Tuesday, April 25, 2006

The ‘Man From Mars’ and His View of Business Enterprise (part 2)

Thus once the industrial arts begun developing, it was easy to understand the plight of industry. Capitalism in its earlier form was concerned with serviceability value, that is, the conditions under which a product was considered useful. With the whole entourage of businessmen, advertisers and underwriters comes the concept of vendibility value.

The value created by the advertisers especially has only in unintentional cases any actual utility for the buyer; it only serves to increase the cost of production. “Its ubiquitous presence” in the realm of business enterprise is a “cost incurred with a view to vendibility, not with a view to serviceability of the goods for human use.” (BE p. 59)

All this marks a decisive change from the small-scale production and the individual owner-entrepreneur of early capitalism, which Veblen considered to be the beginning of “the decay at the top.” The center of attention of businessmen shifts progressively from the production of useful goods and services to the sale and manipulation of corporate securities which in turn represent essentially the capitalized earning power of the underlying firms. It is in this context that the effects of continuous technological advancements must be assessed.

As Veblen saw it, the primary effect of this was a continuous lowering of production costs. With new more efficient technologies, the result would be a steady undermining of existing capital, which would cause an incessant depressing effect on business enterprise in general. Here we may discern a basic similarity in the theories of Veblen and Marx: in the final analysis, both believed that the fate of capitalism would depend on the course and outcomes of the struggle between capital and labor.

But the tension Marx saw was found in the realm of class interest and labor-exploitation having been created by the capitalist class, whereas Veblen saw the tension as having been conditioned by the machine process itself. Industry and its instrumental values leads technicians and engineers to join institutions like trade unions; finance and pecuniary gain leads businessmen to oppose them. The opposition grows. However, Veblen did not purport that the machine process would inevitably lead to a socialist revolution, unlike Marx, since not only the workers but the business class would defend their interests too.

However, Marx offered a positive theory of action, whereas Veblen worked incessantly to curb any action taken under the guise of his theories. Various solutions were proffered to amend the Veblenian problem, all of which, in Veblen’s eyes, failed to do any justice. Educational institutions could not solve the plight of industry since it only existed to further the ideology of the business class. Neither could a free press solve the problem since it reinforces the consumer and cultural ideas under the guise of distributing information .

Using national politics as a way of replacing old leadership with new leadership was seen as futile since it could not address fundamental issues. Lastly, militaristic-imperialist adventures which were the solutions the Japanese and German governments used would keep the existing technology but simply devolve the institutions to earlier, more primitive, eras.

It is important to note that Veblen was not interested in policymaking, but rather mere observing and predicting. He did not want his observations to be taken by policymakers as gospel truths; he thought of himself not as a Marxist per se; not as a technocrat or technological-determinist, nor even a postmodernist. He was, as various writers saw it, something of a man from mars.

The ‘Man From Mars’ and His View of Business Enterprise

Integral to Veblen’s rejection of conventional economics was his claim that it was basically the ideological expression of the dominant capitalist values. Veblen regarded this as understandable in that the point of view of economists has always been in large part the point of view of the enlightened common sense of their time.

However, this didn’t inhibit Veblen from criticizing those whom he admired yet judged to be unscientific apologists for the existing capitalist system, such as Alfred Marshall and the social-Darwinist Herbert Spencer. In Veblenian language, the essential problem of capitalism was not only that it was rooted in the relatively ephemeral instincts of predatory businessmen, but that the habits and institutions that were an outgrowth of this self-regarding propensity operated (most profoundly in his own era) to the detriment of technological progress, and therefore the community as a whole, even though it seemed to be flourishing rather than wilting.

In the Marxian theory of capitalism technological development is motivated and controlled by capital accumulation process. The engineers and technicians in this model are basically agents of the capitalist. But the crucial difference between Veblen and Marx is the distinction Veblen makes between business and industry—the realm of pecuniary values on the one hand and material production on the other.

In Veblen’s account, the engineers and technicians are the ones working with the funding and doing the creative work, while the capitalists are more like “absentee owners”, whose relation to industry is mostly destructive, and is only non-destructive when it is permissive. In this model, the absentee owners operate exclusively in the realm of business. What follows is that the absentee owners play a negative role in the development of the “industrial arts.”

