Tuesday, July 23, 2013

Forbidden Economic Thoughts

 Here are a few snippets from some recent podcasts that I listened to that have stayed with me, and made very good points. I was going to add comment, but there's enough here already. I'm sure I'll be referring back to them often.

This is a recording of a talk by Michael Goodwin, the author of Economix. The talk was given in New York as part of the Full Circle Series and recorded by KMO of the C-Realm podcast:
It turns out that here is a whole forgotten tradition of economics, a very liberal and almost radical tradition of economics that has really; as I said, it’s forgotten. It’s amazing the degree to which it’s fallen off the radar. The most prominent practitioner of this, was a guy named John Kenneth Galbraith. He was a big-shot academic, but he also wrote popular books, and his first big best–seller was called The Affluent Society. And If anybody remembers that book at all, people say that Galbraith was being arch or sarcastic when he was talking about "the Affluent Society," and that he was talking about really, how poor we were, or whatever. That’s not true. The book The Affluent Society was exactly about that.

His point was, and he was his writing in the fifties, his point was, we’ve solved the problem of production. We can make anything we want; any thing we want, in more or less the quantities we want it. Anything that comes from private industry, whether it’s a car or a razor or whatever, it’s coming in enough profusion that we don’t really have to worry about that aspect of the economy anymore. And his evidence was, look around you.  Look at all these people trying to convince you to buy stuff. Hungry people don’t need to be convinced to buy food. Naked people don’t need to be convinced to buy clothes. The most advertising that anyone would do in that situation is just to tell you where to find it. But that’s not the sort of advertising he was seeing in the fifties. That was the fifties; it’s gotten much worse since then. If we were still at the other space; at the other space there were ads in the elevator, because God forbid you should spend that ten-second ride without possibly being convinced to buy something.

And so, all this advertising is expensive, and they wouldn’t do it if we actually wanted the things they were making. Which is actually a pretty radical thing to say, because all our economic ideas are based on the idea that at the end, when people make stuff and sell it, they’re filling our wants. That I may want a silk shirt one day, and a cool new razor the next day, and if I do, that’s great because somebody’s actually coming and supplying that want, and the amount of misery in the world goes down a little bit. But if we didn’t want the thing until these people actually made it and convinced us to want it, then the whole system is not quite as good as we thought.

Far more radical was his next book called The New Industrial State. That’s where he asked the question, ‘well, who’s doing this?’ And obviously you or I can’t afford gigantic marketing campaigns. His point, which is pretty obvious, is that these giant marketing campaigns are coming from very big businesses. But then he made the point that not only do these big businesses like to convince us to buy things, but they actually need to. They have no choice. And he took the example of a car: You start designing a car, you have to tool up, you have to hire the workers, you have to find a plant, all this stuff. And mainstream economics would have it that, after all this process, the car company goes to the free market and lets supply and demand dictate how much they’re going to sell and at what price. And his point is, they can’t possibly do that! They have to control the whole process, including sales. When they start designing the car, they have to know more or less how much it’s going to cost, and they have to be pretty well sure that they’re going to sell enough. And they ensure they’re going to sell enough by advertising.

So GM manufactures cars, and then GM manufactures our desire for cars, and everybody’s happy unless you think we don’t need quite so many cars. Now note how radical this is. Again, you’re getting very far away from the image that we have of businesses as just these helpful things that are giving us things we want.
Galbraith was very big until the nineteen-seventies. And to really take him seriously means abandoning all of economics and a lot of our social thought and completely rethinking our economy, and that’s very hard. And things seemed to be going okay, so he really got dropped and forgotten. And one reason is, we don’t like to be told we’re being manipulated. We like to think that we’re making our own decisions.
Goodwin goes on to describe the ways the food industry has manipulated us into eating crap food that is bad for us.

The next discussion is from the C-Realm podcast itself, from an interview with Ben McLeish
BM: There are a host of technologies that are sitting on the sidelines right now within the entire world that are being developed and maintained and studied by scientists, and by social scientists as well, doesn’t have to be a man in a labcoat, which is probably what people are thinking of, that could be put to use tomorrow, today, yesterday, a couple years ago. And they have not been. For instance, I’ll give you one. Nanobatteries or nanosolar. Highly, highly efficient solar panels, highly, highly efficient, long-lasting, rechargeable batteries that have minimal waste that are much better than the ones that we have now.
What we come to the table with is to say, listen, there’s a very good reason why these aren’t being put to use, and it has nothing to do with their unavailability or their expense, it is in fact that the guiding value system is one that relies on debt, is one that relies on waste, and turnover and profit rather than actual efficiency rather than market efficiency, and that that’s the point we want to make. And that you would solve a huge amount of problems by just acknowledging that and setting about fixing that, if you see what I mean.

