Thursday, June 1, 2023

“Succession” and the end of the illusion of ethical capitalism

 What “Succession” serves us is the end of the illusion of ethical capitalism. The issues are the same as they appeared in the beginnings of the commercial society, and were discussed by Bernard Mandeville and Adam Smith. The question was the following: can the unchecked use of what are conventionally considered vices, namely passions for power and wealth, be reconciled with the existence of an ethical society? Can a society that places the acquisition of wealth on the pedestal, considers it the most desirable social attribute, and regards the rich as worthy of emulation, be ethical?

It is important to make here the distinction between an ethical society and a society where the acquisition of wealth takes place within the legal rules. According to Hayek, speaking of “just” incomes does not make sense (nor should ethics be at all involved in the judgment of how market incomes are earned); what matters alone is whether the rules of the game have been obeyed. But it does not mean that acquiring incomes while following the rules of the game is sufficient to make a society moral.

Adam Smith, while criticizing what I called in “The Visions of Inequality” the “really existing capitalism” and the way that the wealth is made through enslavement of people, plunder, monopoly, or raw exercise of politics still held the possibility open—in the background—that a commercial society could be ethical. To be ethical it must minimize the use of, and the ability to use, power. Power comes either through politically-mediated ability to impose one's preferences or through the ability to order others, for pay, to do what we wish. The use of power can be brought to minimum if there is full competition so that actors cannot influence prices and conditions under which they sell their goods. This rules out monopolies, oligopolies and economic power derived from politics  But in addition to the output markets, it is also important to minimize the exercise of power within the companies. The companies, especially when they are large, are hierarchical. When they are hierarchical the power of those on the low levels becomes small and the power of those on the top proportionately increases.

Adam Smith’s “capitalistic ideal” that would, I think, combine efficiency and agency would be realized in small companies, either family-owned or with few employees, enabling the voice of the employees to be heard, and reducing the power of the owners of capital, while competing on a level playing field with hundreds of alike companies. The power would be dispersed and the power of everyone would be kept in check by the similar power of others. Such a society would never allow the “masters” to become powerful enough to dictate political decisions. It would be thus politically equal too.

The problem is that the current capitalist societies are anything but such small-scale “ethical capitalism.” Our world, on the contrary, is a world of large corporations, monopolies, cutthroat competition among such corporations as well as within the corporations themselves, where workers have no right to make any decisions and influence the process of production, and are thus alienated from it. It is the world of extreme commodification and hierarchical relations. Hierarchical relations within companies and hierarchical differences in power between the companies enable the richest to assume a political role which makes the society resemble a plutocracy.  

The value of “Succession” is that it shows us clearly that world, without committing a mistake of introducing extremely immoral actors that break the law. The strength of the script lies in that all the players work within the confines of legality without –for all that—being either ethical or sympathetic. Everybody follows self-interest only, exhibiting in the process large amounts of self-love, and being a stranger to any moral considerations. Other than the need to stay within the law, or perhaps more accurately, not to be found out to have broken the law, everything is permitted.

Everybody lives in the world of moral grayness. Moral grayness is so pervasive that it is impossible to distinguish among the characters those who exhibit darker hues of moral turpitude from those who might show some lighter nuances. This behavior is not limited to the professional life but percolates into the family life. In “Succession” this is  obvious from the very beginning because the issue is who will among the children succeed the father, and thus most of the action takes place inside the family. Parents and children behave with respect to each other the same way as they behave towards everybody else: their employees, suppliers or investors. The commercialization and amoral behavior have invaded the family life to such an extent that there is no longer any difference between the family and the rest of the world.  There is just unanimous moral greyness between the characters, and between professional and private lives.

This absence of behavioral difference between the two spheres (the private and the professional) is something that would have surprised Adam Smith. For his two big works “The Theory of Moral Sentiments” and “The Wealth of Nations” were written to apply to two different spheres of our existence. TMS deals with our relations within the family, with friends and others who are relatively close to us, to what one may call the “organic community”; WoN is supposed to apply to our relations within the Great Society, that is with respect to, and in the intercourse with, everybody else. But in “Succession” the two areas are no longer divided, they are both parts of the same commodified world, and the same rules of amorality hold whether we are talking of families and friends or people whom we have met once in our life. The main characters are remarkably egalitarian in their treatment of people.  You are as likely to please Shiv, Rom, and Kendall if you are their closest cousin or if they have met you for the first time ever. The greyness envelopes all.

The incompatibility of a fully commercialized society with an ethical society is a problem for those who, evidence to the contrary, believe that capitalism can be successful and at the same time ethical and who deceive themselves by inventing “stakeholder capitalism”, “responsible business”, “ethically-produced coffee or textiles”, and the like. “Succession” disabuses them of these notions. Rather cruelly. The similarity of behavior that we observe on screen and in real life, and the moral bleakness of the characters, upsets this naïve view.  In order to preserve the fantasy of successful and ethical capitalism a very superficial discussion of the series in The New York Times, ignores all the issues mentioned here and puts the accent on an entirely incidental feature, namely that the company over whose ownership the children fight is a media company that influences people through biased news. This however has nothing to do with the main storyline which is the story of ethics and capitalism. Exactly the same situation would have existed had the company been selling electricity like Enron,  been involved in “packaged” mortgages like hundreds of companies during the 2008 meltdown, was laundering money like the Credit Suisse, was mistreating workers like Amazon, or used its monopoly power like Microsoft. So whatever the company Logan Roy and his children had, had nothing to do with the main message  of “Succession”. The main message was to disabuse us of the notion that an advanced commodified society that for its success depends on “disabling” conventional moral norms may be ethical. Or could be made ethical if we were willing to tweak a thing or two. “Succession” says: you cannot have both.

