On “America’s Hidden Philosophy” by John McCumber

John McCumber recently posted an article in aeon about rational choice theory as “America’s Hidden Philosophy,” describing how it grew up in the Cold War and has created any number of perverse effects on American society. While I agree with some of his basic premises, I think that he misconstrues the significance of rational choice theory, and also misrepresents its genesis.

Quite reasonably, McCumber represents American pragmatism as a philosophical rival that rational choice theory and its ally logical positivism defeated in the American academy following World War II. Describing the crest of pragmatist influence, he writes:

…as the country emerged from the Second World War, things were different. John Dewey and other pragmatists were still central figures in US intellectual life, attempting to summon the better angels of American nature in the service, as one of Dewey’s most influential titles had it, of ‘democracy and education’. In this they were continuing one of US philosophy’s oldest traditions, that of educating students and the general public to appreciate their place in a larger order of values. But they had reconceived the nature of that order: where previous generations of US philosophers had understood it as divinely ordained, the pragmatists had come to see it as a social order.

All this is true. Dewey was widely respected, even if his leftism rendered him suspect in the eyes of many, and he was certainly committed to a philosophy of education and democratic social purpose. It is also the case that American pragmatism was the path by which American academia escaped its intimate ties to religion. Dewey was a trained Hegelian in his younger years, when Hegel was the philosopher used by many academics (particularly in the UK and the US) to secularize their disciplines while maintaining the basic value orientation that they had when tied to Christianity. Taking up the causes of Darwinism and socialism, Dewey continued this move away from religion while continuing a focus on the good society. As McCumber notes: “This attracted suspicion from conservative religious groups, who kept sharp eyes on philosophy departments on the grounds that they were the only place in the universities where atheism might be taught…” Dewey and the pragmatists’ battle with the Neo-Thomists had to do with this conflict, and it was part of the reason why Dewey had to leave the University of Chicago to teach in New York.

The next issue McCumber raises is that of the battle over Communism in the American academy. He writes that in the face of the rise of Marxism’s popularity first during the Great Depression, and then in the Global South an as anti-colonial ideology, the conservative American establishment believed that: “A new philosophy was needed, one that provided what the nuanced approaches of pragmatism could not: an uncompromising vindication of free markets and contested elections.” There is a good deal of truth to this. The threat of Marxism as a coherent oppositional worldview was acutely felt at this time. Looking back on the period, Walt Rostow, the father of the American answer to the Marxist theory of history wrote: “I decided as an undergraduate I would work on two problems. One was economic history and the other was Karl Marx. Marx raised some interesting questions but gave some bloody bad answers. I would do an answer one day to Marx’s theory of history.” The Cold War response to Communism in every area of intellectual life was a real trend at this time, and it did extend to philosophy.

McCumber argues that the philosophical response to Marxism was pioneered by Raymond Allen in his efforts to freeze out the hiring of Marxists into Californian universities as part of the McCarthyist political purges. He claims that Allen advanced a philosophical claim that the arguments of Marxist intellectuals were not censored when they were blacklisted because they had lost their reason and were merely parroting the line of Moscow. In having lost their reason these intellectuals were deemed unfit to teach philosophy, whose business was, after all, reasoning. They were in this sense “incompetent.” This contribution to Cold War “anti-totalitarian” ideology was, according to McCumber, given a philosophical foundation by identification with the “scientific” concerns of logical positivism:

Like the logical positivists of his day, Allen identified reason with science, which he defined in terms of a narrow version of the ‘scientific method’, according to which it consists in formulating and testing hypotheses. This applied, he claimed in a 1953 interview with The Daily Bruin, even in ‘the realm of the moral and spiritual life’: Buddha under the banyan tree, Moses on Sinai, and Jesus in the desert were all, it appears, formulating hypotheses and designing experiments to test them.

This obsession with scientific objectivity dovetailed with the desire of senior academics to avoid political conflict, and pass the responsibility for intellectual purges over to government officials. Thus was born the California Plan, that involved the cooperation of Californian universities with the state senate’s committee on un-American activities to bar “unscientific” researchers from teaching positions. This extended not only to Communists and other Marxists, but also to pragmatists, existentialists, and phenomenologists, and was emulated in other states to varying degrees.

The intellectual side of this reactionary movement was found in Rational Choice Theory:

It holds that people make (or should make) choices rationally by ranking the alternatives presented to them with regard to the mathematical properties of transitivity and completeness. They then choose the alternative that maximises their utility, advancing their relevant goals at minimal cost. Each individual is solely responsible for her preferences and goals, so rational choice theory takes a strongly individualistic view of human life. The ‘iron laws of history’ have no place here, and large-scale historical forces, such as social classes and revolutions, do not really exist except as shorthand for lots of people making up their minds. To patriotic US intellectuals, rational choice theory thus held great promise as a weapon in the Cold War of ideas.

From its origins in “empirical contexts of market choice and voting behaviour” RCT was elevated into an all-encompassing ideology through its identification with scientific method:

Facts always underdetermine theories, and this requires scientists to choose from an array of alternative theories, under a preference for highest probability. Science thus becomes a series of rational choices. Which meant that by 1951 there was a unified intellectual response to the two pressures: appeals to science fought the domestic subversives, and when science was integrated with rational choice theory it entered the global conflict.

My qualms with this account do not so much have to do with the particulars it does state, as what it leaves out and to what ends the argument is turned. McCumber claims that the failings of the SAT, the prevalence of “Greed is Good” thinking, the dominance of science, law, business, and medicine over the humanities in the university, and the ethical bankruptcy of American politics can all be traced to RCT. While RCT is certainly implicated in all areas of American intellectual life, and taught to everyone from lawyers, to economists, to biologists, to psychologists, McCumber’s claim that the problems he lists have to do with an abandonment of identity and a loss of “wider horizons of value” ring hollow to me. There are two main points where I think that McCumber’s analysis goes wide of the mark. First, it claims that:

…Cold War philosophy has some obvious problems. Its ‘ethics’, for example, is not a traditional philosophical ethics at all. From Plato to the pragmatists, philosophical ethics has concerned the integration of the individual into a wider moral universe, whether divine (as in Platonic ethics) or social (as in the pragmatists). This is explicitly rejected by Cold War philosophy’s individualism and moral neutrality as regards to ends. Where Adam Smith had all sorts of arguments as to why greed was socially beneficial, Cold War ethics dispenses with them in favour of Gordon Gekko’s simple ‘Greed is good.’

As a one-time scholar of economics, this argument is utterly laughable. As I have discussed in other posts, the absolute bedrock of neoclassical economics (The postwar bedfellow of RCT) is an argument “as to why greed [is] socially beneficial” and the defense of capitalism on the basis of this argument for social welfare is the entire raison d’être of the economics profession in its contemporary form. In a sometimes discreet, sometimes blatant way, the arguments of Rational Choice Theory are tied to into a broader value structure, and the opportunistic deployment of its “objectivity” is used precisely to defend this value structure of class supremacy, white supremacy, male supremacy, and any number of other reactionary bigotries. We do not live in an age that has been deprived of values, nor should we assume that having a “wider horizon of value” is necessarily laudable!

Second, McCumber attempts to maintain a distinction where pragmatism exists on the side of the humanities, while logical positivism exists on the side of science. This is certainly how things shook out in the aftermath of the McCarthyist purges and concurrent institutionalization of science as a part of the military-industrial complex, but to appeal to Dewey as a champion of good old fashioned humanism is a fool’s errand. This is the same Dewey who wrote in his Theory of Valuation:

The breach will disappear, the gap be filled, and science be manifest as an operating unity in fact and not merely in idea when the conclusions of impersonal non-humanistic science are employed in guiding the course of distinctively human behavior…In this integration not only is science itself a value…it is the supreme means of the valid determination of all valuations in all aspects of human and social life.

In fact, Dewey wrote the Theory of Valuation for the International Encyclopedia of Unified Science, a publication edited by the logical positivists Otto Neurath and Rudolph Carnap. To emphasize the point, let me underline the fact that Dewey wrote his definitive statement on valuation itself in a science publication arguing that “science…is the supreme means of the valid determination of all valuations in all aspects of human and social life”!

Certainly, there are documented disagreements between Neurath and Dewey about whether the use of the term value is overly “metaphysical,” but it nevertheless remains the case that a leading logical positivist happily published Dewey’s essay and that both were very much in agreement that the maintenance of a separate preserve of values apart from science was an outmoded way of thinking. The pragmatists and the logical positivists made common cause in the years leading up to and during World War II because they had common enemies in the fascists, and conservatives represented by Neo-Thomism. The pro-science rhetoric and methods of logical positivism developed in the charged political atmosphere of Interwar Vienna, where it was used to combat the rhetoric of the various fascisms that were on the ascendancy at that time. At the time it was not “apolitical,” but like American pragmatism was associated with the socialist cause. McCumber notes the association of pragmatism with science at one point in his article:

Many pragmatists did not even believe that there was a single scientific method: true to their name, they believed that scientific enquiry should be free to apply whatever procedures worked. Moreover, whether a method ‘worked’ or not in a given case should be a matter of its social benefit, a dangerously collectivist standard in those difficult days.

But fails to note that this was also the position of at least some of the logical positivists at the time. This commonality is an inconvenient truth that has been largely forgotten in the bitter aftermath of the McCarthy era.

Like McCumber states, logical positivism did become associated with both the American establishment and, in the form of analytic philosophy, with Rational Choice Theory. It also was the decisive winner in the war over philosophy departments in the United States during the Cold War and it did displace pragmatism, which was pushed to ally with other peripheral schools like phenomenology, existentialism, Hegelianism, and neo-Aristotelian virtue ethics. However the present moment of heightened political tensions, establishment destabilization, rising fascism, environmental crisis, and alienation of at least portions of the scientific profession from power raise the possibility of revisiting earlier pragmatist formulations that were not about reviving “wider horizons of value” in contradistinction to a “disidentifying” and valueless science¸ so much as they were about advancing a value-laden science in opposition to bigoted and reactionary identitarian movements. This was the cause that brought Dewey in contact with Marxists like Trotsky, and it should not be forgotten in times like these.

Demonstration of “Crisis Theory” by David Cribb

Crisis Theory is a new educational indie video game by the developer David Cribb. In Cribb’s words:

In Crisis Theory you play as the spirit of capitalism, as described by the Marxist model of accumulation. Your singular goal is profit. But beware, contradictions abound, and you will have to use every tool at your disposal to avoid falling into crisis!

Earlier this month I recorded a demonstration “Let’s Play” video of the game, and explained some of the concepts that it tries to teach the player. For those new to the ideas of Marxist political economy this video may serve as a useful introduction.

The video can be found here.

Anwar Shaikh’s Capitalism – Notes on Part I, Chapter 4

I recently became aware that Shaikh has provided a lecture series on his book, which you can view on Youtube. Readers of this blog should be sure to watch these lectures to get a better understanding of Capitalism.

I. Introduction

In this chapter Shaikh turns his attention to the characteristics of production, a topic of great importance to classical political economy (and of course to Marx) but one that is largely glossed over in today’s economics, for reasons we will shortly understand. Shaikh starts his chapter with a pithy statement that echoes Marx:

“Underneath the glimmering surface of exchange lie the subterranean tunnels in which is conducted the eternal struggle within production to determine how long and hard labor can be made to work” (120).

Compare this with Marx’s famous transition from the discussion of exchange to production in Capital, Volume I:

This sphere [of exchange] that we are deserting, within whose boundaries the sale and purchase of labour-power goes on, is in fact a very Eden of the innate rights of man. There alone rule Freedom, Equality, Property and Bentham. Freedom, because both buyer and seller of a commodity, say of labour-power, are constrained only by their own free will. They contract as free agents, and the agreement they come to, is but the form in which they give legal expression to their common will. Equality, because each enters into relation with the other, as with a simple owner of commodities, and they exchange equivalent for equivalent. Property, because each disposes only of what is his own. And Bentham, because each looks only to himself. The only force that brings them together and puts them in relation with each other, is the selfishness, the gain and the private interests of each. Each looks to himself only, and no one troubles himself about the rest, and just because they do so, do they all, in accordance with the pre-established harmony of things, or under the auspices of an all-shrewd providence, work together to their mutual advantage, for the common weal and in the interest of all.

On leaving this sphere of simple circulation or of exchange of commodities, which furnishes the “Free-trader Vulgaris” with his views and ideas, and with the standard by which he judges a society based on capital and wages, we think we can perceive a change in the physiognomy of our dramatis personae. He, who before was the money-owner, now strides in front as capitalist; the possessor of labour-power follows as his labourer. The one with an air of importance, smirking, intent on business; the other, timid and holding back, like one who is bringing his own hide to market and has nothing to expect but — a hiding.

It is in production that the “money-owner” becomes a proper “capitalist,” and we will see that neoclassical economics strives mightily to obscure the human, social relations that this shift implies.

II. Microeconomic Production Process

Shaikh begins this section by stressing two points. First, that “labor is the active agent that operates on materials with the aid of tools to produce output at some later time,” (122) which is contrasted with the “…passive and timeless inputs-into-outputs methodology of most other economic traditions” (120). This point is expanded in considerable detail later in the chapter, where it is shown to have deep and far-reaching implications. Second, Shaikh invokes the classical notion of production vs. non-production labor, a contentious point that Shaikh has some interesting arguments about, but which will be discussed later.

1. Circulating versus fixed investment

This section begins with definitions of the two key terms:

1. Circulating investment: Expenditures on additional materials and labor to increase production (Made prior to the start of production)
2. Fixed investment: Expenditures on additional plant and equipment to increase capacity (Also made prior to its employment)

Total investment is made up of these two components. Circulating investment creates new demand, but it also creates new supply at the point of its employment. Fixed investment on the other hand, creates demand but only creates the capacity for new supply. Shaikh argues that both forms of investment are made in order to adjust supply to changes in demand (again, this is not about establishing a static equilibrium, but rather chasing profitability). This linkage to supply is what distinguishes Shaikh’s approach from the Keynesians who treat total investment as exogenous in the long run.

Shaikh then gives a very brief survey of the approaches of other schools to production time:

• Neoclassical: “…labor and capital appear as coequal ‘inputs’ into the production process, from which output emanates instantly and optimally” (123).
• Input-Output: Focuses on the ratios of inputs to outputs but ignores labor and production time.
• Neo-Ricardian: Labor is valued as a determinant of prices but production time is largely ignored.
• Keynesian: Production responds instantaneously to changes in demand.

Here Shaikh recalls Marx’s observations on the importance of imbalances and interruptions in reproduction. Time becomes meaningful when we account for the possibility of a materials shipment being late, or workers striking during a peak period of production, or financing for a factory falling through, or the gradual appearance of a glut in supply, or the wearing down of equipment as it ages. “Then suddenly the time of production and buffers such as the stocks of inventories and money become crucial to the dynamics of the actual path” (123). Readers of Capital: Volume II will recall that the middle section of that book is deeply interested in these sorts of discontinuities in reproduction.

2. Classical and conventional national accounts

Shaikh begins this section by complaining that standard national accounts begin from the premise that “the creation of utility is the end of all economic activity” (123). This means that they focus on net product instead of total product because it offers an account of the consumption goods that directly provide utility and the investment goods that can provide it in the future. The interest of this sort of theory is tracking value added, and so it does not include intermediate goods in its accounts. Shaikh objects to this focus on utility because utility is a historically variable concept, and because tracking total product can provide a better account of the movement of profits, which are of great importance in understanding the capitalist system. In contrast the classical and input-output approaches focus on accounts of the total product.

This total product is accounted for on the value side as intermediate inputs + value added, and on the use side as intermediate inputs + final product. In other words, the “whole product.” Shaikh justifies this approach as “…important for analysis of the inter-industrial sector, long-run prices, technical change, and the overall relation between production and money flows” (123). The difference between classical and input-output approaches, as stated above, is the issue of production time.

Shaikh proceeds to show how the fact that production started in one year may carry into the next, and how the classical focus on finished production as opposed to the Input-Output approach’s focus on “the sum of finished product and changes in inventories of materials and work-in-progress” (125) leads to drastically different measures of annual national production.

Finally Shaikh emphasizes that the emphasis on time in the classical model leads to differing accounts of circulating capital, which is not tracked directly in conventional accounts, and this leads to an obscuring of the differing roles of circulating and fixed capital. As stated above, investment in circulating capital is associated with increases in output, while investment in fixed capital is associated with increases in capacity. Understandably, in a timeless system this is a distinction without a difference, but in a world with time it is of considerable importance in understanding the dynamics of the capitalist system: “Precisely because production takes time, any change in the level of of production requires a prior change in the materials and labor devoted to it.” (127)

3. Production and non-production labor

Here Shaikh turns to the controversial question of productive and non-productive labor. He clearly states the difference:

All labor draws its consumption requirements from present or past production. But only production labor simultaneously adds to the total product. (128)

So what kind of labor doesn’t add to the total product? It is the sort of labor that “…result[s] in other socially mandated outcomes such as the distribution of goods, services, and money (either directly or indirectly when mediated by exchange), general administrative activities in both the private and public sectors, and various other social activities such as police, fire, military, and private guard labor” (128). So non-productive activities are these sorts of labor, plus personal consumption. This is a fraught issue. For example, Shaikh argues that distribution is unproductive, but in Capital: Volume II Marx argues that it is productive. Shaikh argues (with Marx) that the production of services is productive, but admits that Smith argued that it is not. However, Shaikh does make a good point against the argument of neoclassicals that an activity is productive if “…at least someone would be willing to pay for it” (129) and therefore that the classical theory is needlessly restrictive. He writes:

…from a classical point of view, this change is really a retreat from [the classical] ‘comprehensive consumption’ approach (which treat many activities as forms of social consumption, not production) to the ‘restricted consumption’ definitions of the neoclassicals (which restricts the definition of consumption to personal consumption alone) (129).

Shaikh leaves it to the reader to puzzle out what this means, but we can say that the difficulty that neoclassical theory runs into is in trying to characterize all (non-personal consumption) activity as production for sale on the market, whereas the difficulty classical theory runs into is in trying to characterize certain types of activities as forms of consumption alone and not production. While this point is still abstract, one obvious example of the controversy that the neoclassical approach can run into is its characterization of financial speculation and soldiering as economically productive. Furthermore, its attempt to define everything as a market activity has had pernicious social effects in the neoliberal period, where all non-market consumption oriented institutions like the British NHS were attacked as not fitting the neoclassical model of rationality and therefore in need of “market reform.”

