A Primer On Pragmatism: Applications
Posts in this series. This post is updated from time to time with additional resources.
This introduction to pragmatism was motivated in part by the fact that the philosopher Elizabeth Anderson identifies herself as in the pragmatist tradition, but there are other reasons. Our political environment is toxic. It’s hard to maintain our sense of self, of our values, our hopes, and our sense of security. Philosophy offers us reminders of the existence of our values, and the role they play in holding us together as individuals and in our relations with others. It takes us away from the noise and the turmoil and puts us in a quiet atmosphere where we can nurse our wholeness. It can provide us with armor against the forces that are ripping at us.
With that in mind, I’ll close with a brief discussion of democracy and Modern Money Theory. Both begin with the key idea of pragmatism, that all our ideas, no matter how old, were formed for human reasons, and to meet human needs. All of them, no matter how old, are subject to rethinking in light of new conditions.
Pragmatism is particularly well-suited to democracy. The most striking justification for democracy is found in the Declaration of Independence:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.
I’m not so sure these truths are self-evident. Prior to that time, the dominant view was that some people are born to lead, and others are only fit to follow. As Peirce and James point out, philosophical systems then were grounded in the idea that there is a universal truth outside human experience, but one that the best of us can comprehend somehow. Those lucky people can construct a social system that accords with the will of the universe, or the Almighty. Many of them argued for centuries that the King ruled with the blessing of the Almighty, and everyone else was inferior, fit only to follow.
At the time Jefferson wrote, the French and the English were directly contesting the divine right of kings, and there was discontent with the idea of hereditary authority. But the US was the first country to adopt Thomas Jefferson’s formulation as a founding idea. It’s a revolutionary statement, and one we are still trying to reify, not just in our government but in our social lives, our work, and other institutions.
The Declaration was a break with what seemed like a firts principle. And that is fundamentally a pragmatist act: rejecting a first principle because it isn’t working to create the kind of lives people wanted. Jefferson’s formulation wasn’t totally original. It derives from prior thinkers, but instead of laying out a rule, it articulates a value, a value that should guide our efforts to create a decent society. The system of government created by the Constitution was supposed to be one that would enable the creation of a new kind of society, one informed not by rules thought to be eternal, but by values that are thought to be best for human beings.
There have always been people insisting that there are eternal rules, and that deviation from those rules would bring disaster. They settle all doubt by tenacity, as Peirce would say.
Pragmatists say that we have to justify our choices on the basis of what works. But the first step is to decide what our priorities are. We do that by defining our values and our goals, and then by working out the best way to reach them. Life, liberty, and the pursuit of happiness my not be the best goals for today, but they’re a start. Our task is to decide what that means in today’s society. Anderson says we don’t want to be humiliated or dominated. That’s a good way of talking about what liberty and the pursuit of happiness might mean today. We won’t the answers by looking outside our human experience.
Modern Money Theory
Much of neoclassical economics is grounded in normative concepts. One of these is Jeremy Bentham’s utilitarianism, discussed in §2.1 of this entry in the Stanford Encyclopedia of Philosophy. The economist and mathemetician William Stanley Jevons used this normative concept to create the economic idea of marginal utility, one of the foundations of neoclassical economics. See pp 9-10 here.
Utilitarianism is a normative idea. This is from the Stanford link:
… [Bentham] promulgated the principle of utility as the standard of right action on the part of governments and individuals. Actions are approved when they are such as to promote happiness, or pleasure, and disapproved of when they have a tendency to cause unhappiness, or pain. Combine this criterion of rightness with a view that we should be actively trying to promote overall happiness, and one has a serious incompatibility with psychological egoism. Cites omitted.
Jevons explicitly sets out to mathematize Bentham’s utilitarianism. Marginal utility is therefore grounded in a normative idea. It incorporates a specific value, but the value is hidden and ignored when it comes to putting marginal utility into practice. It is only loosely, if at all, based on practical experience of human behavior. Nevertheless, it is the foundation of large parts of neoclassical economics and of its modern version, neoliberalism.
