Marxian Tools and Conservative Caterpillars

May 5 was the 200th anniversary of Karl Marx’ birth, and Jonathan Chait decided to take a slap at him in a piece titled Trump Handed the Agenda to Conservatives and They Blew It. The title concept was addressed several weeks ago by Mike Konczal in a smart essay. Konczal asks why the Republicans who control all branches of government haven’t accomplished more, gives several examples of legislation that never moved, and asks why there is no discussion of these failures by conservative theorists.

Chait begins with an attack on an op-ed in the New York Times by Jason Barker, an associate professor of philosophy at Kyung Hee University in South Korea, titled Happy Birthday Karl Marx. You Were Right!. What was the point of attacking the birthday boy? Chait writes:

It is philosophically irrelevant that every nation-state founded on Marxist philosophy almost immediately metastasized into a repressive tyranny, [Barker] breezily insists. Perhaps this has something to do with the fact that the parties that ruled them all shared a common philosophy, and that this philosophy identified within their society an oppressor class whose political rights could and should be eliminated? No, no, reply the Marxists. All these real-world examples of governments attempting to actualize Marxist principles tell us nothing about Marxism.

Is Chait saying that Leninism is the same as Stalinism is the same as Marxist philosophy? Does he think the capitalists of Marx’ day didn’t oppress the workers? Does he think that early capitalists were tender shepherds to their employee sheep, or that the current billionaire class is the apex of Christian love and respect for their independent contractors? Who knows? This is just trite rhetoric, so he can ignore the thrust of Barker’s discussion of the obvious fact that efforts to put dialectical materialism into practice have failed. Barker says there’s a good reason for this. Marx was first and foremost a philosopher. He was a follower of Hegel, developing Hegel’s ideas of dialectical materialism into a broader theory of society. Barker explains:

… let’s be clear: Marx arrives at no magic formula for exiting the enormous social and economic contradictions that global capitalism entails (according to Oxfam, 82 percent of the global wealth generated in 2017 went to the world’s richest 1 percent). What Marx did achieve, however, through his self-styled materialist thought, were the critical weapons for undermining capitalism’s ideological claim to be the only game in town.

Chait suggests that conservatives will blame their leaders, especially Trump, when the actual problem lies with Conservatism. The parallel is supposed to be that this is just the same as Marxists blaming the failure of all Marxist regimes on evil leaders and not the “philosophy” itself. But that’s just not Barker’s position, or anyone’s, for that matter. Scholars, mostly European but a few Americans too, argue about Marxian philosophy, and about his criticisms of capitalism, but never in favor of the dictatorial regimes that attempted to put it into practice.

On the other hand conservatism and its triumphant successor neoliberalism were constructed by their founders and other cultural workers to be a theory of government. They have a theory of the person, an economic theory, and a rough program for transformation of democracy into a form suited to their flourishing. Their failures, including not least the failure to deliver a decent life to the vast bulk of society, are part of their program.

Chait doesn’t take up the issue of the destruction of conservatism and its replacement by full-blown neoliberalism. He thinks neoliberalism is nothing but a slur directed at real liberals by disgruntled leftists. He takes full advantage of the fact that neoliberalism is a denied structure, or at least a deniable structure.

The Conservative Movement, from its formation by William Buckley to its disappearance in 2016, was always a project funded by the rich. It was marketed with whispers of racism, xenophobia, religious fundamentalism, misogyny, patriarchy, anti-intellectualism and boundless militarism abroad and at home. The Conservative Movement was just a Trojan Horse for neoliberalism, when those whispers turned into roars. Think of conservatism as caterpillars spontaneously generated by the John Birch Society, the White Citizens Council and any number of grifting self-titled Religious Ministers until one day new Leaders burst forth in all their neoliberal putrescence and all the Republicans fall in behind them dancing, playing timbrels and chanting MAGA.

And that’s why the few remaining movement Conservative writers are bewildered into silence. They are stunned that their patrons no longer applaud their finely spun theories and their sharply honed plans. They thought they were relevant, when they were, as Konczal puts it, just the entertainment.

Politicians Did Not Get Rich From Hollowing Out the Economy

In his inauguration speech Trump said:

For too long, a small group in our nation’s capital has reaped the rewards of government while the people have born the cost. Washington flourished, but the people did not share in its wealth. Politicians prospered, but the jobs left and the factories closed. The establishment protected itself, but not the citizens of our country. Their victories have not been your victories. Their triumphs have not been your triumphs and, while they celebrated in our nation’s capital, there was little to celebrate for struggling families all across our land.

He claims that politicians got rich by off-shoring jobs and driving up trade deficits. This is an instance of a standard Republican lie, that our problems are caused by politicians. In fact, all the profits from off-shoring went to corporate executives and owners of corporations. They made political contributions, sure, but that doesn’t enrich anyone. The gains to citizens were some lower prices at a cost of whatever wars and worse-paying jobs.

