Posts Tagged ‘economics’

The California Ideology (again)

Tuesday, August 7th, 2012

Isn’t it odd to still see The California Ideology espoused with such faith?

For the first time in history, the age of networks and mobile devices has created the efficiency and the social glue to… [enable] the sharing and exchange of assets from cars, to bikes to skills to share space.
— Rachel Botsman, What’s mine is Yours: The Rise of Collaborative Consumption

For the first time in history, we’ll be able to share things like bikes! What’s next, carpooling? Who woulda’ thought!? THANKS INTERNET. I would have never thought of sharing my bike if it wasn’t for you.

This raises some disturbing questions concerning the state of education in the land.

Since the dawn of history (to match hyperbole with rhetorical flourish on fact) the world’s communities didn’t need the internet to organise complex ways of sharing. In fact, it went way beyond the idea of sharing things you owned. There was simply “the shared” that in practice nobody owned. The greatest example perhaps go by way of the First Nations; nobody owned the land per se. Or the fish, or the sky, or any such things. Sure, not all was rosy, and tribes fought over territory, but ownership — not quite. The people shared the land with the animals, the spirits, the weather, and other people, and so on. You couldn’t own the land, or anything from it, really.

In Britain, strangely this was also the case: the land all but belonged to no one. On paper, the aristocracy did own the deeds, but it was the same aristocracy that formalized the Commons with anti-enclosure acts of the 15th & 16th centuries. It is ironic (from today’s perspective) that the aristocracy saw the benefit of halting the enclosure of common land, so as not to turn the entire peasantry into vagabonds (the criminalized homeless). Over a period of 150 years, the English aristocracy saw it fit to ensure the peasantry had access to shared land as a common good.

In fact the involvement of 20th century communication technologies has not boded well for sharing. At least not on the whole. Thanks to industrial technologies and this little thing called the industrial revolution the Western world all but abolished “shared space.” The bourgeoise revolutions did out with the aristocracy, establishing, at the same time, private domain over what were previously “Crown lands.” This was known as the enclosure of the commons during the 18th and 19th centuries, and the enclosure acts condemned self-sustaining communities into generations of homelessness and impoverishment. Enclosing the commons conveniently provided the much-needed workforce for the new industrial regime. Wage slavery had been born — as well as urban homelessness, vagabonds, child workers, sweatshop labour and all the ills the aristocracy attempted to guard against. In fact, the whole thing was so abhorrent it prompted a number of interesting books by Charles Dickens and this other one by a guy called Engels.

Anyway, Botsman’s quote was used recently by angel investor Ron Conway in The Economist.

At the same time, entrepreneurs are using technology and social insights to create trusted communities for these new peer-to-peer marketplaces. The flagship example of this movement is AirBnB, which builds a market around renting one’s living space.
— Ron Conway, special adviser to SV Angel (The Economist: The World in 2012, 127)

Of course, this is from someone who sees peer-to-peer markets as a novelty in 2012. Perhaps I am confused, but I thought the very definition of the market meant peer-to-peer. I think we’ve hit upon another ideology here, as in, another point where an assumed truth reveals its artifice: that today, “markets” are for corporations only. When we have small-scale people sharing things, whether for gain or for exchange, we suddenly have peer-to-peer markets. Not the market as-such.

I get that P2P also means distributed software and/or decentralized networks for such things. Great. So now we can do all that online. I get that; it works. And if anything I do see that Conway is sneaking the very concept of “sharing” into the bastion of neoliberal ideology, The Economist, which is no mean feat. It’s just unfortunate he can only do so by turning sharing into a revenue-generating concept, i.e., by enclosing sharing yet again. He is, after all, an angel investor. Sharing needs to be monetized before it has value. The idea of sharing as a common good — precisely because it is a major force against poverty — is all but lost here.

But to get back to general ideas, it seems to me that even in terms of the history of the internet, utilising networks for sharing is not particularly novel. Just a new form of distribution on mobile hardware. It might certainly render it all more effective and integrated, but on a mass scale, but hardly new. I can recall all the levels of the internet being used for sharing, from BBS to iRC. I mean, this is all post-P2P networks anyway, right? I mean, the Net is based upon file-sharing.

As for the concept of sharing, it’s not only ancient, it’s really an eternal concept, as the philosophers put it. It’s so ancient I would even hazard that it says something about one of humanity’s more positive traits: the ability to share things. It bears close resemblance to altruism. It’s kind of altruism in-action.

