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DFTM, I think we should clarify what Marx meant by "moral depreciation". To that end, consider the part of quote hidden by Chris's ellipsis: "In both cases, be the machine ever so young and full of life, its value is no longer determined by the labor actually materialized in it, but by the labor-time requisite to reproduce either it or the better machine. It has, therefore, lost value more or less. The shorter the period taken to reproduce its total value, the less is the danger of moral depreciation; and the longer the working day, the shorter is that period." The point is that the exchange-value of a machine (hardware) will decline even if it isn't in use and thus subject to either wear and tear. This is because the cost of replacing the machine will fall due to technological progress, which either makes the production of similar machines cheaper or creates new types of machine that fulfill a similar function at a lower unit cost. What Marx meant by "reproduce its total value" was the transfer of labour value via the machine to its products - i.e. a £100 machine produces 100 widgets at £1 a pop. The danger of moral depreciation evaporates once this breakeven point is reached, hence there is an incentive to exploit labour at a faster rate. However, many economists would argue that the capitalist already has plenty of incentives to exploit labour and that moral depreciation is a marginal worry at best. The brings us back to Matt M's comments on the "Ricardian equivalence/intertemporal optimisation zombie idea". Do we believe that capitalists are pessimistic about investment because they are optimistic about technological development? If there is an inverse correlation, this would imply that periods of high investment reflect low expectations, which doesn't seem plausible. I think a more plausible explanation is that the cost of investment is falling and this is in large part due to the peculiarities of software. Re your specific example of version-skipping, if moral depreciation were that strong a force, everyone would upgrade to version 8 as soon as possible. That they don't reflects the trade-off between the cost of change and expected utility. There are 3 factors at work here: 1) The upgradability of software means that some of the gains of new techniques can be applied without full replacement (i.e. you go from 7.0 to 7.6 rather than 8.0). 2) The falling cost of investment (i.e. brand new software) is offset by the growing cost of process change, as GG notes. 3) The lack of wear and tear means that the software's useful life is extended well beyond any depreciation schedule (hence all the PCs still running the 14-year-old XP).
DFTM - Mmmuch of the software on which modern business depends is actually decades old: the core of Windows, Unix, the TCP/IP stack etc. In aggregate, software has far greater longevity than hardware. The classic example of this would be the banks, some of whose software is over 50 years old. Though this can give rise to problems (e.g. RBS), it highlights a trade-off between the cost and risk of replacement on the one hand and persistent utility on the other. This structural constraint (which is amplified by the commercial desire for "lock-in"), can result in software becoming so embedded (and a business process so dependent) that moral depreciation is weakened. A further driver of this tendency is that software has a far greater potential to evolve and grow than hardware. A better product coming on the market could mean a wholly new codebase, but it could equally mean the refactoring or extension of existing software. Whereas this has historically been packaged as a replacement, with a one-off fee, the trend now is continuous upgrades as part of a rental agreement. The news that Windows 10 will be the last major release of the OS does not mean that Microsoft's days are over, but that it is moving to a "post-depreciation" model. Even at the application level, moral depreciation is not straightforward. Commercial package A may encode better business rules than package B, but the codebase may be largely common due to opensource libraries and standard methods. Also, bear in mind that a modern system's value may be largely a reflection of its associated data, and that those data are constantly being updated by users, so they appreciate rather than depreciate. Modularisation and the separation of layers in software engineering reflects the isolation of business rules as intellectual capital. In other words, traditional moral depreciation increasingly applies only to a part of a software system. Where those rules are generic or opensource, there may be no moral depreciation to speak of.
