Part 12. The Arena of The Heart and Head
“My wisdom is as despised as chaos.
What is my annihilation,
compared to the stupor that awaits you?”
-- Arthur Rimbaud, Illuminations[i] --
An excruciating long, but inexorable, cyclical decline of the middle class -- a decline prolonged by massive subsidies of incompetence and corruption: such is the cold ground beneath the sunless haze that is threatening to be America’s future. A.k.a. “Happiness House” (see prior post) owned and operated by the oligarchy. The hush of money.
In that haze and hush, life will follow the dramaturgy of American horror movies: long periods of stultifying, soporific routine punctured by spikes of horrific, catastrophic violence.
“Jaws”: a poor boy’s Moby Dick? What was written off by critics as retinal junk food could prove to be prescient.
The rising world of falling expectations;[ii] of open meetings of closed minds; of more church steeples and stop signs; of legal crimes;[iii] indeed, of a tyranny of laws:[iv] is it inevitable?
Yes, if we submit to the oligarchy’s three remedies (see prior post) to the catastrophe that could engulf the Western world in chaos.
You don’t need official statistics[v] to see that catastrophe. You see it every day where you live and work: the rich are getting richer, the poor poorer, the middle class smaller. The three-edged sword is swinging ever lower above our heads: The Pit and The Pendelum by Edgar Allan Poe was a masterpiece of horror and, if America crashes, reality.
The Second American Revolution is the renaissance of the system of government that characterized America for over 200 years. That system, contrary to popular belief, was never a democracy. Rather, it was a политей, a polity -- an oligarchy/democracy hybrid tending toward democracy and moderated by a large middle class. The polity died in 2008-2009, replaced by an oligarchy.
That death was expected -- 2,000 years ago. Aristotle announced it. He warned that the major threat to a polity is posed not by outside enemies, not by the poor, not by the middle class, but by the wealthy:
“[Forgetting the claims of equity], they not only give more power to the well-to-do, but they also deceive the people [by fobbing them off with sham rights]. Illusory benefits must always produce real evils in the long run; and the encroachments made by the rich [under cover of such devices] are more destructive to a constitution than those of the people.”[vi]
If billions of freebee Bush-Obama dollars to the mega-wealthy were not encroachments made by the rich, what is? If adult fairytales about unity and a president rockin’ around the Christmas tree with Kermit The Frog are not illusory benefits, what are?
A polity requires a middle class large enough to moderate the other classes. Obviously, if the economic ruin of the middle class continues, no polity is possible.
If a polity is impossible, The Second American Revolution is nonsense.
In a moment, we’ll reveal the real name of Happiness House.
* * *
Consider the following fates.
All are remedies to the catastrophe we are simultaneously living and awaiting. Of course, some remedies are more remedies than others.
Please do not view them as predictions, much less as visions, but rather as tools in a toolbox to be used as appropriate. They are not mutually exclusive.
(1) A classic Marxist revolution. The middle class falls into the proletariat and the lumpen proletariat: drug dealers, card sharks, pimps, burglars, welfare cheats.
There is a working class revolution. With the backing of ambitious noncoms and generals who collect fossilized fish, it succeeds.
What happens next?
As discussed in The Source of Terrorism: Middle Class Rebellion, middle class rebels take over. Here we arrive at the political fallacy of Marxism:
Lawyers and grocery store checkout girls, Marx tells us, are both working class because they have only their labor power to sell. Well, Karl, when the two groups get together, guess who is going to end up on top. Revolutionary ideals -- self-sacrifice, unity -- do not always prevail when politicos deal out plum jobs (“I get to be ambassador to England!” -- “Oh no you don’t! I called it first.”)[vii]
Not tossed a single bone with any real meat attached, one by one, the checkout girls check out. “Better shadow ‘em,” the rebel in the White House scowls; after all, they might be traitors.
Middle class rebels can’t manage national economies, so what happens is what happened all over Eastern Europe in the latter part of the twentieth century. To wit:
In 1942, Joseph Schumpeter[viii] noted that socialism was capitalism’s repair shop. Of course, once the car is fixed, nobody keeps it in the garage. Nobody.
Hence, the end product of a Marxist revolution: an alternating system of (1) private capitalism owned and operated by a new mega-rich with an oligarchic form of government. In a polite bow to tradition, that oligarchy will have democratic accessories: hat, belt, gloves. (2) State capitalism under a totalitarian tyranny run by middle class rebels.
Truncated, stunted, the middle class lives willy-nilly in a world ruled by The Cult of The Contact. And you thought religion was dead…
What we have here is not a failure to communicate -- oligarchs and middle class rebels communicate quite well -- but rather capitalism and incomcruption (see prior post) gone to seed.
(2) Growing scarcities of natural resources and absolute necessities create unprecedented world strife. An uptick in armed conflict -- look for a mamawar between China and the U.S. -- increases demand for higher levels of education and training, notably scientific, to meet the needs of military combat. Gigantic public and private outlays foot the bill, benefitting the middle class.
A case study of this particular fate -- not of scientific socialism but of socialism for scientists -- already exists: Los Alamos, New Mexico. One evening, kids safely put to bed, a Lab employee whispered its mysterious, secret inner essence: “I got mine. You got yours?”
(3) Mysterium Conjunctionius. This remedy to the middle class decline is the co-mingling and confounding of (i) public and private sectors, (ii) productive and unproductive labor, and (iii) economic surplus and non-surplus-financed activities. The political repercussions are astounding.
(i) Pubic versus private seems obvious enough (for the moment).
(ii) Adam Smith’s classic idea of productive versus unproductive labor:
“There is one sort of labour which adds to the value of the subject upon which it is bestowed: there is another which has no such effect. The former, as it produces a value, may be called productive the latter, unproductive labour. Thus the labour of a [manufacturing worker] adds, generally, to the value of the materials which he works upon, that of his own maintenance, and of his master’s profit. The labour of a menial servant, on the contrary, adds to the value of nothing…A man grows rich by employing a multitude of [manufacturing workers]; he grows poor by maintaining a multitude of menial servants.”[ix]
Smith characterized as unproductive labour[x] that of soldiers and other “servants of the public…maintained by a part of the annual produce of the industry of other people.” He found other examples in what today is the middle class core -- the service sector: “churchmen, lawyers, physicians, men of letters of all kinds; players, buffoons, musicians, opera-singers, opera-dancers, etc.”[xi]
Question: if service sector employees perform unproductive labor, then where does their daily bread come from? Clearly, if everyone has to work all day merely to feed themselves, no unproductive laborers are possible.
