Sunday, June 14, 2015
Reflections on China’s South Sea Trouble
Lying in the South China Sea between Indochina and the Philippines is a collection of 700 or so small islands, reefs, atolls, shoals, and rocks which are all very scattered about and collectively known as the Spratly Islands (named after the British sea captain Richard Spratly, 1802-1870, who "discovered" them in the early 19th century).
The Europeans were, of course, not the first to come across this collection of rocks and mini-islands in the ocean. Though uninhabited they had been explored by and integrated into the Chinese Empire for centuries. Many centuries before there was even an England, let alone the United States, ancient Chinese maps had depicted these islands.
The Chinese were there on fishing expeditions during the Han Dynasty (Third Century B.C.). They appear on Qing (Manchu) Dynasty maps of the Empire dating from the early 17th Century but they were being regularly visited and mentioned in the literature of the Song, Yuan (Mongol) and Ming dynasties as well.
In the 19th Century China, Indochina, the Philippines, and the areas around the South China Sea were under European control. China was in no position to exert its claims in the islands. At this time the French claimed parts of them (from which the Vietnamese claim ultimately derives) due to French Indochina.
Nobody, other than the Chinese, seemed to care about these islands for many centuries but interest in them began to pick up in the second half of the last century. This interest is due to the prospects that undersea oil and gas deposits could be the source of wealth and energy and thus claims on the islands— or at least some of them — would allow the possessor to claim the territorial waters associated with the land. So there are now five countries besides China (PRC) who have claims in the Spratly Islands.
It should be noted all the fuss over the Spratly islands involves pumping up hydrocarbons that should remain just where they are as our scientists tell us global warming is out of hand and this additional supply should remain untapped and alternative sources of energy developed. This also applies to the arctic and all major undeveloped areas on both land and in the seas. Nevertheless, short sighted political entities will probably continue to develop these regions without any concern for the future consequences.
Who are the other five claimants to the Spratly islands in whole or in part? They are Vietnam, Taiwan, Brunei, Malaysia and the Philippines. I maintain that China, having the oldest connection with these islands (going back to the times of the Roman Empire in European terms) has the most justified claims and that if it decides to grant rights to others it should favor the claims of the Vietnamese first and foremost.
I will deal with the Vietnamese claims last. First let’s deal with Taiwan. Taiwan claims the islands for the same reasons the PRC claims them since Taiwan, as the Republic of China (ROC), considers itself the successor state to the Chinese Empire. The PRC claims Taiwan is a province of China that will eventually be reunified with the mainland. The PRC claims simply absorb those of Taiwan and we don’t have to further consider them.
Brunei has a partially submerged reef within its 200 mile limit (exclusive economic zone [EEZ]). Whether this reef is recognized as an ocean “rock” or an “island” will determine if Brunei gets to extend its sovereignty over additional areas of the South China Sea. I think the Chinese could easily grant fishing rights to Brunei in areas beyond the 200 mile limit which it claims without having to acknowledge that this reef is an island. Since drilling for oil or gas is detrimental to the entire earth Brunei’s claim should be rejected if that is its intention. I will explain later why it is more likely that China can be convinced not to drill in the Spratly’s than other claimants (excepting the Vietnamese).
The Philippines claims began in 1978 when the corrupt dictator Ferdinand Marcos issued a decree that parts of the Spratly islands within his EEZ belonged to the Philippines. He then occupied some islands. If the Chinese claim has historical
priority, however, the Philippine action would be invalidated. This claim should be decided in talks between the PRC and the current Philippine government.
Malaysia’s claim is based both on the position of some of the islands are in its EEZ and the fact that they were unoccupied after World War II when the Japanese abandoned the Spratly Islands after their defeat. The PRC’s claim, of course, predates World War II and the fact that wars, colonialism, civil wars, the presence of hostile Western forces (the US Seventh Fleet) prevented the PRC from exercising its sovereignty until recently does not automatically give other nations the right to claim these islands as abandoned or unowned. Malaysia and the PRC should engage in bilateral discussions to resolve this dispute.
Vietnam (SRV, Socialist Republic of Vietnam) which occupies Spratly Island itself among others, bases its claims on having taken over some islands after the French left Indochina and that the puppet government (US installed Republic of Vietnam) had put boundary markers on some islands, and that the Vietnamese Empire had claimed them as far back as the 1600s. Vietnam also says that the ancient claims made by China actually refer to those made by non-Chinese people who lived in what is today Northern Vietnam (yet this area was a province of China in ancient times.)
The SRV and the PRC have special responsibilities is resolving their disputes regarding the Spratly Islands; responsibilities that go far beyond legalistic arguments and interpretations of an international law system basically drawn up by colonial and imperialist powers to serve their interests.
In the first place they both claim to be socialist countries and products of the Marxist- Leninist tradition, resulting from the Russian Revolution, regardless of the unique characteristics which the special historical and cultural developments of each nation has contributed to its form of socialist expression.
International working class solidarity is a basic element of their common socialist heritage and the interests of the Chinese and Vietnamese workers should not appear to result in antagonistic contradictions between their governments. Such contradictions are indicative of leaders who are deviating from socialist principles. We have seen the damage such deviations have caused to the international socialist movement in the last century. It behooves the leaders of the PRC and SRV to resolve their contradictions in the spirit of working class solidarity and unity against the machinations of imperialism, especially U.S. imperialism, in the region.
The U.S. involvement is adventuristic and provocative with regard to the PRC’s activities in the island chain and on the same level with its provocations against Russia over NATO expansion in Eastern Europe and its attempt, along with the EU, to assert its interests in the Ukraine at the expense of Russian interests and those of millions of Ukrainians who wish to maintain friendly relations with both Russia and the EU. Here the U.S. seeks to drive a wedge between the PRC and its neighbors.
Since neither the PRC nor the SRV, in the interests of planetary survival, should be planning to extract hydrocarbons from the South China Sea, and both need to cooperate in finding alternative sources of energy, they should bilaterally resolve their rival claims in this region in the true spirit of working class internationalism by proportionally sharing in the economic development of the region and having a united policy on resolving their problems with the non socialist governments making claims in this area. They should be united in rejecting U.S. interference and saber rattling in the South China Sea as U.S. imperialism has a record of destabilizing areas (such as the Middle East and Ukraine) in order to justify military
spending at home and a divide and conquer foreign policy abroad.
