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.

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.

 

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-19^th 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.

 

Why I think that Argentina 1985 is not a very good movie

Now when the passions have receded a bit after I got an incredible number of critiques and insulting emails because I did but think that Argentina 1985 is a very good movie I would like to explain my reasons.

First, let me say that the critique of a film or a book is totally separate from whether we think the events that are described in a film or a book are important and worth describing. There are many mediocre books or films about extraordinary events.

So I fully understand the importance of the trial. It is even more impressive than Nuremberg trials (with which both the movie and several people on Twitter compared it) because Nuremberg was done by foreign military powers and the Argentine trial was done by the domestic tribunal.

I also understand that some people may not care about the quality of the movie so long as many people in Argentina and elsewhere like it, and get emotional about it. It may be also politically expedient, as a person mentioned, to make it at the current time. Or it may be useful for Argentina’s perception in the world as the events of the trial become better known internationally.  All of these are valid points, but none of them has anything to do with the quality of the film.

Before I explain what I do not find appealing in the movie, let me dispense with two points. First, when I wrote that the movie is “predictable”, clearly I did not mean that it is predictable in the sense it should twist historical events which happened and which are obviously known.  Any film that deals with historical events has to stay within these historic events. It does not make sense to write “La chartreuse de Parme” where Napoleon wins at the Waterloo. What I  meant, and clarified in the second tweet, is that the character development in the movie is entirely predictable. And it is predictable because it is based on well-known clichés. Thus anyone who has seem these clichés applied before knows exactly what to expect.

The second point is rather absurd. I was told, “el gringo de mierda”, that if I did not understand the movie I can go and watch Hollywood Mickey Mouse movies. But my critique was precisely that Argentina 1985 is entirely Hollywoodesque and that this is its weakness. It is a gringo movie, if you will. In fact, had Steven Spielberg been asked to make the movie about the Argentinean trials, he would come with exactly with the movie as was produced.

What are the clichés and what is the problem with the clichés? There are at least four (and I listed them already in my Tweet). A reluctant prosecutor who is really not sure whether to take the case or not but when he does he becomes a hero to his family and country and his fundamentally honest nature is revealed. This is the cliché of a reluctant hero. Each of us is really a hero: we just fail to discover that.

There is next the cliché of the young enthusiastic assistants who come from well to do families that were, in one or another way, involved with the dictatorship. The young assistants reject their family values, but the movie finds it too hard to drive this point to its logical ending (where for example the family would disown the son) because it needs to show that even “bad” families are fundamentally good. Hence the mother’s phone  call. That a person who knew of the atrocities, but (as most of us would do) would either  ignore them (“this does not concern our family”) or justify them (“they are the subversives, they want to destroy the country, family and nation”, “no punishment is too strong”) would, based on a single testimony, change the  opinion, widely held in her social circle—family, relatives, husband—probably from the time when she was born, stretches credulity. Here is the next cliché: even seemingly bad people are really good. We can all, from one day to the next, overcome dozens of years of socialization. There are no moral or class issues because fundamentally we all agree.

A final –extreme—cliché takes place at the end of the movie when all the mothers, after the first one puts back her scarf, do the same and show their solidarity in dignified silence. The scene has been played and replayed hundreds of times and its obvious objective is to elicit applause from the public at the end of the movie and to make everybody feel righteous. To be brutal, I would say it is a cheap thrill.

All of these are clichés from central casting. They are not naive though. Their objective is (as in Hollywood movies going back to the original Westerns) to avoid asking two hard questions: what are the social underpinnings of every dictatorship, and what are the difficult choices that people must make under a cruel system? Argentina 1985 avoids asking either of these two questions. This is why we are treated at the end with a picture where only 6 or 7 admirals and generals, villains about whom we know nothing but who must have been intrinsically evil, have kept a whole nation in thrall for a decade. They had no accomplices, no social base, no nothing: everything in reality was so simple.

This makes Hollywood movies, and movies like Argentina 1985 popular. It makes them popular because they avoid difficult questions, and allow us to go home feeling convinced that we too would have made right ethical choices. Even more, that it is not difficult to choose. Between us and  happiness stand only 7 cardboard villains.  

The movie makes us happy. Justice triumphs. But to be a good movie, it should make us unhappy. It should make each of us wonder what are the decisions we would have taken.  And how hard this would have been.