Thursday, March 4, 2021

Disposable People

Disposable people are indispensable. Who else would fight the wars? Who would preach? Who would short derivatives? Who would go to court and argue both sides? Who would legislate? Who would sell red hots at the old ball game?

For too long disposable people have been misrepresented as destitute, homeless, unemployed, or at best precariously employed. True, the destitute, the homeless, the unemployed and the precarious are indeed treated as disposable but most disposable people pursue respectable professions, wear fashionable clothes, reside in nice houses, and keep up with the Jones.

Disposable people are defined by what they do not produce. They do not grow food. They do not build shelters. They do not make clothes. They also do not make the tractors used to grow food, the tools to build shelters or the equipment to make clothes.

Although disposable people do not produce necessities what they do is not unnecessary. It is simply that the services they provide are not spontaneously demanded as soon as one acquires a bit of additional income. One is unlikely, however, to engage the services or purchase the goods produced by disposable people unless one is in possession of disposable income. Disposable income is the basis of disposable people. Conversely, disposable people are the foundation of disposable income.

Sometimes, disposable people have been called "unproductive." It sounds harsh but it is only meant in a technical sense. In the late 1950s, '60s, and '70s debate raged in academic Marxist circles about the distinction between "productive" and "unproductive" labour. The main issue had to do with the distinction between labour that produced surplus value for capital and labour that didn't, whether or not the product or service was useful or necessary. One further refinement had to do with whether the labour produced reproductive surplus value in the form of wages goods (or services) or machinery. In this view, labour performed producing luxury goods would be unproductive, even though it appeared to produce surplus value for the employing capitalist. In fact, though, it only assisted in appropriating surplus value produced elsewhere.

I suspect these debates could have been illuminated by Marx's Grundrisse or even more so by the 1821 pamphlet by Charles Wentworth Dilke, The Source and Remedy of the National Difficulties. That pamphlet explicitly excluded the manufacture of luxury goods from the process of capital accumulation and clearly explained why. The production of luxury goods destroys reserved surplus labour rather than establishing the conditions for its accumulation and expansion. Jean-Baptiste Say would have agreed:

Misery is the inseparable companion of luxury. The man of wealth and ostentation squanders upon costly trinkets, sumptuous repasts, magnificent mansions, dogs, horses, and mistresses, a portion of value, which, vested in productive occupation, would enable a multitude of willing labourers, whom his extravagance now consigns to idleness and misery, to provide themselves with warm clothing, nourishing food, and household conveniences.

So much for supply creating it own demand. 

Dilke contended that if capital was allowed to actually accumulate, the rate of interest paid for its use would rapidly fall to zero because the accumulation of capital was very limited, "if the happiness of the whole, and not the luxuries of a few, is the proper subject for national congratulation." When that limit was reached, the hours of labour could be drastically reduced, "where men heretofore laboured twelve hours they would now labour six, and this is national wealth, this is national prosperity." "Wealth… is disposable time, and nothing more."

Dilke's disposable time may well have been an oblique rejoinder to Thomas Chalmers's (1808) concept of disposable population. Chalmers was as upbeat about the expansion of disposable population as Dilke was wary about the increase of unproductive labour. Dilke was an ardent follower of William Godwin, as had been Chalmers until he was converted by Thomas Malthus's polemic against Godwin on population. In the Grundrisse, Marx appears to have been enchanted by Dilke's concept of disposable time.

Nearly a century after publication of The Source and Remedy of the National Difficulties, Stephen Leacock's The Unsolved Riddle of Social Justice was serialized in the New York Times. At its core was the same dilemma at the heart of Dilke's pamphlet, with all the vast improvements of productive machinery, why weren't ordinary people better off and why were the hours of work still so long?

If the ability to produce goods to meet human wants has multiplied so that each man accomplishes almost thirty or forty times what he did before, then the world at large ought to be about thirty or fifty times better off. But it is not. Or else, as the other possible alternative, the working hours of the world should have been cut down to about one in thirty of what they were before. But they are not. How, then, are we to explain this extraordinary discrepancy between human power and resulting human happiness?

Leacock imagined an observer looking down from the moon on a production process that stopped short of producing enough necessities, and then again stopped short of producing enough comforts to shift, "while still stopping short of a general satisfaction, to the making of luxuries and superfluities." Leacock was a student of Thorstein Veblen at the University of Chicago and was clearly influenced by Veblen's philosophy. A passage in Dilke's pamphlet that imagines the "last paragraph" of a future historian uncannily anticipates Veblen's concept of pecuniary emulation:

The increase of trade and commerce opened a boundless extent to luxury:—the splendour of luxurious enjoyment in a few excited a worthless, and debasing, and selfish emulation in all:—The attainment of wealth became the ultimate purpose of life:— the selfishness of nature was pampered up by trickery and art:—pride and ambition were made subservient to this vicious purpose…

Inspired by Leacock's Unsolved Riddle of Social Justice, Arthur Dahlberg's Jobs, Machines and Capitalism was described by Louis Rich in the New York Times as "one of the most valuable, both theoretically and practically, since the writings of Veblen." Dahlberg's argument influenced Senator Hugo Black's legislation for a thirty-hour work week. 

