The question we must ask right now: Why is the GOP so determined to expire for good the extra $600 a week in federal unemployment benefits? The answer is not so obvious. For one, economists are certain that reducing unemployment benefits "will pull the rug out from the economic recovery." The pandemic is clearly not going away any time soon. The job market is still in the gutter and not looking at the stars. Of the estimated 40 million jobs lost during the first months of the pandemic, about 9 million have returned, and returned in a climate that daily batters any job opportunities that are out there.
In June, 4.8 million jobs went online because of the aggressive reopening push. But the sharp increase in infection and death rates caused by the reopening has predictably reversed the recovery. The job market is once again in decline.
The White House's economic adviser Larry Kudlow is not in the wilderness. What he said clumsily on CNN (workers do not want to work because the benefits are so good) is consistent with what almost all of the members of his party and those who support its political program believe. But this thinking, this insistence that workers are inherently lazy, makes no economic sense. But it does make sense when we seriously consider the essence of capitalism.
I want us to consider this passage from an excellent new book, The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes, by Zachary D. Carter (I reviewed it here):
[Despite the economic recovery initiated by New Deal policies in the 1930s], the rich, as a group of Harvard economists observed, continued to “complain bitterly” of their tax burden, which they perceived as a violation of “divine right”—even though “the additions to their incomes, resulting from the government’s activities, are far greater in amount than the additional taxes they pay.” Jack Morgan, according to one chronicler of the family, viewed the New Deal “less as a set of economic reforms than as a direct, malicious assault on the social order.”
And also this passage from Michal Kalecki's most popular and quoted piece of writing, "Political Aspects of Full Employment" (PDF):
We have considered the political reasons for the opposition to the policy of creating employment by government spending. But even if this opposition were overcome—as it may well be under the pressure of the masses—the maintenance of full employment would cause social and political changes which would give a new impetus to the opposition of the business leaders. Indeed, under a regime of permanent full employment, the 'sack' would cease to play its role as a disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow. Strikes for wage increases and improvements in conditions of work would create political tension. It is true that profits would be higher under a regime of full employment than they are on the average under laissez-faire; and even the rise in wage rates resulting from the stronger bargaining power of the workers is less likely to reduce profits than to increase prices, and thus adversely affects only the rentier interests. But 'discipline in the factories' and 'political stability' are more appreciated than profits by business leaders. Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the 'normal' capitalist system.
The key sentence from Carter's passage: "Jack Morgan [as in the House of Morgan or Chase Morgan], according to one chronicler of the family, viewed the New Deal 'less as a set of economic reforms than as a direct, malicious assault on the social order.'” The key sentence from Kaleski's passage: "But 'discipline in the factories' and 'political stability' are more appreciated than profits by business leaders." What these passages reveal or indicate is that capitalism is not really an economic system but a system of control. It's not about the production of wealth but the organization and stabilization and reproduction of class relations.
In a 2014 lecture about the Marxist thinker Rosa Luxemburg, whose masterpiece The Accumulation of Capital exerted a decisive influence on the mind of the most intellectually brilliant economist of the 20th century, Michal Kalecki (quoted above), the American social theorist Nancy Fraser described capitalism as "best conceived as an institutionalized social order on par with feudalism that has specificities in its institutional structure..." (Listen to 31:00 to 33:00 of the lecture: "The Significance of Rosa Luxemburg for Contemporary Social Theory.")
My point: The GOP is not about the economy or even growth. It's about the maintenance of an institution (Fraser) that we mistake for a wealth-generating system, capitalism. Giving people $600 during a pandemic might help the recovery, but it will, in this view (the view of the most powerful class of the elite), erode worker discipline (Kalecki) and weaken the present social order (Carter). I have more to say about this institutional decoding of market society, but I can't stop myself from making a sudden turn in this post and mentioning a curious letter I found in a book that recently arrived at my doorstep in Columbia City.
Now, the reason why I read Zachary D. Carter's new book last weekend is because of a letter I found in the back of a book I bought online called The Intellectual Capital of Michal Kalecki by George Feiwel, a Canadian economist who is 91 and spent the main part of his teaching career at McGill University in Montreal. There are two reasons why I ordered Feiwel's book: one, it's favorably mentioned in another book I read in early July, Jan Toporowski's Michał Kalecki: An Intellectual Biography Volume I Rendezvous in Cambridge 1899-1939, and, two, Feiwel impressed me as a superb expositor of the complex ideas of leading post-Keynesians, particularly Joan Robinson (read his long introduction to Joan Robinson and Modern Economic Theory). She was the queen of the Cambridge school, and she's also the figure who moves through Carter's book on Keynes as if through a passage that's hidden behind the narrative and has a few, widely spaced doors through which Robinson enters at key moments of the biography.
At the back of The Intellectual Capital of Michal Kalecki, I found a letter addressed to a prominent Keynesian scholar, Donald Moggridge. He wrote what I rate as the second-best biography on John Maynard Keynes, Maynard Keynes: An Economist's Biography. To my surprise, the copy of The Intellectual Capital of Michal Kalecki I now own was once a part of Moggridge's library. And it was my thoughts about Moggridge's biography on Keynes that inspired me to buy and read Carter's new biography (would it be as good Moggridge's or even the best of the best, Baron Skidelsky's magnificent three-part biography on John Maynard Keynes?). Stranger yet, the letter in my book was from Teresa Rothschild (or Lady Rothschild), who worked at the capital of the Keynesian Revolution, Cambridge University. (Moggridge studied economics at that ancient university.) Lady Rothschild is also the mother of Emma Georgina Rothschild-Sen who is married to the famous Indian economist Amartya Kumar Sen. This book only cost me $15 (including shipping and taxes).
Anyway, the letter does not say much, but here it is. Click to expand the image. Enjoy.