Leiter on Marx

The title brings to mind Bendetto Croce’s _What is Living and What is Dead in the Philosophy of Hegel?_ I remember Daniel Singer supplying a quotation from Croce — “Marxism is definitely dead for mankind” — from 1907. Reports of Marxism’s demise are continually exaggerated.

Like capital: “dead labor which, vampire-like, lives only by sucking living labor, and lives the more, the more labor it sucks.” ;-)

The websiteI’ve helped my friend Gus fiZerega put up has enough fodder for Leiter-Marx-public choice type ideas about the ‘ruling class’.

A good discussion of some of this is in the ‘political cultural’ approach of Neil Fligstein’s work — see: The Architecture of Markets.

But I’m a little sceptical of the idea that regulatory capture is purely a ‘ruling class’ phenomenon.

The Marxian view seems a too simplistic/stylised view of complex reality.

What say, Chris?

Another problem, of course, with a ruling class approach, is that power is homogenised.

Cui bono? Certainly not the same bunch of people every time.

As Fligstein puts it:

“Marxist approaches to markets focus on the organisation of economic elites and usually see them as controlling a given market or capturing Congress or regulatory agencies. The organization of elites and their ability to co-opt political actors should not be underestimated. But one of the biggest problems of this approach is explaining disunity or conflict within elites. As markets come into existence and are transformed, economic elites frequently come into conflict with one another. One elite with a very different conception of doing business can overthrow other elites.”

Indeed, Fligstein’s point in his ‘markets as politics’ approach (which I think is a rather good approach to these issues) is that market activity consists in large part of political activity between capitalists.

You might say that this conflict doesn’t go very far. That discourse is controlled by the elites.

Gus diZerega, I think, has some interesting thoughts on elites and democratic discourse. He thinks people who think elites control discourse are thinking in terms more appropriate to instrumental organisations, hierarchies. While democracies are more like self-organising systems — networks.

But then concentration in the US media concerns him greatly.

(Sorry for making this a Gus diZerega and Neil Fligstein thread instead of a Marx thread. I will stop now.)

““kept wage down” means “made wages lower than would otherwise have been the case””

The problem with this is that it’s nonfalsifiable. If I say that real wages went up, you can always say that they somehow /should/ have gone up more.

(It’s like the people who claim that Ronald Reagan’s arms buildup broke the Soviet Union by forcing them into an unaffordable arms race. When you show them that Soviet military spending either rose very modestly or stagnated during the 1980s, they promptly say that it /should have/ decreased, and that Reagan broke them by forcing them to _maintain_ military spending instead of decreasing it.

(It’s a conversation I used to have a lot, never mind why. Different polarity, same wavelength.)

For the record, I think real wages could have, and perhaps should have, risen more than they did in the ’90s. But I don’t think it has anything to do with “the reserve army of the unemployed”.

“and an unemployment statistic is “false” if it doesn’t accurately measure the reserve army of labour. But maybe that’s just me.”

I think it’s just you. — The unemployment statistics actually do have problems; topic for another time. Employed illegals actually lower the real unemployment rate, you know.

I have trouble understanding how “illegals and potential illegals, here and in Mexico” are keeping aggregate real wages from growing.

Depress ’em in particular sectors, sure. But aggregate? Nuh-uh, the macro don’t work.

N.B., this is why I rather deliberately looked for a cite that mentioned production and nonsupervisory workers — viz., exactly the sectors where you’d expect to find downward pressure from that global army. But this group grew only a little slower than the aggregate, and still scored nontrivial real gains.

A specific example close to home. If memory serves, zizka’s last job was working as a shipping and receiving person in a bookstore. (Correct me if I’m wrong.) Now, shipping and receiving is a job that has become noticeably more productive per worker in the last 20 years, for a variety of reasons. So zizka’s salary should have increased quite a lot in real terms compared to a similar job c. 1980.

