虽然有令人鼓舞的迹象流行的阻力，在富裕的西方国家政府正在推进其转移成本的经济危机给他们的工人和贫穷国家的人在残酷的设计。 资本主义经济危机加剧了全球性的环境危机和不祥加剧国际紧张局势，在帝国主义的军事能力的时候，达到了历史峰值，其经济基础被削弱，和重力对世界经济的中心继续向南移动。

在世界社会主义的政治弱点，（例外令人鼓舞的事态发展在南美洲）是一个迹象，不提的迫切需要，甚至只是可能溶解资本主义，建设社会主义建立在集体意识和世界的工人。 资本主义的宣传强加其解释20世纪社会主义的历史纪录，同时它的一侧和框架为不可赎回失败。 当然，这种思想荒凉的另一个方面是，社会主义者无法拨出自己的历史经验，批判和团结的精神，分离仔细必要性机会，使效果，形式及内容，以及 – 在此基础上 – 我们想要的未来制定一个更强有力的视觉。

社会主义-社会，直接生产者，生产者直接控制的社会中，作为社会个体，在他们的活动场所，过程和结果-不能成为一个自发的历史结果。 相反，它只能建立在目的，故意的。 这意味着它有机会成为现实之前，一个可行的设计，更完整，更详细，社会主义社会必须形成集体的头脑生产者。 这种集体的思维过程必须得到滋养，不仅从正在进行的斗争，工人今天面临的学习，而且还通过吸收过去的历史经验。

我们的工人-我们的血肉，从我们自己的时间和环境，但趋向越来越团结，组织，教育和战斗力-需要思考的社会主义 ，在我们开始之前，重新启动的建设任务。 这仍然是真实的，即使 – 上的苍蝇，在斗争和建设的过程中 – 我们被迫开始一遍，并再次。 如果我们不得不从头重新设计社会主义，往往可能是必要的，直到我们的业绩和激进的需要相匹配，让它成为决定从头开始，没有前提，但仔细公正的评价结论，从历史记录。

事实是，只要工人没有在我们的脑海中建立一个似是而非的观点，充分连贯和详细的未来社会，只要我们尊重现状压制我们的政治想象，我们的政治实践将继续被困在悲惨的范围机会主义和改良主义。 正如大卫Laibman（科学与社会）说，撒切尔夫人的TINA（“别无选择”），的社会主义者必须反对我们TIARA（“有一个革命性的替代”）。 我们的革命性的替代品的需求增长 – 收购形状，质地和颜色 – 在我们的集体意识，我们才能够实现它在实践中，在此期间实施。

在这个21世纪的社会主义者，我们不能忽视在富裕国家社会主义的历史实践经验。 的悲剧（但也英雄）遗留下来的这方面的经验，可能会污染和诋毁我们的恐惧，疏远的倾向，自己的情绪，智力和政治上从该记录，仍然未脱离种族主义和帝国主义的思想傲慢轻视经验外围计数器构成的西方世界。 我们不能接受的说法，社会主义在19世纪也许是有效的，仍然是一个单纯的理想，它的种子在普遍人类，我们称之为劳动活动的目的提出社会主义在21世纪，拥有一支具有实际的历史记录。显示，结果喜忧参半。

这方面的经验，在其巨大的人力规模的悲剧元素，是不可否认的。 但也有建设性的元素，我们必须拥抱。社会主义的历史实践经验的巴黎公社（1871年）开始，但在20世纪达到历史的普遍意义与十月革命（1917）在伟大的卫国战争（1941-1945），苏联的胜利，解放了东欧从纳粹轭（1945），中国革命（1949年），当然，古巴革命（1959年），打败美帝国主义在越南（1975）。 痛哭，工人在富裕的西方世界，现在在一个位置，体会到巨大的积极的引力，对他们的生活和工作条件的有形影响，施加真正的社会主义的活生生的例子。 不能在北方的社会主义者，不得派遣白板这个光荣的史诗。 我们需要回收它，占有它，在对现状的无情批评，马克思给我们留下的精神，但也与团结意识，奋斗的剥削和压迫，总是不利和敌对的条件下，值得我们。 可以学到的教训是，不退保或叛国罪辩护，而是加大争取社会主义的斗争，并赢得。

未来在这个博客发表会试图考察20世纪社会主义的历史经验方面，我认为至关重要的：在向社会主义过渡的经济体的组织和规划 。 我承认，在这一点上，我的工作是不系统的。 这是一个温和的建设工作。 从我做起的前提下，强调社会主义的敌人，并继续强调的是，在他们的热情，否定社会主义的实际可行性的问题是不是虚的，但真实的 ，痛苦的，尚未解决或克服，在理论上或在实践中。 最终，这些问题将不会得到解决通过纯粹的理论手段。 理论工作的作用是有限概括和社交预先存在的经验，以尽量减少的实际斗争中负有不可推卸的成本，但它只是在通过实际斗争，我们将再次展现和所有的历史和经济在21世纪社会主义的可行性。

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这篇文章被翻译使用谷歌翻译。中国的版本未必是好的。抱歉。

The “sequester,” a Washington-made $85 billion package of brutal public spending cuts to hit the economy over the next few years, is expected to destroy nearly one million jobs and wreak havoc on working families and neighborhoods.  This austerity tsunami comes on top of the calamities of the Great Recession and subsequent economic stagnation, also made possible by a political establishment and an economy largely unresponsive to the needs of the 99 percent.  Adding it all together, the near-future outlook for working people is grim, especially for the most vulnerable.  This is, of course, if we do not resist and fight back with all our passion and resources.

WORKERS WILL PAY FOR THIS

The crucial fact is that, one way or another, workers will pay for this.  It is not whether, but how we will pay.  Either with ruined hopes for us and our children, severe hardship endured in silence and shameful isolation, or with the focused and laborious effort required to overcome differences — real and imagined — and act in concert with our class sisters and brothers, turning ourselves into a fighting force, conceivably the most formidable in U.S. history, with an independent spiritual, civic, and political life, and driven by an unstoppable bent to snatch the economy and the political system off the grip of the 1 percent, reorganize them democratically, and make them serve our needs.

According to a recent poll, just over one third of Americans know what the “sequester” is.  “Stimulus package,” “bank bailouts,” “quantitative easing,” “debt ceiling,” “fiscal cliff,” and the latest, “sequester”, are parading terms with confusing meanings.  It is hard for workers, understandably alienated from economics and politics, busy with their own lives, to follow the latest artificial deadlock created by the politicians in Washington.  However, understanding the ABCs of this crisis is indispensable for working people to organize an effective political response.

THE POLITICAL ECONOMY OF THE GREAT RECESSION

On the political surface, the “sequester” is the result of an ongoing dispute between a Democratic White House and Senate, and a Republican House of Representatives, over the ends and means of economic policy.  To grasp the character and import of this dispute, we must see below the political surface.  To begin, consider that the economy expands when two things happen in tandem.  On the “supply side,” domestic businesses produce and market more goods. On the “demand side,” households buy additional consumption goods; businesses buy more plant and equipment to increase future production; the government spends more in the military, social insurance, business subsidies, education and other programs; and foreigners buy more from U.S. businesses than we add to our purchases abroad.

In this light, the Great Recession happened because, in an economy with a $15 trillion annual gross domestic product (GDP), the demand for domestic goods coming from businesses and private households dropped suddenly by over $1 trillion.  Businesses (absorbing on average about 12 percent of GDP, although with much variation over short periods of time) pulled back, especially in construction and connected industries.  A number of businesses shut down while the surviving companies sat on mounting piles of cash, refusing to put them to productive use.  Reasonably so, since private businesses produce for sale and profit, the economy had imploded, and the prospects of a quick recovery dimmed in the face of Washington’s insufficient response.

Households (which tend to absorb around 70 percent of GDP) also recoiled, mainly because their wealth shrank as a result of the abrupt drop of housing values (previously inflated by rampant financial speculation), and then as a result of the economy’s downward spiral, which threw people into unemployment, underemployment, and bankruptcy. All of this further reduced household income and wealth. (For a significant portion of American working class households, their wealth is small or even negative.)  Finally, as the U.S. tends to import more than it exports to the rest of the world, the net foreign absorption of domestic production has been negative since 1975, though insignificant as a proportion of GDP.

It should be transparent to everyone that the cause of the Great Recession was not some meteorite that destroyed one fifteenth of our productive wealth.  Neither was it some mysterious disease disabling our workers and making them one fifteenth less productive.  As an economy evolves and reconfigures itself — buffeted by technological change, demographic and cultural shifts, and global pressures — some mismatch between the skills of workers and the needs of industry is inevitable.  Even with the economy at peak, tens to hundreds of thousands of people file for unemployment benefits in any given month, though in “good times” this is offset by job creation.  Thus it is preposterous to argue that a chief cause of the Great Recession and the subsequent economic stagnation is some “structural” defect of our labor force.  This is why “supply side” arguments about the causes of the Great Recession and ensuing depression, and therefore about the proper ways to turn things around (like the dubious panacea of retraining workers for “the jobs of the 21st century”) are nonsense.

The 2008 election of Barack Obama led many of us to hope for an aggressive response to the economic crisis, mostly by increased government spending, ending the wars, re-regulating banking, and taxing the 1 percent.  Instead, the White House and the Federal Reserve moved quickly to rescue the banks, leaving working people – those unemployed, with underwater mortgages, or with asphyxiating student and credit-card debts – largely out in the cold.  Fearful of opposition or on its own impulse, Obama failed to push Congress to enact a stimulus package proportionate to the spending vacuum created by the private sector, thus ensuring the ongoing economic stagnation, though officially labeled “recovery.”  Predictably, instead of lending in the face of the depressed economy, the taxpayer-rescued banks sat on their bulging cash reserves or used them to fatten their executive bonuses.

THE DEBT IS NOT A THREAT

Sudden economic contractions reduce tax revenues just when government transfer payments increase, as people claim unemployment benefits or rely on whatever remains of the social safety net to make ends meet.  The result is a mounting difference between government revenues and spending: the deficit.  Recurrent annual deficits lead to a higher debt as, to fund them, the government issues and sells bonds, whereby it borrows in the financial markets.  As it turned out, the U.S. debt reached recently a level equal to the economy’s annual GDP, a ratio that — according to conservative pundits and economists — would scare creditors, make them dump their Treasury bonds on the markets, and charge higher interest rates.  Since these bonds are promises of future dollar payments by the government, the creditors were to expect the eventual “debasement” of the dollar, higher inflation, and sharply rising interest rates.  Unsurprisingly in a depressed economy, these scenarios failed to materialize.  In any case, the higher debt-to-GDP ratio, a predictable byproduct of the Great Recession and subsequent depression, would have been short-lived had the government and the Fed responded adequately to the contraction.

It is essential for working people to understand that mounting deficits and, therefore, higher levels of public debt do not, in and of themselves, constitute a threat to the economy.  This is not the first time in U.S. history that national debt levels reach high watermarks.  Immediately after World War II, the national debt-to-GDP ratio was much higher than today.  Yet the economy expanded at a very rapid pace over the following decades.  By the mid 1970s, the national debt had dropped to near 30 percent of GDP. Further evidence that, in themselves, high deficits and debt are not the economic curse that conservative ideologists would have us believe is that, over the last three decades, long-term Treasury yields (the effective interest rates on new federal debt) have dropped relentlessly, making it cheaper for the government to borrow.

