Was Stalin Necessary for Russia's Economic Development?

Some of the he-was-a-baddie-but-at-least-he-modernized-the-place say "yes"*. New research by a team of Russian economists says "no":

This paper studies structural transformation of Soviet Russia in 1928-1940 from an agrarian to an industrial economy through the lens of a two-sector neoclassical growth model. We construct a large dataset that covers Soviet Russia during 1928-1940 and Tsarist Russia during 1885-1913. We use a two-sector growth model to compute sectoral TFPs as well as distortions and wedges in the capital, labor and product markets during the two periods. We find that most wedges substantially increased in 1928-1935 and then fell in 1936-1940 relative to their 1885-1913 levels, while TFP remained generally below pre-WWI trends. Under the neoclassical growth model, projections under these estimated wedges imply that Stalin's economic policies led to welfare loss of -24 percent of consumption in 1928-1940, but a +16 percent welfare gain after 1941. A representative consumer born at the start of the Stalin's policies in 1928 experiences a reduction in welfare of -1 percent of consumption, a number that does not take into account additional costs of political repression during this time period. The projected performance under both Tsarist' and Stalin's wedges is much worse than the economic performance of Japan, which in 1885-1913 had similar levels of per capita GDP and distortions as Tsarist Russia, but experienced a rapid acceleration of non-agricultural TFP during the interwar period. Relative to this benchmark, the welfare loss of Stalin's policies are about -31 percent of consumption.

Via Cheap Talk, who notes that one of the economists -- Sergei Guriev -- has just left the country under duress from public officials.

The story that Russia's development was impossible or unlikely absent Stalin's repression always seemed unlikely to me. Other places have developed without those levels of repression (e.g. Japan, as the authers note, but not just), or have had repression without growth. The repression-growth relationship is not strictly positive and linear, in other words, so any story about Stalin and development has to be particular to Russia. And, frankly, I've yet to hear one that's had any solid theory behind it. (Perhaps someone could point one out to me in the comments.) I've heard mumblings that "Russia was a backwater hellhole" -- this was more or less Marx's view, although it's not true that Marx believed that socialism could not work there -- but every place is a backwater hellhole before they develop. Yes, Tsarism was bad, but plenty of regimes were bad in the 19th century.

I'd never really considered the possibility that all those supposed gains under Stalin didn't actually happen and in fact made things worse. It puts a new spin on the Cold War races for economic, military, and technological superiority.

I'm not sure I fully believe the two-sector growth model the authors use, which is pretty standard as these things go, but even the descriptive evidence is useful.

P.S. Here are some pictures of Soviet life in the 1950s.

*Terry Eagleton is of this sort, in his execrable recent book which manages to both misunderstand Marx and his critics at the same time. One relevant bit is quoted here.

On Keynes, Marx, Krugman, Cowen, and the Possibility of Utopia Via Inequality

At the end of a good post on the shift of income shares earned by capital (more) and labor (less) in the US over the past few decades, Krugman writes:

I think we’d better start paying attention to those implications.

What implications?

[I]t makes nonsense of just about all the conventional wisdom on reducing inequality. Better education won’t do much to reduce inequality if the big rewards simply go to those with the most assets. Creating an “opportunity society”, or whatever it is the likes of Paul Ryan etc. are selling this week, won’t do much if the most important asset you can have in life is, well, lots of assets inherited from your parents. And so on.  

I think our eyes have been averted from the capital/labor dimension of inequality, for several reasons. It didn’t seem crucial back in the 1990s, and not enough people (me included!) have looked up to notice that things have changed. It has echoes of old-fashioned Marxism — which shouldn’t be a reason to ignore facts, but too often is. And it has really uncomfortable implications.

As it happens, I've been writing about this for quite some time. It was the focal point of my criticism of Tyler Cowen's "Great Stagnation" hypothesis (e.g. 1, 2, 3, and others), which I said was a "Great Redistribution". Basically the question I'd like to answer is why mean and median incomes have diverged, as pictured in the graph above. A "Great Stagnation" hypothesis seeks only to explain the flattening of median income growth. But we haven't had a Great Stagnation, since mean income growth has continued, at least until the Great Recession.

