De Juvenal takes a quote from Rostovtzev's "Social and Economic History of the Roman Empire" (quoted on p. 190 of "On Power"). He may as well be talking about the bailouts, Wall Street and America's special interest economy, courtesy of Democrats and Republicans:
"The reforms of Diocletian and Constantine, by implementing a policy of systematic spoliation to the profit of the State, made all productive activity impossible. The reason is, not that there were no more large fortunes: on the countrary, their build-up was made easier. But the foundation of their build-up was now no longer creative energy, or the discovery and bringing into use new sources of wealth, or the improvement and development of husbandry, industry and commerce. It was, on the contrary, the cunning exploitation of a privileged position in the State, used to despoil peole and State alike. The officials, great and small, got rich by way of fraud and corruption."
De Juvenal remarks:
"All that can be said is that contemporaries get the feeling of progress right through the period in which the state is building up, a feeling comparable to the sense of well-being, which in an economic cycle accompanies the period of high prices. When the process nears its apogee, the more sensitive spirits are assailed by feelings of doubt and dizziness...
"Then the question is heard again whether the egalitarian society, which is the handiwork of the despotic state, is more or less advantageous to the mass of workers than a society of independent authorities..."
The irony about the United States is that in the 1880s and 1890s, before the establishment of the "Progressive" state, immigrants were flocking here at a rate of between 100,000 and over 500,000 per year, real wages were rising at more than 2% per year, and living standards of the common man had doubled in 40 years, between 1849 and 1889. More liberty was enjoyed than anywhere else in history and the savings rate of the average person was increasing rapidly.
In its place, led by the "Progressives" Theodore and Franklin Roosevelt and Woodrow Wilson and the establishment of the Federal Reserve Bank, Americans established a system whereby, since 1970, real wages have declined. In the past 10 years the number of years that the average person has needed to work to pay for a house with 100% of his untaxed wages has doubled from 3.6 years to 7.2 years. America went from a federal income tax of 10% in 1950 to a situation now where tax rates are so punitive that saving is all but impossible, where massive amounts of money are transferred to wealthy clients of the Democrats and Republicans via the Federal Reserve Bank's inflation (which subsidizes the stock and real estate markets at the expense of real wages), and the New York Times tells us that the only problem facing America is that taxes aren't high enough.
Friday, June 5, 2009
Thursday, June 4, 2009
How Universities Systemically Expand State Power
Bertrand de Jouvenal's argument concerning the relentless expansion of the state since the Middle Ages is based on the unfolding of monarchy from the twelfth to the twentieth centuries. In the nineteenth century monarchy changed its form of sovereignty from the divine right of kings to popular sovereignty, and the realization of sovereignty from the monarch in flesh to a reified "national will" that, of course, becomes the property of elites. De Juvenal points out that Philip Augustus, the king of France from 1180 to 1223, had to live off his own resources. His only army was a small bodyguard. He had no officials. He depended on Church resources for all official business. But by the reign of Louis XIV, the French king's army was 200,000 men. "He gives out laws and sets his dragoons at those who do not worship God in what he considers the right way; an enormous army of officials animates and directs the nation." (p. 141, On Power).
The expansion of the state continued unabated until World War II. Hitler, in 1939, could command the entire German nation to destroy itself and to murder entire ethnic groups. Since then, there has been further growth in state power in many parts of the world. In terms of relative size, the Soviet- and National-Socialist states could not push power further because those societies were 100% socialized. But in terms of absolute size, the creation of technology in the non-socialist states has been used to increase the state's size. In the United States, the process of monarchization of the nation has proceeded unabated. Government today is far larger than ever before.
One of the concomitants of increasing governmental size is political correctness or mono-thought across a large swathe of the population. The famous argument in Davud Riesmann's Lonely Crowd is that a psychological change occurred from inner to other-directedness. But this may be most characteristic of America, where monarchical power in the name of popular will replaced Lockean liberalism, not monarchy. Likely, other-directedness always had been characteristic of aristocratic Venice, London and Paris.