What does Conway look forward to in 2012? “Collaborative consumption.” The great hope of dot-com neoliberalism today is that we’ll all share our consumptioning together. Or that we’ll consume together. Or perhaps consume each other. Or something. Fair enough, though, I would like to hear more about what this means, because I could sense something subversive about it, insofar as it undermines the sandbox ideal of individual purchases that are not supposed to be shared (i.e., music DRM).

I guess it be a good thing that hey, the internet might facilitate some forms of sharing that humanity has known and loved for thousands of years. Perhaps we’ll even manage to grab back a few shares lost to the ever encroaching Moloch as of late. But to think this is novel only reveals the impoverishment of the capitalist imagination in the 21st century. The world needs to share a whole lot more.

The Invisible Fist (Part III)

Monday, July 23rd, 2012

I’m afraid I have more to say — and critique — concerning the CBC’s radio show The Invisible Hand, a tour-de-force of neoliberal ideology masking as “economics.” In its second show, it looked at the question of the apocalypse, following its first show on economic decision-making in times of crisis (see posts, part 1 & part 2).

The second show easily demonstrates how saving chickens, and not gold, is the way to roll when the apocalypse hits. At least this has a hint of sanity to it — chickens lay eggs, make more chickens, provide food, etc. Of course, what isn’t mentioned is that they require a local economy for their sustenance. The growing and provision of grain requires collective efforts, which requires not only small-scale trade but coordinated agricultural efforts. In short, raising chickens means communal levels of negotiation and organisation around resources. This argument is well-made against the more radical factions of neoconservatives who want to return world currencies to the gold standard, and who advocate hoarding gold. You can’t eat gold if the world goes down in flames.

Yet the second shows harbours an even more insidious level of neoliberal ideology concerning the primacy of the individual, precisely because the above models — of localized community around the chicken economy — are absent from the discussion. Rather, the show assumes a single individual having a choice: gold or chickens? There is no discussion of what raising chickens means, or how it would work. The debate over chickens vs. gold masks a more troubling series of assumptions concerning the apocalypse as a whole: that we will all be going it alone.

The show performs this ideological operation by setting-up a false debate and masking its terms. Under this debate, everyone can see that hoarding gold isn’t that smart if world (and local) economies collapse. Yet this scenario follows from the premises of the first show: the first show established an ideological illusion concerning human nature, ie, that in crisis situations we’d all act like individuals and/or are supposed to, without any kind of collective organisation, communication, principles of sharing, or ad-hoc communal formations with decision-making power to prioritize resources.

Indeed, the apocalypse show follows from this, as it presents the logical outcome of the first show: now there is definitively no governance or community. The apocalypse is here, we’re all on our OWN! In the apocalypse the neoliberal question becomes: what should I hoard? Instead of: what collective/communal arrangements will be the most beneficial in the pooling of resources?

History demonstrates that in every disaster scenario, those that survive are those that band together, pool resources, and learn how to share. Just look at the recent tsunami in Japan, or a few years ago in Thailand — nobody sits around with arms-crossed going “so, what did you hoard?” No, everyone is out there helping each other out. Look at New York after 9/11. In short, all of the economic examples presented demand a very narrow, restricted idea of human nature in terms of crisis. And it is a dangerous one: if you’re sitting around with chickens (or gold) and want to go it alone, you will die. Period. Neoliberal ideology implies that if you don’t hoard, and have no property, you will be excluded from trade (ie society) and thus be left to die, when in fact, historical fact, the opposite is true. Which leads to a question: who is this ideology serving? Do neoliberal economists actually believe this ideology, or do they only propagate individualist versions such as these so as to easier divide-and-conquer, given that most wealthy elites are not that individualistic at all, but operate through all sorts of elite networks, ie through insider-trading, old boy’s clubs, capitalist club retreats such as Davos, etc., all of which make up the privileged economic systems of power and wealth known as oligarchy?

In any case, neoliberal ideology is still definitively at work here in the second show, by insidiously establishing the parameters of individualist economics in times of crisis. And we should be led to ask by now: why is it that neoliberalism specifically requires not only crisis, but apocalyptic levels of crisis, to supposedly demonstrate its principles? Does this mean that we can only observe neoliberalist economics in effect if we reduce the world to crisis, if we bring on the apocalypse?