A quibble: the decline in the profit rate for the UK is magnified by two other secular trends, namely the growth of global competition (notably the US, Europe and Japan) over the period, and the growing capture of surplus value by wages and taxes coincident with the rise of organised labour and the welfare state. You need to discount these to isolate the impact of technology. It's also worth asking whether the decline in the rate of profit has followed a similar trajectory since 1938. Many studies suggest that it did up until the 1980s, but that the neoliberal era has been marked by an increase in profit rates since then. You could attribute this to increased business confidence, but the lower levels of investment would suggest otherwise. Alternatively, you could attribute it to financialisation, noting in passing that the stabilisation of the profit rate trend between 1885 and 1914 reflected the first period of global financialisation. On the binary distinction Matt Moore raises re physical vs intellectual capital, it's worth thinking about the nature of software as a hybrid form of capital. For example, it doesn't experience material wear and tear; it is arguably exempt from moral depreciation, because it has no exchange-value (due to licence restrictions) and can be progressively upgraded/refactored rather than requiring replacement; and it acts as a store of intellectual capital independent of labour. Software is also driving down the unit cost of investment, which may be giving a misleading impression that low levels of aggregate investment are due to a lack of confidence. Part of the problem here is the paradigm of "corporate investment". The exploitation of freeware and the shift from capital expenditure to SaaS (software as a service) means that there is a huge amount of commercial investment that isn't captured in that definition.
What is hilarious (or touchingly sad, I can't judge the context beyond the Times paywall) about Aaronivitch's position was his own anxiety to believe the fantasies and frauds of the early 00s. Some of Corbyn's popularity (like Miliband's before him) derives from his evident limitations as a thinker and political strategist. It is his very naivety that people find attractive, though they gussy it up as integrity and decency. This may be an indulgent reaction to what has gone before, but there's no denying that it is a reaction to a political landscape that the likes of Aaronovitch did so much to cultivate.
Toggle Commented Aug 21, 2015 on On wishful thinking at Stumbling and Mumbling
It is less the case that language and culture impose constraints and more that "we" (vainly) seek to constrain language and culture, limiting meanings and decrying non-standard expressions. Actual language is ill-disciplined. The idea that a vocabulary is lacking, that words are rationed, goes back to the elitist belief that there is a right language defined by the right sort. The roots of the Sapir-Whorf hypothesis lie in nationalism and its baleful legacy inlcudes reactionary grammar pedants like Michael Gove and Toby Young. You suggest that the bitterness of the culture wars partly arises because "different cultures have different standards of what matters", but it would be equally true to say that they have different interpretations of key concepts and words, such as liberty or debt, which they have imposed in support of those standards, and that this is what leads to incomprehension. In other words, the problem is not the inadequacy of language but its plasticity. To get practical for a moment, you could simply agree new orientation terms with your dancing partners, or adopt the suggested port and starboard (once you agree who is bow and stern), but you'll not get very far if your concept of dance is Fred Astaire and hers is Pina Bausch (I'm assuming it's a she, otherwise the eye-candy would be wholly gratuitous).
At least you didn't mention the many Eskimo words for snow.
People's QE is clever politics because it rebrands traditional debt-financing as a modern and radical policy. Compare and contrast with the strangulated guff that was "predistribution". Mind you it's not that clever, as it stops short of real "popular QE" (i.e. helicopter money), as Simon Wren-Lewis and others have noted. It also smuggles in the de facto end of BoE operational independence, which, depending on your view, may be a necessary corrective or simply dispensing with an irrelevant fiction. The left-wing case against Corbyn should focus on the modesty of his economic and social policies (who isn't in favour of housebuilding and better railways?), as well as the statism and lack of autonomy that Chris notes, however I suspect the issues of foreign policy and security will remain the vector of attack because they're easiest for faux-lefties to engage with.
