Economic Elites Drive Trumpian Motion

Posts in this series; some of the terms I use are described more fully in these posts.
Trumpian Motion
Negative Responses to Trumpian Motion
Economic Elites Drive Trumpian Motion
Beneficiaries of Trumpian Motion
Notes on Trumpian Motion Series

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The driving force behind Trumpian Motion is the economically dominant class. In this post I look for an explanation, using the framework provided by Pierre Bourdieu as described in David Swartz’ book Culture and Power: The Sociology of Pierre Bourdieu.

Bourdieu studies the way social classes reproduce themselves so that the dominated class accepts domination as a fair outcome based on their lack of personal merit;, and the dominant class sees its power as natural and not the result of their birth, selection and grooming. A good example of the latter is that the academically marginal at best W. Bush got into Yale.

Bourdieu describes several kinds of capital, economic, social, cultural, religious and others. The most important is economic capital, and cultural capital is second. Cultural capital is a form of power based on “… verbal facility, general cultural awareness, aesthetic preferences, information about the school system, and educational credentials…. P. 75.

Swartz offers this summary of Bourdieu’s thinking:

Bourdieu considers conflict to be the fundamental dynamic of all social life. At the heart of all social arrangements is the struggle for power. One of Bourdieu’s key claims is that this struggle is carried out over symbolic as well as material resources. Moreover, it is Bourdieu’s fundamental claim that cultural resources, such as education credentials, have come to function as a kind of capital, and thereby have become a new and distinct source of differentiation in modern societies. P. 136.

The struggles Bourdieu discusses take place in fields. Fields are arenas governed by formal and informal rules of struggle. The field of power has fewer and less clear rules, but it is the most important. P.138. Bourdieu thinks economic capital is engaged in a struggle with cultural capital for domination in the field of power. This field operates as a source of differentiation and ranking in all fields, including political power.

Domination arises from power. The possessors of cultural power (the terms capital and power mean the same thing) have the ability to be dominant in some areas. Thus, artists, physical scientists, social scientists, museum curators, movie-makers, writers, teachers and others possess cultural power. Cultural power includes symbolic power, which controls the way people understand and respond to the social world. Symbolic power manifests itself in all areas of our social lives. I’ll use two examples: our concepts of justice and fairness; and our understanding of the physical universe.

The dominant culture in this country has changed over the last 50 years in the areas of justice and fairness. For example, when Social Security passed, it was designed to give as little as possible to African-Americans, and that was necessary to gain support from Southern Democratic party legislators . That wouldn’t have happened a few years ago (I’m less sure about today). The same thing is true of other forms of discrimination. So, that’s one expression of cultural symbolic power.

The second example of cultural power arises from the hard sciences and technology. Our understanding of the physical universe has increased dramatically, giving rise to huge fortunes and at the same time showing the dangers of the new understandings.

In the US, the cultural elites (those with a lot of cultural power) quit struggling with the economic elites (those with financial assets) and accepted the domination of capitalism. The economic elites largely quit struggling with the cultural elites over almost all matters of justice and fairness, including racism, sexism, and LGBTQ issues.

Economic elites have a mixed record with physical scientists and technology. In general they support it, but in specific instances they attack. For example, we knew from the 1920s on that leaded gasoline was dangerous. The history of getting lead out of gasoline is ugly, as the petroleum and auto industries lied and denied that danger. That opposition was controlled. Industry claimed to use science in its defense, and pretended to rely on their own fraudulent studies and false assertionas about defects in opposition studies.

As our knowledge grew and time passed, there were more and more examples of the free market poisoning the planet and building unsafe products and then lying and denying to cover it up. Just look at seat belts, the Ford Pinto, smog, water pollution, tobacco, other carcinogens, estrogen toxicity, and global warming. The scientists and technicians who study these things have been shouting into the wind about all of them, but industrial giants and their captive organizations fight back with increasing shrillness and personal attacks. With global warming, the attacks have broadened out because the science is so widespread across disciplines, and it now seems that the economic elites don’t care if they wreck the scientific community and discredit scientific methodology.

These attacks would not happen without the implicit assent of the economic elites.

Bourdieu says that economic power requires some other justification for its legitimacy. P. 91. In the Middle Ages that justification came from religion, which linked Monarchs and the aristocracy to divine will. Today it comes from cultural power, and from symbolic power. Or at least, it did before the rise of neoliberalism, a creation of the cultural elites in the field of economics. They purport to have a complete grasp of human nature. They tell the broad public that the market is wonderful and will make everything great. Meanwhile, economists whisper in the ears of the economic elite that they are the natural leaders blessed by the Market; it’s a modern version of Calvinism. Economic elites no longer need the cultural elites to provide legimation, because they are selected by the supreme computer. And so they feel free to attack the holders of cultural capital, to make them the enemy.

And what’s the goal of the rich? As we learn from James Winters and Benjamin Page, the rich have three goals in common:

1. Protecting and preserving wealth
2. Insuring the unrestricted use of wealth
3. Acquiring more wealth.

They don’t want any interference from anyone, especially the 99%. I’d like to think that there are responsible rich people, but I can’t think of a single example of any of the .01% effectively objecting to any effort of their peers to benefit themselves or the entire group of rich people.

The truce is dead. The economic elites are attacking the cultural elites. The cultural elites ignored the rise of the rich too long, and now lack the capacity to fight back effectively. And that’s why we are suffering from Trumpian Motion. It hides the gluttonous rich behind a wall of noise and fear.

Negative Responses to Trumpian Motion

Posts in this series; some of the terms I use are described more fully in these posts.
Trumpian Motion
Negative Responses to Trumpian Motion
Economic Elites Drive Trumpian Motion
Beneficiaries of Trumpian Motion
Notes on Trumpian Motion Series

===================

I am really bothered by Trumpian Motion and I know other people are too. It seems to me that the reason for this is that the election and the Republican wreckage of government challenge my basic assumptions about my fellow citizens and about the way the country works. In this post I follow Pierre Bourdieu’s concept of habitus as explained by David Swartz in Culture and Power: The Sociology of Pierre Bourdieu to see what it suggests about me and by extension maybe others. There’s a discussion of habitus here, which I would change in several ways, though not in the description of habitus itself. Here’s the Wikipedia entry.

In short, habitus is a deeply embedded mental structure informs us about our culture, actions that are possible for us given our place in the culture, and the likely outcome of actions we could take. It guides our understanding of social interactions more generally. Habitus is learned from experience, starting with our first days, with the social and work worlds we encounter. Habitus controls our understanding of what is possible for us given our social class.

