Category Archives: Politics

Currency War: An Extremely Short Introduction

John Maynard Keynes once wrote that “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.”[1] Bretton Woods, hyperinflation, and stagflation have increased this view’s sway, and some would argue that Keynes’ own economic theories have given his statement a veracity that it would not possess otherwise. Nevertheless, this statement is capable of being combined in a fruitful way with the notion that “the way a society makes war reflects the way it makes wealth.”[2] These two theses become crystallized in the concept of a currency war, the implications of which will first be outlined historically, then contextualized within contemporary discourse on international politics, and discussed in terms of how it problematizes typical discussions of security.

Prior to Bretton Woods, the value of money was pegged to the price of gold, i.e. the gold standard. This led to phenomena such as ‘Gresham’s Law’, where if the price of bullion was higher than the value of a coin made of a precious metal, people would melt down the coin and sell the bullion, pocketing the difference; this tendency can be observed even today with respect to the penny. More importantly, as Lyotard argues, this structured international trade into a zero-sum game. As he comments:

[T]he quantity of metallic money which is ‘circulating in all Europe’ being constant, and this gold being wealth itself, in order that the king grow richer he must seize the maximum of this gold. This is to condemn the partner to die, in the long or short term. It is to count the time of trade not up to infinity, but by limiting it to the moment when all the gold in Europe is in Versailles.[3]

This was not, however, a currency war per se, but rather a ‘wealth war’—the difference will shortly be made clear. In 1933, facing the Great Depression, the United States finally abandoned the gold standard, and soon after devalued its currency 40 percent, which greatly boosted the US economy as well as that of the rest of the world.[4] Deprived of a ‘universal’ numeraire, the currencies of the world subsequently became valued relative to each other, creating a competitive atmosphere of an entirely different kind. The lower a state’s currency is valued, the more businesses in other countries will be incentivized to import their products, and this fact (particularly in the case of Japan) is explicitly taken into account in monetary policy. The picture is complicated further when it is considered how the US dollar is a reserve currency—i.e. the ‘default’ currency which states use to allow for current account surpluses (i.e. countries importing more than they export) or to purposively modify exchange rates (particularly in the case of currencies pegged to another currency, such as China’s yuan to the dollar). As one article[5] describes: “the effect of a devaluation of a non-reserve currency…is implicitly to put upward buying pressure on the USD,” and conversely,[6] “every time the Fed debases the US Dollar it forces the Euro and other currencies higher, hurting those countries’ exports.”

Read the rest of this entry

Fragments of a Non-Economic Lexicon

From Fradin, J. (2006). La voie pauvre de la rébellion. Préambule de la science des pauvres [The Poor Way of Rebellion: Preamble to a Science of the Poor]. Paris, L’Harmattan; part of the series « Nous, les sans-philosophie » Excerpts originally compiled by Didier Moulinier.

{Noëlle Vahanian describes Jacques Fradin‘s project as follows:

In “Prolégomènes à la science des pauvres & à la rebellion non-éco-nomique,” what Jacques Fradin terms la non-économie is a science of the poor as practice of Laruelle’s non-philosophie. Here non-economics and non-philosophy are allied to construct a radical science that can think from the Real (rather than explain it away), according to ordinary Man and the Poor. This, then, is set in contrast to and against the world economy and its philosophy which is without conscience and which produces a reified world—“un monde riche de ses pauvres! Puissant de ses esclaves!” [“a world rich with its poor! Powerful with its enslaved!”] (p. 129).

The radical science of non-philosophical non-economics could study the relative autonomy of the world economy in order to understand conformism, and the mechanization of society. It would tie these findings to some basic structural elements of philosophy, such as, for instance, the idea of a natural law of the social. Finally, this radical science of the poor would also function as an ethic: as a subversive science according to the poor. In this, it would be a partial introduction to the non-religion of theorists (p. 129).

The following is my own, rather poor, translation of a blog post by La Non-Philosophie which collected various excerpts from Fradin’s book. It was made by struggling with Google Translate until some semblance of a grammatical sentence could be parsed into English, so corrections are welcome. My only alterations were rearranging the sections to be in alphabetical order after being translated to English, and separating excerpts from different pages.

Intrigued that someone else had started to think about Non-Economics, I soon found that Fradin’s work really has very little to do with economics (or, for that matter, Non-Philosophy) at all. If one were to be very charitable, one might call it Anti-Economics. There are some interesting ideas—otherwise I wouldn’t post this at all—but these get bogged down in Fradin’s pretentious wordplay, ‘revolutionary’ rhetoric, and dislike of writing in full sentences.

In his use of the word ‘economics’ and its variants, Fradin likes to play off of the French word “économisé’ (saved, in the religious sense) and the Greek word nomos (as in ‘eco-Nomic‘), meaning ‘law’. A few of his neologisms are ‘historial’, ‘de-propriation’ (cf. expropriation), and ‘objectalize’ (cf. reify), as well as Réal, to be contrasted with the normal French Réel.}

ACCOUNT

Domination - (p. 122) The measurements of economics are firstly social productions […]; its accounting/measurement structures are firstly formations of domination, geo-mastrical impositions [impositions géo-maîtrisantes], ‘politico-police’ dimensions which are then re-made by ‘research-(eco)nomists’, re-made ​​and re-commented (but not transformed, the case of price being symptomatic). The economist comes in second place, with the function of the hermeneutician. But he can lie to himself and imagine being in the scientific-creative position of the physicist.

