« Intelligence & violence | Main | Beyond social mobility »

December 17, 2015

Comments

Deviation From The Mean

"In The Fiscal Crisis of the State, James O'Connor argued that the capitalist state served two functions: accumulation, or helping capitalists' profits; and legitimation, or policies that buy social harmony and so create the political stability businesses require."

Capitalism is a thing in motion and has inherent contradictions that continually need to be resolved, one way or the other.

So we can view the state, among many other things, as the consciousness of social capital and not private capital. Or it brings a social outlook to all the individual private capitals.

Joan Robinson called it, keeping the show on the road.

The state will do this and to hell with any private capitalist.

In order to get the logic we can't think of the worker as being exogenous to capitalism or even antagonistic to it, but a part of it. So if the state sometimes panders to workers desires it does so from seeing the worker as being a part of a functioning capitalism, whose needs have to be met in order for the system to operate.

In this way we can think of the state as the 'big other'. Something that has grown organically has capitalism has developed.

But of course history and all that comes into play, so we need to factor all those things into the equation when looking at the EU debate.

Luis Enrique

If you say the welfare state and the government buying stuff come under the heading of managing affairs in the interest of the bourgeoisie, your definition is so broad as to be meaningless. What government could escape that accusation?

and a minor point, but the implicit subsidy for banks could be said to end, in the sense that banks may be required to pay insurance into a bailout fund:

http://ec.europa.eu/finance/general-policy/banking-union/single-resolution-mechanism/index_en.htm

[I am not sure if that fund is a proposal or a done deal]

Deviation From The Mean

Luis,

without wishing to label a point, you can't rely on easy formulas to answer the question of how Marxists arrive at the conclusion, "the state is a committee for managing the common affairs of the whole bourgeoisie.".

This requires a study of history, anthropology etc. This is why your point about the definition being so broad is way off the intellectual point. It isn't a definition but a whole body of work from multiple fields that arrive at the conclusion. So the welfare state is a product of class dominance etc but in order to prove this conclusion you have to have the body of work. The end result, the welfare state is the product of a series of historical developments, forever in motion, in order to understand it you have to study all the historical developments.

It is, I think, possible to cherry pick a few examples to say, look there is a strong indication that the state is nothing but "the committee for managing the common affairs of the whole bourgeoisie" but at the end of the day you can only explain it via a body of work, of research and examination etc.

I would start, as an introduction, right back with Engels, Origin of the Family, Private Property and the State and make your way forward from there.

I suspect then you will begin to understand why your objection was put in the wrong way!

Anarcho

Actually, this is not the "Marxist" theory of the state as anarchists had already argued this before Marxism was invented.

Proudhon had, for example, in 1846 argued that the state "finds itself inevitably enchained
to capital and directed against the proletariat." Needless to say, Marx in "The Poverty of Philosophy" completed distorted Proudhon's arguments and ideas.

What would be the test of the Marxist theory of the state is whether it does not have (class) interests of its own and, moreover, whether the current state could be captured by "political action" and used to introduce socialism (after appropriate "smashing" of the state machine, i.e., the bureaucracy).

Sophisticated Marxists generally argue yes to the former (except when attacking anarchism, of course) and so contradict Marx in 1848 (Marx in 1852 contradicts Marx in 1848!). In terms of the latter, most Marxists (following Lenin) would argue that Marxism did not argue that at all -- and so ignore the substantial textual evidence that Marx and Engels did.

As discussed here: http://anarchism.pageabode.com/afaq/secH3.html#sech310

In terms of a "new" state being a tool for human liberation (the "Marxist" theory of the state in practice) well the Bolshevik experiment showed that this is not the case:

http://anarchism.pageabode.com/afaq/secH6.html

Overall, so far the anarchist theory of the state has been confirmed -- it is an instrument of the economic ruling class (capital), it cannot be captured by the working class and it has its own (class) interests which can, and do, come in conflict with the economic ruling class.