Nonetheless, the industrial arts develop, unavoidably so (BE p. 34). Veblen called this development the “machine process,” which gives rise to large-scale production and, subsequently, corporate organizations, advertisers, securities markets, loan-writers, joint-stock companies, and eventually monopolies. Veblen was very doubtful of any “successful business ventures from which the monopoly element was wholly absent” (BE p. 54).

This later stage in capitalism (n.b. Veblen wouldn’t use the language of dialectical teleology) developed from an earlier stage where the economy was centered around trading but not necessarily for pecuniary gain. The machine process was still in its infancy, having not yet extended the sprawling standardization of that was so prominent in his era and our own. He considered the classical era to have been “stagnant” in the sense that it hadn’t been corrupted by the standardizing aims and practices of the business enterprise.

Once the economy was in the hands the business class as such, their survival operated on the gain in profit, which was reached by the distortions of the economy. It was in the interest of the business class to create distortions, create “large and frequent” shortages, and create needs, in order to gain profit (BE p. 29).


Thus once the industrial arts begun developing, it was easy to understand the plight of industry. Capitalism in its earlier form was concerned with serviceability value, that is, the conditions under which a product was considered useful. With the whole entourage of businessmen, advertisers and underwriters comes the concept of vendibility value.

The value created by the advertisers especially has only in unintentional cases any actual utility for the buyer; it only serves to increase the cost of production. “Its ubiquitous presence” in the realm of business enterprise is a “cost incurred with a view to vendibility, not with a view to serviceability of the goods for human use.” (BE p. 59)

All this marks a decisive change from the small-scale production and the individual owner-entrepreneur of early capitalism, which Veblen considered to be the beginning of “the decay at the top.” The center of attention of businessmen shifts progressively from the production of useful goods and services to the sale and manipulation of corporate securities which in turn represent essentially the capitalized earning power of the underlying firms. It is in this context that the effects of continuous technological advancements must be assessed.

As Veblen saw it, the primary effect of this was a continuous lowering of production costs. With new more efficient technologies, the result would be a steady undermining of existing capital, which would cause an incessant depressing effect on business enterprise in general. Here we may discern a basic similarity in the theories of Veblen and Marx: in the final analysis, both believed that the fate of capitalism would depend on the course and outcomes of the struggle between capital and labor.

But the tension Marx saw was found in the realm of class interest and labor-exploitation having been created by the capitalist class, whereas Veblen saw the tension as having been conditioned by the machine process itself. Industry and its instrumental values leads technicians and engineers to join institutions like trade unions; finance and pecuniary gain leads businessmen to oppose them. The opposition grows. However, Veblen did not purport that the machine process would inevitably lead to a socialist revolution, unlike Marx, since not only the workers but the business class would defend their interests too.

However, Marx offered a positive theory of action, whereas Veblen worked incessantly to curb any action taken under the guise of his theories. Various solutions were proffered to amend the Veblenian problem, all of which, in Veblen’s eyes, failed to do any justice. Educational institutions could not solve the plight of industry since it only existed to further the ideology of the business class. Neither could a free press solve the problem since it reinforces the consumer and cultural ideas under the guise of distributing information .

Using national politics as a way of replacing old leadership with new leadership was seen as futile since it could not address fundamental issues. Lastly, militaristic-imperialist adventures which were the solutions the Japanese and German governments used would keep the existing technology but simply devolve the institutions to earlier, more primitive, eras.

It is important to note that Veblen was not interested in policymaking, but rather mere observing and predicting. He did not want his observations to be taken by policymakers as gospel truths; he thought of himself not as a Marxist per se; not as a technocrat or technological-determinist, nor even a postmodernist. He was, as various writers saw it, something of a man from mars.

Saturday, April 15, 2006

God or Goddess of the Sleep of Cats:

A waitress friend of mine recently told me about a waitress friend of hers who everyday "takes a nap". Now, I never take naps. But I often fall asleep while reading—which is very different from deliberately taking a nap! I am far more like my cats Sweetpea and Oscar than like my waitress friend once removed. These cats never take naps; they merely fall asleep. They fall asleep wherever and whenever they choose (which, incidentally, is most of the time!) Thus these cats are true sages.

