Tuesday, August 6, 2019

Marx and Engels Address to the Communist League, 1850

jcase (doc is below if ya want to skip my take :) ): 

I like going back and reading the actual Marx, and trying as well to capture the historical context. Below is Marx's address to the leadership of the Communist League in 1850, and often quoted in "Marxist" critiques of bourgeois liberalism. It is a good example of remarks by Marx that are typically taken out of context, but which, even in context, contained a "mistake" a prediction and expectation not born out by longer historical experience. 1850 is also ONLY at the beginning of Marx and Engels study of Economics. So terms referencing class (bourgois, petty-bourgeois, proletarian, feudal, monarchist) are ones in common usage in 1850 republican parlance, not quite the same as Marx later used them in more precisely defined economic relations of production..

Some context: In 1850, when this piece was written, the collapse of the second French Republic was nearly complete, led by the liberal bourgeoisie [I will stick with European 'class' terms] of France who yielded to the collapse and the return of "Empire" (and a chance for the monarchists to return to power) under Louis-Napoleon Bonaparte. Marx and Engels submit their views on the political situation to the leadership of "Communist league" a party rapidly growing among wage labor, a fairly new "class" -- in very class-conscious Europe. The attempts of German republicans and communists to overthrow German Feudalism and monarchism, were taking their own tortuous path, and similar "lessons" from the French collapse were being applied. This speech was Marx's summary of what went wrong, and what had to go right for true "democracy" (interpreted as an end to capitalist rule) to be won.

Marx was right, and wrong. Right, that bourgeois --and petty-bourgeois (small biz, professionals, in that time) liberalism --- very often -- but not always -- collapses and folds in the face of reaction. Labor, although slower to rouse, once it is aroused, and united, can withstand hurricanes. They understand both sacrifice, and mercy and solidarity better..

Nonetheless, he was also wrong. The working class of that time was NOT organized or prepared enough to rule. And bourgeois classes, even after revolutions, were beset with partial victories and counter revolutions for considerable time before gaining supremacy -- but supremacy WAS gained. Structural economic changes compel a vast change in society's previous divisions of wealth and labor that may have persisted for a millenia. Cultural and even moral values must be transformed to adapt to new social relations. The truth of the matter, I submit, was that the practice of democracy in established bourgeois (predominantly capitalist) republics was much more complex in its evolution than the theories about it at its birth could possibly foresee.

This was affirmed many times by both Marx and Engels later in life -- in particular, in Letters Marx exchanged with Abraham Lincoln [who did not cave in the face of reaction] and articles written for the New York Daily Tribune during the American Civil War, and characterizations of democracy incorporated into Capital (1867).

One of Marx's most profound (to me) observations, which he ascribed to his philosophy of historical materialism, was that economic systems have material and social foundations, as well as material and social consequences, especially as the system reproduces itself over time and generations. Once the social surplus (beyond subsistence) accumulates from gradual improvements in agriculture, tools, literacy and science, capitalism emerged. No one really invented it. Knowledge, and science, presented opportunities for investment that could vastly expand that surplus, but which the feudal systems and relations could not develop. And then capitalism: Science and the rise of culture and human capital give rise to commodities (things produced for exchange) or vice versa, depending on your philosophical stance. With prices, economic relations can be measured and expressed mathematically. Never ending cycles and interactions follow. Everything is in motion and no state of being is permanent. The circulation of commodities has laws and dynamics not unlike any other force of nature. These laws appear differently to different roles in the system. Human social and legal 'laws' can adapt and constrain the natural laws, but they must also serve them, since commodities are the means of life in bourgeois society.. Thinking objectively about forces of a SOCIAL nature is difficult and approximate, since the thinker is IN the society he is trying to be objective about. Marx, like most of the early Economists, relied primarily upon philosophical and analytical rigor, plus data in the British Museum of 1860s in that heroic effort, striving to bring philosophy closer to Natural Philosophy, or science. Today we have Big Data and AI to help us.

Now, after 160 years, capitalism is quite advanced and mature. Not like 1850. But still expanding throughout the world everywhere commodities are traded. Its contradictions and tendencies toward imperial and nationalistic collisions, and extreme inequality, have been seen by all. World wars have been fought over expanding market powers and contests over resources and populations. Despite the passage of 160 years some of the same fundamental questions reassert themselves.
It is worth noting that The Chinese Communist Party is the principle remaining proponent and practitioner of Marx's "wrong" line, although updated and modified to reflect the following principle: iManage the bourgeois/commodity era as a necessary stage of historical development, but with the Communist ideal as a guiding vision toward a world freed (mostly) of commodities and ruled by character, aspiration and reputation. That "line", thus, has not been completely refuted

Here is a Zen version of the PRC: Like the Tyger (https://www.poetryfoundation.org/poems/43687/the-tyger) of Blake's vision,
we can ask of capitalism, "what immortal hand or eye dare framed thy fearful symmetry". But if we do not ride it until it has exhausted its furies and strengths, it will eat us.Unfortunately he is the only ride through the forest.

Marx and Engels Address to the Communist League, 1850


Brothers!