This thesis — that neoliberal economics requires crisis, if not the apocalypse, to reduce humanity to the Hobbesian savagery of go-it-alone individuality so as to allow for the deity-like “Invisible Hand” to work its magic — does make sense in a twisted fashion, insofar as neoliberalism economics are irrecoverably tied into the apocalyptic agenda of the theoconservative right.

The Invisible Hand and the right-wing, Evangelical/American Catholic Christian god occupy the same position: as the dealer of benevolent reward to believers, and punishment to non-believers (including homosexuals, pro-choicers, feminists, godless socialists, etc). This is why the Invisible Hand rewards the wealthy and punishes the poor: the wealthy have demonstrated their value as Christians of capitalism; the poor are deserving of their lot, as obviously they don’t believe enough in the system to let the Invisible Hand/God help them.

Of course, this isn’t the theology of the charitable Christian whose poor & meek shall inherit the Earth — though perhaps so if interpreted as: the poor & meek shall inherit what is left of the planet after the wealthy have plundered it, stripping the planet bare and exhausting its resources, thereby bringing about the End Times — during which the wealthy Christian elite are zipped up to Heaven during the Rapture. For more on this documented, direct connection between Christian theoconservatives and right-wing neoliberal capitalism, and how this ties into the Bush regime, the invasion of Iraq, the privatization of the US military, and the rise of Christian mercenary armies, see Blackwater: The Rise of the World’s Most Powerful Mercenary Army.

So how could this show be different? If I were doing this show it would be far more interested in questions of how people actually find ways to collectively problem-solve and troubleshoot economic questions (and crises, such as the one we are in right now — climate change!) rather than the underlying go-it-alone premise of individuals acting under the rationale of the “Invisible Hand” which is, basically, a fiction — a bed-time story for the disenfranchised. “One day, the Invisible Hand might touch you in a special place and make you rich too!” The Invisible Hand is yet another name for the depleted and destructive capitalist fiction that is the American Dream.

Right now, what we need is critical thought on economics, given that the prevailing neoliberal model has brought about the collapse of world economies, rewarding the criminal bankers with bailouts at the expense of the rest of us. All of us, the 99%, are paying for the criminal plundering of our planet by the wealthy 1%. Neoliberal economics has failed in even the most basic of its promises — the Reagan-era trickle-down theory — that a so-called “free market” results in eventual equality. The Invisible Hand does nothing to help: it is a fist that smashes all attempts at collectivity, which protects the wealthy elite with military force. Neoliberal economics has also failed at addressing truly pressing environmental issues that will, in the end, probably destroy us if intelligent action is not taken to address climate change, precisely because neoliberal economics is designed to bring about the apocalypse, if we are to believe the published theoconservative agenda. (This is not conspiracy theory — simply read what is on the record from right-wing US Republican representatives, and in Canada, members of the Conservative Party.)

Taking it home to Canada, it just appears to me that The Invisible Hand is a mouthpiece for the Harper government — it attemtps to sell Harper’s neoconservative policies by presenting as an uncontested, received truth the neoliberal doctrine…

The Invisible Fist

Wednesday, June 27th, 2012

Letter to the CBC’s new show on (neoliberal) economics, The Invisible Hand. The letter is self-explanatory. The first episode provided such a weak justification of the so-called “free market” that any first-year philosophy student could’ve poked holes through it. 

 

dear Mathew & Invisible Hand,

Thanks for your new show. As a student of political economy, I found it interesting, and I always like it when radio tries to break down topics like economics for the listener.

However your example provided today was quite lacking in the reality department. I want to pick through it a bit, because I think you can go a lot deeper than this. The consequence of not revealing the true difficulty of economic policy decision-making is obvious: you refer to “economists” as if they are one bunch of people, all thinking the same thing. This, of course, is not the case. The “economists” you are referring to in your show on Hurricane Katrina are neoliberal economists, who believe in a fictional caricature known as the “Rational Actor,” who also plays in a nearly fictional environment known as “the free market.”

Indeed, current “economists” have finally begun questioning these models after fourty years of near unquestioned dominance within mainstream “economics” circles. But I digress.

Let’s liven up your example, and remember that all economics includes ethics. In short, economy, because it always involves people, and thus tensions between individuals and the collective authority that we call the State, is always political economy.

