Posts Tagged ‘society’


In a society in which the products of human labor take the form of commodities, there’s a tendency to think a commodity’s exchange-value is equal to its value to society.

That’s what neoclassical economists do. So, apparently, does Marco Rubio.

Tuesday night, in the fourth Republican debate, Sen. Marco Rubio decided to make a point about the state of wages, education, and employment in America by comparing welders with philosophers. “For the life of me, I don’t know why we have stigmatized vocational education,” Rubio said. “Welders make more money than philosophers. We need more welders and less philosophers.”

Now, it is true, the labor embodied during the course of producing a commodity is not socially validated unless and until it is exchanged in a market. The same holds for the ability to work (although, to be sure, labor power isn’t actually produced like other commodities). In both cases, within capitalism, private labor is transformed into social labor via the market.

However, as philosopher (and friend) Avery Kolers explains, that doesn’t mean the “social worth of a profession tracks the market price it commands in the current economy.”

It is false for at least two reasons. First, it is false because current market prices are distorted by a wide range of diseconomies that have funneled virtually all gains from the recovery into the pockets of the wealthiest Americans. The US economy shovels massive externalitiescosts and risks that fall on those who don’t incur them – onto working people, future generations, and the natural environment, while the wealthy few hoard the benefits. One particularly important case is carbon pollution. Because market prices do not reflect these externalities, all prices in the economy are distorted, including the price of labor and the prices of the machines that replace human labor. So there is no reason to think that the price my labor commands in the current economy is the price my labor would command in an actual market — an economy where costs were internalized, that is, paid by those who produce them. The day I hear Republicans talk about making polluters pay is the day I’ll begin to believe that they care about genuinely free markets.

But even if we made it so that rich people could not offload costs onto poor people, it would still not be the case that the social worth of a profession would be determined by the price its members could command on a market. Market prices reflect supply and demand. If there is a glut of X and a shortage of Y, the price of X goes down and that of Y goes up. It has nothing to do with the social worth of either thing. Worth is a completely different issue; English teachers, social workers, poets, and of course, Republican presidential candidates, are currently in higher supply than demand; this diminishes their wages and employment opportunities in these fields, but it says nothing at all about their social role or value.

To be clear, even if a commodity’s value were equal to its exchange-value (i.e., in the absence of externalities), that doesn’t mean we, as a society, need to make our decisions based on exchange-values alone.

It is only the hubris of neoclassical economists and politicians like Marco Rubio that presumes a commodity’s market price is the sole criterion of its worth to society.


Mike the Mad Biologist [ht: sm] casts doubt on the idea of scarcity. And for good reason:

While they seem to have receded somewhat, a couple of years ago, there were quite a few arguments about the fundamentals of economics (especially macroeconomics) and how to teach them. As an outsider, one thing that struck me as odd was the emphasis on scarcity (e.g., economics is called the science of scarcity). It’s odd because, at least in wealthy societies, there are very few scarce items. We’re definitely not slacking in our ability to produce calories, which arguably for most of human, if not hominin, history was the vital concern.

Mainstream economists, as I teach my students, start with the idea of scarcity—the combination of limited means and unlimited desires. And then, after a great deal of math and a wealth of assumptions, they prove that a system of private property and free markets provides a perfect balance between those limited means and unlimited desires.

But, as I also teach them, the mainstream presumption is that scarcity is universal—both transcultural and transhistorical. In other words, they start with the idea that all human beings, in all times and places, have had to confront and solve the problem of scarcity.

An alternative is to see scarcity as an institutional, historical and social, phenomenon. In particular places, at particular times, the existing set of economic and social institutions makes certain goods and services scarce. Thus, for example, oil is scarce because of the particular configuration of the energy industry, the personal car and truck culture, the government-sponsored expansion of the highway system, and so on. That’s what makes oil scarce. Similar stories can be told about the scarcity of water, arable land, good public transportation, high-quality mass education, and so on. Their scarcity is the product of particular sets of institutions in particular societies.

Why is that important? Because, as against the assumption of mainstream economists that scarcity is always with us (and therefore can’t be changed), the idea that scarcity is an institutional phenomenon means that changing economic and social institutions can change or eliminate scarcities.

The same applies, of course, to abundances. Right now, we’re living in a society that has created a surplus of labor (and, as a result, stagnant wages), which is part and parcel of capitalism’s law of population. If we get rid of capitalist institutions, then we can create a new law of population, one in which the labor workers perform and the value they create are not turned against them.


