Category Archives: Economics

Frye on Blake and Money: “The cohesive principle of fallen society”

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Blake’s “To Annihilate the Self-hood of Deceit,” 1804-1808

I’ve posted this before, but it is worth looking at again. Frye in Fearful Symmetry takes on the money economy from a prophetic perspective:

Money to Blake is the cement or cohesive principle of fallen society, and as society consists of tyrants exploiting victims, money can only exist in the two forms of riches and poverty; too much for a few and not enough for the rest. La proprieté, c’est le vol, may be a good epigram, but it is no better than Blake’s definition of money as “the life’s blood of Poor Families,” or his remark that “God made man happy & Rich, but the Subtil made the innocent, Poor.” A money economy is a continuous partial murder of the victim, as poverty keeps many imaginative needs out of reach. Money for those who have it, on the other hand, can belong only to the Selfhood, as it assumes the possibility of happiness through possession, which we have seen is impossible, and hence of being passively or externally stimulated into imagination. An equal distribution, even if practicable, would therefore not affect its status as the root of a evil. Corresponding to the consensus of mediocrities assumed by law and Lockean philosophy, money assumes a dead level of “necessities” (notice the word) as its basis. Art on this theory is high up among the nonessentials; pleasure, in society, tends to collapse very quickly into luxury and affection. (CW 14, 82)

Quote of the Day: Why Nobel Laureate Economist Joseph Stiglitz Supports OWS

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http://www.youtube.com/watch?v=M6Na9xHN_SQ

Joseph Stiglitz in Slate explains why he supports Occupy Wall Street. An excerpt:

Research in recent years has shown how important and ingrained notions of fairness are. Spain’s protesters, and those in other countries, are right to be indignant: Here is a system in which the bankers got bailed out, while those whom they preyed upon have been left to fend for themselves. Worse, the bankers are now back at their desks, earning bonuses that amount to more than most workers hope to earn in a lifetime, while young people who studied hard and played by the rules see no prospects for fulfilling employment.

The rise in inequality is the product of a vicious spiral: The rich rent-seekers use their wealth to shape legislation in order to protect and increase their wealth—and their influence. The U.S. Supreme Court, in its notorious Citizens United decision, has given corporations free rein to use their money to influence politics. But, while the wealthy can use their money to amplify their views, back on the street, police wouldn’t allow me to address the OWS protesters through a megaphone. The contrast between overregulated democracy and unregulated bankers did not go unnoticed. But the protesters are ingenious: They echoed what I said through the crowd, so that all could hear.

The protesters are right that something is wrong about our “system.” Around the world, we have underutilized resources—people who want to work, machines that lie idle, buildings that are empty—and huge unmet needs: fighting poverty, promoting development, and retrofitting the economy for global warming, to name just a few. In America, after more than 7 million home foreclosures in recent years, we have empty homes and homeless people.

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Stiglitz in the May 2011 issue of Vanity Fair outlines the growing economic inequality of the last thirty years. An excerpt:

It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.

Saturday Night Documentary: “Capitalism: A Love Story”

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We can’t post the whole thing, but this extended interview with Elizabeth Warren is worth seeing on its own. Warren is running for a Senate seat in Massachusetts in ’12. If she gets the seat, it will make her one of the very few grownups in that chamber.

An earlier post on Warren’s lecture, “The Coming Collapse of the Middle Class,” here.

Marx the Prophet

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httpv://www.youtube.com/watch?v=Q7lgXteZ4g0

BBC Radio 4 panel discussion on Marx

It seems to be a discernible trend: since the collapse of the financial market three years ago, Karl Marx is increasingly being cited once again as the prophet of capitalism’s self-destruction. From the BBC:

As a side-effect of the financial crisis, more and more people are starting to think Karl Marx was right. The great 19th Century German philosopher, economist and revolutionary believed that capitalism was radically unstable.

It had a built-in tendency to produce ever larger booms and busts, and over the longer term it was bound to destroy itself.

Marx welcomed capitalism’s self-destruction. He was confident that a popular revolution would occur and bring a communist system into being that would be more productive and far more humane.

Marx was wrong about communism. Where he was prophetically right was in his grasp of the revolution of capitalism. It’s not just capitalism’s endemic instability that he understood, though in this regard he was far more perceptive than most economists in his day and ours.