De Jouvenal makes a crucial point--that there is a direct relationship among social theories, mass movements and state expansion. That is, the groupthink of other-directed political movements that generate widespread unison of thought by its own nature generates state expansion. Moreover, universities that advocate simplistic ideological cure-alls for society such as Keynesian economics, social work, government regulation and the like are inevitably generative of state expansion. This is so because of the combination of the egos of government officials, who derive gratification from imposing their ideas and their will on society; and the simplicity of the ideological solutions that universities propose and seldom if ever work. Big egos need simplistic solutions in order to feel good about themselves.
One of the ramifications of this is the derivation of ego-gratification by mass followers of Power. The majority of the population does not have a crack at implementing its own ideas and experiencing the ego-enhancement that power brings to the powerful. Rather, it is through psychological displacement that large numbers of people identify with one or other of the ego-elements in society--Barack Obama or George Bush--and gain ego-fulfillment by identification with a stronger element, father figure or the like. By parroting the half-baked claims of Harvard economists, members of mass society gain ego fulfillment by feeling that they are identified with the media or intellectual elite. For Democrats and RINO Republicans this is the role that the New York Times plays. For Republicans this is the role that Rush Limbaugh and other talk radio announcers play.
Of course, the theories of both Democrats and Republicans are wrong. Simple theories do not generally do well when confronted with reality. Rush Limbaugh claims to be for smaller government, but when his candidates are elected they expand government to a much greater degree than the candidates he opposes. Barack Obama claims to be for the middle class and poor, but when the opportunity arises to hand several trillion dollars to the very wealthy at the expense of the middle class and poor, he leaps at it like a terrier leaps at a Porterhouse steak.
Universities generate not solutions but ideologies. The powerful pick up on the simpletons' ideologies that universities generate and use state power to enhance their egos. Universities benefit from the support that power confers on them.
De Juvenal writes (p. 144, On Power):
"In the realm of nature there is nothing else to satisfy the human spirit's primitive passions. In love with his own experiments, with the simple relationships and direct causations his brain can grasp, and with the artless plans which he is wise enough to construct, man wishes that the whole created world may show itself built not only with the same instruments as he possesses but also by the same turns of skill as he has mastered. Rejoicing as he does in all that can be brought to uniformity, he is forever being disconcerted by the infinite variety which nature herself seems to prefer, as instanced by the chemical structure of organic bodies.
"It is an agreeable game, imagining how man, if he had the power, would reconstruct the universe--the simple and uniform lines on which he would do it. He has not that power, but he has, or thinks he has, the power of reconstructing the social order. This is a sphere in which he reckons that the laws of nature do not run for him, and there he tries to plant the simplicity which is his ruling passion and which he mistakes for perfection."
The expansion of the state continued unabated until World War II. Hitler, in 1939, could command the entire German nation to destroy itself and to murder entire ethnic groups. Since then, there has been further growth in state power in many parts of the world. In terms of relative size, the Soviet- and National-Socialist states could not push power further because those societies were 100% socialized. But in terms of absolute size, the creation of technology in the non-socialist states has been used to increase the state's size. In the United States, the process of monarchization of the nation has proceeded unabated. Government today is far larger than ever before.
One of the concomitants of increasing governmental size is political correctness or mono-thought across a large swathe of the population. The famous argument in Davud Riesmann's Lonely Crowd is that a psychological change occurred from inner to other-directedness. But this may be most characteristic of America, where monarchical power in the name of popular will replaced Lockean liberalism, not monarchy. Likely, other-directedness always had been characteristic of aristocratic Venice, London and Paris.
De Jouvenal makes a crucial point--that there is a direct relationship among social theories, mass movements and state expansion. That is, the groupthink of other-directed political movements that generate widespread unison of thought by its own nature generates state expansion. Moreover, universities that advocate simplistic ideological cure-alls for society such as Keynesian economics, social work, government regulation and the like are inevitably generative of state expansion. This is so because of the combination of the egos of government officials, who derive gratification from imposing their ideas and their will on society; and the simplicity of the ideological solutions that universities propose and seldom if ever work. Big egos need simplistic solutions in order to feel good about themselves.
One of the ramifications of this is the derivation of ego-gratification by mass followers of Power. The majority of the population does not have a crack at implementing its own ideas and experiencing the ego-enhancement that power brings to the powerful. Rather, it is through psychological displacement that large numbers of people identify with one or other of the ego-elements in society--Barack Obama or George Bush--and gain ego-fulfillment by identification with a stronger element, father figure or the like. By parroting the half-baked claims of Harvard economists, members of mass society gain ego fulfillment by feeling that they are identified with the media or intellectual elite. For Democrats and RINO Republicans this is the role that the New York Times plays. For Republicans this is the role that Rush Limbaugh and other talk radio announcers play.
