June 10, 2010

Paul Krugman notes a curious phenomenon: any number of economists and pundits calling for fiscal austerity – in the U.S., in the U.K., in Germany, in Greece – hell, everyfuckingwhere – even though such policies will straightforwardly and directly inflict suffering on the citizens to whose rulers such wise men address their advice. What could possibly be the explanation for this misguided thinking?

What’s going on here? I don’t think you can resort to class-warfare arguments. What I think is happening is that we’re seeing the deep seductiveness, for many economists (and others), of taking what sounds like a tough-minded position in favor of inflicting pain on the economy — and the people who make up that economy.

Don’t go resorting to class-warfare arguments, now: this is really a matter of innocence. It’s just so seductive to policy advisors, this assault on the working class. No need to inquire about the source of this seductiveness, its motives or purpose, whose interests it serves or what power promotes it. It’s just one of those things! Policy advisors finding fucking over ordinary people seductive! End of story! Move on!

Take the situation in the U.K., for example. We know, if we consume media commentary, that reducing the deficit is the NUMBER ONE PRIORITY for any U.K. government (because continuing debt-financed spending in a recession is of course unthinkable – impossible). And we know that reducing the deficit must mean SPENDING CUTS. We know, therefore, that we are entering a new age of austerity. Britain’s whole way of life will have to change!

Now we might reflect that there are TWO ways of reducing a deficit: cutting spending; or increasing revenue. Increasing revenue means, for a government, increasing taxes. So it seems that if the government were to increase taxes instead of cutting spending, that would also reduce the deficit. As it happens, there’s an entire capitalist class with a fuckload of huge corporations making obscene profits – perhaps taxes could be raised there?

No; don’t be silly. Serious people think that welfare should be cut and jobs should be lost. Why do they think this? Who knows – it’s just something in the air, an inexplicable and innocent collective sadism on the part of paid analysts, almost as if these pundits and advisors were children, too gentle for the world.

Krugman quotes Keynes on Ricardian economics:

That it reached conclusions quite different from what the ordinary uninstructed person would expect, added, I suppose, to its intellectual prestige. That its teaching, translated into practice, was austere and often unpalatable, lent it virtue.

Somehow Krugman forgets (this time) to reproduce the rest of the quote:

That it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely on the whole to do more harm than good, commended it to authority. That it afforded a measure of justification to the free activities of the individual capitalist, attracted to it the support of the dominant social force behind authority.

Even Keynes gets it, more or less. Why can’t Krugman? What could be the explanation for that?

As part of my preliminary research for the Brief History of Capitalism project, I’ve been reading (among other things) Immanuel Wallerstein’s The Modern World-System. To cut a long story short, I’m extremely impressed. There are some things in the book that strike me as problematic, so I’m not signing on the dotted line to endorse every one of Wallerstein’s positions here – but I would unhesitatingly recommend his work as an unusually acute analysis of capitalism as a global dynamic. In fact, I’d go so far as to say that Wallerstein’s stuff is the best published analysis of capitalism-as-system that I’ve read outside of Marx. (And I’m also a bit puzzled as to why Wallerstein isn’t more widely used or praised within the recent Marxist tradition. He has some noteworthy disagreements with prominent Marxist theorists (e.g. the Brenner school, w/r/t the transition), and he’s obviously no activist; but still, he strikes me as both quite orthodox and very good, so I’m a bit puzzled as to why he’s not more popular in Marxist circles.) I’m planning to read more of the world-systems folks (Arrighi next), and will report back as and when. [NB: Preliminary assessment of Arrighi – nowhere near as good.]

Anyway, this post isn’t really about Wallerstein, but is about a line of thought that Wallerstein’s stuff helped me to pin down more cleanly. Apologies if the following is a bit simplistic & schematic – as I say, this post is really just the jotting down of a thought, and more detailed analysis will hopefully one day follow. But: one of the simple but extremely useful schematisations in Wallerstein’s book is the distinction between an empire and a world-system. Wallerstein points out that there have been plenty of extremely large-scale and tightly interconnected economic structures in the world before the European economy turned capitalist and starting swallowing up everything else in the 16th century (by his periodisation). Wallerstein is of the opinion, however, that large-scale and tightly interconnected economic systems prior to capitalism tended either
– to be unified as a single political entity;
– to become unified as a single political entity pretty sharpish; or
– to fall apart pretty sharpish, because they weren’t unified as a single political entity.
What’s historically unique about the capitalist world-system, in Wallerstein’s opinion, is that it functions as a single tightly interconnected large-scale economic system while being composed of a great many different (and generally antagonistic) political entities (= nation states).