Bourdieu thinks that habitus is fairly similar across class and class fractions. He thinks of classes as groups with similar levels of economic, cultural, social and other forms of capital. The class fractions vary by the field in which people primarily operate, and by the amounts of each form of capital each person has. This provides a way to understand society as a loosely grouped sets of people who share common dispositions and understandings.

Bourdieu uses sophisticated survey methods to learn about and describe habitus, class, and other mediating concepts. I don’t have those tools or the ability to use them. Habitus in particular is deeply embedded and may not even be directly ascertainable by introspection, but I’m going to make an effort. What follows is my best guess at elements of my habitus exposed by my reactions to Trumpian Motion.

I know I have deeply rooted expectations about the way society works. For example, when looking at legal problems, I expect the solutions to make sense in terms of what I know about similar situations and what people engaged in the specific field in question would expect. I was just as shocked to win a case I thought I would lose as I was to lose one I thought I should win.

I have a general understanding of the ideals of the United States, and I expect that the nation will move towards those ideals. Underlying this part of my habitus is the assumption that the goal of society is to enable us to enjoy our lives, doing things that are fun, things that are challenging. That includes meeting my family obligations, doing my job, hanging out with other people who like to do the same things I do and are interested in the same kinds of things I am interested in.

I also see in myself a general liking for other people, and a general sense that most people are decent and share a general good will. I expect people to share acceptance of the ideas and values of the Enlightenment.

Finally, I have a general understanding of the way government works, and the role it plays in my life, including such basic things as social programs, regulatory activities, security issues and so on. Among those was the level of day-to-day intrusion into my life. There were plenty of days when I never thought about politics or policy or government, they just worked in the background, collecting and organizing information about the economy and society, monitoring the air and water, general policing, watching out for diseases, doing basic research and so on.

I recognize that these dispositions are a mark of privilege, and that I have a responsibility to move things that way, but I thought that there was general agreement on these principles, even if conservatives wanted to move more slowly, and I mostly thought I was doing enough, or at least as much as could be expected of me consistent with meeting personal obligations and exercising my talents.

Given this habitus, it’s not surprising that the election of Trump was a shock. It’s also not a surprise that I am shocked and a bit frightened to watch these vandals tear up the government, threaten war, insult other countries and their citizens, hand out money to the filthy rich at the expense of everyone else, acting like monkeys flinging poop. It’s disturbing. It shakes the very foundation of my expectations and dispositions.

I am forced to confront a basic failure of my habitus. A huge number of people approve of the job Trump doing, including 90% of Republicans. This is incomprehensible in the context of my habitus. These are not people of good will and decency. They are ugly and hateful. They do not share my goals for society. They think they are superior and deserve everything and that millions of others are worthless and deserve nothing except misery.

And most of all, I hate their stupid racket. I read junk like this fool preacher who says there is no flu epidemic because Jesus is the flu shot. I read about this bozo who thinks the flu shot causes Alzheimer’s and that the flu is a government plot for population control. The true believers are unable to see something as obvioius as that Trump is a racist pig.

That last link is to a Roger Cohen column in the New York Times.

Still, I respect Kennedy. He’s served his country. He’s a patriot. He’s no “deplorable.” He’s smart. The Democratic Party should listen to him, or risk losing in 2020.

That’s the way I used to think, and it’s obviously wrong. I’d guess that Cohen’s habitus is not that different from mine. Habitus is hard to change, and Cohen hasn’t succeeded in taking the first step, which is to realize that it isn’t working. Neither have the other centrist Democrats. I haven’t figured out how I need to change either, but I know I need to, and I know it doesn’t have anything to do with listening to Trump supporters or being battered by Trumpian motion.

Trumpian Motion

Posts in this series; some of the terms I use are described more fully in these posts.
Trumpian Motion
Negative Responses to Trumpian Motion
Economic Elites Drive Trumpian Motion
Beneficiaries of Trumpian Motion
Notes on Trumpian Motion Series

===============

The press has taken to bemoaning the speed of the news cycle, as in this Washington Post story. Harpers Magazine sends a weekly email listing some of the previous week’s craziness before it falls down the memory hole. The constant uproar in our media environment over every little thing reminds me of Brownian Motion. This is from the Wikipedia entry:

Brownian motion … is the random motion of particles suspended in a fluid (a liquid or a gas) resulting from their collision with the fast-moving molecules in the fluid. Fn. omitted.

Think of a grain of pollen in a drop of water on a microscope slide. When you look through the lenses, you can see it move around randomly as the molecules of water bang into it; at least that’s what Einstein said. If there is an external force, the particle moves gradually in accordance with that force. Imagine that the particle is iron and that there is a magnet near one end of the drop of water.

The analogy I see is that we swim in a pool of media water, being bounced around randomly by whatever we click on or see in our news feed, crashing from one stupid to another outrage. The water particles aren’t organized either. Each one acts under forces it can’t completely understand, and often with no purpose other than to slam into us pollens. Then there are the people aggresssively trying to influence us. Think of them as the magnets. The forces are all unseen and to the pollen undetectable. The clamor is deafening. Thought is inconceivable. Understanding is impossible.

That’s part of the reason I’ve been reading and writing here about old books by French and German writers. They were trained in a different time, under different scholarly imperatives. Unlike so many of us, they weren’t trained to get a job; their training was specifically directed at creating at least a few people to study society as objectively as possible. They were all raised in intellectual traditions, including Marxism, but they proved capable of seeing the problems of their own training as clearly as any other problem, and of advancing human understanding. And since Arendt and the members of the Frankfurt School were directly affected by the rise of totalitarianism, they too faced horrifying societal conditions. Foucault and Bourdieu came later but were raised in a similar tradition, in which the intellectual life was valued, and the effort to understand society and history were valued.

I personally feel battered by the media environment. I don’t watch cable news or tv news at all, but even the Twitter is so confounding that some days it’s hard to concentrate on my reading. So, I’m going to write a short series trying to use the ideas I’ve picked up from my reading to provide a sort of grounding, a context, a historical analogy, a comparison to the times observed by some smart people. I’ve tried to do a bit of this in my posts on these old books, so this isn’t new, it’s just a bit more direct. I will start with Hannah Arendt, from The Origins of Totalitarianism, Part 3 on Totalitarianism.

We are told that the Republicans are a movement, and we know they are ideologically driven. The ideology is neoliberalism. The most important principle of neoliberalism is that markets know best, and if let alone that Invisible Hand will drive the human race to perfection. Any interference in the workings of the market will only make things worse. The market is the most marvelous information processor imaginable. No human or group of humans can hope to match its deliberations. Therefore, no human interference with the workings of the markets is permissible, including especially concerted action through government. The market will always work for the best interests of all of us.

Arendt doesn’t think much of ideologies.

