Monday, August 11, 2014

The Pathos of Aggregate Demand Management

"One way to understand Keynes's General Theory is that Say's Law is false in theory but that we can build the running code for limited, strategic interventions that will make Say's Law roughly true in practice." Brad DeLong, January 14, 2009 
"One way to think about the Federal Reserve’s mission is that it’s job is to try to make sure that spending is matched to production–to make Say’s Law true in practice, even though it is not true in theory."  Brad DeLong, February 24, 2014 
"Why Hayek could not see with everybody else–including Milton Friedman–that the Great Depression proved that Say’s Law was false in theory, and that aggregate demand needed to be properly and delicately managed in order to make Say’s Law true in practice is largely a mystery." Brad DeLong, August 9, 2014 
"The working class is either revolutionary or it is nothing." Karl Marx.
Adam Smith's "obvious and simple system of natural liberty" like Karl Marx's class struggle conception of history, relied on the semi-autonomous (some might say 'mechanical' or 'self-adjusting') action of an institution. In Smith's case it was the market. The individual "intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." Say's Law presumably explained the mechanism by which individuals' production is transformed automatically into demand for the aggregate of what is produced.

Is the economic system 'self-adjusting', as the classical analysis suggested? Keynes clearly thought not.

On a second question, whether the required adjustments could be achieved through government policy, Keynes was more optimistic, although somewhat equivocal. He wrote, for example, a sarcastic allegory about people desiring the moon and having a central bank that produces green cheese, which it tells them is the same thing. He agreed with J. M. Clark's worries about the danger of a Keynesian 'school' growing up, which might indiscriminately apply a single policy formula "to conditions by no means parallel."

There is a deeper theoretical breach in the notion of simulating a self-adjusting economic system through government policy, though. The managed system can no longer be regarded as "obvious and simple" or as "natural." Thus the traditional rationale for the market system loses any legitimacy that it obtained from those claims. This argument deserves to be worked out in detail for Keynes and Keynesianism but a parallel instance was elaborated brilliantly for Marx and Marxism by Harold Rosenberg in "The Pathos of the Proletariat," published in the Autumn 1949 Kenyon Review.

To paraphrase Rosenberg's argument in terms of DeLong's rhetorical figure of making what is false in theory true in practice: "the Party's mission was to make Marx's theory of the proletariat as the revolutionary subject of history true in practice, even though it was (at least provisionally) false in theory."

For the sake of reading flow, I've taken the liberty of condensing key excerpts from Rosenberg's essay without indicating ellipses. The passages below represent around ten percent of the essay. 