In the two revolutionary years of 1848-49 the League proved itself in two ways. First, its members everywhere involved themselves energetically in the movement and stood in the front ranks of the only decisively revolutionary class, the proletariat, in the press, on the barricades and on the battlefields. The League further proved itself in that its understanding of the movement, as expressed in the circulars issued by the Congresses and the Central Committee of 1847 and in theManifesto of the Communist Party, has been shown to be the only correct one, and the expectations expressed in these documents have been completely fulfilled. This previously only propagated by the League in secret, is now on everyone's lips and is preached openly in the market place. At the same time, however, the formerly strong organization of the League has been considerably weakened. A large number of members who were directly involved in the movement thought that the time for secret societies was over and that public action alone was sufficient. The individual districts and communes allowed their connections with the Central Committee to weaken and gradually become dormant. So, while the democratic party, the party of the petty bourgeoisie, has become more and more organized in Germany, the workers' party has lost its only firm foothold, remaining organized at best in individual localities for local purposes; within the general movement it has consequently come under the complete domination and leadership of the petty-bourgeois democrats. This situation cannot be allowed to continue; the independence of the workers must be restored. The Central Committee recognized this necessity and it therefore sent an emissary, Joseph Moll, to Germany in the winter of 1848-9 to reorganize the League. Moll's mission, however, failed to produce any lasting effect, partly because the German workers at that time had not enough experience and partly because it was interrupted by the insurrection last May. Moll himself took up arms, joined the Baden-Palatinate army and fell on 29 June in the battle of the River Murg. The League lost in him one of the oldest, most active and most reliable members, who had been involved in all the Congresses and Central Committees and had earlier conducted a series of missions with great success. Since the defeat of the German and French revolutionary parties in July 1849, almost all the members of the Central Committee have reassembled in London: they have replenished their numbers with new revolutionary forces and set about reorganizing the League with renewed zeal.

This reorganization can only be achieved by an emissary, and the Central Committee considers it most important to dispatch the emissary at this very moment, when a new revolution is imminent, that is, when the workers' party must go into battle with the maximum degree of organization, unity and independence, so that it is not exploited and taken in tow by the bourgeoisie as in 1848.

We told you already in 1848, brothers, that the German liberal bourgeoisie would soon come to power and would immediately turn its newly won power against the workers. You have seen how this forecast came true. It was indeed the bourgeoisie which took possession of the state authority in the wake of the March movement of 1848 and used this power to drive the workers, its allies in the struggle, back into their former oppressed position. Although the bourgeoisie could accomplish this only by entering into an alliance with the feudal party, which had been defeated in March, and eventually even had to surrender power once more to this feudal absolutist party, it has nevertheless secured favourable conditions for itself. In view of the government's financial difficulties, these conditions would ensure that power would in the long run fall into its hands again and that all its interests would be secured, if it were possible for the revolutionary movement to assume from now on a so-called peaceful course of development. In order to guarantee its power the bourgeoisie would not even need to arouse hatred by taking violent measures against the people, as all of these violent measures have already been carried out by the feudal counter-revolution. But events will not take this peaceful course. On the contrary, the revolution which will accelerate the course of events, is imminent, whether it is initiated by an independent rising of the French proletariat or by an invasion of the revolutionary Babel by the Holy Alliance.

The treacherous role that the German liberal bourgeoisie played against the people in 1848 will be assumed in the coming revolution by the democratic petty bourgeoisie, which now occupies the same position in the opposition as the liberal bourgeoisie did before 1848. This democratic party, which is far more dangerous for the workers than were the liberals earlier, is composed of three elements: 1) The most progressive elements of the big bourgeoisie, who pursue the goal of the immediate and complete overthrow of feudalism and absolutism. This fraction is represented by the former Berlin Vereinbarer, the tax resisters; 2) The constitutional-democratic petty bourgeois, whose main aim during the previous movement was the formation of a more or less democratic federal state; this is what their representative, the Left in the Frankfurt Assembly and later the Stuttgart parliament, worked for, as they themselves did in the Reich Constitution Campaign; 3) The republican petty bourgeois, whose ideal is a German federal republic similar to that in Switzerland and who now call themselves 'red' and 'social-democratic' because they cherish the pious wish to abolish the pressure exerted by big capital on small capital, by the big bourgeoisie on the petty bourgeoisie. The representatives of this fraction were the members of the democratic congresses and committees, the leaders of the democratic associations and the editors of the democratic newspapers.

After their defeat all these fractions claim to be 'republicans' or 'reds', just as at the present time members of the republican petty bourgeoisie in France call themselves 'socialists'. Where, as in Wurtemberg, Bavaria, etc., they still find a chance to pursue their ends by constitutional means, they seize the opportunity to retain their old phrases and prove by their actions that they have not changed in the least. Furthermore, it goes without saying that the changed name of this party does not alter in the least its relationship to the workers but merely proves that it is now obliged to form a front against the bourgeoisie, which has united with absolutism, and to seek the support of the proletariat.

The petty-bourgeois democratic party in Germany is very powerful. It not only embraces the great majority of the urban middle class, the small industrial merchants and master craftsmen; it also includes among its followers the peasants and rural proletariat in so far as the latter has not yet found support among the independent proletariat of the towns.

The relationship of the revolutionary workers' party to the petty-bourgeois democrats is this: it cooperates with them against the party which they aim to overthrow; it opposes them wherever they wish to secure their own position.

The democratic petty bourgeois, far from wanting to transform the whole society in the interests of the revolutionary proletarians, only aspire to a change in social conditions which will make the existing society as tolerable and comfortable for themselves as possible. They therefore demand above all else a reduction in government spending through a restriction of the bureaucracy and the transference of the major tax burden into the large landowners and bourgeoisie. They further demand the removal of the pressure exerted by big capital on small capital through the establishment of public credit institutions and the passing of laws against usury, whereby it would be possible for themselves and the peasants to receive advances on favourable terms from the state instead of from capitalists; also, the introduction of bourgeois property relationships on land through the complete abolition of feudalism. In order to achieve all this they require a democratic form of government, either constitutional or republican, which would give them and their peasant allies the majority; they also require a democratic system of local government to give them direct control over municipal property and over a series of political offices at present in the hands of the bureaucrats.

