Archive for April, 2014

Dispatches from the Grand Hotel Abyss: the Frankfurt School comes to Morningside Heights

April 22, 2014

Christina Stead has had the peculiar fortune among twentieth-century Australian novelists to have enjoyed, at last count, three revivals of critical attention, reissued or newly collected works, and renewed fashionability.

The most recent bubble (they have taken place roughly two decades apart) yielded a biography and publication of Stead’s letters to her husband, William Blake.

Despite the biography’s concessions to contemporary ideological fashion, these letters remind us that all the leading figures in the Australian literary efflorescence of the 1930s (Eleanor Dark, Xavier Herbert, Katherine Susannah Prichard, Jack Lindsay, Dame Mary Gilmore, Vance and Nettie Palmer and their daughters, etc.) were Communist Party members or fellow-travellers of Stalinism.

Stead’s close friendship with the economist Henryk Grossmann features heavily.

‘I had better become a bit more intelligent before my Escort turns up next,’ she joked to Blake about Grossmann in April 1942:

I wonder at my temerity (in private) in going out cheerfully with the world’s leading Marxist, etc. but my Australian brass comes to my aid.

Stead had arrived in New York in 1937 to promote House of All Nations.

She stayed there until 1942, writing The Man Who Loved Children, joining the League of American Writers and describing herself as ‘a good Stalinist’.

Her social circle in wartime New York also included Mike Gold, whom she called a ‘perverse, deep, vain and self-interested man’ who ‘gives speeches without shame, when he has prepared nothing, for the sake of the money.’

Letters Christina Stead and William J Blake

Grossmann likewise spent the years 1937-1947 as an émigré scholar in New York.

Working in solitude  having been spurned by his old Frankfurt School milieu  he was desperate for company, intellectual stimulation and a rapprochement with Stalinist circles.

Stead sought his tutelage, hoping he might provide a fictional model for a character of the revolutionary ‘type’ (Lukács’s concept of novelistic types was then in the air).

She found to her disappointment that ‘psychology does not occur to him at all. He does not think psychologically and what he said was utterly useless.’

Grossmann eventually served as a fictional model for her Jan Kalojan (or Callowjan) in her short story ‘The Azhdanov Tailors.’

When after the war Grossmann accepted a teaching position in the DDR, Blake sought his patronage to win himself an academic place at the University of Leipzig.

In 1950 the US citizen travelled to the DDR, and enthused to Stead of the life they might enjoy under bureaucratic rule:

Like Henryk I was a nobody in America relatively, here I am a Marxian writer, which in Leipzig is the highest honour in the world apart from that of the directors of party policy and actual high administration.

[…]

He lives beautifully, really like a prince. So would we. He lives in a rococo palatial apartment house opposite a beautiful house…

Sadly Blake found Grossmann in hospital, dying of prostate cancer.

Christina Stead NLA

Stead’s letters regarding Grossmann provide a useful resource about Grossmann’s banishment from the Institute for Social Research, located then in New York.

Grossmann’s complaints of ‘sabotage’, related by Stead, show how the personnel and research program of the Frankfurt School, where Grossmann had worked in the 1920s and 1930s, were evolving into their familiar postwar configuration, in which he was no longer welcome.

By purging politically suspect figures like Grossmann, Max Horkheimer established a coherent ‘Frankfurt School’ research program based around himself and T.W. Adorno.

‘Critical Theory’ would be made academically respectable and salonfähig in time for the Cold War and German economic miracle.

Henceforth the Frankfurt School, shorn of any perilous links to classical Marxism, would rival Paris as the intellectual capital of Western Marxism.

While Grossmann lay on his deathbed in Leipzig, Adorno was making a triumphant return to Adenauer’s Federal Republic, where Horkheimer had been appointed rector of the University of Frankfurt.

As Perry Anderson described in Consderations on Western Marxism, the postwar Frankfurt School would be ‘officially feted and patronized’ in what remained ‘the most reactionary major capitalist country in Europe’.

Henryk Grossmann

In The Dialectical Imagination, his history of the Frankfurt School to 1950, Martin Jay wrote how Grossmann’s relationship with the Institute became ‘scarcely more than a formal one’ during the 1930s, leading to a ‘complete break’ during the Second World War:

An enormously learned man with a prodigious knowledge of economic history, Grossmann is remembered by many who knew him as the embodiment of the Central European academic: proper, meticulous, and gentlemanly.

He had, however, absorbed his Marxism in the years when Engels’s and Kautsky’s monistic materialistic views prevailed. He remained firmly committed to this interpretation and thus largely unsympathetic to the dialectical, neo-Hegelian materialism of the younger Institut [for Social Research] members. 

[…]

More orthodox Marxists within the Institut, such as the economist Henryk Grossmann, were always criticized for their overemphasis on the material substructure of society…

[…]

Grossmann’s ideological inflexibility prevented him from having much impact on the Institut’s analysis of Nazism, or on much else in its work for that matter.

Grossmann was author of The Law of Accumulation and the Breakdown of the Capitalist System (1929), a former member of the Polish Communist Party and, before then, secretary of the Galician Bundists.

Unwelcome in Pilsudski’s Poland from 1926, he had become a researcher at the Institute for Social Research, an organization whose charter announced its dedication to the ‘history of socialism and the labour movement.’

The Institute was attached to the University of Frankfurt. Independent of the latter, it was directly answerable to the local Ministry of Culture, which appointed the Institute’s director.

