Sunday, July 13, 2014

Some thoughts on splitting

Psychoanalysts will tell you a lot about "splitting" which is defined as "the failure in a person's thinking to bring together both positive and negative qualities of the self and others into a cohesive, realistic whole." According to Fairbairn, the psychoanalyst who came up with the idea, splitting is a common defense mechanism used by many people.

Which is all well and good.

But this morning the thought occurred to me that what we like about the early phase of love is precisely the splitting -- the way that the rush of new love overrides our traditional doubts and fears.  

And then I realized that revolutions and revolutionary political theory (from Marx to Hayek) also engage in the splitting associated with new love (and that's what people like about revolutionary movements as well).  They romanticize their team and demonize some other. Everything is black and white and crystal clear -- unlike normal day-to-day life.  

It is only mature love that is able to integrate both light and shadow in ourselves and in others.  

So too, it is only the mature revolution that is able to see and integrate the flaws inherent in our own position.  

Some thoughts while reading Higgins and Dow

Politics Against Pessimism: Social Democratic Possibilities Since Ernst Wigforss by Winton Higgins and Geoff Dow is a magnificent book.  Here are the thoughts that started coming to me as I was reading the book last night:  

Okay wait: If I have a set of unique talents (developed through a solid upbringing, a wealth of education, and dedicated practice) I can get hired by a firm to use my talents. And for my labor I receive a wage. But any bloke with access to eTrade, can buy a "share" of the profits created by my talents (if I'm at a publicly traded firm), in perpetuity for about $20. So I have to stay healthy and focused and keep delivering results, and the bloke with eTrade can just sit and watch movies and still get paid? How does that make sense? 
"Beginning in the 1970s, John Kenneth Galbraith [UC Berkeley alum] argued that shareholders served no useful function in corporate capitalism and that corporations ought to be governed by boards of community-elected monitors (to oversee compliance with taxation, environmental, labour and consumer law), with shareholders converted into debt-holders without direct influence over institutions that would become more like social foundations than private firms." (Winton Higgins and Geoff Dow, "Politics Against Pessimism: Social Democratic Possibilities since Ernst Wiforss" p. 373). 
I can see why investors would want to hold a share of a firm as collateral for big investments (in new or fast growing firms there may be nothing else with which to collateralize the loan). But once that initial investment has been repaid with interest, THE SHARE SHOULD EXPIRE BECAUSE THE LOAN HAS BEEN REPAID. 

The moment my labor stops, my wage stops. But the "wage" (return) never stops for the investor. It's this time difference -- between my labor which expires every day and the rights of the shareholder which never expire and are immortal -- that is how the game is rigged (or at least one of the ways).


By analogy, if I build a house, I own the thing that I created. If a guy loaned me money to buy the bricks, I pay him back for the cost of the bricks plus 5% to 8% to say thanks. It would be extremely odd if they guy who loaned me the money to buy the bricks, claimed ownership of the bricks and a share of everything produced in the house FOREVER. And yet that's what happens with share ownership of firms. 


I'll go one step further (with my out loud brainstorming here): the odd thing about the house is the land. If I buy the land, I own it forever (passing it on to heirs). Under Rawls' Veil of Ignorance, it would seem that property ownership would be prohibited -- because property ownership so completely changes outcomes for the next generation -- there is no way to have equality of opportunity or equality of outcomes if some people are born into property and others are not. 


I can see why the owners of start ups would want to go public. By getting access to a larger pool of investors they are inflating the value of the thing they created. By going public, the founders are getting out -- getting value out of the firm and into their pocket (they may still hold onto shares, even the majority of shares, but going forward the wealth they are creating is generated by their shares, not their wage). But at the same time that owners are getting out, employees are getting in to a system where the profits that they generate are owned by someone else in perpetuity. So my question is, how much of the value that owners are getting out, is based on the value of the employees they are locking in (to a system in which the profits of one's labor is distributed to someone else)? It's not quite 100% because the initial idea had some value. But in many ways, a firm is just an intellectual construction, a vehicle for guiding the actions of lots of people and selling off the value of the thing they create -- without them realizing it.