Smith mentioned the answer above. In case you missed it:
(iii) Unproductive laborers live off the surplus created by the productive work of other people:
“[W]hen by the improvement and cultivation of land the labour of one family can provide food for two, the labour of half the society becomes sufficient to provide food for the whole. The other half, therefore,…can be employed in providing other things, or in satisfying the other wants and fancies of mankind…The desire of food is limited in every man by the narrow capacity of the human stomach but the desire of the conveniences and ornaments of building, dress, equipage, and household furniture, seems to have no limit or certain boundary. Those, therefore, who have the command of more food than they themselves can consume, are always willing to exchange the surplus, or, what is the same thing, the price of it, for gratifications of this other kind. What is over and above satisfying the limited desire is given for the amusement of those desires which cannot be satisfied, but seem to be altogether endless.”[xii]
The boundary separating productive from unproductive labor is vanishing, mainly because of the growing confusion of the secondary and tertiary economic sectors (production and services). That confusion has only just begun; in fact, the transformation of services into commodities, which are the essence of the productive sector, is the defining economic characteristic of our times.
Part 10 of this series explored that transition, and provided the following example:
Is cooking a hamburger patty and inserting the meat, lettuce and ketchup inside a bun a manufacturing job, like assembling automobiles?
That question is posed in the new Economic Report of the President, a thick annual compendium of observations and statistics on the health of the U.S. economy.
Putting jobs at McDonald’s, Burger King and other fast-food enterprises in the same category as those at industrial companies like General Motors and Eastman Kodak might seem like a stretch…
But the presidential report points out that the current system for classifying jobs “is not straightforward.”…
“When a fast-food restaurant sells a hamburger, for example, is it providing a ‘service’ or is it combining inputs to ‘manufacture’ a product?” the report asks.
“Sometimes, seeming subtle differences can determine whether an industry is classified as manufacturing. For example, mixing water and concentrate to produce soft drinks is classified as manufacturing. However, if that activity is performed at a snack bar, it is considered a service.”
The report notes that the Census Bureau’s North American Industry Classification System defines manufacturing as covering enterprises that are “engaged in the mechanical, physical or chemical transformation of materials, substances or components into new products.”
Classifications matter, the report says, because among other things, they can affect which businesses receive tax relief [sic]…
David Huether, chief economist for the National Association of Manufacturers, said that he had heard for several years that some economists wanted to count hamburger flipping as a manufacturing job, which he noted would result in statistical reports showing many more jobs in what has been a declining sector of the economy.[xiii]
The confusion of heretofore separate and distinct functions and sectors is expanding logarithmically…
A post office, for example, should be a clear-cut, elementary case of (i) a public sector entity (ii) performing nonproductive labor paid for by (iii) the economic surplus. However, in France the post office is a mixture of all options. It is both publicly and privately owned, and performs both unproductive and productive work, e.g., financial services, such as banking, and the manufacture of stamps.
Could the post office remove the tripled-edged sword hanging over the Western world? Could the guy behind the counter be what Shakespeare yearned for, the concord of this discord?[xiv]
Lenin thought so. He wrote shortly before he took power: “To organise the whole economy on the lines of the postal service…is our immediate aim. This is the state and this is the economic foundation we need.”[xv]
I believe history will show that the French post office is far ahead of its time, that we are witnessing the emergence of All Directions economics, the counterpart to the All-Directions politics analyzed in The Source of Terrorism: Middle Class Rebellion:
“…the standard political ruler of Left, Center, and Right, instantly presents itself. That tool is as flat as it is narrow -- tedious, brief, in Shakespeare’s words. Not only does it show only three positions but also, because it is applicable to only one dimension, length, it cannot measure up or down, backward or forward.” (p. 341)
Doubts about the old political ruler will expand as its sole dimension of length becomes increasingly irrelevant. The reason is that the oligarchy has learned that the best ideological camouflage to hide the death of the polity is to present its political system as one of All Directions -- Left, Right, Center. [xvi]
As the middle class decline worsens, the confounding of economic sectors and functions will be increasingly resorted to for reasons of political expediency. Mixing and blurring conceal crucial differences, e.g., a middle class service sector employee and a lower class worker in the production sector are more easily confused if each performs some functions of the other. Now you see a worker; now you don’t. Mysterium, indeed;
The upshot is that, in the future, the revolutionary potential of the middle class decline is blunted, if not thwarted. In an All Directions world, life goes on (sorry, Karl). Merry and tragical: Shakespeare[xvii] would call it. We extrapolate: Harder, Faster, Louder, Dumber.
(4) Modernism, with its boundless faith in science and progress, makes a roaring comeback and reinvigorates the middle class.
In the past, creations of science and technology -- notably trains and automobiles -- gave vital impetus to capitalist economies at decisive moments. In the future, equivalent creations give rise to new industries, thereby generating an enormous demand for higher levels of education and training. The middle class decline is thereby forestalled.
The amazing transformative power of science and technology on economics is poignantly illustrated by the following case study:
Adam Smith, writing in 1776, deigned the “tune of the musician” to be a classic example of unproductive labour -- unproductive because it “adds to the value of nothing.” [xviii]
Two centuries later, thanks to science and technology, the unproductive tune changed tunes:
“The music industry is one of the largest in the United States, employing hundreds of thousands of people. Album sales alone bring in $30 billion a year, and this figure doesn’t even account for concert ticket sales, the thousands of bands playing Friday nights at saloons all over North America…Americans spend more money on music than on sex or prescription drugs.”[xix]
The transformation of unproductive into productive work is accountable to no one. We may be to scientific and technological innovations tomorrow what our shadows on the ground are to us today. Discoveries in stem cell research, in nanotechnology, of life on another planet, of nuclear fusion: all could be sources of presently-imponderable economic developments requiring massive injections of cash into higher education and training, thereby reviving the middle class.
