Sunday, December 24, 2023

In Memoriam: Robert Solow

     One of the tallest trees in the economic forest has fallen:  Bob Solow has died at the age of 99.

The modern study of economic growth could not have happened without his work, of course.  He was also one of the funniest economists I know. For years I have had the following quote from him on my office door,  which hilariously sums up his attitude to Lucas and Sargent on business cycles:
"Suppose someone sits down where you are sitting right now and announces to me that he is Napoleon Bonaparte. The last thing I want to do with him is get involved in a technical discussion of cavalry tactics at the battle of Austerlitz. If I do that, I'm getting tacitly drawn into the game that he is Napoleon. Now, Bob Lucas and Tom Sargent like nothing better than to get drawn into technical discussions, because then you have tacitly gone along with their fundamental assumptions; your attention is attracted away from the basic weakness of the whole story. Since I find that fundamental framework ludicrous, I respond by treating it as ludicrous—that is, by laughing at itso as not to fall into the trap of taking it seriously and passing on to matters of technique."
RIP, Robert Solow

Monday, December 4, 2023

Seeing the frowns on the jugglers and the clowns

It is a problem that has vexed and eluded Marxists -- and tantalized critics of Marx -- for a century and a half. If I am correct, Karl Marx had an intuition of the argument I am about to present but he couldn't quite bring himself to articulate it. A bit over a century later, in "Proletariat and Middle Class in Marx: Hegelian Choreography and the Capitalist Dialectic." Martin Nicolaus almost got it or may have gotten it but couldn't put it into words. The question is usually framed in terms of a New Middle Class, although the agglomeration isn't a class, it isn't in the middle, and it isn't particularly new. For background on the debates about this so-called new middle class, see Val Burris's 1986 review article, "The Discovery of the New Middle Class" in Theory and Society, Vol. 15, No. 3 (May, 1986), pp. 317-349.

Burris mentioned Nicolaus's essay in connection with the argument that "Marx was actually an advocate, if not the originator, of the concept of a 'new middle class.'" That hardly does justice to Nicolaus's contribution. Abram Harris had traced the concept to Marx in 1939. Nicolaus's argument was a much more complex one having to do with Marx abandoning certain Hegelian preconceptions in the face of empirical evidence. I won't summarize Nicolaus's entire argument here but focus on two pieces of evidence he presents in his essay. The first is a footnote from the Grundrisse in which Marx wrote, "the creation of surplus labor on one side corresponds to the creation of minus-labor, relative idleness (or non-productive labor at best) on the other." 

The second is a parenthetical commentary from Theories of Surplus Value 1 in which Marx speculated about an advance of productivity such that "whereas earlier two-thirds of the population were directly engaged in material production, now it is only one-third." If the produce and productive labour time were equally distributed, everyone would have more free time and time for "unproductive labor," presumably of their choice. But that could never happen under capitalism. As Nicolaus explained, "[t]he contradiction resides in the fact that the distribution of disposable time cannot be equal so long as the capitalist system operates by appropriating surplus labor."

At the end of his Theories of Surplus Value commentary on the consequences of productivity, Marx supposed that, 

—with the exception of the horde of flunkeys, the soldiers, sailors, police, lower officials and so on, mistresses, grooms, clowns and jugglers—these unproductive labourers will on the whole have a higher level of culture than the unproductive workers had previously, and in particular that ill-paid artists, musicians, lawyers, physicians, scholars, schoolmasters, inventors, etc., will also have increased in number.

I personally don't see why the clowns and jugglers wouldn't also have a higher level of culture, hence their frowns. But I take the point of Marx's listing of occupations to be precisely the heterogeneity of the unproductive workers who live on redirected revenue. This variety of occupations is in contrast to the footnote from the Grundrisse, in which Marx had enumerated, "the paupers, flunkeys, lickspittles etc. living from the surplus product, in short, the whole train of retainers; the part of the servant [dienenden] class which lives not from capital but from revenue." 

