Sunday, July 27, 2014

Reading Capital... in the 21st Century (part 3 of x)

The best way to learn humility about one's own commentary about international politics is to read the commentary of intelligent foreigners about the politics of one's native land. They may have some important insights, but there is inevitably some point of detail that is off. Consider, for example, this passage in Piketty, contrasting the U.S. and Canada. After showing that Canadian capital has been in a net negative position with respect to foreign, mostly British, capital for most of Canada's history, he states:
"This comparison of the United States with Canada is interesting, because it is difficult to find purely economic reasons why these two North American trajectories should differ so profoundly. Clearly, political factors played a central role. Although the United States has always been quite open to foreign investment, it is fairly difficult to imagine that nineteenth-century US citizens would have tolerated a situation in which one-quarter of the country was owned by its former colonizer."

In effect, in this passage Piketty projects a 20th century anti-colonialism back onto the Americans of the late 18th and early 19th centuries, assuming that there was an expropriative drive after independence that accounts for the comparatively low net position of foreign capital in the U.S. In reality, to the extent that there were expropriations, these were actions of plebeian masses with which the American ruling elite of the time was quite uncomfortable. Hence it is little surprise that the fifth and sixth articles of the Treaty of Paris of 1783, in which Britain recognized the independence of the States and ended hostilities, provided for recognition of the rightful owners of all confiscated lands and "provide for the restitution of all estates, rights, and properties, which have been confiscated belonging to real British subjects," and the prevention of future confiscations. To the extent that Britons after 1783 divested themselves of their remaining U.S. holdings, it had less to do with risk of expropriation by the Americans, and more to do with the costs and risks associated with maintaining a business interest across the ocean, in a newly independent country whose institutions were still notoriously unsettled.

He also overlooks a key aspect of the growth of the United States, which is that in the early days of the republic, any white European (especially northern European) could be naturalized as a U.S. citizen almost immediately. This was especially the case for those individuals who arrived in possession of some form of portable capital--e.g. metallic currency or letters of credit from reputable European banks. For any foreign investor who wanted to make a buck in the early U.S., the barriers to being considered American were low, and for those who would prefer to retain their old world comforts while investing from abroad, that was a riskier proposition in those days due to the state of transport and communications.

Piketty is at his most flagrantly ideological in his evasion of the role of chattel slavery in the rise of capitalism. He in effect uses it as a polemical bludgeon against contemporary theorizations of "human capital": "Attributing a monetary value to the stock of human capital makes sense only in societies where it is actually possible to own other individuals fully and entirely--societies that at first sight have definitely ceased to exist." (163) That may well be a fair argument against conceiving of waged labor as "human capital"--though forced labor is hardly a thing of the past--but it says nothing about how capital valued slave labor in the years of its birth, when it was a major "asset class." In a bizarre endnote, he attempts to argue against counting slave ownership as capital at all: "If each person is treated as an individual subject, then slavery (which can be seen as an extreme form of debt between individuals) does not increase national wealth, like any other private or public debt...." (592-3n15) But the whole point is that slavery existed precisely because enslaved Africans and their descendants were not conceived of as "individual subjects". It is not an extreme form of debt, since even if a slave managed to accumulate enough money-capital to buy his freedom, the decision to sell or not was entirely up to the master's whim, and the "debt" continued indefinitely to all future generations. Unlike debt peonage in Latin America and, after 1848, the southwestern U.S., slavery was infinite and eternal.

Piketty tries to justify his refusal by arguing that, among today's advanced capitalist nations, slavery was only significant in the U.S. The value of slaves in the West Indies to the British and French Empires is masked in aggregate figures of capital invested abroad: "Since total foreign assets did not exceed 10 percent of national income in these two countries at the beginning of the nineteenth century, the share of slaves in total wealth was obviously smaller than in the United States." This completely factors out the value of money-capital and other forms of domestic capital that had been accumulated through the participation of British and French merchants in the transatlantic slave trade over centuries, not to mention the growth of related industries (e.g. maritime insurance) around the slave trade. Another historically illiterate endnote informs us that "The number of slaves in French colonies emancipated in 1848 has been estimated at 250,000 (or less than 10 percent of the number of slaves in the United States)." (593n16) Yes, and the reason that there were so few slaves in French overseas territories by that time is that when Napoleon tried to re-impose slavery in 1803, the Haitians under the leadership of Toussaint l'Ouverture and Jean-Jacques Dessalines staged the largest act of self-emancipation in world history.

