Building the Middle Class

Why are poor people in the US enslaved to tyrannical, immiserating institutions?

Santa Claus brought an interesting gift this Christmas, Barbara Ehrenreich's "Nickle and Dimed". This is a memoir of her experiment as a low wage worker. Ehrenreich is a well-educated scientist, feminist, journalist, and successful writer, so this was a dive from very comfortable upper middle class circumstances into the depths both of the low-end housing market and the minimum wage economy. While she brings a great deal of humor to the story, it is fundamentally appalling, an affront to basic decency. Our treatment of the poor should be a civil rights issue.

The first question is why we have a minimum wage at all. What is the lowest wage that natural economic conditions would bear, and what economic and social principles bear on this bottom economic rung? In ancient times, slavery was common, which meant a wage of zero. This was replicated in the ante-bellum American South- minimum wage of zero. So as far as natural capitalism is concerned, there is no minimum wage needed and people can rather easily be coerced by various social and violent means to work for the barest subsistence. The minimum wage is entirely a political and social concept, designed to express a society's ideas of minimal economic, civic, and social decency. Maybe that is why, as with so many other things, the US reached a high point in its real minimum wage in the late 1960's, 66% higher than what it is now.

Real minimum wage in the US, vs nominal.

The whole economy of low wage work is very unusual. One would think that supply and demand would operate here, and that difficult work would be rewarded by higher pay. But it is precisely the most difficult work- the most grinding, alienating, dispiriting work that is paid least. There is certainly an education effect on pay, but the social structure of low end work is mostly one of power relations, where desperate people are faced with endlessly greedy employers, who know that the less they pay, the more desperate their workers will be to get even that little amount. It is remarkable what we have allowed this sector to do in the name of "free" capitalism- the drug tests, the uniforms, the life-destroying scheduling chaos, the wage theft, the self-serving corporate propaganda, the surveillance.

Is it a population issue, that there is always an excess of low-wage workers? I think it is really the other way around, that there is a highly flexible supply of low-wage work, thanks to the petty-tyrannical spirit of "entrepreneurs". No one needs the eighth fast food restaurant, the fifteenth nail salon, or the third maid cleaning service. We use and abuse low wage labor because it is there, not because these are essential jobs. If a shortage of low-wage workers really starts to crimp an important industry, it has recourse to far more effective avenues of redress, such as importing workers from abroad, outsourcing the work, or if all else fails, automating it. What people are paid is largely a social construct in the minds of us, the society of employers who couldn't imagine paying decently for the work / servitude of others. To show an exception that illustrates the rule, nurses during the pandemic did in some cases, if they were willing to travel and negotiate, make out like bandits. But nurses who stayed put, played by the rules, and truly cared for those around them, were routinely abused, forced into extra work and bad conditions by employers who did not care about them and had .. no choices. In exceptional cases where true need exists, supply and demand can move the needle. But social power plays a very large role.

Some states have raised their minimum wage, such as California, to $15. This is a more realistic wage, though the state has astronomic housing and other costs as well. Has our economy collapsed here? No. It has had zero discernable effect on the provision of local services, and the low wage economy sails on at a new, and presumably more humane, level. When I first envisioned this essay, I thought that a much more substantial increase in the minimum wage would be the proper answer. But then I found that $15 per hour provides an annual income that is almost at the US level of median income, 34k annually for an individual. The average income in the US is only 53k. So there is not a lot of wiggle room there. We are a nation of the poorly paid, on average living practically hand-to-mouth. On the household level, things may look better if one has the luck to have two or more solid incomes.

My own individual incomes analysis, drawn from reported Social Security data.

Any any rate, a livable wage is not much different from the median wage, and even that is too low in many economically hot areas where real estate is unbearably expensive. This is, incidentally, another large dimension of US poverty, that the stand-pat, NIMBY, no-growth zoning practices of what is now a majority of the country have sentenced the poor and the young to an even lower standard of living than what the income statistics would indicate, as they fork over their precious earnings to the older, richer, and socially settled landlords among us.

So what is the answer? I would advocate for a mix of deep policy change. First is a minimum wage that is livable, which means $15 nationwide, indexed for inflation, and higher as needed in more high-cost states. It should be a basic contract with the citizenry and workers of all types that working should pay decently, and not send you to a food pantry. All those jobs and businesses that can not survive without poorly paid workers... we don't need them. Second would be a government employer of last resort system that would offer a job to anyone who wants one. This would be paid at the minimum wage, and put people to work doing projects of public significance- cleaning up roadways, building schools, offering medical care, checkups, crossing guards, etc. We can, as a society and as civil governments, do a better job employing the poor in a useful way than can the much-vaunted entrepreneurs. Instead of endless strip malls of bottom-feeding commerce, let local governments sweep up available labor for cleaning the environment, instead of fouling it. Welfare should be, instead of a demeaning odyssey through DMV- like bureaucracies, a straight payment to anyone not employed, at half the minimum wage.

Third, we need more public services. Transit should be totally free. Medical care should be completely free. Education should be free. And incidentally, secondary education should be all public, with private schools up to 12th grade banned. When we wonder why our country and politics have become so polarized, a big reason is the physical and spiritual separation between the rich and poor. While the speaker in the video linked below advocates for free housing as well, that would be perhaps a bridge too far, though housing needs to be addressed urgently by forcing governments to zone for their actual population and taking homelessness as a policy-directing index of the need to zone and build more housing.

Fourth, the rich need to be taxed more. The corrosion of  our social system is not only evident at the bottom where misery and quasi-slavery is the rule, but at the top, where the rich contribute less and less to positive social values. The recent Twitter drama showed in an almost mythical way the incredible narcisism and callous ethics that pervade the upper echelons (... if the last administration hadn't shown this already). The profusion of philanthropies are mere performative narcissism and white-washing, while the real damage is being done by the flood of money that flows from the rich into anti-democratic and anti-government projects across the land.

And what is all this social division accomplishing? It is not having any positive eugenic effect, if one takes that view of things. Reproduction is not noticeably affected, despite the richness at the top or the abject poverty at the bottom. It is not having positive social effects, as the rich wall themselves off with increasingly hermetic locations and technologies. They thought, apparently, that cryptocurrencies would be the next step of unshackling the Galtian entrepreneurs of the world from the oppression of national governments. Sadly, that did not work out very well. The rich can not be rich without a society to sponge off. The very idea of saving money presupposes an ongoing social and economic system from which that money can be redeemed by a future self. Making that future society (not to mention the future environment) healthy and cohesive should be our most fervent goal.

• How about universal basic services, like housing and transit?
• But not in this congress.
• Bernie is still on the case.
• Meanwhile, how does a soak-the-poor tax system sound?
• Mint that coin!
• Economic regression.

Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era

China girds for defense against infiltration by Western ideas. And Wang Huning leads the way.

