Postscript on Cultural Keynesianism

Just a couple of days after writing the last post, which referenced Camille Paglia’s comparison of postmodernists to Wall Street financiers, a book I had recently ordered arrived in the mail: David Lehman’s Signs of the Times: Deconstruction and the Fall of Paul de Man, from 1991, when the philosophy still had very high cachet in academe. De Man was a Yale professor who had emigrated from Belgium after WWII, and was one of the primary proselytizers for deconstruction. Thought by his cult-like admirers to be a man of the Left (though his actual writing is rather apolitical), he was discovered after his death to have written pro-Nazi and anti-Semitic articles for Belgium’s collaborationist newspaper Le Soir in the early 1940’s. De Man turns out in Lehman’s investigation to have been a lifelong liar, bigamist, and petty thief. An opponent of deconstruction could use these facts as an ad hominem attack on such ideas (and in the wake of the scandalous revelations, many did), but Lehman does a great job of avoiding arguments, on the one hand that deconstruction necessarily entails the despicable facts of de Man’s life, and on the other that such facts are irrelevant to it.

I was particularly struck by this passage:

This is not a pipe.

Has deconstruction hit Wall Street? Richard Rand of the University of Alabama, co-translator of Derrida’s Glas, thinks so. In the spring of 1989, when Michael Milken was slapped with a ninety-eight-count indictment on charges of racketeering and securities fraud, Rand- an English professor- sent a letter to the Wall Street Journal defending the misunderstood junk-bond king as a “deconstructive financier.” Rand stated that the two things he had studied with rapt attention over the course of twenty years were Jacques Derrida’s texts and the Journal’s financial pages. To Rand’s mind there was quite a continuity between the two, and particularly between Derrida’s theoretical maneuvers and Milken’s leveraged buyouts. Milken had apparently made a deconstructive move when he turned the junk bond from “a ‘marginal’ (and despised) ‘supplement’ to the overall investment machine” into “a central and dynamic feature.” With his leveraged buyouts he had accomplished a “reversal” and “rewriting”- two more terms from the Derrida lexicon- of the merger-and-acquisition strategies already in place in postwar America.

There is nothing outside the text.

This Rand guy reminds me of a character named Murray in Don DeLillo’s 1985 novel White Noise, an academic who has abandoned arts and letters for the signs and wonders of the supermarket’s cereal isle. Reading Lehman’s account of de Man also brought to mind DeLillo’s main character, Jack Gladney, professor of the trendy new field he has pioneered, Hitler Studies.

But what is the significance of the parallel? Again I would refer to the Paul Cantor essay about hyperinflation in Thomas Mann’s “Disorder and Early Sorrow.” He writes that “Everything threatens to become unreal once money loses its reality.” Severed from its origin as a real commodity valued by real actors in a market economy, money becomes a manipulative game, and so to does language when severed from reality. I don’t think anybody will dispute Saussure’s insight that the relation between sign and signifier is arbitrary, but in no way does this have the nihilistic implications of post-structuralism. The selection of gold, say, as a medium of exchange has a mixture of objective and arbitrary qualities to it. Austrians stress the former, but Keynesian and other neoclassical theories tend to see only the latter, with the result that manipulation of the money is seen as the sole key to prosperity. But it is folly to see society as reducible to linguistic discourse and economy as reducible to finance.

A Critique of Cultural Keynesianism

I’ve often wondered why most literary and cultural theory is Marxist. Conservative claims notwithstanding, most academic intellectuals, especially those in the humanities, are not Marxists. They are not radicals, mostly, but rather polite NPR-listening Democrats. So why isn’t there, for instance, a Keynesian critical theory? A post over at the blog Steamboats are Ruining Everything provides a good example of what this might look like.

The post is quite rambling, proceeding from a scene in Jane Austen that provides a metaphor for capitalist speculation to ruminations on economic metaphors in general, to the current Keynesian stance on whether “WWII solved the Great Depression”, and then on to a quasi-“Crusoe” analysis (islanders trading shells) of the role of money and representation. Obviously, since I think Keynesian economics is wrong, I find that Keynesian assumptions mar the post. But otherwise it is quite interesting, especially comparing it with Paul Cantor’s essay “Hyperinflation and Hyperreality,” on Thomas Mann’s Wiemar-era short story “Disorder and Early Sorrow,” which similarly explores, from an Austrian perspective, the parallels between representation and value in money and representation and value in culture.