(p. 123) The man submitted to the accounting system is a monetary fool […]. A madman whose alienation is so deeply inscribed (into account) that it has become absurd to want to separate the man from his dream of coppers [fr(l)ic]. Whence comes this monetary alienation? Simply this: accounting does not count anything. Accounting, as a measure […] is a political mode of the constitution of a disciplined world. This why accountants are subjected beings. This is why those who are accounted are depressive beings.—To count is never to count something, something exterior to the account, something ‘natural’ that would be accounting’s ‘real referent’.—For what counts is not the account, let alone its ‘results’, but the possibility of imposing techno-logical procedures, the possibility of imposing a mode of language […].

(note 43) From the ‘technical’ point of view it must be noted that accounting is not a ‘neutral technique’, but a politico-constituent process; and subsequently, the whole ‘technique’ is not a disciplinary assembly; its technology has nothing of ‘technique’ which constitutes a(n aletheio-logical) ‘mode of unveiling’, a formation of authoritarian structuration.

(p. 124) So if accounting does not count anything, the monetary-accounting system is nevertheless a fine example of a disciplinary institution, perhaps a policing invention decisive for the history of an enslaved humanity.

(p. 126) The (eco)nomic world (value, price, currency, accounting structure) is the result of a cobbled-together war of control, of a policing structure—always at work. To understand price involves reconstructing the militarized genea-logy of accounting; accounting remains still and always a center of confrontation—already for its continuing existence.

AUTHORITY

Rebellion – (p. 10) It is just, it is always just to rebel, to revolt & incite (revolutionary) subversion: the state of exception in which we live cannot bear the name of (ecoNomic) dictatorship and does not accept that it is the alternation which enforces it. It is just to revolt; because that way, because only in this way will Man (not subject nor agent, nor homo economicus) be respected. Read the rest of this entry

Prelude to a Non-Standard Economics

{I recently received the following question on my tumblr blog:

Hi. You seem to have a better understanding of economics than most of the people here on tumblr, an understanding of how misrepresentations of how economics works can lead to misrepresentations of the actions/attitudes we should take to solve the problems of our current economic system.

Admittedly, I sympathize with the leftist and Marxist sentiments espoused by those on tumblr and with authors such as the one you just ridiculed, but that’s mostly due to my cursory understanding of economics and the fact that when one has such sentiments, leftism and Marxism are the first theoretical positions one comes across. I think you agree that capitalism leads to Huge Problems, but could you shed some light on what you take to be the proper route of critique?

The following is my answer. I’m cross-posting it here because due to midterms it will probably take me quite some time to write a full post fleshing out all my arguments.}

I’m working on a lengthy blog post in response, but it’ll unavoidably be very dull and tedious, and I don’t want to act like I expect people to read it. The question of an alternative to Marxism is one I’ve been puzzling over for several years now, and what I’ve found is that the question is inherently problematic, and needs to first be deconstructed before the practical result it hopes for can be provided. The main problem is the necessarily philosophical nature of the answer it expects: I’m supposed to provide a philosophical theory of economics which can reconcile its different schools of thought and which somehow fits within the Continental tradition. But I don’t think that this can be done. Yahya Madra, for example—a very intelligent guy—has for some years been trying to apply Lacanian psychoanalysis (plus Derrida and D&G) to economics, but hasn’t been able to come up with anything substantial. So the following will first talk about philosophy’s inability to meaningfully speak about economics, then point toward how philosophy caricatures economics in order to speak about it at all, and finally offer some rules of thumb for getting beyond such caricatures.

Laruelle writes in Mystique non-philosophique that “The identity of the with (the One with the One, God with God), is the true ‘mystical’ content of philosophy, its ‘black box’.” (His examples are stupid, but you get the point.) My claim is simply that the statements comprising marginalist economic theory are not conceptual per se, but rather, they operate within the prepositions of a philosophical sentence (in, with, by, to, from, etc.): that is, within the black box of philosophy. As such, economic statements are constitutively inaccessible to philosophy as a discourse. All philosophy can do is to latch ahold of an ‘object’ used in economics (e.g. labor, utility, commodity-form) and try to relate it to other philosophical concepts—but from the point of view of economics, this is just to just to create an alternate model, one which can say nothing about the model it’s ostensibly ‘critiquing’ unless it can hold up to economics’ standards of operativity. (For more on the latter, see below, paragraph five.)

In short, economics is a form of antiphilosophy. This should be clear even historically, since marginalism (contemporary orthodox economics, the kind that uses calculus to measure ‘marginal’ increments between abstract ‘units’ of things such as ‘utility’ or ‘marginal propensity to save’) was designed specifically to circumvent the problems (e.g. exploitation) that Marx raised. For example, due to marginalism’s theory that value is determined solely by the intersection of supply and demand, this implies that all wages are at their proper value—thus eliminating the possibility of exploitation a priori. Likewise, dispensing with the inverse relation of profits and wages undermines the foundation of anyone who would argue that class struggle constitutes a fundamental component of the business sphere.

963-14, by les brumes

Of course, the results of economic theory are apparently susceptible to critique. But are they? I can attest from long, frustrated experience that to write about economics (without writing in economics) is extremely difficult, perhaps impossible—unless you resort to some form of pre-packaged philosophical discourse (or journalistic tripe). The main quasi-conceptual ‘discourses’ about economics are Marxism and Austrianism, and I argue that this dyad is symptomatic of the structure of philosophy, particularly when viewed through Laruelle’s concept of philosophical decision. Put in way-oversimplified terms, the Decisional structure is when philosophies invent a third term of ‘immanent transcendence’ to mediate between two objects, one of which is transcendent, the other immanent. In economics, however, the economy is both transcendent and immanent, thus screwing up this neat little pattern and forcing certain reductionisms on the part of each theory. There’s not much of substance that one can say without getting immensely technical (since it’s not just a cut-and-dried case of each theory favoring one over the other), except that when you compare Mises’ and Marx’s conceptualizations of the economy in terms of immanence and transcendence, there are distinct differences, and once these are straightened out (which I haven’t yet had the chance to do rigorously), it will help us to analyze these discourses as forms of thought, as well as to pinpoint why they have become as entrenched as they have in political discourse.