The current Chinese Communist Party congress prompts us to take stock of where we are in our relations with China and where China is going. The major theme is of course conservativism. Xi Jinping remains at the helm, and may stay there for several cycles to come. The party remains uniquely in control, using all elements of new and old technologies to "guide" Chinese culture and maintain power. And increasingly is trying to shape the international environment to abet its internal controls and maybe spread its system abroad.

It is worth recounting the fourteen points of Xi Jinping thought in detail, as stated on the Wiki page:

• Ensuring Communist Party of China leadership over all forms of work in China.
• The Communist Party of China should take a people-centric approach for the public interest.
• The continuation of "comprehensive deepening of reforms".
• Adopting new science-based ideas for "innovative, coordinated, green, open and shared development".
• Following "socialism with Chinese characteristics" with "people as the masters of the country".
• Governing China with the Rule of Law.
• "Practice socialist core values", including Marxism-Leninism and socialism with Chinese characteristics.
• "Improving people's livelihood and well-being is the primary goal of development".
• Coexist well with nature with "energy conservation and environmental protection" policies and "contribute to global ecological safety".
• Strengthen the national security of China.
• The Communist Party of China should have "absolute leadership over" China's People's Liberation Army.
• Promoting the one country, two systems system for Hong Kong and Macau with a future of "complete national reunification" and to follow the One-China principle and 1992 Consensus for Taiwan.
• Establish a common destiny between the Chinese people and other peoples around the world with a "peaceful international environment".
• Improve party discipline in the Communist Party of China.

The casual reader will note that Communist party dominance and retention of control is the subject of roughly four or five of these points, depending on interpretation. One can sense that control is absolutely the central obsession and fear of party. And no wonder- there are plenty of structural and historical reasons.

China has had a tumultuous history from earliest recorded times, cycling between centralization and dissolution and civil war. The golden periods were always ones of stability, while the worst were times of anarchy, banditry, decline. Then there were the colonial humiliations, from the opium wars to Japanese occupation. Whether one adds in the disastrous legacy of Marxism- which also came from the West- into the mix, is a matter of taste. As noted above, the current CCP still gives lip service to Marxism-Leninism (though pointedly not to Maoism!).

In the more current era, the West promotes free trade, human rights, and democracy as a way to contest the power and ideology of the CCP. Each have their ulterior aspects, certainly in relation to China. Human rights and democracy are obviously direct attacks on the very core values of the CCP. Free trade might seem like a no-brainer and objectively desirable. But in reality, it cements the advantages of highly developed countries, since less developed countries can never gain an advantage in high technology if their only advantage is low labor cost and poor education & other infrastructure. Therefore, China has had to protect itself from the onslaught of the West, economically, politically, and socially.

This is the basic theme of the CCP ideology, driven particularly by Wang Huning, a social scientist. academic, and now politbureau member and close advisor of Xi Jinping. Huning has been a close advisor to the last three leaders of China, and evidently a major architect of their signature mottos, "The Three Represents", "The Chinese Dream", and now "Xi Jinping thought ...". He is a close student of the US, and appears generally to be the "vision guy" for the Chinese leadership. (Maybe even the brains behind the operation, if one wants to be hyperbolic.) While Huning in his earliest writings advocated for the democratic development of China, in line with general development of a modern, mature state, and with models such as Japan, that has all been deferred and subsumed under the more immediate needs of the party. His public writing ceased after he joined the central government. 

The biggest and most traumatic historical shock guiding the CCP today was undoubtedly the collapse of the Soviet Union. (As it guides Putin as well.) Before everyone's eyes, the siren song of the West, of capitalism, and of "freedom" (particularly the freedom to be nationalist) captured the populace, and destroyed the Soviet state from within, resulting in a gangster Russia that has only painfully re-established its strength and order, turning back into an authoritarian (and nationalist) state and a colleague of China on the anti-Western world stage. 

The Chinese Communist Party avoided all that through its merciless grip on power. It never let its eye stray from the ball, or softened it heart towards its dissidents and malcontents. It patiently experimented with a mixed capitalist / one party rule system, which has turned out (so far) to be highly successful. It availed itself of all available technology and capitalist methods from the West to develop its economy at a pell-mell rate, learning especially from its fellow-tigers, Singapore, Taiwan, Japan, Hong Kong, and South Korea. However, it continues to (rightly) fear the siren songs of freedom, democracy, etc. as core threats. It conveniently uses psychological projection to blame the West for all these attractive ideas, which in truth are not exclusively Western at all, but are dreams that Chinese people have as well. (See Hong Kong, see Singapore, see Taiwan) So the ideology and the propaganda follows the age-old script of justifying a bloated, intrusive, and often very cruel state by casting the blame for dissent on outsiders.

That's a big TV screen.

The CCP has also been highly effective in many areas. It obviously keeps tabs on everyone with not just surveillance, but with social surveys and party members at the grass roots, and even allows limited local protests, so that it has a feeling for what the people want, despite a lack of formal democracy. It has engineered a miracle of infrastructure, trains, and housing. Indeed, there is an overhang of construction that it is slowly winding down, in the current real estate crunch. It has protected its population comprehensively from Covid, surely saving millions of lives, even as it imposes stark, and likely not sustainable, costs. It has recognized the dangers of bitcoin and shut down the cryptocurrencies in comprehensive fashion- something we might learn from. And it is leading the way in solar manufacturing and installation, even while its use of coal remains catastrophic. It continually identifies and fights corruption in its own ranks, recognizing that a one-party state is an invitation to rot and sclerosis.

But the fundamental conundrum remains- how to justify and strengthen a one-party state in the midst of the rising well-being, education and sophistication of its own population. The other tigers, including even Singapore, all began with strongly authoritarian systems that each evolved, in parallel with their economic development, into more or less free democracies today. While one can sympathize with the CCP's desire to avoid the chaos of the Soviet Union's demise, the now more cogent and relevant models of political evolution in the local region are far more positive stories, which the CCP seems to pointedly, and lamentably, ignore. 

Indeed, China appears to be heading in a different direction, a bit more like that of North Korea. Their wolf warrior diplomacy is given to vitriolic statements and bullying, now showcased over Taiwan. Their internal propaganda is increasingly nationalistic and strident, following the Xi Jinping thought's guidelines of shaping the cultural values of China to be more cohesive and disciplined. (Covid hasn't helped, either.) It is increasingly intolerant of diversity, as shown against minority ethnic groups, which are being wiped out in systematic terms. For example, the government offers generous subsidies to minority members who marry Han ethnic partners, and drives the same policy by locking up large numbers of Uyghur men for re-education. China's ideological leaders are groping for CCP-friendly "values" that can effectively block what they view as foreign viruses, but which are, in point of fact, endogenous and natural to the human condition.

Under Xi and Wang Hunting, the party is still searching for those elusive "socialist core values" that are uniquely Chinese, not Western, not from the backward (and somewhat feudal) countryside, and supportive of the Communist party. But all they have come up with are greed/capitalism, nationalism, an obsession with stability, and a new personality cult. 

