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March 30, 2009

John Ruskin, the1860s and the eventual end of laissez-faire.

In 1860 John Ruskin first attempted to publish four essays that he later published as Unto this last. This was a condemnation, in difficult and sometimes stunningly beautiful prose of the state of England. Ruskin saw the glaring contrast between the alleged wealth of industrial production and the pattern of pollution and its long term consequences or of the exploitation of the laboring poor. What briefly (he wrote volumes) did Ruskin argue? Has Ruskin anything to tell us for today? What follows is a summarization of a longer piece on John Ruskin by Willie Henderson.

Formal economics looks at the world and sees “scarcity”, albeit relative scarcity. Ruskin looked at the world and saw “abundance” and wondered why such abundance did not translate into healthy and fulfilled working lives. He observed and reacted to a world in which those who produced did not consume and those who consumed did little in the way of production. The question of the proper uses of affluence has been asked many times since, in particular within the radical tradition of non-mainstream American socio-economic criticism. I am thinking of future theorists as diverse as Thorsten Veblen, the institutionalist perspective of conspicuous consumption and the wastes of advertising, John Kenneth Galbraith, a Keynesian perspective of private affluence and public squalor, and, from a Marxist perspective, Paul Sweezy and the economic waste of monopoly capital. There are hints of some of their ideas in Ruskin’s writing. The protest meetings on the street of London against current market failures and the G20 proposals, seem to have a strong Ruskinian tinge. Ruskin was, for example, deeply concerned that monopolies would wipe out the tradition of the independent artisan or small-scale producer.

Ruskin’s response to the ugliness of capitalism—capitalism, for him, produced ugly and polluted landscapes, ugly and unhealthy townscapes, ugly and greedy economic behavior— was aesthetic, as it was for the twentieth-century writer, D.H. Lawrence. Ruskin’s longer term wish was for a system that was capable of naturally painting the white and worn faces of the London poor with healthy color. Ruskin was concerned that Britain’s factories produced two outputs: goods and broken and divided men. He challenged manufacturers and merchants to take into account a full understanding of the costs of production measured in human terms. Ruskin was deeply concerned that far from moderating the selfish drive, the very image of economic man heightened it in the day-to-day ruthlessness of market oriented production. He was deeply suspicious of what he saw as the greedy fiction of “economic man”. Nature in this respect was capable of imitating art. Set our standards of discourse too low, Ruskin felt, and human behavior would soon follow. Whether intended or not, economic man by its very construction recommended “bad” behavior.

Ruskin is concerned about the true nature of wealth and he attempts to get his ideas though to his middle-class audiences with striking imagery. Thus: "So, also, the power of our wealth seems limited as respects to the comforts of the servants, no less than their quietude. The persons in the kitchen appear to be ill-dressed, squalid, half-starved. One cannot help imagining that the riches of the establishment must be of a very theoretical and documentary character" (UTL, 40).

This domestication of the issue of economic well-being had the potential to shock his middle-class, and servant-employing, readers. For Ruskin, wealth must translate into wellbeing before it can really count as wealth. Here he is referring both to individual households and to the nation as a household or estate. Given this insight, Ruskin moves from what I have called “a heap of things” to people themselves: “Perhaps it may even appear, after some consideration, that the persons themselves are the wealth”.

His arguments for economic regulation and the modification of market principles are based on reason and reasonable administration. The flow of resources in an economy is compared to the flow of rivers, each need “administering intelligence”: "The course neither of clouds nor of rivers can be forbidden by human will. But the disposition and administration of them can be altered by human forethought. Whether a stream shall be a curse or a blessing, depends on man’s labour and administering intelligence "(UTL, 46).

Ruskin’s notion of value is distinguished from price and based upon biological principles and environmental respect and on aesthetics (readily recognized by Adam Smith as part of the judgments involved in moving beyond subsistence). The nature contradiction to “wealth” in this sense was “Illth”. Ruskin was very aware of unregulated capitalism’s potential to take the natural resources of this world and of turning them into dangerous rubbish.