Ideologies [are] -isms which to the satisfaction of their adherents can explain everything and every occurence by deducing it from a single premise….

… The ideology treats the course of events as though it followed the same “law” as the logical exposition of its “idea.” Ideologies pretend to know the mysteries of the whole historical process—the secrets of the past, the intricacies of the present, the uncertainties of the future—because of the logic inherent in their respective ideas. P. 468-9.

Ideologies work by the process of logic, the deductive working out of the idea behind the ideology. The ideologies Arendt is discussing, the Marxist idea of the progress of history, and the Nazi idea of racial purity, both have an inherent motion, from the past to the present and on into the future, all driven by a deductive logic. The same is true of neoliberalism. The state of the market at one point in time and the actions taken at that moment create the next state of the market, and on and on like a clock stepping forward.

In Arendt’s description of the rise of totalitarianism, the primary tool of the leaders is terror, a gradually increasing level of fear of armed force, first under the guise of law, and then without any pretense of legal justification. The analogy in the case of neoliberalism is also fear, not of armed force, but of immigrants, or of losing jobs, or that lack of cash will mean death from the money-centric health care system or outright starvation, or of a loss of status that might lead to those terrifying outcomes.

That kind of fear doesn’t work on everyone, but it works on enough people to set a swarm in motion. Suddenly a large group of people are moving almost in lockstep. The racket, the noise, the movement, all draw the attention of the media, and of everyone else through their ceaseless yammering. and the weak-minded hangers-on join in. The goal of the leaders, the Republicans, is to get that mindless crowd in motion. It is the movement itself that they seek, because once in motion, the masses can be led wherever the leaders want them to go. The constant injection of new and more terrifying fears increases the movement; faster and faster, until the very notion of thought disappears in a whirlwind of brainless and frightening activity.

Even if you don’t want to pay attention, the threatening noise and action are everywhere. They’re driving people nuts. That’s what the Republicans want.

Symbolic Violence In Neoliberalism

This post describes the term symbolic violence as used by Pierre Bourdieu as “… the capacity to impose the means for comprehending and adapting to the social world by representing economic and political power in disguised, taken-for-granted forms.“ This means that some people have the ability to impose their own preferred ideology on the rest of us. We can think of ideology as a discourse or as a structure like myth or religion. This all seems abstract, so I’ll try to put it in terms of our own society by looking at the rise to dominance of neoliberalism.

By the 1960s working people as a group had achieved a measure of power in the economy. Most white men could find decent jobs with benefits and live a decent middle class life, and some women and people of color could too. And the arc of justice seemed to be bending towards the latter two groups.

But it all ebbed away, as neoliberalism rose to dominance. In Bourdieu’s terms, neoliberalism is a symbolic structure. Like myth or religion, it offers a way to comprehend society, the way the way the economy works, and one’s place in society. It is a denied structure, in that most of the people who are guided by it do not even admit it exists, or that there is any other way to understand society. Because it is a denied structure, both the dominant and the dominated accept its premises and its results without question.

Symbolic systems do not spring into existence. They are the result of a great deal of work by people Bourdieu calls cultural producers. This group includes artists, writers, teachers, and journalists, according to David Swartz in in Culture and Power: The Sociology of Pierre Bourdieu, p. 94. It also includes experts in various fields, such as economists and lawyers. The first neoliberal producers organized the Mont Pelerin Society in 1947, led by Friedrich Hayek, an Austrian economist whose terror of socialism and Keynesianism was the driving force. Over the next years, money flowed to the Society and more importantly to its members to fund research and publicity for “free-market” ideas and to the institutions at which they worked. Members used their fund-raising prowess to expand the groups of scholars working out the implications of their free-market ideas and making them more palatable.

In Bouridieu’s terms, these efforts constitute symbolic work, work done to elaborate a symbolic structure. These specialists accumulate economic capital in the form of wages and salaries, and income from books and speeches and otherwise. In Bourdieu’s terms that constitutes an interest. But it is not the only interest driving them.

Bourdieu says besides economic capital people struggle for social and cultural capital in their fields of work. For the economists, that comes in the form of recognition in the field, maybe the John Bates Clark medal, or a good slot at a meeting of the American Economic Association, or publication in a respected journal, or an interesting short-term position at the Fed. This conflict takes place in the field of economics, which has its own informal rules about how the work is to be done and the definition of acceptable areas of discussion and research.

In order to engage in that struggle, young economists must learn the rules of struggle, and learn the specific practices and skills considered necessary to participate. That includes college-level math and statistics, techniques of data-gathering and analysis, and a good understanding of the personalities in their training environment. Over time, aspiring economists develop a personal habitus that helps them succeed. This habitus interacts with the various obstacles and structures in the economic field, and that produces the actions they take, such as the specific research projects and the papers they write and the donors they suck up to. In this way, young economists accumulate the cultural and social capital they need to thrive in their field. Then they can use that capital to accumulate economic capital.

As economics became math-oriented and more controlled by theories of human nature as pleasure-optmizing and pain-avoiding calculating machines, more young economists became inculcated with its practices, and their evolving habitus enabled them to win struggles for cultural and social capital in the economic field. They took over as the initial generation died out. Neoliberal economists became the dominant group. Most politicians followed their lead. Hard-core neoliberal economists sound like Paul Ryan; while many others followed softer lines like “market-based solutions”. The relatively few economists who totally rejected neoliberalism were ignored in the profession and among politicians. And this is central to symbolic violence: the ability to control the bounds of acceptable discussion. Swartz, p. 89.

Rich people, then, did not create the neoliberal structure, a form of symbolic capital. That was the work done by a group Bourdieu calls cultural producers, which includes the economists, other teachers, journalists and PR people, writers, politicians, and journalists. The rich supported those people and encouraged the institutions in which they work through donations, their institutional positions, and in other ways. The rich benefit from their support because the neoliberal symbolic structure rewards them directly and indirectly.

But the best part is that both the cultural producers and the beneficiaries have deniability. Neither group has to take any responsibility for their actions; neither can be held accountable for the damage done by their theories. For example, the economists say they are just following the logic of their field and pursuing knowledge. Journalists say they are repeating what everybody knows. The rich say they are just following the course laid out by the intellectuals and geniuses at great universities and think tanks.

This article in Jacobin is a field study of neoliberal teaching. The anonymous writer joined a job club in Austin for unemployed middle-aged tech workers.

Each week, guest speakers shower the jobless not just with interview advice, but with a fully formed ideology that radically individualizes and normalizes their experience. Every Friday, speakers help douse what could be a tinderbox of collective resistance with a rhetorical fire extinguisher.