To halfway appreciate the impact that scientific and technological discoveries could have in store: take your Visible Hand and show Adam Smith a laptop computer. Ask him what he thinks...
In brief: there may be more than one 1492.
(5) Capitalism undergoes important changes. Example: its quest for ever higher rates of profits is permitted only in certain areas, e.g., environmental protection or the creation of new industries. In those sectors, higher levels of education and training are required to invent and apply new processes; hence, the middle class is revived. In the older, profit-capped areas, the division of labor and simplification of tasks slow. There, too, an immediate benefactor is the middle class.
There is a major practical problem with remedy (5). The oligarchy must approve any changes in capitalism, e.g., a cap on profit rates. To enact certain changes in -- not of -- capitalism, therefore, requires first a change of -- not in -- the American political system.
Enter The Second American Revolution. We will return to this issue.
* * *
With remedy (5) we approach the thorny border separating fate and destiny.
Fate is what happens to you. Destiny is what you make happen to fate.
Fate requires neither awareness nor conscious intervention. Destiny requires both.
Hence, important changes in capitalism (remedy 5) could qualify as a destiny, depending on which changes are made and with what degree of consciousness and awareness.
Two destinies present themselves as remedies to the capsizing of Western civilization. They are totally unrealizable today because of prevailing values.
(6) There is a fundamental change in the creation of economic value.
Adam Smith noted that water, an absolute necessary, cost little or nothing, but a diamond, which was useless, cost a lot:
“The word VALUE, it is to be observed, has two different meanings, and sometimes expressed the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called ‘value in use’; the other, ‘value in exchange’. The things which have the greatest value in use have frequently little or no value in exchange and, on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it.”[xx]
Smith’s observation that water as has little or no exchange value is becoming as obsolete as his notion of the unproductive musician’s tune…
In 2007, the United Nations released its fourth Global Environment Outlook. Among its conclusions:
“Available freshwater resources are declining; by 2024, 1.8 billion people will live in countries with absolute water scarcity…Globally, contaminated water remains the greatest single cause of human disease and death.”[xxi]
Tragically, Americans seem unaware that a water crisis can occur in their nation:
ATLANTA . For more than five months, the lake that provides drinking water to almost five million people here has been draining away in a withering drought…
Scientists have warned of impending disaster.
And life, for the most part, has gone on just as before.
By September, with Lake Lanier forecast to dip into the dregs of its storage capacity in less than four months, the state imposed a ban on outdoor water use…
Between 1990 and 2000, water use in Georgia increased 30 percent. But the state has not yet come up with an estimate of how much water is available during periods of normal rainfall, much less a plan to handle the worst-case scenario: dry faucets.[xxii]
Safe, plentiful drinking water is not the only problem. A lower level of water in one place already is creating higher costs everywhere:
Oswego, New York . Water levels in the Great Lakes are falling: Lake Ontario, for example, is about 7 inches, or 18 centimeters, below where it was a year ago. And for every inch of water the lakes lose, the ships that ferry bulk materials across them must lighten their loads by 270 tons or risk running aground…
As a result, more ships are needed, adding millions of dollars to shipping companies’ operating costs…
On average, 240 million tons of cargo travel across the Great Lakes every year. The U.S. fleet circulating in the Great Lakes has 63 ships, which have lost a total of 8,000 tons of cargo capacity for every inch of water the lakes have fallen below normal this year, said James Weakley, president of the carriers’ association. Those 8,000 tons, he said, correspond to enough iron ore to produce 6,000 cars or enough coal to provide electricity to the Detroit area for three hours, or enough stone to build 24 houses…
“If the low levels in the Great Lakes are a result of global warming, I don’t know,” said [Jonathan Daniels, director of the Oswego Port Authority]. “What I know is that we can’t control nature. All we do is hope for rain.”[xxiii]
We can’t control nature . Values don’t exist in a vacuum. They always have a context -- social and historical, factual and ideological. In the end, context is what counts, and it is seldom effected by pure reason or pious wishes. To alter it requires revolutionary transformations on the order of changes in earth realities, that is to say, in nature.
With a transformation of context, values change (for better or worse.)
In what is the top selling, university economics textbook of all times, Paul Samuelson acknowledged the key role of human values. He defined economics as “the study of how men and society choose, with or without the use of money, to employ scarce productive resources to produce various commodities over time and distribute them for consumption, now and in the future, among various people and groups in society.”[xxiv]
Usually, context is latent; Samuelson’s definition makes it manifest. Note carefully that Samuelson assumes having a choice about employing scarce resources. Obviously,
(i) Samuelson’s scarce resources were not absolutely scarce. That is to say, they were scarce only at a certain price offered. If you pay more for them, the scarcity disappears.
(ii) Those scarce resources were not absolute necessities. Samuelson was writing in a time when water, food, etc, were not scarce on a global scale. That situation is changing, however, and most likely irrevocably. Wherever absolute necessities are lacking, there is no choice.
But what is an economic necessity? Until now, necessity has been primarily culturally determined. A car is a necessity in some places -- many employers won’t hire you without one -- a bicycle (as Vittorio De Sica showed) in others.
As water and other absolute necessities become absolutely scarce, the cultural determination of necessity will lose control. In a sort of genetic throwback, necessity will be increasingly defined in terms of the raw physical prerequisites for sustaining life, e.g., daily calorie intake.
In a world of necessities so defined, Western economics and its underlying values will confront a new era quite unlike anything before it.
(i) If Samuelson’s definition is accepted, economics in the future will become post-economics relative to the economics taught today -- including Samuelson’s. Among other things, the market will be seen not as THE determinant of value, as a God-like, self-evident truth, but simply as a convenient medium of exchange.
(ii) If Samuelson’s definition is rejected because absolute scarcities of absolute necessities create absolutely no choice, economics on a global scale will be forced to become actually, finally, truly…economical. John Adams’ recommendation to Thomas Jefferson, “as We our poor We ought to be Œconomists,”[xxv] will assume its full value. And René Char’s plea quoted at the top of the prior post[xxvi] will be answered in the affirmative: economics will finally change, for better if consciously constituted and managed, for worse if unconsciously controlled and endured.