With respect to consumption in a capitalist society, Ruskin was very aware of the need for households to be ethically motivated. Demand, for Ruskin, is romantic in origin. It should be regulated not just by the imagination but by the “heart”, by consideration of the impact that expenditures will have on the “condition of existence” caused for producers, by consideration of a fair price. There is a direct line that goes from Ruskin to the fair trade movement, whether this line is acknowledged or not. Ruskin exhorts his readers to look directly and carefully, as he had done, at the economic world around them and to “raise the veil boldly” rather than filter their impressions through abstract and conventional political economy. His closing acts in Unto this last places the moral responsibility for prevailing economic conditions in the hands of the consumer, in the potentially availing hands of his readership.

Ruskin felt keenly the urgency of improving the lives of poor people for the time span for changing lives is limited by the length of life considered. He would have approved of John Maynard Keynes notion that in the long-run we are all dead. He would have approved of the rise of the fair trade movement and its institutional location in agencies such as Oxfam: their values are his values. He would be shocked to see China and India (to a lesser extent than China) repeating the problems, in their rush for growth, of the Industrial Revolution. The environmental degradation and the abuse of the health of the poor in that context would have astounded him. That product adulteration, a form of dishonesty that Ruskin attacked time and again, could even now claim the lives of babies would have angered him. He would have been appalled at the suicides in India blamed on the impact of corporate capitalism and genetically engineered seeds and the consequent rise of indebtedness in rural lives .

Ruskin would encourage us to look at social phenomenon as directly as we can and respond not simply with conventional analysis but with concern, imagination and compassion. This willingness “to raise the veil boldly” that separates us intellectually, morally and emotionally from the problems of poverty and economic justice is, I think, the enduring legacy, and hence understanding this capacity is the enduring “meaning” of Unto this last. Ruskin's ideas though set in a different time have a lot in common with the ideas of soem of those currently protesting prior to the G20 meeting in London.

March 25, 2009

Is “economic globalization” worth saving?

The endings of periods of sustained globalization have been dangerous times: the Napoleonic Wars; the First World War. Globalization has its good points and bad points. Its good points have been the dramatic changes in the prospects for sustained economic growth in India and China and the pace at which people have been pulled out of extreme poverty and the relative cheapening of production. Its bad points have been the dramatic increase in inequalities in countries where previous policy has been built around the notion of avoiding huge differences in income and the growth of pollution and waste together with the unevaluated spread of western consumption practices. Some argue that the greatest threat to the world economy is the possibly irresistible rise of protectionism. Some might feel that a pause in the reckless development of China or in the destruction of communities by international economic forces beyond their control are good things, allowing time to reflect on the environmental and social impact of the global economy. Leaders are face with a choice of doing nothing (already rejected but still supported by right wing libertarians); doing something to stimulate demand (though the outcomes are uncertain); protecting that stimulus package in-country by protectionist methods (probably very attractive in the short-run); going for global coordination (difficult to achieve).

Accepting the situation and pausing to rethink looks an attractive proposition at first sight. The potential problems with this idea are huge. In the developing world, many countries have young and growing populations. Some of these countries such as Pakistan are of huge significance and the balance of forces between instability and stability is not assured on the side of stability. Increased unemployment could tip the balance. World-wide unemployment has surged. In this sense there is a pause but major and prolonged economic slumps lead quickly to political instability. If this is going to be as long and as bad as the 1930s, when many countries abandoned democracy, then there are likely to be other significant political consequences. Even capitalists abandoned the market in that period. A demand for protectionist policies to ensure that stimulus policies have the highest possible domestic effect may be inevitable. NAFTA is already strained with respect to Mexican-US transportation arrangements. It is a question of what members of a polity see as the relevant community: the national or the international. Prolonged unrest in strategically significant countries, such as Pakistan or Mexico, will not help the cause of recovery anywhere.