More profoundly, Marx understood how capitalism destroys its own social base – the middle-class way of life. The Marxist terminology of bourgeois and proletarian has an archaic ring.

But when he argued that capitalism would plunge the middle classes into something like the precarious existence of the hard-pressed workers of his time, Marx anticipated a change in the way we live that we’re only now struggling to cope with.

The whole article here.

Previous posts on Frye on Marx here, here, here, and here.

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Chart of the Day: Rich, Richer / Poor, Poorer

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If Greece defaults, if the euro collapses, if the world spins into a second deep recession in just three years, these kinds of charts ought to be kept in mind.

We have posted others here, here, here, here, here, here, here, and here.

The poor and the middle class have been screwed to an almost unimaginable degree. Virtually every penny of profit across thirty years of increased productivity has gone to the top 10%, most especially the top 1%. These include the people who oversaw the crash of the financial market three years ago, destroying tens of millions of jobs and wiping out tens of trillions dollars of wealth. They then required a few trillion more in taxpayer-funded bailouts to keep the world’s financial system viable. Having secured that, they were very quickly once again giving themselves billions of dollars in bonuses and making record profits.

But where are the new jobs? There are none because they evidently aren’t needed anymore, not in North America, and not at a decent working wage. The jobs at much lower wages have gone to places like India and China.

Quote of the Day: “Financial intermediation run amok”

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Nouriel Roubini, the economist who correctly predicted years in advance the collapse of the financial market and was roundly mocked for it by Wall Street shills, considers Marx’s prediction that capitalism will collapse on itself:

Karl Marx, it seems, was partly right in arguing that globalization, financial intermediation run amok, and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct (though his view that socialism would be better has proved wrong). Firms are cutting jobs because there is not enough final demand. But cutting jobs reduces labor income, increases inequality, and reduces final demand.

I have just read Francis Wheen’s Das Kapital: A Biography (excerpt here), which details the decades long development of Marx’s life’s work (most especially its nuanced literary dimension which is ignored by hardline ideologues on both ends of the political spectrum), as well as its demonic afterlife as the Bible of Marxist-Leninism. It’s difficult to ignore while reading the book that Marx’s critique of capitalism can still be regarded as prophetic. His account of how capital must ultimately be hoarded by a plutocratic elite remains relevant.

Frye consistently cited Marx as one of those nineteenth century thinkers who upended the traditional mythological conception of social authority. A typical example:

[I]f we look at the thinkers who have permanently changed the shape of human thought, such as Darwin, Marx, Freud, or Einstein, we find, naturally, that their books are complex and difficult and require years of study. Yet the central themes of their work are massive simplicity. Evolution, class struggle, the subconscious mind, are all things that have been staring mankind in the face for centuries. It’s the ability to see what’s straight in front of his nose that marks the thinker of first-rate importance. (CW 11, 271-2)

Frye on the “Crisis of Confidence” in Democracy

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FDR’s Economic Bill of Rights

Frye in an interview conducted on 13 October 1976. Four years later we had Ronald Reagan and the thirty-years-and-counting nightmare of crony capitalism. Things apparently had to get much worse. However, we can hope that the expectation Frye articulates here will prove correct in the long run. The symptomology he lays out very accurately describes the general collapse of democratic values, political discourse, and economic opportunity since the scorched-earth administration of George W. Bush:

In this North American complex that we’re in there’s a crisis of confidence perhaps in our own liberal and democratic values, and I think that that’s partly a political and economic thing. It’s almost a repetition of what happened after 1929 when I was a freshman here. There was a great wave of buoyant confidence which was really infantile, based entirely on credit. Then there was a great stock market crash. Then there was a tremendous reassessment of the values of capitalism and out of that emerged the Roosevelt period. I think that something like that is happening now. We’re going through a crisis of confidence not so much in capitalism as in democracy. (CW 24, 322-3)

Society, Individualism, Laissez-Faire, and Eighteenth Century Sensibility

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As we’ve been following the laissez-faire thread for some time, it’s nice to end up seeing it as part of a larger social and literary pattern.

