Monday, September 21, 2009

Was slavery, not Protestantism, the catalyst for the emergence of modern capitalism?

Back in April of this year, President Obama attended the Summit of the Americas in Trinidad. At a gathering with regional leaders before the Summit, Obama exchanged greetings with Hugo Chavez, President of Venezuela, who gave Obama a copy of Eduardo Galeano's 1973 book, Open Veins of Latin America: Five Centuries of the Pillage of a Continent. The gift was a marketing sensation for the book, which within 2 days rose to #2 on's bestsellers list. Time magazine wrote about the gift of the book (here) and (here).

I thought it was an interesting gesture -- if you had just 5 minutes with a world leader and could give him or her 1 book that might help him/her see the world in a new way, what would it be? Like many other Americans I decided to see for myself what made this book special.

As some of you know, I'm a huge fan of Max Weber's The Protestant Ethic and the Spirit of Capitalism. In the book, Weber argues that Protestantism -- with its emphasis on work without end while also being hostile to the "pleasures of the flesh" (dancing, drinking, sex) led to the widespread accumulation of capital for the first time which was the catalyst for the birth of modern industrial capitalism. It's an absolutely brilliant book that, along with Weber's other works on religion, and industrial and political organization, gave birth to the field of sociology as an academic discipline.

What's especially interesting then about Open Veins of Latin America is that in many ways, Galeano is looking at a similar time period as Weber. Galeano is also trying to understand the origins of modern industrial capitalism. But for Galeano, the institution of slavery, not Protestantism, is the catalyst for the birth of modern capitalism. He makes a really compelling case:

Adam Smith said that one of the principal effects of the discovery of America "has been to raise the mercantile system to a degree of splendour and glory which it could never otherwise have attained to." According to Sergio BagĂș, the most potent force for the accumulation of mercantile capital was slavery in the Americas; and this capital in turn became, "the foundation stone on which the giant industrial capital of modern times was built." The New World revival of Greco-Roman slavery had miraculous qualities: it multiplied the ships, factories, railroads, and banks of countries that were not originally involved in Africa or -- with the exception of the United States -- in the fate of the slave crossing the Atlantic. (p. 79)

Banks proliferated in Liverpool, Manchester, Bristol, London, and Glasgow; Lloyds [of London] piled up profits insuring slaves, ships, and plantations. From the beginning, London Gazette announcements advised that fugitive slaves should be returned to Lloyds. Slave-trade profits financed the building of Britain's Great Western railway and of industries such as the Welsh slate factories. Capital accumulated in the triangular trade made possible the invention of the steam engine: James Watt was subsidized by businessmen who had made their fortunes in that trade. (p. 81, citing the work of Eric Williams in Capitalism & Slavery)

In New England the slave trade gave birth to a large part of the capital that produced the U.S. industrial revolution. In the middle of the eighteenth century Northern slave ships carried barrels of rum to Africa from Boston, Newport, and Providence; they exchanged the rum for slaves, sold the slaves in the Caribbean, and from there brought molasses to Massachusetts, where it was distilled and converted into rum, completing the cycle... With capital obtained from this trade in slaves, the Brown brothers of Providence installed the foundry that provided George Washington with guns for the American Revolution. (p. 82)

I can see why Hugo Chavez or any other leader in Latin America would pick this book to help bring someone up to speed on Latin America. You can't understand Latin American politics and how the people of Latin America view the United States and the industrialized world, without understanding the 500 years of conquest that began with Columbus and continue up to this day. And Open Veins of Latin America is a great crash course in those five centuries of exploitation.

Here's what I find shocking about all of this: I was a political science major in college. I took a fair number of economics classes. And I even specialized in Latin American politics. The idea that slavery was perhaps the catalyst for the birth of modern capitalism, was NEVER mentioned in any class I've ever taken. How is that possible!? It's not even a controversial thesis. As Galeano shows -- insurers and banks in England the U.S. made their profits in the slave trade and then in turn financed things like foundries and steam engines. Not mentioning the relationship between slavery and capitalism is like not mentioning the relationship between the big bang and astronomy. To me it feels like more than an omission from my formal education. It feels like the sort of willful blindness that we perpetuate in order to enjoy the fruits of our collective violence -- free of the guilt that might otherwise get in the way.

