For the Record

Industrial-Corporate Capitalist Coercion, Part II: The Clothier’s Delight, or the rich Men’s Joy, and the poor Men’s Sorrow, wherein is exprest the Craftiness and Subtility of many Clothiers in England, by beating down their Workmen’s Wages

We heapeth up richest treasure great store
Which we get by griping and grinding the poor.
And this is a way for to fill up our purse
Although we do get it with many a curse.

And first for the combers, we will bring them down,
From eight groats a score until half a crown;
If at all they murmer and say ‘tis too small
We bid them choose whether they will work at all.
We’ll make them believe that trading is bad
We care not a pin, though they are n’er so sad.

We’ll make the poor weavers work at a low rate,
We’ll find fault where there is none, and so we will bate;
If trading grows dead, we will presently show it,
But if it grows good, they shall never know it;
We’ll tell them that cloth beyond sea will not go,
We care not whether we keep clothing or no.

Then next for the spinners we shall ensue;
We’ll make them spin three pounds instead of two;
When they bring home their work unto us, they complain
And say that their wages will not them maintain;
But that if an ounce of weight they do lack,
Then for to bate threepence we will not be slack.

And thus, we do gain our wealth and estate
By many poor men that work early and late;
If it were not for those that labour so hard,
We might go and hang ourselves without regard;
The combers, the weavers, the tuckers also,
With the spinners that work for wages full low,
By these people’s labour we fill up our purse,
Although we do get it with many a curse.

Industrial-Corporate Capitalist Coercion, Part 1: “Enclosure” and the Privatization of the English Commons

Two posts ago, I suggested that one need not look so far as international free-trade of the corporate extractionist variety that is presently practiced by---in the usual case, forced by the WTO and IMF on---countries subject to free trade agreements, to identify what appears to be a deep flaw in the primary argument cited in favor of capitalism (discussed five posts ago); namely, that its implementation entails an unacceptable abrogation in the highly desirable goods of being able to freely choose and engage in a given profession. Rather, we need only look at Smith’s paradigmatic case of the sort of division of labor that increases productivity and hence “the wealth of nations”; namely, the case of a pin-making factory, where “one man draws out the wire, another straights it, a third cuts it, a fourth points, a fifth grinds it”, and so on through 18 distinct operations. Attention to this case decisively establishes that the productivity Smith lauds must be purchased, not just at the cost of an individual’s freedom to choose a profession (e.g., tailor versus shoemaker) other than whatever their country’s “low cost” industries happen to be (as I originally noted when considering Smith’s argument for international free trade), but moreover at the infinitely worse cost of an individual’s spending their entire working day doing “one simple operation … making this operation the sole employment of his life”, or something effectively as boring and grueling.

No rational human being, I assert, would willingly choose to partake in such a system, if there were any better option open to them. Hence we needn’t move to considerations of international trade in order to see the loss of human freedom and fulfillment that are characteristic of capitalism at work. Notwithstanding Smith’s cozy and reassuring references to tailors and shoemakers as illustrative of division of labor, the division of labor which Smith sees as the lynchpin (no pun intended) of the capitalist framework immediately and obviously entails, at the national or even more local levels, that human beings enter into an economic system which is in clear opposition to human freedom and fulfillment, on effectively any meaningful definitions of these terms.

Given that it is, I claim, clearly true that rational human beings, either at home or abroad, would not willingly choose to work in the contemporary equivalents of Smith’s pin-maker factory, associated with the manufacturing, agribusiness and service industries, then what explains why so many hundreds of millions (billions, now?) are doing just this sort of work within capitalist systems, here and elsewhere? How has capitalism come to take hold with such a vengeance, in (let us say) the last 500 years?

Here again I will quote at length in the extended post from David McNally’s illuminating and well-documented research in Another World is Possible. Once again, I ask that readers spend the time to read what follows. If you have not yet come across the details of the history of the English enclosure of the Commons, I guarantee that it will be worth your while.

Generation "Whatever"

A recent study shows that young people increasingly feel they have no control over their lives:

Children ages 9-14 and college students increasingly believe that their future is not in their control and nothing they do matters, according to a new study to be published in the August issue of Personality and Social Psychology Review.

The research, led by SDSU Psychology professor Jean Twenge, Ph.D., SDSU master’s student Charles Im and Case Western Reserve University Ph.D. student Liqing Zhang, shows that 30 percent more young Americans now believe their lives are controlled by outside forces rather than by their own achievements as compared to the beliefs of young people in the 1960s and 1970s.

“These findings are very disturbing, because previous research found that young people with these beliefs are more likely to be low achievers in school, exhibit delinquent behavior, cope poorly with stress, and become depressed,” Twenge said. “Our generation has given up. We’re looking at ‘Generation Whatever,’ with many kids feeling like they can’t make a difference. Most feel that luck is a stronger determinant of their future than their own power to make things happen.”