The main point of the latter paragraph is that we need a unified theory of philosophy and economics, of how the two ‘work’ in relation to one another. But to make this accessible to people who aren’t economists is very difficult. Let me be clear here that the problem is not just one of technical knowledge, but also that economists (even moronic econ undergrads like myself) are trained to view theories in terms of their operativity: all economic statements must be capable of being converted into mathematics, and of being used in a mathematical model of an economy. (Continental Philosophers, on the other hand, have no demarcation criteria to distinguish sense from nonsense, and they’re trained to take even the most whacked-in-the-head ideas seriously.) This is the main reason why the paper on “Darwin metaeconomics” is so self-evidently stupid to any economist. He takes freshman-level economic theory and dresses it up with grandiose (but completely vacuous) concepts in order to ‘prove’ a thesis (which he presupposes from the start, giving no evidence whatsoever) that any crackpot or art student at Occupy might make. There are plenty of respectable studies corroborating the idea of Wall Street corruption, centralization of power, and so on, but there’s an unwritten rule in economics that the more one’s conclusions go against mainstream ideas, the more rigorous your study must be—and for the pragmatic purposes of saving one’s resources for important matters and of weeding out crackpots, this is a reasonable rule to have.

Even the notion of a ‘critique’ of capitalism is very problematic, and Lyotard goes into better detail about this than I could in his Libidinal Economy. But since economics is the science of non-discursive social relations, and philosophy is discursive, to begin to critique capitalism from a philosophical starting point is, to a large extent, to determine one’s conclusions from the outset. Much philosophical hostility toward neoliberalism can be attributed to the latter’s inability to be thought philosophically. (And this besides the obvious bad faith of being a Humanities student.) What I don’t want to advise you is to read more about economics—this is the most banal thing in the world to say. Not that it wouldn’t help, but it’s ridiculous to expect that of someone who has no professional interest in the field (and I include due diligence in this clause), especially since laypeople will just gravitate toward books that confirm their preconceived notions anyway. But if you’re a philosopher and are curious about the economy, I recommend that you look at it through antiphilosophy, e.g. McLuhan’s The Gutenberg Galaxy, Veblen’s Theory of the Leisure Class (only the first few chapters though; as soon as he starts talking about racial theories, stop reading), or Lyotard’s Libidinal Economy. They aren’t perfect, but they aren’t autopositional in the same way as typical philosophical texts are. This is to a large extent because they don’t rely on concepts: implicit in every concept is a choice to emphasize some aspects of a thing over others. This is what I take Foucault to have meant when he called Anti-Oedipus “a book of ethics.” Hume’s Law holds absolutely—but only when we confine our purview to sensations and intuitions. In his radical empiricism, Hume denied that ‘other aspects’ of phenomena existed besides those which we immediately perceive; this is why (in its own terms) his argument is valid, but doesn’t hold in real life. So economic models do contain implicit values both positively (prioritizing things like efficiency) and negatively (the aspects of things they ignore).

a place only i can go - AnnCT 07.2012

So let’s get a bit more concrete. One of the things that Tumblr Marxists love to do is to attribute all the evils of the world to “capitalism.” Taking after Marx, they attribute a primacy of the economic sphere over the political sphere (even if they spend all the rest of their time insisting that culture is more important than economics). Yet, people like Chomsky make an excellent case for the primacy of the political sphere over the economic sphere, and thus can meaningfully argue that we’ve never had capitalism. Then again, every single economic argument Chomsky makes that isn’t either trivial or repeated verbatim from his friends (e.g. Ha-Joon Chang) is not only wrong, but really stupid. Much as I love Chomsky, he just has no understanding of economics whatsoever—yet, he’s absolutely brilliant when it comes to politics, and he’s a rigorous empiricist. And of course, Marx is hardly infallible either, despite being a genius. So I think that to think about the question of primacy in terms of being correct or incorrect is to look at matters the wrong way. Rather, the disparate discursive structures of philosophy and economics force any philosophical critique of the latter to be in the form of a model of one’s own; most people just don’t think of it that way. So the real question is what our conceptual model lets us say that other’s can’t (and perhaps more importantly, what our model can’t say that others can).

Hopefully the above doesn’t just seem like unnecessarily abstruse nitpicking about your question. It would be nice if I could just drop a weltanschauung in your lap, but that’s not how economics (or non-economics) works. That said, here are some rules of thumb that I’ve found helpful:

