Op-Ed Fallout, OWS Connex

I’m intrigued by responses like this, to which I was directed by Tim Lacy of USIH (thanks, Tim), because they sound so reassuringly  rational, and yet indulge–indeed are predicated on–the kind of blind faith great religions are made of.

This is from the website “Cafe Hayek,”  I’d give you the URL or whatever it is if I knew how.  Fuck that for now.


Vulgar Keynesianism on Steroids

Here’s a letter to the New York Times:

James Livingston rightly proclaims “the moral worth of consumer culture” and correctly notes the trivial fact that increased savings do not automatically result in increased and widespread prosperity (“It’s Consumer Spending, Stupid,” Oct. 26).  These points, however, are inadequate to support his conclusion that economic growth is driven overwhelmingly by consumer and government spending, and that “[p]rivate investment isn’t even necessary to promote growth.”

Such an astounding conclusion requires a potent argument.  But Prof. Livingston delivers only a storm of feeble anecdotes, post-hoc fallacies, and non sequiturs.

An example of the latter is his observation that “Between 1900 and 2000, real gross domestic product per capita (the output of goods and services per person) grew more than 600 percent.  Meanwhile, net business investment declined 70 percent as a share of G.D.P.”  Yep.  But this fact does not remotely mean that “net business investment atrophied” or that it plays no crucial role in economic growth.

Because each dollar successfully invested raises G.D.P. by multiple dollars, net-investment’s decline as a share of rising G.D.P. (and not, please note, absolutely) is evidence of the impressive success of private investment rather than of the proposition that economic growth requires only “[c]onsumer debt and government spending.”

Donald J. Boudreaux


An astounding conclusion?  That net private investment has atrophied?  I’m by no means the first person to notice the phenomenon, nor the first person to contemplate the consequences–just to begin with, see Simon Kuznets, Capital in the American Economy (1961), and the economists I cite in the Introduction and the Appendix to my new book.  But here’s the thing: this guy says, sure, you can measure the earth’s movement vis a vis the sun, but the earth is still the center of the universe, otherwise god is dead.  Net investment has in fact declined (“Yep”), but that just goes to show you that it’s more important than ever!  God’s providence is utterly inscrutable, but that only means we have to redouble our efforts to understand it.

Another faith-based initiative, I’d say.  Why not call it theology?  My son, god has died–capitalism ain’t what it used to be, and indeed is in such a sorry state that your faith won’t suffice.  You’re going to have to do better than bluster.

Maybe the problem here is just this–Left or Right, none of us likes the idea that we’re going to have to take responsibility for the future.  We’ve lived to see the collapse of capitalism (Du Bois said this in 1940!), but now what?  You mean we’re in charge of this thing?  We can’t blame the oligarchs anymore?  Big banks, big government, blah, blah, all the shibboleths are now worthless?

Well, yeah.  From here on in, we can’t fall back on faith or, what is the same thing, antiquated political reflexes.  We need to get more agile, more mobile, more flexible, more interrogative, in our thinking–like OWS!  Fuck Marx, Keynes, and Hayek, too.  I admire all three, but our goal is not to prove them right.  Our goal is to make a world we want to live in, as Justin Cox/Kray La Soul suggests so eloquently in Occupy Wall Street VIII above.

This is not guerilla war, but it is guerilla theater.  Let’s play our parts.




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9 responses to “Op-Ed Fallout, OWS Connex

  1. I read that string, the comments devolving into whether National Socialism derived from the Left or the Right and other assorted spats. Found the comments that were on topic typical academic economist thinking; typical of the economist-think that rubber stamped Wall Street’s madness before and after the crash. Take one of your premises, investment not rising with GDP in comparison with consumer/government spending, and get real smug, dismissing the rest out of hand. But of course you know, your kind of thinking and approach threatens them so they have to hiss and spit. Great!!!

  2. PS Here’s another “I’m an economist, so I know better” response from Dean Baker: http://www.businessinsider.com/a-bit-of-confusion-on-consumption-2011-10. Curious what you make of it.

  3. Mike

    This guy thinks you’re a dumbass too. http://ricochet.com/main-feed/Historians-for-Keynes He makes the same point Boudreaux does: As technology allows economies to advance, net private investment falls in relation to GDP. They would both agree I’m sure that retained earnings are therefore more than sufficient to support capital investment nowadays. So profits are . . oh wait.