Excerpt from "The Pathos of the Proletariat," by Harold Rosenberg"
The hero of history was to be a social class, a special kind of collective person. The German Ideology describes a class in general terms. As distinguished from other unions, "there exists," says Marx, "a materialistic connection of men with one another." Yet, though it is the basic bond among men, the class is not a mere collection of human beings. "The class in its turn achieves an independent existence over against the individuals." Corporeal and combative, the class stands apart from them and impresses them into an adventure of its own. 
History for Marx is the history of just such separated non-human entities. It is neither the history of individuals nor the history of ideas. Precisely because it is the history of the non-human classes must history be brought to an end. And for the same reason, only the class "character" can perform the act that will terminate it. 
Upon closer consideration, however, we note that these "mere personifications" are not, as such, historical actors but metaphors of political economy. They represent what Marx calls in the same passage the "peculiar traits" of capitalist production. They are like those little figures that illustrate statistical charts. Dramatically, they belong to the order of types in melodrama or the morality play. 
But it is the peculiarity of Marx's "political economy" that he sees this class [the proletariat] as destined to alter completely the conditions that created it. 
Within the movement of capitalism Marx might predict the general direction of certain processes -- concentration of capital, accelerated crises, etc. -- but he cannot predict the total historical situation of the masses, which includes the history of their consciousness of themselves in their situation, or their lack of it. Yet nothing less than this total situation can be meant by "existence" in its determination of consciousness.
Marxism must therefore admit that it can predict nothing concerning the consciousness of the proletariat and hence of its action, in which case the proletariat remains an hypothesis and not a certainty; or it must reduce the situation to a given number of external elements, definable in advance, and thus become identical with what is known as "vulgar materialism" or "mechanical Marxism."  
The failure of the situation to give rise to revolutionary consciousness leads Marx and Marxists to a second type of effort to guarantee the revolution: through politics and propaganda. 
For Engels in 1893 the continuity of the revolutionary movement no longer depends upon the reflexes of a proletariat that has been forced into revolt; it is no longer subject to the intermittences of the heart and mind of the working class. 
Instead of learning in action, the working class is put to school by the Party; it marches with its will in the secure custody of the leadership. Marching has indeed replaced revolutionary action, the movement which was to have been the source itself of the "alteration" of the workers. 
Was Engels' conversion of Marx's drama of history from an order assumed to be inherent in events into a didactic fable of socialist politics a betrayal of the master's thought a decade after his death? In no respect. Marx, too, had attempted to overcome by political means the laggardness of existence in producing revolutionary consciousness. 
But having translated class consciousness from tragic self recognition into political tutoring, Marxism is haunted by its philosophical premises. If its analysis is the consciousness of the socialist revolution, whose existence determines this consciousness? The class's? Or the Party's? Or is it undermined by both? So long as Marx could say, "The great social measure of the Commune was its own working existence," it was clear that theory was subordinate to the concrete action of the class and that communism was in truth attempting to be the intelligence of "the real movement that abolishes the present state of things." Once, however, class spontaneity has yielded to steady marching at the heels of the Party, the latter must look to itself as the source of historical consciousness, since it is it that experiences while the masses are undergoing the "long, persistent work" of learning. But if its own existence guides it, the Marxist Party is "an independent being" and its theory a mere ideology. In that case the high claims of socialism for the release of human individuals into unlimited creativity through the "self-activity" of the proletariat are no longer legitimate. Those hopes rested upon the origin of the collective act in history itself, in the reflex of the individuals of the class to their concrete situation, rather than, as formerly, in a separated community or ideal; but now socialism has produced its own illusory community and independently existing creation of the mind.  
Thus in the heart of Marxism a conflict prevails between metaphysics (existence determines consciousness and defeats all preconceptions) and politics ("we can initiate measures"). The "dialectical" overcoming of this conflict through combining its messianism of total liberation with guidance of the masses as an "army" results logically in a politics of hallucination. In Marx's "we can initiate measures which will later appear as spontaneous movements" -- this sentence shows the actual content of the synthesis of spontaneity and control -- a new principle is making its appearance, though dimly. It is neither the materialist principle of the primacy of existence nor the idealist one that action has its source in thought. It suggests that action can release a revealed destiny which both dominates existence and precedes thought. With the affirmation of this power we stand at the verge of 20th Century political irrationalism. 
Primarily, destiny-politics consists of a demonic displacement of the ego of the historical collectivity (class, nation, race) by the party of action, so that the party motivates the community and lays claim to identity with its fate and to its privileges as a creature of history. In What Is To Be Done, Lenin begins by denying that the proletariat can be an independent historical actor; for him it is a collective character with a role but without the revolutionary ego and consciousness necessary to play its part. Its struggles are but reflexes of economic contradictions which can never of themselves result in revolution. The giant figure of the proletariat is doomed to remain a personification of exploitation and misery until it is possessed by an alien subject that will send it hurtling along its predestined path. This conscious and active ego is the Bolshevik Party of "scientific" (destiny-knowing) professional revolutionaries. In the most literal sense the Party's relation to the class is demoniacal; after a series of paroxysms the collective body of the class is inhabited and violently moved by a separate will which is that of another group or even of one man. Lenin uses the word "subjectivity" to mean precisely the Party and its decisions.  
Political Marxism demands for itself the metaphysical privileges of class action. The violence of the "vanguard," having become "dialectically" the act of the proletariat, justifies itself by the existence of the workers as victims of the wage system. Any attack upon that system by Marxist intellectuals and wielders of power becomes a liberating movement on the part of the class. Thus the Party need not account for the means it employs -- all the more so since its program is taken to be identical with the reality which is the ground of all future values. It even denies that the form of its organization is a "principled question" -- to be totally authoritarian does not prevent its being totally democratic, since its acts are the acts of the proletariat and the proletariat is, by definition, the demos.  
As a liberating program Marxism founders on the subjectivity of the proletariat. So soon as it declares itself, rather than their common situation, to be the inspiration of men's revolutionary unity and ardor -- how else can it offer itself simultaneously to the French working class and to non-industrial French colonials? -- Marxism becomes an ideology competing with others. When fascism asserted the revolutionary working class to be an invention of Marxism, it was but echoing the Marxist parties themselves. If the class as actor is a physical extension of the Party, fascism was justified in claiming that a magical contest in creating mass-egos could decide which collectivities are to exist and dominate history. Moreover, it proved that heroic pantomime, symbolism, ritual, bribes, appeals to the past, could overwhelm Marxist class consciousness. What choice was there for the workers between the fascist costume drama and a socialism that urged them to regard their own working clothes as a costume? In Germany and Italy the working class was driven off the stage of history by the defeat of the Party -- in Russia it was driven off by its victory.



2 comments:

Magpie said...

This may sound like a strange comment for a guy like me, who considers himself a Marxist, but this long series of Rosenberg's quotes points to a real problem -- one, I haste to add, I cannot solve in a satisfactory way: the role of spontaneity and the party within the revolutionary movement.

I suspect left-anarchists would be very pleased (no suggestion the blogger is one). Rosenberg addresses a weakness of Marxist thought (one left-anarchists have been stressing since forever, I must add), and will be quick to point out that Anarchism offers a way out.

(Incidentally, the reference to Lenin, one of Anarchism's bugbears, would probably make them even happier).

Presumably left-anarchists would claim people like Bakunin have an answer:

"the Alliance of all labour associations ... will constitute the Commune ... there will be a standing federation of the barricades and a Revolutionary Communal Council ... [made up of] delegates ... invested with binding mandates and accountable and revocable at all times ... all provinces, communes and associations ... [will] delegate deputies to an agreed place of assembly (all ... invested with binding mandated and accountable and subject to recall), in order to found the federation of insurgent associations, communes and provinces ... and to organise a revolutionary force with the capacity of defeating the reaction ... it is through the very act of extrapolation and organisation of the Revolution with an eye to the mutual defences of insurgent areas that the universality of the Revolution ... will emerge triumphant." (Bakunin, No Gods, No Masters, vol. 1, pp. 155-6)

And maybe that's so -- I truly hope that.

But let's assume, for arguments' sake, that push comes to shove and we reach the point of revolution. And that in spite of all our hopes and efforts, the thing turns ugly and there's a revolutionary war.

To be honest, I fail to see how Bakunin's rather general statements could answer very practical and urgent questions, as Lenin and others had to face:

Do we institute conscription or rely on volunteers?
Where are we going to get our weapons?
Which model of rifle should we adopt?
How do we organize logistics and supply, so that what one factory produces is useful to another and reaches the army and the population on time?
Should we launch an offensive here (with large expected casualties but better chance of success) or there (with lower casualties, but a lower chance of success)?
How are going to deal with that portion of the population reluctant to join the revolution?

Can democratic processes or spontaneity provide viable solutions to that kind of problems?

(This is a genuine request: if any left-anarchist is reading, by all means...)

Reeta Martin said...

Nice post.