The coming absolute scarcities of absolute necessities will be the greatest change of context in world history. Could that change generate values which give birth to
(i) a new economic service?
President Rafael Correa of Ecuador mentioned the possibility of a new service created by … doing nothing, i.e., leaving the earth alone:
“The nations of the Amazon basin are the lungs of the world, without which life on earth would be extinguished...Because fresh air is a good with free access, those nations do not receive just compensation for the service they generate. The idea of compensating for avoiding deforestation is only part of a larger concept, which is to compensate for the net contamination avoided. If the incentives of the Kyoto agreement are expanded to include the net contamination avoided, a revolutionary change in international exchanges could take place, permitting many nations -- above all, the developing ones -- to become exporters of environmental services.”[xxvii]
(ii) A new economic sector?[xxviii] This option probably exists but is marginalized in modern capitalist economies. (In the feudal era, the service sector was small and mostly confined to nascent cities.)
More spectacular than (i) or (ii), could emerging absolute scarcities of absolute necessities create
(iii) a new source of creation of wealth?
Adam Smith identified land, labor, and capital as “the three original sources of all revenue as well as of all exchangeable value. All other revenue is ultimately derived from some one or other of these.”[xxix]
Obviously, a new service, a new sector, or a fourth source of economic value could have a momentous impact on the decline of the middle class, hence on the three-edged sword menacing the Western world.
I suspect that, as with a new economic sector, the fourth source of economic value already exists, hidden in plain sight. We overlook it; our ideological blinders are on. As is always the case, they are produced, maintained and distributed by the system in place. [xxx]
I suspect, too, that as are many real remedies, the fourth source is less than an arm’s length away.
* * *
None of the fates and destinies mentioned so far will stop the long-term cyclical decline of the middle class. Why?
Simply stated, because what is projected onto the screen does not change the screen. In particular, a Marxist revolution and the confounding of economic sectors do not change the underlying process of how economic value is created. As long as that process stays in place, as long as capitalism is capitalism (be it private or state), any new scientific or technological development, any new service, any new economic sector or a fourth source of economic value -- all will eventually undergo the same division of labor and simplification of tasks, hence the same routinization and standardization we are seeing today.
Hence, the same erosion of the middle class.
Thus, no matter how many reprieves and new leases on life are granted, the three-edged sword remains in place.
I am in no way suggesting that palliative measures should not be applied; some relief is better than none. I am saying they should be applied with full awareness that they are indeed palliative, nothing more.
(7) We come to the second destiny -- the last remedy.
The only long term solution to the middle class decline is a post capitalist economic system.
Karl Marx defined a commodity as “an object of human wants, a means of existence in the widest sense of the term.”[xxxi] Adam Smith gave greater specificity to widest sense: the “necessaries, conveniences, and amusements of human life.”[xxxii] From Adam Smith to Karl Marx to Paul Samuelson, then, there is a fundamental agreement that the key to economics is what people value.
That emphasis cuts through the deceptions, errors, and obfuscations of oligarchs and their representatives -- Washington politicos, economic advisers, TV court jesters. Despite everything they say and do, the basic economic question will not go away: what do you want? A democratic question, if there ever was one.
Which is why, they never ask it.
To the oligarchs and their spokesmen who say that a new economic system -- as well as a new economic sector or a fourth source of economic value -- are all preposterous ideas, all I can say is, given the prevailing values, you are right. I couldn’t agree with you more.
* * *
Is there no alternative to the emerging Happiness House -- the caring, gently-violent state despotism Tocqueville warned about; to the stupor Rimbaud foresaw; to the empty thing-filled lives President Carter deplored? To the All Directions political system straddling the All Directions economy of, by, and for the American oligarchy?
Let’s take a parting look at remedy (7), a post capitalist economic system.
As the 2008-2009 meldown showed for all time’s sake, there is precious little that is economical about modern economics. We need to look elsewhere.
To repeat, the secret to economics is no secret at all: human values.[xxxiii] They are ultimately where the remedy is found -- in the mirror.
With the arrival in the world of absolutely scarce, absolute necessities, a new era will unfold. We do not know yet what transformation of economic values will occur. It is reasonable to suppose, however, that the existing capitalist system will continue at least for a while into the new epoch.
- “Twilight Zone” viewers, there’s a signpost up ahead. Oxygen tanks. $100. “Wha’cha’ askin there, buddy’?” the one-eyebrowed salesman inquires, taking your money. “Ya’ wanna new mask too? 50 bucks extra, pal. Take it or leave it. I’m kinda busy right now.”
America won’t be the only nation to have old economic principles and practices hanging around. That fact explains why the hallmark of the dawning epoch will likely be endless wars over necessities (Fate 2). Nothing surprising there. If Hitler had used the same mobilization of resources for peacetime purposes instead of preparing for war; if Bush and Obama had spent the same money on life at home instead of on death abroad … such what-ifs will remain what-ifs as long as the values needed to convert them into realities do not prevail.
If human history has shown anything, it is that to date economic values cannot be constructed by pure logic or reason, by faith or good will.[xxxiv] You may think that high school teachers “should” be paid more or that high flying PDGs of failing companies “should” be paid less. You also know that in today’s world, “it” does not work that way.
Such is less the case with political values, however, which in special circumstances and for brief periods, e.g., post-revolutionary 1780s America, do allow for the creation of better systems (see Part 9 of this series).
The equivalent today of the political change rendered by Washington, Jefferson, Madison, and other Founding Fathers is nothing short of The Second American Revolution. It is the rebirth of the политей or polity, but with greater power for democracy, less for oligarchy. The special circumstances and values needed to enact that Revolution do not exist at present, but that is not to say they never will. The challenge, then, is to be ready when the opportunity arises.
Which brings us to the key question of this 12-part series:
Would greater power for the democratic element of a polity solve the problem of the middle class economic decline? Can an authentic political revolution lead to an economic one?
