Friday, January 29, 2010
“You can’t escape investigation. The facts about you and your whole existence have been collected or are being collected. Banks, insurance companies, credit organizations, tax examiners, passport offices, reporting services, police agencies, intelligence gatherers. . . . Devices make us pliant. If they issue a print-out saying we’re guilty, then we’re guilty. . . . It’s the presence alone, the very fact, the superabundance of technology, that makes us feel we’re committing crimes.” Running Dog features Delillo in full-on postmodern conspiracy mode, tracing the contours of a web of secret links and associations that is never fully unveiled. At the center of this mystery is Moll Robbins, who writes investigative reporting for Running Dog. The magazine had started in the 1960s as a radical publication, a “One-time organ of discontent” (its editor was involved in illegal financial schemes for the Black Panthers and Moll herself used to date a famous leftist bomber), but by the 1970s it had turned to profiting from publicizing conspiracy theories (“This is the age of connection, links, secret relationships.”). Researching an underground market for erotic art objects, Moll hears rumors about a pornographic film made by Hitler and other Nazis in their underground bunker during the last days of the Third Reich, what one character calls “The century’s ultimate piece of decadence.” Pushing forward without the support of her corrupt editor, she pesters and then sleeps with a senator’s aid, Glen Selvy, who acquires erotic objects for his boss. In reality, Selvy is an agent spying on the senator, and Moll’s pursuit of her story drags her into a world of Vietnam War special operations veterans who are trying to move into more profitable domestic ventures. Selvy and some of the parties interested in the Hitler film have connections to a government office called PAC/ORD. Originally created to make intelligence spending more publicly accountable, PAC/ORD became the source of another round of covert operations. PAC/ORD set up “Radial Matrix, a legally incorporated firm” that specialized in systems planning. Radial Matrix was intended to be merely an instrument to fund foreign operations and other dubious activities, but, ironically, Radial Matrix became a tremendous financial success through its business operations (as Delillo’s characters often note, systems are something Americans are particularly good at). The systems engineer who ran Radial Matrix, Earl Mudger, “fell in love with profits. The profit motive became more interesting to him at this stage of his career than pay records or secret bank accounts or whatever fancy paperwork is necessary to maintain agents in the field and deliver money into the hands of favored political leaders in this or that country.” Moll is informed that Mudger “uses the same methods in business he used in espionage activities. That’s why the firm’s a whopping success. . . . What you have in Mudger . . . is the combination of business drives and lusts and impulses with police techniques, with ultrasophisticated skills of detection, surveillance, extortion, terror and the rest of it.” But despite this apparently synergistic combination of crime and business (what might be considered standard operating procedures under neoliberalism), Mudger botches some key operations. Before the narrative begins, Mudger had detached Radial Matrix from the government so that he could more fully pursue profit. But as a result, he lost many of the military resources he needed for business, and much of the narrative stems from the sloppiness of the agents Mudger has at his disposal. The systems ideology his corporation profits from is shown to be thoroughly false, its efficiency dependent on violent supplements. Selvy also rules his life according to his own system of quasi-mystical rules and routines, ranging from shooting practice to sleeping only with married women. Though the narrative takes advantage of “the transcendent beauty of predators” such as Selvy, he finds that the system he has devised can’t save him in the end, that all his planning and preparation have done nothing but readied him for his own death. At the novel’s end, the Hitler film eventually is screened, though it is not what was expected and its “humanized” Hitler (in which Charlie Chaplin plays a curious role) disgusts the would-be investors and renders pointless the murderous plotting that drove the novel's narrative.
Wednesday, January 27, 2010
One-Dimensional Woman is a much-needed frontal assault on the complicity of a great deal of contemporary feminism with the post-Fordist restructuring of work and the glorification of consumption. Trying to avoid academic elitism and unpopular pessimism, this brand of “up-beat” feminism has basically renounced “systematic political thought” and accepted the dogma that there is no alternative to capitalism. Power writes, “That the height of supposed female emancipation coincides so perfectly with consumerism is a miserable index of a politically desolate time.” Explicitly extending the argument of Herbert Marcuse’s One-Dimensional Man, Power aims to prove that “What looks like emancipation is nothing but a tightening of the shackles.” Power begins by showing how we no longer know what is referred to by the word “feminism” because of a “fundamental crisis in the meaning of the word.” One major cause of confusion has been the ascension of women to positions of power and the entrance of feminism into official rhetoric. Today, Sarah Palin is “a kind of terminator hockey-mom who calls herself a feminist,” and the right voices a kind of “hawkish feminism” that frames the invasions of Iraq and Afghanistan as the emancipation of women supposedly oppressed by Islam. In response to the latter, Power repeats Badiou’s argument that such “liberation” of women is better understood as “a generalized imperative that all femininity be translatable into the logic of the market.” Laws banning the wearing of the hijab in public demand that women’s bodies visibly circulate in society, a demand Power later returns to when discussing pornography. Perhaps the most groundbreaking section of Power’s book focuses on women and work. Power admits, “Of course, women have always worked, that is to say, raised children, tended to the home, grown crops, etc.” As they have moved into the workforce in greater numbers, women have undeniably succeeded on a number of levels. But Power argues, “The job market continues to differentiate between men and women – the most blatant is the surprisingly resilient pay differential for the same jobs, and the predominance of women in part-time and badly-paid work.” Women have especially found themselves forced into post-Fordist forms of work that rely on flexible, precarious, and ultimately disposable sources of labor. In fact, temp agencies depend on the supply of women workers, and the “feminization of labor” is progressively making these work conditions general for both women and men. Despite the harsh realities of most work in the post-Fordist era, “images of a certain kind of successful woman proliferate – the city worker in heels, the flexible agency employee, the hard-working hedonist who can afford to spend her income on vibrators and wine – and would have us believe that – yes – capitalism is a girl’s best friend.” Always searching for a new job, both men and women have been forced to become “a kind of walking CV, constantly networking, constantly advertising themselves.” As the entirety of life and the body come to “coincide with the CV,” the objectification of women is no longer a significant problem simply because “there is no (or virtually no) subjective dimension left to be colonized” when all of a woman’s existence is laid bare for public observation. Power then turns from work to consumption, analyzing “the way in which the desire for emancipation starts to look like something wholly interchangeable with the desire simply to buy.” Power rightfully excoriates feminists such as Jessica Valenti, whose “version of feminism, with its total lack of structural analysis, genuine outrage or collective demand, believes it has to compliment capitalism in order to effectively sell its product.” Such feminism functions merely as one more accessory to be acquired, the latest trend to find a place in fashion’s unceasing manipulation of individuals’ totally commodified desires. How did feminism come to assume that all women want are a new bag, a man, and some chocolate? Of course film and television promote such gender stereotypes, though it is notoriously difficult to demonstrate any direct cause and effect. As proof, Power offers her readers the “Bechdel test,” which divides films and books by whether they include women who talk to each other about something other than a man (or marriage or babies). Sex and the City likely fails the test, whereas the magnificent Czech film Daisies by Vera Chytilova passes it. Turning to pornography, Power attacks how the “ahistoricism of the anti-pornography movement takes as its presupposition the idea that men will always nurture a violent desire towards women and that porn is merely a reflection of this.” She claims, “The ahistoric approach to pornography neglects to consider the social and economic conditions surrounding both the form and content of pornography as it exists at any given time.” Power maintains that vintage porn, particularly pre-1950 film porn, dramatically differs from contemporary porn by offering “moments of shared affection,” laughter and wit, and non-categorized “polymorphous perversity.” In contrast, “Contemporary pornography informs us of one thing above all else: sex is a type of work, just like any other. What matter most is quantity – the bigger the better.” Power claims “there is an intimate link between sexual relations and social relations.” Surveying the options for “politicizing sex,” Power notes the failure of “sexoleftist” attempts to establish forms of communal living with egalitarian sexual coupling and she argues we need “a communist hypothesis with regard to the future uses of a sexuality that responds to the insights of psychoanalysis in a non-hysterical manner.” She therefore offers Shulamith Firestone’s The Dialectic of Sex, whose “cybernetic communism” contemplates “the total emancipation of women (and men) from the shackles of biology via advances in contraceptive, reproductive technology and alternative models of work and social organization.”
