Wednesday, October 22, 2008

Book review: Seven Interpretive Essays on Peruvian Reality

Seven Interpretive Essays on Peruvian Reality by José Carlos Mariátegui

José Carlos Mariátegui is one of Peru's most influential left intellectuals. He had poor health from a young age, though he managed to work his way up the ranks of the newspaper industry, becoming an influential and astute social critic. His paper's opposition to the government of a former New York Life Insurance Company executive gained him the animosity of the military coup-installed government, and he was comfortably exiled on government salary to Europe (lucky he was born in 1895 and not 1945!). There he absorbed himself with the political developments of the continent, which he brought back to Peru years later.
This book explains the history of Peru from the Incas to Mariátegui's time (he died in 1929). He describes the Incas as administering a kind of theocratic communism - clearly bucking the orthodox Marxist line that communism is a stage of development reached only after intermediary steps. Then came the Spanish. "The colonial regime disrupted and demolished the Inca agrarian economy without replacing it with an economy of higher yields. Under the indigenous aristocracy, the natives made up a nation of ten million men, with an integrated government that efficiently ruled all its territory; under a foreign aristocracy, the natives became a scattered and anarchic mass of a million men reduced to servitude and peonage."
Mariátegui goes on to criticize the Spanish for bringing "to America the effects and methods of an already declining spirit and economy that belonged to the past:" feudalism. Whereas with capitalism in "the North, there were no kings to dispose of another's land as though it were their own. Without any special favors from their monarchs and in a sort of moral rebellion against the kind of England, the colonizers of the north proceeded to develop a system of private property under which each one paid the price of his land and occupied only as much as he could cultivate" (as put by a non-Marxist writer Mariátegui quotes).
The stage of economic and political development of Peru during Mariátegui's day was called "gamonalismo," or bossism. Gamonalismo represented but a tiptoe step beyond colonial feudalism - the Spanish king was no longer sovereign over Peru, but the same large landowners who used to be his most powerful subjects now ruled. And they ruled in much the same way that the Spanish had, except the surplus extracted by the ruling parasites off the backs of Indian laborers now went to the parasites themselves, rather than being shared with the capo di tutti capi, the king of Spain. Capitalist development in Peru was stunted from the beginning by extreme concentration of wealth and the inefficiencies it creates.
It is interesting the degree to which what Mariátegui writes about the oppression of the Indian under Peruvian gamonalismo can be applied to oppressed ethnic minorities all over the world; African-Americans under U.S. capitalism, for instance:
"The moral and material misery of the Indian is too clearly the result of the economic and social system that has oppressed him for centuries. This system, which succeeded colonial feudalism, is gamonalismo. While it rules supreme, there can be no question of redeeming the Indian.
"The term gamonalismo designates more than just a social and economic category: that of the latifundistas or large landowners. It signifies a whole phenomenon. Gamonalismo is represented not only by the gamonales but by a long hierarchy of officials, intermediaries, agents, parasites, et cetera. The literate Indian who enters the service of gamonalismo turns into an exploiter of his own race. The central factor of the phenomenon is the hegemony of the semi-feudal landed estate in the policy and mechanism of the government. Therefore, it is this factor that should be acted upon if the evil is to be attacked at its roots and not merely observed in its temporary or subsidiary manifestations."
"Gamonalismo is fundamentally opposed to the education of the Indian; it has the same interest in keeping the Indian ignorant as it has in encouraging him to depend on alcohol. The modern school - assuming that in the present situation it could be multiplied at the same rate as the rural school-age population - is incompatible with the feudal latifundium. The mechanics of the Indian's servitude would altogether cancel the action of the school if the latter, but a miracle that is inconceivable within social reality, should manage to preserve its pedagogical mission under a feudal regime. The most efficient and grandiose teaching system could not perform these prodigies. School and teacher are doomed to be debased under the pressure of the feudal regime, which cannot be reconciled with the most elementary concept of progress and evolution."
And applicable to Peru in the 1920s, but fascinating nonetheless:
"Gamonalismo or feudalism could have been eliminated by the republic within its liberal and capitalist principles. But for reasons I have already indicated, those principles have not effectively and fully directed our historic process. They were sabotaged by the very class charged with applying them and for more than a century they have been powerless to rescue the Indian from a servitude that was an integral part of the feudal system. It cannot be hoped that today, when those principles are in crisis all over the world, they can suddenly acquire in Peru an unwonted creative vitality."
Even while describing Peruvian reality - in this case the aristocratic rule of Nicolás de Piérola - Mariátegui could be timeless - or very timely today: "The democratic caudillo, who for so long had thunderously aroused the masses against the wealthy, now took pains to carry out a civilismo administration [supportive of the status quo]. His tax system and fiscal measures removed any possible doubts that might have been raised by his phraseology and metaphysics. This confirms the principle that the meaning and shape of men, their policy and deeds, are more clearly revealed on an economic than on a political level."