This decline in Treasury yields suggests that, for now, global wealth perceives the U.S. as the most creditworthy borrower in the world.  Ongoing developments in the rest of the world, in particular Europe’s economic disarray, worsened by extreme fiscal austerity policies, are reinforcing this perception. This means that, for the time being, “investors” in the global financial markets — the politically powerful and extremely wealthy individuals who control foreign central banks, finance ministries, international banks, and large corporations — stand ready to buy, at record high prices, all the bonds that the U.S. Treasury cares to offer.

In other words, for the time being and with no reversal in sight, the global 1 percent is willing to lend to the U.S. federal government, even (in some cases) at a loss in purchasing power, because the alternative investments are less attractive.  If one can borrow $1 at a 1 percent annual interest and repay $1.01 a year from now, and if that $1 will buy more goods now than $1.01 will buy next year, it would be financially foolish not to borrow and spend the borrowed money now.

In the case of the U.S. government, that money could be spent maintaining basic public services; creating jobs for the unemployed; repairing, rebuilding, and expanding roads, railroads, bridges, communications networks, child care facilities, public schools, hospitals, parks, and other community spaces. The government can and should be helping us make our houses, transportation, and industries more energy-efficient, our urban settings more livable, our environment cleaner, and our lives healthier, longer, and more meaningful. From the perspective of the 99 percent, allowing an irrational fixation on deficits to further dilapidate the productive wealth of the nation, reduce the long-run potential of the economy and permanently lower the average standard of living of Americans, is not only reckless but outright insane.

There is no inherent reason why high levels of public debt must lead to massive joblessness and misery. The “debt crisis” has a straightforward solution (although it may not seem politically feasible at the moment): Expand the economy and tax the rich!  In theory, all that is required for the “debt crisis” to disappear is for the ultimate creditors of the government, the global 1 percent, to show their civic consciousness and write off a hefty part of their public debt holdings – a small loss for them.  Or, alternatively and more plausibly, we, the 99 percent, can demand that the government repudiate a good portion of the debt.  There are legitimate and legal grounds for doing this. Many of those bond-holding 1 percenters are implicated in the financial misdeeds and crimes that led to the financial crash and the recession.  Even a relatively small reduction, achieved by some combination of economic growth and additional taxes on the wealthy (including a reduction in military spending), would shrink the public debt to “manageable” levels.

THE “SEQUESTER” AND THE WORKERS

With this understanding, we can now return to the politics of the “sequester.” In August 2011, as the 2001 and 2003 tax cuts for the wealthy granted by George W. Bush (and extended by Barack Obama in December 2010) were to expire, Congress passed the law that set up the “fiscal cliff,” a series of “automatic” tax increases and spending cuts to go into effect in January 2013, should a bipartisan congressional super-committee fail to devise ways to halve the deficit.  For this, Republicans and conservative Democrats in Congress used their power to authorize increases in the debt ceiling (the maximum level of federal debt) as a bargaining chip.  In the past, Congress had raised the debt ceiling without controversy, as during the George W. Bush administration, when Congress increased the debt ceiling 19 times by a total of $4 trillion.

By the time the economy was to fall off this “fiscal cliff,” Washington agreed on another law that removed the tax-side provisions and postponed until March the implementation of the automatic spending cuts, which came to be called the “sequester.”  The cuts would come from slashing “discretionary spending,” half of it military (over $40 billion) and the other half domestic programs (Medicare $10 billion and other programs $30 billion), excepting Social Security and Medicaid.  Pundits viewed the lifting of tax provisions as a Republican retreat in the face of popular pressure.  With the 2012 re-election results backing him up, Obama appeared to be in a solid position to crush the Republican opposition, forcing them to accept additional and badly-needed spending.  Clearly, the voters had rejected austerity.  In light of this electoral mandate, the White House bears responsibility for its actions which have given credibility to the ludicrous notion that deficit and debt – rather than massive unemployment – are the greatest dangers to the economy.

Although often ignored by “economic experts”, the whole purpose of an economy is or should be the well-being of real people.  In a true democracy, the well-being of the majority, which is to say working people, should be the supreme criterion with which to evaluate the performance of the economy and all of our legal and political institutions.  By these criteria, our economy and political system have failed.  But we cannot simply bemoan the dysfunction of Washington, Wall Street, and Main Street.  The real reasons why deficit and debt have been turned into a major political crisis, threatening economic devastation for a majority of Americans, are socio-economic and political.  Ultimately, these reasons boil down to the political fragmentation and disorganization of the 99 percent, that is, to our political weakness. We have difficulty in grasping our fundamental identity of interests which cuts across our diversity.  Until we overcome our divisions, the “sequester” and all upcoming political and economic crises will be “resolved” at our expense.

Neither of the major political parties, their leaders and political organizations, will come to the rescue of working people of their own volition.  This is not to justify sectarianism or deny the need to cooperate for specific goals with established organizations, including those in the Democratic Party. But it is a stern reminder that, in the last analysis, only the workers can liberate themselves.  The sooner we understand this, the lower the human cost we will have to pay.

TO LEARN MORE ABOUT THE “SEQUESTER” AND ITS IMPACT:

Dylan Matthews, “The Sequester: Absolutely everything you could possibly need to know, in one FAQ,” washingtonpost.com/blogs/wonkblog/wp/2013/02/20/the-sequester-absolutely-everything-you-could-possibly-need-to-know-in-one-faq/.

Congressional Budget Office (2013), “Automatic Reductions in Government Spending – aka Sequestration,” cbo.gov/publication/43961.

TO LEARN MORE ABOUT HOW THE DEFICIT IS NOT A THREAT:

Congressional Budget Office (20013), “The Effects of Automatic Stabilizers on the Federal Budget as of 2013,” cbo.gov/sites/default/files/cbofiles/attachments/43977_AutomaticStablilizers3-2013.pdf.

Paul Krugman’s Blog “The Conscience of a Liberal,” (20013), New York Times, “Gone Deficit Gone,” krugman.blogs.nytimes.com/2013/03/09/gone-deficit-gone/.

TO LEARN MORE ABOUT THE ECONOMIC CONDITIONS OF U.S. WORKERS:

Economic Policy Institute (2013), The State of Working America, stateofworkingamerica.org/.

TO LEARN MORE ABOUT THE MACROECONOMICS OF THE DEPRESSION:

Paul Krugman’s Blog “The Conscience of a Liberal,” New York Times, krugman.blogs.nytimes.com/

Center for Economic and Policy Research, “Economic Crisis and Recovery,” cepr.net/index.php/component/option,com_issues/Itemid,22/issue,32/lang,en/task,view_issue/

RECOVERY FOR THEM, DEPRESSION FOR US:

Blue line: Corporate Profits After Tax/Gross Domestic Product

Red line: Compensation of Employees, Received: Wage and Salary Disbursements/Gross Domestic Product

research.stlouisfed.org/fredgraph.png?g=h17

* This article was published originally on UE News, the newsletter of the United Electrical, Radio and Machine Workers of America.

** Julio Huato is an associate economics professor at St. Francis College in Brooklyn, New York, member of the steering committee of the Union for Radical Political Economics and member of the editorial board of the journal Science & Society.

UPDATE: An earlier version stated that the scheduled sequester’s cuts in military spending were “over $40 million.”  It should have said over $40 billion.

I find dynamic general equilibrium models — from the Ramsey-Cass-Koopmans versions to the Lucas-Chari-Prescott-Kydland or, if you prefer, to the Woodford-Mankiw versions — very thought-provoking; helpful to one’s critical understanding of social life.  They are not necessarily accurate in their “predictions” in a numerical or even algebraic-sign sense, but asking them to bear those fruits is expecting too much from them.

They are rather simple logical edifices that generate straightforward conclusions that can, then, be contrasted with data, observations drawn from the world as is, and thus help stimulate our thinking and inform our actions.  Of course, both the conclusions of the models and the statistical manipulation of the data are as good as the postulates on which they are based.  (To manipulate data statistically, one always imposes on them some “structure,” i.e. assume certain properties of the “data-generating mechanism” when, in fact, such “mechanism” is only known to us through the manipulation of data!)  These postulates are always dictated by our prejudices and, in the last analysis, by the pressure of vested interests.  Furthermore, there’s a sense in which these postulates are inherently self contradictory.  More on this below.

Playing mentally (or with pen on paper, or aided by computers) with alternative postulates to see how the models’ predictions flutter (or how the models fail altogether to yield straightforward conclusions) is the closest the economic discipline gets to the “controlled” experimentation practiced in the physical and biological sciences.  Making the models stochastic adds an additional bell-and-whistle that, if kept well contained, expands the array of what-if scenarios illuminated by the model.  The cost of that is, of course, added complexity.  But so far so good.

Now, why do I say that these models are inherently self contradictory?  Typically, the internal logical contradictions in these models arise from the self-referential character of social life.  One of the classical expositions of these contradictions is, of course, Keynes’ General Theory, chapter 12.  A lucid and updated rendition can be read in Duncan Foley’s introductory chapter to Peter Albin’s Barriers and Bounds to Rationality.   Clearly, the self-referential nature of social life places absolute limits to the stochastic or statistical addenda of dynamic general equilibrium models.  The stochastic element, if the model is to converge to a general equilibrium, needs to be stipulated mildly, in terms of “stationary processes.”  Multivariate stationary processes are those that maintain a certain qualitative stability over time, as captured by the “moments” of the multivariate (or joint) probability distributions.  At certain points, social life experiences drastic qualitative changes that betray these assumptions.  However, as I argued in my critique to Paul Davidson’s The Keynes Solution, these limits will never keep us from trying to anticipate one another’s moves in social life.  Life is a struggle and social life is, well, mainly a class struggle, and we tend to inform our actions with the best knowledge available, even if such knowledge is always contingent.

The notion that one can account in these models for “uncertainty” and, therefore, “risk” — i.e. the economic effects, benefits or costs, that result from said “uncertainty” — is truly disingenuous.  Let me bring this down to earth: What is “uncertainty”?  Some measure of our residual ignorance about the way the world, society included, functions.  In other words: Our common stock of knowledge is finite.  As I explained in a previous post, part of this ignorance and its attendant risk are socially-generated.  But even without that portion of it, even if our social life were perfectly transparent, our knowledge of nature would still be finite.  We only get to know the natural world insofar as we are capable of transforming it practically, fit it to our designs.  Our knowledge is embedded and can only be embedded in the wealth we produce; ultimately embedded in ourselves, in our physical bodies, nervous systems, etc.  We, “individuals producing in society” (Marx), are not only the point of departure of our social life, but also our ultimate point of arrival, our true and ultimate product.  Our knowledge is, simply, an aspect of the productive power of our mindful activity, which — indeed — is finite.  So, uncertainty is just another name for our finite productivity!  In the jargon of the economists, our resources (ultimately the productive force of our labor) are “scarce.”

