I’m going to talk about Wright’s complete failure to say anything about the herd of elephants in the room that completely blocks our way toward any of the desirable futures that the book envisions – climate change, environmental degradation, resource depletion, and their epidemiological, social, economic and political consequences. That Wright did not recognize this in the course of his five years of work on, and world-wide presentation and discussion of, the book’s arguments, mid 2004 to mid 2009 (pp. xi-xv– “I felt that I was part of a global conversation on the dilemmas of our time,” xv) – that in all those presentations and discussions no one ever raised the climate change/environmental degradation issues with sufficient force as to leave a footprint in the 2010 text – despite the scientific evidence and argument that was accumulating during those same years – that is very telling – a sign of our historic failure in meeting our responsibilities as intellectuals – one mark of the current world-historical failure of the social and policy sciences in general, of intellectuals at large, and of the modern state.
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By page 3 of Envisioning Real Utopias I was already disappointed. The Introduction starts with some examples of real utopias – they are participatory city budgets (ok, promising – new to me); Wikipedia (never, ever trust it on living people, or anything controversial); and Mondragon (always Mondragon – is this really still the best example of co-operative production? It was always cited when I was a student in the late 1970s).

So are there better examples of ‘real utopias’, or rather idealism put into practice? Yes. From the anti-globalisation movement, Slow Food and Fair Trade. A bit of a revival of local currency schemes, the Bristol pound being one of the most recent and biggest. The campaign for a Living Wage, backed by anti-poverty bodies like the Joseph Rowntree Foundation.
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I would have said “gradually,” rather than “secretly,” but over on Bloomberg I have a little piece on how FDR ended the US gold standard.

There’s widespread disagreement over when the US went off gold – was it with the end of domestic convertibility, which happened on March 6, though it wasn’t made clearly permanent until later? was it with the end of exports, on April 19? Scott Sumner just claimed the US didn’t permanently leave the gold standard at all in 1933, “just temporarily suspended it,” which is an answer Friedman and Schwartz sort of give, though they fudge it – “the gold standard to which the US returned was very different, both domestically and international, from the one it had left”. I myself like the answer given in one article, that the US went off gold “about crocus-daffodil time, 1933.”

Actually, I think the word “disagreement” isn’t quite right – it’s more lack of agreement; I’ve never seen anyone bother to pick apart who prefers which date and why. Obviously it depends on what you mean by “the gold standard,” and what it means to be on or off.

As the Bloomberg post indicates, I’ve been looking into Roosevelt’s intentions and expressed policies, and I’ve become persuaded that he knew pretty clearly what he was doing.

Two weeks before Roosevelt’s inauguration, Keynes wrote,

can it be possible today to forecast a respectable future for [gold], when in the meantime it has betrayed all the hopes of its friends? Yet it does not follow that the monetary system of the future will find no place for gold. A barbarous relic, to which a vast body of tradition and prestige attaches, may have a symbolic or conventional value if it can be fitted into the framework of a managed system of the new pattern. Such transformations are a regular feature of those constitutional changes which are effected without a revolution.

I predict, therefore, that central banks will continue in the future, as in the past, to keep gold reserves for the protection of their exchanges and as an emergency means of settling an adverse international balance.

That’s, in outline, the policy Roosevelt pursued – probably without having read Keynes, but who knows? – beginning with his inauguration. He wanted a managed currency, so he could influence commodity prices, but he also wanted enough gold in US vaults so he could fend off speculative attacks on his managed currency. That’s why he ended convertibility, but didn’t quite announce it. If he said convertibility was done for good and all, it would have been much harder to get hoarders to return their gold to the vaults.

It’s also, of course, the basis for the dollar that became the anchor of the Bretton Woods system, in which, Keynes would later say, reprising his language of 1933, gold had become a “‘constitutional monarch’, so to speak, which would be subject to the constitution of the people and not able to exercise a tyrannical power over the nations of the world.”

FDR’s intentions matter because if he meant to do what he did, if he was carefully managing expectations, then the history of his monetary policy becomes a useful text applicable to modern affairs.