Luis Enrique

DftM,

well, there's another point, which is that you're always going to be regarded as spouting cobblers by most people if you say something like: The state works in the interests of the rich - look how it provides welfare payments for people with no jobs or disabilities! and then respond to objections by saying a life time of study is required to understand the deep truths

Luis Enrique

DftM

if you want to say that in order to sustain a system which overall serves the interests of the rich against the interests of the poor, then within that system government must do some things to help the poor, otherwise the system would be overthrown, then fine. But then citing those things the government does to help the poor within the system does not make your case, you need to demonstrate that the system overall is bad for the poor in comparison to realistic alternatives.

Deviation from The Mean

Luis,

never have I encountered such a misunderstanding of what I said than your previous comment. I will just respond to a couple of things, but have given up on the rest.


"which is that you're always going to be regarded as spouting cobblers by most people if you say something like: The state works in the interests of the rich - look how it provides welfare payments for people with no jobs or disabilities!"

Well my answer to that is 'most people' need to think a bit harder and that we should not be constrained by what 'most people think'. We now live in a world where the wealth of the 1% is more than the combined wealth of the bottom 50%. Yet we still have welfare payments to the poor and disabled. There is no contradiction between welfare and a system that works for the enrichment of a few. If you take the view that I don't want to think too hard about anything then I agree this idea seems counter intuitive.

"then respond to objections by saying a life time of study is required to understand the deep truths"

I didn't say this. I said you had to read the body of study already undertaken by other people to begin to understand the issue. So you yourself do not have to undertake the study but you could try reading the work of others. Unfortunately some effort is required if you want to understand things. I wish it could be easier.

Luis Enrique

DftM

"Yet we still have welfare payments to the poor and disabled. There is no contradiction between welfare and a system that works for the enrichment of a few"

right, but that's what I have been saying too - fine to say *the system* works for the enrichment of a few, but daft to point to the welfare state as an example of it doing that. Better to say the welfare state is something helps the poor just enough so that they don't revolt, or something like that.

you do not need to read any body of scholarship to understand the idea that a system which is overall bad for group X may contain elements which are in isolation taking system as given good for group X.

Food is good for people. If you run a forced labour gulag, you provide food otherwise system collapses. If you want to say gulags are bad, saying: look how they provide food! not a good argument.

lifetime of study was hyperbole

Luis Enrique

DftM

and "you had to read the body of study already undertaken by other people to begin to understand the issue" is not a statement designed to win friends and influence people.

you have to study for a long time to learn economics, but you still ought to be able to explain an idea from economics is simple terms. Is think it was Feynman who said if you cannot explain an idea to a 9 year old, you do not understand it yourself. I do not see why that doesn't go for Marxist intellectuals.

Deviation from The Mean

"Is think it was Feynman who said if you cannot explain an idea to a 9 year old, you do not understand it yourself."

No, he said it about students. The point about students is that they are already studying the subject! What I am saying is, from your first response to Chris it is obvious you know so little about the subject that you need, for yourself, to go and do some studying and then we will be able to explain it!

I don't Feynman was ever quoted as saying, "Degree courses should only take a few weeks because we can explain everything to a nine year old in 10 minutes"


"Better to say the welfare state is something helps the poor just enough so that they don't revolt, or something like that."

I see your problem, you treat everyone as if they were nine years old!


"you do not need to read any body of scholarship to understand the idea that a system which is overall bad for group X may contain elements which are in isolation taking system as given good for group X."

Who ever said you did? I said to understand and comprehend the statement "the state is a committee for managing the common affairs of the whole bourgeoisie" you can't just throw out a few examples and claim this proves the idea. This was leveled at Chris. But I used your comment as an example of why this is the case. Your argument that

"If you say the welfare state and the government buying stuff come under the heading of managing affairs in the interest of the bourgeoisie, your definition is so broad as to be meaningless"

totally misses the intellectual point.

But the only way I think you can understand why this is, isn't that we throw you a few more examples at you but that you start reading the body of work behind the statement. You, taking your lead from a Feynman quote, think study can be discarded and that things can be explained in a sentence or 2. That isn't my experience of higher education!

Bob

Ah yes The Fiscal Crisis of the State. What a complete load of total bullshit that was. The anti-state Marxists and the Commies and neoliberals teaming up to destroy the post war consensus. These "intellectuals" started steering the progressive agenda down the wrong road and the car is still going.