Titled “It’s Beyond My Control: A Cross-Temporal Meta-Analysis of Increasing Externality in Locus of Control, 1960-2002,” the paper measures changes in childrens’ and young adults’ “locus of control,” or beliefs about what controls their lives. The results show a strong increase in cynicism, helplessness and general negativity among young adults of this generation as compared to kids 30-40 years ago.

The project studied nearly 25,000 young people from two age groups (children ages 9-14 and college students) who completed questionnaires in the years between 1960 and 2004.

[...]

[C]ollege students are now more likely to agree with items such as “Getting a good job depends mainly on being in the right place at the right time,” and “The world is run by the few people in power, and there is not much the little guy can do about it.” They are less likely to agree that “Becoming a success is a matter of hard work; luck has little or nothing to do with it,” and “The average citizen can have an influence in government decisions.”

“No one marches in the streets anymore. Kids feel there’s no reason to – it won’t do any good,” says Twenge. “And if you believe that success comes from luck rather than hard work, why work hard? It’s not surprising that this trait is linked to poor achievement in school.”

Many of these beliefs seem to me to be quite rational. When millions of hard-working and increasingly well-educated individuals, who have spent their lives gaining expertise in a given area, are the victims of downsizing, offshoring and outsourcing, personal effort becomes at best a necessary as opposed to a sufficient condition on success (and indeed, arguably not even a necessary condition, as per Benj's addendum below). Indeed, never mind being a success---whether you are employed at all becomes an accident of circumstance; and hence so does being healthy (as the 40-some million of uninsured can attest); and hence so does being able to live in half-decent circumstances; and hence so does being able to engage in something meaningful rather than menial; and so on, and so on.

The world is in fact run (and extremely poorly) by the very few people in power, and there doesn't seem to be much that the little guy can do about it. The average citizen in the supposed democracy that is the U.S. has almost no ability to influence government decisions, compared to the influence of rich donors and associated corporations. What meagre influence citizens do have via their individual votes for their so-called "representatives" is being increasingly cancelled by redistricting, voter intimidation, voter roll manipulation, and voting machine failure and/or tampering. And this is not to mention the many other means by which the average citizen's franchise is corrupted, via, for example, the continual barrage of right-wing propaganda aimed at getting people to vote in ways clearly against their own and the country's best interests, and the fact that, given the decimation of unions and the increased isolation of persons in their homes, there is effectively no social infrastructure enabling citizens to get together, figure out their interests, and work together to influence policy.

Moreover, it's time for us to take note that marching in the streets and other forms of protest in the U.S. and U.K. have had little if any effect on public policy in these countries. What good did the record-setting protest in Britain do? Blair just kept on keeping on; and of course Bush similarly ignored the millions of protesters across the U.S.. Those in power have evidently realized that they can effectively ignore even the most massive displays of protest, swatting these away with a dismissive "I don't make decisions on the basis of opinion polls (or whatever)", the repetition of a lie, or a chest-thumping "We must stay the course".

And the media, owned or otherwise in service to the same corporate elite that profits off of death and destruction, either fails to report on the protests or else duly mouths the rightwing talking point responses above. Nor do they now point out that these protesters were, in retrospect, right that the stated reasons for invading Iraq were clearly ungrounded; nor observe that the only reasons still standing for the war are those that the protesters identified: to get control of Iraqi oil, shock and awe the world with the crushing power of the U.S. boot, lay Iraq bare for the rampages of capitalist foreign investment, and funnel hundreds of billions of dollars of hard-earned taxpayer money into the pockets of those who profit from the military-industrial complex. Nor is the fact that millions saw all too clearly what was going on ever contrasted with the insincere mea culpas of media pundits and government toadies to the effect that "aw, shucks -- we were duped!".

Meanwhile, tens of thousands of human beings have died, hundreds of thousands of human beings have been gravely injured, tens of thousands of human beings have been sickeningly tortured, and Iraq is socially and economically devastated. Such is the price of complicity and betrayal of the truth, and every government official and media representative who turned their head from the evident facts and motivations for this war has as much blood on their hands as if they had murdered, injured, or tortured these innocent Iraqis themselves. But I digress.

Not content to merely ignore protest, of course, the powers that be are taking measures to shut it down, as witness the so-called "free speech zones" to which protesters of events are restricted---fully operative during our cherished Democrats' convention---and denials of permits to protest. Oh, and by the way, if you're going to Crawford, for god's sake don't wear an anti-Bush button.

Though the mainstream mouthpieces attempt to downplay the many indications of economic and political powerlessness, the crummy reality is out there for people to see for themselves. And it is very bad news for the future of the U.S. and similar countries that our young people---the traditional optimists in society, and the segment of civil society most willing and able to put their time and energy where their hopes are---don't think they have any way to change it.