While I can not foretell the future, this does not seem like a good way to go. In foreign policy, one can measure success by how friendly the neighboring countries are- in this case to China, and to the US. There are areas of the world where very peaceful relations exist, such as across the EU, and between the US and its neighbors. That does not seem to be the case in the South China Sea. The constant drumbeat of threats and bullying by China, against Taiwan in particular, but others as well, various territorial disputes, and a enormous military building spree have put everyone very much on edge, and not on friendly terms. This is a fundamental problem for China, and for the rest of us if they bull their way into a world war.

Domestically, it is quite possible for the repressive system to continue indefinitely, given its continuing determination and often very intelligent management, always on guard against the heresies of freedom and goodwill. But that would be giving up an important future path. The Chinese culture would have greater growth prospects, and greater beneficial consequences at home and abroad, if it opened up and tolerated greater pluralism. Its economic dynamism is up till now built on foreign technology, and its ability to innovate and operate truly in the vanguard of world development depends on some significant degree of political and social dynamism as well, not on Big-Brotherism. 

So I see a future where inevitably, the CCP will have to experiment with grass-roots democracy in order to resolve its fundamental value and motivation conflicts as growth slows and China becomes a wealthier country. These will be frought and dangerous experiments. But in time, there is a chance that they will lead to the same kinds of opening that other Asian countries have experienced so successfully, with the gradual development of another party, and a more humane and less paranoid culture. Conversely, insistence on repression tends to spiral into a need for additional repression, with corresponding chances for a dramatic crackup that might produce another one of the grand cycles of Chinese history.

• Another review, focusing on Xi Jinping.
• On the dangers of private schools.
• Critique of the Nobel prize in economics.
• Religion and the nuttery.

For the Love of Money

The social magic of wealth ... and Trump's travel down the wealth / status escalator.

I have been reading the archly sarcastic "The Theory of the Leisure Class", by Thorstein Veblen. It introduced the concept of "conspicuous consumption" by way of arguing that social class is marked by work, specifically by the total lack of work that occupies the upper, or leisure class, and more and more mundane forms of work as one sinks down the social scale. This is a natural consequence of what he calls our predatory lifestyle, which, at least in times of yore, reserved to men, especially those of the upper class, the heroic roles of hunter and warrior, contrasted with the roles of women, who were assigned all non-heroic forms of work, i.e. drudgery. This developed over time into a pervasive horror of menial work and a scramble to evince whatever evidence one can of being above it, such as wearing clean, uncomfortable and fashionable clothes, doing useless things like charity drives, golf, and bridge. And having one's wife do the same, to show how financially successful one is.

Veblen changed our culture even as he satarized and skewered it, launching a million disgruntled teenage rebellions, cynical movies, songs, and other analyses. But his rules can not be broken. Hollywood still showcases the rich, and silicon valley, for all its putative nerdiness, is just another venue for social signaling by way of useless toys, displays of leisure (at work, no less, with the omnipresent foosball and other games), and ever more subtle fashion statements.

Conversely, the poor are disparaged, if not hated. We step over homeless people, holding our noses. The Dalit of India are perhaps the clearest expression of this instinct. But our whole economic system is structured in this way, paying the hardest and most menial jobs the worst, while paying some of the most social destructive professions, like corporate law, the best, and placing them by attire, titles, and other means, high on the social hierarchy.

As Reagan said, nothing succeeds like success. We are fascinated, indeed mesmerized, by wealth. It seems perfectly reasonable to give wealthy areas of town better public services. It seems perfectly reasonable to have wealthy people own all our sports teams, run all our companies, and run for most political offices. We are after all Darwinian through and through. But what if a person's wealth comes from their parents? Does the status still rub off? Should it? Or what if it came from criminal activities? Russia is run by a cabal of oligarchs, more or less- is their status high or low?

All this used to make more sense, in small groups where reputations were built over a lifetime of toil in support of the family, group, and tribe. Worth was assessed by personal interaction, not by the proxy of money. And this status was difficult to bequeath to others. The fairy tale generally has the prince proving himself through arduous tasks, to validate the genetic and social inheritance that the rest of the world may or may not be aware of. 

But with the advent of money, and even more so with the advent of inherited nobility and kingship, status became transferable, inheritable, and generally untethered from the values it supposedly exemplifies. Indeed, in our society it is well-known that wealth correlates with a decline in ethical and social values. Who exemplifies this most clearly? Obviously our former president, whose entire public persona is based on wealth. It was evidently inherited, and he parlayed it into publicity, notariety, scandal, and then the presidency. He was adulated, first by tabloids and TV, which loved brashness (and wealth), then by Republican voters, who appear to love cruelty, mean-ness, low taste and intellect, ... and wealth. 

But now the tide is slowly turning, as Trump's many perfidies and illegal practices catch up with him. It is leaking out, despite every effort of half the media, that he may not be as wealthy as he fraudulently portrayed. And with that, the artificial status conferred by being "a successful businessman" is deflating, and his national profile is withering. One might say that he is taking an downward ride on the escalator of social status that is in our society conferred largely by wealth.

All that is shiny ... mines coal.

Being aware of this social instinct is naturally the first step to addressing it. A century ago and more, the communists and socialists provided a thoroughgoing critique of the plutocratic class as being not worthy of social adulation, as the Carnegies and Horatio Algers of the world would have it. But once in power, the ensuing communist governments covered themselves in the ignominy of personality cults that facilitated (and still do in some cases) even worse political tyrannies and economic disasters. 

The succeeding model of "managed capitalism" is not quite as catastrophic and has rehabilitated the rich in their societies, but one wouldn't want to live there either. So we have to make do with the liberal state and its frustratingly modest regulatory powers, aiming to make the wealthy do virtuous things instead of destructive things. Bitcoin is but one example of a waste of societal (and ecological) resources, which engenders social adulation of the riches to be mined, but should instead be regulated out of existence. Taking back the media is a critical step. We need to reel back the legal equation of money with speech and political power that has spread corruption, and tirelessly tooted its own ideology of status and celebrity through wealth.

• California police could use some supervision too.
• Marin- a cruel gerontocracy?

Eugenics is All the Rage

Animal breeders have no qualms directing intensive systems of artificial selection.

Eugenics is defined with reference to humans, as any consideration or implementation of artificial selection. There is little doubt that it would be effective, but there is some disagreement about what an "improvement" would represent. We are not cattle to be bred to specification, but organisms with dignity and freedom- specifically freedom from meddling by others in our reproduction. Wild animals have this freedom as well, by default. But domestic animals- that is a different story. For all our "humane" societies and pampering of some, our treatment of others is distinctly undignified. And that includes their breeding. 

Across the domestic animals, from racing horses and show dogs to dairy cows and chickens, breeding these days is carried on at unprecedented intensity, with the most advanced scientific and statistical techniques. For farm animals, this has led to inbreeding and alarming malformations, such as chickens that can't walk, and cows with chronic udder infections. For dogs, the creation of fundamentally malformed breeds also leads to chronic suffering, (short snouts, short legs), as does lack of care in breeding for temperamental health.