On the other hand the classical approach is no less controversial. Shaikh does not mention it anywhere here, but the characterization of child-rearing and other “women’s work” as unproductive was enshrined in the institution of the Postwar male “bread-winner” who had to “support his family.” Clearly this was not the result of any dominance of classical economics, because neoclassical Keynesianism was the dominant school of thought at the time, but this division of labor into productive and unproductive forms can be used in gendered and harmful ways. Another controversy it can provoke is in its characterization of the work of the state bureaucracy as unproductive. In an age when public sector unions remain a last bastion of the labor movement, the argument that “productive labor” possesses any kind of strategic primacy is understandably unwelcome. Much of the controversy over the work of Nicos Poulantzas hinges on this issue. In the end, Shaikh states that the division between productive and unproductive labor is not the main concern of this book and moves on.

III. Production Relations Versus Production Functions

1. Structural and temporal dimensions of production

In this section we start to see the substance of Shaikh’s critique of neoclassical production theory. To begin with, Shaikh defines the “dimensions of production.” Structurally, the dimensions are:

• Tools – plant, equipment
• Materials – raw, auxillary (e.g. electricity, fuel, etc.)
• Labor

Temporally, the dimensions are:

• Production time
• The overall circuit of capital (production time + time to sale)

These dimensions are fairly self-explanatory, so I will not spend much time explaining them. Again, the structure given here follows Capital: Volume II fairly closely, and it is quite interesting that Volume II, which is typically associated with distribution, has so much overlap with the concerns of this chapter on production. That being said, it will not be long before we arrive at concerns of production that should be familiar to readers of Volume I, the volume of Capital most closely associated with production.

Shaikh introduces two more “dimensions” to his model. The first is “the arrangement of shifts,” which refers to how many machines in a plant are used in a day (extensive plant utilization), how long each machine is operated (extensive machine utilization), and at what speed the machine is operated (intensive machine utilization). If we select the maximum of each of these mechanical dimensions we get an “engineering” maximum determined by mechanical limitations. However, these machines usually need to be operated by workers, working on shifts. Shaikh gives the example of a machine that can be operated at maximum speed for 20 hours a day. This machine could be worked by one-crew on a 20 hour shift, two crews on two 10 hour shifts, and so on. This may seem to be an irrelevant distinction, because in any case the machine is worked for all 20 hours, but in fact this arrangement of shifts is deeply significant for production.

The reason for its significance starts to become clear as we come to the next dimension. If we do not assume that the machine is worked at maximum intensity for the maximum length of time, but instead that the length and intensity of its employment is limited by “the relation between the productivity of labor and the length and intensity of the working day” (131). Here Shaikh cites Marx and Braverman’s famous studies of this subject, and notes that “[b]oth of these aspects of the labor process have always been a matter of great contention between employers and employees…and have an important theoretical place in analyses of the labor process” (131). However this somewhat understates the point that he will eventually make, which is that the social relation between capital and labor is the single most important factor in the consideration of production, and that mainstream theory deliberately represses the significance of this relation at the conceptual level. This “conceptual violence” has a long and dark history, and I will return to discussing it as we continue.

2. Social and historical determinants of the length and intensity of the working day

This section is mostly made up of a collection of historical data about the working day, but it begins with a theoretical point. Shaikh argues that the struggle between capital and labor over the length and intensity of the working day is a struggle between “…the power of capital, embodied in and expressed through the machine…” and “…the resistance of workers through rebellion and sabotage…” (132). By looking at the history of the “…length, intensity, and average or marginal productivity of labor…” we can see that these elements of struggle are not technologically determined. The basic point that Shaikh makes here is that the extent of the exploitation of labor has increased and decreased over time and place despite secular improvements in technology. What this implies is that the terrible exploitation of labor in the Global South is not some kind of objectively determined condition, but is open to a “…constantly changing range of alternatives” (134). However I have to say that this section seems underdeveloped. If the machine is the counterpoint of worker resistence, then why does such terrible exploitation happen in workplaces that are relatively primitive in their degree of mechanization? It could be objected that these outcomes are “…not technologically determined,” but in that case, how is the machine the counterpart of worker struggle? The relation is not made clear.

3. Empirical evidence on the relations between work conditions and labor productivity

This section introduces a point of crucial importance for the following analysis: the “exhaustion point” (134).

…on the whole, we may say that labor productivity rises with the length and intensity of the working day, but at a decreasing rate, and after some point of overextension, it may even decline. (134)

Notably, this pattern differs from the patterns of other production coefficients.

There are coefficients that decline continuously as output rises:

• The stock/flow coefficient
• The machine coefficient (machine/output ratio)
• The machine/labor ratio
• The machine labor hour ratio

And there are coefficients that are constant with increasing output:

• The ratio of machine hours to labor hours (“machine services,” “labor services”)
• The materials coefficient (although it may vary with increasing lighting or heating costs on some shifts)

But there is only one coefficient that displays the distinct pattern discussed above: the labor coefficient.

…the labor coefficient (the reciprocal of productivity) declines with the length and intensity of the working day. For any given level of intensity, the labor coefficient falls at a slowing rate as the length of the working day (and hence output) increases, yielding a curve that tends to flatten out at the end of a given shift. (135)

In other words, only labor has an “exhaustion point” that inflects its productivity pattern. This particularity has a decisive influence on the structure of productivity patterns.

IV. Production at the level of a firm

1. Work conditions and “re-switching” along the microeconomic production possibilities frontier

To begin this section, Shaikh raises the issue of engineering capacity, and what output over the course of a working day would look like if there was a single daily shift. In other words, he is pointing out that after we determine engineering capacity we still have to take into account the effect of the varying productivity of labor on output in order to get a conception of what actual output is. As he will do elsewhere, Shaikh is here emphasizing the role of the worker as an “active subject” that should not be reified into an input that is effectively the same as a piece of machinery. His assumption is that “…the productivity of labor rises with hours worked, peaks at the point at which labor exhaustion sets in, and declines thereafter” (135). As an aside, I would note that while this pattern distinguishes the worker from a machine, it does not distinguish them from an animal (e.g. a workhorse). The “active subjectivity” of the worker is only partially expressed here, and is more fully expressed in the worker’s ability to determine the length and intensity of the working day through their struggle with capital. The workhorse can complain of overwork and make some forms of protest, but it is not able to establish concrete limits out of a wide and largely arbitrary set of options. In doing so, workers are able to exercise and establish their power as subjects.

Shaikh illustrates the wide variety of possible work intensities with curves depicting maximum physical intensity of work, socially normal intensity, work-to-rule (Working according to the letter of all rules and directives, causing production disruption while being able to claim otherwise), and a full work slowdown. These are shown for the purposes of illustration only.

After going through some of the points about the characteristics of coefficients discussed above in more detail, Shaikh next turns to the “reswitching” problem mentioned in the section title. Neoclassical production theory seeks to define a “production function” that “…gives the maximum amount of output associated with a given amount of inputs” given a certain production technology (137). As mentioned in the discussion of Aggregate Production Function (APF) in the previous chapter, this function must be “monotonic in each input” (138). Therefore “output [must rise] at a declining rate which approaches zero but never becomes negative” (138) and production can exhibit “diminishing returns” but cannot actually decrease. Why? Because if it decreases there exists an alternate combination of shifts that will have a higher output at the point of its decrease but themselves also be sub-optimal at some point (“switching”). Shaikh illustrates this point in Figure 4.5 on page 139. The only type of shift combination (function) that does not have this problem is a combination of two shifts of equal length. However this type of combination does not occupy the maximum at every given length of time and is in any case totally unrealistic as a standard that could exist in the real world or be used to optimize anything. If this micro-economic production function is so riddled with problems, it goes without saying that a “microfoundations” based APF is out of the question.

2. Output and production coefficent under socially determined work conditions

This section restates the point of the prior section in detail that some may find pedantic and others interesting. Assuming the pattern of changing labor productivity over the course of a shift that was discussed above, Shaikh tries every conceivable combination of coefficients that could produce the desired neoclassical production function and finds that the function simply cannot be produced. As he writes:

…we find that no matter how we choose to specify the inputs KR [real capital], L [labor], it is not possible to derive the hypothesized patterns of a neoclassical microeconomic production function…In the face of such results, the only recourse left to neoclassical theory is to simply postulate, against logic and empirical evidence, that any given machine can accommodate an infinite range of workers in exactly the prescribed fashion (147).

This “fairy tale” postulate “gives rise to the illusion that production coefficients are purely technical” (149) when in fact:

…production coefficients are generally not ‘technically’ determined. Technology itself is an eminently social artifact whose shape and character varies greatly across time and space. And even within any given technology, production coefficients generally depend on the specific social conditions under which labor functions. The so-called engineering side of business operations is profoundly social. Finally, even if labor conditions are taken into account, observed production coefficients would still generally depend on prices and costs (149).

The determination of production patterns by the varying characteristics of labor productivity is one social element, but the influence of prices and costs points to broader social connections that also confound the idea of technical determination.

V. Costs, Prices, and Profits

1. Assumed shapes of cost curves in neoclassical, neo-Ricardian, and post-Keynesian theories

In this section Shaikh goes over the three types of cost curves mentioned in the title. These cost curves are important because they determine the level of output that is profitable, and profit-seeking is essential to the survival of capitalist firms.

The first is the neoclassical cost curve, which includes (as mentioned early in the chapter) “normal profit” as a part of fixed costs. What this means is that it includes variable and fixed costs (as normally defined) + the average level of profit at equilibrium. The ideological implications of this definition were discussed above, but neoclassical cost can be seen as similar to the classical concept of “price of production” (cost-price + average profit), but with the additional baggage of the equilibrium concept and the assumption that “normal profit” is a given. Shaikh plots out both neoclassical cost, and the “true average cost” which subtracts the normal profit from fixed cost. Any sales at costs above normal neoclassical costs (including “normal profit”) are taken as evidence of “…’excess profit’ and imperfect competition” (152). To some extent this forms the basis for the Post-Keynesian perspective.

The Post-Keynesian theory of price focuses on the persistence of “monopoly prices” but Post-Keynesians differ in what they consider to be “monopoly prices.” Some use almost the same definition of what the neoclassicals call normal profit, others define monopoly profits as being in excess of normal profits, and some define anything above “prime costs” (Materials costs + Labor costs) as being monopoly profits. This is typical of the Post-Keynesian downplaying of the role of production, treating the margin above prime cost as arbitrary: “…if gross margins are taken to be stable, then oligopolistic prices are independent of demand, so that variations in demand are met by changes in output rather than changes in prices” (152). This is the opposite of Shaikh’s perspective that was mentioned at the beginning of the chapter.

Shaikh’s classical perspective, unlike the Post-Keynesian perspective, accounts for fixed costs, and assumes that firms that survive in the long run make a “normal profit” at competitive prices above the minimum point of average cost. Importantly this normal cost is a long-term normal cost and it is assumed to be won by firms that are profitable and survive competition. These firms are not entitled to their profits.

2. Cost curves under general conditions of the labor process

This section is mostly a mathematical restatement of points made earlier in the chapter.

3. Implications of general cost curves for various economic arguments

The first part of this section addresses neoclassical responses to the cost curves and production coefficients that Shaikh has derived in this chapter. Cost curves are not “U-shaped”, providing no chance for clear optimization. Production coefficients are not fixed, (remember our discussion of shift work) creating yet more problems for the idea of market optimization under equilibrium and the technical determination of production functions.

The first neoclassical response is to treat shifts as “technologies,” retaining the technical determinism of their approach. However “…this stretches things rather far, since the definition of a ‘technology’ now encompasses not only socially determined working conditions but also all potential combinations of wage payment schemes [hourly wages, daily wages, piece work, etc.] and shift lengths, intensities, and premia” (158). Simply stating that something is a technology does not make it so.

The second neoclassical response is to assume 1) That there are no shift premia 2) That labor coefficients are constant across shifts (that is, there is no exhaustion point, etc.) 3) That wages are paid per hour (preventing any step-wise cost structure). This is simply defining the problem out of existence in another direction. Even with these assumptions in place changes in work conditions would change the magnitude of production coefficients, and they only offer a theory of long term production coefficients because that is how the neoclassicals are able to argue that the firm reaches a point of production at minimum cost.

The Post-Keynesian approach uses a variant on the second response in its arguments “…in which material and labor coefficients as well as hourly wages are constant across all shifts…” (158). Oligopoly pricing is assumed to be a result of a markup above the resulting costs. Shaikh accuses the Post-Keynesians of ignoring the existence of reserve capacity in plant and equipment utilization because of their approach that downplays supply-side considerations, conflating it with “excess capacity” and using this as a basis for their arguments about oligopoly.

Shaikh next notes that discreet changes in micro (plant) level capacity utilization do not necessarily imply discreet shifts at the macro level. As he has strongly argued before, there is no need for “micro-foundations” in macro-economic analysis and emergent properties can lead to quite different macro patterns. Finally, Shaikh points out that neoclassical rule of profit maximization according to the use of price = marginal cost (p = mc) is useless because of the shape of cost curves we discussed earlier, which would give us multiple consistent production levels and therefore be of little help. Shaikh argues for the use of the direct as opposed to the marginal calculation of profit.

VI. Empirical Evidence on Cost Curves

Once again, I will leave the reader to examine the empirical evidence, as it is largely consistent with Shaikh’s work and so does not tell us anything particularly new.

Anwar Shaikh’s Capitalism – Notes on Part I, Chapter 3

I. Introduction

As the chapter title “Micro Foundations and Macro Patterns” suggests, this chapter is concerned with what the relationship between “micro processes and macro patterns” is in a capitalist economy. This is the first chapter where Shaikh begins to present in detail his criticisms of neoclassical economics, and as an autodidact I found a good deal of the chapter intimidating in its details. That being said, Shaikh’s main points are quite easy to grasp and I will present them below.

The obsession of neoclassical economics with “micro-foundations” based on their (hyper)rational choice and expectations model is the main object of Shaikh’s criticism here. We must ask if rational choice is a valid way of discussing individual behaviour, and what that implies for macro-economic patterns. The first question of the validity of rational choice is addressed in some detail in the concluding section of the chapter, but Shaikh’s main line of attack is on the argument that “micro-foundations” have a determining influence on macro-patterns.

The way in which he does this is to model a variety of preference models and show that any of them can be made to conform with widely acknowledeged macro-economic patterns. This implies that the assertion that rational choice is validated by macro-economic evidence is absolute nonsense, as is it performs no better or worse than even the so-called “whimsical agent” model where the consumer makes purchasing decisions at random within their budget constraint (In conforming with the observable macro-economic patterns).

The neoclassical approach is in fact revealed to be doubly bankrupt, as it begins with extremely implausible assertions about individual rationality, looks at macro-economic patterns, and then tries to reconcile its model of individual behavior with the macro patterns. What this rules out is an attempt to reconcile the model of individual behaviour with observed individual behaviour. Therefore neoclassical economics not only places macro-economic analysis in a “micro-foundations” straightjacket, it also impoverishes micro analysis by demanding that it exhibits a unity with the macro-economy that is assumed to hold but does not in fact. Why make all these absurd theoretical contortions?

The real function of the notion of a hyper-rational representative agent is that it serves the mission statement of neoclassical economics, which is to portray capitalism as efficient and optimal. (77)

While the neoclassical socialists of the interwar period, or the market socialists might question this assertion, I think that it does contain a good amount of truth. Neoclassical economics is in the first place a pretension to scientific knowledge of the economy that depicts it in such a formalized and idealized manner that it removes the practitioner from any discussion of messy questions like crises or the social surplus. I agree with Till Duppe that neoclassical economics in its postwar form was primarily an escape from politics into a Cold War institutional/professional legitimacy, not a direct apology for capitalism, but that its idealized and apolitical view of markets came to serve as useful fodder for neoliberal activists and that subsequently it was the political path of least resistance for neoclassical economists to either use their theory as an apology for capitalism or to mostly remain quiet about delicate political questions. As we will see, whatever we attribute their motivation to, the neoclassicals were certainly hostile to some of the primary assertions of Marxist economics.

One final point I want to mention about Shaikh’s introduction is his treatment of individual behaviour. We saw above that Shaikh views the micro and macro as conceptually distinct levels of analysis, and we will get into that in much greater detail below, but if it is true that the macro patterns are “robustly independent” of individual behaviour, then what role do individuals have other than as economic particles that gravitate towards a general pattern? Shaikh has an interesting comment here:

This does not mean that micro processes are unimportant. Micro factors come into their own in determining individual paths, can become decisive if people choose to act in concert to (say) produce a general work stoppage or consumer boycott, and are particularly important in evaluating the social implications of macro outcomes. All of this implies…that a correspondence with the aggregate empirical facts does not privilege any particular micro processes. (77)

As we saw in the case of the determination of the wage rate in the previous section, Shaikh’s theory exists against a backdrop of irregular behavior, and this eruption of individual behaviors (which normally emerge into a fairly regular macro pattern) is one such irregularity. While individual behaviour may have some regularities, they are not treated as the business of the economist. At the same time, while capitalism imposes regularity on individuals in the aggregate (whether or not it does on individuals in particular is left to the sociologists) it is vulnerable to revolutionary irruptions. This irruption of the unpredictable “event” or “singularity” is something that was discussed a great deal in the post-‘68 Marxian literature.

II – Micro Processes and Macro Patterns

1. Representing individual human behavior

Shaikh begins this section with a return to the topic of “hyper-rationality.” As he notes, evidence from “behavioral economics, anthropology, psychology, sociology, political science, neurobiology, business studies, and evolutionary theory” (78) all points to the fact that hyperationality is not a good descriptor of how people behave. Finally: “…as any advertiser could tell us, our preferences are easily manipulated, our responses quite predictable.”

The tendency in neoclassical economics is to admit that people are not in fact hyper-rational, but that this type of rationality can be used as an ideal standard with which to assess our real, “imperfect” rationality. Shaikh rejects this view: “It is a topsy-turvy world indeed when all that is real is deemed irrational” (79)

Weirdly, while this image of hyper-rationality as a perfect ideal beyond this world is a popular one in the neoclassical world, there is also a view of “hyper-rationality as a model of actual behavior” which “plays an instrumental role in the depiction of capitalism as the optimal social system, because (among other things) this portrayal requires that all individuals know exactly what they want and get exactly what they choose.” Why is the absurd claim justified?

1. Because “real economists” believe it! (The “Ptolemaic” argument from authority)
2. Because it is a “good approximation” of how people actually behave!
3. Because it’s a convenient way for getting “analytically tractable results!”
4. Because it “yields good empirical results!”

However as was mentioned above, getting empirical results does not imply that the theory in question is any better than other theories that also get the same empirical results. Furthermore the claim that neoclassical economics models what people want and how they get it is rendered dubious by the fact that “it is possible to define a person’s interests in such a way that no matter what he does he can be seen to be furthering his own interests.” The utilitarian solipcisms required by neoclassical definitions of self-interest are so extreme that any non-market interaction between individuals (such as caring about someone else) is defined as an “externality” (80). Clearly this is not a good approximation of how people behave.