ADDENDUM

Certainly it's no suprise that the youth of the country feel that hard work is worthless and luck and circumstances are everything -- that the Oval Office is occupied by a do-nothing, ignorant, lazy loser who is only there due to being "well-born" cannot but set a bad example. -- Benj

Capitalism: what’s the real problem---international free trade or division of labor?

In my second to last post I argued that implementing Smith’s recommendation that nations should specialize in their low-cost industry, export the surplus, and import whatever can be more cheaply made elsewhere (“If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage”, The Wealth of Nations, 2000 Modern Library edition, p. 486) seemed to require that individuals be forced (or otherwise “encouraged”) to give up specializing in what they do best, and rather specialize in what their country does best. This requirement would, I suggested, unsatisfactorily undermine a basic good attaching to individuals’ being free to engage in a chosen profession; and I observed that this unsatisfactory consequence seems to be playing out in both developed and undeveloped nations operating under a capitalist paradigm. In my last post I then considered whether the loss of this good might be compensated by an increase in another good (namely, overall income and prosperity), and (drawing upon facts presented in David McNally’s Another World is Possible) I argued that, as an empirical matter of fact, this benefit does not seem to attach to the sort of neoliberal free trade currently being practiced.

A helpful reader offers another response on Smith’s behalf; namely, that Smith would not have endorsed the idea that government should interfere in the choice of individuals as regards their occupation, and that to the extent that free trade as currently implemented involves this sort of coercion, it departs from “classical” capitalism:

Capitalists do not claim that specialization should be forced on anyone. To the contrary, we claim that the division of labor, the highest form of cooperation, is naturally occurring and cannot be centrally planned. I don't know how I logically could claim to support free trade and then turn around saying that someone shouldn't be able to freely trade his or her labor.

That is the very type of state planning the classical economist railed against. And it's the very reason that free traders consider these agreements (NAFTA, etc.) as nothing more than impersonations of the real thing. They attempt to gain controls over imports and exports, exchange rates, and any number of regulations. They're a start, but genuine free trade wouldn't be in the form of international agreements. It would look like the trade that exists between states.

That Smith didn’t intend for free trade, as he endorsed it, to involve state coercion is clear from this passage, which occurs directly after his “invisible hand” passage (p. 485) (though it should be noted that this passage occurs in a discussion of whether the state ought to encourage one or other very general sort of industry---e.g., agriculture vs. manufacturing---and so isn’t, strictly speaking, addressing the fine-grained level of choice in profession with which I was concerned. But close enough).

What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted to no council and senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.

I’ll take this passage to support my reader’s remark that classical capitalists think that, just as local division of labor is “naturally occurring”, so too would (or should) be international division of labor. Now, as I noted and as my reader agrees, the international division of labor presently being implemented is not occurring “naturally”. So in a way that gets Smith (and classical capitalism) off the hook: the problem I am concerned with (concerning individuals being forced into certain occupations) lies in the neoliberal implementation of capitalism, not capitalism itself.

Or does it? The idea of “naturally occurring” division of labor makes sense when Smith is talking about tailors and shoemakers, each going about their chosen, fulfilling business, and trading the surplus fruits of each other’s labors (either directly, or via monetary exchange). But it’s worth recalling what sort of division of labor Smith really has in mind as supporting the wealth of nations, as laid out in his opening chapter, ‘Of the Division of Labour’.

Smith starts out with a powerful thesis:

The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgement with which it is any where directed, or applied, seem to have been the effects of the division of labour. (p. 3)

Since (as per his introduction), it is the productive powers of labor that form the basis for the wealth of nations (“The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nations”), division of labor is thus a (the?) crucial foundation of his economic system---that is, of classical capitalism. Smith goes on:

The effects of the division of labour, in the general business of society, will be more easily understood, by considering in what manner it operates in some particular manufactures.

He then gives an example in terms of what he calls “trifling manufactures” which are destined to supply the small wants of but a small number of people. Of these he says

The whole number of which must necessarily be small; and those employed in every different branch of the work can often be collected into the same workhouse, and placed at once under the view of the spectator.

Hmmm. Working in the workhouse under the view of the “spectator” doesn’t sound very appealing, but let’s see what Smith has in mind:

To take an example, therefore, from a very trifling manufacture […] the trade of the pin-maker; a workman not educated to this business […] nor acquainted with the use of the machinery employed in it […] could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty. But in the way in which this business is now carried on, not only the whole work is a peculiar trade, but it is divided into a number of branches, of which the greater part are likewise trades. One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it a the top for receiving the head; to make the head requires two or three distinct operations; to put it on, is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations […]. But though they were very poor […] they could, when they exerted themselves, make among them about twelve pounds of pins in a day.