The first director, Carl Grünberg, was an economist and Austro-Marxist, and Grossmann’s supervisor. (Jay later derided his ‘rather undialectical, mechanistic Marxism in the Engels-Kautsky tradition’, and his ‘inductive epistemology… a tone very different from that set after Horkheimer replaced him as director.’)

In June 1924 Grünberg had launched the Institute with the following words:

[In] contrast with the pessimists, there are the optimists.

They neither believe in the collapse of Western culture or of culture in general, nor do they alarm themselves or others with any such prospect. Supported by historical experience, they see, instead of a decaying form of culture, another, more highly developed one approaching. They are confident: magnus ab integro saeculorum nascitur ordo, a new order is being born out of the fullness of time.

And for their part they consciously demand that what is outmoded should stand aside in favour of what is emerging, in order to bring it more speedily to maturity.

Many people, whose numbers and influence are constantly growing, do not merely believe, wish and hope but are firmly, scientifically convinced that the emerging order will be a socialist one, that we are in the midst of the transition from capitalism to socialism and are advancing towards the latter with gathering speed.

According to Rolf Wiggershaus’s history of the Frankfurt School, its founder’s ‘heartfelt wish was… to create a foundation similar to the Marx-Engels Institute in Moscow, equipped with a staff of professors and students, with libraries and archives and one day to present it to a German Soviet Republic.’

Institut group photo

Just a few short years after the aborted Communist insurrection, the Institute’s academics, most of them KPD or Social-Democrat members, were naturally monitored by the Weimar authorities.

In 1926 the Frankfurt Chief of Police confirmed that Grossmann had ‘not actually drawn any attention to himself politically’. He safely ascended to an economics professorship in 1930.

Meanwhile Grünberg’s successor, Max Horkheimer, was appointed director of the Institute in 1930, despite looser ties and lesser academic standing than Grossmann and other members. The Ministry of Culture, it was felt, would deem him less ‘politically suspect’ than these others, and his appointment would be ‘easier to push through’.

Horkheimer, a mediocre scholar, was ‘more trustworthy to his university colleagues’:

With no hope of attaining a professorship in the normal way, Horkheimer was pushing for the post of director, which brought with it the prospect of an accelerated academic career.

In 1931, the Institute ceased to issue the Archives for the History of Socialism and the Workers Movement; its new review was more innocentlv entitled The Journal of Social Research.

To a correspondent, Horkheimer straightforwardly declared himself ‘not interested’ in the traditional topics of socialism, economics or history. Rather, his ambitions lay ‘in a sociological theory appropriate to the society of those years and in the research that would be helpful for this task.’ Those seeking the substance in this vacuous formula were directed to Horkheimer’s inaugural address.

If intended as an accommodating signal of complaisance, this re-badging was of little avail by the early 1930s. Fascist ascendancy soon forced a scattering abroad.

In 1937 Grossmann was invited to New York by Horkheimer, director of an Institute now transplanted to premises on West 117th Street owned by Columbia University.

Like the Institute’s other designated ‘communist’, Karl Wittfogel, Grossmann was also excluded from the ‘Horkheimer circle.’ Without an office, Grossmann worked from home.

Five years into his stay, Horkheimer terminated the Institute’s relationship with Grossmann and trimmed other scholarly personnel from the payroll. In 1941 Grossmann’s work on economic dynamics, Marx and the classical political economists was not published under its auspices.

Grossmann decried all this as ‘sabotage’, and like Erich Fromm threatened to sue the Institute for breach of contract.

Columbia building

Stead’s letters shed some light on these grubby events, which are of broader interest.

Horkheimer’s renovation of the Frankfurt School certainly involved thwarted ambition, baronial intrigue and petty envy. But its consequences were neither trivial nor limited to the direct participants.

The program was one of lustration, with the conditions of exile allowing, ahead of time, the purifying cleanse of postwar liberation.

The churn of staff allowed the director, who boasted of his ‘dictatorship’, to remove those antiquated fogies whose ‘overemphasis on the material substructure of society’ clashed with his favoured research agenda.

As Jay’s history declares openly, what Horkheimer sought to displace from the Institute was a particularly musty, hidebound central European ‘tradition’, traceable to Engels and Kautsky: the ‘relative orthodoxy of the Institut’s Marxism’,  still dimly alive in figures like the Galician Jew Grossmann, ‘the embodiment of the Central European academic.’

The regional, ethnic and generational nature of this turnover in personnel was no accident.

Initially Stead’s letters present the ‘gallant Cracovian’ Grossmann as a pitiable figure, if ‘highly presentable and entertaining’: ‘desperately lonely’, ‘crazy as a bedbug’, a ‘a splendid fellow, though quite a trial as a conversationalist’, ‘a marvellous fellow when he is not in one of his black or silly moods.’

Grossman was covetous of her time (‘I’ve noticed before with the Gallant, that although he may appear to give you a choice or choices, it always veers around in no time to his choice: pertinacious elf.’).

He moaned often to her of his deliberate mistreatment at the hands of Horkheimer and Adorno, and was bewildered by US society (‘All old people, went to bed 9 o’clock, lights out, finally he said, Isn’t there a café here [poor European!] and they said, Yes and showed him. A milk bar. Poor European’).

In 1942 Stead wrote to Blake in San Francisco regarding Grossmann:

He is very lonely. He talked about himself all the time, his past, his successes in Europe, what everyone said about him – what the newspapers said, praise from adversaries, etc. etc. – what is that (in a man of Grossmann’s mind) but utter loneliness!

