What kind of Canadian political scientist are you?

Via Facebook

You are devoted to the great Canadian tradition of radical political economy. You have some sort of connection to York University. Your great dream is to co-publish with Leo Panitch. You stopped explaining your work and that you are not just “a communist” to your parents and/or your partner a long time ago. You feel guilty about your foreign-made non-union car with its better reliability and mileage.

Me I drive a b3000 which is a Ford Ranger so I have hedged the foreign auto guilt thing. And yes there are both standard and metric requirements. That too keeps Snap-on in the cash.

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.

Brad Delong Wrong Yet Again and Again and Again: oh why can’t we have smarter reform liberals

Scandalum Magnatum, takes Brad Delong to task for botching  Kelecki in a recent post.

Brad DeLong damns Kalecki with praise:

I WAS EXPECTING A 6% PRODUCTIVITY GROWTH QUARTER, BUT THIS IS RIDICULOUS!!!

Productivity increased 9.5 percent in the nonfarm business sector during the third quarter of 2009 as unit labor costs fell 5.2 percent (seasonally adjusted annual rates). In manufacturing, productivity increased 13.6 percent while unit labor costs fell 7.1 percent…

Back in the 1930s there was a Polish Marxist economist, Michel Kalecki, who argued that recessions were functional for the ruling class and for capitalism because they created excess supply of labor, forced workers to work harder to keep their jobs, and so produced a rise in the rate of relative surplus-value.

For thirty years, ever since I got into this business, I have been mocking Michel Kalecki. I have been pointing out that recessions see a much sharper fall in profits than in wages. I have been saying that the pace of work slows in recessions–that employers are more concerned with keeping valuable employees in their value chains than using a temporary high level of unemployment to squeeze greater work effort out of their workers.

I don’t think that I can mock Michel Kalecki any more, ever again.

To which Mike responds:

Well I don’t think DeLong knows much about Kalecki.

In Kalecki’s general model of the business cycle, gross profits fall in recessions just as the pre-3Q-2009 DeLong would have expected them to, because investment and hence total demand declines. The effect on profit and wage shares depends on how much total output and employment fluctuates alongside it, and in fact, on how much labour businesses keep (under)employed – exactly the reason DeLong gives for the worldview he maintained before 3rd-quarter 2009 data came along and shattered it.

In “Distribution of National Income” (1956) Kalecki writes that the wage share excluding salaries “does not seem to show marked cyclical fluctuations”. [p. 66 in his 1971 ‘Selected Essays’ book] But once salaries are included, “the ‘real’ wage and salary bill… can be expected to fluctuate less during the course of the cycle than the ‘real’ gross income of the private sector.” [pp. 75-76] Therefore, the wage+salary share increases in a recession. He gives theoretical reasons – mainly that salaried workers’ employment and pay does not vary so much with output – and runs a regression on US data 1929-41 to back it up. This is exactly the opposite of deLong’s representation.

Kalecki does not use the Marxian value terminology, so DeLong’s use of ‘relative surplus value’ is odd.

DeLong seems to be vaguely remembering and mashing into Kalecki’s business cycle theory his infamous 1943 essay “Political aspects of full employment”, although here too Kalecki clearly argues that less-than-full employment is bad for profits: “It is true that profits would be higher under a regime of full employment than they are on average under laissez-faire; and even the rise in wage rates resulting from the stronger bargaining power of the workers is less likely to reduce profits than to increase prices…” [p. 141]

But full employment was likely to meet political opposition from ‘business leaders’ and ‘captains of industry’ (he also never says ‘capital’ or ‘the ruling class’) because of (i) ideological prejudice against Government deficit spending and (ii) any expansion of public investment “which may foreshadow the intrusion of the state into the new spheres of economic activity” [p. 142], and (iii) dislike of the social and political consequences of greater working class confidence that comes with full employment. ‘Rentiers’ would have an additional reason: the erosion of their wealth from more rapid inflation. Kalecki thus predicted a political alliance between rentiers and the intellectual representatives of big industry, “and they would probably find more than one economist to declare that the situation was manifestly unsound.” [p. 144]

DeLong’s account of Kalecki’s views is thus completely misleading. But there’s some wholesale inventories data out today that might just make him rethink everything he thought he knew about Joan Robinson.