This kind of manufacture produces goods that no individual could produce on their own:

Those ten persons, therefore, could make among them upwards of forty-eight thousand pins in a day. Each person, therefore, making a tenth part of forty-eight thousand pins, might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this particular business, they certainly could not each of them have made twenty, perhaps not one pin in a day […]

Smith goes on to generalize from this case:

In every other art and manufacture, the effects of the division of labour are similar to what they are in this very trifling one […].

This great increase of the quantity of work, which, in consequence of the division of labour […] is owing to three different circumstances; first, to the increase in dexterity in every particular workman; secondly, to the saving of the time which is commonly lost in passing from one species of work to another; and lastly, to the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many. […]

[T]he improvement of the dexterity of the workman necessarily increases the quantity of the work he can perform; and the division of labour, by reducing every man’s business to some one simple operation, and by making this operation the sole business of his life, necessarily increases very much the dexterity of the workman. […]

So, notwithstanding the reference, proximal to the “invisible hand” argument and the argument for international free trade, to the division of labor between tailors and shoemakers, what Smith really has in mind as the foundation for the wealth of nations is a division of labor that, in its purest form, involves “reducing every man’s business to some simple operation, and making this operation the sole business of his life”.

Two points are now worth noting.

First, it turns out that the question of whether classical capitalism would involve individuals’ being forced into certain occupations (this question already being answered in the affirmative, as an empirical matter, for neoliberal capitalism as presently implemented) turns out to be prior to of the international free trade issue. For this question can be antecedently raised as regards national division of labor, of the sort that Smith regards so highly.

Second, one has only to consider the description of Smith’s paradigm case of such national division of labor in order to reasonably infer that some degree of coercion must be involved for individuals to end up engaging in this sort of “profession”.

Most people reading this are probably lucky enough to not be working in a factory. But imagine doing nothing but one’s small boring corner of efficient production---say, stretching out wire for pins---for however many (unspecified---but presumably eight or more) hours a day, complete with some intimidating “spectator” keeping watch over you. This sort of “division of labor”, unlike the sort associated with individuals becoming tailors, shoemakers, or whatever, is not, I suggest, something that “naturally occurs”. Only under duress would humans choose to be both bored and intimidated for half or more of their waking hours.

I submit, then, that, notwithstanding Smith’s protestations to the contrary, the sort of division of labor which serves (by Smith’s own lights) as the foundation for classical capitalism, wherein each person’s business is reduced to “some simple operation”, does not “naturally occur” (since no one in their right mind would choose to do such work), but rather must be the outcome of duress or coercion of some sort. Hence the problem for capitalism that I initially located in Smith’s argument for international free trade---namely, that it requires that individuals specialize in something other than what they would choose to specialize in--- is independent of that argument, and is rather more foundationally located in Smith’s embrace of (what I’ll call) industrial division of labor (with the understanding that this includes agricultural industry).

But what sort of duress or coercion is at issue when individuals are led to engage in industrial division of labor, one might ask? Tune in next week for discussion.

Fact check: Does free trade “increase over-all income and prosperity”?

In my last post, I considered Adam Smith’s oft-cited argument for international free trade according to which, by analogy to local group economies wherein individuals “specialize in what they do best” and thereby “increase over-all income and prosperity”, individual countries should similarly specialize in whatever the country does best, export the surplus products of this specialized industry, and import everything else from the surplus of other country’s (equally specialized) industries. I pointed out that the argument appeals to a purely economic conception of the good associated with local division of labor, thereby ignoring the good which attaches to individuals’ selecting and practicing professions to which they are inclined. I noted that implementing Smith’s suggestion entails the decimation of the latter good, in requiring that individuals in a given country no longer “specialize in what they do best” but rather specialize in whatever their country does best. I noted that this unsatisfactory consequence may be observed both in the U.S. and in other countries where free trade a la Smith has been strongly encouraged, and that the consequences to individual liberty and flourishing have been especially devastating in the global south, where millions of individuals have been forced (by the destruction of their local economies via privatization and resource extraction) into near-slavery in their country’s “low-cost industry”: grueling labor in the agribusiness or manufacturing industries.

A couple of remarks on the limited scope of this argument. Even if it does show that there is a problem with the sort of free trade Smith is advocating, there might be other motivations for free trade which do not require that countries “specialize in their low-cost industry”; and my argument above wouldn’t immediately tell against such conceptions (unless the mere fact of free trade would inevitably push towards such specialization, which is unclear, at least to me). More generally, it is not my intention to deny that international trade between countries can, implemented appropriately, be a very good thing.

It does, however, appear that something in the ballpark of the Smithian conception is very close to the sort of free trade (of the neoliberal/corporate capitalist variety) that is presently operative, as reflected in Smith’s argument being commonly cited as motivation for present policies, and in countries conforming (by choice or under duress) to a capitalist paradigm being encouraged to embrace strict specialization and open markets. (Of course, in its present manifestation free trade has increasing less to do with Smith’s “kingdoms”: these days, governments appear to be serving mainly as middlemen between a country’s natural and labor resources, and the global corporations whose allegiance is to more abstract entities.)