Ethereal Shadows examines Silvio Berlusconi’s rise to economic and political power in Italy and evaluates the political potential of Italian media activism since the 1970s. The first half of the book attempts to show how Berlusconi’s media monopoly and political rule reinforced each other, creating a nearly indomitable combination. The strength of Berlusconi’s “teledictatorship,” his unique hold on “political, financial and media power,” needs little explanation, but how Berlusconi maintained power despite endless corruption scandals and his commitment to imposing brutal neoliberal policies on Italian society is more complicated. Berlusconi entered into media in 1974 with a small cable-TV station for a housing complex he built in the suburbs of Milan. This station soon was transmitting to all of Milan and had attracted the talent of the established stations and acquired a large film and television library. After 1977, state repression of the autonomous movements, violent left "terrorism," and rampant substance abuse encouraged the substitution of private television consumption for public collective interaction. “Berlusconi’s television fed into this melancholization of the urban environment,” offering viewers a mixture of cynicism and hedonism. Berlusconi sneakily sidestepped monopoly laws in order to establish a national network, but he faced little resistance because of the political support he received from a harmonious relationship with Bettino Craxi’s political cartel. But the latter was so thoroughly corrupt that it eventually collapsed in 1993 and threatened to drag Berlusconi down as well. In 1994, Berlusconi reportedly told a journalist, “If I don’t enter politics, they’ll tear me to pieces.” During the election that year, Berlusconi ran a campaign with slick and professionally made advertisements that proved “how powerful the synergy of media and politics can be.” Easily winning, Berlusconi immediately set to work to eliminate RAI, one of the few media outlets that the Left continued to influence. Unable to destroy RAI, Berlusconi succeeded in placing his own supporters on its board of directors. However, when Berlusconi tried to grant amnesty to a number of politicians accused of corruption and he attacked the pension system, his coalition fell apart and allowed a center-left coalition to gain power in the 1996 election. But Berlusconi surged back during the general election of 2001, using billboards, television appearances, and every media resource available to sweep back into power. “As expected, the center-right quickly took possession of all C3 levels (communication-command-control) and completely occupied the mediascape, in particular the television system. After winning the 2001 elections, Berlusconi got his hands on what was left of RAI, the state television system. By fall 2001, more than 90 percent of Italian television stations were under the control of people directly answerable to Berlusconi.” Berlusconi solidified his right to media power through the 2003 Gasparri Law, which legitimated Berlusconi’s ownership of media companies as long as he didn’t take an active part in specific government decisions about them. The center-left has regularly cried out against Berlusconi’s obviously unethical teledictatorship. But the authors argue that these critics' efforts to "speak truth to power" have failed to achieve any change because they have not “understood the new relationship between media and political power, which has less to do with ideology and content . . . than it has to do with the systematic and pervasive occupation of people’s mental time, subconscious habits, attention and imagination.” “What escaped the center-left was the fact that media power is not defined by its political statements. . . . Television is a means of pervasion, rather than persuasion.” The authors therefore shift to analyzing the “social reality” that provided the foundation of Berlusconi's power. They begin with the corruption that accompanied neoliberal deregulation and privatization from the 1980s to the present. They argue that this corruption was not accidental or atypical: “This kind of corruption is a structural phenomenon that occurs when immaterial production takes the lead in the economies of technologically advanced societies.” In contrast to the industrial economy, in which value was linked to the socially necessary labor time involved in the production of the commodity, in contemporary “semiocapitalism” where “the production process directly involves the communication and production of signs,” “Simulation becomes the decisive element in the determination of value.” Today, “Economic power belongs to those who possess the most powerful linguistic machines. Government of the mediascape, dominance of software production, and control over financial information: these are the sources of economic power.” In an economy of simulation that is unconcerned with referentiality, lies and fraud are standard instruments for “manipulating semiotic resources in the accumulation of semiocapital.” Italy’s centuries-deep “roguish and permissive” “anti-Protestant ethic” (which contrasts with the sober work ethic of the Protestant ethic) has made a strong comeback since the 1980s because Italy’s leaders recognized “that neoliberalism was inaugurating an era where the rules of violence, mafia, chicanery, corruption and simulation were the only rules in force.” “The Left was scandalized by the irresponsibility of the new class that emerged with Berlusconi, but this ‘irresponsibility’ is the spirit of neoliberal semiocapitalism.” Berlusconi’s “videocratic power” did not rely on “the transmission of ideological content,” on disseminating falsities that were meant to be taken for the truth. Drawing from the strategies of advertising, Berlusconi aimed “to create waves of impressionistic feelings” unburdened by meaning or referentiality. In particular, he seized on a strategy of “mandatory optimism,” or rather, “optimistic self-delusion (e.g., ‘one million new jobs!’) and anachronistic family values that nobody practiced anymore but in which everybody wanted to believe.” The authors argue that critical thought and traditional protest aimed at “exposing” the truth is completely powerless against “the post-political language inaugurated by Berlusconi.” The last half of the book therefore focuses on Italian media activism that “fought a hard battle to redirect the social imaginary of media audiences away from the ephemeral fantasies of the media conglomerates.” They first discuss the history of Radio Alice, an illegal underground radio station that played an important role in the social unrest of Italy in 1977. Reflecting the heavy influence of French poststructuralism in Italy at the time, Radio Alice took its name not just from Lewis Carroll’s book but also from Deleuze’s nomadological reading of the book in The Logic of Sense. Radio Alice was not merely a source of counterinformation, as if bad information could be countered by good information on a neutral mediatic playing field. “It was about acting on the social imaginary, circulating plays of fantasy and flows of desire capable of destabilizing the dominant message of work, order and discipline.” Radio Alice was a non-hierarchical, chaotic, collective project whose coupling of the radio and the telephone made possible communal real-time media production. During the rioting in 1977, the station transmitted live reports from the streets, gave the location of police forces, and eventually became the target of police repression itself and was shut down. In the next section, the authors then turn to more well known examples, discussing collective networked news sites such as indymedia.org and the “subvertising” of Adbusters. Their final example is Telestreet, which was “a network of micro-television stations” started in Bologna in the early 2000s. Taking advantage of “shadow zones” where commercial television broadcasting could not reach, the creators of Telestreet explored the production of local television broadcasts. Given the extremely small broadcast ranges, Telestreet had more of a symbolic than practical effect, showing that there could be alternatives to Berlusconi’s television empire. The authors argue that Telestreet stopped not just because of participant fatigue but also because of Web 2.0, which offered easier self-production and greater self-distribution of broadcasts. The authors conclude: “Italian media activists understood that in order to succeed they could not simply exist as alternatives to the dominant media outlets (which in the last twenty years meant Berlusconi’s networks). If they tried to simply resist the dominant media by force, or by oppositional content, they would have failed. These groups understood that they needed to invent a social communication based on irony, deviance, disorder and otherness. They sought to let the obscene emerge . . . and act as proliferating agents for lines of flight from the media dispositifs – ones that could potentially lead to social change.”
