Precision is not perfection and perfection is not precision

Precision is not perfection. In fact (and it really is a fact) man (sic) ends where god begins. God is perfection but god is not precision. I start here not out of some seminary instinct but only to indicate that within the Judeo, Christian and Muslim traditions there is a similar understanding of perfection as against precision at work. We mortals often consider precision to be a hand maidens to perfection. It here where we err time and again. To be precisely blind is not to be perfectly blind. To be perfectly blind one would have to have no imagination; one would have to be incapable of transcending their lack of vision through the imagination to navigate the world (time and space).

Much of what constitutes the central debates within the academy is stuck in the false equivalence between precision and perfection. Nature V Nurture, rationality V irrationality, objective V subjective, materialist V culturalist understandings of things and of course the Daddy long legs of divides the natural V the social sciences.

It is not my intention here to start or finish a debate on ontological and epistemic concerns. Maybe some other time. What got me on to this subject was a blog post written over at the Slackwire in the comments sections we get the following response from Will Boisvert:

Instead of a realistic appraisal of workplace alienation, you have, like Marx, advanced a caricature of musical celebrity as your approved model of labor. This seems like another mystification. Surely Keith Richards is just a glittering cog in the Rolling Stones combine, one whose particular, limited job—the rote cobbling of salacious lyrics to hackneyed blues riffs—strikes me as degraded and unfulfilling. I don’t know, maybe it makes him feel exalted, the master of artistic wholes, but so what? You can’t run an economy on rock concerts. That you hold up the Richards figment, a cooler update of Marx’s composer sweating and straining with genius, shows me once again how deeply imbued Marxism is, for all its pretensions to a collectivist critique of society, with a romantic individualism that it insists must somehow undergird a mass economy.

Alas, that’s not possible: a return to artisanal autonomy and holism would spell economic collapse and die-off. Given that reality, I think the liberal dispensation holds up rather well, if fully realized. Jobs may be–usually, must be–uninspiring, but with high pay and short hours they leave workers with money and time to draw satisfaction from family life, civil society and unalienated hobby labor.

First-off artisans never enjoyed total holism. This is just bullshit. What artisans did enjoy (more precisely put) was control over their contribution to greater projects. Marxism is not against a social division of labour, nor economies of scope or scale. When Marx speaks of socialism he speaks of both collective and individual labour. What Marx destroys is the firm distinction bourgeois political economy wants to draw between the two. And weirdly when Willy pops his head-up to defend liberalism he does so on the basis of the necessity of individual sacrifice to meet collective needs! And I quote:

Mass production–machine processes and mindless-cog specialization ruled by bureaucracy and scientific design–has long since achieved a craftsmanship and efficiency that “meaningful” artisan labor can’t rival. Does that mean that liberal capitalism leaves us no escape from a bifurcated, spiritually meaningless life of work-time alienation and leisure-time bacchanal? Well, no, actually; if people want the satisfying experience of tangible, creative, self-directed labor, liberal capitalism is happy to sell it to them. Such jobs are called “hobbies” and there is a vast industry–hardware and gardening stores, art-supply shops, cookbooks, blog-hosting websites–devoted to marketing them to consumers.

There is much here to send one to the intellectual toilet so let us take them in their measure. The cardinal error here is that no Marxist I know has ever argued against industrialism and the concentration and centralization that entailed. Indeed the question was always about who should have access to the profits earned there from. It was always understood that the key to human liberty was to be realized via the increasing social division and specialization of labour. The sticky wicket was always of two concerns: First, who controls this; and second ,who preforms it?

But then the comment is also irrecoverably tainted by the proposition that precision = perfection. There are some things in life where precision really helps: piston clearances; tire balancing; mother board assembly and the optics in microscopes. None of course are perfection. Scale down far enough and they will all be imprecise. But this level of imprecision can be perfect for the task for which they were designed. Precision is not perfection to repeat the meme.