It is only in the U.S. that he is forced, reluctantly, to reckon with the value of slaves as capital, and here we have a curious finding: "If we include slaves along with other components of wealth, we find that total American wealth has remained relatively stable from the colonial era to the present, at around four and a half years of national income." (159) And indeed, his Figure 4.10 appears to confirm it. But here's the peculiar thing about that figure: The chart is plotted in 30 year increments. Indeed, from 1850 to 1880, there is a slight decline in Piketty's all-important β, but only a slight one, and this is at first blush surprising to anyone familiar with U.S. history, coinciding as it does not only with a tremendously destructive civil war, but with a major expropriation of capital, through emancipation of the slaves.

Somehow, U.S. capital managed to mostly recover from the largest expropriation in its history in the span of only 15 years between 1865 and 1880. For those of us who know the history of Reconstruction, this unfortunately comes as no surprised: The former slaves, increasingly stripped of their civil rights and subject to a reign of terror, were with few exceptions forced into a form of debt peonage under the guise of the sharecropping system. Those who urbanized were kept as a subcaste that could be paid wages much lower than average. Chattel slavery ended, but in these forms the lost slave capital could be fiscalized, black labor returned to a state where it could produce reliable rents for a portion of the U.S. ruling class.

Nor is this unique to the U.S.: In 1825 the Bourbon monarchy extorted 150 million gold francs from Haiti as "compensation" for the expropriation of French slaveholders, a debt that Haiti was not able to pay off until 1947--a 122-year span during which many a French rentier clipped coupons from the hides of Haitian peasants and workers.

Such a major blindspot in Piketty's description of capital in the 18th and 19th centuries (with effects that continued well into the 20th and even until today), leaves one alert to similar gaps in his description of capital today.

Saturday, July 26, 2014

Reading Capital... in the 21st Century (part 2 of x)

I've covered a lot of ground in Piketty since my last post and have not even gotten halfway through. The notes in this post will not be sequential, but will instead start with another example of what I have called "Piketty's Straw Marx," this time his feeble attempt to refute Marx on the tendency of the rate of profit to decline, in the subchapter "Back to Marx and the Falling Rate of Profit" (pp. 227-230).

It's a good thing I wasn't eating when I read this passage, or might have choked when I came to the sentence, "Marx did not use mathematical models, and his prose was not always limpid, so it is difficult to be sure what he had in mind." The irony is that the section of Capital Volume 1 where he introduces the concept is one of Marx's more limpid passages. And while one needs to delve into the wilds of the Grundrisse to find the mathematical model Marx was trying to explicate, it is there in quite clear terms, both as a formula and as inequality. As a formula, it is S / (C + V), the formula for calculating the rate of profit, where S equals surplus-value, C equals constant capital (the value of the capital equipment, facilities, materials and supplies used up in the production process) and V equals variable capital (the value of the capital paid out as wages for the purchase of labor power). The inequality compares the rate of profit to the rate of exploitation S / V, i.e., S / (C + V) < S / V, for the straightforward mathematical reason that in no branch of production, at no stage of economic history, can C be equal to zero.

What follows Piketty's dismissal of Marx's prose and mathematics is an attempt to restate Marx's arguments in Piketty's terms that bears no resemblance to what Marx actually wrote anywhere. The presence of this chapter seems to be an attempt to maintain respectability by stressing that, whatever the implications of his statistical analyses, surely it is not Marxism.