Monday, January 18, 2010
Matusow’s “history of domestic liberalism in the 1960s” is another example of the Good ‘60s / Bad ‘60s approach to the decade. His historical narrative begins with idealistic liberals coming to power at the beginning of the 1960s and attempting to confront “unemployment, racism, and poverty.” But by the end of the decade and Matusow’s narrative, a majority of the liberals’ efforts appear as failures and liberals themselves are under heavy attack by both the radical Left and the soon-to-be-dominant conservative Right. In a short period, liberal “optimism vanished, fundamental differences in values emerged to divide the country, social cohesion rapidly declined, and the unraveling of America began.” Matusow argues that the outlines of 1960s liberalism developed during the conservative 1950s. Soon after WWII, anti-Communist liberals such as Arthur Schlesinger developed a new form of liberalism that “recognized the complexity of reality, the ineradicable sinfulness of human nature, the corruption of power, the virtues of pragmatism and gradualism, and the narrow possibilities of all human endeavor.” According to Matusow, liberals in the early postwar era “retreated from their role as critics of society” and moved toward what Schlesinger termed “the vital center.” In particular, growing national prosperity muted, and sometimes even reversed, the antagonism of many liberals to big business. Economist John Kenneth Galbraith led the way by claiming that Keynesian government intervention had capitalist crises under control and that unions and the government served as an effective check on corporate power. As liberals became more bold across the 1950s, decrying “mass” culture and excessive concern with “private” consumption, their demands were therefore rarely aimed at the redistribution of wealth or at the economic system itself. The election of John F. Kennedy in 1960 marked the beginning of a new era of liberal power, but Kennedy’s relation to liberalism was far from straightforward. Kennedy and his famous family had a long history of outraging liberals, and he had to regain the admiration of liberals as he rose toward the presidency. Matusow argues that Kennedy actively sought to win the support of liberal intellectuals in 1959 while he was running for office. Kennedy’s campaign, which employed a number of prominent liberals, drew upon the ideas set forth by liberals during the 1950s. His “speeches were the general ideas of the liberal intellectuals stripped to their essentials and simplified for a mass audience. Their purpose was not to elaborate or document the liberal case but to suit it to the national mood. This Kennedy did brilliantly by reducing the liberal critique to a single theme. It was time, he proclaimed, to get the country moving again.” Matusow writes, “By appropriating the critique of the liberal intellectuals, Kennedy acquired a political identity, gave contour and content to his candidacy, and invested his campaign with a sense of historic purpose. No one, in the end, was more impressed by the performance than the liberals themselves, imitation being the highest form of flattery.” The sympathy of postwar liberals to business emerged in the Kennedy era as what radical critics termed “corporate liberalism.” “Intellectual liberals unashamedly asserted the benevolence of large corporations and defended the existing distribution of wealth and power in America. Political liberals assumed corporate hegemony and pursued policies to strengthen it.” Matusow maintains that “The quintessential corporate liberal was John F. Kennedy. . . . The president’s economic policies – some defensible, some not – would be framed above all to create a stable environment for corporate prosperity and corporate expansion. What was good for the corporate system would be good for the country.” This liberal support for business in fact came as a shock at first to businessmen, who were wary of Kennedy’s advances. But “Despite difficult relations, Kennedy’s policies on taxes, trade, and the all-important matter of antitrust could hardly have been more to corporate taste.” The Keynesian ideas that had spread through economic departments after WW II entered into political power with Kennedy. Liberalism and Keynesianism were a good fit because Keynesianism appeared as a neutral “technical solution” to economic problems and did not require direct wealth redistribution. Businessmen were initially hostile to Keynesian policies, but when they were exposed to Kennedy’s “reactionary Keynesianism” in the form of a tax cut they soon became more receptive. By 1965, Time magazine could run a cover story with the headline: “We Are All Keynesians Now.” Shifting focus to the growing racial tensions of the decade, Matusow documents how Kennedy initially vacillated on the question of civil rights, making big promises while campaigning but doing little when first in office. Kennedy tried to placate the civil rights lobby in Washington and not offend Southern senators while ignoring the serious conflicts brewing in the South. Most notoriously, the White House had Hoover wiretap Martin Luther King, Jr. and even explore strategies for “neutralizing” him as a leader. The turning point in Kennedy’s response to the civil rights movement was the Birmingham riot of 1963, after which Kennedy decided to press forward with his civil rights bill. Matusow argues that one of Kennedy’s motives was a fear that angry blacks, if not placated, “might turn to violence and the black Muslims.” Despite his earlier waffling on the issue, Kennedy gained the admiration of “all but the militant fringe of the civil rights movement.” Matusow fervently admires the Civil Rights Act of 1964, which he considers “the great liberal achievement of the decade.” In Matusow’s historical narrative, the Civil Rights Act is a turning point: the rest of his story of liberalism and of the Johnson administration focuses mostly on the misguided failures of liberalism. Matusow interprets Johnson’s election as a “referendum on the policies” of Kennedy’s presidency, though Johnson found himself personally detested despite his role in realizing many of Kennedy’s liberal plans. Matusow surveys the different anti-poverty programs that were catalyzed by what Barbara Ehrenreich has called the “discovery” of poverty by middle-class Americans. With the exception of the community action programs, which Matusow praises for attempting to grant power directly to the poor, most of these anti-poverty programs produced few results. Matusow seems to avoid taking a real stance on why these programs failed. He does acknowledge that leftists criticized such efforts for failing to “address the only real issue – the maldistribution of wealth and power in America.” But he also frames the errors of liberalism in more conservative, even neoliberal, terms as a “violation of market logic, covert service to special interests, and perversion by bureaucrats.” Radicalism would seem to be the logical reaction to the failures of liberalism, but Matusow is even more hostile toward the radical turn of the late 1960s, expressing skepticism toward the counterculture, New Left, and Black Nationalism. He downplays the size and importance of the counterculture, and emphasizes its economic and racial hypocrisies. He blames the New Left for failing to articulate a coherent ideology and for its devotion to what he terms the “imperialist hypothesis” and the “guerilla fantasy.” He accuses urban race riots and Black Nationalism of undermining the broad appeal created by the civil rights movement and of motivating a “trend toward racial conservatism.” He writes, “After [the Watts riots], many liberal politicians, like President Johnson, found their close identification with the cause of black American a political liability.” He even tries to undermine the importance of the Black Panthers by arguing that, “Among the black masses the classic liberal ideal, more important than any particular liberal failing of policy, never lost its appeal.” Matusow concludes his survey of left radicalism by claiming, “Though most of these radicalisms were mutually incompatible, all of them tended in the late 1960s toward the same result, namely the unraveling of LBJ’s hopes for a liberal reconstruction of America.” Johnson’s withdrawal from the 1968 election signaled the failure of liberalism and made evident “the massive defection of the electorate from the liberalism that had guided the country since 1960s. Liberals had once promised to manage the economy, solve the race problem, reduce poverty, and keep the peace. These promises not only remained unfulfilled; each of them would be mocked by the traumatic events of this election year.”
