Friday, 26 May 2017

An Environmental Theory of Economics - Part One



In keeping with the critique of orthodox economic theory that we have developed in this Blog, what we present here in an entirely new approach to economic theory that takes into account not just how products are "exchanged" in an economy but also and above all how these pro-ducts are pro-duced ("brought forward") - and therefore how a system of exchange interacts with the environment - which is essential to understanding what human societies and "economies" are in substance and reality.

 

The commonsense of this tool of analysis may be formulated as follows: first, if we deal with, say, the organism of a dog, the interpretation of what we observe divides readily into two branches. We may be interested in the processes of life going on in the dog, such as the circulation of the blood, its relation to the digestive mechanism, and so on. But however completely we master all their details, and however satisfactorily we succeed in linking them up with each other, this will not help us to describe or understand how such things as dogs

Joseph Schumpeter, Business Cycles. (1939) 29

have come to exist at all. Obviously, we have here a different process before us, involving different facts and concepts such as selection or mutation or, generally, evolution. In the case of biological organisms nobody takes offense at the distinction. There is nothing artificial or unreal about it and it comes naturally to us; the facts indeed impose it on us.

It is incessant change in the data of the situations, rather than the inadequacy of the data of any given situation, which creates what looks like indeterminateness of pricing. We conclude, on the one hand, that we must take account of this pattern when dealing with the process of change which it is our task to analyze in this book and which must be expected to create precisely such situations, and, on the other hand, that it does not paralyze the tendency toward equilibrium [Gleichgewichtstendenz](Business Cycles, p.43)

 

As we can see, Schumpeter discusses in the same breath two matters that he does not link explicitly but whose link is necessary nonetheless: and the reason that he fails to make this link explicit is that he does not see that the link is indeed necessary! First, there is the fact that his shift in approach to economic theory from static analysis (Statik) to dynamic theory (Dynamik) involves the examination of “the economic system” not as an aggregate of inert mechanical bodies governed by pure economic laws that mirror exactly the laws of mechanics, so that any “change” to that system must be due to “exogenous factors”, but rather as a living organism made up of component members that interact meta-bolically both with one another and with their physical environment. But then, again discussed “in the same breath”, there is the fact that this novel approach of treating the economic system as a living organism so that there is “incessant change” in economic data means also that now “prices are indeterminate”, although Schumpeter hastens to add that this “does not paralyze the tendency to equilibrium”, falling thus into the error that we pointed out previously, namely, that of treating Dynamik and Statik as a categorical continuum when he himself admits throughout his oeuvre that the two processes, evolution and equilibrium, are categorically incompatible.

 

As we saw in an earlier section of this review, the real reason why prices must be indeterminate in Schumpeter’s novel approach – the Dynamik - is not so much that there is “incessant change” in economic data, as Schumpeter seems to believe, but rather that the economic system is now seen as a living organism that interacts metabolically with its physical environment - with its “physis”. Schumpeter does not see that his “economic agents” (Wirthschafts-subjekte) cannot be treated as “atomistic individuals” because these presumed “in-dividuals” are now able to pro-duce, “to innovate”, rather than merely to exchange existing “endowments”. In other words, in the Dynamik, the individual component members of the economic system become economic agents able to initiate economic activity, that is to say, they can pro-duce new economic resources and needs rather than merely exchange existing or “given” economic resources - the “endowments” of neoclassical equilibrium theory. These presumed “individuals” are now theoretically able to produce for exchange and to exchange for production, and not simply “to exchange”. Because of this, it is impossible to attribute a “scientifically objective” or “determinate” or “absolute” value or price to production because prices regulate the distribution of the product and it is quite impossible to attribute both the “ownership” of the product and the economic claim to the pro-duct on the part of different pro-ducers because pro-duction involves the metabolic interaction of individual economic agents, singly and collectively, with their physical environment. And this metabolic interaction is impossible to measure – to value and to price – because it constantly changes the relations among individual producers in both a quantitative and a qualitative sense. To repeat, it is impossible to attribute “ownership” and economic claims by producers to production because “economic agents” are now considered not merely to exchange existing resources (endowments) with one another, but instead are also able to produce new resources by interacting meta-bolically with the physical environment in which “the economic system” operates.

 

And they interact metabolically with the physical environment not ontogenetically, as atomistic individuals; instead, they must so interact phylogenetically, as component members of a living organic community. For it is impossible for an economic system that is a living organism to attribute ownership claims to its individual members given that, as a living organism, it must interact metabolically with its “physical environment”! Indeed, although it is tempting to refer to this physical environment as “the external physical environment”, it is quite misleading to do so because there is nothing “external” to a living organism about the physical environment in which it must metabolize.

 

This is why prices are indeterminate in this new framework of social analysis: if we treat the economic system not as a “closed totality” but rather as a living organism metabolizing with its physical environment it is quite impossible to calculate at all, through any “price mechanism”, the contribution of individual members to the production or welfare of the living organic community.

