Monthly Archives: February 2013
[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.
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).
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:
- 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.
- 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.
- 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.
- 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.
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.
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.
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.
- 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.