Labor vs. Capital: Continuing the Meritocracy Trap Debate

This post, an exchange between Andrew Hart, Marshall Steinbaum, and Daniel Markovits, continues their debate from our March 2020 series discussing The Meritocracy Trap by Daniel Markovits. Click here to read all posts in the series. 

Andrew Hart & Marshall Steinbaum: It seems to us that the issue is not whether one places income in buckets labeled “capital” or “labor,” but rather what those particular buckets signify when it comes to extremely wealthy people. We might all agree to call the $50 million that a healthcare CEO gets for working 80-hour weeks “labor” income, but the fact that the firm or the “economy” has seen fit to allocate $50 million as a proper compensation for a healthcare CEO does not, as far as we can tell, have much to do with the productive value of 4,200 hours of healthcare CEO work over the course of a year. To justify this income by reference to skill is a just-so story—part of the inequality regime of “hyper-capitalism,” as delineated in Thomas Piketty’s recent book Capital and Ideology.

But Markovits seems to accept at least some of the human capital justification for high salaries when he speaks of superordinate workers and their immense skills and training. Put another way, we think Markovits believes the operative question is whether a person needs to work 80-hour weeks to get the $50 million as a healthcare CEO, and if the answer is yes, then the money is labor income. By contrast, we believe that the question should be why a healthcare CEO is “worth” $50 million in the first place, and that the answer to that question may at least cast some doubt on the usefulness of the category “labor income” when a person’s yearly income is high enough.

Continue reading

Historicizing Consumer Protection

Luke Herrine–

Learned Hand once described the task of the Federal Trade Commission as “discover[ing] and mak[ing] explicit those unexpressed standards of fair dealing which the conscience of the community may progressively develop.” In a previous post, I argued that moving consumer protection law beyond consumer sovereignty requires recovering this way of thinking, common among Progressives and inspired by the common law. Talking in terms of fair dealing requires recovering the instinct for moral economy. “Democratic forms of moral economy,” I elaborated, “require developing institutions that enable collective deliberations about which (and whose) interests various consumer markets serve and which interests they ought to serve,” and endowing these institutions with the power to shape the rules that govern those markets.

If we are to recover this style of reasoning, we will have to overcome the defense mechanisms against it in contemporary legal consciousness.

With respect to the FTC’s consumer protection authority, the most powerful defense mechanism is a morality tale about what happened when the FTC tried to imbue the notion of “unfairness” (which lies at the core of its consumer protection authority) with too much moral content. Most consumer protection lawyers have at least a vague notion that the current legal standard for determining whether an act is “unfair” was written after the FTC was chided for attempting to use its unfairness authority to ban children’s advertising some time in the 1970s. On the standard version of this story, the public recoiled at the FTC’s audacity, Congress forced the FTC to develop a more neutral/objective standard for determining whether something is “unfair”, and economists were called in to add some rigor to the proceedings. The lesson is that only bad things result when morals and politics guide consumer protection. The FTC should stick to promoting “consumer choice”.

In a new draft article, I argue that this story is bunk.

Continue reading

Mutant Neoliberalism, Originary Violence and Feminist Revolts in Latin America

This post is part of our symposium on Mutant Neoliberalism. You can find the full symposium here

Verónica Gago – 

mutant neolib imageIn an interview, Michel Foucault said that when “actually existing” socialism was put in scare quotes, as if it were not exactly “real,” the only thing the scare quotes revealed was the strength of an abstract ideal that theorists invariably used as a measuring stick to evaluate, and theoretically marginalize, whatever was actually happening on the ground. What if we were to apply such an ironic qualification to neoliberalism? Consider Latin America, for instance: Is there an “actually existing” neoliberalism in Latin America that fails the normative ideal of its theorists? Is this a geographically specific version of neoliberalism that has just been marginalized due to the region’s peripheral reality and unique history? It would seem, instead, that the opposite is true: The problematic feature of neoliberalism is its polymorphism, its capacity to combine and adapt. The thesis of this book points to precisely this capacity: neoliberalism’s mutant character.