I was (and still understand myself as) an accomplished artisan and the delicate balance between precision and perfection was always a question. Too precise = dead form, dead design: too slack simply = sloppy work. There is then also a difference to make between relaxed and sloppy. Look go to your local industrial design store an pick out some interesting espresso cups. The most high modernists among you might desire and therefore like the most symmetrical and thus industrial of offerings. But, let me give you a chance. Send me a photo of your favourite industrial form (espresso only) and I will bet you I can make you more comfortable with something hand (directly) made. Precision works against warmth and depth: slopiness makes us crave precision.

Artisanal production is hereticaly about perfection not precision but it is not imprecise. It is exacting. Hear doth end the lesson.

Ideological Capture and the Death of the Functionalist Capitalist State

Marx and Engles once famously quipped in an obscure text somewhere that “the executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.” In modern theory this economistic and functionalist rendering of the state has been widely rejected for reasons I will not bother to outline here.

As a first cut theory of the modern capitalist state I, however, had always thought it was rather an astute observation. Business owners have collective needs they can not or will not independently provide and yet require these goods and services in order to conduct their affairs. They need independent courts to police and enforce private contracts, they eventually figure out they need a common currency, a reliable system of roads etc, etc. The solution to this collective action problem is the state. Indeed much of the history of liberalism can be read as a conversation about what the proper functions of the state ought to be and how to protect it from being hijacked by the popular classes to provide for their collective needs. That is why in that same obscure text Marx and Engles called for the extension of the vote to non-property owning individuals. What a Radical Idea!

What strikes me, however, about the latest wave of austerity sweeping through the advanced capitalist zone is the degree to which the state is failing to act as the executive committee of the bourgeoisie. When you read Keynes’ General Theory it is palatable the degree to which he was frustrated by the state’s failure to do its job and save the capitalist class from itself. In our contemporary period of growing myopathy economists like Paul Krugman seem gobsmacked on an almost daily basis at the failure of the present administration in the US to act accordingly. What Paul and many others do not seem to be able to figure out is why?

I think the failure of the state to act as the committee for managing the general affairs of the capitalist class is rather simple: both the bourgeoisie and its representatives—politicians—have been consumed by the ideology they have been selling.

Neoliberalism was about making the world a better place to be a capitalist. As such, it was also about getting citizens to internalize the needs of business as their own. Everyone and every institution were asked, prior to making any practical suggestions to ask themselves what would a business person do? So successful was the campaign to get citizens across the world to internalize the needs of capital that even the elites ended up drinking the cool-aid they sold. Put differently neoliberalism moved from being the Noble Lie to the prize winning Noble Truth.

I am going to coin a new term here and call this phenomenon “ideological capture”; which no doubt, in the case of the US is reinforced by an almost complete “regulatory capture.” Indeed so complete has this ideological capture been that it appears as though instead of individual states acting on behalf of the collective needs of the entire bourgeoisie individual states are rather acting as the executive of a single capitalist firm and viewing the societies they govern as one giant business enterprise. This in train is leading to a whole host of jumbled thinking not the least of which is the package of compositional fallacies and outright contradictions masquerading as fiscal prudence.

In another post perhaps I will take the time to catalogue them all. But of course all of this is a rather moot point. Even if the managers of the capitalist enterprise called the modern state woke up and decided that they would save capitalism from and for the capitalists it is not at all clear how they would do it. Let us say for argument sake I agree with people like Krugman and think that fiscal expansion across the capitalist zone coupled with a real effort on the coordination on international imbalances—as opposed to the bizarre spectacle that was the G20 meeting in Korea—would go some way to stop the haemorrhaging. The fact remains the neoliberal growth model is a failed experiment. A reset back to 2005 will not do the trick; nor 1996; nor 1985; nor 1976; nor the summer of 68.

There are in fact three resets and not one that have to be pulled-off. To meaningfully deal with international imbalances we are going to have to deal with both the class and the environmental imbalances (that was euphemistically put). These are all massive problems with very politically complex solutions to be worked out. Neoliberalism has served to hyper accelerate all three imbalances and there is nothing I am seeing from the Very Respectable People (VRP) like Krugman that betrays any sense of what is really required. To make matters worse VRP are on the outside of the debate which gives a good indication of just how far off is a meaningful consideration of the immensity of the tasks at hand given they are only one quarter of the way there and sitting on the benches.