Toggle Commented Aug 18, 2015 on Corbynomics - meh at Stumbling and Mumbling
@SIOB, you're right that "people believe themselves incapable of making decisions", because that is what the ideology tells them. This is reinforced through the institutional obscurity of the financial system, the arcana of professional economics (excessive maths, a delight in paradox), and even pop-pyschology (from behavioural economics to CBT). Even Chris does his bit, over-emphasising the explanatory power of cognitive biases. People are taught not to tust themselves. One of the central paradoxes of neoliberalism is that its emphasis on personal freedom and empowerment sits alongside an insistence that no individual (any more than a group) can better the information-management and decision-making of the market. In other words, we are urged to accept our innate incompetence and put our trust in the market as a higher power. This is why pollsters ask "who do you trust with the economy?", rather than "who would be most technically competent in managing it?". The implication is that Tories are less likely to go against the market, are therefore more in tune with its mysterious ways, and thus should be considered as more appropriate high-priests. However, it does not follow that people thereby conclude "that there is a need for a class of people to rule over us". Some voters are certainly prey to deference, but that became a minor tendency as far back as the 1960s. It's equally plausible to conclude that this ambivalence - i.e. the conflict between a desire to take control of one's own destiny (as neoliberalism uges) and a fear that one may be incapable of doing so (because of the judgement of the market) - gives rise to resentment. The contempt directed at the bubble would seem to support that.
Toggle Commented Aug 18, 2015 on The C-word at Stumbling and Mumbling
@Luis, you suggest that "the lamentable reality is that voters are swayed by what emerges from the bubble", but that presumes a degree of deference, not to mention close attention, that is hardly supported by the evidence. To judge from opinion polls (risky, I know) voters appear to favour many policies that are considered anathema to the bubble, while the popular opinion of Westminster hovers close to contempt. Institutional politics does not mean giving the people what they want, but what is considered to be good for them. As such, "credible" means in accordance with the tents of neoliberalism, rather than popular or believable.
Toggle Commented Aug 17, 2015 on The C-word at Stumbling and Mumbling
@Matt Moore, I wasn't commenting on the efficacy of markets, or their relative benefits compared to any other resource-allocation mechanism, but on the ideological importance of the efficient markets hypothesis to neoliberalism. It's not a strawman because I didn't invent the EMH. @Igor, I like your distinction between optimistic and cynical neoliberalism, which I suspect owes something to Philip Mirowski's "double truth" idea, not least because it casts Blairites as useful idiots, but I suspect the optimists are more cynical than you give them credit for (Blair, Mandelson, Campbell?), while the cynics have probably drunk more of the Kool-Aid than even they realise. That's the trouble with hegemonic ideology: it gets everywhere.
Gray is a critic of the free market, particularly in the context of globalisation (see 'False Dawn'), so his pessimism is of a different order. Though he dallied with the right in the 80s, he is probably best thought of as a liberal skeptic heavily influenced by Eastern philosophy.
I suspect the chief culprit for this demise is the hegemony of neoliberalism, and in particular its belief in human perfectibility (the representative agent, efficient markets, the end of history etc), which it inherited from Christian teleology (via, ironically, Marxism). The failure of conservatives to mount any sort of critique of capitalism after 2008 - preferring to double-down on blind faith and ignore inconvenient facts - is surely proof of this hegemony. Traditional conservative pessimists emphasised a different dimension of Christianity, namely original sin and the belief that salvation would be restricted to a few. Conservatism is now intellectually moribund, not so much because of the decline of religion as the infection of ethics by personal optimism (as opposed to social pragmatism). What passes for theory in rightist circles has been wholly colonised by neoliberalism, with the heterodox increasingly limited to the lunatic fringe or the wilfully eccentric. The media will only indulge critics of capitalism who are similarly evangelical, and ideally willing to write in the style of speculative fiction. Mason is typical of many who have sought to replace the now redundant proletariat, in its role as the agent of history, by technology itself. But this isn't really existing tech so much as a nebulous connectivity that evokes the Holy Spirit. Fifth Monarchists for Jeremy Corbyn.
tOSPOPE's suggestion is actually quite sensible, if you forget about the idea of capital punishment for a moment, in that it ressurects the idea of taboo. This cultural institution was traditionally used to limit the depletion of key resources as much as to enforce hygiene - e.g. you could only kill certain animals at certain times and in certain ways. The ostracism of the Midwest dentist is a traditional social response: he is being shamed as an example to dissuade others from doing likewise. In years gone by, it is unlikely that this story would have made any great waves, which points to the key role of social media. This is simultaneously a new institutional form and a market for outrage. Kirkup and Jenkins are merely trying to leverage that same market with their provocations. Typically, both are mealy-mouthed, insisting that they personally deplore hunting for sport, while advocating solutions to meet their ideological priors: Lion Corp for Kirkup and sustainable ranching for Jenkins. Will no one stand up for an autonomist Shona workers' collective? Where's Jeremy Corbyn when you need him?
