Archive

Posts Tagged ‘leon keyserling’

Don’t open the window, tear down the walls…

January 1, 2010 Leave a comment

When Tom Walker first raised the topic of Overton’s Window, it did not seem to us to hold much value beyond the obvious conclusion that a democratic society, when it is at equilibrium, allowed for only the most modest changes at the margins.

We thought: Hey Tom, tell us something we don’t know.

After years of living with two wars, after the catastrophe that was the 2008 financial crisis, and after witnessing the fiery critique of American foreign policy that resulted in nearly 3000 deaths on September 11, 2001, and the watery critique of its domestic policy with Katrina, if society could pass through this and emerge with political relations pretty much undisturbed, we thought even marginal change itself seems like an overly optimistic goal.

Our opinion was simple: Society would change when it was impossible for its members to muddle along from one catastrophe to another. In the case of shorter working time, that means when you will reduce hours of work when, no matter whether you have a job or not, you still face starvation.

When hunger and want stalk you, no matter how many hours you sell yourself into slavery, the idea of selling yourself into slavery will die on its own

Okay – a little over the top, we admit. Not wrong, we believe, insofar as it goes, but it certainly doesn’t offer much hope that things will change short of really desperate times. (And, frankly, you can’t be trusted to do the right thing in relatively good times, how likely is it you will instinctively do the right thing in really desperate times?)

So we got to thinking, and trying to imagine something other than the worst case scenario. (Really difficult, mind you, this imagining something other than the worst case scenario. The last time we got our hopes up for real change was when the Soviet Bloc disintegrated, and a tiny handful of people began talking of a peace dividend. But, then HW’s sweetheart got bitch-slapped by Saddam Hussein, and suddenly it was the Munich in the Summer of 1938 all over again. Our children will never know how close this proud nation came to speaking Arabic with Iraqi accents! Just thinking about it gives us chills!)

Short of really desperate times how might the reduction of working time be realized?

One thing which got us thinking about this was recalling the events that led up to the dissolution of the Soviet Union.

After years of subpar performance, the leadership of the SU finally admitted they had among themselves no new ideas how to reverse the decline in the living standards of the country. Much like the US today, massive amounts of work time were being squandered on a useless buildup of military might, environmental degradation, social alienation, and war. A new leader, Gorbachev, ascended to power and found the support among the sclerotic elite to make one last push to break the spiral of decay – in a campaign they called Glasnost (openness and freedom) and Perestroika (economic restructuring). The idea was to take a hidebound, autocratic, ideologically rigid statist political system and open it up to new ideas that would, in some undefined fashion, make it possible for the Soviet Union to overcome the catastrophic course on which it clearly traveled.

It was, in other words, an announcement of the impending systemic collapse of the society by the Soviet bureaucracy in the only way a bureaucracy can admit its complete and utter failure: They put up a suggestion box.

Much like Overton’s Window the question of the moment in the Soviet Union was how to expand the range of possible change to which the system would be subject.

That it failed is not the point of this brief recollection; rather, the point is this item taken from the Wiki:

Arriving in Berlin on June 12, 1987, President and Mrs. Reagan were taken to the Reichstag, where they viewed the wall from a balcony. Reagan then made his speech at the Brandenburg Gate at 2 PM, in front of two panes of bulletproof glass protecting him from potential snipers in East Berlin. About 45,000 people were in attendance; among the spectators were West German president Richard von Weizsäcker, Chancellor Helmut Kohl, and West Berlin mayor Eberhard Diepgen. That afternoon, Reagan said,

We welcome change and openness; for we believe that freedom and security go together, that the advance of human liberty can only strengthen the cause of world peace. There is one sign the Soviets can make that would be unmistakable, that would advance dramatically the cause of freedom and peace. General Secretary Gorbachev, if you seek peace, if you seek prosperity for the Soviet Union and eastern Europe, if you seek liberalization, come here to this gate. Mr. Gorbachev, open this gate. Mr. Gorbachev, tear down this wall!

Later on in his speech, President Reagan said, “As I looked out a moment ago from the Reichstag, that embodiment of German unity, I noticed words crudely spray-painted upon the wall, perhaps by a young Berliner, ‘This wall will fall. Beliefs become reality.’ Yes, across Europe, this wall will fall. For it cannot withstand faith; it cannot withstand truth. The wall cannot withstand freedom.”

The words President Reagan saw on the Berlin Wall, were not written by a young Berliner. The words were actually spray painted on the Berlin Wall by an American. On October 10, 1986, William Ozkaptan spray painted the words “The wall will fall. Beliefs become reality. W.Oz 10/10/86”.