Thursday, May 4, 2023

Capitalism unchained

 Krishnan Nayar makes three key points in his recently published Liberal Capitalist Democracy: The God that Failed. First, he argues that bourgeois revolutions frequently failed to lead to democracy, a view strongly embedded in the Anglo-American Whiggish history and in simplified Marxism. Rather they provoked aristocratic reaction and the authoritarian economic developments which in many respects were more successful than those of bourgeois democracy. In other words, democracy does not come with capitalism and, as we shall see, capitalism often destroys it.  The authoritarian modernizers  (Nayar studies four: post-1848 Germany, Louis Napoleon’s France, Bismarck’s Germany, and Stolypin’s  Russia) enjoyed wide support among the bourgeoisie who, fearful for its property, preferred to take the side of the reforming aristocracy than to throw in its lot with the proletariat. This indeed was one of the disappointments that surprised Marx and Engels in 1848-51, when they noticed that the propertied classes sided with Louis Bonaparte rather than with the Parisian workers.  

Second, Nayar argues that the unbridled Darwinian capitalism always leads to social instability and anomie, and that social instability empowers right-wing parties. He thus argues that Hitler's rise to power was made possible, or was even caused,  by the 1928-32 Depression, and not as some historians think  by either the fear of communism or bad tactics of the Communist Party which instead of allying itself with Social Democrats fought them.


Third, and for the present time perhaps the most interesting, Nayar argues that the success of Western capitalism in the period 1945-1980 cannot be explained without taking into account the pressure that came on capitalism both from the existence of the Soviet Union as an alternative model of society, and from strong left-wing parties linked with trade unions in major European countries. In that sense the period of les trente glorieuses which is now considered as the most successful period of capitalism ever occurred against the normal capitalist tendencies. It was an anomaly. It would not have happened  without socialist pressure and fear of riots, nationalizations, and, yes, defenestrations. But with the rise of neoliberal economics after 1980 capitalism gladly went back to its original 19th and early 20th  century versions which regularly produce social instability and strife.


The lesson to be taken from Nayar is in some ways simple. Capitalism, if it's not embedded in society and does not accept limits  on what can be commodified, has to go through recurrent slumps and prosperities.  But these two cannot be seen just as a plus and a minus that cancel each other out. Their  political effects are very different. And this is where Nayar takes to task many economists who saw the 1920s Depression as a cleansing period of capitalism eventually bound to result in a boom. The point is that here we deal with real people and not mere numbers: many are unwilling to wait until the boom  comes; they may not even be around for its Coming. Thus they vote for radical solutions or go out in the street. This is something that is often forgotten by economists who treat individuals’ incomes over the long-term as a mathematical summation without realizing that the political effects of the minuses are very  different from those of the pluses.


If we look at the three main theses in Nayar’ s  book none of them is new. But they are when strung together and placed in their historical context.  The authoritarian modernizations have of course been a subject of many books some of which, like Barrington Moore’s classic, are cited here. The rise of fascism was, and is, increasingly linked with austerity policies as was recently done by Mark Blyth’s Austerity: History of a Dangerous Idea and Clara Mattei’s The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism. Nayar may perhaps be overstating his case by claiming that many historians such Ian Kershaw and Joachim Fest tend to ignore the economic causes of the rise of Nazism because they take capitalist economy as given. This could be true for some contemporary observers like Churchill as well as Keynes who seems to have been oblivious to the political effects of the crisis until comparatively late, but more serious historians do acknowledge a huge impact of depression. It is indeed hard not to do so when Germany's GDP declined by one-fifth, and more than one-quarter of its labor force were unemployed.


However there is a more subtle argument in Nayar which deals with the position of the Communist and Social Democratic parties in Germany. Unlike many historians who blame Stalin for the decision to direct  KPD’s animus  not towards fascists but towards those whom Stalin called “social fascists”,  meaning SPD, Nayar thinks that the collaboration between the two parties was impossible given their different constituencies and positions within the Weimar system. SPD was strongly embedded in the Weimar system. It participated in the austerity policies, supported spending cuts and the balanced budget, and was involved in the decision not to extend unemployment benefits which triggered yet another fall of government and the elections that finally brought Nazis to power (thanks of course too to the behind-the-scene machinations of von Papen and Hindenburg’s son).  KPD, on the other hand, had its ranks swelled by the unemployed, that is, by the same people whom Social Democrat were driving into the street. It was impossible for the two parties to collaborate, whatever Stalin wanted or not. For sure, the lack of cooperation opened the way for Hitler but without knowing the future which of course no participant in the political life can know, there is simply no way that the two large left-wing parties could ever join forces.


Nayar’s third point about the indirect support that the communist regimes and the left-wing parties provided to capitalism and capitalists, by pushing them to reform the system and realize that without much stronger social policies,  they risk being overwhelmed by communist parties, is also a point that is increasingly recognized. Here is the link to a very important empirical paper by André Albaquerque Sant’Anna that documents that the welfare policies were more strongly developed in countries where either socialist or communist parties were stronger or the threat of the Soviet Union was greater. Nayar quotes a number of British politicians and intellectuals who make the same point even if sometimes unaware of doing it. He rightly criticizes Tony Judt, who, bizarrely, refused to accept it.  