Next we have the problem of the “transitivity” of preferences. This is another well known problem with the neoclassical preference model, which requires that the agent prefer x over z if they prefer x over y over z. Unfortunately, experimental evidence tells us that this is not how people think.

Another field in which very similar assumptions are dogmatically held is game theory, which has been declared to be “a framework within which one can realistically discuss what is or is not possible for a society.” Unfortunately the definition of player preferences in game theory requires “an infinite regress of entirely correct beliefs” in much the same way that is found in neoclassical economic theories.

In a similar vein, Shaikh attacks the Analytical Marxists for their “anti-dialectical and anti-holistic attempt to ground Marxist notions in neoclassical methodology” which “relies on rational choice theory, game theory, and associated neoclassical mathematical techniques to derive its conclusions” (82). The main problem here is that the Analytical Marxists follow the “micro-foundations” approach and therefore reject the existence of emergent properties, which Shaikh strongly advocates as a theoretical device.

Turning to the question of hyper-rationality as a norm of how people should behave as opposed to a description of how they do in fact behave, Shaikh argues that the dismissal of the social component to rationality in the hyper-rational norm does not make it ideal in any meaningful sense. The “social moron” is not much of an ideal to aspire to, except in one sense: “…it provides the foundation for the claim that the market is the ideal economic institution and capitalism the ideal social form. This is its immanent rationale.” (83) Again, the existence of market socialists and Analytical Marxists problematizes this accusation, but I do believe it contains a good deal of truth.

Using the normative argument, some groups like the World Trade Organization and the World Bank advocate programs of social engineering that will make people behave more like the “social morons” that neoclassical theory idealizes (That is as single-minded narcissistic utility optimizers) through the creation of “market friendly” institutions. However this argument relies on the belief in capitalist market optimality, and so does not have much theoretical or practicla merit. Faced with this problem, advocates of capitalism point to its real progressive role in developing the forces of production, but then have to face its history of “violence, inequality, and persistent state intervention” (84).

In the final instance, the advocates of neoclassical theory will defend it on the ground that abandoning hyper-rationality implies falling back on “a hodgepodge of ad-hoc hypotheses” (84) but as has been amply demonstrated, neoclassical theory is itself based on just such a hodgepodge! This is an interesting point, because it gets at the issue of economics’ “scientific” status. In addition to generally being supportive of capitalism, economists are also attached ot the idea of the scientific character of their work. I believe that this has to do with their institutional interest as a discipline and desire to maintain their social status. While acting as a slavish defender of the actions of the capitalist class certainly can reward an intellectual with a degree of wealth and social status (See for example the writings of Thomas Friedman) it cannot afford them the degree of social recognition among intellectuals and the institutional stability it implies. In order to achieve this stability, economists stake their claim to legitimacy on the scientific character of their arguments. This is just as true of Marx as it is of Walras or indeed of Shaikh. As we will see in the next section, Shaikh will explicitly attack neoclassical economics through a reference to scientific methodology, in an attempt to unseat the neoclassicals’ claim to science and social prestige it implies.

2. Representing aggregate behavior

In this section Shaikh details his objections to the neoclassical idea of a “representative agent” that acts as the bridge between micro and macro economics. He begins by noting that neoclassical macroeconomics rests on two assumptions. The first, that hyper-rationality is a useful way to model individual behaviour, has been addressed in the previous section. The second assumption is that “…aggregate outcomes can be treated as the behavior of a single ‘representative’ hyper-rational agent.” (84) Shaikh dismisses this idea as “simply false,” but proceeded to discuss the matter in considerable detail.

Shaikh’s primary argument is that “The behavior of a whole cannot be characterized by that of any of its constitutive elements because a whole is more than the sum of its part” and therefore aggregate behavior “…is generally insensitive to variations in the individual behaviors…Aggregation is robustly transformational“ (84). If this can be shown to be true, then “micro-foundations” will be simply unacceptable under any circumstances as a method for economic inquiry.

Drawing on physics, Shaikh now gives the example of the Ideal Gas Law. The Ideal Gas Law describes the relationship between a number of properties of gases, and was originally obtained empirically. With the advent of the view that gases are in fact made up of microscopic molecules lead to a reconceptualization of the Law. The result was to think of gases as made up of careening, colliding particles within some container. Describing each molecule’s motion would be next to impossible, yet the aggregate of molecule motion can be described statistically, arriving at the same results as the old empirical method. “The aggregate Gas Law now appears as an ‘emergent’ property of the shaped (i.e., contained) ensemble itself and cannot be reduced to, or deduced from, any single ‘representative’ particle.” (85) This is because the properties that are related in the Gas Law are related as a result of the interaction of the ensemble of particles with the container as a limit. Measuring any one particle would tell you nothing about the properties described by the Gas Law.

According to Shaikh, “[e]xactly the same conclusion applies to economic processes” (85); in the case of consumer theory, instead of a container acting as the “shaping structure” of a gas, the “…budget constraint defined by the level of an individual’s income” provides the constraint that defines the emergent consumption pattern. Studies into consumption patterns in models based on hyper-rational neoclassical agents with varying budget constraints have shown that the simple existence of a variation of income distribution among agents is enough to produce an “emergent” effect, where “the shape of the aggregate consumption function is generally completely different from that of individual functions.” In other words, every agent (even) in the neoclassical model must be exactly identical in order for “micro-foundations” to obtain, but in that case there is in fact only one agent and describing a one-agent model as “macroeconomic” is obviously absurd. Shaikh cites the economist Kirman, who writes that it is “illegitimate [to]…infer society’s preferences from those of the representative individual, and use these to make public policy choices.” Another support taken out of the neoclassical house of cards!

From consumer theory, we turn to production theory, which brings us to the question of the Aggregate Production Function and the so-called “Cambridge Capital Controversy”. In its particulars this is a very complicated topic, but I would first like to state what is at stake in the issue. One assertion that neoclassical economics makes is that the owners of each of the “factors of production” (basically: land, labor, and capital) receive exactly the value of their economic contribution in a competitive market. In this view, the Marxist assertion that workers are exploited through the extraction of surplus value is a priori wrong. Any existence of “exploitation” must be a result of imperfections in competition, not a constituent element of capitalist production as such. As you might imagine, this is a very politically charged issue because it provides a theory of “who gets what and why.” This tenant of neoclassical theory has been used, for example, to justify both the extremely high salaries (if we include “bonuses”) that are paid to high-ranking financiers and executives, and the extremely low salaries that are paid to oppressed groups (e.g. Wal-Mart employees, factory workers in the Global South, social workers) and has been used to justify the gender gap in salaries as well. This is the sense in which neoclassical economics can be called without any exaggeration “bourgeois economics.” In earlier times, the French liberal de Toqueville wrote that it was necessary:

to diffuse among the working classes … some of the most elementary and certain notions of political economy, which would make them understand, for example, what is constant and necessary in the economic laws that govern the wage rate. Because such laws, being in some sense of divine law, in that they derive from the nature of man and the very structure of society, are situated beyond the reach of revolutions.

We can see in the way that neoclassical theory was used to browbeat Thomas Piketty after the publication of his modestly critical (and largely in conformance with neoclassical theory) book, that de Toqueville’s sort of thinking still survives in the economics of our day.

So how can this neoclassical just-so story be justified? One way is with the Aggregate Production Function (APF). As Shaikh notes, Paul Douglas, its creator wrote that “the approximate coincidence of the estimated coefficients [of a Cobb-Douglas APF] with the actual shares received…strengthens the competitive theory of distribution and disproves the Marxian” (86). That is, of course, if the APF is in any way plausible, and this is what the Cambridge Capital Controversy and subsequent debates was all about.

Essentially the APF is intended as a model that describes how each of the “factors of production” receive back what they put into the production process through market distribution. If the APF were generally accepted, it would exclude the Marxist theory of exploitation. The difficulty that the APF encounters is in trying to specify what the “capital” factor of production is, and how it is employed. As the Wikipedia entry states:

…the rate of profit…is supposed to equal the marginal physical product of capital. (For simplicity, abbreviate “capital goods” as “capital.”) A second core proposition is that a change in the price of a factor of production will lead to a change in the use of that factor – an increase in the rate of profit (associated with falling wages) will lead to more of that factor being used in production. The law of diminishing marginal returns implies that greater use of this input will imply a lower marginal product, all else equal: since a firm is getting less from adding a unit of capital goods than is received from the previous one, the rate of profit must increase to encourage the employment of that extra unit, assuming profit maximization.

Piero Sraffa and Joan Robinson, whose work set off the Cambridge controversy, pointed out that there was an inherent measurement problem in applying this model of income distribution to capital. Capitalist income (total profit or property income) is defined as the rate of profit multiplied by the amount of capital, but the measurement of the “amount of capital” involves adding up quite incomparable physical objects – adding the number of trucks to the number of lasers, for example. That is, just as one cannot add heterogeneous “apples and oranges,” we cannot simply add up simple units of “capital.” As Robinson argued, there is no such thing as “leets,” an inherent element of each capital good that can be added up independent of the prices of those goods.

So while labour in theory can be reduced to the common unit of unskilled labour, “capital goods” cannot be reduced to a common unit of homogeneous “capital.” The neoclassical response was to argue that capital goods are rendered homogeneous in their money form. The problem then arises that the money value of capital is in part determined by the rate of profit, and the rate of profit is in turn affected by the employment of capital. Because the money value of capital is not independent from the rate of profit it cannot serve as a proper independent measure of the capital “factor of production.” We therefore have an “aggregation problem” in both physical and monetary terms.

The other major problem with the APF is the “reswitching problem.” Again, quoting Wikipedia:

Reswitching means that there is no simple (monotonic) relationship between the nature of the techniques of production used and the rate of profit. For example, we may see a situation in which a technique of production is cost-minimizing at low and high rates of profits, but another technique is cost-minimizing at intermediate rates.

Reswitching implies the possibility of capital reversing, an association between high interest rates (or rates of profit) and more capital-intensive techniques. Thus, reswitching implies the rejection of a simple (monotonic) non-increasing relationship between capital intensity and either the rate of profit, sometimes confusingly referred to as the rate of interest. As rates fall, for example, profit-seeking businesses can switch from using one set of techniques (A) to another (B) and then back to A. This problem arises for either a macroeconomic or a microeconomic production process and so goes beyond the aggregation problems discussed above.

As we saw above: “A second core proposition is that a change in the price of a factor of production will lead to a change in the use of that factor – an increase in the rate of profit (associated with falling wages) will lead to more of that factor being used in production. The law of diminishing marginal returns implies that greater use of this input will imply a lower marginal product, all else equal…” but because the relationship between the techniques of production and rate of profit is not “monotonic“ (As one goes up so does the other, without reversing direction) the stability of the whole system is undermined. The long and short of the issue then is that the APF does not provide a reasonable model that can grant legitimacy to the neoclassical story of distribution.

The only case in which neoclassical economics can provide a production function is when “all firms have the same capital-labor ratio and the same wage and profit rates.” (87) But in this case there is no “aggregate” production function at all because it is in fact a one-agent model. Just as with the neoclassical consumer theory, the neoclassical production theory is a “…trivial [case], because by construction there is effectively only one agent in each domain.” Therefore even if we accept the “hyper-rational” model, neoclassical economics cannot provide anything more than a trivial one-agent model that is completely static and utterly unrealistic.

3. Aggregate relations, micro foundations, and the question of rigor

In this section Shaikh attacks the methodolgical assumptions of the “micro-foundations” approach. To begin, Shaikh points out that “micro-foundations” is not an accepted standard of rigour in physics, the ur-reference for almost every school of economic thought. He offers the example of the Gas Law, which was accepted before it was derived from statistical thermodynamics, the laws of hydrodynamics, crystalization, and magnetism, which have never been derived from “micro-foundations,” and indeed the theory of General Relativity, which is accepted as rigorous despite not being derived from quantum mechanics.

Next, it is not clear that micro-scale theories are in any sense superior to macro-scale theories. Shaikh points out that a minority of physicists have persisted in attempting to abolish quantum mechanics in favour of a physical theory based on the “macro-level” general relativity. It is not as a matter of course assumed that the micro-level theory is superior to that of the macro level.

Shaikh then returns to the example of the Gas Law, pointing out that “it is perfectly possible to derive empirically supported macro patterns from micro foundations that are known to be false.” (88) The Gas Law is commonly said to be derived from a micro-theory of Newtonian collision of atoms “like billiard balls,” but we know that atoms are not anything like billiard balls, but instead “ethereal quantum-mechanical entities lacking the most central of all properties of an object – an identifiable position.” This derivation of a correct law from false premises is possible because “…the Gas Law is an emergent property which is ‘robustly insensitive to details’.” The interaction of micro entities give rise to the emergent stable properties of the Gas Law at the macro level. As we saw above in the case of consumer theory, macro level patterns can persist wildly different, and often absurd micro-level assumptions. To support his argument in the realm of economics, Shaikh points to Keynes’ argument in favour of “…the unimportance of the assumption of individual rationality for the derivation of economic patterns at the macro level” (89) and points to research by other economists that mirror his own previous demonstration in the realm of consumer theory.

Shaikh concludes the section by writing:

In each of these cases, economic shaping structures create limits and gradients that channel aggregate outcomes: the positive profit survival criterion in the case of the firm, individual economic characteristics in the case of income distribution, and the budget constraint in the case of individual consumer choice. Each of these gives rise to stable aggregate patterns which do not depend on the details of the underlying processes. And precisely because many roads can lead to any particular result, we cannot be content with considering a model valid simply because it yields some empirical pattern. Other facets of the model may yield conclusions which are empirically falsifiable, for which the model must be held responsible.

So the aggreement of a theory with some set of empirical facts is not enough to hold it up as a standard of rigour, broader considerations are necessary. In the face of broader considerations, neoclassical economics clearly does not pass muster.

III – Shaping Structures, Economic Gradients, and Aggregate Emergent Properties

Having thoroughly attacked the notion of the “representative agent” based on “micro-foundations,” Shaikh now attempts to describe what his method based on emergent properties will look like. As was described above, these emergent properities are given their particular characteristics in interaction with “shaping structures.” Here Shaikh returns to the question of consumer behaviour, (See Section II – 1) and investigates two shaping structures:

1. “A given level of income which restricts the choices that can be made…”
2. “A minimum level of consumption for necessary goods that introduces a crucial nonlinearity”

Shaikh argues that these two structures provide a basis for explaining the following empirically observable patterns:

1. “Downward sloping demand curves”
2. “Income elasticities of less than one for necessary goods and more than one for luxury goods”
3. “Aggregate consumption functions that are linear in real income in the short run and include wealth effects in the long run”

As in the discussion in Section II – 1, the discussion is supplemented by a simulation involving the following types of agents:

1. “A standard neoclassical model of identical hyper-rational consumers in which a representative agent obtains”
2. “A model of heterogeneous hyper-rational consumers in which a representative agent does not obtain”
3. “A model with diverse consumers in which each one acts whimsically by choosing randomly within the choices afforded by his or her income”
4. “A model…in which consumers learn from those around them (their social neighbourhood) and also develop new preferences (mutate) over time.”

While we might expect such widely varying models to yield widely different results, in fact “all of the models give rise to the very same aggregate patterns. The essential point is that the same macroscopic patterns can obtain from a great variety of individual behaviors” (90).

Sections III – 1..4

In these sections Shaikh outlines a simple mathematical model to demonstrate his ideas about consumption. In the first section he establishes a two good economy of luxuries and necessities, with a budget constraint that all individuals will have to consume within. In the second section he establishes that according to this constraint demand curves will be “downward sloping.” As the price of a good rises, the budget constraint will move “inwards,” restricting the quantity of the good consumed. In the third section Shaikh accounts for Engel’s Law: “…that people buy proportionately less of necessary goods, and hence proportionately more of other (luxury) goods as their income increases.” (92) Shaikh provides a number of assumptions within his model that could “derive” Engel’s Law, according to whether the minimum consumption of necessities varies with income, the slope between necesssity and luxuries varies, or neither varies. Finally he provides a formal definition of his consumption model, and notes that the results are “robustly insensitive” to models of individual behaviour because they are defined by the “shaping structures” of the budget constraint and minimum level of consumption.

5. Simulations: Insensitivity of aggregate relations to micro foundations

In this section Shaikh provides the details for his simulation of various agent behaviour types, with the introduction of various behaviours, both plausible and wildly implausible having little to no effect on the resulting consumption patterns, which remain determined by the shaping structures as he has claimed.

Section IV – Methodology for Economic Analysis

Shaikh begins this section by introducing the question of the importance of heterogeneity among individual agents. He notes that the heterogeneity of agents does “[invalidate] any notion of a representative agent” (101) but it is not sufficient to explain aggregate consumption behaviour. Shaikh explains the reason why heterogeneity invalidates the notion of the representative agent as follows:

Individual actions underlie market, industry, national, and regional macro patterns. But more aggregate sets have properties not possessed by the individual agents, which means that we cannot model the whole ‘as if’ it were merely one large individual. The representative agent is a convenient untruth.

So in the first place agents are not homogeneous, and modelling them as if they were would be illegitimate. However, beyond this point heterogeneous agents give rise to emergent aggregate patterns that diverge from the representative agent. Yet beyond the point of heterogeneity Shaikh adds that of “shaping structures” such as those that we saw in the previous section (e.g. The budget constraint) that give a form to the aggregation of heterogenious agents. Out of the selection of agents we saw in Section III, three of the agent types were heterogeneous, while only one was homogeneous, but under the influence of the shaping structures that Shaikh specified: “…all four simulation models yield the same demand and Engel curves and associated elasticities” (101). If heterogeneous and homogeneous agents yield the same patterns then the explanatory factor must lie elsewhere – namely in the shaping structures.

Shaikh then notes that even agents whose consumption patterns vary at the micro level converge at the macro level using the same relevant variables – in this sense the macro pattern is precisely emergent. He finally notes that while some “information” is destroyed in the transition from the micro to macro level (The assumptions of what it is that makes heterogeneous agents different, such as variation in income) what is really important is “…the existence of a theoretical connection between consumption and the particular variables that affect it, and some understanding of which of the latter count at the aggregate level” (102).

With this background in mind Shaikh goes on to “…specify five characteristics of rigorous aggregate analysis” (102).

1. “It should be rooted in some theory of the relevant factors at the micro level”
2. “It should allow for the fact that only a few of these factors may be relevant at the macro level”
3. “It should recognize that the aggregate functional form will be quite different form corresponding microscopic ones, whch implies that there is no such thing as a representative agent”
4. “Rigorous macroeconomists will also keep in mind that there will be many micro foundations consistent with any given aggregate pattern”
5. “…rigorous economic theory must always keep in mind that equilibration is a hypothesis whose existence, stability, speed, and manner of operation must be explicitly addressed”

So in simplified terms, we need to maintain an awareness of the distinction between micro and macro levels of analysis, the problematic relationship between the two, and we have to think about the real implications of economic dynamics over time. Shaikh concludes the chapter by pointing out how certain aspects of “old-fashioned” macroeconomics does satisfy his requirements for rigorous analysis, using the examples of Keynes, Kalecki, and Friedman.