With this thesis, the book seeks to answer a conjunctural question which I will also consider in this comment: Why is neoliberalism—in different geographies—allied with extreme conservatism, and even with fascism, today? The book also addresses a longstanding question which we have repeatedly posed in these years of permanent crisis: Is there any force that is capable of burying neoliberalism? Indeed, each new conjuncture only differently conjugates the question: Can the coronavirus pandemic annihilate neoliberalism? Following William Callison and Zachary Manfredi’s text on the notion of mutant neoliberalism and the possibility of its extinction, the chapters in the book respond to this series of questions with a complex answer: Even political conjunctures that seem to be animated by an opposition to neoliberal presuppositions can ultimately give them new impetus, reassembling and relaunching neoliberalism in ways that demonstrate its mutant cunning.

I would like to do two things in this comment. First, I will examine key aspects of recent Latin American developments in order to suggest a certain genealogy of neoliberalism. Second, I will address Etienne Balibar’s chapter in the book, linking it to the dynamics of generalized indebtedness in subaltern populations, and drawing connections with the recent cycle of feminist struggles.

Continue reading

The Bourgeois Internationale, Part II

This post is Part II of David Grewal’s response to Mutant Neoliberalism, Part I is available here. You can find the full symposium here

David Grewal – 

mutant neolib imageAs I noted in my first post, it is possible that the COVID-19 pandemic will force a reckoning with the democratic deficit in the European Union and prompt a renewal of left-wing politics across the continent. However, the existing constitutional machinery of the five presidencies that make up the EU is both complex and considerably resistant to change, even (perhaps especially) in a crisis. In 2014, in a review of Thomas Piketty’s Capital, I wondered what we could expect from “today’s unhappy alliance between the remnants of the old workers’ parties of Western Europe and the Bundesbank?” It was mainly a rhetorical question: I expected very little from the political alliance behind “zombie” neoliberalism in Europe. But in light of what Callison and Manfredi term neoliberalism’s mutations, it is worth noting what has in fact come to pass since then: electoral defeat after electoral defeat for the left (and even center-left). This trend should give pause to those who think further federalization will provide the answer to Europe’s deep ordoliberal tendencies, and yet that seems to be the only path that many progressives in Europe can imagine (another TINA, but a teleological one).

Following Cooper’s cogent analysis, what we should expect is precisely what we have been seeing: stasis at the level of the institutions and far-right electoral strategies that leverage anti-austerity sentiment among ordinary voters by promising something that the straitjacketed parties of the mainstream center-left and even the far left have been mostly unwilling to offer: a break with neoliberalism and, if that agenda requires it, a break with ‘Europe.’ Again, the COVID-19 pandemic seems more likely to consolidate rather than repudiate this trend. It will not soon be forgotten that even pro-EU governments in France and Germany called a panicked halt to the export of medical equipment to a stricken Italy while national borders were raised again across the continent.

These events brings us to the second piece I want to discuss, Slobodian and Plehwe’s history of the rise of Eurosceptic neoliberalism, “Neoliberals against Europe,” which presents an important counter to any simplistic equation of the EU with neoliberalism (or ordoliberalism) and hence of Euroscepticism with anti-neoliberalism.

Continue reading

Up or Out: Migration and Rated Governance

This post is part of our symposium on Mutant Neoliberalism. You can find the full symposium here

Atossa Araxia Abrahamian –

mutant neolib imageKen Loach’s 2016 film I Am Daniel Blake (2016) depicts post-crash austerity in all of its bleak barbarity. The plot revolves around the film’s protagonist, a middle-aged carpenter, who attempts to navigate the British welfare system after a heart attack makes it hard for him to work. The authorities don’t seem to agree with Blake’s cardiologist, who deems him unfit to work, so they send him down a rabbit hole of denied unemployment claims, rejected appeals, idiotic make-work and financial destitution. The message the system sends to our unlucky hero is that he is not worthy: of the state’s resources, of an employer’s goodwill, of anyone’s sympathy, of his own basic humanity. On Michel Feher’s assessment, we might add another shortcoming: he isn’t creditworthy, either.