The Soviet experience and its international importance did not play a role only in Western Europe; it did not play the role only in Italy which had at one point one-third of its voting population support the Communist Party, or in France where the share of the communists oscillated around 20%, but also played an important role elsewhere, including in the beginnings of the Dutch planning or Indian five-year plans. So there is I think no serious contest on the matter. Nayar might pick on some historians who are singularly blind to reality but the reasonable view is that the (much embellished) Soviet experience did have a strong impact, indirectly promoting policies which would never have happened otherwise and would have been discarded by the capitalist class out-of-hand.


In that part of the book Nayar is scathing about the disconnect of the so-called Marxist intellectuals with reality in their own countries and the world. He rightly ascribes that disconnect to inability to accept that capitalism has been, even if reluctantly, accepted by the majority of the population including by majority of workers, that real incomes had been rising, and that the typical communist party’s role which saw itself as leading the working class in an  antagonistic relationship with bourgeoisie was simply obsolete. Consequently, Marxist intellectuals became what Nayar calls “intellectual playboys” without any discernible impact on politics. To us today they appear, and they probably were at the time, laughable. Had they been really interested in Marxism, and not in philosophizing for a few, had they been interested in the topics that preoccupied Marx, Engels, Lenin, Trotsky, Kautsky etc., and that had to do with the development of capitalism and lives of normal people, they would have noticed changes that had occurred between 1945 and 1980.  The size of the working class had declined, real incomes have risen, the power of trade unions was vanishing, large companies no longer exerted the role which they had in the past, and perhaps most importantly the technological change became very different from the technological progress that was known in the 19th and early 20th century. All these developments simply escaped the attention of the (quasi) Marxist set mentioned by Nayar: Sartre, Althusser, Marcuse. (To be fair, Nayar’s selection is itself narrow, perhaps too much influenced by the Londonese (my coinage) and Parisian salons. There were many on the left who saw these developments, but it is true they were less popular among the juventud rebelde of the 1960s and 1970s than the people mentioned here.)


They missed the change in capitalism, but capitalists anyway did not pay much attention to them. Neoliberalism felt emboldened by the internal dynamics that marginalized the working class and then by the precipitous fall of the Soviet Union and communism. Once capitalism was without a rival, it promptly went back to its past policies, manifesting many of its worst features that were forgotten during the trente gloirieuses. Marx, with his critique of capitalism, now became much more our contemporary than the myriad of other philosophers, Garton Ash, Ignatieff, Fukuyama e tutti quanti, who oblivious of history’s lessons celebrated the triumph of capitalism in no less unrealistic prose than Sartre and Marcuse reviled it forty years ago.


The question which is on everybody’s mind after having read Nayar’s book is, What next? Because if capitalism continues along the current trajectory that Nayar believes almost preordained, it must again produce instability and rejection. And that would—again--play into the hands of right- wing movements. We may replay a century later the same story that we have seen in the 1920’s Europe. History seldom repeats itself word-by-word or drum-by-drum:  we are not going to see the black shirts or different-color uniformed movements which inundated Europe in the ‘twenties but we might see, as we already do, parties with roots in nationalist or quasi fascist movements coming back to power and undoing globalization, fighting immigrants, celebrating nationalism, cutting  access to welfare benefits to those who are not “native” enough. Is it fascism? Its light variety?  This is the melancholy conclusion that can be made based on this sweeping study of western political and economic developments in the past two centuries.


The book is impressive in the amount of detail it marshals, in Nayar’s erudition and his eye for the unusual and the absurd, and his take-no-prisoner style. However, there are also limits: the book deals only with West European countries, and only a select few of them (UK, France, Germany), and just in one segment with Russian pre revolutionary developments. It is also true that the selection of intellectuals that are targeted by Nayar’s often acerbic, and in some cases savage or funny, commentary is limited to the relatively small group of French and British intellectuals, sprinkled, for a good measure,  by a few Americans. The European intellectual scene was much broader than the people who were mentioned in the book. The book also does not deal with the rest of the world: Africa and the anti-colonial struggle are not present at all; Latin America is entirely absent; India is just mentioned in a few sentences; China is non-existent except for the Korean war. So, it is a book that in its geographical, as well as ideological, scope, and the selection of the people whom Nayar excoriates, is limited. Nevertheless, taking these limits into account it deals in a very persuasive manner with a critically important period in western political history and makes us rather fearful of the future.


Thursday, April 13, 2023

The chronicle of the revolutions foretold?

 For almost two decades, Peter Turchin has been involved, with many colleagues and co-authors, in an epochal project: to figure out, using quantifiable evidence, what are the forces that lead to the rise, and more importantly, to the decline of nations, political turbulence and decay, and revolutions. This has resulted in the creation of an enormous database (CrisisDB) covering multitude of nations and empires over centuries, and several volumes of Turchin’s writings (e.g., Secular Cycles (with Sergey Nefedov), War and Peace and War; I have read the former, not the latter).

End Times is Turchin’s attempt to break what he has learned from the complex work in the field (that he calls), Cliodynamics, to the broader public. It is a work of “haute vulgarisation” even if the adjective “haute” is sometimes inapplicable since, in his attempt to reach the broadest possible audience, Turchin has at times stylistically gone much too low assuming almost no prior knowledge amongst his readers. But this is a question of style.