Friday, April 14, 2006

Kant's Relation to Consequentialism

The concept connected by Kant with the phrase “categorical imperative” seems easy to explain. It means a law valid for the will of every rational being and therefore valid unconditionally. This is in no need of interpretation: it can hardly be misinterpreted. Kant has stated in the clearest and most intelligible terms. Understanding becomes much more difficult if we are concerned, not merely with the verbal definition, but with the content of the categorical command and the interferences to be drawn from it.

Even specialists have fallen into confusion about these questions. But the doctrine of a categorical imperative inherent in the will of man himself appears at present to meet with most unexpected and most unwanted repercussions in the common opinion. To lovers of humanity it may seem a lofty and worthy aim that doctrines elaborated by science and claiming to determine the conduct of every man should gradually spread wider and wider until at last every cottage.

The law formulated by Kant in his categorical imperative is not one by which any principle whatever to which a many may find himself drawn under conditions of experience—such as obedience to superiors or abstention from pleasure of life—can be imposed on him categorically. Kant’s law is rather a way of expressing the conditions under which alone a principle can have the character of a categorical demand. The categorical imperative is thus conceived as the fundamental principle determining which possible principles can be objectively valid for the decisions of our will as such.

When we say it is our duty to do something or to refrain from doing it, we manifestly have in mind such a categorical demand or such an objectively valid principle. Hence we can also say that on Kant’s view the categorical imperative contains nothing but the concept of being under a possible moral obligation as such. If he was wrong in maintaining that such a command is binding upon our will, it is not to be inferred that duty must be determined by some other law; what it would mean is that there are no universally valid demands on human behavior, so far as this depends on our will, and consequently that nothing whatever can be our duty and that we are entirely free to do whatever we may happen to want.

We might indeed by acting in this way get entangled in all sorts of disagreeable consequences or we might be astute enough to find means of escaping these disagreeable consequences. But what Kant maintains is this: the sum total of these means could never have the character of a system of precepts for the will such that men would be under an objective obligation to obey them. Nor could a necessary harmony of these means be discovered (independently of a categorical imperative) such that it would be free from all possible conflict of the will with itself and with the will of others.

We can sum all this up in the proposition that the categorical imperative determines the concept of duty solely as regards its form. It states only what duty as such is and consequently what all duties have in common. But it contains nothing to show how the particular duties determined by it are materially different from each other. Yet we ought not to imagine that this purely formal character of the categorical imperative as the law of duty is identical with the property envisaged by those who describe as formal both the principle of Kant’s ethical theory and consequently this theory itself in distinction from other systems of morality.

Here we find the first misinterpretation of the categorical imperative—the view that this necessarily confines moral philosophy to stating what the concept of duty is simply as regards to its form and makes impossible the articulation of particular duties that are materially different. Every doctrine of duties, if it is based on any principle at all, must begin by stating in what duty consists—i.e. by stating what is the concept of duty simply as regards to its form. If we say, for example, that duty consists in performing the actions required to realize the happiness of the greatest number, we have determined the concept of duty simply as regards to its form. This special characteristic may be described—negatively—as the assertion that if we are to discover the concept of duty, we must abstract, not merely from all the matter of duty, as is obvious, but also—as it not so obvious—from all the matter of the will; that is from all purposes or ends.

Naturally, if anyone intends to realize something tat he has made the end of his action, it is necessary that he should adopt the means adequate to realize it. But such necessity is a conditioned one (hypothetical, not categorical); and it contains no immediate law for his will since he must already will something definite before he can become subject to this necessity. “Yes,” it may be replied, “we must naturally being with some final end. This is already stated by Aristotle. And just as naturally such an end must possess some kind of necessity for the human will.”

“We are not to infer,” John Stuart Mill says, “that it is acceptance or rejection must depend on blind impulse or arbitrary choice.” (U. 1) But if, with Aristotle and Mil, we take happiness as the final end on which we may hope to find all men agreed, can we then say that there is for man an unconditioned command to make his own happiness his end? Even if he may in fact always make it his end, no one can say that this inevitably to found in experience is the necessity of characterizing a demand in virtue of which man has the duty of adopting this end. And is it not at least conceivable that it may be both possible and necessary for the will of man to subordinate the end of his own happiness to a higher condition of his actions?

