Communist Countries: Crisis, Contradiction and Collapse

Introduction: A Beautiful Idea, Really?

I've often had people claim to me that communism would be a great idea, if only human nature let it work. But I don't think that Marxist communism in particular would work on even a theoretical level- the idea of a 'dictatorship of the proletariat' ever seeding power is beyond comprehension. Were then communist systems always doomed to fail, or might they have survived if not for a few historical quirks?

Marx claimed in Das Kapital that “capitalist production begets, with the inexorability of a law of Nature, its own negation”. His argument was that because capitalist societies relied on social production to create wealth but private appropriation to obtain wealth, they were fated to collapse. However, communist systems also suffered systemic crises, from the failure of the New Economic Policy to the USSR’s fall. Indeed, communist systems suffered from the same internal contradiction as capitalist systems, notably an exclusive extractive class which took profits away from socially productive workers. Communist systems in fact fared worse than capitalist economies from this because they entrenched party apparatchiks at the head of their economies and lacked the 'creative destruction' of capitalism. As a consequence,   they suffered systemic crises, to which unlike capitalist democracies, they could not adapt. I want to make two points in this post: first, that the autocratic nature of communist parties lead to the creation of a new extractive class, that of autocratic party bureaucrats and second, that this internal contradiction lead to crises in communist nations, leading to their eventual collapse. Thus, it will be proven that not only did communist systems contain internal contradictions; they suffered worse from them than capitalist systems.

Party Bureaucrats: The World's Best Rent-Seekers

Communist systems lead to the substitution of Marx and Engel’s bourgeois class who aimed for the “accumulation of wealth in private hands” for a group of party bureaucrats who were equally extractive, thus leading to an inherent contradiction. Official Soviet propaganda espoused that the regime was leading the USSR to a “brilliant future… one of liberty, equality, fraternity, guaranteed employment”. However, because of the inherent vagueness in Marx’s idea of the “dictatorship of the proletariat” which he claimed would lead to the “abolition of all classes” after a transition phase of socialist rule, all communist systems in reality did not transition out of bureaucratic socialism. As Olson notes, under Stalin this meant that the party expropriated all natural resources and capital to add to its yield to its tax collections and also directly controlled consumption and investment for its own benefit. 

Party members were rewarded from this expropriation with special stores, health care facilities and vacation spas in return for loyalty to the party. CPSU members were paid 127 per cent of the average wage of a government worker and their pay was one third of the government administration budget. Further, there was systemic soliciting of in-kind payments and direct stealing. They also engaged in what Verdery terms “political capitalism”, that is bureaucrats used the shortages inherent to the system to make a profit from selling scarce goods. Party “apparatchiks” thus became the class of rent-seekers that Marx railed against because the command economy allowed them to do so. They constituted a class both in terms of political power, economic capital and the ability to consume both more goods and those of a higher quality. Communist systems became a form of what Clark and Wildavsky call “vulgar capitalism” or “profit-making without competition… based on corrupt personal relations”. Simultaneously, bureaucrats were rhetorically devoted to “large-scale heroic means of production”, production based around work done cooperatively. Therefore, so-called communist systems suffered from the same internal contradiction as capitalist systems: while production was (at least initially- black markets eventually flourished) social and cooperative, the accumulation of wealth was private and worked by class expropriation.

Tear Down That Wall!

Further, this inherent contradiction led to inevitable crises in communist systems, to which they could not adjust unlike capitalist systems, which led to their collapse.  Marx believed that the inherent contradiction in the expropriation of workers by the bourgeoisie would eventually lead to a decline in the “rate of exploitation” because “vampire-like, the capitalist only lives by sucking labor”. His argument was that eventually this would lead to recessions and the awakening of class-consciousness. This problem was also present in the Soviet Union, where the extraction of wealth by members of the CPSU helped to slow economic growth to the point where in 1967 the GNP of West Germany was larger than the entire Soviet Bloc. In particular as Maier outlines the extractive process of the communist system hampered the social production of the workers on which it depended. 

Somewhat fittingly, this led to the class conflict that Marx had predicted capitalism falling prey to, especially the rise of the Polish trade union Solidarity that was integral in the USSR’s collapse. This was worsened by the chronic shortages of basic goods which led to worse recessions than those experienced in capitalist systems. Capitalist systems did not suffer as badly because, as Marx was unable to foresee, the welfare state was developed, which redistributed profits to the working class because it was in the bourgeois political class’ interest to avoid class conflict. In contrast, the extractive behaviours of communist party members were only possible through continued coercion of those they were apparently serving. As soon as communist regimes faced crises they could not adapt except by further coercion and entrenchment of expropriation behaviours. Thus, as soon as communist regimes were opened to partial openness such as under Gorbachev’s glasnost in order to create more profits to expropriate, they began to collapse under the weight of their own internal contradictions. This has occurred not just in the Soviet Union, but also in the fall of Yugoslavia, the transformation of the People’s Republic of China and recent partial reforms in the collapsing Cuban economy. Thus, the inherent contradiction in communist systems and their inability to adapt to the crises resulting from it led to their eventual total collapse. 

Conclusion and Consequences

In conclusion, contrary to Marx’s predictions, this essay has shown that the autocratic nature of communist “dictatorships of the proletariat” created the same inherent contradiction between the social production and private extraction and accumulation of wealth inherent in capitalism. Further, it has shown that this led to crisis and eventual collapse of communist systems because the extractive class in the communist system could not allow for it to be adapted unlike the capitalist bourgeois class. Thus, Marx’s proposed solution to capitalism became self-defeating in practice for precisely the reasons Marx felt that capitalism would fail.

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Dan Gibbons is a third year Bachelor of Commerce (Economics) student at the University of Melbourne. He has a forthcoming publication in Intergraph: A Journal of Dialogic Anthropology (about memory and nationalism) and is currently submitting papers on the rise of modern consumerism, the role of criminology theory in literary criticism and the institutional theory of nationalism. Dan is a keen debater and public speaker.