(1) A polity with the powerful democratic component The Second American Revolution proposes has never existed in a large, economically developed nation. What is known is the disastrous record of the earth’s ecology under the status quo, the oligarchy. What is known, too, is the dismal and deteriorating performance of the middle class.
The Second American Revolution does not waste a single second preaching to the rich to be less covetous, to develop a social consciousness. The elemental truth is, even if it wanted to, the American oligarchy could not remove the three-edged sword; it doesn’t have the power.[xxxv]
(2) Paul Samuelson noted that the choice of how to use productive resources can be made with or without the use of money.
Without the use of money. Ultimately, the economic realm is not as separate and autonomous as it has been throughout history. To those why say the economy innately is now and forever will be independent of human plans and dreams, that the three-edged sword can never be removed, I have a three word response: John Maynard Keynes.
The end to a sovereign economics that hits with the full force of natural disasters: that is not only what Keynes hoped and worked for -- in 1945, he predicted it. "The day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems -- the problems of life and of human relations, of creation and behaviour and religion."[xxxvi]
What went wrong?
Keynes made his prediction when a polity still existed. And nobody incarnated a polity better than the president Keynes knew personally, Franklin Roosevelt. The polity no longer exists, which is why we are now farther away from removing economics from the driver’s seat than when Keynes made his prediction. I doubt he would disagree with that statement and the cause/effect hypothesis it contains. In fact, Keynes indicated why the rich cannot be expected to put economics in the back seat. [xxxvii]
Keynes did not foresee the change of political systems. Based on hard experience, then, we will say here what he did not: Solving the economic problem requires first solving the political one.
If that is true, then the gateway to the arena of the heart and the head Keynes cherished is The Second American Revolution. Oligarchs, of course, want you to believe that no such option exists, that the only choice is them or chaos. Since The Second American Revolution definitely is not them, they equate it with chaos.
At bottom is this simple truth: the oligarchs do not want any choices made without money. The oligarchy thereby makes manifest the latent conflict in the two alternatives Samuelson observed: (1) with and (2) without money.
We end where we began -- looking at them.
An oligarchy legitimized by an All Directions political ideology sitting atop an All Directions economy, is rapidly consolidating its rule. Life under the new regime was cogently summed up in 1873, by Arthur Rimbaud:
“One must be absolutely modern. Keep up the pace. No religious hymns. Hard night.”[xxxviii]
Let´s go ahead and call that hard night what it is: The Fourth Reich.
Fascism as we know it.
[i] « Ma sagesse est aussi dédaignée que le chaos. Qu’est mon néant, auprès de la stupeur qui vous attend ? » Arthur Rimbaud, « Vies : I », Illuminations in Œuvres complètes, Bibliothèque de la Pléiade, Gallimard, Paris, 1994, p. 128.
[ii] This article was published shortly before the economic meltdown of 2008 hit:
New York . America’s self-confidence is on the wane. That is something that has happened two, or perhaps three, times in recent decades, as fear grew that the country was on the wrong course and that the economic situation was unlikely to improve…
Evidence for the loss of confidence came this week when the Conference Board released its consumer confidence survey for March . What stood out was how far economic expectations have fallen.
The amount of pessimism -- as shown by people who forecast that things will get worse -- is not quite at record highs. But the amount of optimism that things will get better is as low as it has been in the four decades that the Conference Board has been asking questions…
It was in December 1973 that the Conference Board’s consumer expectations index hit its lowest level ever, of 45.2.
The reading disclosed this week, of 47.9, ranks second.
In some ways, there is even less optimism now than there was then.
A lower proportion of those surveyed [ 8.1%] said they expected business conditions to improve. The percentage of people who think their own income will rise [14.9%] is much lower than it was then. Only in jobs is there more optimism now than there was then, and the difference is small.
Floyd Norris, “In America, less-great expectations,” International Herald Tribune, March 28, 2008.
[iii] Montesquieu asked if it was possible to “causing the law to be broken by the law?” (« faire violer la loi par la loi ? ») Charles de Montesquieu, De l’Esprit des lois, in Œuvres complètes II, Bibliothéque de la Pléiade, Gallimard, Paris, 1994. p. 444. (Book XII, Chapter XIV).
Today, the most blatant legal crimes in America are political campaign financing laws. Nowhere are those crimes more evident than in Wisconsin, a state renowned for its political reforms:
Madison, Wisconsin . Even before this state approved one of the most rigorous campaign finance laws in the country 20 years ago, Wisconsin was known as the pioneer in enacting political changes, from inventing the direct primary to establishing a civil service system for state employees.
But now the trend-setting is pointing in the opposite direction…
The unintended effect of the clean-government mentality is that Wisconsin’s stringent laws governing campaign donations and spending have led determined donors to be even more resourceful.
The state was a pioneer in offering public subsidies for candidates who limited their spending. Now, Wisconsin has become a breeding ground for organizations to perfect techniques for bending or evading restrictions on how much political action committees and parties can contribute directly to campaigns.
Richard L. Berke, “A Reform Backfires in Wisconsin. Clever Contributors Find Ways to Evade Campaign Finance Law,” International Herald Tribune, July 27, 1998. To mention only one technique: issue advocacy. Groups are formed to pay for ads which they claim are not political, but which in fact favor certain candidates. In such cases, donors and methods of fund raising do not have to be reported.
Make no mistake, campaign laws were written to be evaded. Those who put pen to paper are fully aware of what they were doing: use the law to break the law. I challenge any lawyer or lawmaker engaged in the process to meet with me behind closed doors and, face to face, deny that conclusion.
Almost a decade after the above article was published, nothing essential had changed:
Over the last decade, former President Bill Clinton has raised more than $500 million for his foundation, allowing him to build a glass-and-steel presidential library in Little Rock, Arkansas, and burnish his image as an impresario of global philanthropy. The foundation has closely guarded the identities of its donors -- including one who gave $31.3 million last year.
The secrecy surrounding the William J. Clinton foundation has become a campaign issue as Senator Hillary Rodham Clinton seeks the Democratic presidential nomination with her husband as a prime source of strategy and star power.