At the core of Dahlberg's theory was the observation that, as machines replaced human labour in core industries, more and more workers were reabsorbed into "miscellaneous" employment, providing services and manufacturing goods that were not spontaneously demanded. They became disposable people in disposable jobs. Demand for these goods and services had to be artificially created through advertising, gratuitous product differentiation, built-in obsolescence, and salesmanship. Consequently, the bargaining power of labour was weakened, and capital was empowered to take a larger share of national income. The goods and services this higher income group were then encouraged to consume with their expanded incomes became increasingly frivolous, as did the new investments available to absorb the rest of their income. Eventually higher income earners would spurn the unappetizing new consumption and investment opportunities and hoard their excess income. Economic recession would ensue.

As had Leacock, Dahlberg cited the example of the First World War as an episode in which a shortage of labour imposed an unaccustomed discipline of efficiency on capital. They both argued that a permanent shortage of labour could be achieved through reduction of the hours of work. Such a shortage would lead to greater industrial efficiency, less waste, higher wages, more leisure, and, ultimately, the elusive goal of social justice.

The chance that Dahlberg, Leacock, or Veblen would have read The Source and Remedy of the National Difficulties is slim but not impossible. Herbert Foxwell mentioned the pamphlet in his introduction and bibliography to August Menger's The right to the whole produce of labour (1899). In Veblen's " The Socialist Economics of Karl Marx and His Followers" he mentions "Foxwell's admirable Introduction to Menger." More probable is some familiarity by Veblen with William Godwin's views on leisure, possibly through the unlikely intermediary of Harriet Martineau's writing. In Society in America, Martineau wrote the following tribute to Godwin, leisure, and… disposable time:

The first attempt to advocate leisure as the birthright of every human being was made now some half-century ago. [Godwin's Inquirer] The plea then advanced is a sound one on behalf of other things besides philosophy, literature and scholarship. Leisure, some degree of it, is necessary to the health of every man's spirit. Not only intellectual production, but peace of mind cannot flourish without it. It may be had under the present system, but it is not. With community of property, it would be secured to everyone. The requisite amount of work would bear a very small proportion to that of disposable time.

Leisure as the birthright of every human being? Harriet Martineau? Disposable time?


Sunday, February 28, 2021

On Golden Idols

 IN Exodus it is reported that while Moses spent time on Mount Sinai receiving the Ten Commandments from Yahweh, the people of Israel down below got tired of waiting for him and so constructed at least one, maybe more than one, as silver is mentioned along with gold, statue to be worshipped, with the golden idol, usually claimed to be of a calf, the most notorious.  When Moses returned with the Commandments he was wroth with anger and denounced them for this perfidy, and Exodus reports that Yahweh destroyed this idol, turning its gold into "dust" or other kinds of small particles depending on the translation, and then a part not usually discussed forced the people who had worshipped this golden idol to drink a liquid containing this dust. Of course one of the first commandments forbade the making of "graven images," with this golden calf or whatever and any silver idol being clear and prime examples of what was clearly forbidden.

So it is ironic that at a conference heavily attended by religious right fundamentalists who most certainly know this passage a golden looking statue of our most recent president has been publicly displayed. The group doing so apparently had a panel not open to the media, although QAnon believer Rep. Marjorie Taylor Greene was seen entering the location of the panel when it was held.  I saw on the internet a photo of a man bowing in front of this absurd statue and placing his hands on it in a clearly reverential way.  I have also read of a man in India who made a statue of our former president and was outright fully worshipping it as a god.  That reportedly healthy middle-aged man recently keeled over dead from a heart attack.  In any case, at CPAC in Orlando we pretty clearly have people worshipping a golden idol, one depicting a living man who does not seem even remotely worthy of a thread of respect, much less worship.  All this in advance of him making a speech that many people see as him solidifying his apparent dominant control over the current opposition political party in the US.

I do not want to go on about this too much, but even though now the Dems control, just barely in the Senate, both the White House and both houses of Congress, clearly the GOP is in position to possibly retake control of onw or both of the Congressional houses in 2022, and even possibly reelect the former POTUS, or is not him then somebody who has been worshipping his golden statue or at least figuratively doing so.  His critics appear to be being purged from the party, or at least isolated.