 

=== THE ICE IS FOR SALE : A REAL SCENARIO ===

In your example, ice is for sale during a disaster. Your customers include those seeking non-essential uses (corsages, cookies) and those seeking essential services (health care and emergency response).

But no mention is made of the purchasing power of the health care and emergency services. Let’s pretend we’re in Canada first.

 

SCENARIO 1: FREE MARKET ALLOWED, CANADIAN CONTEXT

 1. The hospital can only afford $10 worth of ice. At the normal rate of $1 per bag, it can keep alive its ten patients. At $9 per bag, it can only keep alive one patient. This is the first consequence of the so-called free market, where prices are allowed to rise during a disaster.

 1a. Of course, the hospital has emergency funds, and so they dip into them or borrow funds of the public trust to buy ice at 9x the price, thus paying $90 for the ice that would’ve cost $9 before the disaster. This has immediate consequences — the hospital has now spent the money it had saved up for a new diagnostic machine, and so cancer patients awaiting this new treatment will suffer, and perhaps die because of it. Further, the hospital now has debt to pay off if they borrowed the money, plus interest. Where will the hospital get the funds? In the Canadian system, from taxes and/or increased user fees. The ultimate consequence of hospitals paying 9x the price is that taxes rise to cover the trickle down effect of inflated purchases — all so that the corner-store ice owner could make 9x the profit, or, as neoliberal economists put it, “equitably distribute the ice to the agent with the highest need.”

Meaning, in short, we all pay the cost for a single individual’s wealth, while risking lives in the process.

 

SCENARIO 2: FREE MARKET ALLOWED, U.S. CONTEXT

 1. The public hospital can only afford $10 of ice. It is in the same situation above, except that it cannot raise taxes due to neoliberal economic policies that keep taxes down, so that the “free market” can operate more freely. After the disaster, the hospital is shut down as it costs too much money, and the 9x-the-cost acquisition fee is paraded as proof of the inefficiency of the public service. Scores of uninsured Americans fall through the cracks — the deaths are of course unreported, as there is no public service to do the analysis.

1a. Of course, there is a private hospital buying ice too that can well afford the ice. It buys a large chunk of the available ice with the wealth it has from privatized, high-end health services delivery. Those with health insurance (mainly the wealthy) receive the ice and live through the disaster.

The meaning here is obvious: services with equity survive, and so do their wealthy patients; those without wealth do not. Might makes right in this “free market.”

 

SCENARIO 3: NEITHER / NOR: THE STATE IS FOR ALL

In your example, you only offered two choices: either all bags of ice are sold for $1 at a first-come, first-serve basis, or the seller can raise the price to exclude so-called frivolous buyers, so that only those with the greatest need buy the ice.

Of course, this is already a fallacy. Investors can buy and hoard ice, creating a futures ice market during the disaster, and trade large amounts of ice to scaled buyers (those with wealth), creating price fluctuations that generate large amounts of profit. This already exists on a formal scale, and is called the stock market. During disasters, this exists in the form of what is usually called the black market. Throughout history, such markets have popped up — such as in Leningrad during the siege of World War II. However, the people turned on such “free marketeers,” distributing street justice to hoarders and profiteers. And for good reason; the above example should demonstrate that no market is “free” when there is inequality of means to begin with. So here’s a truly rational, third example:

1. The hospitals and all emergency services are given priority access to the ice market by the State. All corner-store shops are mandated to sell ice to health personnel at the normal rate of $1. In this scenario, hospitals and emergency professionals get what they need, thanks to the emergency provisios of the State, which steps in not to “interfere with the free economy” but to insure that the economy does not enter a period of hyperinflation that would only benefit the wealthy (those that could afford the ice or private services that can) and which would have disastrous consequences upon the impoverished and upon public health as a whole (the impoverishment of health services would result due to hyperinflation of necessary supplies).

Indeed, this is what we already have in Canada and the US: various services are declared essential services. (However, in the current situation, this is usually only enacted to limit the right of labour to strike, rather than to provide fair access to necessities — but I digress.)

 1a. In times of dire emergency — what is called a “state of exception” — the State can go much further than this. In World War II, many States introduced food stamps and rations. In this scenario, all ice production is monitored  and controlled by the State, to ensure that everyone receives a fair portion (this is also how Leningrad survived the Siege of World War II: without such strict rationing, ie, not only intervention of the State into the market, but direct control of supply and demand by the State, many more would have died). Indeed, in extreme examples, the State has the right to commandeer property and materiel (though today this is abused to kick out land owners for the benefit of mining, the oil and gas industry, shale fracking or pipelines — such as in Québec’s Plan Nord; but I digress again).