These reflections have, no doubt, overlooked some significant issues involved in the current problems in the South China Sea but I think those problems could be subsumed within the framework of discussion suggested above. In any event, I think these reflections, or something very much like them, will be foundationalto understanding what is happening in this region.
Sunday, May 17, 2015
Sin, Socialism and Sacrilege
In some ultraconservative circles as well as groups of Christians" and other misguided religious zealots the issue of gay marriage has become the cause célèbre du jour. [I use the term misguided to refer to bigoted and backward thinking not in tune, in my view, with modern religious and philosophical opinions.] I propose to discuss a typical article from the right casting aspersions upon the concept of gay marriage as a constitutional right that must be respected under the law and protected from bigoted attacks disguised as authentic religious beliefs claiming also to be constitutionally protected. I will attempt to demonstrate that gay marriages should be constitutionally protected and that no religious objections to it are worthy of respect on legal, ethical, or moral grounds.
The article in question is by an ultra-right political "journalist" Charlotte Allen and was published on May 1 on the op-ed page of The Wall Street Journal: "Modern Sin: Holding On to Your Belief." What is the belief at issue? Socialists and other progressives don't usually think in terms of "sin." The term "politically incorrect" is the one that we prefer. To hold on to, and act upon, discredited beliefs such as racism, sexism, fascism, xenophobic nationalism, chauvinisms of all kinds including religious chauvinisms, and certain kinds of behaviors that are dishonest, socially destructive of people's well being, and many more too numerous to list here are considered not to be politically correct [PC].
So the question to be addressed by the WSJ article should really be what beliefs are people holding on to, and acting upon, that are not PC and, in religious jargon, are "sins" against other human beings and hurtful to them. If your notion of the deity includes the idea that It wants you to act in a hurtful way to other human beings, attacking their rights and happiness in order to make you feel better about your own, my article will hopefully convince you that you are wrong and have a false notion of what "sin" is all about.
Ms. Allens article is a sympathetic account of the trials and tribulations of small business owners whose bigoted interpretation of religion has led them to discriminate against gay couples who wish to marry. Their arguments are not unlike those given a few generations ago by those who also discriminated against interracial couples on religious grounds.
There are, Ms. Allen points out, a small group of [ misguided Christian] bakers, florists, and photographers who maintain that their Christian beliefs in man-woman marriages preclude their providing services to same-sex marriages. Well, Christian beliefs are also opposed to pagan ceremonies and polytheistic worship but they dont seem to preclude people from baking, taking pictures or providing flowers for Hindu wedding ceremonies. There are Christian beliefs against divorce but are divorced people getting married again refused these services?
Businesses open to the public must serve the public in a non discriminatory way.
A misguided Christian restaurant owner is not entitled to tell a couple of same sex individuals they will not be served if he overhears that their meal is a wedding brunch. Or is he? This is the issue. Does freedom of religion include the freedom to discriminate and impose your beliefs on others in the public arena?
It seems that these Christian business people are committing acts of common bigotry under the guise of acts of [selective] conscience. Ms Allen supports the business people involved. She presents the case of a Southern Baptist florist who was fined for refusing to serve a gay wedding because she claimed to have a personal relationship with [an imaginary friend called] Jesus who, it appears, is anti-gay marriage. This defense against anti-discrimination laws did not impress the lower courts in Washington State and is now on appeal. Her case would be strengthened if she could present her friend as a witness. But I doubt Jesus will appear since his constituency includes both gay and non gay people which makes this not a question of Christian belief so much as one of personal interpretation.
Ms Allen thinks holding misguided Christians responsible for their bigoted actions (no one should object to their private or public beliefs only their public activities if they impinge upon the rights of others under the law) goes against former California Supreme Court Justice Ronald M.Georges statement that: Affording same-sex couples the same opportunity to obtain the designation of marriage will not impinge upon the religious freedom of any religious organization, official or any other person. Ms. Allen is, of course, wrong and the Judge is right.
Religious freedom is not absolute in the U.S. It is freedom to practice your religion under the law. For instance, American Muslims dont have the freedom to marry four wives, people cant practice human sacrifice, people of one sect are not free to behead those of a different sect, and Amish elders dont have the right to debeard their opponents, and people considered to be heretics, sacrilegious, or blasphemous cannot be burned at the stake or otherwise dispatched.
All of these practices are, be it noted, sincerely held religious beliefs, some of them by Christians, and to the list should be added discriminatory practices and hateful deeds directed against gay people or any other subsections of society which lawfully seek to enjoy life and peacefully practice their beliefs and life styles in ways not detrimental to the legally protected rights of others.
Businesses serving the public whether they be caterers, bakeries, florist shops, photo stores and studios, wedding planners or any business permitted to engage in services by the state should not, and generally cannot, discriminate against people based on their race, religion (or lack of religion), sex, gender preferences, ethnic origins, looks or age, etc. This means that individuals or groups, including institutionalized religious organizations cannot engage in discriminatory practices against others based on their own shared and practiced beliefs and feelings. They can do as they please as long as it is legally permitted and does not infringe upon the legal rights of others. If there are existing laws permitting such discriminatory actions they must be repealed.
If you have a sincerely held religious belief that same sex marriage is immoral and against the will of God (although God is quite capable I should think to see to it that his will is not violated without any help from humans) then no one can force you to marry someone of the same sex. It is wrong, however, for you to seek to prevent others from engaging in same sex marriage or refuse to serve them if you have a business open to the public.
Tuesday, May 05, 2015
All six parts have been gather together here-- about 17 or so printed pages)
Piketty for Progressives
"Introduction" to Capital in the Twenty-First Century-- Part 1
Piketty opens his book by telling us the questions he wants to answer are two diametrically opposed queries stemming from the works of Karl Marx on the one hand and Simon Kuznets on the other. From Marx-- does capitalism inevitably lead to the concentration of wealth in fewer and fewer hands ? From Kuznets -- does the later development of capitalism lead to less inequality and more social harmony between the classes? A third question is what lessons can we learn and apply to our present century from a study of wealth development since the eighteenth century?