Section V – Turbulent Gravitation

1. Equilibration as a turbulent process versus equilibrium as an achieved state

Here we return to the issue of dynamics that was brought up as point 5 in the previous section. The main distinction, which was also discussed in the previous chapter, is between the “classical” notion of equilibration as a turbulent process versus equilibrium as an achieved state, which is “the most prevalent notion of equilibrium in both orthodox and heterodox economics” (104). The classical notion is “gravitational” and recognizes than any “exact balance is a transient phenomenon because any given variable constantly overshoots and undershoots its gravitational center.”

2. Statics, dynamics, and growth cycles

Shaikh here is trying to explain how the growth rate can actually be dynamic, but the equations he is referring to are completely foreign to me and I was not able to follow his point.

3. Differences in the temporal dimensions of key economic variables

This section focuses on specifying the length of various economic cycles. The first cycle addressed is that of profit rate equalization between industries. This is a phenomenon that occurs over four to five years, and:

…is driven by the reaction of industrial investment to profitability. The higher the profit rate, the greater is the incentive for firms to accelerate the expansion of output and capacity…Industries with higher profit rates will experience growth acceleration until their output begins to grow faster than their demand, at which point their prices and profit rates will begin to decline. The opposite holds for industries with lower profit rates. Two things follow from this. Individual industry profit rates on nw investment will fluctuate around the corresponding overall average rate. This is the equalization of profit rates. But as the average profit rate on new investment itself fluctuates, so too will the overall growth rates of output and investment in the economy as a whole. (106)

Therefore the profit rates of individual industries are equalized around a moving average over time. There is no achieved state of rest at any point.

Shaikh next turns to business cycles:

1. Inventory cycles (3-5 years)
2. Equipment cycles (7-11 years)
3. Long waves (45-60 years)

The inventory cycle is related to the balanced between supply and demand, while the equipment cycle is related to the balance between capacity and actual output (That is, how much is that capacity used in production). Equipment purchases are made in anticipation of future sales, and inventories of raw materials and work in progress are needed to maintain continuous production. Then there are the inventories of finished goods needed for continuous supply for sale. There are normally divergences between expected/desired sales and inventories, and with these divergences come divergences between production capacity and the amount of production required to maintain inventories. The inventory cycle is the most responsive to supply and demand, and with a length of roughly three to five years, Shaikh takes it as a measure of the economic “short run.”

The equipment cycle is taken as representing “the time it takes for actual capacity utilization to cycle around the normal level” (108) and therefore as representing the economic “long run.”

Next we turn to other cycles. While the financial markets are largely trading in “futures” and other virtual entities, instead of labour intensive goods, they seem to follow long term bubbles. Shaikh unfortunately does not have any more to say about this subject here. Labour markets are “…complicated because of the special nature of labor power as a commodity,” a point that appeared earlier, but which we get more information this time. Because (except in some kind of slavery) humans aren’t generated in response to labour demand “the global supply of labor hours is not demand determined” (108). This is a very obvious point in countries like Japan, where the population is aging visibly before my own eyes despite capital’s protests that this will have dire implications for the Japanese economy! There are some ways that the “local effective supply of labor hours” can be increased however:

1. Changing workers from the inactive to the active labor force (e.g. Encouraging women to work outside of the home, hiring from the “reserve army of the unemployed”)
2. Changing workers’ geographical location through emigration
3. Changing the length and intensity of the working day through overtime or speed-up of the labour process

These offer capital “wide limits” in employing labour, but they are not infinitely wide, as the Japanese situation has demonstrated. We will see more about the labour market a long time from now in Chapter 14, but for now we will have to accept that “…the labour market is likely to be the slowest of all the aggregate markets” (109). Shaikh therefore arrives at the following adjustment speed schema:

• Short Run (3-5 Years): Commodity marukets, inventory cycle, profit rate equalization
• Long Run (7-11 Years): Capacity utilization, equipment cycle, labor market

This scheme varies from that commonly accepted in the literature, which is longer and has other determinants.

Section VI – Summary and Central Implications

As in the previous chapter, much of this section is summary, as I have provided in this post! My summary is of course more extensive, but Shaikh does add some new points in his own. There are two points that I think are worth mentioning. The first is Shaikh’s survey of popular approaches to human behaviour in economics. He lists four:

1. Behavioral theory
2. Evolutionary theory
3. Agent-based computational economics (ACE)
4. Stochastic approaches

Shaikh accuses behavioural economics of “[accomodating] some of the knowledge derived from [broader] behavioral within the framework of standard economic theory” (115). In other words behavioural economics cherry picks “disciplines such as psychology, sociology, anthropology, and neurobiology” for ideas that will not rock the boat.

Evolutionary economics is praised for noting “…that the whole can have characteristics that differ from those of individual elements” and that it has attacked the Spencerian notion of the “survival of the fittest” used to propagandize in favour of “the superiority of market outcomes” but is accused of not offering much of an alternative to the neoclassical paradigm and hewing far too close to it in the case of evolutionary game theory. In particular Shaikh accuses it of assuming that too many evolutionary processes are equivalent to calculation, when in fact they are something quite different.

ACE is attacked for being far too arbitrary and “ad-hoc,” (117) and so falling into the same sort of fallacies that we saw with the representative agent earlier in this chapter.

Unsurprisingly, the “econophysics” stochastic approach is the one that Shaikh approves of the most, as its emphasis on macro patterns and physical metaphors most closely resembles his own work found in this chapter.

One final point of interest is the divide that Shaikh highlights between consumers and businesses in “the classical approach”:

…capital is the dominant force and profit the veritable bottom line of capitalism itself. This leads them back to production, to the surplus product as the objective foundation of profit, and to competition as the means by which profit regulates exchange. It is important to note that profit is a potentially objective measure, subject to constrant scrutiny by the firm’s managers, by the stock market, by the banks, and by the public in general. Profit is the survival condition for firms. Individual firms are punish by extinction if they make persistent losses, and can be threatened even if they merely make lower profits than their competitors. Hence, the constant pressure to cut costs so as to improve their odds of survival. In turn, these individual imperatives give rise to a series of ordering mechanisms such as the tendency to equalize profit across industries. Competition is a war among firms, and it is this, the imposed rationality of warfare, which [is] their objective guiding principle. Individual consumers face no such objective winnowing process. They are, of course, subject to social influences which form the the ‘macro foundations’ of their microeconomic behavior. But within these confines they can operate out of habit, out of tradition, or even out of whimsy. Theirs is the domain of the social-subjective. Hence, in the classical approach, there is a great asymmetry between the treatment of businesses and that of consumers. (119)

This might seem like a great deal of common sense, but it is in stark distinction to the “Walrasian” (i.e. neoclassical) approach, which “insists the consumer and the firm be treated in a perfectly symmetrical manner.” (118) As we saw above, the neoclassical approach can only really deal with one agent at one point in time, and this homogenizing approach is evident in the consumer/business divide as well. Shaikh’s “classical” view does seem to capture more of how life as a consumer is actually lived, with a certain amount of freedom experienced by the consumer as to their choices (limited by their budget). The choices we make as consumers are not a matter of strict ranking and optimization, but they are still limited. However it should be emphasized that this freedom is one that is not only limited by how much of the social surplus we can spend as personal income, it is also limited by the fact that we are shut out of the world of production, finding ourselves embroiled in the “imposed rationality of warfare” that is characteristic of capitalist competition and unable to freely act in this sphere. Capitalist consumer freedom, based on “consumer choice” is therefore the free part of a economic split that runs right through us as individuals. This is part of the limitation that Marx recognized in the capitalist system, and demanded be overcome.

In the next chapter we will turn to a discussion of production.

Anwar Shaikh’s Capitalism – Notes on Part I, Chapter 2

In this chapter Shaikh takes empirical data on long-term patters of recurrence and turbulent growth as the point of departure for his study of capitalism. This distinguishes Capitalism from Marx’s Capital, in that it does not begin from an analysis of the commodity form, but rather from a “bird’s eye view” of the history of the capitalist system. Why would Shaikh choose this approach rather than that chosen by Marx? In the first place, it is obvious that in 2016 we have much better access to economic data than Marx did back in the 1860s. Economic history is now a formal discipline with various established institutions and regular funding, and is able to take advantage of the data-collection capabilities of large state and corporate bureaucracies which simply did not exist in Marx’s time. We also have the ability to look back on a longer and more diverse history of capitalism than Marx did. Because of the proliferation of various “varieties of capitalism” and “regimes of accumulation” across geographies and time there is more that needs to be explained.

We can also point to the fact that Marx modeled his introductory approach on that of Hegel’s Science of Logic. As the Stanford Encyclopedia of Philosophy notes: “…being is the thought determination with which the [Science of Logic] commences because it at first seems to be the most immediate, fundamental determination that characterises any possible thought content at all.” Comparing this to the opening of Capital‘s first chapter, we can see the obvious similiarity: “The wealth of those societies in which the capitalist mode of production prevails, presents itself as ‘an immense accumulation of commodities,’ its unit being a single commodity. Our investigation must therefore begin with the analysis of a commodity.” Both Hegel and Marx begin their analysis with what is “immediate” and therefore “appears” or “seems” to be “fundamental.” In the course of dialectical development, we see that what appears to be obvious and simple in fact contains the entire logical structure within itself.

Shaikh takes a rather different approach to his work. He provides a “list” of “long-run economic patterns in developed capitalist countries” that provide a “physiognomy of the system.” He does argue that “Concepts such as recurrence and turbulent regulation arise quite naturally from a scrutiny such as this” (56) but the approach is to argue his point by refering to a list of related examples rather than to focus on a single object and try to tease out its underlying structure by way of considering its contradictions. The advantage of this approach is of course to be able to lay claim to the title of “realism.” By showing that the evidence supports his arguments (and that it does not support the arguments of the neoclassicals) he gains a strong debating position. He is also able to immediately state what the large-scale questions he is concerned with are, unlike Marx who spills a great deal of ink before ever introducing something as fundamental as surplus value to his analysis. While Marx’s logical demonstration is impressive, it requires quite a bit of patience from the reader, to the point that many readers of Capital skip the first chapter altogether. Thankfully, Shaikh’s introduction is much more straightforward.

Section 1 – Turbulent Growth

Shaikh begins his analysis by looking at the history of industrial output and investment in the United States. He chooses the United States for his analysis because “it is the preeminent advanced capitalist country and because it generally has the best available data” (56). The United States demonstrates an “apparently inexorable tendency towards growth” (56) but its growth, whether measured through industrial output or investment is “turbulent” in that it has many ups and downs. Furthermore investment is more turbulent than industrial output in its growth. This is one point that Shaikh will seek to explain. He then turns to examining fluctuations in output: “booms and busts…overshooting and undershooting, in never ending sequence” (58). Upturns in output are associated positively with wars, and downturns with the end of wars. This is a point that was already familiar to Marx, but it is not the underlying cause of the “business cycle” of booms and busts. The most extreme busts are known as “Great Depressions,” and they occurred in the 1840s, 1870s, 1930s, and Shaikh argues, in the 1970s and after 2007 up until the present. He will attempt to explain why these depressions occur in the course of the book.

Section 2 – Productivity, Real Wages, and Real Unit Labor Costs

Next we turn to the history of productivity, wages, and labor costs. As mentioned above, this chapter is a list of topics, so these subjects do not follow logically or directly from the topic of the business cycle and depressions. They are still related, but one could imagine another order of analysis with which to proceed. The last section began with the fundamental fact of long-term capitalist growth, and this section begins with the fundamental cause of that growth – technological progress and productivity growth. As Shaikh argues “Productivity growth is essentially a measure of technical change” (60). Other factors can raise productivity a modest amount in the short term, such as intensifying work or lengthening the working day, but “both of these methods face practical and social limits.” (60) Marx discussed this matter in his analysis of absolute surplus value, but essentially it comes down to the limitations of time, the human body, and the dignity of the worker. At any rate, the long term growth of capitalist productivity is a fact, and generally speaking it has been associated with growth in real wages. However Shaikh notes that this association broke down “in the early 1980s, beginning with the Reagan-led assault on labor and compounded by foreign competition” (60) – these trends of what are commonly called “neoliberalism” and “globalization” initiated a decoupling of productivity and wage growth that is unprecedented in American history (and which forms the current social basis for both Sanders-lead socialism and Trump-lead fascism). This decoupling, Shaikh argues, shows that the relationship between productivity and real wages is mediated by “social and institutional mechanisms” (60). As Marx argued, the wage rate is determined in part by the state of the class struggle. Contrary to the arguments of the neoclassicals, the relationship between productivity real wages is not given, but is subject to “conjunctural” change. This is a thorny issue for any economist, because such turns in the class struggle are not regular or even “turbulently” regular, but are instead exceptional and therefore irregular. As I will note below, this presents significant difficulties for a discipline that wants to emulate the physical sciences.

Shaikh then argues that while “social and institutional mechanisms” can improve the labor’s wage share, “they do so within strict limits” (60). Why? Firms with higher than average total costs will lose out in competition, and labor costs form a very large share of total costs. Furthermore, “at the agggregate level, a rise in real unit labor costs lowers real profit margins.” (61) Looking at the history of real labor costs we see the following periods:

• 1889-1909 Falling
• 1909-1929 Stable
• 1929-1939 Rising
• 1947-1963 Stable
• 1963-Present Collapse

It may seem strange that real labor costs rose during the Great Depression, but this was because they remained somewhat stable against collapsing production levels and nominal prices. Shaikh’s real point here is that the “Golden Age” from ‘47 to ‘63 “led to the sense that wages automatically rise alongside productivty.” but the subsequent collapse has shown that this is an illusion and that “the relation between real wages and productivity has always been conflictual and that the balance of power between labor and capital can always shift” (61). Shaikh here seems slightly confused. This was the point he demonstrated in the previous section. The point that he had to demonstrate here was that there are “strict limits” on the rise in real labor costs. The real issue is not that the relations between labor and capital in dividing up the surplus are conflictual, but that the system tends to frustrate any long-term victories on the part of labor because of the limits on labor cost enforced by competition and the profit rate (As we will see, the profit rate is all-important in capitalism). However we do get some more discussion of this problem in the next section.

Section 3 – The Rate of Unemployment

The point discussed here is the relationship between Great Depressions and unemployment. Unsurprisingly, they are strongly associated with one another! However, Shaikh makes the argument that “economic policy and social structures” can significantly moderate these spikes in unemployment. He claims that the low unemployment in the Great Stagflation of the 1970s – 1980s relative to the Great Depressions of the late 19th century and the 1920s – 1930s demonstrates that this is the case. However he also argues that suppressing a depression will both extend its duration and weaken the subsequent recovery. Nevertheless, he argues that this is preferable to a laissez-faire approach because the costs to labor of suffering a sharp depression are greater than those to capital. This is because high unemployment weakens both the bargaining positions of individual laborers over wages and weakens the institutions that support the working class (presumably unions and so on). However, at least from the data presented in this chapter, this argument does not seem to hold. The “golden age” of labor came after the Great Depression, and the catastrophic collapse in wages relative to productivity came in and after the “moderated” Great Stagflation. It will be interesting to see what Shaikh’s detailed arguments are on this point. In any case, if we fill in the gaps, we can conclude that a low profit rate will lead to a depression, and that the depression will weaken the bargaining position of labor by means of unemployment. Therefore there are “strict limits” on the rise in real labor costs. This is the “profit-squeeze” interpretation of the 1973 crisis, which argues that labor’s rising share before the crisis triggered the conditions for stagflation and crisis. It has enormous political implications, as I will discuss at the end of this summary.

Section 4 – Prices, Inflation, and the Golden Wave

Shaikh begins here by noting that “…what we now call ‘inflation’ is a modern phenomenon” (63) as opposed to a natural one. If we look at historical prices indicies, we can see that “It is only in the postwar period that prices levels begin to display a new pattern, one in which they rose without end” (63). Before this, they “were characterized by successive waves of rising and falling prices.” Prior to the postwar period, prices rose and fell in “long waves” and the downswing in these waves were associated with downswing phases, but these falls are not apparent in the prices indicies after World War II.

However Shaikh suggests that we look beyond what is apparent in the price indicies. Why? Because we should not think of money only in terms of national currencies. Shaikh argues that there are three “layers” of money:

1. Credit money
2. National currency
3. Gold (Commodity money)

The most important of these three, what we might call the “fundamental layer,” is gold. Gold’s “…official or unofficial status rests on the health of global commodity circulation.” (63) While all three currency forms compete against each other and can devalue relative to one another, gold forms a “common international standard.” This is not to say that gold is always the most valuable of these three forms of money, but that it is the currency of last resort. For example, when the US Dollar’s stability was called into question by the 2007 crisis the price of gold shot up. When the US Dollar regained international supremacy the price of gold fell. The important point is that the “dollar standard” is not an absolute standard, but exists relative to other forms of money, and to global commodity circulation. With this in mind, Shaikh proposes that we look at price levels relative to the price of gold in the postwar period. It turns out that if we do so the long “Kondratieff waves” reappear, with a downturn coinciding with the Great Stagflation and another with our present crisis. The reason why this happens will be discussed later in the book.

Section 5 – The General Rate of Profit

Following up the discussion of long waves, Shaikh notes that “…waves in growth…[are] primarily driven by the rate of profits.” (65) This makes the rate of profit the fundamental determinant of the course of capitalist development, and so very important indeed! He writes: “The analysis of the general rate of profit will provide us with our point of entry into the macroeconomics of growth and cycles” (65). However, while the rate of profit may be just that important, we have to specify what we mean by it. This gets us into a very messy technical problem that goes back at least as far as Capital: Volume II. A common definition of the rate of profit is “the ratio of total net operating surplus to the total net stock of (fixed) capital” (65). This sounds reasonable enough, but the problem is that at a material level that fixed capital is not of uniform age, quality, and productivity:

So at any moment the capital stock encompasses capital ranging from that which was put into place (say) thirty years ago, to that which came on line only one year ago. Since there is no particular reason why a thirty-year-old plant should have the same profitability as a new one, the overall rate of profit represents the average of the rates of profit on the various vintages still in operation. In this sense, it is a useful guide to the health of capital as a whole. For the same reason, it would not be a useful guide to the future profitability of any investment under current consideration. (65).