The problem for Piketty is that, for a reader with an understanding of what Marx actually wrote, its mathematical basis, and the economic phenomena those formulas describe, there is a clear homeomorphism between several of Piketty's key concepts and those of Marx. His α (share of the national income represented by earnings on capital) corresponds to Marx's S [or more precisely, S / (S + V)], albeit on a nationally aggregated scale. His r is indistinguishable from Marx's rate of profit, expressed as S / (C + V). And while his β (ratio of the national capital to the national income) is not identical to what Marx terms "the organic composition of Capital" (C / V), since Piketty's definition of the national income includes earnings from capital (S) within it, then to the extent however that the rate of exploitation (S / V) remains fairly constant, there will be a linear relationship between Marx's "organic composition" and Piketty's β.

If anything, Piketty's formulas show why it is that, contrary to the Straw Marx, the actual Marx recognized that the end of capital was never going to be an automatic result of the declining rate of profit. If α = r × β, then even if there is a low r (rate of return, or rate of profit) capital can still appropriate for itself a significant share of the national income as long as there is a high β, that is, as long as the accumulated value of constant capital (Marx's C) is significantly greater than the value of earned wages (Marx's V).

Piketty thinks his assiduous collection of historical data in his technical appendix has disproven Marx. Rather, it has provided Marxists with the datasets necessary to do what they have not been able to do in the past, either for lack of tenured sinecures, or due to energies directed otherwise: to test the truth or falsity of specific predictions of the 19th century Capital.

There may be a methodological limit to this, however, insofar as Piketty uses the market valuation of capitalist enterprises, rather than their book value, to estimate the aggregate value of national capitals. This comes out in his discussion of Germany, where he mentions that the market value of German firms is consistently lower than their book value, in contrast to Britain, France and the U.S., where on average it is the reverse. (Elsewhere in the book, it turns out that this ratio between market value and book value has a name in mainstream economics, "Tobin's Q". I did not know that.) Neither market value nor book value correspond precisely to Marx's C, but of the two book value comes closer. The problem with market value is the potential for "irrational exuberance" in asset valuation, or in Marxist terms, fictitious capital, as can be seen in those countries where Tobin's Q routinely exceeds 1. The problem with book value is that it is basically an accounting term defined at the level of the individual firm: It takes account of one form of depreciation, material depreciation, but not moral depreciation, i.e., when a capital asset is revealed to no longer be as valuable as it once was thought to be, either because it has been superseded by a more productive set of technologies for making its commodity (see the example in my last post of Bob's Widget Company) or because that commodity is shown to no longer be socially necessary, or no longer socially necessary in the quantities that can be produced.

There's more that can be said: About the weakness of his grasp of the significance of foreign asset positions in the U.S. economy, past and present. About his ideological treatment of slavery in its relation to capital, and his complete erasure of the Haitian revolution. But that's enough, I think, for now.

Friday, July 25, 2014

New Fiction Coming out in August & September

My story "Bonfires in Anacostia" will be appearing in the August issue of Clarkesworld. Yes, that Clarkesworld, as in, one of the best science fiction periodicals in the world today. In a certain sense, the story has come full circle: It was reading Nick Mamatas's LJ, back when he read slush for CW in its early days, and the links he would post to their stories, that got me to start taking science fiction seriously as a literary mode. So seriously that, at some point in the mid-2000s, I started writing a story entitled "Bonfires in Anacostia". That first version was terrible, polemical infodump, that I never finished because I realized it was terrible. It has been through several more versions since then. The improvements were more than incremental with each try, but it had a long way to go before it could be sold. And because it was near-future, it kept running the risk of being overtaken by events technological, political and economic. What did not kill it made it stronger. I'm proud of the story I ended up telling, and look forward to people being able to read it on August 1st (and tell me why it sucks, of course).

This marks a few career milestones: My biggest payday to date for a piece of fiction; the first publication that could conceivably put me in the realm of being eligible to be nominated for a 2015 Campbell award (ahem, ahem); first story I've published that my wife actually likes.