Piketty admits that the answers he gives to these questions are "imperfect and incomplete." Now if you write a book whose conclusions are imperfect and incomplete you are inviting a lot critical commentary not only from the Left but from the Right as well. In this respect the reception of his book has not been disappointing. He thinks however his research provides a "new" way to understand the inner workings of capitalism. We shall see.
He believes that current bourgeois economic "science" has become so sophisticated that the "Marxist Apocalypse" can be avoided. This is, however, an article of faith and no argument is advanced to substantiate this claim. He doesn't exactly say what the "Apocalypse" is but I rather think it refers to the collapse of the capitalist system and its replacement with a socialist economic order. Marx did give an argument for this outcome based on his analysis of the inner contradictions of the capitalist system. This analysis is in his work Capital which book Piketty mentions in passing only three times in his own book (according to the index, but I counted more) giving no indication that he read Marx's work.
Piketty admits that if/when capitalism provides a greater return on capital than it does on income and economic growth "then it automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based." This is quite a statement. It assumes we live in democratic societies where a person's social condition is based on merit. This is I think demonstrably false for the politically corrupt oligarchical societies of the West with which Piketty is concerned. Race, ethnicity, family background, wealth, availability of opportunities are the actual factors that determine the social conditions of people living in capitalist democracies not "merit." To say our societies are based on "values" that are plainly non-operative beyond the verbal level is no way to go about understanding reality as if effects most people.
He thinks there are ways democracy can "regain" its power over capitalism. He says "regain" because he thinks these negative features of capitalism were operant in the nineteenth century but were not so dominant in the twentieth (!) but seem "likely" to come into force in the twenty-first century. There are few, if any, people on the Left, I think, who view the twentieth century as a success story for meritocratic democracy (except maybe in a few isolated pockets).
Well, I don't want to jump to conclusions so let’s look more closely at the introduction to his book:
A Debate Without Data?
In this section Piketty points out that previous theories about wealth and inequality have been based on a narrow set of facts that have been appealed to support many different interpretations. He is going to explain his sources and how he and his associates have expanded the amount of data available to researchers.
He also makes some comments in this section that reveal an interesting set of subtextual assumptions of which progressives (especially Marxists) should be aware. For instance, inequality is, he says, visible to many kinds of people and many different theories as to its causes flourish due to inadequate data. He tells us peasants and nobles, capitalists and workers, and bankers and non-bankers [and we might add “slaves and masters” to the mix as well-tr] all see the world differently. Each group sees different “aspects” of reality and this conditions their outlook on justice and injustice. “Hence there will always be a fundamentally subjective and psychological dimension to inequality, which inevitably gives rise to political conflict that no purportedly scientific analysis can alleviate.”
One of the purposes of Marx’s Capital was to show just what nonsense this is and that class struggle and exploitation have objective roots in external reality and can be scientifically understood. Political conflicts between workers and capitalists (just as slave rebellions and peasant uprisings) are not the result of subjective psychological problems due to feelings of oppression because the “oppressed” group only sees its own “aspect” of reality. They are objective historical facts that can be scientifically studied and remedied by a correct understanding of the relations of production and distribution and the mode of value creation within a given society and Marx presents arguments to support his conclusions rather than just stating them as matters of fact.
All sides are represented in [bourgeois] democracy, Piketty thinks, and since there is no scientific explanation for the resolution of the political problems engendered by the subjective psychological reactions of different groups to their experiences of inequality we can conclude “Democracy will never be supplanted by a republic of experts— and that is a very good thing.” Piketty’s value judgment is, of course, a subjective psychological reaction to his understanding of the nature of inequality.
Piketty does see an important role, however, for the class of “experts” to which he himself belongs. While, he maintains, they cannot provide a solution to the violent political conflicts that inequality naturally engenders, they can do research which “will inform democratic debate and focus attention on the right questions.” Piketty says intellectuals such as himself “have the good fortune to have more time than others to devote themselves to study (and even to be paid for it— a signal privilege).” Yes, but who is the paymaster?
Before going into detail on his new methods he wants to present an historical review of how the problems of inequality were dealt with in the past, and so we move on to Part 2 of this review and will resume with the section entitled:
Malthus, Young, and the French Revolution
“Introduction” to Capital in the Twenty-First Century— Part 2
2. Malthus, Young and the French Revolution
This section is not particularly enlightening as it is mostly just descriptive. We are informed that Thomas Malthus (1766-1834) wrote his 1798 work "Essay on the Principle of Population" based on few sources, one of the most important of which was a travel diary that the British agronomist Arthur Young (1741-1820) published of his trip to France (1788-89) where the extent of poverty he saw led him to fear a revolution was in the offing. Malthus was led to believe the social troubles facing Europe as a result of the French Revolution and the changing economic conditions of the day were caused by overpopulation. Too many poor people were being born and not enough food could be produced to feed them. His solution was to advocate the end of any kind of welfare aid to the poor (let nature take its course) and to discourage their procreative activities. Piketty says we cannot understand the extreme views of Malthus without understanding the role that fear played in a Europe experiencing revolution, fast economic changes, and the rapid increase of population and poverty occasioned by the Industrial Revolution. He stress that the theoretical work of the time was based on limited sources due to scanty record keeping by modern standards.
3. Ricardo: The Principle of Scarcity
Piketty says in retrospect we might make fun of the dark prophecies the nineteenth century thinkers made concerning the dire consequences that the development of the class nature of capitalism and the consequent unequal distribution of wealth seemed to indicate. He seems to think “these prophecies of doom” did not happen but were justified by the “traumatic” changes the development of capitalism and the Industrial Revolution engendered. David Ricardo (1772-1823) and Karl Marx (1818-1883) “the two most influential economists of the nineteenth century” both had apocalyptic views of the future. Ricardo thought the wealth of society would be monopolized by the owners of land, Marx by the industrial capitalists. In this section Piketty discusses Ricardo’s views.
Ricardo's interests were in the price and rent of land and were expressed in his 1817 book "Principles of Political Economy and Taxation." He had few statistics to work with, Piketty says, but he understood contemporary capitalism and further developed the theories of Malthus. As population grew the demand for land (for agriculture especially) would go up and so would its price and consequently the amount that could be charged as rent.
