Archive for the ‘Politics’ Category

The Golden Age is in us: Dutch doldrums

April 5, 2016

Tomorrow a referendum, grudgingly conceded by authorities, will test the opinion of Dutch voters, alone of any European electorate, on a commercial and political treaty between the EU and Ukraine.

In February, the Dutch government’s communication strategy for the referendum was leaked. So dreary that its authors escaped much embarrassment, the document paired FAQs with approved talking points.

Why should the North Atlantic ecumene of free trade be extended to the marches of Ruthenia?

The Ukrainian population has the right to decide on their country’s own future, as a mature democracy, without the influence of Russia…

Russia is opposed to this agreement and will be happy with a ‘no’ vote. It’s worth keeping in mind that the Russian president Putin hopes to stop this agreement, keeping Ukraine in its sphere of influence and under its control.

Hostility to Moscow is one thing, in a country now accustomed to a more aggressive foreign policy, and where the crash of Malaysian Airlines Flight 17 prompted an official day of national mourning, the first since Wilhelmina’s death.

Yet there is little enthusiasm for what plainly is an intra-elite project, of marginal importance to the local population. Polls are unpromising.

Reading the mood, the EU Commission’s president Jean-Claude Juncker recently gave an interview with Dutch newspaper the NRC Handelsblad, and delivered some pointed advice:

I want the Dutch to understand that the importance of this question goes beyond the Netherlands… I don’t believe the Dutch will say no, because it would open the door to a big continental crisis. Russia would reap the fruits of an easy victory…

Watch out, this could tilt the balance in Europe. Not to threaten the citizen, but he must be well aware of his responsibility. The Dutch voter must act on 6 April as a European strategist.

Popular consultation on EU treaties and edicts is, for well-founded reasons of elite prudence, typically avoided. Yet today’s situation in the Netherlands, and the media atmospherics that accompany it, emit a familiar echo of the recent past.

A year ago, in an interview with Dutch newspaper the Volkskrant, Juncker had warned that the continent was becoming ‘ungovernable,’ because centrist parties were increasingly ‘populist.’

Mainstream Dutch parties, aping the irresponsible fringes, were ‘giving space to discontent,’ and ‘appealing to dissatisfaction among voters about politicians’:

I remember very well your referendum in 2005 on the European Constitution. The Labour Party, the Christian Democrats, the Liberals: they refused to conduct a campaign for the Constitution, fearing they’d be associated with the EU.

So it went to hell.

The EU’s biggest problem was ‘the gap between citizens and the Union.’ The institution had become sidetracked by trivial concerns. ‘We must clearly say that the EU is only about the continent’s larger issues, not the many smaller issues that affect the daily lives of citizens.’

2005 voting results

Of course, Juncker’s memory — in 2005 he was president of Luxembourg — is known to be a little unreliable.

Yet eleven years ago, when Dutch voters rejected the proposed EU constitution, consternation had been acute. As in France, which voted one week before the Netherlands, elite opinion on the matter had been as one.

Every Dutch newspaper, mainstream political party, trade union, business group, church and NGO had demanded approval. Retired eminences, including every living prime minister, were rolled out to join the consensus.

Before voting day, with opinion polls unpromising and the French repudiation ringing in their ears, Europe’s elite tried to impress upon the Dutch public the extent of popular responsibility. The moment was not to be trifled with.

The Christian Democrat premier, in an open letter to the Telegraaf, explained that he had visited Auschwitz, Normandy and Yad Vashem. Haunted daily by these images, mindful of their lessons, he wanted the Dutch public to understand that ‘everyone in Europe needs to prevent such things.’

His Justice Minister likewise recommended a ‘yes’ vote, otherwise continental war — Yugoslavia on a European scale — would be risked.

Taking up the theme, a Liberal Party TV advertisement, invoking the national sore point of Srebrenica along with the Judeocide and the Madrid train bombings, reminded voters that ‘danger lurks.’

To ensure peace and safety (‘Never again!’), the EU constitution needed popular ratification at the polling booths.

Following the vote, chastened displays were immediately made in The Hague, Berlin and Brussels. Balkenende, Schröder, Chirac and Prodi declared with humility that the message had been heard and, rest assured, lessons learnt.

Behind the scenes, efforts were in train to circumvent the popular will.

The Labour Party’s leader, Wouter Bos, suggested a new referendum should be held within eighteen months. Repetition would give the Dutch public a chance to correct their mistake.

A constitution, declared the Deputy Prime Minister in the NRC Handelsblad, had not been a fit matter for electoral consultation: ‘We now hold a referendum about a matter on which the population has no idea. This,’ said the minister for economic affairs, ‘creates a bad precedent.’ Before the poll, he had warned that ‘the lights would go out’ in the Netherlands if the EU constitution were rejected.

The Guardian pointed to ‘the perverse streak in the Dutch’, amplified by a momentary ‘surly, rebellious mood.’ In ‘a country that has historically championed internationalism and free trade,’ rejection could be attributed to ‘anti-Muslim sentiment, opposition to EU membership for Turkey and fears over losing control of immigration policy.’

Le Monde Diplomatique explained that ‘hatred’ now dominated Dutch political debate. The ‘no’ vote had been ‘a repeat of the 2002 rightwing populist revolt.’

Conventional opinion thus recognized Pim Fortuyn and Geert Wilders as demagogic masters of Dutch public opinion.

Here ethno-religious divisions displaced any talk of a breach between rulers and ruled: antagonism between autochtonen and allochtonen (official euphemism for those of Moroccan and Turkish ancestry) was the sole acknowledged principle of political conflict.

Anointed as presumptive kingmaker before the following year’s elections, Wilders in the event secured less than 6 percent of the vote. (The Socialist Party, which has meandered from Maoism to social democracy, scored 17 percent.)

It would take until the 2010 election before Wilders could be hailed as the ‘real winner’, according to Spiegel and the international press.

VVD election ad

Nonetheless, following the murder of Theo van Gogh, the journalist Ian Buruma detected ‘something unhinged about the Netherlands in the winter of 2004’:

Something had changed dramatically in the country of my birth…

‘The country is burning,’ said the announcer on the television news.

In fact, the country wasn’t burning at all. The arsonists in Uden were a bunch of teenagers looking for kicks. The ‘civil war’ that some feared, the pogroms on Muslim areas, the retaliations by newly recruited jihadis, none of this actually happened. Most people kept their cool.

But the constant chatter of politicians, newspaper columnists, television pundits, headline writers, and editorialists in the popular press produced a feverish atmosphere in which the smallest incident, the slightest faux pas, would spark endless rounds of overheated commentary.

That year, a local television poll returned Fortuyn as the greatest Dutch person in history — naturally ahead of Spinoza, Rembrandt, Erasmus, Huygens, De Ruyter, Jan de Witt, Grotius, Multatuli and Van Leeuwenhoek, but worryingly beating even Cruyff.

Why not?

One of several Dutch aspirants to the role of a local Bernard-Henri Levy, the self-promoting philosopher-journalist Yoram Stein, cornered a noted historian of early-modern Europe in a Leiden bookstore. To the latter, Stein attributed the claim that ‘Ayaan Hirsi Ali is an heir of Spinoza.’

Amid national soul-searching, the Dutch public broadcaster dispatched a TV emissary to Princeton to consult with the historian, Jonathan Israel, on contemporary affairs.

What was up with today’s Dutch?

The Dutch deputy prime minister (and minister for Economic Affairs), located the failure in the absence of a bipolar electoral system (as found in the US or Britain). If proportional representation were replaced by a first-past-the-post voting system, the Netherlands could become a ‘normal’ country, in which two responsible, market-friendly parties of the centre-right and centre-left alternated in power.

Thus the most recent Dutch general election was a ‘positive development’ according to the Financial Times.

Defeat of ‘anti-establishment forces’ had ‘given Europe vital breathing space’:

The skies are clearing over Europe. This week Dutch voters injected a much-needed boost of confidence after decisively rejecting eurosceptic voices in a national poll.

The victory of centrist parties supportive of eurozone rescue measures is the first tangible sign that anti-European sentiment may not be as deeply rooted in northern Europe as many had feared.

The outcome, it observed, was ‘greeted with evident relief elsewhere in Europe… with voters shunning eurosceptic candidates on the far right and far left and turning towards mainstream parties.’

In Berlin, the German foreign minister declared that the result ‘marks a strengthening of Europe and a weakening of populists and nationalists.’

To its own evident satisfaction, the FT declared that ‘pragmatism had defeated ideology’, with the poll becoming ‘a two-party contest between the Liberals and Labour.’

Such were the reassuring signs of a stable, respectable polity.

Rutte Samsom

But how typical of broader trends is Europe’s supposed bellwether?

Heine is supposed to have remarked — there exists no record of the quip — that, should the world start coming to an end, he would flee to the Netherlands, since everything happened 50 years later in the Low Countries.

Whether or not the poet’s crack was apocryphal, the fact of Dutch belatedness in Restoration Europe was genuine and striking. What had been the world’s most productive economy — only overtaken by Britain in the late eighteenth century at the earliest, more likely as late as 1820 — now lagged its North Sea peers.

Industrialization in the Netherlands, unlike in newly independent Belgium, did not begin until 1860 or so.


This placement in northwestern Europe’s arrière-garde was unfamiliar. Homeland of ‘the first modern economy,’ for two centuries the Dutch Republic had been, in one historian’s words, ‘the great path-finder between Europe’s past and future.’

Bas van Bavel and Robert Brenner have shown that capitalist property relations — assetless wage labourers and leaseholding tenant farmers — first emerged in the dairy farms, herring fisheries, peatlands and polders of maritime Zeeland, Holland and Groningen in the mid-sixteenth century.

More novel still, the reclaimed polders had been born free of any aboriginal class of peasant smallholders.

Van Bavel 1560 land ownership

dutch agriculture

After 1580 Habsburg absolutism had been precociously overthrown. A new high-revenue, warmaking ‘fiscal-military’ Dutch state was formed in the world’s first bourgeois Revolt.

By virtue of its tax resources, long-term public debt and securities market, the entrepôt became an imperial maritime power active from Brazil to the Spice Islands. 

From the 1840s the batig slot from the East Indies contributed around 4 percent of Dutch GDP; as the price of Javanese coffee and sugar boomed, colonial revenue provided up to one-half of the metropolitan state’s total income.

By the end of the Napoleonic Wars, per capita income in the Netherlands remained nearly double that in the Yangtze Delta, and Dutch literacy was well above British rates.

Such was for a time ‘the model capitalist nation,’ in Marx’s words.

Van Zanden - tax revenue 1500-1800 Holland England France

Capture of Cochin

Are the Netherlands today Europe’s laggard, precursor, standard bearer or national anomaly? The verdict on this small territory seems to depend on whether European publicists are in a complacent, self-satisfied mood, or inclined to panic.

In one register, the continent is a paragon of moderation, secularism and well-adjusted compromise, host to many faiths and open to all cultures, ‘an inspiration to the world’ which other lands — a glance at the United States or Japan — would do well to emulate.

In another vein, the country is exemplar of a European political order recently derailed by xenophobic backlash against cultural and demographic change: ‘Call them the hipsters of European neurosis. Take any of the anxieties that have lately beset Europe’s politics and you find the Dutch got there first.’

At the 2007 Venice Biennale, the Dutch entry ‘Citizens and Subjects: the Netherlands, for example’ took The Hague as emblematic of developments in the capitalist nation-state since 1989. Governments increasingly treated immigration as an ’emergency’, applying the machinery of coercive force rather than welfare and service provision.

Thus does polite opinion veer between self-congratulation and sensationalism, its outlook episodic. Having celebrated the fair-weather comity of Maastricht, two decades later the pact’s bleak upshot provokes liberal commentators to hand-wringing.

Do those presiding over Dutch society today possess a coherent formula for rule? The answer to this question is a source of either journalistic comfort or despair. The nature of this formula, or the origin of its dysfunction, is rarely examined coolly.

What then are the hallmarks of Dutch society and its political order, and how did they arise?

At the convenience of Dutch manufacturing firms, guestworkers from Turkey and Morocco were brought in to accommodate labour demand in textiles, shipbuilding and mining until 1974.

No longer expedient for Den Uyl’s Labour government as recession hit, the inflow nonetheless continued via family reunions in the late 1970s and early 1980s. This movement of people, mostly to the Randstad, coincided with a downturn in investment and slack demand for employees.

Migration - Turkey and Morocco Migration Netherlands

By 1988, just shy of 25 percent of the Amsterdam workforce was unemployed. Over 50 percent of Moroccan-born residents were out of work.

The Wassenaar Agreement confirmed a tilt in distributive power to the advantage of capital: the wage share of GDP fell 10 percentage points. Real wages did not recover their 1980 level for another generation.

A 2006 article in the Cambridge Journal of Economics named Holland as ‘the OECD country where, after 1982, wage restraint was most adamantly pursued at the national level, by labour unions, employers’ associations and government’:

The response to the, by international standards exceptionally high, reduction in real wage growth, that was achieved after 1982, has been disappointing: Dutch GDP growth and productivity growth were lower during 1984–2000 than in the period 1960–80; and while post–1984 GDP growth has been desultory, labour productivity growth has exhibited a clear downward trend, that was much stronger than the OECD average.

Dutch real wages

Dutch profit rate

Profits recovered regardless.

Enormous pension funds — the Dutch system of retirement provision is one of the world’s most privatized — supply a pool of ready savings for the local capital market. Rather than facilitating productive investment, these assets allow Dutch firms to borrow for mergers, acquisitions and divestment.

Neglected for four decades now, the fixed capital stock has become run down and obsolete, while technical change has stagnated. From 2000 until the crash of 2008, private demand was accounted for by residential investment (construction and dwellings improvement).

Capital age Netherlands

Dutch technical change

This peculiar, hollowed-out domestic profile grants the Netherlands its international role: linking the hinterlands of German-centred Mitteleuropa to the broader North Atlantic zone.

Always tightly entwined with London and US financial markets, the Netherlands played an outsized part in gross capital flows within Europe and without in the leadup to the 2007 crisis.

From the late 1990s, foreign ownership of Dutch government bonds rose to wartime levels.

Ownership % Dutch government debt

National territory, dense with people, also accommodates the virtual encampment of corporations.

In 2012 the Netherlands accounted for 15 percent of all foreign profits reported by US multinational enterprises, easily the most of any country in the world (tax havens Ireland, Bermuda and the UK trail far behind).

This haul of loot from the Netherlands — nearly three times as much as is yielded from US affiliates in the UK — is generated by less than one-sixth of the number of employees.

The Netherlands is home to more than 20 000 ‘letterbox companies’, domiciled there for the jurisdiction’s favourable menu of tax exemptions.

In 2009 a White House press release listed the Netherlands as a tax haven, provoking an official démarche from the Dutch embassy in Washington. The so-called ‘Dutch sandwich’ has entered the journalistic lexicon when discussing tax avoidance.

Dutch sandwich

In 2006 the rock group U2 notoriously shifted its operations from Ireland to the more ‘tax competitive’ Dutch jurisdiction. The Rolling Stones had done the same in the 1970s.

Rolling Stones Dutch tax haven

As in other national economies with swollen financial sectors, the country is now exceptionally unequal.

Dutch housewold wealth distribution

The onset of crisis has not helped matters.

Several large firms (Fortis, ABN Amro. Philips, V&D and Nutreco) cut spending or became insolvent. Non-residential fixed capital formation, already low, fell by 16 percent in 2009. Household expenditure has fallen every year since 2007.

Nearly a third of Dutch mortgage holders held negative equity in the their homes, after a fall in house prices of 15% in 2008 was followed by another 6% in 2012.

Net wealth - Netherlands and others

While private spending is constrained, the Dutch government, which saw its credit rating downgraded in November 2013, spends a similarly low amount on social spending to its British and Luxembourg equivalents.

