Writer of Fancy: The Playful Piety of Jane Austen

Solomon Among the Postmoderns

The Baptized Body

1 & 2 Kings
Brazos Theological Commentary

The Promise Of His Appearing: An Exposition Of Second Peter

A Great Mystery: Fourteen Wedding Sermons

Deep Comedy: Trinity, Tragedy, And Hope In Western Literature

Miniatures & Morals: The Christian Novels of Jane Austen

The Priesthood of the Plebs: A Theology of Baptism

A Son To Me: An Exposition of 1 & 2 Samuel

Against Christianity

From Silence to Song: The Davidic Liturgical Revolution

Ascent to Love: A Guide to Dante's Divine Comedy

Blessed Are the Hungry: Meditations on the Lord's Supper

A House For My Name: A Survey of the Old Testament

Heroes of the City of Man: A Christian Guide to Select Ancient Literature

Brightest Heaven of Invention: A Christian Guide To Six Shakespeare Plays

Wise Words: Family Stories That Bring the Proverbs to Life

The Kingdom and the Power: Rediscovering the Centrality of the Church

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Economics: Markets and People, II

Reader Jay Horne writes in response to my earlier post quoting Charles Morris, “After working on mechanical trading systems for the past several years (and having some success), I would suggest that it is the lumpiness, the human factors, that exactly create the opportunity for success with a mathematical system. I believe Mr. Morris has it exactly backwards. And mathematics is too broad, we’re talking about repeatable, identifiable trades that have a statistical edge of some sort that can be exploited. It is human greed, fear, and folly that create such opportunities, not some completely random, costless, gaseous system. Humans, on the edge of their emotional range, become remarkably predictable.”

Economics: Markets and people

Charles Morris (in The Trillion Dollar Meltdown) says that one of the dangerous trends emerging in the 80s and 90s, and lurking behind the current financial crisis, is the “increased dominance of investment decisions by mathematical constructs.”  He admits that “Large securities portfolios usually do behave more or less as the mathematics suggests,” but warns that the math breaks down in crisis: “For shares truly to mirror gas molecules, trading would have to be costless, instantaneous, and continuous.  In fact, it is lumpy, expensive, and intermittent.  Trading is also driven by human choices that often make no sense in terms that models understand.  Humans hate losing money more than they like making it.  Humans are subject to fads.  Even the most sophisticated traders exhibit herding behavior. . . . in real financial markets, air molecules have a disturbing knack for clumping on one side of the room.”

Economics: Augustine the Marginalist

In City of God, 11.16, Augustine observes the reality of marginal utility: “So far as the freedom of judgment is concerned . . . the reason of the thoughtful man is far different from the necessity of one who is in need, or the desire of the pleasure-seeker.  For reason considers what value a thing has in itself, as part of the order of nature, whereas necessity considers how to obtain what will meet its need.”

Economics: Consumerism again

Heath and Potter find Thorstein Veblen’s critique of consumerism much more persuasive, “far more penetrating than any of the theories developed in the 20th century.”

Veblen argued that while poor societies devote every increase in production to meeting basic needs, richer societies can devote increases in production to “honorific” goods: “Clothing becomes more ornately decorated, houses become larger, food preparation becomse more elaborate and jewelry begins to make its appearance.” The key is that all these luxury goods serve as badges of social status.

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Economics: Consumerism

In their book, Nation of Rebels, Joseph Heath and Andrew Potter explain why the Marxian critique of the consumer society as a product of “generalized overproduction” doesn’t work: “There is no such thing as generalized overproduction. Never was, never has been.”

More fully, “The problem with Marx’s theory is that it ignores the fact that a market economy is fundamentally a system of exchange. Although we sell goods in return for money, the money itself is not consumed; we simply use it in order to purchase other goods from other people. As a result, the supply of goods constitutes the demand for other goods. Total supply and total demand always add up to the same amount, simply because they are the same thing from two different perspectives. So while there can be ‘too much’ of one particular good relative to other goods, there cannot be an excess of goods in general.”

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Economics: Marxism

In his chapter on the Bolshevik Revolution, Rosenstock-Huessy spends a number of pages digressing about Marx and Marxism. The following notes summarize his treatment of Marxism.

Marx, Rosenstock-Huessy begins, is the culmination of the protest against the “order of things” from within Western civilization itself. Marx is biographically well-positioned for this protest, since “he grew up in its actual centre, between the rivers Seine and Weser.”