There are thousands, if not millions, of Daniel Blakes struggling to get by in the world, many of whom have even less going for them than this fictional white man living in Newcastle. In his contribution to Manfredi and Callison’s Mutant Neoliberalism, Feher views these individual lives as the final domino in a decades-long cascade of policy decisions that made creditworthiness a prerequisite for getting by in the world—whether one is an individual, a company, or a country.

Continue reading

The Bourgeois Internationale, Part I

This post is part of our symposium on Mutant Neoliberalism. You can find the full symposium here

David Grewal – 

mutant neolib imageMutant Neoliberalism is an excellent collection of essays canvassing what editors William Callison and Zachary Manfredi rightly diagnose as the changing face of neoliberalism – really, the multiplicity of national, transnational and post-national neoliberalisms – evolving in the aftermath of the 2007-2008 financial crisis. Instead of a mortal wounding, the crisis generated the paradox, as several authors in the collection note, that neoliberalism’s failures led to more, not less, neoliberalism. Crises generated by neoliberal prescriptions (privatization, financialization, austerity, etc.) are said to be solvable using more of the same, while radical reform proposals face the usual assessment (TINA = “there is no alternative”). This fact led to the conception of neoliberalism after the crisis as a “zombie” formation, the onward march of the undead, but Callison and Manfredi rightly note that events around 2016 seem to have altered this diagnosis. Instead, neoliberalism now seems less “zombie” than what they term “mutant,” proliferating in new forms, and hybridizing with traditional and new right social and political movements, sometimes in spite of manifest ideological and programmatic differences between them and the “pure” form of post-war neoliberalism (of Hayek, Mont Pellerin, and so ).

All this seems right and interesting. I want to focus in this brief response on the place of the “international” in this diagnosis, particularly as it concerns debates in the European context. It seems to me that both the undead (“zombie”) and the hybridizing (“mutant”) aspects of contemporary neoliberalism are deeply interrelated and best understood in relation to the problem of international economic integration (a.k.a. “global capitalism”). I will focus therefore on two excellent contributions to the volume, one by Melinda Cooper (“Anti-Austerity on the Far Right”), which looks at the anti-neoliberal politics of far-right movements in Europe during the interwar rise of fascism, and then again from the 1970s to the present; and another by Quinn Slobodian and Dieter Plehwe (“Neoliberals against Europe”), which studies right-wing Euroscepticism in relation to a politics of national neoliberalisms.

Continue reading

LPE on COVID-19 (vol. 5)

Polaris06805106-e1585074878901

Valeria Vital, an ER tech, holds a sign during a protest by medical professionals working for Kaiser Permanente in Oakland, Calif., and their supporters on March 23, 2020. Photo (via The Intercept): Carlos Avila Gonzalez/San Francisco Chronicle via Polaris

 

Dear Readers, 

Today we’re bringing you a special Saturday edition of our ongoing covid-19 series.

Take care,

LPE Blog


 

Your first stop after reading this post should be here, to listen to Amy Kapczynski and Gregg Gonsalves on The Dig podcast. They talk about how to survive this plague – the politics of public health and what we can learn from ACT UP.

Over at Demos, Sabeel Rahman posted this analysis of the pandemic as a crisis of racial capitalism. (Racial capitalism is one of our analytical keystones here at LPE – you can read more about it on the blog.) The post comes from a longer report, available here, that makes clear how the crisis “is revealing the deeper inequities for Black and brown people that have always been present in our economy and democracy but that are often papered over in ordinary times.”

