Thursday, August 31, 2023

Thinkin’ ‘bout a revolution

             As I suppose many older people do, I was thinking about the most important parts of my life, not only personally, but socially: how did the social forces around me affect me and made me think what I think.

There is little doubt that for most of my generation in the West and the East the Cultural Revolutions of the 1960s-70 were a crucial event. (I have to exclude the Third World from this generalization since I do not know enough about how the Western Cultural Revolution affected ideology and the mores there).

May and June this year was the 55th anniversary of Les événements de mai. Last week was the 55th anniversary of the Warsaw Pact’s invasion of Czechoslovakia that also saw the birth of the modern dissident movement in the USSR when eight persons  unfurled a poster on the Red Square condemning the invasion.

The Revolution caught me in the formative years of high-school. All events that happen at that age, even when not revolutionary, have an impact on people’s later lives. So much more if they are revolutionary. We were lucky that the events that affected us were revolutionary mostly in the cultural sense. At the same time China went through the Cultural Revolution, but it was an altogether different series of events, more serious, more ideological, and far bloodier. But no less significant was the Western Cultural Revolution.

What did it accomplish? It reduced social distance between the rich and the poor, a huge achievement; it liberated sex and improved women’s social position in a way that led to the current acceptance of gender equality and all sexual preferences among the liberal elites; it ensured equal or similar civic rights for the Black population in the United States;  it changed dramatically vestimentary habits, simplified them, and thus added to the apparent social levelling by making it more difficult to recognize social status from one’s dress.  

The revolution was similar in the West and in the Communist East, but it produced very different effects. In the West, politically, it diminished class polarization and class antagonism. I lived through the Revolution in Belgium where I went to high school. There was no doubt in my mind when I arrived there that Belgium was a class-stratified society where only rich parents’ boys could date rich parents’ girls. The rules were clear. The Revolution, incrementally, eroded them however: by the mid-1970s, this was not longer true. It produced a deep social change which, I think, has persisted.

In the East, where class differences were less or were obliterated by the political revolution of the late 1940s, the new Revolution opened the vistas of freedom.  It hinted that a different, much freer and diverse world existed close by and that it was possible—not a Utopia. It stimulated resistance to the authorities, and the feeling of freedom—both things that were anathema to the communist regimes that valued conformism and obedience.

Revolution’s effects were long-term and were seen well among the generation that came to power twenty years later. It may seem strange to unify in the same sentence Bill Clinton and Mikhail Gorbachev, but they do illustrate well what I have in mind. Clinton was the product of breaking class barriers to advancement while Gorbachev was a product of the Ideas of 1968: socialism with the human face. That belief affected Gorbachev in his student years as we know from Zdenĕk Mlynař’s memoirs and Gorbachev’s own “confessions”.

One of the complicating features of the Revolution was that it was leftist not only in the social ways that I described, but also because it brought from oblivion the Young Marx (whose early works, by coincidence, were first published then, more than 100 years after he wrote them), and thus the belief in democratic socialism.

The challenge to the ossified pseudo-Marxist regimes in the East came from the left. And even better—thinking of the Young Marx—from  the very founder of the political system the authorities claimed to represent. It was not a coincidence that almost all leaders of the Revolution in Eastern Europe came from the Communist Youth movement: the entire Praxis group in Yugoslavia, students of Lukacs in Hungary, Jacek Kuroń, Adam Michnik, Leszek Kolakowski (coming from the hard Stalinist left) in Poland, Ota Šik and Alexander Dubček in Czechoslovakia.

The Revolution was similar to the Reformation: it refreshed and re-affirmed the original ideological beliefs, and thus highlighted the gap between them and reality. Later the leaders will, with the rest of the society, move towards the right: either in nationalist or classical liberal directions. But that was only possible because the first opposition came from the left, and was thus ideologically more valid than had it come from the discredited right. My point is that in 1968, East European regimes were well equipped to deal with the challenges from the right; but they were ill-equipped to deal with challenges from the left and with the seemingly apolitical challenges of long hair, loud music and bottom bell trousers.

In the West, however, after breaking up some of social barriers and thus establishing apparent equality, the Revolution ended up, in many ways, like the Revolutions of 1848. In the latter case, formal political equality was proclaimed; in the case of the Revolutions of 1968, formal social equality was proclaimed. But in  both cases economic gaps became wider. Moreover, the post-1968 economic gaps became regarded as more justifiable than before when the revolutionaries argued that they were due to large class differences. Now as the Revolution unfolded the gaps reflected differences in ability and effort—in short, in merit. This is where the two iconic figures of the revolutionary generation and the turn to neoliberalism come: Bill Clinton and Tony Blair. It was the left that validated the traditional positions of the right, made them seem common-sensical and thus more firmly entrenched.