If we push it further, the very idea that one can incorporate inter-temporality or, more simply, “time” (hence the adjective “dynamic” in dynamic general equilibrium) in these models is highly problematic.  Time in social life is what is often referred to as “historical time,” i.e. physical or “cosmological” time as experienced by us collectively (and “psychological time” or physical time as experienced by us, individually).  If we believe, as I do, that we are just a piece of nature with a few distinctive properties but ultimately subject to nature’s “laws,” then what is true for physical time extends to historical (and psychological) time.  For what I understand, physicists (e.g. Stephen Hawking) conceive of physical time as one of the four coordinates of the “curved” space-time “hyper-surface” of the universe.  This hyper-surface is curved because the substance of the universe (“energy” or “mass”) is unequally distributed on it.  And its curvature shifts as this universal substance moves around it, the “force of gravity” being an outward manifestation of this curvature.

The “arrow of time” (from past to present to future, as opposed to in the other direction) results from one of the fundamental laws of motion of this worldly substance about its space-time hyper-surface, namely the “second law of thermodynamics.”  As Hawking argues, our bodies (or parts thereof, such as our brains), or its artificial extensions (e.g. computers) embed or store knowledge (“remember the past”) by organizing (or reorganizing) themselves, i.e. by increasing order in a few small parts of the universe, but only at the expense of increasing the disorder or “entropy” in the rest of the universe.  Energy must be spent to increase the order or organization of our brains (or of our computers, since we must deliberately change and maintain their physical states).  Since energy-in has to equal energy-out (“first law of thermodynamics” or “conservation law”) and the knowledge embedded in the higher organization of our bodies, brains, or computers embodies only part of such energy (as “potential energy”), the rest of the incoming energy dissipates in the rest of the universe as non-recyclable heat.  The probability of upcoming disorder overwhelms the probability of future order.  It is this thermodynamic arrow that determines the way in which we perceive, individually and collectively, psychologically and historically, the passage of time.  Our brains (and computers) being physical, are subject to these thermodynamic constraints.  Hence, we will never be able to “remember” (or know) the future; except by reference to the past.  Perfect foresight requires the reversal of the second law of thermodynamics.  Time for us (the way we experience physical time, individually and collectively) is indissociable from our partial ignorance about causes and effects in the physical and social world.  Time and uncertainty are one and the same problem for us.

So what? — one may quip.  Isn’t everything in the world interconnected with everything else?  Yet, don’t we continue to think by abstraction, i.e. by imagining a world when one thing can change at a time giving us the opportunity to see what difference that single change makes on other things?  What is wrong with stripping “pure” time from the “pure” uncertainty element, or vice versa?  Indeed.  But then we must recognize the limits that this artificial dissection of what is always glued together imposes on our understanding.  The point is not to go nihilistic and conclude that human cognition is impossible.  Yanis Varoufakis refers to theoretical manifestations of this contradiction in economics as the “radical indeterminacy” of the discipline, a condition that damns the whole field.  I do not go that far.  Regardless of whether some knowledge is practically worse than no knowledge (and I do not think we know why this would or would not be the case), the quest for knowledge — which is to say, the quest to appropriate the world, social structures included, and conform it to human design — is intrinsic to our humanity (cf. the motto of this blog!).  The point is to undertake action with awareness of the limitations of our cognition.

Here’s another specific example of the internal logical contradictions of these models: Invariably, the models postulate exclusive or private ownership over wealth as part of their institutional framework.  However, “excludability” (the degree of effective ownership over wealth, the ability to choose how such wealth is to be used) is an endogenous outcome.  The equilibrium of these models is a self-fulfilling prophecy when all the agents of the model assume that exclusive ownership is an absolute given (and some other conditions ensue).  By postulating private ownership as given, the modellers are presuming that private ownership is some fact of nature existing in parallel to the mechanism that equilibrates the model.  Instead, at each point or period of time, it is a social outcome.  Private ownership is itself an aspect of the equilibrium: an outcome to be produced precisely by that equilibrating mechanism.

Foresight and other assumptions about the degree of “perfection” of our information or communicable (socializable) knowledge, or in the stochastic setting assumptions about our expectations (e.g. “rational expectations”), are meant to close the loophole.  But, clearly, they are self-contradictory!  How can we have “perfect foresight” if our productivity is finite?  How can we have “rational expectations,” the stochastic keen of “perfect foresight” if our productivity is finite?  Does knowing the average location and variability of social phenomena not entail perfect foresight of society’s probability distributions?   These internal logical contradictions that plague these postulates and, by extension, our social understanding insofar as it is derived from them, would not necessarily invalidate these effort, if we showed awareness of their import and implications.   The fact is that the pressure of the vested interests conspires against this awareness.  It takes a relatively unexpected catastrophic event like the recent crisis for the economists, people who usually brag about their wits to question their default assumptions about how our society functions.  This is from a recent speech by Larry Summers:

A premise of virtually everything I studied in graduate school, and virtually everything I taught as a professor of macroeconomics for some years, was that a coherent model had an equilibrium, and that if conditions changed, it would move to a new equilibrium.

Surely the events of the last few years call that proposition into question. If the world had unfolded forward from 2007 with no policy actions taken, no lending of last resort, no expansionary monetary policy, no expansionary fiscal policy, I would suggest to you that there is a real possibility that the right approximation would have been an unbounded downward spiral, a possibility ruled out in any textbook model or almost any model published in a journal in the last several decades.

Welcome to the club, Larry!  Social structures — both “organisms” like markets or spontaneous mobs and “organizations” like states or firms — are as fragile or as robust as people deem them to be, people taking actions under the constraints imposed by nature and their own social interactions.  So — yes — social structures can disintegrate with little prior notice.  Which leads me to my reflection on the so-called “self-correcting mechanism” of markets.

Some economists deny adamantly that markets have a “self-correcting mechanism.”  I guess it depends on what you mean by “markets.”   One can interpret Larry Summers’ remarks above as saying something like that.  But let me go really basic here and ask the question of: What exactly is what would make or motivate people in a market to adjust their actions in response to changes in the “economic environment” (stuff like “technology,” “preferences,” “wealth redistributive” shocks, or rather “expectations” thereof) so that some price emerges to “clear the market”?  I believe that the answer boils down to the assumption of “rationality,” in whichever sense we may wish to define it.  It is the purposive character of human actions (which is the distinctive feature of human activity vis-a-vis the rest of nature) that leads to the realization — at some point  – that the old actions “demanded” and “supplied” cannot be collectively reconciled with the new “economic environment.”  In the market setting, this is a narrow, individualistic kind of rationality that may — and often does — lead to massive collective irrationality.

In the frictionless world of the typical model, the adjustments happen at once, as soon as the “economic environment” shifts, and their reverberations across the rest of the economy are set up in such a way that some steady state is restored.  In this ideal world, the adjustments stay local and their propagated effects die down with time and distance.  This is by design: Without convergence to some steady state, the model collapses (i.e. it stops being useful).  Because who is interested in the multiple possible ways in which a society can break down?  Now, with sticky prices (or “informational imperfections,” etc. etc.), adjustment processes may become discontinuous, the imbalances in the model may accumulate at the risk of abrupt adjustments, nonlinear effects, etc.  Arguments like this may justify calling for some policy intervention.  Without the state, the “self-correcting mechanism” of markets asserts itself, but not gently.  The self correction becomes a serious snap, a disruptive and sudden explosion, appearing to the agents of the economy — to use Marx’s graphic metaphor — as the law of gravity appears to people when the roof collapses over their heads.  Massively disruptive adjustments caused by the “self-correcting mechanism” of markets is precisely what we call “crises.”  The problem is not that markets (i.e. the social structures that people trading their exclusively owned stuff establish with one another), in general, fail to rebalance social life in some way, but rather that the social cost of such rebalancing, the extent to which they may fray and unravel the existing social structures, becomes too steep to contemplate for the enlightened layers of the ruling class (if they even exist).

As I also suggest in my critical review of Paul Davidson’s book, the pressure for policy interventions is or should be viewed as a “self-correcting mechanism.”  It is a non-market, or extra-economic mechanism, but “self-correcting” nonetheless.  In other words: A severe crisis forces people to demand and expect that the “self-correcting mechanism” of markets be replaced with the “self-correcting mechanism” of the state.  But what if the crisis metastasizes and becomes political in the most radical sense?  What if the very premises of political life, of the state structure, become the obstacle to the restoration of continuity in social life?  What if the very political constitution of society, the state as it exists, gets in the way of restoring order and continuity in the interaction among people?  This obviously depends on how people move politically, what kind of aspirations and demands they are capable of articulating and fighting for.  But this is when the social “self-correcting mechanism” goes truly primal.  It is the time when revolutions become possible and even necessary.

In this light, the “self-correcting mechanism” of markets is a rather superficial expression of human rationality, a narrow rationality that takes much for granted.  The purposeful nature of human activity, the fact that we humans — in contrast with the rest of nature — tend to problematize the world (the human problem par excellence being going from the “world as is” to the “world as we need it to be” or “as we design it to be”), the fact that we exercise “Will” (Hegel) or approach the world as “producers” or “laborers” (Marx), the fact that our purposeful activity, our labor, only exists socially, in association or cooperation, is what underlies in the last analysis any “self-correcting mechanism” — i.e. our impulse to keep society from breaking down altogether and regressing to animality, our impulse to restore civilized life, to reorganize our social life in ways that fit our highest (historically-evolved) values and aspirations.  The political “self-correcting mechanism” fails, the radical premises of the social order get questioned, and the self-correcting mechanism” of revolutions become necessary.

The resolution of a global crisis like the ongoing one will not wind up with the full restoration of the status quo ante.  Some restoration is, of course, very possible — at an extremely high social cost.  Look around: European societies and even the United States are under much stress.  But crises, insofar as people fight back, also help us unleash our political and social imagination.  In these struggles the embryo of a new workable society is lodged.  When one realizes that, at each point in time, we are reproducing our social structures, one also sees that one can choose to produce something else, new and better.   As Marx wrote:

Once the internal connections are revealed, all the theoretical belief in the eternal necessity of the existing conditions collapses, even before the collapse takes place in practice.

Back in 2001, I read in the New Yorker a Jon Lee Anderson’s piece profiling Hugo Chávez. (You can google it.)   Knowing what I know about U.S. society, it stroke me immediately as an influential piece of (perhaps unwitting) propaganda.  Anderson, who as a journalist for the New York Times and other outlets has followed Cuba and Venezuela for a long time, offers reports that — by the dismal standards here — one may even view as “progressive.”  In any case, it always seems to me, Anderson’s pieces eloquently say much more about his own deep-seated liberal prejudices than about the concrete realities he is supposed to be depicting. As a result, I believe, his journalistic career owes much to the fact that his liberal prejudices conveniently rationalize the global imperial ambitions of the 1% that rules this land.

I single out Anderson, because — I believe — his early piece did much to establish in the American consciousness Hugo Chávez as a volatile (maniac-depressive), incompetent, second-level demagogue and micromanager, a pathetic figure caught in the midst of a social storm way high over his head.  Like little else, the article riveted among the broader American public perceptions that, for much more pragmatic reasons, were being pushed from the very centers of American wealth and power, those who do know better what’s at stake.