A few points:

1) Not long ago, I had coffee with an undergraduate who reported that he had just read Derrida and Lacan on Poe and was excited by the idea that criticism might be the new literature. Twenty years ago, when I read Derrida and Lacan on Poe, my professors teased me the same exciting possibility. It occurs to me now that the idea is about as old as, and has certain structural parallels to, the notion that finance is the new manufacturing. Like criticism over literature, finance traditionally supervised manufacturing yet was thought to be parasitic upon it and less “creative” than it.

Finance is not necessarily parasitic upon production, but it tends to replace real economic activity in a central banking regime, which breaks the link between money and real wealth. Likewise criticism is not necessarily parasitic upon literature. Just as one can probably find money and finance as soon as soon as trade emerges, so too literary theory is almost as old as literature (there’s no reason to assume it began ex nihilo with Aristotle’s Poetics). But the period from the 1970’s to the 1990’s was a sort of “theory bubble.” The metaphor has already been deployed by Camille Paglia in her essay “Junk Bonds and Corporate Raiders: Academe in the Hour of the Wolf,” from 1991, which may well be the point when the bubble began to burst. (The equivalent of the economic “flight into real value” being the flight of intelligent students out of the humanities.)

2) I don’t see how Keynes’ theory of the “propensity to consume” necessarily entails equal distribution of wealth (or at any rate a more equal distribution of wealth).

But according to Keynes, there is a problem with concentrating wealth in the hands of the rich: they don’t spend as much of it. They aren’t, after all, in need. “Consumption — to repeat the obvious — is the sole end and object of all economic activity,” writes Keynes, in a sentence quoted by Swartz. That is, money in the bank is for the interim worthless; its value is suspended until it is put into use. Give a rich person ten dollars, and he is likely to put nine dollars in his savings account. Give a poor person ten dollars, and he will have spent all ten by lunchtime on food and services, and its beneficiaries will be people who have to work for a living and who are therefore more likely to spend it themselves. The original ten dollars, if spent by a person of modest means, will multiply their value as they work their way through the economic system.

If aggregate consumption is the goal, and if higher incomes mean lower consumption, then it wouldn’t matter if wealth was redistributed. Consumption by the rich would go up, but consumption by the poor would go down. In fact, we are led to the paradox that we would all be poor if we were all rich, and all rich if all poor.

3) The moral of the story seems to be that when the rich have most of the money and hoard it, the symbolic value of money becomes somewhat unreal—the conversion of money, which is imaginary, into value, which is real, breaks down.

Again, see the Cantor essay on how this is precisely what happens because of the government monopoly on the production of money. But these views are not necessarily mutually exclusive, since a left-libertarian analysis would find that inequality of wealth increases with government monopoly. One can see a bit of this in Cantor and Mann, who find that capitalists (speculators and war-profiteers specifically) are in fact the main beneficiaries of inflation. (There is also a conservative thrust to both, too, but I won’t go into that.)

4) The whole analysis of islanders using shells as a medium of exchange imports facets which characterize a modern central-banking economy into a primitive market situation. Shells would not emerge as money if they had no intrinsic value to the islanders in addition to being a medium of exchange. Therefore it does not matter that “The durability of the shells misrepresents the nature of fish and breadfruit” because the shells are not mere stand-ins for other goods but also goods in themselves. But even if they were just symbolic, it is in the nature of all symbols, all media, to distort what they represent. This is in a sense a defect, but we only use a symbolic medium if it has advantages over the “real thing” as well (usually simplification, but “durability” often applies as well, especially with words).  The point is that in a free market we are much less likely to confuse the map with the territory than we do in a fiat money economy.

5) The question has to be asked of every liberal follower of Keynes: how do you square the belief that in the economy consumption is king with the desire for a less consumerist society? I have my own thoughts on this subject.

Gangstanomics in One Lesson

Party at the Fed! EconTalk’s Russ Roberts and Spike TV producer John Papola co-wrote this rap battle between Keynes and Hayek.