Monday, October 20, 2008

Book review: World-Systems Analysis: An Introduction

World-Systems Analysis: An Introduction by Immanuel Wallerstein

This book, and the world-systems approach, is an antidote to learning about the world by following "current events" in "the news" - the kind of approach taken, for instance, by people who were surprised by the onset of the current financial crisis.
"Part of the problem is that we have studied these phenomena in separate boxes to which we have given special names - politics, economics, the social structure, culture - without seeing that these boxes are constructs more of our imagination than of reality. The phenomena dealt with in these separate boxes are so closely intermeshed that each presumes the other, each affects the other, each is incomprehensible without taking into account the other boxes.
World-systems analysis meant first of all the substitution of a unit of analysis called the 'world-system' for the standard unit of analysis, which was the national state. On the whole, historians had been analyzing national histories, economists national economies, political scientists national political structures, and sociologists national societies. World-systems analysts raised a skeptical eyebrow, questioning whether any of these objects of study really existed... they substituted 'historical systems' [for these objects].
[The] world-economy was said to be marked by an axial division of labor between core-like production processes and peripheral production processes, which resulted in an unequal exchange favoring those involved in core-like production processes. Since such processes tended to group together in particular countries, one could use a shorthand language by talking of core and peripheral zones" or of core, peripheral, and semiperipheral states depending on the types of production processes predominant in each particular state. Core processes are those which are relatively monopolized (oligopoly) and highly profitable (think aerospace and genetic engineering); peripheral processes are relatively free market and less profitable (think textile manufacturing). "When exchange occurs, competitive products are in a weak position and quasi-monopolized products are in a strong position. As a result, there is a constant flow of surplus-value from the producers of peripheral products to the producers of core-like products. This has been called unequal exchange.
The strong states, which contain a disproportionate share of core-like processes, tend to emphasize their role of protecting the quasi-monopolies of the core-like processes. The very weak states, which contain a disproportionate share of peripheral production processes, are usually unable to do very much to affect the axial division of labor, and in effect are largely forced to accept the lot that has been given them. [] The semiperipheral states which have a relatively even mix of production processes find themselves ... [u]nder pressure from core states and putting pressure on peripheral states. ... These semiperipheral states are the ones that put forward most aggressively and most publicly so-called protectionist policies. ... They are eager recipients of the relocation of erstwhile leading products, which they define these days as achieving 'economic development.'"
Core states would be the G8, and the OECD countries; semiperipheral states would be "emerging markets" like the BRIC (Brazil, Russia, India and China) countries, and peripheral states would be those also called underdeveloped or "least developed countries." This is a much clearer and more useful perspective than that of looking at the world solely as what this or that particular nation is up to.

Saturday, October 18, 2008

Pressure and the press

The Washington Post endorses Obama by Alex Lantier

"On the economy, the Post saw Obama as a conservative candidate, who would 'respond to the economic crisis with a healthy respect for markets' and oppose more left-leaning elements in his own party.

The Post noted the fact that Obama 'has surrounded himself with top-notch, experienced, centrist economic advisers [is] perhaps the best guarantee that...Mr. Obama will not ride into town determined to reinvent every policy wheel.' According to Obama’s comments at the October 15 presidential debate, these advisers include multibillionaire investor Warren Buffett and ex-Federal Reserve chairman Paul Volcker.
The Post added, 'A silver lining of the financial crisis may be the flexibility it gives Mr. Obama to override his own party who oppose open trade, as well as to pursue the entitlement reform that he surely understands is needed.' In other words, the Post calculates that Obama would use the crisis to justify cuts in social programs like Medicare and Social Security."