Eventually the landowners would be getting the lion's share of the wealth expressed as income and the rest of the people would be getting less and less. Unless taxes on land were radically increased to readdress this income imbalance social stability would collapse and the spectre of the French Revolution would arise to haunt Europe.
Piketty points out that Ricardo was wrong because of technological and industrial developments that took place after his time that diminished the role of agriculture in the economy. Nevertheless, Ricardo's views on the role of "scarcity" were insightful as they indicated that the prices of certain commodities (goods and services) could get out of hand and disrupt society, especially in the present age when the global economy is coordinated and kept in balance by an international pricing system. "The problem is," Piketty says, "the price system knows neither limits nor morality."
Here is a classic example of the problem of reification discussed by Marx in the first volume of Capital in the chapter on the fetishism of commodities. Something created by human beings takes on an "independent" existence and enthralls its creators who treat it as as some kind of self-subsistent entity whose laws we are subject to and incapable of changing or abolishing.
Scarcity could still be a problem in our century. But there is a way to contain problems of scarcity-- namely supply and demand. Piketty says if prices get too high because of lack of supply, then people will not buy and the demand will lessen causing the prices to fall. But what about a problem with the food supply? Not enough food, sky high prices, people can't buy-- but will the demand for food lessen? It would not. It's possible that food purveyors would end with a wholly disproportionate and unequal share of social wealth in their control. Piketty thinks in this sort of situation a Ricardian Apocalypse is theoretically possible. However, he doesn't think it will ever come to this but will put off further consideration of this problem until later in his book where his treatment "will be more nuanced.”
4. Marx: The Principle of Infinite Accumulation
By the time we get to Marx in the second half of the nineteenth century (Capital Vol. I came out in 1867) the main problem was understanding how industrial capitalism actually worked and what was responsible for the immiseration of the industrial working class [and not just it alone]—“the most striking fact of the day.”
During this period, right up to World War I, Piketty says, the evidence indicates that there was growing income inequality with the ruling class expropriating more and more of the social wealth created and leaving less and less for the working people and others in society to share. He says this “endless inegalitarian spiral” only came to an end due to the shocks of the World War and only these shocks could have halted the growing inequality let loose by the Industrial Revolution. [One of the biggest shocks was, incidentally, the Russian Revolution and the forces of social consciousness it unleashed on the planet— still somewhat reverberating throughout the world.]
Piketty dates the birth of the “first” movements of socialism and communism to the 1840s (actually there were even earlier movements dating back to at least the seventeenth century) when people began noticing that while capitalism was working for the capitalists, enriching them, the working people were not benefiting from the system and were subjected to the same kind of miserable living conditions as they had in the pre-capitalist past.
Enter Karl Marx who sets himself the task of explaining how capitalism works and why it keeps the working people is such miserable conditions (relatively speaking). Piketty says Marx built his system (expressed in Capital ) on two principles he took from Ricardo— the principles of the price of capital and of scarcity. It is true that Marx had great respect for Ricardo but he actually rejected Ricardo’s price theory, and replaced it by his own original theory developed out of his concept of labor power and surplus value based on socially necessary labor time. I don’t see how Ricardo’s views on “scarcity” played any positive role in Marx’s system as Ricardo’s theory was developed in the context of his misconceived theories of agricultural rent.
Pekitty also says that Marx developed a “principle of infinite accumulation” in which he showed “the inexorable tendency for capital to accumulate and become concentrated in ever fewer hands, with no natural limit to the process.” Piketty then says this is the foundation of his “prediction of an apocalyptic end to capitalism.” Either the capitalists will fall into violent conflicts over their inability to keep accumulating (it isn’t infinite after all) OR the workers will revolt because “capital’s share of national income would increase indefinitely.”
Yes capital must continue to accumulate to survive in Marx’s system, but there are natural limits— namely saturating the market both domestically and eventually world wide. It was these conditions that led to monopolization, colonialism, and imperialism and brought about the apocalyptic twentieth century in which the capitalists managed to set off, two world wars, ignite both the Russian and Chinese revolutions, destroy the lives of hundreds of millions of people and usher us into the present century in which they have instigated violent conflicts in Europe, Africa and Asia anyone of which could set off a more general war. The instability of capitalism is as great as it ever was and poverty is spreading everywhere (except mostly in those countries still maintaining communist governments). Therefore, Piketty’s conclusion that “Marx’s dark prophecy came no closer to being realized than Ricardo’s” is considerably premature— the game is still afoot.
This introduction has a strange reading, I think, of twentieth century history— it improves later in the book. He doesn’t see World One I as part of Marx’s Apocalypse but admits a communist revolution did break out in Russia “the most backward country in Europe.” However, “fortunately for their citizens” the advanced European countries “explored other, social democratic, avenues.” I don’t know how advanced Spain and Portugal were after the war (WWI) but I don’t think Franco or Salazar qualify as social democrats, nor do Hitler, Mussolini, or Pétain. By and large I don’t think the citizens of the “advanced” countries had a very fortunate century.
There are two other comments on Marx in this section which are unjustified. The first is that he “neglected the possibility of durable technological progress and steadily increasing productivity” as “counterweights to accumulation and concentration of private capital.” Marx did not “neglect” either technological progress or increased productivity but he saw them not as counterweights but as the results of the accumulation and concentration of capital.
The second unjustified comment is that Marx did not devote much time to speculating about how a post capitalist society would be structured. This is meant to be seen as a failing on Marx’s part but that would be an error. Marx did not think it a good use of his time to engage in utopian speculations on the future but he did study the example of the Paris Commune of 1871 and discussed the economic and political actions that would have to be undertaken in a post capitalist society (“The Civil War in France”) and his ideas were elaborated on later by both Engels and Lenin. There is a Marxist literature on this subject to which Piketty could have referred.
Piketty ends this section by saying Marx is still important to study and that his principle of “infinite accumulation” is still at work in the twenty-first century but not as “apocalyptic” as he thought. But this is faint praise and seems to miss the point of what accumulation is for Marx and why Marx is still important.