But what good is individual resistance? These people need decent jobs, and they can’t find them. Hostility and resentment aren’t going to help them. They are stuck in the neoliberal structure and have no way out, at least in the short term. The system demands acceptance as the price of a life.

Bourdieu uses the term “symbolic violence”, but this is actual psychic violence. It calls for a radical change in the nature of the person, changes that make one less of an agent in one’s life and more of a tool for others. Only the dominant have true agency in the neoliberal structure.

On Pierre Bourdieu Part 4: Symbolic Capital

Bourdieu uses the concept of capital in some ways that are familiar, for example, social capital, cultural capital, and economic capital. Other usages are less familiar. First, according to David Swartz in Culture and Power: The Sociology of Pierre Bourdieu, the word capital means something like money which is both a medium of exchange and a store of value. It also means power, in two senses: the ability to exert influence on one or more people; and something like electric power, a source of energy.

Second, Bourdieu uses the term “symbolic power”, for me an unfamiliar concept. This idea is tangled up with the Marxism Bourdieu absorbed as a student, which is centered around materialism. Bourdieu thinks that human society has both a materialist and symbolic dimensions. Ch. 4, page 65 et seq.; p. 74. Religion is an example of a symbolic dimension. It’s a human-made structure that enables people to grasp part of their world. Other symbolic systems mentioned by Swartz are language, art, myth, and science.

Bourdieu says that the various forms of capital can be exchanged for each other. For example, economic capital can be exchanged for social capital, as when David Koch gives a pot of money to NPR and reaps kudos from liberals.

The various forms of capital are all the result of labor. Cultural capital is the result of learning and training, for example. Social capital arises from the give and take of aid and service among social groups, often over a long period of time. Symbolic power is also the result of labor. For example, rich people can hire people to generate symbolic power for them. Swartz writes:

Bourdieu …[proposes] a theory of intellectuals that emphasizes the specific symbolic interests that shape cultural production. Bourdieu assigns a particularly important—though not exclusive—role to the arenas of symbolic specialization and their representatives in developing the material out of which the symbolic dimension of class struggle is carved. He conceptualizes these arenas as social-cultural markets or fields of force in which specialists struggle over definitions of what is to be considered as legitimate modes of expression. P. 84.

According to Swartz, Bourdieu claims that symbolic systems simultaneously perform three functions: cognition, communication, and social differentiation. P. 82-3. First, they provide a structure for understanding the world. Second, they form the communal understandings that enable people to communicate with each other. Third, they act as instruments of domination by providing a structure that categorizes humans and organizes those categories into hierarchies of social value.

Bourdieu thinks that symbolic systems work by establishing a group of paired oppositions, and placing people into one or the other. As an example, Swartz quotes Bourdieu as follows:

All agents in a given social formation share a set of basic perceptual schemes, which receive the beginnings of objectification in the pairs of antagonistic adjectives commonly used to classify and qualify persons or objects in the most varied areas of practice. The network of oppositions between high (sublime, elevated, pure) and low (vulgar, low, modest), spiritual and material, fine (refined, elegant) and coarse (heavy, fat, crude, brutal), light (subtle, lively, sharp, adroit) and heavy (slow, thick, blunt, laborious, clumsy), free and forced, broad and narrow, or, in another dimension, between unique (rare, different, distinguished, exclusive, novel) and common (ordinary, banal, commonplace, trivial, routine), brilliant (intelligent) and dull (obscure, grey, mediocre), is the matrix of all the commonplaces which find such ready acceptance because behind them lies the whole social order. P. 84-5.

Because uses the same symbolic systems these categories seem natural and just, and people mostly can figure out where they stand on each axis of differentiation. To the extent that people actually accept the axes and their positions on them, they are conditioned to accept their place.

Bourdieu thinks that these differentiating paired oppositions are arbitrary in the sense that they do not reflect social reality. That raises some interesting points. Why do we think some books are better than others? Why is a Harlequin romance novel better or worse than Pride and Prejudice? There are differences in tone and skill, but there are a number of correspondence. One answer is that liking Jane Austen is a cultural marker, and so is liking Harlequin romances. One is high, the other low; one is unique, the other common.

On the other hand, the language of science is ponderous and heavy, and that is considered good. Scientific writing would be useless in political persuasion, as Frank Luntz has proven. No one would read either Austen or Harlequin romances if they were written in scientific language.

In other words, these distinctions are probably not arbitrary in the sense of random, but are instead assigned roles that cement social differentiation. Whether or not they are arbitrary, they are powerful tools for asserting dominance. Swartz writes:

Bourdieu understands ideology, or “symbolic violence,” as the capacity to impose the means for comprehending and adapting to the social world by representing economic and political power in disguised, taken-for-granted forms. Symbolic systems exercise symbolic power “only through the complicity of those who do not want to know that they are subject to it or even that they themselves exercise it. In using the term “symbolic violence” Bourdieu stresses how the dominated accept as legitimate their own condition of domination. P. 89; cites omitted.

Bourdieu says that the exercise of power, including economic power, requires justification; it must be seen as legitimate or it will eventually fail. Symbolic capital provides that justification. It’s hard to imagine that economic power can be delegitimized, but of course it can. We just have to work at it.

On Pierre Bourdieu Part 3: Habitus

The text for this series is David Swartz’ book Culture and Power: The Sociology of Pierre Bourdieu. Swartz says that Bourdieu extends concepts from economics to sociology. Bourdieu writes about various forms of capital the individual might have, and the interests that drive the individual in the pursuit of capital and its use. Capital comes in material forms, as economic resources, as well as symbolic forms, as social capital, cultural capital, religious capital. Bourdieu says that these are recognized as capital when they are “…objects of struggle as valued resources.” P. 43.

Interests are “… defined practically as whatever motivates or drives action toward consequences that matter“. P. 71. Swartz says that for Bourdieu seems the critical interests are obtaining power and wealth, which probably explains the use of economic models. Elsewhere Swartz says that Bourdieu’s framework seems less useful for analyzing the working class or the underclass. P. 82. That makes sense, because the concerns of a large part of society don’t involve gaining wealth and power; other concerns are dominant, such as maintaining their existence.

The use of economic modeling raises the specter of rational actor theory and other axioms of neoliberal theory. Bourdier explicitly disavows rational actor theory. He insists that most human action is pre-reflective, dispositional and tacit, rather than consciously planned and strategized to assure optimal outcomes. The definition of interest is similarly vague. These definitions are more like descriptions. They leave open a space at the center of the theory that serves to remind us that as individuals we are largely inscrutable to others, and perhaps even to ourselves. It also leaves a space for surprise, for the generation of new behaviors by the self. The point of sociological inquiry is to discern regularities in behavior that are invisible even to ourselves, using various forms of observations and different kinds of statistics.

