February 20th, 2021

The Great Conspiracy

ELECTRICITY

Earlier this week, millions of households lost power in the face of a powerful snowstorm. While these numbers are unusual, they are not new—the US suffers among the most frequent power outages of any industrialized country, concentrated especially in rural areas and the South.

In a recent paper, ABBY SPINAK analyzes the political trajectory of America's weak electrical infrastructure by comparing the underlying economic assumptions of the New Deal's Rural Electrification Administration (REA) with those of the Ontario Hydro-Electric Power Commission in Canada.

From the paper:

"In the early twentieth century, experiments in electricity were experiments in statecraft. A malleable technology with significant financing and distribution challenges, electricity was a proxy through which budding welfare states could hash out their responsibilities to the public. Early public electrification efforts became sites of deliberation about balancing urban and rural needs, industrial development, and the public interest. Through electrification programs, policymakers in industrializing countries proposed and tested ideas of economic citizenship, the proper role for government, and the limits of private enterprise. Vibrant forums within and between industrializing nations intensely debated whether electricity was a right or a privilege—and where and for whom.

Why did REA power flow not quite so freely as it did in Ontario? With an explicit charter not to distinguish between private, municipal, or cooperative power companies for dispersal of loans, the REA focused on keeping rates low and distributing power to areas where it could encourage rapid economic growth. It only begrudgingly supported the use of federal loans in the construction of generating stations where power could not be purchased inexpensively enough through the private market. Despite the explicit connection of the REA to Dust Bowl mitigation efforts, its emphasis was less on protecting natural resources for the common good and more on ensuring the efficiency and sustainability of natural resources for national economic growth. In the latter case, who owned what mattered much less than how capably it would be put to use."

Link to the piece

  • "Although REA programs were planned and administered in Washington, D.C., western residents rather than New Deal administrators initiated most of the region's rural electrification projects." Brian Q. Cannon on "Rural Electrical Cooperatives and the New Deal." Link. & Carl Kitchens and Price Fishback examine "The Spatial Impact of the Rural Electrification Administration 1935-1940." Link.
  • "Africa is the most undersupplied region in the world when it comes to electricity, but its economies are utterly dependent on it." David A. McDonald introduces a book of collected essays on inequality and electrification across the continent. (Also inside: river privatization and hydropower, nuclear energy in South Africa, corporate power in Uganda.) Link.
  • Wuyuan Peng Jiahua Pan with a history of rural electrification in China. Link. And from Jonathan Coopersmith's 2016 book: "Electrification transformed capital markets, the military, manufacturing, the spatial geography of cities, and many other facets of Russian life." Link.
 Full Article

February 6th, 2021

The Villa in the Snow

SOCIAL DEMOCRACY

While the neoliberal era appears to be in crisis, we took on a project to investigate its historical foundations. The tensions of the current political moment are commonly traced to the financial deregulation and economic liberalization of the 1980s and 1990s. The "turn" that took place in these decades has been attributed to economic necessity, ideological commitments, and the interests of powerful political actors.

But key to critiquing the economic policies of this period is the assumption of viable political alternatives. Adam Przeworski's classic 1986 text examines the details of this question.

From the piece:

"What is a 'mistake'? The very possibility of committing mistakes presupposes simultaneously a political project, some choice among strategies, and objective conditions that are independent with regard to the particular movement. If the strategy of a party is determined by economic circumstances, then the notion of mistakes is meaningless: the party can only pursue the inevitable. In a world of economic necessity, the question of errors cannot even be posed.

The notion of mistakes is also rendered meaningless within the context of a radically voluntaristic understanding of historical possibilities. If everything is always possible, then only motives can explain the course of history. For an error is a relation between projects and conditions; mistakes are possible if and only if some strategies are ineffective in advancing the realization of a given project under existing conditions, while other strategies would have advanced it under the same conditions. If we are to draw lessons from historical experience, we can assume neither that the practice of political movements is uniquely determined by any objective conditions, nor that such movements are free to act at will, independently of the conditions they seek to transform. These conditions constitute at each moment the structure of choice: the structure within which actors deliberate upon goals, perceive alternatives, evaluate them, choose courses of action, and pursue them to create new conditions."

Link to the book.