Yes, Virginia, the election of Obama is just the beginning. Without a sustained, organized effort to push Obama to the left, the only force operating will be the establishment - represented here by the Post - pushing him to the right.

Friday, October 17, 2008

Book review: The Marijuana Conviction

The Marijuana Conviction by Richard J. Bonnie and Charles H. Whitebread II

The only reason marijuana is illegal is that it was introduced to the country by non-European ethnic minorities, during a time when the country was dealing with widespread opiate and cocaine addiction, and because Prohibition and the social forces surrounding it had firmly introduced the 'illegalization' model in dealing with drug use into the country's psyche.

(I take it that no one any longer wrongly believes marijuana to pose an actual public health risk - if you do, kindly hop in a time machine to the thirties where you belong.)

Due to fear of 'the other', non-European ethnic minorities and their drug, and the profit motive applied unscrupulously to the newspaper business, an anti-drug crusader at the head of the then-Federal Bureau of Narcotics was convinced that marijuana was an incredibly dangerous substance (it led Negroes and Mexicans to rape white women, for instance). He in turn added to the anti-marijuana propaganda blitz, which through lurid, misleading anecdotes and spurious "scientific" research which ignored the body of scientific research dating from before the propaganda blitz, convinced the public that marijuana caused insanity and inexorably led to violence and sexual crimes. His successful propaganda efforts got Congress to write laws sending users of a pharmacologically harmless substance to federal and state rape, labor and human rights-denying camps - prisons - for many years.

Once middle and upper class white kids started to use it in the 60s - woah, then things got to changing. "The scientific propositions attending the application of the narcotics consensus to marihuana had always been assumptions tied to broader social perceptions of the using class. But these assumptions no longer coincided with social expectations when use of the drug was taken up by society's privileged classes. The basic proposition that use inevitably became abuse was quickly challenged. ... Similarly the causal relationships between marijuana and crime, idleness, and incapacitation were now more difficult to maintain. The new users were not 'criminals' or social outcasts. They were sons and daughters of the middle and upper classes. In short, when the consensus against marihuana lost its sociological support, it immediately lost its scientific support as well."

In other words: poor black and brown people being sent off to rape camps for doing nothing harmful? That's OK. But when Billy and Susy start getting kicked out of university for a five year prison sentence... well let's take a look at that marijuana science again. The 60s' and 70s' saw a renaissance of actual scientific investigation into marijuana, after a long hiatus, and found that marijuana is a remarkably nontoxic substance. Some tried to translate science into policy, but with limited success.

However, the public propaganda starting in earnest in the 30s had been too successful. Even now, "cultural conservatives" ensure that a rational marijuana policy is simply too much for the United States to implement.

The upside of this policy of sending users of a harmless substance to mental health-destroying federal and state rape and institutionalized violence camps? Once people realize that marijuana is harmless and its criminalization is the summit of both cruelty and absurdity, then they are, with respect to government policy, down the rabbit hole. Which in the United States is very, very deep.

Thursday, October 16, 2008

Book review: they thought they were free

they thought they were free: the germans 1933-45 by milton mayer

(Note to publisher: thanks for choosing a bright red cover with prominent swastika! I'm sure it helped you sell books, but it got me a bunch of nasty looks on the subway... dick.)

Fascinating account of an Unitedstatesian Jewish journalist who lived in Germany, became friends with ten former Nazis, and told their stories: about how they allowed themselves, or actively chose to, become a part of the Nazi machinery. Mayer does an excellent job of allowing readers to put themselves in German shoes, letting them imagine Nazis as an in-group rather than a demonic enemy out-group. And the scary thing is how natural this book makes the transition seem...

Perhaps the truly scary thing is how Unitedstatesians consider themselves to exist on a much higher moral plane - that it is anathema for us to consider how we too could sink to the same moral depths we know so well our enemies inhabit.