Some of her rivals argue that donors could use presidential foundations to circumvent campaign finance laws that are designed to limit political influence…
The New York Times has compiled the first comprehensive list of 97 donors who gave or pledged a total of $69 million for the Clinton presidential library in the final years of the Clinton administration. The examination found that while some $1 million contributions were longtime Clinton friends, others were seeking policy changes from the administration. Two pledged $1 million each while they or their companies were under investigation by the Justice Department.
Other donations came from supporters who had been ensnared in campaign finance scandals surmounting Bill Clinton’s 1996 re-election campaign...
In raising record sums for her campaign, Hillary Clinton has tapped many of the foundation’s donors. At least two dozen have become “Hillraisers,” each bundling $100,000 or more for her presidential race…
To limit the influence of any single donor, U.S. election law prohibits foreign donations to presidential campaigns and limits individual Americans to $2,300 an election.
But presidential foundations are free to accept unlimited and anonymous contributions, even from foreigners and foreign governments. For instance, the Saudi royal family, the king of Morocco, a foundation linked to the Untied Arab Emirates, and the governments of Kuwait and Qatar have made contributions of unknown amounts to the Clinton Foundation…
William Brandt Jr., a bankruptcy lawyer in Chicago and prolific Democratic fund-raiser, pledged $1 million in May 1999. At the time, the Justice Department was investigating Brandt’s testimony to Congress about a $10,000-a-couple fund-raiser he had held for the president’s 1996 re-election campaign. At issue was whether he lied when he denied promoting it as an explicit opportunity to lobby a top bankruptcy official at the event.
In August 1999, the Justice Department determined that “prosecution is not warranted.” Brandt, who is now a Hillraiser, did not respond to several phone and e-mail messages.
Don Van Natta Jr., Jo Becker and Mike McIntire, “Bill Clinton’s foundation haunts campaign,” International Herald Tribune, December 21, 2007.
Reforms of campaign financing will always fail as long as what is normal is viewed as abnormal. And what is normal is the dominance of the oligarchy, which manifests itself in laws that are illegal. Of course, the prevailing resistance to recognize the American system as an oligarchy is also part of what is normal.
[iv] That expression comes as an oxymoron to most American readers who are taught in high school that “there are governments of laws and there are governments of men,” and that the latter are tyrannies. However, as Montesquieu noted: “One can kill by laws as surely as one kills by swords. In a period of 150 years the Roman emperors destroyed all the old Roman families. One of Rome’s greatest tyrannies was that of its laws.” (« On peut exterminer par les lois, comme on extermine par l’épée. En 150 ans de temps, les Empereurs romains détruisirent toutes les anciennes familles romaines. Une de leurs plus grandes tyrannies fut celle de leurs lois. ») Charles de Montesquieu, Dossier de l’esprit des lois, in Œuvres complètes II, op.cit., p. 1,054. See also De L’Esprit des lois, p. 397 (Book XI, Chapter VI), p. 558 (Book XIX, Chapter IV), p.564 (Book XIX, Chapter XIV).
Montesquieu did not stop there in demystifying laws: “An abuse can become the law, and the correction can become an abuse.” (« un abus peut devenir la loi, et la correction, devenir un abus ».) Dossier de l’esprit des lois, op.cit., p. 1,111.
Alexis de Tocqueville found tyrannies of laws in treaties with Indians and the treatment of slaves. Alexis de Tocqueville, De La Démocratie en Amérique I, in Œuvres, Volume II, Bibliothèque de la Pléiade, Gallimard, Paris, 1992, pp. 377-8, 388-90, 393, 407. (Part II, Chapter X).
[v] We presented them in Part 10 of this series and in the post “No We Can’t” of August 15, 2011.
[vi] Aristotle, The Politics of Aristotle, translated and edited by Ernest Barker, Oxford University Press, New York, 1962,, op.cit., p. 186. (Book IV, Chapter XII). Brackets made by the translator.
Tocqueville foresaw the same crossroad. “Is it possible that, after having destroyed feudalism and defeated kings, that democracy will retreat before the bourgeoisie and the rich? Will democracy stop now that it has become so strong and its adversaries so weak?” (« Pense-t-on qu’après avoir détruit la féodalité et vaincu les rois, la démocratie reculera devant les bourgeois et les riches ? S’arrêtera-t-elle maintenant qu’elle est devenue si forte et ses adversaires si faibles ? » » Alexis de Tocqueville, De La Démocratie en Amérique I, Œuvres, Volume II, Bibliothèque de la Pléiade, Gallimard, Paris, 1992, pp. 6, 7. (« Introduction »).
The answer to Tocqueville’s prescient question arrived 180 years later in the form of billions of Bush-Obama dollars doled out to America’s oligarchy.
[vii] You think no adult would engage in such disputes? I personally witnessed many of them. No capitol building is without them.
[viii] Capitalism, Socialism and Democracy, Harper Collins, republished in1975, ad passim.
[ix] Adam Smith, pp. 429-30. There are initial indications that, due to the technology of the Internet, Smith’s menial servants could become what Smith said the servants were not -- productive in the sense that their work can be the source of profit:
New York . The first wave of slicing up services work and sending it abroad has been all about business. Computer programming, call centers, product design and back-office operations like accounting and billing have all migrated abroad to some degree, and mainly to India. The Internet makes it possible, while lower wages in developing nations make it desirable for corporate America.
The second wave, according to some entrepreneurs, venture capitalists and offshoring veterans, will be the globalization of consumer services… [They predict] a market that will one day include millions of households in the United States and other nations. They foresee a host of potential services beyond tutoring and personal assistance like health and nutrition coaching; personal tax and legal advice; help with hobbies and cooking; learning new languages and skills; and more. Such services, they say, will be offered for affordable monthly fees or piecework rates.
Steve Lohr, “E-mail to India: ‘Reserve table for 2’,” International Herald Tribune, October 31, 2007.
[x] Unproductive labor should not be confused with unnecessary labor. Policemen provide necessary services; however; in and of themselves, they are unproductive because they do not add value.
[xi] Adam Smith, pp. 430-1.
[xii] Ibid., pp. 268-9.