Piketty says too much accumulation of wealth when population and productivity growth rates are low can lead to social disequilibrium. But Marx isn’t talking about accumulation as too much private wealth. When Marx says “Accumulate, Accumulate! That is Moses and the prophets” [Capital I c. 24, section 3] He means that the wealth accumulated is to be reinvested in production because capital must expand itself continuously or perish. By reinvesting the capital people are put to work the economy expands and more accumulation is generated to do it all over again (until a crisis due to capitalism’s contradictions.) Marx is still important because this movement of capital is still going on and still creating crises (we are in one now) and the spectre haunting Europe has not been exorcized.
Part III of the this introduction will continue with Piketty’s section “From Marx to Kuznets, or Apocalypse to Fairy Tale.”
5. From Marx to Kuznets, or Apocalypse to Fairy Tale
As we have seen, Piketty rejects Marx's views about the future of capitalistic inequality, which he called "Apocalyptic", and in this section he will also reject the views of Simon Kuznets (1901-1985) which he finds too optimistic. Kuznets engaged in empirical studies and arrived at the view that as capitalism became more advanced income inequality would decrease-- on the principle (mis-attributed to President Kennedy) that "a rising tide lifts all boats."
Although Piketty does not accept Kuznets’ conclusions, he credits him with being the first to empirically utilize two sources of information which must be used in conjunction to be able to meaningfully study income inequality and its evolution__ i.e., growth of national income for a country and the distribution of that income to individuals. It was using such information that Kuznets arrived at his views regarding the decrease of inequality. The question is-- did the data reflect universal trends within advanced capitalism or just an historical fluke? If the latter then Kuznets’ theory was a "fairy tale"-- as Piketty suggests by this section title.
6. The Kuznets Curve: Good News in the Midst of the Cold War
In this section Piketty says that Kuznets admitted his statistical discovery of a decrease in inequality in the US (the period covered was 1913 to 1948) was “largely accidental.” In his 1953 book Shares of Upper Income Groups in Income and Savings he even admonished his readers not to jump to conclusions based on his data. But that is just what he did himself two years later in a famous lecture where he proposed a bell curve to explain the relation between capitalism and
inequality. As capitalism begins to develop inequality increases between the capitalists and the general population and peaks just as capitalism becomes mature and widespread, thereafter it begins to decline as the benefits of the capitalist system begin to be shared by all.
Even in this lecture Kuznets says his statistics reflect unique historical circumstances, but also suggests that, despite the historical specificity that shaped his curve, the inherent nature of the capitalist system itself would also work to produce the curve. This was simply cold war propaganda posing as science.
Piketty points out that in the lecture Kuznets told his audience (it was a speech to the American Economics Association) that he was giving an optimistic twist to his theory to, in his own words,” keep the Third World “within the orbit of the free world.”
Nevertheless, despite this lecture and other papers, Piketty says that Kuznets showed the true “scientific spirit” in his big 1953 book (the supposed first use of meaningful statistical analysis) even if the Kuznets curve is a fairy tale. It was the two world wars and the Great Depression that brought about a decrease in inequality not the inherent tendency of capitalism.
7. Putting the Distributional Question Back at the Heart of Economic Analysis
Piketty thinks the question about how wealth is distributed is important. He says there has been a big increase in economic inequality since the 1970s— in all the developed countries, but especially in the U.S. In the Third World it is possible that economic development may decrease inequality— especially the development of China. All of this, he says, is a cause “of deep anxiety.” He does not make clear why this should be so— whether it is the growth of inequality, the development of China, or both.
Also, markets that are supposed to exhibit “balanced growth” according to Kuznets and others ( real estate, oil and financial) are showing remarkable “disequilibrium.” Piketty asks who will be running the show in 2050 or 2100 (i.e., controlling the world as it were). He lists several possibilities, one of which is the Bank of China. I can see the origin of “anxiety.” The Bank of China is ultimately under the control of the Chinese Communist Party (it is state owned).
In any case, the distribution of wealth becomes, for Piketty, the most important area of study if we are to understand the growth of inequality. To determine this we must collect data on the economic history of many countries and forecast future developments by a scientific understanding of past and present trends.
8. The Sources Used in Piketty’s Book
Piketty says his work is basically an extension of the work begun by Kuznets in his study of the period 1913-1948 in the U.S. Kuznets’ statistical methods were extended to France, the contemporary U.S., and to other countries. But “the primary source of data” for the book comes from the World’s Top Incomes Database (WTID). [Google: The World’s Top Incomes Database]
Piketty says there are TWO components of income— from labor and from capital.
He says labor income consists of wages, salaries, bonuses, non-wage labor, and income “statutorily classified” as such [tips?]. Capital income consists of rent, interest, dividends, profits, royalties, capital gains, and “other income” from land, real estate, financial instruments, industrial equipment, etc. [!]. It is obvious that this is an un-Marxist way of treating income but Piketty can define his categories anyway he chooses since he is not a Marxist economist. We shall see later how useful, or not, his definitions are.
Piketty says his book “stands out” from those before it because he has “made an effort to collect as complete and consistent a set of historical sources as possible”
for the study of the distribution of income and wealth “over the long run.”
We will resume the fourth installment of this commentary on Piketty’s introduction with the 9th section :“The Major Result’s of Piketty’s Study.”
9. The Major Results of Piketty's Study
Piketty says his study has arrived at two major results. First, that economic determinism is not the answer to why we have inequality in wealth and income between people. But no economist worth his or her salt has ever been an economic determinist, so this is not a very startling conclusion.
Any Marxist would ready agree with this observation by Piketty (it is commonplace in the writings of Marx, Engels and Lenin): inequality results from the interplay and conflict of forces between people in the economic, political, and social institutions in which they find themselves and the relative power they have at their disposal to enforce their values and choices; inequality "is the joint product of all the relative actors combined." Marxists might be a little more concrete about who these actors are (classes and social strata) and what the power relations rest upon (ownership of the means of production, ability to create surplus value and such) but the first major result of Capital in the 21st Century echoes one of the major results of Capital in the 19th Century.
But, "the heart of the book" Piketty says, is his second major result. This is that there are major forces at work that push both towards increasing inequality (divergence) and decreasing inequality (convergence). I will call these D-forces and C-forces.
What is important, and will be rejected by all apologists of the Ann Rand version of laissez faire capitalist hokum (surely there are no intelligent Randists left after Greenspan's The Age of Turbulence) as well as mainstream bourgeois economists, is Piketty's findings that there is no internal mechanism within capitalism itself that can regulate and control the D-forces and prevent them from increasing "permanently."