How mindfully I do not know, but there is no doubt in my mind that Anderson’s article exploited the racist predispositions of readers, fostering strong lizard-brain animosities against Chávez.  I do not doubt that Chávez’s looks, voice, boisterous mannerisms, the color of his shirts, etc. rubbed some people the wrong way — even people in the U.S. left, who thought that by keeping a hefty empathetic distance from Chávez they were simply guarding themselves against the “authoritarianism” of old socialism.  We all are conditioned by our social milieus.  We breath the culture around us.  The more or less idiosyncratic choice of villains by a Hollywood director may stay in the unconscious layers of our minds for much longer than we would admit.   Consciously or not, we tend to assume that our particular cultural sensibility is the human sensibility.  And this rule applies as well to educated, highly self-aware, comfortable Americans.  Thus, I argue, Anderson’s piece contributed to shape up for ill the notions of the Bolivarian revolution and of Chávez among “upper middle-class” Americans. I bet that, after reading Anderson’s piece, a fair portion of his readers thought to themselves that Chávez’s supposed irrationality, his alleged ignorance of the arcane principles of economic management, his “erratic” way of conducting politics, could only meet a tragic end.  Perhaps the U.S. government, a government of presumed grownups, competent folk, would have to intervene to clean up the mess or at least make sure that the vast reserves of oil, bauxite, iron ore, gold, etc. that God placed under Venezuelan soil for the convenience of Americans remained under safe custody.

Knowing how lazy journalists across the narrow ideological spectrum of the mainstream tend to be with regards to other societies, I am sure that Anderson’s portrayal was taken at face value and got amplified mightily through the echo chambers of the U.S. media machine.  It even rippled back — I believe — to the upper crust of Latin American societies, people who tend to import their ideas wholesale from the Miami Herald and CNN en Español and need tiny little to confirm their dislike of “populism.”

What about the charge of “authoritarianism,” repeated ad nauseum by rightists and leftists?  On that, I recently wrote this comment on the wall of a Facebook friend:

The authoritarian meme is so tired. How do you uproot “authoritarianism” (the new word for what we used to call the “hierarchical division of labor”) overnight? Do you just wish it away? Do you believe that the strategy to dismantle “authoritarianism” in the left and, more importantly, in social life is self evident, so you don’t even need to sketch it? Isn’t the redistribution of oil rents in favor of the poor, effectively, the most anti-authoritarian measure that any ruler in Latin America (not about to fold or give up) may conceivably take? Where is the evidence that Chávez moved to concentrate power personally at the exclusion of the people (as opposed to at the exclusion of the bourgeoisie and the “Empire”)? Another big charge you level against Chávez is “demagoguery.” Really? Because he painted a vision of a better society and, thus, promised people that, if they organized, etc., they could turn around their living conditions, and people take a long time to organize and change their living conditions? I guess that is such a deadly blow (no pun intended) to his character that it allows you to avoid taking sides. Finally, the association with fascism is truly lazy. My only explanation for the insistence among Anglo-American educated people in linking fascism with the oratorical style of Latin American leftists is — I suppose –that the historical sources of our rhetorical education can be traced back to Jesuits and other Catholic priests, French, Italian, and Spanish. Yeah, he had some resemblance with Mussolini. That does it.

I wonder if Anderson looked back at what he wrote and had any second thoughts.  Aside from the information out in the public domain, I had a couple of brief opportunities to shake Chávez’s hands and observe him up and close, and he appeared to me exactly as Eva Golinger described him: as an unpretentious human being who — genuinely and concretely — cared about other human beings.  And, in my view, an incompetent manager he was not.  The key virtue of a manager is to get the priorities right.  To cite Donald Knuth, “Premature optimization is the root of all evil.”  Chávez had the right priorities well outlined in his mind.   To put it in jargon economists can understand, he may have been less than perfect at optimizing his objective function, but he had the right objective function — and he moved relentlessly in the direction of the gradient.

The reduction of poverty rates in Venezuela — in the midst of brutal external and domestic hostility, coups, and sabotage — is all one needs to confirm Chávez’s spectacular political, macroeconomic, or you name it success.  As Robert Dreyfuss put it: Chávez was “a man who did a lot of good for a lot of people.”  To me, that is the point of any sensible economy.  With the resources at his disposal, which — if you understand the concrete nature of political power — were much less than people believe from a distance, he achieved wonders by focusing on what was truly strategic: the development of the concrete powers and — therefore — the concrete freedoms of concrete people. There is nothing less authoritarian and less demagogic than helping people develop themselves as makers of their own history, and — as Marta Harnecker says — that is what will prove to be the longest lasting legacy of Hugo Chávez, the man.

Update: Some Spanish readers got perhaps a vaccine against the biases of Anderson and his ilk with none other than Gabriel García Márquez’s 1999 article, which Cubadebate is now republishing:

http://www.voltairenet.org/article120084.html

Update 2: The CEPR has this nice graphical summary of the economic performance of Venezuela under Chávez:

http://www.cepr.net/index.php/blogs/the-americas-blog/venezuelan-economic-and-social-performance-under-hugo-chavez-in-graphs

Protesters against the banks (Reykjavik, 2009).

Hat tip to Robert Naiman for sharing this editorial piece by Bloomberg praising the bottom-up approach followed by Iceland in dealing with the financial and economic crisis and, by contrast, blasting the U.S. and EU approaches:

http://www.bloomberg.com/news/2012-09-26/is-remedy-for-next-crisis-buried-in-iceland-view-correct-.html

But, who would have thought that using public resources to help regular people manage their debt — rather than the bankers keep paying obscenely high bonuses to their top executives — could ever work?

Actually I did.  I said that the bottom-up approach would be “more effective, equitable, and inexpensive.”

http://juliohuato.org/2008/09/23/my-rescue-plan-2/

The sooner we understand the best economic policy for us is an organized and enlightened class struggle (and act accordingly), the better.  Here are two economists ruminating about it:

http://www.guardian.co.uk/global-development/video/2012/nov/05/ha-joon-chang-jobs-policies-street-video

From Robert Reich’s Facebook page (Reich was U.S. Labor Secretary under Clinton):

One of the most encouraging things I’m seeing isn’t happening in Washington. It’s happening at big-box retailers and fast-food chains, where the lowest-paid and most vulnerable workers in America are beginning to organize for higher wages. Yesterday, fast-food workers at McDonalds, Burger King, and other chains went on strike in New York. Last week, Walmart workers staged protests. The Bureau of Labor Statistics estimates 7 out of 10 growth occupations over the next decade will be low-wage fields like these whose workers are earning between $8 and $10 an hour. And contrary to popular mythology, these jobs are not being done by teenagers. The median age of fast-food workers across America is over 28, and women — who make up two-thirds of the industry — are over 32, according to the BLS.

This is how this country’s economy policy should proceed:

1. Military spending should be reduced drastically.  The grounds for this are sanity and good international karma (which does work, cf. Cuba’s solid international support at the United Nations).
2. The tax cuts for the wealthy should be left to expire.  Not only that, but tax rates for the wealthy should go up.  The grounds for this is equity, which — as Stiglitz and others imply — will wind up in the medium and long term increasing macro efficiency.
3. Taxes should be reduced for everybody else.  The grounds for that are both equity and short-term macro efficiency.
4. Public spending should increase drastically not only to offset the reduction in military spending and the tax cuts for the wealthy (although the latter is a tiny thing, as the spending by the wealthy is barely affected by tax changes), but more importantly to hit full employment.  The grounds for all this is macro efficiency.

There are many areas for federal and overall public spending to go to: Federal help to states and municipalities is urgent to sustain basic local public services.  Substantial investment in public education, health care, science & technology (for civilian applications) are sorely needed, and the green/energy/transportation/communications/urban/suburban/rural 21st-century infrastructure must be built.  Quality-of-life public spending (e.g. in the arts) is absolutely necessary.

A bigger deficit is fine.  Treasury yields are and will remain low, and even some inflation will help with debt relief — which is good on equity (and hence, on macro efficiency — Stiglitz again) grounds.  The sky won’t fall.  Instead, the deficit/debt so-called problem will vanish.

I have explained before that the debt (public or private) is about how wealth is distributed and does not necessarily have anything to do with how the productive wealth of the country (and of the world) is employed.  The nervousness of rich people (debt holders) about their future should not be allowed to turn into a generalized economic disaster.  (Ultimately, decoupling debt from employment requires that wealth be redistributed — i.e. a profound social revolution, but for the time being we can push back against the attempts to make one thing depend on the other.)

These are the economic policies that make sense to the 99%.  How can we make them happen?  We can do things like these:

http://www.euronews.com/2012/11/14/europe-wide-strikes-against-cutbacks/

Let’s take action before the Austerity Bomb (so-called Fiscal Cliff) goes off!

UPDATE: Hat tip to Jim Farmelant for reminding me of Michal Kalecki’s essay, “Political Aspects of Full Employment,” on the political difficulties facing the enactment of full-employment policies.  Again, we need mass action to set this in motion.

Comrades,

How are Marxists to approach electoral politics in the United States? This is a hot question for us to ponder in the aftermath of Obama’s reelection. I would like to pose it in the most general way.  But, before I get to it, let me explain more precisely what I regard as the specific essence of Marxism, so I make myself clear.

In my view, the distinctive essence of Marxism as a worldview is not some fixed set of propositions about how the world (society in particular) evolves, or some method of thought — as Lukács (1920, History of Class Consciousness) argued.  Indeed, there are some general theses that historical experience and theoretical work have validated amply, theses that — a number of Marxists would agree — summarize the heuristic core of the Marxist worldview.  However, as firmly established as they may appear to us, these theses do not — in my view — constitute the true essence of Marxism as a worldview.

I believe that the ultimate essence of Marxism lies in a specific human attitude, which the young Marx (1844, A Contribution to the Critique of Hegel’s Philosophy of Right) ranked as a categoric imperative, namely the steadfast, unyielding opposition to the existing social conditions, insofar as these conditions debase us, fragment us, impoverish us, and — therefore — dehumanize us.

This spirit of indomitable opposition to the status quo, of relentless resistance and fight, is not an attribute unique to socialists.  To degrees that vary with time and circumstance, this is a trait inherent to all humans qua producers, it is lodged at the heart of the purposeful activity of transformation, of the world and of self, that we call labor.  Communism or — as Engels later called it — modern or scientific socialism (i.e. “reality-based” socialism, to use a currently fashionable expression) is this attitude, except that it seeks to be increasingly conscious, continuously improving upon itself and incorporating the top achievements of human culture and science.

As Marx noted (1867, Capital), it is not in us to accept passively what nature or history hands us.  We engage the world in a conscious or purposeful manner, we use the world as the material means to embody our designs.  This is what distinguishes us from the rest of nature.  We problematize the world.  We face the world as is and find it to be lacking.  We contrast it with the world as it needs to be for us.  Our problem, the uniquely human problem, is then how to go from the world as is to the world as it needs to be for us.

This requires that we start by recognizing the world as it exists.  And what is the most salient and comprehensive trait of the world as it exists?  How can we encapsulate in one phrase the character of the existing social conditions?  Evidently, the main trait of our social structures — economic, legal, political, etc.; from families, to markets, to states, to virtually any other existing social institution — is that as a rule they are not truly ours: of the producers, by the producers, and for the producers.  The social structures we create through our interactions are not responsive to our needs.  They appear to us as out-of-control powers, hostile forces that pit us against one another and crush us.  In sum, our society, although the product of our interactions, is fundamentally alien to us.  The chief characteristic of the existing social order is its alienation.