The most damaging thing about this, even if the Dems are able to hang on to power over the next few years, is that even the possibility of him or somebody following his views returning to power at all in the foreseeable future means that the damage he did especially to US foreign policy and commitments is difficult if not impossible to overcome.  I already have concerns about some overly hawkish tendencies in the Biden admin, but if even in areas such as rejoining the Paris Accord or negotiating with Iran or China or allies, other nations will no longer be willing to accept commitments made by this president or his admin because they might be so easily overturned after another election, well, this is serious harm and damage.  It means that while maybe parts of the post-WW II era that Trump overturned needed changing, those parts that were benevolent may not be able to be restored.  We shall be stuck drinking a fluid made of gold dust instead.

Barkley Rosser

Wednesday, February 24, 2021

Has Elon Musk Damaged His Portfolio By Buying Bitcoin?

 After tweeting repeatedly for some time about bitcoin and the originally satirical degecoin, both of which have gone up massively in the past year, on Feb. 8 Elon Musk put his money where his mouth had been and had his Tesla EV company buy about $1.5 billion in bitcoin.  The immediate aftermath of this was a substantial surge of the crypto from somewhat over $40,000 to somewhat over $50,000.  This seems to have inspired several other major established corporations and entities to also announce they would be holding bitcoin as part of the asset portfolios, along with renewed discussions of more official cryptocurrencies possibly being issued by various central banks (commercial banks have for some years used XRP for transactions amongst themselves, but somehow it has not increased nearly as much as bitcoin or some of the other top cryptocurrencies for reasons I do not understand).

Anyway, it may be that instead of being a brilliant move that establishes the legitimacy and long term value of bitcoin once and for all, despite the massive amounts of electricity used in the mining of it, way more than for other leading cryptocurrencies, it is not out of the question that this may prove to have been its peak.  Bitcoin has been noticeably sliding in recent days, although it is still just above $50,000, which might prove to be a new floor, given all the corporate backers it seems to have picked up.

However, even if bitcoin does not collapse, Musk appears to have damaged his portfolio in the near term rather badly with this move.  After Tesla stock rose 700% last year, putting Musk ahead of Jeff Bezos as the world's wealthiest individual bordering on $200 billion, Tesla stock has fallen 22% since Musk made his bitcoin move.  This has cost him about $30 billion, more than wiping out the $ 1 billion or so he reportedly made directly from his bitcoin deal.  Maybe bitcoin is not a bubble about to crash, but it does seem that Tesla's stock got way overdone, and now people are tying the value of its stock to the volatile movements of bitcoin.  Musk may yet come out of all this a way big winner, but as of now, he is taking a pretty big hit.

Barkley Rosser

Thursday, February 18, 2021

We Need a Plan for Militias

 A social trend can lie dormant for years, gradually expand and then suddenly explode as if following a hidden exponential growth curve.  Revolutions work this way, and so do religious cults.  Most of the time the curve is nipped in its early phase, but not always.  It isn’t a good idea to assume a fringe movement will always remain fringe.

Which brings us to the topic of right wing militias, people who carry assault rifles, study military tactics, go target-shooting in the woods and live in an end times epistemological bubble.  They’ve been around for decades, occasionally getting in the news, and gradually getting more numerous and influential.  Read this recent report in the New York Times, which documents the mainstreaming of armed freelancers aligned with the Michigan Republican Party, and ask yourself whether we are approaching an inflection point.

So what would a counter-strategy look like?  I don’t think an attempt to suppress all extreme right wing thought and expression would work—it’s too unfocused—and in any case empowering the government and tech monopolies to carry it out would be suicidal for free thinkers of any sort.  The answer has to center on the militias themselves.

I suggest gun control legislation at the state and national levels that explicitly targets militias.  The idea is that it would be a felony to use firearms for any political purpose, where “use” means carry as well as pull the trigger.  No arms at demonstrations or rallies.  No armed political meetings.  No “second amendment solutions” to political conflicts.  I’ll leave the legal language to the lawyers.

Simply discussing such an idea would drive the militia folks crazy.  It’s their worst nightmare, liberals taking their guns away to prevent any resistance to their politically correct tyranny.  They will fulminate and foam, waving their guns in our face.  Let them, and let their threats of violence be a reason for suppressing them.

Tuesday, February 16, 2021

Is China Committing Genocide In Xinjiang?

 On the last day it could, the Trump State Department officially declared that the Peoples' Republic of China is committing "genocide" in Xinjiang Province against the mostly Sunni Muslin Uighr minority, the previously dominant group in the province. New SecState Antony Blinken has publicly stated that he agrees with this judgment.  However, reportedly the State Department is reviewing this decision, as it is doing with many other parts of US foreign policy, including such things thought to be fairly straightforward such as rejoining the JCPOA nuclear agreement with Iran that Biden ran on rejoining and should. So whether or not this last minute action by Pompeo at State remains official or not is up in the air at the moment.