Wednesday, January 13, 2010
“[M]odern business enterprise took the place of market mechanisms in coordinating the activities of the economy and allocating its resources. In many sectors of the economy the visible hand of management replaced what Adam Smith referred to as the invisible hand of market forces. The market remained the generator of demand for goods and services, but modern business enterprise took over the functions of coordinating flows of goods through existing processes of production and distribution, and of allocating funds and personnel for future production and distribution. As modern business enterprise acquired functions hitherto carried out by the market, it became the most powerful institution in the American economy and its managers the most influential groups of economic decisions makers. The rise of modern business enterprise in the United States, therefore, brought with it managerial capitalism.” In The Visible Hand, Chandler once again surveys the rise of American corporate capitalism, this time deepening the scope and depth of his research and emphasizing more the function of management. Whereas Strategy & Structure focuses on how corporate administration had to create new organizational structures that were suited to changes in business strategy, The Visible Hand describes how managerial coordination and control allowed large, hierarchical corporations to profitably internalize many of the functions carried out by the market. During the 19th century, the revolution in transportation and communication (i.e, the railroad and the telegraph) expanded the practical size of the domestic market. New and advancing technology also made possible enormous leaps in the volume and speed of production. Over the last half of the 1800s, large multiunit businesses under the guidance of the “visible hand” of management were better than the market at coordinating and integrating the expanding flow of goods and services, and they therefore soon came to dominate the U.S. economy. Prior to 1840, the “low speed of production and the slow movement of goods through the economy” created no need for complex administrative hierarchies and organizational structures, and the institutional framework of the economy was relatively static. For the most part, merchants and producers relied on temporary business partnerships instead of incorporation to handle growth, especially since the latter at that time was legally limited to businesses that served the “public interest.” Most owners also operated their own businesses themselves without full-time managers, and usually different businesses handled the different steps of production and distribution. Despite increases in the size of the economy and the scale of production, the market continued to be able to coordinate the transactions of different economic units. In the decade before the Civil War, however, the growing availability of coal began to have a substantial impact on the nature of American industry. But it was the revolution in transportation and communication that provided both the raw materials and the markets needed to take advantage of the new production technologies. The railroad and telegraph companies not only made possible other large, hierarchical businesses, but also served as the model for later organization builders. In a burst of construction, the railroad network spread across the country in the 1840s and 1850s. The high cost of constructing railroads led businesses to seek external funding, and financial trading and speculating in railroad securities played a major part in creating the modern form of the New York Stock Exchange. The railroad companies quickly adopted administrative hierarchies because of the requirements of operating the gigantic networks in a safe and efficient manner. “The great railway systems were by the 1890s the largest business enterprises not only in the United States but also in the world.” Chandler claims the “railroads were . . . the first modern business enterprises. They were the first to require a large number of salaried managers; the first to have a central office operated by middle managers and commanded by top managers who reported to a board of directors. They were the first American business enterprises to build a large internal organizational structure with carefully defined lines of responsibility, authority, and communication between the central office, departmental headquarters, and field units; and they were the first to develop financial and statistical flows to control and evaluate the work of the many managers.” The erection of telegraph and telephone networks, often alongside the railroads, completed the construction of a nationwide “infrastructure” that made possible the subsequent development of the American economy. According to Chandler, “Modern mass production and mass distribution depend on the speed, volume, and regularity in the movement of goods and messages made possible by the coming of the railroad, telegraph, and steamship.” Beginning in the 1850s, the former system of commission-selling was replaced by a new web of mass retailers, large wholesalers, and commodity dealers. Distribution and marketing were transformed by the introduction of traveling salesmen, department stores, advertising agencies, mail-order houses, and chain stores. A bit more slowly than mass marketing, mass production began to take advantage of the economies of speed made possible by the new methods of transportation and communication. A combination of technological and organizational innovations allowed mass production industries to “produce a massive output” by using capital-intensive machinery and fewer employees. Some factories were able to integrate new machinery with little organizational change, and others required better plant design rather than better organization. But some large plants, such as those of the metal-working industries, demanded organizational innovations to coordinate the flow of high-volume processes. The scientific management movement was created and promoted by engineers working in this context. But mass production and mass distribution during much of the last half of the 1800s remained separate kinds of businesses. According to Chandler, “The modern industrial enterprise – the archetype of today’s giant corporation – resulted from the integration of the processes of mass production with those of mass distribution within a single business firm. The first ‘big businesses’ in American industry were those that united the types of distributing organization created by the mass marketers with the types of factory organization developed to manage the new processes of mass production.” Only once this “vertical integration” was complete would corporate management administer “the flow from the suppliers of raw materials through all the processes of production and distribution to the retailer or ultimate consumer.” During the last three decades of the 19th century, more and more businesses integrated by “internalizing” these different functions that previously had been carried out by the market. The visible hand of management coordination made possible lowered transaction costs, higher volume throughput, and more competitive prices. Chandler uses the wave of mergers in the 1890s as evidence for his claims, arguing that such mergers rarely were profitable until a new administrative structure was set in place that could coordinate, monitor, and plan “the activities of a large number of operating units.” The multifunctional integrated corporation came to dominate the U.S. economy by 1917, and its multinational form soon spread across the globe. Though owners in some industries maintained control of their businesses, the day to day operations of most large integrated corporations were run by the new class of middle managers. The development of the multidivisional structure further eliminated the last vestiges of entrepreneurial capitalism and isolated a body of top management that was focused on long-term planning and analysis. In the first decades of the 20th century, professional organizations, business schools, and management consultants swept across the business world. As a result, information about the new corporate structures and administrative procedures was shared and the possible forms of the firm became relatively standardized. Firms continue to change as a result of product diversification, new technologies, and expanding overseas markets, but the institutional framework that was established by the end of WWI remained stable up through the 1970s, the time of Chandler’s writing.
Tuesday, January 12, 2010
Charles Babbage (1791-1871) holds perhaps the strongest claim to inventing the computer. Though his plans for two mechanical proto-computers - a “difference engine” and an “analytical engine” – were never realized in his lifetime, they have recently been proven to be (mostly) viable instructions for the construction of functioning machines. Babbage always conceived of his inventions as serving science and industry, and his writing on political economy forms a continuum with his thinking about calculating machines. Along with Andrew Ure, Babbage was one of the first writers on political economy to substantially treat the rise of industrial manufacturing in Britain. Marx’s understanding of the impact of machinery on capitalist production therefore owes a debt to Babbage. Babbage’s book first shows how the “science of calculation” can be applied to tools and machinery, and then extends this analysis to the creation of factories. For Babbage, there really is no ultimate limit to what can be calculated, but only the book’s final section reveals the metaphysics that underlies Babbage’s optimism. According to Babbage, there can be no limit to mankind’s calculation of nature because in one sense nature is the product of God’s divine calculation, of which mankind will only ever know a small fraction. Both Babbage and his faith in calculation will be familiar to readers of William Gibson and Bruce Sterling’s steampunk novel The Difference Engine, which in one sense highlights the omissions and contradictions of Babbage’s ideas by realizing them (in fiction) far more perfectly than he ever managed to. Babbage states that his aim in the book “is to point out the effects and the advantages which arise from the use of tools and machines, to endeavour to classify their modes of action, and to trace both the causes and the consequences of applying machinery to supersede the skill and power of the human arm.” As benefits of using machines in production, he mentions how machines add to human power, speed up the process of production, and allow the productive employment of previously useless materials. According to Babbage, mankind creates machines but not power: “Man . . . does not create power; but availing himself of his knowledge of nature’s mysteries, he applies his talents to diverting a small and limited portion of her energies to his own wants.” Even a steam engine is only an example of this temporary redirecting of nature’s powers, an example of a brief intervention in nature’s equilibrium. Thoroughly committed to the ideal of efficiency, Babbage recommends that machines and tools be built so that their motions are absolutely uniform and as quick as possible. He also praises machine-based production for “the perfect identity of things manufactured by the same tool.” But his promotion of machinery is also aimed at correcting what he views as the weaknesses of human workers. He mentions that one of the benefits of the machine “is from the check which it affords against the inattention, the idleness, or the dishonesty of human agents.” Just as F. W. Taylor would in the next century, Babbage suggests breaking down and scientifically observing the production process. And just like Taylor, Babbage aims to both “rationalize” the work process and to control the unruly body of the worker. Babbage is a strong proponent of the division of labor, and he lists off the common arguments for its efficiency. He adds to these justifications for the division of labor what has become know as the “Babbage principle”: the ability of capitalists to purchase the exact labor they need by dividing up the production process. Babbage writes, “the master manufacturer, by dividing the work to lie executed into different processes, each requiring different degrees of skill or of force, can purchase exactly that precise quantity of both which is necessary for each process.” Babbage’s principle in fact anticipates the kind of “cellular” production processes Berardi describes, which are made possible by the computing technologies that Babbage helped invent. Babbage adds, “the division of labour can be applied with equal success to mental as to mechanical operations, and . . . it ensures in both the same economy of time.” He describes how a complex equation can be divided into simple functions that can be carried out by different mathematicians, and such a mental division of labor also seems to have guided his ideas about computing “engines.” Throughout the book, Babbage attempts to refute the idea that the introduction of machines increases unemployment. He writes, “A Most erroneous and unfortunate opinion prevails amongst workmen in many manufacturing countries, that their own interest and that of their employers are at a variance.” He finds the resistance of organized labor, and particularly the violence of the Luddites, to be an “unreasonable” response to machinery. Because of the pressures of competition, the owners of factories will simply move production elsewhere or hire different workers. It is not surprising that Babbage argues that the introduction of machines into manufacturing is both rational and economically necessary. But he goes even further, claiming machines benefit worker intelligence and add to the wealth of the nation as a whole. He admits that the introduction of new machines may lead to an immediate drop in demands for labor, but in the long run machines generate a need for more labor and particularly skilled labor. He argues that England has materially benefited from its pioneering use of machines and tools in production, and that the rest of the world has been made better off by England’s mechanical innovations. [I have to mention the ironically poor quality of the General Books reprint of Babbage’s work (not the edition pictured above). The book was automatically generated through optical scanning technologies, and it is clear that no human editor ever looked at the edition before it was published. The scanners produced so many errors on each page that even Babbage might have been led to reconsider his faith in machinery.]
