Posts Tagged ‘history’


Special mention

182241_600 mike3aug


I cited Andrew O’Heir’s critical review of Boom Bust Boom, Terry Jones and Theo Kocken’s Monty Pythonesque documentary about the crash of 2007-08 back in March but I hadn’t seen the film itself until last night.

In many ways, I wish I hadn’t.

Oh, sure, there are a couple of good moments. Introducing the work of Hyman Minsky to a larger audience. A cameo by John Cusack, who suggests that economics students should pelt their professors with vegetables and rotten fruit if they continue to parrot the party line. “Maybe urinate on them. That’s what I would do.” And some well-deserved attention to the students in the Post-Crash Economics Society at the University of Manchester.

But otherwise, the film is just not very good. For starters, consider the fact that, after the worst crisis of capitalism since the first Great Depression, only once is capitalism itself even mentioned!

Then, as O’Heir wrote, there’s not a single mention of John Maynard Keynes (who published his General Theory in 1936, in the midst of the earlier depression), let alone Karl Marx (who, along with Friedrich Engels, was writing about capitalism’s crisis tendencies in the middle of the nineteenth century). Since Jones and Kocken decided to make forgetting a central part of their story—especially failing to remember and draw lessons from previous financial crises—they might also have mentioned the deliberate forgetting by mainstream economists and economic policymakers of other economic ideas, now as in the past.

And, in this day and age, it smacks viewers in the face that, as Shane Ferro wrote, “Women and minorities are almost entirely left out of this film—not unlike the way they’ve been left out of financial and economics professions.” The only two expert women the movie manages to feature are Lucy Prebble, a playwright who once wrote a play about the collapse of Enron, and Laurie Santos, a Yale psychology professor who studies how monkeys make decisions. Neither, as it turns out, has a background in economics, or much knowledge of capitalism, its history, or the 2007-08 crash.*

But the worst part of this high-budget, cleverly animated documentary is the actual story Terry and Kocken decided to tell. What it boils down to is this: financial crises have always been with us (at least since Tulip Mania in the 1630s), people tend to make irrational decisions (e.g, by forgetting about previous crises and taking on too much risk), and making irrational decisions is part of our human nature, as determined by evolutionary behavioral psychology (hence the monkeys).

Actually, the film is more confused than that. At one point, it features Minsky (in an animated dialogue with his son)—and, if it had continued in that vein, it would have been able to reveal something about the financial fragility inherent in the regular boom-and-bust cycles of capitalism (since the key actors in Minsky’s approach are capitalist enterprises and banks). But then Minksy is dropped and the filmmakers decide to go in a different direction, with a fanciful discussion of human nature (continuing an approach that, from the beginning, features an undifferentiated “we” who is responsible for speculation, risk-taking, euphoria, forgetting, and so on) and then an attempt to ground human nature in primate behavior (this after criticizing the scientistic pretensions of neoclassical economics).

There’s no attempt to identify the dynamics of a particular economic system, which we usually refer to as capitalism. No attempt to identify particular and differentiated actors and institutions within capitalism, such as bankers, workers, consumers, politicians, enterprises, financial markets, and so on. No references to other countries today, in addition to the United States and the United Kingdom. No mention of the grotesques levels of inequality in the lead-up to the crash, and no discussion of unemployment, poverty, homelessness, and so on after the crash.

Instead, what we are presented with is a succession of financial crises, which in the end are grounded in our singular human nature.

That, to say the least, is not a particularly insightful analysis of the causes and consequences of the crash. And the best the filmmakers and the various talking heads can come up with by way of policies is the need, since human nature can’t be changed, to regulate the financial system (perhaps, at its most adventurous, by restoring Glass-Steagal barriers between commercial and investment banking) to keep “us” from making the same mistakes.

To which we can all respond: “Been there, done that. Now let’s try something that might actually work, beginning with the inherent instabilities of capitalism itself.”