They do not like him in the Institute – he has a contract with them and if they did not pay him he “would make them a law” [Stead’s rendition of Grossmann’s clumsy English] – but they say he is “genial but they sabotage, they compliment him, we all know Dr. Grossmann and at first he was too stupid, but now he sees it was only to sabotage.” (sabatayge) They want to cut down his work, take out all the parts that are really Grossmann and would make him stand out above them.

Then he sets out to explain Akkumulations-Theorie to muh! Let me tell you one thing – in his atrocious English he makes himself clear and interesting. He is a born expositor and teacher. He regrets most his “workshop”; all the brilliant young men he taught now scattered – where are they – he had letters from Yapan – now at war – a world scattered – what a world for a scholar says he.

And I see it as he speaks – he is tired, I think. It breaks his heart that after all his work in Europe, known and admired by enemies even, that no one even knows he exists here…

Poor lonely scholar. Isn’t it pathetic? I am quite sure that if you would work with him in S.F. he would go there at once – and that is positively all he has in mind.

He is getting rather bowed; very much so, in fact. He reads books about seven hours a day, and works in the evening too.

He is studying – well, he told me all about his work and he made it interesting, which I consider very smart, for it was all about Descartes, his mechanical view of the universe, quite new and revolutionary for the time; and now he is studying all the algebra that every was and mathematical economics – and the question of why the machines didn’t develop before, for it was invented long before – the Greeks had machines but only for toys, and in the fourteenth century they invented the bobbin, etc. but never used it. Why didn’t they need the machine in Greek times? Slave labour, unemployment, due to robbery abroad, etc. etc.

This guy is so clear in his thinking that though he is an abstruse marxist I keep seeing the clearest pictures and getting good ideas for writing from him…

He is simply overwhelmed that the Marxists don’t known him or criticise him here.

What lay behind the ‘sabotage’ Grossmann complained of?

Wiggershaus’s history tells how, in 1937, the double-dip Depression, and an ‘unlucky touch in investments’ in stocks and real estate, had brought a ‘drastic deterioration’ in the Institute’s balance sheet. (Its endowment had been donated by the grain merchant father of Felix Weil.)

Horkheimer elected to cut salaries and research personnel.

Staff were ‘left confused and insecure by more or less secretive hints about the Institute’s impending financial collapse and by obscure reductions in the salaries’:

When the endowment capital began to shrink, from the late 1930s onwards, Horkheimer’s main concern became to reserve a large enough part of the assets early enough to secure his own scholarly work on a long-term basis. Accordingly, Lowenthal – in his capacity as one of the trustees of the ‘foundations’ among which the funds were distributed – was one day asked to transfer $50 000 to a fund with Horkheimer as its sole beneficiary.

First to go was Erich Fromm (whom less successful members apparently resented: T.W. Adorno had once described him as a ‘professional Jew’).

The work of Grossmann, too, was altogether too redolent of Galicia and classical Marxism, with its embarrassing tendency to cite Plekhanov and Rosa Luxemberg, and its talk of capitalist ‘breakdown’:

[Grossmann’s] long, ponderous manuscripts did not meet the expectations of the Institute’s directors at all, and, with a not particularly happy life, he had become a rather difficult character.

Wiggershaus describes a conflict of interest between Horkheimer, Adorno, Leo Lowenthal and Friedrich Pollock on the one hand, and Herbert Marcuse and Franz Neumann on the other:

With closer incorporation of the Institute into the university [Columbia], the chances of an academic career for Marcuse and Neumann would increase; in contrast, Horkheimer and those basing their hopes on having their material needs supplied by the Institute did not want to see its independence restricted in any way.

The Institute’s co-founder informed Horkheimer that ‘Teddy’ Adorno had ‘one interest in life, to become a minor gentleman of leisure on the west coast as soon as possible’.

By 1943, the only research supported full-time by Institute funding was that of Horkheimer and Adorno. Herbert Marcuse and Franz Neumann now worked for the OSS, and every other scholar was likewise employed in the US government’s war effort.

In Pacific Palisades, a starstruck Adorno giddily assisted Thomas Mann’s work on Doktor Faustus.

Meanwhile Adorno’s stark Minima Moralia, together with his and Horkheimer’s Dialectic of Enlightenment, provided something of a programmatic manifesto for Critical Theory’s new postwar direction. The latter would reject all the aims set out for the Institute in Grünberg’s inaugural address.

Written simultaneously, these books jointly announced, in morose but full-throated tones, the Frankfurt School’s conversion to what Grünberg had called the camp of the ‘pessimists’, taking as their theme ‘the collapse of Western culture or of culture in general.’

With its strictures against ‘positivism’ and famously grim verdict on Francis Bacon and his epigones, Dialectic of Enlightenment provided a remarkable contrast with Grossmann’s history of the Scientific Revolution, also completed during the waning days of the Second World War.

In California, Grossmann’s work would no doubt have been judged as insufficiently ‘mediated.’

Adorno Brentwood residence

After German surrender, the Institute’s return to Europe was funded by the Allied High Commission for Occupied Germany and the City of Frankfurt.

Horkheimer became rector of the University of Frankfurt. With the Institute no longer relying on Weil’s money to fund its operations, Horkheimer appealed to the premier of Hesse.

The solicitation of grants and donations is described by Wiggershaus:

Horkheimer and Adorno sought support, not from the labour movement or from opposition groups, but from the ruling authorities themselves. As Horkheimer put it in a letter of thanks to the Prime Minister of the state of Hesse, Georg August Zinn, they were looking for ‘friends in high places, the sort of friends often hoped for in vain by academics also pursuing the practical goals of genuine education’.