"To emphasise his point, O’Connor quoted from testimony given by the Chairperson of the US Federal Reserve Bank (Arthur F. Burns) to the Joint Economic Committee hearings on July 26, 1972:

We stand at a crossroads in our fiscal arrangements. Many of our citizens are alarmed by the increasing share of their incomes that is taken away by Federal, Stated, and local taxes … The propensity to spend more than we are prepared to finance through taxes is becoming deep-seated and ominous. An early end to Federal deficits is not now in sight. Numerous Federal programs have a he growth of expenditures built into them, and there are proposals presently before the Congress that would raise expenditures by vast amounts in coming years."

Every economic and social class and group wants government to spend more and more money on more and more things. But no one wants to pay new taxes or higher taxes on all taxes. Indeed, nearly everyone wants lower taxes, and many groups of agitated successfully for tax relief. Society’s demands on local and state budgets seemingly are unlimited, but people’s willingness and capacity to pay for these demands appear to be narrowly limited. And at the federal level expenditures have increased significantly faster than the growth of total production …

"We have termed this tendency for government expenditures to outrace revenues that “fiscal crisis of the state.”

In the Introduction to the 2009 reprint of his book by Transaction Publishers, we read that:

"The state has three ways to finance increased budgetary outlays: create state enterprises that produce social expenditures; issue debt and borrowing against future tax revenues; raise taxes and introduce new taxes. None of these mechanisms are satisfactory. Neither the development of state enterprise nor the growth of state debt liberates the state from fiscal concerns. Similarly, tax finance is a form of economic exploitations and thus a problem for class analysis."

Nope. The government issues the currency. All spending works by crediting bank accounts and taxes debit bank accounts. Governments can "print money." This is either not mentioned or vilified.

The crisis he envisages is that the capacity to tax lags behind the ever-increasing state expenditures, which mean that fiscal deficits rise. What is wrong with this?

First of all, 100% of government spending will come back as tax if there is no saving in the spending chain. Government spending causes the tax and 'borrowing' to fund government spending. So it is not true that the deficit is under control of the government. The deficit is just net saving. Does he have anything against saving?

The cost of spending is the real resources it uses. Any spending, public or private, can cause inflation. And again this whining about tax. On the other hand the left seem to be addicted to raising tax for "revenue." Taxing flows is absolutely necessary to free up resources. You can't run a society without tax.

But on the other hand tax only frees up general fungible resources. It is not magic. The Holy Power of Taxation does not cause Doctors to form from the soup. You have to have long term planning for these things.

Bob

"Secondly, its refusal to adopt a high basic income that would allow workers to opt out of degrading work shows that it prefers to ensure that capitalists get a big supply of labour than that people get real freedom."

Pipe dream. They want others to work and like to work themselves. And you have to deal with people *as they are* not as you would like them to be.Humans are tribal and resentful. Sure we can compete away crap jobs. But saying 'work' equals 'crap jobs' is a strawman. It is the Marxists who think they have a right to free money who are the weird ones.

And your lot are also responsible for the Eurozone:

"But in the early 1970s, just as governments were becoming financially unconstrained and floating their exchange rates, which freed their central banks from engaging in official foreign exchange market intervention, the intellectual (Marxist) ‘left’ was becoming besotted with notions that the deep crisis was to be found in the lack of taxing capacity of governments.

The situation became worse when the ‘left’ started incorporating the increasing global nature of finance and production-supply chains into their analysis. They wrongly assumed that these trends further undermined the capacity of states to spend and maintain full employment.

The ‘fiscal crisis of the state’ and ‘globalisation’ were held out as the two major impediments to state sovereignty. Nothing could have been further from the truth. But the ‘left’ bought it and in the 1970s, the neo-liberal resurgence as Monetarism, then privatisation and austerity, became virtually unchallenged and the ‘left’ disappeared up its own post-modern whatever.

Academic journals became overwhelmed with all sorts of post modern deconstructions of this and that, while the main game, the macroeconomics debate was lost – in a no contest. James O’Connor had taught the ‘left’ that the government was financially constrained and could not run continuous deficits because it would run out of money.