I bet it didn’t, or didn’t much; hence the productivity-wage gap. On the other hand, you got some ‘splainin to do, Lucy, before you can show me how the wage paid a stoop laborer in Oaxaca, or a garment worker in Yucatan, or even a shipping clerk in Mexico city, helped keep down the wages of a shipping clerk in the Pacific Northwest.

If zizka was suffering from direct competition from illegals, that’d be something else again; but I have a sneaking suspicion that wasn’t the case. (Again, please correct me if I’m wrong, zizka.)

In other words, I have a lot of problems with zizka’s formulation, but I guess my biggest one is the naive assumption that labor markets (1) are unified, and (2) clear quickly. They aren’t, and they don’t.

I remember the 1990s as a time when sectoral labor shortages were all over the news, from IT workers to junior officers in the US military. But maybe that’s just me.

— Actually, I would rather read a Gus diZerega and Neil Fligstein thread than another Marx thread. Much rather.

Doug M.

I think Leiter’s post is great…until he gets to the topic of ideology. Knowing something about language and its role in society, I just don’t buy that you can call certain ideas true or false in this way, especially free from context. Otherwise, I liked where he puts his chips, ie on Marx’s continuing explanatory power.

Full-employment without wage-price inflation is regarded as something that needs to be explained. I suggested an explanation. The economists who rejected the Marxist concept of “reserve army of the unemployed” were the same ones who had problems with full employment without wage-price inflation. (Simply pointing out that most economists rejected Marx’s analysis long ago is not a strong response to my suggestion that they shouldn’t have done so).

Doug has an unhealthy interest in my employment history. None of the factors he or I talked about affected my own job situation which was a slightly-featherbedded, overpaid public sector job. For that reason I did not mention my job in my post. (My present situation IS impacted, however, by the wonderful “jobless recovery” we’re now enjoying.)

I was basing my suggestion on a large mass of anecdotal information — not only jobs which have gone overseas, but companies which negotiated lower wages and benefits while threatening to go overseas, the whole agricultural sector (in which I once did work, in fact), the whole food-processing and meat-packing sector, janitorial and landscaping work, and whatever manufacturing remains. I didn’t have an economist’s analysis of the situation, but it doesn’t seem to me that Muir does either, except sufficiently to flick some shit my way.

Muir did not respond to my suggestion that the gains promised to Mexico may never appear, since their jobs can go to Thailand and Bangla Desh. Nor to my somewhat undeveloped idea that the gains seen by Taiwan, S. Korea, etc. were made under different rules than those presently being imposed on “developing” countries. (In part because Taiwan and So. Korea were favored as key military allies during the critical period.)

Finally, my question was not “Why did American wages remain so terribly low without rising at all?” It was “How did we get full employment without wage-price inflation?” — a questions which I believe economists ask themselves.

And why is it suddenly more profound to call them a ‘reserve army of unemployed’ when they can more easily be called an excess supply of labour?

BTW, this might be relevant.

dsquared:

Yes, that’s what I was getting at. How is it intentional in reality?

Doug, IIRC, the *late* 1990’s saw a labor shortage. The early 1990’s didn’t.

“Depress ‘em in particular sectors, sure. But aggregate? Nuh-uh, the macro don’t work.”

I’m willing to be convinced of this, because economists seem awfully confident on this score, but my anectodal experience doesn’t fit. (I remember being shocked at a sign in a local Subway restaurant offering 2x the minimum wage plus medical benefits, circa 1998. I’m not seeing signs like that anymore, and I doubt that it’s because of a loosening demand for fast-food workers.) Labor seems more fungible to me than the “foreign competition is irrelevant” crowd believes.

“I remember the 1990s as a time when sectoral labor shortages were all over the news, from IT workers to junior officers in the US military. But maybe that’s just me.”