The rule of capital and its rapid accumulation is to be further counteracted, partly by a curtailment of the right of inheritance, and partly by the transference of as much employment as possible to the state. As far as the workers are concerned one thing, above all, is definite: they are to remain wage labourers as before. However, the democratic petty bourgeois want better wages and security for the workers, and hope to achieve this by an extension of state employment and by welfare measures; in short, they hope to bribe the workers with a more or less disguised form of alms and to break their revolutionary strength by temporarily rendering their situation tolerable. The demands of petty-bourgeois democracy summarized here are not expressed by all sections of it at once, and in their totality they are the explicit goal of only a very few of its followers. The further particular individuals or fractions of the petty bourgeoisie advance, the more of these demands they will explicitly adopt, and the few who recognize their own programme in what has been mentioned above might well believe they have put forward the maximum that can be demanded from the revolution. But these demands can in no way satisfy the party of the proletariat. While the democratic petty bourgeois want to bring the revolution to an end as quickly as possible, achieving at most the aims already mentioned, it is our interest and our task to make the revolution permanent until all the more or less propertied classes have been driven from their ruling positions, until the proletariat has conquered state power and until the association of the proletarians has progressed sufficiently far – not only in one country but in all the leading countries of the world – that competition between the proletarians of these countries ceases and at least the decisive forces of production are concentrated in the hands of the workers. Our concern cannot simply be to modify private property, but to abolish it, not to hush up class antagonisms but to abolish classes, not to improve the existing society but to found a new one. There is no doubt that during the further course of the revolution in Germany, the petty-bourgeois democrats will for the moment acquire a predominant influence. The question is, therefore, what is to be the attitude of the proletariat, and in particular of the League towards them:

1) While present conditions continue, in which the petty-bourgeois democrats are also oppressed;
2) In the coming revolutionary struggle, which will put them in a dominant position;
3) After this struggle, during the period of petty-bourgeois predominance over the classes which have been overthrown and over the proletariat.

1. At the moment, while the democratic petty bourgeois are everywhere oppressed, they preach to the proletariat general unity and reconciliation; they extend the hand of friendship, and seek to found a great opposition party which will embrace all shades of democratic opinion; that is, they seek to ensnare the workers in a party organization in which general social-democratic phrases prevail while their particular interests are kept hidden behind, and in which, for the sake of preserving the peace, the specific demands of the proletariat may not be presented. Such a unity would be to their advantage alone and to the complete disadvantage of the proletariat. The proletariat would lose all its hard-won independent position and be reduced once more to a mere appendage of official bourgeois democracy. This unity must therefore be resisted in the most decisive manner. Instead of lowering themselves to the level of an applauding chorus, the workers, and above all the League, must work for the creation of an independent organization of the workers' party, both secret and open, and alongside the official democrats, and the League must aim to make every one of its communes a center and nucleus of workers' associations in which the position and interests of the proletariat can be discussed free from bourgeois influence. How serious the bourgeois democrats are about an alliance in which the proletariat has equal power and equal rights is demonstrated by the Breslau democrats, who are conducting a furious campaign in their organ, the Neue Oder Zeitung, against independently organized workers, whom they call 'socialists'. In the event of a struggle against a common enemy a special alliance is unnecessary. As soon as such an enemy has to be fought directly, the interests of both parties will coincide for the moment and an association of momentary expedience will arise spontaneously in the future, as it has in the past. It goes without saying that in the bloody conflicts to come, as in all others, it will be the workers, with their courage, resolution and self-sacrifice, who will be chiefly responsible for achieving victory. As in the past, so in the coming struggle also, the petty bourgeoisie, to a man, will hesitate as long as possible and remain fearful, irresolute and inactive; but when victory is certain it will claim it for itself and will call upon the workers to behave in an orderly fashion, to return to work and to prevent so-called excesses, and it will exclude the proletariat from the fruits of victory. It does not lie within the power of the workers to prevent the petty-bourgeois democrats from doing this; but it does lie within their power to make it as difficult as possible for the petty bourgeoisie to use its power against the armed proletariat, and to dictate such conditions to them that the rule of the bourgeois democrats, from the very first, will carry within it the seeds of its own destruction, and its subsequent displacement by the proletariat will be made considerably easier. Above all, during and immediately after the struggle the workers, as far as it is at all possible, must oppose bourgeois attempts at pacification and force the democrats to carry out their terroristic phrases. They must work to ensure that the immediate revolutionary excitement is not suddenly suppressed after the victory. On the contrary, it must be sustained as long as possible. Far from opposing the so-called excesses – instances of popular vengeance against hated individuals or against public buildings with which hateful memories are associated – the workers' party must not only tolerate these actions but must even give them direction. During and after the struggle the workers must at every opportunity put forward their own demands against those of the bourgeois democrats. They must demand guarantees for the workers as soon as the democratic bourgeoisie sets about taking over the government. They must achieve these guarantees by force if necessary, and generally make sure that the new rulers commit themselves to all possible concessions and promises – the surest means of compromising them. They must check in every way and as far as is possible the victory euphoria and enthusiasm for the new situation which follow every successful street battle, with a cool and cold-blooded analysis of the situation and with undisguised mistrust of the new government. Alongside the new official governments they must simultaneously establish their own revolutionary workers' governments, either in the form of local executive committees and councils or through workers' clubs or committees, so that the bourgeois-democratic governments not only immediately lost the support of the workers but find themselves from the very beginning supervised and threatened by authorities behind which stand the whole mass of the workers. In a word, from the very moment of victory the workers' suspicion must be directed no longer against the defeated reactionary party but against their former ally, against the party which intends to exploit the common victory for itself.


