Accounting for the Current Economic Crisis and Inadequate Political Responses
by Tom Walker (aka Sandwichman)
(Dan here…this piece is in the middle of a conversation starting in 1997 to now and how we measure up in our capacity or willingness to learn different lessons from the series of financial bailouts of the last thirteen years. The links are necessary to flesh out the argument, but I hope further posts will develop the debate for newcomers. This also marks Tom’s new website Ecological Headstand)
The day before yesterday, while searching for an online copy of an article on the rhetoric of Polish accounting he had cited many years ago, Sandwichman stumbled upon an old email list exchange from thirteen years ago between himself and the inestimable Miracle Max. The exchange illuminates the present economic crisis and the inadequate political responses to it from the left as only “a tiger’s leap into the past” can.
The question Max was addressing was the attitude of the left, broadly defined, toward financial bailouts. At that time, it was South Korea on the block. Max’s instinct was that “we’re going to see more rather than less of these events — crises that fall short of apocalypse but which reflect significant acts of economic exploitation and lost political opportunities.” Who can argue with that? “It seems to me,” Max mused, “that our politics lacks the right response to the current and incipient financial events. By “our” I include both a liberal, muddle-through stance and a radical, sit-back-and-gawk posture.” Thirteen years on and we haven’t learned a bloody thing!
Sandwichman’s reply called for “attention to something the left generally hasn’t been too interested in: accounting standards.” Remember, this was four years before the Enron, Arthur Anderson, etc., etc. debacle. It went on to contrast the much-hyped public drama of bailout negotiations with the arcane minutiae of the behind-the-scenes “technical” discourse of accounting where the conventions of what constitutes the bottom lines are drawn.
Max answered that he’d “like to hear more on the substance of the accounting issues, which really get my juices flowing” and Sandwichman replied that he, too, would like to hear more. “It seems to me that there is a missing link that I’ll call ‘labour accounting within capitalism.’ …I have a sense of what the missing pieces are but the task of pulling the loose threads together is huge. I could write an article or even a book, but I have a sense there is an entire missing sub-discipline here.”
Thirteen years later, the Sandwichman retreated to idyllic Mesa Refuge in Point Reyes Station, California to work on the revision of his manuscript. The gist of that revision was to bring the topic of social accounting – which had been buried entrails of a pair of chapters dealing with other matters – to the fore. The book, Jobs, Liberty and the Bottom Line (an unpublished manuscript), can serve as an introduction to that “missing sub-discipline” but more urgently it stands as an indictment of broad left complacency in assenting to the grammar and vocabulary of a bankrupt model of social accounting, riddled with “wondrous errors and confusions,” whose overt purpose is anathema to the prospects of human emancipation.
“One of the most important points in the whole of political economy,” according to Fred Engels, arose out of the problematic relationship between the ordinary business practice of book-keeping and political economy proper. Simon Kuznets was no flaming radical but he recognized and warned of the “dangerous implications that should be obvious” of fetishizing, in the national income accounts, government itself as the ultimate consumer. Exactly what Kuznets meant by that hinges on an understanding of such arcane points such as how to distinguish between intermediate goods and final goods and just what constitutes “duplication,” which I hope this brief historical note will clarify. The proper response to every assertion that “economic growth is essential” should be “do you want that growth with or without ‘double counting’?”
(Permission granted from Max to use e-mails)
Sandwichman
i am not qualified to comment on the main substance of your post, but you raise two issues, or an issue and a half which i think are key to the “why can’t we do anything about it” aspect of your essay.
i seem to remember a long time ago having an unsatisfactory exchange with you about some thing or other which i thought i knew something about. The inability to communicate was frustrating but by no means uncommon. Something in the human brain prevents easy communication from different perspectives among people much older than four.
This, I believe, is related to the general inability of “liberals” to agree with each other, much less accomplish anything, or even imagine accomplishing anything. The general “who, us? do something?” attitude of commenters to this very blog, who are satisfied to express their opinions and their disdain of anyone else’s opinion. Not that most opinions, mine included, don’t deserve a degree of disdain, but merely to observe that there is almost no communication happening.
I don’t think that “conservatives” are any better at this than “iiberals,” except for two things. The first is that conservatives today appear to be doing the driving. They actually have an agenda and an organization that they back with money and strategy. Secondly, one of the results of their money and strategy is that they have created “public opinion,” so you can rely on legions of people who don’t know anything all agreeing about “the Problem” and “the cure.”
now back to our program.