Marx and Engles quipped somewhere in an obscure text second only in obscurity to the Bible that Capitalism creates its own gravediggers. Some good irony then that the state is busy performing this historical mission that was once bequeathed to the working class.

Getting radical about Canadian debt levels and servicing facilities: Let Canadians tap on the window of the Bank of Canada

There has been some considerable ink spilled over Canadian consumer debt to income ratios (I am not providing the links; that is why god invented google). I am one of these rare (in the aggregate but not rare) Canadians which has a debt to income ration of around 70%. The down side, for both me and my creditors, is that none of it is secured. So I made an appointment with a bank representative to see if there was some way to consolidate all the different unsecured debt into a nice little package with a fixed (low) interest rate and fixed payment schedule with the agreement that I would cancel all but my banks credit card which is unencumbered. The answer was yes it is possible but the interest rate is going tobe on average higher than the different rates on all my debt. About half my debt is at 5.5% the other half at 10% and the consolidation loan was the high end of 9%. All this, in an environment in which the central bank rate is 1%.

That is an 8% spread. If the government really wants to get debt to income ratios down and does not want serious deleterious effects on aggregate demand then it should empower the BOC to offer consolidation loans at 1.5% with the proviso that they are structured over a maximum of 5 years and no consumer credit lines can be taken up by the borrower for the term of the consolidation loan. Further, to back stop against the plaint that these are unsecured, the legislation can be past that effectively secures them. Here is how: take them out of bankruptcy provisions and empower revenue Canada to pursue payments via forfeiture of all tax credits until the balance is paid in full.

So what is the benefit to Canadians? The ability to individually deleverage without killing aggregate demand. This of course is far too pragmatic so it has no chance between two hockey sticks an E and two Ls of getting traction. But it does suggest that there are still some non-revolutionary options left on the table .

Of course we could always just wait for bankruptcy provisions to solve the problem and or a long protracted period of reduced aggregate domestic demand.

Causes of the financial Crisis

These animated lectures are really good. One problem is that watching the drawing can be more interesting then the lecture. Here is David Harvey’s Crises of Capitalism. One critique that I would have is that this not really an original contribution by David but rather a summary of an account of the crisis that has been consistently told among Marxian political economists. But it is an efficient 10 minute summary and with the animations highly entertaining.

Retail sales in Canada: A tale of public and private consumption

The retail sales number released by statistics Canada this morning are not dismal but they are bad as in retail sales are down by -0.1% on a month over month basis (M/M). On a year over year (Y/Y) basis retail sales are up by a respectful 3.3%. For the present it is very much an open question as to how retail sales will finish the year.

However, if we take a look at a bar graph of retail sales what I find interesting is that public consumption, by which I mean personal consumption that directly projects a public image, although softening is nonetheless for the most part still solid. And this holds across durability categories. So for example auto sales are still relatively strong and so are clothing sales. What has dropped off and gone into negative territory is private consumption by which I mean personal consumption that the public do not necessarily see. So for example, while car sales are strong, parts are down; while home sales are still positive, home furnishing is negative; and while cloths are positive personal health products are down. In short, Canadian consumers are maintaining appearances while cutting back on those items that do not deliver the highest social bang for the buck.

Click for a crisper image.

In Thorstein Veblen’s theory conspicuous consumption the luxury end of public goods is the driver in booms. The more ostentatious displays of wealth the better: Jewellery ect. But that end of public consumption has gone negative. In short the status war aspect of public consumption has ended and now appearances are being maintained through cuts in other areas of consumption.

If this trend is at all robust; i.e., if it continues into the August and September numbers than we could well be seeing the end of consumption as an economic driver.

Goldman Sachs, Market Makers and standard economic theory

I wish I had the time to work through this more systematically but I do not. But can anyone watching the US senate grilling of G&S execs believe in the micro-foundations of orthodox economics (scientific liberalism)? What I liked was Sen. Levin’s interpretation of a Market Maker (MM) and G&S’s interpretation of MM. The G&S position is thus: we can sell anything to anybody without divulging what we think it is worth; in fact our obligation is to sell shit, if it is shit, it is just that shit, and we have no obligation to divulge our position about its quality.