Bourdieu says that just because a scientist can formulate a rule that describes the behavior of a group doesn’t mean that individuals are following a rule. Rather, he says that we follow a practical and informal knowledge that helps us predict which behavior might produce the desired results. Again, that leaves from for individual agency.

Bourdieu says that people form ideas of the way society works and the way they fit into society beginning at a very early age from their families, their friends and their surroundings including people and events. These experiences are internalized, and become the basis through which people understand the world and their own potential. This practical sense of position and possibility is called habitus. Habitus is “the product of class situations, not their cause.”

Habitus, then, represents a sort of deep-structuring cultural matrix that generates self-fulfilling prophecies according to different class opportunities. And Bourdieu’s “cultural” explanation of unequal educational attainment differs from the blaming-the-victim version of culture-of-poverty arguments in emphasizing individuals’ adaptation to limited opportunities rather than the cultural origins of deviant behavior. It shows how structural disadvantages can be internalized into relatively durable dispositions that can be transmitted intergenerationally through socialization and produce forms of self-defeating behavior. P. 104.

This unconscious socialization of the individual turns into an acceptance of the power structures confronted by the individual. It seems natural, so that neither the dominated nor the dominant feel cheated or privileged. It affects the sense of possibilities and establishes the limits of aspiration, and thus limits the scope of actions that seem plausible to each individual. In other words, it cements class relations.

As I was reading, I got the impression that Bourdieu used habitus to make predictions about how people would behave. I don’t think that’s right. Instead, it appears that the point of the concept is to describe how people come to accept the status quo. They learn from experience what results are likely from particular actions, and they internalize the results of those experiences as the world they live in, the world that sets the parameters for the success or failure of their actions. Kids learn beginning at birth what actions produce favorable outcomes, and which produce bad outcomes. They aren’t thinking, these are concrete experiences, not processed by a thinking mind. The learning is pre-reflective, that is, people aren’t even aware that they are learning, because they aren’t able to think about or to understand what is happening. They only see that it is happening, and they think that’s the way things are and will be.

Changing one’s habitus is difficult. Swartz says that change occurs only when the strategies are applied in new situations and they produce unexpected results. In such cases there can be a gradual adjustment to the new circumstances. Action requires some use of capital, mostly social, cultural or economic. People are reluctant to make use of their capital unless they think there is a reasonable chance of success, won’t make such use if the outcome is uncertain. That assessment arises from habitus, which limits the exposure to new situations. As an example, Swartz cites the results of changes in the French education system after WWII. Middle class people were more likely to take advantage than members of the working class who were inclined to “know their place”.

So far I haven’t seen discussion of things done strictly for pleasure. For example, in the discussions of cultural and social capital, there is no mention of the fact that both can be enjoyed purely on their own, without regard to the possible gain of wealth or power. Similarly, there is no discussion of religious behavior as personally rewarding, and there is no discussion of altruism. This is an interesting gap, in part because personal pleasure is an important concern to the Frankfurt School. I wonder whether the omission will be cured later in the book, or whether maybe this is a result of the use of the economic model of competition for scarce resources that frames Bourdieu’s thinking.

On Pierre Bourdieu Part 2: Systems of Domination

The text for this series is David Swartz’ book, Culture and Power: The Sociology of Pierre Bourdieu. Swartz says that the central focus of Bourdieu’s work is how in a given culture the systems of domination reproduce themselves in such a way that it seems natural and obvious, so that there is no resistance and so that neither the beneficiaries nor the non-dominant people recognize the forces at work. The hope is that understanding the way these systems operate will give us a chance to affect change that benefits them even if there is a loss to the dominant elites. The need for this should be quite obvious as we watch elites in the US, the UK and other more or less democratic nations slowly drive us to collapse while authoritarian governments survive. Change is not without its own dangers, of course.

Swartz opens with this sentence:

Culture provides the very grounds for human communication and interaction; it is also a source of domination. P. 1.

As an example, Bourdieu spent a lot of energy studying the education sector. He himself was an outsider, born in 1930 to a working class family in a small town in southwestern France. He began his studies in rural schools and only at the age of 19 did he move to Paris to continue his studies, first in a prestigious Lycée and then at the top French school, the Ecole Normale Supérieure, where he studied with and under many of the leading French intellectuals of the day. Although some of his fellow students were from similar backgrounds, including Michel Foucault, most were upper class Parisians. This no doubt gave impetus to his study of the way French intellectuals reproduce their dominance across generations. Swartz explains:

Educational institutions secure partial autonomy from political intervention and economic constraints by establishing their own criteria for legitimation and by recruiting and training their own personnel—that is, by securing control over their own reproduction. P. 77.

This should be obvious. Academia has been reproducing itself this way since it began, and it seems logical and natural that new teachers would begin by learning from experienced and knowledgeable teachers. But it is far from universal, we in the US are in danger of treating it as a factoid, a given, and taking it in isolation. If we did that, we might add the fact that people like to hire people who are like them, so we would draw the conclusion that this is a problem because it tends to exclude people who aren’t like existing teachers in some unacceptable way, such as gender or skin color. Or we might say that it is good because it removes the government from the academy regardless of whatever flaws there might be.

Bourdieu embeds the fact in a theory. The theory is that society is organized to reproduce itself in a natural and unthreatening way, so that members of society, elites and others, don’t see the machine at work and are strongly inclined to accept things as they are. When we see it this way, we ask different questions. For example, we see clearly how legacy admissions to elite universities serve the goal of perpetuating the domination of the elites. Their children get an edge that is invisible to most people; only the smart kid from Enid OK who didn’t get into Yale sees it, and people write her off as bitter. Then legacies get an edge in taking power in government, corporations and other sectors, including education.

A 2011 survey of 30 top universities found that legacies had a 45% greater chance of admissions that non-legacies. Even when legacies are reasonably competent compared to the other applicants, this advantage is a natural way to recreate the dominance of the existing elites. I don’t doubt that Chelsea Clinton is bright, though obviously Jared Kushner is a tougher call. The point is that Clinton and Kushner are certain to reproduce the attitudes and politics of their parents. Their slots at Stanford and Harvard did not go to equally qualified people from non-elite backgrounds, and the same is true of all the slots that went to the legacies. On the other hand, I’m just sure both Clinton and Kushner see themselves as hard-working meritocrats, succeeding because they are special.

But that isn’t all we can see. The elites don’t like the idea that they don’t get to influence academia. They intend to deploy their wealth as they see fit (the link is to my post on oligarchy in democracy, and may be of interest for further links), and aren’t interested in hearing from the rest of us; they don’t want democratic control of anything. Thus we get charter schools that can easily be used to teach kids that society is organized to facilitate the capitalist mode of production and that joyful participation is the way to succeed in life. If you don’t succeed in this way, you are a loser who deserves to suffer. If this schooling is successful, the profits and losses are irrelevant to the rich.