My marxian comrades are thinking to themselves, "duh!" But (unlike my comrades) I still see a role for money, I still see a role for capital and firms (at least for now). It's just that share ownership is such a bizarre concept when you really think about it. 

By the way we have the (theocratic feudalistic) KRATS block and Hobby Lobby to thank for this whole line of thinking. If firms are people, then people owning firms is slavery, so then all stockholding should be abolished (as a violation of the 13th Amendment). But then once you see that, you realize that even though firms are not people, it is extremely odd to be allowed to sell off the fruits of someone else's labor, in perpetuity, to someone else. 


Corporations then are this magical cardboard box. The owners of the corporation tell investors: 1.) that investors will be entitled to all of the profits produced by people who are lured into this magical box; and 2.) that the owners have figured out a way to lure people into this box (without them knowing the function of the box). What gives the cardboard box power is: 1.) the initial idea (which may very well be compelling); and 2.) corporations law which simultaneously helps to legitimize the rules of the box while obscuring its true function. 


Why didn't the owners of Facebook, just issue debt, instead of stock? Mark Zuckerberg knew that the game was fixed for insider investors -- that's why he "screwed" them on the IPO by pricing it at market value rather than the discounted rate that Goldman Sachs and others traditionally offer to insider clients (hence no immediate bounce after the IPO -- and an additional $10 billion or so to FB's initial owners). The market even has a term for a fair IPO -- they call it a "busted IPO" because the insiders didn't get their cut. But everyone knew that FB was solid gold -- and was about to take over the world. If that's the case -- that Zuckberg knew the market was rigged and knew that FB was a solid investment -- why not just issue bonds at a 5% rate of return and retain 100% ownership? If the purpose of the stock sale is to raise money for needed investment (servers, programmers, etc.) why not just make that needed investment with loans, rather than stock? 


The answer has to be that the value of an IPO is higher (by a lot) than the value of a firm that just issues debt because in an IPO one is selling someone's labor (and the value of patents I guess) in perpetuity. 


Also it must be that those who have $16 billion to lend, will not do so unless they get stock in return. But the public would have gone for it. If members of the public were offered bonds issued by Facebook guaranteed to return 5%, FB could have easily raised $16 billion directly.


Okay last beat in this conversation:

Growing up I used to play Monopoly with my two older brothers and I always lost (I invested heavily in low rent properties Baltic Avenue and Mediterranean Avenue while giving up on the rest of the board). It used to make me so mad -- I just could not figure out why I could not win.  

Whenever I got my sick, my mom would ask me what I wanted to do (to feel better) and I always wanted to play Monopoly.  And when I played with my mom, I cheated like crazy -- if I needed a seven but rolled an eight I would tap once on the property, once on the line between properties, and then once on the next space to get to the property I wanted.  But the worst part, and the part I still feel most guilty about today, is that when my mom went into debt, I started making all of these crazy unilateral demands. I would demand vast swaths of her property in return for paying off even minor debts.  She would protest mildly and I would assert that 'those were the rules.'  I always won when playing my mom and she would go away feeling lousy.  So I felt lousy when playing Monopoly with my brothers and then I made my mom feel lousy when I played with her. 

But that's really the system we have under modern capitalism.  Capital demands vast swaths of ownership in return for modest outlays of cash.  Owners give in to those demands and sell out their workers because the deal makes them rich.  But the value of the share price is based not on the present worth of the firm, but on selling off the future good faith profits produced by workers, who are often oblivious to the deal owners made with capital.  

[Note to parents: don't let your kids cheat, it turns them into monsters. It would have been so much better in that situation for my mom to have explained to me that zero sum competition, capitalism, and monopoly capitalism in particular make people miserable and that we would all be better off under systems of mutual cooperation -- and then to have gone off and baked bread together. It's on me that I cheated, but there were some teaching moments in there too that were missed (but who knows, I may not have listened, and eventually I got the message anyway).]  