Traditional frugality has not slackened. Having disposed of the uncooperative Wilders, the Liberal prime minister found new partners willing to hike the VAT, cut health subsidies, loosen employment protection and raise the pension age.

After Vestia, a public-housing association, lost €20 million on derivatives deals, the government obliged it to sell residential properties it owned. This left occupants to become tenants of an international investment fund.

Circumstances are such that, eighteen months ago, 1600 people applied for a job working in the cloakroom of the Rijksmuseum in Amsterdam.

In the king’s address to parliament that year, Willem-Alexander, as ventriloquist for the prime minister, declared the end of the Dutch welfare state.

Amid this panorama of gaping inequality and social misery, political authority has remained robust.

The Christian Democrat Ruud Lubbers, taking office at the same time as Helmut Kohl, ruled for 12 years; Kok followed for eight years, succeeded by Balkenende for the same span; Rutte is now in his sixth year.

Electoral convulsions, provoking alarm among bien-pensant commentators, have been absorbed without fuss by political operatives themselves. Upheaval at the polls has not been matched by any corresponding fragility at the apex of executive power, or disturbance in the streets and workplaces.

The partisan system is another matter. Differences of label and identity have long outgrown ideological divisions among Dutch political parties. In the 1990s, a pensée unique spawned purple coalitions uniting Labour with liberals in the same enduring, market-friendly ruling cabinets.

To the numbing chorus praising the wonders of markets, efficiency and privatization, an angry counterpoint naturally emerged, drawing attention from a dazed electorate, cast adrift for two decades while wages stagnated and profits surged.

Among the parliamentary blur, how to distinguish friend from foe, sturdy advocate from unprincipled chancer? The old markers of partisan affiliation and programme were henceforth meaningless covers for momentary calculation. Were not shared culture, religion and ‘community’ the only reliable means of securing loyalty and defining boundaries of group membership?

A succession of entrepreneurial figures from within the established scene — Hans Janmaat, the Liberal and former EU commissioner Frits Bolkestein, the Labour Party’s Paul Scheffer, the doyenne of Dutch social democracy, Hilda Verwey-Jonker, and the Freedom Party ideologue Martin Bosma — thus took loud media stands in defence of the Enlightenment, social cohesion and ‘our fundamental values.’

Unique virtues of the Netherlands were threatened by Islam and recent immigrants:

If everyone’s cultural identity is allowed to persist unimpaired, integration will suffer. And integration there must be, because the Turkish and Moroccan immigrants are here to stay. That is now recognized by all.

If integration is officially declared government policy, which cultural values must prevail: those of the non-Muslim majority or those of the Muslim minority?


Here there can be no compromise and no truck.

In many parts of the Muslim world the principles I have mentioned are not honoured. Islam is not only a religion, it is a way of life. In this, its vision goes counter to the liberal separation of church and state.

In many Islamic countries there is little freedom of expression. The case of Salman Rushdie may be extreme but still indicates how far apart we are on this issue.

The same goes for tolerance and non-discrimination. The way women are treated in the world of Islam is a stain on the reputation of that great religion.

I repeat that on these essential points there can be no compromise. These principles have a value that is not relative but of the essence.

As elsewhere, the Rushdie affair supplied a pretext.

Centre Democrats - Nederland voor de Nederlanders

Centre Democrats

Far from being threatened, authority was stabilized by these unruly entrants. In Fortuyn and Wilders, it found a supplement of charismatic appeal to make a hidebound parliamentary scene more appetizing, without ever risking popular mobilization against the forces of order in Dutch society.

The compensation of ethno-politics now provides solace and distraction for all comers. The tribal heraldly of orange lion and Islamic crescent alike salves the wounds of unkind labour markets, harassment by police, bureaucratic hostility, political remoteness, social displacement and cultural unmooring.

By comparison, the Socialist Party’s program offers thin, meliorist gruel: ‘Human dignity, equality of worth, and solidarity together with our rational analysis of the world.’

The shift in popular priorities was sealed when the Immigration Minister, defying advice from Cruyff and others, grandly rejected the naturalization of a promising Cote d’Ivoire footballer.

Might maintenance of domestic order now interfere with The Hague’s mission abroad? Can international high politics, however sound and responsible, survive a narrowing base of popular support?

Since 1945 the Dutch elite has been ‘doggedly pro-European.’

Together with Belgium’s Paul-Henri Spaak, J.W. Beyen — a Philips and Unilever executive, parachuted into the postwar foreign ministry without so much as membership of a political party to his record — embraced supranational institutions as the best way to secure Dutch influence otherwise diminished by the end of colonialism. Continental integration meant upward national mobility.

Meanwhile, having briefly defied Truman in Indonesia, The Hague was brought to its senses by Acheson’s threat to discontinue NATO and Marshall Plan support. Thenceforth Dutch governments have humbly made amends with loyal Atlanticism. Joseph Luns would become NATO’s longest-serving secretary general.

Little genuine risk to these priorities is posed by the electoral success of Wilders, who welcomed the lynching of Gaddafi, expressed hope for the new Libyan regime, salutes Tel Aviv as ‘the first line of defence for the West,’ and approved the deployment of Dutch F-16s to Syria and Iraq.

In Europe, on the other hand, the Union’s oligarchic structure provides the best insurance against popular truculence.

The EU’s locus of power is vested in obscure bureaucracy, adept at ‘closed-door decisionmaking.’ Matters are occasionally delegated to the wider population when the stakes are sufficiently trivial or voters can be trusted to behave responsibly. Otherwise this ‘collusive enterprise… serves to take the steam out of issues which European politicians find too hot to handle in public.’

Where voters thwart the will of the regenten, no dodge is deemed too high-handed to bypass the obstruction. In 2005 the EU constitutional treaty promoted joint military action, cooperation between intelligence agencies, and compatible immigration statutes. These were matters of importance and, after rejection at the polls, they were swiftly achieved via the Treaty of Lisbon.

What of translatlantic solidarity? Balkenende’s first cabinet, which included representatives from the Pim Fortuyn List, prominently supported Washington’s regime-change operations in Iraq. Its foreign minister, Jaap de Hoop Scheffer, so excelled himself that he was recruited as NATO secretary general. There he oversaw the ramping up of military occupation in Afghanistan.

Indeed, during the last 20 years under Kok, Balkenende and Rutte, the country’s armed forces have participated in each war initiated by the US: the Netherlands provides the only example of such devotion outside the core Anglosphere.

Thus has the Dutch state’s militarism abroad erected and furnished the domestic stage on which Fortuyn, Hirsi Ali and Wilders strut. War against one Muslim population after another contributes the emulsifying substance without which their demagogy would crumple.

Bolkestein in 1989, speaking as the Soviet satellite states collapsed, invoked a ‘clash of values’ and ‘universal rights’: Huntington and Ignatieff at once. He thereby introduced into local discourse the mood music that would accompany NATO’s expansion and belligerence in Eastern Europe, Southwest Asia, North Africa and Central Asia over the next 25 years.

Hirsi Ali shuttled easily from the Dutch Labour Party to the Liberals, then to the American Enterprise Institute.

For the most part there has, therefore, been continuity between domestic agenda and international stance. Where conflict does appear, the truth is that the popular will as expressed at the domestic ballot box is not decisive in the formation of any European state’s politico-military policy abroad. Plans are designed and deliberated upon on high. When they do not already correspond to the wishes of a domestic constituency, civic assent — negative compliance, if not positive enthusiasm — can usually be contrived; where not, it is trumped or flouted. However disagreeable to the voter, parliamentary majorities are stitched together.

The brutal reality of West European politics is that no government has successfully defied the wishes of the United States on a matter of strategic importance since the Suez Crisis.

No matter which crass, deliberately tactless parvenu is chosen to occupy the Catshuis in coming years, this binding imperative cannot be shirked by any Dutch ruler.

Wilders, pledging to reclaim ‘sovereignty’ from Brussels, has said little about the overlord in Washington. He is, assures Bloomberg, ‘strongly pro-US and pro-Israel.’ These are the prerequisites for high office.

Should Turkish accession to the EU ever become a strategic necessity, Dutch assent will doubtless be forthcoming. The most recent advance, in 2005, came during The Hague’s previous presidency of the EU Council; that it again occupies the office is no coincidence.

The Netherlands possesses an enthusiastic demographic constituency with straightforward material interests in Turkish membership of the EU. The liberal establishment has long supported Ankara’s entry as a matter of honour. The cavils of a rump right, indulged for the moment while convenient, will not be brooked if necessity demands otherwise.

timmermans erdogan

But for now chauvinism of the Heimat thrives. Nearly a decade of prolonged European stagnation, punctuated by the blowback of violent attentats and displaced populations, has dissolved cooperative dreams.

The deputy prime minister warns Europe that ‘the dykes are in danger of bursting’ due to migration from the continent’s east. The finance minister suggests that refugee inflows might ‘blow up the welfare state.’ He proposes that the Schengen Area be trimmed to the Benelux countries, Germany, Austria and Sweden, explaining that ‘countries must take their own measures to protect their society.’

These are the polite voices of centre-left moderation.

Deplored everywhere as regression by a formerly pragmatic, liberal-minded people, Dutch anti-immigrant ideology lacks a local reservoir of atavistic images, depicting a nation unspoiled before the arrival of aliens.

Historians estimate that foreigners already made up one-third of the Dutch maritime labour market (whaling fleet, naval seamen, herring fisheries and merchant marine, VOC crews to the East and West Indies) during the late seventeenth century. By the end of the eighteenth century, they numbered one half.

The Dutch Republic, moreover, was a loose confederation that bequeathed few unitary institutions to the post-Napoleonic state. The monarchy is a recent contrivance. It was restored largely by force of Prussian, British and Russian arms, its rule arranged behind the scenes at Vienna.

The Golden Age thus supplies no obvious images d’Épinal of the public sphere (as distinct from the private household). How then to exalt a continuous heritage around which national sentiment today might congregate?

Chauvinist pride is unable to fix on a distinct religious foundation or appeal directly to ethnic bonds. Instead it celebrates the Netherlands’ contemporary cultural mores: sexual tolerance, emancipation of lifestyle, domestic customs and conversational candour as the badge of national character. Provos of the 1960s are telescoped backwards to Spinoza and Erasmus, in a fantasy of unbroken Dutch Enlightenment.

Staid, unremarkable centuries of Calvinism, not to mention contemporary sources of frustration, are projected on to achterlijke foreigners, yet to achieve Enlightenment:

I don’t feel like going through the emancipation of women and homosexuals all over again… because of Turkish and Moroccan boys…

I don’t hate Islam. I find it a backward culture. I have travelled in many parts of the world. Wherever Islam rules, it’s simply ghastly. All that ambiguity. They’re a bit like those old Calvinists. Calvinists are always lying.

No slave to consistency, Fortuyn also appealed to nostalgia for the lost Netherlands of the 1950s. In that postwar decade, before the loosening of the 1960s, traditional cultural authority remained intact under the Labour government.

Behind such parades of national self-love, there is compensation for today’s worldly hardship. Smugness offers a surrogate, a displacement of passions that disguises the source of straitened circumstances for many Dutch people.

But the fascination with Dutch ‘norms and values,’ the concern for heritage protection of the national character, has a deeper source.

The capitalist market unleashes powerful homogenizing tendencies, with its ‘convergence criteria,’ standardized products, land clearances, and disdain for tradition as an obstacle to trade and profit. National distinctions in European manners, dress, cuisine, buildings, artistic output, material culture, child-rearing practices and political institutions have all diminished since 1945. Hybrids have formed.

The Netherlands, famously open to exchange with the world beyond its borders, has adulterated or relinquished many national peculiarities, and absorbed others.

Having razed all features from the landscape, however, the market grows tired of uniformity. Announcing a new respect for endangered folkways, it seeks to promote ersatz ‘local’ flavour.

National identity is retrofitted as brand, colour or product feature.

Thus a central business and recreational district, planned by the Dutch architect Rem Koolhaas, was recently completed for the city of Almere. Almere is a polder town reclaimed from the former Zuiderzee, built during the 1970s.

The new city centre was named ‘Dutchtown.’

A nameless, placeless town… The polder was a perfect tabula rasa, without context, without history, without obstacles, and with a topography that would be shaped entirely in accordance with their wishes. Since there was nothing, everything was possible.

A description of Almere, a kind of exurb built on sand, appears at the conclusion of Simon Schama’s brilliant book on Dutch culture, The Embarrassment of Riches.

The new city represents, says Schama, the recovery of one essential ‘temper of Dutch culture’: gezelligheid, or coziness:

Recently, in reaction against the vast anonymous compounds of high-rise buildings that comprise the urban overspills of the Randstad, there has been a turn back to neighborly intimacy…

And for a city that is supposed to house 200 000 people, Almere makes a decent effort to return to the principle of the buurt, the neighbourhood, by arranging its houses around courtyards.

Inevitably these have a somewhat artificial look, so that from the air Almere looks more like a cantonment… than a group of spontaneously clustered houses.

But there is much brick and tile there, sloping roofs and little yards, and the people have responded with their own natural inclinations for the gezellig.

Gemeenschap, or its pastiche, was thus recovered in unlikely circumstances. Where rootless anomie might otherwise be thought to reign, ‘Dutchness’ had been planted.

In his S, M, L, XL, Koolhaas noted how the postmodern ‘Generic City’ simulates reverence for the past:

There is always a quarter called Lipservice, where a minimum of the past is preserved; usually it has an old train/tramway or double-decker bus driving through it, ringing ominous bells — domesticated versions of the Flying Dutchman’s phantom vessel.

Its phone booths are either red and transplanted from London, or equipped with small Chinese roofs. Lipservice — also called Afterthought, Waterfront, Too Late, 42nd Street, simply the Village, or even Underground — is an elaborate mythic operation: it celebrates the past as only the recently conceived can. It is a machine.

The Generic City had a past. In its drive for prominence, large sections of it somehow disappeared, first unlamented — the past apparently was surprisingly unsanitary, even dangerous — then, without warning, relief turned into regret…

In spite of its absence, history is the major preoccupation, even industry, of the Generic City. On the liberated grounds, around the restored hovels, still more hotels are constructed to receive additional tourists in direct proportion to the erasure of the past.

Meanwhile, late-capitalist ‘Junkspace’, said Koolhaas, meant ‘the end of Enlightenment, its resurrection as farce.’

In this, as well, today’s Netherlands is hardly alone.


If a crime, a very widespread one: Brazil’s tropical Atlanticism

March 23, 2016

A mere 25 years after Flaubert invented a new literary technique for puncturing the daydreams, bêtises and received opinion of the French Second Empire, technology transfer allowed Machado de Assis to release an upgraded version in Brazil.

Machado’s Posthumous Memoirs of Brás Cubas (1881) arrived just as Brazil’s monarchy expired and coffee planters forfeited their human property. Rarely has a novel been so perfectly on the spot to expose ruling delusions at their moment of enunciation. Still relatively obscure behind its lusophone veil, today it remains the national classic.

Towards the novel’s end, its narrating antihero sizes up his brother-in-law, a grotesque ornament of Rio de Janeiro’s mercantile and slave-trading class:

Perhaps Cotrim’s scruples will seem excessive to one who didn’t know that he possessed an extremely honourable character. I myself was unjust with him…

Since he was cold in his manners, he had enemies who even accused him of being a barbarian. The only fact alleged in that particular was his frequent sending of slaves to the dungeon, from where they would emerge dripping with blood.

But, alongside the fact that he only sent recalcitrants and runaways, it so happens that, having been long involved in the smuggling of slaves, he’d become accustomed to a certain way of dealing that was a bit harsher than the business required, and one can’t honestly attribute to the original nature of man what is simply the effect of his social relations.