Toggle Commented Jul 31, 2015 on Creating markets at Stumbling and Mumbling
I think the reason for this particular cognitive dissonance is the same as the reason why we've still got the Parthenon marbles. If we gave them back, we'd be admitting that we shouldn't have taken them in the first place. If we had an open borders policy, we'd be admitting that the historic wealth accumulations of the country might not have been largely the result of our genius for manufacture and trade, or even the advantages of geography. That a reluctance to concede this is a popular attitude, i.e. not just limited to the descendants of the exploiters in chief, reflects a fairly sophisticated understanding of our collective history, which the response to recent revelations about our historic ambivalence towards slavery would seem to support (i.e. ignore reparations; focus on slebs coming to terms with skeletons in the closet).
Toggle Commented Jul 27, 2015 on "Demography is destiny" at Stumbling and Mumbling
One of the paradoxes of the Labour leadership campaign is that the right are insisting on delegation ("we must accurately reflect the views of the voters", albeit mediated by the Tory press and centrist think-tanks) as opposed to trusteeship (the Burkean model). I think the institutional dimension of the struggle is under-appreciated. Like the SDP before them, the Blairites want to appeal over the heads of party members directly to the electorate, thereby presenting the party as a dead form that must be sloughed off if the "new" is to emerge. The popularity of Corbyn is less about his mild and antique policies, or even resentment of the "bubble", and more that he treats the party with respect. If John Prescott had still been Deputy Leader, does anyone think he would have made Harman's mistake?
@Luis, yes it's a cost/benefit analysis; but such exercises typically distinguish between "hard" and "soft". The hard case suggests that the costs (bother) may outweigh the benefits (a reduced bill). That would imply the case is dependent on the soft side - i.e. there are intangible benefits that tip the balance. The unwillingness of the Tories to discuss those intangibles suggests they are either unpopular or embarrassing. We're not a million mile away from Swift's "A Modest Proposal".
Toggle Commented Jul 16, 2015 on The Cushnie principle at Stumbling and Mumbling
Hello Nick, There would be harm in changing the benefits system to stop a non-existent (or relatively trivial) problem. We don't have an infinite number of civil servants or parliamentary time, so using resources for this means not doing something else. In other words, it's an opportunity cost. GG estimates the scale of the problem as 1% of welfare costs. According the the DWP, fraud amounted to 0.7% (£1.1bn) in 2014/15. There was a further 1.2% (£2.0bn) paid in error. Less monies recovered, the net loss was £2.3bn, or 1.4%. Unclaimed benefits are difficult to accurately estimate, because of means-testing, but are thought to be about £10bn. In comparison, the government reckon we lose £4.1bn in tax evasion. Including avoidance, they estimate the total "tax gap" at £32bn. It's reasonable to assume that some fraud goes undetected (your anecdata suggests as much), but it is unlikely to be anywhere near as big as tax evasion. A rational response would be to devote 80% of our resources to tax evasion and 20% to benefit fraud. We actually do the opposite.
Toggle Commented Jul 16, 2015 on In defence of welfare at Stumbling and Mumbling
"Fairness" is obviously a subjective - and therefore political - judgement. What could be fairer than an unconditional basic income? Efficiency appears to be more objective, but that presumes we understand a policy's purpose and scope and can therefore gauge it. The 2-child cap may cost more to administer than it saves in benefit payments, but that may be to ignore the indirect changes in behaviour it is intended to prompt, and whether it has an ideological purpose. So why are the Tories keen to discourage births given that they are ostensibly "pro-family"? Is it simple class contempt (it was amusing to see the "Cambridges" coincidentally talk of their plans for a third child, which will presumably qualify for the Civil List); or a racist bogey ("1 in 4 births to foreign mums", according to the Daily Star); or is it just another reinforcement of the primacy of inheritance.