  • In Phenomenal World's first book, Market Economy, Market Society, Przeworski reconsiders the issue: "The social democratic vision of transforming society survived for nearly one hundred years, even when it was imperative to cope with immediate crises, and even when social democrats experienced political defeats. This is what faded at the end of the 1970s." Link. In the book's second introductory text, Stephanie Mudge notes, "social democratic parties can make the difference between mere rights and actual representation. But simply occupying that space isn’t enough—it matters how these parties work, the agendas and policies they promote, and how and for whom (or what) they speak." Link.
  • "It is, decisively, the Italian left’s weakness in proposing achievable reforms at the state level which has made it particularly suffer the effects of the decline of the mass workplace." In the book's first section, David Broder analyzes the "Italian Left After Keynesianism." Link. Also in this section, an interview with former Prime Minister Giuliano Amato, link, and interviews with Emanuele Macaluso and Claudio Petruccioli.
  • In the book's second section, an interview with former Spanish Prime minister Felipe González: "What worries me is that to some degree social democracy died of success. It died because it couldn’t understand that the society that it had helped create was not the society which existed when it started." Link to the interview, link to the section's introduction by Juan Andrade. Also in this section, interviews with Begoña San José and Héctor Maravall.
  • "Mitterrand shows that if the path of radical reformism is challenging and uncertain, the alternative has been disastrous." In the final section, Jonah Birch analyzes the political shifts in France. Link to the article. And the section also features interviews with Anicet Le Pors, François Morin, and Roger Martelli.
 Full Article

January 30th, 2021

Turn and Burn

SOCIAL HISTORY

Next week marks the launching of our first book-length Phenomenal World publication: Market Economy, Market Society: Interviews and Essays on the Decline of European Social Democracy. The book examines the fracturing of the social democratic consensus through the eyes of policymakers, trade union leaders, and party politicians who lived through, and in some cases enacted, the liberal market reforms of the 1980s and 90s.

A 1997 essay by Eric Hobsbawm reflects on the social, political, and cultural importance of historical inquiry in shaping collective understandings of the present and future.

From the piece:

"To be a member of any human community is to situate oneself with regard to one's (its) past, if only by rejecting it. The past is therefore a permanent dimension of the human consciousness, an inevitable component of the institutions, values and other patterns of human society. The problem for historians is to analyze the nature of this 'sense of the past' in society and to trace its changes and transformations.

Paradoxically, the past remains the most useful analytical tool for coping with constant change. Some sort of historicism, that is the extrapolation of past tendencies into the future, has been the most convenient and popular method of prediction. At all events the shape of the future is discerned by searching the process of past development for clues, so that the more we expect innovation, the more history becomes essential to discover what it will be like. However, at this point a contradiction arises: the capacity to discern general tendencies does not imply the capacity to forecast their precise outcome in complex and in many respects unknown circumstances of the future. History ceases to be of use at the very moment when we need it most. The value of historical enquiry into 'what actually happened' for the solution of this or that specific problem of present and future is undoubted. Yet the nature of this often arbitrary process of dipping into the past for assistance in forecasting the future by itself does not replace the construction of adequate social models, with or without historical enquiry. It merely reflects and perhaps in some instances palliates their present inadequacy."

Link to the book containing the paper.

  • "Students of history have imagined that they were dealing with phenomena like ocean tides, whose regularities they could deduce from sufficient knowledge of celestial motion, when they were actually confronting phenomena like great floods, equally coherent occurrences from a causal perspective, but enormously variable in structure, sequences, and consequences." Charles Tilly on explaining political processes. Link.
  • "By the late twentieth century, it can be argued that concepts of identity at every level are crucially derived from highly fashioned and coherent narratives about the past." A 1995 paper by Olivia Harris examines the relationship between historical narrative and political agency. Link.
  • A 1980 reflection from Braudel: "The one thing that fascinates me in the history profession is the extent to which it can explain the life of men as it is being woven before our very eyes, with its acquiescences and reticences, its refusals, complicities, or surrenders when confronted with change or tradition." Link.
 Full Article

January 9th, 2021

Plucked Goose

AMERICAN EXCEPTIONALISM

The deep divisions in American political and social life have long been thought to explain the unique weakness of America’s welfare infrastructure, and the absence of an integrated system of universal benefits.