Rockin’ in the Free World

Hey, have you noticed that we never hear the phrase “Free World” applied to Western Democracies anymore? Maybe it’s because the U.S. doesn’t have another superpower to wage a propaganda war against, or maybe such a lie is just too damned obvious these days. Maybe we don’t really care if we are free or not. At any rate, it’s interesting to see articles not written from a radical perspective employing the term “Authoritarian Democracy” to our society. I agree with the article’s basic premise, that we (or rather that section of the bourgeoisie whose matter) have traded economic well-being for liberty. The main evil is identified with the neoliberal economic policies that came in with Thatcher and Reagan, which fits in nicely with the journalistic zeitgeist. Not that this is wrong, but rather too narrow. First of all, Keyensian macromanagement (or “macromancy” as the witty Sean Corrigan has called it) offers perpetual GDP expansion (and of course Jobs! Jobs! Jobs!) engineered at the commanding medium-heights while holding their nose at the “free market”. “Liberal” administrations have been as much gung-ho globalizers as “conservative” ones. Secondly, just because the power elite offers a trade-off between a charge card and what certain of our forebears knew as the “Rights of Englishmen” doesn’t mean that that the choice is real or necessary. And the article’s seeming conclusion that the whole mess is just a big tax dodge by the rich surely misses the point by a long shot.

But the takeaway message here is to not define freedom narrowly. It is worth considering, for liberals, that mass elections don’t mean freedom in any sense that matters in our daily lives. And libertarians who feel that their main job is forever spinning apologetics for “capitalism” ought to ponder the “Singapore model”, where lax economic regulation is mixed with extreme moral authoritarianism.

Nothing is allowed that the government fears might threaten public order or social stability; and the government’s sensitivities on this score are very delicate indeed. Spitting, chewing gum, yelling, or failing to flush a toilet in a public place; overstaying your visa; depicting (never mind engaging in) certain sexual acts; rashly employing irony or sarcasm; and, most important, criticising the government in ways the government deems not constructive – all these are swiftly and severely punished. Petty offenders are fined or caned; overzealous opposition politicians or trade unionists tend to be imprisoned for long stretches. Indiscreet newspapers or blogs are served with defamation suits. The local media is almost entirely under the control of state-owned companies, and even international publications like the Economist and the Far Eastern Economic Review watch their steps very carefully to avoid being charged in court. As Kampfner observes, Singapore “requires an almost complete abrogation of freedom of expression in return for a very good material life.”

The Monkey Speaks His Mind*

I’ve been revisiting Robert Shea and Robert Anton Wilson’s 1975 paranoid phantasmagorical comedy (I refuse to call it “science fiction”), Illuminatus! and had to share this hilarious bit. The novel features a number of talking animals, including a tribe of anarchist gorillas, one of which explains their reticence in dealing with humans because of their politics:

If it got out that we can talk, the conservatives would exterminate most of us and make the rest pay rent to live on our own land; and the liberals would try to train us to be engine-lathe operators. Who the fuck wants to operate an engine lathe?

No doubt some Ivy League Keynesian would be appalled at the low employment numbers among the gorillas and the deflated price of bananas.

*Yeah, I know gorillas aren’t monkeys, but who wants to let a good title go to waste?

Modern Procrustes, or consumerism is too important to be left to the consumers

Capitalism is dead, consumerism is king.
-Aldous Huxley, Brave New World Revisited

The great disease of modern life is that coercive institutions, or institutions which ultimately derive from and reap the spoils of coercion, are justified to the masses on the basis that they serve the needs of people both collectively and individually. But even when they most obviously cease to do this (public education, high finance, national defense, representative democracy), they are not done away with, and only halfheartedly, slowly, and irrationally are they reformed. Indeed, it should be obvious to anybody upon a moments reflection that none of our institutions- not a one- actually serve any need of ours. We serve their needs. We must change for their sake, for they will never (barring a crisis, which may be forthcoming) change for ours. For instance, I wrote a couple of months back:

“Keynesian policy insists that if aggregate demand falls, producers should not scale back or close up shop, but rather the government should pump them full of funny money to keep them going. Does this not mean that we are to serve a preconceived, ideal structure of production, rather than having it serve us? Does it not make a fetish of ceaseless GDP-growth at the expense of actual human desires? . . . How is it that few have called this an absurdity on its face? I am reminded of Chesterton’s critique of his friend and intellectual sparring-partner George Bernard Shaw’s ideas of progress:

Having come to doubt whether humanity can be combined with progress, most people, easily pleased, would have elected to abandon progress and remain with humanity. Mr. Shaw, not being easily pleased, decides to throw over humanity with all its limitations and go in for progress for its own sake. If man, as we know him, is incapable of the philosophy of progress, Mr. Shaw asks, not for a new kind of philosophy, but for a new kind of man. It is rather as if a nurse had tried a rather bitter food for some years on a baby, and on discovering that it was not suitable, should not throw away the food and ask for a new food, but throw the baby out of window, and ask for a new baby.”