Chris Dillow is right: when corporate power exists, prices do not reflect social costs, and profit-maximization may not contribute to the welfare of society as a whole.*

Even more: the existing approaches (such as ignoring corporate power or suggesting that corporations adhere to ethical norms or creating new business regulations) ignore the existence of class.

There is, though, a fourth view – the Marxian one. This says that the tension between profit maximization and welfare hasn’t increased simply because of a failure of law and morals, but because of a genuine shift in the balance of class power. Firms now have power and one thing we know about power is that it’ll be used. Unless this changes, hopes of reconciling profit maximization with well-being might well prove mistaken.

What happens then when we focus on class? It means, first, we can locate the origins of corporate power in the surplus corporations are able to capture (either from their own employees or, in the case of the financial sector, from the employees of other corporations, in the manufacturing and service sectors). Corporate power derives, in other words, from control over the social surplus—which allows corporations to set the rules of the game and reproduce their power over time (with the aid, of course, of economic doctrines that justify corporate power through theories of value according to which profit-maximization is in the social interest).

The second implication is that a different way of organizing corporations would change the balance of class power. If, for example, corporations were run by their employees instead of by a board of directors elected by shareholders, the surplus appropriated and appropriated by the collectivity of workers could in fact be used in the social interest. That’s not to say tensions and contradictions over the surplus would cease to exist—but it wouldn’t be as now, when the decisions of powerful profit-maximizing corporations are inimical to the well-being of the vast majority of the members of society. Instead, workers would decide, under a very different set of norms and regulations, how the surplus they produce would be utilized to eliminate existing forms of corporate power.

Just that one change would be a welfare-enhancing move for the world in which we live.

*In technical terms, when corporate power creates negative externalities (such as pollution or unfair wages), the conditions of the first theorem of neoclassical welfare economics are not satisfied. Therefore, it cannot simply be said that the only social responsibility corporations need to adopt is to maximize profits.


Special mention

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It just can’t be denied any longer: class is central to much of what is happening in the midst of the Second Great Depression.*

For Will Hutton [ht: ja], the “economic and social crises are merging” because of the hardening of class distinctions.

The protracted “contained” depression is making life ever harder and disillusioning for those, and their children, trapped at the bottom – while making those at the top ever more robust about looking after themselves and their own. A mean world growing still meaner fosters division and mutual suspicion.

Paul Krugman, for his part, sees this year’s election as an example of class warfare.

like it or not, we have an election in which one candidate is proposing a redistribution from the top — which is currently paying lower taxes than it has in 80 years— downward, mainly to lower-income workers, while the other is proposing a large redistribution from the poor and the middle class to the top.

So the next time someone tut-tuts about “class warfare”, remember that the class war is already happening, in real policy — with the top .01 percent on offense.

Meanwhile, Globescan found, in a poll of 23 nations [pdf], that in only six countries did more than half feel that rich people deserve their wealth. Sam Mountford, GlobeScan’s Director of Global Insights, comments:

These figures show that citizens around the world remain far from convinced that the way wealth is divided in their country is fair. This underlying sense of economic inequity may well present a challenge to governments planning to cut and deregulate their way back to prosperity.

The latest attempt to recognize the existence of a class divide in the United States—but then to deflect attention from its economic roots—focuses on marriage patterns, as if changes in family structure were an independent cause rather than a consequence of growing inequality.

Estimates vary widely, but scholars have said that changes in marriage patterns — as opposed to changes in individual earnings — may account for as much as 40 percent of the growth in certain measures of inequality. Long a nation of economic extremes, the United States is also becoming a society of family haves and family have-nots, with marriage and its rewards evermore confined to the fortunate classes.

“It is the privileged Americans who are marrying, and marrying helps them stay privileged,” said Andrew Cherlin, a sociologist at Johns Hopkins University.

Finally, to show what is at stake in the current forms of class war, we need look no further than the cash payments made to the families of the miners who died in the Upper Big Branch mine disaster in West Virginia—without a single high-ranking Massey Energy executive having been criminally charged or a single new piece of federal mine safety legislation having passed. As one commentator noted:

These people want justice, not money. Some of you posters seem to be lacking the gift of empathy. No amount of money replaces a lost loved one. In taking the money they, the survivers actually feel guilty because that the amounts they receive will allow them to live a different lifestyle. The problem is somebody had to die in order for that to happen. Furthethmore there seems to be nothing they can do to get the justice they Desire in the form of criminal convictions for Massey managers and executives. This problem should be disturbing to us all.