What is the substance? To simplify, in my turn:  Turchin’s model of decay has one variable: inequality in income or wealth. That variable which is often adduced as a source of political discord is given a very concrete meaning by Turchin. (Here, I have to mention the often uncomfortable personal experience when people keen to praise my work on inequality would claim that it is important because high inequality leads to social conflict, yet without either them or me being able to pinpoint exactly how it does it. Now, Peter Turchin comes with an explanation).

Rising inequality means by definition that the median-income person will fall further behind the mean-income person, and increasingly behind the top 10% or the top 1 percent. The median-income person could be, as in today’s United States (a county to whose analysis most of the book is dedicated), an insufficiently credentialed manufacturing or service sector worker; or it could be a semi-skilled laborer in the 19th century Great Britain, or a small landholder in the 1830s France and 1850s Russia.  Thus, precise occupation or class does not matter: income position does. 

What happens on the top of income distribution? Increased inequality means, again by definition, that people at the top are getting richer compared to the rest, or put differently, that the advantage of being in the top decile or top percentile is increasing. This, as every economist knows, implies that the “demand” for such top slots will go up. If the elite (the top decile or the top percentile) is composed, as in today’s US, of executives, investment bankers, corporate lawyers there will be an increasing attempt to study the most lucrative fields and to adopt the type of behavior (including the beliefs) most likely to lead to joining the elite. If more people do so than there are numbers of elite positions, a game of empty chairs follows. Not everyone among the aspiring elite will make it. The split in the elite, created by the disappointed would-be elite fighting for top positions, comes next.  

In conditions where (a) the distance between the median and the top goes up (what Turchin calls “immiseration” although it is important to note that this is a relative immiseration; i.e., the median-income person can in real terms become better off), and (b) there is elite overproduction, a pre-revolutionary situation ensues.  Immiseration is not enough. To produce a breakdown, we have to have different elites fighting each other, with one of them enlisting the support of the “people” (or others) in order to win.

Even passing knowledge of the backgrounds of the most important revolutions in the modern era shows that Turchin’s simple model provides a good fit. Take the French revolution: stagnation of income and recurrent famines occurred simultaneously with a divided elite (aristocracy and part of the clergy against the rising city merchant class); in Russia in 1917, it was one part of aristocracy against another which lost its landholdings and wealth after the abolition of serfdom and could not compensate it with well-paying state jobs. (The statistic of the number of revolutionaries who were themselves, or their families, the impoverished nobles is striking.) Or take the 1979 Iranian revolution: the sidelined clergy against the bourgeois elite, which, like in the Russian case, produced through its offspring the future revolutionaries.

The model fits well—almost too well—the current American reality. The median person is the “deplorable” (to quote Hillary Clinton), a populist (to quote the mainstream media), a Hillbilly (to quote J. D. Vance) or one of the candidates for the deaths of despair (to quote Anne Case and Angus Deaton). The disaffected, disenchanted American lower middle class has been studied extensively after Trump came to power. The current elite, whom Turchin dissects in an almost forensic manner, is composed of CEOs and board directors, large investors, corporate lawyers, “policy-planning network”, and top elected officials (p. 203), that is, of all those who have money and who use it to gain voice and power. (Not unexpectedly, Turchin argues that the United States is a plutocracy that uses the tools of the general right to vote as a way to legitimize its power).

But that elite is not monolithic. An aspiring elite (“credential precariat”) has been constituted. It has failed so far to reach the top and has ideologically defined itself in opposition to immigration, globalization, “woke” ideology. Turchin argues that this aspiring or would-be elite is in the process of taking over the Republican party and thus creating a political tool for an effective intra-elite competition. This is, of course, resented by the ruling elite that enjoyed an extraordinary good run between 1980 and 2008 as its view of the world (neoliberal capitalism, “credentialism”, and identity politics) became espoused by both mainstream parties. Turchin regards the present political struggle in the US as the ruling class trying (desperately) to fend off an assault on its ideology and, more importantly, on its economic position, by an aspiring elite that is enlisting the support of the disaffected middle class.

It seems to be a battle of epic proportions. Many of the pre-revolutionary signs are there: dysfunctional political system, strong interparty splits, lack of political representation for the outsiders. Turchin approvingly quotes the seminal empirical work by Amory Gethin, Clara Martinez Toledano and Thomas Piketty arguing that in all Western democracies, the left-wing or social-democratic parties have become parties of the educated credential elites, while the working and middle classes have lost their influence and even representation.   

Turchin is agnostic—as one should be—regarding what the outcome of the American political crisis will be. The American political system has shown itself to be extraordinary flexible and able to withstand serious shocks. In some ways, one could even think that Trump’s various conscious and unconscious “subversions” redounded precisely to the advantage of the system because they showed system’s resilience even when the President tried to “overthrow” it. But on the other hand, deep incomprehension and lack of interest in the other side’s view is precisely one of these characteristics of pre-revolutionary times and the US has plenty of evidence of this.  

Turchin’s model applies to China (not discussed in the book) probably as well as to America. The relative immiseration of the median class has gone on for the past forty years. Indeed, it went hand-in-hand with its phenomenal increase in material well-being, to the clip of almost 10% per year, and is thus less noticeable. At the top end of the distribution, the political/administrative class that has historically ruled China is opposed, still very cautiously, by the rising capitalist/merchant class.  In a paper by Yang, Novokmet and Milanovic, we have documented and analyzed probably the most radical change —short of a revolution—in the composition of the elite ever. That has occurred in China between 1988 and 2013. Economic growth has displaced the administrative class in favor of those linked with the private sector (capitalists).