  1. Try to view the concepts you use in their contingency as models.This is the basic idea of what Laruelle calls ‘cloning’, where (political) philosophies are made into material, and one’s focus becomes how the form of an argument determines its conclusions. The conclusions of all models are tautologies, derivable from their premises (the aspects of the world they focus on), and what separates a good model from a bad model is the extent to which it relies on ad hoc provisions and ‘deus ex machina’-like axioms that lie dormant for a while, then tie everything together in the last minute. What studying economics lets you do is see how ‘economic facts’ (e.g. statistics) are constructed—and this, again, is the meaningful content of economics that takes place within the black box of philosophy. So since philosophy has no way to explicitly speak of its tautologous (or: autopositional) nature, it becomes doubly important to make the effort to interpret issues through more than one theory, jumping from one view to the other the way one does with a duckrabbit.
  2. Avoid thinking in terms of linear causality. In the social world, X rarely ever causes Y on its own: rather, multiple lines of causation converge together thanks to certain conditions, occasionally leading to positive feedback loops and other nonlinear behaviour. This is George Soros’s big insight, as well as that of Malcolm Gladwell in The Tipping Point. A corollary of this is that we should separate the goal we have in mind (e.g. support the working class) from the means of reaching it. It’s not that everyone who isn’t a communist wants to fuck over the working class: people like Milton Friedman just argue that Leftist measures like unions are counterproductive. It’s easy to treat political issues emotionally, e.g. that it isn’t ‘fair’ to give corporations tax breaks. But even a liberal like Robert Reich can agree with Milton Friedman (though for different reasons) that corporate income tax should be abolished. This is why I think that it’s useful to distinguish between the ‘letter’ of a partisan position (the typical goals it advocates) and its ‘spirit’ (the emotions and values it evokes to support its position). Iain Murray’s book The Really Inconvenient Truths uses original and data-focused arguments to back up conservative prescriptions traditionally supported by appealing to religion and other arbitrary value judgements. I haven’t come across any books supporting the letter of Leftism but not its spirit, but think that this would be an excellent technique to avoid falling back on stale tropes.
  3. Accept that philosophy is limited in its applicability. Philosophy’s inability to accept its non-transferability to certain domains is what Laruelle calls the “principe de la suffisance philosophique,” which may be translated as ‘principle of sufficient philosophy’ or ‘principle of philosophical arrogance’. As the Austrian economists argue quite well, markets are able to take account of tacit knowledge and inarticulable desires in a way that discourse (and central planning) just can’t. To a large extent, accepting that many social structures have evolved as they have for a reason (cf. Taleb, 2012: 212) is enough to start sympathizing—at least a little bit—with conservatives. If you believe that biosemiotics has no effect on your behaviour, dye a bowl of oatmeal with blue or black food coloring and then explain to me why it’s the bourgeoisie’s fault that you’re filled with an overpowering sense of aversion as you try to eat it. Not that these social structures are all desirable, but unless one holds a naïve base-superstructure theory, any practical efforts for social change have to keep these in mind, and try to find a way to reroute them.
  4. Make a point of avoiding paranoia. What I mean by paranoia in the context of social theories is when behind appearances is postulated some sort of absolute agency that controls everything (what Lacan calls the Other of the Other). This tendency is common among intellectuals, and I’ll give some examples. In Naomi Klein’s book The Shock Doctrine, once you remove the presupposition of malicious agency by the USA, her argument degenerates into the claim that regime changes tend to happen during economic crises—which is quite trivial. Likewise, Chomsky’s lecture on Colombia (entitled “An American Addiction”) degenerates into vacuous conspiracy theory once the reader takes into account that coca ≠ cocaine. Coca is, of course, a staple agricultural product in South America precisely because of all its useful applications, and Chomsky attributes its pervasiveness solely to the malevolent interests of the Colombian government (backed, of course, by the USA). This is NOT to say that the USA doesn’t use its hegemonic power for the sake of coercion, or that theories of a paranoiac form are always invalid. After all, people like Chomsky and Glenn Greenwald show over and over the naïveté of denying that the USA behaves in many respects like an Empire. What I am saying is that one’s personal pathologies influence the type of data one seeks out, and also that by indulging one’s pathologies one is apt to make shitty arguments. Moreover, any social theory should allow for the possibility of contingent events influencing an outcome—and Marxism rarely does. This is why things like falsification criteria and scientific method are so important—they’re constructed specifically to avoid all-too-human tendencies of adopting pet theories, or of convincing yourself that you’re valiantly fighting the capitalist beast.
Sargam Griffin - The Economy, 2010

Sargam Griffin – The Economy (2010)

So if I had to sum up all of the above into one little catch-phrase, it would be this: it is absurd to expect one kind of economic policy to hold for all countries and situations; instead, policies should be chosen on the basis of each country’s unique situation. This isn’t a crazy thing to suggest. There are some scenarios where the tenets of neoclassical theory just doesn’t hold, just as there are others (e.g. stagflation) where those of Keynesianism don’t hold; conversely, there are scenarios where communal business practices work very efficiently. As I’ve argued before, this perverse desire (reinforced by party politics) to impose one policy everywhere can be thought of as the ‘principle of sufficient economics’. Economics since Keynes has focused on developing a general economics—instead we need to develop a Riemannian economics. This is what I think a non-standard economics inspired by Sraffa can do.

Peter Lichtenstein, in fact, presents a very interesting Sraffian model of a pluralist domestic economy. It does become problematic when you consider its relation to global finance, plus how zero-growth would make it into a zero-sum game between capitalists and communes, and this is something I need to think more about. But it should be obvious that austerity is not generally applicable—if all countries cut consumption at once, the world would go into another Great Depression. So, much as I’m annoyed by Richard Wolff’s populist rhetoric, I’m fully in favor of his attempts to draw attention to scenarios in which communal business practices are more efficient than capitalistic ones. (And of course, we need not confine ourselves here to overly narrow definitions of ‘efficiency’ which, as Taleb [2012: 44-5] argues, leave much to be desired.) All that matters is what works best. But one should be suspicious of any political theory or policy that says it will only work when it is applied to the whole world at once. And if you object to the notion of economic pluralism by the Marxist fallacy of lumping together disparate economic policies under the heading of ‘capitalism’ or ‘neoliberalism’, then this is what happens.