Toggle Commented Jul 16, 2015 on The Cushnie principle at Stumbling and Mumbling
Don't forget ... 4. Unicorns The most common complaints are about people none of us actually know, though we're sure our mates know them; or maybe mates of our mates do; or we saw them on the telly, so they must be real.
Toggle Commented Jul 15, 2015 on In defence of welfare at Stumbling and Mumbling
Dang. That opening "If" should be an "I". One final point: a CI can also provide a stimulus through a temporary increase in its level. Rather than boosting the economy via QE that operates through share and security purchases, the government can use a CI to distribute "helicopter money".
Toggle Commented Jul 15, 2015 on In defence of welfare at Stumbling and Mumbling
If should have added to #1 above, "Additionally, the quantum increase in welfare payments caused by a rise in unemployment would be reduced, as it would be limited to means-tested benefits such as housing". @Ted, an alternative is for the CI to replace the tax-free allowance - i.e. only income above the CI level (from investments as well as work) would be taxed, though at a more steeply progressive rate (e.g. rising in multiple bands from say 5% to 65%)
Toggle Commented Jul 15, 2015 on In defence of welfare at Stumbling and Mumbling
@Bob, a citizens' income (CI) does serve as an automatic stabiliser in three ways: 1. The subtraction from aggregate demand of the spending of those suddenly thrown out of work is less than it would otherwise be. 2. If implemented in a distributive fashion (i.e. shifting societal income from rich to poor), aggregate demand becomes less dependent on the spending power of those in work. In the same way that a growing pensioner population acts as a muffle on demand shifts, so a CI would be a stabiliser. 3. By providing income protection, a CI encourages workers to jump ship during a downturn, thus accelerating "creative destruction". In other words, it acts as a disincentive to labour-hoarding and an incentive to entrepreneurship, thus hastening recovery from recession.
Toggle Commented Jul 15, 2015 on In defence of welfare at Stumbling and Mumbling
Your emphasis on cyclicality, collective insurance and social resilience reminds us that welfare and work were once joined at the hip: the one an essential adjunct of the other. Structural changes in the economy have been driving a wedge between them for decades; a situation exacerbated by workfare and similar brute-force solutions. Labour's recent talk of rebooting the contributory principle of NI, like IDS's foray in Schillerian insurance markets, is clearly aimed at reattaching a socially-acceptable form of welfare for "hardworking families". In other words, Harman's stance is not so much anti-welfare as anti-poor.
Toggle Commented Jul 14, 2015 on In defence of welfare at Stumbling and Mumbling
Excuse the wee tangent, but ... The introduction of driverless trains has nothing to do with the bargaining power of unions or whether the network is public or private. It has everything to do with the engineering, and thus the age, of the railway. The Victoria line and the DLR were designed for partial automated operation from day one, though the degree of automation reflects the technology of their respective eras. The 60s-vintage Victoria line still uses a "driver" as a visual safety-check, while the 80s-vintage DLR relies on remote-control and CCTV. Partial automation has already been extended to to Central, Northern and Jubilee lines. The challenges to full automation are visual (i.e. spotting track obstructions or passengers/items trapped in doors), which in turn reflects the architecture of the tunnels and platforms. The "high wages" of Tube drivers essentially reflect the challenge of controlling a steampunk vehicle in a Victorian sewer. As the alternative would be billions invested in drilling new tunnels and building new platforms, the cost is actually a bargain. Naturally the only cost-benefit analysis the media are interested in is full automation of the entire Tube network, without appreciating that this is impossible with the combination of legacy engineering and current technology.
Toggle Commented Jul 12, 2015 on Labour's failure at Stumbling and Mumbling
One possible factor in Osborne's calculation is the current low level of inflation. Conceivably, some employers will simply pass on the wage rise through higher prices, particularly if they assume that their domestic competitors will do likewise. In other words, the Chancellor is once more being opportunistic.
Toggle Commented Jul 10, 2015 on Minimum wages & jobs at Stumbling and Mumbling