Thursday, January 7, 2010
Far from being just a culturally insular discussion of the recent French election, The Meaning of Sarkozy is an essential work on politics that adds to Badiou’s Metapolitics and incorporates the philosophical innovations of Logics of Worlds. Clear and incisive as usual, Badiou’s writing in the book is also refreshingly polemical in style. For example, Badiou, defending his “right to use ‘zoological metaphors’” against ridiculous accusations of anti-Semitism, regularly calls Sarkozy the “Rat Man.” Badiou begins the book by arguing that France has two histories. The first, the most well-known to foreigners, is that of intellectual and political revolution, exemplified by the Revolution of 1792-94, the Commune, and the intellectual fecundity of the 1950s-70s. The second, of which Sarkozy’s election is a part, is a “history of dark and ruthless conservatism,” of “rancid reactionary obsessions.” Badiou, extending the critique of parliamentary-politics from Metapolitics, dismisses the entire electoral process. Reiterating Sylvain Lazarus’ distinction between politics and the state, Badiou claims that “voting is a state operation,” not a political one. Resisting the general “parliamentary fetishism,” Badiou maintains that elections today are dominated by “unreason and ignorance,” the manipulation of “collective affects.” He argues that it is wrong to praise the electoral process for what it is or supposedly stands for without actually evaluating what it produces. Noting how frequently elections are held both at times of crisis and when the dominant power is not actually threatened, he argues that “elections are at least as much an instrument of repression as the instrument of expression that they claim to be. Nothing produces greater satisfaction on the part of the oppressors than to hold elections everywhere, to impose them, by war if need be, on people who did not ask for them.” In the recent French election, voters did not have any real choice at the voting booth because both political sides offered only fear. The first fear, which Sarkozy represented, was the fear of the powerful and dominant that their power was slipping, that they were threatened by foreigners, workers, other races, etc. “This fear, conservative and gloomy, creates the desire for a master who will protect you, even if only while oppressing and impoverishing you all the more.” On the Left, there was only more fear, and in fact only fear of the first fear. Wary of the master promoted by the first fear, this side did not “have the least positive vision to counter the massive effect of unleashed capitalism.” Having only weak negativity to offer, many on the Left quickly defected after the election and accepted positions in the new government. According to Badiou, the election of Sarkozy was “a blow against the symbolic structuring of French political life;” it was the symbolical defeat of the whole “Left/Right system.” Badiou explains, “What is lacking in the vote is nothing less than the real.” No Real punctures contemporary political reality, and we are therefore left with only the “submission to this reality, what Lacan called ‘the service of wealth.’” There can be no doubt that today, “Electoral democracy acknowledges the extent to which it is a site where impotence is the rule.” Badiou argues that in this period of impotence, it is necessary, as Lacan proposed, “to raise impotence to impossibility.” That is, politics requires “finding, constructing and holding on to a real point, which we know we are going to hold on to, precisely because it is point uninscribable in the law of the situation, unanimously declared by the prevailing opinion to be both . . . absolutely deplorable and completely impracticable, but which you yourselves declare that you are going to hold on to, whatever the cost.” Only by holding on to such a point can the “individual animal” (or we might add, the “finite” intellectual) become incorporated into “the subjective body that they gradually constitute in our world.” Badiou offers his readers eight such points they might hold on to: 1) all workers who are here are here, or “belong here.” This is the question of the treatment of immigrant workers that Badiou has devoted so much effort towards. 2) “Art as creation . . . is superior to culture as consumption.” 3) “Science . . . is absolutely superior to technology, even and especially when the technology is profitable.” We need to resist the “ontology of profit,” which asserts that “what isn’t profitable has no reason for existence.” 4) “Love must be reinvented . . . but also quite simply defended.” A common claim since the 1960s, but Badiou articulates it in a particularly persuasive manner: “love begins beyond desire and demand, even though it embraces these. It is an examination of the world from the point of the Two, with the result that its territory is in no way the individual. If love has a subject, it is precisely because it is a disciplined construction that cannot be reduced either to the satisfaction of desire, or to an egalitarian contract between responsible individuals. Love is violent, irresponsible and creative.” 5) A renewed Hippocratic oath promising to make sure all who need medical treatment receive it, without conditions. 6) “Any process that is intended to serve as a fragment of a politics of emancipation must be held superior to any managerial necessity.” 7) Information should not be under the control of the corporate and political elite (he admits this is a minor point) 8) “There is only one world.” Badiou highlights the importance of this final point and dedicates an entire chapter to it. He argues that despite all the talk about globalization creating one world, the world is governed by a principle of division. He claims, “behind the propaganda about globalization, the thesis that governs an increasingly violent and enclosed politics is that there are two worlds at least. The price of the supposedly unified world of Capital is this brutal and violent division of human existence into two regions separated by walls, police dogs, bureaucratic controls, navel patrols, barbed wire and expulsions.” (Think of the horrors described by Mike Davis’ work) For example, repressive immigration laws are based on the belief that immigrants “come from a different world.” In contrast to this axiom that the world is separated, “We must say this very simple sentence: ‘There is only one world.’ This is not an objective conclusion. We know that, under the law of money, there is not a single world of women and men. There is the wall that divides the rich and the poor. This sentence ‘there is only one world’ is performative. It is we who decide that this is how it is for us. And we shall be faithful to this motto.” For Badiou, maintaining that “there is only one world” is not in any way a barrier to or attack on cultural difference. He explains that the “single world is precisely the place where an unlimited set of differences exists.” (This is where his work on the “transcendental” in Logics of Worlds is put to good use) In the last sections of the books, Badiou briefly discusses what he calls the “communist hypothesis” (Verso will publish his book of that name next summer). Badiou declares: “communism is the right hypothesis.” By communism he does not mean all that we know as the communist state, communist party, and so on. Badiou wants to restore to the term a more generic sense. Badiou explains that we should understand communism as a Kantian Idea, as “a regulatory function, rather than a programme.” Communist principles “are intellectual patterns, always actualized in a different fashion, that serve to produce lines of demarcation between different forms of politics.” The communist hypothesis upholds “that the logic of classes, of the fundamental subordination of people who actually work for a dominant class, can be overcome.” “The communist hypothesis is that a different collective organization is practicable, one that will eliminate the inequality of wealth and even the division of labour: every individual will be a ‘multi-purpose worker’, and in particular people will circulate between manual and intellectual work, as well as between town and country.” Badiou maps out the different historical sequences of the communist hypothesis. “The first sequence runs from the French Revolution to the Paris Commune, say from 1792 to 1871.” The first sequence aimed at creating “a popular working-class movement acting on the basis of the communist hypothesis” that would overturn society through revolution. “The second sequence ran from 1917 (the Russian Revolution) to 1976 (the end of the Cultural Revolution in China, but also the end of the militant movement that arose throughout the world around the years 1966-76, and the epicenter of which . . . was May 1968 in France and its consequences in the years that followed).” Adding on to the achievements of the first sequence, the second sequence aimed to realize the communist movement, giving it duration through “militarized organization” and the seizure of state power. This unfortunately led to absolutism and bureaucratic repression and stagnation, prompting the Cultural Revolution as well as the efforts of those during and after May ’68 to find a way to “make the communist hypothesis endure even outside the logic of the seizure of power.” Like the “new philosophers” of the 1970s, Sarkozy wants to “put an end” to May ’68. That is, he wants to be done with “the spectre of communism” of which May ’68 was a manifestation (Badiou makes mention of Derrida, whose book on Marx is clearly an influence here). For Sarkozy and his like, “Empirical communism has disappeared, which is all well and good, but that is not enough. [They] want to prevent anyone mentioning communism . . . even in the form of a hypothesis.” Yet today, we see “the opening of a new sequence of the communist hypothesis.” This new sequence will not repeat the errors of previous sequence: “what will come will not be, and cannot be, a continuation of the second sequence. Marxism, the workers’ movement, mass democracy, Leninism, the proletarian party, the Socialist state – all these remarkable inventions of the twentieth century – are no longer of practical use. At the theoretical level, they certainly deserve further study and consideration; but at the level of politics, they have become impracticable.” Today, the communist hypothesis must be brought “into existence in a different modality.” Its “form of presentation” must change in a way that will be inseparable from new “figures of action.” Badiou concludes: “To support the communist hypothesis today, in local experiments with politics, experiment that enable us to maintain, against the established domination of reaction, what I call a point, in other words a specific duration, a particular consistency: that is the minimum condition for the maintenance of the hypothesis to appear also as the transformation of its self-evidence.”