This is central to capitalism’s ‘success’ as a social form, Wallerstein argues. I’m not sure quite how much of the following is Wallerstein and quite how much is my own opinion / reconstruction. But I at least would make the argument that one of the most significant events (or series of events) in the history of the development of capitalism is the creation of national debts (which was a long and pretty troubled process), because this subordinates (at least in one extremely significant way) the political decision-making of sovereign political entities to a global economic dynamic that cannot be controlled by any given political entity (or even by a number of such entities acting in concert). [On all this see the quote from Marx below the fold.] (And of course we can see this playing out now, w/r/t the ongoing economic crisis.) The ‘political’ is subordinated to the ‘economic’ here in a way that has had massive ramifications. (Not that national debts are the only way this happens; more straightforward global competition for economic resources between state actors is another notable way in which capitalist dynamics influence political decision-making, for instance.) (Of course, what the ‘dynamic’ of capitalism consists in matters a lot here – none of this is meant to be a real analysis, just gestures towards one; I aim to elaborate this stuff more adequately in the series of historical posts I’m planning (though hopefully it’s mostly obvious and intuitive).)

Anyway, one of Wallerstein’s points, I take it, is that given the way the capitalist system as a whole functions, if any given political entity aims to set itself up in opposition to the imperatives imposed by the system as a whole, sooner or later it’s probably going to get bulldozed. Mostly it doesn’t come to that, of course, because the powerful political actors in any given political entity see which way the wind’s blowing, make policy accordingly, and suppress dissent from those within the political entity who’ll be hurt by the consequences. There’s a double class dynamic, in Wallerstein’s schema – a global opposition between core and periphery (with semi-periphery in the middle); and an opposition within political entities between those who call the shots and those who suffer the consequences. It’s important w/r/t the way the system works, however, that even the ‘core’ political entities are subordinated to the general dynamic – made ‘core’ by their participation in this dynamic. A failure of the core to play its coercive and exploitative role adequately is likely to result, under capitalism, not in the collapse of the system (as it would if we were dealing with a truly centralised empire), but in a (slow but powerful) reconfiguration of the system, and a shift in the location of the system’s ‘core’. (Though of course like all historical processes this is anything but inevitable.)

So far so blah. The noteworthy point for me, in all this, right now, is what it means w/r/t the possibility of non-capitalist political alternatives: how to get them, and what they might be. W/r/t the former, we’re dealing with the old problem of the apparent long-term untenability of ‘socialism in one country’; these are the features of the capitalist system that lead so many communists to insist that a world revolution is necessary for the project to work. I’m going to bracket questions of what forms of political action are best suited to emancipatory transformation, however, to ask the related question: what’s the goal? What are we actually envisaging that could be a global economic system of comparable complexity and productive potential to capitalism (which isn’t what every critic of capitalism wants, of course – but it’s necessary if a lot of people aren’t going to starve), without capitalism’s coercive dynamics and constant recreation of poverty?

To begin to answer that, I think, you’d need a better analysis of how capitalism actually functions than anything I’ve offered on this blog so far (and this is hopefully what I’m working towards in the historical project). I think Wallerstein is right, however, to suggest how difficult it is to envisage anything of this sort being implemented simply via sovereign political entities making policy decisions applicable only to their own spheres of ‘legitimate’ political action. The same applies, but even more so, to more local political change. (Which obviously isn’t to denigrate either national government policy or, especially, local political battles; I’m just saying that you also obviously need a global transformation if you’re going to get a non-capitalist system out the other side.) One of Wallerstein’s central points is: if you’re part of the global capitalist dynamic, you’re part of capitalism – the dynamic itself needs to be transformed, and that’s going to mean a transformation of the economic institutions that bind together political entities at the level of the world-economy (along with a corresponding transformation of the nature of those entities themselves, perhaps).

Wallerstein’s answer to this problem is straightforward (and may be one of the reasons he’s not better liked): he wants a single world government. I’ve got enough anarchism in my Marxism not to find that intuitively very appealing. But Wallerstein’s thinking is, I think, pretty clear: under capitalism, political decision-making is subordinated to a global economic dynamic; we need to reverse that, and make our economic activity subordinate to political decision-making (which could be driven by social need rather than the drive to accumulation); ergo, we shift from capitalist-world-economy to non-capitalist world-empire. Bing bang bosh.

This serves, I think, to frame the question of political alternatives quite clearly. Assuming we don’t want a single world government, what global economic institutions can keep the world economy functioning while not reproducing capitalist dynamics of exploitation and poverty-production? (Alternatively, if we choose to go with Wallerstein on the world government thing – how would such a world government be achieved and democratically structured such that its policies are egalitarian and not tyrannical?) This seems to me to be a question the answer to which would require a lot of detailed analysis. I’m not planning to even try to answer it any time soon. But I think this is a formulation of the problem that I’ll probably return to.

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