Coberly,
If it is any consolation, I agree entirely with you that it is too easy to argue and too hard to learn. In my own case, a lot of what I do is (semi) “popularization” of material that I have to work extremely hard at to grasp. And then I get complaints about being arcane or academic. I have to laugh. They should see the stuff I just had to plough through! Our sound-bite culture encourages this. It lends a certain cachet to being “in the know” even if what one is in the know about is pop-culture trivia and the platitudes of conventional wisdom.
Fortunately there is a cure for this malady. Read my book.
Sandwichman
I’ll look for the book, but i can’t promise i won’t just read it for the sound bites.
I used to try to teach a mathematical subject to undergraduates. It broke my heart: i could teach most of them to jump through hoops, some with a degree of agility. but i couldn’t teach any of them to understand. it occured to me toward the end of the adventure that it never occured to them that they might have to think about it. They thought it was my job to think about it and tell them in some easy to remember way how to get the right answers on the test.
I think this is the way Geithner and Orszag learned learned economics, or whatever it is they are non partisan experts in.
Parting shot: i don’t remember our earlier “debate,” but if it was about Social Security and your answer makes a point about annuities and return on investment, it was likely I was asking you to abandon your whole frame about SS and think of it as more like a life raft. At some point you don’t care about your “return on your investment,” you are just glad to have enough to eat.
Actually it takes two times thru to understand a lot of stuff, in my experience (a long time ago) it took advanced calculus to really understand the subject. (Not that 40 years later I recall a lot of it but…) The issue you raise is the same one where kids can do manipulation problems but not story problems, allthough of course thats the only kind of problem life presents one with.
Speaking of story problems. Here’s a brain teaser. Find the “really wondrous errors and confusions in Sir William Armstrong’s calculation during the 1871 engineers’ strike in Newcastle.
http://ecologicalheadstand.blogspot.com/2010/11/following-estimate-is-from-letter-to.html#more
While the specifics of this post are interesting, I think there’s still something behind them.
It’s a matter of definition. I would argue that in order to call something “broadly” on “the left”, the entity in question whether person, organization or whatnot would have to be basically on board with the idea that there are classes and they conflict, and be on the side of the class/es on the bottom of the conflict in their struggles with those on the top. Go broader than that and you find yourself on a fundamentally different side.
Much of what gets referred to as “left” in the United States has inadequate responses to current economic troubles not because of any given example of carefully skewed framing which badly needs debunking (although such examples abound and I’ll readily believe that the one the author identifies does badly need debunking) but because they are not on the left in the broad sense I describe. Rather, they are “liberals”, which tends to mean that they avoid believing in the existence of classes, much less struggles between them, while their actual membership is with the “on the top” classes. They have a politics of enlightenment on social issues in a “government out of the bedrooms of the nation” kind of way, but economically at best they think that the upper classes will be better off if the lower aren’t crushed too severely–thus espousing “limited war” from the top rather than “total war”. Hence the general “liberal” refusal to question any number of highly questionable frames on which conventional understanding of events are mounted: They aren’t in fact on a side that wants those frames questioned.
Sandwichman–I attempted to post a comment to your Armstrong brain teaser. I couldn’t get my comment to stick on the link posted here. Anyhow, what I said was that Armstrong’s problem was that the didn’t think in terms of hours of work, not fixed weekly tours. He didn’t lose anything if he paid people hourly wages. So, fallacy. And, seems like he had a poor grasp of negotiating a rate of pay for wage employees. Ya know, split the shifts. That’s my comment. NancyO
Purple
i think i agree with you.
only problem i have is that there are lots of us who are sorta left and have neither power nor any clear sense of class war.
in my case its just mostly a way of distinguishing myself from the insane right.. currently the dominant form… and a general belief that ‘government’ is the only possible answer to national problems… not unlimited government, but careful government, which in our case we have not got… not even when “the left,” as you define it, is nominally in charge.
the problem that sandwichman brings up… as i understand it… is that all of us on the left, including academics who actually know something… are unable to agree with each other much less effectuate a policy. i have seen some of that “dialogue among liberals” up close enough to suspect that the left… us individuals… are no more capable of reason and cooperation than the rest of the poor, including the self identified members of the insane right… who at least have been organized by their leaders into effective foot soldiers.
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