By stating the problem, the solution insinuates itself.   If the problem is alienation, the solution is its polar opposite: appropriation.  If when we produce, we are moved to appropriate and transform the world in accordance to our designs, then the drive to appropriate will necessarily extend beyond the immediate premises and results of our production and to our very social structures.  Again, socialism is the increasingly conscious historical form that this human compulsion takes in our times.

Socialism is this reaction against social conditions that are alien to us, this drive to take over a world that eludes us, but a drive that is increasingly conscious.  So, what I am really saying is that the essence of Marxism is socialism viewed as a movement.  It is conscious movement in the sense that it recognizes and grasps the world as it exists, without sugarcoating it or denying it, and then proceeds in a manner as deliberate, systematic, and organized as possible to transform it, from its foundations if need be.

I believe that a great deal of the historical experience of the socialism under Marx’s influence, when considered broadly, confirms these views.  Also, I believe, almost two centuries of heroic and also tragic social experimentation, from the Paris Commune to the Soviet Union, to Eastern Europe, to the People’s Republic of China, to revolutionary Cuba, to Venezuela, etc., validates the description or prescription in the Manifesto (1848) about the role that socialists play in the historical development of this movement.  This role, let us remember, is not the creation of sects, parallel organizations, separate and apart from those that the working class itself forms, groups whose membership is based on ideological criteria and devoted to propaganda and/or (in extreme cases) to putschism.

As Marxists, we are well aware of the importance — in fact, the historical necessity — of leadership, which arises as a consequence of the division of labor in the most basic sense.  And we do well in emphasizing it, especially in our times when this importance is often minimized or denied.  But we are also well aware of its limits and of the perils involved, which the history of socialism has highlighted tragically.  We cannot fetishize its role or, worse, justify its authoritarian corruption.   Over the long haul, the role of socialists in the movement of the producers to appropriate our social conditions is self effacing.  Even in the most immediate sense, the basic role of socialists, as the conscious caucus of the working class, is to assist – not to supplant nor to substitute for — the existing organizations of the workers, their movements, in their myriad forms, as they have developed them for their self-defense and for the improvement of their living and working conditions, regardless of how limited or deficient these organizations may appear.  The role of socialists is to help them see the bigger picture by promoting within them the longer-run and broader interests of the class, by encouraging the wider unity of the workers beyond all types of divisions and differences.

Should these workers’ organizations prove ineffective (not to the socialists, but to the workers themselves), then it will be incumbent upon the workers to refit them or discard them and replace them as need be.  Only the producers can liberate themselves (1871, General Rules of the International).  This obviously does not mean that socialists, the self-appointed enlightened subset of the producers, must be passive, lack initiative, or trail behind the mass.  The socialists aspire to be the most active and resolute subset of the working class, its leading force.  But their initiatives cannot be arbitrary.  These initiatives should always be calibrated to the concrete needs and resources, the tempo, the collective state of mind, and even the mood of the bulk of the producers involved, because it is ultimately in and through their struggles that they will develop themselves as the agents, constructors and owners of a new society.

Although I was asked to speak about “Marx, Marxism, and Electoral Politics,” I have avoided extensive quotations or arguments to authority in my discussion so far.  However, with regards to electoral politics, let me use Marx’s latest battle in the International against Bakunin and followers as the canonical illustration of the proper general approach to the political struggle, a struggle the anarchists shunned.  The anarchists shared with Marx and others in the International the general goals of liberation and communist construction by the workers.  Like Marx, the anarchists viewed the economic institutions of capitalism as intolerable: they had to be overthrown.  Also, there was coincidence that the state was an oppressive Frankenstein that had to be taken apart.

Marx’s differences with the anarchists were in emphasis and approach.  The anarchists emphasized the state as the representative form of social alienation, somewhat neglecting or slighting  the fact that the political, legal, and bureaucratic apparatus of the state was erected upon alienated economic conditions: social inequality, markets, the social division of labor.  The anarchists took an uncompromising stance against the state.  Like today’s anarchists, they believed that by addressing the state with their demands, or by engaging in the political arena, they would be recognizing and thereby reinforcing the state, rather than dismantling it.

The idea of struggling to generalize universal suffrage or to conquer political power a la Paris Commune, which attempted to take over and reorganize the state to serve the needs of the workers, temporarily at least, was anathema to the anarchists.  The state could not be recognized; it had to be abolished immediately.  In a similar vein, the workers were not supposed to form unions or go on strikes or seek immediate economic improvement in their working or living conditions, because all that entailed a de-facto recognition of social structures that could not be accepted as legitimate and had to be overthrown.

Marx argued strongly against this approach, since in practice it amounted to denying the workers — I quote — “any real means of struggle,” because the arms with which workers can fight are always “drawn from society as it is” (1873, Political Indifferentism).  The struggle for economic gains, for political freedoms and rights, for expanding the influence of workers on legal codes and on the apportioning of public resources, which the anarchists viewed with suspicion, methods that would corrupt the soul of the workers and lead them to conformity or turn them into active accomplices of the status quo, were — in Marx’s view — absolutely necessary for the workers to transform themselves into a combative and independent political force, capable of self emancipation.

Obviously, Marx was aware of the perils the anarchists warned against.  However, passivity, defeatism, conformity to the status quo, tolerance of the existing conditions, and all sorts of diversions of the workers’ energy away from the struggle, in a word internalized alienation, was the default condition of the working class.  While external help could speed up the learning process, the combative spirit against the existing social order could not be imbued into the workers’ consciousness from the outside.  In fact, such spirit was already in them, dormant, and it could only be awaken and developed further by the workers’ own engagement.  Again, socialists could help accelerate the learning process, but they could not bypass it or dictate its pace, forms, and ultimate outcome.  Self defense as well as efforts, however narrow or limited, to improve their living and working conditions were the only starting point on which any further political development could be built upon.

So, Marx’s approach, far from shunning the struggles, organizations, movements of the workers as they existed, fully embraced them.  These struggles, organizations, or movements were viewed as the necessary embryo of more advanced struggles, organizations, and movements, and — hence — of any workable future society.  Again: How else could workers fight and transform themselves into a revolutionary force if not by resisting and struggling, and — being that their condition was that of an alienated, fragmented mass — resisting and struggling with whatever ideas, instruments, or organizations were at hand?   Again, in the Manifesto (1848), Marx and Engels explicitly warned against the formation by socialists of small sects intent on steering the workers away from their existing organizations and struggles.

It is only through their immediate struggles that workers will find when and if a given existing political instrument (idea, practice, or organization) is inadequate to a given struggle, and is through that collective learning process that they will set out to transform the given instrument — or discard it and forge an entirely new one.  But the decision will be made, effectively, by the workers themselves, after — if history is guide — extensive trouble-shooting of the instrument at hand.

Trouble-shooting is the most apt analogy I can think of to illustrate the materialist, Marxist approach to the political struggle, including the electoral struggle.  This analogy may seem trivial to address such a serious question as the involvement of U.S. workers in electoral politics, and — to be more specific — to address the way in which such involvement relates to the Democratic Party, but I argue that it is most apt.

Consider the way David and Tibby deal with the problems that frequently arise with the computer at the S&S’s office.  Whenever a glitch makes their work difficult, Tibby and David trouble-shoot.  They start by wondering whether it is something they are doing wrong.  If they decide it is not, then they expand the scope of their investigation.  But it is always along the Occam’s razor‘s edge.  Perhaps it is the software application they are using, or the operating system needs to be upgraded, or — God forbid — the hardware.  If the problem is the hardware, they will agonize on whether to upgrade it, expand its RAM memory or hard-drive memory, etc. or — only as their last thought — replace the damn computer altogether.  I’ve been with S&S for several years, and I’ve seen them struggle with that computer for all these years, and they are still clinging to it!

I have given them my expert (but perhaps premature) advice that they need to buy a new one.  Basically, they have ignored my wisdom.  I suppose that a big factor is that every computer system entails a learning curve, adaptation, etc.  They have already invested much time and energy in this system, and they don’t want to discard all that sunk effort along with the old computer unless they are convinced it is absolutely necessary.  I do not do the day-to-day office work.  So, my perspective is that of an outsider.  The emancipation of Tibby and David from that alien computer monster that is causing them terrible headaches and frustrations can only be achieved (“conquered”) by Tibby and David themselves.  They will decide if and when it is time to dump the clunker.

Perhaps, if I were more convinced that they are wasting precious time with the old computer, I could take a more materialist, less sectarian approach to help them meet their needs.  That would require a greater engagement on my part with the work they do on the computer.  It’d require a very patient cooperation in their struggle to make the computer perform the tasks assigned to it.  And only through that engagement, by accompanying them in their frustrations and successes along the way, they would perhaps come around to realizing that I was always right or — worst case scenario — we would all realize that our initial views were partial and one-sided, and arrive then at a more comprehensive well-consensed synthesis or shared conclusion.

All analogies have flaws, of course.  But if it has taken years for Tibby and David to discard a computer that years ago was already old, imagine the kind of leap that would be required to have the U.S. workers challenge frontally the direction of the existing political system or, more specifically, the direction of the Democratic Party — let alone to break up with it in mass.  The fact is that, in the United States, there is no meaningful national political organization of the workers, by the workers, and for the workers.  The process of political differentiation of the working people in the U.S. is still in its infancy, for a host of historical reasons that I cannot discuss now.  That process of political differentiation will eventually lead to political independence, but — as far as I can anticipate it — such leap will result only after a prolonged period during which they will be trying stubbornly to steer the Democratic Party and the policies of the state in their favor.

It is not true, as many of us may feel, that such struggle will prove sterile, that the attempt to alter the direction of the Democratic Party by working people in motion is inevitably doomed to fail.  We do not know this.  The outcome of any and all class struggles is contingent and can only be resolved by the class struggles themselves.  What socialists believe they know may or may not turn out to be correct.

Let me clarify at this point that there are all sorts of organizations and movements that advance the workers’ interest in various ways, not only trade unions, but women rights, undocumented immigrant, civil rights, environmental, health-care advocacy, or other single- or multiple-issue organizations, many of them connected to churches and other religious institutions.  These organizations, and their individual members, may or may not share the outlook of Marxist socialists.  These are the workers’ organizations that exist.  What does not exist, and I repeat, is a national political organization with the apparatus and resources required to give workers any fighting chance in the struggle for pro-worker legislation and policies, let alone to frontally challenge the political power of the capitalists or (an even more remote goal) to build socialism in the United States. This, of course, is things as they stand today, and we all know that things change, sometimes rapidly.  But, as materialists, we know that overnight changes are always prepared by  a gradual accumulation of not always visible small changes.  And it is to these gradual accumulation of small changes, which often go unnoticed under the surface of events, that I would like to call your attention.

Up to the present, historically, the main de-facto political vehicle for the advancement of the workers’ interest has been the Democratic Party.  It is not only that a significant number of individual workers vote for the Democratic Party, support their candidates and, to some extent, contribute to it financially and support its policies and share its ideology.  Also, and perhaps most importantly, organized workers, unions and other organizations that promote their causes, i.e. the workers that until now have effectively demonstrated to be most willing and ready to fight, have felt forced to cooperate with the Democratic Party, and to rely on that cooperation as their only viable political vehicle.