Turchin’s model of internal breakdown thus acquires a geopolitical dimension.  The struggle for global supremacy between the US and China can then be visualized as the question of whose political system will crack first. If China’s does, it will have to scale down its foreign ambitions, and accept the role of a subaltern power (to the United States) even in Asia. If the American political system collapses first, the US would move toward isolationism and would have to acquiesce into Chinese rising power in Asia, thus losing controlling power in the most dynamic part of the world.

Will Turchin’s model’s predictions turn out to be correct? We do not know, but I think, it is important to focus on the logic of the mechanism proposed by Turchin and to see the next couple of decades as a period of difficulties rather than to think, as some people who popularized Turchin’s views did in the Summer of 2020, that social processes can be predicted with a precision of movement of celestial bodies.

Turchin’s is a fascinating thesis worth reading about, and then either witnessing the chronicle how it unfolds, or perhaps participating in bringing about the outcome or staving it off —because Turchin does show that there the cases when the elite foresight and well-understood self-interest enabled it to ride off the times of troubles.  




Sunday, March 5, 2023

On charisma and greyness under communism

Several years ago in a conversation about politics and history,  a friend asked me something about the durability of Tito’s regime in Yugoslavia (35 years). I cannot remember what was my answer, but I remember that he summarized it by saying that Tito must have been a charismatic leader. That statement struck me as odd. My friend lived in Argentina for a decade or more, and I thought that perhaps it came naturally to him to associate the long rule and popularity of leaders to their “charisma”.  Yet, as far as Tito was concerned,  no one could claim that he was a charismatic leader. Towards the end of his life, he was quite popular, liked by most, even adored by many—but “charismatic”: never.

That led me to think about the absence of charismatic figures among the second generation of communist leaders. For sure, communists had some charismatic leaders: Trotsky, partly Lenin, and surely Fidel Castro (but not Raul) come to mind. Even Mao—although I would like to treat him separately. But nobody else. Stalin was certainly not a charismatic leaders. Nor were the leaders whom I remember well from my youth: Todor Zhivkov, János Kádár, Gustav Husak, Walter Ulbricht, Władysław Gomułka were the greyest shade of grey. There is no crowd where they would stand out. Rather, they seem to have cultivated the desire for greyness and “averageness”. Others were not much better. Khrushchev was mercurial and often unpredictable, but not charismatic. And Brezhnev. Kosygin, Andropov, Chernenko were of the same grey-greyness variety. Jaruzelski stood out a bit, but this was because he was an unusually-looking communist leader: a military man with dark glasses. He looked more like an East European Pinochet than a communist leader. Ceauşescu was more known because of his independent foreign policies and crazy domestic policies, but he too was far from charismatic—as we can easily ascertain by watching his much replayed last speech at the Victoria square in Bucharest.

An easy answer to this absence of charisma or individuality is to point out that all post-revolutionary communist leaders were men of the “apparat”: skillful in bureaucratic machinations and back-room maneuvering.  They did not need to appeal to the population, run in elections, gather votes. And bureaucratic organizations prefer greyish technocrats like Kosygin and Kadar, or just grey  people in general with no individuality (like the rest of the characters  mentioned  above).  Reading recently David Halberstam’s “The best and the brightest”, I thought: was not McNamara, the man of the system, the same greyish-grey?; even if he was in certain intellectual ways probably more impressive than some on this list of communist “apparatchiks”.

Nonetheless, this bureaucratic explanation is neither sufficient not fully convincing. I think that there was another ideological explanation. When a friend mentioned Tito’s presumed charisma, I felt like correcting him, by saying that for communists charisma was never an ideologically desired property. No true communist leader would explain his popularity or longevity by “charisma”. “Charisma” and individual popularity were bourgeois inventions, good for class-based societies. Communist leaders were tools, playthings of history; individuals who just embodied the historical Geist. Thus ideally, and I think that this is a correct ideological frame within which to place their “greyness”, they as persons did not matter. What mattered was being on the right side of History and doing what the Party commanded. Every individualism, and even more so every flamboyant individualism, was suspicious. (My cousin who was a perfect Party man, scrupulously honest and dedicated, would never answer any personal questions directly: asked what are his plans regarding  his work and life, he would invariably –and honestly—reply: “I have none. It will be as the comrades decide.”)

The submission of individuality meant of course no place for charisma. This seems at first strange because some of these leaders—Stalin in particular, but also Tito, Enver Hoxha and Mao—enjoyed and encouraged a cult of personality but without claiming any charisma. History spoke through them.

Communist ideology was, fundamentally, an ideology of ordinary, working-class men and women. It was an ideology of masses. It thus frowned upon all displays of individualism and even favored an esthetic of ordinariness, of utilitarianism, of non-standing out in the crowd. Greyness of the leaders was exactly how ideologically the leaders should be: not any different from you and me, dressed in grey or brown, wearing dark shoes with thick soles, speaking softly, boringly and for a long time in a mixture of Marxist and economistic jargon that would put most listeners to sleep.  

The point was to be “the average man”.

There was a distinct communist aesthetic of greyness and drabness, derived from the ideology of “averageness” and levelling, where what may be judged as colorless and dull was precisely what was sought. Every aesthetic is deeply subjective. There is no reason to believe that an aesthetic of grey, dusty colors is inferior to the aesthetic of a rainbow. What is often ridiculed or criticized as lack of elegance or aesthetics in leaders, clothing, apartment buildings, and perhaps art in general is the application of foreign (to communist ideology) aesthetic criteria. The conventional ugliness of communist constructions was not a defect. It was something that was desired. It was an alternative aesthetic where nothing  would ever stand out. The grey leaders were beautiful—on their own terms.