Meanwhile, in modern affairs, it’s not a good season to be a gold enthusiast. As usual, the answer to a headline that ends in a question mark is “no.”

Continuing in our seminar on Envisioning Real Utopias, a contribution from David Estlund. Like several of the contributions, it’s a bit long for a blog post, so I’m posting the opening paras, and posting it as a PDF. Read, enjoy and comment.

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In the Huffington Post, Alex Zakaras, a political theorist at the University of Vermont, levels a familiar charge at today’s GOP: they’re not real conservatives.

Over the last several decades, the party has abandoned political conservatism and embraced its opposite: an agenda of radical, experimental reform.

I’ve addressed this argument many times, including in a book now out in paperback that’s selling for $16, so there is no need for me to rehearse my position here.

What drew my attention to Zakaras’s piece is this claim: [click to continue…]

It’s been interesting to follow the progress of Daron Acemoglu and James Robinson over the last few years, from what I suspect (but don’t know – happy to be corrected) was a right-leaning centrism to a set of vigorous arguments about the pernicious consequences of inequality. This is perhaps comparable to Keynes, who was never a full-on lefty, but instead a liberal interested in saving capitalism from itself. Now, via JW Mason on Twitter, I see they have a “new paper”:http://economics.mit.edu/files/8741 arguing that economists need what “some of us would call”:http://vserver1.cscs.lsa.umich.edu/~crshalizi/weblog/778.html a theory of politics, and that if they developed one, they’d see why unions were often well worth any deadweight cost.

bq. In this essay, we argue not only that economic advice will ignore politics at its peril but also that there are systematic forces that sometimes turn good economics into bad
politics, with the latter unfortunately often trumping the economic good. Of course, we are not claiming that economic advice should shy away from identifying market failures
and creative solutions to them, nor are we suggesting a blanket bias away from good economic policy. Rather, our argument is that economic analysis needs to identify, theoretically and empirically, conditions under which politics and economics run into conflict, and then evaluate policy proposals taking this conflict and the potential backlashes it creates into account.

bq. Our basic argument is simple: the extant political equilibrium may not be independent of the market failure; indeed it may critically rest upon it. Faced with a trade union exercising monopoly power and raising the wages of its members, most economists would advocate removing or limiting the union’s ability to exercise this monopoly power, and this is certainly the right policy in some circumstances. But unions do not just influence the way the labor market functions; they also have important implications for the political system. Historically, unions have played a key role in the creation of democracy in many parts of the world, particularly in Western Europe; they have founded, funded and supported political parties, such as the Labour Party in Britain or the Social Democratic parties of Scandinavia, which have had large impacts on public policy and on the extent of taxation and income redistribution, often balancing the political power of established business interests and political elites.

bq. Because the higher wages that unions generate for their members are one of the main reasons why people join unions, reducing their market power is likely to foster de-unionization. But this may, by further strengthening groups and interests that were already dominant in society, also change the political equilibrium in a direction involving greater efficiency losses. This case illustrates a more general conclusion, which is the heart of our argument: even when it is possible, removing a market failure need not improve the allocation of resources because of its impact on future political equilibria. To understand whether it is likely to do so, one must look at the political consequences of a policy: it is not sufficient to just focus on the economic costs and benefits.

It would be nice to see more economists starting to think about the world in this way. It would be even nicer to see this paper having some influence on the numerous technocratic pundits who have unconsciously absorbed economists’ way of thinking about policy problems.

Welcome! Once more, I’m trying to help people understand how policies get made from the inside, and how something that looks like a dumb idea can often be the best choice out of a bad decision set, in the context of the ongoing Euro crisis. The last one was pretty didactic, in that I was aiming to steer people down a path to the decisions I thought were being under-rated. This time, what strikes me about the Cyprus policy agenda is the sheer amount of uncertainty and ambiguity; nearly every idea could end up succeeding brilliantly or failing horribly. So this time round, I’m introducing a large element of chance.