So then how do we reconcile the competing claims of Weber ('Protestantism was the catalyst') and Galeano ('slavery was the catalyst')? I'm not sure that we have to. I think Protestantism, slavery, and capitalism all worked (or is it work, present-tense?) hand-in-hand. The Protestant Reformation also led to capital formation, banks, and perhaps most importantly, organized industrial societies. It is true that many Catholic nations (Spain, Portugal, and Italy) profited by the slave trade. But as Galeano shows, it was the nascent banks in Protestant countries that profited most from the pillaging of the New World -- first by extending loans to slave traders and slave trading nations, and then taking their profits and plowing them into manufacturing to sell to the rest of the world. So Protestantism provided the formal organization of the capitalist system while slavery turbo-charged the whole system -- flooding European and American nations with capital thus turning modern capitalism into capitalism on steroids.

If you have the chance, I highly recommend checking out Open Veins of Latin America: Five Centuries of the Pillage of a Continent.

And thanks to Galeano, my next read is going to be, Capitalism & Slavery by Eric Williams.

Update #1: In many ways, Open Veins of Latin America makes an interesting sequel to Guns, Germs, and Steel: The Fates of Human Societies and a fitting prequel to Shock Doctrine: The Rise of Disaster Capitalism.

Tuesday, September 15, 2009

how can the field of economics so easily overlook the violence that produces winners and losers?

Okay call me a Luddite but I want rap down this idea for a second because I'm kinda incredulous that it isn't discussed more already.

Although the field of economics has been around for a long time, modern economics really began with Adam Smith's The Wealth of Nations published in 1776. Since that time modern economists have developed increasingly elaborate mathematical formulas to try to explain the world around us and predict the economic outcomes of certain actions.

But what's astounding about modern economics is how often those elaborate equations turn out to be incorrect in the real world. Paul Krugman did a good job answering the question, "How Did Economists Get it So Wrong?" in his recent NY Times Sunday magazine feature. In spite of over 200 years of economic thought and the most advanced mathematical formulas and computer modeling, most economists failed to see the recent stock market bubble. And often economists fail even the most basic common sense test such as when Edward Prescott (who later went on to win the Nobel Prize in Economics) argued that unemployment is a deliberate decision by workers to take time off -- thus implying that recessions aren't really recessions, just widespread unpaid staycations for American workers!!!

But here's the point I want to make: isn't "economics" often just the clever mathematical narrative used to justify and hide theft (as a result of violence) on a global scale?

Europe is wealthy. Africa is poor. Africa is poor because Europeans controlled the continent for centuries under the guise of colonialism, drew up national boundaries and stole all the natural resources (often including people) from the region.

Europe is wealthy. Latin America is poor. Latin America is poor because European warships invaded Latin America, stole all of their natural resources and enslaved their people for 500 years.

White Americans tend to be richer than African Americans and Native Americas. White Americans stole the labor of Africa Americans for a century and then stole their labor through other means (Jim Crow) for another century. So too white Americans genocided Native Americans and stole their land and profited from that theft -- thus making White Americans richer than Native Americans.

Nations that win wars are wealthy (United States). Nations that lose wars are poor (Mexico). Unless the winning nation decides it is in its interests to rebuild the defeated nation (As the U.S. did with Europe, Japan). Nations that aren't rebuilt after a war remain poor as fuck for a long time (Afghanistan, most of Africa) regardless of their natural resources.

I mean I suppose we can talk about microeconomics and money supply and currencies flows and all that. But don't we really have to start the conversation with an acknowledgment of:
1. who punked who;
2. how much of that wealth, obtained through violence, is still in our system; and
3. to what degree the winners and losers in our current economic order (individuals, institutions, and nations) are a result of that theft?

More thoughts on the relationship between economics, violence, and the psyche of a nation in my earlier post (here).

Update #1: Naomi Klein has an absolutely brilliant article on race, violence, and wealth in The Guardian (UK) and on her blog.

Sunday, September 06, 2009

Getting thrown under the bus by a really nice guy

Okay I really want to break this down because I think it's an important case study in how our political system really works.