Thursday, July 03, 2014

Some thoughts on strategy

So both Gandhi and King, correctly understood: 1.) that society is organized in a sadomasochistic fashion and that 2.) participating in that system, through fighting back by traditional means (violent revolution) risked turning the oppressed into the very monsters they were fighting against.  (Their actions remind me of Yoda from the Empire Strikes back counseling Luke not to give into hatred.) So Gandhi and King refused to recognize the oppressors' unjust laws and worked to highlight the sadism of those who were in power.  All well and good.  But, Gandhi and King met the same fate as O in The Story of O in that they are both killed by sadists.  So while their actions liberated millions from being forced into submission, the leaders themselves were killed by a system they refused to recognize.  So where does that leave us?  At least in a revolution, the leaders sometimes survive. Furthermore no one expected the Founding Fathers or Abraham Lincoln to follow non-violence to achieve justice.  It seems like a lot to require martyrdom as the price of social movement progress.

Tuesday, July 01, 2014

Planning for Utopia, overcoming the contradictions of the human condition

Okay so there are lots of articles out there on the contradictions of capitalism and the inherent weaknesses of capitalism and the profound flaws of capitalism.  All well and good.  I particularly like the work of Ha-Joon Chang and his book, The 23 Things They Don't Tell You About Capitalism.  He writes in this popular and easily accessible manner and presents the material in such a clear and thoughtful way that it's pretty hard to argue with him.

But, it seems to me that there is another, perhaps more pressing conversation that we need to have now.  And it goes something like this: Any alternative to capitalism, will need to be able to effectively speak to, address, and in some cases resolve, several fundamental problems inherent in THE HUMAN CONDITION.  I've started a list below and hope to add to it over time:

1. Merit.  Neoliberals fetishize merit and have created a whole system to "measure" merit (SAT, college admissions, the Bar Exam, credit scores, etc.) that merely serves to reinforce and naturalize existing class divisions in society.  Merit is almost never actually present in these measures -- scores on these evaluations almost always correlate most closely with the income/level of education of your parents. So the great trick that the neoliberals pull off is that they obscure, even from themselves, the fact that there is no real content in their measurement system.  Said differently, they manage to convince themselves of the lie that rich people are more deserving as a result of their superior efforts and abilities.  

But Marxians do not have a better answer.  "From each according to his ability to each according to his need" is a non-starter.  In any system some people are going to work harder than others. Some people are going to apply their talents in more creative or useful endeavors. Some people are going to make greater sacrifices than others.  Should those things be rewarded? And if not, what happens to a society when hard work, innovation, and sacrifice are not rewarded?

2. Difference/sameness.  Progressives have made an idol out of difference.  But are there any universal truths that should guide our efforts as a society?  How do we balance difference and universals?  [Interestingly the LGBT movement in the United States started as a celebration of difference. But it's very hard to mobilize a political campaign for rights around, "to each, his/her own." So over time the LGBT movement coalesced (for better or worse) around the universal theme of marriage equality and in a short time achieved historic victories.]  

3. The role of motivation/aspiration.  Motivation is one of the hardest things to teach (think of Jaime Escalante's relentless focus on ganas in Stand and Deliver.)  What role should motivation and aspiration play in our utopia?

4.  The role of fear. Capitalism is built upon fear and it's awful. People fear their boss, they fear starving to death, they fear homelessness, they fear going to work on Monday, they fear making a mistake, they fear not living up to expectations. But fear also drives a lot of creativity and production.  If fear disappears, what happens to society? I know we should aim for a society where love replaces fear. But so many communist revolutions that attempted to replace fear with love ended up in a totalitarian nightmare where love of party and love of state were the only forms of love that were permitted (and fear ruled every second of every day). A tiny touch of fear can be okay and lead to great things, too much fear leads to collapse and disintegration. So what role should fear play in our proposed utopia? And what role should love play? And how can we prevent love from being subverted?

I'm sure there are many more contradictions of the human condition that we could explore as well (and I would welcome any suggestions in the comments section).