348. Double negation of the market

In the preceding items of this blog I proposed that the market should not be abolished but reformed. That presupposes knowledge of what is good about it and what not, and how to separate the two. I discussed that more pragmatically in a book[i], but here I want to look at it more philosophically. For that, I employ the Hegelian notion of the ‘negation of a negation’.

In sum, what I want to say is this. The ideal of the market presented in traditional economics is that of ‘perfect competition’, and that is still the lore in economics, the pedestal of neo-liberal ideology. In Žižek/Lacan parlance, the ideal market is the master signifier that covers and hides the reality of markets. In fact, the actual working of markets is very different from the ideal, is in fact, in Hegelian parlance, its negation. The problem with the market is not that the idea is wrong but that it is never fully or even adequately realised.

So, here comes the negation of the negation: reject markets where they do not approach the ideal, try to reform them so that they do, and halt them when that cannot be done.

The irony of all this is another negation of a negation, as follows. The crux of markets is competition, as opposed to state planning, but in fact so-called competition takes the form of the avoidance of competition. There are many ways to do this, but here I do not have the space to elaborate. I will do that in future items in this blog. The upshot is that limits are needed to the market as it works in reality, to preserve competition, striving for markets as they should ideally work, in so far as possible, and this is the job of state competition authorities.

Now, the big twist that occurs in present capitalism is that states are sidetracked by multinationals threatening to move their business elsewhere, so that regulation is foiled and even reversed into favours for predation, as I indicated in preceding items in this blog.

But there is an even more fundamental problem of time. In the ideal, markets are driven by demand, by the needs of people. Supposedly, an assessment of future needs, such as preservation of nature, leads to present investment. In fact, consumers and shareholders give precedence to present consumption and wealth.

Consumers are not willing to pay extra for environmentally sound products and services, or to reduce their consumption. An increasing number of idealistic producers try to develop such products that can compete, but there are obstacles to this. Novelty at first is always expensive, due to imperfections that need time and application to iron out, and small scale due to lack of widespread use. And they run up against powerful established interests that protect themselves. That requires state intervention, which is politically not viable under neo-liberalism.

When firms invest for the future, that takes money away from present profit, which shareholders do not accept. Private equity firms, or ‘hedge funds’ incur loans to buy firms and then act as locusts, grazing them bare, financing the loan from reducing investments for the future, in research and development, increasing present profits by cutting labour costs, and then cash in on the resulting rise of share value. This is done for the sake of ‘efficiency’, which here means the grasping of opportunities for present profit to the detriment of the future. Again, states see themselves as unable to change the global financial markets involved and renounce themselves to this reality.      

The utilitarian ethic of liberalism was collectivist, aiming for the greatest good for the largest number of people. The pursuit of private interest is taken to promote public interest. Present reality is a travesty of that, with the richest 1 % in the US owning almost half (47%) of national income, and in Europe more than a third (37%). The utilitarian ethic has fallen into a hedonistic, individualistic ideology of instant gratification and wealth. Adam Smith, the godfather of market economics, said that ‘moral sentiments’ should correct private interests when they do not serve the public interest. But that has been ‘lost in translation’, the translation of market ideology.

So, what to do now? First of all, continue the unmasking of the master signifier: show how markets really work, how the ideal market is a fata morgana in he heat of the capitalist desert.

Next, it is up to philosophers rather than economists. The economy is too important to be left to economists. That is why I turned from economics to philosophy. The utilitarian ethic underlying economics and liberalism has to be reformed or, as I argued in my book on markets, and in preceding items in this blog, replaced by a virtue ethic. This may sound utopian or revolutionary, but to put it more modestly: I am merely trying to make good on Adam Smith’s promise of moral virtues in the economy.

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[i] Bart Nooteboom, 2014, How markets work and fail, and what to make of them, Cheltenham UK: Edward Elgar.

347. Žižek: Between capitalism and centralized bureaucracy

Is there a way out of the capitalist crisis discussed in the preceding item? Žižek says that he is a Marxist in his criticism of capitalism, but recognizes that communism as a centralized bureaucracy without private property and markets has irrevocably failed. Yet he called himself a communist, but when challenged on this explained that what he meant was that he was concerned about the loss of the global commons, of nature, culture, intellectual capital, and biogenetics, which capitalism causes and cannot cure. He thinks that social democracy has also failed, in bending to neoliberal capitalism, and he has himself difficulty in finding a solution between capitalism and communist centralized bureaucracy.