The left-wing attack on the regimes in the West soon morphed into the validation of the positions of the right, now even reinforced because shorn of its usual, and hard to justify, class support. The seemingly anti-capitalist Revolution of the 1968, made the world safe for capitalism. Joschka Fischer became foreign minister of Germany and oversaw the first deployment of German military might since the end of the Second World War; Bob Dylan received the Medal of Freedom;  Mick Jagger was knighted. To more vividly appreciate the change, note that Jeremy Corbyn, perhaps the only significant political figure in the West who continued to hold the 1968-like beliefs, came to be seen in the 2020s like a relic from a distant past.

The political effects of the Revolution East and West were at first different, but over the long-term, almost identical. In the East, as we have seen, the attack on the regime was from the left and that made the regimes clumsy in their response. But socialism with the human face, or any kind of socialism for that matter, was gradually discarded, and in an evolution that mimicked that in the West the end-point was declared to be what Václav Klaus called “capitalism without adjectives”. Liberals, united with strong forces of nationalism that grew independently in the meantime and were rather unimportant in 1968, brought communist regimes down. (I am not denying thereby the importance of American readiness to wage war on Communism in every quarter of the globe; when I say that the regimes were brought down from within, I have in mind the fact that ideologically, by 1989, Communist regimes had very little to offer to their populations.)  

The Revolution–with the important exception of nationalism that I mentioned— fashioned the world in which many of us lived until the Financial Crisis of 2008, or covid in 2019, or the war in Ukraine in 2022—whichever of the three possible markers dividing the eras one wishes to take. But in any case, it is plain that we live in a different ideological world today.



Friday, August 25, 2023

BRICS and non-alignment today

             The expansion of BRICS membership is directly related to the expansion of NATO and NATO-like alliances around the world. When this statement is read superficially without understanding what is meant it seems wrong: the two organizations could not be more dissimilar.  The new globalized NATO is a hierarchical, monolithic, and military alliance. None of the four terms applies to BRICS. BRICS is non-hierarchical; the members are extremely heterogeneous and often in political disagreement with each other; BRICS’  objectives are not military;  and it is not an alliance but a mere organization. While two of the now eleven BRICS members are in open or tacit conflict with the West, the others are not. BRICS is not a counterweight to the West or NATO. But it is growing in reaction to NATO’s globalization. Why? Because it is the only place where nations not interested in participating in the new Cold War, or even in a possible hot war between the superpowers, can “run away” in order not to have to choose sides.

It is a profound misunderstanding of what BRICS is, to search for commonalities amongst the members and not having found them to dismiss the organization. Looking for commonalities at times makes sense—but not always. Let’s go over some historical precedents. We can think of international political organizations in positive terms, that is of countries banding together because they believe in a set of common things (which they might consider values). When the Nazis created the Anti-Comintern Pact (the Tripartite pact), the member-countries, spanning two continents, believed in nationalism and fighting Communism; when NATO was formed in 1949, the member countries believed in democracy and containment of the Soviet Union; when the Warsaw Pact was formed in 1955, the member countries believed in expansion of communism, or at least in defending it over the area it then ruled.

But when the non-alignment movement was formed in the late 1950s and early 1960s (note the dates!), or later the Group 77, the members did not possess a positive agenda similar to the ones I just listed. Their agenda was negative: they did not want to have to choose sides in the Cold War waged between the West and the East. They wanted to stay out of it. Many people failed to understand the logic of non-alignment, precisely because they failed to understand that you can create an organization composed of heterogeneous countries that may disagree on many issues, but find it useful, for geopolitical reasons, to get together in a loose association. Non-alignment was liked neither by the Soviet Union nor by the USA. The Soviets believed that it was superfluous because the USSR was “the natural ally” of the Third World and decolonization and rather than getting together in a new organization, the Third World countries should simply support the Soviet bloc. The United States saw the non-alignment as little better than betrayal: countries who drew the equivalence between democracy and tyranny. John Lewis Gadis, the US historian of the Cold War, barely disguises his contempt for the movement and when he condescends to note it, calls it “the so-called ‘non-alignment’ movement.”

The movement in fact ended with the end of the Cold War. This also shows what its true role was: to be a buffer zone during the global confrontation between the US and the Soviet Union, and to minimize the likelihood of their members becoming the ground on which the proxy wars may be fought. Once that confrontation ended, there was no room for non-alignment. It was not obvious what one is non-aligning with anymore.