There is no question that the PRC's policy towards the Uighurs is simply awful, not remotely defensible.  Ir involves having large numbers of people in reeducation camps as well as lots of torture. This is combined with the more general program of simply having Han people fully dominating the province, which parallels a similar program in Tibet, although somehow currently the central government is not engaging in quite as unpleasant programs regarding the native ethnic Tibetan population as is happening regarding the Uighurs.

Which brings us to this question of whether or not the indubitably bad things the central PRC government is doing to the Uighurs constitutes genocide or not. Prominent comparative economist, Gerard Roland, who knows a great deal about China and is at UC-Berkeley, has put up a post on Facebook arguing that it is not. His argument is that the true meaning of the term involves actual killing, a systematic effort to actually kill off members of a group, with what happened in the Holocaust and more recently in Rwanda, being prime examples.  If this is the criterion then, no, for all of its horror, what is happening in Xinjiang is not genocide.  Roland argues that the term should not be watered down from its more horrific meaning, with indeed genocide something that does happen and can happen again.  So it should be saved for those fully true cases.  I happen to agree with this.

The argument for why the term is appropriate takes the form of saying that trying to exterminate a culture deserves to have the term be applied to it.  That is not a completely ridiculous argument.  And it does seem that the PRC central government is certainly out to massively damage and reduce Uighur culture, although perhaps not completely eliminating it.  I know that they do have Uighurs represented in national bodies, who show up in ethnic clothing, and so on.  So I do not think they are out to completely obliterate the culture.  But it is clear that Uighurs will be expected to acknowledge the dominance and superiority of the central government rule and culture.  But it does not seem that there is a move to completely end the culture, and more importantly, for all the camps and torture, no effort to actually physically elminate the Uighurs by killing them.

I understand that the Biden administration faces a difficult decision about what line to take with China.  Relations have deteriorated between China and the US and also with many other nations.  I do not wish to go through all the issues that are out there, but while Trump engaged in a lot of unnecessarily aggressive actions, such as his trade war, it is also the case that China has engaged in various actions that have made its neighbors less happy with it, such as aggressive actions on borders and claims on territories legally belonging to other nations.  There are clearly grounds for the Biden administration to take a less friendly position than was taken during the Obama administration.  But there are many areas from dealing with climate change to dealing with terrorists and also the pandemic where there are grounds for cooperation. By all reports Biden seeks some kind of reasonably balanced approach. That will be hard to achieve, and there will be hard decisions coming up, such as whether the US will lead a move to boycott next Winter's Olympics in Beijing over the Uighur issue.  Clearly the prelude to that and some other issues will be how this review about the genocide question is resolved.  I understand many will be unhappy and critical, but I hope that they undo this last minute Trump admin decision.

Barkley Rosser 

Saturday, February 13, 2021

Normalizing Foreign Trade Relations

 The Biden admin has not yet made moves to undo elements of Trump's trade war, and some parts of it may not get undone, perhaps especially some directed at China.  But at least one move towards normalization with the rest of the world has just happened as the Biden admin has agreed to let the individual nominated to lead the World Trade Organization (WTO) take office. This is Ngosi Okunjo-Iweala, not only a woman, but a former Finance Minister from Nigeria.  She had previously been blocked by the Trump admin, with Trade rep Robert Lighthizer claiming she had "no experience in trade relatrions at all." The Trumpers supported a former South Korean trade minister who negotiated a trade agreement with the US in 2018, but others did not do so.  The Trump admin had also blocked appointments of new judges to adjudicate trade disputes at the WTO, a more general move to essentially declare the WTO to be useless and no good in pursuit of an "America First" policy.

As it is, Okunjo-Iweala has a PhD in economics from MIT and long experience in negotiating several trade agreements along with having had a record of combating corruption in Nigeria as Finance Minister.  Aside from obvious possible sexism and racism in opposing her, according to the WaPo story on this the real reason for Lighthizer's opposition to her was based on her supposedly being too close to former US Trade rep Robert Zoellick of the Obama admin, a pretty petty reason in the end.

This certainly does not mean that everything the WTO does is great.  The entry of China into it two decades ago was followed by serious loss of jobs in manufacturing in the US.  This should have been offset by policies within the US, not trying to keep China out of global trade agreements.  I do think it is reasonable to try to have a set of global rules about trade, even though we know that these get violated a lot, and enforcement of them may get spotty or biased.  But having such a set of rules looks to me better than not having any, which seems to have been the position of the Trump admin.  As for the China issue, well, the damage was done long ago now and China is in   Time to move on.

Anyway, this may not be a big deal, but it does signal yet again a willingness by the new administration to reengage with global organizations to try to achieve common goals, with the this following the reentry into the Paris Climate Accord and the WHO. All of these may be flawed, but improving them is going to be achieved by being in them, not standing outside whining and pushing obviously super nationalist agendas from the US.