 

We can see therefore that by moving away from Statik to Dynamik Schumpeter ought to have added three new inter-related theoretical components to his analytical framework: the first is “social labour”, the second is “production”, and the third is “metabolism”. It can be objected that Schumpeter meant to include all three elements in his overall category of “innovation”, but we will show presently that although the concept of “innovation” certainly includes that of “pro-duction”, intended as the making of fresh resources and needs, Schumpeter fails to theorize “pro-duction” explicitly as “metabolism” or “living activity”, and the other two elements he either confuses (“individual labours” with “social labour”) or wholly neglects (metabolism) because of his obsessive focus on “the economic system” as “totality” and on metabolic production as “individual labour” rather than “social labour”.

 

The fact that the economic system is now “transformed from within” by its economic agents who are   not subject to inflexible axioms set “from outside” –, this fact means that the “prices” that obtain in the economic system must be “indeterminate” for the simple reason that it is impossible to assign a logico-mathematical or “scientifically absolute” value on the innovations that transform the economic system by means of an “objective market mechanism”. To be “objective”, prices and values in Schumpeter’s “pure economic theory of economic change” would have to be determined objectively, from outside - as if the economic system were a “closed system” or “totality”. But this is precisely what his theory of economic development (Entwicklung) cannot allow because its central postulate is that any change, mutation, trans-formation or e-volution of the economic system must be endogenous, must come “from within” as well as be “incessant”, and therefore the “change” or “mutation” must be in relation to the “without”, the “physical environment” in which “the economic system” operates – not as a “closed” system but as a metabolic living organism.

Again, what makes prices and values “indeterminate” is not so much that the economic system is in a state of “incessant change”, as Schumpeter maintains, but rather it is the fact that this “incessant change” is the outcome of decisions and actions taken by “economic agents” - and not by the “inert mechanical bodies” of neoclassical equilibrium theory - in relation to a physical environment that allows them to produce metabolically fresh resources and needs that constantly transform the existing relations of production between “economic agents” both individually and collectively. For this reason, the very notion of “innovation” is simply categorically incompatible with the “objective” (meaning “internally fixed”) determination of relative prices based on Subjective Value that obtains in Walrasian equilibrium or indeed with the “objective” (meaning “externally fixed”) determination of absolute prices prescribed by the Labour Theory of Value of Classical Political Economy.

Because this “dynamic” economic system is transformed from within by the innovative actions of what are now properly-called “economic agents” and not by the “inert mechanical bodies” of “static” Walrasian equilibrium – for this reason, the economic system is no longer one of “pure exchange” but it becomes instead one in which pro-duction takes place, one in which goods and services are pro-duced (“brought forth”) metabolically by the interaction of economic agents not only with one another but also with their physical environment. This means that not only are economic agents interacting individually with one another and with the physical environment: but it means also that “the economic system” cannot be examined in its entirety, as a whole, as a totality, precisely because it is interacting meta-bolically with its physical environment – just like a living organism. Only when “exchange” involves “pro-duction” can this exchange be more than a sterile “id-entity” (the same entity); only then can it make a “dif-ference” (a practical, unquantifiable, qualitative change): only then can there be “change in the ex-change” between economic agents - precisely because the exchange is un-equal in that its “value” is now determined not relatively to its individuals, not subjectively, but collectively in metabolic relation between the economic system as a living organic community and its physical environment.

This means that market exchanges no longer constitute a “zero-sum game” but effectively change the internal relations of individual participants both quantitatively and qualitatively so that prices and values are not just indeterminate but in fact are meaningless in any other than a political sense – in the sense that any equality or equi-valence can be established only politically, either violently or legitimately. In other words, unlike the Statik, in the Dynamik “pure exchange” is no longer possible: economic agents exchange to pro-duce and pro-duce to exchange. This means essentially, as we are about to see, that “pro-duction” is “living activity” or “living labour” and that there can be no “individual labours” but only “social labour”. Put differently, “labour” is a phylogenetic, not an ontogenetic category.



Schumpeter’s likening of the economic system to a “dog” in the quotation above reveals most clearly his mental confusion in this regard: because if the economic system is regarded as a living organism that, first, interacts metabolically with a physical “medium” in which it can evolve, and therefore, second, can assess and theorize this “evolution” in relation to some “frame of reference” that can be “objective” only in the sense of being the result of decisions and actions taken by the component members of that living organism as an organic community, then it is obviously quite impossible to assign and attribute precise “values and prices” to the contributions of individual members of that living organism as if these individual members or “economic agents” were separable from the living organism! It is obvious that any such “separation” and assessment of “individual contributions” can occur only by means of ethical or political standards that the organic community imposes on itself – but most certainly not by means of an “absolute scientific standard”.

The fact that Schumpeter sees “the economic system” on one side as a living organism - as a “dog” - that must confront its physical environment, and then on the other side as a collection of atomic individuals who are able to mutate the economic system “from within” through their autonomous “innovations” without interacting as a collective living organism with their (“external”) physical environment – this fact is the source of all the confusions in which Schumpeter gets mired. On the one hand, Schumpeter wishes to examine “the economic system” as a “closed totality” whose component members can be treated as isolated “individuals”; but then, he forgets that this is impossible without considering how this “totality” or “system” must interact metabolically with its physical environment and therefore how it can no longer be treated as a “totality” or “system” that can be mutated “from within” by its “individual members” without this “mutation” or “evolution” having to be assessed not from the viewpoint of “the atomic individual” but exclusively from the viewpoint of “the living organism”, of the living organic community, by reference to its physical environment !