Thus the Cold War Berufsverbot, having been preemptively enacted in exile, would require no more victims, and the Frankfurt School little intellectual defanging.

Henceforth, the long and steady descent to today’s Habermas, an ornament of the establishment — yet a figure, one must remember, of only the second postwar Frankfurt generation, and thus lineal recipient of a virtually pure inheritance from the founders — would proceed smoothly.

Habermas Kosovo

Since the beginning of his career in the 1950s, Habermas had been committed to German Atlanticism, or Westbindung:

The unreserved opening of the Federal Republic to the political culture of the West is the great intellectual achievement of the postwar period, of which my generation in particular could be proud…

That opening has been achieved by overcoming precisely the ideology of the center… [the] geopolitical palaver of “the old central position of the Germans in Europe”…

The only patriotism which does not alienate us from the West is a constitutional patriotism.

If, Habermas maintained, the source of all moral and intellectual authority lay in Western benevolence, and any hope of a future ‘cosmopolitan order’ reposed in Washington, then all trace of a German Sonderweg must be erased. After General Clay and John J. Mccoy had departed, the Bonn republic would have to hunt out and destroy any lingering German pretensions to being a bridge linking western and eastern Europe.

What must go, Habermas explained in the 1980s, if one was to ’emphatically defend the Federal Republic’s orientation to the West’, was ‘an ideology of “the middle”‘:

Only since the end of World War II have Germans this side of the Elbe and the Werra considered themselves, as a matter of course, to belong to Western Europe…

What is in dispute is not whether the Federal Republic belongs to Western Europe, but whether or not the option for the West has to be broadly anchored in a renewed national self-consciousness…

For it is only in the unclouded consciousness of a break with our more fateful traditions that the Federal Republic’s unreserved opening to the political culture of the West can mean more than an economically attractive opportunity and politically almost unavoidable choice…

The West integration of the German Federal Republic has taken place step by step: Economically through the Currency Reform and the European Community, politically through the splitting up of the nation and the consolidation of independent states, militarily through rearmament and NATO alliance, and culturally through a slow internationalization of science, literature and art that was not finalized until the late 1950s. These processes took place in the power context of the constellations brought about in Yalta and Potsdam, and later on through the interactions of the super-powers. But from the very beginning, they met with “an extensive pro-Western opinion among the West German population, an opinion nourished by the radical failure of the NS-politics and the repulsive appearance of Communism”.

What exactly was the pedigree disposed of by this Westbindung, with its ‘anchoring’ of Germany in NATO?

Today the once-enormous historical influence and international renown of German culture and language across Mitteleuropa, from the Baltic to the Balkans, can scarcely be imagined.

A figure like Grossmann was emblematic. He was born into the rickety Austrian political institutions of Franz Joseph: heir to the failed revolutions of 1848, with a large, recently emancipated and urbanizing Jewish population, and a residual landowning class, sharing a mostly German-language high culture across central and eastern Europe.

Long nurtured among the cultivated middle classes of the Habsburg, German and Russian imperial monarchies, since 1945 — and especially following the nationalist fragmentation and irredentism that has consumed the region since 1989, crafting monocultural territories out of formally multicultural federations this shared lingua franca has ceased to exist.

While it lasted, however, it provided a setting in which classical Marxism, during the last third of the nineteenth century, emerged and flourished.

Both the custodians and the enemies of this heritage the opponents of ‘Judeobolshevism’ with rather more relish than its embattled practitioners acknowledged this geographical and demographic pattern.

The original Institute for Social Research thus established its firmest international connections with Vienna and Moscow.

Its early members generally partook of that ‘economic determinism’ (sic), which Horkheimer’s Frankfurt leadership would later repudiate as a cardinal and egregious error, a worn-out relic of the Second International and Stalinism.

Yet against this early continental reach can be measured the later national introversion of the postwar Frankfurt School, with its provincial retreat to Kant, Hegel and (with Habermas) a smattering of Anglo-Americans (Mead, Dewey, Parsons).

The upshot of Horkheimer’s victory can be judged by the following anodyne prospectus, setting out the Institute’s postwar research agenda:

Social research, in all its aspects, and particularly in the areas of research on the structure of society, on human relationships and modes of behaviour within the labour process, of opinion research and the practical application of sociological and psychological knowledge in the last few decades, has received a great boost.

Owing to political events, Germany has not been able to participate in this to the extent that might have been desired. The part these disciplines can play today both in Germany’s public life and in the rationalization of its economy can hardly be overestimated, if the experience of other industrial nations is anything to go by.

Social analyses will be able to throw light on many crucial political and social problems of the post-war period, such as the refugee problem. They can provide an important cognitive basis for the reconstruction of cities and industrial areas. Training in the methods of social research can help young people better to grasp the tensions within our own population, as well as those between nations, and thus allow them to make an independent contribution to overcoming them . . .

Last but not least, social research can open the way to a variety of new professions. The demand for scientists trained in the new methods is no less than that for engineers, chemists or doctors, and they are valued no less than those professions are. Not only government administration, and all the opinion-forming media such as the press, film and radio, but also businesses maintain numerous sociological research bodies.

Social research can create the optimal social conditions in their factories, ascertain and calculate in advance what the public needs in their branch of business, and monitor and improve the effectiveness of their advertising. A similar course of development can be expected in Germany as well.

