Tuesday, February 28, 2017

Machiavelli as an economist


I was recently rereading The Discourses (as I periodically enjoy doing) and on Sunday I read a review of an interesting new book on Machiavelli—an inexhaustible topic indeed. So I thought of writing down why I, and I would presume many economists, admire Machiavelli (and thus adding to this inexhaustible topic yet another piece).

There is a clear affinity between economists and political scientists in the Machiavelli tradition. For Machiavelli, the objective of a ruler or a politician is maximization of power in two dimensions, at any point in time and over time. This is exactly the same as maximization of income or utility over time. The ruler is a rational homo politicus in the same way that people, according to economists, are rational homo economicuses.

Moreover, the ruler is a political entrepreneur: his job is no different from a job of a tailor, carpenter, teacher. He is after selfish objectives which are attained under constraints.  The constraints for the ruler are of two kinds: he must somehow acquire the power and he must be able to keep it despite attempts of many people to prevent him from coming to power or trying to overthrow him.

The ruler therefore must have the famous virtù which is indeed one of the rarest combination of talents. He must fight off domestic foes, foreign  enemies or adversaries, and must combine the use of deception, violence and genuine concern for his subjects in the right proportions to be able to stay in power. Machiavelli’s politician is like a businessman. There are cases when the businessman will gain more by lying and others when he would gain more by telling the truth. Similarly, the ruler would sometimes gain more through violence, guile and ruse, and at other times through honesty and improvements of his subjects’ welfare. The attractiveness of Machiavelli to economists comes also from the fact his  ruler always remains a self-interested individual who might do well for his subjects not because he cares about them but because he believes that doing well for them would be ultimately good for himself. In that he is like Adam Smith’s baker: he is selling us bread not because he is concerned about our hunger but because he is concerned about his self-interest.

Throughout centuries Machiavelli has, of course, been accused of condoning many  evils. Yet his type of the politician is much more benign and better for the mankind that the types that have normally ruled us. This is because the rulers who actually come to believe they are trying to accomplish good things are most likely to create endless bloodsheds. Most of the killings in history have been motivated by “goodness” and desire to be virtuous. Surely, all religious wars have been such. In recent past, all communist exactions (most notably, the collectivization in the Soviet Union and the Great Leap Forward in China) were motivated by the desire to lift people from their millennial poverty. George W. Bush’s invasion and occupation of Iraq cannot be explained otherwise since no economic or any other rational objective was ever achieved or was even given serious consideration in the decision to wage the war.

The most potentially destructive forces today are hidden under the banner of “goodness”. Whether this is done hypocritically or because the rulers believe in such professions of “goodness” is immaterial; the latter is even worse. The terms under which such “goodness” is projected to the heathens—“the American exceptionalism,”, “the Third Rome”, “Hindutva”, “the new (old) Caliphate”—are nothing but a self-license  to impose own values and beliefs on those who dare disagree with them. Such rulers are the most bloodthirsty because belief in own moral superiority renders them unconcerned with reality.

Machiavelli’s ruler will for sure also engage in deception and cruelty,  but his objective will never be to impose one form of government or religion, or more generally a set of beliefs as such, on others. He might decide to impose a new government if he believes that this would increase his dominion. This would be a rational objective, grounded in self-interest. Ideological puritans who want to bring happiness to others would engage in such operations more frequently and fully. Disengaging from them implies for the ideological zealots a destruction of their own intimate world of beliefs; never so with Machiavelli’s ruler who would give up the operation once its costs outweigh the benefits.

The world ruled by politicians who follow own interest like Adam Smith’s baker, and leave the rest of the world in peace, may be the best world we can hope for.

 

 

Sunday, February 19, 2017

Did post-Marxist theories destroy Communist regimes?



The break-up of the Soviet  Union was one of the most unusual events in history.  Never before had an empire this powerful and vast given up its power and allowed the dissolution of its internal core (the Soviet Union) and its tributary states (Eastern Europe) so quickly and without a fight. The Ottoman empire went into a process of disintegration that lasted several centuries and was punctuated by numerous wars, both with western powers and Russia, and numerous struggles for national independence (Greece, Serbia, Bulgaria). The Habsburg  empire dissolved after four years of the hitherto largest conflict in history. The same is true of the Russian empire and the Hohenzollerns’. But the Soviet Empire gave way almost entirely peacefully and without a fight. How did that happened?