Another highlight of the speech was Reagan’s call to end the arms race with his reference to the Soviets’ SS-20 nuclear weapons, and possibility of “not merely of limiting the growth of arms, but of eliminating, for the first time, an entire class of nuclear weapons from the face of the Earth.”

A little background to understand this excerpt

When National Security Council Report 68 was written in 1949-1950, the authors anticipated that the Soviet Union would, on occasion, make peace proposals to limit the possibility of conflict between the two empires. In their view, such proposals were little more than ploys designed to undercut Western resolve to contain the SU and its bloc of allies.

… the absence of good faith on the part of the U.S.S.R. must be assumed until there is concrete evidence that there has been a decisive change in Soviet policies. It is to be doubted whether such a change can take place without a change in the nature of the Soviet system itself. (p. 83)

However, whether these were ploys or legitimate attempts by the Soviet Union to deescalate the conflict is besides the point, since the reality the authors of NSC-68 faced was the possibility that such “ploys” might appeal to public opinion in Western Europe and the United States – and they wanted nothing to compromise Western willingness to contain the SU for what promised to be a very long time.

Gorbachev’s Glastnost and Perestroika was viewed in the same light by the authors of NSC-68 – who had, since, abandoned the Democratic Party in disgust, and rallied to Reagan during the Carter Presidency. A Soviet leadership committed to change on its own terms threatened an already grumbling coalition of Western governments and malcontents, and presented the threat that Washington Empire might disintegrate as well. To answer this threat, Reagan took to the podium on that day in Berlin to issue the ultimate challenge to the Soviets: Tear down this wall!

The Soviets called his bluff, and the American Dollar Empire went looking for a new evil to justify its bloated existence.

The rest of the story is a collection broken bodies, burnt beyond recognition, in buildings, wedding parties, and beds.

What lesson is there in this?

Gorbachev set out to widen the window of possible change in the Soviet Union. Reacting to this event, and intent on maintaining its coalition, the United States responded to this charm offensive by demanding that the Soviet Union do more than widen a window in the wall: The wall itself must be brought down.

The Soviet Union had to abolish itself.

Having abolished itself, it imediately called into question its opposite – the American Empire – the leaders of which have been working mightily to justify its continued existence based on the proposition that 48 percent of global war spending must be devoted to the extermination of one guy in a cave on the Afghan-Pakistan border.

Don’t widen the Overton Window, tear down the Wall.

As Barkely Rosser at Econospeak has pointed out, all of the most pressing problems today, which have produced fairly broad, if mostly unconnected, movements for change are rooted in the need to reduce hours of work. (Rosser made this point only to disparage the work of Tom Walker, but it is true.)

To give a few examples:

  • The wars in Afghanistan and Iraq could not be waged were it not for the excess hours of work put in by us that take the form of armaments production.
  • The waste that results in environmental degradation occurs first as the waste of the human labor which produced it.
  • The problem of containing health-care costs and delivering medical care to those who need it is generated not by too little working time in that sector, but too much.
  • The inequality endemic in all major industrial nations, which has led to bubble after bubble, and financial collapse, is created by hours of work set at unsustainable levels, which makes for massive profits seeking any outlet for reinvestment – even as unconscionable levels of human want is left intact.
  • Free trade, protectionism, immigration reform are all clearly connected to the problem of global excess capacity and an large global pool of unemployed labor that owes its existence to the overwork of those who are employed.
  • The overhang of debt, both public and private, rests on a large pool of superfluous profits that exist to be loaned out to governments and individuals – it is these superfluous profits which compel the growth of debt, not the other way around.

We could go on and list any of a number of social ills that have produced movements of individuals devoted to their eradication that are, at their core, only symptoms of a society which simply suffers from overly long hours of work.

(In fact, it was our intuition at the time, that the Soviet Union faced precisely this problem – albeit in a more pronounced form. Economists called it investment hunger, or some such stupid label. However, the paradox presented by this investment hunger was that adding ever more labor resources to enterprises only raised cost without significantly raising output)

We think it is time to take Ronald Reagan’s advice and tear down the walls that separate work time reduction from each of these movements, and, which separate and compartmentalize these movement each from the other – often on opposite sides of the political spectrum. Advocates of work time reduction must do the painful, difficult work of amassing evidence to support the proposition that each of these ills are no more than symptoms of overwork.

Much has been done so far to make the connection between global warming issues and long hours of work. Still more work like this is needed on a host of issues, even – dare we say it – wading into emotionally charged issues like immigration, and speaking to the leaders and members of a movement not known for political correctness.

We would like to know your thoughts on this.