Tuesday, January 5, 2010
North’s book attempts to show why economic theory needs to consider the historical evolution of institutions. His aim is admirable: to convince economists that their abstract models and formulas, in which economic equilibrium is achieved through the maximizing efforts of individuals, say little about the functioning of the real economy. But starting from the wasteland of mainstream economics, North faces the task of single-handedly constructing a theory of historical stability and change. His focus on institutions is an important contribution to thinking about history, but his argument will surely appear reductive and lacking in subtlety to those approaching the book from the humanities. According to North, “Institutions are the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction.” Institutions exist because they “reduce uncertainty by providing a structure to everyday life.” They “define and limit the set of choices of individuals” and are “the framework within which human interaction takes place.” North’s argument closely resembles Herbert Simon’s claims about how organizations reduce complexity and uncertainty (and thereby make possible an approximate rationality), though North explains that institutions are slightly different than organizations. Making an analogy to competitive sports, North claims that institutions would be the rules of the game whereas organizations would be the teams and strategies that have arisen through adaptation to those rules. Institutions determine an “opportunity set” that organizations are created to take advantage of. “Both what organizations come into existence and how they evolve are fundamentally influenced by the institutional framework.“ But unlike in a game, the actions of organizations slowly modify the institutional framework over time. Institutions can be simply ignored, gradually replaced by other ones, or directly contested by strong players. Historically, institutions have provided incentives for different kinds of economic behavior, though as economies became more capitalist the institutional framework, at least in the developed world, reinforced incentives for productive activity. Yet according to neoclassical economics, institutions shouldn’t be necessary for directing the economy toward growth through productivity. North uses transaction cost economics to explain the need for institutions. Ronald Coase famously argued in “The Nature of the Firm” that “when it is costly to transact, institutions matter.” If information was abundant and free, transactions would be essentially costless (one could identify the best alternative, judge the trustworthiness of other individuals, etc.) and the market would approach that described by neoclassical economics. In such a frictionless exchange, institutions would be useless. “No institutions are necessarily in a world of complete information.” But in situations of “incomplete,” “asymmetric,” or even “erroneous” information – that is, the real world – institutions play an important role in making exchange possible, in creating an environment in which expectations can be reasonable and agreements can be maintained. North also rejects the neoclassical belief in the rationality of economic agents, or even the more subtle claim that competition drives such agents toward a maximizing ideal through rewards and punishments. It should almost go without saying that humans have various subjective and ideological motives and “decipher” their environment in radically different (and often incoherent or incorrect) ways. So again, institutions generate “regularized patterns of human interaction in the face of such complexities.” “Institutions exist to reduce the uncertainties involved in human interaction. These uncertainties arise as a consequence of both the complexity of the problems to be solved and the problem-solving software (to use a computer analogy) possessed by the individual.” North claims that economic exchanges of different complexity require different institutions. The institutions that make exchange possible in a small, face-to-face market are different than those needed in a globalized context. In modern impersonal economies where exchange occurs over long distances and times and between strangers, a whole set of institutions are vital for securing the reliability of individuals and the transmission of necessary information. Institutions can be either informal or formal, and each type affects the other. Informal constraints are often indistinguishable from culture, which transmits conventions and norms that influence habits and the way information is interpreted. This should be common sense to those in the humanities, and North reveals the sad state of economics when he has to defend the claim that, “Ideas, organized ideologies, and even religious zealotry play major roles in shaping societies and economies.” Formal constraints consist of “political (and judicial) rules, economic rules, and contracts.” Institutions are only effective if the costs of breaking their rules are high and if they can be enforced. North argues that the development of third-party enforcement – primarily the State – is essential to the functioning of the institutions that support modern economies. Throughout most of the book, North makes the rather troubling claim that the economies of most Third World countries have failed to develop because of a lack of a proper institutional framework. He writes, “The institutional structure in the Third World lacks the formal structure (and enforcement) that underpins efficient markets. . . . In addition, the institutional framework, which determines the basic structure of production, tends to perpetuate underdevelopment.” There is some truth to this claim: no doubt the Third World has not acquired the kind of cultural/informal and formal constraints that make individuals of the First World such willing servants of capitalist accumulation. North also offers a few examples of government ineffectiveness and economic corruption in the Third World to support the idea that certain institutions are poorly enforced or that existing institutions create incentives for nonproductive activities. North claims, “If organizations . . . devote their efforts to unproductive activity, the institutional constraints have provided the incentive structure for such activity.” He also points out that efforts to directly import First World-style institutions into the Third World have failed because of the “tenacious survival of institutional constraints in the face of radical alterations in the formal rules of the game.” But surely the current economic troubles of the Third World (or global South) cannot be simply attributed to a bad set of institutions. Both imperialism (or at least the systemic nature of the international economy and the unequal history of capital accumulation) and local resistance (cultural and political) to the encroachment of capital need to be further recognized. Later in the book North is more sophisticated, admitting that Marxist economics is compatible with the argument of his book. However, he states that the Marxist theory of imperialism and exploitation needs to be reworked to examine how institutions, both those externally imposed and those internally developed, have helped prevent poor countries from achieving economic growth. Given the economic troubles of the U.S. today, North’s argument should instead be turned back at the First World. What needs to be asked is which institutions provided incentives for the financialization of the U.S. economy and generated this crisis, and which new institutions might provide a framework that can get us out of it?