From “Varieties of Eighteenth Century Sensibility”:

The feeling of an intensely social view of literature within the Augustan trend has to be qualified by an interpenetration of social and individual factors that were there from the beginning. The base of operations in Locke’s Essay is the individual human being, not the socially constructed human being: Locke’s hero stands detached from history, collecting sense impressions and clear and distinct ideas. Nobody could be less solipsistic than Locke, but we may notice the overtures in Spectator 413, referring to “that Great Modern Discovery . . . that Light and Colours . . . are only Ideas in the Mind.” The author is speaking of Locke on secondary qualities. All Berkeley had to do with this modern discovery was to deny the distinction between primary and secondary qualities to arrive at this purely subjective idealist position of esse est percipi, “to be is to be perceived.” If we feel convinced, as Johnson was, that things still have a being apart from our perception of them, that, for Berkeley, is because they are ideas in the mind of God. It is fortunate both the permanence of the world and for Berkeley’s argument that God, according to the Psalmist, neither slumbers not sleeps [Psalm 21:4]. But Berkeley indicates clearly the isolated individual at the centre of Augustan society who interpenetrates with that society.

The same sense of interpenetration comes into economic contexts. In the intensely laissez-faire climate of eighteenth-century capitalism there is little emphasis on what the anarchist Kropotkin called mutual aid: even more than the nineteenth century, this was the age of the work ethic, the industrious apprentice, and the entrepreneur: the age, in other words, of Benjamin Franklin. A laissez-faire economy is essentially an amoral one: this fact is the basis of Mandeville’s Fable of the Bees, with its axiom of “Private Vices, Publick Benefits.” The howls of outrage that greeted Mandeville’s book are a little surprising: it looks as though the age was committed to the ethos of capitalism, but had not realized the intensity of its commitment. (CW 17, 29-30)

Frye: “Democracy is in essence cultural laissez-faire”

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A perhaps unexpected but delightful inversion of values: Laissez-faire may be anti-democratic, but democracy is culturally laissez-faire. From “War on the Cultural Front,” (written in August 1940, when the war was going badly for the British Imperial forces, including Canada):

Democracy is in essence a cultural laissez-faire, an encouragement in art, scholarship, and science. The list of people tortured and banished by Hitler includes Jews, Catholics, Protestants, Freemasons, homosexuals, and sponsors of rival brands of Nazism like Strasser. No one can be equally sympathetic with all these groups, but in the last century English culture has received contributions from Jews (Disraeli), Catholics (Newman), Protestants (Browning), Freemasons (Burns), homosexuals (Wilde), and a spokesman of potential English Nazism (Carlyle). Obviously there has been some considerable anarchy in English culture, a hopelessly inconsistent inclusiveness about it, and that large inconsistently is the basis of democracy. For it implies the acceptance and practice of the scientific attitude on the part of the people as a whole: the inductive suspending of judgment until enough, not only of the facts and discoveries and techniques, but of the viewpoints and theories and gospels and quack panaceas, are in, before changing the direction of social development. Opposed to this is the crusading religious temperament of the dictatorships working with a partial and premature cultural synthesis. Out of this inclusiveness of outlook springs everything else we associate with democracy, and it is on that basis that democratic countries rest their claim to be more hightly civilized. (CW 11, 186)

Frye: “Laissez-Faire is Anti-Democratic”

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The trillion dollar bailouts of just three years ago demonstrated that we now have a “too big to fail” oligarchy who fleece citizens by whatever means necessary. It has nothing to do with democracy; it is kleptocracy

Laissez-faire is as anti-democratic is as it is “anti-Christian“:

The geopolitical America, unlike the European countries, was able to add its colonies to its own body, and hence was a kind of proving ground for all the expansionist energies of its age, economic laissez-faire, political liberalism, and religious individualism included. The belief that men can be and have a right to be equal and independent is the growing point of this expansionism and the source of everything vital in it, and that belief, rather than any political modus operandi, is what is usually implied first of all by the word “democracy.” As the conception of democracy has matured, it has separated itself from its vague background of Utopian optimism. Many Americans still believe that laissez-faire is the economic aspect of democracy, but there is a growing realization that laissez-faire by itself does not lead to democracy, but to oligarchy, and thence to managerial dictatorship. Laissez-faire by itself is antidemocratic: all progress in the conditions of the working classes has been wrung from it in a kind of cold civil war — not always so cold, as it has included lynchings, sadistic beatings, systematic starvation, and an occasional massacre. (CW 11, 251)