Monday, August 25, 2014

You Asked for Institutions.


A few days ago, Daron Acemoglu and James Robinson published a critique ("The Rise and Fall of General Laws of Capitalism") of Thomas Piketty's book "Capital in the Twenty First Century".

In it, Acemoglu and Robinson liken Piketty's views with those of "the great classical economists, Malthus, Ricardo and Marx":
"We argue that all of these general laws are unhelpful as a guide to understand the past or predict the future, because they ignore the central role of political and economic institutions in shaping the evolution of technology and the distribution of resources in a society".
Branko Milanovic replies to the charge that Piketty totally neglects institutions:
"This is hard to understand since Piketty's explanation for a large part of changes in inequality in the US, France and elsewhere are precisely institutional: higher and then lower income and inheritance tax rates, abolition of slavery
"Actually, that part of the critique is fundamentally dishonest. It proceeds as follows. First, Acemoglu and Robinson establish the equation Piketty=Marx 
So far, so good. The Acemoglu/Robinson charge against Piketty is obviously unfounded.

But then, as if to show he is a reasonable mainstream economist, Milanovic "bounces" the charge against Marx:
"They then criticize Marx for ignoring institutions, more or less correctly (but clearly that has nothing to do with Piketty)".

Today, David Ruccio literally taught the three men a lesson. Out of Capital, volume 1 -- only -- he cites thirteen (yes, 13!) chapters where Marx considers institutional details in addition to an assortment of works by Marx and Engels (including Engels' "The Origin of the Family, Private Property, and the State" -- can there possibly be any title more explicit about its institutional content?).

Ruccio closes his post with this (although I urge you to read the whole epic takedown post):
"They want institutions? Then try this vivid summary (from Chapter 31) of the institutions that gave rise to capitalism:
"Tantae molis erat, to establish the 'eternal laws of Nature' of the capitalist mode of production, to complete the process of separation between labourers and conditions of labour, to transform, at one pole, the social means of production and subsistence into capital, at the opposite pole, the mass of the population into wage labourers, into 'free labouring poor,' that artificial product of modern society. If money, according to Augier, 'comes into the world with a congenital blood-stain on one cheek,' capital comes dripping from head to foot, from every pore, with blood and dirt.
"Acemoglu and Robinson and Milanovic (not to mention Piketty) can't, it seems, handle that kind of institutional analysis."

Will Very Serious Economists learn anything from this? My guess, for what it is worth: not a chance in hell.

Saturday, August 23, 2014

Nietzsche at Nuremberg.

Thursday, 17 January 1946.

Morning Session

The President: "I call upon the Counsel for France".


M. François de Menthon (Chief Prosecutor for the French Republic):
"Over a people in this state of spiritual crisis and of negations of traditional values the culminating philosophy of Nietzsche was to exercise a dominant influence. In taking the will to power as a point of departure, Nietzsche preached, certainly not inhumanity but superhumanity. If there is no final cause in the universe, man, whose body is matter which is at once feeling and thinking, may mould the world to his desire, choosing as his guide a militant biology. If the supreme end of humanity is a feeling of victorious fullness which is both material and spiritual, all that remains is to insure the selection of physical specimens, who become the new aristocracy of masters.
"For Nietzsche the industrial revolution necessarily entails the rule of the masses, the automatism and the shaping of the working multitudes. The state endures only by virtue of an elite of vigorous personalities who, by the methods so admirably defined by Machiavelli, which alone are in accord with the laws of life, will lead men by force and by ruse simultaneously, for men are and remain wicked and perverse.
"We see the modem barbarian arise. Superior by his intelligence and his wilful energy, freed of all conventional ethics, he can enforce upon the masses obedience and loyalty by making them believe in the dignity and beauty of labor and by providing them with that mediocre well-being with which they are so easily content. An identical force will, therefore, be manifest in the leaders, by the harmony between their elementary passions and the lucidity of their organizing reason, and in the masses, whose dark or violent instincts will be balanced by a reasoned activity imposed with implacable discipline.
"Without doubt, the late philosophy of Nietzsche cannot be identified with the brutal simplicity of National Socialism. Nevertheless, National Socialism was wont to glorify Nietzsche as one of its ancestors. And justly so, for he was the first to formulate in a coherent manner criticism of the traditional values of humanism; and also, because his conception of the government of the masses by masters knowing no restraint is a preview of the Nazi regime. Besides, Nietzsche believed in the sovereign race and attributed primacy to Germany, whom he considered endowed with a youthful soul and unquenchable resources."
(see here)

After the previous tragicomic interpretation of Nietzsche and his moral philosophy, the words of the French Chief Prosecutor at Nuremberg add a rather sinister dimension to the man and his political philosophy.

And, yet, Nietzsche (and his political philosophy) is the man some (like this young, up-and-coming Post Keynesian) want to propose as your inspiration, instead of Karl Marx.

Now, choose.

Don't worry if you have a family. It's not me you'll have to answer to, if you chose the wrong guy.

Image Credits:
[A] Nuremberg Trials: some of "he accused on their bench (front left to right: Wilhelm Frick, Julius Streicher, Walther Funk; back left to right: Franz v. Papen, Arthur Seyß-Inquart, Albert Speer, Konstantin v. Neurath)". The image is in the public domain. Source: Wikipedia.