Parkinson’s Law and the Neoliberal Theory of Bureaucracy

mc-escher-relativity-

The main prescription of New Public Management (hereafter NPM)—that public administration should be operated similarly to a business—is the brunt of much criticism, while at the same time gaining many faithful adherents. Liberals such as Inwood (2004: 321, 389, 408, 410-1, 414) view NPM as little more than facile economism, and pine for a return to Keynesian policies. Nevertheless, such curt dismissal ought to be the cause of some suspicion: it may well be, after all, that Liberalism proceeds from such radically different premises than NPM that the former must necessarily oversimplify the latter in order to say anything about it at all. This, as will be shown below, is indeed the case. Through an examination of the policy area of human resource management, it will be argued that NPM policy possesses a sophisticated theory of subjectivity (as manifested in its capacity to deal with matters of knowledge management) which may prove flexible enough to supersede controversial issues such as affirmative action.

The most common view of the role NPM in human resource management is to identify redundant staff members and work practices which can be cut without damaging performance capacity. Yet, a strong reply to this is that the structure of bureaucracy may be more intricate than appears at first sight, relying on uncodified (and perhaps uncodifiable) practices—known as tacit knowledge—in order to implement whatever policy is important at a given time. According to a quantitative study of knowledge management in the workplace (Wah 1999b, quoted in Smith, 312), “99% of the work people do is knowledge-based” and furthermore, “90% of the knowledge in any organization is embedded and synthesized in people’s heads” (Wah 1999b, Bonner 2000a, Lee 2000; quoted in Smith, 311). This presents significant problems when it comes to measuring workplace performance, since firing any particular worker risks altering the tacit workplace dynamic. As well, the key role of tacit knowledge in the workplace presents a trade-off between unhindered intra-organizational ‘flow’ of knowledge and the ‘democratic’ introduction of special interest groups into the decision-making process (Wiig, 228). Such problems, insofar as they are uncodifiable, present seemingly insurmountable problems, pointing toward persistent expansion of bureaucracy for fear of endangering the system, contrary to the prescriptions of NPM.

When viewed in terms of C. Northcote Parkinson’s theory of public administration, however, the prescriptions of NPM may be seen to be quite sensible. He takes as a premise his eponymous ‘Law’ that “Work expands so as to fill the time available for its completion” (Parkinson: 2). This is due to two “almost axiomatic” motive forces: “(1) ‘An official wants to multiply subordinates, not rivals’ and (2) ‘Officials make work for each other’” (ibid, 4). As he makes clear in subsequent chapters, this law may be generalized such that instead of ‘time’ only, it applies to resources of any sort. This is often viewed as facetious, but can be interpreted in an entirely serious light: in fact, in addition to Parkinson’s own data (ibid, 7-12) taken from military records, Klimek, Hanel, & Turner’s quantitative study (2009) of the formulae derived by Parkinson from his eponymous Law concludes that they “hold empirically to remarkable levels of significance” (3939). Parkinson’s conceptual innovation is to take the quality of work as a constant, while leaving as variables the amount of resources available for the work’s completion and the degree of the work’s ostensible complexity. This assumption is legitimate in the case of public administration, since much of the work (e.g. paperwork) can only be done so well; in the terminology of economics, the marginal productivity of effort spent on a project drops to (or, at least, toward) zero at a certain fixed point. Following Laruelle (2000), it can be said that NPM views the matter of budgets as a “unilateral duality”—defined as any scenario where from the perspective of x, both x and y exist, but from the perspective of y, only y exists. To illustrate, Laruelle’s main inspiration here is Marx, whose base-superstructure model posits that in the last instance, all elements of society are determined by the relations of production (cf. Inwood, 29-30). So according to NPM’s Parkinsonian logic, all the incidental details comprising the completion of a project are effectively epiphenomenal, since they are determined-in-the-last-instance by the budget.

Moreover, Parkinson’s Law possesses an interesting sophistication in that it posits an asymmetrical distribution of possible amounts of resources to assign for a given project: while there is an obvious limit in terms of parsimony, there is no limit when it comes to abundance—thus accounting for stereotypical bureaucratic wastefulness. What the concept of unilateral duality contributes to our understanding of budgets is this: since allocating more resources to a project than are strictly needed causes the knowledge networks related to the project grow more and more complex, this redundancy can be deliberately managed in order to create intellectual capital for use in future projects related to the present one (cf. Wiig, 232; Taleb, 72-3). This idea may be expressed rather clearly in the distinction made by Clausewitz (1906, bk II, ch. 1)—which should obviously be taken figuratively—where “tactics is the theory of the use of military forces in combat” and “[s]trategy is the theory of the use of combats for the object of the war.” Rather than budgets progressively increasing, according to the Parkinsonian view budgets should be steadily decreasing as the ‘learning-by-doing’ allowed by each project increases administrators’ productivity. By use of Parkinsonian logic, then, NPM is capable of overcoming cynical views of bureaucracy as wasteful—instead, by means of ‘strategy’, NPM is able to reflexively redirect the inflationary tendencies of bureaucracy toward productive ends. IBM consultants, for instance, were able to encode their personal heuristics for proposal writing into a database, which subsequently “cut proposal-writing time from an average of 200 hours to 30 hours” (McCune, 1999; quoted in Smith, 312-3). So, in much the same way that Taleb (2012) recommends that institutions be set up in such a way that they gain from volatility, from Parkinson’s Law may be gathered a prescription of purposively making use of redundancy.