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Economics: Work and teaching

Discussing the separation of workplace and home, Rosenstock-Huessy makes the striking observation that this divide separates labor from a man’s “right to teach, once the supreme value of a master’s earthly life.”

Economics: VISA World

Dee Hock, founder and CEO of VISA Corporation, describes the rise and size of the company: “In 1968 the VISA community was no more than a set of beliefs and a vague concept. In 1970 it was born. Today, twenty-nine years later, its products are created by 22,000 owner-member financial institutions and accepted at 15 million merchant locations in more than 200 countries and territories. Three-quarters of a bllion people use VISA products and make 14 billion transactions producing annual volume of $1.25 trillion - the single largest block of consumer purchasing power in the global economy. VISA has grown a minimum of 20 percent and as much as 50 percent compounded annually for three decades, thought the best and worst of times, with no end in sight.”

Economics: Global corporations

Peter Drucker notes that “the distinction between parent and daughter [companies] is increasingly blurring. In the transnational company, design is done anyplace within the system. Major pharmaceutical companies now have research laboratories in five or six countries, in the United States, Great Britain, Japan, Switzerland. They do their research wherever there are research scientists. They produce wherever the economics of manufacturing dictate. . . . A major pharmaceutical manufacturer makes and sells prescription drugs in 164 countries, but all fermentation work is done in one plant, in Ireland. The treasurer in the transnational company centrally manages money for all the members of the group rather than have the U.K. company manage money in Longon, the West German company manage money out of Frankfort . . . and so on. . . . Top management is transnational, and so are the company’s business plans, business strategies, and business decisions.”

Economics: Iconomics

The reviewer of Ernest Sterberg’s 1999 Economy of Icons in the American Journal of Economics and Sociology summarizes some main points from this latter-day Thorstein Veblen:

“The thesis of this controversial book is that ‘enterprises make their way in the capitalist economy by transforming commodities into icons.’ An icon is generally regarded as a sacred painting or perhaps “an exceptionally meaningful work of secular art.” In today’s culture the word applies to the consumption experience or, should I better say, obtaining an object or service because it communicates meaning both to oneself and to various onlookers. The BMW that responds to James Bond’s every command, when purchased by an individual customer (who is, like Bond, a male) signals to every onlooker, and most importantly to the owner himself, that he shares other qualities with James Bond in addition to owning the BMW. What these other qualities are vary from intelligence to virility.”

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Economics: Bakhtin the capitalist

Stallybrass and White critize Bakhtin for conceptualizing the fair purely as a place of communal celebration, ignoring the commercial activities of the fair: “In developing this concept, Bakhtin succumbs to that separation of the festive and the commercial which is distinctive of capitalist rationality as it emerged in the Renaissance. As the bourgeoisie laboured to produce the economic as a separate domain, partitioned off from its intimate and manifold interconnectedness with the festive calendar, so they laboured conceptually to re-form the fair as either a rational, commercial, trading event or as a popular pleasure-ground.” In addition to the threat of political subversion arising from fairs, early modern bourgeois, Stallybrass and White clai, “were perhaps more scandalized by the deep conceptual confusion entailed by the fair’s mixing of work and pleasure, trade and play.”

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Economics: Elegant dress

In his Theory of the Leisure Class, Thorstein Veblen notes that it is good if it shows that “the wearer can afford to consumer freely and uneconomically,” but beyond that should “make plain to all observers that the wearer is not engaged in any kind of productive labor.” Elegant dress is “contrived at every point to convey the impression that the wearer does not habitually put forth any useful effort.” Thus, “much of the charm that invests the patent-leather show, the stainless linen, the lustrous cylindrical hat, and the walking-stick, which so greatly enhance the native dignity of a gentleman, comes of their pointedly suggesting that the wearer cannot when so attired bear a hand in any employment that is directly and immediately of any human use.” Elegant dress displays wealth; it also displays that the wearer “consumes without producing.”

Economics: Rational Actors

Featherstone claims that economics has generally focused on the production rather than the consumption side of things, perhaps because of “the assumption that consumption was unproblematic because it was based upon the concept of rational individuals buying goods to maximize their satisfaction.” Only in the late 19th century was attention given to “conspicuous consumption, the snob effect, and the bandwagon effect.”

Perhaps, but perhaps this is just a different form of rationality. After all, conspicuous consumption has the not unwelcome effect of making the consumer stand out from the competition, which, however disadvantageous economically, has social and perhaps political advantages.