In the European context, the unchallenged domination of the Monetarists was an important reason why France and Germany were able to come together and advance the move towards monetary union.

In 1972, the Governor of the Danish Central Bank said):

"I will begin to believe in European economic and monetary union when someone explains how you control nine horses that are all running at different speeds within the same harness. "

What eventually allowed the ‘nine horses’ to be harnessed together was not a diminution in Franco-German national and cultural rivalry but rather a growing homogenisation of the economic debate.

The surge in Monetarist thought within macroeconomics in the 1970s, first within the academy, then in policy making and central banking domains, quickly morphed into an insular Groupthink, which trapped policy makers in the thrall of the self regulating, free market myth.

The accompanying ‘confirmation bias’, which arises when people or groups only accept information that ratifies their prior beliefs and reject contrary facts, overwhelmed the debate about monetary integration that was being conducted along ‘Keynesian’ lines at the time – that is, the recognition that there had to be a federal fiscal capacity in order for the union to be effective.

Across Europe, unemployment became a policy tool aimed at maintaining price stability rather than a policy target, as it had been during the Keynesian era up until the mid 1970s. Unemployment rose sharply as national governments, infested with Monetarist thought, began their long-lived love affair with austerity."

http://bilbo.economicoutlook.net/blog/?p=31403

Bill Mitchell - The origins of the ‘leftist’ failure to oppose austerity

The ‘left’ was disappearing into its post modern haze by this time.

Luis Enrique

well it's not my experience of higher education either but once you are proudly clasping your doctorate, it's not a bad idea to be able to explain a few things you learnt in simple terms.

Bob

The question is - do you support corporatism or democracy?

The government should not pander to businesses by giving them cheap labour. For those who prefer to do nothing at all, a person should be able to work only as much as required to support that. The world doesn’t owe any able bodied, able minded individual free meals and a roof over their head. Sorry.

"mmigration controls are hurting firms."

But they are of no use to those UK residents without jobs that want them. Companies don't need to improve their processes to use lower level staff when they can get cheap higher level staff from abroad.

Admit it. It's a political thing really. If it is more important to you to belong to a big hug club than have the political freedom to solve unemployment and poverty once and for all then you will of course sell your fellow citizens down the river.

The result is stalled UK productivity.

All great for individual foreigners. Not so great for foreign nations - who lose skilled staff and no so great for low-level UK workers, or increased wages for higher level UK workers.

Bob

"the state is "a committee for managing the common affairs of the whole bourgeoisie.""

For 5 years at least.

In a democracy the state is whatever government that is voted in.

tony

"Fiscal Crisis of the State refers to the tendency of government expenditures to outpace revenues in the U.S. in the late 1960s and early 1970s, but its relevance to other countries of the period and also in today's global economy is evident. When government expenditure constitutes a larger and larger share of total economy theorists who ignore the impact of the state budget do so at their own (and capitalism's) peril.

Similarly, tax finance is a form of economic exploitation and thus a problem for class analysis. O'Connor contends that the fiscal crisis of the capitalist state is the inevitable consequence of the structural gap between state expenditures and revenues. The state's only way to ameliorate the fiscal crisis is to accelerate the growth of the social-industrial complex."

Or they could create money to fill the gap, like they have done for over a century, whenever needed. Seriously, this is some bad scholarship.

Andrew Dabrowski

The simplest test is to compare preferences among the economic elite with those among all voters, and see which group is more likely to see its preferences become law. This has been done.
http://www.bbc.com/news/blogs-echochambers-27074746

Thomas Lord

Chris, I think there is a better way to understand what Marx means by "a committee for managing the common affairs of the whole bourgeoisie."

In Marx's view the bourgeoisie are "a competitive fraternity". In other words:

The individual interests of bourgeoisie often conflict, and they fight and compete with one another.

At the same time, the bourgeoisie are self-consciously a class, with some class interests in common.

To take a very basic example: capitalists do not all agree with one another about the ideal form of bourgeois property rights -- variations in the details might benefit capitalist A or B. At the same time, all capitalists have a common class interest that bourgeois property rights exist (for which purpose the state was formed).