Advertisements

“There stirs in Americans today a haunting sense of insecurity…”

November 29, 2009 Leave a comment

In fitting tribute to the Messiah’s new shovel ready jobs program which is to be rolled out this week – 40,000 public employees digging foxholes in Afghanistan at the rumored cost of about $1 million per employee per year – Tom Walker has posted the full text of a remarkable yet almost forgotten 1952 speech by Dwight David Eisenhower exposing how Washington was solely responsible for inflation in the economy by using Cold War armament production to create a false prosperity under NSC-68.

As I said at the outset: all our problems today are tied to one another, and none can be solved by itself. With tens of billions spent on armaments, another six to seven billion yearly on foreign aid, we see again that the soundness of our financial health at home depends on the soundness of our foreign policy.

The blunt truth is this: we cannot bear this huge burden indefinitely. We cannot—year after year, decade after decade— both maintain our standard of living, finance huge armaments, and help to rebuild economies of nations all around the globe. We cannot, in short, win the peace with foreign policy of drift, makeshift, and make-believe.

We must ‘honestly face the fact that such a policy not only fails to secure the peace: it also places the hopes of the free world in jeopardy by the strain it puts on our economy., and by the confusion it creates in other lands.

There is in certain quarters the view that national prosperity depends on the production of armaments and that any reduction in arms output might bring on another recession. Does this mean, then that the continued failure of our foreign policy is the only way to pay for the failure of our fiscal policy? According to this way of thinking, the success of our foreign policy would mean a depression.

Don’t count on a replay of the Great Depression…

September 9, 2009 Leave a comment

We are trying to figure out what of the criticism we leveled at Paul Krugman is relevant, and what is not.

Krugman’s article raised two important points:

  1. Schumpeter was not some flat earther who believed in a stable, steady state theory of capitalist markets. He believed, based on what I have read of his works – a tiny. perhaps, unrepresentative fraction – both that markets were prone to sudden and even violent dislocations, and had a definite trajectory toward ultimate collapse. The former, at least, driven by technological change. Perhaps the latter as well. He also seemed to believe these two tendencies were not exceptional cases, needing to be explained or accounted for separately from a description of how capitalism worked, but had to be accounted for in the description of the capitalist market itself. The fact that even the most rudimentary examination of his work reveals how different his ideas were from how he is presented by Krugman is telling.
  2. The same conclusion applies to how Krugman treats Lord John Maynard Keynes. I have not been a fan of his, and only came to understand his work based on tutoring by Tom Walker. I had absorbed much of what I knew of his theories from reading the post-war American interpretation. That interpretation, which, apparently, Krugman has swallowed whole cloth, calls for government intervention to stabilize the economy through fiscal and monetary policy tools. It completely neglects Keynes’ comments that shorter working time is the long term solution to the problems arising from the depression. However, it is one thing for me to fall victim to this misunderstanding, it is quite another for Krugman – who fancies himself as a follower of Keynes – to spout the same one-sided interpretation.

*****

schumpeterSchumpeter’s main criticism of the steps taken by the Federal Reserve and the Roosevelt administration during the Great Depression was simple: the Great Depression, however, difficult, was a necessary adjustment to the changes which had taken place in the economy over several decades – changes which had virtually transformed the economic landscape, and increased the productive power of labor beyond anything imagined up until that time.

To cope with those changes, a number of measure had been taken, some of which were necessary – relief for the unemployed – some of which only served to intensify the crisis – protectionism, the replacement of gold by fiat money, and the imposition on Germany of the costs of World War I – some of which were called for, but vulnerable to charges they undermined economic activity – the Glass-Steagall Act (which ultimately was undone by the Clinton administration) comes to mind.

And then there were those measures specifically designed to prevent the economy from adjusting to the new economic reality of less work: the Keynes inspired government intervention, using its fiscal and monetary powers to promote an inflationary expansion of the working time.

Tom Walker has pointed out recently that, based on the available evidence, at least one author of the history of working time, Benjamin K. Hunnicutt, believed the Roosevelt administration undertook the latter set of policies specifically to avoid reducing the work week as proposed by the Black-Connery 30 hours legislation:

It is true that Ben Hunnicutt doesn’t see the New Deal programs as a conspiracy. What he does say, though, is that the only real coherence to the programs was the intent to defeat the Black Bill. Or, to soften that somewhat he attributes the view to a few of his sources (Keyserling and Connery) without directly disputing it. Whether or not one calls an intentional program a conspiracy depends, technically speaking, on its legality and secrecy.

“In a letter to Arthur Schlesinger dated April 9, 1958, Leon Keyserling stressed that Roosevelt came to Washington without a “systematic economic program.” The “highly experimental, improvised and inconsistent” programs of the first New Deal defy categorization. They were the products of “schools of reformers” that had been promoting diverse programs that Roosevelt, higgledy-piggledy, picked up.