1. By all accounts Barack Obama is a decent guy. Smart, caring, compassionate, well-organized, able to hold a range of opposing views. Obama is exactly the kind of guy one would want as President.

2. The evidence suggests that Barack Obama is about to completely throw the American people under the bus by abandoning the public option in the health care bill (if he hasn't bargained it away already). To abandon the public option is a violation of everything he stands for. It would break a campaign pledge. It would abandon the most cherished Democratic Party goal of the last 50 years at precisely the time when it has the best chance of being enacted. And it's completely irrational -- it is impossible to hold down health care costs without a Medicare for All type public option. Most importantly perhaps, it represents a moral failing to protect the most vulnerable in our country from needless suffering and death (as Peter Singer argues, 'If it is within your power to save a life, you also have a moral obligation to do so.')

It would be easy then to collapse this situation down into one pole or the other. Either:
  1. 'Obama really is a great guy and we just don't understand the complexities of passing a bill'; OR
  2. 'Obama is a liar who always intended to sell us out.'
But let's walk through the implications of the health care bill for a second.

One of the fascinating things about the health care bill is how often members of Congress admit openly that if a real public option was attached to the bill, that it would lower costs too much and be the end of private insurance in this country. And they say that like it's a bad thing. At first the notion that private insurers would go out of business seems silly. As Obama argued in his last press conference:

Why would it drive private insurance out of business? If private insurers say that the marketplace provides the best quality health care; if they tell us that they're offering a good deal, then why is it that the government, which they say can't run anything, suddenly is going to drive them out of business? That's not logical ....

But then, you start to look at the numbers as I did in my last post. Private health insurers make about 30% profit for holding your money in reserve until it is needed to pay for medical bills. As David Waldman pointed out: "Insurers don't provide care. They just finance it. Why are we supposed to be happy paying 30 points on that deal (to private insurers) when Medicare takes just 4?"

And then it all makes sense.

If there were a real public option, private insurers, over time, indeed would go out of business.

I happen to think that's a good thing, a really good thing.

Private insurers provide nothing of value. They don't have the leverage or negotiating power that a Medicare for All government type program would have. And their accountants don't actually look for efficiencies, they just look for technicalities to fuck you so that they can profit from your pain. And for all of that, they pocket 30 cents on the dollar versus the 4 cents on the dollar that Medicare charges for administrative overhead. Private insurance then is a pure mafia-style racket to take money from people in return for "protection services" that are never really provided (or rather the financial services that they provide are marked up an exorbitant 30% over their actual costs).

So if there were real competition, people would naturally chose the fairer program with the larger negotiating power and 4% overhead over the more expensive, less efficient, private plan. Medicare For All would in fact become Medicare for all, a de facto universal health plan just on the basis of the fact that it is A BETTER PRODUCT AT A LOWER COST than the private plans.

Which brings us back to Obama. As Obama himself has argued, the only way to insure competition and lower cost is through a public option. So if it's logical, if it is indeed in the public interest, then why is Obama about to walk away from it?

Because private health insurance is a trillion dollar a year industry (that's trillion with a T). And Obama doesn't have the stomach to take out a trillion dollar a year industry. He just doesn't have it in him. Mr. Consensus is no Huey Long.

So it is true, logical, and rational to argue that a public option was the best way to control costs (which is what Obama did during the campaign). But it is also true that a trillion dollar a year mafia racket can hire a lot of lobbyists and buy a lot of TV time during elections (and everybody in D.C. knows it). Indeed private insurers will spend every last penny they have stolen from us to protect their profitable scheme.

Obama the post modernist wants to have it both ways -- a public option for the American people while preserving the jobs (and profits) of private insurers. The problem is, health care is largely a zero sum game -- what's good for the American people is bad for private insurers and vice-versa. And in trying to have it both ways, Obama's message comes out as convoluted, confused, and lacking in moral authority (because it is).

Do 100% of private insurers' profits come from denial of claims?

By most accounts, private health insurers make about 30% profit for holding your money in reserve until it is needed to pay for medical bills. As David Waldman (KagroX at Daily Kos) so aptly tweeted:

Insurers don't provide care. They just finance it. Why are we supposed to be happy paying 30 points on that deal (to private insurers) when Medicare takes just 4?