This week Mehrsa Baradaran also posted a reporton financial inclusion and building an equitable financial system in the wake of COVID-19:

As part of Congress’s financial stimulus response to the COVID-19 pandemic, the CARES Act included $1,200 stimulus checks to all qualifying Americans—but there was no clear plan for delivering these checks to unbanked and underbanked Americans. Unfortunately, financial inclusion—access to payment systems, credit products, and financial services of all kinds—is an afterthought in politics and policymaking debates, but it’s wholly necessary to build an equitable economy.

Along with Julius Krein, and E. Glen Weyl, Ganesh Sitaraman suggested this week that the US create a war production board to ramp up “production, coordination, and deployment” of COVID-19 testing.

As cities and states report desperate shortfalls, Robert Hockett is promoting ‘Community QE,” to give them a lifeline. You can read about it in these two forbes posts, and in his longer piece up on SSRN.

In case you’re left wanting more, a few recommendations from around the internet:

First, LPE folks can learn a lot from this op-ed by Melissa L. St. Hilaire, a domestic worker in Florida who was fired when the pandemic hit. Next, the Boston Review has been publishing a wave of great pieces on class and inequality in the crisis – in no particular order, here’s one on the politics of disposability, another about a Brazilian town building a successful solidarity economy, and a look at the figure of the welfare queen in policy debates about COVID relief.

 

 

 

 

Consumer Protection after Consumer Sovereignty

Luke Herrine–

The consumer is at the center of the neoliberal’s moral universe. For both neoclassical welfarists and Hayekian moralists, the consumer is the Everyman. For, whatever else we do, we are all consumers. The “free market” has value because it forces the firms that control the process of production and distribution to compete for our business. Because firms’ very survival depends on their ability to convince us to pay them and because we only pay for things we think are valuable, firms are incentivized to take our interests into account in every decision they make. As they compete to serve our interests more and more effectively, the process of production and distribution becomes more and more efficient at giving us what we want.

According to this ideology of consumer sovereignty, we collectively control the social provisioning process through our individual decisions. Democratic governance is the facilitation of free consumer choice.

Consumer sovereignty is at the center of many familiar neoliberal reform projects. Chicago School antitrust builds on the proposition that the only reason to prevent business consolidation is to lower prices for consumers. Virginia School public choice (and its theory of regulatory capture) depends on the idea that citizenship is basically like consumption, with elected officials acting as firms that compete for votes and appointed officials as firms that compete for resources. Part of the First Amendment’s Lochnerization has involved undermining legislative and regulatory power in teh name of protecting consumers’ right to the information that judges deem necessary to make their purchasing decisions. Etc.

It has become familiar to those who follow the LPE movement that, in building a post-neoliberal way of thinking, we need to move beyond consumer sovereignty. LPE thinkers in antitrust have pointed out the implications of corporate power for workers, for productivity, for corruption of our political system, and generally for our collective ability to control our social system. Similarly with respect to public choice theory and the Lochnerized First Amendment.

But what does all of this mean for how we think about consumers and the law that is supposed to protect them? How can we think about consumer protection law if we reject the ideology of consumer sovereignty?

As I argue in a draft article, consumer protection law should be understood as a variety of moral economy.

Continue reading

LPE on COVID-19 (vol. 4)

 

Polaris06805106-e1585074878901

Valeria Vital, an ER tech, holds a sign during a protest by medical professionals working for Kaiser Permanente in Oakland, Calif., and their supporters on March 23, 2020. Photo (via The Intercept): Carlos Avila Gonzalez/San Francisco Chronicle via Polaris

Dear Readers, 

 

As part of our ongoing coverage of the COVID-19 crisis from an LPE perspective, we bring you a round-up of recent work from our LPE community. We’re aiming to make these a (semi) regular feature of the blog throughout the crisis. Above all, we hope you are as well as can be expected. 