The proof that Cotrim had pious feelings could be found in his love for his children… He wasn’t perfect, needless to say…

In short, he may have been owing in a few courtesies, but he didn’t owe anyone a penny.

Machado’s late-nineteenth century irony may seem a little heavy: able, surely, to puncture only the crudest and most complacent of elite hypocrisies.

Yet in point of historical fact, self-apology in the Brazilian Empire, the last slave society in the Americas, regularly proceeded in just the manner lampooned.

By 1870 or so, the sense of provincial isolation and national backwardness in the country’s most urbanized, developed districts was stark. Coffee planters in Rio, Minas Gerais and São Paulo, their counter-Abolitionist repertoire now depleted, relied upon diffident and contorted intellectual defences of labour coercion.

With Britain’s Royal Navy having dealt a humiliating slap to Brazilian amour-propre in its own territorial waters, local ideology adopted, as its alibi, the lofty notes of Palmerston’s liberalism in its high era.

Royal Navy 1851 Brazil

How was this done?

In bland oratory before the Chamber of Deputies, lumbering editorial columns in the Jornal do Commercio, and the private diaries and letters of great merchants and landholding families, the awkward details of today’s personal misdeeds were dissolved in a general mist of timeless, universal national failings.

The US South’s ‘our peculiar institution’ had a sheepish Brazilian counterpart. There the contemptuous term for national defects — brasileirice — mitigated the local oligarchy’s gravest enormities, converting them into the merest quirk and bagatelle.

Institutional imperfections, acknowledged as the source of individual misconduct, tempered any undue criticism of either Brazilian notables or society itself.

Cleansed in this bath of tartuffery, mutual self-satisfaction was restored. After a few doleful shrugs, the virtue of planters, politicians and slave traders gleamed anew.

Thus, in his book on Machado, the literary critic Roberto Schwarz quotes a parliamentary address made by the Conservative Party’s then-leader.

In 1850, Eusébio de Queirós sought public exculpation for Brazil’s political corps, following abolition of the transatlantic slave trade:

Let us be frank. In Brazil, the [slave] traffic was linked to the interests, or, more correctly, to the presumed interests of our planters.

And in a country in which agriculture has so much power, it was natural that public opinion… would express itself in favour of the traffic.

Why does it then surprise us that our politicians bowed before that law of necessity? Why is it surprising that all of us — friends or enemies of the traffic — bowed to that necessity?

Gentlemen, if this was a crime, it was a very widespread crime in Brazil. But I maintain that when in a nation all the political parties hold power, when all of its politicians have been called to exercise that power, and all of them agree on one policy, that policy must have been based on very powerful considerations.

It cannot possibly be a crime, and it would be bold to call it a mistake.

The senator for Rio de Janeiro, Queirós was himself born in Angola to a family of slave merchants. He would later remark to parliament: ‘Gentlemen, the great interests, if they do not justify, almost always explain the behaviours which, at first glimpse, are not understood.’

Such, more recently, has been the self-justification proffered by successive Brazilian governments, as corruption scandals consumed the high command of the Workers’ Party (PT).

First came revelations of systematic vote-buying by Lula’s first administration in 2005. More recently a judicial investigation into Petrobras kickbacks, its details gleefully amplified by Globo and the other São Paulo media, has dogged Dilma Rousseff.

Alas, both presidents have declared sombrely, such lack of probity has long been the Brazilian way in public office and business. Contemporary enormities reappear in a flattering light, they explain, when compared to the failings of their predecessors.

When reckoning the moral ledger and comparing eras, must not adjustments be made for inflation?

Such imponderables yield the result that no person convicted of insider trading or other capital-markets crime has ever been imprisoned in Brazil.

After narrow acclamation at the polls in late 2014, the president imposed a ‘fiscal hawk’, nicknamed ‘Scissorhands’, as finance minister. On Dilma’s behalf, Joaquim Levy busied himself ‘cancelling subsidies and cutting handouts.’

The Wall Street Journal made approving note of Dilma’s agile reversal from her electoral platform, with ‘a move to more conservative policymaking’:

During the presidential campaigns, Ms. Rousseff ran campaign ads portraying bankers maniacally laughing as food disappeared from the plates of the poor. Just weeks later, the former Marxist rebel is appointing a banker to her cabinet.

Personal origins, of course, as Brazilian history proves, are no reliable guide to political conduct: Lula’s predecessor, Fernando Henrique Cardoso, was himself once a Marxist sociologist of worldwide fame.

Another scholar, Roberto Unger, renowed theorist of ’empowerment’ at Harvard Law School, briefly became Lula’s minister of Strategic Affairs. (Not the only celebrity appointment: Gilberto Gil was appointed culture minister.)

While in office, Unger oversaw development of a national defence strategy that would, as its main planks, boost industrial capacity in Brasilia’s armaments industry, and plunge Brazil’s armed forces in peacekeeping expeditions abroad.

A few months after the 2014 election, the Economist observed with satisfaction that Dilma’s fiscal and monetary programme was now ‘closer to that of her defeated opponent, Aécio Neves, than to the one she campaigned on.’

Disjunction between spectacle and policy substance remains.

Meanwhile Brazil’s historical pattern of electoral allegiance has been inverted, with the PT now winning voters in the former oligarchic redoubt of the northeast, and disapproval in the traditional urban-industrial centres of the south.

Brazil 2014 presidential election by region

Yet two years of deep recession and the Petrobras scandal now threaten to undo Dilma’s presidency. Brazil’s familiar framework of state-capital relations, erected with Washington’s tutelage in the early 1950s, preserved under the generals, and rejuvenated over the past two decades under PT governments, may yet capsize.

This institutional model was settled upon as a second-best solution when full privatization was not politically acceptable and local credit markets insufficiently deep. Market failures, and the longer time horizons needed for investments in energy and transportation, justified the Brazilian state’s holding a controlling stake in hundreds of firms at national and provincial level.

Today the state holds minority equity positions and provides subsidized credit to local firms via its development bank (BNDES), sovereign wealth fund and pension funds. Rents in oil, mining and utilities, sizeable during the long commodity boom, were shared between government and private owners.

Returns from these high-yield investments funded costly social programmes like the Bolsa Família. Meanwhile disbursement of loans and contracts, and appointment to boards, benefited obedient functionaries and politically connected capitalists (notoriously, Eike Batista and Marcelo Odebrecht).

Thus was a political coalition stitched together.

brazil development bank equity holdings

Into this consensual scene spilled the June 2013 demonstrations, made up largely of the highly educated but tenuously employed. Wrongfooted by negative headlines during the FIFA Confederations Cup, the government responded with a mixture of repression and cosmetic concessions on public services.

To popular discontent was soon added a split in elite ranks.

The following year brought unwinding of the global carry trade, with collapse of the oil price and the emerging-markets asset bubble. Brazil’s currency, government revenue and growth rate fell violently.

In such circumstances, when striking at the nexus between Petrobras, the PT, construction firms, electoral finance and parliamentary clientelism, it suddenly was possible for media and judiciary to challenge longstanding conventions of domestic rule.

Local commentators and international observers now insist that a private-ownership market economy is an all-or-nothing affair. Brazilian firms have become financially constrained since dollar liquidity dried up in 2014. There is no room for coddled favourites or sweetheart deals. State interference in credit allocation must end; government liabilities must be reduced; the double-bottom line of social goals for private enterprises must be replaced by the single objective of profitability.

Since 2011 Dilma has promised much but failed to reform pensions or attack inflation.

The budget deficit and the currency crisis now demand focus on short-term imperatives: restoring creditworthiness of the state and private borrowers, and cutting costs.

The electoral base of the PT — and the constitutionally mandated existence of multiple veto points in the presidency, cabinet, legislature and Party bureaucracy — present obstacles to this project. Painful reforms are too easily thwarted. What is demanded is rule by technocrats insulated from popular accountability.

How to impose such a government, only a year into Dilma’s presidential term, without threatening the entire post-1989 legal framework of civilian rule?

Following his release from detention this week, Lula observed of the PT’s Paulista enemies: ‘with the press leading the investigative process they are going to re-found the republic.’

recent article from the Financial Times summarized the contending perspectives among the local elite leading to Brazil’s ongoing political crisis:

One São Paulo businessman points out that the impeachment of Mr Collor not only relieved the intense pressure within the political system, it also provided the backdrop for important economic reforms — notably the Real Plan that ended hyperinflation…

Most importantly, there is little consensus among the economic, media and political elite about how to resolve the current crisis and considerable anxiety about the consequences of a new impeachment.

Lula’s recent detention may signal the end of the prolonged irresolution. It had, noted the FT, ‘raised hopes among investors that the barriers to political change may be overcome sooner than expected.’

What can be concluded from this scene?

On one hand, since restoration of civilian government in 1985, Brazil has witnessed abrupt reversals in regional growth patterns alongside birth of new political parties. This has produced dramatic swings in electoral affiliation from one ballot to the next (and policy continuity after the new government is sworn in). The 1988 constitution has already been amended more than 70 times.

On the other hand, amid the novelty of social-democratic rule, there seem to persist the perennial national traditions: complaisant acceptance of staggering levels of corruption, deference to authority and respect for social hierarchy.

people 50 most beautiful people 1990

In this huge territory, whose glinting surface announces stillness at one moment and churning disorder the next, what deeper processes are at work?

An exceptionally helpful guide to Brazil’s long-term development from Vargas to Lula can be found in Adalmir Marquetti’s study of Brazil’s macroeconomic performance between 1953 and 2003.

Following the trente glorieuses of postwar industrial development (Kubitschek famously promised 50 years of progress in five years), Brazilian capital accumulation was much slowed after 1980.

Debt repayments to creditors abroad absorbed much of the domestic surplus product. The local propertied classes frittered away most of the rest on luxury displays.

Investment per worker - Brazil

batista car living room

Infrastructure (roads, ports and electricity) consequently languishes in a deplorable state. Only 14 percent of roads in the country are paved. Power rationing regularly looms during summer months.

Paucity of fixed investment, and Brazil’s sectoral shift from manufacturing to less equipment-intensive activities, has also meant a slowdown in mechanization.

Capital-labour ratio Brazil

Lance Taylor has outlined the consequence of policies adopted, by Cardoso and Lula alike, at the behest of the IMF:

Brazil enjoyed GDP growth of about 7.5% per year for more than three decades prior to the international debt crisis triggered by the Mexican default in 1982.

Foreign finance dried up immediately, and to meet debt service obligations Brazil had to transform a trade deficit of 2.2% of GDP in 1980 to a surplus of 5.9% by 1984.

This massive macroeconomic shift required currency devaluation (itself inflationary in an “indexed” economy where most current prices were tied to lagged overall price indexes), demand contraction, and (arguably) steadily rising prices as a means for cutting back on real spending via “forced saving.”

Liberalization-cum-appreciation were associated with de-industrialization. In metropolitan São Paulo, the industrial heart of the country, in 1990 48.7% of private sector workers were employed in industry, with the figure falling to 32% in 1999.

The employment share of services correspondingly increased. Relative service sector as well as skilled wages also rose. In six major metropolitan regions, total unemployment (“open” and “hidden”) went from 10.3% in 1990 to 17.7% in 2000.

As in other countries, demand growth was insufficient to offset faster productivity growth so there was negative net job creation. Informality in the labor market also increased.

Thus growth in domestic labour productivity stalled for two decades, resuming only with Lula’s accession.

Labour productivity Brazil

After falling throughout the 1970s and the ‘lost decade’ of the 1980s, Brazil’s output-capital ratio (or ‘capital productivity’, by analogy) recovered in the late 1980s and has since fluctuated with the business cycle.

Labour productivity and capital productivity - Brazil

This result was due less to technical progress, than to the increasing price of output relative to the price of capital goods (equipment, machinery, non-residential buildings). The relative price of capital rose until 1989 then became less costly.

Output-capital ratio Brazil

What, meanwhile, of distributional conflict in notoriously unequal Brazil?

The share of profits in national income, after rising sharply under the dictatorship, fell again from the late 1970s until the mid-1990s. Since the Cardoso administration, the profit share has recovered, with productivity growth mostly outstripping the rise in wages and salaries.

Wage share Brazil - Cardoso and Lula

forbes brazil

Such is the result of drastically unequal bargaining power in the labour market: around 42 percent of non-agricultural employees are informal. Brazil has the greatest number of informal employees of any country besides India.

When combined with stabilization of the output-capital ratio, this favourable distributional climate under Cardoso and Lula has raised the average rate of profit.

Profit rate Brazil - Cardoso and Lula

What by 2007 the world’s journalists hailed as a Brazilian Wirtschaftswunder is nonetheless beset by financial fragility of a familiar sort.

Like other economies that have experienced short-term capital inflow in pursuit of speculative gains, Brazil follows a periodic cycle, at gradually greater amplitudes, of asset-price inflation and exchange-rate appreciation, allowing a consumption boom fuelled by imports and easy liquidity, followed by deindustrialization and a real-estate bubble, and culminating in withdrawal of external funds, currency depreciation and inflation.

Brazil current account to GDP

Brazil exchange rate 2012-2015

Brazil indeed shows evidence of ‘early deindustrialization’: a switching of capital into natural resources and raw materials. Brazilian firms now operate closest to the technological frontier (i.e. approximate the level of the world’s most productive and mechanized firms) in mining, energy and food production.

Brazil labour productivity by manufacturing subgroup

Once more, as though four decades of import substitution had never occurred, the country depends on external suppliers for machinery and consumer goods.

In 1990 Collor, busily dismantling protectionist props for the local steel and automotive industry, joked that ‘Brazil does not produce cars; it builds horse carts.’

Today the rustic image seems apt. Soybeans, sugarcane and iron ore buoy the current account.

Brazil manufacturing industries - trade balance by subgroup

Even as unproductive sectors such as finance and residential construction become more important drivers of growth, since the mid-1990s Brazilian economic output has become increasingly tied to rising carbon dioxide emissions. This is an index of the weight of agricultural and mining activities.

CO2 to GDP ratio Brazil

Brasilia’s external posture follows from this domestic pattern of production. Since the 1990s governments have preoccupied themselves with regional and WTO trade negotiations in which agricultural subsidies might be reduced and the field cleared for Brazil’s ‘national champions’.

What more generally?

Despite the vast size of its population, territory and internal market, and regular overblown promises of its ascent to the ranks of a major power, Brazil has never been a diplomatic or military entity of much significance.

The New York Times complained recently:

While the other three large emerging economies, China, Russia and India, are pursuing muscular foreign policies, under Ms. Rousseff’s watch, Brazil’s voice in the international arena barely registers above a whisper…

American officials saw significant promise in Ms. Rousseff during her early years in office, viewing her as a more pragmatic leader than her predecessor and mentor.

In the United States, misgivings have been voiced that Chinese FDI and Brazilian exports to China make Brasilia a less reliable ally for Washington in the General Assembly.

The odour lingers of Lula’s defiance over Palestine and Ahmadinejad. Brazilian qualms about Obama’s mega-trade agreements irk, without actually endangering a prized US objective.

Yet the facts show Dilma’s government going out of its way to accommodate the State Department. Upon taking office, she immediately embraced the ‘international consensus’ on Tehran, and replaced Lula’s foreign minister with a more amenable nonentity.

The Financial Times noted a ‘growing sense of bonhomie between the two countries’:

For the US, Brazil is looking more than ever like a friendly face in an increasingly multipolar world,  one that is tilting slowly towards east Asia… Brazilian foreign policy has changed subtly under Dilma Rousseff – and become less aggravating to the US…

For ten years Brazil has been nominal head of the US-led military intervention in Haiti. In 2010 Washington and Brasilia signed a military-cooperation agreement governing technology exchange, joint exercises, logistics and intelligence sharing.