Barkley Rosser

Friday, February 12, 2021

Fucking With The Football

 That would be the nuclear football, the one that a President of the United States can use to destroy all human life on the planet with by pushing some buttons.  It turns out there is a second one, a backup, one that is kept near the backup President. That would be the Vice President.

So CNN has put out a report that Tyler Cowen has picked up on and put as one of his daily news stories on Marginal Revolution, although barely commented on and not getting much attention on most media. The story in fact sort of does not quite play up how serious it is.  It focused on how people at DOD did not know how serious the situation was, without in fact playing up how serious it was.

The problem is that while there has been a lot of attention paid to how former President Trump continued to tweet negatively about his own VP, Mike Pence, even after hearing that Pence had been evacuated from the Senate chambers with a mob having entered the Capitol.  Trump's concern was how Pence had let him down by not engaging in an unconstitutional act to try not to recognize the certified state electoral college vote results. This tweet was read to the crowd outside, and the mob chanted over and over "Hang Mike Pence!"  We have now all seen this.

But probably the most dangerous part of this whole episode, I mean even probably worse than that Trump might have overturned the election and turned the US into a lifetime dictatorship run by him, is that when the mob was within 100 feet of Pence, the backup nuclear football was with him, carried by a Secret Service agent.

Now, if the mob had been a bit faster and caught Pence, certainly that Secret Service agent would have resisted vigorously, probably to the extent of giving up his life. But if the mob had succeeded in obtaining that nuclear football, well, maybe there are limits on the ability of a random person getting that object that keep them from destroying all human life on this planet.  But even short of that, there is no doubt that one of these people could have brought about very serious trouble.  This story needs more reporting, not how mean Trump was not to stand up for his VP who was following the law to certify the electoral college votes that would bring about the end of Trujmp's presidency.

Barkley Rosser

Impeachment: What’s the Message?

The mantra of the moment is that impeachment is not a trial and shouldn’t be governed by the same rules that apply to a court of law.  True, but that means it’s really a political event, where the verdict matters less than the message.

What’s coming through the media reporting is “Trump incited a riot.”  Well, he did, more or less, but that just means he’s a bad person.  It’s not news that Trump is a pretty nasty role model, and I fear the reaction of many people will be that the campaign to impeach him for it is just more of the same.

I would have preferred a different message: America needs to protect its democracy from the refusal of political leaders to accept defeat.  Around the world we see many countries where elections settle nothing.  Defeated parties routinely claim the election was rigged and only they have the right to hold power.  Street violence accompanies voting.  Military coups occur regularly to impose temporary stability.  The reason we should impeach Trump is to draw a line against this development in the US.

If that’s the message, the key evidence is not a single speech on January 6 or even the rhetoric leading up to it.  Rather, it was the drumbeat of assertions that the election was stolen without evidence to back them up.  After all, if the election had been stolen and the proof was in front of us, it would have been justified to throw sand in the gears of the system in any way possible up to and including an occupation of the Capitol building.  The crime was systematic lying, of a sort that, if not identified and rejected, will lead to a breakdown of democratic power rotation.

Now I can understand why Democrats might be reluctant to make this case, since it implicates not only Trump but much of the Republican leadership as well.  That would make it impossible to pick up the votes they need for impeachment, but they are unlikely to get those votes anyway.  If the real goal is to do everything possible to reverse the descent of America into a country where any political defeat threatens to be permanent and triggers violent resistance, then that’s what needs to be said.

Wednesday, February 10, 2021

Is Bitcoin Really Real Money? Ontological and Epistemological Questions

 The movement to make Bitcoin into a de facto form of money has taken a step forward when Elon Musk declared that he would be purchasing over a billion btc.  Some are claiming that Musk did this to pump up an alternative asset because Tesla stock is overpriced and may fall hard soon.  But who knows? Anyway, although btc fell today, it has reached dramatic new highs well over $40,000, with various people calling for it to go to $100,000. Many respectable financial advisers seem to be changing their tune, shifting to maybe one should hold a percent or two of btc along with gold in the non-income-earning part of their portfolios. Gold has remained flat just above $1800, and btc is the "new gold.  But is it (or any other cryptocurrency) really real money?  That is the ontological question of money.

So what is the ontological nature of money?  We know there are debates over which of the standard textbook functions is the most important, with use as a means of exchange, a unit of account, and a store of value the standard list. Some emphasize one over another. MMT advocates emphasize the unit of account function, especially when that unit of account is used to pay taxes.  In that view this is the ontological foundation is the declaration by a government that something must be used to pay taxes, with this also resolving the epistemological issue assuming the government has sufficient existing credibility and communications skills as well as enforcement capability to enforce making its citizens actually pay their taxes using the established form of money.

As of now no government mandates taxes be paid in btc, any more than that former official form of money, gold, is so mandated.  We do see gold being held in large amounts by many central banks, with them even occasionally using it to make transfers between each other (and XRP is used by many commercial banks to carry out interbank transactions), but nobody uses any cryptocurrency or gold to pay taxes.  Currently taxes are all paid in pure fiat currencies backed only by the word of the governments involved.