But now when the contours of a new Cold War are apparent, the need for an organization grouping countries that do not want to be involved in it (and including, somewhat incongruously, and for historical reasons, countries that are in war or conflict with NATO and the West, namely Russia and China) had naturally re-emerged. Many commentators dismiss the new BRICS because they dislike the idea of the formerly Third World nations, whose economic importance has risen, getting together. They fear the grouping will, in some economic areas like de-dollarization or international infrastructure finance, challenge Western supremacy. Other, as I mentioned, very wrongly believe that any grouping must be based on some shared ideas, values, interests, or on hegemonic pressure. Not finding any of the four among BRICS, they dismiss them. Indeed, if BRICS could have more in common they would be stronger. But they do not, and cannot have---for various historical, political or cultural reasons. Yet, the fact that an increasing number of countries want to join BRICS cannot be ignored, nor taken lightly. BRICS’ refusing to participate in new global trade, proxy or actual wars may make such wars less likely. And BRICS’ economic clout may help reduce some of the glaring economic imbalances between the rich, middle-income, and poor nations across the world.

Monday, August 14, 2023

Why slave-owners never willingly emancipated their slaves?

         When I wrote my chapter on Adam Smith in The Visions of inequality (to be published October 10) I considered including a section discussing Smith’s views on slavery. I eventually decided against it because slavery plays only an incidental role in Smith; most of his analysis in The Wealth of Nations assumes the three standard social classes that are all formally free and the interplay between them generates their incomes and social positions. In that context slaves who no longer existed in countries with which Smith was mostly concerned, namely England, Scotland, France, Netherlands, and the rest of Western Europe, were somewhat outside of the main scope of his interest.

However Smith's views on slavery are, as is well-known, fairly complex. I wrote about his argument that the position of slaves was better in autocratic than in  oligarchic democratic governments. The reason is that in an oligarchic and representative government the power is held by the people who themselves are the largest slave-holders (US comes to mind) and they are very unlikely to emancipate slaves because they would thus deprive themselves and their friends of a large amount of capital. They are wary to treat them well because they are permanently afraid of slaves’ insurrection. In richer societies (Smith explains this at some length), the income and social gap between the master and the slave is much greater. Slave has also much more to covet. Hence, in more democratic and richer societies the treatment of slaves, in order to forestall their insurrection, must be particularly harsh. In one of perhaps most striking passages in The Lectures on Jurisprudence Smith says:

Opulence and freedom, the two greatest blessings the men can possess, tend greatly to the misery of this body of men, which in most countries where slavery is allowed makes by far the greatest part. A humane man would wish therefore, if slavery has to be generally established, that these greatest blessings, being incompatible with the happiness of the greatest part of mankind, were never to take place. LoJ (A), February 16, 1763.

(The passage is, I think, so seldom cited because it questions the two most cherished  beliefs: popular government and opulence. If both can exist only if slaves are terrorized, what good are they? It is a striking statement.)

In more autocratic forms of government, the kings are not necessarily dependent on slaves for their power and, as Adam Smith explains regarding the abolition of serfdom in Western Europe, they might even like to get rid of forced labor if it reduces the power of local lords that could use slave armies to challenge the king.

But the most important part which attracted attention of the economists, and I want to single out a recent paper by Barry Weingast, is the following. Smith very clearly in his Lectures on Jurisprudence states that slavery, as an economic institution is, inefficient. That means that a slave-toiled land would yield to the owner much less than if the same land were leased for a reasonable rent to the tenant. The reason is obvious: the tenant farmer has an incentive to increase production even if he has to give one-third (Smith’s estimate, but we can substitute any number) of the crop to the owner. The owner can easily calculate that over a period of x years, the Net Present Value (NPV) of the rent he gets would exceed the amount of the surplus product that he receives from slaves, to whom he pays only the subsistence wage. We are not talking here about high mathematics. Things are pretty simple. We can introduce different discount rates, and different amounts for rent, different productivity differentials for the land worked by free vs. slave labor etc., as Weingast does, but whatever set of (reasonable) assumptions we choose the final result is the same. The landlord should just dismiss his slaves, offer to some of them to continue working as free tenant-farmers, find new tenant famers if needed, and spend the rest of his time at leisure enjoying the rent.

So why did not slave owners do precisely that? Why we never observe in history endogenous scrapping of slave-holding when it is such an inefficient system and when the owners could actually make more money by hiring free labor than by using slave?

It is a fair question and Weingast solves it by using a game theoretic framework showing that neither side can credibly commit to their part of the bargain. (He does this because he introduces, in my opinion, totally unnecessarily further assumption of slaves buying over time their freedom. Yes, slave owners can try to extract that too, but in a simple model, it is superfluous. For slave owners are better off even if they emancipate slaves for free.)