 

Taking candy from a baby?

April 13, 2014

A front-page article in last weekend’s Australian Financial Review spoke darkly of the federal government’s budget preparations ‘pitting one generation against another.’

A tired locution, no doubt, but has the claim any substance, or is it mere journalistic inflation?

Back in 1959, Abba Lerner compared the standard economic treatment of public pensions to a ‘swindle’ or a ‘chain letter’, criticizing it for neglecting transfers between generations living today, in favour of a spurious infinity of mutual benefit:

[The] “new” welfare economics… cannot consider the distribution of the product between younger and older people living at the same time… They are limited to the consideration of the distribution of an individual’s consumption between his working life and his own retirement.

Through ‘the fairy tale of the time-travel of interest-collecting savings… the authorities can pretend that “social security” is not a “socialistic”  tax and give-away program by the government but a “saving” by each worker out of his current income to provide for his old age.’

But, said Lerner:

[From] the social point of view, the pensions of the old can come only out of current output of consumption goods…

The essence of the matter is that the fable of the time-travel of consumption is accepted with implicit faith by the accountants, as guardians of the private point of view of savers who are putting money aside for their old age. It is the duty of economists, as guardians of the social point of view, to explode this fairy tale…

The only real problem from the social point of view is the allocation of current output of consumption goods between current consumers of different age. This can never be achieved by any kind of trading or lending, but only by a one-way transfer of current consumption from some citizens to others with no genuine quid pro quo. It is only a somewhat more sophisticated fable that today’s transfer from workers to pensioners is a “repayment” of yesterday’s transfer from workers to pensioners…

The tax-and-pension is nothing but a device by which today’s pensioners are maintained out of today’s social product, which is, of course, produced by today’s workers.

Lerner derided ‘the accountants who insist on the “solvency” of the Social Security Administration.’ Pre-funding was a red herring: ‘the “new” welfare economics, by limiting comparisons to the utility of the same individual at different dates, fits in fatally with the accountants’ predilection for considering social security as the translation of savings over time.’

Paul Samuelson, against whom Lerner was arguing, had declared with typically folksy glibness:

Outside of social security and family altruism, the aged have no claims on the young: cold and selfish competitive markets will not teleologically respect the old; the aged will get only what supply and demand impute to them…

Once social coercion or contracting is admitted into the picture, the present problem disappears. The reluctance of the young to give to the old what the old can never themselves directly or indirectly repay is overcome. Yet the young never suffer, since their successors come under the same requirement. Everybody ends better off. It is as simple as that.

This Elysian vision depended upon the premise that ‘each and every today is followed by a tomorrow’:

If each man insists on a quid pro quo, we apparently continue until the end of time… Let mankind enter into a Hobbes-Rousseau social contract in which the young are assured of their retirement subsistence if they will today support the aged, such support to be guaranteed by a draft on the yet-unborn.

Yet the future would not last forever, Lerner averred: growth would slow or the day of reckoning arrive. And when it did, Samuelson’s fairy tale of optimal saving, an attempt to legitimize PAYG, would have left Social Security exposed to attack from its enemies: the ‘accountants’ and their backers:

In our society many people feel that social security by redistribution of income by the government is alien to the pure essence of the individualist capitalist system so that, if “social security” has to be provided it should take the form of individual saving for old age. This has led to the belief that a social security system cannot operate honestly unless it has acquired a fund actuarially corresponding to the savings of all those members of society who have paid in their contributions in the past and who will be taking them out as benefits in the future…

[The] fact is that such a fund is completely unnecessary. It is called for only because accountants look on the social security program as old age insurance provided by an enterprise that must accumulate assets to match its contingent liabilities. Such accounting practices are completely justified for a private insurance company, which must be prepared for the eventuality of failing to enrol any new customers and still having to pay the covenanted benefits to its old customers.

Lerner’s objection provided a downbeat and untimely interruption during the postwar golden age of capital accumulation. Samuelson, heedless, could dispatch it with characteristic insouciance: ‘The beauty of social insurance is that it is actuarially unsound… A growing nation is the greatest Ponzi scheme ever devised.’

But, as public retirement provision has come under attack during the last three decades, it has become more congenial for its opponents to acknowledge, and profitable for them to belabour, Lerner’s point that pensions are simply a tax-based income transfer between generations or birth cohorts.

Abruptly, the principle of intergenerational equity has entered the journalistic lexicon (the Stern Review having sped the acquisition).

To its horror, conventional opinion has discovered that the elderly are cosseted, not abiding by Samuelson’s social contract of give-and-take.

Society’s rules are ‘seriously biased against the young.’ This alleged fact is finally discerned just as a looming demographic shock  increased life expectancy and reduced fertility rates —  lowers the natural rate of workforce growth, promising a higher dependency ratio in the advanced economies.

Australia dependency ratio

Samuelson’s roseate vision of mutual benefit no longer fits the bill. ‘Intergenerational catastrophe’ has now taken its place.

As his own generational cohort has been succeeded by the likes of Martin Feldstein, and collegial academic debate given way to ambitious policy programmes, it has been acknowledged (as Milton Friedman once insisted) that retirement income does involve redistributing today’s output between currently living social groups.

Hysterical claims about trillions of dollars worth of unfunded pension liabilities over an infinite horizon have been just one of several tactics used by advocates of  ‘individual saving for old age’.