Globalization was in difficulty even before the financial crisis. The promise of the Doha Round to prevent further protection and free-up agricultural trade, withered, lingered and eventually died. There was already a protectionist mood abroad, not only in emerging economies but in the U.S. Congress. Economic policy, like the so-called economic science itself, is contingent on historical circumstances. Economic regulation was out for a long time, now it is back. It is hard to see what the right thing to do is. The British government is seeking to develop another package of measures. The Bank of England is not so sure. Obama’s policies have been criticized by some European politicians though it is denied that there is an EU/US split. It is hard to see how the Unted States can avoid massive inflation down-the-line. There is an intellectual as well as a political confusion. It is hard to see how protectionism can be avoided if national economies try to re-establish growth through stimulus measures. The leakages are enormous. Open economies do not respond well to Keynesian-type policies and current circumstances are not routine.

We will need to wait to see how the G20 meeting will handle the issues. The British Prime Minister, Gordon Brown, has pushed the global line vigorously but even with the EU there is no consensus line. He will need to work hard if he is to get anywhere.

March 5, 2009

Gordon Brown, United States protectionism and the special relationship

Gordon Brown, the British Prime Minister, was in Washington D.C. this week, telling the Congress things that it likes to hear (how forward looking the United States is) and telling them a few things that on the whole it did not wish to hear. He also sent them a message about the so-called “special relationship” between Britain and the United States. He did not tell it that the present economic crisis originated in the United States though this is the case nor did he add that hence there is an obligation not to make the present situation worse by turning to protectionism. Nor did he tell them that he presided as Chancellor over the UK economy for several years leading up to this crisis. There is wobbly ground all around! What did Brown say and why?

Gordon Brown will be hosting the G20 economic summit in early April and this was one reason for him being in Washington D.C. The summit will discuss the global crisis and will attempt to find a coordinated basis for international action in the face of the recession. The UK economy is a very open economy and needs both imports and exports. Unlike countries in the euro zone it can adjust its economy by adjusting the exchange-rate which it can do indirectly by reducing the level of interest rates. It has just cut interest rates again. this is of course a kind of protectionism: it makes imports dearer and exports cheaper and this has itrritated those in the euro zone who do not have directly this policy option. He is keenly aware of the need for maintaining the international economy and is concerned about the move towards protectionism, already present in the Congress long before the last Presidential election. Monies voted for economic stimulus in the United States need to be politically seen to be helping directly the United States economy but a move to protectionism in the United States will be followed by vigorous protectionist policies in the rest of the world. If world trade is further cut, incomes will continue to fall and resources will move to inefficient rather than competitive production on a world-wide basis. Brown has been consistently calling for a global strategy. Unfortunately sentiment in the United States is moving against such a view whilst he is not in the strongest position to gain any leverage. Moral suasion is not a strong force, nor is Gordon Brown in a stong postion to call for it.

The other aim of his visit was to reinforce the “special relationship”, as Britain describes its foreign policy relationship with the United States. Since the 1950s Britain has looked at its foreign policy in terms of the Commonwealth (a loose association of states of the former Empire); Europe and the special relationship as America’s strongest ally. Most people in the United States know nothing of this relationship and Britain’s sensitivity about its significance looks odd. It is hard to see why the United States would wish to continue this relationship if, in Brown’s own understanding, Europe has the most consistent pro-American leadership in years. If the chances of multilateral cooperation because of a new administration are great, why would the United States need Britain? Of course, the United States could squander this chance by becoming protectionist and the squabbling between Europe and the United States could become intense. I wonder where Britain would be in that context. The United States wants a Europe that it can talk directly with but thus far this is not really available given the rejection of the constitutional proposals.

The ending of intense periods of globalization in the past has been fraught. The war in Afghanistan is moving against the United States and its allies and Britain is significant here. Britain is still needed. The Russian economy is in turmoil and it is not clear when or how the economic situation will impact on political stability there. Eastern Europe is in significant danger of economic collapse. Economic crisis soon becomes political crisis. Who knows what might happen next and who will need what kind of relationship and with whom? Britain should stop posturing about its “special relationship” with the United States. Brown should concentrate on making the G20 meeting effective by whatever cooperative means, particularly within Europe, he has at his disposal. Brown cannot prevent the United States turning to protectionism, but a firm line from all European leaders working together might.