KMO: I do. I’d like to have you expand, though, on the difference between actual efficiency and market efficiency.

BM: So, market efficiency, particularly in the capitalist system now, and this recognized also by people like the Austrians, is the efficiency of producing as much profit as possible out of the materials and labor that you have. So, in other words, it is financially, or market efficient, to produce products that break down, that work suboptimally, that need replacing, that need servicing, and that have limited capacity in their actual functions. Now anybody who owns a computer of any kind, this is true for Apple, this is true for PC, it’s true for Lenovo, it’s true for anything, will know how often their computers break down. Granted, it’s a lot better than what we had. We’re not saying we should go back to the abacus, although the abacus is very powerful on its own as well, but not so good for viewing DivX files I would say. This is something that people intrinsically know about and they moan about their household items breaking down, or their car breaking down, or their house breaking down, or the road systems breaking down. As large as you want to get, you’ll notice this.

Now, technical efficiency is of course what people are actually asking for when they complain about the breakdown of their products, something called inbuilt inefficiencies or planned obsolescence. Intrinsic and planned obsolescence, for which there are rather decent films on the subject as well. One claim is that this inbuilt obsolescence, this deliberate obsolescence, is in fact a myth because that would be selected against in a particularly market-orientated or capitalist system. There’s a great film called Pyramids of Waste that actually digs out historical documents of the [intelligible] consortium conspiring to produce lightbulbs that break extremely quickly. This is true of not just of lightbulbs but of really everything.

Technical efficiency is the very opposite. It’s the deliberate building of the most powerful, upgradable, recyclable, and long-lasting goods, services, and orientations of technical application in society. I do mean in society, I mean the whole world, for their own sake, rather than to maximize profit and create so-called market efficiency.

KMO: Talk about the resistance of the current market system to that approach.

BM: My favorite story, which is the one that Lawrence Lessig, the copyright professor from Stanford University always mentioned, was the story of a gentleman who invented FM technology. FM technology is everything that we’re used to now, although digital radio is creeping in now, and it was essentially much cleaner than AM. You can try this out now by pressing the AM button on any radio that’s near you. AM had a lot of static, didn’t have as much distance in terms of broadcast power, and when this was first shown to the world it was, in fact, on the back of a project that was run by AT&T. And it was decried as being competition to the existing AM market. Even though it’s a better waveform, even though it’s a more efficient, if you like, technology; it uses less power as well. This was heralded as something that would be expensive and dangerous. It’s expensive because you have to change all your incumbent systems that are there and that affects your profit if the only thing you’re looking at is the only thing that’s important.

And this gentleman was actually hounded to his death by years and years of working on patent litigation against AT&T. This gentleman’s name was Edwin Armstrong, a genius now finally recognized in the inventor’s hall of fame and put on stamps. But, all of that, and of course, his FM technology adopted widescale now, better for music and all of the other technical reasons, but of course all of that comes after the fact that he stepped out of his eleventh-story building after seeking financial bankruptcy from  years of litigation. One man versus a corporation and the essential destruction of his legacy in any meaningful sense because of course nobody knows who he was, and it only meant a huge delay in FM.

Now of course FM is a fairly inconsequential technology. What about more life-preserving technologies like new cures for cancer? I say new; ones that have been around for a very long time and have not ever been put into place because its more efficient marketwise, financially, to have repeat prescriptions of poisons and all of that, instead of what would actually be a cure for a problem.
And that’s really the model that we talk about for really all of economics. We compare it based on the work of John McMurtry of the University of Guelph, to a kind of cancer. And that’s not fanciful, it’s not even a metaphor. It’s the same market development. It’s the increase of goods and services that are feeding off the failures and the inefficiencies of the market itself rather than solving the problems. That’s very much like the behavior of cancer cells within a life host that feed off the life host’s capacities and systems and if you like ‘natural capital’ in order to feed a growing tumor of pollution and waste and useless money profit.
Here's Professor Richard Wolff on the same topic on the Extraenvironmentalist podcast:
We have highly efficient automobile companies in the United States. We have highly efficient rubber tire manufacturers. We have highly efficient road contraction companies. But we have the most inefficient transportation system the world has ever seen. Let us look at it with an eye to efficiency. Is the private automobile an efficient way to move people across distances? The answer is, no.

Automobiles now are the major user of fossil fuels in the United States. Automobiles are the major polluter of air in the United States. Automobiles foul huge quantities of our surface because they are rusting hulks buried in the ground with all sorts of toxic results. Automobiles are the largest killers of American people in automobile accidents far exceeding what all all our wars do in the way of killing and wounding people.