But on their own, demographic divisions need not necessarily fragment coalitions for universal demands—history is teeming with political movements which were capable of uniting different factions. In his 1981 book, City Trenches, political scientist IRA KATZNELSON situates a history of immigration and racial conflict within a structural account of America’s urban geography and economic development.

From the text:

"Analyses of games or contests, political or otherwise, must do more than describe the players and their adversary play. They must also say something about the boundaries of the contest, which define its limits prior to the playing of the game itself. Attempts to make sense of what is special about class in America have ordinarily proceeded without this specification. They have most frequently focused on one of three conditions of American life—the racial and ethnic fragmentation of the working class itself, the unusual economic rewards of the economy, or the values that integrate American society—and they have generally argued that these conditions have made virtually impossible the development of class-based politics.

But America’s working class was not created once and for all. It has been fashioned and refashioned as members of national, ethnic, or religious groups that had been outside of the frame of capitalist labor relations have entered the ‘free’ labor market. I argue below that the unique characteristics of American institutions are aspects of a sharply divided consciousness about class in American society that finds many Americans acting on the basis of the shared solidarities of class at work, but on that of ethnic and territorial affinities in their residential communities. Each kind of conflict has had its own separate vocabulary and set of institutions: work, class, and trade unions; community, ethnicity, local parties, churches, and voluntary associations. Class, in short, has been lived and fought as a series of partial relationships, and it has therefore been experienced and talked about as only one of a number of competing bases of social life. What is distinctive about the American experience is that the linguistic, cultural, and institutional meaning given to the differentiation of work and community, a characteristic of all industrial capitalist societies, has taken a sharply divided form, and that it has done so for a very long time."

Link to the book.

  • "The factors that lead people to see the world in class terms may not be the same as those that sustain organizations created to act on such a vision. We need to investigate the conditions which encourage both the world view and organizational longevity in critical moments." Kim Voss’s 1992 paper examines American Exceptionalism through the rise and fall of the Knights of Labor. Link.
  • Mike Davis considers the question in a 1980 NLR: "On the one hand we must discard the idea that the fate of American politics has been shaped by any overarching telos. On the other hand, we cannot underestimate the role of sedimented historical experiences as they influenced and circumscribed capacities for development in succeeding periods." Link.
  • "Perhaps the debate over American exceptionalism has gone on for so long and so inconclusively because the question itself is fundamentally flawed. Perhaps beginning our investigation with a negative question inevitably invites ahistorical answers." A 1984 article by Eric Foner casts doubt on the debate. Link.
 Full Article

December 3rd, 2020

Transition Theory

On Jairus Banaji’s A Brief History of Commercial Capitalism

Capitalism is either eternal or it isn’t. There are people who defend the first view, or something close to it—the multivolume 2014 Cambridge History of Capitalism opens in Babylonia, circa 1000 BCE—but it is much more plausible that capitalism, like most other social phenomena, has its origins in specific historical developments. The trouble is that, once you’ve got everyone to agree that capitalism has a history, you have to define what capitalism is and then explain when, where, why, and how it emerged.

Of course, no one thinks you can date the transition the way you can specify when a battle took place or a patent was filed. But even after abandoning false precision, those who’ve grappled with the problem of defining and explaining capitalism’s emergence have been unable to agree even on which centuries and continents were involved.

 Full Article

October 1st, 2020

A Popular History of the Fed

On Populist programs and democratic central banking

Since Lehman collapsed in 2008, central banks have broken free of historical norms, channelling trillions into the banking system to prop up global finance and the savings of depositors from Germany to Hong Kong. The corona crash has only accelerated this emancipation. In April, the Bank of England helped the Johnson government finance an ambitious furlough scheme, while the European Central Bank stepped up their older quantitative easing program, pumping liquidity back into the bank sector. Swap lines by state banks have been set up in the United States, while the latest European recovery plan ratified an extension of the Pandemic Emergency Purchase program. Adam Tooze cast all of this as “a remarkable display of technocratic energy and imagination in western financial centers”—necessary to both “control the epidemic” and “restore the world economy.”

