Archive | Economy RSS feed for this section

Why is there so little opposition to the hegemony of the super-rich?

21 Mar

What we have here is a failure of political memory and imagination.

In 2014, when Oxfam arrived in Davos, it came bearing the (then) shocking news that just 85 individuals controlled as much wealth as half of the world’s population combined. This January, that number went down to 80 individuals.

Fraser terms out current era the second Gilded Age. The first ran from the end of the Civil War through to the stock market crash of 1929. In that first Gilded Age:

American elites were threatened with more than embarrassing statistics. Rather, a “broad and multifaceted resistance” fought for and won substantially higher wages, better workplace conditions, progressive taxation and, ultimately, the modern welfare state (even as they dreamed of much more).

So far there is little popular resistance in the current Gilded Age. What’s missing?

Fraser offers several explanations for the boldness of the post-Civil War wave of labor resistance, including, interestingly, the intellectual legacy of the abolition movement. The fight against slavery had loosened the tongues of capitalism’s critics, forging a radical critique of the market’s capacity for barbarism. With bonded labor now illegal, the target pivoted to factory “wage slavery.” This comparison sounds strange to contemporary ears, but as Fraser reminds us, for European peasants and artisans, as well as American homesteaders, the idea of selling one’s labor for money was profoundly alien.

This is key to Fraser’s thesis. What ­fueled the resistance to the first Gilded Age, he argues, was the fact that many Americans had a recent memory of a different kind of economic system, whether in America or back in Europe. Many at the forefront of the resistance were actively fighting to protect a way of life, whether it was the family farm that was being lost to predatory creditors or small-scale artisanal businesses being wiped out by industrial capitalism. Having known something different from their grim present, they were capable of imagining — and fighting for — a radically better future.

It is this imaginative capacity that is missing from our second Gilded Age, a theme to which Fraser returns again and again in the latter half of the book. The latest inequality chasm has opened up at a time when there is no popular memory — in the United States, at least — of another kind of economic system. Whereas the activists and agitators of the first Gilded Age straddled two worlds, we find ourselves fully within capitalism’s matrix. So while we can demand slight improvements to our current conditions, we have a great deal of trouble believing in something else entirely.


Software Mysteries: Roll over Beethoven, let Satchmo come over!

9 Mar

I spent a fair amount of time in the last decade of the previous century working in the software industry (see this post for example) and reading popular prescriptions for improving America’s management style, many of those inspired by Japan. Somewhere along the line I got the idea that these new organizational ideas were more like an improvising jazz quintet and basketball than like the classical symphony and football. That is to say, that, stylistically, high-tech owes a debt to African-America even if African-Americans are not widely employed in the high tech world.

That’s what my current piece in 3 Quarks Daily is about: Cultural Styles in the 21st Century, or the High Tech Debt to Africa. This is the kind issue I’ve looked at elsewhere as well. Here’s a passage from Cultural Evolution: A Vehicle for Cooperative Interaction Between the Sciences and the Humanities:

During the 1960s the late Alan Lomax (1968) decided to investigate folk song styles against the background of cultural complexity. Lomax and his colleagues prepared a sample of over 3000 songs, representing 233 cultures from 5 continents plus the Pacific islands, and had judges code the songs on features of style — nature of the performing group, relationship between vocal part and instrumental parts, melodic style, rhythmic style, wordiness, tone quality, tempo, and so on. They correlated style traits with measures of social complexity and found that the simpler the society, the simpler its song lyrics. The simplest societies used a great deal of repetition and nonsense syllables. Similarly, the precision of enunciation varies with social complexity; the more complex the society, the more precise the enunciation. The prevalence of solo singers was also associated with complexity. In the simplest societies, everyone sang; no one was given or took a solo role. It is only in more complex societies, with permanent leaders and social stratification, that we see ensembles divided into a soloist and accompanists.

This is an empirical finding. And, while it may seem intuitively obvious that complex cultures create a collective ambiance that favors expressive forms that are different from those of less complex cultures, one would like an explanation for this “fit.” I would expect a robust account of cultural evolution to provide such an explanation.