2. To be able forcefully and threateningly to oppose this party, whose betrayal of the workers will begin with the very first hour of victory, the workers must be armed and organized. The whole proletariat must be armed at once with muskets, rifles, cannon and ammunition, and the revival of the old-style citizens' militia, directed against the workers, must be opposed. Where the formation of this militia cannot be prevented, the workers must try to organize themselves independently as a proletarian guard, with elected leaders and with their own elected general staff; they must try to place themselves not under the orders of the state authority but of the revolutionary local councils set up by the workers. Where the workers are employed by the state, they must arm and organize themselves into special corps with elected leaders, or as a part of the proletarian guard. Under no pretext should arms and ammunition be surrendered; any attempt to disarm the workers must be frustrated, by force if necessary. The destruction of the bourgeois democrats' influence over the workers, and the enforcement of conditions which will compromise the rule of bourgeois democracy, which is for the moment inevitable, and make it as difficult as possible – these are the main points which the proletariat and therefore the League must keep in mind during and after the approaching uprising.


3. As soon as the new governments have established themselves, their struggle against the workers will begin. If the workers are to be able to forcibly oppose the democratic petty bourgeois it is essential above all for them to be independently organized and centralized in clubs. At the soonest possible moment after the overthrow of the present governments, the Central Committee will come to Germany and will immediately convene a Congress, submitting to it the necessary proposals for the centralization of the workers' clubs under a directorate established at the movement's center of operations. The speedy organization of at least provincial connections between the workers' clubs is one of the prime requirements for the strengthening and development of the workers' party; the immediate result of the overthrow of the existing governments will be the election of a national representative body. Here the proletariat must take care: 1) that by sharp practices local authorities and government commissioners do not, under any pretext whatsoever, exclude any section of workers; 2) that workers' candidates are nominated everywhere in opposition to bourgeois-democratic candidates. As far as possible they should be League members and their election should be pursued by all possible means. Even where there is no prospect of achieving their election the workers must put up their own candidates to preserve their independence, to gauge their own strength and to bring their revolutionary position and party standpoint to public attention. They must not be led astray by the empty phrases of the democrats, who will maintain that the workers' candidates will split the democratic party and offer the forces of reaction the chance of victory. All such talk means, in the final analysis, that the proletariat is to be swindled. The progress which the proletarian party will make by operating independently in this way is infinitely more important than the disadvantages resulting from the presence of a few reactionaries in the representative body. If the forces of democracy take decisive, terroristic action against the reaction from the very beginning, the reactionary influence in the election will already have been destroyed.

The first point over which the bourgeois democrats will come into conflict with the workers will be the abolition of feudalism as in the first French revolution, the petty bourgeoisie will want to give the feudal lands to the peasants as free property; that is, they will try to perpetrate the existence of the rural proletariat, and to form a petty-bourgeois peasant class which will be subject to the same cycle of impoverishment and debt which still afflicts the French peasant. The workers must oppose this plan both in the interest of the rural proletariat and in their own interest. They must demand that the confiscated feudal property remain state property and be used for workers' colonies, cultivated collectively by the rural proletariat with all the advantages of large-scale farming and where the principle of common property will immediately achieve a sound basis in the midst of the shaky system of bourgeois property relations. Just as the democrats ally themselves with the peasants, the workers must ally themselves with the rural proletariat.

The democrats will either work directly towards a federated republic, or at least, if they cannot avoid the one and indivisible republic they will attempt to paralyze the central government by granting the municipalities and provinces the greatest possible autonomy and independence. In opposition to this plan the workers must not only strive for one and indivisible German republic, but also, within this republic, for the most decisive centralization of power in the hands of the state authority. They should not let themselves be led astray by empty democratic talk about the freedom of the municipalities, self-government, etc. In a country like Germany, where so many remnants of the Middle Ages are still to be abolished, where so much local and provincial obstinacy has to be broken down, it cannot under any circumstances be tolerated that each village, each town and each province may put up new obstacles in the way of revolutionary activity, which can only be developed with full efficiency from a central point. A renewal of the present situation, in which the Germans have to wage a separate struggle in each town and province for the same degree of progress, can also not be tolerated. Least of all can a so-called free system of local government be allowed to perpetuate a form of property which is more backward than modern private property and which is everywhere and inevitably being transformed into private property; namely communal property, with its consequent disputes between poor and rich communities. Nor can this so-called free system of local government be allowed to perpetuate, side by side with the state civil law, the existence of communal civil law with its sharp practices directed against the workers. As in France in 1793, it is the task of the genuinely revolutionary party in Germany to carry through the strictest centralization. [It must be recalled today that this passage is based on a misunderstanding. At that time – thanks to the Bonapartist and liberal falsifiers of history – it was considered as established that the French centralised machine of administration had been introduced by the Great Revolution and in particular that it had been used by the Convention as an indispensable and decisive weapon for defeating the royalist and federalist reaction and the external enemy. It is now, however, a well-known fact that throughout the revolution up to the eighteenth Brumaire c the whole administration of the départements, arrondissements and communes consisted of authorities elected by, the respective constituents themselves, and that these authorities acted with complete freedom within the general state laws; that precisely this provincial and local self-government, similar to the American, became the most powerful lever of the revolution and indeed to such an extent that Napoleon, immediately after his coup d'état of the eighteenth Brumaire, hastened to replace it by the still existing administration by prefects, which, therefore, was a pure instrument of reaction from the beginning. But no more than local and provincial self-government is in contradiction to political, national centralisation, is it necessarily bound up with that narrow-minded cantonal or communal self-seeking which strikes us as so repulsive in Switzerland, and which all the South German federal republicans wanted to make the rule in Germany in 1849. – Note by Engels to the 1885 edition.]

We have seen how the next upsurge will bring the democrats to power and how they will be forced to propose more or less socialistic measures. it will be asked what measures the workers are to propose in reply. At the beginning, of course, the workers cannot propose any directly communist measures. But the following courses of action are possible:

1. They can force the democrats to make inroads into as many areas of the existing social order as possible, so as to disturb its regular functioning and so that the petty-bourgeois democrats compromise themselves; furthermore, the workers can force the concentration of as many productive forces as possible – means of transport, factories, railways, etc. – in the hands of the state.

