4/25/20 Piketty “Capital & Ideology” c. p. 511

This blog has been disused for a while. Hardly anybody ever read it, so I decided to hardly ever write for it. But now I’ve decided to use it, for a while at least,  to start posting comments on things I am reading, copied from my notebooks. These are not edited, and particularly not made to function as stand-alone essays. I.e., I have not tried to paraphrase the arguments from the books that I may be discussing. The first book I’m doing this with is Thomas Piketty’s “Capital and Ideology”. Page references are to the 2020, hardcover, English language edition, published by Belknap Press.

4/25/20 Piketty “Capital & Ideology” c. p. 511

Had these thoughts a couple of days ago, when I was reading this section, but didn’t write them down. Trying to reconstruct.

Piketty’s considerations of fairness re. the entrepreneur trying to start a small business seems to conflate a couple of questions – at least the mechanics of capitalization and questions of passion and ambition.

First it assumes a capital regime similar to ours, that businesses are financed out of private savings, also a wealth regime such that a person not born wealthy might accumulated a small capital by saving, sufficient to start a business. (How realistic is his example, BTW? Is even $50,000 enough to start a small business with a brick-and-mortar store and two employees? My guess is it would be iffy, at least without also securing a substantial line of credit.)

Imagine, instead, Schweickart’s model, where the capital would come from a public board. Then, P’s entrepreneur would pursue her dream by developing her powers of persuasion, including the ability to develop a well-documented business plan, instead of by working in solitude to amass a capital. Powers of persuasion would also serve her in good stead in finding sympatico coop partners. And persuasion is a skill that requires much more social values than accumulation.

If we do assume private capital, the unfairness in the initial injection of the resources of one to be subsequently shared by all could be addressed by making capital infusions, over and above some initial universal buy-in, perhaps, in the form of loans. The terms of the loan would be set at the making of the loan (by contract), and could not later abrogated unilaterally by one party (the collective) acting against the other party (the member/investor “entrepreneur”). Of course, this isn’t necessarily fair, either, if we consider questions of initial social distribution of assets and privilege.

The other issue that seems to be conflated in Piketty’s story is an attitudinal one. P’s entrepreneur has ambition – a dream. Her two potential coop partners just want a job. This is P’s character thinking like a boss. She wants to hire people to fulfill her dream using her money, and feels annoyed that a coop structure might give them too much power to influence the direction of that dream. Successful coop recruitment, I would think, requires a different mindset. You need to think more like an organizer than a boss. Persuasion, again. You need to seek people who are not just hungry for a job, but who are capable of being infected with your dream, and then you need to spread it to them.

A large coop may be able to tolerate a range of levels of commitment to the mission or vision. Also some members may be motivated less by the mission, per se, than by social solidarity (or friendship) with their comrades. Diversity of motives is probably a good thing. (Even better when most people have more than one.) But a small coop like P’s example needs a high level of shared purpose, I would think, to succeed. In this it is like any human enterprise that is not able, due to external forces, to be structured purely hierarchically.  But capitalism is based on hierarchical structures of capital over labor, bosses over employees, managers over line workers, and Piketty, for all his research and creative thinking, has trouble shaking this mindset.

[Alt language at end of note not incorporated: Conflates issues of capital and social structure of firm, and involves quite a lot of classical bourgeois background assumptions.]

7/2/20 This ended up being the last post in this sequence. I had intended to continue, but decided I did not like this raw dump approach. Then I was going to synthesize an over-all book review, but couldn't get that to go in a way that satisfied me, so I dropped that, too. Live moves on.

4/19/20 Piketty “Capital & Ideology” p. 410

This blog has been disused for a while. Hardly anybody ever read it, so I decided to hardly ever write for it. But now I’ve decided to use it, for a while at least,  to start posting comments on things I am reading, copied from my notebooks. These are not edited, and particularly not made to function as stand-alone essays. I.e., I have not tried to paraphrase the arguments from the books that I may be discussing. The first book I’m doing this with is Thomas Piketty’s “Capital and Ideology”. Page references are to the 2020, hardcover, English language edition, published by Belknap Press.