Take care,

LPE Blog


Last week, Amy Kapczynski and Gregg Gonsalves appeared on Democracy Now, where they talked about the ways market logic has created a woefully insufficient American healthcare system, and what kind of policies could build an alternative.

They also have another installment in their work on COVID-19 up at Boston Review- this one is called Markets vs. Lives – beating back the wave of hot takes suggesting that we ignore the epidemiologists in order to serve “the economy.”

“What is happening today has no analogue in mainstream economic analysis: a rapid retraction of our paid economy, and a vast expansion of the kind of unpaid work that has never been properly valued. We are doing it for deeply human reasons, with the best evidence we have at the moment: to save the lives of people we know, perhaps even our own, and to protect our health care system”

You can also follow the work they are doing to improve our response to COVID-19 as part of the Global Health Justice Partnership.

Up recently at The Guardian, Veena Dubal draws attention the choice facing Uber and Lyft drivers in the crisis: risk contracting the disease, or starve. She also appeared on NPR this week to discuss coronavirus and the gig economy.

Brishen Rogers is also writing about the future of labor, as in this Boston Review piece imagining work post-coronavirus:

“COVID-19 has exposed the fragility of our labor markets just as much as the fragility of our public health and welfare systems. As we take the economy out of its induced coma, we should ask what kinds of jobs we want and need.”

At Jacobin, Jedidiah Purdy-Britton writes that “the only treatment for coronavirus is solidarity.”

Mehrsa Baradaran explains how the CARES act fails to help those who need it most, and offered reflections on the crisis at The American Prospect. She recommends that LPE readers check out this symposium at Just Money, featuring many LPE Blog contributors.

Following the money and finance trail, on Wednesday, Saule Omarova posted on Just Money about Money in the time of Coronavirus,  calling for a contemporary analog to the New Deal-era Reconstruction Finance Corporation. She has also posted a memo on SSRN – “Why We Need a National Investment Authority.” 

In the absence of a permanent institution specializing in capital allocation and management, the American public is forced to rely on ad hoc crisis-containment measures that are notoriously politicized, messy, and prone to corrupt influence by private interests. The task of national economic mobilization falls mainly on the U.S. Treasury and the Federal Reserve, whose modus operandi relies heavily on direct injections of public funds into—i.e., bailouts of—financial institutions and other private firms. As the 2008 experience shows, however, bailouts are difficult to execute without reinforcing the economically and politically damaging pattern of “privatizing gains and socializing losses.” Having a permanent federal agency with the authority and expertise to manage emergency bailouts would help to ensure that this process is handled in a transparent, democratically accountable, economically efficient, and distributionally just manner.

Robert Hockett has also been working to promote his Treasury Dollar plan, here on LPE Blog, and in a variety of other places. You can read the text of his proposed bill here, and further commentary in these two pieces at Forbes, and these two pieces on the democratic digital dollar at the Harvard Business Law Review and Stanford Journal of Blockchain Law and Policy.   Also this (paywalled) Wall Street Journal op-ed.

Finally, Lev Menand and Ganesh Sitaraman have a summary of lessons we should learn form the Great Recession in the face of another massive economic contraction.

 

 

 

 

Money in Context: Part 2

This is the second post on ‘Money in Context.’ You can read the first post here

Robert Hockett –

The observation with which I closed Part 1 implicates a challenge – or perhaps better put, it extends an invitation. In light of the inherently infrastructural role played by payment systems and their associated monies in any ‘exchange economy’ or ‘commercial society’ such as our own, there is one urgent conclusion to draw.

I mean that we as a polity both can and must very soon establish a single digital payment platform and associated digital fiat currency freely available to literally every citizen and legal resident of our nation. It means that we must soon develop what I call a Democratic Digital Dollar and Fed- or Treasury-administered National Ledger available to all. This is where the arc I identified earlier – ‘from ledger to coinage and back’ – should, and I believe will, take us.

Continue reading