A Great Redistribution view, on the other hand, says that the structure of the global economy has changed over the past 40 years in ways that benefit (US) capital and hurt most of (US) labor. Specifically, the rise of a low-skill labor force in the former global South has competed away wage gains from low-skill American workers, while the rise of a medium-skill industrialized labor force in places like the NICs has competed away wage gains from medium-skill American workers. Additionally, the rise of mechanized labor (via robotics, which prompted Krugman's post) shifts income from labor to capital. Take a look at this chart:

Wages are converging globally, and since the US had disproportionately high wages this is hurting American labor in relative terms. At the same time, the global market has expanded dramatically. This increases the return to high-skill American labor as well as the owners of capital, who can now sell their production to much larger markets. This is particularly the case for goods and services which are reproducible at essentially zero marginal cost: think intellectual property and entertainment. Since the "high skill labor" and "owners of capital" groups are not mutually exclusive, this shows up in the data as both a) increasing wage inequality, and b) increasing returns to capital.

This is the simplest story in the world... basically just stating comparative advantage, at a mix of sectoral and factoral levels. The fact that it's so novel -- even to someone with a Nobel Prize in international macroeconomics! -- is a point of evidence that our intellectual class is way too focused on explaining everything locally. The Great Redistribution view has plenty of implications for political economy at global and local levels, but it is essentially a rejection of many public choice arguments, which tend to emphasize capture of political institutions by bankers or other oligarchs as the fundamental driving force in recent trends in the American economy.

I'm not sure what Krugman means by "uncomfortable implications". It could mean that the fact that the economy is working the way the way it's supposed to is an inconvenient truth for those who think that our political economy is being wrecked by those who prefer public choice explanations. But I doubt Krugman means that. It could mean that the "Golden Age" of American labor that Krugman loves so much -- the 1950s-1960s -- was a historical anomaly, the result of specific contingent circumstances that are not likely to be replicated ever again (and would be tragic if they were, given that that arose because of two devastating world wars and a Great Depression). But I doubt Krugman means that either. It could mean that the technocratic neoliberal vision is a fraud, and that the politics of distribution is likely to dominate capitalist political economies for the foreseeable future.

In any case, as an example of this Krugman talks about "re-shoring", the process of bringing manufacturing production back to the United States. Krugman suggests that this will have no major effect on employment or the income accruing to labor, because much of this production is done using robots. I think he's right that the direct effects on labor and wages will not be much. The indirect effect could be much higher, however. Why? Because in order to have robots build things, you first have to have factories. Humans have to build those. And you have to have roads to transport the goods. Humans have to build those too. And you have to have shops where the goods can be sold. Humans have to work in those shops. The desire for human labor that is complementary to robot labor can support wage gains for the median worker. That may not be enough to overwhelm the relative redistribution from the median worker to the top 10%, but it can help the absolute numbers.

American labor can benefit in another way: by receiving more non-cash compensation. The trend in the US is to provide more years of subsidized non-work at the beginning and end of life -- longer periods of education, longer retirements as lifespans increase -- and more non-cash benefits -- subsidized health care and education -- in a somewhat egalitarian way. These programs are overwhelmingly funded by the top 10% of wage earners, who are the high-skilled workers and the owners of capital*. To the extent that goods are increasingly created by non-human labor they free up people to do other things, some of which will not be market work. We'll call that "unemployment" or "underemployment" but if we generate sufficient national income to guarantee minimum standards of living at a level that ensures human dignity it will function as quasi-early retirement.

At the same time, quality of life continues to increase rapidly as the marginal cost of entertainment, education, and other goods approaches zero as a result of advances in information technology. This gain is felt by the median member of society as much as the richest person in society, and is more valuable for those with more available time. In terms of maximizing valuable leisure and minimizing alienating labor the typical citizen might be doing better, maybe even much better, than she otherwise would even while the data continue to show that she is doing much worse.

If this is an equilibrium it will have some negative consequences, for sure. Among them will be a reduction in social mobility and an increasingly bitter political economy. But Keynes dreamed of a world in which the gains from capitalism were distributed in a way that allowed people to work less, and some people are still dreaming of it. Marx too: his criticism of capitalism was not just that it generated inequality, but that it created alienation as labor became routinized. Marx didn't care about social mobility... he cared about human dignity. So maybe the left should welcome our new robot overlords (and their capitalist owners) for bringing the vision of Keynes and Marx closer to reality. Instead of slaving away in factories we can all post kittens to Tumblr and write stimulating blog posts. Yeah, maybe it looks like inequality, but it could end up being Utopia.