'It is the morality of altruism that men have to reject': Why I find Rand's Objectivism Objectionable

"I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine"- John Galt, Atlas Shrugged

Most philosophies, even those who are particularly detrimental in their consequence, have redeeming features: nihilism (broadly the idea that life has no meaning) provides an interesting criticism of the concept of meaning and anarchism validly points out that states have overreached boundaries in many circumstances. But Rand's Objectivism, cannot be redeemed as it is founded on the premise that, to quote Rand of "the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute". This sounds fine on the surface- why can't we be self-interested? But instead of justifying this belief in self-interest via the outcomes it produces or recognising its limitations, Rand's idea just attempts to cut off all that is good about human beings (charity, altruism and cooperation) and replace it with a cold, calculating society. Indeed, Rand is so devoid of feeling- the despondency of nihilists, the anger of reactionary conservatism or the somewhat naïve hopefulness of communitarianism- that it is difficult to tell on reading her whether she is talking about the same species of Homo sapiens that I interact with daily. 

I want to chart my objections to Rand on two levels: a slightly more esoteric look at why I think Rand's ideas are morally bankrupt and a pragmatic look at why Rand should never, ever be used as a basis for policy making.

'To say "I love you" one must first be able to say the "I."'- The Sterile Self Interest of Rand's Philosophy

In the Groundwork, Immanuel Kant conceived of humans as the ends in themselves- that is we should treat other people (and ourselves) as ends, rather than means to an end. Now Kant's philosophy obviously has problems- what about in purely economic transactions? Why is it silent about animals? But it brings up the important point that to be moral in any sense, we can't just aim for ourselves and ourselves alone. Yet Rand would have the individual only ever act for themselves- when it is clear that human society is based on cooperation and reciprocity. It is worth presenting a more detailed rebuttal of this kind of individualism before I get to why I find it to be morally reprehensible rather than just incorrect.

Rand argues that by choosing to think, humans can liberate themselves from the tyranny of being yoked to others, a logical consequence of a person's primary obligation which she thinks is one's own wellbeing. She believes that humans have a choice to think, and rational thought will necessarily lead them to Rand's philosophy. Setting aside this supreme arrogance, one of the examples she cites is that "He cannot obtain his food without knowledge of food and of the way to obtain it. He cannot dig a ditch––or build a cyclotron––without a knowledge of his aim and the means to achieve it. To remain alive, he must think" (Atlas Shrugged). Now this is odd- because her examples are all examples of what we need other people for - gaining knowledge and tools to survive in the world. All human societies, but especially the capitalist societies Ayn praises are rooted in trust and cooperation- because the market isn't a natural state- it relies on trust for its very survival. Indeed contra Margaret Thatcher, there is such a thing as society- it is based in the cooperative social relations of semi-autonomous semi-rational individuals with overlapping state, market and social institutions. Humans cannot reason just for themselves- both because we have evolved to be happier when other people are (so called other-regarding preferences) and because as I will later elaborate on, to do so would be a disaster.

But why is this immoral, rather than just factually inaccurate? I will borrow another of Kant's ideas as an 'intuition pump' (i.e. my argument will not rely on it, but it helps to illustrate a point), that of the 'categorical imperative' or basically that any moral law should be universal, without regard to circumstance. Now, if everyone applied Rand's morality or i.e. if Rand's thoughts were taken to be universal- the consequences would be monstrous! We have enough problems in our society as it is with self-regarding people (think of the consequences of crime or unrestrained uses of power). We would have no regard for the vulnerable, or disadvantaged- no social progression, only the inevitable march towards violent anarchy. This is important because Rand wants her principle to be universal, rather than say historically contingent on post-industrial capitalism. Even if it was contingent, this presents even larger problems for her philosophy, it is empirically true of modern society even more than every previous society that it can only function by cooperation- meaning the application of any of Rand's principles would not lead to more freedom, but rather societal collapse. 

Further, if morality is 'having a good will' or doing what is 'right', the ability to fully determine that for ourselves despite the consequences for others- seems both contradictory and downright criminal (why can we just disregard all others?- Rand is not particularly clear on this point). Now, I would not claim that everyone should follow Comte's maxim that we should all live for others, but any practical morality must include both other- and self-regarding components, otherwise in my view we may as well give up on humanity. 

But the lack of moral value aside, what briefly are the pragmatic outcomes of Rand?

"Wealth is the product of man's capacity to think"- The Practical Consequences of Randian Thinking

I want to briefly illustrate now three ways Objectivism is a real-life disaster: what would happen if some people took on Rand's worldview, what would happen if everyone did and some actual examples of Objectivists as policy-makers.

In Anthem, Rand acknowledges that the earlier is more likely as "The truth is not for all men, but only for those who seek it" (Rand also acknowledges that in various places not all people will 'think' enough to embrace her ideas). This would likely lead to Objectivists trying to manipulate others as to increase their own happiness- as without proper regard for others or society at large, many of our innate moral precepts cease to have real meaning. On a policy level, Objectivists would agitate for the abolition of 'coercive' government structures- such important social mechanisms as any kind of welfare, public goods: indeed most things that governments do. While it is their right to do so- these policies would lead to the kind of outcomes detailed in the next paragraph.

If for some horrible reason we all became Objectivists, something similar to what I discussed earlier would happen- the state would retreat into such minimalism that it could not function (Rand wants the slow abolition of all taxes) and society itself would never be able to fill the gap that the state previously had. Especially when all members of society now treat themselves as the only end to any means. But what has this looked like before?

Two prominent disciples of Rand are Paul Ryan (although he's released contradictory statements to try and hide this) and Alan Greenspan. Ryan's budget, drawing on Rand's principle of pulling back any coercion of individuals, would fundamentally wreck the balance of income distribution in the United States and would ruin the already struggling United States healthcare system. Greenspan, the former US Federal Reserve chief cited Rand as one of his primary influences in his stewardship of the US economy towards the oblivion of 2007 by pursuing ruthlessly pro-business and anti-regulation policies.

Conclusion- Where to from here?

I should note at this point that I don't find Objectivists themselves immoral- many of them are quite lovely people, partly because I've never actually met anyone who acted as Rand would have them do in real life (even if it affects their political views). But I do think that Rand's thinking is a dangerous virus that can infect the impressionable and ruin political debate with its dogmatic insistence on the primacy of individual self-interest. We should all inoculate ourselves against such thinking.