So, how might defenders of Smithian free trade in its present neoliberal manifestation, understood as involving such forced (or however “encouraged”) specialization, respond? Certainly one line of response is to maintain that the individual goods lost as a result of implementing this program are, contrary to my assertion, adequately compensated by the benefits. Two such benefits are, it seems to me, regularly called out.

The first sort of benefit refers back to Smith’s claim that international free trade, just like local division of labor, will “increase overall income and prosperity”. Even if money can’t buy love, the objector notes, it can buy a lot of other things that could potentially make a huge difference in individual lives: better food, shelter, health care, education, and so on. So even granting my point that neoliberal free trade often involves a loss of some goods, nonetheless this loss is compensated by the greater goods that increased income and prosperity will bring. The second sort of benefit is less tangible and varies widely, but in general involves various personal and social goods that, it is claimed, are frequent concomitants of Smithian free trade. So, for example, it is suggested that when individuals (in particular, women) enter the capitalist work force they gain the benefit of seeing themselves as independent and capable of making a living on their own; people in a global culture get exposed to more information and become more cosmopolitan, etc.

I’ll consider whether Smithian free trade in its present neoliberal manifestation encourages the latter less tangible goods sometime down the line. For now I just want to present what seems to me to be compelling evidence that such free trade does not “increase the overall income and prosperity” of those in the countries in which it is implemented. What follows in the extended post is pages 44-52 of David McNally’s Another World is Possible (2002). McNally has written a succinct, powerful, well-documented book on globalization and the effects of capitalism. This info is so important that I typed this sucker in by hand (my scanner isn’t working and it isn’t available on-line). So do me a favor and read it all (then go buy McNally’s book and read the whole thing).

Annals of unsound arguments: From local division of labor to international free trade

Last week's New Yorker contains an 'Annals of Economics' piece by John Cassidy, entitled 'Winners and Losers'. The article is notable for challenging (however timidly) the fairly uniform endorsement of "the luminaries of the economics profession" that "trade liberalization is always and everywhere beneficial". Chairman of the WH Council of Economic Advisers N. Gregory Mankiw's recent descriptions of white-collar job outsourcing as "the latest manifestation of the gains from trade that economists have talked about at least since Adam Smith" and as "just a new way of doing international trade" such that "More things are tradable than were tradable in the past and that's a good thing" is a case in point.

Mankiw's remarks drew some political (though not economic) fire, probably because, as Cassidy notes, the claim that trade liberalization is always and everywhere beneficial "simply isn't true":

In today's world, where multinational corporations can produce many goods and services practically anywhere, and where investment capital can move from one continent to another at the flick of a switch, there is no economic theory which guarantees that new types of trade, such as outsourcing, automatically benefit the United States. Some Americans gain: consumers, who enjoy lower prices; stockholders, who see profits rising at companies that employ cheap foreign labor. Some Americans lose: workers whose jobs are displaced; the owners of firms whose contracts are transferred to foreign suppliers. But the economists' argument that the country as a whole inevitably benefits is questionable.

Such observations are clearly correct, but in my view they fail to identify the real problem with the received economic wisdom; namely, that it's based on an unsound argument. Cassidy summarizes Adam Smith's original argument for international free trade, which "economists cite ... all the time in an attempt to alleviate concerns about outsourcing":

As Mankiw indicated, it was Adam Smith who developed the argument that the unfettered exchange of goods and services allows individuals to specialize in what they do best, thereby raising over-all income and prosperity. "The taylor does not attempt to make his own shoes, but buys them of the shoemaker," Smith wrote in "The Wealth of Nations," which was published in 1776. "The shoemaker does not attempt to make his own clothes but employs a taylor." [...] [T]he division of labor, which is what Smith was talking about, lies at the heart of outsourcing and offshoring. [...]

Smith took the logic of specialization and applied it to the international market, arguing that no country should produce anything it could import more cheaply from abroad. "What is prudence in the conduct of every private family can scarcely be folly in that of a great kingdom," he wrote. This analysis implied that countries should concentrate on industries in which they are the low-cost producer, or, in the language of today's economists, industries in which they have an "absolute advantage" over foreign competitors.

A classic example involved Lancashire textile mills, which exploited the damp climate of northern England, and Portuguese vineyards, which prospered in the southern sun. In the presence of prohibitive tariffs on imports and exports, which were widespread at the time Smith was writing, England would have been forced to make its own wine (or go without), and Portugal would have had to manufacture cloth, which would have wasted valuable resources. But if free trade was introduced each country could concentrate on its strength, with England exchanging its surplus cloth for Portugal's surplus wine, to the benefit of consumers in both places.