These animals have serious problems, of a genetic nature.

Animal breeding has progressed through three major stages. First is the traditional approach, using hunches and personal judgements- using the best animals, and perhaps cross-breeding with animals from other farms to retain diversity, if any directed breeding is done at all. With a relaxed approach, this led to generally good results, establishing the great dog breeds and other livestock, where hardiness and health were always prominent values. But in pigeon, cat, dog, and other casual breeding since Victorian times, amateur breeding like this can also go rather astray. 

In modern livestock breeding, this was superseded by the use of Estimated Breeding Value, or EBV, which is a systematized way to account for the genetic, rather than phenotypic trait quality in animals, by accounting for their relatives, as far as they have been measured, and also by accounting for uncertainties around heritability and systematic and environmental effects on the trait of interest. This concept puts breeding on a far more scientific basis, with quantification of traits, and of pedigrees. One result is that the breeding value can be estimated for animals who do not even have the trait, such as male dairy cattle. Another has been that animal breeding has been even more relentlessly driven to meet commercial and consumer objectives, even ones that shift over time as tastes change.

Naturally, the EBV method has now been supplemented by DNA-based evaluations in more recent times. The ability to "see" into the genome by sequencing some or all of it, thereby establishing a landmark map based on variants distributed throughout, allows the traits (if linked to such landmarks) to be tracked in all individuals, regardless of phenotype, and even in individual gametes and fetuses. This dramatically reduces the lottery that otherwise is genetics. However, its value is significantly bounded by the fact that most interesting and desirable traits are usually not genetically simple (like, say, eye color), but are complex, influenced in very small amounts by many different loci / genes. 

This is a frontier for animal rights and humane policy development, that animals not only should be treated well, but bred well. In livestock breeding, European countries have some relatively aspirational standards and laws, the US lacks even that. The "standards" used by such organizations are the American Kennel Club are worse than nothing, as they drive breeding for looks alone, and welcome the most obscure and unhealthy breeds, regardless of grave malformations, temperamental disasters, and inbreeding. While health of the animal needs to be paramount, other issues such as the ability of animals to live without special care and infrastructure, and genetic diversity, also need to be addressed, if we are going to be serious stewards of animals in our care.

• Our inert politics.
• The sleaze never let up.

Cooking With Solar

Who knew cooking with energy from the sun would be so difficult?

Cooking with rays from the sun- what could be more delightful, or more efficient? The same rays that warm the skin can heat food as well- one merely needs to concentrate the heat a few fold. Well, doing so is remarkably difficult to do in practical terms. Not only do you need to concentrate the sun's heat, but then you have to preserve the heat you collect, without blocking out the light with all that insulation. This can be quite a trick. Thermostatic control? You must be joking- none of the currently sold or proffered DIY projects incorporate such an extravangance. The current state of play is a slightly demented world of youtube videos, fly-by-night companies, and charitable efforts pointed at developing regions. But rest assured, it can be done.

Naturally, the most significant drawback is that the sun doesn't shine all the time, confining solar cooking to mid-day times, and sunny conditions. Several kinds of cookers have been developed, each with individual drawbacks and features. 

• Parabolic stove
• Vacuum tube oven
• Closed box oven
• Open panel oven

First off, the parabolic solution puts the premium on power. While the other cookers are akin to ovens, this one is more like a range / stove. It gets extremely hot and cooks in a hurry. The concentrated light from the sun needs, however, to be constantly tracked and aimed at the pan on the burner. Yet it is an invisible flame, presenting some difficulty. It can burn a finger or blind you in an instant. One company developed a reasonably practical design, complete with glowing video. But then it promptly shut down and disappeared, I assume due to the daunting legal liability implied in selling such an appliance. These cookers remain very much a DIY, and at your own risk, proposition.

A parabolic cooker- adjust often, and use with care!

Second are vacuum tube ovens, which are basically thermos bottles with sun-facing inputs. These have outstanding insulation, so they capture the radiation coming in very effectively, storing it as heat. They can be used in cloudy conditions and maybe in non-mid-day conditions. The downside is that the thermos structure limits capacity for food, and also hides it from view. These also come in water-heating versions, filling a core camping and emergency need.

A vacuum tube style of oven. This one has quite high capacity. The central thermos provides extremely effective insulation, collecting every bit of the insolation.

Third are closed-box ovens, which are perhaps the most widely used form of solar cooking. Given enough insulation and a well-sealed glass top, you can make a reasonably practical oven out of cardboard boxes, wood, or metal, which get up to 350 degrees °F. This is a slow kind of cooker, perhaps more like a crockpot than an oven, taking quite a bit of time to heat up. They are not so sensitive to light direction, so can be left out for lazy afternoon and will still work. This is an amazingly active area of DIY activity, with endless variations. One of the most impressive I have seen is a sleek, low oven build of glass and wood, meant to stay outside full time.

 A commercially made box oven, with glass top and room for one or two pots.

A DIY version of a box oven, with clean lines and very high capacity.

Lastly, a more portable version of a solar oven is an open panel oven, where a set of foldable or collapsable reflective panels surround the pot, without much other structure. These are maximally simple, and aimed at camping and other portable needs. But they need something extra to hold in the heat around the pot, which may be a plastic oven bag, or a pair of glass bowls that go around the black pot inside. When properly protected, set up, and with large enough collectors, these can get to 300 degrees and work well cooking stews, rice, etc. These enjoy a wide variety of DIY efforts and styles as well, and one of the best is offered by a maker in Southern California.

A panel cooker being used on the go. Note the glass bowl holding the central pot.

Those are the current types, each with its pluses and minuses. Once one considers solar cooking, it is natural to want to deploy it to those who really need it- the rural and poor around the world, who have lots of sun, and not many other resources. The scourge of traditional cooking fuels in these areas is particularly alarming, usually being wood, coal, or dung, which lead to deforestation, climate change, land depletion, and copious pollution, both indoor and outdoor. Thus solar cooking becomes another sort of colonial dream foisted on the less fortunate, who have not set up proper infrastructure to pillage the earth and pollute the atmosphere. But the various impracticalities of solar cooking, including inconvenient timing, outdoor location, low capacity, slow speed, unusual, non-local, and fragile materials, have doomed such efforts to marginal effectiveness. Maybe some further leap in the technology, like incorporating a heat storage mechanism (rocks?) might solve some of these problems. It is amazing, really, how convenient the stored /reduced forms of carbon (in biomass and fossil fuels) are for our needs, and how hard they are to replace.

• Shades of WW2: All Russia wants is a little elbow room.
• The gravitational wave observatories are running, and recording the death spirals of black holes.
• The next presidential election could start a civil war.
• Carbon tax, now.
• Good sleep, good life.

What Would be an Effective Carbon Tax?

Carbon taxes could be effective if they are high enough. None are high enough now.