*The US tax code is already pretty progressive, and is likely to get much more progressive over the coming years, beginning with whatever deal comes out of the fiscal cliff negotiations. At the same time, the US benefit system is one of the least progressive, but I expect this to change over the coming decades for political economy reasons. Ultimately it will be up to the democratic system to manage these structural shifts.

Eric Hobsbawm, RIP

But really, Brad DeLong got it right in 1995: Hobsbawm was blinded by faith, and when the faith was gone he was blinded by habit. As a historian his inability to grasp the true course of history -- rather than the trajectory imagined by Marxists -- was shocking. The 20th century was revolutionary; it's just that the enduring revolutions weren't propagated by the radicals.

An intellectual hobby of mine is to think about how and why much of the left has become so doctrinaire: the recitation of the same tropes and catch-phrases, the absence of real analysis much less actionable politics, the wanderlust since 1989 (at the latest; for many it was 1968 or 1956 or 1945 or, hell, Kronstadt itself), the knee-jerk ideology. It is all so... reactionary. In a review of Hobsbawm's memoir, Hitchens put it thus:

Thus there is less paradox than first appears in the willingness of such a civilized man to align himself with such a barbaric and philistine politics. He did it, he tells us in effect, because the Communist International supplied the elements of family and fatherland that were unavailable to a deracinated Jewish orphan intellectual. In other words, he did it because of his displaced yearning for family values, religion and patriotism: the Tory virtues.

Hobsbawm described himself as a "Tory communist," and there is something to be said for sticking to ones' guns even when the cause is lost, as Hobsbawm did. What exactly should be said is another matter, but here is what Hobsbawm did say:

“I didn’t want to break with the tradition that was my life and with what I thought when I first got into it,” he told The New York Times in 2002. “I still think it was a great cause, the emancipation of humanity. Maybe we got into it the wrong way, maybe we backed the wrong horse, but you have to be in that race, or else human life isn’t worth living.”

That last sentence sums up DeLong's critique: it was the wrong horse, and in his last book of history on the 20th century he kept backing it even after the USSR had dissolved and it was clear that the emancipation of humanity was more likely to occur -- and was in fact occurring -- via the social processes that Hobsbawm dedicated his life to resisting. In 1994, decades after Stalin's de-iconization by the Soviets themselves, Hobsbawm said that Stalin's millions of murders were "probably excessive" but would have been worth it had a communist society emerged. As if that was ever the goal. Even for Hobsbawm himself one wonders, given that he was on record as saying that if Stalin enlisted him for the KGB he would be compelled to answer the call whatever misgivings he may have had. (And he doesn't have to have had many.) His Tory communism was servile, in other words, not emancipatory.

Many ex-communists and some post-communists took a different path, congratulating themselves all along the way on how clever they'd been to switch allegiances only after there was no remaining viable alternative. In his a postscript to an essay on Solzhenitsyn, collected in As of this Writing, Clive James chided those (like Hitchens) who came late to Robert Conquest's party:

[They may] be found conceding that Conquest might have had a point about the Bolsheviks all along. But those who never doubted that he did can't expect credit for having been right. What we can expect is to be dismissed for having been on the Right. To be a liberal democrat was considered reactionary then, and to have been so then is to be considered reactionary now. People who have abandoned erroneous opinions would be giving up too much if they ceased to regard people who never held them as naive. As Revel pointed out, the Left demands a monopoly of rectification. 

So what then to do with those few who never rectified at all? With the reactionaries on the Left? Perhaps Hobsbawm deserves some credit for his unflappable conservatism, or might deserve some if the Tory communist was not the worst sort: the authoritarian impulse thrives on the credulous, on those who are capable of reflection but choose to suppress critical thought instead, who channel intellectual energy in only one direction and in service of only one master. While Hobsbawm eventually came to the point of denouncing Stalin, he never fully disavowed the project that not only made Stalin possible, but made him inevitable.

Yet these same aspects of Hobsbawm's personality helped make him one of the 20th century's great historians. He did as much as any single person to change the study of history from Great Men to broader social processes and global orders. His influence on method may last much longer than his influence on thought. Both have already lived longer than his political ideology. As Tony Judt put it:

If he had not been a lifelong Communist he would be remembered simply as one of the great historians of the 20th century.

Marx and America

Henry Farrell passes along something that he seems to think is a historical curiosity: an 1864 letter of admiration from Karl Marx to an American Republican leader: Abraham Lincoln. Marx's letter was graciously answered in kind.