I have just begun to read Kevin Carson’s book on organization theory, which begins by challenging assumptions shared, oddly, by many Marxists, corporate liberals, and libertarians, about economies of scale- in short, that a modern economy requires the organization of capital on a massive scale. To the vulgar libertarian, this means that gargantuan corporations are destined to stand triumphantly astride the globe, and only a motley crew of petty Washington bureaucrats and deluded left-liberal dreamers in American universities and the media conspiring with leftist demagogues and ignorant peasants in the third world could complain about it. To the vulgar Marxist this means that the bourgeoisie does their historically appointed role of dragging those same peasants kicking and screaming into the modern world before duly stepping aside and into the guillotine so that the proletariat can take over the means of production. The corporate liberal . . . well, we’ll get to that. I haven’t yet absorbed Carson’s full dissenting argument about economies of scale, but I find a quote from Keynesian John Kenneth Galbraith which relates to my point about how the people are made to serve the institutions rather than the other way around.

The need to control consumer behavior is a requirement of planning. Planning, in turn, is made necessary by extensive use of the advanced technology and capital, and by the relative scale and complexity of organization. . . . Thus it comes about that, as the industrial system develops to the point where it has need for planning and management of the consumer that this requires, it is also serving wants which are psychological in origin, and hence admirably suited to management and by appeal to the psyche.

A feverishly paranoiac and primitive brain, such as the one I possess, would be tempted to recall Huxley’s infamous- but quite misunderstood- consumerist and administrative dystopia Brave New World where the needs and tastes of the public are not left to chance, but rather inculcated in the very womb- or rather, in public hatcheries where budding little humanoids receive behaviorist conditioning and  hypnopoedic instruction.

In the nurseries, the Elementary Class Consciousness lesson was over, the voices were adapting future demand to future industrial supply. “I do love flying,” they whispered, “I do love flying. I do love having new clothes, I do love . . .

This is Galbraith’s “planning and management of the consumer” taken to its logical conclusion. Of course Galbraith is famous for an essay called “The Dependence Effect” where he complains that corporations don’t really sell people what they want, but rather insidiously use advertising to tell consumers what they want. Hayek dismissed Galbraith’s claim as a “non-sequitir“, and Murray Rothbard concurred, but I think they should have taken him more seriously. After all, it’s not as if Galbraith, as a Keynesian corporate liberal, is against this manipulation per se, but only wishes it to entrust it to wise technocrats- the Mustapha Monds and Benito Hoovers of the world- instead of greedy Madison Avenue types (or perhaps in partnership with them). Far from wanting to abolish corporate capitalism, Galbraith sees some purpose in it other than that intended by the capitalists.

. . . a benign providence . . . has made the modern industry of a few large firms an excellent instrument for inducing technical change. It is admirable equipped for financing technical development. . . . Technical change has long since become the preserve of the scientist and engineer . . .

Not for Galbraith a decentralized and competitive economy. You won’t see him bandying the rallying cry “Small is Beautiful” or desiring “human scale” technology and industry. Indeed, “there must be some element of monopoly in an industry if it is to be progressive.” Carson writes about how Galbrath’s “New Industrial State” takes the economy out of the hands of the consumer, whom it ostensibly serves.

For Galbraith, the “accepted sequence” of consumer sovereignty, or Misesean “dollar democracy,” in which consumer demand determines what is produced, has been replaced by a “revised sequence” in which oligopoly corporations determine what is produced and then dispose of it by managing consumer behavior. In contemporary terms, the demand-pull economy is replaced by a supply-push model.