Last year Dilma, beaming on a visit to the US capital, assured all that she harboured no hard feelings towards Obama for the NSA’s monitoring of her telephone and email conversations, because ‘should he ever need nonpublic information about Brazil, he would just pick up the phone and call me.’

The ‘love affair’ between Lula and Sarkozy sealed deals for Brazil to acquire submarines and Dassault aircraft, tightening relations with one of NATO’s most belligerent members. Buying French weaponry and sensors, with a technology-transfer agreement attached, is a traditional method by which aspiring military powers enhance their strategic reach while remaining safely within the US security umbrella.

Vast dollar reserves, and the march of Brazil’s agricultural frontier to Pará and the remote Amazonian west, have increased commercial and logistic ties with the rest of Latin America.

Brasilia, notes the New York Times, plays ‘a constructive role in the economic and political evolution’ of Cuba as it is reincorporated into the capitalist world-system. BNDES recently funded and the engineering firm Odebrecht built Port Mariel, a Cuban container terminal tricked out with a Special Economic Zone nearby.

Meanwhile, in support of ‘multi-polarity’, Lula embarked on diplomatic and commercial forays across the Atlantic.

The lusophone band stretching intermittently from Cape Verde and Guinea-Bissau, to São Tomé and Príncipe and Angola, offered Brazil a potential strategic beachhead in the Gulf of Guinea. It has begun to project its navy into the oil-rich maritime seaboard between Senegal to Angola, taking part in US-led anti-piracy exercises off West Africa, and providing equipment and training to local armed forces.

Since 2008, it has conducted joint naval exercises off southern Africa with its Indian and South African counterparts. Lula installed a ‘military advisory team’ in Walvis Bay, and concluded military agreements with South Africa in 2003, Guinea-Bissau (2006), Mozambique (2009), Nigeria (2010), Senegal (2010), Angola (2010), and Equatorial Guinea (2010 and 2013).

Brazilian corps Africa

The bonds of shared culture and ‘South-South’ solidarity aside, geology has supplied Brazilian statecraft with its legitimizing theme.

When Petrobras discovered abundant offshore hydrocarbon deposits in the South Atlantic, Lula hailed it as the second coming of national independence.

His Secretary of the Navy invented the term ‘Blue Amazon’, affirming that ‘the untold riches of the marine space under national jurisdiction also require a Naval Power able to protect them.’ The government’s 2012 military White Paper rebranded Brazil’s offshore Exclusive Economic Zone as an integral part of the national territory.

This strategic novelty was accompanied by textbooks and an educational campaign for the Brazilian public, so patriotic schoolchildren could take appropriate pride in deepwater oil deposits.


blue amazon

But offshore ambitions extended far beyond Brazil’s coastal waters.

The 2012 White Paper declared a national interest in controlling South Atlantic trade routes:

The Atlantic Ocean holds some relevant strategic areas, such as the “Atlantic Throat”, the area between the Brazilian Northeast Coast and Western Africa which is vital for world trade. The southern passages, which link the Atlantic to the Pacific, constitute an alternative route to the Panama Canal, mainly for large ships. The Cape of Good Hope’s route, connecting the South Atlantic to the Indian Ocean, is an alternative to the Suez Canal and also offers better maritime access to Antarctica.

Between the Caribbean and Antarctic, a new gyre of seaborne freight had formed.

Nigerian oil, no longer directed across the Atlantic to North America, was increasingly shipped to East Asia. Tankers skirted the South American coast on their way west through the Drake Passage, Cape Horn and Magellan Straits.

Mindful of events in the Indian Ocean and the South China Sea, where regional governments operate as Washington’s proxies in its contest against Beijing, Brasilia’s planners warned ‘militarily significant states of other regions’ against interference:

The military presence of these states in the Atlantic Ocean should be reduced and, in future, eliminated. States located in other regions should not project on the South Atlantic any conflicts and rivalries that are alien to it.

Thatcher’s ‘spirit of the South Atlantic’ was to be reclaimed by the locals.

Was this a hopeless velleity? Cool-headed rejection of the internecine logic churning the maritime straits of Southeast Asia – or just another instance of it?

The Brazilian government would equip its navy to undertake patrols and inspections, conduct surveillance and establish reconnaissance facilities, engage in interception and forced boarding, detain crews and seize vessels throughout ‘the region delimited by the 16th parallel north, the west coast of Africa, Antarctica, the East coast of South America and the East coasts of the Lesser Antilles.’

South Atlantic maritime transit
South Atlantic islands

In earlier decades, a few Brazilian strategists had fantasized about dominating the sealanes of the South Atlantic. But for over a century the local elite had not sought a naval domain consonant with the nation’s population, coastline or dependence on seaborne freight.

What now accounted for the change?

Unger, under whom Obama had studied at Harvard, reversed traditional diplomatic verbiage in offering an explanation. Brasilia was not defensively responding to existential threat, but seeking the place in the sun due to any self-respecting rising power:

We are not concerned by the strength of our neighbors, but we are concerned by our own weakness. The national defense strategy is not a circumstantial response to circumstantial problems. It is a far-reaching inflection, a change of course and a change of direction.

His president took the opposite line, pleading Brazil’s territorial vulnerability to imperial plunder.

When the US Navy re-established its Fourth Fleet in 2008, Lula publicly fumed:

The [Brazilian] Navy plays an important role in protecting our sub-salt reserves, because the men of Fourth Fleet are almost there on top of the sub-salt areas…

Our Navy has to be the guardian of our offshore oil platforms to protect our patrimony, because before you know it some wise guy will come along and say: ‘This is mine, it’s at the bottom of the ocean anyway, so it’s mine.’

His defence minister, later revealed to be a sub rosa source of intelligence for the US State Department, went further in playing to national feeling:

Brazil will not allow the Fourth Fleet to enter and operate within the limits of the  territorial sea. This is not a boast, but a warning. If it enters territorial waters, Brazil will have every right to protest and the U.S. will not want a diplomatic incident. Anyway, the reactivation shows an urgent need to re-equip and modernize the Brazilian Navy…

Thus did the public rhetoric of ‘multi-polarity’ prosper last decade. Among sympathetic journalists, it was presented as a counterweight to the unilateralism and bullying of the G.W. Bush administration.

Would not Brazil — a former colony, newly democratic, its multi-ethnic population famously genial and only recently indigent — promote a diplomacy of treaties and consensus, rather than the belligerence and ultimatums favour by the western hemisphere’s long-time overlord, accustomed to getting its way?

Perhaps, duly enlarged with fresh members, the oligarchy of imperial powers might adopt new methods for resolving disputes and mediating claims. Remade to 21st-century specifications, the new security order would preclude the outbreak of destructive, fratricidal conflict, and end the post-1945 subordination of lesser (European and East Asian) capitals to Washington.

Might the gradual development of strategic parity — in which emerging economies like Brazil, playing catch-up, found their ambitions accommodated — create a more peaceful, less anachronistic inter-state system?

Such pieties did not survive Dilma’s first presidential term.

Brazilian aggrandizement does not presage arrival of a Concert of Powers, sharing the world equitably and pacifically. It is a symptom, not a correction, of chronic disproportion in the world’s productive capacity and relations between states.

As propensity to invest within the United States wanes, aspiring powers can leverage great, momentary flares of dollar liquidity. Asset prices are bid up, local firms enjoy huge rents, the Treasury is filled. New spending power allows firms to acquire foreign assets and the government to upgrade military programs and extend its reach abroad.

Once gained, these prizes must be preserved against encroachment from foreign rivals.

Last year came reports that Beijing was negotiating a base at Walvis Bay. Meanwhile Chinese investment in Nigeria, Mozambique, and throughout sub-Saharan Africa has brought in its tow influence in regional palaces and chancelleries.

This, as AFRICOM and its NATO allies discover new missions in stability promotion and counter-terrorism, is the context for Brasilia’s neighbourly approach to anti-piracy drills.

As speculative euphoria within Brazil collapses, Dilma’s fiscal retrenchment has mostly spared weapons programs. If the Planalto’s occupant is not yet judged an automatically loyal second for the White House, Brazil remains a ‘responsible stakeholder’ within the US system of power.

Otherwise, with its debt now rated as junk, Brasilia has little capacity for effective political initiative outside South America.

dilma obama g20

If the armed forces have played an outsized role in national life since the War of the Triple Alliance and founding of the Republic, traditionally the Brazilian elite has neglected to pursue external ambitions.

Brazil’s frontiers abut almost every country in South America. But these border regions are largely impassable jungles, mountains, and arid, sparsely populated badlands. This topography has secured against attack or invasion from abroad, while nurturing a somewhat parochial outlook among the local oligarchy and intellectuals.

More crucially, the unpropitious landscape — Amazon in the west, unforgiving Sertão in the northeast, Cerrado in the interior, and precipitous slums in the urban southeast — has challenged the state’s ability to maintain exclusive authority, knit together an integrated national market and extract an economic surplus from its vast territory.

Rebellions against government authority are met with ferocity: land clearances for dams on the agricultural frontier, special forces rampaging in the favelas.


The sea beyond this territorial cage has often served as a utopian fantasy for Brazilian artists, isolated by language and geography from the rest of Latin America.

‘There’s gold in the sea beyond,’ announces a stricken Geraldo Del Rey, tramping across Brazil’s arid northeast in Black God, White Devil.

‘The sertão will become the sea and the sea the sertão,’ comes the answer from followers of a messianic leader, modelled on the historical figure of Conselheiro. (Conselheiro’s separatist community was brutally razed by the Rio government in 1897. He was later traduced in Mario Vargas Llosa’s novel about the battle of CanudosWar at the End of the World).

In Barravento, Glauber Rocha spins an allegorical picture of Brazilian society out of a Bahia fishing village’s relationship with the sea, and their worship of a sea goddess.

The last decade of placid growth, helped by a benign wind from the east, was said to have lifted Brazil out of its accustomed position, catching it in permanent updraft: in Unger’s words, ‘inflection, a change of course and a change of direction.’

The latest volta do mar has brought one more familiar deluge.

Promises, promises: Turkey as borrower and proxy

December 9, 2014

In 1936, two months after arriving at Istanbul University from Hitler’s Germany, the philologist Erich Auerbach reported back to Walter Benjamin in Paris, offering his first impressions of Kemalist Turkey.

Charmed by his ‘glorious’ new house on the Bosphorus, Auerbach viewed the cultural policies of the ‘sympathetic autocrat’ in Ankara more warily.

Official replacement of Arabic by Latin script, and the ‘purification’ of alien loanwords from the language, seemed to the German scholar to have brought cultural deracination.

The Turkish young had been severed from any link to their Persian, Ottoman and Arabic past:

They have thrown all tradition overboard here, and they want to build a thoroughly rationalized—extreme Turkish nationalist—state of the European sort.

The process is going fantastically and spookily fast: already there is hardly anyone who knows Arabic or Persian, and even Turkish texts of the past century will quickly become incomprehensible since the language is being modernized and at the same time newly oriented on “Ur-Turkish,” and it is being written with Latin characters…

According to official mythology Turks were, indeed, the very originators of human language and spreaders of civilization to the world.

A few months later, Auerbach sketched out the programme of the Kemalist state and its ‘fanatically anti-traditional nationalism’:

Rejection of all existing Islamic cultural heritage, the establishment of a fantastic relation to a primal Turkish identity, technological modernization in the European sense, in order to triumph against a hated and yet admired Europe with its own weapons: hence, the preference for European-educated emigrants as teachers, from whom one can learn without the threat of foreign propaganda.

Result: nationalism in the extreme accompanied by the simultaneous destruction of the historical national character…

Istanbul itself was a ‘a wonderfully situated but also unpleasant and rough city consisting of two different parts’:

The old Stambool, of Greek and Turkish origin, which still preserves much of the patina of its historic landscape, and the “new” Pera, a caricature and completion of the European colonization of the 19th century, now in complete collapse.

A year later Auerbach again complained, this time to Johannes Oeschger, of ‘a purist nationalism that destroys the living tradition, and that bases itself in part on completely fantastical conceptions of ur-times, and in part on modern-rationalist ideas’:

Piety is combated, Islamic culture despised as an alien Arabic infiltration, one wants to be at the same time modern and purely Turkish, and it has gone so far that through the abolition of the old script, through the elimination of Arabic loan words and their replacement by Turkish neologisms and partly by European loan words, the language has been totally destroyed: no young person is any longer able to read the older literature — and there reigns a spiritual lack of direction that is extremely dangerous.

In 1926 Kemal had notoriously imported Mussolini’s penal code from Italy, embracing it as ‘compatible with the needs of our century’.

Abolition of the Caliph, suppression of dervishes, etc., was necessary, Kemal proclaimed, ‘in order to prove that our nation as a whole was no primitive nation, filled with superstitions and prejudice.’ The fez had ‘sat on our heads as a sign of ignorance, of fanaticism, of hatred to progress and civilization.’

Thus spoke the great Gazi (the term itself a religious honorific) in his six-day, 36-hour speech to the Turkish assembly.

He is pictured below at a blackboard marked with the new alphabet.

Kemal 1928 blackboard

By the mid-1930s, placed in European context, Turkish autocracy presented alarming signs to the émigré Auerbach.

What was ‘not yet a certainty for everyone’ in fascist Italy and Germany, ‘steps forth here in complete nakedness’:

The language reform—at once fantastical ur-Turkish (“free” from Arabic and Persian influences) and modern-technical—has made it certain that no one under 25 can any longer understand any sort of religious, literary, or philosophical text more than ten years old and that, under the pressure of the Latin script, which was compulsorily introduced a few years ago, the specific properties of the language are rapidly decaying…

I am more and more convinced that the contemporary world situation is nothing other than the cunning of providence to lead us along a bloody and circuitous route to the Internationale of Triviality and Esperanto culture.

I thought this already in Germany and Italy, especially in the horrifying inauthenticity of Blut und Boden propaganda, but here for the first time it has become a certainty for me.

Such was not merely the familiar tendency of German exiles, easily discomposed, apt to detect worrying similarities to Hitler’s regime in places of refuge.

Across Europe, the invented traditions of late-Victorian nationalism — the ceremony of flags, anthems, rituals and insignia — as well as compulsory schooling in a common language, the fusing of national markets by domestic transport and communication infrastructure, and the assumption by national bureaucracies of administrative and tax-raising power over a henceforth homogenized territorial jurisdiction, had famously converted peasants into Frenchmen.

In both the European metropoles and their colonial possessions, ‘modernization’ proceeded through the dragooning of diverse peoples into a unitary national culture. ‘Annihilate the patois!’ ran the project.

Yet the particular grandiosity and vacuity of Turkish nationalism after 1923 rested on a blank slate, both territorial and cultural, created by erasure and ethnic cleansing.

In the same year that Kemal abolished the Caliphate, launched his Kulturkampf and imposed the Turkish Republic’s enlightened new constitution, he addressed an audience in Adana:

The Armenians have no rights whatsoever in this fertile land. The country belongs to you, the Turks. This country has been Turkish in history, and thus is Turkish and will eternally live as Turkish…

The Armenians and others have no rights in this place. These fertile places are a profoundly and quintessentially Turkish country.

In 1916 the grand vizier Talaat Pasha had issued an edict concerning the ‘Turkification’ of assets confiscated from Armenians deported and killed during the genocide.

Looted wealth was to be assigned to the local Muslim elite, urban merchants and peasantry:

The movable property left by the Armenians should be conserved for long-term preservation, and for the sake of an increase of Muslim businesses in our country, companies need to be established strictly made up of Muslims. Movable property should be given to them under suitable conditions that will guarantee the business’ steady consolidation.

The founder, the management and the representatives should be chosen from honourable leaders and the elite, and to allow tradesmen and agriculturists to participate in its dividends, the vouchers need to be half a lira or one lira and registered to their names to preclude that the capital falls in foreign hands.