To which I would add that when I read Delong’s post I was sure he was channelling Paul Mattick:

“Both Marx and Keynes, then, though for different reason, recognize the capitalist dilemma in a declining rate of capital accumulation. Keynes diagnoses its cause as a lack of incentive to invest. Marx, looking behind the lack of incentive, finds the reason for it in the social character of production as a production of capital. Keynes does not regard crisis and depression as necessary aspects of capital formation; they are such only under laissez-faire conditions, and then only in the sense that the economic equilibrium does not include full employment. For Marx, however, a continuous capital accumulation presupposes periods of crises and depression, for the crisis is the only “equilibrium mechanism” which operates in capitalism with regard to its development. It is in the depression period that the capital structure undergoes those necessary changes which restore lost profitability and enable further capital expansion.”

Paul Mattick (1955), “Marx and Keynes”

So here we have three very different views of recessions and depressions and the way forward:

Keynes insufficient investment which can be remedied by augmenting effective demand (in a liquidity crisis);

Kalecki in accord with Keynes but sees political limits to full employment policies as a solution to aggregate demand and investment;

In Marx interpreted by Mattick, crises  restore a particular balance between productivity growth, wages and profits–with the restoration of profits hinging on rapid productivity growth and declining wages. Over at Angry bear just this scenario seems to be playing itself out in the US.  Productivity was running 9.5% and wage share of output is declining at an increasing pace.  Someone here is being vindicated.

That said, maybe Brad is just rehashing his own understanding of Marx, and like Keynes confesses to have never read him. Hence, it is of little surprise that Brad should make a mash-up of, what are for him, random Marxists and pin his tail on the wrong donkey. Just using the word “Marxist” is akin to the most vulgar of profanities for Brad and thus a display of his necessarily macho character so he thinks.

Someday leading liberals in the US will have to confess that they, like their Republican counterparts, are no Angles when it comes to accurate representation.  Further they will have to admit that much of what passes itself off as economics is really political economy–a confession that I am fine with.

Does Collective action by workers always increase unemployment?

Thinking out-loud

The answer to this question is almost a unanimously agreed upon yes across paradigms even within formalized Marxian models.  In the classic Marx-Goodwin formulation successful collective action by workers only serves to increase the long-run rate of unemployment: some workers maybe able to raise their wages but this will be balanced out in the aggregate by increased unemployment.  However, if as Shaikh (2003) points out the strength of labour endogenously influences the rate of technical change then workers can increase their wages in the aggregate (wage share) without causing an increase in long term rate of unemployment.

Shaikh sums up the case thus:

6. Summary and Conclusions

This paper has attempted to analyze the manner in which alternative macroeconomic frameworks portray the dynamics of the labor market. Two types of dynamics have been of interest, both of which depend upon the mutual interactions between the wage share and the employment rate. In disequilibrium dynamics, the issue is the manner in which these variables respond to imbalances in the labor market, while in growth dynamics the issue is their response to technical change and growth in labor supply growth. We examined the basic neoclassical, Keynesian, Harrodian and Marx-Goodwin models, since each embodies a particular approach to macroeconomics

Dynamics require explicit analysis of stability of various equilibria. But even the existence of a particular stable equilibrium need not imply that the economy will be at or even near that point. The analysis of the neoclassical model in Section 2 demonstrates that if real wages respond to the current excess demand for labor, then the labor market converges to a particular wage at full employment (Figure 1). But if real wages respond to the cumulative excess demand for labor, then the labor market would exhibit endless and possibly large fluctuations in real wages and excess labor demand, around but not at, the equilibrium real wage and full employment (Figure 2). This second type of response is reminiscent of Goodwin’s elegant representation of Marx’s argument about the reserve army of labor, except that in his model the center of gravity is a persistent level of unemployment, not full employment (Section 5). In any case, this type of disequilibrium dynamic remind us that we should be careful to distinguish between equilibrating paths and equilibrium points. At an empirical level, this cautions us not to confuse observed variables with their putative equilibrium levels.