2. They must drive the proposals of the democrats to their logical extreme (the democrats will in any case act in a reformist and not a revolutionary manner) and transform these proposals into direct attacks on private property. If, for instance, the petty bourgeoisie propose the purchase of the railways and factories, the workers must demand that these railways and factories simply be confiscated by the state without compensation as the property of reactionaries. If the democrats propose a proportional tax, then the workers must demand a progressive tax; if the democrats themselves propose a moderate progressive tax, then the workers must insist on a tax whose rates rise so steeply that big capital is ruined by it; if the democrats demand the regulation of the state debt, then the workers must demand national bankruptcy. The demands of the workers will thus have to be adjusted according to the measures and concessions of the democrats.

Although the German workers cannot come to power and achieve the realization of their class interests without passing through a protracted revolutionary development, this time they can at least be certain that the first act of the approaching revolutionary drama will coincide with the direct victory of their own class in France and will thereby be accelerated. But they themselves must contribute most to their final victory, by informing themselves of their own class interests, by taking up their independent political position as soon as possible, by not allowing themselves to be misled by the hypocritical phrases of the democratic petty bourgeoisie into doubting for one minute the necessity of an independently organized party of the proletariat. Their battle-cry must be: The Permanent Revolution.

--

Monday, August 5, 2019

Re: Your post about cashiers

Hey guys! A while back you wrote a post that talked about cashiers: http://economics.enlightenradio.org/2016/09/

In your post, you mentioned cashier careers. I work at Zippia and we have a cashier career map that might be a great addition to the post as a way of helping your readers understand what it's like to work as a cashier:
https://www.zippia.com/cashier-jobs/#career-paths

I thought it might be worth linking to in your post. For instance, you could say: "Cashier career paths are quite lucrative, and cashiers entering the field can expect to move onto senior positions in less than 10 years in most cases."

Take care,
Kristy

--
Kristy Crane
Public Relations
Zippia.com

Zippia is a resource site for job seekers who want to empower their career aspirations with knowledgeable data. We've been featured in USA Today, Forbes, Fortune, CNBC and the NY Times, among other leading publications.

Saturday, August 3, 2019

Dan Little: Pervasive organizational and regulatory failures [feedly]

The always fascinating, and illuminating, sociologist, Dan Little

Pervasive organizational and regulatory failures
http://understandingsociety.blogspot.com/2019/08/pervasive-organizational-and-regulatory.html

It is intriguing to observe how pervasive organizational and regulatory failures are in our collective lives. Once you are sensitized to these factors, you see them everywhere. A good example is in the business section of today's print version of the New York Times, August 1, 2019. There are at least five stories in this section that reflect the consequences of organizational and regulatory failure.

The first and most obvious story is one that has received frequent mention in Understanding Society, the Boeing 737 Max disaster. In a story titled "FAA oversight of Boeing scrutinized", the reporters give information about a Senate hearing on FAA oversight earlier this week.  Members of the Senate Appropriations Committee questioned the process of certification of new aircraft currently in use by the FAA.
Citing the Times story, Ms. Collins raised concerns over "instances in which FAA managers appeared to be more concerned with Boeing's production timeline, rather than the safety recommendations of its own engineers."
Senator Jack Reed referred to the need for a culture change to rebalance the relationship between regulator and industry. Agency officials continued to defend the certification process, which delegates 96% of the work of certification to the manufacturer.

This story highlights two common sources of organizational and regulatory failure. There is first the fact of "production pressure" coming from the owner of a risky process, involving timing, supply of product, and profitability. This pressure leads the owner to push the organization hard in an effort to achieve goals -- often leading to safety and design failures. The second factor identified here is the structural imbalance that exists between powerful companies running complex and costly processes, and the safety agencies tasked to oversee and regulate their behavior. The regulatory agency, in this case the FAA, is under-resourced and lacks the expert staff needed to carry out in depth a serious process of technical oversight.  The article does not identify the third factor which has been noted in prior posts on the Boeing disaster, the influence which Boeing has on legislators, government officials, and the executive branch.

 A second relevant story (on the same page as the Boeing story) refers to charges filed in Germany against the former CEO of Audi who has been charged concerning his role in the vehicle emissions scandal. This is part of the long-standing deliberate effort by Volkswagen to deceive regulators about the emissions characteristics of their diesel engine and exhaust systems. The charges against the Audi executive involved ordering the development of software designed to cheat diesel emissions testing for their vehicles. This ongoing story is primarily a story about corporate dysfunction, in which corporate leaders were involved in unethical and dishonest activities on behalf of the company. Regulatory failure is not a prominent part of this story, because the efforts at deception were so carefully calculated that it is difficult to see how normal standards of regulatory testing could have defeated them. Here the pressing problem is to understand how professional, experienced executives could have been led to undertake such actions, and how the corporation was vulnerable to this kind of improper behavior at multiple levels within the corporation. Presumably there were staff at multiple levels within these automobile companies who were aware of improper behavior. The story quotes a mid-level staff person who writes in an email that "we won't make it without a few dirty tricks." So the difficult question for these corporations is how their internal systems were inadequate to take note of dangerously improper behavior. The costs to Volkswagen and Audi in liability judgments and government penalties are truly vast, and surely outweigh the possible gains of the deception. These costs in the United States alone exceed $22 billion. 