Farrell offers no context -- I would have thought he might -- but the story is actually significantly more interesting than just that. Marx had published his Communist Manifesto (with Engels) in 1848, nearly two decades before the congratulatory letter to Lincoln (and when Marx was only 30). Shortly thereafter the German moved to London where he found ends difficult to meet. As a result he sought work as a journalist, often as a foreign correspondent for newspapers. By 1852, and until 1863, these included Horace Greeley's New York Tribune. At the time the Tribune had the largest circulation of any newspaper in the world. From that spot he wrote in favor of the American abolitionist movement -- and against British imperialism -- while constructing Capital and other more theoretical works in his spare time. Marx's journalism is mostly ignored by history, but there are some interesting moments.

For example, here is Marx reviewing a letter of Harriet Beecher Stowe's, in criticism of the British Tories who tended to take the South's side by arguing that the war was not about the emancipation of slaves, in 1861:

The question of the principle of the American Civil War is answered by the battle slogan with which the South broke the peace. Stephens, the Vice-President of the Southern Confederacy, declared in the Secession Congress that what essentially distinguished the Constitution hatched at Montgomery from the Constitution of the Washingtons and Jeffersons was that now for the first time slavery was recognised as an institutional good in itself, and as the foundation of the whole state edifice, whereas the revolutionary fathers, men steeped in the prejudices of the 18th century, had treated slavery as an evil imported from England and to be eliminated in the course of time. Another matador of the South, Mr Spratt, cried out: 'For us, it is a question of founding a great slave republic.' If, therefore, it was indeed only in defence of the Union that the North drew the sword, had not the South already declared that the continuance of slavery was no longer compatible with the continuance of the Union?

Pity him for having to do it, but Ta-Nahisi Coates has spent a good bit of his last few years making the same point, sometimes as well but always with hindsight.* Marx spent a good amount of his prime professional life, and spilt a great deal of ink, defending the American project against its detractors in Europe. He felt a kinship with the abolitionists, to be sure. He saw in these American revolutionaries, as he had seen in previous American revolutionaries, the same spirit that animated him. And he, like many of America's early leading lights, believed that this revolutionary spirit had global reach. From the letter Farrell linked:

From the commencement of the titanic American strife the workingmen of Europe felt instinctively that the star-spangled banner carried the destiny of their class.

There are strong indications from the repetition of his writings during the period that this was not a platitude; Marx truly thought in this way. He felt that the American Civil War was simply a continuation of the War of Independence from the British Empire, which he loathed, and represented a large step towards the emancipation of mankind.**

Why mention any of this? One of the great ironies of the 20th century -- and if any could appreciate an irony, Marx could -- is that Marx thought that America was the revolutionary force in the global political economy.*** Nor can we say that Marx's mind was changed over time: by 1861 Marx had already written not only his Manifesto, but also his analysis of the proto-fascist coup d’état by which Napoléan Bonaparte’s nephew seized control of the French state, a critique of classical political economy, and his Grundrisse. It was 1867 before the first volume of Capital was printed, but enough of Marx’s intellectual development had occurred before then for him to apply his materialist conception of history to the American project.

In brief: Marx believed in America and the American project as a revolutionary force for positive change in global affairs. I tend to think he was right. I frequently wonder if he would have kept that belief had he witnessed the 20th century as well as the 19th. My suspicion is that he would, and that the tenor and argument of his later works would have changed qualitatively with a longer run of history in his view. And no, I don't just mean the deplorable parts of the 20th century that were done in his name.

This history used to be better known, to the extent that John F. Kennedy, in a 1961 speech to the American Newspaper Publishers Association, remarked:

[I]f only Marx had remained a foreign correspondent, history might have been different.

Kennedy meant this as a moral lesson: Marx only ceased to be a foreign correspondent because his wages were so meager that he eventually gave them up to pursue his revolutionary agenda. Kennedy is, in other words, suggesting -- in no uncertain terms... read the context around the pulled quote -- to capitalists that they may buy off the revolutionaries if they are just a bit more generous with their salaries.

I'm not so sure about that in Marx's case. His intellectual project had begun well before Greeley came into the picture. And it continued with the full knowledge that at least one dictatorship of the proletariat -- the Taipings -- devolved into theocracy, militarization, and oppression almost immediately. So it's not clear that Marx would have seen through the Bolsheviks had he lived longer. Maybe he would have, but it's hard to think of Marx as a Menshevik given his disdain for the Gotha Program and democracy under capitalism. It's possible that Marx's Kronstadt moment would have happened well before Kronstadt. Or maybe he would have been slow on Lenin and his heirs just as he was slow on the Taipings.