"Secretary of War Henry L. Stimson, appalled by the absence of public protest in America [at the great fire raid on Tokyo which according to the Air Force produced more civilian causalities 'than any other military action in the history of the world'], thought 'there was something wrong with a country where no one questioned' such acts committed in its name." Indeed there is something wrong with such a country. And it is information, and access to it.

Within Nazi society, there were horrors, "but these were advertised nowhere, reached 'nobody.' Once in a while (and only once in a while) a single crusading or sensation-mongering newspaper in America exposes the inhuman conditions of the local county jail; but none of my friends had ever read such a newspaper when there were such in Germany (far fewer there than here), and now there were none. None of the horrors impinged upon the day-to-day lives of my ten friends or was ever called to their attention. There was 'some sort of trouble' on the streets of Kronenberg as one or another of my friends was passing by on a couple of occasions, bu the police dispersed the crowd and there was nothing in the local paper. You and I leave 'some sort of trouble on the streets' to the police; so did my friends in Kronenberg. ... Man doesn't meet the State very often."


"None of my ten Nazi friends, with the exception of the cryptodemocrat Hildebrandt, knew any mistrust, suspicion, or dread in his own life or among those with whom he lived and worked; none was defamed or destroyed. Their world was the world of National Socialism; inside it, inside the Nazi community, they knew only good-fellowship and the ordinary concerns of ordinary life. ... That Nazism in Germany meant mistrust, suspicion, dread, defamation, and destruction we learned from those who brought us word of it - from its victims and opponents whose world was outside the Nazi community and from journalists and intellectuals, themselves non-Nazi or anti-Nazi, whose sympathies naturally lay with the victims and opponents. These people saw life in Germany in non-Nazi terms. There were two truths, and they were not contradictory: the truth that Nazis were happy and the truth that anti-Nazis were unhappy. And in the America of the 1950's - I do not mean to suggest that the two situations are parallel or even more than very tenuously comparable - those who did not dissent or associate with dissenters saw no mistrust or suspicion beyond the great community's mistrust and suspicion of dissenters, while those who dissented or believed in the right to dissent saw nothing but mistrust and suspicion and felt its devastation. ... just as there is when one man dreads the policeman on the beat and another waves 'Hello' to him, there are two countries in every country."


"The 'democratic,' that is argumentative, bill-collector, Herr Simon, was greatly interested in the mass deportation of Americans of Japanese ancestry from our West Coast in 1942. He had not heard of it before, and when I told him of the West Coast Army Commander's statement that 'a Jap is a Jap,' he hit the table with his fist and said, 'Right you are. A Jap is a Jap, a Jew is a Jew.' ... He asked me whether I had known anybody connected with the West Coast deportation. When I said 'No,' he asked me what I had done about it. When I said 'Nothing,' he said, triumphantly, 'There. You learned about all these things openly, through your government and your press. We did not learn through ours. As in your case, nothing was required of us - in our case not even knowledge. You knew about things you thought were wrong - you did think it was wrong, didn't you, Herr Professor?' 'Yes.' 'So. You did nothing. We heard or guessed, and we did nothing. So it is everywhere.' When I protested that the Japanese-descended Americans had not been treated like the Jews, he said, 'And if they had been - what then? Do you not see that the idea of doing something or doing nothing is in either case the same?'"

Tuesday, October 14, 2008

Hoping IBD got it right just this once...

Investors' Real Fear: A Socialist Tsunami by Investor's Business Daily

Investor's Business Daily: the source you can turn to for sound investment advice. So long as you have access to a time machine and can travel into the future to read future issues, to take advantage of IBD's 20/20 hindsight.

Like the IBD's (opposite of) prescient analysis of the subprime market-induced credit crisis: blame it on the Democrats' interference with the market beginning with Carter. Too bad their foresight wasn't so hot: their editorial page mentioned the word "subprime" three times in one editorial from '98-'04.

This gem details how Obama desires to implement socialism in the U.S. Please god, let the IBD be right, just this once?