The growth of entrepreneurship in the minds of Muslim people needs to be monitored, and this endeavour and the results of its implementation needs to be reported to the Ministry step by step.

The plunder of Armenian property in Anatolia included farms, houses, livestock, factories, workshops, plantations, shops, schools, churches, tools and equipment — all officially designated as ‘abandoned properties’ after the land had been denuded of Armenians, massacred under cover of war.

Confiscated Armenian buildings by province 1Confiscated Armenian buildings by province 2

Under Kemal, agents of genocide were rewarded for services to the fledgling nation, with the president’s own official residence lifted from an Ankara merchant:

[The] family of district governor of Muş, Servet Bey, who in 1915 had annihilated the Armenians of that city, was awarded a composite package of Armenian property.

The family of Cemal Azmi, the murderous governor of Trabzon, was also assigned considerable ‘reparation’, specifically from Armenian properties.

Hafız Abdullah Avni, a hotel owner who had collaborated in the genocide in Erzincan, was executed for his crimes in 1920 by the Istanbul tribunal. His wife, Hatice Hanım, was compensated with a house and a field from the Armenian villages of Şuhe and Kani.

The fanatical district governor of Boğazlıyan, Mehmed Kemal Bey, had left behind a family in Yozgat. They received a large apartment and a house from the available Armenian property in that area.

Dr. Bahaeddin Shakir Bey’s family received a house in the upmarket Şişli district of Istanbul.

The former district governor of Urfa, Mehmed Nusret Bey, had played a key role during the genocide and was executed in 1919 for his crimes. His wife, Hayriye Hanım, was compensated with a shop and a house in Istanbul’s Beyoğlu district, on Cadde-i Kebîr (the current İstiklâl Caddesi) on numbers 264 and 266. The property was located in the Aznavur Han and originally belonged to a merchant named Bedros.

Cemal Pasha’s heirs and family were compensated with the property of Vicken Hokachian, a merchant in Istanbul. A shop and a strip of land in Beyoğlu across the French cemeteryas large as 1,450 square metres, was assigned to his wife Senice, his daughter Kamran, his sons Ahmed Rüşdü, Hasan Necdet, Hasan Behçet, his big sister Şaziye and little sister Bakire.

The list is long…

All are signed by President Mustafa Kemal Pasha and his cabinet of veteran Young Turks…

Along with the local Turkish population, new Muslim settlers to Anatolia (from the Balkans and Caucasus) picked over the booty left behind in suddenly vacant Armenian villages:

In 1915 the amount of property allocated to settlers was 20 545 buildings, 267 536 acres of land, 76 942 acres of vineyards, 7 812 acres of gardens, 703 491 acres of olive groves, 4 573 acres of mulberry gardens, 97 acres of orange fields, 5 carts, 4 390 animals, 2 912 agricultural implements, 524 788 planting seeds.

Forced expulsion across the Aegean of nearly one million Anatolian Greeks in 1923 was capped off, in 1955, by Istanbul’s anti-Greek pogrom.

The objective, in the words of the Turkish Army in 1922, was that Greek and Armenian ‘material ties to Anatolia will be disconnected.’

By 1924 the non-Muslim population of Anatolia, 20 percent in 1912, was down to 2 percent.

Kemal in Smyrna 1922

Kemal in Smyrna 1922 more

One upshot of this severing was that Turkish nationalism, inheriting razed earth, would be likewise unbound by preexisting constraints or obstacles.

Kemal’s state-led modernization, leaving property relations untouched and making no attempt at agrarian reform, would aim to drive an ethnocultural clean sweep through the smouldering Ottoman ruins.

The fanciful mythology of ur-Turkey, about which Auerbach complained, was both compensation and boast by a new state whose territory had been emptied at birth by the killing of one-tenth of its inhabitants, whose founding act was the expulsion of another tenth, followed by the internal displacement, ‘Turkification’ and bloody repression of Kurds, another one-fifth of the population.

Dersim massacre 1937

While adulation of the national founder remains a mainstay, over the decades other elements of the Kemalist recipe have been trimmed, adapted and discarded according to the exigencies of the hour.

Yet the homogenizing element in the republic’s founding ideology has endured as a bedrock: official pursuit, according to the Interior Minister in 1934, of ‘a country speaking with one language, thinking in the same way and sharing the same sentiment.’

The confessional turn in the electoral scene, most pronounced since the 1980 military coup and the premiership of Turgut Özal, has brought sharp modifications to Turkey’s public life: growing numbers of religious schools, flagrant displays of devoutness, the Crescent rivalling the sword for symbolic preeminence, as a powerful executive branch stamps its mark on all agencies and directorates of the state.

Movement towards EU membership, meanwhile, has obliged some ecumenical gestures and concessions to Kurdish and Alevi cultural rights. Erdoğan lifted the state of emergency in the southeast, and wound back language proscription in 2004.

But the basic formula is unchanged, Copenhagen criteria notwithstanding. Education, bureaucracy and media remain zones free of linguistic or cultural impurity. The Armenian genocide, likewise, is officially a non-topic.

In today’s Turkey, the decidedly post-secular AKP leadership nonetheless vaunts an integralist slogan of ‘one nation, one flag, one religion, one language’, and a notorious penal article that makes ‘insulting Turkishness’ a criminal offence.

This detour through the recent history of Turkish nationalism helps to clarify current arrangements, explaining how matters reached such a pass in the Caucasus, Black Sea and Caspian basin, Cyprus and eastern Mediterranean, Balkans and Levant.

These are the former contested borderlands of Russian tsar, Ottoman sultan and Persian autocracy.

Today, in the words of its prime minister, the AKP’s former foreign minister and eminent grand strategist, Turkey is ‘a country with a close land basin, the epicentre of the Balkans, the Middle East and the Caucasus, the centre of Eurasia in general and is in the middle of the Rimland belt cutting across the Mediterranean to the Pacific.’

Turkey Stratfor

Within elite circles this view, at least publicly, has its detractors.

Turkey, Nicolas Sarkozy once declared on the campaign trail, ‘is in Asia Minor’:

I will not explain to little French school children that the borders of Europe extend to Iraq and Syria.

Once safely installed in the Élysée Palace, Le Pen’s voters having been tossed a few verbal sops, the French president’s pedagogic concerns evaporated.

Sarkozy treated his population to a demonstration of Dassault’s aerial might over North Africa, later striking a triumphant pose atop a Benghazi podium.

His Socialist successor extended the Libyan campaign to Mali and the Central African Republic.

A ‘Europe of values’ (Blair’s oily phrase, found useful by Cameron and Sarkozy) acknowledges few boundaries. If the Maghreb, why not Thrace?

The European continent, the concept a recent invention, may be demarcated however you like. But the frontiers of Christendom are firm. They do not extend to the Euphrates.

Ocean littorals, on the other hand, are free to expand or retreat as required, the North Atlantic Treaty Organization supplemented with whatever ‘add-on’ Washington wishes for its Eurasian beachhead.

Turkey’s frontiers with Syria, Iraq and Iran thus present NATO with a boundless operational vista in the Mashreq and beyond.

Referring to ‘challenges we’re facing in the east and the south’, today’s incoming secretary-general says: ‘NATO has a strong army after all. We can deploy it wherever we want to.’

US Patriot missiles may thus be placed east of Jerusalem in the name of European and North American security. (The US air base at Incirlik is itself built on expropriated Armenian land. The Air Force’s approved history of the site ends discreetly in 1921).

And, if today’s armed conflict in the Levant threatens Ankara’s security, ‘NATO will be there’, says the secretary-general.

The ‘post-Cold War enlargement of NATO and EU’, said the US Vice President earlier this year, ‘is not complete, in my view.’

What task remains undone, what destiny unfulfilled?

To the post-1923 status quo that had prevailed in the Black Sea-Caucasus-Central Asia region following the collapse of Ottoman and tsarist empires, the retrenchment of Moscow’s power since 1991 has threatened disruption.

Washington’s objective, laid out unblushingly by its strategists, is to hinder the local powers from reaching convivial terms, and to prevent, at all costs, any state outside its own military alliance structure — Moscow, Tehran, Beijing — from attaining regional predominance.

Brzezinski Turkey Russia Iran

There exists, explained Turkey’s current prime minister Davutoğlu to the US Council on Foreign Relations, ‘a compatibility’ between this need of the United States and Ankara’s ‘unique’ ability, arising from its convenient location.

Washington is a non-Eurasian power that hopes to remain the dominant power on the Eurasian continent. Turkey can help ‘close this gap of geographical discontinuity’:

Turkey is right at the center of Afro-Euro-Asia, having multidimensional characters of geopolitics. Turkey is a European country, an Asian country, a Middle Eastern country, Balkan country, Caucasian country, neighbor to Africa, Black Sea country, Caspian Sea… all these geopolitical challenges are in the agenda of American global strategy…

The United States needs allies in Africa-Eurasia, and Turkey needs a cooperation with a global power.

Thus has Europe’s Eastern Question been resolved, if only temporarily and after a fashion.

To the apparent satisfaction of the continent’s elite and with Washington’s benevolent approval, Ankara’s EU candidature was placed in prolonged abeyance, even as Turkey assumed new regional prominence, becoming NATO’s geographic fulcrum for ‘out of area’ missions in the eastern Mediterranean, Caucasus and West Asia.

On its eastern border, the Turkish state acts as faithful proxy in Syria, seeking to overthrow Assad’s Iran-friendly government. In the Black Sea basin, it facilitates continued thrusts and harassing operations against Moscow.

Washington, seeking to conduct a proxy war at two removes in Syria, has relied on its local agents in Ankara and the Gulf monarchies to supply weapons, funds, training and cross-border transit.

Turkey’s intelligence chief was recorded, in conversation with Davutoğlu, musing over how best to ‘make up a cause of war’ with the Syrian government by staging a false-flag operation against Ankara.

Atmospherics from the US Vice President, aimed plainly at a domestic rather than diplomatic audience, convey the nature of Turkey’s helpful efforts in the Levant:

The Turks, who are great friends — I have a great relationship with Erdoğan , whom I spend a lot of time with. The Saudis, the Emiratis, etc. What were they doing?

They were so determined to take down Assad and essentially have a proxy Sunni-Shia war, what did they do? They poured hundreds of millions of dollars and thousands of tons of weapons into anyone who would fight against Assad — except that the people who were being supplied were al-Nusra and Al Qaeda and the extremist elements of jihadis coming from other parts of the world…

Now they’re sealing their border.

To Ankara’s role as NATO proxy is added that of ’emerging market’ debtor.

Since 2002, under the AKP Turkey has become increasingly dependent on short-term external borrowing, mostly portfolio investment in search of speculative gains. This has increased financial fragility, exposing Turkey to asset-price inflation and the risk of worse if capital is withdrawn.

International borrowing rests ultimately on a promise to pay US dollars. Issues of the Turkish domestic currency are a form of debt: the credibility of the borrower depends on its ability to pay the ‘best’ money: the liabilities of the global hegemon.

hierarchy of money

Should Turkish growth founder, capital inflow cease, and local banks become unable to refinance their debts, international creditors will no doubt be found in a compassionate mood. A stabilization loan, arriving swiftly, will come attached with less onerous conditions than those applied to Cyprus.

Turkey, as a ‘geopolitical pivot,’ is too important for the IMF (behind it the US Treasury) to countenance domestic upheaval on any great scale.

Just as credibility of the Turkish lira rests on a promise to pay US dollars (the ultimate international means of settling debts), behind Turkish arms Washington sits in poised reserve, ready to back up its NATO proxy whenever Ankara’s Ostpolitik in the Mediterranean and Levant goes awry.

In NATO parlance, this is known as ‘extended deterrence.’ US solicitude is manifested in the form of radar installations (since 2011) and (since 1961) nuclear missiles deployed on Turkish territory, aimed at Russia and Iran.

On this foundation, grandiose regional ambitions flourish. The latter focus on Turkey’s strategic potential as an energy corridor, reducing Moscow’s bargaining power in Europe.

Turkey is Iraq’s ‘gateway to the European Union’, Davutoğlu has noted. And ‘Erbil is our gateway to Basra.’

In Istanbul, three months ago, the World Economic Forum held a Special Meeting on Unlocking Resources for Regional Development, the Turkish president and prime minister contributing to that noble cause by demanding, in keynote addresses, armed overthrow over the Syrian government.

There an Emirati oil CEO, with investments centred on Iraqi Kurdistan, suggested that ‘if Turkey became a price-setting centre for the region [that] could really bring on much more supply from Middle East resources, which would not only meet Turkish needs, but go on to meet European needs as well.’

Ankara’s energy minister deplored political difficulties in Iraq and Iran: ‘You can’t have a growing economy and a shrinking energy sector.’

A fortnight ago the Atlantic Council held its Energy and Economics Summit in Istanbul.

There the Turkish Mediterranean port of Ceyhan, long touted by the Energy Ministry as ‘the natural direction for exports of hydrocarbons from the region [of Iraqi Kurdistan] to the world’s market’, received a boost.

Alongside President Erdoğan in Ankara, the Russian leader announced that Gazprom’s planned South Stream pipeline was to be abandoned, after EU thwarting efforts and US sanctions.

The US Vice President was on hand to salute the news, calling for ‘development of a strategic pipeline from Basra to Ceyhan.’

The Turkish state, its line of strategic credit secure in Washington, has leveraged its momentary good fortune to pursue regional initiatives otherwise beyond its reach. A permanent military presence in Cyprus has been declared not negotiable. EU accession, less urgent, has been allowed patiently to simmer, safe for another day.

Yet what realities lie behind the salesmanship about ‘Anatolian Tigers’ and a ‘boom on the Bosphorus’?

In the past three decades, the Turkish economy’s capital-labour ratio, or capital intensity, rose at a distinctly lower rate (6.6% annually from 1964-1978, compared to an average of 3.7% over the next thirty years).

Capital intensity Turkey

Taking account of the business cycle, there has been a steady fall in the output-capital ratio, or what may be termed ‘capital productivity.’

Capital productivity - Turkey

Technical change has followed a labour-saving, capital-using pattern familiar elsewhere.

Labour productivity and output-capital ratio in Turkey

Turkey’s development, all in all, has been modest. Agriculture retains a high share of employment (24%); female labour-force participation is abysmal (29%, below Sudan and well below Armenia).

State-led modernization by a republic descended from one of Europe’s largest imperial powers, with a population greater than France or Britain at its disposal, has produced unscintillating results.

Not needing to displace a landlord class in any agrarian revolution (small independent farms long predominated), nor did industrialization of the classical modernizing sort follow.

The Turkish army — the most numerous in Europe besides Russia’s, and occupying Cyprus since 1974 — and a traditionally hefty state officialdom absorb much of the investible surplus. The familiar features of the externally indebted economy — credit expansion, consumption growth, speculative bubbles in real estate and asset prices — further discourage productive expenditure. Patronage networks and political clientelism siphon the residue, all impeding local formation of a substantial capital-goods sector.

Small wonder, amid such frustrations, that the consoling appeal of religion plays a growing part in Turkish electoral politics.

Yet not every plan has gone awry.

Kemal’s language reforms were recently described as a ‘catastrophic success’. A linguist noted, amid the general poverty of Turkish expression, that a mere 26 years after it was delivered, Kemal’s great speech already needed to be ‘translated into the present-day language’ so that it could be intelligible to the young.

A frightening abyss

October 21, 2014

Political funerals are naturally light on candour and heavy on encomium, a polite sponge applied to the deceased’s public record.

Such prettification, in an Australian Labor setting, typically does without much elevated language  the latter being beyond whichever dim leading lights of today, and fossilized contemporaries of yesteryear, have been selected from among the assembled personages.

Bureaucratic droning is the standard official tribute.

Honest political testament, and quivering oratory, is best sought elsewhere.