It's an interesting thought.

*This does not demean Coates in any way. Orwell is famous for saying, or writing (I'm not sure which), that "We have now sunk to a depth at which restatement of the obvious is the first duty of intelligent men". Cheers to Coates for dredging that depth, and cheers to Marx for having it right at the moment. There's plenty of space for both, and many others too.

**Marx didn't get it all right. Around the same time as he was defending the cause of the Union in the New York Tribune he was also defending in the same pages the Taiping Rebellion, which abolished private property and promoted elements of gender equality. Marx later turned against the Taipings, but only after they had demonstrated a theocratic tendency which he had not recognized before. And only after some 20-30 million Chinese were killed as a result of their insurrection, which would later be applauded -- and perhaps mimicked -- by Mao Zedong. This was all finished by the time Marx wrote his letter to Lincoln in 1864. The fact that Marx, as well as later revolutionary Marxists, could have but did not take proper stock of this historical episode is another irony. The fact that China's traumas in the middle part of the 19th century were not understood in real time might be considered tragedy; the fact that they were repeated in the 20th century must be considered farce. Terry Eagleton, and his ilk, might wish to chew on that for awhile.

***Many Marxists push the corollary too far, and suggest that Marx thought that Russia was too reactionary to be a suitable place for the revolution to take hold. Terry Eagleton wrote as much in his recent (horrible) Why Marx Was Right, as many others have, but it's a misreading. In an 1881 letter to Vera Zasulich – co-founder with Lenin of the revolutionary newspaper Iskra and first translator of Marx into Russian -- Marx agrees that Russia's "rural commune" peasantry might bypass the capitalist stage of development altogether and move straight into socialism. He furthermore suggests that his theory of capitalism as a necessary stage of development was limited to Western Europe -- i.e. the places where industrialization had already occurred. Such places where this development had not yet taken place, such as Russia, Marx believed could bypass the "suicide" of capitalism altogether. Marx concluded his letter thus: "If revolution comes at the opportune moment, if it concentrates all its forces so as to allow the rural commune full scope, the latter will soon develop as an element of regeneration in Russian society and an element of superiority over the countries enslaved by the capitalist system." Zasulich was not discouraged by this, and continued to work towards a communist revolution in Russia. Eagleton might be correct in asserting that Marx would not have been a Bolshevik, but that is mere speculation; Marx's own words suggest he was strongly in favor of a Russian revolution.

Romney! Obama! Same Effing Difference (?)

Foreword: I have promised a fair few posts on other topics, but I caught the bug for this one and felt like getting it out first. More stuff on finance and politics TK, when I can find the time.

In 2000, in a fit of pique, I briefly became politically active. Disgusted by the cynical triangulations of the Clinton administration, and turned off by Dubya's anti-intellectual populism (and young enough to believe that both were something other than typical), I marched in a few rallies in support of opening up American politics to alternative parties. One of them became a touch violent -- and I was nearly pepper-sprayed by the police, and was nearly impaled by them as well... unfortunately for this story I narrowly escaped all harm -- and it was a great deal of fun.

One of the chants of the day was "Bush! Gore! Same fucking difference!" This was put only slightly less crassly by Ralph Nader, then Green Party candidate for president, as "The only difference between Republicans and Democrats is the speed with which they get on their knees when corporations come calling." Even in my piquedness I cringed at that one, although not as much as I did when my fellow protestors, in violation of multiple laws and menacing in numbers, began bellowing "This is what democracy looks like! That is what a police state looks like!" while gesturing to the men and women in blue who were doing nothing even remotely police-state-ish, but who did intend to maintain rule of law in protection of the actual majority of the population, which we did not represent. The cops did just that, with very little excessive force and that little bit in direct response to intentionally provoked duress. My fellow members of the mob had little sense of irony, apparently. They seldom do. It was more than just a bit off-putting.

(That reminds me to again refer to Milos Forman's surprisingly good essay on how people who lazily make reference to authoritarianism without real knowledge of what actual authoritarian regimes do and have done do a disservice not only to their own reputations but also to wider cultural memory.)