But what is this progressive inducement of “technical change”? It behooves us to return to Huxley’s nightmare conception of the highest state of liberal technostructure. From his introduction to the 1946 to Brave New World (first published in 1932):

All the existing patterns of human life will have to be improvised to conform with the nonhuman fact of nuclear power. Procrustes in modern dress, the nuclear scientist will prepare the bed on which mankind must lie; and if mankind doesn’t fit- well, that will be just too bad for mankind. There will have to be some stretching and a bit of amputation- the same sort of stretching and amputations as have been going on ever since applied science really got going into its stride, only this time they will be a good deal more drastic than in the past. These far from painless operations will be directed by highly centralized totalitarian governments.

That the specific technology that concerns Huxley is nuclear power is irrelevant. What is relevant is how often the Procrustean theme is sounded in relation to technology. In playing the liberal technocrat as scientific Procrustes, Galbraith is in a long line going back to at least August Comte, and especially in America John Dewey, who saw the purpose of modern education as preparing the individual for the “conflict between institutions and habits originating in the pre-scientific and pre-technological age and the new forces generated by science and technology” (Liberalism and Social Action). These “institutions and habits” are clearly what Huxley meant by “existing patterns of human life” or in other words, what we would all be doing if scientific social planners didn’t come along to dragoon us into schools and corporations and the military. (Or, let me be more sophisticated about it, allowing us to choose which of these wonderful career paths we’d prefer after they’ve destroyed all the alternatives they don’t like.) Speaking of schools, it’s important to note that these precursors to Huxley’s mass hatcheries and conditioning centers are what dissident teacher John Taylor Gatto has called an “administrative utopia”, which he describes in Procrustean terms as,

a peculiar kind of dreaming by those in power, driven by an urge to arrange the lives of others, organizing them for production, combat, or detention. The operating principles of administrative utopia are hierarchy, discipline, regimentation, strict order, rational planning, a geometrical environment, a production line, a cellblock, and a form of welfarism. Government schools and some private schools pass such parameters with flying colors.

Huxley later called his World State the “welfare-tyranny of Utopia”, which is what Gatto appears to be describing. Actually, many of our institutions pass such parameters. It also recalls Michel Foucault’s famous observation, (glib and grandiose like most things he said, but resonates nonetheless) “Is it surprising that prisons resemble factories, schools, barracks, and hospitals, which all resemble prisons?”

(By the way, if you doubt the authoritarian streak in modern liberals, try an experiment and tell one that you don’t believe anyone should be forced to go to school.)

Carson addresses the issue of the Austrians dismissal of things like advertising and the dependence effect when it comes to corporations managing consumer demand, insisting that not only do the former get great assistance from the state but that they should be viewed as part of the same apparatus of propaganda as the government schools austro-libertarians complain about.

. . . government schools and the USDA were integrally involved in the effort to manufacture a mass consumer culture. The USDA through most of the 20th century conducted a large-scale barrage of cheerful, taxpayer-funded agitprop on behalf of the denatured, factory-farmed produce of corporate agribusiness, with propaganda handouts as late as the 1970’s dismissing as “myths” the belief that some foods (e.g., bleached white flour) were less nutritious than others, or that soil depletion affected the nutritional quality of food. Home economics classes from the 1920’s on stigmatized home-grown vegetables and home-baked bread as old-fashioned and atavistic, and heralded the modern, up-to-date housewife who fed her family scientifically out of tin cans.

Recall Dewey’s desire to rid the populace of its “pre-scientific and pre-technological” habits. The politics of food-production and consumption and its environmental and health effects have become important in recent years with popular books like The Omnivore’s Dilemma. Usually these issues are pushed by liberal critics of the market, and dismissed by its defenders. But as we see, not only is the situation not a natural outgrowth of free-market conditions, but is another instance (along with urban sprawl) of liberals trying to remedy a problem their intellectual predecessors helped to create.

Taking our cues from Galbraith and Huxley, we really should see government and business leaders as co-captains of the corporatist ship, which explains why Keynesian economics, with its obsession with “full employment” and insistence on perpetual spending and no consumer saving, makes the most sense for this system. Carson quotes from Jeffrey Kaplan article called “The Gospel of Consumption” that describes how business leaders were upset to discover that the basic needs of consumers could probably be taken care of with “three days work a week”. National Association of Manufacturers President John E. Edgerton set the tone for elite opinion, both governmental and corporate:

“I am for everything that will make work happier but against everything that will further subordinate its importance. The emphasis should be put on work- more work and better work.” “Nothing,” he claimed, “breeds radicalism more than unhappiness unless it is leisure.”