Look around, and you are struck by the myriad ways we use and waste fossil fuels. Live pigs are shipped by the airplane load from the US to China. Wildfires caused by global warming are fought with tanker airplanes. Plastic shopping bags by the trillion are churned out for single use followed by permanent entombment. Back-country hikers rely on helicopter rescues to get them out of jams. And of course we burn them with abandon for transport, heat, and electricity. Fossil fuels are far too cheap- from merely an efficient use perspective, quite apart from their disastrous role in climate heating, other forms of pollution, and overall sustainability.

The last decade has seen astonishing progress in renewable energy technologies, bringing them to par price with fossil fuels or even cheaper. But this price relationship is misleading, since it only reflects the low-hanging fruit of adding sporadic power to a grid that runs largely on fossil fuels with highly flexible dispatch characteristics. Making progress to a fully renewable and stable grid, and extending this to transportation, industrial processes, and chemicals will take vastly more work, including technologies not yet in hand.

We have such a long way to go to decarbonize.

The most  effective way to do this is to price the vice: price CO2 emissions. A uniform price will reach all the uses of fossil fuels, (I would add biomass as well, which generate CO2 emissions just the same), and harness the same capitalist motivation that has spent decades thoughtlessly expanding their destructive use. Government regulation can do a great deal, and is gradually driving coal to oblivion. But it will not be enough to drive the more complete transition that is needed, especially at the speed required. Climate heating is already rampant and highly destructive. 2040 is a mere 18 years away- nothing in infrastructure terms, and not much more in transport vehicle lifetimes. Natural gas remains the fuel of choice across the electric grid, residential, and industrial applications. Within twenty years, it needs to be demoted to minor status.

So what would be an effective carbon tax? One can take the baseline to be the carbon cap and trade system instituted by California, which ends up as an auction price for carbon emission credits. This is a very light tax with lots of exceptions, which has had a commensurately light effect. The price currently stands at ~$23 per ton of CO2 emitted. This is equivalent to about 22 cents per gallon of gasoline. This is not going to change many people's behavior, obviously. At ten percent or less of the retail price, this scale of tax is not going to drive a transition to electric vehicles. Overall in California, this tax brings in roughly a billion to two billion dollars per year, and is thought to be having a beneficial effect, but only as a fractional part of a much broader portfolio of regulations and policies.

In Sweden, the carbon tax is over $130 per ton. This is more significant, on the order of a dollar per gallon of gasoline. Again, there are so many exceptions, especially for heavy industry, that it touches only forty percent of emissions. Overall, it has caused only an eleven percent reduction in transport carbon emissions. Europeans pay much higher prices for motor fuels to start with, for many reasons beyond the carbon tax, so the relative effect of even such a larger tax is small. Europeans already use gasoline at a rate roughly one fifth that of the US, so are already very thrifty. We can expect in the US to have much greater elasticity to higher fuel prices, assuming a bit of political maturity instead of whining about our god-given right to cheap gasoline. 

At the same time, unless alternative fuels, forms of transport, or social behaviors appear, especially in the truck and other heavy vehicle segments, this kind of tax would still have limited effect and serious economic costs. So the modeler and prognosticator has to wonder where the response to carbon taxes will come from. The pandemic showed that we can telecommute very effectively, thereby saving prodigious amounts of fuel. Tesla has shown the way in electric vehicles- a segment that had previously been brutally decimated by GM in various bait-and-switch schemes. Hybrid technology is edging into in larger cars and transit. It will take a big price signal to switch these markets in a dramatic way. Even doubling the price of gasoline, which in the US would take a carbon tax on the order of $400 or more per ton of CO2 emitted, would only bring our fuel prices to those of Europe, which still drives, has traffic jams, and emits vast amounts of CO2 from the transport sector. Such a tax would bring in about $400 billion per year in the US, easily within the normal taxation and economic capacity of a $20 trillion economy.

Yet now there are replacement technologies, so a carbon tax will, in classic economic fashion, create change, not just disgruntlement and economic pain. It will also bring forth more replacements, while working at every margin to drive conservation. Do we need continued technology investment? Absolutely. Do we need more public policy and infrastructure investments, such as reducing give-aways to the fossil fuel industries, charging them for their many immediate as well as long-term harms, and reconfiguring electrical grids and natural gas grids? Yes. A carbon tax is an accellerant to save the biosphere from incalculable harm. Its revenue can be administered right back to citizens or into the government accounts, displacing other taxes. So its net economic effects could be minimal, even while its effects on economic reconfiguration and conservation would be strong. 

• All laws must be enforced, or what good are they?
• No wonder the internet has gone to the dogs.

Remembrance of Climates Past

As the climate heats up, we are heading back in time, very rapidly.

Climate change is the challenge of our times and of our planet. However attractive it is to not care, to ignore it, to hide in traditional ways of thinking, to let inertia have its way, inexorable change getting worse by the year. The American way of life can not go on, and will not go on as before. This year has been a remarkable demonstration of the range of catastrophe, from melting Arctic villages to Pacific Northwest heat waves, California wildfires, record draught on the Colorado river, hurricanes running out of letters, and catastrophic floods in Europe. Migration crises around the world point to another implication- that as the global South becomes unlivable, increasing hordes of people will be knocking on the borders of the Northern countries, who have authored the mess.

To get some perspective on the change, we can look backwards into the geological record to see where we are going, and how fast. Earth has had a very diverse climatic history, from its beginning in a Venus-like cloud of high CO2 and no oxygen, to "snowball earth" freezes, to torrid warm periods extending to the poles. Over the last few billion years, earth's climate has had a fundamentally, if slowly, self-correcting mechanism based on CO2 production and consumption. CO2, needless to say at this point, is the main variable in our atmosphere's tendency to retain or give up solar heat. Volcanoes liberate CO2 from geologic and organic buried carbon. Organic carbon can also be liberated by fires and decomposition of organic carbon, including exposed coal, methane, and oil deposits. On the other hand, the biosphere fixes and buries carbon, and on an even more vast scale the weathering of exposed rocks drives the formation of carbonate minerals that lock up atmospheric CO2. When conditions are warm, weathering of rocks accelerates, as can organic fixation and burial, drawing down CO2. When conditions are cold, ice sheets cover the land and inhibit both organic fixation and rock weathering, allowing CO2 to build up in the atmosphere.

These cycles mean that over a scale of millions of years, earth does not get caught irretrievably (as Venus has) in an inhospitable climate. Instead, our recent ice ages ebbed and flowed, back and forth as the CO2 balance in the atmosphere responded fitfully to geologic conditions. The dramatic snowball periods, which occurred just before the Cambrian period, came to an end even though the earth-wide snow cover dramatically reduced solar absorbance. But it also reduced weathering and organic fixation of CO2, so eventually, CO2 built up to the very high levels needed to overcome the snowball effect and the climate snapped back to very warm conditions.