In a similar vein, John Roberts, Brian Sutton-Smith, and Adam Kendon (1963) were interested in the relationship between child-rearing practices, community size, types of games, and folk tales. In particular, they were interested in what they have called the strategic mode. Strategy plays minor role in games of physical skill, but a dominant role in games such as chess and poker, which also has strong elements of chance. In folk tales, we can examine how the outcome is achieved, whether through physical skill, chance (guessing, casting lots, magic), or strategy (e.g. evaluating a situation, deception, out-witting an opponent). They discovered that games of strategy are likely to co-occur with folktales having a strong strategic element and that both are more likely in politically complex societies (chiefdoms and above).

The general point is simple: Expressive culture, how and what we sing, dance, and tell stories, is not just about entertainment. It pervades our society and all that we do. The cultural requirements of high tech industries are quite different from those of ‘classical’ industrial revolution. The fact that high tech culture evolved in a society pervaded by jazz, rock and roll, and hip-hop is not incidental. It is foundational.

The East India Company: Capitalism and Colonialism Hand-in-Hand

6 Mar
For the corporation – a revolutionary European invention contemporaneous with the beginnings of European colonialism, and which helped give Europe its competitive edge – has continued to thrive long after the collapse of European imperialism. When historians discuss the legacy of British colonialism in India, they usually mention democracy, the rule of law, railways, tea and cricket. Yet the idea of the joint-stock company is arguably one of Britain’s most important exports to India, and the one that has for better or worse changed South Asia as much any other European idea. Its influence certainly outweighs that of communism and Protestant Christianity, and possibly even that of democracy.
Companies and corporations now occupy the time and energy of more Indians than any institution other than the family. This should come as no surprise: as Ira Jackson, the former director of Harvard’s Centre for Business and Government, recently noted, corporations and their leaders have today “displaced politics and politicians as … the new high priests and oligarchs of our system”. Covertly, companies still govern the lives of a significant proportion of the human race.
The 300-year-old question of how to cope with the power and perils of large multinational corporations remains today without a clear answer: it is not clear how a nation state can adequately protect itself and its citizens from corporate excess. As the international subprime bubble and bank collapses of 2007-2009 have so recently demonstrated, just as corporations can shape the destiny of nations, they can also drag down their economies. In all, US and European banks lost more than $1tn on toxic assets from January 2007 to September 2009. What Burke feared the East India Company would do to England in 1772 actually happened to Iceland in 2008-11, when the systemic collapse of all three of the country’s major privately owned commercial banks brought the country to the brink of complete bankruptcy. A powerful corporation can still overwhelm or subvert a state every bit as effectively as the East India Company did in Bengal in 1765.

H/t 3QD.

Richest 1% of people own nearly half of global wealth, says report | Business | The Guardian

14 Oct

The richest 1% of the world’s population are getting wealthier, owning more than 48% of global wealth, according to a report published on Tuesday which warned growing inequality could be a trigger for recession.

According to the Credit Suisse global wealth report (pdf), a person needs just $3,650 – including the value of equity in their home – to be among the wealthiest half of world citizens. However, more than $77,000 is required to be a member of the top 10% of global wealth holders, and $798,000 to belong to the top 1%.

“Taken together, the bottom half of the global population own less than 1% of total wealth. In sharp contrast, the richest decile hold 87% of the world’s wealth, and the top percentile alone account for 48.2% of global assets,” said the annual report, now in its fifth year…

“These figures give more evidence that inequality is extreme and growing, and that economic recovery following the financial crisis has been skewed in favour of the wealthiest. In poor countries, rising inequality means the difference between children getting the chance to go to school and sick people getting life saving medicines,” said Oxfam’s head of inequality Emma Seery.

via Richest 1% of people own nearly half of global wealth, says report | Business | The Guardian.