Among non-MMT economists many probably think the most important role of money is the main medium of exchange.  Again, gold is not so used, and even when it was an official money, it was only infrequently used in actual transactions because it has always been scarce and highly valuable. It was only used for high value exchanges.  Bitcoin was initially set up to be a widely used medium of exchange, and gradually more and more entities will accept payments in bitcoin, and some will accept a few other cryptocurrencies.  However, apparently it is rarely used for these established venues. By most accounts its main use as a medium of exchange is by criminals attempting to hide their activities.  This could change, and maybe Elon Musk's move will push it over into wider use.  But it has not happened yet.

As it is the ontological reality of a medium of exchange is ultimately subjective.  It does not matter what a money is "backed by" (and btc is not backed by anything, even a government, while gold is supposedly what some monies were backed by in the past). In fact the ontological reality is that a medium of exchange exists as a self-fulfilling prophecy: people accept it because they believe others will accept it.  If they all believe it, it is real.  The epistemological problem is solved when people find that they can use it.  For btc, maybe people believe it, but it still does not get used much. 

Of course this self-fulfilling prophetic aspect of money is the key to the literature dating to Allais and Samuelson using overlapping generations models that show how a fiat currency with zero "fundamental value" (defined by the value of what it is backed by) can have a stationary positive value that persists.  It is a stationary bubble that is rational because of the overlapping generations, so there is never a need to have it get converted into its fundamental in the lifetime of anybody.  The bubble can just be passed on to the next generation of sucker believers, who are in fact not suckers because they can get to pass it on themselves.  Nobody ever has to "face the music."

Actually this matter of being a self-fulfilling prophecy applies even to the unit of account/usable to pay taxes also ultimately depends on such subjective prophecies. These do not seem like this because governments may be able to have armed police come to arrest you if you do not pay.  But their willingness to do that depends also on the broader public accepting that the government in question has legitimacy and exists. If people stop believing in the government, it ceases to exist, and its money becomes valueless, see the former Confederate States of America, whose money does have value as a collectible, but cannot be used to pay taxes or pay for groceries.

Of course the matter of being a store of value is a function that pretty much any asset can play, land, bonds, famous paintings, etc.  No doubt this function is now being performed by btc and gold. But in the case of cryptocurrencies there is a problem that is the high volatility that they have been experiencing.  That there has been a lot of increases in them, especially btc.  But we have also seen rounds of collapse.  There is all sorts of excitement by many for btc, with Musk's call further encouraging this.  But it remains the case that these do not have the stability of other things, even gold. If it crashes like Gamestop, Elon Musk will not step in to save it, although the Bank of China might step in if gold were to fall below $1000/oz as some claim is something the bank would, although that has never been promised.

In short, the ontological reality of any form of money is actually a social reality, a matter of people believing that other people believe something, rather like the famous beauty contest of Keynes.  This makes the epistemological question being a matter of ascertaining what those beliefs are and how solidly people believe them.  Bitcoin may have become somewhat more real as a possible quasi-money, but for now it remains mostly an asset but not a full form of money.

Barkley Rosser

Monday, February 8, 2021

Pushing Back For Democracy Around The World

 Given the massive impetus the presidency of Donald Trump gave to authoritarian and anti-democratic forces around the world, it is worth seeing that his defeat in a democratic election, despite his efforts to illegally overturn it, seems to have been followed by some outbursts of pro-democratic demonstrations in parts of the world, even as we saw a major setback for democracy in Myanmar with the military coup there.

Indeed, one of those pushbacks has been in Myanmar, where various groups have gone into the streets to protest this coup. I fear they will not succeed in reversing it, at least not immediately. But the generals have not gotten away with doing this without pushback and clearly will have their hands full hanging on to power.

Another location has been in Russia, where Trump's old boss, Vladimir Putin, after giving himself a de facto lifetime appointment (or at least until 2036) has been facing large demonstrations since the return of Andrei Navalny from Germany, where he recovered from Putin's effort to have him poisoned. Putin has tried to ridicule the accusation by Navalny regarding this matter, saying that his people would have succeeded in killing him if they were really doing it. But, of course, they failed, and it clearly was Putin's people, as the complete lack of any investigation to find the "real" killers made clear.  Large numbers have been out in many cities, with an apparent new atmosphere by a new generation, who do not seem as subservient to Putin as their elders.  However, apparently Navalny's people have called off further demonstrations for the near future.

Finally we have a major uprising by students at Bogacizi University in Istanbul against Erdogan appointing a flunky of his to be Rector.  I am not sure if those are continuing, but they at least went on longer than anybody expected, with Erdogan duly embarrassed.