In October 1975, Clyde Cameron, a senior member of the Whitlam Cabinet and back-room powerbroker for the ALP Left, delivered a remarkably frank, unvarnished speech in the House of Representatives.

With explicitness born of desperation, he described the role of the Australian Labor Party and trade unions in preserving the existing institutional order from those who would menace it.

Cameron beseeched the conservative Opposition (and the propertied classes) to see reason, explaining that removal of the Labor government threatened ‘total collapse of the parliamentary system of government’ and victory for the unruly, repugnant ‘mob’:

The people are many; the moguls are few. Yet it is the representation of those privileged few who have brought us to this very brink of mob rule. A frightening abyss is certainly before us now…

Without parliamentary democracy what is there? Why should the masses tolerate this mockery of democracy? What will prevent the masses from becoming a mob and what will then stand between the classes of privilege and the mob once the institution of parliament is destroyed? Who will then man the powerhouses, the oil refineries and the transport systems? Who then will man the ships, mine the coal and man the wharves? The Opposition cannot do that with guns and bayonets. It cannot do that with its wealthy racketeer friends. Revolution does not ever happen until some spark ignites the dynamite. The steps which the Opposition has now taken could be the spark that will bring down all the institutions in this country.


Parliament does not derive its strength, its authority, its respect and power from the shell of masonry that carries the name of Parliament House. Nor does it derive its power and respect from the people who sit in its chambers; it derives its power, respect and authority from the fact that people identify Parliament with a whole wide range of ancient traditions, conventions and principles without which it can no longer act as the barrier between our present way of life and the mob which would seek to change it. And yet, it is they, the privileged sections of the community and the Press barons, who have most to lose from the destruction of the present system. They, the Press barons, the mining magnates, the foreign-owned multinational corporations, the ruling classes generally, the barons of business and the privileged classes are now urging the Opposition to embark upon the course of action which will destroy the only bastion which stands between them and the mob.


Once working people see that their chosen governments are not to be allowed to govern, what is it that will stop them from responding to those memorable lines of Percy Shelley who, in conditions very much like those which will apply when the collapse of the parliamentary system occurs, made this clarion call to the men of England:

Rise like Lions after slumber

In unvanquishable number

Shake your chains to earth like dew

Which in sleep had fallen on you-

Ye are many they are few.

This Parliament stands between the rule of the mob, the law of the streets and society as we know it and have enjoyed it throughout our country.

Thereafter, dumped from power despite its importuning, the Australian Labor Party would play its perennial role, as sturdy protector of ‘the institution of parliament’ and ‘society as we know it.’

Very late in life, Cameron joined Socialist Alliance.

His trembling evocation of the mob, given rare expression in Canberra (an urban environment designed to exclude the popular citizenry), was common in nineteenth-century literature. The riot scenes of Dickens and Zola record the physical terror inspired by dense populations of workers and artisans unleashed from authority.

Today, however, the imagery of stormed palaces has become somewhat tattered and remote — and the toppled statue is now a kitsch trademark of US-engineered regime change. Nonetheless, fear and contempt for the ‘masses’ endures, finding an outlet in supercilious journalistic sneering about moral panics and ‘populism.’

Yet isn’t such demophobia pointless, after three decades of relative domestic social peace, if not outright quiescence, in the advanced economies?


Why has the governing elite of this country recently invested so heavily in the machinery of repression (administrative detention, ‘control orders’, military call-out powers, engorgement of police and intelligence agencies)? Why erect such bastions and barriers between ‘our present way of life and the mob which would seek to change it’, when the latter are so disorganized, discredited and demoralized, and in any case no longer possess in any great numbers a coherent vision of an alternative society?

Some clue to this development is found here, where I describe Steven Pinker’s fondness for state violence, the latter approved as a queller of rowdy passions from below:

Mounting a consistent and effective defence of property rights nowadays compels the honest ideologue to adopt such a position [pragmatic authoritarianism].

For if ‘gentle commerce’ transforms ‘zero-sum warfare into positive-sum mutual profit’, this same growth of productivity and cooperative non-rivalry (i.e. the necessity for team production by co-workers in factories and offices) also raises the costs of excluding non-owners from access to resources and enforcing private claims to wealth.

In today’s Garrison USA, it takes more than one-quarter of the labour force (up from 6% in 1890 and 7% in 1929) to maintain order and to enforce the existing allocation of ownership claims over economic resources. A colossal number of citizen-soldiers now work as supervisors with the authority to discipline, sanction and fire, or as prison guards, private security personnel, employees of the military, lawyers, etc.

This is what mainstream economics calls the ‘technology of conflict’, in which resources are devoted to enforcing, adjudicating, seizing or redistributing private claims to social wealth.

At the heart of US society beats a massive disciplinary apparatus, public and private.

The body shop

July 11, 2014

From a feature article in last Sunday’s New York Times:

In an era of globalization, the market for children crosses national borders; witness the longtime flow of Americans who have gone overseas to adopt babies from South Korea, China, Russia and Guatemala.

Other than the United States, only a few countries — among them India, Thailand, Ukraine and Mexico — allow paid surrogacy. As a result, there is an increasing flow in the opposite direction, with the United States drawing affluent couples from Europe, Asia and Australia. Indeed, many large surrogacy agencies in the United States say international clients — gay, straight, married or single — provide the bulk of their business…

Together, domestic and international couples will have more than 2,000 babies through gestational surrogacy in the United States this year, almost three times as many as a decade ago.

What, if anything, is to be made of such developments?

A little more than a decade back, a succession of startling innovations in biotech, the turn of a new millennium and Clinton’s ‘New Economy’ boom together spawned a potboiling genre of fanciful prognoses, fretful futurology and journalistic speculation on the fate of the ‘body’, marriage and parenthood, and human reproduction.

This was a publishing bubble of airport literature and Kulturkritik, which various eminences did not eschew.

Habermas Future of Human Nature

Around the same time, Foucault’s ‘biopolitics’ was rediscovered by the Anglophone academy, a narrow seam contributing another rich source of mischief and vapidity for cultural studies.

In the midst of this scene, in 2001 Duncan Foley delivered a clear-eyed scholarly lecture on economic growth and demography. In it, he anticipated the new century bringing ‘opportunities and pressures’ for what he termed ‘reproductive arbitrage’.

The latter, he suggested, would ensue in a world where sub-replacement fertility prevailed in the ageing metropolitan economies, alongside a demographic floodtide of human misery elsewhere, as much of the globe experienced industrial growth insufficient to absorb its massive, stagnant ranks of young and prime-age people into employment.


Planet of Slums - Mike Davis

This reproductive arbitrage — a ‘global market for children’, buying where cheap and selling where coveted, at a premium — would, he pointed out, be something novel.

It was to be distinguished from the traditional migration of underutilized reserves of labour from remote hinterlands to the industrial centre.

The twentieth-first century, at its dawn, heralded a ‘sharp polarization between countries with rich ageing populations which cannot reproduce themselves and countries with poor, younger populations which are growing’:

Productive arbitrage opportunities will arise because the rich countries will have chronic shortages of labour and surpluses of capital, while poor countries will have chronic shortages of capital and surpluses of labour. Arbitrage suggests either the movement of capital to the poor countries through foreign investment, or the movement of labour to the rich countries through migration…

Reproductive arbitrage opportunities will arise because of the tendency for poor countries to specialize in producing children, as the rich countries specialize in producing wealth. Thus, we can expect an explosive growth in the trade in reproduction and its associated services like surrogate parenthood, adoption, and the provision of child-care services between older, richer countries and younger, poorer countries. We have also begun to see the early stages of this phenomenon already.

As its clients have multiplied, treatment of the gestational-surrogacy market by the popular media has been equivocal.

Amid warm applause for the realization of parental dreams long held, misgivings are voiced, shortcomings admitted. Queasiness rarely rises, however, to the level of outright reproach, rejection or, least of all, investigation of underlying causes.

Prurience of the ‘Octomom’ variety carries its share of denunciation and spite, of course. But few right-thinking people would see fit to deny that the technology and ‘bioethics’ of assisted reproductive procedures are the chief matters at stake: philosophy, of a sort, rather than politics.

‘Regulation’, by vigilant international NGOs if not local authorities, is the prescribed salve.

(Not yet accustomed to the ways of the world, earlier journalistic treatment of ‘traditional’ surrogacy [insemination with sperm rather than embryo] was, in the 1980s and 1990s, rather more stringent in its scrutiny of market participants and their claims.)

Typically less given to delicate euphemism, the gurus and think tanks of the libertarian right have maintained a cautious silence on surrogacy’s cosmopolitan turn. Perhaps wary of upsetting a precarious apple cart, they are more likely to have found intervention unnecessary.

Inferences can, however, be drawn from past forthright statements.

In 1977, Judge Richard Posner notoriously proposed ‘legalizing a market for babies’. Affecting bemusement at the outraged response that greeted this calculated provocation, Posner observed in his own defence, and with some justification, ‘we have legal baby selling today… I simply think it should be regulated less stringently than today.’

The University of Chicago’s Richard Epstein, in a 1995 paper on surrogacy and contract law, complained that ‘condemnation of any transaction as “baby-selling” is all too often treated as a conversation stopper’.

A more phlegmatic outlook was called for.

Surrogacy’s ‘commercial aspects’ were ‘a regrettable but necessary part of transactions that yield enormous nonquantifiable benefits to the biological father and his wife, and to their friends and family who have comforted them during their years of anxiety and distress’:

The ability of individuals to handle these transactions with sensitivity and discretion is not precluded because money changes hands. Indeed the success of the venture may be aided if the money allows skilled professionals to ease the transition of both sides.

Meanwhile the industry of international adoption receives promotional services from the likes of Harvard Law School’s Elizabeth Bartholet.

Foley’s remarks were little more than an aside, to which, as the phenomenon he identified has since grown, detail can be added.

What circumstances underpin the global specialization of reproductive tasks, linked increasingly by commercial transactions undertaken for profit?

Relative prices and jurisdictional peculiarities play their part (an Indian surrogate at the most internationally renowned clinic in Gujarat is fortunate to receive a fee of $6500, some others as little as $800, while their North American counterparts fetch around $30 000. Merely donating ova, if their source is an Ivy League graduate, itself attracts $20 000).

Fertility rates are inversely related to female labour-force participation (and per capita output), lifetime births per woman being highest where female paid employment is least, and the costs of child rearing (education, medical care, foregone wages) smallest.

Malnutrition causes half of all Indian women to be anaemic. Nearly half of all Indian children under three are underweight and undersized, and maternal mortality (around 200 per 100 000 live births) is estimated to kill 80 000 Indian women each year, contributing with Nigeria around a third of the world’s annual maternal deaths (most from anaemia, haemorrhage or uterine rupture, eclampsia and septic abortion).

A bare half of all Indian childbirths are attended by skilled health personnel (the figure is around 80% for Indonesia, and 99% for China).

Why is it that ‘poor countries’, seemingly so ill-suited for the task, should today have come to ‘specialize in producing children’ for the industrially developed zones of the planet?

‘Reproduction’ arises as a topic in classical political economy (Smith, Ricardo, Marx) because of the peculiar character of that productive input known as human labour.

The latter is not (as are capital goods) produced as a direct commodity via the capitalist system of production; nor (like land, minerals and similar resources) garnered freely from nature; but must instead be born, reared, trained and socialized, in the domestic household or elsewhere, before it can be hired on the market as employable labour-power.

Thus, in the view of classical political economy, labour supply is induced by demand, growing or shrinking according to demand for employees at a given real wage, caused by variation in productive investment.

Over a few decades, labour supply is flexible or elastic, because employers seeking workers may tap in to external sources (idle pools abroad drawn in as immigrants) or underutilized domestic sources (the unemployed, housebound women, etc.).

Conditions in the slums and shanty towns of today’s Delhi, Jakarta, Lagos, São Paulo, Karachi, Kinshasa, Dhaka, Istanbul and Cairo may thus be compared to those of Henry Mayhew’s London.

In early Victorian times, Britain’s industrial revolution had breached Malthusian limits, detonating population growth and urbanization that, for the moment, outstripped the pace of fixed-capital accumulation and demand for employees.

The London streets of 1840 therefore teemed with petty vendors and sole proprietors (fruit sellers, flower stalls, artisans, prostitutes) whose meagre inventories and simple tools of the trade were of a scale measly enough to be owned by a single precariously placed individual or family, hawked and peddled by day and carried home at night.

With the available workforce more plentiful than the needs of capital owners required, human life came cheaply and the necessities of subsistence were procured in haphazard, opportunistic fashion, as described vividly by Mayhew in London Labour and the London Poor, and captured in the crowded tenements of Dickens’s fiction.

Despite rapid growth in productivity, British real wages remained stagnant throughout the first half of the nineteenth century, its urban hordes preserving slack in the labour market.

The Rookery St. Giles's 1851

Nearly two centuries later, in today’s Britain and other advanced economies, shrinking working-age cohorts (15-64 years) support relatively large economically inactive cohorts of the elderly and infirm.

In this metropolitan core, most strikingly in Europe and Japan, mechanization of production has caused output-capital ratios eventually to fall, as the stock of factories and equipment accumulates more rapidly than the number of available employees.

Labour productivity and output-capital ratios in the OECD

Labour productivity over time (US) and space (world)

Beyond the frontiers of the OECD, however, in the less industrially developed countries whose populations comprise the overwhelming majority of the world, Mayhew’s vista of scrounged livings now predominates.

In today’s official lexicon, it is designated as the ‘informal economy’.

Ninety-three percent of the Indian workforce, and 85 percent of the non-farm workforce, is deployed outside the organized corporate or state-owned sector in tiny household enterprises.

These marginal hundreds of millions of South Asian ‘self-employed’ and sub-contractors, whose low business revenue and few tangible assets makes them uncreditworthy to formal lending sources, provide the social infrastructure for those microfinance initiatives that so capture the hopes of well-meaning left-liberals abroad.

More importantly, such vast pools of urban misery — propelled out of the countryside by the Green Revolution, into cities where insufficient investment exists to draw them into paid employment — form a latent reserve of potential employees, thus keeping a ceiling on wage growth.

In Africa, South Asia, Latin America, West and Southeast Asia, low labour productivity corresponds to lesser capital intensity (fewer tangible assets used per worker), high output-capital ratios and a younger population.

Indian agricultural, construction, pottery and textile workers thus perform manual labour whilst their more productive counterparts abroad are assisted by machinery and equipment.

The capital-labour ratio in India is less than one-tenth its level in the United States. The resulting difference in labour productivity yields a stark income divergence: India’s average real wage is one-twentieth that of the USA.

In these circumstances, with the postcolonial prospect of secular ‘development’ and improved living standards having long since receded, those offering otherworldly salvation and similar religious consolations have naturally thrived.

In India, appeals to the devout, and invocations of Hindutva, have multiplied under the impeccably business-minded administrations of Rao, Manmohan Singh and Modi. BJP and Congress alike truckle to local piety while catering to foreign creditors.

Typically backed as an anti-left bulwark by the local security apparatus, favoured as a counterweight to unruly secular nationalism by imperialist intelligence services, and firmly planted in the soil of matrimonial and sexual conservatism, such confessional movements, of whatever stripe, have not looked favourably upon the entry of women to paid employment, female enrolment in public schooling and other novel social roles.

Along with these superstitious revivals, the persistence of archaic social relations  debt bondage, small farms and petty proprietorships, landlordism and sharecropping, patriarchal tyranny, hereditary caste occupation, and various other forms of labour tying  tends to encourage precocious marriage sealed by dowry, relatively early age of first pregnancy, reduced spacing of births and high birth rates.

Nearly half the female Indian population is illiterate; fewer than half receive secondary education.

The wealthier Indian states  Maharashtra, Haryana, Gujarat, Punjab — have the most imbalanced sex ratios, with sex-selective foetal reduction facilitated by imaging technology. The practice of female-specific abortion therefore increased from the 1990s.

