Wednesday, June 19, 2019

Non-exemplary lives

Recently I read, rather by accident than design,  short lives of several contemporary economists. What struck me was their bareness. The lives sounded like CVs. Actually, there was hardly any difference between their CVs and their lives (to the extent that I could tell).

The lives (i.e. CVs) typically went like this. He/she graduated from a very prestigious university as the best in their class; had many offers from equally prestigious universities; became an assistant professor at X, tenured at Y; wrote a seminal paper on Z when he/she was W. Served on one or two government panels. Moved to another prestigious university. Wrote another seminal paper. Then wrote a book. And then…this went on and on. You could create a single template, and just input the name of the author, and the titles of the papers, and perhaps only slight differences in age for each of them.

I was wondering: how can people who had lived such boring lives, mostly in one or two countries, with the knowledge of at most two languages, having read only the literature in one language, having travelled only from one campus to another, and perhaps from one hiking resort to another, have meaningful things to say about social sciences with all their fights, corruption, struggles, wars, betrayals and cheating. Had they been physicists or chemists, it would not matter. You do not have to lead an interesting life in order to understand how atoms move, but perhaps you do need it to understand what moves humans (cf. Vico).

Can you have a boring life and be a first-rate social scientist? To some extent, probably yes. You can be very smart and figure our how people behave under conditions that you have never yourself experienced—nor anyone you know. I cannot say it is impossible. But I think it is unlikely: because it in human nature, however smart we may be, to understand certain things or to look at different and new aspects of an issue, only when we face the problem ourselves. I think that we have all experienced that. Faced theoretically with a given problem, we can provide a perfectly reasonable and coherent answer and even explain well the choices. But then, if faced by the same problem in our own lives, we shall quickly find out that such well-reasoned answer was only partially correct. It failed to take into account a number of secondary issues, many conditions and constraints that, in the abstract case, we either ignored, assumed away, or most likely just never thought about. Or never imagined.

Orderly  and boring lives are a privilege of rich and orderly societies.  We all (perhaps except when we are 25) wish to lead such lives. But they are also very limited lives: the range of emotions and choices that we experience is narrow. We may want to have as our teachers in social science people who had to drink poison to make a point (Socrates), or were jailed and tortured (Machiavelli), or were executed on the orders of a national assembly (Condorcet), or banished and killed by a totalitarian regime (Kondratieff); or those who had to flee their governments and reinvent themselves (Marx), or move into incendiary politics (Weber), or migrate to another language and continent (Schumpeter, Hayek, Kuznets, Leontieff), or experience the thrill of forbidden pleasures (Keynes).

But if our life is a CV, can we understand human choices and human nature—a precondition for being a great social scientist? By asking that question, are we not asking whether well-behaved individuals in orderly and rich societies can really produce breakthroughs in social sciences. Or will their lessons remain circumscribed to orderly and rich societies only and to orderly and boring people, and not carry over to the rest of the world? In other words, to use Plutarch’s term, do we need exemplary lives for greatness in social sciences?

Friday, May 24, 2019

“We had everything before us, we had nothing before us”.

When I was young and would overhear (rare) conversations that my father and his friends had about their own young lives in the inter-war period, I would  often long for these years thinking how great it must have been to be growing up then, between 1918 and 1938, when three powerful ideologies, liberalism, communism (with its many mutually internecine shades) and fascism, clashed mercilessly across Europe and the world. Not only was what was on the offer in these ideologies so different, and in each case, powerful but the stakes were high. Choosing one or the other ideology (or in the communist case, one or the other subgroup) led most of the time directly into illegality, jail, or for many ultimately to death. The intensity of ideology is not measured only in the space of ideas, but in the space of risks people are willing to take to defend them.

The dreamlike enthusiasm and envy for those years were of course tempered by the knowledge that young people like my father lived then in the shadow of a great war. But perhaps the very life on the edge of the precipice added to the excitement. Perhaps that the belief that if you defeated fascism now, and it would not engulf the world into destruction and extermination, gave an extra zest to the life composed of equal measures of ideology and action.

I compared in my mind the excitement of that period  with what I regarded as an intellectually sterile age of the confrontation between the two immobile blocs of US capitalism and Soviet communism. On the one hand, stood US with its simulacre of ideology that could best be explained as utilitarianism-cum-pragmatism (hardly something that would move you), defended by people in boring suits, wearing funny glasses, and living in suburban homes. On the other had there was a crumbling edifice of state socialism that has not produced a single new idea since 1925, defended by dreary bureaucrats in fedora hats wearing light grey socks and shoes. Only the Third World offered some hope, novelty or excitement. It was, I thought, the only part of the world—Cuba under Castro, Egypt under Nasser, Indonesia under Soekarno, Ghana under Nkrumah-- that had vigor and youth. (We know that these things ended mostly badly; but they did not look like in the late 1960s or early 1970s).

This stalemate between two decrepit ideologies ended with the victory of liberal capitalism. And that ushered the most ideologically deadening period of all. The period 1990-2010 in its “pensée unique” and wooden language almost replicated the worst features of Sovietiana: a formulaic language of false unity of everybody and everything under the benevolent rule of liberal bourgeoisie. Like in Soviet  regimes, all contradictions were supposedly solved; once for ever. There were no new questions, and answers to all previous questions were provided. The whole world was just hurrying to become another Denmark where nothing of interest would ever happen.