Of course, the theories of both Democrats and Republicans are wrong. Simple theories do not generally do well when confronted with reality. Rush Limbaugh claims to be for smaller government, but when his candidates are elected they expand government to a much greater degree than the candidates he opposes. Barack Obama claims to be for the middle class and poor, but when the opportunity arises to hand several trillion dollars to the very wealthy at the expense of the middle class and poor, he leaps at it like a terrier leaps at a Porterhouse steak.
Universities generate not solutions but ideologies. The powerful pick up on the simpletons' ideologies that universities generate and use state power to enhance their egos. Universities benefit from the support that power confers on them.
De Juvenal writes (p. 144, On Power):
"In the realm of nature there is nothing else to satisfy the human spirit's primitive passions. In love with his own experiments, with the simple relationships and direct causations his brain can grasp, and with the artless plans which he is wise enough to construct, man wishes that the whole created world may show itself built not only with the same instruments as he possesses but also by the same turns of skill as he has mastered. Rejoicing as he does in all that can be brought to uniformity, he is forever being disconcerted by the infinite variety which nature herself seems to prefer, as instanced by the chemical structure of organic bodies.
"It is an agreeable game, imagining how man, if he had the power, would reconstruct the universe--the simple and uniform lines on which he would do it. He has not that power, but he has, or thinks he has, the power of reconstructing the social order. This is a sphere in which he reckons that the laws of nature do not run for him, and there he tries to plant the simplicity which is his ruling passion and which he mistakes for perfection."
De Jouvenal on the Public Loss Function
The notion of a loss function is the basis of total quality management. Quality losses appear when the realization of an output deviates from its target qualities. For instance, if a nail is supposed to be 6 inches long, and it comes off the conveyer belt measuring 6.0000001 inches, the .0000001 is a loss. Total quality management is a process of reducing the loss by investigating deviations that are more than three standard deviations from the target.
De Jouvenal argues that Power, the governing elite, derives historically from conquest. In European history this took the form of the conquest of the Roman territories and Rome itself by the Franks, Goths, Angles, and other Barbarians. In China this took the form of the unification of China by the Duke of Zhou and Qin Shi Huang's reunification following the warring states period. Qin, by the way, buried China's scholars alive, a fate I have dreaded after seeing the movie The Vanishing.
The monarch or leader of the conquering tribe exploits the conquered population rather than kill them. The invention of slavery reduced the amount of killing because the conquerers learned to make use of the conquered economically. The king realizes that the nobility, the leaders of his army, pose a threat to his power. Over time, perhaps multi-generationally, the king realizes that by taking the side of the conquered against the nobility he can reduce the power of the nobility and enhance his own power. This happened in England in the 1500s. The establishment of the Chinese Civil Service was within roughly two centuries of the Qin Shi Huang's reunification of China. In America, the Progressives, representatives of big business, realized that they could work with populist and socialist movements by saying that they were against the trusts, and in doing so bring regulations that attacked the rising entrepreneurs and benefited big business to bear. Thus, the king creates a bureaucracy or civil service that aims to provide social benefits in order to unite the people against the nobility. This occurred in modified form in the United States. Abraham Lincoln had enhanced federal power in the 1860s, and Progressivism appeared within 40 years.
Ultimately the people realize that the king can be replaced with the popular sovereignty or national will, which of course are non-existent imaginings. The king is deposed and democracy replaces the monarchy. The unlimited definition of democracy, in turn, leads to tyranny. Thus, the French Revolution led to killings by Jacobins, Robespierre and the Committee of Public Safety; the democratic revolution of Sun Yat Sen led to the tyranny of Mao Tse Tung; and the overthrow of the Czar led to the Bolshevik Revolution.