This is simply buyer beware all trussed up. I am kind of sympathetic to this position as far as it applies to capitalism. The job of a capitalist enterprise is to make a profit: Some profit by selling quality and some profit by selling fake versions of Viagra. To paraphrase Marx: “capitalists seek profits; that in the process real or imagined needs get satisfied, satisfied well, or not is of secondary importance to the capitalist.” People sell lemons all the time in the attempt to lay-off their risk. In for the penny into the pound.

The community sets the standards on what is fraud and what is not. Now of course it is clear that firms like G&S bought the regulator (or in more polite form captured the regulator). So all of this is a bit of a smoke screen: political theatre. The real question is about how the state came to give these firms such latitude to determine what is fraud and what is not: or what is a lemon what is not?

Standard micro economic theory has a highly transparent view of information. Between the rational expectations and the implied substance of the efficient market hypothesis G&S should never have been able to push junk onto a market and find buyers in a sustained fashion over a prolonged period of time. But the G&S defence wants it both ways: we can sell shit because buyers should know they are buying shit. And they want to say we can sell shit because nothing obliges us to divulge the fact we are selling and saying shit.

And this is not much different from standard economic theory. Standard economic theory is want to say that shit can be sold because the market will almost instantly recognize that it is shit and that is the natural limit thus we do not need regulation to define shit. But G&S’s actions prove that market makers have an informational advantage that will not necessarily disappear by the discovery processes of market agents; at least not any meaningful sense of what is meant by this. The EMH boyz now want to redefine colossal market failure (the failure for good information to drive out bad) as the financial crisis. The crisis, the market pancaking thus becomes the rectifying process, the proof of real information discovery. That is like saying nautical engineers are successful because when ships sink they really sink.

What the sad story of G&S actually indicates is that market makers really make markets and that information is, by design, and in the absence of regulation, asymmetrical and consciously so. In a more revolutionary direction G&S, along with the entire private financial sector, indicates that private entities, if they have the financial wherewithal, will thwart, to the best of their abilities, the capacity for public oversight and regulation. This being the case it would seem to suggest that some activities ought to be brought under the public domain.

A day in the life of capitalist consumption: the extended warranty

A beautiful sunny day and with my internet service completely unstable I decided to take a walk up to the bench beside my local public library and hook-up to the library’s free wireless service (shh do not tell the economists or they will have us paying user fees). So there I sat basking in the glowing sun checking my email, surfing the web, while composing a missive to my internet service provider somewhere along the lines of:

Dear Sir,

I wish to remain a costumer of your company however you have not resolved the problem after three weeks and unfortunately the definition of a consumer is someone who consumes a good or service. In short if I cannot consume I cannot remain your customer.

Just as I was composing the above missive I received a call on my cell phone. Hoping it was someone I wanted to talk to (which I cannot verify because the external call display ceased functioning a while back) I answered the phone. And alas it was a rather friendly chap from Gears (actually it rhymes with Gears). The chap from Gears wanted to inform me that the washing machine I bought from them nearly a year ago was coming off warranty at the end of April and did I want to buy an extended warranty.

I asked the fellow: “do you know something I do not?”

To which he responded: “I do not follow.”

So I asked fellow:

“What is the track record of these machines, as in, what percentage break after the first year?”

He said: “I do not know.”

To which I responded:

“Then how can I make an informed decision about whether or not I need (and I said lets be clear here) insurance?”

I then further asked:

“Surely the accountants at Gears are tracking all this information otherwise they would not know how to price these insurance packages.”

He responded:

“I am pretty sure somebody above me knows but that is not information that is given to me or the other client service agents”

To which I asked:

“How can you be my service agent if you cannot tell me what kind of I risk I may be insuring myself against?”

He responded:

“you are not going to buy the extended warranty are you?”

To which I said:

“No, but if the machine breaks one month after the warranty expires I will not buy anything from Gears again.”

He replied that a lot of people say that.

I suppose originality is for kings and children.