Marxists would say the internal contradiction within capitalism between the C- and D-forces is certainly not permanent. Ultimately the build up of the pressure from the D-forces will explode the system (there cannot be infinite inequality). Piketty's language is not the language of Marxism, but in his own way he has restated, in the language of neoclassical economics, the objective reality of Marx's Apocalypse.
The D-forces are heading in that direction and Piketty wants to find a program that can bolster the strength of the C-forces and drag back the D-forces, if not to a stop, at least to a non-critical mass. This won't be done within the capitalist system qua capitalist so the energy required by the C-forces must come from outside. There's the rub.
The above states the main points of this section. However, Piketty mentions two theories which have been put forth to counter the D-forces from within the system without extraneous help for the C-forces. Both of these theories are logically possible but their practical implementation as a solution to growing inequality is "largely illusory" if the history of capitalism has anything to tell us about them. I will only mention them in passing as Piketty doesn't put much stock in them.
The first is the "human capital hypothesis." As technology advances workers need more and more skills and hence have to be paid more so capital will be transferred from the money bags to the working class increasing the C-forces and leading to greater democratic control of society. A pipe dream.
The second is that "class warfare" will be replaced by "generational warfare" because science is making people live longer. This type of "warfare" is more benign since all young people will end up old people (all workers won't end up capitalists on the class war model). Young people will begin saving up for old age so they will have enough to mitigate the effects of the D-forces. The young will be ants and not grasshoppers. Another pipe dream.
It says something about "economics," as taught in bourgeois educational establishments, that capitalism's existential threat (unsustainable D-force pressure) can produce solutions that amount to pipe dreams.
The real counter to the D-forces, Piketty says, as revealed by history has been "the diffusion of knowledge and skills." This "diffusion" must be an external factor independent of the capitalist system because Pitketty has said capitalism has no
internal mechanism to prevent run away D-forces, or if it is an internal factor then it cannot prevent the Marxist Apocalypse.
10. Forces of Convergence, Forces of Divergence
Piketty says that while the diffusion of knowledge and skills is the main source for the C-forces, it is nevertheless a fact that the D-forces can overcome it and increase in power. This is because the C-forces need to be reinforced by social policies that are not sufficiently built into the mechanism of capitalism to counter the the D-forces (which are built in) on their own.
Presently there are two major D-forces independently at work in the world economy. The threat, Piketty says, is that these two forces may merge and become unified thus creating a new and super powerful motor driving inequality. From what would this Super D-force be composed? From the current D1-force which is the ability of top-earners to “quickly separate themselves from the rest by a wide margin” and the current D2-force which is itself an amalgamation of forces that bring about “an accumulation and concentration of wealth when growth is weak and the return on capital is high.” The D2-force is the “principal threat’’ to income equality.
Piketty uses the example of the United States from 1910 to 2010 to show how the D1-force has been developing. What has happened is an explosion in the income of the top managers of the large capitalist enterprises that dominate the economy. Gigantic inequality gaps separate this capitalist elite from ordinary workers and citizens. Piketty says the most likely explanation of this inequality gap is the power these capitalists have of setting “their own remuneration” and to do so independently “of their individual productivity.”
This, by the way, this could never have come about in a properly functioning democratic society. It suggests that capitalism is incapable of creating such a society and that the problems of inequality cannot be solved within the parameters of such a society.
Bad as this D1-force is, it is the D2-force that Piketty considers the main threat to equality and the growth of the C-forces under capitalism. It is this second force that we will deal with in the next installment of “Piketty for Progressives.”
This posting will cover sections 11 and 12 in Piketty's introduction to Capital in the 21st Century.
11. The Fundamental Force for Divergence: r > g
This formula, r is greater than g, where r is the average annual rate of return on capital and g is the rate of annual economic growth “sums up the over all logic” of Piketty’s arguments regarding growing inequality under capitalism.
Piketty thinks the outlook for the 21st century is that r will be much greater than g and this means that inherited wealth will be greater than output or income. Under the rule of r > g it follows that people with wealth need save only a small fraction of their income and it will accumulate faster than the economy does thus increasing inequality. A real possibility exists that the increase in inequality will undermine the principles upon which bourgeois democracy is based. Billionaires, for example, could be able to sink so much money into elections and lobbying that they will basically control the electoral process and the government and people’s democratic rights will honored in name only if at all.
Piketty thinks that this scenario is a real possibility but it is not inevitable. Besides this powerful D-force there are also C-forces at work that could delay or even completely counteract it. He thinks, however, that the decrease of g in the coming decades is very likely.
His view is, he says, less “apocalyptic” than Marx’s view. But I think he mischaracterizes Marx’s outlook. He says Marx has a principle of “infinite accumulation and perpetual divergence” because he thinks g will be 0 due to 0 growth in productivity. Because of this there will be a revolution to overthrow capitalism (the Apocalypse). But this isn’t Marx’s view at all. His view, somewhat simplified, is that capitalism will eventually run out of markets due to a crisis of over production and will breakdown because it won’t have the profits needed to sustain itself.
Piketty says his theory of r > g has nothing to do with any “Imperfections” in the market. It is not inevitable but is a likely occurrence and we should be aware of it. He stresses that the “more perfect” the capital market the more likely is r > g. Does this imply that the “better” the capitalist system is the more inequality it will create? This would make it incompatible with any kind of democracy and logically implies that some sort of fascist anti-democratic state is its natural outcome.
Piketty thinks the capitalist state will have to intervene and manipulate the outcome of the “more perfect” capitalist market to counteract the negative effects of r > g. He suggests “a progressive global tax on capital.” He doesn’t think this will be a real world solution to the problem and whatever the different nation states end up doing will be “less effective.” Does this mean that, after all, in the real world r > g is actually unstoppable? Is the Apocalypse destined to be our fate?
12. The Geographical and Historical Boundaries of Piketty’s Study
The upshot of this section is, that while Piketty will use information from many areas of the world to bolster and develop his views, he will rely “primarily on the historical experience of the leading historical countries: the United States, Japan, Germany, France, and Great Britain.”