In the case of growth dynamics, a second type of finding emerges. It turns out that in each of the four macroeconomic approaches, the paradigmatic case is one in which the organizational or institutional strength of labor has no influence whatsoever on the path of real wages and on the level of the wage share. In all of the approaches, it is technical factors and labor supply growth which determine the standard of living of workers. The degree of labor strength in the struggle over wages has no effect at all. In the neoclassical case, this is instanced by the ubiquitous Cobb-Douglas production function, in which the labor elasticity parameter directly determines the wage share. Hence the profit-wage ratio is entirely determined by production conditions. In the standard Keynesian case, the corresponding outcome arises from mark-up pricing, in which changes in money wages are said to cause equiproportional price changes. This not only leaves the real wage unchanged, but also implies that it is unchangeable. In the Harrodian framework, unemployment affects the wage share, which in turn affects the warranted rate of growth via the dependence of the savings rate on the wage share, a la Kaldor and Pasinetti. This feedback loop leads the system to stabilize around full employment in the long term. But it also implies that the wage share is completely determined by the rates of technical change and population growth, completely independently of labor strength. Finally, even in Goodwin’s classic formalization of Marx’s theory of the reserve army of labor, “class struggle” over wages has no effect whatsoever on the rate of surplus value. Indeed, greater labor strength would only serve to increase the long-run equilibrium rate of unemployment. This is a particularly unkind cut for a Marxian model.

Two critical questions are raised by the general theoretical finding that wage shares are independent of labor strength. First of all, it is at all empirically plausible? The stability of wage shares is a well-known “stylized fact.” But then so too are differences between wage shares across nations and across levels of development. Are these differences reducible to those arising solely from technical factors and conditions of labor supply?

Alternately, if social forces do indeed influence the wage share, how might such a mechanism operate? The key expression to consider is equation 15, in which the rate of change of the employment ratio depends solely on two critical variables: the rate of accumulation g_K = s(u)R and the rate of mechanization g_k, assuming that the rate of growth of the labor supply g_n is exogenous.

v‘/v = g_K – (g_k + g_n) = s(u)R – (g_k + g_n)                                            (15)

We saw that if the output-capital ratio R and the mechanization rate g_k are exogenously given, then there is only one wage share u = u* consistent with a stable employment rate (i.e. with v‘/v = 0). But this conclusion would not be altered if R and g_k, and indeed even g_n , were to also depend on the wage share.²¹ What is needed, therefore, is some other mode of feedback between the employment rate and one of these variables. A particularly simple one is to suppose that the rate of mechanization depends not only on the wage share (i.e. indirectly on the employment rate through its effect on the relative cost of labor) but also directly on the employment rate (i.e. directly on the relative availability of labor). Rowthorn (1984, pp. 203-205) notes that this is precisely the argument in Marx.²² Then g_k = f(u,v), and

v‘/v = g_K – (g_k + g_n) = s(u)R – [g_k(u,v)+ g_n]                                      (15a)

The results of this apparently minor extension are dramatic. Suppose we consider the extreme case in which the wage share is now entirely determined by “class struggle,” so that u = u₀. Then if v‘/v > 0 initially, the employment rate v will rise, which will raise the mechanization rate g_k(u₀, v), thereby bringing the employment rate back into balance. It follows that the same result would also obtain if we assume that the wage share depends on both “class struggle” and the employment rate. Thus the preceding simple modification completely reverses the general theoretical conclusion that the wage share is independent of labor strength, for now there is plenty of room for the influence of the relative strength of labor.