It is now possible to return with a critical eye to the arguments about knowledge management raised above. Although Parkinson’s Law precludes any arguments about ‘ruining’ the tacit knowledge dynamic of the workplace, there is still the problem of the trade-off between ‘democratic’ participation and uninterrupted flow of information. To address this problem, the subtopic of affirmative action will be discussed initially, and its conclusions applied to remaining subtopics. As Inwood (295) notes, the education requirements for administrators are becoming increasingly stringent, to the point where schools intended specifically for training management workers have been opened. As Schmidt (2000) argues, the main purpose of professional education of this type is twofold: to instill standardized knowledge and practices for practical use in the workplace, and to impart specific modes of thinking and dealing with problems. Qualification criteria are expressed in standardized tests, and grades are thus viewed as positively correlated with merit. Since affirmative action policies relax the grade requirements for minority applicants, there is resistance to affirmative action on the grounds of a trade-off between inclusion of minorities and overall benefit to society. Looking at the matter in terms of tacit knowledge, however, Schmidt argues that this dichotomy is a false one. The problem is simply that qualification criteria have limits: “a professional is more than someone with technical knowledge” (Schmidt, 108). In many cases, Schmidt observes that there are many instances in which professionals draw upon tacit knowledge related to their socioeconomic background in order to relate to clients, make causal inferences to diagnose problems, and to make ethically informed choices; he uses the example (ibid, 108-9) of a doctor who realizes that a patient’s illness is psychosomatic, that is, brought about by his or her work conditions, and is motivated to take steps to try to bring about change—as opposed to ‘mechanistic’ and palliative treatment of an isolated body part. Schmidt’s conclusion is that despite Wilsonian objections as to the objectivity of public administrators, the decisions made by professionals of all types are inherently political.

mc escher - square limit

So the prescriptive conclusion that we should draw from the above points in conjunction is as follows. Considering that “[n]early two-thirds of work-related information that is gradually transformed into tacit knowledge comes from face-to-face contacts, like casual conversations, stories, mentoring, internships and apprenticeships” (Smith 314-5), efforts should be made to facilitate interdepartmental communication in an attempt to transmit tacit knowledge among departments. One workable idea is provided by Smith (317), who describes the online ‘social tactical system’ developed by Xerox:

Technicians write up ‘war stories’ to teach each other how to diagnose and fix machines. Service reps access over 5,000 tips a month for a 5 percent saving on both parts and labor. Field service reps create and maintain the tacit knowledge base by contributing and renewing all the tips and information and maintaining the system. Each time reps contribute a tip, their name goes on the system.

Given that flexible boundaries for budgets, according to Parkinson’s Law, only serve to motivate unnecessary complexity, these are to be avoided. In short, in order to run the government more like a business, finances must be tightly controlled from the top down. Affirmative action is to be encouraged (though not necessarily to excess) among departments, though this need not extend to executive positions, whose qualifications typically depend on traditional standards of competence more than do other administrative positions (cf. Inwood, 281). Such policies as described above are quite similar to those which currently obtain under NPM (cf. Inwood, 70-1), or are at least within the horizon of its potentiality. Future examinations of the Parkinsonian model of NPM in less parsimonious, and perhaps more quantitative, terms may prove fruitful, though this is beyond the scope of the present essay.

References

  • Clausewitz, C.; Graham, J.J. (trans.). (1909). On War. London : N. Trübner.
  • Inwood, G. (2004). Understanding Canadian Public Administration, 2nd Ed. Toronto: Prentice Hall.
  • Klimek, P.; Hanel, R.; Thurner, S. (2009). To how many politicians should government be left? Physica A: Statistical Mechanics and its Applications 388(18), 3939-3947
  • Laruelle, F.; Adkins, T. (trans.). (2000). Introduction au non-marxism, ch. 3. PUF: Paris, pp. 39-55. Retrieved from speculativeheresy.wordpress.com/2008/07/20/chapter-3-of-laruelles-introduction-to-non-marxism-determination-in-the-last-instance-dli
  • Parkinson, C.N. (1957). Parkinson’s Law, and other studies in administration. Boston: Houghton Mifflin.
  • Smith, E. (2001), The role of tacit and explicit knowledge in the workplace. Journal of Knowledge Management 5(4), 311-21.
  • Schmidt, J. (2000). Disciplined Minds. Lapham, MD: Rowman & Littlefield.
  • Taleb, N. (2012). Antifragile: Things that Gain from Disorder. New York: Random House.
  • Wiig, K. (2002). Knowledge management in public administration. Journal of Knowledge Management 6(3), 224-39.

Income Redistribution vs. Grade Redistribution: An Economic Sophism

This argument tends to crop up every once in a while. Young America’s Foundation, which is responsible for the above video, describes it thusly (emphasis in original):

[W]hen students at Carthage where asked if they would be willing to sign a petition to redistribute GPA points from the top 10% to the rest of the college, most of them said NO. One student said, “No, because I worked hard for my grades!”

Another said, “At Carthage, each student has an equal opportunity to get the GPA they desire.” And another, “I don‘t want my GPA being taken away from me if I had an ’A’.”

When the petitioners told students that oftentimes outside factors leave students at an unfair disadvantage, a student said, “No. I’m low-income and a minority, and I have a fairly decent GPA, so…” 

Fittingly, some not in the upper 10% welcomed the free points. “Why not? I’m down,” said one student with a low GPA  (eagerly signing the petition), but then the student’s friend standing next to him said, “It takes away from people working hard… and obviously it’s paid off with their higher GPA.” Later in the conversation, when the first student told his friend to sign the petition, the friend responded, “How about trying harder for a semester?”

The main purpose of the study is to point out the ‘hypocrisy’ of being in favor of income redistribution while refusing to redistribute one’s own grades. The fact is, however, that this entire argument is based on fallacious reasoning, or more specifically, a false analogy.