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Economics: Roofless factory

The “roofless factory” of some contemporary capitalist theory and practice reverses one of the basic drives of modern economic life. Bringing all workers into a single location under a single roof was one of the main features of the early modern factory system, and provided not only the economic benefit of concentrated activity and production, but the disciplinary benefit of increased oversight and ease of management. Writing in 1913, V. Dauphin suggested that “The order and inspection that must be maintained require that all workers be assembled under the same roof, so that the partner who is entrusted with the management of the manufactory may prevent and remedy abuses that may arise among the workers and arrest their progress at the outset.” Suspicious of everything, Foucault finds this nefarious; seems like good practice to me. As a historical matter, however, the reversal of this economic centralization may prove to be a shift of epochal proportions - a return to home-based work, or work decentralized among various small specialty operations.

Economics: Estate Tax

Peter Beinart offers one contradictory, one misleading, and one astonishing argument in favor of the estate tax on the “super rich” (TNR, May 15).

The contradictory argument first: He quotes from Teddy Roosevelt to the effect that the wealthy owe a particular debt to the state because they benefit disproportionately from the services that every citizen enjoys - education, infrastructure, police protection, etc. This argument implies, Beinart says, that “because the American dream involves both public suppport and individual initiative, vast inheritance pervert it.” Inheritances are fine, but “beyond a certain level, unearned wealth undermines the moral link between effort and reward. The argument for the estate tax is an argument for the dignity of work.”

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Economics: Consumerism

Consumerism is a popular category of analysis, but what exactly does it mean? How is consumerism or the consumer society different from anything else? Haven’t every economies had producers and consumers?

In his The Romantic Ethic and the Spirit of Modern Consumerism, Colin Campbell offers this description of consumerism: “that distinctive cultural complex which was associated with the consumer revolution in eighteenth-century England, and which embraced the rise of the novel, romantic love and modern fashion, is related to the widespread adoption of the habit of covert day-dreaming. The central insight required is the realization that individuals do not so much seek satisfaction from products, as pleasure from the self-illusory experiences which they construct from their associated meanings. The essential activity of consumption is thus not the actual selection, purchase or use of products, but the imaginative pleasure-seeking to which the product image lends itself, ‘real’ consumption being largely a resultant of this ‘mentalistic’ hedonism. Viewed in this way, the emphasis upon novelty as well as upon insatiability both become comprehensible.”

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Economics: Age

Sennett again: “The number of men aged fifty-five to sixty-four at work in the United States has dropped from nearly 80 percent in 1970 to 65 percent in 1990.” Trends are similar in Western Europe. Older workers are often downsized, perceived as inflexible deadwood, too critical of management, apt to fall behind the technology curve. This is an economic problem; but, again, what does this attitude toward age and experience mean if transferred to other realms of social and political life?

Economics: Economy of ingratitude

To return to one of my recent obsessions: The flexible economy described by Sennett seems inimical to the cultivation of gratitude, one of the key components or grounds of loyalty. Employers have various sorts of incentives (stock prices, meeting market demands with flexible specializations) to dispense with employees who have invested themselves in the business. Employees are not inspired to grateful loyalty toward a company that offers no promise of permanence.

Economics: Flextime

Sennett claims that the apparent decentralization of power in flexible organizations is only apparent. In fact, power remains concentrated in the hands of top level managers, often enhanced by the surveillance capabilities of contemporary technologies. The actual practice of flextime illustrates the point. When employees are given leave to work at home, employers grown anxious, since “they fear losing control over their absent workers and suspect that those who stay at home will abuse their freedom. As a result, a host of controls have come into being to regulate the actual work processes of those who are absent from the office. People may be required to phone in to the office regularly, or intranet controls may be used to monitor the absent worker; e-mail is often opened by supervisors. Few organizations who deploy flextime propose to their workers, ‘Here is a task; do it any way you wish, so long as you get it done. . . . A flextime worker controls the location of labor, but does not gain greater control over the labor process itself. By now, a number of studies suggest that the surveillance of labor is in fact often greater for those absent from the office than for those who are present.” Submission to a manager is replaced by electronic monitoring.

Economics: Downsizing

Sennett summarizes a study from the early 1990s done by the American Management Association, which found that “repeated downsizings produce ‘lower profits and declining worker productivity.’” The study found “less than half the companies achieved their experience reduction goals; fewer than one-third increased profitability” and only one-quarter increased productivity. The reason, according to Sennett is clear: “the morale and motivation of workers dropped sharply in the various squeeze plays of downsizing. Surviving workers waited for the next blow of the ax rather than exulting in competitive victory over those who were fired.”

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