The change from an atomistic theory like that of equilibrium in which estimations of value are entirely individual and subjective and therefore can be described – not measured, if by “measure” we mean an absolute standard! – and determined tautologically in terms of relative prices, to an organicist theory in which the economic system is “measured” against its physical environment in terms of a politically agreed and collective standard –, this change in the theoretical framework of analysis means that now “the economic system” is no longer based on competition between atomic individual members but rather on an organism or better an organic community (in the case of animals, a species) that is not a “closed totality “ but is instead a living organism  dealing meta-bolically with its “physical environment”!

The point here is that if we start with an atomistic state like equilibrium, then the rules of exchange must be imposed exogenously whilst at the same time it is impossible to assess the efficiency of the “economic system” as a whole - as an “economic system”, at the “systemic” level, as a totality, because that “totality” would have to encompass its physical environment and therefore it could never constitute such a “totality” intended as a closed system whose prices and values are determined internally or self-referentially. The axiomatic atomicity of equilibrium theory, by making all values strictly individually subjective, forces us to treat the economic system precisely as such a “closed self-referential system” or “totality” and prevents us from treating it as a living organism dealing “openly” or metabolically with its physical environment! Yet, if we assume that “the economic system” is a living organism, then it will be impossible to determine individual contributions from its “members” to overall social production or wealth precisely because there are no “individual contributions” or “individual labours”, whereas in fact we have social contributions or social labour.

Perhaps the greatest mistake that Adam Smith made in his analysis of the division of labour (and therefore of production) in Book Two of The Wealth of Nations was to treat this “division of labour” as the effect of exchange and not as the cause of exchange! Anybody with any spark of historical and anthropological knowledge and any scintilla of thoughtful reflection will be able to conclude that human beings are able to exchange anything not only because they cannot engage in “individual labours” but because they are physiologically incapable of surviving, like the robinsonnade in Defoe’s Robinson Crusoe, as isolated “individuals”! Human beings quite simply could not even exist as “individuals”, let alone be able to survive, in complete isolation! All human labour is “social labour” and cannot even be conceived as “individual labour”! Brian Loasby has reminded us that “exchange is a matter of life and death”, without for that matter being able to perceive the inevitably phylogenetic nature of human labour. But this notion of the indispensability of the division of social labour – and therefore of “exchange”! – is a conclusive counter-argument to the Hobbesian notion of “the state of nature” – on which Neoclassical equilibrium theory is based - as a system made up of atomistic self-interested individuals.

Atomistic theory can determine only “relative exchanges” whereas organicist theory can assess only “communal goals”: the two “systems” are simply incomparable and incommensurable because the first can be viewed as a “totality” because its “individuals” are mechanically inert bodies, whereas the second is in constant “becoming” and the decisions and actions of its “individual members” cannot be assessed “individually”. Neither theory can ever devise an Objective Value for the simple reason that living activity – whether human or otherwise - cannot be measured in terms of a standard of value that is “external” to that activity or “absolute”! For human communities, any such “standard of value” can be applied only as the result of political domination by some social agents over others or else by political consent – but never “objectively” in terms of an absolute standard!



Once again, the central point that we are making here is that, once we consider human society from an organicist rather than an atomistic viewpoint, “economics” as a sphere of social analysis separate from “politics” becomes quite simply im-possible because the partiality of all “economic” concepts, the im-possibility of reducing human activity to “purely economic” categories, implies their “dissolution” in any “scientific” sense. It was this socio-political “separation” (Trennung) of human society between economy and politics, between private property and political institutions, between bourgeois and citizen, between civil society and political State that was the ultimate theoretical concern of the rationalist philosophers from Rousseau and Hegel to Marx. And it was the assertion of the ultimate im-possibility of over-coming and super-seding this “separation” (Trennung) – in fact, the impossibility of any “social synthesis” both at the economic level, between economic agent and product, and at the sociological level, between private (property) and public (political) spheres – that is the central and essential feature of the negatives Denken from Schopenhauer to Nietzsche and Weber, to the Austrian School and Heidegger.

Indeed, it is this very “separation” (Trennung) extended to the individual level of any “economic agent” – be it a worker or entrepreneur - from (a) the immanently “social” nature of production in a phylogenetic and physio-logical sense (not the division of “labour”, which is an empty abstraction, but the division of social labour which bourgeois economic theory reduces to “individual labours”), (b) the means of production, and (c) the pro-duct - that constitutes the most indispensable foundation of the negatives Denken at the economic level as a reaction to Hegel’s dialectic of “self-consciousness” first expounded in the Phenomenologie des Geistes and later elaborated in Marx’s critique of political economy. As Weber makes clear from the very opening of Parlament und Regierung, the matter of “ownership” is always and everywhere one of sheer violence: it is the overlord who enforces the separation of the peasant from the land, of the artisan from the tools – and indeed of the soldier from the weapons. – And therefore also from the “pro-duct” of their activities. Schumpeter himself draws the essential distinction between “directing” and “directed” labour in the opening chapter of the Theorie in a manner that clearly indicates the lack of con-nection between worker and pro-duct. The simple fact that the claim by the Entrepreneur to the “profit” generated from “innovation” can only be “legal” means immediately that this claim will be disputed and will be the subject of conflict – and that indeed even the adoption of innovations will give rise to social conflict.