“The need for an administrative theory resides in the fact that there are practical limits to human rationality, and that these limits are not static, but depend upon the organizational environment in which the individual’s decision takes place. The task of administration is so to design this environment that the individual will approach as close as practicable to rationality (judge in terms of the organization’s goals) in his decisions.” It is best to have some sense of Simon’s intellectual trajectory before approaching this work of organizational theory, if only to make its administrative concerns more theoretically appealing. Back in the 1950s, Simon established himself as an expert on automation and wrote texts speculating on the use of computers by corporate management (he reassured executives by arguing that, at least for the time being, the functions of management could not be programmed). In more recent years, Simon has worked in artificial intelligence, writing a book titled Sciences of the Artificial that extends his ideas about organization to the design of A.I. Finally, his arguments about complexity and bounded rationality are important precursors to the systems theory of Niklas Luhmann, whose career also started in organizational theory. Because Administrative Behavior was published in 1947, around the same time as the first mainframe computers were being unveiled to the public, the book lacks the attraction of computers and cybernetics found in his later work. But the book contains the outlines of the ideas on which Simon would build his entire career. According to Simon, administration, oriented toward getting the organization to accomplish some goal, aims at “influencing the operative group toward a pattern of coordinated and effective behavior.” Because all behavior involves selection (one does this instead of that), administration needs to be concerned with the processes of decision-making, “the anatomy of decision.” If individuals always made perfectly rational decisions, administration would need to do nothing but provide individuals with adequate knowledge that would allow them to logically evaluate alternatives. In such a situation, individuals would always choose the one, rational decision, which would be completely predictable, and administration itself might become obsolete. But for Simon, there are always “limits to rationality,” always “elements of nonrationality” with which administration must deal. The “area of rationality” is “bounded” by the particular skills, values, and habits of individuals. Decision-making is also limited by the existence of more alternatives than can be evaluated, insufficient available information, restrictions on time and attention, and an imperfect ability to imagine the future. And in group situations, rationality and decision-making are further undermined by the difficulties of anticipating the behavior of others and coordinating the actions of multiple individuals (Simon flatly rejects the theory of anarchism). Because of such constraints, “even an approximation of objective rationality is hard to conceive.” “In actuality, the human being never has more than a fragmentary knowledge of the conditions surrounding his action, nor more than a slight insight into the regularities and laws that would permit him to induce future consequences from a knowledge of present circumstances.” Characterized in this manner, the human being and his weak cognitive capabilities would seem to be powerless in the face of the complexity of reality. Simon, however, argues that organization serves to compensate for man’s “bounded rationality” and allows him to act in a more rational fashion. Organization serves to reduce the complexity of reality to “a limited number of variables and a limited range of consequences.” Through communication, training, standardization, and structuring, organization makes possible stable expectations about the behavior of others and provides stimuli that channel behavior into certain patterns. Authority (direct, external control) is one method administration has to influence decisions. But by determining the organizational “environment of decision,” administration can influence the behavior of employees without such a use of force. “The behavior of a rational person can be controlled . . . if the value and factual premises upon which he bases his decisions are specified for him. This control can be complete or partial – all the premises can be specified, or some can be left to his discretion. Influence, then, is exercised through control over the premises of decision.” Because rationality is conditional on organization, Simon makes the rather alarming claim: “The rational individual is, and must be, an organized and institutionalized individual.” In his commentary on the chapter, however, Simon fortunately shows more tact. In classical economics, the perfectly rational “economic man” always tries to “maximize.” According to Simon, in reality, “administrative man,” with his severely bounded rationality, merely attempts to “satisfice,” to do what is “good enough.”
Monday, January 4, 2010
“It is the crisis of crises, a crisis that has a long story and, in all likelihood, a long future. It is a violent crisis, of a violent finance. . . . It is a systemic crisis that saw an entire economic, political, and cultural model collapse under the pressure of its own contradictions, a crisis in which anger, disenchantment, distrust, and protest are limited to questioning the very limits of capitalism.” In The Violence of Financial Capitalism, Christian Marazzi analyzes the current economic crisis and evaluates the different strategies for economic revival from the perspective of Italian operaism and autonomous Marxism. The contours of Marazzi’s argument will be familiar to readers of Aglietta, Arrighi, and Negri, but Marazzi contributes a striking interpretation of the theoretical import of the financial details of the crisis. Throughout the book, Marazzi argues that “we are confronted by a systemic crisis requiring ‘radical changes.'” The U.S. government’s intervention through bailouts, deficit spending, and credit expansion will therefore produce only a temporary recovery, and Marazzi speculates that the crisis will persist for quite some time because of the systemic difficulties of bringing about a truly global response to the global crisis. He comments, “The margins of economic and monetary policy to effectively manage the crisis are extremely restricted.” Rather than blindly believing in the power of Keynesianism, Marazzi claims it is “necessary to analyze social forces, subjects, and forms of struggle that can substantiate in a politically innovative way the escape from the crisis.” Marazzi maintains that the current crisis is unique. “The classical financial crises were situated at a precise moment of the economic cycle, particularly at the end of the cycle.” As Braudel and Arrighi have noted, at a certain stage in the economic cycle, investment in production is no longer attractively profitable, so capital is redirected to financial markets where a stronger return is promised. That is, at such points money flows not into “real” production but into what Marx termed “fictitious capital,” through which money seems magically capable of producing more money (Marx’s formula was M-M’). Marazzi claims the classical financial crises were “based on a contradictory relationship between real and financial economies, a relationship that today is no longer expressed in the same terms.” What is different is that “[t]he financial economy today is pervasive, that is, it spreads across the entire economic cycle, co-existing with it, so to speak, from start to finish.” The sources of contemporary financialization are not just manufacturing profits that have been directed away from reinvestment in production. From credit cards to car loans to house mortgages to retirement funds, there has been a “multiplication and extension of the sources and agents” of fictitious capital. Yet the singularity of the “new financial capitalism” is often obscured by the fact that it did originate in same way as previous financial expansions: “as non-reinvestment of profits in directly productive processes.” As Aglietta and the Regulation School have argued, the limitations of the organic composition of capital in the Fordist mode of production (that is, the “relationship between constant and variable capital”), when exacerbated by the saturation of markets, exhaustion of technological potentials, and strength of collective worker power, created a crisis of profitability by the end of the 1960s (In The Economics of Global Turbulence, Robert Brenner contests this “vertical” explanation of the crisis of profitability, substituting his own explanation of increased “horizontal” international competition). In addition to causing the dismantling of the postwar era’s “mode of regulation,” the decline of profitability in production led to a financial expansion, as was the case in previous financial expansions. Since the 1970s, even manufacturing firms have turned to financial speculation as a key source of income and profit, and the manufacturing sector has been a predominant force in the financialization of the economy. Marazzi claims that this fact “is enough to definitively discard the distinction between (industrial) real and financial economies, distinguishing industrial profits from the ‘fictitious’ financial ones.” Despite the decline of profitability in production, financial capitalism has been able to grow because of the enlargement of private domestic debt (as Brenner has also pointed out, economic stimulus through public, government deficit spending was replaced, or supplemented, by private, individual debt: call this the privatization of Keynes through the financialization of everyday life). The most obvious case of the explosion of domestic debt is the housing market, where increased consumption was made possible through remortgaging and inflationary house prices. The financialization of almost everything and the “explosion of private indebtedness” was aided by banking deregulation that made possible huge new markets in credit derivatives. Securitization of debts such as mortgages or credit card balances through “complex financial engineering” allowed “the artificial increase of the total amount of credit.” Derivatives of subprime mortgages, which are now considered “toxic” assets, have become the most scandalous example of such securitization. Subprime mortgages served as a convenient public scapegoat for the crisis, but Marazzi rejects the idea that mere greed or naivety, or even imprudent financial deregulation, can fully explain the recent history of the housing market. Combining Marx and Agamben, he argues, “The expansion of the subprime loans shows that, in order to raise and make profits, finance needs to involve the poor, in addition to the middle class. In order to function, this capitalism must invest in the bare life of people who cannot provide any guarantee, who offer nothing apart from themselves. It is a capitalism that turns bare life into a direct source of profit.” The growth of the housing market relied on the creation of high risk mortgage loans that were made “manageable” by being grouped in derivatives with lower risk loans. The poor were allowed into homes through subprime loans, and then