The Germans are worried about high-tech corporate cowboys

12 Oct
Anna Sauerbrey, an editor of the daily, Der Tagesspiegel, in today’s NY Times:
How can Germany be both afraid of and in love with technology, and the companies that make it? The key is to look beyond those things, to the corporate model they represent.
The true origin of the conflict lies in the economic culture innate to those former Silicon Valley start-ups — now giants — that are taking the European markets by storm. To create and grow an enterprise like Amazon or Uber takes a certain libertarian cowboy mind-set that ignores obstacles and rules.
Silicon Valley fears neither fines nor political reprimand. It invests millions in lobbying in Brussels and Berlin, but since it finds the democratic political process too slow, it keeps following its own rules in the meantime. Uber simply declared that it would keep operating in Germany, no matter what the courts ruled. Amazon is pushing German publishers to offer their books on its platform at a lower price — ignoring that, in Germany, publishers are legally required to offer their books at the same price everywhere.
It is this anarchical spirit that makes Germans so neurotic. On one hand, we’d love to be more like that: more daring, more aggressive. On the other hand, the force of anarchy makes Germans (and many other Europeans) shudder, and rightfully so. It’s a challenge to our deeply ingrained faith in the state.
Very interesting. She’s right to be skeptical about these high-tech corporate swashbucklers. And it’s clear that the nation state is increasingly in trouble (see this post on virtual feudalism). If national governments can’t regulate these behemoths, who can?
It’s time to convene the Jivometric Advisory Committee of the New World Order.

Finally, the Truth About the A.I.G. Bailout –

29 Sep

Lincoln talked of government “for the people, of the people, and by the people.” He didn’t say anything about too-big-to-fail banks.

Starr contends that the government could have spent less money on A.I.G. — and therefore imposed less onerous terms on the company — had the bailout’s architects directed some of their tough love at the Goldmans and Deutsche Banks of the world. And Starr is hardly alone in making these claims. Ever since the details of the A.I.G. rescue entered the popular consciousness, everyone from members of Congress to financial commentators to Occupy Wall Street protesters and Tea Party activists have fulminated against the “backdoor bailout” of Goldman et al. By fully litigating the issue, the Starr trial may finally help heal this festering wound.

At the heart of the controversy is the fact that the government has never provided a plausible explanation for why the Federal Reserve Bank of New York, which had enormous leverage over banks like Goldman thanks to its role as their regulator, didn’t lean on them to accept less than 100 cents on the dollar in their payouts from A.I.G.

via Finally, the Truth About the A.I.G. Bailout –

Have the Oligarchs and Plutocrats Won?

4 Apr

Just watched Alex Gibney’s powerful documentary Park Avenue: Money, Power and the American Dream (you can stream it on Netflix). Here’s the trailer:


It uses the conceit of two Park Avenues to tell the story of the 1%, living on the Park Ave of Manhattan’s upper East Side, and the (bottom quartile of) the 99%, living on the portion of Park Ave that extends into the South Bronx. It’s one thing to know the story in numbers and graphs, which Gibney presents, but it’s another thing entirely to see the story in actions through moving images and spoken words. The combination of the two is potent, and, alas, depressing.

As I think over the film the sections that keep coming back, however, are those featuring a social psychologist at U Cal. Berkeley, Paul Piff, and some students. Piff had pairs of students play Monopoly, the board game born during the Depression. But, they played the game with a crucial difference. One player started with twice the amount of money as the other player and was allowed to roll both dice; the other player could roll only one die. The student players were assigned to these roles randomly.

The privileged players, of course, walked all over the others, whose disadvantage was too much to surmount. No surprise there. What was interesting, and chilling, is that over the course of a game, the privileged players assumed at attitude of entitlement – you could see it in their posture and hear it in their comments. It was their RIGHT to win. But they did nothing to earn that right; it was simply given to them at the beginning of the game. The oligarchs Gibney showed us displayed that same entitlement even as they lobbied to cut their taxes and blathered on about creating opportunity for all. Continue reading

This Is Brad DeLong’s Grasping Reality…: Tomas Piketty: Capital in the Twenty-First Century/Inequality and Capitalism in the Long Run: The Honest Broker

19 Dec

Piketty says: sociologically, America today may be the worst of all worlds for those who are neither top income earners nor top wealth successors: you are poor, and depicted as dumb & undeserving:  “nobody was trying to depict Ancien Régime inequality as fair”.

via This Is Brad DeLong’s Grasping Reality…: Tomas Piketty: Capital in the Twenty-First Century/Inequality and Capitalism in the Long Run: The Honest Broker.