    • Thanks for this, Mike, just read it and laughed out loud, even though I was trying to be cat-like quiet in my girlfriend’s kitchen at 7:15 on a rainy Saturday morning. I’ll do a whole post above about it, but the amazing thing to me is the bland smugness, the imperturbable complacency, that saturates this bizarre site. A true Banaiinian Republic. I love the part about how I’m “channeling the great man himself,” but clearly don’t understand a word he wrote. If I did, I’d obviously have to agree with the King of Bananas here, and also with the Dean of Bakers, as well as the Robert of Brenners and the David of Harveys. But I don’t. They’re not seeing that forest.

  4. Ian MacDonald

    Cafe Hajek is here http://cafehayek.com/. I used to read it until the inanity drove me to drop it from my econblogs list.

  5. Did my post not make it through the internets? Just reposting in case it didn’t:

    In that letter, what does the following mean, since it’s the crux of the objection to your op-ed position (which I thought was great, and which I’m still thinking about). The key phrase in the letter is: “Because each dollar successfully invested raises G.D.P. by multiple dollars.” What does that mean? Where is that position coming from? I’m just trying to understand the essence of the response economically, though I’m with you on the notion of reimagining cultural, intellectual, and economic assumptions based more on faith than actual pragmatic (or better said Pragmatic) approaches to knowledge and action.

    Here’s a bigger observation your op-ed made me ponder: I see a link between your thinking in the op-ed piece (and as I take it from the title in your new book) and David Harvey’s recent interpretations of the current economic crisis (and the influence of Arrighi’s work lingering in the background?).

    For you, as for Harvey, the central problems in the current economic crisis are the twin tendencies toward overfinancialization and underconsumption, which are locking up surplus capital in private equity markets and the hands of a very small elite. My favorite take on this was position was Harvey’s essay on the debt ceiling vote a few months back, when he came to the conclusion that the Republican, Koch Brothers-funded move to limit government debt was in fact a path to the end of capitalism (give ’em enough rope and all, I suppose): http://davidharvey.org/2011/07/the-vote-to-end-capitalism/.

    It seems to me that your work brings in the moral/intellectual/cultural component in a way that Harvey’s doesn’t. Which is to say that Harvey’s work takes him toward a kind of global geographic sense of the problems we face (spatial fixes, etc.), whereas you are interested in reimagining the connections between deep-seated cultural attitudes and norms (Puritan in their deepest roots? Weberian in your analysis of them?) and attitudes toward the morality of consumerism and hedonism.

    There’s a link here, and it’s more than just the productive Marxist one (or should I say consumer Marxist one?). It’s the sense that we need to rethink the intellectual and cultural frame beyond the neoliberal paradigm. At the broadest level, we need to think about how economic practice is a subset of culture, not vice-versa. And we need to start there to grapple with the economic and political inadequacies that continue to make a lot of people suffer at the expense of (or lack of expenses paid by) the select few.

    The one other issue that your op-ed made me think about was environmental questions: if we need to unleash consumption, how do we do so in new ways that are sustainable ecologically as well as more satisfying morally and hedonstically? Beyond thrift, then what? What kind of dialectic can develop between the old binaries of consumption and thrift, splurging and saving, grasshopper and ant, can we imagine? I’ll read Against Thrift to see if you take on that issue there, but this was one of the silences in your op-ed piece that I was wondering about. I will keep thinking about this issue in my house on Walden Pond, while I watch the Superbowl on my hi-def flatscreen.

    Very much enjoying and benefiting from your blogging insights and explorations.


    • Thanks for this, very useful, pragmatically speaking. I address Harvey and Brenner in the book, claiming that, like Baker, they fall back on the producerist paradigm, suggesting that reinvestment in manufacturing is the real problem (too much “financializtion,” as per Arrighi). The environmental issue has been the fallback of my critics ever since I decided that consumer culture was a whole lot more interesting–and liberating–than any strike I’d studied. Can’t tell you how many times colleagues and friends have said, “Yes, but . . . ” I think I solve the problem in Against Thrift, but you’ll have to decide for yourself.

      In the book, I’m actually trying to flesh out that moral universe you sketch.

  6. luap silopek

    “This is not guerilla war, but it is guerilla theater. Let’s play our parts.”
    Abbie Hoffman, wherever he is, is smiling from an unexpected frisson.

  7. Pingback: Dr. Livingston, They Presume | Michael J. Kramer

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