Wednesday, July 24, 2013

Detroit, Change and Marx.

"You ever get the feeling that everything
In America is completely fucked up?"
Detroit's Vanity Ballroom dance floor, by Albert Duce. [A]

Detroit, MI, had a population of 1.85 million people in 1950. By 2010 its population had plummeted 61%, to 0.71 million, partly as a consequence of the so-called White Flight, induced by the migration of black Americans, searching better employment opportunities in a by then already changing auto industry. And then, globalization, offshoring and depression happened.

Abandoned house in Delray, Detroit, by Notorious4life. [B]

Last Friday, July 19, Detroit mayor Dave Bing announced the city had filed for bankruptcy, as municipal revenues shrank together with the taxpaying population and economic activity.

Detroit, if the largest bankrupt municipality in American history, is only one struggling city in the so-called Rust Belt.

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Karl Marx and Friedrich Engels characterized the normal development of capitalist economies in the following terms:

"Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. (...) All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses, his real conditions of life, and his relations with his kind.
"The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.
"The bourgeoisie has through its exploitation of the world-market given a cosmopolitan character to production and consumption in every country".
(The Communist Manifesto)
Although the passage above seems relevant to describe Detroit's predicament, it would be silly to claim that Marx (and Engels, Marx's co-author) "forecasted" that city's downfall.

When mainstream economists think of prediction, they think of an accurate forecast (and one whose required accuracy will grow in proportion to how much one dislikes the forecaster): something like an astronomer predicting a lunar eclipse, which will start at a certain time, will last so many seconds and will be visible in such and such places.

That's not what Marx did. What he did is akin to what geologists do: they do not forecast when an earthquake will happen, what intensity it will have, how many buildings will crumble and how many people will die inside them. They identify areas where earthquakes are likely to happen and they explain why.

Marx gave us reasons to expect radical change as a normal part of life under capitalism. He explained it, too: change is inherent in capitalism, much more so than in any other mode of production, because it is generated endogenously (i.e. "laws of motion").

Unlike mainstream economists, change for Marx doesn't come about only as consequence of unpredictable and unexplainable exogenous "shocks", disturbing an otherwise equilibrated and somehow optimal and stable state of society:
David Cassidy: "So what caused the recession if it wasn't the financial crisis?"
Professor Eugene Fama: "(Laughs) That's where economics has always broken down. We don't know what causes recessions. Now, I'm not a macroeconomist so I don't feel bad about that. (Laughs again.) We've never known. Debates go on to this day about what caused the Great Depression. Economics is not very good at explaining swings in economic activity". (See here)
While Cassidy assumes (in my view, erroneously) that the depression was caused by the financial crisis, Fama's reply is revealing.

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But, never mind what doom doomsayers say.

Besides, there is a kind of demonic, terrible joy in dancing madly to what may well be our requiem:


Image Credits:
[A] "The Vanity Ballroom dance floor", January 16, 2010.  File licensed under the Creative Commons Attribution-Share Alike 3.0 Unported licence. Wikipedia. Author: Albert duce. My use of the file does not in any way suggests its author endorses me or my use of the work.
[B] "Delray, Detroit, MI", May 20, 2010. Author: Notorious4life. This work has been released into the public domain by its author at the Wikipedia project. This applies worldwide.

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