Tuesday, May 5, 2009

A Mexican Standoff

Or, more appropriately, a Chinese American standoff. Here, in a nutshell is the situation:

1. The Chinese are nervous about holding large dollar denominated foreign reserves, but are also nervous about allowing their currency to appreciate. The only way to keep the currency to appreciate is to buy dollar denominated assets in sufficient amounts to keep that from happening.

2. The Americans want the Chinese to allow the Chinese currency to appreciate, but need the Chinese to continue buying U.S. government securities to finance the American deficits (fiscal and trade). If the Chinese were to stop increasing, much less begin liquidating, their dollar holdings there would be a serious problem.

So, the Chinese cannot achieve their currency objective without continuing to finance the American deficit. The Americans may lecture on currency manipulation (lecturers fallen silent recently) but urgently need the Chinese purchasing presence.

What makes this situation unusual, from an American perspective, is that the outcome is dependent more on how the Chinese assess the situation than on any American initiative.

The United States is in the unfamiliar position of responding to the policies of others, rather than framing an initiating its own. This is Un-American, and a situation ripe for miscalculation.

Sunday, May 3, 2009

Neo-Marxist Caveats, Part 2

The first step towards assessing the current American situation employing a neo-Marxist analysis is to assess the Marxist approach itself in little of current circumstances. In particular, the continuing conceptual viability of several of the key building blocks of the approach is questionable.

The first of these is the notion of defining class in terms of relationship with the means of production. Forest of trees have died, and oceans of ink have been spilled in an effort to define class, which is a slippery concept indeed. A bit less attention has been devoted to defining the idea of 'means of production', mostly, because doing so actually requires some understanding of how things work, how work is done and all sorts of grubby details about all sorts of odd little backwaters in which the vast majority of humankind labors.

Suffice it to say that a mid-19th century focus on the industrial wastelands and imperial steamship routes of the dominant European nationstates of the era are about as relevant to the beginning of the third millenium as exegesis of Sharepeare's bare ruined choirs of 16th century Catholicism would have been to understanding the 18th century Enlightenment on England.

I would be inclined to acknowledge from the get go that class is defined in political and social as well as economic terms, and that the 'means of production' has to be understood to mean something radically different in a service dominated economy with an significant public sector than it did a century and a half ago. That said, focusing on what makes fmembers of the population productive (or economically autonomous) rather than blathering on about the "American consumer" or the "consumer society" or looking to renewed credit flows to stimulate consumer spending as a way out of the economic malaise is probably a step in the right direction.

A second major caveat to a neo-Marxist analysis is what I'll call the Freudian problem. Like Freudian analysis, Marxism was a product of a time and place, and it's not at all clear how well either travels through time and space so as to be usefully applied elsewhere (even assuming that they served explicatory purposes where they originated). There can be perfectly valid, local belief systems that organize human activity and regulate human conduct that do not serve the came purpose once exported. Voodoo and witchcraft may have local power in Haiti, but in New Orleans, they are merely camp. Clearly, the Freudian approach to understanding the human mind was premised on a set of bourgeoisie family relationships that were simply not to be found in, say, the Japanese imperial court or an Amerindian tribe.

A fair amount of the Marxist tradition falls prey to the same tendencies. There is a progressively more complex self-referential conceptual trend of increasing refinement that is progressively less-intelligible to outsiders and, indeed, less and less concerned with the external world and more and more focused on the internal balance of philosophical construct.

This criticism is not, however, confined to Marxist philosophical developments. No fair minded legally trained American can help but look on the development of First Amendment jurisprudence and not marvel at how we have tied ourselves in knots in a similar fashion. The ancient criticism of the Scholastics debating how many angels can dance on the head of a pin shows similar theological tendencies. So, while the Freudian analogy is cautionary, it is not a grounds for discarding the approach.

Basically, this is boiling down to a question of whether one can identify groups of actors sufficiently well defined by their roles to be deemed classes, and whether those actors have a reified class consciousness that determines (in some sense) their actions.