“According to Keyserling, the PWA, CWA, NIRA, and the rest were not parts of any systematic plan or overall purpose. The only coherence given these events came from outside the administration. It was the “desire to get rid of the Black bill” that prompted the administration to draw up such things as the NRA, “to put in something to satisfy labor.” This same point was made by other notables in Roosevelt’s administration, among them Raymond Moley.

“Throughout the depression, 30-hour legislation goaded Roosevelt to action. The Black-Connery bill, introduced in each depression Congress until passed in highly modified form as the Fair Labor Standards Act [FLSA] in 1938, with all the work-sharing teeth pulled, continued to function as a sort of reverse polestar, enabling Roosevelt to chart his course by the simple expedient of sailing in the opposite direction.

Roosevelt’s instinctive reaction against 30 hours matured to positive approaches to industrial stabilization and reemployment. They were built on work creation, not work spreading, founded on industrial growth and increased spending as the wellsprings of progress. In the process, he and his administration discarded the century-old notion that work reduction had the potential for social and individual advancement.

“From the point of view of someone like Representative William Connery, who pushed for 30 hours from 1932 to 1937, the New Deal had a coherence, a reason for happening when and as it did, that was lost on others not so positioned. From Connery’s perspective, the New Deal was what it was because of its opposition to 30 hours. — Hunnicutt, Work Without End, pp.248-49″

The relevance of Schumpeter’s observation to the present crisis is compelling. If he is correct, what we are witnessing is not simply a replay of the Great Depression, but of the Great Depression PLUS all the accumulated changes to global economy which have taken place since that time.

But to this balance of adjustment which must be accounted for in this crisis, we should add all the imbalances that have built up over that time, and, which resulted from seven decades of government intervention to forestall the adjustment to all the economic changes over that entire period.

Says Schumpeter:

For any revival which is merely due to artificial stimulus leaves part of the work of depressions undone and adds, to an undigested remnant of maladjustment, new maladjustment of its own which has to be liquidated in turn, thus threatening business with another crisis ahead. Particularly our story provides a presumption against remedial measures which work through money and credit. For the trouble in fundamentally not with money and credit, and policies of this class are particularly apt to keep up, and add to, maladjustment, and to produce additional trouble in the future.

*****

john-maynard-keynesBy contrast Keynes believed there was a role for just the kind of monetary and fiscal intervention that Schumpeter wanted to avoid.

The problem, from Krugman’s perspective, is that he saw this as a strictly limited intervention, with clear limited aim, and further limited in duration.

The blog, Econospeak, has reproduced his ideas on this in full, of which we excerpt the relevant portion:

4. After the war there are likely to ensure [sic] three phases-
(i) when the inducement to invest is likely to lead, if unchecked, to a volume of investment greater than the indicated level of savings in the absence of rationing and other controls;
(ii) when the urgently necessary investment is no longer greater than the indicated level of savings in conditions of freedom, but it still capable of being adjusted to the indicated level by deliberately encouraging or expediting less urgent, but nevertheless useful, investment;
(iii) when investment demand is so far saturated that it cannot be brought up to the indicated level of savings without embarking upon wasteful and unnecessary enterprises.

In Keynes’ view, in other words, following World War II there would be a period of rationing while the economy recovered; a period where economic policy would be to encourage some additional investment to bring the economy up to its potential; and a period where, in his words, It becomes necessary to encourage wise consumption and discourage saving,-and to absorb some part of the unwanted surplus by increased leisure, more holidays (which are a wonderfully good way of getting rid of money) and shorter hours.”

Keynes estimated that it would take some 10 to fifteen years after the war ended to get to the point where working time would have to be reduced in order to discourage saving and prevent unnecessary and wasteful over-investment – what we would call a bubble today.

The war ended in 1945, which would have put the ideal time to begin reducing hours of work at around 1960 at the latest.

If we double Keynes’ off the cuff estimate, just to be conservative – to thirty years, rather than fifteen – we are in the middle of the stagflation of the 1970s, which brought about the collapse of the Keynesian Revolution in economics.

*****

It is impossible to say with precision how this insanity will unfolds over the next period, but we believe any comparison to the Great Depression completely underestimates the degree of adjustment that must impose itself on the global economy to account for unfinished adjustments of the Great Depression, the accumulated changes since then, and the perversities introduced into what Schumpeter called the economic organism in the seven decades since World War II, which have resulted in one after another bubble.

This triple threat is now aimed at the survival of millions of working families in this country, and billions more beyond.

The management of this crisis is now in the hands of the very men and women who failed so miserably to avoid it. It really is not clear that it can be managed even in the best of circumstances, but it is obvious that the first step in that process is to remove those who made it inevitable by prolonging the very policies that made it inevitable – this is now a political catastrophe.