Yet the origin of commercial surrogacy in India, Thailand and the former Soviet republics is not simply the penury and devastation internal to these countries, enormous though these are.

The ‘market for children’ depends upon economic and jurisprudential developments pioneered in the advanced regions of North America, Europe, Northeast Asia and the Antipodes.

Trails of commodification are blazed in California.

There, the presence of an advanced biomedical-university complex, a favourable judicial environment, and cultural deregulation to make the rest of the United States blush, have placed the state at the forefront of proprietary and contractual developments governing human somatic material, as well as probate and family law (disputes over inheritance and parental rights).

Efforts by universities and research hospitals to secure intellectual-property claims to their research findings, and to patent the research tools (including biological material) used in obtaining them, have spurred the process.

Moore v Regents of the University of California (1990)  establishing that a patient or donor had no claim to profits derived from use by recipients of his or her own harvested or extracted tissues, cells or gametes  encouraged resort to sperm and ovum donations, and sped development of the ‘oocyte economy.’

The ruling in this case explicitly referred, as a foremost consideration, to its implications for biomedical research, the judges dutifully genuflecting before the needs of industry.

Similarly, to facilitate the practice of IVF, sperm donors are legally held to have relinquished parental rights over biological offspring born as a result of artificial insemination. Californian judges have found that gestational hosts do likewise, in order that surrogacy arrangements should proceed without a hitch.

It is in Sacramento, rather than Ahmedabad, that authorities have been asked to rule on the ownership and disposition of frozen embryos.

And it is in the beating heart of world capitalism that a 1996 article in a legal journal could announce that gestational surrogacy had brought about the ‘demise of the unitary biological mother’. (Its author is now a ‘philanthropy consultant’ who ‘helps charities and brands secure celebrity support for cause-marketing campaigns and fundraising events.’)

Ivy League egg donors


This image of divided maternity (‘demise of the unitary mother’) furnishes an almost parodic example of the fragmentation that follows from commodification or rationalization, as described in the Marxist and Weberian traditions.

Once an activity (such as human sexual reproduction) is drawn into the sphere of production for the market, or a need is supplied as a commodity, the division of labour splits it apart into its specialized aspects or components.

‘Reproductive arbitrage’ and the ‘market for children’, therefore, are symptoms of what Arlie Hochschild calls the ever-advancing commodity frontier, the encroachment of commodity production and the capitalist sector upon ever more elements of human life.

Activities once performed by individuals or households for their own use, for satisfaction of their own needs with both the labour and its output free of monetary cost — become services available for purchase on the market, in return for payment.

The ‘relinquishing of family functions to the market realm’ is hardly novel. The role of the domestic household as a production unit that self-provisions has ebbed for several centuries, its scope annexed and chiselled away since at least Britain’s Agricultural Revolution.

Few households now cultivate their own crops, educate their own children, spin and weave their own textiles, or construct their own houses. Responsibility for all these activities has been transferred to the capitalist sector or the state.

A few residual tasks remain for unpaid housework: the final stages of food preparation, childcare for infants and preschoolers, some custodial care of school-age children, cleaning of residential premises, etc.

The waning role of the domestic sector  and the transfer of production to a capitalist sector that can introduce efficient new techniques, raise productivity and realize economies of scale  has meant a degree of liberation from isolation and household drudgery, freeing up women for paid employment and other social roles.

Yet Hochschild, since The Managed Heart (1993), has drawn attention to recent new incursions by the market into the domestic household, in the fields of emotional intimacy, affective display and attachment.

With supply of these to customers now yielding a profitable return, employees, especially in ‘hospitality’ or service occupations, are obliged to convincingly demonstrate emotion: the solicitousness of the waiter, the empathy of the care worker, the conviviality of the flight attendant, the cheerful verve of the tour guide.

Emotional labour ‘requires one to induce or suppress feeling in order to sustain the outward countenance that produces the proper state of mind in others.’

Such transactions may be extended, Hochschild has noted, to ‘outsourcing’ (from independent contractors or employees) family functions traditionally performed by women, as mothers and wives, within the domestic household: cook, teacher, nurse, nanny, but also provider of emotional support, companionship and sexual partnership.

Intimacy may be purchased either in spot markets or by entering into long-term bilateral arrangements, with previous methods of attracting mates and forming pair-bonds having now dissolved or become too time-consuming,

A ‘familial role’ is ‘shown to be divisible into slivers, a whole separated into parts.’

Here, too, efficiency gains are made from turning tasks over to dedicated specialists:

Especially in its more recent incarnation, the commercial substitutes for family activities often turn out to be better than the “real” thing. Just as the French bakery may make bread better than mother ever did, and the cleaning service may clean the house more thoroughly, so therapists may recognize feelings more accurately. Even child care workers, while no ultimate substitute, may prove more warm and even–tempered than parents sometimes are.

Thus, in a sense, capitalism isn’t competing with itself, one company against another. Capitalism is competing with the family, and particularly with the role of the wife and mother.

Recoil, if it occurs here, is surely inspired not just by dread of the ersatz, but from threatened fulfilment of the bleakest Frankfurt School visions of the ‘exchange principle’ making human beings fungible and interchangeable.

In the banalization sought by use of the term ‘sex worker’, there is a caricature that mimics and nullifies the earlier hopes of women’s liberation, in the guise of realizing those aspirations.

To be sure, demands to revise the family, and disrupt standard reproductive arrangements, have long featured as a staple in visions of social transformation.

But surrogacy in a dingy Gujarati basement dormitory, or a gleaming Californian clinic, is far indeed from the sexual and matrimonial innovations proposed for Fourier’s phalanstère, Bacon’s New Atlantis or Campanella’s City of the Sun, let alone Firestone’s utopia of ‘artificial reproduction’ and parthenogenesis.

The relationship of gestational host to client is less novel than supposed, as made clear in an anecdote from Hochschild’s The Outsourced Self:

I didn’t want her to think of me as this big rich American coming in with my money to buy her womb for a while. So I did touch her at some point, I think, her hair or her shoulder. I tried to smile a lot.

Through the interpreter I told her, “I am very glad and grateful you are doing this.” I explained that we’d tried to have a baby but couldn’t. I told her not to worry for herself; she would be taken care of. I asked her about her own child.

She didn’t look at ease. It was not the unease of, “I can’t believe I’m doing this,” but more the unease of the subordinate meeting her boss.

Of course, the precise relationship is rather presumptuously misspecified: the surrogate is a commercial subcontractor, not an employee. The contracting parties, holding all cards, are the surrogacy clinic and its commissioning clients.

World capitalism is capable of accommodating, and indeed of promoting, those survivals of domestic servitude and patriarchal terror that assist the growth of its latest production lines. The hereditary dynasty of Nehru, not to speak of the lineages of Bush and Clinton, attest to an official capacity for preserving the atavistic: inherited charisma, or family branding, at the head of the bureaucratic state.

Maintenance of a servile pool of Indian women (contractually denied any right to abortion, etc.) thus serves roughly the same social function as does existence of the idle, squandered two billion or so human beings wasting away, on standby, in the slum workshops of Asia’s informal sector, and in the continent-sized skid row of Africa: exiled from capitalist employment yet useful to employers.

Liberal capitalist societies, in ideal form, prohibit certain market transactions (e.g. the sale and purchase of human beings, contracts of indentured servitude).

They offer thereby a more limited scope for commodity exchange than do slave-owning societies. When the Roman civil code was rediscovered in the High Middle Ages, and used as the foundation for European commercial law, a good deal of antiquated material relating to trade in slaves had perforce to be discarded by the glossators.

However, it is a commonplace of Marxist thought that capitalist property relations tend, by their nature, to expand into every available territory, occupy each vacant line of production, and invade any vulnerable social nook. Commercial transactions, and property rights, thus tend to encompass more domains of existence than ever before.

This may be most apparent in the industries of health, physical embellishment and body transformation: repair, modification, procreation and enhancement.

What types of entities and powers may legitimately be alienated, surrendered under the profit motive, or acquired by payment? What parts of the body, or human capabilities, have recently lapsed into chattel status, and may validly be transacted in the market; which of them are murky?

While the United States’ National Organ Transplant Act (1984) forbids the sale or purchase of vital organs for ‘valuable consideration’, some philosophers have recently advocated legalization of payment for kidney sales; another salutes ‘commodification of human body parts’ and, indeed, ‘universal commodification.’

The attitudes of some, it has elsewhere been remarked, betray ‘an underlying fear of treating the human body, or the cellular material that will develop into a human being, as the personal property equivalent of cars or television sets.’ This, ‘although perhaps justifiable on moral grounds’, is unhelpful. All rights, ultimately, flow from proprietary interests.

Thus speaks the wisdom of the age.

It brings to mind the young Marx’s description of the ‘power of money’, which Adam Smith had said conferred the ‘power to command’ labour and the products of labour.

As the productivity of human labour increases, the fruits of the entire world are brought within the grasp of the wealthy, who can through spending remedy all deficiencies:

That which is for me through the medium of money  that for which I can pay (i.e., which money can buy)  that am I myself, the possessor of the money. The extent of the power of money is the extent of my power. Money’s properties are my  the possessor’s  properties and essential powers.

Thus, what I am and am capable of is by no means determined by my individuality.

am ugly, but I can buy for myself the most beautiful of women. Therefore I am not ugly, for the effect of ugliness its deterrent power  is nullified by money.

I, according to my individual characteristics, am lame, but money furnishes me with twenty-four feet. Therefore I am not lame.

I am bad, dishonest, unscrupulous, stupid; but money is honoured, and hence its possessor. Money is the supreme good, therefore its possessor is good. Money, besides, saves me the trouble of being dishonest: I am therefore presumed honest.

I am brainless, but money is the real brain of all things and how then should its possessor be brainless? Besides, he can buy clever people for himself, and is he who has power over the clever not more clever than the clever?

Do not I, who thanks to money am capable of all that the human heart longs for, possess all human capacities? Does not my money, therefore, transform all my incapacities into their contrary?

If money is the bond binding me to human life, binding society to me, connecting me with nature and man, is not money the bond of all bonds? Can it not dissolve and bind all ties? Is it not, therefore, also the universal agent of separation? It is the coin that really separates as well as the real binding agent.

The chubby pimpernel

May 31, 2014

Charles Ryder, both eager to preserve order and hankering for a street skirmish, skips back across the Channel in Evelyn Waugh’s Brideshead Revisited:

I returned to London in the spring of 1926 for the General Strike.

It was the topic of Paris. The French, exultant as always at the discomfiture of their former friends, and transposing into their own precise terms our mistier notions from across the Channel, foretold revolution and civil war.

Every evening the kiosks displayed texts of doom, and, in the cafés, acquaintances greeted one half derisively with: ‘Ha, my friend, you are better off here than at home, are you not?’ until I and several friends in circumstances like my own came seriously to believe that our country was in danger and that our duty lay there.

We were joined by a Belgian Futurist, who lived under the, I think, assumed name of Jean de Brissac la Motte, and claimed the right to bear arms in any battle anywhere against the lower classes.

We crossed together, in a high-spirited, male party, expecting to find unfolding before us at Dover the history so often repeated of late, with so few variations, from all parts of Europe, that I, at any rate, had formed in my mind a clear, composite picture of ‘Revolution’  the red flag on the post office, the overturned tram, the drunken N.C.O.s, the gaol open and gangs of released criminals prowling the streets, the train from the capital that did not arrive.

One had read it in the papers, seen it in the films, heard it at café tables again and again for six or seven years now, till it had become part of one’s experience, at second hand, like the mud of Flanders and the flies of Mesopotamia.

Then we landed and met the old routine of the customs-shed, the punctual boat-train, the porters lining the platform at Victoria and converging on the first-class carriages; the long line of waiting taxis.

‘We’ll separate,’ we said, and see what’s happening. We’ll meet and compare notes at dinner,’ but we knew already in our hearts that nothing was happening; nothing, at any rate, which needed our presence…

He collides fortuitously with his old chum Mulcaster, who already has enrolled with the defenders of property, but whose paramilitary urges remain equally unsatisfied:

We dined that night at the Café Royal. There things were a little more warlike, for the Café was full of undergraduates who had come down for ‘National Service’.

One group, from Cambridge, had that afternoon signed on to run messages for Transport House, and their table backed on another group’s, who were enrolled as special constables. Now and then one or other party would shout provocatively over the shoulder, but it is hard to come into serious conflict back to back, and the affair ended with their giving each other tall glasses of lager beer.

‘You should have been in Budapest when Horthy marched in’ said Jean. ‘That was politics.’


We went to a number of night clubs. In two years Mulcaster seemed to have attained his simple ambition of being known and liked in such places. At the last of them he and I were kindled by a great flame of patriotism.

‘You and I ‘ he said, ‘were too young to fight in the war. Other chaps fought, millions of them dead. Not us. We’ll show them. We’ll show the dead chaps we can fight, too.’

‘That’s why I’m here,’ I said. ‘Come from overseas, rallying to old country in hour of need.’

‘Like Australians.’

‘Like the poor dead Australians.’

Boy Mulcaster (Jeremy Sinden)

We were sitting round after luncheon that day when Bill Meadows came back from the telephone in high spirits.

‘Come on,’ he said. ‘There’s a perfectly good battle in the Commercial Road.’

We drove at great speed and arrived to find a steel hawser stretched between lamp posts, an overturned truck and a policeman, alone on the pavement, being kicked by half a dozen youths. On either side of this centre of disturbance, and at a little distance from it, two opposing parties had formed.

Near us, as we disembarked, a second policeman was sitting on the pavement, dazed, with his head in his hands and blood running through his fingres; two or three sympathizers were standing over him; on the other side of the hawser was a hostile knot of young dockers.

We charged in cheerfully, relieved the policeman, and were just falling upon the main body of the enemy when we came into collision with a party of local clergy and town councillors who arrived simultaneously by another route to try persuasion. They were our only victims, for just as they went down there was a cry of ‘Look out. The coppers,’ and a lorry-load of police drew up in our rear.

The crowd broke and disappeared. We picked up the peace-makers (only one of whom was seriously hurt), patrolled some of the side streets looking for trouble and finding none, and at length returned to Bratt’s.

Next day the General Strike was called off and the country everywhere, except in the coal fields, returned to normal. It was as though a beast long fabled for its ferocity had emerged for an hour, scented danger, and slunk back to its lair. It had not been worth leaving Paris.

Jean, who joined another company, had a pot of ferns dropped on his head by an elderly widow in Camden Town and was in hospital for a week.

Counter-revolutionaries thwarted by the absence of revolution; heroic ambitions frustrated, and reduced to play-acting, by the sedate doddering of British Labourism: it is a droll picture. (This blog has described the historical context of British society in the interwar years, and aspects of the political situation in Europe during the 1920s.)

But the scene is less farcical, and the players politically sharper, than the official anti-austerity ‘opposition’ mustered today against Mulcaster’s boyish lookalike, the Australian Treasurer Joe Hockey.

Such opposition has, for now and in the manner predicted, been successfully ushered, to the advantage of political stability, into unthreatening and expedient channels. In thrall to Labor and the Greens, faithful to the trade unions: la gauche respectueuse backed by tidy street demonstration.

One feature of this landscape is the extraordinary burst of publicity given lately by Australia’s mainstream media to Socialist Alternative, a tiny organization itself well versed in street theatre.

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.

Roemer’s retour à property rights; or, Justice as squareness

February 12, 2014

The Hayekians Tyler Cowen and Peter Boettke have alerted econobloggers to a recent article by John Roemer: ‘Thoughts on arrangements of property rights in productive assets’.

Roemer has kept quiet on this topic for the past 20 years, having proposed a coupon/mutual-fund model of market socialism back in the early 1990s.

Two decades on, what does he have to say about these issues? On the whole, very little.