A slender volume by Wisła Suraska (How the SovietUnion disappeared, Duke University Press, 1998) tries to answer the question. It is important to explain what the book is not. It is not a book about Communism and economics.  It does not try to answer (at least, not directly) the question about successes and failures of Communism nor does it deal with economics at all. It is remarkable that the book does not contain a single number. It is a book written by a political scientist and it focuses on internal political determinants of the Soviet collapse.

It is a very well and clearly written volume. The key conclusion of Suraska, enounced in italics in the last chapter, is that the break up is due to “the general failure of communist regimes--their inability to build a modern state” (p. 134). It is “the state weakness, rather than its omnipotence [that] stalled communist project of modernization and, most notably, Gorbachev’s perestroika” (p. 134). Lest somebody believe that Suraska is a partisan of state power, let me explain that what she means is that the arbitrary nature of Communist state, overseen by the Communist party, prevented it from ever developing a responsible and impersonal machinery of Weberian bureaucracy. Such a machinery that follows well-known and rational rules cannot be established if the power is arbitrary. And without such a machinery, the project of modernization is doomed.

But this still does not explain why the country (the USSR) broke up. It broke up, she argues, because of a Brezhnevite equilibrium that—lacking a functioning centrally-controlled state apparatus and forsaking the use of terror—consisted in the creation of territorially-based fiefdoms. The power at the center depended on having peripheral supporters and these peripheral supporters gradually took over most of the local (in the USSR case, republican) functions. They could be dislodged only by the application of mass terror as when, under Stalin, the center actively fought the creation of local centers of power, either by “purging” the leaders or by shifting them constantly between the regions in order to prevent accumulation of power. But Brezhnevite equilibrium consisted precisely in “decentralizing” power to local “barons”  who would then support the faction in the center that gave them most power.   

When Gorbachev tried to recentralize decision-making in order to promote his reforms, he was obstructed at all levels and eventually figured out that without the republican support he could accomplish nothing. This is why, as Suraska writes, at the last Party congress in 1991, he outbid his competitors (Yegor Ligachev) by formally bringing all  regional party bosses into the Politburo and thus effectively confederalizing the Party and the country. But even that proved too little too late as the largest unit, Russia under Yeltsin, became, together with the Baltic republics, the most secessionist.

Suraska rightly adds to this vertical de-concentration of power the ever-present wariness and competition between the Party, the secret services (KGB) and the Army. The triangular relationship where two actors try to weaken and control the third contributed to the collapse. She sees the beginning of the end of the Army’s role in Politburo’s decision, strongly promoted by Andropov (then the head of KGB), not to intervene in Poland in 1980-81. Andropov’s positon (according to the transcripts of the Politburo meetings) that “even if Poland falls under the control of “Solidarity” …[non-intervention] will be” (p. 70) was grounded in the belief that every Soviet foreign intervention (Hungary 1956, Czechoslovakia 1968) reinforced the power of the Army and thus, if KGB were ever come on top, Army must not be in the driver’s seat.

The ultimate weakness of the Party could be, as Suraska writes, seen in the final denouements in the Soviet Union and Poland: in one case, the top party post went to a head of the secret police, in the other case, to the head of the Army.

In perhaps the most original insight, Suraska deals with the ideology of Gorbachev and the first entirely Soviet-raised and bred generation that came to power in the mid-1980s. They were influenced by post-Marxist thinking where democracy or its absence were simple external (or non-essential) features: democracy was a sham since the “real power” resides elsewhere. “Armed” with this belief and the 1970 ideas of convergence of the two systems plus (in my opinion) millenarian Marxist view that Communism represents the future of mankind, they began to see no significant contradictions between the two systems and trusted that even the introduction of democracy would not affect their positions. Thus, in an ironic twist, Suraska, who is thoroughly critical of both Marxist and post-Marxist theories,  credits the latter (p. 147) for bringing to an end the Marxist-based regimes.