Žižek does not have any faith in some new, historically necessary utopia. He sees no universal, clear, all-encompassing alternative. He is wary of utopian designs, and more in favour, like Karl Popper, of what the latter called ‘piecemeal engineering’.[i]   

I agree that it is not easy to offer a grand design of how to proceed. The whole, coherent capitalist system of consumerism, advertising, profit making, competition, and financial markets, is difficult to change effectively in isolated bits by bits, and impossible to change in one coherent sweep.

I would not want to abolish markets. I still accept Hayek’s notion that the market is unparalleled in its use of local knowledge and room for initiative, which a central bureaucracy could never match. However, I disagree with Hayek that markets work well and need to be left alone. I wrote a book on this.[ii] In some areas markets should not be allowed, and where they are allowed they are often imperfect and need to be regulated. As Karl Polanyi said: markets need to be 'embedded' in society.       

One proposal has been that of local ‘commons’. There, choices concerning local facilities and services (schools, playgrounds, bridges, traffic, health care, parks, …) are no longer made on the basis of political parties, in representative democracy, but on the basis of ‘direct’ democracy with citizens councils to which willing citizens are elected or selected by lottery.

Žižek rejected such what he called ‘reversion to pre-modern times’. It is blinded, he claims, by some naïve faith in  unification of honest people in multicultural harmony. It would get mired down in endless and fruitless deliberation, erratic policies, and lack of reliability and continuity of services. It cannot solve problems of cultural mixing with immigrants. He would himself not like to take part in it, and prefers some impersonal, ‘alienating’ bureaucracy, to take care of things so he would not have to bothered with it. No doubt many other people would agree.

Žižek is half wrong and half right.

He is right that on many other issues, policy making is not to be decentralized to local communities, but, on the contrary, to be raised to a higher, supranational level. That is needed to block the perversities of power play and blackmail for advantages by multinational corporations. It is needed, in the EU, for effective military defence, foreign policy, the refugee crisis, and fighting terrorism. It is needed, in particular, for rescuing the environment, enforcing a long term perspective on investment and finance, a circular economy and abolition of pollution.

Alas: Re-emerging nationalism is blocking expansion of the EU.

My main point here is that Žižek is wrong concerning the local commons. Rousseau already recognized the problems of central government at a distance from communities: then one cannot meet the requirements of diversity in local conditions and customs, the contact between those who govern and those who are governed is impersonal, and the citizens involved are strangers to each other.[iii] The law is still a matter of the state, and can be since it is impersonal and applies equally to all everywhere, but government should be proximate to the people.

Žižek himself says that culture is needed to structure daily life, and that in finding ways to deal with problems of immigration we should involve the immigrants. That is precisely what would happen in local commons: dialogue concerning how to approach daily matters. The best path for integration of migrants is for them to do things together with locals, in shared projects. I will elaborate on that in a future item in this blog.

If you say no to this, what is your answer to the legitimate grievance of populists that government has alienated itself too much from citizens?   

The downside that Žižek notes is valid, but it can be resolved. Of course on the local level one would still need a professional, bureaucratic organization to provide the requisite expertise, continuity and reliability for the provision of public services. But what is the essential difference, in that respect, between a council with members from elected political parties and a council with directly elected or randomly selected willing citizens? One would still need an (elected) mayor and aldermen, elected by the council, to direct the running of the system.

There would remain issues that go beyond local communities, such as inter-local transport, a legal system, crime fighting, environmental issues that go beyond locality, and so on.

Also, I am under no illusion that on the local level there will not be minorities left out. Elimination of exclusion is not that simple. There will remain a predominance of influence, in city councils, of the higher educated and socially skilled. However, the local issues at play are concrete, not abstract, and easy to grasp and handle for many. Political ability and skill is not primarily a matter of education. Some possibility of appeal would still need to be available for those who remain excluded.

A further issue is this. Room for locally embedded choices inevitably yields differences between localities in the amount, kind and quality of public services. That may threaten old ideals of equality. An answer perhaps is the following. There may be equality of process that yields differences in outcome, depending on local conditions. Perhaps there still is a task on the national level to guarantee equality of conditions and process.

In sum, the national level would shrink, surrendering some authority to the supranational level, and some to the local level, but in sleeker form it would still remain.

Would all this qualify as Popperian ‘piecemeal engineering’?   

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[i] I love to imagine how Žižek would hate it to be included in the same category as Popper.