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Dan Gibbons is a third year Bachelor of Commerce (Economics) student at the University of Melbourne. He has a forthcoming publication in Intergraph: A Journal of Dialogic Anthropology (about memory and nationalism) and is currently submitting papers on the rise of modern consumerism, the role of criminology theory in literary criticism and the institutional theory of nationalism. Dan is a keen debater and public speaker.

China's 'Bread and Butter Question' and the New Scramble for Africa

This is an edited text of a paper submitted to 'Contribute' Magazine, the publication of UQ's United Nations Student Association

In January this year, an interesting guest attended the opening ceremony of the new African Union headquarters building in Addis Ababa, Ethiopia: Jia Qinglin, the fourth ranking member of the Politburo Standing Committee of the Communist Party of China. Amazingly, the entire US$200 million construction project (everything from raw materials to interior furnishings) was bankrolled by the Chinese government. This is a profound exemplification of the Sino-African union in the changing economic and political landscape of the twenty first century.

The isolationist foreign policy of the Middle Kingdom is no more. Indeed, since the economic reforms and Open Door Policy of Deng Xiaoping (1978), China has been at the forefront of the global economy and international trade. Since 1999, the ‘Go out Policy’ has become the primary framework defining China’s investment in, and exploitation of, expanding regional and international markets. As the example of the Chinese donation of the new African Union headquarters suggests, Africa has been the major focus of China in recent years. China needs the continent’s natural resources to augment its (already) unprecedented industrial growth. Channelled through its state-owned enterprises (and defined by a large migratory flows of Chinese nationals), Chinese capital has often crowded out any local or regional economic actors. Although the ‘Go out Policy’ has been at the fore of Chinese economic activities in Africa, the so-called peaceful rise (marked by soft power, non-interference and responsible world leadership) also characterises the Sino-African relationship. At the opening ceremony of the new African Union headquarters, China reaffirmed this commitment: Jia Qinglin remarked, “China will firmly support African countries in their efforts to uphold sovereignty and independence and to resolve African issues on their own.”

China has reignited the scramble for Africa and is seemingly reigning as the Rhodes Colossus. In recent years, it has been the largest single source of financial aid and foreign investment for Sub-Saharan Africa. Last year, trade amounted to US$120 billion, surpassing the United States and the European Union. This this comes at no coincidence, given China’s newfound status as the world’s largest energy user, according to the International Energy Agency. The resource extraction has been further complimented by a large inflow of Chinese nationals into the continent (with Chinese state owned enterprises now dominating the economic landscape). Sanou Mbaye, a former senior official of the African Development Bank, states, “more Chinese have come to Africa in the past ten years than Europeans in the past 400. First came Chinese from state-owned corporations, but more and more arrive solo or stay behind after finishing contract work.” The new Chinese entrepreneurial movement has excelled with government support. Notwithstanding the continental disincentives of civil wars, institutional corruption, political instability and (recently) the GFC, China has been capitalising on the lack of Western competition. Indeed, negotiations with African governments (particularly those with records of human rights abuse) have proven remarkably straight-forward for Chinese investors. Chinese investment is afforded protective security by African governments through legitimate reciprocal trade agreements, but also through corruption. Suffice to say, these cacophonous relations show no signs of quietening down. On the diplomatic front, China has more embassies and diplomatic postings in Africa than the United States and European Union combined. In 2000, the Forum on China–Africa Cooperation (FOCAC) was established and its 2006 ministerial meeting was the largest diplomatic forum in both modern Chinese and African history.

In the wake of the United States’ waning influence and Europe’s economic woes, many consider that the Middle Kingdom is heavily engaged in neo-imperialism throughout Africa’s postcolonial states. In 2006, then UK Foreign Secretary, Jack Straw, criticised China as neo-imperialist, remarking, “most of what China has been doing in Africa today is what we did in Africa 150 years ago.” In 2011, US Secretary of State, Hillary Clinton, warned Africa of a “new colonialism”. Although not explicitly naming China, she did urge greater scrutiny of its investments in Africa. Nevertheless, the character of Sino-African relations is markedly different from that of the continent with European and American relationships. Now, it is investing in industry and infrastructure and importing resources and goods; though this largely centres upon the extraction of largely finite resources, China has also invested in telecommunications, financial services, and energy infrastructure. Sino-African relations are officially guided by the policy of ‘mutual benefits’ and bilateral economic cooperation. Drawing upon this policy’s profoundly positive developments, Ethiopian Prime Minister Meles Zenawi recently stated, “The future prospects of the [Sino-African] partnership have never been brighter. China’s amazing re-emergence and its commitments for a win-win partnership with Africa is one of the reasons for the beginning of the African renaissance.”

In exchange for these developments, China has received large contracts from African governments and priority with respect to to the extraction of natural resources. In 2007, China signed a US$9 billion dollar mining agreement with the Democratic Republic of the Congo, constituting 68 per cent of the latter’s annual mining revenue. In return, the Congo received hospitals, schools and 6000 kilometres of railway and road infrastructure all financed by China. Without Chinese textile corporations, unemployment in the South African town of Newcastle would be over 80%. Workers are paid approximately US$200 per month, which is greater than in China, but still less than South Africa’s minimum wage. The local unions have tried to shut these textile factories down, but a majority of the workers consider a poorly paid job to be better than none at all. 

Whilst many Africans perceive the West’s demeanour as condescending, the Chinese ostensibly manage their relationship with Africa as a serious business partnership. As Faida Mitifu, the Democratic Republic of the Congo’s Ambassador to the United Nations said, “There are people who still consider Africans like children who can be easily manipulated. The good thing about the [Sino-African] partnership is that it’s sincere and give and take.” On the surface it does – in fact – seem that China is improving Africa’s wellbeing through its trade, investments and financial aid.