He thinks the UK and France are particularly important because they have the best economic records kept from the 19th century and they were the leading countries of the “first globalization” (1870-1914) of international trade and finance. This, by the way was the period analyzed by Lenin in his Imperialism: The Highest Stage of Capitalism. This first globalization was, Piketty says, “prodigiously inegalitarian.”
Piketty notes that the “first globalization,” is “in many ways similar” to the second one which has been going on “since the 1970s.” It is so similar that Lenin’s book on Imperialism is still largely relevant for understanding it. One of the weaknesses of Piketty’s book is that neither “Lenin” nor “Imperialism” appear in its index — a strange omission in a work trying to explain the origins of, and remedies for, inequality.
One of the similarities Piketty notes is the fact it was not until beginning of the 21st century that the leading imperialist countries attained the level of stock market capitalization vis a vis GDP as the UK and France had at the beginning of the 20th century.
He next explains why he spends so much time on France. The first reason is that it has records going all the way back to the late 1700’s. The second reason is he thinks France is more typical than the US and its future will more likely be what most states will experience rather than that of the US. This is because the US population went from 3 million in 1776 to 300 million today. That quantitative leap has had its qualitative accompaniment and the US “is no longer the same country it was.” France meanwhile has only doubled its population from 30 to 60 million over two hundred years not increased it a hundred fold. It is still basically the same country. Piketty doesn’t see the world population increasing 100 fold in the next two hundred years so French development is more likely representative to the future.
He means the trends in inequality seen in French history are more useful to predict future developments than are those seen in US history. This is another example of “American Exceptionalism" as the US experience “is in some sense not generalizable” and social class and inequality in the US are “so peculiar” when contrasted with other countries.
The third reason is that France is “interesting” because its revolution was more “bourgeois” than the English (1688) or the American (1776). The English kept their nobility and the Americans their slaves while the French actually established “ the ideal of legal equality [of men] in relation to the market.” This has important implications in discussing the growth and future development of inequality. Piketty also says that the concentration of wealth was the same in Britain as in France so even though the French had legal equality for all and the British did not this was not enough to “ensure equality of rights tout court.”
We will finish the introduction to Piketty's book in the next posting.
Piketty for Progressives (Part Six suite et fin)
14. The Theoretical and Conceptual Framework of Piketty’s Book
In this next to last section of his Introduction Piketty presents some autobiographical information that he thinks will be helpful in seeing how his views developed. This information is about his subjective emotional experiences and not at all on scientifically based views nevertheless, the information is interesting and helps to explain many of his attitudes. It is a section more about what he calls his “intellectual itinerary” than about theory, as we shall see.
He tells us he turned 18 in 1989 when the Berlin Wall fell and was part of that generation who listened to the news of the fall of the Communist dictatorships and who had no affection or nostalgia for any of them including the Soviet Union.
An older generation who remembered it was the Communists who ran the underground against the Nazi occupation of his country and the Soviet Union which basically single handedly defeated Hitler’s Germany and liberated most of Europe from Nazi control might have had a different reaction. But it is a characteristic of callow youth to have no historical memory. He was, at 18, he says, “vaccinated for life against the conventional but lazy rhetoric of anticapitalism….” The disease infecting young minds in Paris at the time, however, was anticommunism not anticapitalism and it appears the young Piketty got the wrong inoculation.
Piketty is a firm believer in bourgeois democracy and supports a social order based on democratic debate which will provide equal justice to all under the rule of law. He appears innocent of the struggle based on class conflict aimed at ending the exploitation of working people resulting from the expropriation of their surplus labor power by a class of social parasites which has control over the means of production and distribution. This accounts for the popularity of his book.
At the age of 22 he had a decisive experience. Having just been awarded his PhD he got a job at MIT and, as he puts it ,“I experienced the American dream.” This was extremely fortunate for him because as an economist he must be aware that the majority of Americans never get to experience the ‘’American dream’’ (except as a dream).
The dream, however, wore off and by age 25 he knew he wanted to go back to France. One of the reasons he left was he was not convinced by the work of US economists and he realized, despite his early successes that he “knew nothing at all about the world’s economic problems.” Economists didn’t seem to have much interest in history and turned out theories without realizing what facts had to be explained.
Piketty thought that the field was still addicted to a childish fascination with mathematical models which created the illusion of science without its substance due to the lack of proper historical research and contextualization of factual material. Piketty decided he wanted to do research and discover the data that was necessary in order to do mature scientific work in economics.
It seems that American economists and French economists share a tendency to think they are being scientists while in fact “they know almost nothing about anything.” This doesn’t seem to bother American economists but it does the French and as a result they have made great efforts to communicate and collaborate with other disciplines— sociology, anthropology, history, political science, perhaps even (shudder) philosophy.
The fact is that Piketty thinks economics “should never have sought to divorce itself from the other social sciences and can advance only in conjunction with them.” His book is an attempt to advance this cause and he considers it just as much a history book as one on economics. He tells us that anyone, with a little effort, will be able to understand his book (there is minimal jargon) and come away with a clear understanding of the historical developments that form the background to his theories on the growth of income and inequality in the modern world.
The last section of the Introduction deals with the
Outline of the Book
Piketty’s book is organized as follows:
Introduction [covered by this series of articles]
Part One— two chapters to go over basic ideas to be used later in the book.
Part Two— four chapters on the future of the capital/income ratio and the division between nations of the future income between labor and capital.
Part Three— six chapters on the structures of inequality both within and between nations and the future possibilities of wealth distribution internationally over the next few decades.
Part Four— four chapters on conclusions and policy suggestions on how to handle the problems of income inequality.
Piketty admits, and shows, that all the subjects that he is writing about are basically "deeply unpredictable.” Not a good inducement to spend a lot of time going over these four parts. He also tells us that “ history always invents its own pathways” and that the “usefulness” of the lessons he has drawn from his research “remains to be seen.”
Finally there is a conclusion in which Piketty sums up his position, decides that Marxism is old hat, and advocates for a more robust democracy “if we are ever to regain control over capitalism.”
There is no doubt that inequality and exploitation is increasing. There is an historically, I believe, tried and true explanation of these phenomena and a solution to the the human misery they cause. It is be found in the works of Karl Marx and his followers who have studied the capitalism of the past and present and have demonstrated that the system cannot reform itself sufficiently to ward off existential disaster and must be replaced by a socialist order.