In this episode, as in the last one you are once again a representative of the Secret One World Government, and you have been temporarily flown in to pull the strings in the island of Surpyc, which is currently experiencing a bailout crisis…

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Following up on Corey’s piece, I want to restate a point that seems to be forgotten a lot, especially by those who went along with the Bush-Blair claims about WMDs. Until December 2002, there was plenty of behavioral evidence to suggest that Saddam had WMDs, namely the fact that he had expelled (or, more precisely, refused to co-operate with) the UN weapons inspection program. Given the benefits from being declared WMD-free, this made little sense unless he had weapons. Equally, Bush and Blair were making statements that they knew what WMDs Saddam had and fairly accurate knowledge of their location. Again, this seemed (to me, at any rate) to make no sense if they were relying on a bluff that Saddam could easily call.

All of that changed, in December 2002, when Saddam readmitted the inspectors and declared that he had no WMDs. At that point, it suddenly became obvious (again, to me, at any rate) that Bush and Blair had been making it up. I naively supposed that it would be equally obvious to everyone else, and that, as a result it would be impossible to mobilise support for war. I was particularly struck by the unanimity with which the pro-war bloggers reproduced the ever-changing propaganda lines of the Administration. No one would be surprised now, but back then, the assumption was that disputes with people like Glenn Reynolds were a matter of honest disagreement.

This is my contribution to the Erik Olin Wright Envisioning Real Utopias book event. One note: our event was originally supposed to kick off round about February 1st. You know how it goes with utopia. Delays, delays. I mention this because my rhetorical trick was going to be to check the newspapers, a week before our event, for signs of utopia. As a result, as of today, I’m quoting 7-week old newspapers. (I could have rewritten the post to suit last week’s news. But I find I like my even-more-vintage fish and chip papers better. I’m sticking with ’em.)

Let’s start by locating our author’s project – Envisioning Real Utopias – with respect to a familiar dilemma. [click to continue…]

Utopia means “nowhere” so I guess its appropriate that our seminar on Erik Olin Wright’s Envisioning Real Utopias has been in the vaporware category for years. However, we’re finally ready to go live. We’ll be putting up a post every day or two for the next couple of weeks, then Erik will respond. Some of the posts will be fairly conventional reviews, others will take some particular point as a license to jump off in new directions. Enjoy and comment!

At the suggestion of a commenter “m”, here are some useful links

buy and read the book,
Envisioning Real Utopias

or read chapters here freely accessible here
http://www.ssc.wisc.edu/~wright/ERU.htm

or read an article that summarizes many of the points, here

Click to access New%20Left%20Review%20paper.pdf

or listen to this talk that also summarizes a few points, starting at 54:00
http://videoarchive.asanet.org/presentations/2012ondemand_awards_presidential_address.html?plist=2012

Or this written version of the talk

Click to access Presidential%20address%20–%20uncorrected%20page%20proofs%20–%202012.pdf

On the 10th anniversary of the Iraq War, it’s important to remember that George W. Bush did not always or simply lie about Iraq and the threat it posed. He did not sell the war simply by making stuff up about the presence of WMD or exaggerating the threat posed by Iraq. That storyline is too easy. Bush and his allies did something far subtler—and more disturbing—and what they said was actually well within the canon of national security discourse, both on the left and the right. [click to continue…]

On the 45th anniversary of the My Lai Massacre,  you may want to read this, from the Washington Post:

Pham Thanh Cong leans forward, his 55-year-old face a patchwork of scars and dents, and explains what’s wrong with My Khe hamlet. Vietnamese families are built around a three-generation structure, Cong says. Parents work the fields while grandparents take care of children. In time, children will become caregivers and grandparents the cared-for. Eventually, the generations will shift and the cycle will repeat. Families have been this way since there were families in Vietnam.

But in My Khe, a generation is missing. [click to continue…]

The first question to be asked about Erik Olin Wright’s Envisioning Real Utopias is whether it makes any sense to pursue, or even talk about, utopian projects.

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