Whilst the official policy guiding Sino-African relations is of ‘mutual benefits,’ the primary rationale for Chinese involvement is out of economic necessity and hunger for resources. Consequently, whilst official government statements report on the positive friendship, there are widespread claims of human rights abuses, poor working conditions and environmental degradation leading to a wave of anti-Chinese sentiment and xenophobia on the continent. As evidenced by oil spills in Sudan and Gabon, weekly deaths in Zambia’s Chinese-controlled mines, slapdash construction in Guinea and endemic corruption in some African governments, China has inflicted substantial harm across the continent.

Amongst other continental statesmen, the Environment Minister of Zimbabwe has been an active critic of the Chinese, calling them “makorokoza”, a scornful local term for criminals. Thus, to avoid condemnation from African governments, the Chinese have engaged in bribery and coercion. Chinese managers have bribed government ministers and even taken some on ‘study tours’ to massage parlours in China. Obstructionist African midlevel officials are sacked and workers who assemble in groups are dispersed with rubber bullets. In the rare event that cases do end up in local courts, there have been reports that witnesses are intimidated and judges being paid off.

China has become just as embedded in the African continent as the minerals and oil that its state-owned companies are extracting. Whether through massive migration of Chinese nationals or the perpetual presence of state owned enterprises, China is seemingly, at least to some Western officials (such as Clinton and Straw) and local African populations, colonising the African continent. But this begs the proverbial question: is this really neo-imperialism and, akin to the Scramble for Africa of the late 19^th and early 20^th centuries? On balance, the answer is ‘no’; there is a lack of cogency between the plethora of Chinese corporations and the heterogeneity of Chinese private entrepreneurs. China is simply being a rational economic powerhouse and seizing the opportunity to exploit the resources and markets in Africa to fuel its own economy.

This points to an even more important question – is a Chinese monopoly on Africa’s natural, economic and political capital good for the world economy? Obviously a monopoly in any market is detrimental, but is China alone to blame for crowding out other regional and international actors? Arguably Western nations are equally if not more to blame – Europeans and Americans exploited the natural resources of the continent through imperialism and are responsible for the some of the most intense ethnic violence in history. Many Africans have felt that the West has abandoned their plight. Indeed since the 1980s, with increased civil wars and ethnic violence, and with the global financial crisis since 2008, there has been an apparent lack of political and corporate willingness in the West to invest in infrastructure and industry on the Africa continent.

Although China’s monopoly on African markets and industries may be regarded as a form of economic imperialism, it fundamentally differs from the character of historical European colonialism in Africa. The driving forces of European colonialism were administrative, political and cultural. European nations attempted to maintain cultural hegemony over African colonies, importing customs from food to sports and entrenching political and legal institutions. The British implanted the common law system and cricket in Kenya; the French implanted language and pastries in the Ivory Coast. Not bound by such administrative or cultural hegemony, the underlying motivations for Sino-African relations are marked by a deep paranoia over energy security by the Chinese government.

China has decidedly operated like a private corporation in a Western nation – prioritising profit and only caring about social responsibility and public administration when it serves a purpose. It has rationally sought to exploit African resources for its factories that are fuelling the global economy and making the cheap products that we in the West consume. Surging foreign direct investment from China has substantially affected Africa’s economic prospects and continental infrastructure networks. Indeed, according to Johnnie Carson, the United States Assistant Secretary of State for African Affairs, “China is a very aggressive and pernicious economic competitor with no morals. China is not in Africa for altruistic reasons. China is in Africa for China primarily.” During the nineteenth century, the British Empire was widely regarded as a mercantile powerhouse ‘upon which the sun would never set’. Today, it is perhaps more appropriate to reason that ‘the sun never sets on Chinese investment’. Notwithstanding speculation as to the future character of its political hegemony in Africa, Beijing’s insatiable appetite for natural resources will define the growing presence of Chinese investment throughout the African continent.

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Tasman Bain is a second year Bachelor of Arts (Anthropology) and Bachelor of Social Science (International Development) Student at the University of Queensland. He is interested evolutionary anthropology, public economics and philosophy of science and enjoys endurance running, reading Douglas Adams, and playing the glockenspiel.

The 'Sole director of the fate of human beings'?: Revisiting the idea of markets as 'default'

Markets are often described by economists in an almost messianic way- as if they alone will solve all of the world's problems. Now, it is worth noting that markets do a great many things well- they can be great democratisers (in the sense that they in principle allow for a levelling of the playing field), they are often better at distributing resources than a centralised economic instruments and they are more free of rent-seeking and political influence than command economies. However, something they certainly are not is natural- they are like anything else institutions, Douglass North's 'rules of the game' or 'humanly devised constraints on action'.

Indeed, as Polanyi claimed what has really happened is a Market Society (for anyone interested in a more in-depth look at this idea I recommend Polanyi's The Great Transformation) has been created: a combination of market exchanges, industrial production and hedonistic consumption. In this blog post, I will briefly chart how this is different from the mainstream economic account of what market mechanisms are, before briefly posing some conclusions on how this might affect modern development policy (looking particularly at the experience of Russia in the early 90s). The key difference I posit is that along Polanyi's lines, markets are embedded in the social and cultural relations of a society, rather than existing as a separate mechanism alongside them as neoclassical economics assumes (actually neoclassical economists mostly just seem very disquieted whenever the word 'culture' is mentioned).

'The Invisible Hand': Modern Market Exchanges

Markets used to be largely places where often subsistence-based farmers, tradespeople or originally small-scale settlers or tribes would get items they needed but didn't have or couldn't produce from other people. They were often ad hoc, sometimes based on barter and very much not interconnected- prohibitions both religious and social against profit-making ('usury') were followed to various degrees. Modern capitalism changed all this. Modern market exchange is predicated on the idea that commodities have value because of the relationship between things, especially in terms of the translation into a monetary value. Trade is predicated on the substitutability of unlike goods and each participant having a different scale of values in order to produce mutually beneficial trades. Markets have to be embedded and naturalised within society, that is markets must have “institutedness”. As Polanyi observes, ‘free markets’ are instituted processes that must be articulated through social, legal and political strategies. 