The state is a "a committee for managing the common affairs of the whole bourgeoisie" and like any committee, it is a site of contention, struggle, conflict, compromise, and resolution. The decisions of a committee might dissatisfy some or even all members, even while all members insist the committee continue to exist and perform its function (because the alternative is worse).

Marx and Engels also foresaw that as capital developed, the state would necessarily be less and less able to perform the function of preserving the bourgeoisie in thriving state. Most specifically, the relentless development of production including the relentless economizing on labor would erode and eventually destroy the basis of capital accumulation.

For example, a crisis of over-accumulation required massive state intervention during the Great Depression and then through a century of war. It required the gradual abandonment of commodity-money as the foundation of exchange.

Each of those steps that "rescued" capitalism were driven by the bourgeoisie as a "committee", even over the strong objections and to the large private detriment of many individual capitalists.

Thomas Lord

"And in (at least) two senses, the British state does this. First, it subsidizes financialization rather than good financial innovation. Secondly, its refusal to adopt a high basic income that would allow workers to opt out of degrading work shows that it prefers to ensure that capitalists get a big supply of labour than that people get real freedom."

Those are terrible empirical tests in the sense that they beg the question of whether a basic income or "financial innovation" advances the real movement of society. (Briefly, nothing I can think of in labor theory suggests that either measure would tend to counter the immiseration of the proletariat, or that either would necessarily counter the expansion of capital.)

A much simpler empirical test is available, namely, that of direct observation of the decision making processes that reproduce the state. There, I think you can see by more or less direct observation (though you do have to *look*) that the state is a bourgeois instrument.

Interestingly, these days, the state is losing power to global capital. It's role is shifting from a national capital, in what is mainly a competition among national capitals, to a kind of territorial authority subordinate to global capital. The sovereignty-challenging trade agreements are a good example. So is the fiscal structure of the Eurozone.

Bob

"Interestingly, these days, the state is losing power to global capital. It's role is shifting from a national capital, in what is mainly a competition among national capitals, to a kind of territorial authority subordinate to global capital."

No it is not, or at least doesn't have to be. That is just what people putting out propaganda want those on the left to believe.

Capitalism is great at protecting the wealthy, and the wealthy in other countries know very well that capitalism kool-aid in the West will protect their (many times, ill-gotten) gains in the future and let them live an exuberant life without having to worry about the politics of their nation.

From our western PoV is hard to grasp how the internal power-games are in most of there world where you can be killed (literally) easily if you misstep or there are deep political changes.

The actual idiots running our governments for thinking that "we need their money", or that is a good idea to erode your own industrial and knowledge base because of money, and build an extremely not resilient system like our current international production system which is a couple weeks away of total collapse in case of serious problem.

Increased complexity and connectivity without local resilience is bound to fail (all complex networks that work in the real world, like any ecosystem or the functioning of a multicellular organism, have a high degree of local resilience, our system has close to zero local resilience in most places, and not even getting down to the blackholes that are cities like London or NY, one week away of massive starvation). When you start looking at things from a real resource perspective, the global economic system is completely bonkers.

Bob

The other problem again is Open Borders. At some point the anti-state people must be pragmatic.

Open immigration should be limited to countries that treat their poor at least as well as you do. Otherwise you get problems in the Labour Market.

But that doesn't mean you stop using say, anti-dumping import measures, nor international pressure to improve the social welfare in other countries.

But you have to realise that one country in the world cannot fix the entire planet's problems on its own and stitching up its own citizens because the rest of the world is a basket case isn't really sensible either. In fact it undermines your ability to put pressure on overseas. If you read what I have said

If you have a distributed system then some parts of that system will always be better than the other parts and you will have variation in output based upon local conditions.

The alternative is excessive centralisation where the benevolent dictator sets out the production values from on high and hands them down on tablets of stone.

Except that what you find is that the 'benevolent dictator' is a group of corporate and the tablets of stone have TTIP written on them.

Charity begins at home. Get your own house in order first before you start lecturing others.

Bob

"to a kind of territorial authority subordinate to global capital. "

90% of UK trade is within the UK.

Think in terms of *currency zones*

There is little difference between someone in Northern Ireland saving GDP and someone in Ireland.

In contrast things 'inside' your country may need to be taxed to put them in your 'zone.'

