Sunday 29 June 2014

Saint Karl of Trier?


According to The Raw Story/AFP, Pope Francis said yesterday:
" 'The communists have stolen our flag. The flag of the poor is Christian. The poor are at the heart of the Gospel,' he said in an interview published on Sunday.
"He cited the Beatitudes, the opening verses of the Sermon on the Mount, as an example of where Christianity had influenced communism.
" 'The communists say that all this is communism. Yeah, right, twenty centuries later. So one can say to them: but then you are Christian,' the pope said while laughing, according to the interview in Rome daily Il Messaggero."
Fair enough. Take your flag back, comrade. Don't leave it lying around again... and canonize the man: it's only fair!

Tuesday 24 June 2014

Pilkington, Hegel and Rumba: The Quote.

"I can't call what David Harvey does pointless intellectual masturbation because what David Harvey does, does not feel good at all". (J. Bradford DeLong)

Economist, philosopher, journalist, op-ed writer, hedge-fund manager, think-tanker, and Pope, movie star, quantum physicist, hipster, statistician, rock god, Nietzschean Übermensch and _____________ (you fill in the blank) Philip Pilkington found the definitive reason why Marxism totally sucks and is out, all guns blazing, to set things straight:
"I'm going to here quickly lay out why the LTV requires Marx's materialist dialectic to function philosophically. In order to understand this we must first understand how 'value' functions in Hegel."
Like, wow. After that readers would perhaps have expected with trepidation a lesson, profusely supported on Hegel quotes, about how value really, really functions. Shock and awe stuff. Makes sense, yes?

You would have been mistaken. Philip's ways, like the Lord's, are mysterious: he quotes from Post-Modern historian Michael S. Roth, who explains French Hegelian Alexandre Kojève's ideas about what Hegel really, really meant. If you try it slowly you'll get the idea. Otherwise, try this diagram:


Readers may be asking now, why so convoluted? No idea. Ask Philip.

But here comes the best part: The Quote! I took a screen capture, so you dear readers won't accuse me of lying. Without further ado, in all its PoMo glory, I give you, The Quote:

(right click to open in a separate tab for a larger image)

So, "human desire is the desire…", tautology, anyone? "… for recognition (reconnaissance), which, according to Kojeve's Hegel, alone can lead to self-consciousness". Yadda yadda. "Desire, Kojeve says (following Hegel) is the presence of an absence". Evidently, right? It couldn't be the absence of a presence… Or just the opposite, or… something.

After half an hour struggling (Ah! Prof. DeLong, how I appreciate your wise words now!) I gave up and attempted to move on, just to stumble upon this:
"I highlight the above examples not because they are particularly important with regards to Roth's excellent analysis but because they serve as a simple departure to discuss a properly dialectical analysis of value as against a crude Marxist so-called "dialectical materialist" analysis" (emphasis mine).
Simple?! Not particularly important?!

A little digression: do you, dear readers, remember the episode where the Simpsons travel to Japan? At one stage, Homer yells in frustration "modafuka mi", which, although it may sound like cursing, it is not -- the subtitles helpfully instruct us, is Japanese for "D'Oh!"

Well, that was my exact reaction. I too exclaimed "D'Oh!" in Japanese, even though I can't speak that language.

After that philosophical preamble and paraphrasing DeLong, Philip finally came to the "suggestion of a shadow of an argument":
"As we can see, for Kojève and Hegel value is attributed to objects due to our desire for them. This desire, in turn, is inter-subjective …
"This is similar … to that posited by … Thorstein Veblen … It is also similar to James Duesenberry
"It is, in its very structure, interdependent; that is why, for example, people are more inclined to buy Nike runners when they see Michael Jordon
[sic] wearing them".
Now comes the tricky bit. I suppose I should start my counter-argument, but… what kind of argument to choose? Something abstract wouldn't work any better here than it did in the comments thread to that post (more on this below).

So let me try, instead, a more concrete approach. Take something as unglamorous as toilet rolls: do people buy toilet rolls for the (A) "symbolic positions they [i.e. the toilet rolls, not the people, I think] occupy in the inter-subjective network of desires" or (B) because people just want to buy it after learning how Philip swipes his ass after taking a dump (which is the creative result of the "satisfaction of a human desire": to eat)?, or (C), well, people need to swipe their own asses?