However, if the mechanism is technical change–the swapping of machinery for living labour–it strikes me that over the short run the Marxist model would have to say that unemployment must initially increase unemployment.  This is consistent with Marx’s observation that capital can always adjust to existing supply shortages through technological / organizational innovation. Surely this process takes time.  As Marx was well aware.   I think Marx’s position was that even in cases where capitalism managed to produce full employment that such a condition would not prevail for long do to the tendency to substitute away from labour.

Moreover, what about the case of successful collective action by workers in the face of not labour market shortages but rather excess supply aka unemployment?  It seems the inescapable answer is that such action would serve to increase the short term rate of unemployment even if over the medium to long term there were not any adverse effects.

This result undoubtedly sharpens the political question for unions during recessions.

Real Economist Needed: New Keynesian explanation of unemployment confounds me

I have been going around on this one for some time.  The new-Keynesians’ (NKs) widely regard themselves as being a realistic improvement on their new-classical cousins.  One area in particular is said to be major part of their coup-de-grace.  Namely, the explanation of unemployment by recourse to the efficiency wage conjecture.  In short, firms pay an above marginal product wage to elicit the requisite effort of workers. This above marginal wage, in the aggregate, is the cause of unemployment.

Lets do a mind experiment.

Said worker is hired for $12.50 per hour.  The employer gets X work effort (we) which is less than their marginal product.

Said worker gets a raise of $2.00 per hour.  The employer gets X + we*+we** which equals the worker’s marginal product.

The only way the efficiency wage hypothesis can add anything to the neoclassical story is if workers, when hired, deliver a work effort below their marginal product.  Problem is, this would already explain unemployment.

Similarly, if the extra $2.00 per hour actually induces a work effort on the part of labour such that it equals their marginal product then unemployment can’t be explained by recourse to the efficiency wage premium because the wage equals the marginal product.

If, when workers are hired at the initial wage, the worker delivers a work effort at their marginal product then there is no need for efficiency wages:  efficiency wages are then irrational and the NKs have violated the terms of the peace.  That is, they have teased a sub-optimal outcome by recourse to irrational behavior on the part of employers.

So where is the savvy?

—————–

Update: Nick Rowe was generous enough to walk me through it.

My problem was that I was stuck on this paragraph out of the Stiglitz Shaprio (1984) article “Equilibrium Unemployment as a Worker Disciplining Device:”

To induce its workers not to shirk, the firm attempts to pay more than the going wage; then, if a worker is caught shirking and is fired, he will pay a penalty.  If it pays one firm to raise its wage, however, it will pay all firms to raise their wages.  When they all raise their wages, the incentive not to shirk again disappears.  But as all firms raise their wages, their demand for labour decreases, and unemployment results.  With unemployment, even if all firms pay the same wages, a worker has an incentive not to shirk.  For, if he is fired an individual will not immediately obtain another job.  The equilibrium unemployment rate must be sufficiently large that it pays workers to work rather than to take the risk of being caught shirking (p.433).

This is the paragraph I had in mind when I wrote the original message.  Nick did me the favour of transposing it onto the supply-side… and then… the light:

Here is how I would write it:

Suppose we start at zero unemployment, supply=demand for labour. One firm realises that if it raises its wage above other firms’ wages, its workers will not shirk. Other firms realise this too, so each tries to raise its wage above other firms’ wages. They cannot succeed at this of course, but the result is that wages rise. As wages rise, quantity of labour demanded falls, and quantity of labour supplied rises, so there is an excess supply of labour, or involuntary unemployment. Wages stop rising when unemployment gets high enough to deter shirking, without an individual firm needing to raise its wage above other firms’ wages.

This is I think a much clearer presentation.  I have several residual doubts about the logical consistency of the explanation.  It seems to me that the EW conjecture relies on workers comparative evaluation of their own wage relative to the prevailing sectoral wage.  I get the Mdisutil side of the story (see comments section) that is, I get the supply side description but I still don’t get or don’t buy the demand side part of the argument.  Actually what I find fuzzy is the dynamics  responsible for firms demanding more labour than mp wages would warrant.  Alas, this will have to wait for another day.