So this rate of profit is not useless, but it is also quite misleading when thinking about investment, and investment is of course the leading edge of growth. If you want to know what economists spend their time arguing about, it is often finicky definitional issue like this one. Just visit any Marxist economics blog and you’ll find raging arguments about definitonal issues of this type. Putting that issue aside, we will go with Sheikh’s definition and see where it takes us. The important point about this section is that we do not want to use the “general rate of profit” in order to study investment patterns. Instead we need “some measure of the rate of return on recent investment” which will bring us closer to the decisions that investors make based on recent economic performance. While definitional issues like this one are tiresome and convoluted, they have an enormous effect on what sort of “empirical results” one gets out of research. Data is theory-laden, and the devil is in the details.

Section 6 – Turbulent Arbitrage

This section continues the discussion of the rate of profit. Shaikh begins by noting:

The profit rate is central to accumulation because profit is the very purpose of capitalist investment and the profit rate is the ultimate measure of its success (66).

In this argument Shaikh follows Marx. While capitalists are sometimes referred to popularly as “job creators,” job creation is very much incidental to what they are about. It would be better to refer to them as “profit pursuers” instead of job creators, as that is what they actually do. Their profit seeking investment is what gives capitalism its dynamic character. In seeking profit, capitalists invest in profitable sectors of the economy. Shaikh argues that this ultimately has an “equalizing” effect on the profit rate. This is one of those important concepts that came up in the introduction, and we get our first discussion of it here. So how does this work? The process is as follows:

1. Investment goes to profitable sectors
2. Investment raises production
3. Production increases supply, and therefore lowers prices and profits
4. Investment goes to more profitable sectors

And the process is repeated ad infinitum. This is “turbulent arbitrage” – “A roughly equalized profit rate is an emergent property: it is not desired by any, yet it is imposed on all” (66). Very importantly, this is NOT a form of equilibrium! Equilibrium is a foreign concept to the sort of economics that Shaikh is defining, and readers would be well advised to not get equalization and equilibrium confused! Shaikh’s inspiration is classical political economy, which as Phillip Mirowski noted in his excellent More Heat than Light is a substance theory, as opposed to neoclassical economics, which is a field theory. The fundamental metaphor is of a growing substance in motion, whereas the fundamental metaphor of neoclassical economics is of a field of forces in equilibrium and rest. For example, consider Shaikh’s statement:

…the movement is a never-ending one, with profit rates always overshooting and undershooting their ever-changing centers of gravity. There is never a state of equilibrium, but rather an average balance achieved only through perpetually offsetting errors. (67)

The “balance” that exists in this system is emergent because it is formed by the interaction of objects that are perpetually out of balance. In Hegelian terms, we might say here that “truth is error as such!” This is the concept of “order-in-and-through disorder” we saw in the introduction. Departing the discussion of physical metaphors, and getting back to profit, we see that “competition..produces a persistent distribution [of profit] around the average” and “…because this process is driven by the movement of new capital, the relevant profit rates are those on new investment. It is these profit rates…which we would expect to see equalized across sectors” (67). When we look at the movement of profit rates across sectors in these terms (of new investment) we see the following:

This is profit rate equalization in its true form: incremental rates that careen in rapid succession from one level to another, and even from positive to negative…(68)

Shaikh argues that this is characteristic of “real competition” where investment decisions are not made with reference to stable rates of profit. This “incremental rate of profit” is what is relevant in explaining the movement of stock and bond prices, and therefore interest rates. It also explains the structure of relative industrial prices, to which we now turn.

Section 7 – Relative Prices

This is a short section that discusses the composition of the prices of commodities. Shaikh argues that the prices of commodities are composed of two parts:

1. Vertically integrated labor cost
2. Vertically integrated ratio of profits to wages

These are “vertically integrated” in the sense that they are (to take labor costs as the example):

Sum of direct labor costs + Sum of labor cost of inputs + Sum of labor costs of inputs of inputs

The same structure holds for the ration of profits to wages. Essentially this is the ratio of “labor’s share” vs. “capital’s share” in the price of a commodity. This kind of argument was first made by Adam Smith, and then refined by David Ricardo. Ricardo reckoned that labor costs were 93% of prices on a long-term average, and this idea was ridiculed by the neoclassicals, but Shaikh argues based on his research that Ricardo was not too far off the mark, placing the figure at 87%. This preponderance of “labor’s share” will have important consequences down the line but they are not discussed here.

Section 8 – Convergence and Divergence on a World Scale

In this section Shaikh compares the economic development of different regions and countries between 1600-2000, based on the work of Maddison. What we find is that the capitalist era is associated with a growth in world inequality. While it is true that “…growth in living standards is a characteristic feature of successful capitalist development” (71) it is also true that “…in regions that are tangled in the coils of capitalism, such as Africa and Asia, we find stagnation and even decline for almost three centuries.” The relative rating of regions can change, as with the “western offshoots” (including the USA) overtaking Europe, or Asia surpassing Africa economically in the 20th century, but inequality remains the rule. If instead of looking at regions, we compare the four richest countries to the 4 poorest, we see a pattern of persistent and growing inequality. As Shaikh states:

…capitalist development is not just a matter of unequal gains but gains for some alongside extended periods of loss for others.

This is another important pattern that must be explained.

Section 9 – Summary and Conclusions

Surveying what he has discussed in the chapter, Shaikh writes:

The great debate of the times is about whether these deficiencies [declining share of wages relative to productivity and persistent world inequality] are to be remedied by channelling and curtailing capitalism, or by hastening its spread across the globe…The patterns shown in this chapter, and others yet to be elucidated, are deeply rooted in this system. Social and economic interventions have their say within the limits prescribed by these processes. The theoretical task is to show how they are linked. (74)

This brings us back to those “strict limits” we saw discussed above. The theoretical move that Shaikh is making is like that made by Marx. At first glance it may seem arguing that the contest between labor and capital, or between the “multitude” and the rulers is nothing but a naked power struggle subject to total contingency would be a better way of thinking than claiming that the system imposes “strict limits” on what labor can achieve. Why not shoot for the stars? Yet by taking the “scientific” stance that the system has regularities and “regulates” limits, it is possible to argue that only with a profound revolutionizing of the capitalist system is it possible to secure the wellbeing of the working class over the entire world. The more “conservative” position is simultaneously the more radical one. Whether the reader considers this point of view overly rigid or powerfully motivating is something to consider as we go through the rest of this long journey through the book.

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Anwar Shaikh’s Capitalism – Notes on Part I, Chapter 1

I will be writing up a (no doubt long) series of notes on Anwar Shaikh’s new book Capitalism: Competition, Conflict, Crises on this blog. The book was not easy to get ahold of in Japan, and so I am only starting my reading today. I hope to be able to present a paper on the book at this year’s Japan Society of Political Economy (JSPE) conference. In an age of highly specialized research, this is a book of unusual and enormous scope, and unlike Piketty’s Capital in the Twenty-First Century it truly does seem to be a worthy successor to Marx’s landmark work. My first impression of the book is that it is aimed squarely at an audience of academic economists, with the intention of having a long-term effect in the academic war of ideas, rather than being oriented to a popular audience of workers and activists. I will try to distill the main points of the book in this blog, but the scope of it is so encyclopedic that I’m worried it will be easy to get “lost in the weeds.” In this sense it seems to be similar to Capital’s volumes 2 and 3. There are points of general interest to be found, but it will take some work to get to them.

Of course, I will start at the beginning because this is my first contact with the text, but writing a summary of an introduction is always a challenge. The introduction to a book is typically written last, so without knowing the contents of the book it is hard to summarize what it is saying. That being said there are a few things I found worthy of comment.

Section 1 – The Approach of the Book

In the first section of the introduction, Shaikh lays out the general intent of his magnum opus. His design is to provide a distinct alternative to the neoclassical account of economic “order and disorder” (3). What is called the economy displays both patterns of regularity, such as “almost constant progress” according to various indicators, and “internal coherence” at the macro level. On the other hand, at the micro, or even at the “meso level” it displays a much more “haphazard” character. This is a world of confused and “entangled” factors: uneven development, class struggle, speculation, state intervention, and so on. Any general economic approach will attempt to account for “these two, equally real, aspects” (3). Shaikh’s intent is to provide a plausible account that is at odds with that given by neoclassical economics.

According to Shaikh, the approach of neoclassical economics is to focus on the patterns of regularity and ignore all the other chaotic aspects of economic reality: “The perceived order of the system is recast as the supreme optimality of the market, of the ever-perfect invisible hand. This optimality is in turn projected back onto microscopic units, so-called representative agents, from whose superlatively rational choices it is said to derive” (4). After this perfect order has been set as the norm, then “disorder” is introduced as a post-hoc attempt to capture some element of reality.

This leads to Shaikh’s more interesting criticism of the Post-Keynesian approach. He argues that the Post-Keynesians, while focusing on imperfections with the economic system, “being…from the same foundation” as the neoclassicals. He calls this “imperfectionism” – a view that accepts that there is some validity to the “perfectionist” base model that is adjusted with the introduction of imperfections to various degrees. In this view Post-Keynesianism is a kind of system of imperfections that cannot provide any fundamental criticism of neoclassical economics.

This brings us of course to Shaikh’s own approach, which does not accept the neoclassical perfectionist approach at all, but instead “develop[s] a theoretical structure that is appropriate from the very start to the actual operation of existing developed capitalist countries” (5). How does he propose to do this? Well he gestures at a lot at theoretical principles, such as a “hierarchical,” yet “multidimensional structure of influences” or “Order-in-and-through disorder,” “turbulent regulation,” “pattern recurrance,” “equalization” and so on, but these concepts remain too abstract in the the introduction to really evaluate.

One point that Shaikh makes that is easier to grasp is his reliance on the ideas of classical political economy. As Shaikh writes: “The principle of turbulent regulation has its roots in the method of Smith, Ricardo, and particularly of Marx” (7). This approach puts a great deal of emphasis on the importance of production and profit in the “regulation” of the of the economic system: “Supply and demand are co-equals here, strutting on the stage in alternating splendor. But, as always, profit is pulling the strings” (7).

Finally, Shaikh notes that he heavily references empirical evidence in the book. No doubt the book’s extreme length is due in part to this reference to the empirical, as it is a large contributor to the length of Marx’s Capital as well. This evidence is not objective, but instead structured by theory in the terms of its collection, compilation, and analysis. Another contributing factor to the length of the book is the author’s extensive engagement with the ideas of other schools of economics. In Capital reading groups, I have often heard participants complain about the length of the book, but the reason given there, that advancing a new theoretical approach requires extensive demonstration of ideas and reference to examples, seems to be as valid in discussing Shakih’s book as it is in discussing Marx’s.

Section 2 – Outline of the Book

This is a very thorough summary of the main points of each chapter in the book. There is no real point to me summarizing these summaries, but I will note that they seem useful for trying to keep track of the thread of the book as the reader goes through it. I will probably be referring back to this section, but at this point it is simply overwhelming.

For those who are interested, Shaikh does respond to Piketty’s ideas in one of the final chapters of the book. If readers are eager to hear about this section I could skip ahead and try to write about it, but I will otherwise be reading the book sequentially.

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Slavoj Žižek’s Theory of Everything – Notes on Less Than Nothing and Ontology

The following are some thoughts I have assembled after finishing Less Than Nothing, and I cannot claim that they represent anything like an expert and complete analysis of this vast text. Certainly I do not have the scientific background required to evaluate Žižek’s analysis of physics and can only attempt to provide an analysis of what he has written on the subject. The highly abstract discussion here has no obvious connection to politics, so next month I will attempt to write a follow-up post connecting my interpretation of Žižek’s philosophy to political thought.

Some reviews of Less Than Nothing suggest that the book does not have a traditional structure of presentation to its argument, but this is only true to a point. Generally speaking the structure of the book is quite clear – it begins with an introduction, is followed by four body sections, and concludes with a political commentary based on the philosophy presented in the rest of the book. The four body sections “The Drink Before”, “The Thing Itself: Hegel”, “The Thing Itself: Lacan”, and “The Cigarette After” form a clear progression (And a typically Žižekian joke). “The Drink Before” deals with precursors to Hegel. First, ancient Greek philosophy, then Christianity, and finally German Idealism, focusing mainly on the work of Fichte. The next two sections, dealing with Hegel and Lacan respectively, attempt first to present Žižek’s unorthodox interpretation of Hegel and then advance his argument that Lacan represents a “repetition” of Hegel (In the specifically Hegelian sense of the term). “The Cigarette After” then combines insights into both Hegel and Lacan. These chapters are interspersed with interludes that deal with issues first related to Hegel, and then issues related to Lacan. Finally we have the “Conclusion”, which is like the concluding chapter to Capital: Volume I in that it is somewhat extraneous to the main argument – a kind of coda or “conclusion after the conclusion.” The real conclusion of the book is arguably its penultimate chapter “The Ontology of Quantum Physics”, which brings together the whole book into a kind of “theory of everything.”

It is when we lose sight of this big picture and look only at the contents of individual chapters that we find Žižek’s style to be unusual. Within and across chapters, Žižek repetitively deploys a method of logical homology. He repeatedly makes use of a small collection of logical forms in his consideration of a vast variety of topics, and this formal structure is at the same time the content of the text as a work of philosophy. This is to say that the “big idea” of the book is the repetition of these logical forms across a variety of fields. While Žižek does make a great number of points about many topics and intervenes in a vast number of intellectual debates in Less Than Nothing he does this through homology in a kind of textual ostinato. This is why Žižek is able to present a topic, suddenly change topics, and then take the original topic up again in another chapter – a form that many of his reviewers have noted. The homologies he employs form the consistency of his argument against the dissonant presentation of content. In this way the changing content reveals slowly to the reader the form of Žižek’s logic at work; the scope of its application and frequency of its repetition impressing upon them its general character.

What specifically then is the big idea that Žižek is attempting to get across in this book, and why can we label it a “theory of everything?” In order to explain this idea, it is important to first understand what the traditional understanding of Hegelian philosophy has been, and how Žižek’s interpretation differs from it. This is accomplished very well in Todd McGowan’s article “The Insubstantiality of Substance, Or, Why We Should Read Hegel’s Philosophy of Nature“. McGowan describes the “traditional view” as follows:

According to this view, Hegel sets out to describe the structure of being itself without taking into account the epistemological barrier limiting the subject’s access to this structure. It is as if Hegel is able to read the mind of God. To this day, this remains the received wisdom concerning Hegel among those yet to read any of his works. This view of Hegel finds its baldest expression in Hegel’s arch-enemy Arthur Schopenhauer, who attacks “the attempt specifically introduced by the Hegelian pseudo-philosophy … to comprehend the history of the world as a planned whole.”…This interpretation of Hegel views him as committing all the philosophical errors that Kant had corrected in the Critique of Pure Reason.

The abandonment of Kant’s distinction between thought and being manifests itself in a seemingly straightforward way in the preface to the Phenomenology of Spirit. Here, Hegel claims that “everything turns on grasping and expressing the True, not only as Substance, but equally as Subject.” This statement provides one of the pillars of the panlogical interpretation of Hegel’s philosophy. According to this view, here Hegel is conceiving the external world, the world of independent substances, as the manifestation of the thinking subject. The subject can know the world because the world is the product of the subject’s own activity. Not only does Hegel toss aside Kant’s caution about our capacity to know, he also grants the subject an extraordinary power to create the world in its own image.

McGowan first outlines the view of the late 19th and early 20th century Hegelians:

…the contingencies of history and nature exist within the necessity of the subject’s self-expression and self-externalization. There is no fundamental barrier to the subject’s knowledge of the world because the subject participates in spirit’s production of the world. When the subject attempts to understand what appears external to itself, it is engaged, even if unknowingly, in an act of self-understanding.

According to McGowan this “panlogical” Hegel was not accepted as respectable within the philosophical community, and Hegel’s thought was carried on in the academic world only through “a radical amputation” that moved the focus of Hegelianism away from “the structure of the universe” (Ontology) and towards the structure of subjectivity – In other words by moving to grounds more acceptable to Neo-Kantian – “critical” – thought. This was the trend represented by Sartre, Fanon, Kojève, and the “Critical Theory” of Lukács and the Frankfurt School. As McGowan writes, this Hegel “…could become the ally of Heidegger and the friend of Marxism.” On the level of purely philosophical interpretation of Hegel, McGowan argues that Kojève was the most influential interpreter in this trend of thought, and characterizes his argument as follows:

Kojève centers Hegel’s philosophy on its thoroughgoing commitment to the fact of human reality as the sole province of thought and as the sole source for thought. Far from being a panlogical philosopher, Hegel shows us that thought never escapes the subject itself. As he puts it, “Hegel rejects all species of ‘revelation’ in philosophy. Nothing can come from God: nothing can come from any extra-worldly non-temporal reality whatever. It is the temporal creative action of humanity or History that created the reality that Philosophy reveals.” For Kojève, Hegel has value for what he says about the struggle of the human being in the history that humanity itself creates and not for what he has to say about the nature of being. As a result, Kojève dismisses the entirety of the Philosophy of Nature as a fantasy that anyone who takes Hegel seriously must toss aside…In Kojève’s interpretation, Hegel’s philosophical project comes to resemble that of the early Marx or that of Heidegger in Being and Time.

McGowan sees this subjective interpretation of Hegel at work in Merleau-Ponty’s theory of time and the hostility to ontology in Foucault’s critique of dialectics. Subsequent philosophers went on to develop Hegel’s epistemology (Reading Hegelian thought as an extension of Kant) or elaborated a view of Hegel as a speculative-political thinker, but Hegel’s ontology remained the “amputated limb” that formed the basis for Hegelian philosophical legitimacy. Into this space steps Slavoj Žižek, and his project of reviving Hegel’s ontology, which ultimately culminates in Less Than Nothing.

As McGowan puts it, Žižek re-establishes the legitimacy of Hegel’s ontology primarily through relating it to language. According to Žižek’s account, Hegel’s ontology does not return to a naive pre-critical stance which sees philosophy as a speculative inquiry into the self-sufficient and knowable truth of being, but rather radicalizes Kant’s epistemology by exploring its ontological implications:

There is no being that is entirely independent and self-sustaining, and we know this because our very act of speaking testifies to an incompleteness both in ourselves and in what we are speaking about. Hegel’s ontology begins with this rejection of pure substance and affirmation of the inherent self-division of being… The speaking being’€™s division from itself-its inability to realize its desires or achieve wholeness-€”must have a condition of possibility within being itself. Thus, we can work our way backward from the self-division of the subject to the self-division of being. Our ability to pose the question of our subjectivity testifies to the subject’s non-coincidence with itself, and this non-coincidence appears to separate speaking beings from rocks. This leads Kojève to confine Hegel’s philosophical purview to the speaking subject and its history. But Žižek sees the error in positing this artificial limit to Hegel’s reach. Even beings that cannot speak and demonstrate their self-division through speech nonetheless participate in an ontological self-division, and we know about this ontological self-division because of beings who exhibit it explicitly-that is, speaking subjects. The speaking subject retroactively reveals the contradictory nature of being. Hegel is a philosopher of language who recognizes that the nature of language reveals a fundamental truth about the nature of being.