No, I am not expecting any of these to lead to the downfall of any of these regimes in the near future, just as the ongoing demonstrations in Belarus have not yet dislodged Lukashenko.  But I am glad to see at least some like among those who oppose these dictatorial regimes at this time. I like to think that the victory of Biden over Trump may have given support to many of these who have stood up in their nations to oppose further manifestations and assertions of power by their dictatorial leaders.

Barkley Rosser

Barkley Rosser

Karl Marx/Benjamin Franklin Mashup

Capital itself is the moving contradiction, in that it presses to reduce labour time to a minimum, while it posits labour time, on the other side, as sole measure and source of wealth. Remember that time is money. Hence it diminishes labour time in the necessary form so as to increase it in the superfluous form; hence posits the superfluous in growing measure as a condition – question of life or death – for the necessary. 

He that can earn ten shillings a day by his labour, and goes abroad, or sits idle one half of that day, though he spends but sixpence during his diversion or idleness, ought not to reckon that the only expense; he has really spent or rather thrown away five shillings besides. On the one side, then, it calls to life all the powers of science and of nature, as of social combination and of social intercourse, in order to make the creation of wealth independent (relatively) of the labour time employed on it. On the other side, it wants to use labour time as the measuring rod for the giant social forces thereby created, and to confine them within the limits required to maintain the already created value as value. In short, the way to wealth, if you desire it, is as plain as the way to market. It depends chiefly on two words, industry and frugality.

Waste neither time nor money, but make the best use of both. Forces of production and social relations – two different sides of the development of the social individual – appear to capital as mere means, and are merely means for it to produce on its limited foundation. In fact, however, they are the material conditions to blow this foundation sky-high. 

Truly wealthy a nation, when the working day is 6 rather than 12 hours. He that gets all he can honestly, and saves all he gets (necessary expenses excepted) will certainly become rich; if that being who governs the world, to whom all should look for a blessing on their honest endeavors, doth not in his wise providence otherwise determine. Without industry and frugality nothing will do, and with them everything. Wealth is not command over surplus labour time (real wealth), but rather, disposable time outside that needed in direct production, for every individual and the whole society.

Saturday, February 6, 2021

Summers and Ricardo

I share some of Summers' concerns about the magnitude of Biden's proposed stimulus.  The comparison to the January 2009 situation is marred by the fact that we are not now in a Demand-deficient Keynesian-style recession as we were then. What's holding back output now is clearly pandemic-induced supply constraints. 

On the other hand, if the Ricardian Equivalence theorem holds, perhaps some non-negligible portion of the transfer component of the stimulus will be saved. (Even borrowing-constrained individuals will save some of a big-enough transfer.) 


 

Thursday, February 4, 2021

Doing the world a favor. For Michael.

 

I did indeed post Dilke's work. Then I reposted it. Then, ten years later, Contributions to Political Economy reprinted Dilke's pamphlet, along with an essay about it by Giancarlo de Vivo. And forthcoming in the next issue of CPE is my article on the "Ambivalence of Disposable Time." Thank you, Michael, for asking me to do the world a favor. Rest in Peace.


Wednesday, February 3, 2021

RIP MIchael Perelman

 I have just learned that old friend Michael Perelman has "passed quietly in his sleep" (not reported of what) on September 21, 2020, having been born on October 1, 1939, so just shy of his 81st birthday.  I knew Michael for a long time and considered him a personal friend, although it has been some time since I have seen him in person.  He long had an active internet list and was officially signed on as one of the people who could post here on Econospeak when it started, and I remember him in fact posting a few times in the early days, but then stopped.  He was always insightful.

Michael received his PhD from the Agricultural Economics and Natural Resources Department at UC-Berkeley in 1971, where his major prof was George Kuznets, younger brother of Nobelist Simon Kuznets. Michael then taught for 47 years at Chico State University in California where he was widely praised as an excellent teacher.  Among his students was Mark Thoma who apparently was strongly influenced by Michael and who would later run the widely respected and busy blog, Economists View, no longer functioning unfortunately.

He was definitely of a heterodox and progressive position and active in URPE, someone who took Marx seriously while not necessarily buying into all things Marx advocated.  He wrote 19 books, which I shall list below, although I am missing the year for one of them.  As can be seen they covered a wide range of topics.

I would note a few of them that I think are the most important.  Probably the one with the biggest splash was his 2000 The Invention of Capitalism: The Secret History of Accumulation, in which among other things he revealed a lot of dirt on Adam Smith.  Another was his1987  Karl Marx's Crises Theories: Labor Scarcity and Fictitious Capital, of especial interest now with all the wild speculative bubbles we are seeing with "fictitious capital" Marx's term for asset values above their fundamental due to speculation. Then there is his 2003 The Perverse Economy: The Impacts of Markets on People and Nature, in which he attempted to reconcile Marx with environmentalism, although I think he made the fuller version of this argument in some articles. Along with Paul Burkett, he noted that while Marx did not see see land creating value, he was it as containing wealth and wrote quite a bit about the implications of the work of the German organic chemist, von Liebig, developer of the famous "Libig's Law of the Minimum," an important idea in both ecology and agricultural economics.