To make it easier for people living in countries that do not use the GPA system, let us stick with percentage points. Typically, grades are assigned a value between 0 and 100%. What this means is that if one’s percentage points were to be ‘redistributed’, this would detract from one’s final grade the exact amount of percentage points that were redistributed. This should be obvious. Let us think of the matter in utilitarian terms, with the assumption that each person assigns the same value to each percentage point. What this means is, that the top 10% lose utility in exactly the same proportion that the others gain that utility. This, however, goes against one’s natural sense of justice: why should one person be harmed so that other, undeserving, people gain? In economic terminology this sort of situation is known as Pareto optimality, which means that no one can gain without someone else losing.

Now let us imagine a slightly different, but still plausible scenario. Occasionally some schoolwork allows for bonus points, where if one scores over 100%, the extra percentage point(s) can be transferred to another paper. It is quite common for students to calculate exactly the grades they need on the remaining assignments and/or tests in their class in order to get the grade they want. So imagine that a student has amassed a very large number of bonus points—so many that even if she receives a zero on all of her subsequent assignments and tests, she will still receive a final grade of 100% in the course.

It is this latter case which corresponds to the acquisition of income in the real world, rather than the case presented in the video. It is no doubt the case that anyone with a net worth of a million dollars would be able to live a relatively comfortable life without working, provided they do not concern themselves with extravagances. Even if a disaster occurred, e.g. one’s house caught on fire, one would still be able to make up the loss without needing to fear for one’s future financial security. In the same way, if a student has exactly the amount of bonus points to guarantee that he will have a final grade of 100%, he will be indifferent about any more bonus points that he is given; he loses nothing by having his extra percentage points redistributed, so he has no reason to object to redistribution. To return to economic terminology, the state of our fictitious economy prior to redistribution is not Pareto optimal: because the redistribution of extra bonus points (above the aforementioned threshold) does not harm the high-grade student, other, low-grade students can be made better off without making the high-grade student worse off.

To drive home the point, the only way that the analogy expressed in the video would be applicable to real life would be if there were a maximum income, after which point taxation became 100% (with, perhaps, infrequent ‘bonuses’), which is obviously not the case.

Hence, the only relevant questions remaining to be asked about the data in our imaginary scenario are 1) whether the bonus points are the property of the top-grade student, to be used any way s/he wishes, as, e.g., in a scenario where bonus points can be spent on luxury goods; and 2) whether it is people’s own fault that they are unable to become wealthy, or whether society is ultimately to blame—i.e. to whose agency a given person’s poverty should be attributed. These, however, are at root metaphysical questions, the kind that philosophers have thought about for millenia, and for which no solution is likely forthcoming. So it would seem that much of the public debate about welfare revolves around different attempts of patching up various gaping holes in philosophy. Moreover, the particular type of attempt to which one gravitates is typically chosen without any conscious contemplation, but often more or less out of habit, i.e. by what views one has previously been exposed to.

Suffice it to say, then, that appeals to metaphysical concepts are insufficient to convince people of whether welfare is justified. In other words, the vast majority of public discourse on the topic of welfare can safely be thrown in the garbage without a second thought. If we hope to say anything meaningful at all about such issues, our best best would be to focus on empiricism, i.e. such questions as whether the value added by such measures (in terms of increased productivity, decreased need for health care, etc.) is sufficient to justify their cost.

On the Vacuousness of ‘Neoliberalism’ as a Political Category: A Dialogue

Marxist: You want to know why the economy is in such dire straits these days? It’s because of this damn neoliberalism that all the countries of the world are uncritically accepting!

Capitalist: Whoa, now. That’s a really broad statement. Let me try to see if I fully understand what you mean. So you think that stimulus is a neoliberal policy?

M: Absolutely. All the Fed is doing is making more financial gimmicks in an attempt to help a structurally broken economy.

C: Okay, that’s a legitimate point of view, I suppose. So given that the USA has to somehow pay off its deficit, you must be in agreement with the people who say that austerity is the way to go.

M: Absolutely not! If the government tried that, me and my friends would be up in arms! Austerity is neoliberalism in its worst form!

C: Hmm. Well to me it seems like those are two very different policies, but you’re lumping them together under the same category?

M: Yes.

C: Okay, then. Let’s try a different tack. What would you say isn’t neoliberalism? Is North Korea neoliberal?

M: Of course not.

C: So dictatorships like Ethiopia and Guinea aren’t neoliberal either?

M: No.

C: What about communist countries like China?

M: Yes. They are neoliberal, or at least they have been ever since Deng Xiaoping took over. Besides, China shouldn’t be considered communist anyway.

C: Why not?

M: Because it’s not what Marx actually intended communism to be! Full communism and actually-existing communism are two completely different things.

C: Okay then. Let’s accept your definition of ‘full communism’. Now, it seems to me that what you mean by ‘neoliberalism’ encompasses any sort of social arrangement that might call itself capitalist, even if on the surface of things, different neoliberal countries seem to have strong disagreements. Is that accurate?

M: Yes.

C: So we could just as well say that in your definition (and excluding dictatorships), neoliberalism is any point of view that isn’t communist.

M: I suppose so.

C: That seems to make sense. So why do you insist that neoliberalism, in all its various guises, is a bad thing?

M: Well that should be self-evident! It’s because of the inherent contradictions in the commodity-form, plus the exploitation of workers’ surplus value inherent in the act of a capitalist purchasing labor-power from the proletariat!

C: Hm. I was never taught these sorts of ideas in business school, so could you tell me who came up with them?

M: Karl Marx, of course! Just as Darwin discovered the laws inherent in organic development, Marx discovered the laws inherent in capitalism!