It is often argued that the unions and other workers’ organizations are making a fatal mistake by investing their resources and placing their hopes in the Democratic Party.  The argument is that, by so doing, they are perpetuating the workers’ political dependence and subordination to the capitalists.  Surely, in series or in parallel with their effort to conquer organized political independence, the workers will have to reorganize their unions and their other organizations as well, if they want them to sharpen them.  But we have to see the rational kernel in the argument made by the unions and the other organizations that cooperate with the Democratic Party, namely that there is no other political instrument in sight, and that unions and other organizations, out of their need to survive, are obligated to defend and advance the interest of their members with whatever resource may be available to them.  This is not a trivial argument, and we should resist the temptation to dismiss it offhand as a mere rationalization of opportunistic tendencies.  It can be such rationalization (most everything can be), but it need not be.

Unions (let me single them out), to justify their existence, are forced to be involved in shaping up legislation, in influencing the implementation of laws and policies as well as their adjudication, when litigated through the court system.  They simply cannot afford to ignore the political process — legislative, administrative, or judicial.  Or they can ignore it at their peril.  However — the contrary argument goes — is it not true that unions often avoid or neglect the use of methods such as strikes, mass demonstrations, “direct actions” in general, presumably because they have become bureaucratized, gotten too cozy with the political establishment and the bosses?  And is it not true that mobilization outside of the electoral system is, ultimately, their only reliable instrument?  I believe that there is significant truth to this claim.  However, we have to accept that mobilization outside the electoral system alone is also one-sided and insufficient.  Furthermore, direct mobilization has its own limitations, if not other than the finite disposition of workers to mobilize. Economic gains that can only be conquered and maintained politically, through electoral influence and legislative clout, provide conditions that expand the workers breathing space and thus (other things constant) increase their willingness to mobilize.  Remember that workers, even in the U.S., are hard-pressed under the weight of their most immediate needs, and their unwillingness to sustain mobilization cannot be simply the result of the timidity (real or alleged) of socialists.  Mass mobilization outside of the electoral or political system in general should not be fetishized.

How about the argument that the Democratic Party is an instrument of the capitalist class?  There is no question about it: The Democratic Party is, in its organizational structure and ideology (insofar as one can impute to it some sort of coherent ideology), a political formation of, by, and for the capitalists.  The Democratic Party is not, as it exists, an organization of the workers.  It is true that workers’ organizations provide a substantial amount of financial support and muscle for vote mobilization, but they do not have the power or resources to dictate terms in the legislation or in the administrative implementation of the laws.  It will not be easy for workers’ organizations to develop these capabilities.  It is the duty of Marxists to make this fact known and not to sugarcoat it.  This willingness to ruthlessly expose the class nature of the Democratic Party, by reference to its concrete political behavior, is a key trait that separates Marxist socialists from liberals and non-radical progressives.

A frequent contrarian argument is that there exists a well-tested principle of the class struggle that workers should never cooperate with the organizations of the capitalist class, that only candidates postulated by political parties with explicit pro-worker programs should be supported.  This is simply nonsensical.  The historical cases alluded to prop up this argument presuppose conditions that do not necessarily exist in the United States today.  Countless cases and references can be found in the works of the Marxist classics and — much more importantly — in the history of socialism to prove that this is simply not true, that workers and their organizations, including political organizations led by socialists, have been, are, and will be forced by circumstances and tactical necessity to cooperate with the organizations of the capitalist class on a regular basis.  But, much more importantly than any reference to the workers or the personal experiences of Marx and his followers is the fact that this proposition is absurd in its face.  It is impossible for working people immersed and crushed in a capitalist society to refuse any and all cooperation with the capitalist class, be it in the workplace or outside of it.  The question is not whether to cooperate or not with the capitalists, as that cooperation (coerced, both extra-economically and economically, but cooperation nonetheless) is the default mode of existence of the working class (including socialists) under capitalism, but how to extract from such cooperation advantages over and above those the class enemy extracts from it.

For the time being, it is simply not viable for socialists to demand that the workers’ organizations that provide electoral support to the Democratic Party pull the plug.  This, again, cannot exclude propaganda exposing the nature of the Democratic Party, which should be a constant effort by the socialists, but it is neither tactically nor strategically viable or even advisable for socialists to ask workers to abstain from electoral participation, or to join third-party campaigns insofar as they are not propelled by the workers in mass motion.  Things would, of course, be very different if the workers themselves, discontent with the Democratic Party, were to stage a political insurrection against its existing apparatus.  In that case, we would want to actively encourage their pursuit of other ways of struggle.  The historical experience shows that the most significant and lasting advances in pro-worker legislation resulted from mass insurrections against the status quo that show the rulers the disposition of working people to turn things around; the most radical these insurrections have appeared, the more significant and lasting their effects.

Although the main impetus of the Occupy Wall Street movement was not directed at the Democratic Party, but at the financial system and, only indirectly, at an unresponsive, bipartisan political establishment in its entirety,  the eruption of this movement in 2011, following up closely on the Wisconsin uprising, raised the abstract hope — at least during its peak — of such an insurrection against the Democratic Party apparatus, but the hope did not grow enough to become a concrete possibility on time to change the course of the 2012 presidential elections.  This is something that I came to admit reluctantly, as things unfolded.  In any case, the impact on the electoral process was significant.  On the other hand, third-party initiatives (and, worse, abstentionism) were doomed to be a diversion of meager political forces.

I must emphasize here that mass insurrections of this type, disrupting politics-as-usual, especially in times of crisis, should never be ruled out as a possibility.   We should not deny either that, often in history, all these insurrections need to be triggered is a small but audacious kick in the pants by a small group of individuals, and that — in such junctures — the role of radical socialists becomes decisive.  This is the kernel of truth lodged in the ultra-leftist rejection of electoral politics, rejection that is the most strident the furthest removed these groups are from the mass of workers and from their existing organizations.  Often, ultra-left groups and individuals direct their agitation almost solely against the Democratic Party, and like the proverbial broken clock, they are bound to be correct on occasion.

Let me here point out a related phenomenon.  We have recently witnessed the impact of the Occupy Wall Street movement on the union movement — one among its many positive repercussions.  It is difficult to conceive of two approaches to the struggle with more contrasting backgrounds than unionism and OWS activism, the latter being heavily influenced by modern anarchism.  It is a development of historical significance that a  number of unions have maintained active cooperation with OWS activists in the organization of joint direct actions, mass protests, etc.  This is a clear indication that the unions are not as immune to change as we often assume, that there exists in them serious potential for self transformation or that — in any case — the decision to reorganize the unions or discard them (as I tried to establish above) is better left to the incumbent workers themselves.  Where this ongoing cooperation between Occupy and the unions may lead is, of course, a matter of historical contingency.  The role of Marxist socialists is to encourage and assist both sides and promote this kind of unity in action.

Let me say at this point that, very clearly, Obama’s reelection was — to a very significant extent — a byproduct of the Occupy Wall Street movement.  Without the social eruption unchained by the actions of the Occupiers of Liberty Plaza, the focus of the public (and of the media, and then of wider and wider segments of the public) would have not turned to the ills of the financial and economic system and the government, as well as to the gaping social inequality that underlies it all, and the Wall-Street creeps and their minions in the media would not have been put on the defensive, and the ideological climate of the nation would have continued to shift further to the right.  A financial and economic crisis, even as deep and widespread as the ongoing one, is no guarantee that working people are going to move in the proper direction.  History is full of cases in which economic dislocation led to the demoralization, further fragmentation, and exploitation of the working class.  The Obama victory, which required him to position his political marketing slightly to the left of the core consensus in the political and media establishment, was a clear collateral effect of Occupy Wall Street.

I argue that this is a fact that workers and socialists should take to heart and use it to encourage all efforts and initiatives in the direction of popular mobilization, self organization, and self education.  This is aside from the fact that a significant number of the people who participate in Occupy Wall Street (or view themselves as part of the 99% in action) actually helped Obama’s campaign concretely, registering people to vote, knocking on doors, making phone calls, etc. There is no doubt that many of those directly involved in Obama’s campaign claim to be active part of Occupy Wall Street, even if the movement as a whole chose to remain critical and apart from the electoral process.

But let me get back to the relation of the workers’ movement to the Democratic Party: Whether it conforms to our preconceptions and wishes or not, a significant, massive group of workers, including organized workers with active political agendas, are already relying on the Democratic Party as a political vehicle for their struggles.  Whether the workers are extracting significant advantage from this is another (yet very important) issue.  Of course, as I just said, we want the workers to extract the maximum amount of benefit from this engagement that, whether we like it or not, is ongoing and — rules overnight dramatic changes — will continue for the time being.

Furthermore, the sheer logic of this engagement entails the existence of a movement within the Democratic Party aimed at changing its course, at wresting the control of its apparatus and placing it in the hands of people with a demonstrated commitment to the goals of these workers’ organizations.  This motion within the Democratic Party is not necessarily at the brink of a qualitative rupture, one way or the other.  It seems to still be at an early stage of gradual accumulation of molecular changes.  But one can expect that, at some point, the mounting tensions between the pro-worker wing and the pro-status quo wing of the Democratic Party will come to a head.  There is significant evidence indicating that the recent electoral outcome improved the standing of the progressive, left-leaning wing of the Democratic Party.

Let me stress the fact that I am only registering facts that can be observed.

I am not arguing that Marxists should call working people to join the Democratic Party in mass, or that they should ask workers currently not in the Democratic Party to join it.  I’m not saying they should, but neither am I saying  saying they shouldn’t.  What I have affirmed, and I reaffirm it, is that socialists cannot expect workers to abandon the Democratic Party in mass for the time being.  The decision to join or not to join the Democratic Party has to be based on a very concrete calculus of political benefits and costs, on the specific struggles in question, balance of forces, resources and needs, etc.

I have not referred to local and state electoral politics, a field that is grossly neglected by the radical left focused on propaganda.   Developments in this field are a necessary precondition for any serious mass insurrection against the political status quo.  So the following remarks may apply more properly to local and state electoral politics than to federal elections.

For some working people or workers’ organizations and movements, affiliation with the Democratic Party, the development of a “progressive” wing within the Democratic Party, will appear as the handy alternative.  Indeed, the struggle within the Democratic Party will at some point face hard limits and run into serious self contradictions.  No wonder: Any and all approaches to the struggle, when pushed beyond some threshold, entail limits and self contradictions.  But, again, it is easy to see why the “entryist” approach may appear as viable to particular segments of the working class.  I don’t think one can predict the outcome of this struggle, but Marxists are clearly obligated to support it resolutely.  I repeat that it doesn’t matter if we believe this to be a futile struggle, doomed to fail.  It is not up to us to decide the tempo of the decision of the workers and workers’ organizations in the Democratic Party to abandon their attempts and set up a separate tent.  I can be more specific:

Consider the struggles of Latino, undocumented workers, workers who lack the most basics rights of citizenship in U.S. society.  I cannot stress sufficiently how important their struggle is for the unity of the U.S. working class.  The conquest of full rights to immigrant workers ought to be at the top of the political agenda of the U.S. workers.  The “actually-existing” organizations of immigrant workers called to support Obama in the presidential elections.  These are the organizations that prepared the wave of demonstrations in 2006, organizations that constantly criticized Obama for the increase of deportations during his administration.  Yet it is not hard to see why they may view their electoral support of Obama and of the Democratic Party as an unavoidable compromise in their struggles.  They do not have much political leverage other than their own number, capacity to mobilize, organize, vote, etc., but that capacity is limited in contrast with the formidable political obstacles ahead of them.  One cannot reproach them for choosing such a path.