Suppose one answers, “Yes, admittedly there must be an end necessary in and for itself—that is, necessary for the will of every rational being independently of all subjective conditions—and end which alone supply the ground for an unconditioned demand that it be adopted.” The question then arises: in what way is it possible for us to have such an end? If we assume that man by nature can have no ends conflicting with the end that is necessary in itself, then clearly he can be subject to no command at all about the decision of his will: his will must always of itself have this highest good as its object. In that case there can be no question of duty.

If we admit, on the other hand, that he can decide to act contrary to this end which is necessary in and for itself, there must be, even beyond this highest end, a motive which can move him to do what he does not already do of himself—namely to make this end his own. He would then need to have above this highest end, a still prior end by which he would be required o take as his end what was good in and for itself. But such a prior end contains a contradiction; for all possible ends must be naturally subordinated to the end which is by definition the highest. Hence along this line we could produce neither a categorical nor a hypothetical imperative for adopting the end on which the whole necessity of human action is supposed to be dependent. We should be left merely with a choice between a will that was infallibly good and a will that could not even be asked to be good at all.

It is purely analytic considerations like these that ought to be adduced if we want to understand the real motive which led Kant to what constitutes the strictly formal character of his ethics. This character is to be found in the fact that in place of some previously given end—that is, in place of some matter of the will—Kant asserts that the mere form of maxims (that is, of the subjective principles of our arbitrary choice), so far as this fits them for the making of a universal law, is what determines duty as regards to its form.

After what has been said, there should be no need to explain further why in this statement the word “form” occurs twice. The form which fits maxims for the making of universal law—whatever may be their matter, that is their end—is here identified with that demand by which alone an imperative can have the character of being categorical, or in other words, by which duty is determined as regards to its form. If in the language of this abbreviation we call this imperative “formal,” this does not mean that it has no content. It has precisely the content we have just adduced; and we cannot infer conversely that because the categorical imperative has in fact a content, therefore Kant must be in error when he maintains that only the form which fits maxims for the making of laws can supply a universally valid ground for determining our will.

Apart from objections of this kind, which rest merely on a play of words, the fact that Kant has calmly built up a whole system of commands and prohibitions on the basis of his moral law has been looked on with the utmost suspicion and indeed with open scorn. “When he begins,” says John Stuart Mill, “to deduce from this precept any of the actual duties of morality, he fails, almost grotesquely, to show that there would be any contradiction, any logical impossibility, in the adoption by all rational beings of the most outrageously immoral rules of conduct.

This charge has its history. It is already present in Hegel’s assertion that when Kant deduces particular duties, he goes continually round in circles since in order to show a contradiction between a maxim and the possibility of willing it as a universal law he has always to presuppose as necessary the very volition whose necessity it is his business to prove. By this method it would be open to us to put forward any kind of arbitrary conduct as a demand of duty. This seems to confirm one view of the history of moral evaluation.

Yet we cannot say in Kant’s sense that atrocities have been commanded “at some time and some place” by conscience and duty, or are still commanded, unless we have first shown that such conduct is contained in the demand of his moral law. Obviously in the opinion of the author the formalism of Kant’s ethics consists in this—that his concept of duty can be applied to any arbitrary behavior, so far as man believes himself constrained to it by any will beyond which, for some subjective reason, he recognizes no higher.

We have at least establishes this—that the obedience required by the categorical imperative is the direct opposite of an obedience by which a man could subject himself at random to any arbitrary power. If anybody is looking for definite precepts contained in the categorical imperative, he can put this down as the first—that such subjection is forbidden. The ban admittedly is only another way of saying that the categorical imperative is in fact nothing but the law of the will’s autonomy (it’s making of its own laws). But with this view of it are we not plunged into a difficulty of the opposite kind?