This system of exchange is predicated on social acceptance, which is why Western development projects often include help setting up market economies, as a ‘charitable’ venture. Therefore, when confidence is lost in markets they cease to function and as a test of this hypothesis, the exchange system should also fail. This occurred amongst the Nentsy people of Northern Siberia when the bank accounts the Soviets had given them became valueless due to the depreciation in the value of the ruble in the early 1990s. As predicted, the herders switched from buying consumer goods off the Russians back to solely reindeer herding. 

Markets did not become successful because barter inherently transformed into modern capitalism- indeed as Polanyi notes, the really curious thing about laissez-faire capitalism is how planned it was- it needed helping although through establishing private property rights, creating and then dismantling large monopolies (like the East India Trading Company) and a change in attitudes to wealth accumulation, which brings us to consumption. 

'J'adore, Dior': Consumption Patterns and the Modern Corporation

Value in cultural terms is defined by how people expect the world and people in it to behave and how they judge that behaviour. The value of wealth accumulation has changed from the medieval view of public virtue arising from private virtue to the formal economists’ idea that public virtue can arise from private vice. Associated with this has been a popularisation of modern hedonism, characterized by the creation of cultural value in the self-conscious seeking of personal pleasure. These concepts have spread widely to the point where self-interest is taken for granted in most of modern Western society and through global media, much of the world. Consumer goods are in Western society associated with 'commodity aesthetics' in which people ascribe value solely on the basis of design or promotion. Companies have sought to create a 'hyperreality' (Baudrillard) or an aesthetic coating of the world that seeks to use images to generate a market-based society. Companies have also successfully in many cases proselytised to the developing world, for example a Power Rice Ad that was run in Papua New Guinea that was synchronised to the soundtrack recording of “Power to the People!” and featured a muscular man lifting the rice at a construction site. Foster also charts the rise of beauty contests and other competitions that serve to reinforce that cultural capital is to be gained through individual choices (see Materialising the Nation: Commodities, Consumption and Media in Papua New Guinea by Robert Foster). This is also related to what Jonathan Friedman calls homo consumens, "whose fragmented identity is constantly rearranged by the winds of fashion". But how is this all made?

'Work must not Cease’: Mass-Production'

Production is driven by the demands of the market, with an emphasis on creating surplus to trade with others and where the value is determined by what others will exchange for them. Perhaps the defining feature of the capitalist mode is its tendency to reproduce itself on an increasing scale. Production is also changed from previous reciprocal or household modes of production, because who makes the product is now irrelevant- i.e. all goods can at least hypothetically have their value translated into a monetary one (this is quite different to say the Kubo system where who gave you the pig is more important than the pig's 'worth' to you). Capitalism also means that production is no longer autonomous- capitalist production is the most interlinked of any economic system. Finally, high fidelity is ensured by industrialised production technologies, which can produce millions of copies of the same good (this is a key difference from say craft-based economies).

Moving from the Positive to the Normative: Some Policy Ideas

All of the claims I have made so far are what economists call 'positive', that is I've tried as hard as possible to make factual claims about what is not what should be (by hedonism for example, I do not mean a Catholicesque value judgment, I just mean the pursuit of individual pleasure). Now I will try and draw some tentative policy conclusions from what I've written.

The first is that we should not expect markets in the third world to just spontaneously exist- governance needs to get better before the 3rd world can open up to trade more fully and before those countries can actually prosper. In particular, Chicago School style 'shock therapy' is an appalling idea because weak economies with markets that are barely embedded in society will just collapse- witness Russia in the early 1990s. There is a role in international NGOs and other aid providers to tie further aid to institutional improvements- also Western governments should help here rather than just prescribing more of the 'Washington Consensus'.

The second is that the continued survival of markets means that institutions in every country have to be kept strong- there is a role for government policy in other words to stop the collapse in social relations that Polanyi discusses (though I obviously disagree with Polanyi's solution, which is to transition to either socialism or economic democracy).

The last is that while international finance and other forms of globalisation are breaking down national boundaries, there will be a continued role for nation states in the future to regulate these issues and that they will require a truly international response.

I would also make the empirical observation that economics needs to study these issues more- it should not be left to sociologists and anthropologists to fix up huge gaps in modern economic theory.

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Dan Gibbons is a third year Bachelor of Commerce (Economics) student at the University of Melbourne. He has a forthcoming publication in Intergraph: A Journal of Dialogic Anthropology (about memory and nationalism) and is currently submitting papers on the rise of modern consumerism, the role of criminology theory in literary criticism and the institutional theory of nationalism. Dan is a keen debater and public speaker.

If You've Got It, Flaunt It: The Rise and Rise of Consumerism

What is consumerism?

I take consumerism to mean the 'expression of the apparently ubiquitous act of consumption' (Miles), which particularly occurs in capitalist economies. Consumerism has become the dominant mode of identity in modern ‘globalised’ culture-- from the mods of 1960s England to the cosplayers of modern Japan, “without consumer goods, acts of self-definition in this culture would be impossible” (McCracken). Understanding why it is so successful is vital in a world where final consumption accounts for 61% of world economic activity. 

I should note that this piece assumes no negative or positive outcomes from consumerism- there have been a mixture of both (envrionmentalism vs. new identities and empowerment) but seeks rather to explain why it has been so successful. 

What are the current approaches?

There are three primary explanations so far proffered: those of cultural anthropology, social anthropology and neoclassical economics. 

Cultural anthropologists have proposed that consumerism is an outgrowth of a 'consumer society', that is products confer a 'moral' authority to those who have them because proper use of objects indicates that a person knows how the world works. Cultural explanations often err in assuming that culture is a static object rather than a field of connections, which often means they are of limited use by themselves.

Social anthropologists have proposed that consumerism is largely used as a way of purchasing recognition in particular groups (students, hipsters, mods etc) and part of the acts of mutual recognition and association. The problem with this approach is that it neglects how social attitudes are actually formed and makes Durkheim's mistake in assuming that groups agree on a 'totality' of beliefs and practices. 

Neoclassical economists have proposed that rational actors will always act as if 'more is better' and in essence that consumerism is just a particular manifestation of this desire. The first flaw is that this may not apply culturally, for instance certain societies such as the Tzeltal directly limit wealth by making wealthy individuals have expensive feasts for the whole village and even in our own society there are social and cultural limits on excessive consumption. 