The Michael Jordan's sneakers thing Pilkington periodically resurrects apply only to a limited set of goods. At the risk of stating the bleeding obvious: it couldn't be otherwise! Not all final goods, or even consumption goods, can be luxury goods.  It doesn't apply to toilet rolls. What about intermediate goods? How do you price them?

But then, don't firms buy stuff? Say, does Nippon Steel & Sumitomo Metal buy iron ore because it "will win recognition in the eyes of our [i.e. their] peers"?

But Pilkington proposes his "Nike-Jordan theory of value" as a general theory of prices, in place of Marx's theory of value and of the marginalist theory of value. Veblen himself never meant his ideas as a general theory of value: how on earth would he explain prices? This was evident to Veblen, is evident to me and I bet is evident to the readers (well, maybe not to Will and "Felipe"), but, boy, is evidently news to Pilkington.

Moreover, why do employers pay their workers? Because they desire (as in The Quote) their staff and want "the loved ones to return the love"? That's called sexual harassment.

To make a long story shortish, after that pseudo-intellectual farce ended, a fairly abstract discussion between commenter Hedlund and Pilkington ensued. That's probably the most entertaining part of the post, but I won't chronicle it: check it by yourselves. The discussion soon became heated (almost unilaterally, I should add, with Hedlund mostly on the receiving end) and finally, Hedlund gave up, leaving Pilkington the final word:
"Insults and rudeness are not equivalent to Unhappy Consciousness and ressentiment. I might be an asshole; but at least I'm an epistemologically correct asshole. And I'll take that over being a cult follower and a shabby philosopher any day."
I disagree on his alleged epistemological correctness, but that won't surprise you, dear readers. What might surprise you is that I actually agree with Pilkington on something fundamental: he is a rude asshole.

He's also many other things, including an imbecile and a wanker, but you fill in the blanks, _____________


Being totally serious now: this creature gives Post Keynesian economics a bad name, and that's something Post Keynesian economists cannot afford. You guys look the other way when he goes bananas with Marxists and mainstreamers, perhaps thinking that so long as he leaves you alone, things don't matter. But they do: he claims to be one of you and this is what people perceive.

Mark my words: you've been warned.

Monday 23 June 2014

Marx for Beginners: The Comeback Kid.


Sean McElwee finds that Karl Marx is making a bit of a comeback, but "has been widely misappropriated".

Well, I think you can do something about that misappropriation.

Whatever self-proclaimed "experts" (both, Marx's fans or his detractors) might claim, I doubt there has ever been a person who has read all of Marx's work, let alone mastered it. The reasons are many, among them the wide variety of Marx's writings (from polemical work to personal correspondence; from politics to philosophy, passing through economics, history, and journalism) and its extension (50 volumes published so far).

Even the task of tackling Marx's strictly economic writing is daunting. Prof. Robert Paul Wolff, political philosopher and professor emeritus at the University of Massachusetts Amherst, after a lifetime of study, writes:
"I am due to start talking about Marx's economic theories. This is an enormous subject (he wrote about 5000 pages on economics, all of which I have read)."
And that informal "guesstimate" could be conservative: somewhere else Wolff adds that 7000 pages is also a possible figure. (The man was busy!)

But if you work for a living and you want to understand the world around you, you need to hear Marx's message. Deep down, you know -- don't you? -- the "explanations" mainstream economists offer are largely bullshit.

That is a bit of a conundrum, isn't it?

Well, the good news is that you are not the first to find yourself in that position. In fact, some people have attempted (with varying degrees of success) to make your journey easier.

Ted Trainer, from the UNSW, is one of them. He has a readable and brief outline (some 15-16 pages long) of Marx's main ideas. I've read it and I think it's a pretty good one: so much so that after studying it carefully, you'll know more about Marxism than many of Marx's critics.

However, its brevity comes at a price: depth is lost, particularly the strictly economic stuff (it's hard to distil 50 volumes into 16 pages!)

Now, although I am by no means an expert, I have some posts that may help filling in the gaps. So, you may want to have a look at what Trainer has to say, and, if you have questions, I'd be glad to attempt to answer them.

Another alternative, much deeper, not to mention visually appealing and even entertaining (yes, entertaining, believe it or not) are the series of video lectures "Law of Value - the series", made freely available by the good folks from Kapitalism101. Unfortunately, it's more focused on Marx's economics (so, even if you are more into economics, you should still try first Trainer's outline, and then move on to Kapitalism101)

Good luck!