But now a report out of the California Attorney General's office shows that:

PacifiCare denied 39.6% of claims this year, Cigna 32.7%, Health Net 30%, Kaiser Permanente 28.3% and Blue Cross 27.9%.

Holy shit. Can those 2 sets of numbers be put together?

Namely, if private insurers are making roughly 30% profit, and those same private insurers are denying 30% of all claims, then is it the case that 100% of private insurers profits come from denying claims to sick people?

I can see a situation in which those two number would not be put together -- namely what if those 30% of claims that are denied represented only say, 15% of the costs facing Health Net in a given year? But isn't it likely that the opposite is in fact true -- namely that private health insurers are likely to deny THE MOST EXPENSIVE claims -- in which case the private insurers would be insolvent if not for profiting off of the pain of others (whose claims they deny).

For their brilliant post highlighting the CA Attorney General's health care Report, Corrente has now being added to my blog roll.

Saturday, September 05, 2009

A very strange week for the death penalty

Last week was a very strange week for both supporters and opponents of the death penalty.

Last Thursday (August 28) brought news of the case of Jaycee Dugard, kidnapped at 11 and held in sexual slavery for 18 years by Phillip Garrido, and his wife, Nancy. I'm sure that many opponents of the death penalty, upon learning the details of this horrific case, would gladly volunteer to press the button to start the drip to execute Garrido. The Garrido case is a perfect example of why voters in many states consistently support the death penalty.

Then, just two days later, evidence emerged that the State of Texas had executed an innocent man, Cameron Todd Willingham back in 2004. The jury in the case took less than 1 hour to convict the man based on the testimony of arson investigators. Even though evidence mounted over the years that Willingham was in fact innocent, the State of Texas proceeded with the execution anyway. Now a new report has found that:

...the official inquiry into the Willingham fire did not meet prevailing scientific standards of the time, much less current ones.The investigators “had poor understandings of fire science,” Mr. Beyler said, and their “methodologies did not comport with the scientific method.” He determined that the opinions of one main investigator were “nothing more than a collection of personal beliefs that have nothing to do with science-based fire investigation.”

The Willingham case is a perfect example of why the death penalty should be abolished.

And so there, it seems, we are left -- with a criminal (Garrido) so heinous that he deserves to die a thousand painful deaths and a criminal justice system so flawed that it can't be trusted not to execute the innocent (Willingham) along with the guilty.

Update #1: The September 7, 2009 edition of The New Yorker has an extensive article on the details in the Willingham case: "Trial by Fire: Did Texas execute An Innocent Man?" Often, articles on The New Yorker site are behind the subscription pay wall -- but this one is available free, at least for now. It's brilliantly written and meticulously documented.

Friday, September 04, 2009

Rocket science

No public option = one term President

Why? Because Obama promised universal coverage during the campaign and we in turn gave him $500 million in campaign contributions, 13 million volunteers, 60 Democratic Senators, and 256 Democratic House members. In politics that's as close as you're ever gonna get to a royal flush and if you can't win the hand with a royal flush -- if you can't win on the signature Democratic initiative that has defined the party for the last 50 years -- then go back to writing uplifting autobiographies and we'll find another candidate.

The problem with TARP, the reason people hate that bill and the reason it's a huge anchor dragging this administration down -- is that it is a bailout of Wall Street NOT a bailout of the American people.

And the problem with the health care bill as it's being written by Rahm and fucking Olympia Snowe is that it is becoming a bailout of the insurance and pharmaceutical companies -- not a universal health care plan for the American people (which is what we were promised).

Look if Obama truly believes that "What's good for Wall Street is good for the American people (TM)" -- if that's his governing philosophy -- great. But that's not what he said during the campaign. And right now Hope and Change and Yes We Can and Bipartisanship (TM) is being used to sell us on bailouts for billion dollar companies rather than services for the American people.

The fact that Obama seems willing to bet the farm on triggers -- the fact that he is willing to bet his entire presidency on giving the private health insurance industry one more try! -- is lunacy. 81% of Democrats want a public option. You fuck 81% of your base it's gonna be awfully difficult to get re-elected.