A key point in all of this is that climate change over earth's history has been driven geologically, and thus has been slow. Slowness has critical effects in allowing the biosphere to adapt. The typical driver is a new spate of volcanic eruptions, which release lots of CO2. This takes thousands of years to happen, so while this can be fast in geologic terms (a prime example is the Paleocene-Eocene thermal maximum, which took maybe 20,000 years to drive the climate from very warm to quite torrid, roughly 55 million years ago). However, the homeostatic mechanisms kicked in, and this torrid phase only lasted  a couple of hundred thousand years. Another example has been the slow uplift of the Tibetan plateau, which exposed a great deal of rock to weathering, thus drawing down atmospheric CO2. This is thought to have driven the cooler temperatures and glaciations of the last few million years.

A notorious exception is the K-T boundary extinction, where an asteroid hit the earth and changed the climate overnight. And life suffered correspondingly, with all the dinosaurs wiped out. (Well, all except for birds). Whatever was not pre-adapted somehow for this instant crisis failed to make it through. The stress this put on the biosphere is obvious, catastrophic, took many millions of years to recover from, and changed the trajectory of evolution dramatically.

An extremely rich graph of the last 70 million years of earth's climate, from a recent benchmark paper. Temperatures are shown on top right, while the isotopic findings that undergird them are shown on top left (temperature proxy based on oxygen isotopes) and bottom left (carbon concentration proxy based on carbon isotopes). The overall trend is correlation between the two, with CO2 the primary driver of higher temperature, and subject to swings for various geologic and biological reasons. Temperature is also affected secondarily by orbital mechanics and other factors. Even the Eocene high temperatures were driven by CO2, though the correlation is not so clear here.

What does all this mean for our current trajectory? The graph above helpfully supplies the current IPCC scenarios of temperature change, under stringent, medium, and business as usual scenarios. The temperature today (green) is already equivalent to conditions of about five million years ago. So in time machine terms, we have travelled, in the span of a century, five million years of climate history, to before the recent ice ages. We are already beyond the stringent scenario, obviously, so the only possible futures we have to look forward to are the medium and no-action scenarios, which, within the next fifty to one hundred years, will put us, in time machine terms, fourteen and forty million years into the past, respectively. And what of the century after that? CO2 stays in the atmosphere for many thousands of years, so not only do we have to reduce emissions now, we will have to remove those that have already happened. Climate stewardship will be humanity's job whether we like it or not.

The biosphere can not cope with this rate of change. While we often think in narcissistic terms of how humans will suffer, we are the lucky ones, being the most adaptable creatures ever devised by evolution. Our problems are nothing compared to the rest of the biosphere. The ability of animals to migrate or shift their ranges is highly strained by the availability of the rest of their essential networks, mostly based on plants at the base of the ecological network. And plants are not going to have the ability to migrate at these speeds and generate new ecosytems in more northerly areas. To us, the speed of climate change is slow, barely discernible on a lifetime scale. But in earth history terms, it is blindingly fast, just a blip over an asteroid impact, and far faster than normal ecosystem dynamics, let alone evolution, can cope with. Uncounted species are falling by the wayside, victims of another great extinction in earth history in this, the anthropocene geological epoch.

Time machines are exciting tropes of science fiction, allowing amazing journeys and byzantine plot twists. But usually, the outcome is not good, since changing the time line has unpredictable and sometimes catastrophic effects. Typically, a ruse is employed to extricate the heroes from the twisted plot, and everyone sighs with relief at the end when the normal time line is restored. Our climate path is not heading for such a happy ending. We are gambling, now consciously and willfully, with not only our own civilizational existence, but with the progressive and rapid degradation of the entire biosphere, on this warp-speed trip into the geological past.

• Trendy Democrat turns to the dark side, leaves climate action in tatters.
• Capitalism is ultimately at fault, channeling our greediest instincts and empowering the greediest people.
• If we are serious, we would have a substantial carbon tax, and one thing that would kill would be crypto.
• Bill Mitchell on Marxism and melioration.
• The Balkanized streaming and video landscape.
• Origins of the horses and domestication.

Being American

With apologies to those outside the US, throughout the Americas, naturally.

The meaning of being an American is obviously a bit fraught right now. The US had a heyday in the post-WW2 era, when we ruled the world and enjoyed breakneck technological and economic growth. Many seem to think that the conditions of that era are some kind of birth-right, that a lifestyle of mainline Christianity, hamburgers, and trucks is a cultural patrimony worth fighting for, against the existential changes wraught by demography, immigration, climate change, and education. We have come a quite a way from the days of the Civil War, when a similar fight revolved around the right to keep Black people in bondage, but the current historical predicament does rhyme, as they say.

The US is still an incredibly rich country, and a technological leader in countless fields. But at the same time, other countries with lower military budgets and fewer world policing duties show us up in better living conditions, and more progressive political systems. But that is obviously not what grates on the right wing base- that other countries may be more liberal, prosperous, and happy. (Though in fairness, such competing countries are typically also less diverse, and thus have higher social solidarity, from a tribal / ethnic perspective, which does seem to be striking a chord with the right wing). No, what grates is that their god-given right to the American way is dissolving, for all kinds of reasons, but none that completely irresponsible policy, cynical politics, and general greed and obtuseness can't make go away, at least for a little while.

During the Civil War, Lincoln through his Gettysburg address and other writings tried to forge a new vision of what America was about, one with world-wide significance that left behind the stasis and meanness of slavery for the promise of equal opportunity and human development in an abundant and growing land. It was that vision that propelled the US through the next century, through railroads, flight, military might, the oil age, and to our current age of computer and biomedical technological frontiers.

It is clear that we again need a new vision, now that our peak of relative military and economic power is waning. There is no going back. Climate change is making sure of that, even if the Chinese don't follow it up with other unpleasant facts on the ground. The US of old is irrevocably gone, and pining for it isn't going to bring it back, especially if destroying our democracy is the method chosen to get there. What is worse, our moral authority is even more imperiled than those harder forms of power and influence.

Atlanta Olympics opening ceremonies, featuring lots of Stetson hats and pickup trucks.

Remember the 1996 Atlanta Olympics? Dreadful generally, but what sticks in my mind is the fleet of pickup trucks that were featured in the opening ceremony. How incredibly tone-deaf, and what an homage to greed and planetary destruction. But now, a quarter century on, we are still fighting that same fight, between those looking to the past, and those looking to the future. The past was one of abundance, thanks to the bountiful nature that the US was endowed with (or stole brutally from its occupants). The future looks a bit less abundant, because of the damage we ourselves have wrought on the way to all these technological wonders. Also because our population is itself unsustainable, and needs to be smaller, even after we adhere to more sustainable lifestyles and technologies. The future is going to be difficult, no question, and it will require us to think harder, and feel more keenly about others and the environment around us. Merely raping the environment will no longer do (just as chaining and whipping other humans no longer did a century and a half ago). We will have to work with it and in many cases, make sacrifices to heal it. Even pay reparations.

Land-grant colleges endowed throughout the US, courtesy of far-thinking Republicans of the Civil War era.