Consider, also, the case of disenfranchised, oppressed Black communities in the South (and not only there), who are continuously threatened with denial of their voting rights, discrimination, and outright harassment by racist individuals, businesses, organizations, and local and state governments.  Helping them to have their voice heard, to exercise their rights is a top priority if we want to seriously encourage the unity of the class.  The working class will never be a class for itself without prioritizing its most vulnerable segments and individuals.  These cases are clear cut.  It is the obligation of Marxists to support these struggles, even if they entail a de-facto support of Obama and the Democratic Party, regardless of any reservations anyone may have.

Now, working people in other particular settings may find it unnecessary to join the Democratic Party.  If such is the case, the inside and outside approaches must be viewed as complementary, rather than as mutually exclusive.  It is true that, under certain conditions, the logic of the two approaches may conflict.  But this does not have to be the case necessarily.  It seems to me that, under current conditions, both approaches are forced on working people by circumstances that cannot be altered overnight.  The point is not to deny their specificity, but rather to find ways to articulate them into a single coherent struggle.  There is very little else that can be said about it until the conditions mature sufficiently to counterpose these two approaches in practice.

I should wrap up my presentation by remarking the following:

It is a fact that, in the United States, electoral politics is already one important way in which working people are conducting their class struggles.  Working people are already trying to use the existing Democratic Party as a vehicle for their class struggles and, consequently, the real issue for Marxists is not whether it is “correct” or not for workers to do so, but rather how best to assist the engaged workers so that their results result in the political development and greater unity of the U.S. working class.

The political involvement of U.S. workers in electoral politics and, more specifically, in the Democratic Party has proved to be historically necessary, as a result of the pre-existing weakness and fragmentation of the U.S. working class.  It is not clear at this point whether the result of this involvement will reinforce the subordination of the U.S. workers to the capitalists or, contrariwise, the result will be the political strengthening of the U.S. working class. The outcome of these struggles is contingent.  The duty of Marxists is to support the workers and help them grow politically.

Thank you very much!

* Prepared remarks at the Annual Meeting of the Editorial Board of Science & Society on November 10, 2012.

Marx began his 1857 Introduction to his Critique of Political Economy (http://bit.ly/U1GGzn) with the following remarks:

The object before us, to begin with, material production.

Individuals producing in Society – hence socially determined individual production – is, of course, the point of departure. The individual and isolated hunter and fisherman, with whom Smith and Ricardo begin, belongs among the unimaginative conceits of the eighteenth-century Robinsonades, [1] which in no way express merely a reaction against over-sophistication and a return to a misunderstood natural life, as cultural historians imagine. As little as Rousseau’s contrat social, which brings naturally independent, autonomous subjects into relation and connection by contract, rests on such naturalism. This is the semblance, the merely aesthetic semblance, of the Robinsonades, great and small. It is, rather, the anticipation of ‘civil society’, in preparation since the sixteenth century and making giant strides towards maturity in the eighteenth. In this society of free competition, the individual appears detached from the natural bonds etc. which in earlier historical periods make him the accessory of a definite and limited human conglomerate. Smith and Ricardo still stand with both feet on the shoulders of the eighteenth-century prophets, in whose imaginations this eighteenth-century individual – the product on one side of the dissolution of the feudal forms of society, on the other side of the new forces of production developed since the sixteenth century – appears as an ideal, whose existence they project into the past. Not as a historic result but as history’s point of departure. As the Natural Individual appropriate to their notion of human nature, not arising historically, but posited by nature. This illusion has been common to each new epoch to this day. Steuart [2] avoided this simple-mindedness because as an aristocrat and in antithesis to the eighteenth century, he had in some respects a more historical footing.

The more deeply we go back into history, the more does the individual, and hence also the producing individual, appear as dependent, as belonging to a greater whole: in a still quite natural way in the family and in the family expanded into the clan [Stamm]; then later in the various forms of communal society arising out of the antitheses and fusions of the clan. Only in the eighteenth century, in ‘civil society’, do the various forms of social connectedness confront the individual as a mere means towards his private purposes, as external necessity. But the epoch which produces this standpoint, that of the isolated individual, is also precisely that of the hitherto most developed social (from this standpoint, general) relations. The human being is in the most literal sense a Zwon politikon [3] not merely a gregarious animal, but an animal which can individuate itself only in the midst of society. Production by an isolated individual outside society – a rare exception which may well occur when a civilized person in whom the social forces are already dynamically present is cast by accident into the wilderness – is as much of an absurdity as is the development of language without individuals living together and talking to each other.

The footnotes:

[1] Utopias on the lines of Defoe’s Robinson Crusoe.

[2] Sir James Steuart (1712-80), ‘the rational exponent of the Monetary and Mercantile System’ (Marx), an adherent of the Stuart cause who went into exile in 1745 and pursued economic studies on the Continent. Author of An Inquiry into the Principles of Political Economy, London, 1767 (2 vols), Dublin, 1770 (3 vols—the edition used by Marx).

[3] Zoon politikon—political animal.

The following observations can be noted:

By stating that his subject matter is material production (which he immediately qualifies and narrows down to material production under specific capitalist social conditions) and material production conducted by individuals, Marx is connecting his critical study of political economy to his (and Engels’) German Ideology (1845, http://bit.ly/8DWyU); in particular, to the following seminal passages:

The premises from which we begin are not arbitrary ones, not dogmas, but real premises from which abstraction can only be made in the imagination. They are the real individuals, their activity and the material conditions under which they live, both those which they find already existing and those produced by their activity. These premises can thus be verified in a purely empirical way.

The first premise of all human history is, of course, the existence of living human individuals. Thus the first fact to be established is the physical organisation of these individuals and their consequent relation to the rest of nature. Of course, we cannot here go either into the actual physical nature of man, or into the natural conditions in which man finds himself – geological, hydrographical, climatic and so on. The writing of history must always set out from these natural bases and their modification in the course of history through the action of men.

Men can be distinguished from animals by consciousness, by religion or anything else you like. They themselves begin to distinguish themselves from animals as soon as they begin to produce their means of subsistence, a step which is conditioned by their physical organisation. By producing their means of subsistence men are indirectly producing their actual material life.

The way in which men produce their means of subsistence depends first of all on the nature of the actual means of subsistence they find in existence and have to reproduce. This mode of production must not be considered simply as being the production of the physical existence of the individuals. Rather it is a definite form of activity of these individuals, a definite form of expressing their life, a definite mode of life on their part. As individuals express their life, so they are. What they are, therefore, coincides with their production, both with what they produce and with how they produce. The nature of individuals thus depends on the material conditions determining their production.

The adjective material in the phrase material production above can be construed in two distinct ways: (1) as proposed by Gerald Cohen in his Karl Marx’s Theory of History: A Defence (1978, http://bit.ly/R1mETN), the adjective material is to be paired dialectically (not Cohen’s term, of course, who shunned dialectics) with the adjective social, as in material reproduction and social reproduction.  Cohen aptly pointed out that this distinction between — on the one hand — the aspect of social life that is invariant through human history and humans can only manage, since abolishing it would entail self abolishment, and — on the other hand — the aspect of social life that humans can modify with their actions, provided they have the (productive) powers (freedom) to do so, is absolutely key in Marx’s understanding of history. Cohen also noted that this distinction, indispensable in determining the range of historical variance, goes back to the Sophist philosophers in Ancient Greece, a point that — I believe — can be found in Protagoras’ argument with Socrates, as the story is told by Plato (http://bitly.com/aVBtmA), where Protagoras contrasts the set of human powers owed to Zeus (“nature”) with those owed to Prometheus (“convention”).

And: (2) all production is material in the sense that its output is always a materially or physically transformed world.  Here, the adjective material is to be paired, dialectically, with the adjective ideal.  Material refers to the physical, objective existence of the premises, processes, and results of production.  And ideal refers to the subjective content that humans impress upon the world as they transform it.

Thus, all wealth — the output of production or the natural resources — has a material or physical existence (not necessarily directly perceptible by our raw senses, but physical nonetheless).  Also, all wealth, insofar as it is deliberately produced (or can be produced), embodies the conscious purpose inherent to all human labor.  (The notion of purpose is used here in a sense akin to the concept of technology in theoretical economics, where technology is viewed as a knowledge or information set, where information means communicable knowledge, that includes (a) a description of the final product, (b) a complete list of the inputs required to produce it, and (c) a description of the process that combines the inputs and turn them into the final product.)

To sum it up: All produced (and producible) wealth is, necessarily, human ideas in a material embodiment; ideal in content and material in form.

I have noted elsewhere that a great deal of the recent chat, among conventional thinkers and leftists, about “cognitive capitalism,” the “information economy,” the “knowledge economy,” etc., i.e. the (often vaguely stated) notion that a half-plus century of technological advances has led to a radical departure in the conditions of modern capitalist societies, separating them qualitatively from those of 19th century metropolitan capitalism studied by Marx, since the very nature of products (or an increasing number of them) has been altered essentially, is profoundly mistaken.  (Cf. Quah’s claims about the pure “nonrivalry” of “digital goods” in his “Digital Goods and the New Economy” [2002, http://bit.ly/SjdbpE] or Hard & Negri’s claims in Empire [2000, http://bit.ly/bCosAi] about “immaterial production.”)

Yes, of course, there are significant differences between 21-st century capitalist societies, 20th-century capitalist societies, and 19th-century capitalist societies.  And, yes, these differences are intimately related to the development of technology prompted by capitalism and by socialism (the historical movement of the direct producers to replace capitalism as it has unfolded concretely, with its own mixed record of successes and failures in the field).  But these differences are to be found elsewhere.

The mid-20th century digital revolution and accompanying developments led to a dramatic reduction in the (labor) costs of communications and computing, which spanned the emergence of a host of new products (and needs) and allowed for an array of production processes (or stages in them) to be automated and reorganized.  If the industrial revolution introduced the mechanization of physical tasks at a mass scale, the digital revolution introduced the automation of certain mental tasks at a mass scale.  And that process continues.  However, the nature of wealth production in general (as the material embodiment of ideas) has not been altered qualitatively.  Since humans began to reproduce their lives consciously (i.e. since they separated themselves from the rest of the animal kingdom) and for as long as the eye can see, human labor has combined and will continue to combine physical and mental tasks, their physical products have embodied their ideas, and their ideas have always existed in physical or material media (including their own brains, nervous systems, and bodies, which are also physical or material).

Back to the quotation above: It must be emphasized that Marx’s stated point of departure of his critique of political economy and, thereby, of his critique of capitalist production is individuals.  Not individuals in isolation, of course, but individuals interacting with other individuals, and thus forming social relations or social structures, i.e. making society (I use the term here in the same sense in which the term “making markets” is used in finance) or forming society (a concrete society is a social formation).