As to the question of whether or not this NK conjecture is Keynesian?  I will just sketch my initial thoughts.  Part of the problem is that Keynes retained the neoclassical labour supply curve and the marginal disutility conjecture.  As Spencer* (2006, p. 467) points out, Keynes’ deployment of effective demand does not account for the origins of unemployment, but, rather, explains its persistence and does not necessarily point in the direction of a certain policy intervention because Keynes retained the crucial neoclassical equality between the real wage and the marginal disutility of labour.

It may be that the NKs are Keynesian but only because they retain the labour supply curve and fail to account for the origins of unemployment (as Nick might say (?): as we understand it when we ask the average unemployed person why they are unemployed).   But in this sense, the strict new-classical conjecture has the same problem: there is a theory of the volume of employment but not much else.  I think Spencer is right: if you retain the NC supply curve then not much can be added to the basic NC conjecture on unemployment: wages are too high relative to what their marginal product would warrant.  The NKs achieve the same result but through the argument that EW>MP wage and hence calls forth too much labour supply resulting in involuntary unemployment.   But at the end of the day wages are too high to clear labour markets.  It strikes me that the essence of Keynes GT was an attempt to escape this logic.

*Spencer, David A. “Work for All Those Who Want It? Why the Neoclassical Labour Supply Curve Is an Inappropriate Foundation for the Theory of Employment and Unemployment.” Cambridge Journal of Economics 30 (2006): 459-72.

From Despotism to Hegemony and Round-again to Hegemonic Despotism: Burawoy’s Neoliberal premonition

Michaels Burawoy’s the Politics of Production (1985), stands out as an important contribution to Marxist political economy in general and in particular Marxist analyses of the dynamic interaction between welfare state institutions, the juridical regulation of industrial relations, and the labour process.  Inter alia, Burawoy set himself the task of developing an analysis of the “politics of production which aim[ed] to undo the compartmentalization of production and politics by linking the organization of work to the state” (p.122).  Burawoy used the dynamic interaction between labour market, welfare state, and managerial regimes to generate a typology of labour relations regimes.   Specifically he argued that “the process of production is not confined to the labour process… It also includes political apparatuses which reproduce those relations of the labour process through the regulation of struggles.  I call these struggles the politics of production or simply production politics” (Ibid: italics in original).

Burawoy argued that for classical Marxist political economy it was simply assumed that the naked coercion of the labour capital relation; i.e., that the dependence of workers on wage labour for its existence and reproduction through time was sufficient to bind workers to capital and by extension to the arbitrary authority of management. It is the latter which Burawoy labels as market despotism, wherein “the anarchy of the labour market is replaced by despotism in the factory.”  While Burawoy argues this characterization of labour relations regimes was historically correct for sectors such as the New England mills after the 1860s or in the contemporary agricultural sector of the US, it does not capture the essential dynamics of post-WWII labour relations regimes in much of the advanced capitalist zone.

For Burawoy two kinds of state intervention caused a decisive break with “the ties binding the reproduction of labour power to productive activity in the workplace” (p.125).  The first of which being the development of the welfare state and its associative institutions which put an implicit floor on wages and the second being state intervention directly in the relations of production via industrial and labour relations laws which severely restricted the arbitrary exercise of authority by management.  Burawoy concluded from the above therefore that:

…management [could] no longer rely entirely on the economic whip of the market…..Workers must be persuaded to cooperate with management…..The generic character of the factory regime is therefore determined independently of the form of the labour process and competitive pressures among firms.  It is determined by the dependence of workers’ livelihood on wage employment and the tying of the latter to performance in the workplace.  State social insurance reduces the first dependence, while labour legislation reduces the second (p.126).

It was this dynamic of negotiated internal consent over the labour process and the incomplete external alienation of labour from the means of subsistence owing to the provision of a social minimum wage by the state that Burawoy designated as a “hegemonic regime.”