In the penultimate chapter Suraska quickly and very critically reviews different theories that purported to explain the Communist state: modernization theory, totalitarianism, bureaucratic theory, are all found wanting. Suraska’s conclusion, stated in the beginning of this text, is then expounded in the last chapter revealingly entitled “Despotism and the modern state”.  There, in a final note worth pointing out, Suraska discusses Communist rejection of the state and its rules-bound procedures (which make Communists ideological brethrens of anarchists) and compellingly argues for the complementarity of  “council (“soviet”) democracy and central planning.  Both eviscerate the state, take over its functions, impose arbitrary decision-making, and do away with the division of powers. Anarchic and despotic features are thus shown to go together, moreover to be in need of each other.   


Note. Regrettably, I have to point one, extremely odd mistake in somebody whose knowledge of the Soviet and East European politics is, by all indications,  quite remarkable. Suraska puzzlingly writes of  Gheorghiu-Dej (also misspelled), the Romanian leader, as Bulgarian (p. 128). I think she had in mind Chervenkov, but made a mistake, not spotted by herself nor the editors.

Friday, February 10, 2017

Tony Judt’s “Reappraisals”: The shipwrecks of the 20th century


Tony Judt was a Jewish Anglo-American historian of France and of Western intellectual life. He used to write for the New York Review of Books.

After these two sentences (deliberately mimicking the first  sentence of Leszek Kolakowski’s Main Currents of Marxism, very well reviewed in Judt’s book), you should basically know what to expect: Judt was a mainstream liberal thinker similar to the scores that have in the recent decades populated New York, Paris and London publications.  While in some sense this is true, it would be also a simplification of the man as he appears in these essays. There are at least two important areas where Judt diverges from the pensée unique which has so disastrously overwhelmed Western  intellectual life in the past thirty years.

He wrote extraordinarily prescient articles in the early naughts about the dangers that Western democracy faces due to the runaway globalization and rising inequality at home with the gutting out of the middle classes. These were not the usual homilies (although even such homilies were exceedingly rare prior to 2007) but well-argued and genuinely felt cris de coeurs about the perils of the post-Cold War Western triumphalism. Historians can often detect social trends much earlier and better than more empirically-minded economists, among whom only a tiny minority sensed the forthcoming dangers.

Judt was very critical of Tony Blair whom in another prescient essay about the emptiness of New Labour, and inauthenticity of the England outside of London, he calls “gnome” and “an inauthentic leader of an inauthentic land”. That essay, written in 2001, can be read today as an almost perfect introduction to Brexit.

The second topic on which Judt differs from the mainstream is his very tough stance on Israel, in this book appearing in the essay on Edward Said whose engagement and policies Judt fully supports. I will not enter into how realistic is his proposed one-state solution because I am not a specialist of the Middle East and it is not my topic here, but I just mention it to highlight the dissonance of Judt from other liberal thinkers.

Now, those who read carefully the first two sentences know that people who fit that description write on about six topics in toto: the Holocaust (Shoah), the Ribbentrop-Molotov  pact and the division of Poland, Kirov murder and Moscow show trials, the Vichy France, Camus vs. Sartre and McCarthyism. Judt is faithful to this description and most of his essays can be allocated to one of these themes.

But if you do only these themes, however  important they might seem, you are leaving out a lot of other themes and you end up with a strongly blinkered view of the world. It is that that I would like to discuss next.

What struck me as I was reading Judt’s reflections on Sartre, Camus, Kolakowski, Hobsbawm, Koestler etc., most of which obviously have to do with Communism and Marxism, are two things. First, they were discussions of ideas where people (“real people”) have almost no place, and second, their discussion, so anachronistically placed around the events in the 1930s or 1940s, has very scant real-life resonance to somebody who lived under Communism in the 1970s and 1980s (like me) and obviously even less to anyone today. It occurred to me that practically no one of these people (Kolakowski obviously excepted) lived under Communism and for them the Cold War battles were waged in New York and Paris. Moreover, they were waged around the issues that were of almost total irrelevance to the “real people” in Eastern Europe.  In some sense, these “battles” replicated Lenin without Leninism: primacy of ideology, disregard of real life.

This is why, “ the world he describes seems unreal, like the bodies of the Gods who in the Vedic belief project no shadow” (“le monde qu’il decrit semble irrreel, comme les corps des dieux qui, dans le croyance vedique, n´ont point d’ombre”; Paul Veyne on Rostovtzeff’s description of the Roman world).  