The rich have led the way in bringing business methods into the university. Today the focus is on job-oriented education as a replacement for liberal arts, in other words on vocational training instead of learning to think clearly and objectively. Education, if that’s the word, becomes a consumer object, with the student as consumer. As in business, the goal is to drive down the costs of labor, hence the use of miserably-paid and abused adjuncts. Meanwhile endowments grow repulsively big. We can easily see Yale and Harvard as hedge funds with a few attached schoolrooms, dorms and gyms.

But Bourdieu’s question is merely the apex of a framework. There is a broader and deeper analysis of society that establishes the framework, and makes it easier to apply to a wider range of strategies and rationalities supporting the central point, that societies and especially elites are organized to reproduce themselves and their dominance as covertly as possible. The carceral state is the tool for dealing with the dissidents and the non-conformists.

On Pierre Bourdieu Part 1: Vocabulary

The text for this series is David Swartz’ book, Culture and Power: The Sociology of Pierre Bourdieu. I’m starting with a vocabulary of some of the technical words and ideas in the book.

1. Practice. For Bourdieu, practices are the behaviors that people exhibit in coping with their social environment. A simple example is table manners. Manners are taught to us at an early age, and it’s rare that we ever think about them, but they say a lot about us. Emily Post manners are essential for people trying to climb the greasy pole to the C-Suite, just as State Fair eating manners are crucial to political candidates. They’re a necessary but not sufficient condition for entering certain social groups. They also matter in dating, as the charming series Blind Date in the Guardian shows. The paper sends a couple on a blind date to a restaurant and then interviews them about the date. They always ask about table manners. In this one,, the pair went to a Japanese restaurant and apparently tried to shell edamame with their chopsticks, a funny faux pas.

Practices can be complex. How do I interact with higher-ups in my workplace? I don’t have to think about that, I just do it, and it is obvious that I’m not thinking when I do it. One way to describe this is to call it intensive behavior as contrasted with reflective behavior, two terms I learned years ago from an otherwise unreadable book.

2. Capitalist Mode of Production. When I found this term in the book, I knew exactly what it meant, but somehow it made me uncomfortable. After a moment, I realized it was because I associate the term with Marxist analysis, and as a good American boy, I know that all of Marx is evil. But of course, it isn’t. There’s a lengthy discussion of the capitalist mode of production (without the term) in Thorstein Veblen’s book The Principles of Business Enterprise, which I discuss here and here.

Fear and loathing of Marxism is a foundational aspect of neoliberalism; its founders wanted to insure that capitalism would never be threatened by such un-American ideas. But in the intellectual training in France in the 40s and 50s Marxism is a jumping off point.

3. Thinking. Perhaps we all know what this term means intuitively, but there’s more than just self-examination as a way to understand it. I contrast thinking with behaviors that don’t involve thinking, like the practices that Bourdieu studies. Practices are learned behaviors that we emit without being conscious of them. We deploy them as needed in response to the social signals we encounter.

The act of thinking calls on us to become aware of ourselves as thinking. In action, it feels like we are activating a specific part of our mind. Once we start thinking there are various ways to go. One is to ponder an idea, trying to get a grip on it, trying to flesh it out, and generally to meditate on it. Another is purposeful, thinking with a goal. A good example of the former can be found in Plato’s Socratic Dialogs, as Hannah Arendt discusses in The Life of the Mind. Here’s a .pdf; see the two sections starting on page 166.

The latter is what we do when we try to prove a mathematical theorem. We know where we begin, with axioms, theorems, lemmas and corollaries, and a mental image of the problem; and we know to use formal logic. But the choice of steps to take is an art, not a science.

I use the word “contrast” as opposed to define because there are many other contrasting mental states. For example, I could contrast thinking with the kind of mental babble that the Buddhists call the monkey mind. Or I could contrast it with the mental state of practicing a physical behavior.

We live in a complicated society; I think building in complexity is something mammals just automatically do to amuse themselves if nothing else. We can’t comprehend the complexity we jointly create, so we invent mediating concepts to enable us to proceed. The selection of those concepts is an art. The use of those mediating concepts is an art. The Frankfurt School, for example, designed its empirical research around its theoretical concepts as a test of those concepts and as a way of understanding their results. The choice of contrasts is a useful way to add structure to the messy social world.

4. Dialectical thinking. I spent hours reading The Dialectical Imagination, and more hours reading texts about the Dialectic, but I am not comfortable with my understanding. Most of what i read was some version of thesis, antithesis and synthesis, That makes sense in the context of dialectical materialism, because we can see that historically one movement is confronted by another. We don’t have to explain why the second movement arose, except that it arose in opposition to the dominant thesis. In The Dialectical Imagination, it seemed to be a braoder idea, based on negation, which I understood to mean that when working in the context of abstract ideas, the thinker would try to work up an opposing thesis and it’s implications.

In The Life of the Mind, Arendt talks about the dialog of the self with the self, which seems to be a form of dialectical thinking. Swartz adds another idea, from the French philosopher of science Gaston Bachelard. He says that science doesn’t proceed from a priori constructs. It does not begin with atoms or cells, but only comes to them after empirical observation, and changes them as new observations are made.

Rather, the movement of thought proceeds from a limited conceptual framework, which is closed to some important aspect of experience, to the development of a broader framework that includes the previously excluded aspect. In this way, for example, Euclidean geometry was not replaced but rather superseded and regionally situated within a broader non-Euclidean, space-time conceptual space. P. 32.

That seems much closer to what I understood from The Dialectical Imagination. Jay quotes Adorno as saying the true dialectic is “… the attempt to see the new in the old instead of simply the old in the new.” P. 69. I’ll leave this here, but I will be alert to this issue.

5. Relational thinking. According to Swartz, Bourdieu’s approach is to define a term as I did above, in opposition to another term. Concepts have meaning in relation to other concepts. This view appeals to me, because it sets up poles in the space of inquiry, which otherwise would feel too unstructured. At the same time, it doesn’t limit us to other contrasts that may open our minds to other possibilities.

That’s my starting point for working on this new area. We’ll see if it holds up.

Culture and Neoliberalism

My last series summarizes the state of my neoliberalism project. It turns out that I have mostly focused on the economics of neoliberalism. Another aspect of the project was to learn how we as a society got caught up in neoliberalism. None of the work I’ve done so far has given me much of an answer to that, let alone the question of how we get out of this mess.