That was when I was a lowly journalism student at a community college. I had never heard of Duverger's law. I had never heard of the median voter theorem even, much less directional models or any further complication. Because things didn't make a ton of sense to me, in my ignorance and at that moment, I thought very much that the forces at work in politics must be sinister. Adbusters made quite a lot of sense, at the time. The WTO was sort of threatening, really, what with its internationalism and its governments and their suits. Who was controlling all of this? Weren't corporations going to profit from all of this? And wasn't that ipso facto a terrible outcome? I'd never heard of comparative advantage, all I know was that people -- people who looked like me -- were pissed right off. Plus we had cool people on our side. Fugazi sang (see above) "Never mind what they're selling... it's what you're buying." All politics is local, man. It starts at home. Far out.

When I was a child I spake as a child, I understood as a child, I reasoned as a child. When I became a man I put away childish things. I'll still consider myself part of the "left", but it's a "left" that mostly only exists in my mind. It's a "left" that believes that the redeemable parts of Marx reveal him as one of the first public choice thinkers; so he's of the "right" too, in his way, in my mind. It's a left that believes that had Marx witnessed the 20th century -- not even the bits of it done in his name -- his writings might have taken a different tone. It's a left that is dedicated to the idea that the best hope for an internationalist emancipatory movement is found in secular capital social democracy. I.e., it's a left that thinks that the Gotha program had something like the right idea after all. It's certainly not a left that is embodied in any actually-existing internationalist political movement of which I'm aware. So I'm not so politically active these days. I'm content to sort of shrug, think that the American "right" and "left" both embody a certain bastardized bit of truth, and take the long view that things in 21st century America are probably gonna end up far better than they generally have in the course of human history.

But. But! What about that "Same fucking difference!"? Well we hear every election that "this election is the most important election since" like 1932, or 1864, or 1776, or something. Every go round we hear it and we're hearing it again. But if Nader was right in 2000, if the only real choice we have is marginal rather than categorical, then we could either agree with my younger self that things are pretty sinister at the moment, or we could take the more restrained view that politics stays fairly close to the median as a matter of necessity. So which is it? Is there a difference between Romney and Obama worth getting up for? Is this election a clash of the mediocre, or will it decide the eternal course of the Republic?

Steven Landsburg provides one answer. He notes that Ezra Klein has published the following picture, purportedly showing the vast differences between the platforms of Obama and Romney on the issue of income taxation:

Leave aside for now the tacky Excel-template graphic... this message has been approved by Krugman and many others across the web. And it looks like a pretty big difference! Except:

What we actually have is an election in which both candidates are proposing massive redistributions from the top downward, one slightly less so than the other. You’d never know this from looking at Klein’s chart because it illustrates changes in rates, whereas what actually matters is the rates themselves. It makes no sense to ask whether any particular group ought to be paying more or less without reference to how much they’re already paying.

Indeed, this is a classic example of what I once called the “Grandfather Fallacy” — by focusing on changes instead of absolutes, Klein’s chart conceals any existing inequities and hence treats them as “grandfathered in”.

Maybe you could quibble with Landburg's use of the word "massive", but he does a quick-and-dirty correction of Klein's graph by plugging in the relevant pre-existing points, and comes up with this (tacky Stata-template) graphic:

Pretty big difference! In the story the graphs are telling, I mean. Not so much in the candidates' plans. Which will be subject to further moderation in both cases, meaning that they are highly likely to move closer together rather than further apart.

Now there's no reason to not consider both changes and levels. I get that both can be meaningful, especially symbolically. But while symbols are important the baseline reality is, unquestionably, even more important. Symbolism is often ephemera, and even if ephemera is often the stuff of politics those of who us who have put childish things behind us might wish to do better. The baseline reality suggests that there really isn't a qualitative difference between the two candidates, at least as it pertains to income taxation. And now that the GOP has made it a huge part of their platform to defend socialized health care at all costs, and that Romney is in favor of keeping the majority of PPACA intact too, I'm not super-clear on how they qualitatively differ on health care reform either. Maybe they'd differ greatly on foreign policy (paging Drezner!), but I can't for the life of me discern what Obama's foreign policy actually is -- "pivot to Asia" and "use drones to blow up whomever we damn well please" notwithstanding -- and Romney stubbornly refuses to even broach the subject*.

The point is that these differences are marginal, not fundamental. The argument is whether that is a good thing or not. And I really don't know... I think the fundamental conservative point -- that stability is ceteris paribus preferable to instability -- is not appreciated nearly enough by the left. At the same time I believe that the fundamental liberal point -- that we can always do better than we have done, and really should try to -- is not appreciated nearly enough by the right.