Instead of inferring that our will must be unconditionally fettered to the will of another are we not bound to infer that our own arbitrary will must be unconditionally unfettered? Must not a will subjected solely to its own legislation be able to pass any law it likes? Must it not be able in virtue of its autonomy “to will as a law” any arbitrary maxim it says to use in regulating its choice of ends?

At any rate Kant—as we have already heard—fails “almost grotesquely” in the eyes of his critics when he tries to persuade us that we must will any particular maxim as a law or that we cannot will it as a law. This failure is obviously called “grotesque” because, in the examples he gives of such necessities and impossibilities, it looks as if he casually introduces, in order to reach a decision, that very consideration of the agent’s personal advantage which the categorical imperative professes to set aside as a principle of moral evaluation.

Suppose, for example, he wants to show that nobody can will as a law the maxim of not bothering about the distress of others: “For,” he says, “a will which decided in this way would be in conflict with itself, since many a situation might arise in which the man needed love and sympathy from others, and in which by such a law of nature sprung from his own will, he would rob himself of all hope of the help he wants for himself. A clear case, it might seem.



The Tao is a Mysterious Female

"The Valley Spirit Never Dies
It is named the Mysterious Female
And the Doorway of the Mysterious Female
Is the base from which Heaven and Earth
Sprang.
It is there within us all the while
Draw upon it as you will, it never
Runs dry."


-- Lao Tse

So! The Tao is a mysterious female! No wonder I like it so much! What could be more enthralling than a mysterious female? A mysterious female is delightfully enchanting for two reasons: (1) She is female; (2) She is mysterious. Yes femininity and mysteriousness are certainly two of the most entrancing things in life. But combined! Good God, what could be more divine?

Speaking of mysterious females, I have never yet met a female who is not mysterious. To me, all females are mysterious! And l love them for all their mysteriousness and femininity.

But the idea of the mysterious female is, I think, a romantic fiction. As I see it, the mysterious female is not one person but something generic, nearly platonic, something embodied in all particular mysterious females. And the platonic mysterious female is something imageless and vague--just like the Tao.

At any rate, back to my homework!--which is also at times a mysterious female!

Thursday, April 13, 2006

No Need for Armor, Just Tea

You and I are great souls.
We come together for a time.
And we shall meet over a cup of tea!
Shall we leave our shell and join with each other?
Shall we put down our shield and armor?
What will become of us if we do?
What horrible fate awaits us if we are defenseless?
Tea is a time for love and tenderness without fear.
It is a time for sharing and learning and growing.
Come now, leave the battle gear behind.
Brave with me and let's have tea!

Tuesday, April 11, 2006

Utopian and Dystopian Portraits of the Stationary State in Classical Economics

Adam Smith’s model of economic growth remained an influential model throughout classical economics. While Smith alluded to a period of zero economic growth—which was seen as an historical inevitability of economic growth even to non-Marxists of the classical period—it was Ricardo and Mill who expounded the analytical arguments for this so-called “stationary state.” I will argue that Ricardo’s portrait of the stationary state is a dismal and gloomy one, whereas John Stuart Mill’s “happy-face” portrait of the long-run economy is a splendid society.


David Ricardo modified the growth model by including diminishing returns to land. The basic idea is that output growth requires growth of factor inputs, but, unlike labor, land is “variable in quality and fixed in supply”. This means that as growth proceeds, more land must be taken into cultivation, but land cannot be “created”. This has two effects for growth: firstly, increasing landowner's rents over time (due to the limited supply of fertile land) cut into the profits of capitalists from above; secondly, wage goods (from agriculture) will be rising in price over time and this then cuts into profits from below as workers require higher wages. Growth is, however, primarily due to the saving and investment of the capitalist class since the other classes (laborers and landlords) are said not to increase the nation’s capital stock of investment. For Ricardo, the profit of the capitalists is crucial. With Mill, as shall soon see, it is the institutions which are crucial.


The Ricardian model for economic growth, which Mill largely accepts, proceeds as follows. (1) The economic growth caused by investment leads to an increased demand for laborers.