Monday, October 13, 2008

Robbing Peter to pay... Peter's creditor

Governments got religion after peering into the systemic meltdown abyss: aggressive and comprehensive policy action is now likely but significant downside risks to markets will remain by Nouriel Roubini

" A key policy tool – that is currently missing in the G7 and EU plans is to use fiscal policy to boost aggregate demand. ... If the private sector does not spend and/or cannot spend old fashioned traditional Keynesian spending by the government is necessary. It is true that we are already having large and growing budget deficits; but $300 bn of public works is more effective and productive than spending $700 bn to buy toxic assets. I[f] such fiscal stimulus plan is not rapidly implemented any improvement in the financial conditions of financial institution[s] that the rescue plans will provide will be undermined – in a matter of six months – with an even sharper drop of aggregate demand that will make an already severe recession even more severe."

OK, so the experts who work for the world's economic elite, who live on the top of a pyramid are scared because the pyramid's capstone is deteriorating and looking unstable. So they wisely decide not to allow nature to take its course. Instead they try to reinforce it, by taking bricks from the pyramid below the capstone. Amazing.

Eh, but why listen to a crank like Roubini (note foreign-sounding name!), he's only been uncommonly prescient over the past few years... for an economist.

Book review: The Battle for China's Past

The Battle for China's Past: Mao and the Cultural Revolution by Mobo Gao

The book's thesis: that the dominant narrative about China in the US is also the dominant narrative about China in China. In China, it is dominant in the sense that it reigns supreme within the brains of the elite, who dominate the media and academia in a far more direct fashion than in the U.S. So foreign scholars who read the most easily accessible Chinese sources are reading sources from those Chinese who supported Mao's revolution only insofar as it was the most likely to succeed at ejecting foreign imperialists (the Japanese, British, etc.) and allowing the Chinese elite to make China a strong country in the sense that the U.S. is a strong country: in that its elite would have sway on the international scene, while the majority of China's people would eke out a more or less marginal existence. The Chinese writers foreign scholars read are those that Mao called "capitalist roaders," in that they wanted for China to take the capitalist road to national greatness, rather than the socialist road which would distribute wealth more evenly, thereby frustrating the emergence of a stratified Chinese elite who would then enjoy a sufficient concentration of resources to wield some power on the international stage - like in the old days.

Gao makes this case, and then demonstrates how on the most loosely regulated media, internet websites, a coterie of intellectuals representing an arguably much larger segment of the Chinese population convincingly argue that under Mao's leadership, China made incredible economic advances that formed the foundation for China's recent GDP growth spurt.

Most interesting excerpt:

"A good test case would be to compare China, the largest communist country, with India, the largest democracy, using labels for convenience. The Novel Prize-winning economist Amartya Sen makes the point that although India never suffered a 'politically induced famine' like the Great Leap Forward in China:
'[India] had, in terms of morbidity, mortality and longevity, suffered an excess in mortality over China of close to 4 [million] a year during the same period. ... Thus in this one geographical area alone, more deaths resulted from 'this failed capitalist experiment' (more than 100 million by 1980) than can be attributed to the 'failed communist experiment' all over the world since 1917." (Black 2000)"

Wednesday, October 01, 2008

Blood, sweat and tear prices dropping drastically

Student loan bailout? by Alan Collinge

Of course, it'll be the lenders that get bailed out, not the debtors. Hey, someone's gotta look out for poor Albert Lord of Sallie Mae; yachts don't refuel and maintain themselves, you thoughtless bastards!

Why would student loan companies need a bailout? It's not like student loans are backed by mortgages on homes who's values go down - they're backed by the sweat, blood, and tears, of graduates without the parental assets to pay for school - so they are safe, right?

No. Because the values of graduates' blood, sweat and tears are going down. Wise financial management counsels people to spend only 10-12% of their incomes on debt repayment. In the past ten years, as income stagnated, tuition went up by nearly a third. With an economy in depression, and graduates unable to earn an income sufficient to repay record levels of debt, default rates will continue to rise. Already, for those with over $15,000 in debt - and the median debt load for graduating seniors is over $17,000 - the default rate is 1 in 5. That default rate is so bad, it makes mortgage-backed securities look like a safe investment.

The student loan and mortgage problems are fundamentally the same: metastasizing debt outstripping the ability of debtors to pay. (There's another similarity in that the prices of the underlying asset, degrees and houses, were irrationally inflated.)

So now that the bailout has passed, Sallie Mae and others are sure to stick their snouts in the trough.