In America De Jouvenal's model does not apply exactly because there was no monarch. Also, Rousseau's unlimited theory of democracy did not take hold. Rather, Lockean liberalism limits the power of democracy. Hence, the tyrannies and suffocating power of government that took hold in backward Europe and Asia did not occur here. However, America's elite, jealous of the wonderful triumphs in Europe, aimed to introduce Rousseauean unlimited democracy here. Just two decades before the ascension of both Hitler and Stalin, Herbert Croly, Walter Weyl and Theodore Roosevelt argued for Progressivism. Croly's book glorifies the state and is very much in the tradition of German historicism, as was Progressivism in general.
The notion of a loss function is that the action of a producer can be improved by reducing losses. Many will argue with the claim that unlimited democracy leads to tyranny. However, whether you believe that unlimited democracy leads to social justice and benefits society, or whether you believe that limited government is better at achieving those ends, the question needs to be asked what the method of achieving each citizen's best interests can be. In other words, even if unlimited democracy and the state apparatus can advantage society, the question needs to be asked what method of execution or production will work best. It is unlikely that the centralized state by which Progressives hoped to emulate European Christian Socialism and social democracy (and itself was but an extension of monarchy, according to De Juvenal) is best at meeting public needs even if the state is better at meeting public needs than are private firms. The reason is bounded rationality.
Bounded rationality was discussed by March and Simon with respect to organizations in their book Organizations. Walter Lippmann discussed the idea with respect to public opinion in his book Public Opinion. Ludwig von Mises discussed it with respect to centralized economic planning. And De Jouvenal discusses it with respect to the ability of the state to achieve the objective of the common good.
Naturally, he mocks the idea that Power (as he defines it, the elite that governs society) has the common good in mind. This is the assumption of all advocates of big government, socialism, Progressivism, social democracy and the like. The notion that people seek power out of altruistic ends is laughable. We see this today with the naive news broadcasters, like CNN's Jack Cafferty, who offer prayers to Saint Barack Obama and his colleague, Lou Dobbs, whose head touches the floor seven times whenever Saint Barack's name is mentioned. But De Jouvenal grants this assumption.
He notes:
"But as soon Power is conceived as being exclusively the agent of the common good, it must form a clear picture for itself of what this common good is. While Power was eogist, the vital necessity under which it lay of reaching every day a daily accommodation with society, itself sufficed to form in it pictures of public requirements which, though confused, were born of actual contacts. But as soon as Power, under the spur of altruism, has a vision of the entire community and what medicine it needs, the inadequacy of human intelligence to such a task appears in its fullness. What the judgment pronounces then shows itself a blinder guide than what the senses indicate--to put it another way, touch is superior to vision.
"It is a noteworthy fact that all the greatest political mistakes stem from defective appraisals of the common good--mistakes from which egoism, had it been called into consultation, would have warned Power off." (On Power, p. 137).
In organizational theory, it is well established that one of the cures for cognitive limits on rationality is decentralization or divisionalization of organizations. Thus, one way to address the problem of the social loss function that government creates is to reduce the scope of governance. In other words, to download responsibility to the states.
American government anticipated this idea in the form of Federalism. However, the tendency over the past two centuries has been to reduce the power of the states and increase the monarchical power of the federal government. The reason for this is, as De Jouvenal points out, the economic, political and egoistic interests of the ruling elite--the politicians in Washington, the Justices of the Supreme Court, the academics who cater to them and receive significant jobs and consulting contracts, and the military industrial complex.
The monarchical process thus results in one rather odd effect: that a key finding of the social sciences, that information is difficult to procure; that rationality is limited; and that experimentation is the best way to learn; is scoffed at by judges, economists and academicians, whose economic interests take precedence over their interest in pursuing justice or the truth.
De Jouvenal argues that Power, the governing elite, derives historically from conquest. In European history this took the form of the conquest of the Roman territories and Rome itself by the Franks, Goths, Angles, and other Barbarians. In China this took the form of the unification of China by the Duke of Zhou and Qin Shi Huang's reunification following the warring states period. Qin, by the way, buried China's scholars alive, a fate I have dreaded after seeing the movie The Vanishing.