Such a big sale, however, doesn't mean that I've turned my back on the little people, the peculiar zines and whatnot. How could I? Most of what I write is a bit too bizarre to get a hearing elsewhere. So I will be making a second appearance in FLAPPERHOUSE, this time with a story entitled "Cold Duck". It was inspired, in part, by a Twitter interchange with the poet Anne Boyer, who deserves to be more widely read.

By the way, you can now subscribe to a year's worth of FLAPPERHOUSE for only $10. So if you want to be sure not to miss "Cold Duck," go ahead and subscribe.

A reminder also that Phantasm Japan, which includes my story "Thirty-Eight Observations on the Nature of the Self," is available for pre-order. I don't know the exact ship date, but it might be September-ish, so I'm including that in this blog post.

On a much lighter note, I have been reminded of the existence of my Tumblr Yiddish Curses for People Who Think I'm a Shaygetz, and will be posting a few more imprecations in the coming weeks.

Sunday, July 20, 2014

Reading Capital... in the 21st Century (part 1 of x)

Starting yesterday and over the next couple of weeks I'm making the slog through Thomas Piketty's Capital in the Twenty-First Century. To the extent that I post about it, it will be a series of notes on the process of reading it, not an attempt at a comprehensive response or critique.

As I already wrote on Twitter, Someone could write an entire book about his misreadings of Marx alone. The full thread is interesting. I've even come up with a potential title for that book: Piketty's Straw Marx. I will not write that book, however. You may. Feel free to borrow from me.

His passing polemics aside, however, I have the experience, rare in a book on political economy (neo-classical, Keynesian or "Marxist") that the definitions and formulas are coherent, both with themselves and with the world that they attempt to describe. This struck me as I came across his definitions of "national income" and "national capital". Perhaps a bit too coherent: He admits to his tautologies. But I prefer tautology to flagrant tendentiousness.

This is also the only time that I have been reading a thick book on political economy in public, and a waiter in the restaurant where I was having lunch asked me what I thought of it. One suspects that waiter, among others, might be favorable to a campaign for a $15 minimum wage here in Maine.

Here is a passage which, if the underlying calculations are correct, should give pause to every socialist in Western Europe, North America and Japan:

The population of the planet is close to 7 billion in 2012, and global output is slightly greater than 70 trillion euros, so that global output per capita is almost exactly 10,000 euros. If we subtract 10 percent for capital depreciation [not sure how he comes up w/ 10% as a rate of depreciation, but OK] and divide by 12, we find that this yields an average per capita monthly income of 760 euros.... (p. 62)

In other words, if output of the existing productive base were distributed evenly on a global scale, we'd be looking at an average standard of living comparable to about $1,000 per month, roughly on par with the current per capita average in Latin America. Consider also that, for the sake of human survival, a considerable portion of world output would need to be directed toward the replacement of existing capital stocks (infrastructure) with an infrastructure in which economic output would result in much lower rates of carbon emissions, and a 10% rate of depreciation looks not only arbitrary but conservative. One has to conclude that, over the short term--that is, over a period associated with the seizure of power from the capitalists and the reconstruction of the economy on a basis consistent with long-term human survival--an ecologically tenable socialism would require a decline in the standard of living of many, if not most, working-class people in Western Europe, North America and Japan.

These are not Piketty's conclusions, of course. They are mine. But the benefit of a scientifically informed book by someone who does not share your premises is that it enables you to think more rigorously about the implications of your premises.

The discussion of depreciation reminds me of an unresolved question I have long had with respect to Marx. Some years ago, I had a disagreement with Walter Daum over whether the depreciation of existing capital stocks as a result of increases in the productivity of labor could be considered a possible countertendency to the fundamental (in a Marxist view) tendency of the rate of profit to decline. My recollection--which could be wrong, since I never got around to writing up my view of it, let alone securing a response from Walter, so I'm relying on faulty memory instead of written documentation--was that he thought it was, and I was not so sure. I'm only sixty-something pages into Piketty, and so have not gotten to his polemic against Marx on the rate of profit question, but piecing together a few things he has said, his view would be that not only is depreciation a counter to the falling rate of profit, but that the latter is fundamentally cancelled out and falsified by the falling rate of profit.