As I suggested in an earlier post, policy circles have also luridly announced a ‘war’ between young and old, a zero-sum game for scarce resources, in which benefits for one generation can only come at the expense of another: ‘welfare policies have favoured the elderly at the expense of the young.’

David Thomson Selfish Generations

The crudity of this divide-and-rule campaign  pursued with asinine zeal by politicians as well as academics, journalists, media commentators and policy analysts — can scarcely be exaggerated.

This year the Australian treasurer, Joe Hockey, has spoken repeatedly of public spending on pensions as ‘intergenerational theft’. So has his parliamentary secretary, Steven Ciobo.

Looking ahead with trepidation to fifty years of a ‘greying’ population, and invoking Hayek for comfort, minister for Social Services Kevin Andrews has described ‘intergenerational theft… [an act that] picks the pockets of our children who’ll be left to pay the bill. It’s a raid on the future prosperity of young Australians, both born and yet-to-be-born.’ So has his assistant minister, Mitch Fifield.

Josh Frydenberg and Brett Mason, both parliamentary secretaries, have also deployed the term.

Thus the welfare of future cohorts  the youth, our nation’s shining future  provides the satisfyingly elevated creed served up to the mass electorate, a thin gauze veiling a ruthless distributional claim to today’s social product.

At stake is the price of state debt and valuation of the chief asset on the government balance sheet: the discounted present value of all future primary surpluses (net private-sector tax liabilities imposed by the state). State bonds promise their holder a stream of interest payments financed out of tax revenue.

Behind the putative conflict between baby boomers and subsequent generations is, therefore, an elite constituency seeking to sustain, rather than diminish, the value of interest-bearing government debt.

To accomplish this, the claim on future net output represented by the state’s obligations to the elderly, infirm and other dependants must be reduced.

Treasury intergenerational report 2010 - pension forecast

Why, as this goal of the propertied classes finds popular expression, is it embellished as intergenerational conflict? Why risk such strident and incendiary terms, when more decorous evasions, more pious expressions of national harmony, might conceivably be found?

In the first place, electoral mobilization depends increasingly on appeals to narrow demographic groups (the Australian Greens have sought to convert young adults into a vote-bank), with today’s parties lacking the broad social constituencies, and the programmatic variety, of the past.

The increased salience of non-class forms of social classification or ascribed status (ethnicity, race, gender, generational cohort) is also a pacifying factor during recessionary phases of business cycles or more enduring periods of instability.

In Australia, privatization of public pensions (supplemented by a means-tested system of residual relief for the poor) arrived long ago. In other, more stubborn jurisdictions, it has been the desired end-goal (‘one of the most important conservative undertakings of modern times’). In every case the accompanying rhetoric has involved panic over the solvency of a system of unfunded liabilities (‘the current system is heading for an iceberg… That reality needs to be seared into the public consciousness’).

Local talk of an ‘ageing tsunami’ simply partakes of this global idiom.

Finally, the demographic shock, apparent by no later than the mid-1970s, does pose a genuinely epochal challenge to Australia’s state elite. The diminished natural rate of labour growth has called forth an assiduous policy response including mass immigration, pro-natalist subsidies, efforts to increase workforce participation rates through ‘social migration’ of housebound women and disabled people, etc.

Treasury Intergenerational report 2007 - Projected contribution of net inward migration to population growth

McDonald and Temple - Demography and labour supplyRBA - Female labour force participation

Yet the impact in Australia of the demographic shock is broader and deeper still.

Even in the absence of full employment, a less elastic supply of employable labour imposes a constraint on profitable investment, especially when technical change is stunted (as it has been since the 1970s). Slow capital accumulation in recent decades  reducing productivity growth and channelling funds into unproductive and speculative pursuits — has therefore maintained the relative bargaining position of Australian firms in conditions where excessive labour demand might conceivably have raised the bargained wages of employees.

This curtailing of productive investment, involving the diversion of the surplus into residential expenditure, asset markets and luxury consumption, has been the decisive feature of Australian society in the last three decades.

The turn from long-term investment to shareholder value has entailed restructuring of the labour market towards sporadic, tenuous and low-paying employment, a change that has disproportionately affected young adults. Youth, lacking the savings and the borrowing capacity of their elders, and contributing much of the necessary slack in the labour market, then provide an aggrieved constituency for those intent on stoking intergenerational rancour.

oz young unemployment

Keating - Working Nation

The headaches and misery of the day

April 6, 2014

With plenty of time to himself during the Phoney War, Sartre mused about André Gide’s ethic of disponibilité:

Barnabooth sells all his goods, ‘castles, yachts, cars, huge properties…’ and he calls that ‘dematerializing his fortune.’ The gesture is inspired by that of Ménalque or of Michel in L’Immoraliste. Gidian.

That word ‘dematerialize’ made me dream. For when you come down to it, it’s really a question of detaching yourself from goods, as the concrete aspect of wealth, and of keeping only its abstract aspect: money. Here, moreover, in the guise of bundles of shares and cheques.

In short, that’s the advice given by Gide and followed by Barnabooth: to swap real possession for symbolic possession, to swap property-wealth for sign-wealth.

It’s no accident that Gide preaches disponibilité. Basically, the Gidian homme disponible is the one whose capital isn’t tied up. And what I saw clearly was that Gide’s moral code is one of those myths that marks the transition from big bourgeois property — concrete ownership of the house, fields and the land; private luxury — to the abstract property of capitalism.

The prodigal son is the rich grain-merchant’s child who becomes a banker. His father had bags of grain, he has bundles of shares. Possession of nothing, but this nothing is a mortgage on everything.