4/19/20 Piketty “Capital & Ideology” p. 410

I don’t think the far flung parts of the world had previously “ignored” each other. Extensive and important trade networks had always existed, effectively linking people from Scandinavia to the Far East, and large parts of at least Northern and Eastern Africa. The Americas were largely unknown in Europe, but Norsemen had already explored them, some, and attempted colonization. Also, there had been important military excursions west to east and east to west dating at least from the Bronze Age (Sea Peoples), or even before.  In the Middle Ages, the Crusades and the Mongols are obvious examples, not to mention the Moors in Spain and Sicily.

What changed in early modernity was the possibility of European domination, based on improvements in technology (including weaponry and transportation) and organization. Prior conflicts had been reduceable simply to force of man against man, similarly armed, organized, and equipped. Such struggles had never shown the West to have the superiority it liked to claim.

Taxes

It is true, as I understand it, that the modest amount of progressivity left in the Federal tax code means that most income taxes are paid by people who are at least moderately well off. It is also true that Federal income taxes, proper, are only a part of the overall tax burden, and when you factor in other taxes (FICA, sales taxes, gas tax, state income tax, real estate taxes) the overall tax structure in this country becomes regressive (poorer people pay a higher percentage of their income in taxes, overall, than rich people, and MUCH lower than the super-rich. That is a reason activists often give in explaining why having rich people pay more in income taxes is fair.

But there's another reason I think is even more important. Wealth, ALL wealth, ultimately derives from profits - i.e., from something like a rent for the use of your property - and not from labor. This is true even if a high income is disguised as salary. NOBODY's labor is "worth" more than 200 times the median. Ultra-high CEO salaries come from their ability to control property (their own, and that of shareholders).

And profit is essentially a privatized tax - a tax that we pay on every good and most services that we consume, but that goes strictly to the benefit of a small class of individuals. (Small in percentage population terms; rather large in absolute numbers.) Profit represents the owning class blackmailing us by threatening to withhold the means of production, which would mean that we could not, with our labor, produce anything at all. And the more that wealth becomes concentrated, the stronger the stranglehold that property has on us, and the more they are able to squeeze out.

What progressive tax rates do, in a capitalist society that refuses to simply expropriate private owners, is to reclaim part of that private tax, for the public benefit. More progressive tax rates actually represent a LOWERING of the private tax that is capitalist profit.

And that is why progressive taxes are fair.

Government control

One “common sense” argument put forth against socialism, in the (limited) sense of direct government control over the economy, is that the government cannot be trusted to invest wisely.  They may keep non-viable enterprises going, for example, pouring in money drawn from better-performing portions of the economy, in order to win votes.

As a prima facie argument, this strikes me as silly.  After all, private capitalists cannot be trusted to invest wisely, either, and to the extent that they do, they invest for their own benefit, not ours, and the public weal follows as a side effect, if at all.  It’s not that I don’t believe in the existence of the “invisible hand”.  I just think its reach only extends so far.  Maintaining jobs in a money-losing business that produces a useful commodity may actually be a perfectly reasonable public investment in some circumstances, but not one that would ever appeal to the private capitalist.

On a more detailed, implementation-focused level, of course the anti-socialist objection is not entirely ridiculous.  If we have publicly managed investments, we do want them to be managed well, and managing investments well is not a trivially easy job.  We also need to protect ourselves from outright corruption.  Addressing these issues is partly a matter of management, of checks and balances, of trying to design a system as free as possible from irrelevant, systematic distortions.  But to get a well-balanced, robust plan of public investment that takes all direct and indirect costs and benefits into account, I think we would need a much more participatory planning process.   (Note that taking ALL direct and indirect costs and benefits into account is something that capitalist enterprise management NEVER does.)