The decisions to off-shore and outsource jobs are made by corporate executives and controlling owners. They had many reasons to invest in other countries, ranging from a desire to protect their own businesses from being underpriced by foreign entitiesk, incentives offered by foreign countries, lower labor costs, and access to foreign markets among others.

US policy in both parties since at least WWII has been generally sympathetic to foreign investment for many reasons, not least the belief that nations linked by commerce and trade are less likely to go to war.

Foreign investment is always dangerous. The risks include expropriation, local governments that won’t or can’t stop violence against plants and equipment, lack of protection of intellectual property, and others. Karl Polanyi discusses these risks in The Great Transformation. Hannah Arendt agrees in The Origins of Totalitarianism. In different words, and with different emphasis, they say Western European capitalists solved this problem by enlisting the government to protect them when they invested abroad. The same thing happened here. Thorstein Veblen saw it clearly in 1904:

… [W]ith the sanction of the great body of the people, even including those who have no pecuniary interests to serve in the matter, constitutional government has, in the main, become a department of the business organization and is guided by the advice of the business men. Chapter 8, Principles of Business Enterprises.

Here’s a discussion of the implications of that statement for foreign investment.

Right down to today, capital enlists the support of the government to protect it so it can make profits in other countries, and government responds for its own reasons. We have always used military force for that purpose, but now the primary tool is trade treaties. The recent example of the TPP stands out. It was written by corporations and their lobbyists and lawyers, and supported by mainstream economists. It was opposed by working people and unions and most progressives. It was supported by a bipartisan majority of legislators. It should be noted that it was rejected by Trump and Sanders and disparaged by Clinton.

I won’t try to untangle all the interlocking interests, or to discuss the negotiations between the two camps, government and capital. But Trump’s assertion that Washington politicians got rich off foreign investment is stupid and false. The people who got all the money from from foreign investment are the executives and the obscenely rich people who own and control these corporations.

The incoherence of Trump’s statements in his inauguration speech and in his campaign speeches about corporate overseas investment is displayed in this New York Times article discussing Trump’s meeting with CEOs of giant US manufacturers. The reporters, Nelson Schwartz and Alan Rappeport, say that Trump told the “titans of American business” that they had better move manufacturing jobs here, threatened them with taxes that look like tariffs, and offered rewards like lower taxes and fewer environmental regulations. The reporters say that this is pointless, because taxes and regulations do not determine where corporate investment are made.

The reporters say that the real cause of overseas investment is Wall Street, by which they mean Capitalists, including hedge fund managers, giant Banks, and the richest investors.

In some cases, Gordon Gekko-like hedge fund managers are to blame, but much of the time, it is the drive for bigger returns on 401(k) accounts, pension plans and other retirement vehicles that depend on steadily rising corporate profits and, in turn, a buoyant stock market.

That’s just wrong. Many pension funds are operated by private Wall Street firms through Gordon Gekko-like managers. The largest funds spread management around among several management firms, and invest with hedge funds, and get investment advice from Wall Street firms for the funds they manage themselves. The idea that Wall Street cares about small investors or their IRAs is silly. I’ll just ignore the stupidity of using a movie character when it’s easy to identify the real perpetrators. You could just read this article to find one, Daniel Loeb.

The actual problem is that the federal government let the interests of the rich set our industrial policy with no public input, and actively ignored the interests of US workers and citizens, and sometimes even the security interests of the nation.

I suppose it’s possible that Trump meant that the rich have too much influence in government, and he means to change that. But seriously, can anyone imagine that the Republicans or the neoliberal Democrats will allow Trump to initiate trade wars over protectionist tariffs? Does anyone think that Trump will do anything to harm the interests of the rich, or that Trump doesn’t personally identify with the rich and their interests?

And exactly how is this different from that time President Obama chewed out the banksters over their greed in April, 2009? Nothing changed then. Why should this time be different?

It won’t be different until a solid majority of voters come to grips with the fact that the dangerous elites in this country aren’t college professors or scientists or liberals. The dangerous elites are the rich people who control the giant corporations and the people who support them, in and out of government.

The Theory of Business Enterprises Part 5: A Legal System That Supports Businessmen

In Chapter 8 of The Theory of Business Enterprises, Thorstein Veblen takes up the political and legal systems of the US. Both are designed to support business at the expense of everyone and everything else. By 1904, people were used to thinking about almost everything in terms of money, and that means that “… the management of the affairs of the community at large falls by common consent into the hands of business men and is guided by business considerations.” And that’s true of both national and international matters.

He claims that this habit of mind is reinforced by the doctrines of Natural Liberty, a reference to the theory of John Locke, which I discuss here. Locke’s theory was formed at a time when production was dominated by the artisan and the small farmer. He argued that the worker, these individual small producers, were entitled by the principles of Natural Liberty to own the things they produced, whether it was the blacksmith, the cobbler, or the weaver/dyer. Locke was concerned to protect their production from the monarch, whose absolute power was backed up with troops. Apparently teh landlord was entitled to rent, and to a share of the produce of tenants, but never mind why, exactly. That notion carried over to industrial production, so that the owner of the factory was entitled to the goods produced by the workers. Veblen refers to this as a metaphysical theory, but it obviously doesn’t explain much.