What the families wanted, as a fitting memorial for their dead children and spouses and for all the surviving miners, was class justice. And they didn’t get it.

Not when a war is being waged against them and all the lower classes by the tiny minority on top—who, instead of offering agape (1 Corinthians 13), look at the world through a class, darkly.

*Class is, of course, not the only determinant of current events—either in the first or last instance. What’s interesting, however, is that after decades of deriding the existence and significance of class, a wide variety of commentators and news reports just can’t overlook or ignore the injuries and insults of class any longer.

What is the relationship between economics, as a social science, and the natural sciences?

The usual argument is that the social and natural sciences are fundamentally different, that the natural sciences are objective in a manner that economists and other social scientists do not and cannot achieve. For Sean Carroll, it’s a matter of consensus versus contamination:

On the very basics of their fields (the Big Bang model, electromagnetism, natural selection), almost all natural scientists are in agreement. Social scientists seem to have trouble agreeing on the very foundations of their fields. If we cut taxes, will revenue go up or down? Does the death penalty deter crime or not? For many people, a lack of consensus gives them license to trust their own judgment as much as that of the experts. To put it another way: if we talked more about the bedrock principles of the field on which all experts agreed, and less about the contentious applications of detailed models to the real world, the public would likely be more ready to accept experts’ opinions. . .

. . .political inclinations and other non-epistemic factors color our social-scientific judgments, for experts as well as for novices. On a liberal/conservative axis, most sociologists are to the left of most economists. (Training as an economist allegedly makes people more selfish, but there are complicated questions of causation there.) Or more basically, social scientists will often approach real-world problems from the point of view of their specific discipline, in contrast with a broader view that the non-expert might find more relevant. (Let’s say the death penalty does deter crime; is it still permissible on moral grounds?) Natural scientists are blissfully free from this source of bias, at least most of the time. Evolution would be the obvious counterexample.

The problem is that commentators like Carroll continue to carry around a conception according to which the natural sciences are free of bias, and that natural scientists are able somehow to carry out their work independently of the society in which they work.

It’s a view of natural science disputed by the participants—Steven Rose, Andy Rowell, and Connie St louis—in a recent Red Pepper roundtable on science and society.

‘Actually I don’t think there’s any such thing as science,’ states neuroscientist Professor Steven Rose at the start of Red Pepper’s roundtable on the subject. He pauses while we contemplate his opening remark. ‘There are only “sciences” – different ways of approaching and trying to understand and make sense of the world.’

Science is still popularly viewed as a uniform realm of objectivity: an organised way of knowing the world in the form of testable explanations and predictions. Rose offers a different definition: ‘Scientific questions don’t exist outside of the social framework in which those questions are phrased, so the sorts of science that are done in one culture, one social context, one historical epoch, are very different. There’s no science outside the society in which it is embedded.’

The link to the audio version of the conversation is here.

The only thing reasonable about the draft proposal released today by Erskine Bowles and Alan Simpson, the chairpersons of Obama’s bipartisan commission on reducing the federal debt, is the idea that their recommendations shouldn’t be enacted immediately. As for everything else, even if delayed until 2012, it would create an economic and social disaster in the United States.

The best example of how unserious the proposal is: one of the illustrative budget cuts is the elimination of funding to the Corporation for Public Broadcasting. In fiscal year 2010, the regular federal appropriation to the CPB was a whopping $420 million!

The two key provisions of proposal, which are serious, are cut-backs in social security (primarily by raising the retirement age) and capping the growth in federal spending (and revenues to 21 percent of GDP). Let me offer just two quick comments:

1. The entire proposal has the effect of boosting corporate earnings (by cutting corporate tax rates and limiting other distributions of profits, such as those that go to funding social security and health care for employees) and balancing the federal budget on the backs of workers (directly, in terms of firing federal employees, and indirectly, by cutting social programs).

2. This proposal, like wage-and-price controls, will be cherry-picked and selectively applied. The history of wage-and-price controls is that wages are always subject to more controls than prices (and thus profits). I suspect that this proposal will have a similar fate—in that the provisions that cut what were once considered entitlements and existing social programs and that boost profits will be applied, and the benefits to others—such as the poor, elderly, and students—will be postponed indefinitely.

Now, some will argue that there are too many sacred cows in the proposal to make it realistic. My suspicion is this is only the opening salvo in an attempt to impose the kind of austerity we’ve already seen in Greece, France, and the UK—U.S. style.