Incidentally, that footnote began with the disclaimer "[i]t does not belong here..." "Does not belong here" is a frequent occurence in the Grundrisse, appearing 17 times in that form. Sometimes Marx was referring to an anachronism. Sometimes he may have felt that a stray thought belongs in a different section than the one he is currently writing. But it seems to me that in this case "it does not belong here" referred to an idea that he did not know what to say about it. The footnote contains what appear to be several non-sequiturs but they are only such because Marx failed to develop the connections:

It does not belong here, but can already be recalled here, that the creation of surplus labour on the one side corresponds to the creation of minus-labour, relative idleness (or not-productive labour at best), on the other. This goes without saying as regards capital itself; but holds then also for the classes with which it shares; hence of the paupers, flunkeys, lickspittles etc. living from the surplus product, in short, the whole train of retainers; the part of the servant [dienenden] class which lives not from capital but from revenue. Essential difference between this servant class and the working class. In relation to the whole of society, the creation of disposable time is then also creation of time for the production of science, art etc. The course of social development is by no means that because one individual has satisfied his need he then proceeds to create a superfluity for himself; but rather because one individual or class of individuals is forced to work more than required for the satisfaction of its need - because surplus labour is on one side, therefore not-labour and surplus wealth are posited on the other. In reality the development of wealth exists only in these opposites [Gegensatze]: in potentiality, its development is the possibility of the suspension of these opposites. Or because an individual can satisfy his own need only by simultaneously satisfying the need of and providing a surplus above that for another individual. This brutal under slavery. Only under the conditions of wage labour does it lead to industry, industrial labour. - Malthus therefore quite consistent when, along with surplus labour and surplus capital, he raises the demand for surplus idlers, consuming without producing, or the necessity of waste, luxury, lavish spending etc.

On the one hand it is a jumble, on the other it is an extremely compressed summary of the theory Marx is developing. Right at the centre of that theory is disposable time: "In relation to the whole of society, the creation of disposable time is then also time for the production of science, art, etc." Recall Nicolaus's observation that under capitalism "the distribution of disposable time cannot be equal." That is both a law of capital accumulation and a fundamental contradiction of capitalism.

The pamphlet that inspired Marx's affection for disposable time, The Source and Remedy of the National Difficulties, contains a multi-page polemic against the proliferation of the "unproductive classes" in answer to the question, 

Why then is it that no existing society, nor society that ever had existence, has arrived at this point of time, considering that in all times, and in all societies, excepting only the very barbarous, a few years would naturally have led to it?
"It" being "that real national prosperity, when men would no more labour,

'than sufficed
To recommend cool zephyr, and make ease
More easy, wholesome thirst and appetite
More grateful;'"

In his polemic, C. W. Dilke, the author of the pamphlet cited "all soldiers, sailors, parsons, lawyers, counsellors, judges, and innumerable other persons," as representative of the unproductive classes. Was Marx influenced by this opposition between disposable time and unproductive labour in The Source and Remedy? Consider that the does-not-belong footnote came at the end of a passage that began with a quote from The Source and Remedy:

With the development of the forces of production, necessary labour time decreases and surplus labour time thereby increases. Or, as well, that one individual can work for 2 etc. (‘Wealth is disposable time and nothing more. ... If the whole labour of a country were sufficient only to raise the support of the whole population, there would be no surplus labour, consequently nothing that can be allowed to accumulate as capital . . .')

Marx subtly modified the pamphlet's maxim about wealth: "The whole development of wealth rests on the creation of disposable time." For Marx, disposable time became not merely the product of surplus labour but also its origin. Where Dilke had written of only an opposition between unproductive labour and the realization of disposable time, Marx, the dialectician, detected a unity.

Could it be, though, that this unity was already implicated in Dilke's term "disposable time"? At the end of his "does not belong here" footnote, Marx cited Malthus and acknowledged the consistency of his "demand for surplus idlers, consuming without producing." In notebook VI Marx quoted Thomas Chalmers, "one of the most fanatic Malthusians," writing that profit " has the effect of attaching the services of the disposable population to other masters, besides the mere landed proprietors." The quote is from Chalmers's On Political Economy: In Connexion with the Moral State and Moral Prospects published in 1832, but Chalmers had discussed and extolled the "disposable population" at length in his 1808 Inquiry into the Extent and Stability of National Resources.The latter book contains a chapter "On the distinction between productive and unproductive labour," which objects at length to the "mischief" done by the definition of unproductive labour.