But that stultifying intellectual world was exploded by the 2008 crisis, the rise of political Islam, and the rise of China. It exploded because it was (i) unable to address real issues and contradictions and supplied only ready-made formulaic bromides, and (ii) it wrongly assumed that people desire to be free of ideological choices. In other words, it is not only unlikely that the world  will ever become Denmark (the Middle East has been in turmoil for the past 4,000 years and is likely to be so in the next), but the world does not want to live in a society devoid of major ideological choices, cleavages and battles.

Now, the exciting times are back again. It is especially exciting for the young people because the richness of ideological choices they have before them is immense: liberalism, new socialism, nationalism, political Islam, Chinese political capitalism, probably more. In my father’s youth there were three strong, different and very potent brands of ideological cereals that you could buy in your neighborly market of ideas. During the Cold War, the offer was reduced to two, rather bland, types. Then in the (original) Fukuyama moment we had only one brand of rather tasteless cereals on offer. Nothing else existed on the ideological shelves, a bit like Moscow’s real supermarket shelves in 1975. But today, we are thriving with numerous cereals, some with potent taste, others very spicy, some sugary. The choice is great and it is all yours. The stakes, fortunately, are not as great as during the inter-war years in Europe and the world. We do not all crave to die for an ideology. But the intellectual excitement and ferment is back. My students are lucky. It is good to be young in interesting times, despite that much quoted Chinese curse.

Wednesday, May 22, 2019

The social and geopolitical origins of China’s rise

I read with pleasure the recent book “The China boom: Why China will not rule the world” by Ho-fung Hung. You should not be put off by the silly subtitle (probably added by the publisher to contrast Hung’s book to Martin Jacques’s). The book is much better than its subtitle implies. It gives a historical overview of how China’s economy functioned under Ming and Qing, goes over the well-known themes of how and why capitalists failed to create a coherent class in China (unlike in Europe), and how the paternalistic Qing slowed down that process by often supporting workers in disputes with owners, the very opposite of what capitalist-controlled European states did at the time. I wrote about these themes in my reviews of Arrighi, Jacques, and Pomeranz, so I will not go back to them.

There two other interesting things that I find in Hung’s book.

The first is: what is origin of China’s success? It is the mixture of the Asian export-driven policies (with open US markets) combined with Maoist centralization of capital through surplus exploitation of peasantry. For the reasons of paternalism and weakness, the Qing were never able to centralize capital needed for development. The post-Qing (republican) regime also failed in it but, in an era of chaos, let local gentry, merchants and the military be transformed into a number of regional  “military-predatory elites” vying with each other for power. China under the Republican regime was like Libya today. If you believe that Libya will soon begin to develop, then you can as well see in those multiple “militaro-predatory” elites of the early Republic a proto-capitalist formation, as some like Pseudoerasmus do. (I had a Twitter discussion on this issue with him.)

China’s rise differs in another way from the general East Asian experience. The flying-geese pattern (Akamatsu) whereby the most developed country gradually abandons less value-added productions to the next in line, and so forth, was upended by China, which started low but gradually took over the top-of-the-line products while not giving up the low-value added. Rather than flying in a orderly flock, China thus, both through its size and fast innovation, changed the model by becoming the hub through which many East Asian products are now exported to the US and Europe. The entire second part of the book is devoted to the interdependence between the US and China (trade surplus and investments in dollar-denominated T-bills) and while it may be, especially now, of significant interest for many I will not review it here.

For me, the second interesting part is what Hung regards as the class base of China’s current regime of political capitalism. This is a topic I deal with in Chapter 3 of my “Capitalism, Alone”. I wish I had read Hung before I completed the chapter because he introduces several interesting elements. Hung, like many others (including me), sees the dominant class to be “politico-capitalist” or in his formulation “politico-entrepreneurial” (p. 91). The “ruling bloc” combines people from the political sphere who benefit from political and economic power of SOEs, and capitalists, mostly from the Southern maritime provinces, who benefit from China’s “export machine”. Following Michael Pettis, an American professor at Peking University, Hung argues that three fundamental Chinese policies of (i) wage (and consumption) suppression, (ii) cheap yuan, and (iii) financial repression have their origin in this class structure.  Wage suppression and depreciated currency are obviously good for Chinese exporters (the new entrepreneurial class). Financial repression, combined with huge trade surpluses generated by the “export machine”, allow the political part of the ruling class to use SOEs for projection of its power domestically, and increasingly, internationally.

There is an additional twist that lovers of history’s convoluted implications would appreciate. Hung argues that the wave of privatizations that increased unemployment by thousands and reduced workers rights in the early- to mid- 1990s was possible only thanks to the repressive post-Tiananmen regime. The pro-democracy students and pro-Maoist workers who decried inequalities in 1989  “succeeded” in unifying different political factions of CCP, afraid of losing power, and made it possible for CCP to launch, after Deng’s “Southern turn”, the most far-reaching privatization and liberalization policies. In Hung’s view such policies would have met with much stronger societal resistance had they been implemented in the more permissive pre-Tiananmen climate.

Hung also explains why wage repression and urban-rural differences in China are, and can be, greater than they were in South Korea and Taiwan at the same level of development. The answer is also somewhat counter-intuitive but no less logical. South Korea and Taiwan had to be more careful and to spread the wealth to the countryside lest they create revolutionary conditions in villages or allow disgruntled rurals to move into cities. They had to be more careful because of proximity of China and the appeal of left-wing, pro-Communist, policies. But China does not have to “fear” the left-wing appeal of any nearby egalitarian power, and can thus pursue much more inegalitarian policies.

Let me finish with a small detail,

The book that was clearly written before the last US presidential election (although it was published in 2017), mentions, as a curiosity, on page 1, one “Donald Trump’s…entertaining [sic] bid for presidency in 2012”. The joke is on Hung.