Monday, February 27, 2023

Capitalists, the state and globalization

             “The tendency to create the world market is directly given in a concept of capital itself. Every limit appears as a barrier to be overcome…In accord with this tendency, capital drives beyond national barriers and prejudices as much as beyond nature worship, as well as all traditional, confined, complacent…reproductions of old ways of life. It is destructive towards all of this, and constantly revolutionizes it, tearing down all the barriers which hem in the development of the forces of production, the expansion of needs…” etc. (Grundrisse).

            This is how Karl Marx saw globalization as an inseparable part of capitalists’ interests and drive.  Nothing has changed in 180 years since the passage was written to make us believe that the behavior and the incentives of capitalists are different today. So is the continuation of “high globalization” that began with the opening of China and the fall of communism in the Soviet Union and Eastern Europe, simply a natural and unstoppable process of capitalism  breaking barriers of space, technology and habits in search of profit? In our own time capitalism has expanded not only geographically but also by creating new activities and new markets from renting our flats to being paid for influencing other people’s buying decisions or selling one’s name as a trademark. How can we then understand that the quintessential capitalist country like the United States might decide to opt out of globalization or at least to restrict its further advance?

We can explain it, I think, only by bringing two other “players” in addition to the one highlighted by Marx. First, we can bring in the state assuming that the state is to some extent  an autonomous actor, and  that what it does is not entirely determined by capitalists’ interests. It is a topic which has been discussed  for over a century and on which no consensus has been reached. But if the state does have sufficient autonomy of action then it can override, in some cases, the interests of capitalists.

The second possibility is to allow for the split within the capitalist class. Alongside what we may call “the cosmopolitan capitalists” who have profited handsomely from globalization through outsourcing of production, there may be what we might call “the military capitalists”, i.e. that part of the capitalist class directly linked with the “security” sector, procurement of weapons and replacement of technologically suspicious imports from unfriendly countries. The removal of every Kaspersky anti-virus protection software and every Chinese-made CCTV camera benefits somebody who would produce a substitute. They do have incentive to support a more bellicose policy and thus to question globalization.

But military capitalists labor under two important handicaps. They are very unusual capitalists in the sense that their profits depend on state expenditures which in turn require high taxes.  So in principle they have to be in favor of high taxation in order to fund  government expenses on defense. They might benefit on balance, but the preference for high spending and taxes puts them at odds with other capitalists. The second problem is that by restraining globalization they work against a force responsible for lower increase in nominal wages, namely cheaper wage goods imported from Asia. For perhaps that the greatest contribution of China and the rest of Asia was not the direct one (higher profits from investments), but the indirect one: allowing Western real wages to rise, albeit modestly, but shifting the distribution in favor of capital. This is what has happened over the last thirty years in the US and other advanced economies and goes under the rubric of the decoupling between productivity and real wage growth: it is just another way to say that the labor share has gone down. The labor share has gone down without reducing real wage thanks to the fact that wage goods themselves have become cheaper. This was a huge boon to both cosmopolitan and military capitalists. If  globalization is overturned, that benefit will evaporate: nominal wage would have to go up even if the real wage is constant, and the profit share in GDP will be reduced.

Thus military capitalists face two problems: they need to argue for higher taxation and implicitly in favor of reduction of capital incomes. Neither is popular. However the success cannot be ruled out. An alliance may be formed between the military capitalists and the hawkish part of the semi-autonomous state. They may be wiling to accept such “costs” if they enable the US to curb  China’s rise. The pure geopolitics would dominate economic interest. Historical experience helps such an alliance too: US has won all big wars (the First, the Second, and the Cold) and every time its victory has led it to the peak of geopolitical and economic power. Why should not that happen again?

 This is how we should regard the future of globalization, at least from the point of view of the western calculation: as a  trade-off between unconstrained geopolitical power and higher real domestic incomes. The economic arguments as well as the usual (and at times perhaps facile) assumption that the state does what capitalists want it to do overwhelmingly point in favor of continued globalization. Yet the “bellic alliance” may be just sufficiently strong to keep the other side in check, if not to entirely overturn globalization and shift the country towards autarky.

Wednesday, February 22, 2023

The comprador intelligentsia

In “Orientalism”, Edward Said spoke of an orientalist as an interpreter of local custom and knowledge to the foreign intellectual. A common term in neo-Marxist literature of the 1960-80, for the absence of articulation between the domestic areas that interacted with the rest of the world, and the hinterland that was cut off from it, was the comprador bourgeoisie. In the past thirty years, the world might have created a “comprador intelligentsia” too. 


What I have in mind here is the following. On the global level, the West is unquestionably the creator of most of knowledge. Its only two significant competitors are China and Islam. However, it still dominates, economically as well as in its readiness to spread its knowledge and to influence what is produced elsewhere. Sometimes out of best intentions, sometimes out of ignorance, and sometimes out of ulterior motives, a number of academic, non-governmental,  quasi-governmental, and fully governmental, associations have been created with that objective in mind.  