[ii] Bart Nooteboom, 2014, How markets work and fail, and what to make of them, Cheltenham UK: Edward Elgar.

[iii] On the social contract, Chapter 9, book 2.

346. Žižek: The crisis of capitalism

Žižek tells us that he appreciates capitalism, as even Marx and Stalin did, as ‘the most productive, welfare producing, dynamic force in human history’. However, as Marx did in his way, and many others do now, Žižek sees a looming crisis of capitalism.

Some people see light at the end of the tunnel, in some correction on capitalism, but Žižek joked that this light may be an oncoming train.  

Multinational corporations pressure governments to provide tax breaks, allow for deteriorating conditions of labour, and give subsidies for settling in a country and for cheap energy. This is yielding a ‘race to the bottom’, with governments competing among each other to attract or keep multinationals.

Banks were bailed out after incurring excessive risks, hiving the losses off onto the public, leading to the 2008 crisis. Measures were taken to re-regulate banking to prevent such crises from occurring again, but in the US those are being abolished again by president Trump, and the next crisis is brewing.

These developments have been accompanied by the emergence of what is called a ‘precariat’ (a contraction of ‘precarious’ and ‘proletariat’). There, workers have no lasting jobs, hop from one project or temporary employment to another, often with bad labour conditions, poor perspectives for housing, proper health care and pension. This is not only undermining their economic position, but is eating away their self-respect and hope.

Extremes occur, for example, in mines in Congo, factories in Bangladesh, services in India, and building projects in Arab gulf states, just to name a few. In China, many millions have been uprooted from their rural communities, to migrate to factories in the large cities, dumped in poor and filthy housing, meeting discrimination from the settled middle class that enjoys rising prosperity and cultural facilities.

In Western countries conditions are less dire, but serious enough to breed discontent and resentment, yielding political upheaval in populist movements in the US and Europe.

Žižek said, in one of those one-liners he throws out, that he supported Trump. When challenged on this, he said that what he ‘really meant’ was that Trump helps to carry the system to a crisis, unearthing the ugly truths of neoconservatism.

What will the precariat do when they find out that the populists also have no adequate answer, giving promises they cannot keep?

Marx predicted that the proletariat would form a class and would grab political power in a revolutionary overthrow, which they did. What will the present precariat do? An obstacle here is that the workers compete with each other in getting work, and do not have a shared workplace as a platform for banding together. Or will the new media offer the means to do so?

In one of his lectures, Žižek recalled how communism and Nazism also had guilty dreams of the submission of labour to higher purposes. In late capitalism that higher purpose lies in the supremacy of markets. An end of human submission in labour may lie in the emergence of androids, robots, who will not clamour for food, freedom or happiness.

Karl Polanyi, in his Great transformation (1944) proposed that unchecked markets lead to fascism. That happened in the rise of Hitler and is happening now.

Žižek offers the Hegelian thought that every system contains its contradictions and anomalies. Capitalism inevitably entails unemployment, exclusion. Poverty of the drop-outs is the price to be paid for prosperity. Means to a declared aim become aims for themselves. In capitalism markets and production systems were aims for prosperity, but now they have become aims in themselves.

A case in point is Chili, which under Pinochet was the pioneer of extreme neoliberalism. It wins in both the best and the worst. After some years it had the highest rate of investment, economic growth and per capita income in Latin America, and the lowest murder rate. The inequality of capital ownership is among the highest in the world: the top 1% owns 1/3. Among the rest of the population 3/4 has debts, one third of which is behind in payment. The depression rate is the highest in the world, suicide rates are among the highest in the world, and next to North Korea it is the only country with rising suicide among minors. Only the rich can afford good health care and education.[i]  

Then, for another dimension, Žižek also notes, like many others, that the emerging ‘platforms’ such as those of Google, Facebook, Amazon and Uber, with their use of algorithms that employ ‘big data’ on choices of consumers and voters are now getting to know them ‘better than they know themselves’, manipulate their subconscious choices and thereby dehumanize them.

As Žižek says, this is privatization and monopolization of intellectual capital, yielding rent, not profit as a margin on costs, but as unrelated to costs, thus going against the main argument of market efficiency and liberty that capitalism proclaims.

This is one of the cases of ideology that Žižek loves to expose, where dark reality is hidden behind the shining official lore.  