Can we get a suitable democratic planning process within our current models of government?  I do not believe in the blanket statement, asserted by some on the left, that “you cannot tear down the master’s house using the master’s tools.”  But some of the master’s tools are in fact rather specifically engineered to serve the master’s purposes, and are not so readily adapted to the needs and purposes of the folk.  In my mind, our really-existing systems of representative government are examples of such tools.

Representative governments originated, in Europe, as a way for kings to appease the aristocracy, and eventually the richer bourgeoisie, without ceding too much central control.  Some constitutions, of course, were constructed as a conscious break with the rule of kings; however, the one such “revolutionary” constitution I know something about – our own in the U.S. – was consciously created to keep hoi polloi at arm’s length, and guarantee effective control by the richer classes.  Obviously, there have been modifications in these constitutions over the centuries, most of which (I think)  have been in the direction of greater democratization, but there still is a long way to go.  Most ordinary folks participate in democracy only by spending ten minutes every 2-4 years in voting  (if they even do that).  “Debate” takes place between politicians and pundits in the commercial news media (primarily), and is, to most people, at best a spectator sport.  People’s own discussions tend to take place amongst small groups of their own friends, and can influence the broader process of policy formulation only to the extent they happen to be queried through the passive (and eminently manipulable) process of polling. 

A truly democratic process would have people involved in interactive debate, with both themselves and opponents as participants; a debate taking place in a public forum that fed directly into the decision making process.  Listening to arguments pro and con, and being forced to make a meaningful decision afterwards, focuses the intelligence, I believe, like almost nothing else.

The punditry would assure us that people just don’t want to be that involved in their own government.  Maybe that’s only because they’ve never had the chance.

Madness foisted

Does anybody remember when Kleenex boxes just had a hole in the top to get the tissue out, and didn't have a slotted piece of plastic film glued around the hole to hold the next sheet in position?  Why did they change this?  Did anybody have a real problem getting the next tissue out of the old boxes?  Seriously?  The old boxes were simple, and about as cheap as they could be.  The new boxes are probably cheap, too, but making a box and gluing a sheet of plastic in it MUST be at least a little more expensive than just making the box, and it is more harmful to the environment to use the extra material, especially a non-biodegradable, petroleum-based plastic. Why?

Another of my pet peeves is coffee cup lids.  I drank coffee on the go for many years when the cups had simple, tearably-thin plastic lids with no holes to drink through.  I never had a problem getting my coffee out (improvising a sipping hole if-and-when I needed one), nor did any of the other coffee drinkers I knew.  But over time, all the coffee shops started providing (and ONLY providing) much heavier lids (more material) that couldn't easily have custom holes torn in them - but had a PERMANENT sipper hole.  The main function of these sipper holes seems to have been to dribble coffee everywhere (usually all over your clothes) while you were walking to your destination with the cup.  After several decades of this madness, some coffee shops started realizing that this was a problem for their customers.  Their solution was to provide ANOTHER thick, heavy piece of plastic to temporarily plug the unnecessary hole in the unnecessarily thick plastic lid.

The theoretical justification of the capitalist marketplace is that it "puts the consumer first" because they have sovereignty over their purchasing decisions, and producers compete to satisfy the sovereign customer.  But the only feedback is the purchasing decision, which comes LONG after the production decision has been made (and after many prior purchasing/production decisions, such as deciding on expensive retooling of factories).  But I don't think consumers were ever clamoring for plastic tissue-holders in Kleenex boxes, or thicker coffee cup lids with permanent sipping holes, and I doubt that many consumers ever made the choices of buying or not buying tissue or coffee based on these features.  These were unnecessary and irrational choices made by producers and foisted on consumers due to the inefficiency of a feedback mechanism so feeble as to be virtually non-existent.