The principle of absolute advantage is relatively easy to understand, and economists cite it all the time in an attempt to alleviate concerns about outsourcing. "The benefits from new forms of trade, such as in services, are no different from the benefits from traditional trade in goods," the Council of Economic Advisers said in its testimony to Congress earlier this year. "When a good or service is produced at lower cost in another country, it makes sense to import it rather than produce it domestically. This allows the United States to devote its resources to more productive purposes."

Cassidy goes on to note that the doctrine of "absolute advantage" might not explain some cases of outsourcing (where the outsourced jobs could be done better or more cheaply locally); and that in such cases, economists instead appeal to the doctrine of comparative advantage, according to which an absolute advantage over all other countries isn't required in order to motivate a country's specializing in a given area (and trading for all other goods); rather, it is enough that the area have a comparative advantage over other areas in which the country might specialize. Cassidy intones that the argument for this doctrine "is subtle---Paul Samuelson, the great M.I.T. economist, once said that comparative advantage is the most difficult economic theory to grasp", and perhaps for this reason, does not bother to report it (is anyone else but me worried that one of the driving theoretical underpinnings of U.S. economic policy is so "subtle" and "difficult" that it is considered beyond even the readers of the highbrow New Yorker?). But for purposes of assessing the basic motivation for free trade, we do not need to consider situations involving (only) comparative advantage, insofar as situations involving a country's having an absolute advantage in some area over all other countries offers a best-case scenario for the argument from the local division of labor to international free trade.

So, what about Smith's argument? As presented by Cassidy, it goes like this:

(1) In relatively small local groups, such as families, villages, towns or cities, there tends to be a division of labor.

(2) This division of labor "allows individuals to specialize in what they do best".

(3) Allowing individuals to specialize in what they do best is good.

(4) The way in which such specialization is good is that it allows the "raising of over-all income and prosperity".

(5) What is good at the local level is also good at the international level: "What is prudence in the conduct of every private family can scarcely be folly in that of a great kingdom".

Conclusion: There should be an international division of labor, with each country "concentrating on industries in which they are the low-cost producer", exporting the surplus to other countries, and importing all other goods from the surplus of specialized industries in other countries.

There are several problems with this argument, but here I will assume that the first three premises are broadly correct, and focus just on the worst problems, associated with the combination of premises (4) and (5), which problems lead directly to an unacceptable consequence of Smith's argument.

As regards (4), the problem is that (even granting that individuals' specializing in what they do best at the local level is good in that it "raises over-all income and prosperity"), there might be other goods associated with individuals so specializing, that are as or more important than the good associated with raising income and prosperity. There is an obvious candidate for such a good: namely, the good attending to humans becoming competent at something they enjoy doing. Yes, it's more economically efficient for the tailor to buy her shoes from the shoemaker rather than make them herself; but this is not the only reason she does so; there is also the fact that the tailor prefers making clothes to making shoes. After all, in general we do not choose our professions solely on the basis of gaining "income and prosperity", either for ourselves or for our community, but rather (at least when not forced to do otherwise) in large part because we are inclined towards the profession at issue, and our specializing in and practising this profession is part of what it is to be a fulfilled human being.

The fact that the "good" at issue in local group division of labor may go beyond that stated in premise (4) is relevant to assessing the truth of premise (5). Smith's claim that "What is prudence in the conduct of every private family can scarcely be folly in that of a great kingdom" is surely too broad, but it would be enough for purposes of his argument if he could establish that "What is prudence in the local division of labor can scarcely be folly in that of a great kingdom", so let's read (5) in this more restricted fashion.

Now, if the prudence---the "good"---at issue in (5) were just that of "raising over-all income and prosperity", then perhaps one couldn't have anticipated that (5) was false (though arguably it has since been empirically disconfirmed). But insofar as the "good" at issue in local group division of labor is clearly not just that of "raising income and prosperity", but also includes the human fulfillment that comes from "specializing in what one does best", then (5) is clearly false. For the inevitable consequence of applying the local division of labor to "the conduct of the kingdom" will be that individuals may no longer "specialize in what they do best" but rather will be forced, in one way or another, to work at whatever industry has an "absolute advantage" relative to other countries.

This is the sick secret of "free trade": Smith's suggestion, if taken seriously, entails an immediate abrogation of the freedom of individuals to specialize in "what they do best" and rather specialize in what their country does best. Free trade leads directly to individual lack of freedom in one of the most important areas of human existence: one's profession. And a lack of freedom in this area is bound to have a drastic negative impact on individual human satisfaction---an impact that is unlikely to be sufficiently compensated by the (in any case illusory) "raising of over-all income and prosperity", or by vaporous consumer benefits, such as lower prices for cheap plastic goods or inedible vegetables made or grown elsewhere.

In addition, Benj points out that another unsatisfactory outcome of the national mono-culture mandated by the "absolute advantage" argument is that individuals lose out on the value of living in a diverse, self-sustaining local community.

