom the government won a contested case.

The United States still has the highest incarceration rate in the world—but the U.S. prison population doesn’t, and won’t, include the executives of Wall Street banks.

Cartoon of the day

Special mention

 

Home economics

According to a new report from the Pew Research Center, in 2014, for the first time in more than 130 years, adults aged 18 to 34 were more likely to be living in their parents’ home than they were to be living with a spouse or partner in their own household or in any other living arrangement.

Dating back to 1880, the most common living arrangement among young adults has been living with a romantic partner, whether a spouse or a significant other. This type of arrangement peaked around 1960, when 62% of the nation’s 18- to 34-year-olds were living with a spouse or partner in their own household, and only one-in-five were living with their parents.

By 2014, 31.6% of young adults were living with a spouse or partner in their own household, below the share living in the home of their parent(s) (32.1%). Some 14% of young adults were heading up a household in which they lived alone, were a single parent or lived with one or more roommates. The remaining 22% lived in the home of another family member (such as a grandparent, in-law or sibling), a non-relative, or in group quarters (college dormitories fall into this category).

So, what’s going on?

On one hand, a single kind of household arrangement (married or cohabitating in one’s own household), which peaked in 1960, has given way to a variety of arrangements (including living with parents, single parenting, living with family members other than parents, and living on one’s own or with a non-related group). Clearly, for young adults, the Leave-It-to-Beaver household has been displaced by many different alternatives.

Except, of course, many young adults are staying or moving back in with their parents, in traditional households that are presumably being transformed by their presence. And, as the report makes clear, “trends in both employment status and wages have likely contributed to the growing share of young adults who are living in the home of their parent(s), and this is especially true of young men.”

Young men’s wages peaked around 1970 and they’ve been declining ever since—first gradually and then, after 2000, precipitously. And, as their earnings declined, the share of young men living in the home of their parent(s) has risen.*

More recently, the absence of an effective social safety net in the midst of the Second Great Depression has meant that many young workers have been forced to avail themselves of the private safety net of their parents’ households.**

That, of course, is only a short-term solution. Longer term, it means that, as a society, we have to both open up the discourse of the family and create the conditions whereby young adults can imagine and create new, more vibrant forms of householding for themselves.

And not just move back in with their parents.

 

*According to the report, “Economic factors seem to explain less of why young adult women are increasingly likely to live at home. Generally, young women have had growing success in the paid labor market since 1960 and hence might increasingly be expected to be able to afford to live independently of their parents. For women, delayed marriage—which is related, in part, to labor market outcomes for men—may explain more of the increase in their living in the family home.”

**As for the folks at FiveThirtyEight, they can’t seem to decide if it’s the economy or not that explains young adults moving back in with their parents. First, it’s not the economy (but, instead, “long-run shifts in demographics and behavior”); then, it is the economy (“The strong job market of the early 2000s overcame the demographic forces, allowing young singles to afford their own apartments and essentially suppressing the living-with-mom trend until the Great Recession hit.”). So, for the folks who are so confident with their “value-free” numbers (in, e.g., writing story after story bashing Bernie Sanders), which is it?

Zeitgeist representations

Regular readers of this blog know that I take seriously the idea that representations of the economy are regularly produced and disseminated in many different forms and social sites. They are generated, of course, within the discipline of economics as well as by official (degreed) economists in think tanks, financial institutions, the media, and elsewhere. But, I argue, economic representations are also created and circulate outside economics—in a kind of Bakhtinian carnival—in academic departments other than economics (from anthropology to cultural studies) and outside the academy itself (in painting, film, graffiti, music, cartoons, and so on).

Some of these alternative economic representations I’m aware of. But there are many others I’m not. One of them showed up in a recent piece on “Feeling Let Down and Left Behind, With Little Hope for Better,” on the role of an e-cigarette shop in Wilkes County, North Carolina.

Lonnie Ramsay, 45, walked in looking for help. He described a nasty falling-out with his girlfriend and said he just wanted to get home to a nearby city. But he only had $25 to his name. He said he had been making $10 an hour at a factory.

One Friday afternoon someone brought a pair of virtual reality goggles hooked up to a laptop to the shop. Mr. Foster exhaled a cloud that smelled like a Popsicle. He said he had been reading up on the idea, explored in the “Zeitgeist” movie, of a “resource-based economy” — a system in which, he said, “There’s no money and everything is controlled by computers and resources are equally distributed and there’s no ownership or anything like that.”

“The system we have now is going to collapse,” he said. “And technology, the automation process, is going to keep taking over and over.”

That, he said, would free up people to do what they wanted.

Chris Lentz, 36, a worker for a utility company in a pair of mud-caked boots, frowned and asked, “If people were just given everything they ever needed, then what’s the point of going to work?”

And so it went: the thick, sweet haze; the frustrations, diversions and digital toys; and the sense, in this jagged, hyperconnected moment, that everything is possible, or nothing is.

The essay itself is a representation of the economy—of an America riddled with economic anxieties, based on the “Fear that an honest, 40-hour working-class job can no longer pay the bills.”

And then, in the midst of that representation, there’s another: a reference to the Zeitgeist film series, especially (I am guessing by the quotations) the second film, Zeitgeist: Addendum from 2008. It was produced and directed by Peter Joseph, as a sequel to the 2007 film, Zeitgeist: The Movie. (There’s a third installment, Zeitgeist: Moving Forward, which premiered in 2011.)

What I find interesting about the film is less the conspiracy-driven analysis of the monetary system and the Federal Reserve (although there’s a certain validity to the idea that people are forced to have the freedom to sell their ability to work in order to pay off their debt) than the argument that capitalism perpetuates the conditions it claims to address and that it’s possible to imagine a different economy, one that puts environmental friendliness, sustainability, and abundance as fundamental economic and social goals. Zeitgeist offers a particular representation of the economy as it is and how it can be made better, in a manner that runs directly counter to the representations offered by most official economists in the United States.

That and the fact that the film has been viewed on Youtube over half a million times.

Cartoon of the day

Special mention

Cartoon of the day

Special mention

 

Cartoon of the day

Special mention

 

Only in America

 

A week ago, I wrote about the fact that the United States’ top 500 chief executive officers managed to capture 335 times the average worker’s wage last year, taking home $12.4 million on average.

But I didn’t make this calculation for the top 200 CEOS, including Wells Fargo’s chief executive, John G. Stumpf, who was awarded $19.3 million, “making him perfectly representative of the best-paid chief executives in the country”:

According to Bureau of Labor Statistics data compiled by the A.F.L.-C.I.O., the average worker in the United States who doesn’t have management responsibility earns $36,875 a year. . .

A bank teller at Wells Fargo making that average wage would have to work more than half a millennium, until 2539, to earn what that company’s chief executive, Mr. Stumpf, who made the average among chiefs on the Equilar list, earned last year.

That’s right: the average American employee would have to work until 2539 to earn as much as the average of the 200 highest-paid American CEOs did just in one year.