Yet, by the early nineteen eighties Burawoy began to see a new emergent dynamic arising in the advanced capitalist zone which he described as hegemonic despotism.

The new despotism is founded on the basis of the hegemonic regime it is replacing.  It is in fact hegemonic despotism.  The interests and capital and labour continue to be concretely coordinated, but where labour used to be granted concessions on the basis of the expansion of profits, it no w makes concessions on the basis of the relative profitability of one capitalist vis-à-vis another – that is, the opportunity costs of capital.  The primary point of reference is no longer the firm’s success from one year to the next; instead it is the rate of profit that be earned elsewhere (p.150. Italics in original, emphasis added).

Here Burawoy, although without the benefit hindsight and without calling it as such, was describing one of the central characteristics of neoliberalism; namely, the increasing international competition between capitals and the increased mobility of capital relative to wage labour.  Further Burawoy identified a key shift in the way in which the relative failure or success of capitalist firms was being evaluated—according to the opportunity costs of capital.

Northern Rock Nationalisation : Don’t Believe the Hype

By Travis Fast

Over the last couple of months one could be forgiven for thinking that the world had reverted to those heady pre 1970s days. First, the phrase market failure crept back into to the popular lexicon in the wake of the subprime meltdown; then a concert of central banks stepped in to underwrite and manage financial markets; then growth came to preoccupy central bankers over price stability; then deficit spending became not only acceptable again but was championed by the bastions of fiscal probity; and now alas, a Labour government has nationalized a major financial institution. Indeed, if one could only see the trees and not the forest it would seem as though there was decisive shift in the political economy of macroeconomic management to the left.

Such a myopic vision would however be remiss. Crucially context matters. These are neoliberal times. It is, after all, David Miliband who stalks the halls of New Labour and Whitehall–not his father Ralph. Understood correctly, the litany of events outlined above must be viewed through the lens of system maintenance and crisis attenuation. This is further down the putative «Road to Freedom» and not the  further down the«Road to Serfdom».

Plainly stated, the logic of the present invocation of deficits through to nationalization is not one of system change, but, rather, system stabilisation and crisis management. Deficits are being used to shore up the system–not to undermine its logic; low interest rates are similarly being used reinforce the price floor–not with an eye to full employment; and now nationalisation is being used to ensure that the mother of all market failures does not see the light of day—not to socialize mortgage markets (the mother of all middle-class public goods I should add).

New Labour has been an active architect of the present conjuncture. They have purged every economic lefty in their dogged determinism to be born-again. To that end, New Labour has not merely made their peace with the City and international finance but actively encouraged their deepening influence. The collapse of Northern Rock, and the consequence that would follow in train cannot be merely viewed, as Darling would have it, as the protection of the public purse, but rather, the protection of a financial system and middle England to which New Labour has been so slavishly devoted and used so well to wage its own intercene struggle against old labour.

When it dawned on Darling that he could use that great Shibboleth of the left—nationalisation—in the service of the capitalist class as whole, while wearing the mantle of guardian of the public purse, it must have given him a wry smile indeed. And with some irony it also rather confirmed Ralph Miliband’s instrumental view of the state.

On this view, the nationalisation of Northern Rock and the rest must be viewed in the sober light of continuity not change. If private shareholders want to view this as infringement on their human rights they need only console themselves with the thought that they took one for the team.  Now they know how it feels to be Red Ken and G. Galloway.

Is the Central Bank a Gambling Man or a Confidence Trickster?

By Travis Fast

I encourage everyone to watch this clip of David Dodge. In his estimation commodity prices will remain high and as such fuel higher incomes which taken together with the paltry one cent reduction in the GST will be sufficient to keep domestic demand growing strong.

There are two bets here, both of which are far from a sure thing.

I am not convinced that high commodity prices are a sure thing nor am I convinced that even at present levels they will be sufficient to drive enough investment to pick up all the slack created by a high dollar and declining exports to the US.