Today we can see much better the real importance of these ideological battles: it was quasi nil. Communism fell for entirely different reasons, because it lost the economic race with capitalism and because people wanted to own property. Whether Camus was right and Sartre wrong mattered in the end very little. In effect, it did not even matter to the French working class, and of course even less to anyone else. Reading of the sterile debates among the people who were either intellectual (Malraux) or political poseurs (Sartre) is today a waste of time.

When Judt wears the blinkers of his “pensée unique” he fails to make the subjects he discusses compelling and move them into interesting directions.

In his essay on Arthur Koestler he criticizes Darkness at noon for never mentioning the use of force whereby false confessions were extracted during the Moscow trials. Almost in a socialist realistic way, he chides Koestler for hiding the ugly truth of torture, stopping just short of implying that Koestler, despite his anti-Stalinism and anti-Communism, remained the prisoner of the ideas he once believed in. But Judt fails to see that this is precisely the strength of Koestler’s book. Extracting confession through torture is nothing new: it has been practiced through times immemorial. But convincing people that they should deliberately and falsely accuse themselves in order to further a cause is something truly important. It shows the quasi religious nature of Communism. Ignacio de Loyola and Glatkin (the interrogator in Darkness at Noon) would have perfectly understood each other, as indeed Dostoyevsky in his “Great Inquisitor”  saw a century before. Compared to that, beating somebody to a pulp is banal.

Than, take Eric Hobsbawm on whom Judt writes a nice essay that turns abruptly and sharply critical because Hobsbawm never explicitly abandoned his faith in Marxism. But Hobsbawm should have, much more interestingly, provided Judt with the theme of loyalty to one’s ideas and friends vs. loyalty to truth. We may be loyal to truth (as Djilas—unmentioned--, Koestler, Silone etc.) were but fail to be loyal to the people who are, often, our closest friends. What should we choose: loyalty or truth, mother or justice (to use Camus’ example)? It is important to acknowledge the existence of this difficult choice, perhaps the most common dilemma of the dreadful 20th century. “Extra Ecclesiam nulla salus”  Is present here too.

Judt’s very narrow focus on Western Europe, plus Poland, makes him not realize how politically parochial he can be at times. In an otherwise nice essay on Romania (a bit unusual given the geographically constrained topics of the book), Judt reports, with apparent disapproval, how a listener in a Romanian town asked him whether European Union should be limited only to Christian nations (p. 258). The question is supposed to illustrate the “nativism” of the Balkan man. Judt finds the idea abhorrent. But only five pages later (p. 263), Judt mentions how Bucharest, being “Balkanic” and “Byzantine” (as opposed to Central European cities) somehow rules the country out from the membership in Europe. Thus, in the span of five pages, we move from a seeming (skin-deep?) cosmopolitan inclusiveness to cultural nativism.

There are many similar contradictions, rather bizarrely displaying the prejudices of the author—the very same prejudices that, when political correctness lights are “on”, he rejects in other, less enlightened, individuals.

I enjoyed reading Reappraisals. Given the number of writers covered in the book, I could write several reviews. But I do not think that reading this book made me wish to read his History of Europe since 1945. Too bad because he was a good writer.

Sunday, January 29, 2017

Is liberalism to blame?



By “liberalism” I mean what is considered under this term in the US. By “to blame” I mean “for the rise of Trump and  similar nationalist-populists”.

What are the arguments for seeing liberal triumphalism which began with the collapse of Communism in the 1990s as having produced the backlash we are witnessing today? I think they can be divided into three parts: economics, personal integrity, and ideology.

In economics, liberalism espoused “neo-liberalism” which was the replacement economic ideology for social-democracy. It championed, especially under the Clinton-Blair duo, financial liberalization, much smaller welfare state, and so-called “meritocracy” which essentially meant the ability of the rich to place their kids into the best schools out of which 90% would graduate and thus “meritocratically” claim later in life huge wage premiums. Free trade agreement privileged, as Dean Baker has written, the interests of the rich in advanced economies through protection of patents and intellectual property rights and with scant or no attention to labor rights. In the international arena, through the World Bank and the IMF, Clintonite neo-liberalism was associated with Washington consensus policies. They are in many respects reasonable policies, but were applied dogmatically and mindlessly especially with respect to privatization and often with the principal objective of ensuring that the debts be collected regardless of the social effects on the population. Greece is the best known example of such policies because it sits in the middle of Europe and the results of “debt collections” are easiest to see. But the same principles were applied across the world.