I dream of a more rational economic system in which production decisions could me made deliberatively and collectively in a broad-based social process, and not in isolation and secret by competing cabals of producers, to be "voted on" after the fact by individual consumers acting even more in isolation and faced with limited and complexly aggregated purchasing options.

But, hey, maybe its just me that's gone mad, and not the rest of the world.  Who knows?

All the Money in the World

"If you had all the money in the world, it would be worthless." At the risk of ruining the appearance of sagacity, I will 'splain my thinking.

If "money" is defined as "gold" or "cattle" or something else which has use value as well as value as a medium of exchange, then the statement in my "status" would not be true. If you had all the gold or cattle in the world, it would be worth something. But money, qua money, has value only in its role as facilitating exchange in a functioning economy. If it became TOO concentrated, it could no longer fill this role. Most people having no money, they would have to acquire goods and services they didn't produce themselves in some other way (e.g., barter or rapine), or they would have to introduce some other medium of exchange in lieu of "money" (e.g., cigarettes in prison or post-war Europe), which of course would then technically be money, in which case the people who had concentrated the official "money" in their hands would no longer have "all the money in the world".

In any case, my thought experiment ran that IF you had "all the money in the world" its extreme scarcity would make it useless as medium of exchange, and it would no longer be "money". Of course, social disruption and change (of the political system, or economic system, or both) would happen long before that that time. The relevant questions, to our own radically unequal national and (even more) world societies are: "What kind of change?" and "When?"

Casinos, capitalists and class struggle

The rush of Massachusetts to build casinos and other gambling dens makes me crazy.  The casinos are sold to us as a jobs program - this is almost a pure scam.  It is as if the 1% were to hire a small number of the 99% to construct, and then operate, a gigantic vacuum cleaner, the sole purpose of which was to suck money out of the pockets of the 99%, and deposit it in the bank accounts of the 1%.

Compare this with a genuine jobs bill - the Conyers bill, HR 870, which would tax the 1% (through a small financial transactions tax) and use the proceeds to hire some of the 99% to build and repair things (schools, roads, bridges) that belong to the 99%.

In today's political parlance, the second bill – the genuine jobs bill – is considered class warfare.  Casino construction, which employs some people to better exploit others, is not.  Essentially, "class warfare", for the punditry, is a term used to describe anything that acts effectively to the detriment of one specific class - the ruling class.

Even a casual student of Marx knows that the class struggle is not an option - something one chooses to engage in, or not.  It is an inevitable side effect of a class society.  As long as the economy is structured so that one particular class – feudal landowners, slave-owners, or capitalists – derives its income solely and explicitly by the exploitation of others (aka the workers), then you have a class society, one feature of which will be a struggle over the degree of exploitation.

A Keynesian analysis of a capitalist economy suggests there may be some "sweet spot" for the capitalist class, a level of wages that balances off increased demand and economic activity against a reduced profit margin, so as to maximize the capitalists' overall net income.  But there's no magic way to detect this "sweet spot", and the capitalists' greed is such that they will tend to overshoot when it comes to driving down wages.  Also, manipulating the overall wage rate in the economy, so as to manipulate demand, is beyond the power of most individual capitalists, or even cartels. 

At a given level of output and technology, the individual capitalist can only increase his income by increasing the level of exploitation - his profit.  Any such increase in profit comes directly out of the worker's wages.  So struggle is inevitable.  The only question is whether the workers resist low wages individually (in which case the majority of them are bound to lose), or collectively, through labor unions and political action, in which case they have a chance.  It is this latter form of collective struggle that the right wing insists on calling "class warfare".

A genuine jobs bill, like the Conyers bill, would strengthen the working class, lessen inequality, and make the 99% genuinely better off.  The casino alternative plays some in the working class against others, and its overall effect is to further the impoverishment of the 99% with respect to the 1%. 

Some with in the Occupy movement have started saying "They only call it 'class warfare' when we fight back."  I would add that they only call it "class warfare" when we adopt a strategy that might actually win results.