A Memetic Explanation: What is a Meme? Why is Consumerism a Meme? 

Memes are a concept of Richard Dawkins' that are best defined as “elements of a culture … passed from one individual to another by imitation” (Blackmore). Memes are selected for or against, because of the nature of humans as imitators or the memes themselves and their groupings. 

I argue that consumerism is a meme because it succeeds by spreading through people imitating others' choices, either because of what they see in advertising, their peer group, observing others etc. The consumerist meme has flourished because companies shaping culture and promoting social reinforcement now define economic value and this system of value is propagated by the production of consumer goods and a pervasive system of market exchange. 

I will explain consumerism along three axes: consumption, production and exchange.

‘I do love new clothes’: Consumption Patterns and the Modern Corporation

The meme of consumerism has sought to manipulate the environment in which it exists culturally to make it more favourable to itself by changing attitudes to wealth and consumption.

The value of wealth accumulation has changed from the medieval view of public virtue arising from private virtue to the economic idea that public virtue can arise from private vice. In the 20th century in particular there has also been a popularisation of modern hedonism, characterised by the creation of cultural value in the self-conscious seeking of personal pleasure. These concepts have spread widely to the point where self-interest is taken for granted in most of modern Western society and through global media, much of the world. Daniel Miller, for example has documented how contact with the West has made this idea spread to Trinidad, where independence signaled the potential for new wealth and thus new possibilities, which an oil boom helped perpetuated. The existence of a normative type of wealth accumulation, centered around elaborate ornamentation is evidence of a changed material culture.  

Companies have also sought to associate “sign values” with consumer goods through “commodity aesthetics” in which people ascribe value solely on the basis of design or promotion. This is an outgrowth of what Marx called “commodity fetishism” or the mystification of human relations resulting from market trade. 

Further, the idea of fashionability where “to be and not to be in fashion are nowdays important components of choice” (Ilmonen), allows for a strict dichotomy between those who consume what the group consumes and those who break the bonds of commonality. This relates to what Jonathan Friedman calls “homo consumens, whose fragmented identity is constantly rearranged by the winds of fashion”, which he explains by examining how Swedish culture has come to privilege the modern.

But this does not explain how consumer products are effective meme vehicles, so we move to production.

'Work must not Cease’: Consumer Goods as effective Meme Vehicles

Any meme needs to be transmitted and its vehicle thus needs to have three characteristics: high copying-fidelity or the ability to be copied accurately, high fecundity or the ability to make many copies and a level of longevity adapted to its environment (Blackmore 58). 

High copying-fidelity is ensured by industrialised production technologies, which can produce millions of copies of the same good. This form of production also relies on disembedding production from social relations, for example the Kubo system where they own the means to complete production but do not own products because consumption is immediate could not sustain consumerism alone. Without the disembedding, fidelity is impossible because goods have different sign-values due to their relations to a specific person’s labour. 

High fecundity is perhaps the chief feature of the production of consumer goods, which often leads to overproduction when more supply is produced than consumers demand.

The longevity of consumer goods can be selected for the producer’s benefit due to planned obsolescence or the building in of faults so products can only be kept for a certain period.

But this does not explain how consumer products are sold successfully, so we move to exchange.

‘The Invisible Hand’: Consumerism and Market Exchange

Market exchange is predicated on the idea that commodities have value because of the relationship between things, especially in terms of the translation into a monetary value. Trade is predicated on the substitutability of unlike goods and each participant having a different scale of values in order to produce mutually beneficial trades. For consumerism to work, markets have to be efficient at allowing a relatively free flow of goods. To do this, markets have to be embedded and naturalised within society, because as Polanyi observes, ‘free markets’ are instituted processes that must be articulated through social, legal and political strategies. Markets also act as a distribution network for consumer goods and help to coordinate economic action.

This system of exchange is predicated on social acceptance, which is why Western development projects often include help setting up market economies, as a ‘charitable’ venture. Therefore, when confidence is lost in markets they cease to function and consumerism should also fail. This occurred amongst the Nentsy people of Northern Siberia when the bank accounts the Soviets had given them became valueless due to the depreciation in the value of the ruble in the early 1990s. As predicted, the herders switched from buying consumer goods off the Russians back to solely reindeer herding.  

Conclusion

Companies have manipulated cultural and social capital to propagate the meme of consumerism through changing the worth of wealth accumulation and the nature of identity itself. The consumerist meme is able to spread because it has an effective vehicle in the consumer good and associated production processes and an effective distribution network in the form of the ‘free’ market. The memetic approach builds on all three of the current approaches within a coherent theoretical framework. It shows that the success of consumerism should not be taken for granted-- it has been a product of complex social, political and cultural processes.

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Dan Gibbons is a third year Bachelor of Commerce (Economics) student at the University of Melbourne. He has a forthcoming publication in Intergraph: A Journal of Dialogic Anthropology (about memory and nationalism) and is currently submitting papers on the rise of modern consumerism, the role of criminology theory in literary criticism and the institutional theory of nationalism. Dan is a keen debater and public speaker.

Happiness: From Epicurus to Economics

He who is not satisfied with a little is satisfied with nothing.

Epicurus, Greek philosopher (341 BC – 270 BC)

Pursuit of individual self-interest is not necessarily a good formula for personal happiness.
Richard Layard, British economist (1934 AD - present)

Introduction

We live, to say the least, in an age of stark contradictions. Whilst the world enjoys the wonders of technology, over one billion people live in hunger each day. The world economy has developed new heights of productivity, yet the natural environment is degraded in the process. National income levels have risen yet so have social harms and health hazards from obesity, declining literacy and numeracy standards, teenage pregnancies, substance abuse and addiction, suicide, anorexia, diabetes, cardiovascular diseases, cancer, depression and other ills. Indeed, many of the developed nations with the highest levels of Gross Domestic Product (GDP), such as the United States, have achieved striking economic and technological progress over the past half century without gains in the self-reported happiness and social wellbeing of their citizenries but with widening socioeconomic inequalities, declining levels of trust and apathy to government. Economists and policymakers, both from the left and the right, have placed priority in utilising GDP as a means to measure social progress and yet rates of life satisfaction and subjective happiness have stagnated or even decreased since the 1950s according to a number of data, including from Gallup World Poll and the World Values Survey. This article will look at why measures of happiness should be prioritised as a policy and index by governments around the world for achieving and measuring social progress.