(2) Wages then rise above the subsistence level. This will cause

(3) a Malthusian increase in population (increasing geometrically) which then causes

(4) and increase in the demand for agricultural foodstuffs (increasing arithmetically), which can only be met by

(5) an increase cost of production and hence

(6) a rise in the price of food. Due to the Iron Law of Wages, higher food prices lead to

(7) higher wages which ultimately

(8) equilibrate with the profits of the capitalist class.

The important point is that there are no net profits by the time the economy reaches step 8.


All the capitalists can do at this point is maintain the existing level of capital and thus production. It is worth noting that this model introduces a quicker limit to growth than Smith allowed, but Ricardo also claimed (at first) that this decline can be happily checked by technological improvements in machinery (albeit, also with diminishing productivity) and the specialization brought by trade. Ricardo was somewhat ambivalent about technology, however. On the one hand, he recognized that technical improvements would help push the marginal product of land cultivation upwards and thus allow for more growth. He noted that technical progress requires the introduction of labor-saving machinery.

This is costly to purchase and install, and so will reduce the wages fund. In this case, either wages must fall or workers must be fired. Some of these unemployed workers may be mopped up by the greater amount of accumulation that the extra profits will permit, but it might not be enough. A pool of unemployed might remain, placing downward pressure and wages and leading to the general misery of the working classes. This so-called stationary state, for Ricardo, was not a “many-splendored” thing.


However, Ricardo claimed that, in fact, machinery displaces labor and that the labor “set free” might not be reabsorbed elsewhere (because capital is not simultaneously “set free”) and thus merely create downward pressure on wages and thus lower labor income. In order to reabsorb this extra labor without this effect, then the rate of capital accumulation must be increased. But there is no obvious mechanism for this to happen—particularly given the tendency described above for profits and thus savings to decline over time.


Ricardo's portrait of the stationary state is somewhat more dystopian and pessimistic than Smith's. Or to use Carlyle’s word, dismal. The ultimately dismal portrait, however, was painted by Malthus with his famous claim that population growth was not so easily checked and would quickly outstrip growth and cause increasing misery all around—an utterly abject long-run economy.


For John Stuart Mill, salvation lies elsewhere. Mill is alarmed by the “tone and tendency of the speculations” of earlier economists who, like Ricardo, identify all the pleasant aspects of the long-run economy with the progressive state and all the unpleasant aspects with the stationary state. The basic Millian view of the long-run economy is just as Ricardian as the analytic model set forth in the third paragraph, for Mill tacitly consents to this model. Far from being an “end-of-history” approach, Mill contends, however, that since the stationary state is not as subject to wild fluctuations in capital investment and labor demands, the long-run economy reaches a happy and even-paced way of life. It is a more leisurely state, to be sure, one which later Marx will elaborate upon and famously describe a typical day in the commune where we fish in the stream after ploughing the fields. Mill even goes as far as to identify the stationary state with stronger tendencies towards full employment and the potential for reproductive prudence. Mill is not impressed by the political economists of the old school, he says, and he is “inclined to believe that [the stationary state] would be, on the whole, a very considerable improvement on our present condition.”


Mill’s long-run economy is utopian. No longer are human beings struggling to get on, “trampling, crushing, elbowing, and treading on each other’s heals.” We will find a state in which while no one is poor, no one desires to be richer, or suffers fear of being thrust back. Social mobility ceases to be of concern. But utopias have a tendency to be somewhat statist, and Mill certainly nods to paternalism in this sense. If it could be shown that a new laborer could not find employment in the stationary state by means of displacing older laborers, Mill believes that the “combined influences of public opinion might in some measure be relied on for restricting the coming generation within the numbers necessary for replacing the present.”


Not only does government have a larger role in sympathizing with the unemployed, but also a larger role in state intervention in general. Insofar as Mill believes that public opinion might be relied on for the necessary government programs, this relies in turn on the proper moral education of the citizenry and thus the proper institutional arrangements will need to be setup.


To sum up, Mill is disappointed with the conclusions of his predecessors. He sees no reason for associating the stationary state with dismal and unhappy outcomes. It is possible to believe, as do the modern environmentalists and sustainability activists, that the stationary state is more desirable than is often allowed. “I sincerely hope,” says Mill, “for the sake of posterity, that they [the dismal scientists] will be content to be stationary, long before necessity compels them to it.”