Amongst these institutions none possess as much luster as the American Federal Reserve. While other banks waver or bow to political leadership, the Federal Reserve’s action is swift and decisive, protecting against financial collapse at home while safeguarding assets abroad. Unsurprisingly, the Fed is often singled out as one of the greatest triumphs of capitalist statecraft, from its creation in 1913 under Woodrow Wilson to its decisive role in the neoliberal counterrevolution of the 1980s under Paul Volcker. Yet while the bank seemed deeply conservative for the intermittent period, its proactive capacity asserted itself with a vengeance in 2008, when Timothy Geithner’s New York Fed almost single-handedly saved the global financial system from collapse.

 Full Article

August 26th, 2020

Banks, Bubbles, Profits

An interview with Richard Westra

Richard Westra is University Professor at the Institute of Political Science, University of Opole, Poland and international Adjunct Professor of the Center for Macau Studies, University of Macau. His research focuses on the philosophical underpinnings of economic phenomena, with an emphasis on financialization, globalization, and neoliberalism. His many writings also consider the politics of states of exception, legalization of politics, and the study of global apartheid.

Alongside Robert Albritton, Makoto Itoh, and Thomas Sekine, Westra traces his intellectual lineage to Japanese political economist Kozo Uno (1887–1977). Arising largely out of debates about the nature of the transition from feudalism to capitalism in Japan, Uno’s thought responds to a need to comprehend social-economic forms displaying “mixed” characteristics—mixed modes of production (i.e. feudal societies with capitalist characteristics or vice versa) and mixed economies (i.e. socialistic economic forms internal to capitalist economies or vice versa), as well as “capitalist” economic activity in pre-capitalist societies. Both Uno and Westra’s work is therefore concerned with reconciling the “law-like” aspects of economic phenomena with the contingency of empirical history. The task of analytically articulating these mixes necessitates a theoretical understanding of capitalism in its most pure and general form.

 Full Article

August 10th, 2020

Ships in Port

UNEMPLOYMENT

It's been over a week since Congress allowed the Federal Pandemic Unemployment Compensation scheme to lapse, and negotiations over an extension have reached a gridlock. But even prior to its end, access to the enhanced benefit was far from equal across the country—a host of administrative and practical hurdles in states like Florida and Alabama prevented scores of applicants from receiving aid.

The absence of a functional and unified federal unemployment scheme is a characteristic feature of America's patchy safety net. In a 1987 paper, Edwin Amenta, Elisabeth S. Clemens, Jefren Olsen, Sunita Parikh, and Theda Skocpol trace the history of this decentralized structure through a comparative analysis of 1930s UI legislation in Wisconsin, New York, Massachusetts, Ohio, and Illinois.

"The states, not the federal government, were the units that debated health and unemployment insurance bills and passed workers' compensation and mothers' pension laws during the Progressive Era and after. The debates surrounding unemployment insurance provide considerable insight into the political dynamics of industrial society. More than any other component of welfare policy, the states' response to unemployment politicized antagonisms between capital and labor. Moreover, the emergence of unemployment as a legitimate target for state action entailed both the development of a politically viable interpretation of the cause of unemployment, and decisions concerning the appropriate extent of the government's intervention in the economy.

Neither organized labor nor political parties have been identified as important shapers of Social Security. But, as we have seen, a programmatic political alliance between organized labor and the Democratic party did shape generous unemployment insurance in New York, and the influence of labor, mediated by Democratic parties, also mattered in Massachusetts, Ohio, and even Illinois. Moreover, in Wisconsin, the 1932 unemployment benefits law grew out of patterns of administrative-led political bar- gaining established in the Progressive Era. This bargaining included organized labor and its political allies, the Milwaukee Socialists; it also occurred in a partisan context marked by the strong influence of Progressive Republicans. In short, if we examine politics at the state level, we discover that organized labor and political parties (as actors and as organizational structures) played a much more important role in the shaping of American unemployment insurance than nationally focused research reveals."

Link to the piece.

  • A report from the New York State Department of Labor provides a legislative history of UI following the passage of the Social Security Act in 1935, with an appended chronology of significant legislative changes on the federal and state level. Link. And two Congressional Research Service reports summarize the structure of the current federal system, including that of the Unemployment Trust Fund which supports states in the case of insolvency. Link and link.
  • In a 1990 paper, Steve Valocchi examines the internal dynamics of the unemployed workers movement in the 1930s US: "The movement's inability to change its organizational form in the face of early New Deal reforms led to the precipitous decline in protest activity in 1934." Link.
  • "Governments shape the meaning of unemployment through policies and public declarations. Some kinds of joblessness come to 'count' as unemployment while others do not." In a 2004 book, Philip Baxandall situates categories of unemployment in Hungary within the country's changing political context. Link.
 Full Article

August 3rd, 2020

Nocturnal Pasture

OFFSHORING

Much research has documented the vast sums of "missing wealth" stored in tax havens, and detailed its implications for inequality, fiscal policy, and economic growth. Less present in the discussion is the institutional and political history of these offshore financial centers.