The insuperable contradiction of Neoclassical Theory and of the Austrian School is that they firmly espouse the negatives Denken with regard to this “separation” – the Trennung - at the individual and at the social level, and yet they claim to be able to establish a scientific economic link between producers on one side and their claims to the distribution of the product on the other side!

Friday, 19 May 2017

Donald Trump and the Deep State



We are certainly neither friends nor fans of US President Donald Trump. Yet it is impossible to pore over accounts of his now daily afflictions – mounting to possible impeachment when he is just over 100 days (!) into a four-year term – without reflecting on the role of the Deep State in the operation and governance of the American res publica (Latin for republic, literally “public thing”). It just so happens that Trump’s travails provide a unique illustration of the way in which the Deep State operates and governs what is supposedly a “republic” from behind the screen of the Constitution. Imagine – just imagine for a mad moment – that instead of a nutcase like Trump we actually had in the Oval Office a President who matched in zeal and purpose a reformist agenda as Trump is pursuing his own clearly reckless self-serving and deluded one. If you just bear with us for a few moments to entertain this “thought exercise” – then you will see quite clearly how constrained such a reformist President would be in his reformist path by the very Constitution that grants him such enormous powers in his (or her) office. (For further research on this, see the insuperable works by ES Corwin and R. Hofstadter on the American presidency.)

As we argued in an earlier intervention quite recently, the Constitution sets out the formal relation of certain institutions (the Executive, the Judiciary and the Legislature) to one another. But no constitution can prescribe who the exact person that occupies a particular office actually is or will be and what the precise actions that they take are or will be! And because no written document is ever exempt from “interpretation”, it is clear that “constitutional practice” or “tradition” or “protocol” is inseparable from the written text of the constitution. (Great Britain, for instance, never had a written constitution.)

What we are witnessing with Trump is exactly this process whereby the interpretation of a variety of actions by the current President depends clearly not on his stated intentions, but rather on the common assumptions of an entire network of office-bearers who occupy the myriad institutional positions that form both the Administration (the Executive) and the other two branches of government (Congress and the Judiciary). There is no cut-and-dried definition of “constitutional practice”; nor are there clear boundaries between all these institutions. The functioning of the Constitution depends on implicit behavioural assumptions that take a myriad divers forms until they converge into a given “consensus” (literally, “common direction”).

So here is the rub; here is the kernel of the question; here is the crux: who exactly decides on what this “consensus” is? How is a consensus reached when it comes to interpreting the practical operation of constitutional rules? For it is at this point that the clear evidence emerges that this consensus is arrived at by means of various institutional “checks and balances” that are always and inescapably the province of the various elites – the power elites – that rule America. As we are witnessing quite clearly right now with Trump, the elites – not just the leaders of the political parties, but also and above all the vast army of personalities and leaders who occupy the most powerful positions in the American “republic” (from the military to the industrial, even to the cultural, if one looks at the culture industry, for instance, which is most powerful and influential in the US) – these “power elites” all come utterly exclusively from the “one per cent” that we all know and that we can identify just by looking at their income tax returns!

The Constitution sets out the “formal” boundaries and powers of each office-holder. But the content of what these office-holders do, and the interpretation of their actions, are all subject to a very complex socio-political “informal” process of interaction within and between the “power elites”. (On the concept of “power elite”, we can go no further then C Wright Mills’s great homonymous work dating back to the 1960s. Indeed, the dearth of more recent scholarship simply reveals the extent to which the American power elites have been able to stifle and suppress all forms of countervailing socio-political and economic analyses since the 1960s and early 1970s.)


The innumerable obstacles that Trump is encountering in his maldextrous (insolently incompetent) running of the Presidential office are indeed the same obstacles that even the ablest President would encounter if his or her actions deviated from what the power elites see consensually as their overriding interests. Doubtless, this informal Constitution is what hampered Barack Obama right from the outset of his presidential mandate. The power elites always seek to personify democratic powers by concentrating them in the hands of very few “individuals”. On one hand, this makes the exercise of these heavily concentrated powers very dangerous for the bourgeoisie. Yet, on the other hand, the very fact that constitutional powers are concentrated in the hands of very few “personalities” or “leaders” means also that the bourgeoisie is better able to influence and dictate decision-making and the operation of constitutional powers in its own “consensual” interests.