Think of it as people and entities across the world holding financial things denominated in different currencies.

If you go to Canada for the first time, you'll buy CAD and suddenly you're part of the CAD currency zone.

If you're in Argentina and swap all your savings into dollars, then suddenly you're no longer part of the ARS currency zone, but have become part of the USD currency zone.

Exporters and importers drop into and out of various currency zones rapidly.

That's what causes the shimmers and ripples.

Chris,

Much of the 'capital flow' comes from monetary creation - aka loans.

Borrowing in GBP to buy USD assets ought to alter the FX supply/demand balance and push the GBP down (a classic carry).

The open question for me is how does the market settle in aggregate, how much does bank lending play a part in that, and what would happen if you restricted lending by policy (say making loans for currency sales/purchase of foreign assets unenforceable)?

Currency markets are very simple. It's raw supply and demand. There are no market makers and every open trade has to be settled with delivery of the currency at 10pm GMT every day.

That means you have to get hold of the real thing and give it to somebody else or get out of the market. So the actual final liquidity in the market that allows things to move comes from people actually changing what they hold over a daily basis. Those playing Contracts for Differences and throwing 'forward next' are just greasing the daily wheels with liquidity.

Overall net short positions from an aggregator still have to be delivered. You have to supply pounds and take US dollars. That means getting the pounds in the first place and is an obvious control point in the system.

Currency areas are not necessarily the size of the country that owns the currency. They can be bigger or smaller than an individual country. What size they are depends upon how the country uses the monopoly power of the currency to influence activity.

Purchase of foreign assets would require either equity or foreign sourced loans.

What is your view on this idea? Could you do a post on foreign trade?

Bob

"GDP"

Doh. GBP. Pounds Sterling. What I mean.

Bob

See this is what I am talking about:

*deep sigh*

http://www.theguardian.com/commentisfree/2015/dec/19/left-grassroots-global-capital-jeremy-corbyn

"He could soon find that not only is the parliamentary Labour party not up to the challenge of taking on global capital – nor is the nation state he would be leading. This is not a new problem. Indeed, it is precisely because it has gone on challenged, but virtually unchecked, for more than a generation, that political cynicism has intensified. Whoever you vote for, capital gets in.

This was the experience of Syriza. After standing on an anti-austerity platform, winning the election, putting its negotiating position to the test in a referendum, and winning, Syriza was forced to buckle when confronted by the might of the European Union leadership. The party was later re-elected to implement austerity in much the same way as the centre left party it eclipsed had done."

The UK issues its own currency. Not comparable to Greece.

David McDonagh

Clearly, the capitalists would have had a world state long since, and never had any war since when they took over [1800?] the state if it was truly capitalist.

Marx himself, let alone his followers, do not seem to have thought about his thesis in any serious way at all.

States are clearly nationalist. 1914 showed that.

Bob

Right David.

"Mearsheimer is working on a new book that tackles the relationship between liberalism and nationalism in international politics.
"My argument is that nationalism is the most powerful ideology on the planet and, whenever liberalism and nationalism clash, nationalism wins almost every time," he said."

http://www.aljazeera.com/news/2015/12/isil-won-defeated-151208064707882.html

Bob

"Clearly, the capitalists would have had a world state long since, and never had any war since when they took over [1800?] the state if it was truly capitalist. "

This is "One World Order" conspiracy thinking. Everyone is doing separate things. The idea that things can only happen if the whole world does something is mad.

Thomas Lord

David wrote: "Clearly, the capitalists would have had a world state long since, and never had any war since when they took over [1800?] the state if it was truly capitalist."

And added: "Marx himself, let alone his followers, do not seem to have thought about his thesis in any serious way at all."

David, that is simply false. You are wrong about Marx and Engels view on this. Wrong about the prospect of one world government.

The state does not eliminate conflict among the bourgeoisie. The opposite. The state is the premise that allows that conflict to take place (both intra- and inter-nationally).

You can't just put words into Marx and Engel's mouths, argue against that, and then claim to have refuted that which you obviously have never read.

The comments to this entry are closed.

blogs I like

Why S&M?

Blog powered by Typepad