The reason why this spontaneous emancipation has never happened in the real world is the following. What would be the reaction that our emancipatory landlord would meet from his peers at the news that he has just released all his slaves? How would such an act be viewed by them? Certainly not with pleasure and warmth. As Smith writes, slave-owners like all property owners, the richer they are the more they live in a perpetual fear of expropriation by the poor. Every slave-owner forms part of that implicit compact. Everyone who, as a slave-owner, does not observe the compact is as much of a threat, if not more, to other slave-owners as slaves themselves.    

Smith holds that in richer countries, where the slave-owners are much richer than slaves, they are especially fearful of rebellions. The only way to hold slaves down is to apply brutal control that Smith details, with gory detail: from whipping them on a daily basis, keeping people in chains during most of the day, or even in the most gruesome example crucifying them for trivial offenses, hacking their bodies into pieces and then feeding them to the fish. In such an atmosphere of fear of constant rebellion a landlord who would follow the economic logic described above would find no sympathy from other landlords. Moreover, other landlords would do everything to stop the manumission: they might claim that our economist-landlord has lost his mind, has been bewitched by slave wizards, is mad, a traitor, foreign agent, anything. They would do everything to make his life impossible, to make him change his decision and short of it, to punish him by seizing the land which in their view he is mismanaging. So, in calculating gains and losses from slavery on a piece of paper is a very different proposition from acting on what the calculation reveals.

But let us go further and assume that for some reason the rationality prevails and that his decision to emancipate the slaves gets imitated by many, and enjoys a sufficient momentum so that at certain time a large number of slaves become free, as it were, spontaneously. Make even further a very unrealistic assumption that the powers-that-be which Smith very clearly associate with people who own slaves and who, as he says, “hate them” overcome the hatred because of material interest and agree to the emancipation.

We have to ask the new question then: what will happen next? If the land was originally toiled by 5 slaves and can now be worked equally productively (yielding the same  output) by 1 tenant this means that all the released slaves will not be able to find a job on the land on which they worked before. Perhaps only a fraction would. Others would congregate in the urban areas looking for jobs there.

And that's where the problems begin. There will be a massive surge of brutalized, poor and unskilled people who would get into a cut-throat competition with the urban proletariat, driving the wages down and getting into conflicts, perhaps riots and fights, with the working class. Moreover in the urban areas there would be now two large classes of malcontents with unstable jobs, subsistence wages, deep hatred of each other and even deeper hatred for the rich. This is something the top politicians among slave-owning elite are unlikely to overlook.

This is not a very different situation, just more dramatic, than what many contemporary developing countries have faced: immense inflow of labor from the countryside into the urban areas which has created political instability, violence, crime, and conflict between different parts of the lower classes and then ultimately the conflict between the lower classes and the upper classes.

Only a little dose of reality shows that the Panglossian idea, shared by some economists (but not by Adam Smith) that by proving that slave holding was not profitable for the individual landlord should have led to the spontaneous emancipation of slaves. Such economists make several logical mistakes: they make a composition error by assuming that what is true for one might also be true when it is extended to everybody, and they ignore political externality by assuming that other slave-owners are not affected by the decision of some of them.

Most importantly they make a mistake that Smith did not make: they disregard political forces and political implications of such a big move. After all we have by now sufficient historical evidence that no society has ceased being slave-holding spontaneously through the working of economic factors alone: not the slave-holders of Egypt, nor Persians, nor the Arabic slave-holders, nor the slaveholders of Justinian’s Eastern Roman empire, nor the slave-holders of the Western Roman Empire, nor the slaveholders among the Visigoths and Ostrogoths, not was forced labor abolished spontaneously in France, nor in the Habsburg empire, nor in Russia, and obviously not in the West Indies and the American South. And it is not because slave-owners were not numerate enough to calculate Net Present Value that economists have discovered.

The way slavery was crushed and abolished was almost always through the use of violence: riots, revolution, threats to government, and civil wars. Adam Smith, who believed that anti-slavery forces will never be strong enough to abolish slavery: “Notwithstanding of those superior [economic] advantages it is not likely that slavery should be ever abolished, and it was owing to some peculiar circumstances that has been abolished in the small corner of the world in which it now is” was wrong on that score, but he offers us a cautionary tale showing that looking only at economic advantages without considering them in their political context is insufficient. We can draw game theoretic boxes but they are a paltry substitute for what we observe in reality. They may be a starting, but never an ending, point.