Below I list his books:

Farming for Profit in a Hungry World (1977)

Classical Political Economy: Primitive Accumulation and the Social Division of Labor (1983)

Karl Marx's Crises Theories: Labor Scarcity and Fictitious Capital (1987)

Keynes, Investment Theory and the Economic Slowdown: The Role of Investment and q-Rartios (1989)

The Pathology of the U.S. Economy: The Costs of a Low Wage System (1993)

Critical Legal Studies (with James Boyle, 1994)

The End of Economics (1996)

Class Warfare in the Information Age (1998)

The Natural Instability of Markets: Expectations, Increasing Returns and the Collapse of Markets (1999) [also an excellent book and well-timed]

Transcending the Economy: On the Potential of Passionate Labor and the Waste of the Market (2000)

The Invention of Capitalism: The Secret History of Accumulation (2000)

The Pathology of the U.S. Economy Revisited: The Intractable Contradictions of Economic Policy (2001)

Steal this Idea: Intellectual Property and the Corporate Confiscation of Creativity (2002)

The Perverse Economy: The Impacts of Markets on People and Nature (2003)

Manufacturing Discontent: The Trap of Individualism in a Corporate Society (2005)

Railroading Economics: The Creation of the Free Market Mythology (2006)

The Confiscation of American Prosperity: From Right-Wing Extremism and Economic Ideology the Next Great Depression (2007) [another well-timed one]

The Invisible Handcuffs of Capitalism: How Market Tyranny Stifles the Economy by Stunting Workers (2011)

Information, Social Relations and the Economy of High Technology (date unknown)

I shall miss him.

Barkley Rosser


Friday, January 29, 2021

Is China Now Number One?

 Actually I think focusing on such questions can be a not very useful exercise, but here I am asking it anyway.  As it is, indeed the Peoples' Republic of China (PRC) is indeed Number One on a number of important grounds, although probably the bottom line is that the world is now dominated by a G2, the US and China, with it unclear which is Number One overall.  What has happened is that up until quite recently there was no question: the US was Number One as it had been for a long time.  That is not the case now.

Probably the most important fact lying behind PRC moving into a possible Number One position is that it indeed does have in real PPP terms the world's largest aggregate GDP, probably on the order of 30% higher than the US's, with this gap continuing to grow.  Most people are unaware of this, and it is hidden by the fact that the US continues to be Number One on nominal GDP, which gets constantly reported in the US media with no commentary or recognition of the situation regarding PPP GDP.  As it is this complicated situation signals the likely current quasi-equality, because indeed nominal GDP is important as it reflects the ability of a nation to assert itself globally.  But PPP does show how much it is really producing. And, assuming current trends hold, PRC probably will surpass the US even on nominal GDP within the next several years, almost certainly before the end of the decade.

Another important matter is that sometime in the last few years China replaced the US as the world's leading financier of development. Indeed, the PRC has accepted this role in a coordinated plan of action, its Belt and Road Initiative, which has come under some criticism by some nations for various reasons, including that it is an effort to achieve a dominance over the nations involved in this.  But whatever the truth or falsity of that, this initiative is indeed leading to large scale infrastructure expansion in many nations that will aid their future economic growth.  The US is not remotely providing such aid, and also is not going to be doing so.  This places China in a very important position regarding the world economy, a position once held by the US.

Of course there are some areas where the US is still ahead. One involves military.  China's military is growing and expanding, and it probably has the ability to cause US forces more damage in a conflict than many might expect, such as the ability to knock out an aircraft carrier and compete seriously in cyber and space warfare.  But the bottom line is that if there were a full-blown war, the US continues to maintain an overwhelming edge.  But let us hope we do not have to see such a test, although such comparisons are obviously important.

Certainly there are many other areas where the US retains the edge, even as PRC is rising in many of them. So in the crucial area of scientific and intellectual developments there is rising competition, but the US continues to broadly have the lead, even as China is taking it in various areas, some of them quite important, such as developing solar energy technology.

Needless to say the last four years has seen the US shooting itself in the foot on all this during the presidency of Donald J. Trump.  "America First" led to America Second or worse.  Angering allies and simply removing the US from so much going on in the world and violating treaties, left China as the relatively responsible party at the global level, and while China has engaged in hostile actions towards some neighbors, at the global level it looks more responsible than has the US, although this latter may be changing with the change in administrations in the US.

Anyway, clearly these two nations are global level competitors, with a long run trend tending toward the advantage of China, at least as it seems now.  But let us hope this relationship can be managed without actual war breaking out.

Barkley Rosser