Is it possible that Dilke chose the term "disposable time" -- as opposed to the more prosaic "leisure" -- as a veiled rebuttal to Chalmers's "disposable population"? The possibility is amplified by Dilke's attachment to William Godwin's philosophy and Chambers's (and Malthus's) open hostility toward Godwin.

We are by no means finished...

Still, we are by no means finished. The contradiction between production and realization - of which capital, by its concept, is the unity - has to be grasped more intrinsically than merely as the indifferent, seemingly reciprocally independent appearance of the individual moments of the process, or rather of the totality of processes.

Immediately following Marx's "does not belong here" footnote in the Grundrisse begins a 22-page section that examines the "transition from the process of the production of capital into the process of circulation." The climax of the section is the four point summary of the fundamental contradictions that I mentioned in a previous post and that culminates in the "fetter" that “real wealth has to take on a specific form distinct from itself, a form not absolutely identical with it order to become an object of production at all." One might be tempted to conclude that it is precisely those barriers that arise during the transition from production to circulation that necessitate the increase in unproductive workers as consumers of the revenues from surplus labour. As Malthus pointed out, at the end of a long quotation by Marx, "The very existence of a profit upon any commodity presupposes a demand exterior to that of the labourer who has produced it." Did Marx offer direct analysis of the relationship between the fetters on the development of productive forces and the expansion of unproductive labour? Only negatively: by explicitly "omit[ting] here any regard for the other possessing and consuming etc. classes, which do not produce but live from their revenue..." 

Summing up, then, productive labour, which produces surplus value, thereby also produces unproductive labour as both an external demand for the products of industry and as a conduit for the revenues of capital that are not reinvested: "the creation of surplus labour on the one side corresponds to the creation of minus-labour, relative idleness (or not-productive labour at best), on the other." First, the wages of productive labour are limited because otherwise there would be no incentive for capital to invest: "the existence of necessary labour time is conditional on the creation of superfluous labour time." 

Second, the amount of surplus value that can be re-invested is limited by consumption, which can not grow as fast as productivity could grow if all profits were reinvested. Economists' favorite maxim that "human wants are insatiable" is false. Wants can expand over time but at any given moment they are limited by taste, habit, and custom. The capitalist production process is driven by the production of exchange values and only incidentally produces use-values. But for that exchange value to be realized, the commodities produced must also be use-values for someone with the means to purchase them. Besides, if too much capital is taken out of circulation for re-investment, then not enough will be available in circulation for the purchase of the goods produced.

Finally, real wealth is distinct from the commodities that are produced. It must "take on a specific form, distinct from itself... to become an object of production at all." What might that imply for Dilke's statement that "wealth is disposable time"? For the capitalist, disposable time comes in the form of servants that improve the quality of their quantitatively finite free time. For all with disposable income, disposable time is produced in the form of time-saving "conveniences" ranging from automobiles to household appliances to communications devices, all of which began as luxuries and evolved into necessities. Whether they live up to their billing as time savers is questionable, though, if they are subjected to full cost accounting. For example, "free parking" is anything but and the cost of housing is escalated by zoning requirements to provide parking spots for each unit. Not to mention the huge environmental "externalities" of the automobile. Given a choice between working eight fewer hours per week or working the eight more to earn enough money to buy devices that save six hours per week, how many people could even find the information to make the comparison, wrapped as it is in regulations, taxes, urban development and a thousand other roundabouts?

Funny, people spend all kinds of time trying to figure out the meaning of the lyrics to Like a Rolling Stone (for example) but are incurious when it comes to what happens to their own free time. "You never turned around to see the frowns on the jugglers and the clowns" is 14 words and gets 23 results in Google Scholar, 100 times that many on Google. "Surplus labour on the one side corresponds to the creation of minus-labour" is 13 words and gets 6 results on Google Scholar, "about 10" on Google. Sure, the comparison is arbitrary and invidious. Karl Marx was no Bob Dylan.