Sunday, 14 May 2017

Theoretical Reflections on the Concept of “Secular Stagnation”


The notion of “secular stagnation” – made famous initially by Alvin Hansen when the Great Depression was in full swing in the 1930s – refers to the secular – that is to say, constant and irremediable, in the course of time – decline of “the natural rate of interest”. There are two elements that immediately leap to our attention when considering these twin notions: the first is that secular stagnation refers to the inevitable decline of the “natural rate of interest”; and the second is that therefore the “natural rate of interest” is not “natural” merely in the sense that it is set and determined by involuntary factors beyond human control – natural in the sense of “automatic” – but also that the natural rate of interest is “natural” in the sense that the economic organism to which it applies is subject to a physiological or organic process of stagnation that resembles the ageing of an organism that is unstoppable. This would seem to bring the operation of economies, and therefore also of economics as a “science”, closer to the study of a biological process rather than a purely mechanical-quantitative one. The old notion of Classical and Neo-Classical Political Economy that located the scientific kernel of “economic science” in the determination of Value and in its distribution among various “factors of production” – this notion seems to be outflanked and entirely superseded by that of “the natural rate of interest” when it is tied to that of “secular stagnation”.

In both Classical and Neo-Classical Political Economy there simply was no room for notions such as “secular stagnation”, though there certainly was an implicit notion of a “natural rate of interest”, that is, a rate of profit “naturally” corresponding to a given type of economy. The concept of secular stagnation goes beyond Wicksell’s initial formulation of the natural rate of interest in the sense that for the first time the problem of economic science is no longer that of the distribution of Value or indeed of the growth of Value (its production) which up until now had seemed to be a “natural” aspect of capitalist production. With the notion of “secular stagnation” for the first time bourgeois economic “science”, and thus the bourgeoisie itself, seems to be coming to terms with the “decline” of its system of production, capitalism, which it now sees as inevitable to the degree that it is “secular”. At the same time, with this notion the bourgeoisie tries to shift the blame for the decline of its system of production and of its political regime to a “natural” and “organic” process – a process akin to that of the “ageing of an organism”.

In other words, whereas in the heyday of bourgeois capitalist development the focus of orthodox bourgeois “economic science” was to determine the “natural” mechanism for the production and above all the distribution of Value – now suddenly bourgeois economic science becomes aware of the inevitable, unstoppable decline of capitalist production…and quite possibly even of the demise,of this system of production – and with it, surely, also the extinction of the bourgeoisie itself. For once, the usually triumphant bourgeoisie becomes aware and wary of its ultimate mortality!


Hence, not only is the bourgeoisie aware of its system of vertiginously and intolerably destructive production (the oxymoron is a slap in the face for Schumpeter’s “creative destruction”), but yet it also seeks profligately to deflect responsibility for this onto some “natural” process of decay – without examining the causes of this degeneration and indeed the reasons behind the fact that “economic science” can no longer be an objective impersonal and disembodied, neutral-technical study but must rather concentrate on the ways in which distorted human social relations of production have as their ultimate deleterious effect the destruction of the environment in which humans necessarily operate – the destruction of the ecosphere.

Thursday, 11 May 2017

The Ultimate Causes of Secular Stagnation and Populism



We saw in our study on Knut Wicksell that “the natural rate of interest” – a phrase that he coined in his seminal works – is ultimately the rate of profit in a market economy that has established “universally free competition”. Of course, under conditions of universally free competition among both capitalists and workers, the natural rate of interest would ultimately come down to the rate of growth of the working population – because under these conditions only the marginal increase in the working population could provide the marginal product that could then be monetised by capitalists as “profit” or “interest”. Yet this phrase – “universally free competition” – alludes not just to “competition among capitalists”, but it refers above all to “competition between workers”. It follows that the chief aim of the bourgeoisie, so far as it has any political cohesion, is to de-compose and de-politicise the working class. But such de-politicisation will turn workers into a mob or “lumpen-proletariat”, if you wish – an inchoate, formless mass of atomised individuals without any political cohesion or direction.

The biggest attraction of a mob for the bourgeoisie resides in the fact that, first, a mob is easily instigated politically to do what the bourgeoisie wishes it to do; and second, that because a mob represents the decomposition of the working class, this necessarily raises the rate of exploitation or rate of profit or, if you wish, “the natural rate of interest”. The bourgeoisie despises the mob, but it fears the working class: the result is that the bourgeoisie needs continually to turn the working class into a mob as much as it can to reproduce its system of exploitation. That is why we said before that “the bourgeoisie loves the mob” – yes, but equally it despises it, and it fears the working class more than it fears its turning into a mob. Except that a mob is ultimately just as deleterious to the bourgeoisie as a cohesive working class can be.

The conundrum that the bourgeoisie faces with the creation of a mob, however, is dual: first of all, the creation of a mob – that is, the decomposition of the working class – also has the deflationary effect of lowering antagonism in the workplace, which is what drives capitalist ‘innovation’ and investment, with consequent loss of productivity; and second, the consequent lowering of workers’ living and consumption standards leads to a generalised malaise and resentment against the political system (the parties, the parliaments, and ultimately the deep-state administration) that are the forerunners to either revolution or dictatorship.

Any careful observer of the convulsions that bourgeois parliamentary regimes and capitalist economies the world over are experiencing right now and with growing exasperating intensity – any such careful observer will see that each of these phenomena – taken separately – are undoubtedly taking place before our eyes; and, if taken together, will have to agree that they present a compelling outline of the causal chain that links these otherwise seemingly unrelated socio-economic and political phenomena.