The challenge I would put to Piketty, and perhaps to Daum, is that while that may be at least partially true from the point of view of large aggregates, it is not true from the perspective of individual capitalist enterprises. Suppose Bob's Widget Company invests $1 million in a new widget-maker that, soon after the investment, is outstripped by a new widget-maker that costs twice as much but is roughly four times as productive. Bob's widget-maker has now been devalued by roughly half. Yet Bob, if he paid from out of his own stock of money-capital, is still out a million dollars. And if he didn't, but instead financed the purchase by borrowing or sales of stock, then others still have claims on his capital with a paper value of at least a million dollars. Meanwhile, his competitors who could afford to replace old widget-makers with new ones, have, by increasing the portion of the aggregate value of widgets that go into replacing constant capital, driven down the overall rate of profit. Even so, they claim a larger share of the overall profit, while Bob's profits are driven down, perhaps even to zero or a negative rate of return. Bob, to put it bluntly, is fucked. The depreciation, however, does not take full effect until Bob is driven out of business and his old widget-maker no longer forms part of the active stock of productive capital.

So there is another variable that needs to be taken into account if one is to answer the question of whether the depreciation of existing capital stock acts as a countertendency to the falling rate of profit: The rate at which depreciated capital is actually repaired or replaced. Piketty takes depreciation for granted, building it into his definitions of large capital aggregates--national and global capital. What remains to be seen is the extent to which this definition actually matches the realities of... capital in the 21st century.

Sunday, July 6, 2014

Discipline and Punish

Did I read Michel Foucault's Discipline and Punish at some time in the 1990s? I must have: It was the 1990s, and I was an undergraduate philosophy major, and then briefly, a graduate student in literary theory. Reading Foucault is just what was done, whether one understood his project or not. It is safe to say that I did not understand that project. I can still recite from memory a dogmatically Leninist thumbnail critique of Foucault. A re-reading combined with reflection on twenty years of intervening history have convinced me how off target that critique was.

Which is not to say that there are no on-target critiques to be made. What particularly struck me is how certain historical observations he makes, however true they may be for Europe, are limited in their applicability to the U.S. Specifically, the disappearance or removal of the body from the spectacle of punishment, which for Foucault serves as a precondition for the emergence of discipline and penality in their modern forms, has never been completed here. Certain bodies--especially black bodies--are forcibly kept on the scene. For example, at the time that France abolished the chain gang (1836), American slavery still had almost three decades of life remaining. The Thirteenth Amendment, in abolishing slavery, carved out an exemption "as a punishment for crime whereof the party shall have been duly convicted," and chain gangs are still with us. So are police mugshots on the nightly news, and "reality shows" displaying alleged offenders as the cops take them into custody. The last public execution in the U.S. was as recent as 1936, and the man executed, Rainey Bethea, was black. I suspect also that, if one takes into account the various forms of punishment employed in the French colonies, the course of development is not quite so clear. The emergence of the carceral as the logic of power and knowledge in advanced capitalism is discerned by Foucault only by abstracting from race. And whenever a white philosopher abstracts from race, the resulting concept warrants suspicion.

That suspicion, however, does not negate its potential, partial accuracy. The challenge that the United States poses as a polity for such a theory is to understand how the spectacle of corporeal punishment and the discipline of countless refined surveillance practices can coexist in the same time and space. A theory that could account satisfactorily for that could, perhaps, begin to explain how it is that this country can, at the same time, incarcerate more human beings than any other and yet be acclaimed by most of its citizens as a land of the free. As the Texas GOP tells us, America is exceptional: exceptionally cruel, to start with.

Such a theory would have to synthesize spectacle and surveillance, trace the genealogy of how the crowd at a lynching and the covert action of a Pinkerton compiling a Red Scare list, or the panopticism of the NSA and an enraged crowd in Murrieta, can condition, facilitate and support one another. Such a theory would have to begin where Foucault left off, but would end up covering much the same ground in different ways.