*Here’s the list of the contributors: Dan Ariely, Dirk Bezemer, Zvi Bodie, Willem Buiter, John Cassidy, John Cusack, John K. Galbraith, James K. Galbraith, Andy Haldane, Daniel Kahneman, Steve Keen, Stephen Kinsella, Larry Kotlikoff, Paul Krugman, George Magnus, Paul Mason, Perry Mehrling, Hyman P. Minsky, Alan Minsky, Lucy Prebble, Laurie Santos, Robert J. Shiller, Nathan Tankus, Sweder Van Wijnbergen, and Randall Wray.


This is my own chart—showing the dramatic changes in the average incomes (excluding capital gains) of the top 1 percent compared to those of the bottom 90 percent, expressed as a ratio, from 1920 to 2015—from the World Wealth and Income Database.

Thus, for example, the ratio first peaked in 1928 (when, on average, top 1-percent incomes were 32.7 times those of the average of the bottom 90 percent), eventually decreased to a low in 1972 (of 10.2), then peaked once again in 2012 (with a value of 32.5). As of 2015, the ratio stood at 31.7.

Other charts in this series can be found here, herehere, and here.

Emmanuel Saez, Thomas Piketty, and the rest of the team need to be credited for making their data available. Readers should feel free to use this chart and reproduce it as they wish. . .

Karl Rove

Wall Street Journal columnist Daniel Henninger tries to be witty by referring to the “Trumpen proletariat” and citing Marx’s colorful characterization of the lumpenproletariat in 1850s Paris:

Alongside decayed roués with dubious means of subsistence and of dubious origin, alongside ruined and adventurous offshoots of the bourgeoisie, were vagabonds, discharged soldiers, discharged jailbirds, escaped galley slaves, swindlers, mountebanks, lazzaroni, pickpockets, tricksters, gamblers, maquereaux, brothel keepers, porters, literati, organ grinders, ragpickers, knife grinders, tinkers, beggars—in short, the whole indefinite, disintegrated mass, thrown hither and thither, which the French call la bohème.

He then proceeds to invoke the usual Republican shibboleth of the “culture wars” instead of reading on in The Eighteenth Brumaire of Louis Bonaparte:

This Bonaparte, who constitutes himself chief of the lumpenproletariat, who here alone rediscovers in mass form the interests which he personally pursues, who recognizes in this scum, offal, refuse of all classes the only class upon which he can base himself unconditionally, is the real Bonaparte, the Bonaparte sans phrase. An old, crafty roué, he conceives the historical life of the nations and their performances of state as comedy in the most vulgar sense, as a masquerade in which the grand costumes, words, and postures merely serve to mask the pettiest knavery.

The fact is, Henninger’s party has chosen Trump as George Bush’s successor. And the tragedy that was Bush has now been publicly confirmed—first, in the biography by Jean Edward Smith (“Rarely in the history of the United States has the nation been so ill-served as during the presidency of George W. Bush.”), and then in the Chilcot report (which is even more an indictment of Bush’s war crimes than it is of Tony Blair’s misleading his country into war).

But perhaps the farce today is not just Trump but the choice between him and Hillary Clinton—the former threatening anarchy as the representative of the the party of order, the latter order having saved the party from presumed anarchy (which is how they saw the possibility of democratic socialism). Both will pretend to campaign on behalf of the disenfranchised but that’s only an attempt “to make the lower classes happy within the framework of bourgeois society,” not to actually change the circumstances that leave the lower classes further and further behind the tiny group at the top.

That group of wealthy individuals and large corporations don’t know what to do with Trump, because it seems they can’t control him—but they certainly can live with Clinton, who takes their money and is willing to do their bidding even as her machine calculates the demographics and counts the votes coming from the other classes.

The 2016 presidential campaign will be a grand spectacle but now, even before the conventions, we know who will win. And the rest, including the nation’s growing lumpenproletariat, will be the losers.


Special mention

181423_600 kn062


David Wojnarowicz, Untitled from Ant Series (time/money), 1988

Tom Chatfield [ht: ja] makes a compelling case that, in the era of “big data,” we often suffer from what is called a recency bias, the “tendency to assume that future events will closely resemble recent experience.”