The monarch or leader of the conquering tribe exploits the conquered population rather than kill them. The invention of slavery reduced the amount of killing because the conquerers learned to make use of the conquered economically. The king realizes that the nobility, the leaders of his army, pose a threat to his power. Over time, perhaps multi-generationally, the king realizes that by taking the side of the conquered against the nobility he can reduce the power of the nobility and enhance his own power. This happened in England in the 1500s. The establishment of the Chinese Civil Service was within roughly two centuries of the Qin Shi Huang's reunification of China. In America, the Progressives, representatives of big business, realized that they could work with populist and socialist movements by saying that they were against the trusts, and in doing so bring regulations that attacked the rising entrepreneurs and benefited big business to bear. Thus, the king creates a bureaucracy or civil service that aims to provide social benefits in order to unite the people against the nobility. This occurred in modified form in the United States. Abraham Lincoln had enhanced federal power in the 1860s, and Progressivism appeared within 40 years.
Ultimately the people realize that the king can be replaced with the popular sovereignty or national will, which of course are non-existent imaginings. The king is deposed and democracy replaces the monarchy. The unlimited definition of democracy, in turn, leads to tyranny. Thus, the French Revolution led to killings by Jacobins, Robespierre and the Committee of Public Safety; the democratic revolution of Sun Yat Sen led to the tyranny of Mao Tse Tung; and the overthrow of the Czar led to the Bolshevik Revolution.
In America De Jouvenal's model does not apply exactly because there was no monarch. Also, Rousseau's unlimited theory of democracy did not take hold. Rather, Lockean liberalism limits the power of democracy. Hence, the tyrannies and suffocating power of government that took hold in backward Europe and Asia did not occur here. However, America's elite, jealous of the wonderful triumphs in Europe, aimed to introduce Rousseauean unlimited democracy here. Just two decades before the ascension of both Hitler and Stalin, Herbert Croly, Walter Weyl and Theodore Roosevelt argued for Progressivism. Croly's book glorifies the state and is very much in the tradition of German historicism, as was Progressivism in general.
The notion of a loss function is that the action of a producer can be improved by reducing losses. Many will argue with the claim that unlimited democracy leads to tyranny. However, whether you believe that unlimited democracy leads to social justice and benefits society, or whether you believe that limited government is better at achieving those ends, the question needs to be asked what the method of achieving each citizen's best interests can be. In other words, even if unlimited democracy and the state apparatus can advantage society, the question needs to be asked what method of execution or production will work best. It is unlikely that the centralized state by which Progressives hoped to emulate European Christian Socialism and social democracy (and itself was but an extension of monarchy, according to De Juvenal) is best at meeting public needs even if the state is better at meeting public needs than are private firms. The reason is bounded rationality.
Bounded rationality was discussed by March and Simon with respect to organizations in their book Organizations. Walter Lippmann discussed the idea with respect to public opinion in his book Public Opinion. Ludwig von Mises discussed it with respect to centralized economic planning. And De Jouvenal discusses it with respect to the ability of the state to achieve the objective of the common good.
Naturally, he mocks the idea that Power (as he defines it, the elite that governs society) has the common good in mind. This is the assumption of all advocates of big government, socialism, Progressivism, social democracy and the like. The notion that people seek power out of altruistic ends is laughable. We see this today with the naive news broadcasters, like CNN's Jack Cafferty, who offer prayers to Saint Barack Obama and his colleague, Lou Dobbs, whose head touches the floor seven times whenever Saint Barack's name is mentioned. But De Jouvenal grants this assumption.
He notes:
"But as soon Power is conceived as being exclusively the agent of the common good, it must form a clear picture for itself of what this common good is. While Power was eogist, the vital necessity under which it lay of reaching every day a daily accommodation with society, itself sufficed to form in it pictures of public requirements which, though confused, were born of actual contacts. But as soon as Power, under the spur of altruism, has a vision of the entire community and what medicine it needs, the inadequacy of human intelligence to such a task appears in its fullness. What the judgment pronounces then shows itself a blinder guide than what the senses indicate--to put it another way, touch is superior to vision.
"It is a noteworthy fact that all the greatest political mistakes stem from defective appraisals of the common good--mistakes from which egoism, had it been called into consultation, would have warned Power off." (On Power, p. 137).
In organizational theory, it is well established that one of the cures for cognitive limits on rationality is decentralization or divisionalization of organizations. Thus, one way to address the problem of the social loss function that government creates is to reduce the scope of governance. In other words, to download responsibility to the states.