The point then is to consider the Kantian account of the limited subject in terms of an ontological totality, recognize the logical antinomies that this produces within the linguistic exploration of the matter, and then accept these antinomies as an ontological reality. We could not reach the antinomies in thought if they did not have some real condition of possibility, and the fact that there is such a condition of possibility implies that there is a contradiction in the world that exists in the strongest sense possible: “Hegelian reconciliation is a reconciliation with the irreducibility of the antinomy, and it is in this way that the antinomy loses its antagonistic character” (Less Than Nothing, 950). Therefore Žižek accepts the subjectivist Hegelians’ division of the world into beings-with-speech and beings-without-speech, but he argues that the division of the world into language and nature cuts across both of these categories:

It is therefore not enough to say that, while things exist out there in their meaningless reality, language performatively adds meaning to them: the symbolic transcendentally constitutes reality in a much stronger ontological sense, in its being itself. (Less Than Nothing, 960)

Natural beings without language such as rocks or animals do not exist in a kind of stupid self-sufficiency (e.g. Sartre’s famous door knob in Nausea) but are as alienated in language as beings-with-speech without a capacity for reconciliation with this alienation through language and thought.

Žižek sees this language-oriented philosophy as validated by the theories of language found in structualism and psychoanalysis (and their union in the thought of Lacan). Structuralism teaches us that language is in some sense always “out of joint” because of an ambivalence in the relationship between signifiers and signifieds, where the universality of signifiers in language is never firmly anchored in real things out there in the world, but is rather determined by oppositions between signifiers themselves. In this way signifiers are alien to signifieds, and therefore to sense perception at its most basic. Nevertheless, these alien terms coexist in their antagonism.

The validation that Žižek finds in psychoanalysis comes from its discovery (As McGowan puts it) of the “…split between what the subject desires and
what the subject says” – simply put, a subject’s desire never directly coincides with what it says it desires, or even with what an analyst says it desires. This constitutes another form of linguistic alienation, which Žižek sees as validating the split character of Hegel’s ontology.

The structure of Less Than Nothing is based on Žižek’s desire to establish the connection between Hegel’s philosophy and Lacan’s development of psychoanalysis in a structuralist mode. This is the concern that motivates its more or less straightforward “big picture” narrative. However if we accept this unorthodox Hegelianism as valid, we then are left with an ontology that is everywhere in antagonism and contradiction. If it is the case that language is alienated from sense/nature, that this alienation applies to all things, and that this implies the omnipresence of contradiction, then the Hegelian logic of contradiction (dialectics) applies to all things. In other words the Žižekian Hegel is the “panlogical” Hegel seen in a different light. “The real is the rational and the rational is the real” but rationality is not what we thought it was:

Here, we need only introduce a little displacement, and the entire image of a grand metaphysical process turns into a freakish monstrosity…Yes, antagonism is “reconciled;’ but not in the sense that it magically disappears-what Hegel calls “reconciliation” is, at its most basic, a reconciliation with the antagonism. (Less Than Nothing 951)

Rationality is not a clear and self-sufficient “deployment” of subjectivity, but rather split, impoverished, contradictory, tortured, and so on. The Hegelian real is a real of negativity, nothingness, and evil, but through thought and reason we can grasp it another light:

…in its positive aspect, as a condition of possibility: what appears as the ultimate obstacle is in itself a positive condition of possibility, for the universe of meaning can only arise against the background of its annihilation, Furthermore, the properly dialectical reversal is not only the reversal of negative into positive, of the condition of impossibility into the condition of possibility, of obstacle into enabling agency, but, simultaneously, the reversal of transcendence into immanence, and the inclusion of the subject of enunciation in the enunciated content.

This reversal-into-itself-the shift in the status of what-is-at-stake from sign to Thing, from predicate to subject-is crucial for the dialectical process: what first appears as a mere sign (property, reflection, distortion) of the Thing turns out to be the Thing itself. If the Idea cannot adequately represent itself; if its representation is distorted or deficient, then this Simultaneously signals a limitation or deficiency of the Idea itself. Furthermore, not only does the universal Idea always appear in a distorted or displaced way; this Idea is nothing but the distortion or displacement, the self-inadequacy, of the particular with regard to itself.

This brings us to the most radical dimension of the (in)famous “identity of opposites”: insofar as “contradiction’ is the Hegelian name for the Real, this means that the Real is simultaneously the Thing to which direct access is impossible and the obstacle which prevents this direct access; the Thing which eludes our grasp and the distorting screen which makes us miss the Thing. (Less Than Nothing, 535)

A recognition of these ideas is what constitutes Hegelian “reconciliation.” We become reconciled with reality, but this is reconciliation one stage removed from any positive fact – it is a reconciliation with negation itself and is therefore not a license for the kind of “social adjustment” that is the stock-in-trade of all the therapeutic and disciplinary apparatuses of the state. Given the all-encompassing nature of this theory, it is important to understand why Žižek characterizes it as “materialist” and therefore to understand how Žižek relates it to the physical sciences – for this is an area of his thought that strongly diverges from the subjectivist Hegelians who preceded him (Marcuse famously called for a “new science” that would exist in harmony with his philosophy of life, but he was an exception in this and was strongly criticized for it, notably by Habermas).

It is noteworthy that the culmination of Žižek philosophical arguments in Less Than Nothing is his chapter on quantum physics, which attempts to salvage the reputation of Hegel’s much maligned Philosophy of Nature and develop its themes in a modern context. If Žižek’s Hegelianism cannot be applied to nature, then its claims to refute arguments for the self-sufficiency of nature cannot be taken seriously. In this sense, Less Than Nothing is an all-or-nothing venture.

Žižek approaches contemporary physics through its intersections with ontology, and understanding why Žižek calls himself a materialist despite identifying himself with the “absolute idealist” Hegel will clarify his approach to physics considerably. In the first place, it is important to understand why there has historically been a connection between materialism, communism, and democracy. Simply put, any idealist system of thought will tend to rely on a distinction between spiritual and base-material orders of being. Whether the higher order is spirit, the soul, the intellect, or any other such thing, this higher order can always be used to justify hierarchy in the name of maintaining the proper authority of the higher order of being (Whether it is spiritual or meritocratic or cultural). Certainly revolts can also be carried out in the name of this higher order, but these are in the end necessarily conservative, as they can only aim to reestablish a hierarchy after the dust has settled.

On the other hand, materialism is inherently democratic insofar as it does not recognize a higher order of being. For the materialist, on the most fundamental level of ontology we are all equal. As a matter of practice though it has generally been the case that materialism has also been used to justify hierarchy, except with a secular gloss that claims the authority of knowledge instead of the authority of some higher order of being. Nevertheless, materialism does hold an enduring sort of democratic/communist promise, and this is the promise that Žižek is attempt to hold faithful to in his philosophy.

That being said, Žižek’s materialism is highly unorthodox in that is rejects the “naive empiricist” or “naive realist” form of materialism wherein there is only the self-sufficient determinism of the material whole, within which we as material beings with limited senses and cognitive capabilities grasp an illusory figment of reality we experience as consciousness. As we have seen above, Žižek instead strongly emphasizes the reality of the symbolic, but in doing so he opens himself up immediately to the criticism that he is in fact an idealist in disguise. If we have the natural and the symbolic as two separate orders, a materialist account must find a way to somehow unify them in some common material order. This is where the gap plays such a crucial role in Žižek’s ontology, and it is with this concept that he takes up a consideration of contemporary science.

Žižek chooses quantum physics as his point of entry into the world of physics because as he says, this strange physical world is similar in many ways to the world of language – which we will recall is the cornerstone of Hegelian philosophy. As Žižek writes:

A fact rarely noticed is that the propositions of quantum physics which defy our common-sense view of material reality strangely echo another domain, that of language, of the symbolic order-it is as if quantum processes are closer to the universe of language than anything one finds in “nature;’ as if, in the quantum universe, the human spirit encounters itself outside itself…(918)

It is important to note that Žižek qualifies this statement with “as if,” because the notion that the human spirit encounters its double in the quantum physical world has of course been the starting point for all sorts of idealist and spiritualist obscurantism (a popular example of which is the documentary What the Bleep do We Know!?) which he aggressively attacks. Žižek makes his case for discussing quantum physics in dialectical terms through four main points:

1. The virtual is efficacious in both the symbolic order and quantum physics. In the symbolic order the potential of exerting coercive force itself has a real effect, in quantum physics the potential trajectories in the wave function of a particle determine its actual trajectory.
2. In both the symbolic and quantum worlds we find “knowledge in the real” – that is, what we take something as, conditions what it actually is. This has to do with the famous fact that an electron “knows” whether or not it is being observed, and “displays itself” as either a wave or a particle accordingly, almost as if it is following an expected social role.
3. In both the symbolic and quantum worlds something only “becomes what it is” when it is “registered” in the broader network surrounding it. The wave function collapses when it is “registered” by the observing instrument, a signifier acquires a meaning only in specific context of use.
4. Both the symbolic and quantum worlds display the phenomenon of retroactivity. In the symbolic world a new master signifier “rewrites history” (e.g. With the dawn of Christianity all of history became a story leading up to the birth and death of Christ, and a path to his second coming) and similarly the “registration” of an electron changes not only its current form, but also the trace it left of its past to be consistent with its particle form. The “history” of the electron is determined retroactively.

Žižek then claims that these four characteristics of quantum physics produce two main reactions: Either the spiritualist claim that the observing subject’s mind creates reality, or the “naive realist” claim that “registration” of electrons is done by instruments with no subject neccesarily involved at all (Which allows the claim that consciousness is an illusion of no real ontological consequence to be sustained):

The basic enigma is the following: insofar as the result of our measurement depends on our free choice of what to measure, the only way to avoid the implication that our observation creates reality is either to deny our free will or to adopt a Malebranchean solution (“the world conspires to correlate our free choices with the physical situations we then observe”). (923)

Žižek rejects the “naive realist” position on the grounds that it can only be defended in terms of an abstract mathematical understanding of reality that is overly abstracted from any basic experience of reality:

“objective reality” as a mathematicized set of relations is “for us” the result of a long process of conceptual abstraction. This does not devalue the result, making it simply dependent on our “subjective standpoint;’ but it does involve a paradox: objective reality”(the way we construct it through science) is a Real which cannot be experienced as reality. In its effort to grasp reality “independently of me;’ mathematicized science erases “me” from reality, ignoring (not the transcendental way I constitute reality, but) the way I am part of this reality. The true question is therefore how I (as the site where reality appears to itself) emerge in “objective reality” (or, more pointedly, how can a universe of meaning arise in the meaningless Real).

He then also rejects the spiritualist claim, on the grounds that it cannot account for the fact that any observer of an experiment will obtain the same results (given the same object being observed and the same apparatus). To Žižek, this suggests that the “finitude” of the observation should be instead read as the “incompleteness” of reality itself. In other words the issue is “to conceive how our knowing of reality is included in reality itself” – to move from epistemology to ontology. Typically, the “transcendental materialism” that Žižek is advocating here is not simply a compromise position between the spiritualist and naive realist positions, but instead focuses on the gap or contradiction that structures their opposition in the first place, producing a new position altogether.

Žižek’s point is that this sort of gap is not only real but “Reality-in-itself” (926):

Reality-in-itself is Nothingness, the Void, and out of this Void, partial, not yet fully constituted constellations of reality appear; these constellations are never “all;’ they are always ontologically truncated, as if visible (and existing) only from a certain limited perspective. There is only a multiplicity of truncated universes: from the standpoint of the All, there is nothing but the Void. Or, to risk a simplified formulation: “objectively” there is nothing, since all determinate universes exist only from a limited perspective. (926)

In other words, if we take what is common to multiple perspectives as what is “objective” we should recognize that the most common property of everything is in fact finitude – nothingness. However as noted above, Hegelian reconciliation is a reconciliation with negation, not with “the Void” as a fundamental reality against which all phenomena are taken as illusory. The void is in fact fecund and active, because in negating itself it produces things which still bear the mark of finitude and are themselves destined to be negated, producing something else. Žižek explains this in terms of the Higgs field:

Left to their own devices in an environment in which they can pass on their energy, all physical systems will eventually assume a state of lowest energy; to put it another way, the more mass we take from a system, the more we lower its energy, until we reach the vacuum state of zero energy. There are, however, phenomena which compel us to posit the hypothesis that there has to be something (some substance) that we cannot take away from a given system without raising that systems energy. This “something” is called the Higgs field: once this field appears in a vessel that has been pumped empty and whose temperature has been lowered as much as possible, its energy will be further lowered. The “something” which thus appears is a something that contains less energy than nothing, a “something” that is characterized by an overall negative energy-in short, what we get here is the physical version of how “something appears out of nothing:’

Therefore Žižek’s argument is that reality as a “negation of the negation” is in fact less than nothing – If we take “the Void” as “Reality-in-itself” and self-sufficient, reality-with-consciousness is a subtraction from that strange plenitude, and, like with the Higgs field, there is a natural tendency of reality to continue negating itself (which Žižek identifies with Lacan’s interpretation of the “death drive”). This is the “negation” with which one can become reconciled. It is “immortal” in the sense that every particular negation is survived by yet another negation.

This leads Žižek to a discussion of “the Vacuum” in an attempt to elaborate on this ontology. Žižek argues that “the Void” is always in fact divided against itself into the “false vacuum” and the “true vacuum.” Žižek associates the false vacuum with Buddhist “Nirvana as the return to a pre-organic peace” (945) – it is the Void self-sufficient in itself. The true vacuum on the other hand is the “negated nothing”, it is the nothing which has become something by negating itself. As in the case of the Higgs field it is the “less than nothing” that emerges out of the false vacuum, or taking another of Žižek’s examples, it is like the particle that emerges out of the collapse of the wave in quantum physics.

Žižek then brings the discussion back to Hegel by claiming that this move from the false vacuum to the true vacuum is homologous to Hegel’s claim that reality exists not only as substance but also as subject. The false vacuum is substance “in-itself” and the true vacuum is the subject which disturbs it, the subtracted abstraction that causes substance to appear to itself as alienated. This is why Žižek argues that:

It is crucial that this tension between the two vacuums be maintained: the “false vacuum” cannot simply be dismissed as a mere illusion, leaving only the “true” vacuum, so that the only true peace is that of incessant activity, of balanced circular motion-the “true” vacuum itself remains forever a traumatic disturbance. (950)

The subject then is properly “alienated” from substance. If we simply had substance reality would be “stupid” – there would be no self-reflection and therefore no antagonism. On the other hand if we simply had subject (i.e. the “mind of God”) reality would be just as stupid because it would lack all distinctions and would be without any “content.” Finally if substance could be truly “sublated” into subject so that we could reach the “true peace” of “incessant activity” (as is sometimes argued in Daoist texts, or in the work of the ‘panlogical’ Hegelians) the result would be functionally equivalent to the case of the “mind of God” since substance would no longer be alien to subject. What Žižek calls the “properly dialectical reconciliation” is none of these things:

…the two dimensions are not mediated or united in a higher “synthesis;’ they are merely accepted in their incommensurability. This is why the insurmountable parallax gap, the confrontation of two closely linked perspectives between which no neutral common ground is possible, is not a Kantian revenge over Hegel, that is, yet another name for a fundamental antinomy which can never be dialectically mediated or sublated. Hegelian reconciliation is a reconciliation with the irreducibility of the antinomy, and it is in this way that the antinomy loses its antagonistic character. (950)

Finally Žižek restates this point in ontological terms by drawing a distinction between Being and the Real, arguing that “there is no ontology of the Real” (958). Ontology attempts to give us a complete picture of Being, but it therefore has to “ignore the inconsistency or incompleteness of the order of being, the immanent impossibility which thwarts every ontology” (961). The abstract, alienated “real” thing we call the subject is therefore never successfully included in any ontology, except of course the sort of “reconciled” ontology that Žižek offers, which only gives us a “complete” picture by recognizing the “incompleteness” of the order of Being created by the subtraction of the subject.

This conclusion allows Žižek to provide the “transcendental materialist” ontology he has been aiming at. The “third term” that unites the symbolic and the natural is the “Real”: “We touch the Real-in-itself in our very failure to touch it, since the Real is, at its most radical, the gap, the “minimal difference;’ that separates the One from itself” (959). There is no “higher” and “lower” orders of being in this ontology, only a reality sustained by its failure to be complete and identical to itself.

On Marx’s Name and its Exorcists

All times I have enjoy’d
Greatly, have suffer’d greatly, both with those
That loved me, and alone, on shore, and when
Thro’ scudding drifts the rainy Hyades
Vext the dim sea: I am become a name;
For always roaming with a hungry heart
Much have I seen and known; cities of men
And manners, climates, councils, governments,
Myself not least, but honour’d of them all;
And drunk delight of battle with my peers,
Far on the ringing plains of windy Troy.
I am a part of all that I have met;

-Tennyson, “Ulysses”

 

The tradition of all dead generations weighs like a nightmare on the brains of the living. And just as they seem to be occupied with revolutionizing themselves and things, creating something that did not exist before, precisely in such epochs of revolutionary crisis they anxiously conjure up the spirits of the past to their service, borrowing from them names, battle slogans, and costumes in order to present this new scene in world history in time-honored disguise and borrowed language.

-Marx, The Eighteenth Brumaire of Louis Bonaparte

 

After the financial crisis, however, it seemed like capitalists had flunked a test they had themselves designed. Marxism might have failed as a political project, but the conditions were set for its recovery as critique, both because of where it diverged from the consensus and what it affirmed. It was easy to swap one kind of economism for another. Like a photographic negative, the Marxist critique took what was light in the capitalist worldview and made it dark. The outlines of the picture were the same, but the shadings reversed. The resulting image was arresting—definitely worth putting on Instagram.