[xiii] David Cay Johnston, “Should burger-flipping be a heavy industry?,” International Herald Tribune, February 21/22, 2004.
[xiv] William Shakespeare, A Midsummer-Night’s Dream, in William Shakespeare, The Comedies of Shakespeare, Random House, New York, undated, p. 533.
[xv] V.I. Lenin, The State and Revolution, in V.I. Lenin, Selected Works, Volume 2, International Publishers, New York, 1967, p. 304. To which one can respond: all that suffering and all those sacrifices, all those famines, all those purges, imprisonments, tortures, firing squads, hangings, beatings, wars, in order to have…a post office.
In 1994, I saw V.I. Lenin, or rather his mummy, appropriately attired in a formal black suit, stretched out in his cathedral-quiet, air conditioned tomb on Red Square. He remains in death what he was in life: a classic middle class rebel (Father was a bureaucrat).
Surprisingly, a large percentage of Russians have never been in the tomb. Not surprisingly, the Lenin mummy is adored mainly by other middle class rebels, for whom -- when the dust settles -- the only good revolutionary is a dead one.
[xvi] The All Directions system already exists albeit in embryonic form:
Arnold Schwarzenegger was first elected Governor of California in 2003:
Los Angeles. Rarely has a person assumed so high an office with so little known about his political philosophy and so few clues to his governing style…
In his first post-election visit to Sacramento in late October  a reporter asked Schwarzenegger what to expect from his first days in office.
“Action, action, action, action,” Schwarzenegger said, repeating a word he must have heard often during his movie career. “That’s what people have voted me into the office for.”
But action toward what end?…
..[T]he new governor’s agenda is rather vague. The clearest indication of the direction in which he intends to lead the state is the 20 appointees to senior posts in his administration he announced over the last three weeks. The nominees were from across the political spectrum.
For example, Schwarzenegger nominated Terry Tamminen, a Democrat and a staunch environmentalist, as head of the California Environmental Protection Agency. But on the same day, he nominated James Branham, a Republican timber company executive, as Tamminen’s deputy.
“The obvious lesson is that he will govern the way he has appointed, the way he campaigned and the way he came into politics -- from left, right and center,” said Bill Whalen, a research fellow at the Hoover Institution and a former speechwriter for Pete Wilson, the former Republican governor…
“You will see a blend of ideologies -- that’s Arnold in a nutshell,” said Whalen, who is [among] close former Wilson aides who have been advising Schwarzenegger. “…Like a sailing ship on the ocean, he will tack left and right but ultimately try to find a course down the middle.”
John M. Broder, “Testing time begins for Schwarzenegger,” International Herald Tribune, November 18, 2003.
There is no better representative of All Directions politics than Barack Obama:
After eight weeks in Office, Mr. Obama has managed to satisfy or outrage nearly everyone on the ideological spectrum. But his once-murky governing philosophy is coming into sharper…
Obamaism…appears to be an amalgam of philosophies -- a strong belief in the role of an activist government in shaping the economy and redistributing wealth, and a more centrist view of national security and at least some cultural issues…
He has rallied liberals behind efforts to overhaul health care, tackle climate change and raise taxes on the rich. But he has challenged liberal orthodoxy on issues like linking teacher play to performance and has won Republican support for sending 17,000 more troops to Afghanistan and pulling out of Iraq more gradually than the left wanted…
“He’s not an ideologue,” said David Axelrod, his senior White House adviser. “He’s a pragmatist. He’s someone who’s interested in ideas that will work. Some may have their roots in one doctrine; some may have roots in another. But he’s not concerned about that.”
In a recent interview with The Times, Mr. Obama rejected the “socialist” tag, arguing that he was only returning top tax rates to where they were before Mr. Bush. Asked if “liberal” or “progressive” better defined his philosophy, he said, “I’m not going to engage in that.”
Peter Baker, “Obama defies easy political labels by melding philosophies,” International Herald Tribune, March 16, 2009.
[xvii] William Shakespeare, “A Midsummer-Night’s Dream,”Act V, Scene 1
[xviii] Adam Smith., pp. 430, 431.
[xix] Daniel Levitin, This Is Your Brain on Music: The Science of a Human Obsession, Dutton, London, England, 2006, p. 7.
[xx] Adam Smith, pp. 131-2.
[xxi] See in particular Chapter 4: “Water.” The bottom line of the report -- “the final wake-up call to the international community”:
Paris . “The human population is now so large that the amount of resources needed to sustain it exceeds what is available at current consumption patterns,” Achim Steiner, the executive director of the [UN Environmental Program] said in a telephone interview. Efficient use of resources and reducing waste now are “among the greatest challenges at the beginning of the 21st century,” he said…
Steiner said environmental tipping points, at which degradation can lead to abrupt, accelerating or potentially irreversible changes, would increasingly occur in locations like particular rivers or forests, where populations would lack the ability to repair damage because the gravity of a problem would be far beyond their physical or economic means .
James Kanter, “Planet stretched to breaking point, UN says,” International Herald Tribune, October 26, 2007. For the report: http://www/unep.org./geo/geo4.
[xxii] Shaila Dewan and Brend Goodman, “A slow-motion response to drought in U.S. South,” International Herald Tribune, October 24, 2007.
In facing ecological problems, Americans have chosen the road more traveled:
"I swear ´tis better to be much abus´d
Than to know´t a little."
-- William Shakespeare, Othello, Act III, Scene 3 --
[xxiii] Fernanda Santos, “As Great Lakes shrink, a high price to pay,” International Herald Tribune, October 24, 2007.
[xxiv] Paul A. Samuelson, Economics: An Introductory Analysis, fifth edition, McGraw-Hill, New York, 1961, p. 7. Words italicized by Samuelson.
[xxv] John Adams, “Adams to Jefferson, Grosvenor Square Nov. 1. 1785,” in Lester J. Cappon, Editor, The Adams-Jefferson Letters: The Complete correspondence between Thomas Jefferson and Abigail and John Adams, The University of North Carolina Press, Chapel Hill, North Carolina, 2005, p. 88.
[xxvi] “Source, where are you?
Remedy, where are you?