Apparently it never occurred to Edgerton that one of the things which might make work happier is the subordination of its importance. At any rate, more work (if not better work) has always been at the top of the Keynesian agenda. Ever wonder why unemployment per se should really be such a vexing problem? What if we really don’t want to work all that much? Edgeton’s words could come right out of the mouth of Huxley’s World Controller Mustapha Mond, and indeed Mond, explaining the operating principles of Brave New World to John the Savage, describes their economy in similar terms:

“Technically, it would be perfectly simple to reduce all lower-caste working hours to three or four a day. But would they be any happier for that? No, they wouldn’t. The experiment was tried, more than a century and a half ago. The whole of Ireland was put on to the four hour day. What was the result? Unrest and a large increase in the consumption of Soma; that was all. Those three and a half hours of extra leisure were so far from being a source of happiness taught people felt constrained to take a holiday from them. The Inventions Office is stuffed with plans for labour-saving processes. Thousands of them.” Mustapha Mond made a lavish gesture. “And why don’t we put them into execution? For the labourers; it would be sheer cruelty to afflict them with excessive leisure. . . .

What compassion for the happiness of the workers! And Big Brother surely loves them, too. Perhaps also, though, the workers might in their leisure time, rather than drugging themselves with the state-provided intoxicant, contemplate what a bizarre society they live in and how it might be made different, and what exactly they needed these World Controllers for. Obviously that would be the beginning of the end for Brave New World.

Of course all this work should not indicate that there ought to be no play. One of the most prominent features of Brave New Worlders is their promiscuity, addiction to fleeting pleasure and childlike need for instant gratification. Mond says “Industrial civilization is only possible when there’s no self-denial. Self-indulgence up to the very limits imposed by hygiene and economics. Otherwise the wheels stop turning.” Spend spend spend! The thrifty are robbers of the public good! More credit! More debt! Hence also the obsession with never having “idle resources”. What a neat arrangement: Huxley’s Keynesian utopia simultaneously achieves the goals of the state, the corporation, and the counterculture. Huxley later wrote, “As political and economic freedom diminishes, sexual freedom tends compensatingly to increase. And the dictator (unless he nees cannon fodder and families with which to colonize empty or conqured territories) will do well to encourage that freedom.” I am amazed at how much Huxley got right. With the “unless he needs cannon fodder” proviso he even foresaw the neoconservatve program of family values!

Another text that is brought to mind is one that does not have a high reputation with libertarians: Adorno and Horkheimer’s essay “The Culture Industry” from Dialectic of Enlightenment. I must confess I reacted very strongly against it when I first encountered it. But it basically applies the Procrustean theme (and the Dependence Effect) to radio, movies, television, and publishing:

It is alleged that because millions participate in it, certain reproduction processes are necessary that inevitably require identical needs in innumerable places to be satisfied with identical goods. The technical contrast between the few production centers and the large number of widely dispersed consumption points is said to demand organization and planning by management.

When I first read this, I thought, “alleged by who?” But even then, in my vulgar libertarian phase, I should have known who. Of course Adorno and Horkheimer do not examine the role of the state in concentrating “production centers” or extol the virtues of a freed market. But in school I wrote a reaction essay about how they did not understand “how the market works” which involves feedback mechanism and Hayekian disbursed knowledge and so on and would not allow the culture industry such a captive audience, which I now see as an overly rosy view of the current market. That’s how culture would work in a free market, but we do not have anything close to a free market. The culture industry described by Adorno and Horkheimer is precisely the Galbrathian model “in which oligopoly corporations determine what is produced and then dispose of it by managing consumer behavior.” (I should note that in media we do have a much more competitive market than when the essay was written in 1944, and also that Adorno’s pessimism and snobbery colors everything he wrote, including and especially this essay. Even during that low period in modern life, culture never was quite “a system which is uniform as a whole and in every part” as bombastically claimed.)