In a 2017 paper, VANESSA OGLE recounts the making of what she terms the offshore "archipelago"—the various institutions that, outside of the core of powerful nation-states, became central to the international financial system. From the paper:

"Contemporary definitions of tax havens are often too static to capture the more fluid and multifaceted legal constellation among such sites as they appear to the historian. In the age of empire, the natural state of affairs entailed legal unevenness. This world was made up of centralized nation-states, multiethnic land empires, overseas empires with their colonies, protectorates, settlements, and dominions, as well as 'informal empire' with its regimes of extraterritoriality and legal pluralism. Local administrations in overseas territories had considerable leeway in drafting company and bank laws or tax codes and accounting standards for these respective entities and sub-entities. Legal and political unevenness greatly benefited tax avoidance on a global scale.

As empires came undone, an archipelago-like landscape of distinct legal spaces re-created some of the unevenness that had characterized the nineteenth century. Yet in the twentieth century, this offshore world and the unevenness it offered existed in and for a world order in which bounded, homogeneous national state spaces and generally sizable nation states had eventually become the norm. The New Deal, the European welfare state, decolonization, and the Bretton Woods system were state-based and government-driven projects. The offshore world emerged on a more significant scale precisely at the moment when these state-based projects began to assume their greatest importance. It consisted of tax havens, flags of convenience registries, offshore financial markets and banking institutions, and special economic zones. This landscape allowed free-market capitalism to flourish on the sidelines of a world increasingly dominated by larger and more interventionist nation-states."

Link to the piece.

  • Antonio Coppola, Matteo Maggiori, Brent Neiman, and Jesse Schreger recalculate global capital flows, accounting for cross-border financing and tax havens: "We find that portfolio investment from developed countries to firms in large emerging markets is dramatically larger than previously thought. The national accounts of the United States, for example, understate the U.S. position in Chinese firms by nearly $600 bn, while China’s official net creditor position to the rest of the world is overstated by about 50 percent." Link.
  • Drawing on interviews with key informants from banks, shell companies, foreign real estate, and investor citizenship programs, Alexander Cooley and J. C. Sharman argue that "professionals in major financial centers serve to lower the transaction costs of transnational corruption by senior foreign officials." Link.
  • Daniela Gabor and Cornel Ban's 2017 paper on the political economy of shadow banking. Link. And Jan Fichtner's 2016 "anatomy" of the Cayman Islands offshore financial center. Link.
  • The 2011 book The New Fiscal Sociology, edited by Isaac Martin, Ajay Mehrotra, and Monica Prasad, marks and collects interdisciplinary research in the comparative history and politics of taxation. Link.
 Full Article

July 22nd, 2020

Laws of the Land

Property rights and extraction in the mineral frontier

“The Mining Law of 1872,” reported California Democrat Alan Lowenthal in May 2019, "is one of the most obsolete laws still on the books.” At a hearing before the House Subcommittee on Energy and Mineral Resources, Lowenthal was rehearsing a longstanding critique of antiquation against hard rock mineral legislation—a law to privatize federal mineral lands that has remained in place since the nineteenth century.

For decades, this statute has come under scrutiny, with Congressional hearings on its merits held under every President since George H. W. Bush. Two objections are raised consistently. The first is that, in contrast to developers in other extractive industries, hard rock mining corporations may purchase Western mineral lands from the federal government for the minuscule price of \$5.00 per acre, and are charged no royalties on the resources they extract. This nearly 150-year-old arrangement remains a major gift to multinational corporations: in 1994, the US Interior Department sold about 1,949 acres in Nevada to the Barrick Resources Corporation. The land contained 30 million ounces of gold, which was valued at \$380 per ounce. Sold for just under \$10,000, the land was worth billions. A small royalty commensurate to those of other extractive enterprises would by now have generated hundreds of millions of dollars for the public.

 Full Article