The more likely scenario is that the recession in the US will drive down commodity prices along side declining demand for Canadian exports and there will thus be a double demand shock to the Canadian economy. That leaves the one cent decrease in the GST to do all the heavy demand lifting.

I do not know about you, but the 1 dollar savings per 100 is not a sufficient inducement for me to rack up more debt on my credit cards. Nor is the ¼ point reduction of interest rate any great inducement either. So that leaves big durable ticket items like cars and houses.

What Dodge must think is that decreased interest rates in tandem with a diminished GST will be sufficient to keep demand for housing and complimentary durables chugging along. The problem is that housing mortgages are not just determined by interest rates but also by credit worthiness. How many more credit worthy buyers are out there especially given the cost of housing in the strongest markets? I think the supply of worthy borrowers has almost run its course.

So unless a lot of hot money starts flowing in and credit conditions are relaxed—i.e., the conditions necessary to create a bubble—the real estate party might just be over in Canada too. But who knows? The Americans seem determined to open the spigots and let the easy money flow and thereby re-inflate the bubble. This can only prolong the inevitable fall.

The essence of socialism.

Travis Fast

Sometimes when I find myself questioning many of my political positions (which I do every so often despite what appears here: which is the mark of a good social scientist I should add) I return to some foundational passages from bygone years and see if in them I am still able to see myself; that is, my sentiments –the fusion of the heart and head– reflected (don’t get all scared: you have a heart even if you think you don’t use it; and, don’t get all scared: you have a head even if you feel you don’t use it).

Below is one such passage which has been heavily edited down to the punch line. What I like about this passage is that it makes plain what characterises relationships between human beings when they are reproduced through alienated labour and its products. But more significantly the passage outlines the sentiment of what one might call an alternative socialist modernity in which mutual recognition in love through our individual labours and subjectivity is the causa belli. And although the passage offers no clue about how a community of human beings could be constituted on such a basis it does provide a normative basis from which we can judge our own and hold ourselves to account.

The passage is also quite stunning in the way that the author deals with subjectivity and objectivity: and even puts forward a positive notion of objectification. If you have not read this passage give it a twice-over; if you have, perhaps you will feel a little less lonely after having revisited it.
…………………

Comment on James Mill

When I produce more of an object than I myself can directly use, my surplus production is cunningly calculated for your need. It is only in appearance that I produce a surplus of this object. In reality I produce a different object, the object of your production, which I intend to exchange against this surplus, an exchange which in my mind I have already completed. The social relation in which I stand to you, my labour for your need, is therefore also a mere semblance, and our complementing each other is likewise a mere semblance, the basis of which is mutual plundering. The intention of plundering, of deception, is necessarily present in the background, for since our exchange is a selfish one, on your side as on mine, and since the selfishness of each seeks to get the better of that of the other, we necessarily seek to deceive each other. It is true though, that the power which I attribute to my object over yours requires your recognition in order to become a real power. Our mutual recognition of the respective powers of our objects, however, is a struggle, and in a struggle the victor is the one who has more energy, force, insight, or adroitness. If I have sufficient physical force, I plunder you directly. If physical force cannot be used, we try to impose on each other by bluff, and the more adroit overreaches the other. For the totality of the relationship, it is a matter of chance who overreaches whom. The ideal, intended overreaching takes place on both sides, i.e., each in his own judgment has overreached the other.

On both sides, therefore, exchange is necessarily mediated by the object which each side produces and possesses. The ideal relationship to the respective objects of our production is, of course, our mutual need. But the real, true relationship, which actually occurs and takes effect, is only the mutually exclusive possession of our respective products. What gives your need of my article its value, worth and effect for me is solely your object, the equivalent of my object. Our respective products, therefore, are the means, the mediator, the instrument, the acknowledged power of our mutual needs. Your demand and the equivalent of your possession, therefore, are for me terms that are equal in significance and validity, and your demand only acquires a meaning, owing to having an effect, when it has meaning and effect in relation to me As a mere human being without this instrument your demand is an unsatisfied aspiration on your part and an idea that does not exist for me. As a human being, therefore, you stand in no relationship to my object, because I myself have no human relationship to it. But the means is the true power over an object and therefore we mutually regard our products as the power of each of us over the other and over himself.