That part was relatively straightforward. I had a basic understanding of how to read and learn about neoliberalism. I have a background in dealing with the actual economy; I knew most of the mainstream economic ideas from College where I took several courses; and from continued readings over the years; and I’m reasonably fluent in college-level math. When it comes to culture as a field of study I’m pretty much at ground zero, and to tell the truth, I was surprised to see the emphasis on culture in Critical Theory. So, this will be a different kind of reading.

I’m going to start with Pierre Bourdieu, a French Sociologist of the second half of the 20th Century. Bourdieu and Foucault are perhaps the best known French thinkers of that period today, as existentialism and indeed most straight philosophy have fallen out of intellectual favor. Their kind of thinking is not that common in the US; we don’t exactly have an intellectual class, and we never really valued the life of the mind. We have a lot of experts and a lot of smart and well-trained people, but they are rooted in specific fields, and the number who think usefully beyond their areas is small. Historically, the intellectual was a recognized class in France, and even today many French politicians aspire to the title. Can you imagine a US politician who wants to be thought of that way? We elect regular folk just bursting with common sense, which probably explains something about our inability to solve problems.

But there is another factor: David Brooks. I read parts of Brooks’ New York Times column regularly as a check on my own ambitions. One common form of column is “I read this article and it proves conservatives like me are right and liberals are killing society.” Here’s a lovely example of High Brooksism. I think wants to say that neoliberalism is a bad theory because it emphasizes the isolated individual and rejects communal and social values, but he can’t because neoliberalism is at the heart of conservativism. Too bad, because it would enable him to criticize Republicans and most Democrats, and it would move him outside the boundaries of “both sides do it” and into an open policy space. But, as he says, people over 56 years old like him are clueless, so we get this absurd conclusion from the incoherent mess above it:

Congressional Republicans think a successful tax bill will thwart populism. Mainstream Democrats think the alienation problem will go away if we redistribute the crumbs a bit more widely. Washington policy wonks build technocratic sand castles that keep getting swept away in the cultural tides.

I absolutely don’t want to be like Brooks with his unmoored rationalizations and his pretense of intellectualism. My goal is to see what other people think and try to make sense of it. To that end, I think someone who sees things from a perspective outside my own culture will give me more distance, as was the case with my earlier readings.

I first heard of Bourdieu some time ago, I don’t remember where or when, but the gist was that his book Distinction: A Social Critique of the Judgement of Taste was a must-read. Now I want to read it, because some of the issues around taste seem important in the US, where all our choices seem to define us. But as with Critical Theory, I’m going to start with an overview of Bourdieu to learn some of his basic concepts. So, the next book is David Swartz’s Culture and Power: The Sociology of Pierre Bourdieu. I’ve started it, and it seems very readable.

I have a couple of basic thoughts to start with, and we’ll see if they hold up.

1. I’m pretty sure that culture isn’t the outcome of the economy, as might be the point of early Critical Theory. It seems likely that people’s natural creativity just pours out. I read The Kandy-Kolored Tangerine-Flake Streamline Baby by Tom Wolfe years ago, and came away with the idea that the people in that car culture, just like the surfers, the anti-war groups, and the disco dancers in Saturday Night Fever were happily living in the shadows of the economy, not straining for success in the broader world, but creating their own milieu with what was at hand. Of course, corporate culture sucked the life out of those cultures, or they died on their own, but the impulse to use the conditions of life in new and inventive ways never dries up. We can watch the process as gaming culture grows up and gets turned into an ESPN sport. I’m sure the kids will be moving on, leaving the olds farther out of touch.

2, When I was growing up, there was this trope about lowbrow, middle-brow and high-brow taste. We have plenty of classifications of people today: tribalists, angry white people, Evangelicals, Berniecrats; personality types like INTJ, and authoritarian submissives; and of course all the marketing categories, like these in Wikipedia. These characterizations feel ad hoc and instrumental, and no matter how fine the segments are, they hardly seem adequate to the complexities of most of the people I have ever met. But we can’t think clearly about a population of 320 million without categories, so some kind of classification seems important.

3. The first book about psychology I read was I’m OK, You’re OK, by Thomas Anthony Harris. I thought I knew something when I was done. Then I read some Freud, Jung, Adler and other actual psychologists (badly, I should add), and realized I had been sucked into a pop psych book. It wasn’t useless, but close. I want to avoid that. More pointedly, I don’t want a system. I think we all come in in the middle, including the Frankfurt School and Bourdieu and Foucault, and try to figure things out as best we can. What I’m looking for is some sort of starting framework that can be used and evaluated and reformed, over and over until it needs replacement by a better framework.

What I don’t want is sloppy, disjointed and internally inconsistent thinking, theories unconnected to data, or random collections of data interpreted ideologically. And no thought leaders, whatever the hell they are. And no David Brooks.

The Slow Death of Neoliberalism: Part 3 The Phillips Curve and Critical Theory

Part 1.
Part 2.

I described attacks on the Phillips Curve in Part 2. This part discusses the history of the Phillips Curve in detail, and concludes with a discussion of the problems revealed by the failure. The Observations are the fun part if this is too long.

History of the Phillips Curve

This section is based on parts 1-3 of The History of the Phillips Curve: Consensus and Bifurcation by Robert Gordon, an economist at Northwestern, published in the 2008 in the journal Economica at p. 10 et seq. (behind paywall, but available online through your local library). In 1958, William Phillips published a paper which as Gordon puts it,

… replaced discontinuous and qualitative descriptions by a quantitative hypothesis based on an unusually long history of evidence. Since 1861 there had been a regular negative relationship in Britain between the unemployment rate and the growth rate of the nominal wage rate. P. 12.

Phillips fitted a curve to data from the period 1861-1913, and plotted data for the remaining periods, through 1957 against that curve to find disagreements. Phillips found that his curve was close across the entire time except for a couple of years that he explains away. Here’s the curve Phillips fitted to his data:

1) wt = -.90 + 9.64U-1.39

Gordon says “… the inflation rate would be expected to equal the growth rate of wages minus the long-term growth rate of productivity.” P. 12.

1a) p = w – k

For some reason p is inflation and k is productivity. Upper case letters are levels and lower case letters are rates of change. So equation 1 can be written

2) p = -.90 + 9.64U-1.39 – k.

Paul Samuelson and Robert Solow discussed the Phillips results in the US context in a 1960 article. They found no similar data for the US, but they did some estimates and suggested that the PC doesn’t fit their data for several periods, and that it can shift up and down. Phillips estimated that an unemployment rate of about 2.5% was consistent with zero-inflation, while Samuelson and Solow think it might have been 3% pre-World War II and was about 5-6% in the early 60s.