Capitalism still legitimizes itself as being based on liberal democracy, but it is presently in important ways becoming similar to the authoritarianism that it condemns. How different will authoritarian capitalism of present China, Russia, Malaysia, etc. be from the new-capitalist monopolies and manipulations of economic, social, intellectual and symbolic capital?          

Žižek claims that, even more deeply dark, capitalist competition is not only joy in winning but also, but hidden, joy at others losing, which is now increasingly becoming manifest in indifference to the increasing exclusion of the losers from employment. I am not yet sure what to think of this.   

This is one of the cases Žižek exposes of excess enjoyment, or ‘jouissance’, in transgression of morals. Also, feelings of guilt about consumerism, global injustice and ruin of nature, are assuaged, paid off, by firms (Žižek gives Starbucks as an example) that include in the high price of a product percentages they transfer for protection of the destitute, the suppressed, and nature. One can also think of airlines giving the opportunity to plant trees to fight pollution. Commodification of conscience.    

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[i] Source: Volkskrant, 16-17 december 2017.

345. Žižek: Hitler and Stalin

Žižek claimed that Stalinism was fundamentally more evil than Nazism. While in Nazism the victim was clear (Jews, Roma, the mentally ill), in Stalinism it was totally unpredictable who would suffer elimination, and the chance of it was higher the higher up one was in the hierarchy of the communist nomenclatura. The revolution devoured its children. Žižek is at a loss to explain this, he said.

Here is an explanation. It goes back to Rousseau’s ‘general will’, from his book on the ‘Social contract’ (1762). There, every individual has to surrender its natural liberty to submit to the indivisible collective taken as sovereign, representing the interest of the united people, devoid of any particular partial interest. If there is a clash between individual perception, opinion, interest and the general will, the latter is always right, and the individual has to submit to it willingly.

He wrote, literally: ‘.. when the collective opinion contrary to mine wins (in the determination of the general will), that proves nothing else than that I was mistaken, and that what I estimated as being the general will wasn’t’[i]

Rousseau could not stand the messiness, the erraticism of democracy, where people may submit to what is democratically decided but still stick to their conviction and strive to amend the decision. He wrote, literally: ‘.. the long debates, the discussions, announce the emergence of particular interests and the decline of the state’.[ii]  

What is still, or again, the relevance of this? Populists on the right also demand conformance to the general will of the people, or else be excluded or cut loose from the law. And the leader next claims that he is the unique voice of the general will.

But who are the leaders? Who is the true interpreter of the general will, untainted by particular position, interest or opinion? Anyone claiming leadership or aspiring to it can rightly be accused not being able to satisfy such purity, because no one is.

Hence the trials and tribulations of the ‘virtuous’ Jacobine terror of the French revolution, which arose against the established interests and position of the king, nobility and clergy. No new special interest could be permitted to raise its head, which was cut off when it did.  

There is a ‘Catch 22’ at play here. To recall: In the novel ‘Catch 22’, by Joseph Heller, a soldier at war has the right to be sent home when mentally unstable. But when you apply for it, you prove you are rational, not mentally unstable. So, no-one gets sent home for mental instability. In the present context: the wrong people rise to the top. The top requires people who set aside their personal ambition but when you do that you do not aspire to the top. So, people at the top are prone to be purged. 

That, I think was what was also going on in Stalinism, though intensified by Stalin’s paranoia. It explains the arbitrariness of elimination, and the trials in which perpetrators had to admit guilt and submit to judgement. That also happened under Mao, and Pol Pot.

Behind this also lay, I think, the Hegelian notion of an inexorable march of history towards the realization of the absolute spirit, at the ever receding horizon, in comparison to which human life here and now is insignificant and to be sacrificed when opportune.

Like Kantian ethics, like the categorical imperative, this general will is to be free from personal interest or satisfaction, is abstracted from human nature and worldly contingency, hanging in the cold stratosphere, far from life on earth. I quote Rousseau again: ‘The law considers the subjects … as abstract, never a human being as individual, nor as a certain particular’.[iii]

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[i] On the social contract, book 9, chapter 2, my translation.

[ii] Ibid.

[iii] Ibid., book 2,  chapter 6. Let me add that I do appreciate the principle that the law should apply equally to all, in establishing guilt, but in assigning punishment personal circumstance should be taken into account.