-Timothy Shenk, “Thomas Piketty and Millenial Marxists on the Scourge of Inequality”

As a teenager I was always struck by the ambiguity of Ulysses’ “name” that I have quoted here. At first glance Ulysses’ statement “I am become a name” appears to be a part of his boasting of his worldliness – his person and his exploits are so grand that he is recognized by everyone as a “big name.” However we can also read this passage in the opposite sense. Ulysses is old and tired, nothing more than a “name” that has faded from the time of his younger adventures and become a degenerate copy of his younger self. In fact the pathos of the poem arises from the distance between these two different senses of what Ulysses is. Tennyson’s poem powerfully elicits a sense of finitude, loss, nostalgia, and masculinity, but it also points to how we are a part of language and how it is a part of us. More specifically it speaks to the distance between ourselves as “empirically” existing finite creatures of flesh and blood and ourselves as figures existing in the medium of language. One of the strange characteristics of our existence is how these two selves do not quite fit together. It is a commonplace of fiction about celebrity culture that celebrities must struggle mightily to control and not be undone by the simultaneously terrifying  and thrilling power of their names as “stars,” and this is an endless source of fascination for those caught up in the world of the tabloids. To a lesser extent it is a preoccupation of all of us in an age of social networks and omnipresent surveillance, in some sense abolishing the anonymity that grew up with the end of village life and mass migration to the cities in the 19th century. However the phenomenon that Tennyson points to is not quite that of stardom (Which of course he was personally familiar with in its early form) nor that of common personal reputation. He is instead pointing to the sort of names that are recognized by history as agents. These personages are agents in the sense that they are recognized as influencing their immediate historical situation, but more importantly they are agents in the sense that they hold an influence over the present moment through their presence in our conceptual world. Ulysses speaks to us at an imagined moment of parting between himself as a living person of flesh and blood and himself as a disembodied “name” possessing continuing power and agency in its linguistic and conceptual presence. These are the “spirits of the past” that Marx invokes in the Eighteenth Brumaire and although they are often not individuals (The Ancient Romans), they often are (Napoleon).

The fact that Marx’s “specter” continues to haunt us even after the fall of the USSR was well explored and established by Derrida in his Specters of Marx and I do not intend to add much more to the topic in this article other than to note that Marx’s “name” has recently once again become a point of great controversy.  As Shenk notes, Marxism has undergone a “[a] small but serious…renaissance” since the 2007 crisis began because Marx continues to exist for us as a “negative” of capitalism.  Speak the word “capitalism” and you will find Marx’s specter there protesting its continuation. He remains a part of our language, or “tradition” as Marx himself put it. Shenk, for his part, is part of that group of intellectuals who want to see this “nightmare” exorcised from our presence. Shenk’s objection to the force of the Marxist critique is that “Capitalism did not create socialism; socialists invented capitalism” – it was a narrow totalizing concept invented by the socialists, and especially Marxists, that they could use to tar all their opponents with.  In Shenk’s view then, Marx’s name is an obstacle to clear thought and progress.  The discourse of socialism and capitalism is an incestous little language game that weighs like a nightmare on our minds and obscures the truth. The neoliberals were just as entrapped in the Marxist game as the Marxists originally were and all we have been experiencing is a futile series of reversals of these related “economistic” terms. It is unquestionably the case that neoliberal thought is strongly conditioned by Marxist thought, and that the Marxist thought of today is in turn strongly conditioned by that of neoliberalism, however it seems to me that Shenk misses the point when he describes the birth of “capitalism.” Shenk’s objection is that the term that socialists have critiqued was in fact posited by the socialists themselves and therefore a kind of vicious and dogmatic solipcism, but the origins of critique can be seen in a different way. As Zizek writes in his recent book Less Than Nothing: Hegel and the Shadow of Dialectical Materialism:

…one should not confuse dogma with the immediate pre-reflexive acceptance of an attitude. Medieval Christians were not ‘dogmatic’ (just as it is senseless to say that the ancient Greeks ‘dogmatically’ believed in Zeus and other Olympian divinities: they were simply part of their life world ), they become ‘dogmatic’ only when modern Reason started to doubt religious truths. A ‘dogmatic’ stance is always already mediated by its opposite, and this is also why contemporary fundamentalism really is ‘dogmatic’: it clings to its articles of faith against the threat of modern secular rationalism. In short, ‘dogma’ is always already the result of the decomposition of a substantial organic Whole (382).

From this point of view, it is only the critic that can give a name to the object of criticism. The critical negation is what rendered capitalism “in-itself” into capitalism “for-itself” as a entity “dogmatically” opposed to the socialist criticism. This dogmatism should be familiar to any socialist who has met the standard defenses of capitalism (The argument from human nature, the argument from information, etc…) which all amount to the assertion that “There Is No Alternative.” It is not that social truths are there to be discovered as self-evident facts and are obscured by dogmatism, but that they appear to us as truths through their own negation. Shenk’s objection to Marxism then is essentially its own dogmatic position that “There is No Alternative to Our Alternative”, that all other critiques of capitalism are insufficiently radical. Shenk’s complaint is not new – it is exactly the sort of complaint Marx himself made when he called for the poetry of the future to replace the poetry of the past. What is strange about the present moment is that the fall of the USSR was proceeded by the development of “Post-Marxism” and “Third Wayism” which raised just these sort of objections and yet this Post-Marxist moment was followed by the crisis of 2007 which revealed its own blindness to exactly the fundamental questions that Marx had posed. There is therefore a kind of intellectual superposition we are confronted with where it is unclear who occupies the dogmatic position and who occupies the critical position. Is the Marxist criticism of the Post-Marxist and neoliberal dogma of “the new economy” a dogmatic or a critical one? It has been my conviction that it is only through a committed Marxist criticism of the prior dogma that we can arrive at a new critical moment of rupture. It has been my wager that attacking the dogmas of the 1990s with Marxist criticisms in a considered and engaged would allow for the negation of both in the form of a new point of view. In the aftermath of the crisis Marx’s name was on everyone’s lips. We have to remain faithful to that memory of the terrifying power of the alien force of capital in order to challenge the thought that was blind to its growth.

Opposed to this view is Jonathan Sperber’s Karl Marx: A Nineteeth Century Life which attempts to exorcise the name of Marx through a collection of empirical and biographical facts. Sperber wants to deny the “specter” of Marx by asserting that he was in fact just a person of flesh and blood, and engaged in the immediate commitments of his time. This is a Marx who was a committed political activist but never wrote the abstract theories found in Capital. And yet Marx’s thought did in fact rise to this level of abstraction and his name is still with us today influencing our way of thinking. Sperber’s protestations to the contrary betray their own futility. Every time he points to Marx the man he cannot help but invoke Marx’s name.

Marx’s name also haunts the current hubbub surrounding Piketty’s Capital in the Twenty-First Century. Every review of the book points to its large accumulations of data on inequality to explain its current sensation, yet these reviews also invariably point to its title and to its preoccupation with the concept of capital and its contradictions, which is genetically linked to the Marxist project – a point which Piketty protests, but which the books own title betrays. Before the book was even published in English the controversy over inequality was well underway, engendered by the resurgence of criticisms of capitalism brought about by the crisis. Yet what Piketty has done is allowed for these criticisms to be voiced without any excessive risk of being contaminated by the Marxist label. Piketty’s faith in his data acts as a shield separating him and his supporters from association with the communist project. Nevertheless I believe that it is exactly this proximity-but-not-identity with the Marxist taboo that has generated such a buzz. Like Elvis’ appropriation of early R&B for white audiences, Piketty’s work allows for a consumption of the critique of capitalism at a comfortable distance.

All these denials of Marx’s name only serve to make it stronger. It is my belief that is only through an affirmation of this name that we can in fact overcome its weight on our brains.

Why Should Anyone Bother Reading Capital: Volume II?

I’m finishing up my read through of Capital: Volume II, and thought I would provide a short list of what valuable insights I think it offers the reader.  David Fernbach, who provided the translation for the popular Penguin Classics edition of the volume, notes that

Volumes 2 and 3 follow much more in the wake of the less purple passages of Volume 1.  Their content is to a far greater extent technical, even dry; and Volume 2, above all, is renowed for the arid deserts between its oases.  From the scientific point of view, this is all quite contingent; but it has caused many a non-specialist to turn back in defeat.

Because Volume II can be such a slog at times, most people choose to skip reading it, and it is certainly fortunate that David Harvey and his students have provided us with a free lecture series to help make things a bit more lively.  There is some talk that he will publish a companion volume summarizing his lectures, as he did for Volume I.

In any case, here is my list of what I thought the “oases” of insight were in Volume II.

-It examines in much greater detail than Volume I the question of “What is capital?” and therefore also the question of “What is capitalism?”  The examination of the various circuits of capital allows Marx to do this.

-By examining the various circuits of capital, Volume II does much more to highlight the contradiction between use value and exchange value that was first introduced in Chapter  1 of Volume I in the discussion of the commodity.  Marx does this by examining the specificity of the various forms of capital, and how the points of their transformation at various stages of circulation provide the possibility for crisis.

-Although it does not examine its functioning in much detail, Volume II also highlights the vital importance of the credit system to the reproduction and expansion of the capitalist system by describing the points in circulation where credit plays an important role.  In doing so it provides some ideas for those who would like to reform or revolutionize that system.

–Volume II also reveals the importance of temporality and continuity to capitalist production, particularly in its discussion of turnover times.  This should be of considerable interest to anyone studying the geography or history of capitalism.

-It also shows how “moral depreciation” can create crisis conditions if technology is being revolutionized too quickly.

–Volume II describes the contradiction between production and consumption under capitalism.  While Marx only notes this important contradiction in passing, his comments are of considerable interest.

-This volume also contains some of Marx’s clearest descriptions of his ideas about economic planning under socialism.  His ideas here formed the basis for some of the efforts in the USSR at establishing a planned economy.

–Volume II (through its reproduction schemas) is also arguably the major point of departure of the macroeconomic analysis of capitalism.  While Keynes claimed to have never read it, he was influenced by economists who drew directly from it, including the famous Michal Kalecki.

If any of these points pique your interest, you may want to head off into the desert of Capital: Volume II and go searching for its oases.

EDIT: While I did not originally mention this, Harvey’s reading of Capital should be taken with a grain of salt. I still recommend his video lectures for lack of a better alternative, but readers would be well advised to heed criticisms such as those found here on Michael Roberts’ blog.

Considering Ellison’s Critique of Marxism in Invisible Man

The following is a paper I recently wrote for a graduate course in American literature.  I do not plan to upload full-length papers on a regular basis, but I thought it might be of interest to the readers of this blog.

Published in 1952, Ralph Ellison’s Invisible Man is a novel about both race and class in America. It is a novel of its time, belonging to the revisionist movement of “new liberalism” that was born out of the disillusionment of American intellectuals with the communist project following the horrors of World War II. Like other members of this movement, Ellison is aware of the Marxist materialist critique of capitalist class society, yet he rejects this critique in favour of an idealist critique of society that emphasizes the importance of “irony” and “ambiguity.” Where the socialism of the 1930s was collectivist and objectively-oriented, Ellison’s new liberalism is individualist and subjectively-oriented. While it may be argued that Ellison’s position in Invisible Man is not a rejection of Marx per se, but rather a rejection of the Stalinism of the Communist Party of the United States of America (CPUSA) the fact remains that Ellison does not elaborate his critique of the CPUSA through a “return to Marx,”¹ And a close reading of Ellison’s conclusions suggests that his work in fact diverges considerably from that of Marx. This paper will therefore seek to address Ellison’s criticisms of Marxism, first by analyzing Ellison’s position within the context of new liberalism, and then by referring to Marx’s Grundrisse and Capital in order to consider whether Ellison’s intellectual rejection of historical materialism is a necessary conclusion of those criticisms.

Before addressing the text of Invisible Man itself, it is important to provide the historical context of new liberalism as a movement, and of Ellison’s specific position within that movement. Thomas Hill Schaub’s American Fiction in the Cold War provides an excellent basis for such a background. Schaub identifies the origins of new liberalism in the betrayal of the revolution represented first by the Moscow show trials, and later by the Molotov-Ribbentrop pact of 1939 in which Stalin made peace with the arch-reactionary Nazis. Further decisive events in pushing intellectuals away from communism were Stalin’s actions during the Spanish Civil War,² and the “mass deception” of the proletariat into following the fascist governments in Germany and Italy through the use of propaganda, which suggested that the proletariat could not only be deceived into passivity, but into ultra-reactionary violence.³ At the same time the American left was subjected to the counter-revolutionary state terror of J. Edgar Hoover’s FBI political police and the McCarthyist witch hunts.⁴ In this atmosphere of disillusionment, fear, and isolation former socialists such as Arthur Schlesinger Jr. and Reinhold Niebuhr adopted a “centrist” position of “new liberalism.”⁵ This new liberalism took a pessimistic view of human nature, “oppos[ing] the realities of human corruption and an irrational history to the utopian illusions of science and secular humanism”⁶ and shifting “away from purely social and economic sources of historical change and emphasiz[ing] instead psychological and behavioral categories like ‘anxiety’ and ‘conformity’ which cut across class divisions…”⁷ In moving from a worldview based on optimism, objectivity, rationality, historical materialism, and collective solidarity, to one based on pessimism, subjectivity, irrationality, ahistorical transcendentalism, and elitist introspection the “new liberals” in fact moved very close towards something like old-world conservatism of the Burkean variety, a change that some both recognized and embraced.⁸ In the representative work of Lionel Trilling, heavily influenced by Freudianism, “reality is finally at base a psychological reality, an experience of complexity that has its generative roots in the ineradicable conflicts of the private self. Ideation and rational action have their troubled source in subterranean emotions.”⁹ While this form of “liberalism” does not possess the “one-dimensionality” of the “sunshine liberalism” of pro-American propagandists in that it retains an agonistic view of society, it also turns Marx “on his head” in rejecting materialism and denying the possibility of progressive epochal change (i.e. social revolution).¹⁰

Ralph Ellison’s Invisible Man largely fits within the pattern of new liberalism, yet it also differs from the work of white new liberals in that it is preoccupied not only with the “ambiguity” of human nature, but also with the ambiguity of American identity rooted in racial oppression and conflict. As Schaub writes:

While ‘contradiction’ and ‘irony’ might be constitutive of human existence and history for Cleanth Brooks and Lionel Trilling, for black Americans these terms described their experience within a political system that promised freedom and equality for all but in practice failed to deliver those rights to a tenth of its citizens. In writing Invisible Man, Ellison made this long-standing hypocrisy a central theme of his novel, but his determination to make the experience of his central character resonate universally for all readers had the effect of mediating historical and political urgencies within the ashistoricism of mythic form and tragic vision so typical of postwar critical thought.¹¹

For Schaub then Invisible Man “is constituted by the dynamism of…incompatible discourses…”¹² While the tension between the concrete historical struggle of black Americans for social equality and the situation of that struggle within an “ambiguous” view of human nature and history forms a dialectical unity of opposites, its result is not dynamic motion but “paralyzed alertness.”¹³ Ellison was disillusioned by his experience with the CPUSA, and summarized his views as follows: “The Communists recognized no plurality of interests and were really responding to the necessities of Soviet foreign policy, and when the war came, Negroes got caught and were made expedient in the shifting of policy”¹⁴ These criticisms of the CPUSA’s reductionism, opportunistic ‘realism,’ and abandonment of African Americans form the background of Ellison’s critique of Marxism in Invisible Man.

Although Ellison’s critique of Marxism is the subject of this investigation, Invisible Man is hardly a novel solely concerned with this issue, and it does not begin to make itself clearly apparent until the unnamed protagonist begins his employment at Liberty Paints in Chapter 10 of the novel. This chapter is perhaps the most clearly influenced by Marxist thought in that it examines relations of production in an industrial capitalist enterprise, and uses these relations as the basis for a broader social critique. Prior to this chapter the class analysis in Invisible Man is more concerned with questions of ressentiment and the hypocrisy of philanthropy than it is with the question of exploitation.¹⁵ Liberty Paints is a corporation in the business of producing “Optic White” paint, a white so bright and pure that it is used for painting national monuments.¹⁶ However we later learn that in order to form this pure white, it must be mixed with a black “dope,” and Ellison leaves the question of whether the paint is really white or is in fact grey (yet mistaken as white) open to interpretation.¹⁷ Ellison’s color symbolism here repeats his theme running throughout the book that American culture is formed from an admixture of both black and white culture, but that its blackness is rendered invisible. However in this chapter Ellison takes this concept to a higher level by combining it with a class analysis, heavily laden with Marxist imagery. As the chapter progresses the reader learns that the “guts” of the Optic White paint is produced in the basement of the factory by the uneducated black worker Brockway, and later sent upstairs to be “mixe[d]” and made “pretty” by the white and black middle class workers.¹⁸ Here Ellison combines his race analysis with the imagery of Marx’s base and superstructure model. Liberty Paints becomes a model of society, with a literal superstructure resting upon a literal base. However Ellison problematizes this model by introducing a number of antagonisms between the various workers. While Brockway occupies an archetypal proletarian position, he is ferociously opposed to any form of solidarity with his fellow workers. He is tremendously suspicious of the younger protagonist, who he fears has been sent to take his job, and suspicious of the other workers as well. A unionization effort is underway in the factory, and when the protagonist introduces himself as a subordinate of Brockway at a locker room union meeting he stumbles upon he is immediately confronted with extreme hostility and labeled a “fink.”¹⁹ The mostly white union men label him as such because Brockway did in fact previously betray them to the corporate management, while the protagonist (based on his experience in the American South) mistakes the source of their hostility as stemming from racism and not the state of class struggle in the factory.²⁰ Furthermore, there is a struggle between the union leadership and the mob-like rank-and-file in this scene, with the leadership trying to maintain control over the rank-and-file’s anger against the “finks.” When the protagonist extracts himself from the meeting he is put-off by the encounter, but encounters even more hostility from Brockway, who flies into a murderous rage at the mention of the union, attacks the protagonist, and after being defeated pronounces his servile devotion to the capitalist management:

‘…them young colored fellers up in the lab is trying to join that outfit, that’s what! Here the white man done give ’em jobs,’ he wheezed as though pleading a case. ‘He done give ’em good jobs too, and they so ungrateful they goes and joins up with that backbiting union! I never seen such a no-good ungrateful bunch. All they doing is making things bad for the rest of us!’²¹

Finally in the chapter’s conclusion Brockway attempts to murder the protagonist in an industrial “accident,” succeeding in forcing him out of his job at the factory.²² Chapter 10 is unique in the novel in that it directly combines both a race and class analysis, with problems of miscommunication and capitalist hegemony frustrating all attempts at building inter-racial and inter-generational proletarian solidarity. While it is conceivable that Ellison would carry on the novel’s narrative from this point by continuing his analysis of these problems and working through them towards the end of building solidarity, Chapter 10 in fact occupies a strangely disconnected position in the novel’s narrative, almost entirely unrelated to the protagonist’s later involvement with the “Brotherhood” (Ellison’s name for the CPUSA in the novel) in Harlem.