Underpinning such policies was an ideology that saw economic success as the only dimension (in addition to the acceptance of certain liberal tropes which I will mention below) in which worth of an individual is expressed or measured. That ideology found broad acceptance across the world, fanned by globalization and by what that ideology has pleasing to the human psyche which craves acquisition of more. It was thus consistent with human nature and probably helped increase world output several-fold and reduce world poverty. But it might have been pushed too hard to the exclusion of other human characteristics and helped create especially among those who were economically less successful resentment and estrangement from the values promoted by liberals.

Corruption.  A corollary of this hyper-economicism in ordinary life was the corruption of the elites who espoused the same yardstick of success as everybody else: enrichment by all means. Avner Offer documents this shift in his analysis of where social-democracy went astray with “New Labour” and “New Democrats”. The corruption of the political class, not only in the West but in the entire world, had a deeply corrosive and demoralizing effect on the electorates everywhere.  Being politician became increasingly seen as a way to acquire personal riches, a career like any other, divorced from any real desire either to do “public service” or to try to promote own values and provide leadership. “Electoralism”, that is doing anything to be elected, was liberalism’s political credo. In that it presaged the populists.

It is, I think, important to see the link between the economic ideology of “commercialism” which informed economic policies since the early 1980s in the West and China, and since the 1990s in the formerly Communist countries, and systemic and all-pervasive corruption of the elites. Since being successful meant amassing most money, politicians could not operate in a different dimension (for example in “ideals”) nor could they get elected without being corrupt because campaigns could not be fought without money. It is an illusion that the political space may operate according to different rules from the rest of society.

Pensée unique. Liberalism introduced a dogmatic  set of principles, “the only politically correct way of thinking” characterized by identity politics and “horizontal equality” (no differences, on average, in wages between men and women, different races or religions) which left actual inequality go unchecked. A tacit hierarchy was introduced, where the acceptance of these watered-down principles of equality combined with economic success, was the requirement to be “non-deplorable”. Others, those who did not do well economically or did not adhere to all the tenets of the mainstream thinking, were not only failures but morally inferior.

The high priests of liberalism, ruling the media, loved to hold, at the same time, logically contradictory beliefs which somehow were both “good”. Thus they created terminological or behavioral contortions that were either direct attacks on common sense or examples of hypocrisy as “supporting the troops” while being “against the war” or giving enormous donations to private schools (in order to get their names emblazoned in classrooms) while “supporting public education”. They were not embarrassed by contradictions, nor accepted trade-offs: you could support soldiers killing civilians “because soldiers protect us” and be against the war and killing of civilians at the same time; you could send kids to private schools and be in favor of public education; you could fret about climate change, berate others who do not, and emit more CO2 than 99% of the mankind. It was ideologically an extremely comfortable position. It required very little mental effort to accept five or six essential tenets (you could just read a couple of writers who repeated ad nauseum the same ideas in the main liberal publications), and it allowed you to do wherever you liked while claiming that every such action was ethically unimpeachable. Everybody was a paragon of virtue and indulged all their preferences.

Others who failed to appreciate the advantages of such a position were ignored until their dissatisfaction exploded. No one among liberals seemed to think it odd (much less to do something about it) that the best educated country in the world with one of the highest world per capita GDPs, could have a third of the population who believed in creationism or in aliens running our lives. It really did not matter to the elite so long as these people existed in the Netherworld.

Those who trusted in Fukuyama, and to whom the 1990s seemed like a triumph that would keep them at the pinnacle of human evolution forever, see today’s events as a catastrophe not only because they could indeed lead to a catastrophe  but because their carefully nurtured ersatz ideology and place in society have collapsed.

I am writing this in Vienna, in Prater, overlooking a giant Ferris Wheel which inevitably makes one think of Harry Lime. One can see liberalism as having set the Ferris Wheel in motion, with each car moving at first slowly and then faster and faster. The ride brought immense joy at first, but eventually, it seems, somebody turned on the switch to super-fast, locked the control room, and most of us are now in these cars that no one controls and no one can stop, running at break-neck speed, and wondering how and when the crash will come.