A similar story, this time from the tech industry, concerns a settlement of civil claims against Cisco Systems to settle claims "that it sold video surveillance technology that it knew had a significant security flaw to federal, state and local government agencies." Here again we find a case of corporate dishonesty concerning some of its central products, leading to a public finding of malfeasance. The hard question is, what systems are in place for companies like Cisco that ensure ethical and honest presentation of the characteristics and potential defects of the products that they sell? The imperatives of working always to maximize profits and reduce costs lead to many kinds of dysfunctions within organizations, but this is a well understood hazard. So profit-based companies need to have active and effective programs in place that encourage and enforce honest and safe practices by managers, executives, and frontline workers. Plainly those programs broke down at Cisco, Volkswagen, and Audi. (One of the very useful features of Tom Beauchamp's book Case Studies in Business, Society, and Ethics is the light Beauchamp sheds through case studies on the genesis of unethical and dishonest behavior within a corporate setting.)

Now we go on to Christopher Flavelle's story about home-building in flood zones. From a social point of view, it makes no sense to continue to build homes, hotels, and resorts in flood zones. The increasing destruction of violent storms and extreme weather events has been evident at least since the devastation of Hurricane Katrina. Flavelle writes:
There is overwhelming scientific consensus that rising temperatures will increase the frequency and severity of coastal flooding caused by hurricanes, storm surges, heavy rain and tidal floods. At the same time there is the long-term threat of rising seas pushing the high-tide line inexorably inland.
However, Flavelle reports research by Climate Central that shows that the rate of home-building in flood zones since 2010 exceeds the rate of home-building in non-flood zones in eight states. So what are the institutional and behavioral factors that produce this amazingly perverse outcome? The article refers to incentives of local municipalities in generating property-tax revenues and of potential homeowners subject to urban sprawl and desires for second-home properties on the water. Here is a tragically short-sighted development official in Galveston who finds that "the city has been able to deal with the encroaching water, through the installation of pumps and other infrastructure upgrades": "You can build around it, at least for the circumstances today. It's really not affected the vitality of things here on the island at all." The factor that is not emphasized in this article is the role played by the National Flood Insurance Program in the problem of coastal (and riverine) development. If flood insurance rates were calculated in terms of the true riskiness of the proposed residence, hotel, or resort, then it would no longer be economically attractive to do the development. But, as the article makes clear, local officials do not like that answer because it interferes with "development" and property tax growth. ProPublica has an excellent 2013 story on the perverse incentives created by the National Flood Insurance Program, and its inequitable impact on wealthier home-owners and developers (link). Here is an article by Christine Klein and Sandra Zellmer in the SMU Law Review on the dysfunctions of Federal flood policy (link):
Taken together, the stories reveal important lessons, including the inadequacy of engineered flood control structures such as levees and dams, the perverse incentives created by the national flood insurance program, and the need to reform federal leadership over flood hazard control, particularly as delegated to the Army Corps of Engineers.
Here is a final story from the business section of the New York Times illustrating organizational and regulatory dysfunctions -- this time from the interface between the health industry and big tech. The story here is an effort that is being made by DeepMind researchers to use artificial intelligence techniques to provide early diagnosis of otherwise mysterious medical conditions like "acute kidney injury" (AKI). The approach proceeds by analyzing large numbers of patient medical records and attempting to identify precursor conditions that would predict the occurrence of AKI. The primary analytical tool mentioned in the article is the set of algorithms associated with neural networks. In this instance the organizational / regulatory dysfunction is latent rather than explicit and has to do with patient privacy. DeepMind is a business unit within the Google empire of businesses, Alphabet. DeepMind researchers gained access to large volumes of patient data from the UK National Health Service. There is now regulatory concern in the UK and the US concerning the privacy of patients whose data may wind up in the DeepMind analysis and ultimately in Google's direct control. "Some critics question whether corporate labs like DeepMind are the right organization to handle the development of technology with such broad implications for the public." Here the issue is a complicated one. It is of course a good thing to be able to diagnose disorders like AKI in time to be able to correct them. But the misuse and careless custody of user data by numerous big tech companies, including especially Facebook, suggests that sensitive personal data like medical files need to be carefully secured by effective legislation and regulation. And so far the regulatory system appears to be inadequate for the protection of individual privacy in a world of massive databases and largescale computing capabilities. The recent FTC $5 billion settlement imposed on Facebook, large as it is, may not suffice to change the business practices of Facebook (link).

(I didn't find anything in the sports section today that illustrates organizational and regulatory dysfunction, but of course these kinds of failures occur in professional and college sports as well. Think of doping scandals in baseball, cycling, and track and field, sexual abuse scandals in gymnastics and swimming, and efforts by top college football programs to evade NCAA regulations on practice time and academic performance.)  

 -- via my feedly newsfeed

A Smart Approach to China-U.S. Relations [feedly]

A Smart Approach to China-U.S. Relations
https://www.bradford-delong.com/2019/08/a-smart-approach-to-china-us-relations.html

Consider a country that is the global superpower.

Its military is best-of-breed. Its reach extends from Japan to the West Indies to the Indian Ocean, and beyond. Its industries of the most productive in the world. It Is predominate in world trade. It dominates global finance.

But, when this global superpower looks to the west, across the sea, it sees a rising power—a confident nation with a larger population, hungry for wealth, hungry for preeminence, seeing itself as possessing a manifest destiny to supersede the old superpower. And, unless something goes horribly wrong with the rising power to the west, its rise is indeed all but inevitable.

Thus the proper goal for the current superpower is to ensure a soft landing—ensure that the world will still be a comfortable place for it, once its preeminence as the global superpower is over.

There are, of course, sources of conflict: the rising superpower wants more access to markets and to intellectual property than the current superpower wishes to provide. And what the current superpower does not willingly provide, the rising superpower will seek to take. The rising superpower wants a weight in international councils corresponding to what its fundamental power will be a generation hence, nd is not satisfied with a weight corresponding to its fundamental power today.