From Epicurus to Easterlin

Ever since the invention of agriculture which bequeathed opportunities for private property, wealth generation and fiscal improvement, humans have studied that causal relationship between financial income and personal happiness. Indeed the Greek philosopher of Epicurus stated that pleasure is the greatest good and that pain is the greatest evil and combined a theoretical hedonism with a practical asceticism. He stressed frugal life of pleasure, as the mere absence of pain is the greatest good, through achieving three fundamental tenets of friendship and love, self-analysis, and self-sufficiency being the key to the gate into wellbeing. He suggested that wealth is important for attaining various rudimentary needs, such as water and food and basic wants, but wealth for its own sake or wealth past the requirements to afford comfort is unnecessary. Rather we should focus on our friends and relationships, on self-reflection and philosophy, and on achieving self-sufficiency or merit in a chosen a subject or activity. Indeed “wealth beyond what is necessary is no more use than an overflowing container” is an apt statement whereby GDP past what is necessary for a developed economy is akin to an overflowing container. A simple meal and the company of friends in a modest garden is suffice for Epicurus and he tells us this should be and is suffice for our happiness too.

From the wellspring of the Enlightenment came the school of Utilitarianism as first developed by British philosopher Jeremy Bentham (1748 AD – 1832 AD), influenced amongst others by David Hume’s Treatise of Human Nature. For Bentham utility is the test and measure of all virtue and the sole origin of justice and that the greatest happiness of the greatest number is the foundation of morality. In Utilitarianism, it is the greatest happiness in society that is the criterion by which the affairs of a state should be judged. The Felicific Calculus was an algorithm developed by Bentham to calculate the specific degree of pleasure accrued by a certain action. This calculus and the entire An Introduction to the Principles of Morals and Legislation can be synthesized by his own mnemonic doggerel:

Intense, long, certain, speedy, fruitful, pure–

Such marks in pleasures and in pains endure.

Such pleasures seek if private be thy end:

If it be public, wide let them extend

Such pains avoid, whichever be thy view:

If pains must come, let them extend to few.

Bentham can be seen as a foundational figure when it comes to studying and measuring happiness and the role of government in promoting it. If we agree that the normative role of government is to increase utility and promote the greatest happiness in society, than utilising GDP is a flawed manner in doing so.

In 1974, Richard Easterlin, a Professor of Economics at the University of Southern California, published a revolutionary paper entitled “Does Economic Growth Improve the Human Lot? Some Empirical Evidence” which established an essential paradox in economics. Easterlin discovered, through quantitative analysis of economic and social trends of developed and developing nations, that past a certain amount of income for an individual and past a certain GDP for a nation, subjective levels of happiness and social wellbeing do not increase and indeed sometimes decrease. In 2010, Easterlin returned to the paradox and published his findings in the Proceedings of the National Academy of Science. In it Easterlin utilised long term surveys from 17 developed countries, 11 countries transitioning from socialism to capitalism, and 9 developing countries to firmly re-establish the happiness–income relationship, come to be known as the Easterlin paradox, that over time a higher rate of economic growth does not result in a greater increase of happiness.

Bhutan and the United Nations

The concept of Gross National Happiness (GNH) was developed in 1972 by the King of Bhutan Jigme Singye Wangchuck who opened Bhutan to modernisation but was committed to developing the national economy based on Buddhist spiritual principles. The Centre for Bhutan Studies, along with various academics from around the world, then began to develop both objective quantitative and subjective qualitative indicators for GNH culminating on a measurement based upon a robust multidimensional methodology known as the Alkire-Foster method. In 1990 the Human Development Index was established by the United Nations Development Programme and was used as the yardstick of measuring socioeconomic progress. It was established in response to the flaws of GDP being a holistic measure of progress and incorporated the measures of Life Expectancy Index, Education Index, Mean Years of Schooling Index, Expected Years of Schooling Index, and Gross National Income. However, HDI is also not a true measure of utility as it misses the important indicators of mental health, sustainability and environmental conservation. In July 2011 Resolution 65/309 was proposed by the Kingdom of Bhutan advocating for GNH as the primary measure of progress and was unanimously passed by the United Nations General Assembly. In April 2012 the High Level Meeting on Wellbeing and Happiness: Defining a New Economic Paradigm was held at United Nations Headquarters in New York hosted by Bhutan discussing the value of utilising GNH as a measure for social progress.

“We buy things we don't need, with money we don’t have, to impress people we don’t like”

In 2005 the Australian economists Hamilton and Denniss developed the concept of affluenza defined as:

1. The bloated, sluggish and unfulfilled feeling that results from efforts to keep up with the Joneses.

2. An epidemic of stress, overwork, waste and debt caused by the pursuit of the increased income.

3. An unsustainable addiction to economic growth.

At the crux of affluenza is that despite some of the highest levels of affluence in wealth, happiness has not increased, and rather the ideals of consumerism and materialism have led to a number of social harms. As Hamilton and Denniss state “above a certain level, increases in income have little or no effect on well-being, yet the single-minded pursuit of growth may come at the cost of personal relationships, social equality and cohesion, job security and the quality of the environment, all of which do add to personal and national happiness.” Indeed, affluenza reaffirms the Easterlin paradox and presents tangible harms that exist in society due to it.

Dismal Science of Economics to the New Science of Happiness

Economics, once described as the dismal science, is now at the fore of new discoveries in explaining our behaviour, emotions and indeed happiness. This new science of happiness is informed by insights from cognitive neuroscience, evolutionary anthropology, behavioural economics and positive psychology, and is making its mark. Richard Layard of the London School of Economics and Bruno Frey of the University of Zurichis are pioneering figures in this new field and they respectively lay their findings out in Happiness: Lessons from a New Science (2011) and Happiness: A Revolution in Economics (2008). Richard Davidson of the University of Wisconsin Laboratory for Affective Neuroscience is making new discoveries in the neurosciences of emotions, and Nobel Economics Laureate Daniel Kahneman has been developing measures for subjective wellbeing. All the findings have profound implications, such as for the measurement of experienced utility and subjective wellbeing, for how human beings value goods and services and social conditions, and also for public policy.