344. Žižek: Beyond Lacan

Here I continue with a series of items on Žižek. Like many others I am amused by his style, but also detest the hyperbole, provocation, bluff, outrageous statements later retracted with the excuse that he did not mean them in that way, and so on, but he does have interesting or at least challenging things to say that call for response. I cannot read all the 50 books or so that he published, which anyway are said to include many repetitions. The sources I use are mostly the interviews and debates posted on YouTube. I am not everywhere sure that I understand or interpret him correctly, which also is difficult because he regularly seems to contradict himself. He endorsed Donald Trump but also rejected him. He favoured Jeremy Corbyn but rejected his socialism. He pleaded for bureaucratic socialism but also rejected it. And so on. I am doing my best to make sense of it all. I begin with a discussion of his use of Lacan.   

If I understand correctly, Žižek is inspired first of all by Hegel, and second by psychoanalysis, in particular Lacan. What those have in common is interest in paradoxes, tensions, between ideas, in conduct, and in social systems. The difference between the two is, I heard Žižek say, is that with Hegel the tensions are resolved in a dialectic that raises the issues to a higher level of synthesis (called ‘aufhebung’, in German), while in psychoanalysis the tensions remain unresolved and hidden, with mental trauma’s, mostly from infancy, buried in the unconscious, but with conduct or expressions or dreams sometimes revealing them in ‘Freudian slips’.

Here I want to look a little further at what Lacan called jouissance, enjoyment with an ‘excess’ that goes beyond enjoyment, with some paradoxical twists. Sex is the more appealing when it is more or less illicit, or submissive, or repressive. More sexual freedom and permissiveness have made it less enticing, has bred more frigidity. Fraternities, at universities and in armies, are aimed at brotherhood, mutual loyalty and support, but engage in hazing practices that are demeaning, suppressive, assaulting at times. Movies condemn violence while relishing it.

I am interested here, in particular, in celebrity worship. People with simple lives, perceived (by themselves or supposedly by others) as insignificant, pedestrian, compared to the lives of public figures, celebrities, craving for some vicarious enjoyment from reflection of their glamour and fame. People enjoy it the more when there is some deviance, something illicit in the celebrity’s conduct.

I wonder where this comes from. Is it ‘just there’, in the human being? Is it a romantic relish of transgression? Is it a consolation for their own mediocrity: these people may be glamourous, but they are also bad, unlike us decent people.  

Žižek used the example of Donald Trump. A striking phenomenon is that his adherents celebrate him not in spite but partly because of his vulgarity, lies, provocation, aggression, bigotry and hypocrisy. Why?

Žižek says that this is because his followers are secretly like him, and Trump gives them a feeling of legitimation. Also, they feel victimized by globalization and a political elite, and relish Trump’s rebellion, and his politically incorrect scorn and defamation of that elite.

I think Žižek himself is an example. He gathered fame with interesting views but also by provocation, bluff, political incorrectness, and humour.

If these insights are due to Lacan, that is to be applauded.

However, Žižek seems to surreptitiously apply this insight from psychoanalysis to the level of social systems: capitalism and politics. That is a category mistake. It helps to explain the Trump phenomenon, but does it explain the present crisis of capitalism that Žižek considers to be of critical importance (along with many others, including myself)?

To some extent perhaps it can. Capitalism is indeed full of paradox. Its virtues of yielding material prosperity, dynamism and freedom of enterprise are tainted by perversities of exclusion, exploitation, and injustice, which are relished and at the same time denied and justified by the logic of markets.

So, Lacanian insight does seem to apply, but there is more, which lies on the system level, not in psychoanalysis. Like many other systems, social systems have ‘emergent properties’ that are lacking in the individuals that make up the system.

In particular there is what in this blog I have called ‘system tragedy’. People in banks, other business, government and politics are ensnared in positions and roles in organizations and networks of interests and dependencies that coerce them to go along with processes and outcomes that are at odds with their ethics, which then is hidden, tucked away, in buried shame. This is not jouissance, I think.

What mostly plays a role, is the logic of prisoners’ dilemma’s, as I have discussed earlier in this blog. Some people may secretly cherish to perversion of the game, but others would like to exercise their ethics and turn things around, but can afford to do so only if others do so as well, and since everyone argues like this, no-one does, and perversities of the system remain.

The classic solution is for governments to intervene and impose a way out of the dilemma, but now, and that, in particular, is the feature of present capitalism, governments are themselves engaged in prisoners’ dilemma’s that force them into a ‘race to the bottom’ in facilitating the interests of multinational corporations, to the detriment of citizens. Anger about this is one of the feeds of populism.