Of course, the absolute advantage argument isn't strictly implemented, and so as a matter of fact there do remain (at least in first-world countries) certain options open for certain individuals as regards what they would like to do with their lives. But these options are, as a result of the decimation of local group economies, the off-shoring of manufacturing, and the outsourcing of jobs, increasingly closing off. Moreover, the present and increasing suffering of U.S. workers and unemployed pales next to the sort of enforced industrial and agribusiness servitude that this system is presently imposing on individuals in the global South. In these countries, too, there has been a decimation of the local group economies (often by their government's privatizing, under the gun-point direction of free-trade enforcers such as the WTO and the IMF, the land, water, food and other common resources that enabled local communities to live self-sufficiently for centuries). But the individuals thereby displaced have little option than to go "specialize" in the industry in which their country has a "low-cost advantage"---namely, labor so cheap and grueling that it is barely distinguishable from slavery. The pathetically few "success stories" of how free trade has enhanced the lives of third-world individuals (as in the continually hauled out tale of Indians who have risen to the "middle class"---on $6 an hour---as programmers or call-center specialists) cannot make up for the grisly fact that free trade of the statist, corporatist sort that Smith's argument encourages, necessarily spells anything but freedom for the vast majority of those it affects.

Ithaca event: David Solnit to speak Wednesday

David Solnit was a main organizer of the WTO protests in Seattle in 1999 and the shutdown of San Francisco's financial district the day after Iraq was invaded in 2003, and a cofounder of Art and Revolution (which popularized street theater in mass actions across North America).

Solnit will be speaking in Ithaca, at Bush Must Go! Headquarters (above Autumn Leaves Used Books on The Commons) on Wednesday, August 11th, at 7:30 p.m. He'll talk about his book "Globalize Liberation" and about "how the shared principles of new radicalism connect grassroots struggles across the planet into an unprecedented and hopeful global movement".

Moving beyond Bush-bashing

Naomi Klein articulates more reasons to think outside and beyond the 'Anybody but Bush' box, to rather address the deeper causes of the present cross-party acceptance of brutal and unjust policies:

[T]here is something about George W. Bush's combination of ignorance, piety and swagger that triggers a condition in progressives I've come to think of as Bush Blindness. When it strikes, it causes us to lose sight of everything we know about politics, economics and history and to focus exclusively on the admittedly odd personalities of the people in the White House. [...]

This madness has to stop, and the fastest way of doing that is to elect John Kerry, not because he will be different but because in most key areas--Iraq, the "war on drugs," Israel/Palestine, free trade, corporate taxes--he will be just as bad. The main difference will be that as Kerry pursues these brutal policies, he will come off as intelligent, sane and blissfully dull. That's why I've joined the Anybody But Bush camp: Only with a bore like Kerry at the helm will we finally be able to put an end to the presidential pathologizing and focus on the issues again.

Most Nation readers are already solidly in the Anybody But Bush camp, convinced that now is not the time to point out the similarities between the two corporate-controlled parties. I disagree: We need to face up to those disappointing similarities, and then we need to ask ourselves whether we have a better chance of fighting a corporate agenda pushed by Kerry or by Bush.

I have no illusions that the left will have "access" to a Kerry/Edwards White House. But it's worth remembering that it was under Bill Clinton that progressive movements in the West began to turn our attention to systems again: corporate globalization, even--gasp--capitalism and colonialism. We began to understand modern empire not as the purview of a single nation, no matter how powerful, but a global system of interlocking states, international institutions and corporations, an understanding that allowed us to build global networks in response, from the World Social Forum to Indymedia. Innocuous leaders who spout liberal platitudes while slashing welfare and privatizing the planet push us to better identify those systems and to build movements agile and intelligent enough to confront them. With Mr. Dum Gum out of the White House, progressives will have to get smart again, and that can only be good.

Some remarks on causes and effects

Lately I've been feeling pretty overwhelmed by just how bad things are in the world. The gross curtailment of civil liberties, the blatant stealing of elections, the ubiquitous propaganda, the astonishing economic inequity, policy driven primarily for the benefit of corporate interests, the financial and military support of brutally repressive regimes, the torture and murder of civilians... and that's just what the U.S. has been up to lately.

As the ghastly revelations continue to pour in, it seems to me that the next step, beyond the inevitable outrage, is to figure out what can be done (including what each of us can do) to make this a better world. (We could just despair, but how boring!) And to figure this out it seems to me that we must first figure out how and why things gone so wrong. That is, we must discover what is causing the above sorts of unacceptable states of affairs.

Given available information, it is often possible to identify the proximal causes of individual cases of injustice, corruption or atrocity. For example, the 2000 presidential election was stolen due to the disenfranchisement of minorities via Katherine Harris's purposefully inaccurate voter rolls; the suspicious disappearance of 20K electronic votes for Gore in one Florida county---in place just long enough for Fox to justify calling the state for Bush; and the shameful partisan payback by Supreme Court justices installed by Republicans.