World Happiness Report

In April 2012 The World Happiness Report (I definitely recommend having a read through), compiled by Jeffrey Sachs of the Earth Institute at Columbia University, Richard Layard of the London School of Economics and John Helliwell Professor of Economics at the University of British Columbia, was released. It is a tour de force promoting Gross National Happiness as a measure for sustainable development and socioeconomic progress. It provides a comprehensive overview of current world state of happiness, summarises findings from the emerging science of happiness, and offers analysis for further implications and benefits of using Gross National Happiness as the yardstick for development. It also looks at three major case studies (Bhutan, United Kingdom, OECD) where focusing on happiness has proved the most effective public policy in addressing poverty, development and a host of socioeconomic harms. The report shows that:

§  Happier countries tend to be richer countries. But more important for happiness than income are social factors like the strength of social support, the absence of corruption and the degree of personal freedom.

§  Over time as living standards have risen, happiness has increased in some countries, but not in others (the majority of developed nations). On average, the world has become a little happier in the last 30 years (by 0.14 times the standard deviation of happiness around the world).

§  Unemployment causes as much unhappiness as bereavement or separation. At work, job security and good relationships do more for job satisfaction than high pay and convenient hours.

§  Behaving well and acting selflessly makes people happier.

§  Mental health is the biggest single factor affecting happiness in any country. Yet only a quarter of mentally ill people get treatment for their condition in advanced countries and fewer in poorer countries.

Conclusions

The twenty first century is an epoch already infamous for unprecedented individualism exemplified by the Global Financial Crisis. The highest obligation that many people feel is to realise their own potentials and make the most of themselves. This has proved a terrifying and lonely objective and the epitome of anomie. Whilst we are finding solace in online social networks, these are simply lacking the face to face interaction that we humans long for and are ironically making us feel disconnected. Indeed, we feel obligations to others, but there exists no unifying social fabric. The old religious worldviews are fast losing congregations, the post war and Cold War ideals of national solidarity are gone, and the neoliberal ideologies of consumerism and individualism from Regan still percolate into the psyche of the population of the developed world and we have been left suffering from affluenza. In response to this status quo, a number of organisations and figures have made their marks on the intellectual and social topography. Using the philosophies of Epicurus to Bentham and the economics of Easterlin to Layard as inspiration and theory, organisations such as Action for Happiness and the New Economics Foundation have been at the fore of the intellectual and social fray, taking on board the research from the insights of economics and neuroscience. 

The World Happiness Report (again, definitely have a look) is a milestone. Economics is no longer the dismal science and, just as Bentham developed his felicific calculus to measure pleasure, we can measure happiness. A generation of studies by psychologists, economists, pollsters, and social scientists have shown that happiness, though indeed a subjective experience and perhaps culturally relative to an extent, can be objectively measured, assessed, correlated with observable brain functions, and related to the characteristics and indicators of an individual and the society and economy. Asking people whether they are happy, or satisfied with their lives, offers important information about the society. We understand certain predictable factors that cause and facilitate happiness that reflect various facets of our human nature and social lives. Focusing on happiness provides a broader range of possible ways to build a better world, including more effective solutions for poverty, development and health. Indeed there are profound implications for public policy (Layard also lays them out here): improving mental health services, promoting volunteering and investing in communities, conserving the environment, regulating commercial advertising, making flexible workplaces, and valuing empathetic education. The United Nations has recognised this and many nations around the world led by Bhutan, such as the United Kingdom's Office for National Statistics Measuring National Wellbeing Programme, and even the OECD is developing measures for wellbeing and progress, are beginning to realise the importance of happiness for all aspects of society and the economy. It seems that Epicurus was accurate in this philosophy of a frugal life of pleasure, that Bentham was on the right track with his Felicific Calculus, and that the Easterlin paradox that we are all subject too points to a certain truth in our happiness-income relationship.

Create all the happiness you are able to create: remove all the misery you are able to remove. Every day will allow you to add something to the pleasure of others, or to diminish something of their pains. And for every grain of enjoyment you sow in the bosom of another, you shall find a harvest in your own bosom; while every sorrow which you pluck out from the thoughts and feelings of a fellow creature shall be replaced by beautiful peace and joy in the sanctuary of your soul. 
Jeremy Bentham, British philosopher (1748 AD – 1832 AD)

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Tasman Bain is a second year Bachelor of Arts (Anthropology) and Bachelor of Social Science (International Development) Student at the University of Queensland. He is interested evolutionary anthropology, public economics and philosophy of science and enjoys endurance running, reading Douglas Adams, and playing the glockenspiel.

Review of The Cooperative Species

The Cooperative Species (Bowles and Gintis)

While it is quite mathematical and thus partly inaccessible to the lay reader (for whom I would recommend The Company of Strangers, which treads much of the same ground in a more accessible format), this book is an incredibly important work. The central thesis is twofold: that humans have social preferences as well as self-regarding ones (including punishing defectors even when this lowers their own payoff, maintaining reputation even in one-shot games and parochial attitudes to in-group members) and that human altruism evolved as a survival tool for the more violent pre-agricultural period. It is a fascinating book with broader consequences for how we perceive altruism (it helps to show the clear limits to the Folk Theorem, economic signalling and other explanations for altruistic endeavours). It is a worthwhile read for anyone interested in the science of human decision-making, but probably difficult for the non-specialist.

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Dan Gibbons is a 3rd year Bachelor of Commerce (Economics) student at the University of Melbourne. He has a forthcoming publication in Intergraph: A Journal of Dialogic Anthropology (about memory and nationalism) and is currently submitting papers on the rise of modern consumerism, the role of criminology theory in literary criticism and the institutional theory of nationalism. Dan is a keen debater and public speaker.