Virtual Feudalism is Here: the 1% vs. the 99%

16 Oct

Over at Crooked Timber they’re having a discussion of the software SNAFU that’s occurred in the rollout of Obamacare. As anyone in the software biz knows, that’s just how it is with large software projects. The thread title suggests something more interesting and far more sinister: Neo-Liberalism as Feudalism.

That title reminded me of the work of Abbe Mowshowitz, whom I met when I was on the faculty at The Renssalaer Polytechnic Institute back in the previous century. He was interested in how the deployment of computer technology was creating virtual organizations that, he believed, would lead to a virtual feudalism:

Absent a sense of loyalty to persons or places, virtual organizations distance themselves—both geographically and psychologically—from the regions and countries in which they operate. This process is undermining the nation-state, which cannot continue indefinitely to control virtual organizations. A new feudal system is in the making, in which power and authority are vested in private hands but which is based on globally distributed resources rather than on possession of land. The evolution of this new political economy will determine how we do business in the future.

Here’s an essay I ghosted in Abbe’s name back in ’97 but which, alas, never got published. The ideas are his, the prose mine.

* * * * *

The New World Order of Virtual Feudalism

One might imagine that, in 2020 a person could be brought to trial on criminal charges in a court convened by a private corporation under provisions granted by the United Nations. What is perhaps more difficult to imagine is a world in which such an institutional arrangement is the solution to a pressing problem, and that a wide range of individual and corporate actors would agree to such an arrangement. At the moment we live in a world where criminal prosecution is primarily a power of nation-state authorities, with the United Nations being an organization created by states and having no direct power in the private sector. This imaginary trial thus violates fundamental distinctions governing our political life.

Yet I believe that such arrangements are not only possible, they are inevitable. New actors — most noticeably, large multinational corporations — have come to dominate the world’s advanced economies. Increasingly these organizations are operating in a seamless global marketplace. Ironically, as the marketplace becomes global, the great nation states and empires are fragmenting into smaller and smaller units. Large companies have more wealth and power than small states. These developments conjure up visions of the brave old world of medieval feudalism, in which the role of the nobility will be played by corporate executives assisted by employee-vassals who rule over legions of latter day serfs.

Day by day the emerging new world order looks like a virtual feudalism. In thus talking of feudalism I am not, however, asserting that our immediate future holds a regression to the distant past, though there may well be regressive elements. Rather, I think that we are increasingly living in a world which exhibits patterns of social organization and action characteristic of feudal societies, such as fragmented authority, private security arrangements, and a highly permeable boundary between private and public activity. This feudalism is “virtual” because these patterns reflect non-territorial organizational arrangements made possible by information technology rather than being rooted in the customs of land ownership and tenancy which existed in medieval Europe.

To get a feel for this future let us consider the life of three different individuals who are born in the current world and move into middle-age as virtual feudalism unfolds. Continue reading

The Messy Link Between Slave Owners and Modern Management – Forbes

10 Oct

Sounds like animal husbandry:

Slave owners were able to collect data on their workforce in ways that other business owners couldn’t because they had complete control over their workers. They didn’t have to worry about turnover or recruiting new workers, and they could experiment with different tactics—moving workers around and demanding higher levels of output, even monitoring what they ate and how long new mothers breastfed their babies. And the slaves had no recourse.

“If you tried to do this with a northern laborer,” Rosenthal says, “they’d just quit.

”The widespread adoption of these accounting techniques is partly due to a Mississippi planter and accountant named Thomas Affleck, who developed account books for plantation owners that allowed them to make sophisticated calculations and measure productivity in a standardized way.

via The Messy Link Between Slave Owners and Modern Management – Forbes.