More generally, this administration has been the proximal cause of the worsening of many problems: there has not, in anyone's lifetime, been such an incredibly corrupt and incompetent ship of fools at the helm. Undoubtedly, getting Bush and the rest of his gang out in November should be our present top priority. But if we really hope to effect change we are going to have to go beyond focusing on specific individuals. After all, the sorts of states of affairs above (and the conditions that enabled their occurrence) have long preceded the present administration.

Though we couldn't know, a priori, that the deeper causes of the present problems would be straightforward or have anything in common, in any case it is good scientific methodology to start by looking for the most unified, straightforward explanation(s) possible. And here I offer, as a first pass, my present working hypotheses as to the primary sources of the present misery. So far as I can tell, there are two such primary sources (each of which has various aspects).

The first is capitalism, both as institution and ideology, especially in its present manifestation of globally unregulated corporate extractivism. The idea that an economic system based on a competitive drive for the acquisition of, protection of and increase in private property and corporate profit, could serve as
the framework for a humane, reasonable social system (at the local, national or international levels) is on the face of it ludicrous. And the facts are by this point clear: while capitalism, as practiced here at home and as imposed, via the IMF, WTO and various "free trade" (read: unregulated foreign acquisition) agreements, is succeeding wildly at concentrating power and wealth in the hands of the insatiable few, its implementation has drastically increased national and world-wide inequity and misery. It has also inevitably encouraged legislative corruption, to the extent that true representative democracy (for citizens, as opposed to corporations) is effectively non-existent; the media has similarly been co-opted. And there are myriad other costs and failings of capitalism, including the fact that most people are stuck in excrutiatingly boring jobs (this is being one aspect of how one can be "alienated from one's labor"), and that the quotient of charm in the world is being drastically decreased as bland corporate services invade every city, town and byway.

I'll be substantiating the empirical facts above in future posts. But as a general aside, I want to repeat what every one of us should know and remember: theories (of economics, politics, or whatever) that purport to address the domains of human affairs should grow out of, not substitute for, common sense. If "understanding" just how it is that a system entirely predicated on the profit motive could be good for human or environmental welfare requires that you ignore or discount what you well know about how people and the world work, then the theory, not your understanding, is the problem. We have to use our common sense about these matters, people, and not be intimidated by institutional "experts" and their terminology. Neither theories nor theorizers are magical. Theories that purport to be about the domain of human interactions, and which are used to guide public policy and hence deeply affect people's lives, can and should be challenged if these theories fail to comport with what we know, as the result of a lifetime of experience. In the case of capitalism, any of us could have easily predicted that an unregulated drive for the accumulation of private property and profits would spell disaster for the vast majority of persons. The empirical facts confirm this, but they are no big surprise.

This brings me to what I see as the second source of the unsatisfactory states of affairs we have been witnessing; namely, the phenomenon of situationism about psychology, which has not, I think, been sufficiently recognized and accounted for in the design and implementation of our social institutions. What seems to be the case is that what humans do and believe is strongly affected by their surrounding circumstances, and in particular by what others in their immediate vicinity are doing and believing. The Stanford prison experiments and the experiment where 75% of subjects are willing to deny the obvious evidence of their own eyes in order to side with the majority opinion, are cases in point; but the phenomenon is everywhere present. Among other things, this feature of human psychology renders humans almost trivially easy to manipulate, as has been known for a century (the most glaring contemporary manifestation being Fox News). Situationism also promises to explain how people who should know better, behave in corrupt or harmful ways.

The two causes---Capitalism and psychological situationism---interact, of course. Just as subjects in the line experiment ignore (or inappropriately interpret) the evidence of their senses, so do proponents of capitalism ignore (or inappropriately interpret) the evidence of a lifetime and the empirical facts, so as to comfortably continue on about their business. Similarly, situationism explains the remarkable adaptability of the legions who work within, but do not benefit from, the capitalist system. Situationism thus acts as a form of inertia, whereby humans accommodate themselves to whatever happens to be going on.

Anyway, those are my working hypotheses as to the joint common causes of much (though obviously not all) of the world's current misery. If correct, then, at a minimum, I should be able to explain how various bad states of affairs naturally arise from these causes. An ultimate confirmation would also show that alternative explanations weren't as good. Supposing something along my suggested lines is correct, then the further harder work is to consider how to improve things in light of this understanding. As regards the first cause, it would appear that we must consider what alternative economic paradigms there are, or---and I do not a priori rule this out, though I am pessimistic---whether some limited form of capitalism might be compatible with a (much) more humane and sane world, if coupled with appropriate moral and ethical motivations, desiderata, and constraints. As for the second cause, it seems that the best we can do is, first, become aware of and face the facts about psychological situationism, and second, implement some sort of checks and balances as a way of correcting for or controlling for the inevitable consequences of these facts.

Next week: a detailed case study.