That is to say, our own product has risen up against us; it seemed to be our property, but in fact we are its property. We ourselves are excluded from true property because our property excludes other men.

The only intelligible language in which we converse with one another consists of our objects in their relation to each other. We would not understand a human language and it would remain without effect. By one side it would be recognised and felt as being a request, an entreaty, and therefore a humiliation, and consequently uttered with a feeling of shame, of degradation. By the other side it would be regarded as impudence or lunacy and rejected as such. We are to such an extent estranged from man’s essential nature that the direct language of this essential nature seems to us a violation of human dignity, whereas the estranged language of material values seems to be the well-justified assertion of human dignity that is self-confident and conscious of itself.

Although in your eyes your product is an instrument, a means, for taking possession of my product and thus for satisfying your need; yet in my eyes it is the purpose of our exchange. For me, you are rather the means and instrument for producing this object that is my aim, just as conversely you stand in the same relationship to my object. But 1) each of us actually behaves in the way he is regarded by the other. You have actually made yourself the means, the instrument, the producer of your own object in order to gain possession of mine; 2) your own object is for you only the sensuously perceptible covering, the hidden shape, of my object; for its production signifies and seeks to express the acquisition of my object.

In fact, therefore, you have become for yourself a means, an instrument of your object, of which your desire is the servant, and you have performed menial services in order that the object shall never again do a favour to your desire. If then our mutual thraldom to the object at the beginning of the process is now seen to be in reality the relationship between master and slave, that is merely the crude and frank expression of our essential relationship.

Our mutual value is for us the value of our mutual objects. Hence for us man himself is mutually of no value.

Let us suppose that we had carried out production as human beings. Each of us would have in two ways affirmed himself and the other person.

1) In my production I would have objectified my individuality, its specific character, and therefore enjoyed not only an individual manifestation of my life during the activity, but also when looking at the object I would have the individual pleasure of knowing my personality to be objective, visible to the senses and hence a power beyond all doubt.

2) In your enjoyment or use of my product I would have the direct enjoyment both of being conscious of having satisfied a human need by my work, that is, of having objectified man’s essential nature, and of having thus created an object corresponding to the need of another man’s essential nature.

3) I would have been for you the mediator between you and the species, and therefore would become recognised and felt by you yourself as a completion of your own essential nature and as a necessary part of yourself, and consequently would know myself to be confirmed both in your thought and your love.

4) In the individual expression of my life I would have directly created your expression of your life, and therefore in my individual activity I would have directly confirmed and realised my true nature, my human nature, my communal nature.

Our products would be so many mirrors in which we saw reflected our essential nature.

This relationship would moreover be reciprocal; what occurs on my side has also to occur on yours.

Let us review the various factors as seen in our supposition:

My work would be a free manifestation of life, hence an enjoyment of life.

Presupposing private property, my work is an alienation of life, for I work in order to live, in order to obtain for myself the means of life. My work is not my life.

Secondly, the specific nature of my individuality, therefore, would be affirmed in my labour, since the latter would be an affirmation of my individual life. Labour therefore would be true, active property.

Presupposing private property, my individuality is alienated to such a degree that this activity is instead hateful to me, a torment, and rather the semblance of an activity. Hence, too, it is only a forced activity and one imposed on me only through an external fortuitous need, not through an inner, essential one.

My labour can appear in my object only as what it is. It cannot appear as something which by its nature it is not. Hence it appears only as the expression of my loss of self and of my powerlessness that is objective, sensuously perceptible, obvious and therefore put beyond all doubt.

Karl Marx, “Comments on James Mill” 1844