So on the grounds of fuel efficiency, on the grounds of pollution efficiency, on the grounds of the efficiency of life, death and wounding, we would be much better off if we had a system of light rail transportation, of van transportation, of regular railroad and boat transportation. It’s much more efficient. It would waste less resources, and on and on and on. It is an example of stunning inefficiency. Our housing system is the same. It’s much cheaper to heat houses that are built collectively, whether they’re apartment houses or garden apartments or cooperative housing developments. Child care, laundry, home maintenance, fuel, heat, electricity, all of it is much more efficiently provided to people living in groups of housing units than people living in individual, isolated, single-family homes.
We have the private car and we have the private home in the United States because it was profitable for capitalist enterprises to do that. The fact that they are in themselves efficient does not offset the grotesque inefficiency of  allowing their profit seeking the shape the otherwise inefficient mode of housing and transportation, and I just chose those as examples. But that’s the way we culturally train our people. We tell them that capitalism is efficient, without telling them all the areas in which it is the opposite.
And finally, from a discussion with David Collum on the Kunstlercast:
...This goes for me all the way back to high school. I remember my brother was an econ major in college and he said that an economy was unhealthy unless it was growing. And even then I said, ‘that can’t go on forever.’ That’s a Malthusian concept. And I to this day don’t get that. I don’t understand why, let’s say, GDP didn’t grow. Why is that not just existing in our current form? I’m lost, and I get really lost at the idea that we just have to keep growing.
And what I do know is about mathematics is that anything to some nth power where n is bigger than 1, right, so it’s 3 percent growth rate, n is 1.03, that mathematical function blows up. And so, you say, how does it blow up? A great analogy is if your ancestor at the time of Christ had $100.00 and put it at a 3 percent above inflation bearing account and put it in your name, you’d now be worth 10^28 dollars. To calibrate that, I’d have to do some quick math, but it’s something like covering the United States in M&M’s 100,000 miles deep.

10 comments:

  1. All these ideas are well and good, and true.
    The problem is, that re-engineering the current capitalist regime to allow us all to wallow in affluence and luxury, or even get our basic needs met without toil will not happen.

    Why not?

    The system that could provide this is centralized. Centralized systems will be controlled by those of a sociopathic, brutal nature. They always rise to the top.

    Thus, a centralized system that could theoretically ease man's toil and let us all sit around playing with our iPads and eating crappy food from factory farms will end up being controlled by brutal oligarchs who want to, and will, and have, enslaved us to debt and propaganda.

    The only alternative that is real is to opt out and create your own parallel, small-scale, village-level, communal economy. That's the only way out (if there is one) of This Ugly Civilization, to steal Borsodi's title.

    Dreaming of reforming industrial civilization is utopian thinking in the non-productive way: it is dreaming of doing something that will not be allowed to happen. Democracy is far past the stage where it has any life. The masses are too manipulable.

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  2. I don't necessarily disagree with you, but let me play devil's advocate for a minute. I think anyone espousing this view needs to consider the following questions:

    1. While seperatism may be possible for certain members of society, it is hardly a viable option for everyone.

    2. Withdrawal and apathy is exactly what those in power want. Benjamin Franklin: "we shall all hang together or we shall all hang, seperately."

    3. You cannot seceed from society. As I tell people, your self-suffient farm won't work when your groundwater is contaminated by a neighboring fracking company who have rewritten the laws thanks to campaign donations.

    4. During the 1930's to 1970's, incomes flattened and the middle class in America was created. This was hardly a utopia, but it was an improvement. This was caused by direct action, from socialist and anarchist movements to the Progesssive movement, not by abandoning society. Government was afraid of the people, not the people of the government.

    5. To say that change has never happened ignores history. The Chartist movement of the 1840's, for example, called for:

    1.A vote for every man over the age of 21;
    2.A secret ballot;
    3.No property qualification for members of Parliament;
    4.Payment for MPs (so poor men could serve);
    5.Constituencies of equal size;
    6.Annual elections for Parliament.

    All of which eventually happened long after the movement was exhausted. If this time really is fundamentally different, than why? Big money corrupting the government is not a new phenomenon.

    To say there is no other possibility, You would have to refute these these points. I don't expect any detailed refuation in a comment, since it would take too much room. An entire book could be used for that, and perhaps it already has been written.

    Consider - can such a community be a city neighborhood itself. There are many progressively-minded areas in the country, from Boulder to Portland to Austin to Madison, to larger places like Pittsburgh and Boston and yes, New York. Should these not be the centers of resistance?

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  3. Ok, Ok, you got me.
    We of course must try to organize, block by block.
    A successfully organized "communal" system on the neighborhood level can be expanded to a city - to a state. A nation.

    Anything is possible.

    Just because something is possible doesn't mean it is likely. But as Camus pointed out, one must continue to try, to fight for justice.

    I suspect that the price for resisting will be getting higher and higher. It's already so high that most middle class people can't conceive of resisting and risking their livelihoods.