These are all valid sources of conflict. They need to be managed. Interests need to be advanced, and defended. But they do not outweigh the joint interests in peace and prosperity.

So what should the superpower currently dominant do? How should it use its current preeminence?

And am I talking about the United States and China today, about Britain and the United States a century and a half ago, or about Holland and Britain 350 years ago?

In the case of Holland and Britain, a spate of cold trade and hot naval wars in the 1600s led to the infusion into the English language of a remarkably large number of derogatory phrases based on "Dutch": Dutch bargain, Dutch book, Dutch comfort, Dutch concert, Dutch courage, Dutch defence, Dutch leave, Dutch metal, Dutch nightingale, Dutch reckoning, Dutch treat, Dutch uncle, "if I do it not, I'm a Dutchman"—and, possibly, Dutch auction and Dutch oven. It led also to perhaps the most memorable line in British naval bureaucrat Samuel Pepys's diary, as the navy he had built and supplied faced superior numbers of Dutch at Harwich, Portsmouth, Plymouth, and Dartmouth: "By God! I think the Devil shits Dutchmen!"

But in the long run fundamentals told, and Britain rose to global hyperpower. Possibly decisive for the Dutch-British transition was the wind shift of 24 October 1688 to an east Protestant wind. That allowed the Dutch fleet to leave harbor. The following Dutch military intervention in support of the aristocratic-Whig coup against the Stuart dynasty that brought hereditary Dutch Stadthouder William III of Orange to the British throne.

Thereafter the common interests of both powers in limited government, mercantile prosperity, and anti-Catholicism created a durable alliance with the Dutch as junior partner around, in the words of the viral tweet of the 1700s, "no popery or wooden shoes!" Under Britain's aegis the Dutch remained independent rather than becoming involuntarily Francofied. It was a—largely—comfortable world for the Dutch, and for Holland.

In the case of Britain and the United States, after 1815 the British government followed a durable policy that was rather odd for 19th Century Britain, whose SOP was usually: "we burn your fleet, and perhaps your capital, first, and negotiate later".

Britain acceded to the Monroe Doctrine in 1823; accepted a line of demarcation in the Oregon Territory that left the British-settler majority region that is now the state of Washington in American hands; did not intervene on the side of free trade in 1862; accepted American mediation on the Venezuelan border; supported American annexation of the Philippines; relinquished rights and interests in what became the Panama Canal zone; and acquiesced to the American position on where the boundary between Alaska and the Yuko actually was.

Britain, instead, gave scholarships to American wannabe aristocrats who wanted to study at Oxford and Cambridge; gleefully married off its own aristocrats with titles to American heiresses—Winston Churchill's parents became engaged three days after meeting at a sailing regatta on the Isle of Wight—and stressed common lineage, cultural, and economic ties; and, as the young Harold Macmillan unwisely, because too publicly, put it when he was seconded to Eisenhower's staff in North Africa in late 1942, became "the Greeks to the American Romans".

The result was that the United States became Britain's wired aces in the hole in teh game of seven-card stud that was twentieth-century geopolitics.

The fundamentals tolled against Britain. One island cannot, they said, in the long run "Half a continent will, said economic historian J.H. Clapham speaking of the United States, in the end raise more coal and melt more steel than one small densely-populated island".

Yet perhaps Britain's supersession by America was not inevitable. In 1860 the United States had a full-citizen population of 25 million, and Britain and its dominions had a full-citizen population of 32 million. By 1940 the full-citizen numbers were 117 and 76 million. But the pro-rated descendents of the full citizens as of 1860 were 50 and 65 million, advantage Britain and the Dominions.

As the Financial Times's Martin Wolf points out, his ancestors were some of the very few who made the much cheaper migration from the Ashkenazi Pale of Settlement to London than to New York.

Up to 1924 New York welcomed all comers from Europe and the Middle East, while London and the Dominions were only welcoming to northern European Protestants.

A Britain more interested in turning Jews, Poles, Italians, Romanians, and even Turks who do not happen to be named Alexander Boris de Pfeffel Johnson—who bears Turkish Minister of the Interior Ali Kemal's Y and five other chromosomes, and hence is, by all the rules of conservative patriarchy, a Turk—at turning them into Britons or Australians or Canadians would have been much stronger throughout the twentieth century.

Perhaps it would not be in its current highly undignified position.

Compared to Holland and Britain when they were global hyperpowers pursuing soft landings, how are we doing?

The answer has to be: since January 2017, not well at all.

There is a lot of wisdom in George Kennan's 1947 "Sources of Soviet Conduct". Three points stand out:

  1. Do not panic, but recognize what the long game is, and play it.

  2. Contain, but not unilaterally: assemble broad alliances to confront, resist, and sanction as a group.

  3. Become your best self, because ultimately, as long as the struggle between systems can be kept peaceful, liberty and prosperity will be decisive.

    • Are we forming alliances—cough, TPP— to contain?
    • Or are we making the random incoherent demands for things like immediate bilateral balance that can only be understood as the actions of a chaos monkey?
    • Are we not panicking?
    • Are we soberly playing the long game?

 -- via my feedly newsfeed

Congress has never let the federal minimum wage erode for this long

https://epi.org/170071#.XUXIJvK0g3U.gmail

June 16th marks the longest period in history without an increase in the federal minimum wage. The last time Congress passed an increase was in May 2007, when it legislated that the minimum wage be raised to $7.25 per hour on July 24, 2009. Since the minimum wage was first established in 1938, Congress has never let it go unchanged for so long.

When the minimum wage remains unchanged for any length of time, inflation erodes its buying power. As shown in the graphic, when the minimum wage was last raised to $7.25 in July 2009, it had a purchasing power equivalent to $8.70 in today's dollars. Over the last 10 years, as the minimum wage has remained at $7.25, its purchasing power has declined by 17 percent. For a full-time, year-round minimum wage worker, this represents a loss of over $3,000 in annual earnings. Moreover, since its historical peak in February 1968, the federal minimum wage has lost 31 percent in purchasing power—meaning that full-time, year-round minimum wage workers today have annual earnings worth $6,800 less than what their counterparts earned five decades ago.