These institutions tend to finance the projects that deal with the issues that are currently considered important or fashionable in the Center.  They could hardly justify doing otherwise to their donors who are not interested in whether such topics are of relevance in the “faraway countries of which we know nothing”. The projects, or more exactly, the funding which comes with them, create a small local elite, the comprador intelligentsia. The elite becomes very savvy in packaging and presenting the results of the research so that they appeal to the Western funders. The problem, however, is that the comprador intelligentsia—being focused on pleasing the donors—is often cut off from the domestic intellectual life. Like the comprador bourgeoisie it has very few links with the “hinterland”: it exists purely thanks to the foreign donors. Once the foreign donors move somewhere else, the comprador intelligentsia disappears. (If the donors move to another topic, the comprador intelligentsia will move with them to the new topic too.)


Intellectual activity which is largely unrelated to the real issues in a given place and time, and responds to the epistemic desires of an entirely different place is meaningless. It leaves hardly any trace domestically. It does permit the country to remain within some vaguely defined orbit of international knowledge-creation, but the motivating forces of this knowledge-generation are entirely external. They produce little domestically, other than allowing the comparator intelligentsia a nice life of intellectual and material comfort.


Such phenomena are seen in all peripheral societies where financial resources to fund research are meager, and the intellectual class needs to survive. I have seen it, in rather technical matters, too. Until about ten years ago, statistical agencies in many African countries were very weak, both in terms of personnel and money. They could not organize household surveys that have been routine in the rest of the world. Thus very little such information existed. What did the foreign donors do? They each, responding to their temporary interests or whims of their bosses, funded a study of this or that area, or of this or that population. Thus one got (e.g. in Tanzania) most disparate surveys, none of which could be combined in any time-series, and none of which allowed to find out whether things were changing, improving or not. The Swedes would fund surveys of poor rural households in area X, the US AID would fund the survey of single mothers in Y, the British, not to be outdone, will discover sudden interest in youth unemployment in Z. Domestic statistical office will oblige—with indifference—because of need of money. The surveys will be done, the reports written, and sent to the higher authorities in Stockholm, Washington and London. To be promptly forgotten there. And they would be entirely ignored locally.


The same is happening with the so-called Randomized Controlled Trials (RCT) which were crowned with the Nobel prize. In order to proceed to many ethically questionable practices (on which much has been written, see Sanjay Reddy, Angus Deaton, Martin Ravallion), domestic support by few individuals is invented, in many cases probably in return for promises of fees or foreign travel. When the RTC project that subjected people in different parts of Nairobi to arbitrary water cuts led to the worldwide outcry,  the Principal Investigator Paul Gertler wrote a pathetic defense of the project by arguing that it had local “purchase” through an ill-defined cooperation with local government: “through joint discussions between the World Bank and Nairobi Water teams, it was agreed to additionally test a softer less potentially harmful nudge [disconnection from water services!] as an alternative”. Even if one leaves out the ethical problems of RCT (on which I am not focusing here), this is yet another example of a foreign-funded project with no links to any creation of useful domestic knowledge. Its only result—other than leaving poor people without water--and perhaps the only objective to start with, is the personal aggrandizement of the Center’s researchers. (One wonders if Kenyan researchers could engage in a similar exploratory project by withholding RCT researchers’ salaries for several months to study how they would react.)


Similarly to the comprador-driven domestic development which never resulted in economic growth, the comprador-driven intellectual development is sterile. It will continue to be produced because it supports the ideological needs of the Center and the financial needs of the periphery, but it will never have much influence in either: the Center thinks it has nothing to learn from the periphery, and nobody in the periphery is much interested in the topics given to the comprador intelligentsia as a homework to study.


Friday, February 10, 2023

Statistics as a philosophy and art

The statistical work during the first fifteen years of the People's Republic of China can be usefully, if somewhat simplistically, divided into three periods as the excellent book “Making it Count” by Arunabh Ghosh argues

The first goes from the foundation of the People's Republic in 1949 to approximately 1956. During that period the Chinese statistical system and the overall approach to statistics were heavily influenced by the experience of the Soviet Union. The statistics were seen as a handmaiden of planning. The implication of that view was, as it became clear at a very important conference in Moscow in 1954 (i.e., after Stalin’s death but before Khrushchev’s “thaw”)  that statistics is a social science and that its use is directly related to the tasks of industrialization and development. Its three key principles, as applied by Chinese statisticians too, were exhaustiveness, completeness, and objectivity. This meant that the entire phenomenon studied should be covered and documented, and that it should be done in a non-probabilistic “objective”, almost descriptive, way. The implication was to relegate what is today the dominant view of  philosophy of statistics into the more abstract mathematical statistics that hardly ever dealt with social phenomena. (The politicization of statistics in the Soviet Union became such, Ghosh writes, that several prominent statisticians decided to move away from anything that may be politically controversial and to apply their statistical knowledge to the study of astronomy.)

The Soviet approach was soon found wanting in China. It put extremely high demands on providers of information, generated a huge amount of paperwork so much so that the State Statistics Bureau (SSB) was drowning in  data—which paradoxically it did not know how to summarize into useful information for policy-makers.  Thus the two contradictory phenomena appeared: on one hand the providers of data complained of the enormous, and quasi-continuous,  cost in effort and time, while, on the other hand, SSB was unable to fulfill its role. Ghosh shows that the problems were very severe in the agricultural sector, composed of hundred of thousands of villages and farms from which crucial information about yields and production was needed. The system was less inefficient for the much smaller and more concentrated sector of industrial enterprises.