    Therefore, true resistance won't happen until a large percentage of the middle class becomes immiserated, and has nothing left to lose.

    By that time, there really will be nothing left to lose, because if/when that happens, the government will have become ineffective at anything other than repression.

    So - if you are far-seeing and see this coming, is it rational to stay there and risk everything, or is it better to decamp for a better environment? The country commune will be better for those with resources at that point, or even for those who saw it coming.

    The feudal age arose, because those with resources left for the countryside, to escape the chaos and anarchy (of the bad sort) of the cities.

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    1. Personally, I'd rather get out of the U.S. but I don't think that's possible, unfortunately. I tend to follow a Taoist philosophy, simply move with the times. The grass in the wind doesn't push back, it bends. The stiff bamboo that pushes back against the wind snaps. The water modifies itself to the environment it finds itself in, in this way it weighs down everything, including rock. Sometimes passive resistance is the best strategy - just opt out as much as possible. It's not an all-or-nothing option. Going your own way and staying engaged are not mutually exclusive. If the SHTF, I would definitely seek higher ground. but I only have me to think of.

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  4. You said it yourself escape - Forbidden Thoughts! How dare you.... ;>))

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    1. The thought police will come and arrest me and take me to thought prison ;-)

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  5. Good interaction on this post.
    For a while I was thinking that I was getting a bit frustrated with you, seeing you calling for reforms that I see as very unlikely... I myself am now coming around to the idea that one must always be politically engaged. The idea that you'll be "safer" by staying out of politics is really a myth - if those with the ideas and know-how stay out, eventually the system will devolve to the point that they are in danger, too.

    America is a strange place: the passivity of the masses, combined with enough resources to actually make a difference. But by the time enough people mobilize, those resources will be squandered. The biggest recipient of never-to-be-available-again resources: the police state. Not pretty.

    I like your Taoist bent, also.
    If you travel my way, to where the women are strong and the men good-looking, I'll get you a beer or coffee and a meal, and we can discuss.

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  6. That tag line under the blog name isn’t just for show ;-)

    They’re not mutually exclusive – you can unplug from the system and still agitate for change. It’s easy to give up, but often these things take more than one lifetime. There are so many things that are just obvious. It’s obvious the rich cannot squeeze workers forever. It’s obvious we can’t just have more and more people fall into unemployment. It’s obvious that government, health care and education are all corrupt and predatory. It’s obvious that there are better ways to run an economy. When people say there are no solutions, they’re wrong. It’s just that we refuse to implement them. Perhaps a distinction without a difference, but I think it’s a valuable distinction to make. And as things break down, perhaps then there is room for change. Neoliberals like to say ‘there is no alternative.’ I feel the same way, but I mean something very different. If I didn’t have good criticism or valuable alternatives, there wouldn’t be much point in writing this would there? And there is, of course, posterity. I think there is some value in letting future generations know that at least some of us saw what was coming.

    I think of it like a Bodhisattva vow in Buddhism. One difference between Mahayana and Hinayana Buddhism is that in Mahayana there is the concept of the Bodhisattva. The Bodhisattva is a being who is enlightened. Yet the Bodhisattva continues to suffer the pain of death and rebirth until all sentient beings are saved. In other words, the Bodhisattva ideal refuses to believe just saving oneself is desirable while others continue to suffer. No enlightened person can cut themselves off from the people around them. Apologies if I’ve misstated any Buddhist concepts here.

    We’re not alone. We’re far from the first people to have to live through our society crumbling around us. We’re far from the first people to see oppression closing in and feeling powerless to stop it. And yet, goodness endures even in the worst places. Take some comfort in that. Here’s a good article on that subject:
    Many people have tried to describe what it feels like to endure the disintegration of one’s entire civilization, to watch the buildings and landscapes of one’s childhood collapse, to understand that the moral world of one’s parents and teachers no longer exists and that one’s respected national leaders have failed. Yet it is still not an easy thing to understand for those who have not experienced it. Words like “vacuum” and “emptiness” when used about a national catastrophe such as an alien occupation are simply insufficient: They cannot convey the anger people felt at their prewar and wartime leaders, their failed political systems, their own “naive” patriotism and the wishful thinking of their parents and teachers. Different parts of Eastern Europe experienced this collapse at different times. But whenever and however it came, national failure had profound effects, especially on young people, many of whom simply concluded that everything they had once thought true was false.
    http://www.slate.com/articles/news_and_politics/foreigners/features/2012/iron_curtain_applebaum_excerpt/iron_curtain_excerpt_anne_applebaum_on_how_lives_in_eastern_europe_were.html

    You’re in Minnesota, I take it? I have some family members in Minneapolis area.

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  7. This comment has been removed by the author.

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  8. I sent my contact detail via a comment and then deleted it. Did you get it? Thx

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