 1b. If things aren’t quite that bad, but bad enough, the State can introduce intermediary policies, such as demanding that ice be sold direct from producers and distributors to health services at cost — at enough of a margin to cover expenses and live from, but less than standard pricing, say at 40% off retail. In this scenario, less profit is made by one industry in order to better provide the required health services for all. In short, the short-term profits of the few are sacrificed to save the lives of the many. The State has every right to do this to protect its health care services in times of disaster.

Moreover, it is right to do so: by ensuring cheap supply to necessary services, there is no tab to pick up later. Companies selling the required services make a tad less profit, and certainly don’t reap in profits from price-gouging, but neither do they go under or face higher taxes as a result of the “free market,” had it been allowed “free reign” to raise prices to obscene levels.

 

=====

I sincerely hope that in future shows you go beyond the facile, bloodless examples you’ve already provided. There are no economic policies without consequence, especially when dealing with disasters. Economics always involves ethics.

The correct answer to the real-life problem of disaster supply management is that both of the options provided on the show — either $1 pricing or $9 price-gouging — are ultimately inefficient and wrong. In both cases the “market” is relied upon to provide necessities without any hint that a democratic state has the authority to garner what resources it needs to ensure the survival of the many, if not all.

This is what democracy means: it is above the market.

The actual reality is that the State ought to, and as in the case of Katrina, finally did step in and provide such necessities.

As for the Louisiana ice-seller, some laws are necessary here, because the actual issue is not price-gouging, but street justice. If a seller is seen as contravening the basic ethical principles of community that arise from human nature during such disasters, such a seller may be dispensed without mercy. Indeed, the law is there to limit such activities to protect the safety of such sellers. A better solution would be to have the State request all entrepreneurs to maintain prices at a fair percentage; and they too would be subject to certain pricing regulations when selling to health and other necessary services.

So in this case, Louisiana should not have made an example out of the truck seller (who sold generators).  A true example should’ve been made of the hired mercenaries — ie Blackwater USA — that poured into New Orleans to secure the privilege and property of the wealthy, distributing privatized violence at will, and introducing a climate of fear that descended into racism on a mass scale.

Hopefully your show will go much farther in demonstrating the ethical choices behind economic policy in future episodes, as well as showing that alternatives to either/or propositions exist. At the least, I hope your show will stop referring to “economists” as some homogenous group. As a political economist, I certainly found little to agree with in the models presented, for they are nothing but fictions designed to present what many of us “economists” would argue is a dangerous neoliberal ideology: that of the “free market.”

 

the terrible community of financial capitalism

Wednesday, July 14th, 2010

the terrible community of financial capital (spiral formation)

IV. 2

As post-authoritarian formations, the corporations of the “new economy” constitute terrible communities in the fullest sense.  And no one should see any contradiction in the similarity between capitalism’s avant-gardes and the avant-gardes of its opposition: they are both prisoners of the same economic principle, the same need for efficiency and organization, even if they set themselves up on different terrain.  They in fact serve the same modalities of the circulation of power, and in that sense they are politically quite near one another. Tiqqun, Theses on the Terrible Community

In Tiqqun’s Theses on the Terrible Community [translation / French original], what is the terrible community? The community is an illusive circulation of isolated dividuals — subjects struck through with the schizophrenia of capital. Sacrifice holds it together, to an ideology or cause, be it for profit or for the people, and every terrible community revolves around a Leader. The terrible community can take many forms: a corporation is a terrible community, as is any workforce. In particular, Tiqqun seems to have in mind the activist community, or any anarchist squat, insofar as it projects itself as outside to, or at least resisting against, what Tiqqun calls democratic biopower. Yet the activist community just like the business community are both terrible communities, beholden to rituals of sacrifice, isolated existences, vertical hierarchies, and even worse, self-policing and self-censorship. I would like to ask Tiqqun (if they can be addressed) as to what they think of the branding of communities – the Muslim community, the gay community, etc. – in terms of their alleged coherency, unity and collective responsibility within the mediasphere of Spectacle.

Tiqqun flattens all communities to the relations of their form.

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