Pragmatism rejects the idea of starting from normative theories. I don’t know how to deal with marginal utility from a pragmatic point of view, so I turn to another fundamental idea of economics, the creation of money. As best I can tell, mainstream economists say that banks create money. There’s a story about bank multipliers you can google. Governments get money by taxation or borrowing. In this story, the private sector is responsible for money creation subject only to some loose guidance from the Federal Reserve Board. This protects us by making sure Congress can’t ruin the financial sector with profligate spending and borrowing which would automatically happen, and which would be an inflationary disaster.
Modern Money Theory starts with a question: how is money created? It looks at the things that are done as a result of which there is money. Governments create money by spending it. They reduce the amount of money by taxation. They may or may not issue bonds. MMT is based on observable facts. The description of the creation of money leads to other testable ideas and to a completely different concept of the role of government in money creation and society.
Money creation is a governmental action, and thus is subject to politics. Congress decides how much money is created, and how the new money is used. The old story tries to deny this reality with cloudy abstractions and claims that it’s all the working of some invisible hand. Pragmatists don’t believe in invisible hands. They say that politics is the arena in which we decide about how to use the power to create money.
MMT isn’t just for progressives. Deficit hawks and small government supporters get to argue their opinions, and to assert their values. This is a quote from Modern Money Theory by Randy Wray:
However, I also believe that most of the tenets of MMT can be adopted by anyone. It does not bother me if some simply want to use the descriptive part of MMT without agreeing with the policy prescriptions. The description provides a framework for policymaking. But there is room for disagreement over what government should do. Once we understand that affordability is not an issue for a sovereign currency-issuing government, then questions about what government should do become paramount. And we can disagree on those. (Emphasis in original.)
The fact that MMT is value-neutral, that it can be used by people of every political persuasion is a powerful point in its favor. I don’t think we can say the same thing about neoliberalism.
There is much more to be said about pragmatism. It is a powerful tool we can use to cut through old ideas and useless distinctions. But perhaps its most important contribution is that it is an open-ended theory. It makes room for the endless possibilities of human beings. I think that is a powerful value.
Pragmatism’s focus on what works – and for whom it works – fits well with observations about biological life in general and evolution in particular. Evolution is the result of endless rounds of competition for survival among species, in environments that constantly change, often slowly, sometimes rapidly.
“Survival of the fittest” is shorthand for a small piece of that process: the temporary dominance by a species in its local environment. It is a snapshot, a moment in time, of a small part of a panorama. Those who advocate its application to human relations ignore the massive die-off of those relatively less locally adapted.
They also miss that there is no permanence. There is no progress. There is temporary relative advantage. Those that do not or cannot change in response to changes in their environment, lose out.
MMT also highlights that government can and does address more than the rate of inflation. Its policies mediate between competing groups.
William Jennings Bryan’s Cross of Gold speech illustrated that more than a century ago. Bryan argued on behalf of farmers, who led the progressive movement, in opposition to banks, which represented capital’s efforts to preserve the value of their assets through low inflation and tight access to credit under onerous terms. Farmers and progressives lost, in dramatic fashion.
Similar competition exists today, so far, with similar outcomes. MMT is a tool that can aid government in mediating the interests of competing groups. It could do so, for example, by refusing to subsidize the wealthiest industries and people in society, and by taxing their wealth to reduce concentrations of political power that rival the state’s. Neoliberal economics argues that government promote only the interests of capital, regardless of the social costs.
What’s needed are government leaders willing to wield such tools to mediate rather than to promote one group’s desire to dominate.
There are really only a few basic facts that convey the point of MMT.
1. The US can never run out of dollars. The US dollar is a fiat currency and the US government has a monopoly on creating dollars. (There are some legitimate concerns that “printing” too many dollars can cause inflation, but Weimar and Zimbabwe—the Benghazis of the Austrian School—did not happen from printing too much money). When it needs money, the US government never waits for tax dollars to arrive: it creates new dollars and spends them into the rest of the US economy.
2. Deficit spending becomes private wealth. If the US spends $10 in a given year, and taxes back $8, then the $2 of “deficit spending” that remain in the private sector are actually the private sector’s wealth. The GOP knows this—and it’s why they don’t actually care about deficits—but few others are aware of this. A balanced budget would leave the country no wealthier, and generating a surplus removes wealth from the economy.