It’s a version of what is also known as the availability heuristic: the tendency to base your thinking disproportionately on whatever comes most easily to mind. It’s also a universal psychological attribute. If the last few years have seen exceptionally cold summers where you live, for example, you might be tempted to state that summers are getting colder – or that your local climate may be cooling. In fact, you shouldn’t read anything whatsoever into the data. You would need to take a far, far longer view to learn anything meaningful about climate trends. In the short term, you’d be best not speculating at all – but who among us can manage that?

The same tends to be true of most complex phenomena in real life: stock markets, economies, the success or failure of companies, war and peace, relationships, the rise and fall of empires. Short-term analyses aren’t only invalid – they’re actively unhelpful and misleading. Just look at the legions of economists who lined up to pronounce events like the 2009 financial crisis unthinkable right until it happened. The very notion that valid predictions could be made on that kind of scale was itself part of the problem.

And the solution?

What’s needed is something that I like to think of as “intelligent forgetting”: teaching our tools to become better at letting go of the immediate past in order to keep its larger continuities in view.

Now, if only we could intelligently forget mainstream economics—and spend more time studying history, including of course the history of capitalism. Then, we’d be in better shape to understand the recurring boom-and-bust-cycles that regularly throw millions of people out of work and subject them to the kinds of crises they’ve been forced to endure for the past nine years, while those at the top once again benefit from the way the game is rigged.


Oskar Eustis is the artistic director of The Public Theatre, where Hamilton had its Off-Broadway début in 2015.

According to Eustis, in an interview with David Remnick,

There’s a fundamental principle underneath Marxism that I believe in, which is: the critique of capitalism is that it is the individual appropriation of collective creation.

It’s well worth listening to the rest of the interview for Eustis’s discussion of other ways his Marxism affects how he thinks about culture, theater, and much else.

And while we’re on the topic, here’s a link to Christian Parenti’s essay on reading Hamilton—against Jefferson—from the Left.

In the American political imagination, Jefferson is rural, idealistic, and democratic, while Hamilton is urban, pessimistic, and authoritarian. So, too, on the US left, where Jefferson gets the better billing. Michael Hardt recently edited a sheaf of Jefferson’s writings for the left publisher Verso.

Reading “Jefferson beyond Jefferson,” Hardt casts him as a theorist of “revolutionary transition.” We like Jefferson’s stirring words about “the tree of liberty” occasionally needing “the blood of patriots and tyrants,” and his worldview fits comfortably with a “small is beautiful” style localism. We recall Jefferson as a great democrat. When Tea Partiers echo his rhetoric, we dismiss it as a lamentable misunderstanding.

But in reality, Jefferson represented the most backward and fundamentally reactionary sector of the economy: large, patrimonial, slave-owning, agrarian elites who exported primary commodities and imported finished manufactured goods from Europe. He was a fabulously wealthy planter who lived in luxury paid for by slave labor. Worse yet, he raised slaves specifically for sale. . .

Hamilton was alone among the “founding fathers” in understanding that the world was witnessing two revolutions simultaneously. One was the political transformation, embodied in the rise of republican government. The other was the economic rise of modern capitalism, with its globalizing networks of production, trade, and finance. Hamilton grasped the epochal importance of applied science and machinery as forces of production.

In the face of these changes, Hamilton created (and largely executed) a plan for government-led economic development along lines that would be followed in more recent times by many countries (particularly in East Asia) that have undergone rapid industrialization. His political mission was to create a state that could facilitate, encourage, and guide the process of economic change — a policy also known as dirigisme, although the expression never entered the American political lexicon the way its antonym, laissez-faire, did.

To be sure, Hamilton was living in the era of “bourgeois” revolutions and the state he was building was a capitalist state, complete with the oppressive apparatus that always involves. Hamilton did not oppose exploitation. Like most people of his age, he saw child labor as normal and defended the rights of creditors over debtors. But regarding slavery, he firmly and consistently opposed it and was a founder of the Society for Manumission of Slaves. It was Hamilton — not Jefferson — who had the more progressive vision.