So score another one for the structuralists I guess. And score one more for the proximity models I guess. And give one more to the marginalists. And get cynical if that's your bag, or sit back and let it all wash all over you and think about how much worse it used to be. But please let's keep the argument running a bit longer. I'm not finished with it just yet.


*The lack of actual foreign policies from either the right or left is a topic for another day. My current thinking is that a) the right adopted the Manichean/Messianic view of the neocons -- most of whom were not Republicans in any other sense -- because it fit in with their Manichean view of foreign policy since World War II; b) Democrats found it tough to oppose because many of the neocons came from their ranks, and also because it was politically popular and because they had no other frame to adopt. Now that the neocons are out of sorts, no one has anything. I think HR Clinton's State -- via Slaughter -- is grasping towards something, but they aren't there yet and Obama hasn't latched onto it.

Links

Probably won't get to blog these properly, but they deserve attention.

-- Sad that this is necessary, but Barry Eichengreen discusses why a return to the gold standard is probably impossible, and not at all desirable anyway.

-- "The network of global corporate control", a very interesting research paper.

-- "The Convulsions of Political Economy", an application of Marx to the current environment from an unlikely source: a Senior Economic Advisor at UBS.

Misc IPE Developments and Research...

... That I won't properly blog.

-- US and Mexico finally reach agreement on cross-border trucking. This issue has been festering since NAFTA's beginning, but came to a head a few years ago when Mexico got fed up and enacted retaliatory tariffs. To be clear: the US has been in the wrong here all along. Via Greg Weeks on Twitter, who also noticed Chomsky criticizing Chavez.

-- US, EU, and Mexico win case against China in the WTO over Chinese restrictions of exports of rare earth metals. China said the restrictions were for environmental reasons, but they were pretty clearly intended to benefit domestic manufacturers by subsidizing the price of an important input into production.

-- Brazil's real continues to rise, and they don't like it. Is this what adjustment looks like? And is it just me, or do all of Latin America's major economies look fairly fragile right now?

-- John Quiggin has an excellent series of posts [1, 2, 3] on what remains of Marxism if we ditch the assumption that revolution is both necessary and sufficient for positive social change. The answer, it seems to me, is very little that we can't get elsewhere. I've been thinking about this a lot lately, prompted by this awful book by Terry Eagleton (and even worse promo essay). I will probably be returning to the topic eventually.

-- Chinn, Eichengreen, and Ito do a "forensic analysis" on global macro imbalances in the run-up to the crisis. They aren't very optimistic about corrections in the near future. And Chinn describes an important-looking paper by Rose and Eichengreen on the effects of abandoning currency pegs for gaining policy flexibility elsewhere.

-- Tim Harford explains what all the fuss about bank capital is about. Excellent intro for those unfamiliar with the topic.

-- An aggravated take on the current US political economy of banking and bailouts.

-- The BIS compares the internationalization of the 2008 banking crisis, as compared to the 1931 banking crisis. The takeaway is that we only got a Great Recession (Little Depression? What are we calling this?) in 2008 because the lack of a gold standard allowed large liquidity injections.

-- Ha-Joon Chang and Jagdish Bhagwati debate the merits of a strong manufacturing base in The Economist. I wonder if the vote tally is a sign of the times? Ryan Avent adds some levity.

-- Cosma Shalizi reviews the new Easley-Kleinberg book on networks in The American Scientist. A free pre-print of the book is still available here (very large pdf).

QOTD

Interfluidity:

It is not those who advocate, but those who prevent, stabilizing transfers of purchasing power, who are the true Marxists. These self-styled capitalists do not espouse Marx’s theories, but they do something much worse: They perform them. They behave in precisely the way that Marx expected capitalists to behave. They cripple the American system’s greatest strength — its ingenuity, flexibility, adaptability. They prevent the sort of collective action through which earlier generations proved that capitalism could made be consonant with decent, stable, and broadly prosperous societies. In doing so, they risk proving Marx right.

Turnabout Is Fair Play

I don't want to be accused of reducing this blog to a YouTube channel, and I have several substantive posts in the works, but I recently posted the animated version of David Harvey's critique of capitalism, and so feel compelled to offer this riposte. I don't agree with everything in either of them, but both are entertaining and contain some substance. If you watched and enjoyed the first one, then you should watch the rebuttal. If you didn't, you should watch both.