C: ‘Inherent’ is a strong word, you know. I assume you’re aware that there are other ways of thinking about economic phenomena that don’t involve these sort of concepts.

M: Yes. But they’re wrong. It takes a refined eye to notice these sorts of things, not the sort of thing a vulgar capitalist like you would understand. *sententious tone* There are more things in this world, my dear capitalist, than are dreamt of at your business school.

C: *quizzical expression* Fair enough. Now what should I do if I want to learn about this point of view?

M: Read Das Kapital, of course! It’s hard going at first, but once you read it through about four or five times, it will be obvious to you that this is the truth. But after that, if you still insist on debating with us, you’ll have to be familiar with the literature! I’ve seen plenty of cases like yours. At first the thousands of books and articles on Marxism may seem so rife with confusions and question-begging that out of despair you may be prepared to believe anything, but once you’ve made your way through the basic authors (Althusser, Balibar, Deleuze & Guattari, Hardt & Negri, Poulantzas, Castoriadis, Adorno & Horkheimer, Debord, Gramsci, Eagleton, Callinicos, Jameson, Lukács, Luxemburg, Marcuse, and Žižek), you should be all set to think critically about the world! (And of course, by thinking critically I mean denouncing all existing conditions!)

C: *ponders for a minute* I think I finally understand.

M: That’s the spirit!

C: Let me sum things up: neoliberalism is bad because of the contradictions inherent in capitalism, as shown by Marx, which can only be grasped by a Marxist point of view, since all other perspectives take neoliberalism for granted.

M: By Jove, you’ve got it!

C: So in other words, any relatively successful form of social organization except communism is bad because it isn’t communism, and it’s impossible to see the truth of this unless you’re a communist, since all other positions besides communism take neoliberalism (again, defined as everything that is not communism) for granted.

M: Eureka! You’re one of us now!

Lyotard on the Merchantilism of the Gold Standard

[Lyotard initially quotes the following letter from Colbert to Louis XIVwhich he takes as representative of the ‘merchantilism’ of the gold standard (Libidinal Economy, pp. 188-9). Paragraph breaks have been added.]

…The good state of Your Majesty’s finances and the augmentation of his revenues consists in increasing by all available means the amount of silver converted into money which is continually circulating in the realm, and in keeping in the provinces the exact proportion of this money that they require…augmenting the silver in public commerce by drawing it from the countries from whence it comes, retaining it within the realm by preventing it from leaving, and by giving men the means to draw a profit from it.

Since the greatness and strength of the State and the Magnificence of the King are composed from these three points, the expenditures for which great revenues provide the opportunity render State and King all the greater, because they deplete the revenues of all neighbouring States at the same time. In view of the fact of having just one constant quantity of silver circulating in all Europe, augmented from time to time by that which comes from the West Indies, it is certain and demonstrable that if there are only 150 million pounds of silver in public circulation, one can only succeed in augmenting it by 20, 30, and 50 millions at the same time as one removes the same quantity from neighbouring States….

I entreat Your Majesty to permit me to tell him that since he took on the administration of finances, he has undertaken a war of silver against all the States of Europe. He has already conquered Spain, Germany, Italy, and England, which he has thrown into very great poverty and destitution, and has grown rich from their spoils, which have given him the means to perform such great things as he has done in the past and still does every day. Only Holland still remains fighting with great forces: her northern trade…and that in the East Indies…that in the Levant…that in the West Indies…her factories, her trade in Cadiz, Guinea and an infinity of others in which all her strength consists and resides. Your Majesty has formed companies which, like armies, attack them on all fronts….

The factories, the canal for the transnavigation of seas and so many other new developments as Your Majesty has created, are so many reserve corps which Your Majesty created and drew out of nothing in order better to perform their duty in this war…. The sensible fruit of the success of all these things would be that by drawing, by means of trade, a very great quantity of silver into his realm, not only would he soon manage to reestablish those proportions which must exist between the silver in currency in trade, and the taxations which are paid by the people, but he could even augment each of them, in such a way that his revenues would increase and he would put his peoples in a powerful position to assist him more considerably in the event of war or some other necessity….

[Lyotard later comments (pp. 191-2):]

“[T]he quantity of metallic money which is ‘circulating in all Europe’ being constant, and this gold being wealth itself, in order that the king grow richer he must seize the maximum of this gold. This is to condemn the partner to die, in the long or short term. It is to count the time of trade not up to infinity, but by limiting it to the moment when all the gold in Europe is in Versailles. And it is to identify gold with the traditional form of wealth, which the earth. To draw gold into the frontiers of the realm is the same thing as to extend the frontiers up to the sources of gold. The earth being round, the conquest must in principle close up on itself, the armies progressing eastward establishing the empire of the world. Locking gold up within the limits of the realm is for Colbert the same operation relativized: it is the earth-gold or the golden earth which must come to complete its movement in the king’s coffers. In the first case, the realm is displaced over the earth, envelops it and becomes its coffer, in the second the gold which was displaced will become incarcerated in the realm.”

 [Later (p. 196) Lyotard also quotes Keynes’ General Theory (Ch. 23, §3):]

‘Never in history’, writes Keynes, ‘was there a method devised of such efficacy for setting each country’s advantage at variance with its neighbours’ as the international gold standard.’

[The moral of the story? The gold standard structures the process of acquiring wealth into a zero-sum game, where one nation’s gain is another nation’s loss. To endorse the gold standard, therefore, is to endorse imperialism, returning to merchantilism. I find it odd that these implications of the gold standard are not talked about (i.e. denounced) by the mainstream, despite the unanimity among orthodox economists that the gold standard is an awful idea.]

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