With this seal of approval, the idea was incorporated into econometric models in two equations. In one, the PC was embodied and other variables were added, including demand, unemployment, the rate of change of unemployment, taxes, expected inflation and others in different combinations. This result was fed into an equation that calculates inflation based on wage levels, price levels and trend productivity. Gordon explains that

The reduced form of this approach implied that the inflation rate depended on the level and rate of change of unemployment, perhaps other measures of demand, and lagged inflation.

This is followed by a long discussion of the views of the Chicago School, which Gordon dismisses as utter failures. Moving along to 1975, Gordon turns to efforts to modify the Phillips Curve by adding supply and demand shocks. The price of oil shot up in 1973 because of OPEC. The demand for oil doesn’t decrease quickly in the short run, so people spend more on oil and less on other things. The Phillips Curve didn’t predict the results. Gordon says

The required condition for continued full employment is the opening of a gap between the growth rate of nominal GDP and the growth rate of the nominal wage to make room for the increased nominal spending on oil. P. 21, cite omitted.

That means wages must fall, Gordon says, or we have to add money to the economy, but the latter would lead to inflation. What we actually did, he says, was wage rigidity, increased unemployment, and some nominal (meaning not adjusted for inflation) GDP growth. Gordon then developed and published this version of the Phillips Curve:

3. pt = Ept + b(Ut – UtN) + zt + et

The second U term is the “natural” rate of unemployment, which I’m not going to take up. The z term represents cost-push pressure from unions and supply monopolies. The e term is apparently a constant but it seems odd that it might vary over time. Gordon explains that this version incorporates inertia, the idea that if there’s inflation in one period, there will be inflation in the next. It also reflects supply and demand issues, like wage and price rigidity.

Gordon then mentions in passing that the wage equation (Equation 1a) is only valid if labor’s share of the GDP is fixed, but it isn’t. Here’s a chart from FRED

That problem, says Gordon, is “fruitfully ignored”. We don’t need to consider wages, we just look at prices. With these changes, we can understand the past by explaining away variations with negative or “beneficial supply shocks” and other variables. Gordon says that Equation 3 is foundation of the mainstream model. There is a related model, the New Keynesian Phillips Curve which is similar except that it incorporates future expectations of inflation, and makes no specific provision for supply and demand shocks. I assume these in some combination are the models used by the Fed, and heavily criticized as discussed in Part 2.

Observations

The concept is replaced by the formula, the cause by rules and
probability. Dialectic of Enlightenment, Horkheimer and Adorno,p. 3.

1. Phillips was working off empirical data when he fitted his curve, data about inflation and the rate of growth of wages. There are some theoretical issues in the preparation of that data. But the only abstract theory he adds to his data is Equation 1a, which Gordon says has a solid base in intuition. At the time he was writing, Phillips would only have seen data supporting that theory. We have new information:

As it happens, and perhaps not surprisingly, Phillips’ Equation 1 doesn’t work on US data. Gordon himself and others start adding things to make the Philips Curve work. They are convinced that there is a link between unemployment and inflation, and that they just need to add the relevant variables from their theoretical arsenal to get it to come out. Some focus on expectations, others on supply and demand shocks, and others add taxes or something else. Once they get those pesky variables set up, it’s just a matter of solving for constants. The point is to fit a curve to the actual data, not to use the actual data to see what’s happening. The concept connected to the real world is gone, replaced by the formula. The cause is replaced by the rules of economics.

2. If we set inflation at 0 in Equation 1a, the rate of wage growth is equal to the rate of productivity growth. As the above chart shows, this relationship broke about 50 years ago. If all the gains from productivity are not going to labor, they are going to capital. Of course, capital takes several forms, for example, housing, agricultural land and other domestic capital. See, Piketty, Capital in the Twenty-First Century, Figure 4.6. When you think about it, it seems almost impossible that some of the gains from productivity weren’t going to capital all along. But in the current economy, it’s obvious that companies like Facebook can provide vastly more services with disproportionally fewer additional employees, few of whom are well paid, so that most of the gains from increased sales go to capital. Or, suppose that manufacturing is outsourced, reducing labor costs. Some of the gains might go to cutting prices but surely some go to capital. Let’s rewrite Equation 1a to reflect this, using γ for the growth rate capital.

1b) p = w + γ – k.

Using Equation 1b instead of 1a, we would have this instead of Equation 2:

4) p = -.90 + 9.64U-1.39 + γ – k.

This equation focuses attention on the changes in the return to capital. That issue never seems to trouble most economists, but the rate of return to capital is the central focus of Piketty’s Capital In The Twenty-First Century. This chart from the Center on Budget and Political Priorities shows that top wealth started on its climb at the same time wages diverged from productivity, which supports the idea that gains from productivity are going to capital:

It also calls attention to the fact that nowhere in Gordon’s paper is there a mention of power, market power, political power, or social power, all of which Piketty talks about. Actually, hidden away in Gordon’s article is a backhanded reference to power. Equation 3 (Equation 7 in Gordon’s paper) includes a term “…zt to represent ‘cost-push pressure by unions, oil sheiks, or bauxite barons’”. P. 22. Obviously Gordon understands that the power to control the price of goods and services could create a negative supply shock, and the loss of control could produce a beneficial supply shock. P. 25. However, this is not explicit, and it certainly doesn’t deal with our current economy, in which almost all goods and services are dominated by a small number of gigantic companies exercising a significant degree of price control.

The tweaking Gordon describes might work for a while, but as the degree of price control through monopoly and oligopoly power increases, and γ becomes a bigger factor, the tweaks quit working.

3. Let’s put this in a larger context. For many economists, the Phillips Curve is structural. But why would you think so? It seems more likely that the relationship holds in a certain set of social conditions, including legislation and regulation, power conditions, and people’s attitudes. A logical use of the data is to work out the conditions that must exist to make it so. That’s how Piketty approaches his inequality data.

It’s a mistake to use a coincidence to predict the future. It seems to be a particular problem in economics. Even people who seem to know better continue to believe in the Phillips Curve. Here’s the President of the Boston Fed, Eric Rosengren:

A number of papers at the conference highlighted that some of the economic relationships that are frequently assumed to be stable over time have proven to be not so stable as we have come out of the financial crisis. These structural changes mean that if you tried to have a model that was fairly invariant to these changes, or a process that was invariant to these changes, there would start being big misses in monetary policy.

He goes on to explain that we have to raise interest rates because maybe not the Phillips Curve, but when employment goes up, inflation goes up. Rosengren knows there’s a problem, but he doesn’t have any idea of how to cope, so he keeps doing what he thinks he knows is right. It’s another example of Horkheimer and Adorno’s statement in action.

Updated to define γ more exactly.

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