Piketty, as well as other establishment economists who think capitalism can solve its own problems within the system, will continue to put forth alternative explanations opposed to those of the Marxist economists. Whether these alternatives are mere fads of the moment or useful counter-theories, indeed, remains to be seen.
Friday, April 24, 2015
Kissinger and Shultz on 'The Iran Deal'
For our edification The Wall Street Journal on 8 April turned over an entire editorial page to former secretaries of state Henry Kissinger and George Shultz so that we could understand why President Obama's negotiations with Iran over nuclear issues "will reinforce, not resolve, the world's challenges in the region." Let's take a look at what these two nonagenarians (who served under Nixon and Reagan respectively) present as the reasons for their prediction.
We can ignore the first half of their article which consists of nothing more than pointing out the difficulties involved, should an agreement be reached, in inspecting and monitoring Iran's nuclear facilities. The subtext of this portion of the article is that the U.S. is naive and trusting and the Iranians are crafty and untrustworthy and are likely to cheat and cover up their bomb making progress. "In a large country with multiple facilities and ample experience in nuclear concealment, violations will be inherently difficult to detect." But what is the point of even entering into negotiations if your starting position is that the other side is dishonest and won't negotiate in good faith?
The whole point of making a deal with Iran is to diffuse a dangerous and unstable situation and prevent a military confrontation over that country's ability to be a nuclear armed regional military threat. It is not just the US who wants to make a deal with Iran. There are six world powers involved-- the so called P5 + 1 (i.e., the five permanent members of the U.N. Security Council plus Germany). So let's not just focus on the U.S. and President Obama as our establishment media and the Republican - Israeli lobby alliance tend to do. It is not rational to think that the combined diplomatic corps of the P5 + 1 (no matter how bumbling the U.S. may be) can be bamboozled by the crafty Ayatollahs.
We will now turn to the second half of the article where we will find the really substantive arguments against the Iranian deal as it now appears to be shaping up based on the much ballyhooed "Framework Agreement" announced on 2 April.
In analyzing this section of the Kissinger/Shultz paper it becomes clear that their only reason for thinking the deal with Iran won’t really work is that the Iranians will not agree to submit to U.S. hegemony in the region. There is no compromise position available in which the U.S. and Iran can give and take in such a way that both sides can have their interests protected. It is the U.S. way or the highway. Even though the negotiations are with the P5 + 1, Kissinger/Shultz completely ignore two of the P5 (Russia and China) and carry on as if only Iran and the West are involved, and by “the West” they mean “the U.S.”
The negotiations will only work if both sides cooperate to bring stability to the Middle East as well as resolve the nuclear issues and this requires “congruent definitions of stability.” Messrs. Kissinger and Shultz write, “There exists no current evidence that Iran and the U.S. are remotely near such an understanding.” I think Israel and the West Bank and Gaza is a good example.
The U.S. supplied Israel with both weapons and political support during its military assault on Gaza last year and Israel succeeded, for the time being, in establishing “stability” with regards to its occupation of Palestinian territories. Can we realistically expect that Iran, a supporter of Palestinian rights, will accept this kind of “stability” and adopt “congruent” positions with the U.S. vis a vis Israel and the Palestinians? In fact the US position is not even “congruent” with other members of the P5 + 1. In this, and many other issues, the fact is that the positions of the U.S. are realistically untenable, rest on aggressive, hegemonic behavior, and are the main causes of instability in the region.
It is objectively the case that it has been and is U.S. actions that have destabilized Iraq, Afghanistan, Libya, Yemen, areas of Pakistan, worsens and prolongs the civil war in Syria, supported military dictatorship in Egypt, enables Israel to perpetuate the oppression and occupation of Palestine, and created the conditions that brought forth the Islamic State. So we must agree with Kissinger and Shultz that there are no “congruent definitions of stability” upon which the U.S. and Iran can cooperate.
The U.S., due to deep ignorance of the cultures and the peoples of the Middle East (as elsewhere) combined with the fact that its policies are totally focused on the economic interests of its multinational corporations and their extensions and allies with little or no regard for the interests and rights of the local populations, is incapable of providing security and stability for the region. The best expression of this incapacity is demonstrated by the ignorant and unrealistic discussion presented by Kissinger and Shultz in their Wall Street Journal article.
Both men are former Republican U.S. secretaries of state and the best they can come up with to explain the present problems in the region is that Iran (the victim of a C.I.A. directed coup against their democratic government in the 1950s and the installation of the tyrannical government of the Shah, as well as the overt support of a war against it launched by Iraq under Saddam Hussein, when he was our S.O.B., in the 1980s) is trying to create “a new Shiite empire.”
They oppose the Obama administration’s supposed desire to militarily disengage
in the region (no boots on the ground—maybe) which will leave the Sunni states at a disadvantage— especially our ally Saudi Arabia (a medieval tyranny second only to the Islamic State [ISIS] whose religious fanaticism it largely shares). They maintain that the region cannot become stable on its own (due to Sunni/Shiite rivalry). Therefore, since, according to the doctrine of “balance of power” theory of international relations which “suggests the need to bolster the weaker side” the U.S. has to remain engaged in the area and help out the Sunnis. But if either one of these so-called experts really believed in “bolstering the weaker side” to maintain stability they would also be advocating for the U.S. to support the Palestinians not the Israeli Zionists.
As far as the problems in the Middle East are concerned, the article implies, the U.S. has clean hands. It is all the fault of Iran. “Stability requires an active American role. For Iran to be a valuable member of the international community, the prerequisite is that it accepts restraint on its ability to destabilize the Middle East and challenge the broader international order.” In other words, it must comply with the diktat of the U.S.
If the deal with Iran being negotiated with the P5 + 1 does not go far enough in making the Iranians come to heel to the demands of the neoconservatives in the U.S. and Israel, and the Framework Agreement indicates that it won’t, then the U.S. will likely become even more involved in the area in the future according to the authors of The Wall Street Journal article.
The only conclusion that can be reached, in my view, after reading this article, is that neither Kissinger nor Shultz know what they are talking about and the sole purpose of the article is to give aid and comfort to the enemies of peace in the Middle East and to strengthen politically those forces backing U.S. imperial domination of the region.