3. A current account deficit isn’t necessarily bad. The US gets to send dollars to Germany in exchange for BMWs. We’ll be able to get away with this as long as the world keeps wanting US dollars.
So a very MMT solution to, say, Social Security would be to eliminate the payroll tax and pay current obligations with new dollars. Business gives everyone a 6% pay cut, workers get a 6% raise, and all that extra money enters the economy and compounds over time. At retirement, we just cut monthly checks with brand new dollars.
A very MMT solution to, say, war in Iraq would be to just spend the money. Which is exactly what Bush did.
So MMT is real, and, ummm, battle-tested. Not only does it “seem to work” it’s actually what the GOP is relying on now (not to diminish the importance of racism, misogyny, gerrymandering, etc. to the GOP project).
Yep. Good summary.
Too many so-called politicians today think politics is the art of capturing and keeping public office. We know these poseurs primarily for their record of promoting their own self-interests.
Modern dictionaries define politics as that conflict among individuals or parties having or hoping to achieve power. We also know these types of ‘politicians’, again, because they’re motivated primarily by their own or their party’s self-interests.
Both of those modern definitions are essentially wrong, and lead to dead ends.
A much earlier definition describes politics as the study of ideal social organization and for a time, America hewed more closely to that former definition and less so toward these latter wholly inapt definitions.
Now more than ever we need to look back to that older definition and support ’politicians’ who believe their primary goal lies in forming and promoting a more ideal social organization.
Our founders were of that sort of politician, they, in their way, worked toward the goal of a more ideal social organization, they advanced their premise in that regard within our Declaration. We need to return our efforts towards honoring that foundation they laid for us.
A good first step would be to correct our course and redefine the very concept of ‘politics’ itself, shun the self interested ‘politicians’ and embrace those who are selfless in their pursuit of achieving the goal of a more ideal social organization.
The modern ‘politician’ is anything but pragmatic. It’s long past time for a reset.
And neoliberalism was designed and implemented specifically to bring about precisely that outcome.
Oh bullshit. There was no organized conscious design involved in neoliberalism. It’s like Facebook and the tech industry’s “Move fast, break shit” theory of development but applied to economics and politics. People with capital ran fast, broke shit, never gave serious thought to whether they should, because profit. Ethical considerations went out the window unless they were forced by laws and then r>g met those laws to remove them.
Neoliberal policies have always attempted to eliminate national controls on cross-border capital flows, while at the same time hindering the flow of people. That’s precisely the source of their power.
The only flaw with colonialism (in neolib eyes) is that it was run by politicians. Neoliberalism created the international legal structure to disempower nations by threatening them with capital flight, which nations can no longer stop.
Check out “Globalists: The End of Empire and the Birth of Neoliberalism”
by Quinn Slobodian
You know what? As a person of color whose father’s family lost their entire country to white squatters while killing most of the indigenous residents I really don’t give a flying fuck about white peoples’ take on the history of colonialism.
Maybe try reading something not by white men about colonialism, and neoliberalism for that matter.
Neoliberal principles are the wires that held up colonialism.
Stop. Really. Was George III a neoliberal? Give me a fucking break and just stop.
George V, not III.
In the wake of WW I, Hayek, Mises and others studied ways to avoid another similar fiasco. They eventually figured they could wrest management of the global economy from political actors and vest that control in international organizations. That’s the “neo” in neoliberalism, and that’s the economic regime we need to overcome if we’re to have equality.
Unimpeded trans-national capital flow and the primacy of property rights were both alive and well back in III’s day, via the East India Company and The Royal Navy, but as you pointed out it’s not the same.
Colonialism didn’t start with George V (or with the previous Georges, Williams, Anne, Charleses, Jameses, Elizabeth…) but thanks for making my point about not listening to white guys pontificating about the history of colonialism.
To the colonized it really doesn’t fucking matter what economic excuse is used to murder and enslave the colonized and steal their birthright.
I’m done with your tripe on this topic.
I guess I’l; just have to keep my racism (and sexism?) to myself, then.