Roemer market socialism

Roemer’s impatience and waning interest in the subject had been evident back in A Future for Socialism (1994).

In that book, property relations were candidly described as mere means rather than ends in their own right. They were not intrinsically worthy of attention, whether political or theoretical:

[In] Eastern Eu­rope, many different proposals for what to do about the formerly state-owned firms are currently under debate…

My view is that socialists have made a fetish of public ownership… What socialists want are the three equalities [of welfare and self-realization, political influence and social status]; they should be open-minded about what kind of property relations in productive assets would bring about those equalities… The link between state ownership… and the three equalities is tenuous, and I think one does much better to drop the concept from the socialist construction….

Another instance of the fetishism of public ownership is the position common among socialists that the public should decide, presumably through some kind of representative democracy, how to use the economic surplus (or, as economists say, how to determine the rate and sectoral distribution of investment)…

[But if] there were a full set of futures markets, if externalities associated with investment were small, and if people’s preferences were formed under conditions of equal opportunity, I would have little objection to determination of investment by the market…

In sum, I view the choice of property rights over firms and other resources to be an entirely instrumental matter; possibilities for organizing such rights should be evaluated by socialists according to the likelihood that they will induce the three equalities with which socialists are concerned.

Such pragmatic insouciance, while long a feature of Roemer’s work, had not hitherto applied on this fundamental question.

Previously, as late as 1989, he had seemed to think such doctrinal matters were essentially settled and non-negotiable. Revision or amputation of these basic socialist principles, unlike many others, was deemed unnecessary.

Roemer himself still retained the classical enthusiasm for socialized industry, to judge by his article from that year, ‘Public ownership and private property externalities’. There, exhibiting little of the later diffidence, he lined up dutifully behind public ownership, calling for the ‘abolition of capitalist private property… not simply the particular distribution of it that exists in capitalist societies.’

‘Market socialism’, in its 1989 definition, and even later, meant: ‘(a) public ownership of the means of production and (b) private ownership of skills and labour.’

As Mill had once pleaded that the ‘principle of private property has never yet had a fair trial in any country’, and should be judged ‘at its best… not as it is, but as it might be,’ Roemer likewise declared that Stalinism could not constitute the final verdict on socialized property, for the latter had been warped and perverted by its bureaucratic rule.

Yet, as with many other left-wing intellectuals, Roemer’s political beliefs and professional networks were transformed abruptly during five years in the late 1980s and early 1990s.

Thus, amid the collapse of European Stalinism, Roemer would present his 1994 book as a blueprint for a more ‘feasible socialism’, shorn of outmoded features. With restoration now underway in eastern Europe, might not that region provide a testing-ground for novel projects?

The countries where the opportunity costs of adopting market socialism are the least are, I believe, those that have formed in Eastern/Central Europe and out of the Soviet Union since 1989. These countries face a momentous task of institution building, no matter what kind of market system they will have, and one could argue that the costs of designing a coupon stock market, a bank-centric monitoring system, and constitutions that adequately shelter economic institutions (banks, firms) from state interference would be no greater than the costs of building a capitalist system along Anglo-American lines…

[I]ntroducing the kind of market socialism advocated here in some of these states will perhaps be politically possible in a few years… I think, as well, that this kind of transformation is not out of the question in China or Viet­nam, or perhaps in Cuba.

This was recognizably wishful thinking, and unsurprisingly events did not turn out as Roemer had hoped.

An unkind reader (Jon Elster?) might suggest that Roemer could not candidly admit to himself or his readers how irresistibly the political and ideological wind was blowing in the direction of capitalist restoration, for to do so would have exposed his own work as just one more unexceptional instance in the general market-embracing process.

Roemer’s market-socialist vision did not provide any group with political inspiration, left behind no adherents, and is long forgotten. (It proved itself of momentary use to some. When in 1995 the British Labour Party abandoned its own ‘fetish’ for nationalized industry, two of its house intellectuals, writing in New Left Review, acknowledged Roemer’s coupon model as kin, if not direct inspiration, for Tony Blair’s ‘new politics of ownership’).

Roemer subsequently shifted intellectual territory, devoting himself to innovative work in political science. As a kind of minor post-Rawlsian, he also did some less groundbreaking work on distributive justice

The latter field now provides occasion for him to revisit matters long neglected.

He has contributed to a special journal issue devoted to John Rawls’s idea of ‘property-owning democracy’.

This latter term, vague and short on institutional specifics, was introduced by Rawls as a possible ‘alternative to capitalism.’ It is flexible enough to have been adopted by Margaret Thatcher (indeed, its roots lay in British anti-Labourism). On anyone’s reading, whatever substance the term might have lay in the compound adjective rather than the noun it modified. Lately it has been rediscovered as fertile material for political philosophers, generating much learned commentary.

Roemer starts his new article on familiar old ground. If exploitation arises from asset inequality (differential ownership of productive resources allows the wealthy to appropriate the labour effort of employees) he imagines what would happen if everyone owned his or her per capita share of capital goods:

In thinking about alternatives for the arrangement of property rights in the United States, it is useful to begin with some facts.

In 2007, before the financial crash, the total market capitalization of US stocks was $51 trillion. There are approximately 114 million households, and so if those corporate assets were to be owned in equal shares by households, each would own about $449 000 in corporate equities. The share of capital income (profits, rent, interest and proprietors’ income) in national income is around 25%, but this oscillates over time.

Thus, under an egalitarian distribution of capital assets, and assuming profitability and labour supply remained about the same as now, each household would earn about one-fourth of its income from capital. If we take the average real rate of return on capital to be 4%, then each household would earn about $18 000 per annum from returns on its equity portfolio.

This would, in particular, have a substantial impact on poverty.

In the 1980s Roemer had presented this scenario as ‘people’s capitalism’, in which there was no abolition of private property per se, but only a correction of its unequal distribution.

It is recognizable as Rawls’s model of property-owning democracy, and less so as Roemer’s own blueprint for market socialism.

In the latter scheme, public ownership was, though mutilated beyond recognition, nominally preserved. Roemer had defined his market socialism as ‘a politico-economic mechanism embodying competitive politics, market allocation of most goods, and public ownership.’

(In the conclusion to A Future for Socialism, he repeatedly spoke of ‘nationalization of private assets’ as a step ushering a society towards his market socialism. Elsewhere he emphasized the ‘reorganization of property rights’, rather than simply their redistribution. With Pranab Bardhan he declared: ‘We take public ownership, in a wider sense, to mean that the distribution of the profits of firms is decided by the political democratic process—yet the control of firms might well be in the hands of agents who do not represent the state.’)

It is true that a distinction between the two schemes, Roemer’s market socialism and Rawls’s property-owning democracy, is hard to maintain. In the early 1990s Roemer exerted little effort to deny their practical equivalence. In any case, his own stated views obliged him to carry on as though the precise arrangement of property relations was irrelevant: what mattered were the downstream consequences for egalitarianism.

Thus he declared early in A Future for Socialism: ‘This work was not initiated by the socialist movement but by the publication of John Rawls’s book, A Theory of Justice, in 1971.’

But Rawls, for one, insisted that ‘property-owning democracy’ was something distinct from the market-using economic arrangement he called ‘liberal socialism’.

And Roemer, in 1994, found it both meaningful and congenial to use the appellation ‘market socialism’, and to assert, with some adamance, that ‘socialism remains an ideal worth pursuing’, and moreover worth preserving as a distinct kind of egalitarianism not otherwise provided for.

He continued to refer to himself as a Marxist, not a liberal egalitarian, and did not publicly resile from previous statements like: ‘[The] Marxist negation of “unequal ownership of the means of production” is not “equal but private ownership of the means of production.”‘

Twenty years later, however, the political setting warrants less compunction than before. Roemer thus goes further, saying his vision had, like Rawls’s, simply ‘intended to maintain approximately equal corporate ownership by households.’ In A Future for Socialism he had merely proposed a system of property relations that was ‘what we currently have, except… egalitarian.’

Roemer model - Per capita profit income

Having retrospectively given his scheme the name ‘property-owning democracy’, Roemer now declares himself ‘skeptical of further pursuing the approach I proposed in 1994.’

Tyler Cowen is not quite correct to describe this as Roemer’s recantation. It is instead a peculiar mix of revisionism, confession and apostasy: What I said was not what I claimed to be saying at the time, and anyway I don’t believe it (“Which part?” “None of it!”) any more.

Roemer proceeds thereafter in rambling and discursive fashion, making breezily gnomic assertions about what is feasible and what is desirable, and rarely slowing to provide evidence for his claims:

[There] appear to be three alternatives for the way in which firms can be owned, which might deliver a more egalitarian distribution of income: state ownership, worker ownership, and household ownership.


The efficiency of state ownership continues to be debated. A number of industries, in a number of countries, have done well under state ownership: steel in Korea, insurance in Germany, oil and railroads in a number of countries, retail liquor in Canada, many sectors in China, and banking in Taiwan and some other countries. The key seems to be to give a good deal of autonomy to the industry, that is to shield it from political interference. As a template for the economy as a whole, it is probably not workable.


One of the very important developments of the late twentieth century was that the composition of the richest tranche of the US population changed. A very significant portion of the income of the very rich now comes from salaries, not from capital. It is earned income, in IRS terminology.

These people are the upper management of corporations, both financial and industrial, movie stars, some athletes, some highly paid professionals, and I conjecture that, for the most part, the salaries of these individuals are competitively determined. No one would challenge this claim with respect to movie stars or athletes, but many would challenge it for corporate management. I think it may well be true of their salaries as well.

It’s that sort of article. More formal or technical argument may well have been out of place, but it is remarkable that after his long hiatus Roemer did not feel obliged to be more seriously minded about the topic.

Were there no criticisms from the left he might have addressed? Was A Future for Socialism marred only by its author’s excessive political optimism and radical fervour? Do the only ‘problems that one must face if one wants to design a property-owning democracy in which the distribution of ownership of firms remains quite egalitarian’ arise from a ‘culture of greed’ existing in the contemporary United States?

Roemer today is ‘not eager to defend’ A Future for Socialism. Has he outgrown it, or have events rendered its proposals outdated? There are good reasons to imagined him satisfied with its consequences, though the book failed in its explicit aim of ‘designing the next wave of socialist experiments’.

In the late 1980s many left-wing academics found themselves in a professional bind. They had made large Marx-specific investments (the sunk costs incurred in acquiring specialized knowledge about property relations, classes, modes of production, etc.).

The time, effort and money put into this training were designed not for general scholarly purposes. The skills learnt were suited for a particular world in which socialism and social democracy were serious prospects and could be discussed, with people much like themselves, in polite collegial conversation, while also providing opportunities for deployment outside the university.

With the collapse of Stalinism and social democracy/labourism, these dedicated skills were suddenly much less valuable. Such specialized expertise could not easily be redeployed, especially in economics and political science departments. Specific investments could either be written off at a loss, or put to alternative use, if the latter could be found.

Engaging in speculation about market socialism and ‘transitology’ thus served a purpose for people like Roemer. It allowed them to deploy their available skills in an academically respectable manner, smoothing out the switching costs while gradually converting to mainstream social science.

Once this transition was achieved, it became apparent that their preoccupations now lay permanently elsewhere. The topics of the past became the past, no longer meriting sustained concern. What had been a hasty and undignified rush for the exit would henceforth discourage any return to collect belongings or settle arrears.

Distributional conflict and technical change in Australia, 1963-2009

September 3, 2013

For anyone hoping to understand Australian society, it’s essential to be acquainted with a few stylized facts about the Australian economy and its macro trajectory.

Throughout the past 50 years, mechanization (the adoption of more capital-intensive techniques through capital-using, labour-saving technical change) has increased the level of output per hour worked, more or less steadily.

But higher capital intensity hasn’t brought a proportionate increase in labour productivity. Especially over the last decade, capital deepening (the increase in capital used per employee) has proceeded more quickly than labour productivity has risen.

Capital-labour ratio - Australia

Labour productivity and capital productivity - Australia

The result has been that the output-capital ratio (i.e. net value added per dollar of fixed capital, which may be called ‘capital productivity’ in analogy to labour productivity) has fallen. Again, the last decade in particular has been notable in this respect.

output-capital ratio - Australia

One reason for this sustained decline is a long-term exhaustion of technical innovation in the capital goods sector, observed worldwide since the exceptional postwar boom petered out in the 1970s.

The decades of the mid-twentieth century were distinguished by a change in the composition of the fixed capital stock, occasioned by differential rates of productivity growth experienced by the various types of tangible capital goods. Marked technical advances during the 1930s and 1940s saw a relative decline in the cost of structures compared to machinery and equipment in the advanced capitalist core, and a substitution away from using structures and towards using equipment (metal products, electrical and non-electrical machinery, transport equipment, communication equipment, office machinery, and professional and scientific equipment).

Maddison capital stock

This adjustment within the capital stock was completed within a few decades. Since the 1970s, despite bursts of investment in software and IT equipment, no comparable sustained cheapening of fixed assets has occurred.

But, along with this real (i.e. physical, non-price) change, another factor in Australia’s falling output-capital ratio is nominal: the decline in Australia’s terms of trade and the exchange rate of the Australian dollar throughout much of this period. Australian firms import much of their machinery and equipment. Depreciation of the dollar during the 1980s and 1990s meant that the price of imported capital goods would have risen relative to Australian-produced goods.

It should be noted that the secularly declining profile of the output-capital ratio has been arrested or reversed during several periods of the above series (the mid-1980s and late 1990s).

Several causes account for this. The latter include the movement of capital into new, relatively labour-intensive lines of production (e.g. ‘service’ industries such as health and education), the growth of unproductive employment (e.g. in law, advertising and financial services), and the offshoring of production.

But since 2001 these haven’t been sufficient to prevent the output-capital ratio from falling.

This trajectory of the output-capital ratio is important since the gross profit rate is the product of two terms: capital productivity and the profit share of GDP.

What then of this second factor?

Australian real wages were stagnant for nearly two decades, throughout the 1980s and until the late 1990s, and again for much of the 2000s.

This interval was made possible by political changes to labour-market institutions (including the ALP-ACTU Prices and Incomes Accord and the dissolution of the ALP as a social-democratic or labourist party) and the replenishment of vast, under-utilized labour resources (e.g. collapse of the Soviet Union, rural migration in China, stagnant pools of petty producers in India, greater labour-force participation of women, vast immigration inflow).

Throughout this period, labour productivity rose more swiftly than real wages, reducing the wage share (i.e the share of net output captured by employees as wages and salaries) and raising the profit share.

wage share - Australia

This, together with the temporary rebound in the output-capital ratio allowed the profit rate to recover during the 1980s.

Ultimately, however, the increase in labour productivity hasn’t been sufficient to prevent the output-capital ratio from falling. The long-term impasse in capital productivity has once again, over the past decade, dragged down the profit rate.

Profit rate - Australia

These circumstances make it essential for Australia’s propertied classes and the policymaking elite that labour costs be reduced.

This imperative is what lies behind the assertion — repeated quietly but assiduously by senior Australian bureaucrats, policy advisors and politicians over the past year — that ‘national living standards’ must fall following the federal election this Saturday. (The project, of course, had already long commenced.)

Indeed, the entire drawn-out election campaign — with its various follies, diversionary sideshows, deliberate pollutions of popular opinion and officially foredained result — has been conducted to guarantee this result. The codeword, by which political leaders speak to elite audiences while evading public detection, is ‘productivity.’

Pursuit of this elite objective also helps explain the institutional renovation of the Australian state over the past two decades.

The latter includes strengthening of repressive organs, ‘anti-terror’ measures, mass incarceration at the whim of the executive of people innocent of any crime, and technocratic forms of policymaking.

As with the reconfiguration of the US state, these changes are designed to allow measures to be implemented against mass opposition.