That is pretty clearly where the new vision of America should be going. To a prosperous future that is sustainable at the same time that it is abundant and equitable. This is a hard task, politically as well as technically, far more difficult than the great things we have accomplished in the past, like the Manhattan project or the Apollo program. And one can sense that the younger generations are ready for this task- they just need a little encouragement and vision to get us there.

• The Taliban is better at politics than the US, or its Afghan allies, were. Politics, Islamic-style.
• On the importance of spirit and core values.
• Realignments in Asia.
• What do you do if your party is a minority?
• Natural selection at work.
• "Valuing your bodily integrity"- idiots with degrees.
• Trash-talking Larry Summers.

Nature and the Corporation

Douglass North on the role of institutions in our society, part 1. "Understanding the process of economic change"

Institutions, in the thinking of this book and its general field of institutional economics, are the rules of the game of life, while people and their organizations are the players. The practice of going to workplaces and being forced to work there for eight hours, and then going home.. that is an institution of modern societies, based partly on unwritten traditions, and partly on explicit rules written in laws, regulations, organizational guidelines, etc.  The fabric of our lives, and particularly the efficiency and success of our economies, depend on the details and quality of institutions, which set the parameters and incentives throughout the system, which the actors then grapple with, trying to either to satisfy them in competition against other actors, or to evade them, or to alter them through legal, polical, or social means. 

For example, North cites other writers who have concluded that one of the fundamental defects of the Muslim world, as it fell behind the Northern Europeans in economic and cultural terms through the Middle Ages, was the complete lack of the cultural institution of the corporation. Muslim commercial law centers around partnerships, typically very small partnerships between an investor and a merchant, which form anew for each trade mission. But until modern times and reforms inspired by the West, there was no legal form for corporations, which are so fundamental to the Western economic model, providing durable legally and financially independent homes for entrepreneurial teamwork and innovation. Corporations obviously tap into natural human tribalism, offering the familiar setting of small group cohesion and competition, and helpfully cross-cutting against other cultural organizations and power centers such as actual clans, tribes, nations, and religious groupings.

This is a very powerful view of how culture and economics interact. Are corporations all good? Obviously not. They are given rules by the culture at large, though traditional practices and by legal structures when those unwritten rules prove insufficient. Child labor, fraud, tax evasion, family-destroying work schedules... the ways corporations have to make money in socially destructive ways, and thus the ways in which they need to be regulated, are endless. And it is our collective view of these harms and our capacity through social and legal structures / sanctions to address them that manifest in the strength and quality of our institutions.

And here is where one looks back in horror at what has happened to our institutional structures over the last few decades. Donald Trump was merely the apotheosis of lawlessness and institutional destruction that has been the program of the Right for decades. It was enunciated most charmingly by Ronald Reagan, (earning him high grades from historians), but he was only repeating the thoughts of intellectuals like Friedrich Hayek and Milton Friedman who made such persuasive cases for the "freedom" part of free enterprise. I recall especially the spellbinding nature of Friedman's narratives, which contrasted the sclerosis of communist economies with the vibrancy of free markets. Friedman was a hedgehog, advocating one big idea and bulldozing through any nuance or complication. And I regard him as the most influential cultural figure responsible for the general inequality and institutional weakness we find ourselves facing today.

A typical nostrum from Milton Friedman. As though "freedom" was self-explanatory and absolute. Rich people take it to mean something quite different from how others take it, and therein lies the destructive magic of this ideology. 

For he was spinning fairy tales, quite simply. The free market was always good, the government was always bad in his telling. Ham fisted regulation and intrusive economic policy were only one target of attack. Money and inflation was another, and one of the most damaging wedges of this argument. The government is necessarily in charge of the money, by printing it and managing its value through the interest rate, banking regulation, and other mechanisms. But the private sector and general economic conditions are obviously enormous factors as well, creating a complex system of feedbacks and unanticipated events. But Friedman gleefully pinned all the blame for inflation on the government, pronounced a false simplicity in his monetarist program, and used it to further bludgeon the state to get out of the regulatory business. If the government couldn't even get something as simple as the money supply right, how could it possibly have the intellectual wherewithal to regulate the internet, or corporate mergers and concentration, or industrial policy vs other countries? This was the kind of thinking that led to people buying gold, and eventually to the thought that we should get back on the gold standard, one of the greatest lunacies of right-wing politics. (Which Friedman would never have subscribed to, incidentally.)

This intellectual and rhetorical attack, so richly supported and cheered by business interests and the rich, led to the following decades of revolt by the Right against all forms of regulation and enfetterment by the government, to the point now that Republicans speak blithely of defunding the IRS, as if defunding the government and enabling vast tax avoidance consitutes the most natural and virtuous motivation that anyone could imagine. And the gross over-simplifications that Friedman engaged in, his rhetorical excesses, are reflected in more general anti-intellectual trends like the denialism and warfare waged by the right against climate change, among many other topics of urgent and common interest. He, Nobel Prize winner that he was, disastrously debased our intellectual debates on politics and economics. His narrative framing (and that of the whole Chicago school) shaped a generation and more, misleading us into false certainties and terrible policies.

Now, our institutions are in tatters, given that half of our political system is in open warfare against the very idea of productive regulation of economic affairs and a positive role for the state in managing elementary unfairnesses and corruptions that are mounting across our political and economic systems. No wonder that on the world stage, our system is no longer in the vanguard, but is faced with a fundamental challenge coming from states (principally China) whose political systems remain in the driver's seat in managing social institutions, including economic institutions of all kinds, even while harnessing markets in extremely successful ways. 

The question is not whether the government is good or bad, or whether corporations are good or bad. Both institutions have critical and positive roles to play in our prosperity. Both are tools, not ends in themselves. Both need rules to operate effectively- government to be refreshed (via elections, education, research, and new talent) by ever-expanding public perspectives on how society can be improved, and business by an active set of institutions and rules set down by the government to channel all that greed to productive directions instead of the socially destructive directions it inevitably takes when rules are absent. (See Haiti, post-war Iraq, and Afghanistan for examples.) Indeed, it is not going out on a limb to state that business people who spend their time railing against regulations, legal strictures and other institutions designed to make economic markets fair, socially responsible, and productive are not really interested in business at all, but in plunder.

"Because there is a widespread prejudice among many neo-classical economists that simply an absence of government intervention is a sufficient condition for good economic performance in a particular market, it is important to stress that the performance characteristics of any market are a function of the set of constraints imposed by institutions (formal rules- including those by government- informal norms, and the enforcement characteristics) that determine the incentive structure in that market. As noted in the discussion of institutional change in chapter 5, if the incentives reward piracy then that will be the outcome. Any economist who doubts the importance of this observation has only to examine the characteristics of various factor and product markets in Russia in the 1990s to be convinced that it is the incentive structure derived from the institutional framework that is decisive. The rash of entrepreneurial malfeasance in large U.S. corporations in 2001-2 has reflected the evolution of the institutional framework that has altered relative prices to provide incentives for such anti-social behavior."  p.77

 

• Notes on China's economic trajectory. Institutions will be the main determinant.
• Vaccines? Schmaxines!
• Democrats- and the planet- have a problem in coal country.
• What is it with Republicans and basic health & decency?