You can also check my Comments and Resources page, for more educative resources.

Tuesday 17 June 2014

Reaganomics as Keynesianism.

Or, a Two-Edged Sword Cuts Both Ways.

Beheading. Shahname. Isfahan (?), 1st quarter of 14th century. [A]

In all likelihood readers interested in economics have heard about the Laffer curve and supply-side economics. Applied during the Ronald Reagan presidency, Reaganomics has been singled-out as cause of the increase in inequality in the U.S.

Ronald Reagan gives a televised address from
the Oval Office, outlining his plan for Tax Reduction
Legislation in July 1981. [B]
I am unsure, however, whether readers understand what Reaganomics was and where it came from?

Arthur Laffer, one of its chief promoters, is in an exceptional position to answer. In 2004, in a report published by the American ultra-conservative Heritage Foundation, Laffer did just that.

Laffer starts by dispelling a myth: he did not invent the Laffer curve. He traces his ideas back to the 14th century Muslim philosopher Ibn Khaldun. But he acknowledged a more recent muse.

Laffer quotes:
"When, on the contrary, I show, a little elaborately, as in the ensuing chapter, that to create wealth will increase the national income and that a large proportion of any increase in the national income will accrue to an Exchequer, amongst whose largest outgoings is the payment of incomes to those who are unemployed and whose receipts are a proportion of the incomes of those who are occupied...
"Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more--and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss."
(Emphasis added)
The quote is from Keynes' "The Means to Prosperity" (1933), which predates "The General Theory" by 3 years only and largely anticipates it.


There is more of His Lordship in Laffer's tax cuts than a quote, however.

Those who were around at the time may remember the Republican sales pitch: "tax cuts pay for themselves". The idea was that balanced budgets would be achieved, because (paradoxically enough) of lower tax rates; in Keynes' words: "a reduction of taxation will run a better chance than an increase of balancing the budget".

Laffer's argument:
"Because tax cuts create an incentive to increase output, employment, and production, they also help balance the budget by reducing means-tested government expenditures. A faster-growing economy means lower unemployment and higher incomes, resulting in reduced unemployment benefits and other social welfare programs." (Emphasis added)
It doesn't get much more Keynesian than that: Laffer was talking, of course, about the very Keynesian automatic stabilizers!


Did it work? A quick look at the data below would suggests otherwise.


However, in fairness, Reaganomics was more than tax cuts and what we have above is the effect of all those things combined. So, perhaps a fairer answer would be (inverting the ordinary usage) that the evidence failed to confirm the hypothesis.


Some years ago, John Cassidy mentioned the above and concluded very aptly:
"Reaganomics, too, was a species of Keynesianism.
"But any attempt to categorize Keynes along traditional left-right lines is apt to founder. In his life and in his theorizing, he delighted in paradox".


Perhaps due to Keynes' usefulness as justification to opposed political objectives -- to cut both ways, as it were -- Lord Skidelsky has proposed a Keynes/Hayek reconciliation; others have gone as far as arguing that conservatives should embrace Keynesianism.

Lefties should heed that: it sounds ominous to me. But that's me.

Image Credits.
[A] Execution, 14th century. Shahname illustrations from the Diez Albums. This is a faithful photographic reproduction of a two-dimensional, public domain work of art. Source: Wikipedia.
[B] Ronald Reagan gives a televised address from the Oval Office, outlining his plan for Tax Reduction Legislation in July 1981. Public domain, author: White House Photo Office. Courtesy of the Reagan Library. Source: Wikipedia

Thursday 12 June 2014

Was Keynes… a Post-Keynesian?

The Prophet Malachi,
painting by Duccio
di Buoninsegna, c. 1310 [A]
Lars P. Syll (or here) approvingly quotes Joseph Stiglitz on the neoclassical economists' "religious beliefs":
"In the aftermath of the Great Depression, a peculiar doctrine came to be accepted, the so-called 'neoclassical synthesis'. It argued that once markets were restored to full employment, neoclassical principles would apply. The economy would be efficient. We should be clear: this was not a theorem but a religious belief."
As a reply, Brad DeLong reveals who conceived that "religious belief": no one other than his lordship, Baron Keynes.