In the Brotherhood-focused chapters of the novel (Chapters 13 – 25) Ellison moves from the structural analysis of Chapter 10 into an organizational and ideological analysis that indites the CPUSA along the lines laid out in Ellison’s criticism of the party cited above. He here lays out a “liberal narrative” as identified by Schaub, describing a movement towards “maturation and realism, of awakening to a more sober and skeptical perception of political reality and human nature.”²³ The naïve protagonist is lured into working for the Brotherhood, and dazzled not only by their claims to “science” and “liberation” but also their claims to racial equality, which cause him to see within the Brotherhood his long-awaited chance to achieve a position of social prominence and leadership. Over the course of the final section of the novel the protagonist becomes disillusioned on two levels: first by the Brotherhood’s rigidly hierarchical structure and cruel realpolitik, and second by the Brotherhood’s reductionist Marxist epistemology and blind adherence to the notion of the scientific inevitability of revolution. Given that the concept of Leninist (Let alone Stalinist) democratic centralism was not an invention of Marx, but rather a later development following his death, our interest here will be in examining Ellison’s epistemological critique of Marxism, and not his critique of the CPUSA’s political structure.²⁴

Ellison’s critique is foreshadowed throughout the Brotherhood section of the novel, yet it is most succinctly stated in Chapters 22-23, where the protagonist undergoes a crisis of faith and rejects the Marxist ideas of the Brotherhood. In Chapter 22, a crucial section of the novel, the protagonist realizes that Brother Jack, the leader of the Brotherhood cell to which he belongs, makes use of a glass eye to stand in for an eye he previously lost in the line of duty. This lost eye constitutes Brother Jack’s “sacrifice” to the cause.²⁵ In this rather heavy-handed symbolism Ellison portrays Brother Jack as having sacrificed his full vision in his devotion to the communist cause, leaving him with a one-sided and incomplete understanding of reality. In Chapter 23 Ellison explains just what is missing from the communist world-view, revealed to the reader in a picaresque montage of scenes of ghetto life. The protagonist dons a disguise of hat and sunglasses which cause him to be mistaken for Rinehart, a Harlem mover and shaker whose name refers to a conflation of appearance and essence, exterior and interior – rine and heart.²⁶ As “Rinehart” the protagonist stumbles into a series of episodes, learning of the variety of Rinehart’s professions: pimp, number runner, gambler, briber of police, preacher. This journey through the Harlem underworld culminates in the protagonist’s discovery that “Rinehart the rascal” includes “Spiritual Technologist” amongst his professions, combining preaching with neon lights, gaudy costumes, and the music of electric guitars to provide one of his many opiates to the masses.²⁷ The protagonist’s discovery of the mass acceptance of this blatant charlatanism destroys his faith in the “objective reality” of Marxist science:

Could he himself be both rind and heart? What is real anyway? But how could I doubt it? He was a broad man, a man of parts who got around. Rinehart the rounder. It was true as I was true. His world was possibility and he knew it. He was years ahead of me and I was a fool. I must have been crazy and blind. The world in which we lived was without boundaries. A vast seething, hot world of fluidity, and Rine the rascal was at home. Perhaps only Rine the rascal was at home in it. It was unbelievable, but perhaps only the unbelievable could be believed. Perhaps the truth was always a lie.²⁸

The protagonist then goes on to reflect on the implications of his discovery for the Marxist ideology of Brother Jack. He considers the notion that he could subsume his experience within the rational categories of social science: “Perhaps, I thought, the whole thing should roll off me like drops of water rolling off Jack’s glass eye. I should search out the proper political classification, label Rinehart and his situation and quickly forget it” but then rejects this possibility.²⁹ The protagonist concludes that he has “discovered Jack’s missing eye” by realizing the fluid and ambiguous nature of reality.³⁰ Schaub observes of this passage that “Ellison seems to use the Rinehart episode to ground ‘social equality’ not on the rights of man but within a metaphysics of illusion which applies to all institutional and personal identity, without regard to race, creed, or color.”³¹ This “metaphysics of illusion” runs up against the fatalist determinism of the Brotherhood’s conception of history when the protagonist proceeds to seek some final reassurance in the counsel of his former teacher, Brother Hambro. Hambro justifies the Brotherhood’s abandonment of Harlem in abstract terms of “scientific necessity,” “progress,” “sacrifice,” “objectivity,” and “realism”³² Hambro explains calmly to the protagonist that “it’s impossible not to take advantage of the people” whereupon the protagonist realizes that the Brotherhood is nothing more than “Rinehartism.”³³ The metaphysics of illusion applies equally to both Rinehart’s charlatanism and the false objectivity of Marxism, with Rinehart at least providing the people with the thrills of “an electric guitar”³⁴ Marxist science is revealed as nothing but another mask behind which lurks a subjective will to power no less reprehensible than that possessed a ghetto hustler.

In Ellison’s Epilogue this logic is further extended, yet also subsumed within the metaphysics of nationalism. The figures of Rinehart and Jack are once again summoned up, and Rinehart made to stand for “freedom,” while Jack stands for “power.”³⁵ The protagonist rejects both as a path he will follow, but argues that the knowledge he has gained from Rinehart has made his world “one of infinite possibilities.”³⁶ Nevertheless the protagonist claims to have moved past illusion, as he has come to recognize the importance of “difference” and “diversity.”³⁷ He accuses the Brotherhood of being “tyrant[s]” because of their reductionism and denial of diversity, which for him personally means a denial not only of his freedom, but of his blackness, attempting to force him to become “colorless”³⁸ These realizations are all subsumed within the idea of “America,” which is “woven of many strands” and therefore embodies the transcendental principle of diversity.³⁹ Ellison writes:

It’s ‘winner take nothing’ that is the great truth of our country or of any country. Life is to be lived, not controlled; and humanity is won by continuing to play in the face of certain defeat. Our fate is to become one, and yet many- This is not prophecy, but description.⁴⁰

The metaphysics of illusion therefore gives way to a metaphysics of liberal pluralism, with America standing in for universal truth. With this knowledge of “ambiguity” in mind the protagonist gives up on the notion of a “public life and…the assumption that the world [is] solid and all the relationships therein” in order to pursue the truly authentic action of communicating the ambiguity of life through writing.⁴¹

However it must be asked whether Ellison’s conclusions in fact follow from the premises of his critique. The crux of Ellison’s critique of the Marxist epistemological approach lies in the Reinhart episode, and so it is from there that we will proceed. Here Ellison’s contention is that the world of fluidity and illusion which Reinhart inhabits cannot adequately be addressed by the Marxist method. He states that Brother Jack would “search out the proper political classification, label Rinehart and his situation and quickly forget it” (emphasis added) because it did not fit within his general conception of society as comprised of economically determinate subjects. While this may have been the Stalinist worldview, it hardly seems to be a fair description of Marx’s method. For example in the introduction to the Grundrisse, where Marx attempts to lay out the conceptual basis for his work in Capital, he writes the following:

…production, distribution, exchange and consumption form a regular syllogism; production is the generality, distribution and exchange the particularity, and consumption the singularity in which the whole is joined together…Production is determined by general natural laws, distribution by social accident, and the latter may therefore promote production to a greater or lesser extent; exchange stands between the two as a formal social movement; and the concluding act, consumption, which is conceived not only as a terminal point but also as an end-in-itself, actually belongs outside economics except in so far as it reacts in turn upon the point of departure and initiates the whole process anew.⁴²

Marx here argues that the social totality is in fact comprised of three levels of analysis: generality, particularity, and singularity. The generality has a law-like character, the particularity has a social-accidental character, and the singularity has an unpredictable and unrepresentable character. He then goes on to investigate how these levels of the social totality are dialectically interrelated to one another, eventually arriving at his conclusion:

The conclusion we reach is not that production, distribution, exchange and consumption are identical, but that they all form the members of a totality, distinctions within a unity. Production predominates not only over itself, in the antithetical definition of production, but over the other moments as well…A definite production thus determines a definite consumption, distribution and exchange as well as definite relations between these different moments. Admittedly, however, in its one-sided form, production is itself determined by the other moments. For example if the market, i.e. the sphere of exchange, expands, then production grows in quantity and the divisions between its different branches become deeper. A change in distribution changes production, e.g. concentration of capital, different distribution of the population between town and country, etc. Finally the needs of consumption determine production. Mutual interaction takes place between the different moments. This the case with every organic whole.⁴³

This passage may at first appear cryptic, but its meaning is in fact quite simple. Marx here is using the term “production” in two separate senses. The “one-sided form” of production is the simple form of production as the creation of things, whereas production in the sense of the “antithetical definition of production” refers to the concept of the mode of production – in other words to the totality.⁴⁴ Therefore Marx is here stating that the totality predominates over its various aspects because the whole is greater than the sum of its parts. The generality has a determining effect on the particularity and singularity, yet these levels also have a determining effect upon the generality. This mutual reciprocity manifests itself as the “predominance” of the totality, not as the predominance of the generality.

The unfortunate overemphasis on generality committed by Marxists therefore arguably does not arise from Marx’s fundamental ontology, but rather from the fact that Marx largely confined his analysis in Capital to the level of generality in order to draw upon the power of abstraction,⁴⁵ even as he acknowledged the importance of particularity and singularity in various parts of the analysis. With Capital (rightly) viewed as Marx’s masterpiece, many Marxists have tended to forget that his other excellent work in The Eighteenth Brumaire of Louis Bonaparte, The Civil War in France, and The Class Struggles in France does not follow this pattern, focusing to a much greater degree on particularity or “social accident” than on any law-like generality. This is to say that Marx conducted his analysis at a level he considered appropriate to his subject matter, and did not value general analysis over any other level, an interpretation consistent with his emphasis on the importance of totality over any one level of analysis.⁴⁶ Yet even when we turn to Marx’s general analysis of the laws of capitalist society in Capital, we still find a considerable sensitivity to the ambiguities of representation.

In Marx’s celebrated discussion of the fetishism of commodities, where he describes the peculiar manner in which value is represented, he writes the following:

Men do not therefore bring the products of their labour into relation with each other as values because they see these objects merely as the material integuments of homogeneous human labour. The reverse is true: by equating their different products in each other in exchange as values, they equate their different kinds of labour as human labour. They do this without being aware of it. Value, therefore, does not have its description branded on its forehead; it rather transforms every product of labour into a social hieroglyphic. Later on, men try to decipher the hieroglyphic, to get behind the secret of their own social product: for the characteristic which objects of utility have of being values is as much men’s social product as is their language. The belated scientific discovery that the products of labour, in so far as they are values, are merely the material expressions of the human labour expended to produce them, marks an epoch in the history of mankind’s development, but by no means banishes the semblance of objectivity possessed by the social characteristics of labour. Something which is only valid for this particular form of production, the production of commodities, namely the fact that the specific social character of private labours carried on independently of each other consists in their equality as human labour, and, in the product, assumes the form of the existence of value, appears to those caught up in the relations of commodity production (and this is true both before and after the above-mentioned scientific discovery) to be just as ultimately valid as the fact that the scientific dissection of air into its component parts left the atmosphere itself unaltered in its physical configuration.⁴⁷

Even though value possesses only a “semblance of objectivity” which has been identified by Marx as illusory, it nevertheless continues to persist as a social force. In his Representing Capital, Fredric Jameson identifies this passage as making use of Hegel’s concept of “objective appearance”:

We are then here in the realm of Hegel’s objective appearance, or what Marx calls the Erscheinungsform, the ‘form of appearance’ of a properly capitalist reality which is in that sense neither true nor false but simply real.⁴⁸

This “objective appearance” is remarkably similar to Ellison’s formulation of the protagonist’s epiphany in the Rinehart episode, and Schaub seems to interpret it in these terms: “That is, order is always a fiction, but nonetheless real. Surface in this sense has depth-has the substantial power to ignite action and reaction, to produce lived history.”⁴⁹ Indeed, Schaub sees Ellison’s thinking as representing a kind of “psychologized Marxism typical of new liberal discourse.”⁵⁰ But can Ellison’s thought in Invisible Man really be called Marxist at all? After all, paid apologists of the bourgeoisie such as New York Times columnist Thomas Friedman make use of Marxist concepts in their work, but no one would make the mistake of calling their work Marxist!⁵¹

It seems possible to read Ellison’s critique in Chapter 23 as a critique of Stalinist vulgarizations of Marx, rather than a total rejection of Marxism. Indeed, as Jameson states regarding this split between value-theory analysis (of the sort prominent in Soviet Marxism) and reification analysis (of the sort Ellison is conducting here) in Marxism:

…reification, the transformation of a potential experience into a commodity or, in other words, an object or thing, is a figural process, however real or social it may also be. Its critical practitioners will then inevitably end up moving in a different direction than those of the theory of value, if only in the sense in which parallel lines, prolonged to infinity, end up diverging. Both are essentially thematizations: that is, they translate and transform aspects of a given analysis or a given reality into terms which structure a discussion of the consequences in their own semi-autonomous fashion, becoming at one and the same time names for methods and codes for evoking reality itself.⁵²

In other words “economic” value theory analysis and “symbolic” reification analysis move within Marxism with the same revolutionary origins and orientation, yet diverge due to the method of their investigations.⁵³ In this view Ellison’s critique in Chapter 23 could be included with the general movement of reification analysis. yet the quietism and “paralyzed alertness” of Ellison’s Epilogue would seem to invalidate that interpretation. After all, Marx’s discussion of the “objective appearance” of value is located in the first section of Capital, and forms the point of departure for his subsequent analysis. Marx was not discouraged into inaction by his discovery of “ambiguity”, but rather carried on in the spirit of his famous eleventh thesis on Feuerbach.⁵⁴ He was not deceived into believing that this symbolic ambivalence constituted “infinite possibilities” in itself, but rather went on to investigate how the objective appearance of value formed, at the level of generality, a law-like social objectivity fraught with contradictions that pointed towards social revolution. These general findings could then be entered into a dialectical analysis of the moving social totality through its combination with an analysis of given particularities and singularities.⁵⁵ In the case of the situation presented in Invisible Man, this would entail situating the particularity of Harlem society within the general movement of the capitalist totality, while also considering how the fluidity of life in the Harlem ghetto in turn determined these broader levels of analysis.⁵⁶ While Ellison approaches such an analysis with his description of the paint factory in Chapter 10, and to some extent in his description of Harlem in Chapter 23, he ultimately abandons it in order to escape into idealist abstractions. His abandonment of Marxist analysis is not required by the limitations of Marx’s analysis, but only represents a rejection of a superficial form of Marxism. The resulting “paralyzed alertness” represents a theoretical and political retrogression from the potential presented by a more fully developed Marxism.

Endnotes

1That is, by attempting to critique orthodox “Marxism” through a critical reading of Marx’s work in order to establish the basis for an independent Marxism. This was the path taken by Gramsci, the Monthly Review school and other third worldist Marxists, the Frankfurt School, the Sartean existentialists, the Althusserian Structuralists, the Black Panthers, and to a lesser extent the Trotskyist movement.

2Namely, Stalin’s brutal betrayal of the FAI anarchists and POUM left-communists first to the liberals and then later to the fascists as documented in: George Orwell, “Homage to Catalonia,” last modified February, 2011, Project Gutenberg Australia, http://gutenberg.net.au/ebooks02/0201111.txt.

3Thomas Hill Schaub, American Fiction in the Cold War (USA: University of Wisconsin Press, 1991), 4.

4This terror was arguably so effective in smashing, demoralizing, and subsequently co-opting the American left that it has never recovered to pre-war levels of influence since.

5Schaub, American, 9.

6Schaub, American, 14.

7Schaub, American, 17.

8Schaub, American, 11.

9Schaub, American, 21.

10While Marcuse’s postwar work shares a number of characteristics of “new liberalism” in its turn towards subjectivism, it also differs in that it retains some notion of collective solidarity and grounds the (however remote) possibility of revolution in the overcoming of alienation. Herbert Marcuse, “One-Dimensional Man: Studies in the Ideology of Advanced Industrial Society,” last modified May, 2005, Official Herbert Marcuse homepage, http://www.marcuse.org/herbert/pubs/64onedim/odmcontents.html.

11Schaub, American, 92.

12Ibid.

13Schaub, American, 97.

14Schaub, American, 95.

15While these concepts are frequently used in Marxist analysis (often in combination with an analysis of race relations similar to that employed by Ellison) they are not clearly Marxist concepts in the manner of the analysis of the paint factory.

16Ralph Ellison, Invisible Man, (USA: Random House, 2001) 202.

17Ellison, Invisible, 205.

18Ellison, Invisible, 214.

19Ellison, Invisible, 221.

20Ellison, Invisible, 219.

21Ellison, Invisible, 228.

22Ellison, Invisible, 230.

23Schaub, American, 6.

24The concept of democratic centralism was first elaborated in 1868 by Jean Baptista von Schweitzer, a member of the German Social Democratic Party, and was further developed by Lenin in his famous What is to be Done? Lenin Rediscovered. Anarchists and Marxists alike have drawn on concepts from Marx to critique the ideas of democratic centralism. See: Lars T. Lih, Lenin Rediscovered: What is to be Done? in context, (The Netherlands: BRILL, 2006).

25Ellison, Invisible, 475.

26“rine” is a non-standard spelling of the word rind.

27Ellison, Invisible, 498.

28Ibid.

29Ibid.

30Ellison, Invisible, 499.

31Schaub, American, 111.

32Ellison, Invisible, 504.

33Ellison, Invisible, 504.

34Ellison, Invisible, 506.

35Ellison, Invisible, 575.

36Ellison, Invisible, 576.

37Ellison, Invisible, 577.

38Ibid.

39Ibid.

40Ibid.

41Ellison, Invisible, 576.

42Karl Marx, Grundrisse: Foundations of the Critique of Political Economy (Rough Draft), (England: Penguin Books, 1993), 89.

43Marx, Grundrisse, 99.

44David Harvey, “Reading Marx’s Capital Vol 2 – Class 1, Introduction,” last modified 2012, Reading Marx’s Capital with David Harvey, http://davidharvey.org/2012/01/reading-marxs-capital-vol-2-class-01/.

45Bertell Ollman, “Dance of the Dialectic: Steps in Marx’s Method Chapter 5,” last modified 2012, Dialectical Marxism: The Writings of Bertell Ollman, http://www.nyu.edu/projects/ollman/docs/dd_ch05a.php.

46 In the years following Marx’s death Gramsci would develop a sophisticated Marxist analysis of particularity, while the Birmingham School of cultural studies developed a Marxist analysis of singularity, but these did not become dominant methods of analysis until the second half of the twentieth century.

47Karl Marx, Capital: A Critique of Political Economy Volume One, (England: Penguin Books, 1990), 166.

48Fredric Jameson, Representing Capital: A Reading of Volume One, (London: Verso 2011), 26.

49Schaub, American, 111.

50Ibid.

51See: Thomas L. Friedman, The World is Flat: A Brief History of the Twenty-First Century, (New York, Farrar, Straus, and Girioux, 2005).

52Jameson, Representing, 27.

53This is not to disparage value-form analysis, as both forms of analysis are necessary to grasp the movement of the totality.

54“The philosophers have only interpreted the world, in various ways; the point is to change it.” Karl Marx, “Theses on Feuerbach,” last modified 2005, Marx/Engels Internet Archive, http://www.marxists.org/archive/marx/works/1845/theses/theses.htm.

55David Harvey, “Reading”

56Here Marxist human geography would provide a fruitful basis for the construction of the analysis.