Where Does Surplus Value / Profit Come From in Capitalism?

Marxists say it is stolen from the worker. Capitalists say it comes from risk-taking and managerial work. Who is really doing the work?

One of the pillars of Marxism is that capitalists steal labor from workers. All profits come from excess labor done by workers by the sweat of their brow, which capitalists, through various nafarious means, appropriate for themselves. The workday, for instance, is an artificial construct. What if all the necessary work could be done in three hours? Well, the labor agreement means that the employer has the right to eight. Therefore, employers extract as much value as possible from that time regardless was really needed to fulfill the actual job- value that ends up as profit in the pockets of owners, who do no work at all.

On the opposite side, Chicago school economists hold to a theory of marginal value, where every factor in production is fairly paid for its individual contribution, through the magic of the various markets- commodity, labor, financial, etc.- that they come from. Each of these markets is assumed to be efficient, thus rendering each input to production fairly bid for its contribution, and leading also to a dynamic re-ordering of production systems when conditions change, such as when some inputs become scarce (and their price goes up), or new technologies expand the availability of other inputs, like, say, computation power.

It should be obvious that each of these theories is a fairy tale, (a panglossian one in the neoclassical case), heavily motivated by ideology, while carrying grains of truth. Labor markets are not efficient at all, and businesses work night and day to keep them that way. At the same time, businesses capture profits from countless other streams than the exploited labor of their workers. And in fact, the whole purpose of business is to exploit miss-priced market opportunities- otherwise profit could not exist.

A recent pair of posts on Bill Mitchell's blog delved into the Cambridge controversy- an economist's spat of the early 1960's which was formative in left-wing economics. Many tangential issues came up, such as whether economic growth is more demand-limited or supply limited. But it also dealt with issues of the value of capital, the source of profits, and the accuracy of marginal value theory. To summarize rather brutally, left-wing economists from Cambridge, England argued that business profits were not market-based, but based on social and power relations, cultural tradition, and many other factors besides the markets. Economists from Cambridge, Massachusetts (MIT) argued a classical theory that profits were based in marginal theory on all the market ingredients, and particularly could be approximated by the current interest rate, representing the default alternative to business investment- that is, the marginal value of capital.

The result of the controversy was that the British school successfully pointed out some flaws in the American analysis, which the Americans admitted, to the effect that the general profit rate does not always follow capital intensity, and nor does the individual firm's investment schedule necessarily follow the logic of interest rate-driven margins either. From this molehill, the left made a triumphant mountain, while the mainstream regarded it as a minor hiccup from their ever-more baroque modeling of perfect markets and ideal economies.

Joan Robinson, principal proponent of the Cambridge England end of the Cambridge controversies.

All that said, it is worth being more specific about where profit comes from, and here I confess to going off the reservation of economic convention. While stealing extra labor is surely one of the time-honored methods of making a profit, it is far from the only way. Indeed, businesses can be seen as miners, always on the hunt for those special gems in the environment that cost less than they should, or can be sold for more than they cost. And the opportunities of this sort are endless in variety and scale. 

• difference between supply and demand
• difference between efficient producers and inefficient
• difference between using family members and paying workers from the labor market
• difference between dumping toxic waste and disposing it properly
• difference between hiring an amoral accountant and a lawful one
• difference between buying lower grade inputs for manufacturing
• difference between lying to customers, or not
• difference between running marketing campaigns, or not
• difference between paying taxes, or not paying taxes
• difference between suing competitors successfully, or not
• difference between buying competitors or competing with them
• difference between doing research to find new technologies, or not spending that money, or stealing that technology
• difference between lobbying the government successfully to make protective laws, or not

The scope for finding  money and making profit goes far, far beyond the conventional notion of arbitrage between capital goods and interest rates. Labor is also only part of the picture. Being a typically large part of most company's costs, its treatment and mistreatment is, however, an endlessly fruitful area for losses and gains, not to mention wider social tension. Money and profit can be found under any number of rocks, which is where the mantra of a "business model" comes from. Everyone and every business has some angle by which they make a living.

Are these gems of profit fairly priced in their factor markets? Don't be ridiculous. A coal company only makes money because coal is free. The earth makes no contracts, and nor does the air for the pollution sent up by the power plant that burns the coal. Turning free things, like enslaved or cowed labor, or personal data, or natural resources, or computer power, or shady accounting, or corrupt laws, into money, is the essence of "business models". Finding a way around markets, by collusion, by substitution, by doing without, by corruption, even by clever new technologies, are a business person's top priorities. So not only are markets, when they are used, hardly "fair" in any financial or social sense, but they do not begin to address all the sources of business profit or return to capital.

We can grant that most of this work of finding profitable gems is done by the capitalist or her managerial minions, thus should be accounted to the returns of capital, not to wages stolen from workers. Only in the classical mass industrial enterprise where the raw material costs are negligible and labor is the overwhelming factor would these converge into the same thing as envisioned by Marx. (Though the modern fast food industry, and gig "economy" come to mind as well.) Some of these gems can be valued financially, and can be regarded as capital, obtained via savings and investment and even competitively priced in a marginal accounting. But many cost nothing, and characterize the pursuit of business as more than a dry exercise in accountancy or economics, but rather as a cultural mode, descended from a long tradition of opportunistic ownership / exploitation / employment of others, of technological innovation, trade, and plunder.

Not to put a fine point on it, business is about greed, and in its natural state reverts to rapine and pillage. The Vikings were consummate businessmen, converting earnings into capital- long-boats and other weapons-, which were the backbone of their centuries of pillage all over coastal Northern Europe. Today, we can see a similar process in Afghanistan. The Taliban leverages ruthless terror into power., plundering as it goes along. They can then tell everyone how to live, collect the taxes, and run their many businesses, corrupt or not. 

Whether their state is "business-friendly", their example points to the intertwined nature of state systems and business systems of exploitation. States set the rules, in the ideal case driving business from brutal mafia and gang activities, which are generally socially destructive, if not entirely zero-sum, towards level and transparent playing fields that are at least somewhat constructive, pulling their profits from the mute vaults of nature and its resources instead of from social oppression. But all this depends on the wisdom and foresight of the state. Many "business model" gems mentioned above involve skirting the law, or engaging in activities the law has not even (or yet) contemplated, to make a buck. There is a constant arms race going on, between the "innovation" of private greed, and the capacity of the state to conceptualize, measure, and legislate against new areas of long-term harm. When the business class and Republicans bleat about taxes and "freedom", they (and their pet economists) are explicitly taking one side of this conflict, the side of irresponsible regression to unregulated, irresponsible, and destructive styles of "business". 

• Ready for the Rapture?
• What's happening in the lumber business.
• Is Facebook a state?