The unquestioned idea that property rights are part of Natural Liberty survived the days of artisans and small farmers, where they made some kind of sense. The common people could be said to be free in the sense that they controlled their hours of work and the methods of production. The idea carried over into the era of industrial production, where businessmen controlled much more of the work and private life of the worker. It meant that the arrangements of industrial production could not be interpreted as unlawful coercion. Workers were free to take whatever work was available at whatever price. They not entitled to any of the goods produced, directly or indirectly, but only to a wage, if the capitalist actually paid one. Or, they could starve. We’ve seen this before.

Veblen offers this explanation for the willingness of the workers to put up with this arrangement. It’s like the manorial system, where the workers thought, he says, that the production remained with the feudal lord, and thus increased the wealth of the group, and that was good for the peasantry. Also, the feudal lord provided protection to the peasants, for which they were grateful. This in turn looks like patriotism. These two ideas of property and patriotism in led the common people to feel as though they had “some sort of metaphysical share in the gains which accrue to the business men who are citizens of the same ‘commonwealth’; so that whatever policy furthers [their] commercial gains … is felt to be beneficial to all the rest of the population.” Or, as he puts it later when discussing the governmental support for all things business,

And in its solicitude for the business men’s interests it is borne out by current public sentiment, for there is a naive, unquestioning persuasion abroad among the body of the people to the effect that, in some occult way, the material interests of the populace coincide with the pecuniary interests of those business men who live within the scope of the same set of governmental contrivances.

“Some occult way”, a lovely description of much economic theory.

The main function of the law is to insure that the interests of business men are protected. In large part, that means enforcing “freedom of contract”. That means the freedom of the workers to enter into whatever contract they choose. The reality is that workers don’t have much in the way of freedom, and the businessmen were free to offer whatever terms they chose. The pressure on the workers was pecuniary, and therefore wasn’t assault and battery nor breach of any contract. Consequently the law had no interest in the matter. If the jury of workers objected to this interpretation of the law, and ruled in favor of a worker injured on the job, that was because their vulgar minds couldn’t grasp the grandeur of the rules of Natural Liberty, and they would be quickly corrected by the superior minds of the Judiciary.

Veblen’s view was to receive confirmation the very next year in the now famous case of Lochner v. New York, 198 S.Ct. 45 (1905), where SCOTUS upheld the freedom of bakers to work more than 60 hours a week despite a New York statute designed to protect their health and safety. The case is famous for the dissent filed by Justice Oliver Wendell Holmes, who claimed that the majority decided the case on the basis of “…an economic theory which a large part of the country does not entertain.” Also, it was decided under the Fourteenth Amendment, just the first of a long string of horrible misuses of that Amendment.

Here’s Veblen’s view of the results:

De facto freedom of choice is a matter about which the law and the courts are not competent to inquire. By force of the concatenation of industrial processes and the dependence of men’s comfort or subsistence upon the orderly working of these processes, the exercise of the rights of ownership in the interests of business may traverse the de facto necessities of a group or class; it may even traverse the needs of the community at large, as, e.g., in the conceivable case of an advisedly instituted coal famine; but since these necessities, of comfort or of livelihood, cannot be formulated in terms of the natural freedom of contract, they can, in the nature of the case, give rise to no cognizable grievance and find no legal remedy.

Veblen doesn’t mention one ground of support for property rights that seems important to me: That’s Mine!. This may be the most deep-seated view that any of us has, and the idea that we have to share anything, including the very air we breathe, seems unfair to many of us. I can do what I want with my property, so If I want to paint my house with polka dots, hand a garish sign on my shop, or poison the air and water, and lie about it, that’s my right and you can’t stop me. The natural extension of that idea is that businessmen can do whatever they want with their property, just like I can with mine, and screw the community.

With that background, and with a grasp of how firmly it’s held, we can begin to understand how the neoliberals found a strong basis for their reworking of neoclassical economics into the force it has here today. Natural Liberty reinforces That’s Mine to create loathing for any intrusion on the freedom to do what one wants with one’s property. Everyone agrees that the proper role of government is to enforce those property rights. And that is the real ground of property rights: raw power. Locke makes a metaphysical argument, but the Monarch had armed troops. If Locke’s conception prevailed, it was because the power to command those troops to seize property and give it to the monarch had been eliminated.

In the US, private property is protected by the Constitution, and all levels of government enforce that protection zealously. Laws that restrain the use of property to damage the community are not enforced zealously, as we know from the aftermath of the Great Crash and the rate of rise of prices of pharmaceutical drugs. This is a deeply stupid and dangerous arrangement of priorities.