subsequently expelled from them as the collapse of the real estate “Ponzi scheme” threatened investment profitability. That is, finance “produces a commune (of goods) that then divides and privatizes through expelling ‘residents of the commune’ by means of the artificial creation of scarcity of all kinds – scarcity of financial means, liquidity, rights, desire and power.” This “autonomization of financial capital from any collective interest” destroys “social cohesion and the quality of life itself,” and leads to a “dead-end.” How, then, to overcome the crisis? Marazzi is skeptical of arguments about “re-industrializing” the economy and returning to “making things.” Because there is global overproduction, simply increasing “real” production will not solve the problem. Marazzi claims we need to radically rethink “the sterile distinction between the manufacturing sector (where they ‘make things’) and the sector of non-material activities, an opposition certainly reinforced by the abnormal development of the financial sector.” He claims that since the crisis of Fordism there has been a “metamorphosis” of the processes that produce surplus-value. The extraction of value has moved beyond the immediate site of production, that is, “beyond the factory gates,” to encompass the sphere of circulation (this is the point in the book where Marazzi's background in operaism and Autonomia becomes most evident). This “biocapitalism” does not limit itself to extracting value from the laborer while he is at the workplace, but aims to extract it from his entire existence. That is, “in biocapitalism, the very concept of accumulation of capital was transformed.” Marazzi cites Ikea, Microsoft, and the web 2.0 (all of which involve consumers performing many of the functions that previously would have been carried out by the corporation) as examples of how the consumer today has been transformed “into a veritable producer of economic value.” Through such consumer “coproduction,” companies take advantage of the “’free labor’ of users.” In a similar manner, the precarization of work forces the individual laborer to spend more and more “personal” time in activities that the company formerly would have had to pay for. Marazzi adds that “cognitive/non-material labor” is becoming increasingly more important than fixed capital, further encouraging the “transfer of a series of productive-instrumental functions to the living body of labor-power.” Marazzi argues there are financial ramifications to this “new accumulation process” that is “external to classical productive processes.” Today, finance is not merely a parasite on “real” production, draining investment away from its proper outlet. Rather, “financialization, with the logics defining it – particularly the autonomization of the production of money via money by the directly productive process - is the other side of externalization of the value production typical of biocapitalism.” Both have sought to escape the confines of the traditional concept of the production of surplus value. “Financialization represents the adequate and perverse modality of accumulation of new capitalism.” As readers of Arrighi will know, the financialization of the U.S. economy can only be understood by considering the place of the U.S. within the capitalist world system. Marazzi therefore devotes the next chapter to explaining how mortgage debt in the U.S. was encouraged to keep expanding beyond any reasonable limit as a result of easy credit from emerging countries, whose export-oriented economies generated commercial surpluses. In fact, the Federal Reserve was unable to curb the real estate bubble between 2004-2007 because of this influx of foreign liquidity. Because of a “gap between the economic and financial-monetary cycles,” money continued to pour into the U.S. housing market even after there were signs of its collapse. Reflecting “a crisis of global governance,” both U.S. authorities and the banks of emerging countries saw few options other than continuing down the dead-end path they were on. In the final chapter, Marazzi considers the “geopolitical and geomonetary strategies” that might lead to economic revival. He considers proposals for a redefinition of the international monetary system through a “super Bretton Woods,” but notes that such a plan would require the reversal of the “development and affirmation of financial biocapitalism.” Though he holds back from offering any grand solution or predictions, he concludes with a sympathetic appraisal of the Obama administration’s health care proposals and housing market plans. Marazzi singles out a plan that would allow “judges to modify the loans taken by owners of insolvent houses.” It would reform the monetary system by starting at the base, and it would acknowledge “the right to social ownership of a common good.” He argues this plan would also help “restore value to the derivative assets that are today clogging up the world banking system” and would not have any “large immediate effects on the public deficit.” A “local intervention” with a “global dimension,” the plan is also an “investment in the future,” which for Marazzi means “giving each other the means of inventing one’s own future, freeing it from the anxiety of immediate profit.” In its final pages the book contains a brief and useful appendix of definitions of financial terms. Introducing the appendix, Marazzi claims, “Finance has its own language and, moreover, a rather esoteric language.” He adds that “finance prospers” “under the shelter of this linguistic opacity.” The appendix and the rest of his book go a long way toward empowering readers in speaking the new language of finance.
Sunday, January 3, 2010
Alfred Chandler is one of the few business historians who is equally likely to be cited by Marxist economists (including Aglietta, Harvey, and Arrighi) and by traditional economic historians. Chandler’s trilogy – Strategy and Structure, The Visible Hand, and Scale and Scope – remains essential reading for anyone interested in the rise of American corporate capitalism or in the evolution of large-scale organization. The thesis of this first book is that “structure follows strategy.” Strategy (the particular type of growth a firm pursues) must be followed by an adjustment of structure (the organizational hierarchy and “lines of authority and communication”) if inefficiency is to be avoided. In particular, the book traces through long case studies of four major corporations – du Pont, General Motors, Jersey Standard, and Sears – the transition from the centralized, functionally departmentalized structure to the decentralized, multidivisional one in the early decades of the 20th century. Chandler begins with the early experiments in administrative organization by the railroads before and after the Civil War. As other industrial enterprises grew in size and complexity, the railroads provided not only the means for larger markets but also a model of organization building. By the 1890s, a significant number of industrial firms had dramatically expanded as a result of a strategy of growth through volume and/or vertical-integration, but they typically lacked an effective organizational structure. Often, small firms were added to the existing business without being integrated into a “centrally managed industrial enterprise.” Part of the problem was that the industrialists who created these enormous businesses were rarely suited to the new administrative challenges. But eventually, and in either “an informal, unplanned manner” or “more systematically and rationally,” firms undertook the creation of a new structure in which a central office oversaw departmental units that were organized by function. To a varied extent, executive administration was distinguished from everyday management. Communication channels and lines of authority were established that ensured a steady flow of information from the department to headquarters and back. After an initial burst of administrative creativity by different firms, ideas about this structure slowly entered into general circulation, so that “at the close of World War I, most large industrial companies whose executives paid any attention to organizational matters were administered through much the same type of organization – the centralized, functionally departmentalized structure.” Almost by default, at that time the centralized, functionally departmentalized structure appeared “the only one which could assure effective administrative control over a large industrial consolidation.” Yet the structure had a weakness: executives still faced too many decisions and rarely had the ability to address the needs “of the corporation as a whole.” As long as growth was limited to expansion in existing areas of production, there was not a problem. But once firms pursued a strategy of growth through diversification into new markets, the centralized, functionally departmentalized structure quickly revealed its insufficiency. Product diversification forced administration to make decisions about potentially quite different industries and greatly increased the complexity of coordination and communication among different lines of production. Once again, a new structure needed to be developed for the new strategy. “By placing an increasing intolerable strain on existing administrative structures, territorial expansion and to a much greater extent product diversification brought the multidivisional form.” Switching from a centralized, functionally departmentalized structure to a decentralized, multidivisional one involved making “product rather than function the basis of organization.” The structure is most clear in General Motors, which overseas different automotive divisions that each produce their own brand of car. In the multidivisional structure, division managers had greater autonomy over the operation of their divisions and administration in the general office was more available to plan out how to best utilize the firm’s various resources. New administrative systems ranging from budgeting and accounting procedures to economic forecasts to internal communication channels made sure adequate feedback moved between the different levels of the firm and between the firm and its economic environment. The distinction between long-term administrative planning and day-to-day management was heightened by these administrative systems and embodied in the new corporate structure, both of which placed executives further from the responsibility of making decisions about the everyday operations of the business. The multidivisional form quickly spread after WWII and by 1960 became the dominant form of corporate organization, in part because it was capable of sustaining the development of the multinational corporations that took advantage of America's rise to hegemony of the capitalist world system. Chandler summarizes the book’s historical argument: “Thus four phases or chapters can be discerned in the history of the large American industrial enterprise: the initial expansion and accumulation of recourse; the rationalization of the use of resources; the expansion into new markets and lines to help assure the continuing full use of resources; and finally the development of a new structure to make possible continuing effective mobilization of resources to meet both changing short-term market demands and long-term market trends.”