Speaking of culture, I don’t want to get into where exactly the management of mass society is heading, but I would look to the denizens of Brave New World for a clue. Chesterton accused Shaw of desiring “a new baby” and the phrase is apt to describe both the products of Huxley’s “welfare-tyranny of Utopia” (as he brilliantly put it in the 1946 intro) and the culture industry of America today. (By the way, Jeffrey Herbener suggests in a speech* that Keynes’s Utopian goal with things like aggregate demand-management and the socialization of investment was to make people more present-oriented, less action-oriented, and to bring about a society of instant gratification. The old romantic dream of the death of homo-economicus could well become Huxley’s nightmare of “false, lying happiness” or Adorno’s “ecstasy without content”*.)

But the question should be asked, does technological society actually require reconstructing humanity? Not at all, if it is emergent, decentralized, voluntary. At the time he wrote his dystopia, Huxley gave us only one other option to the perpetual babyhood of consumerist civilization, which is the primitive mysticism of John the Savage, who ends the book flagellating himself like some visionary monk from the middle ages. The average libertarian, who is a committed rationalist (as I am) is likely to say, “No thanks, I’ll take my chances with the feelies and centrifugal bumble-puppy and sex-hormone chewing gum thank you.” (And no doubt many “cosmopolitan” Reasonoids would find Huxley’s World State a fairly groovy place to live.) But though Huxley never rid himself of his mystic streak or discomfort with technological civilization (which probably involved some family romance issues, given Huxley’s lineage), by his 1946 introduction he had come to regret not providing a “possibility of sanity”. For his third option he invoked two names well known to left-libertarians. “In this community economics would be decentralist and Henry-Georgian, politics Kropotkinesque and co-operative.” This would be close to the mutualism Carson is arguing for. Now I’m not a mutualist, but I have some mutualist sympathies, and certainly I’d take Carson’s, or even Kropotkin’s, version of anarchy over the Brave New World Order prepared by the Procrustean technocrat any day of the week.

*You’ll have to scroll to about 3/4ths of the way through to get to the part about Keynes.

* A phase which appears in a dour but fascinating Adorno essay from the 1930s called “The Fetish-Character in Music and the Regression of Listening” which assails the taste for pop as well as a prototype of the tech-geek, the “ham radio enthusiast”.

Is Mises.org stealing my metaphors?

No, probably not, but I should point out that I came up with the comparison of Keynesian stimulus to a perpetual motion machine weeks before William L. Anderson published his article, “Is the Economy a Perpetual Motion Machine”. It’s a fairly obvious comparison, really. He also explains the fallacy a lot better than me, so do yourself a favor and read the article.

Keynesianism is full of mechanistic metaphors of engines and hydraulics. I also compared the phenomenon of staglflation within that metaphorical system to a car that is simultaneously slowing down and speeding up- it should be impossible.

Here’s another comparison I’m particularly proud of. Keynesian policy insists that if aggregate demand falls, producers should not scale back or close up shop, but rather the government should pump them full of funny money to keep them going. Does this not mean that we are to serve a preconceived, ideal structure of production, rather than having it serve us? Does it not make a fetish of ceaseless GDP-growth at the expense of actual human desires? (There are a number of problems with GDP. Austrian economist and stockbroker Peter Schiff has pointed out that since GDP only measures expenditures, from government boondoggles and make-work schemes, to the inflated bubble-prices of the modern equivalent of tulipomania in the private market, much of GDP represents, not wealth-creation, but wealth-destruction. And Kevin Carson has challenged the most-cited of economic statistics vis-a-vis actual quality of life: “We often hear that the per capita GDP in Italy or Ireland is a fraction that of the U.S., and yet the actual quality of life doesn’t seem to be anywhere near that small a fraction of our own. The reason is that much of our increased GDP results, not from a proportionate increase in the value of the goods and services we consume, but from the increased ratio of overhead cost to the value of what we consume. Suppose we decided we could meet our need for bread by baking it in our own ovens, or producing some other good in the household to exchange with a neighbor’s bread, with a fraction of the hours of wage labor required to buy it. Suppose we decided that we could meet a major part of our needs through such informal and household production, and non-monetized exchange through a neighborhood or community barter network.  The portion of GDP resulting from that wage labor and the purchase of those store goods would simply disappear.  But our quality of life would be improved.”) And it is the free market that is supposed to attend to mere “materialistic” pursuits at the expense of loftier spiritual interests? How is it that few have called this an absurdity on its face? I am reminded of Chesterton’s critique of his friend and intellectual sparring-partner George Bernard Shaw’s ideas of progress:

Having come to doubt whether humanity can be combined with progress, most people, easily pleased, would have elected to abandon progress and remain with humanity. Mr. Shaw, not being easily pleased, decides to throw over humanity with all its limitations and go in for progress for its own sake. If man, as we know him, is incapable of the philosophy of progress, Mr. Shaw asks, not for a new kind of philosophy, but for a new kind of man. It is rather as if a nurse had tried a rather bitter food for some years on a baby, and on discovering that it was not suitable, should not throw away the food and ask for a new food, but throw the baby out of window, and ask for a new baby.