A simple way to fix this problem once and for all would be to adopt automatic annual minimum wage adjustment (or "indexing"), as 18 states and the District of Columbia have done. The Raise the Wage Act of 2019 would raise the federal minimum wage to $15 by 2024—boosting wages for nearly 40 million U.S. workers—and establish automatic annual adjustment of the federal minimum wage. Automatic annual adjustment would ensure that the paychecks of the country's lowest-paid workers are never again left to erode.

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Thursday, August 1, 2019

The Inequality of Nations [feedly]

are globalization and inequality eroding the viability of democracy?

The Inequality of Nations
https://www.project-syndicate.org/commentary/market-power-encroaching-on-politics-by-michael-spence-2019-08

Markets are mechanisms of social choice, in which dollars effectively equal votes; those with more purchasing power thus have more influence over market outcomes. Governments are also social choice mechanisms, but voting power is – or is supposed to be – distributed equally, regardless of wealth.

MILAN – The eighteenth-century British economist Adam Smith has long been revered as the founder of modern economics, a thinker who, in his great works The Wealth of Nationsand The Theory of Moral Sentiments, discerned critical aspects of how market economies function. But the insights that earned Smith his exalted reputation are not nearly as unassailable as they once seemed.

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Perhaps the best known of Smith's insights is that, in the context of well-functioning and well-regulated markets, individuals acting according to their own self-interest produce a good overall result. "Good," in this context, means what economists today call "Pareto-optimal" – a state of resource allocation in which no one can be made better off without making someone else worse off.1

Smith's proposition is problematic, because it relies on the untenable assumption that there are no significant market failures; no externalities (effects like, say, pollution that are not reflected in market prices); no major informational gaps or asymmetries; and no actors with enough power to tilt outcomes in their favor. Moreover, it utterly disregards distributional outcomes (which Pareto efficiency does not cover).

Another of Smith's key insights is that an increasing division of labor can enhance productivity and income growth, with each worker or company specializing in one isolated area of overall production. This is essentially the logic of globalization: the expansion and integration of markets enables companies and countries to capitalize on comparative advantages and economies of scale, thereby dramatically increasing overall efficiency and productivity.

Again, however, Smith is touting a market economy's capacity to create wealth, without regard for the distribution of that wealth. In fact, increased specialization within larger markets has potentially major distributional effects, with some actors suffering huge losses. And the refrain that the gains are large enough to compensate the losers lacks credibility, because there is no practical way to make that happen.1

Markets are mechanisms of social choice, in which dollars effectively equal votes; those with more purchasing power thus have more influence over market outcomes. Governments are also social choice mechanisms, but voting power is – or is supposed to be – distributed equally, regardless of wealth. Political equality should act as a counterweight to the weighted "voting" power in the market.



To this end, governments must perform at least three key functions. First, they must use regulation to mitigate market failures caused by externalities, information gaps or asymmetries, or monopolies. Second, they must invest in tangible and intangible assets, for which the private return falls short of the social benefit. And, third, they must counter unacceptable distributional outcomes.

But governments around the world are failing to fulfill these responsibilities – not least because, in some representative democracies, purchasing power has encroached on politics. The most striking example is the United States, where electability is strongly correlated with either prior wealth or fundraising ability. This creates a strong incentive for politicians to align their policies with the interests of those with market power.

To be sure, the Internet has gone some way toward countering this trend. Some politicians – including Democratic presidential candidates like Bernie Sanders and Elizabeth Warren – rely on small individual donations to avoid becoming beholden to large donors. But the interests of the economically powerful remain significantly overrepresented in US politics, and this has diminished government's effectiveness in mitigating market outcomes. The resulting failures, including rising inequality, have fueled popular frustration, causing many to reject establishment voices in favor of spoilers like President Donald Trump. The result is deepening political and social dysfunction.1

One might argue that similar social and political trends can also be seen in developed countries – Italy and the United Kingdom, for example – that have fairly stringent restrictions on the role of money in elections. But those rules do not stop powerful insiders from wielding disproportionate influence over political outcomes through their exclusive networks. Joining the "in" group requires connections, contributions, and loyalty. Once it is secured, however, the rewards can be substantial, as some members become political leaders, working in the interests of the rest.

Some believe that, in a representative democracy, certain groups will always end up with disproportionate influence. Others would argue that more direct democracy – with voters deciding on major policies through referenda, as they do in Switzerland – can go some way toward mitigating this dynamic. But while such an approach may be worthy of consideration, in many areas (such as competition policy), effective decision-making demands relevant expertise. And government would still be responsible for implementation.

These challenges have helped to spur interest in a very different model. In a "state capitalist" system like China's, a relatively autocratic government acts as a robust counterweight to the market system.

In theory, such a system enables leaders, unencumbered by the demands of democratic elections, to advance the broad public interest. But with few checks on their activities – including from media, which the government tightly controls – there is no guarantee that they will. This lack of accountability can also lend itself to corruption – yet another mechanism for turning government away from the public interest.

China's governance model is regarded as dangerous by much of the West, where the absence of public accountability is viewed as a fatal flaw. But many developing countries are considering it as an alternative to liberal democracy, which has plenty of flaws of its own.

For the world's existing representative democracies, addressing those flaws must be a top priority, with countries limiting, to the extent possible, the narrowing of the interests the government represents. This will not be easy. But at a time when market outcomes are increasingly failing to pass virtually any test of distributional equity, it is essential. -- via my feedly newsfeed