American government anticipated this idea in the form of Federalism. However, the tendency over the past two centuries has been to reduce the power of the states and increase the monarchical power of the federal government. The reason for this is, as De Jouvenal points out, the economic, political and egoistic interests of the ruling elite--the politicians in Washington, the Justices of the Supreme Court, the academics who cater to them and receive significant jobs and consulting contracts, and the military industrial complex.
The monarchical process thus results in one rather odd effect: that a key finding of the social sciences, that information is difficult to procure; that rationality is limited; and that experimentation is the best way to learn; is scoffed at by judges, economists and academicians, whose economic interests take precedence over their interest in pursuing justice or the truth.
Wednesday, June 3, 2009
Bertrand De Jouvenal on the Equivalence of Progressivism and Corporate Conservatism
"Every association of men shows us the same spectacle. When once the social end ceases to be continuously pursued in common (as happens, for instance, in an association of pirates, where there must be a chief, but where no active body emerges over a passive generality) and becomes the permanent charge of one differentiated group, to be interfered with by the rest of the associates only at stated intervals--when once the differentiation has come about, then the responsible group becomes the elite, which acquires a life and interest of its own.
"It withstands on occasion the mass whence it came. And it carries the day. It is hard in reality for private persons attending a meeting, taken up as they are with their own concerns and without having concerted among themselves beforehand, to feel the confidence necessary to reject the proposals which are cleverly presented to them from the platform, and the necessity for which is supported by arguments based on considerations of a kind to which they are strangers."
De Juvenal shows that power is monarchical in nature. The popular sovereignty-based power of Progressivism is an imitation of European monarchy. Europe arrived at this model, shows de Juvenal, via monarchy. Dirgisme, strong state power, is the function of monarchy legitimized by popular sovereignty that has replaced the monarch with the "national will", an abstract concept that is vacuous of meaning. Thus, power becomes the possession of a group of self-interested activists or demagogues who claim to reflect the "national will". In the case of corporate conservatism, the argument is that the efficiency of corporations entitles them to special consideration. This is the corporate conservative view. But the corporations are not efficient and they cannot be because if they were there would be no motive to act as special interests in claiming state privilege.
Both corporate interests and social democratic cliques claim to serve the public. The corporate interest claims to do so through efficiency, when it is actually inefficient. The social democratic clique claims to do so when it actually serves itself.
Progressivism and progressivism, corporate conservatism and social democracy, are the same ideology with two rival gangs competing for power.
What is to be done? The alternative ideology to Progressivism and progressivism is Lockean liberalism: the insistence on individual rights; the insistence on no special treatment for any party; and skepticism that the state has the ability to create benefits out of thin air. This skepticism leads directly to a rejection of Keynesian economics; of socialism; and of social programs that have caused more harm than good.
"It withstands on occasion the mass whence it came. And it carries the day. It is hard in reality for private persons attending a meeting, taken up as they are with their own concerns and without having concerted among themselves beforehand, to feel the confidence necessary to reject the proposals which are cleverly presented to them from the platform, and the necessity for which is supported by arguments based on considerations of a kind to which they are strangers."
De Juvenal shows that power is monarchical in nature. The popular sovereignty-based power of Progressivism is an imitation of European monarchy. Europe arrived at this model, shows de Juvenal, via monarchy. Dirgisme, strong state power, is the function of monarchy legitimized by popular sovereignty that has replaced the monarch with the "national will", an abstract concept that is vacuous of meaning. Thus, power becomes the possession of a group of self-interested activists or demagogues who claim to reflect the "national will". In the case of corporate conservatism, the argument is that the efficiency of corporations entitles them to special consideration. This is the corporate conservative view. But the corporations are not efficient and they cannot be because if they were there would be no motive to act as special interests in claiming state privilege.
Both corporate interests and social democratic cliques claim to serve the public. The corporate interest claims to do so through efficiency, when it is actually inefficient. The social democratic clique claims to do so when it actually serves itself.
Progressivism and progressivism, corporate conservatism and social democracy, are the same ideology with two rival gangs competing for power.
What is to be done? The alternative ideology to Progressivism and progressivism is Lockean liberalism: the insistence on individual rights; the insistence on no special treatment for any party; and skepticism that the state has the ability to create benefits out of thin air. This skepticism leads directly to a rejection of Keynesian economics; of socialism; and of social programs that have caused more harm than good.
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