Anyway, I continue to rely on the Mises Institute and the Austrians (supplemented by a few rabble-rousers like Carson) for the economics, while concentrating my own efforts on literary conceits.

The Government as Perpetual Motion Machine

"Liquidity": Capitalism as Ouroboros

In the car this morning I caught a snippet of an NPR segment on the stimulus package (you know, one of those great ones where a liberal Keynesian debates a conservative Keynesian), and I heard someone justifying the level of spending in precisely the same terms as Krugman had on “Fresh Air several months ago: the government spending revives a stagnant economy, and then the debt and deficit the spending creates is then paid back with increased tax revenue, siphoned off as it were, from the newly healthy economy. Even if this were not a classic case of the circular logic fallacy as I argued before, and that this is in fact how the economy works, does it not make the government a kind of economic perpetual motion machine? And if it is that, why stop at 800 billion and change, when we can wipe out poverty forever by cranking it up? I’m sure a Keynesian will argue that an “overheating” might take place in the form of runaway inflation. This relies on the shopworn metaphor of economy as automobile, with deflation being like running out of gas. But then how can you explain stagflation, which would have the car somehow slowing down and speeding up at the same time?

Keynesian economics is supposed to be built on a number of “paradoxes”. Might they not just be contradictions?

Obama’s Economicon

A new cartoon from Joe on the magical art of stimulus:

Here’s a look at what’s inside the Economicon, courtesy of the YAL:

Are we all blockheads now?

It’s always nice to see people associated with the Mises Institute on national TV, such as this interview with Thomas Woods on Glenn Beck. Also nice to hear Keynes and the New Deal bashed. Yes, the Keynesians are blockheads- but sadly, they aren’t the only ones.

Beck: "He's a good man, but he's not quite right in the head."

Here’s the problem with Glenn Beck, and indeed many libertarians: thought he advocates the right position for the government on the financial crisis (do nothing), but he complains that “the rich are being demonized”. It’s precisely statements like these that make libertarians seem to most people like shills for the corporate plutocracy. In truth, it is the exact opposite, since “the rich” are the prime beneficiaries of both the bailout and the stimulus plan, while the rest of us would benefit more from a libertarian monetary system. I know that his point is that people simply blame those who have the money instead of those with the monopoly on making the money, but it still sounds wrong. And I suspect “average schmo” Beck has little idea how closely tied together the plutocrats, the bureaucrats, and the politicians really are- just like his liberal counterparts, who prefer a different part of that triumvirate.

Libertarianism, correctly understood, is a populist philosophy, and has much too gain from “demonizing the rich”- but the right “rich”, for the right reasons.

As good as conservative critics of the New Deal like Woods, Folsom, and Jim Powell are, they do not have a monopoly. A critique of the New Deal and FDR from a left-wing perspective exists also. I recommend the essay “The Myth of the New Deal” by Ronald Radosh, from A New History of Leviathan: Essays on the Rise of the American Corporate State, co-edited by Radosh and Murray Rothbard. Written in 1972, this remarkable book brings together historians from the anti-imperialist and laissez-faire Old Right like Rothbard with the New Left revisionists in order to present an alternative history of modern America as a radical antidote to the corporate state center. This is precisely the sort of alliance we need today.

Oh, and that Newsweek cover story Beck mentions: though the title claims “We are all Socialists Now”, its actual content reveals (unwittingly of course) that we fit the model, not of socialism or capitalism properly understood, but a neo-mercantilist corporate fascism.

“. . . mechanically fascism, corporate capitalism, and communism are so closely allied as to be almost indistinguishable. A committee of Communist commissars, a corporate board of directors, a syndicate of Fascists all work in about the same way.”

-Adolf Berle