With the political change in 1956 and 1957, leading to the break of close relations with the Soviet Union, there was also a change in the approach undertaken by Chinese statisticians. They turned much more towards India. India was then also beginning  its Second Five-Year Plan (1956-61) and it saw statistics as an important planning tool. But rather than using the exhaustive censuses it pursued, under the influence of its famous statistician P. S. Mahalanobis (Professor Ma to the Chinese), the system of random surveys. Such surveys, it was argued, were not only faster and cheaper than the alternatives, but produced the statistics (for example, on grain or cotton yield) that were accurate and whose mean values had a bias that could be quantified.

 Mahalanobis, who was personally and politically close to Nehru, was able to stimulate an interest in Indian statistics in Zhou Enlai and other Chinese officials during one of their visits to India. Propelled by the politics of Sino-Indian rapprochement in the wake of the Bandung conference, there were several years of close relations between the Indian Statistical Institute in Calcutta and SSB in Beijing. SSB began a cautious move away from comprehensive enumerative approach toward the use of random sampling.   

Despite several practical advantages of random sampling, one should not disregard the philosophical differences between the two approaches. Ghosh’s book brings them out quite well. The comprehensive and exhaustive approach aims to a full and complete understanding of social reality. Like in Borges’ short story “On exactitude in science”, its aim is nothing less than the replication of reality it studies. The sampling approach is more limited in its objectives, more pragmatic  and utilitarian, and holds that through randomization and stratification it is able to comprehend the same reality much more cheaply, quickly and in a more purposeful manner.

Before we come to the third period, and the third approach, it is important to mention that throughout all this time in the background was present yet a different method, championed by Mao himself, when he studied social structure in the rural areas of Hunan in 1927. Mao privileged the ethnographic method with researcher’s direct involvement.  The ethnographic method is comprehensive but is also purposeful in the sense that its objective is not  to study the peasant society for its own sake, but to find out, through careful observation of reality, what are the differences in class interests, and what classes are likely to support or to oppose communist policies. The ethnographic approach advocated an unmediated contact with, and direct knowledge of, reality that is studied. That is not a feature that the comprehensive enumeration or sampling normally exhibit. There is a distance between the people who supply information in factories and fields, those who collect it, and the statisticians in the center who decide how to present it to the public and the policy-makers.

The statistical methods used during the first and the second period were to some extent antithetical to Mao’s view where the producer of information should be personally involved with the object of his study. It is true that the direct knowledge of the reality that is being studied is helpful but Mao’s approach to complex and large economies, and to the China that at the time had more than 700 million citizens, is simply not feasible.

The third period begins with the anti-Rightist campaign in 1958 and the Great Leap Forward in 1959-60. It led to the abandonment of the earlier approaches in favor of “typical” or “purposeful” sampling, where researchers are not interested in the integrity of the phenomenon but in some of its typical or average features. In terms of the field with which I am familiar, distribution of income and consumption, the typical approach does not aim to cover the entire spectrum of incomes that are being received, i.e. the poor, the middle class, and the rich; rather it focuses on a priori selected types of households who are studied in detail. In other words, the interest is how various typical households are faring, not how all households are doing. The typical approach has its origin in the early Soviet family budgets surveys of the 1920s that were concerned with the rural-urban differences and where the objective was to look at how typical industrial household compares with the typical agricultural household. (One can go even further back to the mid-19th century English surveys of workers’ households.) There are two major problem with this approach: its neglect of the entire distribution, and its a priori selection of what typical is. Of course, the latter is driven by policy choices and, as we shall see, it produced disastrous effects during the Great Leap Forward.

Ghosh’s discussion of the use and misuse of statistics during the Great Leap Forward (GLF) is especially important. While it is commonly argued that the statistical information during the GLF collapsed as the center became disorganized and weakened by the placing of political correctness before professional skills, and the collection of information became decentralized with clear incentives to present only positive, and to suppress every negative, information, Ghosh argues that this is not a full story.  Ideological change in statistics was also to blame. Even if political incentives of the suppliers of information to show a much more rosy picture, are left aside, the methodological choice led to the misrepresentation of reality. During the GLF information was collected mostly from the villages that were doing things relatively successfully or were not affected by the worst effects of famine. Data that were then presented to the leaders, under such extraordinary circumstances, were biased by the very design of surveys. (Obviously, had circumstances been less dramatic, the consequence of the use of typical surveys would be far less.)

Ghosh’s book is an important contribution because the philosophy behind the statistical research is very poorly understood and the history of how statistics has evolved to the position that it now occupies is neither taught nor known even among the practitioners. The contribution of the book, while it looks at China specifically, is not only that it enables us to study the philosophy behind the statistical work in China but to see the ideological or philosophical underpinnings to much of statistical work in general. Another contribution of the book,  as  the author mentions, is that it departs from the simplistic US- or Soviet-centric approach and looks at the early instances of the South-South cooperation and the role that the exchange of information, ideas and methods  between India and China played in the 1950s. The reader is left in no doubt that had that cooperation continued, and had it did not been derailed by the Great Leap Forward and the political incidents following the revolt in Tibet and the exile of Dalai Lama to India, the Chinese statistical situation would have been much better in the 1970s than it was.

The book ends before the Cultural Revolution which caused yet another, possibly even greater, shock to the Chinese statistics. The number of statistical publications by SSB during the first several years of the Cultural Revolution fell practically to zero. That the statistical office which in the 1950s employed, over all China, more than 200,000 people came to employ barely several hundred, illustrates the extent of the disruption.  The next stage, which continues to this day,  is only hinted at: it begins in the early 1970s with some improvements in the collection of data, and finally with 1981 when the first issue of the Chinese statistical yearbook was published.