Economics, are you finally going to change?”
[xxvii] “[L]os países de la cuenca amazónica constituyen el pulmón del planeta, sin el cual la vida en la Tierra sencillamente se extinguiría […] por ser el aire puro un bien de libre acceso, dichos países no reciben la justa compensación por el servicio que generan […] La idea de compensar la deforestación evitada es sólo parte de un concepto más amplio, que es compensar la contaminación neta evitada. Si se amplían los incentivos de Kyoto hacia dicha contaminación neta evitada, se podría dar un giro revolucionario en los intercambios internacionales, al permitir convertir a muchos países – sobre todo a los que están en vías de desarrollo -- en exportadores de servicios ambientales.” Rafael Correa, Ecuador: de Banana Republic a la No Repúblic, Random House, 2011, pp. 204, 205.
[xxviii] The primary sector is the extraction of raw materials, such as mining; the secondary is production, e.g., manufacturing; the tertiary is services.
Some economists add
Sector 4. Intellectual activities. Culture, government, education, R & D.
Sector 5. Voluntary activities as well as executive functions in all sectors.
I disagree with the latter two categories. In order for a typology to have explanatory power, its categories must be mutually exclusive. Sectors 4 and 5 are services, hence are already covered in the tertiary sector. I present their two options here because they reflect in thought the confusion and confounding occurring in practice:
[xxix] Adam Smith, pp. 155, 356.
[xxx] One ancient river worth exploring: the gift process . See Marcel Mauss, Essai sur le don (1925), in Marcel Mauss, Sociologie et anthropologie, Presses Universitaires de France, Paris, 2004; Jacques T. Godbout, L’Esprit du don, La Découverte, Paris, 2000; and Maurice Godelier, L’Enigme du don, Librairie Arthème Fayard, 2004.
[xxxi] Karl Marx, A Contribution to The Critique of Political Economy, Edited by Maurice Dobb, S. W. Ryazanskaya, translator, International Publishers, New York, 1970, p. 27.
[xxxii] Adam Smith, p. 133.
[xxxiii] Instead of the instrumental spirit of The Thrifty Scotsman haunting Western economic textbooks, could the true heart of economics, i.e., its values, be quasi-religious -- irrational -- in origin?
Émile Durkheim’s definition of religion begins with the words: “A religion is a unified system of beliefs and practices relative to sacred things…” (« Une religion est un système solidaire de croyances et de pratiques relatives à des choses sacrées […]. ») Émile Durkheim, Les Formes élémentaires de la vie religieuse, Presses Universitaires de France, Paris, 2007, p. 65.
How does a thing come to be sacred? Durkheim: “It is relative to a totem that things are classified as sacred or profane. The totem is the prototype of something sacred.” (« c’est par rapport à lui [le totem] que les choses sont classées en sacrées et en profanes. Il est le type même des choses sacrées. » Ibid;, p. 167.)
Durkheim observed of various Australian aboriginal tribes that it was forbidden for them to eat the plant or animal which was the group’s totem except under exceptional circumstances and with economy, i.e., “when it is permitted to eat the plant or animal that was the totem, the consumption is not entirely free; one cannot eat it except in small quantities at a time [sic]. To eat too much constitutes a ritual fault that can have grave consequences.” (« là où il est permis de manger de la plante ou de l’animal qui sert de totem, ce n’est pourtant pas en toute liberté ; one ne peut en consommer qu’une petite quantité à la fois. Dépasser la mesure constitue une faute rituelle qui a de graves conséquences. » Ibid., 182. See also pp. 184-5.)
[xxxiv] The prevailing value in America: fear. Marine Corps General Anthony C. Zinni, former commander in chief of the U.S. Central Command, reflected on the meaning of being a military officer 1960-2000:
“The Cold War was a 40-year attempt to refight World War II if ever the need arose. We were energized to engage in a global conflict against the evil Red Menace. The problem was that we never could figure just how this particular war would actually start…
The Cold War was ever present, and it was great for justifying programs, systems and force structure -- but no one seriously believed that it would actually happen. Still, it drove things. It drove the way we thought, it drove the way we organized and equipped, and it drove the way we developed our concepts of fighting.”
Anthony C. Zinni, “For The U.S. Military, War Isn’t What It Used To Be,” International Herald Tribune, July 21, 2000.
But what is “wrong” with using fear as a mobilizing force for a country?
Answer: the means becomes the end. Jules Henry: “A nation that will respond only to fear cannot govern itself wisely, for it has no destiny but fear…” Jules Henry, Culture Against Man, Random House, New York, 1963, p. 113.
[xxxv] The prior post discussed why power expands only to the extent it is shared:
“Today, nobody in Western governments knows how to increase power -- real power, that is. As long as that lack of recognition exists, the United States, as well as other Western nations, will sink further into the quicksand that is power without power. The cause of the sinking is that power cannot be created mechanically by elections or by laws, by organization charts or by military force. Power must be exercised -- increased, that is to say, shared -- in order to exist. The same is true for human rights. ( “A right is only born by exercising it.” (« Le droit ne naît que par l’exercice. ») Alexis de Tocqueville, Notes et variantes, in Œuvres, Volume II, Bibliothèque de la Pléiade, Gallimard, Paris, 1992, p. 957.)
However, Western nations are unable to admit that they do not have democracies, much less recognize that power is increased by sharing it. As long as that admission and recognition are not made, a re-evolution of political values -- and of economic values inextricably tied to them -- is impossible, and gradually but inevitably, the middle class will be forced to give up its place on the quiet side of the fire.”
That admission and recognition are secrets no one reveals to anyone, not even to themselves.
[xxxvi] John Maynard Keynes, "First Annual Report of The Arts Council" (1945-1946).
[xxxvii] John Maynard Keynes, Economic Possibilities for Our Grandchildren, in John Maynard Keynes, Essays In Persuasion, W.W. Norton & Co., 1963, pp. 358-73.
[xxxviii] « Il faut être absolument moderne. Point de cantiques : tenir le pas gagné. Dure nuit ! » Arthur Rimbaud, « Adieu », in Une Saison en enfer, Œuvres complètes, p. 117.