Because bourgeois, or “orthodox”, economists view the capitalist economy purely in quantitative terms of stocks and flows, they are quite unable to perceive the all-important sociological aspects of economic behaviour that affect their quantitative variables. One of the greatest conundrums orthodox economists have faced recently is precisely why so much apparent technological innovation has failed to produce any improvements in “productivity”, broadly defined. Yet the answer becomes obvious when one considers that whilst technological innovation has been applied to the “consumption” side of production, the same cannot be said for the “investment” side: and this is for the simple reason that, given the loss of working-class composition and the shift of investment to low-wage countries such as China – where workers as a class have been annihilated by the Communist Dictatorship -, then there has been and there is still no incentive for capitalists to introduce new machinery with higher productivity.

Political Consequences: The Rise of “Populism”


The conspicuous and perspicuous consequences of this de-composition of the working class the world over are, first, the ideological irrelevance of political parties and, with them, of the parliamentary system; and second, the growing need for the Deep State – the executive or bureaucracy – to intervene in politics in the first person, with the consequent re-politicisation of its role in the running of the society of capital. The more political parties lose their very raison d’etre, as is clearly happening everywhere around the world, the greater grows the need for “technocratic governments” to take over the reins of the economy and society at large. For a long time, for instance, central banks were able to make decisions that were then presented by political parties as part and parcel of their overall political strategies. But now that political parties and political governments are unable to legitimise such decisions cohesively – because they no longer “represent” the real conflicting interests of specific constituencies – it is unavoidable that central bankers themselves are called not just to make the decisions (which they always did in any case), but also to explain and justify them to an irreparably divided and antagonistic society of isolated abulic or headless “individuals” whose “opinions” change as fast as the next television drama on Netflix! This is what has come to be known as “populism” – a word that may roughly capture the symptoms of this phenomenon, yet also certainly misses its real origins and causes.

Monday, 8 May 2017

LEGITIMATION CRISIS of the Deep State


The frightful writhing convulsions of the Deep State that we are witnessing each new day – indeed, it may be said, even on an hourly basis now, and not just due to the 24-hour news cycle – are only the symptoms of much deeper and ominous causes. They are a warning to the bourgeoisie – at the international, not just national level – that its margin of manoeuvre (what Weber called “Ellebongsraum”, elbow room) is shrinking alarmingly quickly. The alarums and warning bells are there for everyone to hear. And because the room to manoeuvre of the bourgeoisie is shrinking so rapidly this has immediate and, again, terrifying consequences at the inter-national, geopolitical level. The surreal part of this coming denouement for the global bourgeoisie is that it seems to come at a time when indeed its power and global reach seem almost unlimited: but if Nero fiddled while Rome burned, it is also true that the flames of the coming conflagration will reach the temples of the nonchalant and indolent bourgeoisie much sooner than it realises.

That margin of manoeuvre (again to return to Weber, see “Politics as a Vocation”) is afforded to the bourgeoisie by the parliamentary system and, deeper down into the grassroots of society, by the party system. Thus, the first harbinger of growing social antagonism and of the loss of legitimacy of bourgeois rule – the earliest warning sign of the tsunami that is about to hit the thus-far impregnable fortress of the Deep State – is the precipitous, spectacular decline of the influence and appeal of political parties in the parliamentary system. Of course, without popular and strong political parties able to ensure the adherence of the mass of society to parliamentary institutions, it is parliaments that will collapse quite rapidly and sink without a trace in the groundswell of political conflict that will arise.

Parliaments were initially intended by the bourgeoisie as political devices to ensure the representation before the feudal Absolute Monarch of the propertied classes: remember that the initial war-cry of the bourgeoisie was “no taxation without representation”. But with the numerical and political rise of the working class from the 18th Century onwards, the bourgeoisie was forced to grant political representation to the vast majority of the population (universal suffrage) and also to allow workers to assemble in a political party. It was the rise of social-democratic workers’ parties that compelled the bourgeoisie to seek its own form of party-political representation in the shape of conservative formations seeking the political support of middle class electorates.

Bourgeois political parties were always parties of “notables”, popular figures or personalities or “leaders” who could draw the support of large numbers of the population through connections and influence. Of course, proletarian revolutionary or “opposition” parties always posed a danger to bourgeois supremacy in the parliamentary system, so a way had to be found to integrate or assimilate these opposition parties in the “parliamentary system”. And the way to do this was to force them to become “mass” or “umbrella” parties with political programs that did not embody the “partisan” interests of their members but extended their appeal to “the people” or “the nation”. Of course, the more political parties have become engulfed and mired in the parliamentary game, the more their appeal has become “national” to the point where they have entirely lost any antagonistic substance, that is to say, to the point where political parties are no longer able “to represent”, as they were meant to do initially, the conflicting and antagonistic interests of their members.