Update #1: I think this post from Firedoglake is the most damning post about the behind the scenes horse trading (selling out) going on in Congress and at the White House.

Update #2: The borough of Brooklyn has almost TWICE the population as the STATE of Maine. So why is Olympia Snowe writing the health care bill again? Maybe we should just let some Brooklyn Borough President write the health care bill since after all, he represents more people.

Thursday, September 03, 2009

How did economists get it so wrong

Paul Krugman once again hits a homerun with his NY Times Sunday Magazine feature, "How Did Economists Get it So Wrong." I know the term "must read" gets over-used but this piece is a really nice overview of the various competing schools of economic thought within academia. Money quote:

As I see it, the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth.

One thought kept coming up for me in reading Krugman's discussion of depressions and recessions. And it's pretty sobering. But basically, research in psychiatry has shown that if a person experiences one episode of major depression, they are usually able to pull through without any further relapses. But once someone has a second episode of major depression -- they are much more likely to experience relapses:

After having been depressed once, the average person has at least a 50% chance of becoming depressed again, but after two episodes, the risk of a third episode is 70%. After the third episode, the risk for a fourth is 80%, and after four episodes, the risk of another one is 90%.
--Essentials of Clinical Psychiatry by Robert E. Hales & Stuart C. Yudofsky

I wonder if the same thing is true, collectively, of depressions in national economies? Namely, the U.S. had one major economic depression in the 1930s -- and seemed to pull through just fine. But if we dip into a second one, will the U.S. end up like Mexico or Poland or Zimbabwe with endless economic swings and one economic depression after another?

This analogy from psychiatry suggests that the stakes in the debate over the economic stimulus are extremely high. And the Republican political gamesmanship and lack of seriousness regarding the major recession we are experiencing has the potential to turn the U.S. into a Third World country (which Republicans would probably like because 3rd world countries are usually thuggish patriarchies with no regulations). Furthermore, isn't a Third world country just a nation that got beat up by a first world bully (in the Conquest, Manifest Destiny, Colonialism, or the Middle Passage), then sank into a depression, and then has experienced one relapse after another for the past several hundred years?

Real progressivism

Just in the last 48 hours, it seems that progressives have broken ranks and are now in full revolt against the White House's milquetoast health care strategy. I think David Axelrod's "spirit" comment yesterday to ABC News was really the straw that broke the camel's back:

"The spirit that led him to support a public option is still very much at play here and so you know he wants competition. "

But honestly, it's hard having a conservative Democrat as President. On the one hand, he's a Democrat, he seems like a decent guy, he has real power, and he's the one keeping the Republican theocrats from turning the U.S. into their Old Testament fantasy land. On the other hand, he's not really a progressive, never has been, but because he's a Dem., progressives usually bite their tongues instead of speaking out against him (because the alternative is far far worse, and because, Reagan's dictum, "thou shalt not speak ill of fellow party members," is a winning political strategy.)

But with Obama and Axelrod and Rahm selling us out on the public option -- the signature Democratic Party goal for the last 50 years -- I've gone back to looking for real progressive voices who can illuminate our present moment.

First, I went looking for Ian Welsh. He's absolutely brilliant and he used to write a lot for Firedoglake -- but I haven't seen any posts from him in a while. To my delight I discovered that he now has his own solo site and once again he is hitting it out of the park. Please read his post from yesterday:

"Some Inconvenient Truths"

It's really one of the best pieces that has been written in a while about the health care debate.

Then Ian links to all sorts of other great posts. These two posts below should be required reading in any political theory course:

The Overton Window, Illustrated

Obama Stump Speech Strategy of Conciliation Considered Harmful

One of the truisms of politics for me is that if something doesn't make sense, it's usually because there is something else going on -- and so then one just has to go figure out what that something else really is. I'm not talking conspiracy theories -- but rather, the informal rules of the game that are where the real action is at. And these three posts above do the best job I've seen of explaining what's really happening in the health care debate (and in the political debate in the U.S. in general).

Ian Welsh has also been added to my blog roll over on the right so that you can click over to his site whenever you're jonesing to understand what's really going on.