At a given point in time, society (a complex set of concrete social structures) is viewed as preexistent, the product of former interactions among individuals, but it then appears to individuals as a relatively hardened object, as a power and, therefore, as a limit (since human powers are always finite)  – i.e. as an objective reality they did not choose and must now depart from.  As a result of their actions, which are — insofar as they affect other individuals — social interactions (and it’s difficult to conceive of individual human actions that do not impinge on other individuals, one way or another), new social structures are subsequently produced, which will then enable and constrain (in a word, condition) the future actions of individuals (the same or other individuals).

It is in this sense that Marx can be regarded as a pioneer of what I would call bounded methodological individualism, or Arrow-corrected methodological individualism, namely the approach that, although seriously attempting to explain social outcomes (from the continuous or periodic allocation of society’s productive forces to the formation of more or less permanent social structures: economic, legal, political, ethical, aesthetic, etc.) as a result of the actions undertaken by individuals, it cannot manage to avoid entirely the assumption that social structures preexist at the outset, e.g. a certain initial endowment of wealth to individuals, a given set of productive possibilities, historically conditioned preferences, a pre-formed degree of rationality in action taking, etc.  Cf. Kenneth Arrow’s “Methodological Individualism and Social Knowledge,” (1994, http://bit.ly/R0hPu2).

In this important sense, Marx’s presumptions are not essentially different (nor should they be) from the general equilibrium approach (in its dynamic and stochastic versions) in economics, an abstract framework that captures essential features of social life in a highly idealized society of decentralized private markets (that includes the existence of labor markets, which implies it is an idealized capitalist economy).  The chief difference lies in that, from the beginning, unlike the GE theorists, Marx is absolutely adamant and explicit about the historicity of capitalism and, more generally, of private or exclusive ownership, markets, and the ultimate foundation of inequality: the hierarchical division of labor.

This historicity is highlighted not only by comparison to old social structures that capitalist production has overthrown and replaced, but more importantly by deriving opposite conclusions (“predictions”) to those derived by the GE theorists, namely that capitalist production is expected to waste increasing amounts of human productive power, that it will prove to be grossly inefficient (relative to the higher and higher standards that accompany the development of the productive force of labor) and, hence, historically unnecessary.  In fact, I contend, a plausible argument can be made that the reason why the GE conclusions are so at odds with Marx’s lies in the fact that the GE model excludes ex hypothesi absolutely essential and expanding aspects of capitalist life, which — if included — would exactly reverse the results of the model.

The GE approach (Arrow, Debreu, Koopmans, et alia) assumes the existence of individual producers and consumers who, privately or exclusively, hold wealth (natural resources, labor power, inventories of produced means of production and consumption goods) at the outset and have well-defined preferences (i.e. definite relations between different levels of wealth consumption and each individual’s sense of well-being), and then pursue the highest level of well-being that their powers (as embodied in the wealth they each hold relative to one another, in their production possibilities, and in their preferences) can yield by producing, exchanging, and consuming wealth in such proportions that they wind up equalizing the exchange rates of wealth items for wealth items in the markets to the ratios of the marginal costs of those wealth items in production and, also, to the ratios of marginal individual well-being that each of these wealth items yield in consumption.  These latter results generalized previous work by Menger, Jevons, Walras, and Marshall, later systematized and streamlined by Allen, Hicks, Samuelson, and others.

(Also Engels, in Anti-Dühring, made a few remarks that can be construed as aligned with these views.  But that belongs to another post.)

At first, I thought I’d devote my blog to commentary on politics and economics, mostly driven by news.  At some point, I started sharing some of my notes on socialism.  But then I stopped doing that, as I realized that many of the notes were rather unintelligible to readers.

I have a large stock of semi-digested ideas collected in notes to myself, mainly in categories that one would conventionally list as finance, public economics, and socialism.  They are, mostly, written in the way I talk to myself, which has been shaped up — obviously — by the intellectual traditions in which I grew up: Marxism and then conventional economic thinking.

The ideas in these notes start from external stimuli that stirred me up and sent me thinking in various directions.  I have a keen sense that this material is frustrating to read.  Still, adventurous and stubborn readers may find things of value in them.  That’s why I’m daring to post the notes here.  Readers beware.

An addendum to my previous post on incentives and ownership.  This is Marx’s take on the section of Hegel’s Philosophy of History (1837, http://bit.ly/97F6dv) that I quoted (and on the portions that follow it).  It is drawn from Marx’s Capital (1863-1883, vol. 3, ch. 37, http://bit.ly/X3OlQS):

Nothing could be more comical than Hegel’s development of private landed property. According to this, man as an individual must endow his will with reality as the soul of external nature, and must therefore take possession of this nature and make it his private property. If this were the destiny of the “individual”, of man as an individual, it would follow that every human being must be a landowner, in order to become a real individual. Free private ownership of land, a very recent product, is according to Hegel, not a definite social relation, but a relation of man as an individual to “nature,” an absolute right of man to appropriate all things (Hegel Philosophie des Rechts, Berlin 1840 p 79).  This much at least is evident: the individual cannot maintain himself as a landowner by his mere “will” against the will of another individual, who likewise wants to become a real individual by virtue of the same strip of land. It definitely requires some thing other than goodwill. Furthermore, it is absolutely impossible to determine where the “individual” draws the line for realising his will – whether this will requires for its realisation a whole country, or whether it requires a whole group of countries by whose appropriation “the supremacy of my will over the thing can be manifested.” Here Hegel comes to a complete impasse.

Here, Marx is mocking Hegel for leaping from appropriation in general (i.e. re-production) to a specific social form of ownership: private or exclusive ownership.  The former is a material condition of life; the latter is a social form that the former adopts transitorily under certain historical circumstances.

Of course, Marx is not rejecting the notion that the drive to appropriate the world is materially necessary for any society to exist.  He is only showing that the drive to appropriate, when it takes the exclusive form of ownership, becomes self-contradictory and, hence, limited.  How?  Our drive to appropriate vis-a-vis nature is one thing.  There, the only limit is the productive force of our collective labor.  However, if my drive to appropriate is at your exclusion and your drive to appropriate is at my exclusion, then our so-called “absolute rights” (Hegel) clash, cancel out, annul each other.

The specific social form of appropriation (I reserve the term ownership to refer to these forms) is an emergent social structure.  It emerges from certain types of repeated interaction among the producers.  I have elaborated somewhere else the layered nature of this social structure, with layers that are interlocked.

I’ll illustrate the key ideas on this respect by alluding to the ways in which I usually discuss the topic with my students.  Consider, I say, the exclusive ownership of a piece of wealth in a modern capitalist society — e.g. a car.  Start with the most superficial aspects of this social relation.  Can the legitimate and legal owner of the car do whatever she wishes with the car?  When I formulate this question to my students, there’s invariably at least one student who nods and says, “Yes!”

It is very common that people may hold the illusion that exclusive ownership, somehow, endows the owner with infinite powers or, in Hegel’s term, an “absolute right.”  In fact, I say, the car does not grant you the power to violate the laws of physics.  You cannot fly on a car, because the car does not have the physical, mechanical, etc. properties that would make the object take off and fly.  You can only use the car in ways that the physical properties of the vehicle allow it to perform.  At a given point in time, nature imposes constraints on our powers, and those constraints appear as absolute as a granite wall.  We may be able to circumvent them, but that takes time and resources — ultimately some portion of the productive power of our labor must be invested today to advance our productive power in the future.

But that is not the only obstacle to our possible design or intent in using the car.  In a capitalist society, a society of markets embedded on a foundation of gaping social inequality, there are serious economic barriers to the individual powers that accompany the exclusive ownership of the car.    Say that the car owner wishes to sell the car in the market: Can she sell the car for $1 billion?  Very unlikely.  Trade is a voluntary exchange of commodities.  The owner(s) of the $1 billion would have to consent in paying such an amount of money for the car.  It is not only nature that raises barriers to the car owner, but also the rest of society — e.g. potential car buyers in the market.  Their wills are involved as well.

There’s an inherent conflict of interest in the relation, and that is Marx’s point above.  It also comes to mind the Kantian antinomy that Marx alludes in reference to the mutually exclusive claims of capitalists and workers over the distribution of the working day between necessary and surplus labor time: “Between equal rights force decides.”

Exclusive ownership is socially constrained by, inter alia, economic conditions (e.g. market conditions).  Clearly, the economic barrier is much “softer” (less “absolute”) than the natural barrier, but it is hard alright.  But that is not all.  There are also legal obstacles that condition or constrain the exclusive ownership of the car.  You cannot drive without a state-issued license; or you can, but you are then exposed to penalties.  You cannot use the car as a weapon against others; or you can, but then you’re exposed to severe punishment.  You cannot park the car wherever you wish or drive it at whatever speed you desire, even if the car mechanically can run at such speed, etc.

The legal code, implicitly or explicitly, stipulates the specific rights of ownership the legal owner of the car is entitled to, and also the obligations that accompany car ownership.  The obligations of the car owner (e.g. not to use the car as a weapon, not to park it in reserved space, etc.) are immediately rights granted to the rest of society: Pedestrians have a right to safety on the streets, etc.  And, vice versa, the rights of the car owner are granted at the expense of the rest of society.  In other words, your rights of ownership, the rights that turn you into a wealthy person, are my obligations, i.e. they make me poor!

As I wrote in my previous post, insofar as rights are (and they are, necessarily) rights of “ownership,” claims over specific pieces of the totality of wealth in society, then the granting of rights is necessarily the assignation of financial assets to the beneficiary — and, therefore, the parallel assignation of financial liabilities to others.  The totality of legal claims over society’s existing wealth (productive and consumptive wealth: the stocks of natural resources, produced means of production, consumption goods, and labor power), i.e. the financial superstructure of society, can shift its composition as legal claims are created, transferred among individuals (via trade or not), redeemed, left to expire, etc.

However, in and by themselves, these shifts cannot alter the level (stock) of material wealth that exists in society at that given point in time.  Wealth must be produced the hard way: by combining natural resources, produced means of production, and labor power in adequate proportions.  An existing financial superstructure may facilitate or impede this from happening.  In this light, the test of historical rationality of this financial superstructure overall is its ability to ensure that the productively wealth of society is used efficiently, to ensure that the labor force is fully employed, that society’s overall welfare is optimized, etc.  The crisis unleashed by the capitalist financial meltdown of 2007-2009 is a testimonial to the drastic historical limits of the existing financial superstructure and the economic foundation beneath it: capitalism.

But back to the social barriers that define and contain ownership.  The ones above are not all.  There are also ethical and aesthetic constraints that push back against the exclusive owner of the car.  They are of much softer nature, but she cannot (without a cost) race her car noisily in her neighborhood late at night or display obscene images on her car, etc.  The social nature of exclusive ownership, which Marx and his followers, emphasize clashes frontally with the liberal (and conservative libertarian) notion of “natural rights.”  Again, to the extent a natural right has teeth, it is undistinguishable from social power, i.e. from might: the productive power of labor brandished to ensure that the owner excludes others from the disposition over the car without her consent.

Ownership is not nature, it is a social structure.  But why, then, is the exclusive form of ownership (so-called “private ownership”) so pervasive and so robust in the civilized human history?  What are the conditions that make the exclusive form of ownership so successful, historically speaking?  That will be the topic of a future post.