Do not, O Nathanael, seek God anywhere but everywhere: reject material possession, which limits the horizon and makes God a withdrawal into oneself; swap it for symbolic possession, which will permit you to take trains and boats and seek God everywhere. And you’ll find him everywhere, so long as you put your signature on this little bit of paper, in your cheque-book.

I’m not exaggerating: that’s exactly what the Gidian Barnabooth, on page 18, calls a ‘burning quest for God.’ And Gide himself, now a traveller and now head of the patriarchal community of Cuverville, is a great transitional figure between the propertied bourgeoisie of the 19th century and the capitalism of the 20th.

Try to ignore Sartre’s idiosyncratic terminology, which confuses the issue somewhat.

Here he mixes up large-scale historical changes in property systems (the movement from what he calls the ‘big bourgeois property’ of the Second Empire to the ‘abstract capitalist’ of the Third Republic) with an individual’s portfolio choice (allocating wealth between liquid financial assets and productive capital goods).

The transition Sartre describes is that from the typical nineteenth-century personification of capital — the individual entrepreneur whom Marx called ‘our friend Mr. Moneybags’ — to the twentieth-century world of corporate enterprises.

In that later period, the capitalist agent is famously personified by several different figures (shareholders, managers, etc.), each of whom takes care of a specialized financial, administrative or supervisory responsibility within a firm or spread out across an economy.

In this team effort, Gide’s homme disponible performs the rentier function.

Gide - Fruits of the Earth

Nathanael is thus exhorted to stray far from ‘the concrete aspect of wealth’ (organizing and superintending the production process). He can reap a flow of dividends, interest payments, capital gains and royalties while he idly enjoys the fruits of the earth, frittering his income away on la volupté just as an Edwardian coupon clipper might have done on servants for his country house.

This historical development (in which the business enterprise also becomes its own legal person and accounting entity) is one with the increasing scale and mechanization of production.

Sartre, himself an avid traveller, plainly regarded Gide’s advice as frivolous (‘it would be absurd to offer Ménalque as an example to an unskilled labourer, a man out of work or an American negro’. But Nathanael is ‘a rich white Aryan, the heir of a great bourgeois family…’).

The ‘princely games’ of Lafcadio were replaced in Sartre’s work by a succession of pitiful, wealthy young runaways and would-be Nietzscheans, from Lucien Fleurier to The Reprieve‘s Philippe.

And in place of disponibilité was the tough-minded doctrine of committed literature:

Since the writer has no way of escaping his time, we want him to embrace his era — tightly. It is his only chance; it was made for him and he for it… We don’t want to miss out on anything of our time. There may be better ones, but this one is ours: we have only this life to live, amid this war, and perhaps this revolution…

Thus, by taking part in the singularity of our era, we ultimately make contact with the eternal…

We are obliged to be satisfied with forging our history blindly, one day at a time, choosing from all the options the one which seems best to us at present… We are inside.

Here can be detected Sartre’s obsession with captivity, a horror and fascination, most notable in his plays, with themes of confinement and sequestration.

As an aggressive statement of art’s debt to politics, Sartre’s editorial introduction to Les Temps modernes is often grouped with the avant-garde manifestos of the mid-twentieth century. But littérature engagée was a label with no hint of a collective movement or school behind it.

As with the later invention of ‘Abstract Expressionism’ by art dealers, critics and the CIA, Sartre’s declaration was clearly a new kind of exercise in commercial self-promotion, a rather platitudinous and non-committal branding of journalistic territory in postwar France’s up-ended publishing scene.

les temps modernes ninth edition

But, more importantly, was Sartre’s ‘writing for one’s age’ not also marked by the same mutation in property forms he described above?

For the other side of this historical development (growth of the limited-liability company and a class of idle creditors) was what happened to the ‘concrete aspect of wealth’. Who took responsibility, while Nathanael larked vagrantly about, for the capital goods that were tied up in accumulation, and the production processes that needed overseeing?

Here could be found the emergence of professional managers and bureaucratic functionaries, accountable to owners, with delegated control rights in a firm or organization’s physical assets (i.e. decision-making power over how some item of equipment was to be used or task undertaken). These administrators might or might not receive property income in the form of high salaries and stock options. They might be more like Veblen’s engineers.

More to the point, their prerogatives were tied to specific assets, which they themselves could not transfer or liquidate. The factories and machines over which they exercised power could not be bought, sold, or bequeathed for their private benefit — not by anyone in the case of state property, nor by a non-owning manager in the case of privately owned wealth.

For them, therefore, not Nathanael’s possession of ‘nothing’, but acute dependence on this thing. If God was everywhere for Gide, eternity was right here and now for Sartre.

The functionary was marooned on an island rather than floating in a sea, engaged in an ongoing dyadic transaction with the same corporation, cartel or government agency, rather than a series of one-shot interactions in spot markets. He could not shirk what, in Sartre’s words, was ‘his only chance; it was made for him and he for it.’

Sartre likewise advocated a thoroughgoing embrace of one’s era and all its features. He himself practised this clinch without scruple (‘In vain would we attempt to be our own historians’), comparing it, as did De Gaulle, to a lover, participating in all its skirmishes, and (here he may have been describing his opportunistic relationship with the PCF) ‘choosing from all the options the one’ which seemed ‘best at the present.’

Deleuze, Sartre, Foucault at Vincennes

Marxists, on the other hand, have typically suggested that some critical distance from one’s contemporary circumstances is a good thing.