Yet this very “massification” of political parties – the fact that they have been forced to channel and adapt their antagonistic drive to the homologating strictures of parliamentary and constitutional rules set up by the bourgeoisie – has emptied their “political” function of all content and substance and reduced mass parties to the status of football teams! The real reason behind the decline of bourgeois “liberal democracy” is the very success of the bourgeois effort to reduce political parties to arms or instruments or indeed extensions of “the State”: in short, by turning into arms of the bureaucracy, of the Deep State, political parties – even and especially(!) “opposition” parties – have signed their own death decree! The respective electoral mottos of Emmanuel Macron and of Marine Le Pen in the French presidential election just concluded were “Ensemble, la France” for the former and “Choisir la France!” for the latter. It would be absurdly laughable if it were not also tragic! As is amply obvious, the real antagonism that threatens to tear French and European society asunder is now hidden and farcically disguised behind besotted appeals to “unity” and “la France”!

The much-trumpeted “decline of social democracy” in Europe and around the world, which is celebrated by the haute bourgeoisie as the seal of its ultimate triumph, is in reality the beginning of the end for the bourgeoisie itself – because once it cannot channel and control by means of the parliamentary game the antagonism rampant in capitalist society, the bourgeoisie will find that it is impossible to control its own population let alone that of other national bourgeoisies, themselves in the throes of de-legitimisation and political dissolution.

Of course, the massification and dilution, the evisceration of antagonistic political parties has been achieved not just through the bureaucratic parliamentary regime established by the bourgeoise through the Deep State, but also and above all by the cultural and organisational “massification” of the body politic itself. We have said repeatedly here that “the bourgeoisie loves the mob”: and it has made monumental efforts to create a mob by turning the body politic into a shapeless mass of abulic individuals through concerted attacks on the organic composition of the working class and, to no small extent, through the brutalisation of everyday life consequent upon the denial of social services and also, last but not least, through the culture industry – the entire bizarre machinery of panis et circenses (bread and circuses) that ranges from Hollywood to show business broadly as well as advertising and marketing.

This specific form of propaganda comes naturally to the capitalist bourgeoisie: capitalism, after all, is a form of domination whereby workers “freely” alienate their living labour “in exchange for” the objectified products of their activity (“dead labour”), which the capitalist then uses “to purchase” the living labour of other workers, and so on ad infinitum. This impossible exchange involves, of course, the coaxing of workers to purchase their own products from the capitalist – something that we know as “consumerism”. And consumerism requires marketing as the main form of persuasion (recall V. Packard’s famous work “The Hidden Persuaders”). In short, the bourgeoisie is masterful in devising infinitely devious and diabolical ways of selling its peculiar brand of slavery. By the same token, this sales effort must be able to hide and disguise – indeed, to present as desirable – all the deleterious and despicable practices that debase, defile and distort human instincts and values. Thus, for instance, motor vehicles that pollute the ecosphere are sold with lakes and mountains in the background, driven on roads with no other vehicles in sight… It takes just one simple instance like this to illustrate once and for all the self-destructive suicidal bent to which global capital, the bourgeoisie, is driving humanity.


Even more than the mob, the bourgeoisie is entranced by the degree of political and social mastery and command over their populations exhibited by “Oriental” and Eurasian dynasties such as those of Imperial and now Maoist China, and those of Czarist and then Stalinist Russia. In the guise of Donald Trump, of course, this extends to Putin’s Russia, as we know. Perhaps the most odious aspect of late capitalism is the way in which it presents new and more insidious and powerful methods of political domination such as “artificial intelligence” as ineluctable aspects of human Progress, as capable of solving all human problems when in fact they are just hideous illustrations of the intolerable brutality and hubris of the bourgeoisie against which we shall either rise up or else to which we shall infallibly succumb.

Saturday, 6 May 2017

The Party System and the Deep State


The common belief shared almost universally even by the most trenchant critics of “liberal democracy” is that it is the legislative arm of the State – the Legislature or Parliament or Congress – that determines the political direction of a country and its people; and that the Executive (the bureaucracy or public administration) merely executes or implements what is decided by the Legislature. And it is an even more ingrained belief that this political will emanates directly from “the electorate” through the election of political “representatives” to the Legislature or Parliament. And, as we know, this political will is expressed through an electoral process that is monopolised by political parties.

What few understand, however, is the simple truth that even the political organisation of electoral parties must conform to strict “constitutional guarantees” that allow the Deep State (the bureaucracy or, if you wish, “the system”) to control the constitution of political parties – their membership, their charters and programs, their funding. Even before it begins to formulate its political program, therefore – indeed, right from its political birth and inception – a political party must conform to the organisational rules laid out by the Deep State in the Constitution. Remember that, as Carl Schmitt incessantly reminded us, the Constitution sets out the rules – but it does not tell us who precisely is the person who decides! In other words, there are two levels at which the Deep State controls the outcome of elections and the implementation of the so-called “political will of the people”. The first level is by setting out strict rules – the strictest possible because they are legislated in the Constitution – with which all political participants and parties must comply. Indeed, as we know, many constitutions either explicitly or implicitly institute political parties as being already part and parcel of the Constitution itself! In other words, even before political parties can express the will of their members, they are already obliged to play “by the rules”!
But the second level of control is that even though the rules are set out clearly in writing since the Code of Hammurabi or the Roman Decalogue, the reality remains that the Constitution does not prescribe who precisely will decide upon the rules and – most important – on their “exception”! The constitutional rule is ultimately dependent both for its interpretation (the Judiciary) and for its enforcement (the Police or the Army) upon the decision of a particular person or group of persons! This means that the bourgeoisie is always able from the outset to determine the outcome of “the parliamentary game” by sheer virtue of the fact that its own members occupy the offices of political power in the Deep State!