Saying that they were sectoral begs the question. What’s the difference between lots of sectors experiencing labor shortages and a general shortage of “labor”? And if the latter is possible, then offshoring seems to me to be a way to gain access to Marx’s “reserve army of the unemployed”.

msw

If jobs start moving from Mexico to Thailand as soon as Mexican wages start to rise, that means that some of the benefits that were promised to Mexico from NAFTA will not be realized. The same thing can happen to Thailand if jobs jump to Bangla Desh. Only when everybody in the world has a job can we see the third world rise to first world standards.

It’s not a bad thing for Thailand to get jobs, but as long as employers are able to shop among the global reserve army for the lowest wages, there are pretty strict limits to how much can be expected from that kind of development.

As far as I know “wage-price inflation” is not a peculiar 1870-1880 error of Marx’s, but a well-known, orthodox, contemporary concept. I certainly didn’t make the term up. Likewise the idea that you raise interest rates to keep inflation down at the cost of increasing unemployment.

Marx’s version of the truism, as opposed to the rebranded orthodox version, highlights some of the political and social consequences of the situation. And I’m still not convinced that the high-unemployment / low-inflation miracle of the 90’s wasn’t due to the fact that the labor force was being counted nationally for statistical purposes whereas hiring was being done globally.

“output gap model, or Taylor rule, has a long term NAIRU, or something operationally equivalent to a NAIRU as its engine. Any central bank which sets policy rates using such a model is, fairly explicitly, aiming to trade off employment against inflation. Any such central bank, therefore, is relying on the chilling effect of a reserve of unemployed workers to keep down wage demands.”

Well, I see your problem right there: unstated assumption between the penultimate and final sentences. You’re assuming that wage demands are the primary driver for inflation.

Sometimes that’s true, but usually it isn’t. Neither of the last two inflationary bouts in the US had anything to do with wage rises. (I’m talking 1973 and 1978 here. Most economists don’t count the sharp but brief 1991 spike in the CPI as an inflationary episode, and neither do I — although I notice that one wasn’t driven by wage demands either.)

To find wage-powered inflation in the US numbers, you have to go all the way back to 1969, and as inflation episodes go that was pretty small potatoes. The most savage recent attack of inflation, 1978-81, came at a period when real wages were slowly but steadily falling, and unemployment was high and (in the last three inflationary quarters) rising.

When Volcker cranked interest rates into orbit, he wasn’t trying to depress wages — they were already depressed — he was trying to cut prices. And in fact the next year saw a modest /rise/ in real wages… accompanied by skyrocketing unemployment, to be sure.

Me, I’d guess that wage increases overshot the declining inflation rate in the early ’80s, enough to to offset the wage-depressing effect of high unemployment. That’s speculation; but the numbers are real, and they don’t match your model.

Moving forward a few years, we see the next big hike in interest rates coming in 1994, when the Fed more than doubled them as a pre-emptive strike against inflation. Hmm, what happened to real wages in the mid-1990s? Anyone? Bueller? Bueller?

I’d ask you to check your assumptions, but I have a feeling it’s not gonna happen.

Look, the Fed’s mandate is to promote price stability, not wage stability. And it’s, well, it /is/ Econ 101 that the two are only loosely coupled; most obviously, increases in productivity can allow wage increases without price increases.

And the Fed is entirely aware of this. You might want to look at the work of Todd E. Clark, another Vice President at the Fed. He’s written a modest pile of papers explicitly rejecting the notion that wage increases lead to inflation. (Interestingly, he thinks it’s more likely to work the other way around. Not exactly what you’d expect from a Federal Reserve VP in this day and age, but there it is.)

BTW, even the strongest supporters of NAIRU now concede that they no longer believe in a “long term NAIRU”.

Doug M.

Yes, zizka, there is such a thing as wage-price inflation. And there are such things as poisonous snakes.

But not all snakes are poisonous, and not all poisonous animals are snakes.

Similarly, not all inflation is driven by wage increases, and not all wage increases lead to inflation.

In fact, in advanced countries in the last 30 years or so, the two phenomena have become increasingly decoupled; we’ve seen inflation without wage increases (late 1970s) and wage increases without inflation (mid-late 1990s).

Does that help?

Doug M.