In January 1917 Rosa Luxemburg wrote from prison to Luise Kautsky:

Probably for you the desire for music, as for all other things, has gone by for a while, your mind is full of concern about world history, which has all gone wrong, and your heart is full of sighs over the wretchedness of—Scheidemann and comrades. And everyone who writes to me moans and sighs in the same way.

Don’t you understand that the overall disaster is much too great to be moaned and groaned about?

I can grieve or feel bad if Mimi is sick, or if you are not well. But when the whole world is out of joint, then I merely seek to understand what is going on and why, and then I have done my duty, and I am calm and in good spirits from then on. Ultra posse nemo obligatur.

And then for me there still remains everything else that makes me happy: music and painting and clouds and doing botany in the spring and good books and Mimi and you and much more. —In short, I am “stinking rich” and I’m thinking of staying that way to the end.

This giving oneself up completely to the headaches and the misery of the day is completely incomprehensible and intolerable to me.

See, for example, how Goethe stood above things with cool composure. But think what he must have gone through: the Great French Revolution, which must surely have seemed like a bloody and completely pointless farce from up close, and then from 1793 till 1815 an unbroken series of wars, when once again the world must have seemed like a madhouse turned loose.

Yet at the same time how calmly, with such equanimity, he pursued his studies about the metamorphosis of plants, the theory of colours, and a thousand other things. I don’t ask that you be a poet like Goethe, but everyone can adopt for themselves his outlook on life — the universalism of interests, the inner harmony — or at least strive toward that.

And if you say: but Goethe was not a political fighter, my opinion is this: a fighter is precisely a person who must strive to rise above things, otherwise one’s nose will get stuck in every bit of nonsense. — Obviously I’m thinking of a fighter on the grand scale, not a weathervane of the calibre of the “great men” who sit around your table…

Weimar Goethe as a model held up for political emulation by revolutionary socialists?

Goethe and Napoleon at Erfurt

Perverse, one would think.

Yet in 1950 Isaac Deutscher would also include Goethe among ‘great “intellectuals” who, in a similar situation in the past [the Napoleonic Wars], refused to identify themselves with any established Cause. Their attitude seemed incomprehensible to many of their contemporaries: but history has proved their judgement to have been superior to the phobias and hatreds of their age’:

Goethe opportunistically bowed to every invader. But as a thinker and man, he remained noncommittal and aloof… His aloofness, in these as in other matters, gained him the reputation of ‘the Olympian’; and the label was not always meant to be flattering. But his Olympian appearance was due least of all to an inner indifference to the fate of his contemporaries. It veiled his drama: his incapacity and reluctance to identify himself with causes, each an inextricable, tangle of right and wrong…

All three – Jefferson, Goethe, and Shelley – were in a sense outsiders to the great conflict of their time, and because of this they interpreted their time with more truthfulness and penetration than did the fearful – the hate-ridden partisans on either side.

Now as then, the organs of conventional opinion present a menu of false choices — Napoleon or the Holy Alliance? — announcing that these options are exhaustive, and one of them must be chosen.

An urge to clamorously participate  in every ‘struggle’ — ‘the cheap ambition to have a finger in the political pie’, for fear of lost opportunity, accusations of quietism, or organizational market share — turns ambitious ‘political fighters’ into weathervanes, their ‘nose stuck in every bit of nonsense’.

Thus the ‘engaged’ activists of today’s radical protest politics, heedless of principle and refusing to abstain, participate in every trifling and dangerous ‘movement’ that arises: taking up positions in a meaningless Kulturkampf, venturing opinions on this or that media inanity, preferring one monstrous ‘lesser evil’ to another, lending support to one wing of the propertied elite over today’s provisional enemy, greeting wars of aggression as salutary ‘revolutions’.

In the political life of the advanced economies, such squabbles usually involve, at best, tinkering with markets (through subsidies, taxes or other regulation) to shift economic surpluses between groups, transferring rents from one constituency or special interest to another. To immerse oneself in these ‘policy’ debates is to live an arid life (but to do so professionally can attract its rewards).

What is described loftily as a ‘war of position’ (echoing Karl Kautsky’s ‘strategy of attrition’) typically involves the creation of a durable bureaucratic apparatus that can be used for self-dealing or provides a platform for career advancement.

Moreover, if such projects are to be sustained their participants must find solace and consolation where they can. Typically this is done by investing some political agent or figurehead with exaggerated potential, finding illusory messages of hope or imagining that headway is being made. This obliges activists to nourish illusions in what exists: to find silver linings and abandon trenchant thought.

I’ve written before about these varieties of accommodation to what exists.

Motivated mental states include wishful thinking (adapting one’s beliefs to fit one’s desires) and sour grapes (making a virtue of necessity, consenting to the inevitable, or consoling oneself by modifying one’s desires to exclude what is unattainable). Motivation affects not only high-level cognitive processing (i.e. how people think about the world) but basic activities like visual perception.

The futility and corruption of the weathervane can be avoided, as Luxemburg explained to her friend, by coolly taking a little distance. Against Sartre, doing one’s intellectual duty requires treating the present as history: sceptically and mercilessly examining its limitations, including those of its pseudo-oppositional elements, just as one would the past.

Of course, to do this has its bearing on the morale of others. As ‘incomprehensible’ as was the silence of Goethe or Shelley’s rage to their contemporaries, cool appraisals often invite accusations of cynicism (or idealism), purism, maximalism, sterility, pessimism.