Of course, once political parties succeed in having their “candidates” elected to the institutions prescribed by the Constitution – and most specifically to Parliament -, then the candidates elected, the “electoral or party representatives”, are even more constrained and bound by the parliamentary rules set out in the Constitution! One thing is for an elected representative to get to Parliament; it is quite another once that “representative” gets to Parliament – because once in Parliament the representative can no longer simply represent the electorate or party that got her or him elected but must indeed first and foremost represent the Constitution! He or she must be bound by the myriad rules laid out either in the Constitution and in all its instrumentalities. Essentially, a representative or member of parliament must act always “in the interests of the nation” – which is to say, in the interests of the persons who already are the guardians of the Constitution, which is to say, in the interests of the Deep State as it is constituted by the bourgeoisie!

It is not the case that the bureaucracy of the Deep State is impersonated or embodied by functionaries selected at random or indiscriminately from the body of the population – from the body politic. As everyone knows, the selection of the bureaucracy is almost exclusively decided by the existing bureaucracy – and this bureaucracy goes back to the early establishment of modern bourgeois parliamentary regimes. This is a way of saying that the old Absolutist State, the Ancien Regime, never truly died: it simply metamorphosed into the present-day State bureaucracy, into the Deep State. The Parliaments that the bourgeoisie established since the American and French Revolution, and since the earlier English Revolution with Oliver Cromwell and the Long Parliament – these parliaments had the paramount and indispensable function of absorbing and neutralising the conflicts and contradictions and antagonisms existing in our societies provoked predominantly by the sheer violence and brutality of the bourgeoisie, by its domination over the rest of society. And the bourgeoisie achieved this aim, albeit reluctantly, through its co-optation of social antagonism by means of the institutions of parliament and ultimately of the political parties.

Indeed, it is a historical fact that the organisation of working-class parties themselves – the European social-democratic parties and Labor parties – quite faithfully mirrored the bureaucratic organisation of the bourgeois Deep State because, once the “elected representative leaders” of these parties joined the Parliaments it was impossible for them even to begin to govern and legislate without complying with and strictly adhering to the bureaucratic decision-making processes of the bourgeois Deep State. As we have seen with greater intensity and frequency recently, political parliamentary representatives are invariably torn between formulating and promoting their political “mandates”, on one side, and then winning over the co-operation of the existing bureaucracy in order to implement them!
Almost invariably, elected representatives find that by the time they attempt to implement their mandates the bourgeois bureaucracy – empowered by the constitution – bluntly forces them to restate and indeed recant and renounce their original “democratic mandates”. To the degree that the democratic mandate of parliamentary representatives has to be translated into the rules of the parliamentary game and then be made to fit into the straitjacket of bureaucratic execution – by that time any “transformational” and indeed “revolutionary” or even “democratic” content that these mandates had is totally lost in the bureaucratic maze!

The Deep State – the bureaucratic Executive – thus has the power to neuter and defeat any conflictual and antagonistic content that the bourgeois constitutional electoral process might have placed in motion. As one droll but piercingly accurate anarchist motto has it, “if elections could change anything, they would be outlawed!” This histrionic motto in fact quite accurately and brilliantly summarises the reality that “elections” (parliamentary democracy) are entirely dependent on “the constitution” (the deep State) which ensures that elections cannot change the Constitution erected by the bourgeoisie: - quite simply because such a change - and not this or that insignificant policy, fruit of the squabbling between political parties and politicians – would clearly amount to the most serious crime! There is no crime more serious in a constitutional democracy than any attempt to change the Constitution! The Constitution is sacrosanct to the bourgeoisie not because it contains the infamous “democratic guarantees” idolised by Benjamin Constant and Alexis de Tocqueville or Edmund Burke, but simply because these “guarantees” are the foundations of bourgeois domination over the entire nation and its population! They are “guarantees” – in other words, they are legal rules independent of the democratic will of the society, and specifically of the working class – that do not emanate from the society itself but – as the word “guarantee” suggests – from a pre-existing “constituted power”! Modern bourgeois capitalist regimes adamantly and rigorously and violently proscribe any and all attempts at “constituent power”!


In the “parliamentary game”, the sheer connivance of political parties in the bolstering of the Deep State is starkly evidenced by the phrase “Her Majesty’s loyal opposition”. The concept of “loyal opposition” clearly illustrates and demonstrates how the “alternation” of political parties in forming governments is entirely subordinated to maintaining the status quo embodied in the Constitution and administered by the Deep State! The “loyal opposition” to which all political parties must subject themselves under the Constitution demonstrates the ultimate supremacy and pre-eminence of constituted power over constituent power – of the status quo over any revolutionary velleity by the antagonistic movement; it represents the forswearing and abjuration by political parties of any activity that may challenge the established constitutional order. (For a revealing exposition of the historical development of political “opposition” parties in the United States, see R. Hofstadter, The Idea of A Party System. For Europe, see our already cited M. Duverger, Les Partis Politiques.)