So, I guess now Keynes can claim the title of religious prophet:
"Our criticism of the accepted classical theory of economics has consisted not so much in finding logical flaws in its analysis as in pointing out that its tacit assumptions are seldom or never satisfied, with the result that it cannot solve the economic problems of the actual world. But if our central controls succeed in establishing an aggregate volume of output corresponding to full employment as nearly as is practicable, the classical theory comes into its own again from this point onwards. If we suppose the volume of output to be given … then there is no objection to be raised against the classical analysis of the manner in which private self-interest will determine what in particular is produced, in what proportions the factors of production will be combined to produce it, and how the value of the final product will be distributed between them". (The General Theory, chapter 24, the same "euthanasia of the rentiers" chapter)
Now, I am sure readers may come up with many interesting thoughts on that. I'm happy making a rather obvious observation: in the passage above, Keynes seems to claim that, outside of recessions, "neoclassical economics" works just fine (which would explain DeLong's interest).

This is remarkable because, among Post-Keynesian economists, the term "neoclassical economics" is something of a putdown: with or without reason [*], they claim pretty much everything in "neoclassical economics" is wrong, beginning with its assumptions.

Post-Keynesian economist Steve Keen illustrates this. He claims to have found "logical flaws" in the neoclassical theory of economics: without much digging, part 1 of his book "Debunking Economics" reads "Foundations: the Logical Flaws in the Key Concepts of Conventional Economics" [%]. (Incidentally, I mention Keen only on account of his prominence; it wouldn't take much effort to point to other examples)

But according to Keynes, the problem was not "finding logical flaws in its [i.e. neoclassical economics'] analysis". For him, there were no such flaws: "For if orthodox economics is at fault, the error is to be found not in the superstructure, which has been erected with great care for logical consistency, but in a lack of clearness and of generality in the premises" (The General Theory, preface). His aim was to clarify those premises and make them more general, while preserving its "fundamental theory of value" [#]: "We are thus led to a more general theory, which includes the classical theory with which we are familiar, as a special case".


Whether Keynes was right or not regarding "neoclassical economics" is irrelevant here. My observation is that Keynes' position and that of the self-described Post-Keynesian economists are mutually contradictory: both sides cannot be right.

You are free to adjudicate victory: either Keynes, or his self-proclaimed intellectual legitimate children and heirs, the Post-Keynesian economists. But you cannot deny that is a dysfunctional "family".

On top, and ironically enough, it's the neoclassical economists, Keynes' bastard children, who seem closer to the Father on this.

So there, Department of Whiskey, Tango, Foxtrot, Bang, Bang, Bang.

[*] While I have my own views on this, I ain't taking sides in this family feud.
[%] Keen, Steve (2011-09-22). Debunking Economics  - Revised and Expanded Edition: The Naked Emperor Dethroned? (p. 37). Zed Books. Kindle Edition.
[#] One can only imagine Mrs. Robinson's face reading this reference to a "theory of value".

Image Credits:
[A] The Prophet Malachi, painting by Duccio di Buoninsegna, c. 1310. License: Public Domain. Source: Wikipedia.

Tuesday 3 June 2014

On Confessions and Proof.

I'm no fan of Noah Smith. I seldom visit his blog, so I rarely read him. In fact, if memory serves, only twice did I read him from beginning to end.

The first time, some years ago, it was an unbelievably god-awful post on Marx, Ayn Rand and their Jewish heritage (and yes, Will, before you object, I know about Smith's ancestry: link). And, trust me on this, "unbelievably god-awful" is a deliberate understatement (take into account that I am no Rand fan, either).

Thankfully, Smith apparently had the good sense of deleting it from his blog… Anyway, it was more than enough to put me off for good. But enough said.

After that experience, a few days ago I read another of his writings. It's a long story and you'll forgive me if I don't go into details. In my defence I can say it was by accident and mercifully, it was a brief text:


To my surprise, I didn't regret reading that message: it was interesting and useful, even if Smith, always the comedian, did not intend it.

Like that unforgettable first one, this message is about Marx and Rand, only now Mises joins them (Smith hits 3 out of 3: perfect score): there is something about these 3 guys, in Smith's mind, that makes them legitimate targets for ridicule and that something is not what they say or think…

After that confession, there is no need for further proof, so I rest my case: link.


PS. Don't worry, Noah, for some reason I feel no need to ridicule you.