By Peter “Shotgun” McDonald, ‘11
This is really long, but you’re going to read it anyway. If you think it’s rambling and pretentiousness, congratulations. I kind of agree with you. There’s no need to leave a comment indicating as such.
We are people of this generation, bred in at least modest comfort, housed now in universities, looking uncomfortably to the world we inherited, attending a university that helped create it, and capitalism is some bullshit.
When we were kids the United States was the wealthiest and strongest country in the world: the proprietors of a technological revolution, prevailers of the Cold War, an initiator of a mass cultural/entertainment force that we thought would distribute American influence throughout the world. Freedom and equality for each individual, government of, by, and for the people, of both the corporeal and corporate variety, — these American values we found good, principles by which we could live as people. Many of us began maturing in complacency.
This month will mark the fiftieth anniversary of the Port Huron Statement. Anyone who says that college students are incapable of understanding the complexities of the modern world has not read this statement. Whatever we understand to be the 1960s would not have happened without it. Two days after May Day, a panel of activists brought together for the sixth lecture in the Occupy Art series argued that radical change was not only possible but necessary, and there was no need, indeed no time, to wait to act toward it. This week, hundreds of students will take exams on economic models created in an era when phrenology and phlogiston were still accepted parts of science. Last month, JP Morgan lost $2 billion of federally-insured money due to “errors, sloppiness and bad judgment” made by zealous believers in the free market. Last week, the same Occupy Art class taught students about Stanford occupations and the fight to create the CSRE department. Right now, a $700 trillion derivatives market is purported to exist. On April 23, the editorial board for the Stanford Daily argued that “classes that promote social engagement…should occupy a minority rather than majority of the liberal arts curriculum.” On May 18, that same editorial board argued that “it would behoove Stanford activists to go beyond the Stanford culture as an explanation for student disinterest,” arguing that activist culture is as much to blame as complacency for our student body’s lack of social engagement. Right now, 50 million people lack health insurance in a market that is efficient. Our complacency is not just mature, it’s aged, like a twelve year scotch, rich in its subtlety.
Fifty years ago, The Port Huron Statement assessed the mood on college campuses as such:
“Students don’t even give a damn about the apathy,” one has said. Apathy toward apathy begets a privately-constructed universe, a place of systematic study schedules, two nights each week for beer, a girl or two, and early marriage; a framework infused with personality, warmth, and under control, no matter how unsatisfying otherwise….But apathy is not simply an attitude; it is a product of social institutions, and of the structure and organization of higher education itself. The extracurricular life is ordered according to in loco parentis theory, which ratifies the Administration as the moral guardian of the young. The accompanying “let’s pretend” theory of student extracurricular affairs validates student government as a training center for those who want to spend their lives in political pretense, and discourages initiative from more articulate, honest, and sensitive students. The bounds and style of controversy are delimited before controversy begins. The university “prepares” the student for “citizenship” through perpetual rehearsals and, usually, through emasculation of what creative spirit there is in the individual.
The academic life contains reinforcing counterparts to the way in which extracurricular life is organized. The academic world is founded in a teacher-student relation analogous to the parent-child relation which characterizes in loco parentis. Further, academia includes a radical separation of student from the material of study. That which is studied, the social reality, is “objectified” to sterility, dividing the student from life — just as he is restrained in active involvement by the deans controlling student government.”
Six years later, the students of San Francisco State University went on a strike that led to the creation of the first ever School of Ethnic Studies.
We like to think of Stanford as a hotbed of student activism, but student activism can be defined in either two ways: as activism for students or as students engaging in activism. Coordination of speakers and film showings, even films of a radical nature, the gentle pressuring of student affairs officials to adopt progressive student-life policies, the holding of forums, even petitions for divestment all are great work in demonstrating the diverse and open atmosphere of Stanford, the Greatest Place in the World, the Second Happiest Place on Earth. The narrative of Stanford as Disneyland, though, is predicated on the idea that no one here would actually do anything. The university permits and funds a group called Stanford Students for Queer Liberation safe in the knowledge that the Stanford Blood Center will remain unmolested in its continued refusal of donations from homosexual men. It allows a group called Stanford Says No to War to exist with the understanding that the Hoover Institute will remain secure in its standing (none of which is to degrade the work those groups do, by the way, and I admit, of all the times I have donated blood, I have never mentioned this as an issue). Activism for students allows for slightly-deeper-than-cosmetic changes to the undergraduate experience, provides a sense of personal fulfillment, and teaches students valuable skills to be used in their potential professional activism future, but it leaves the structures that shape that experience in the first place unchanged.
Economics Is Indoctrination
Right now, three majors at Stanford that aren’t economics require the taking of introductory economics courses. The three majors that that require introductory economics are urban studies, public policy, and international relations, with political science accepting introductory economics courses as substitutes for introductory political science courses. Anyone who wants to major in something that has to do with reshaping society in a governmental framework has to learn, has to be indoctrinated in, the study/ideology of introductory economics. If econ is a science, then its instruction is the teaching of facts. If econ is an ideology, then its instruction is indoctrination. Anyone who wishes to do governmental work via his/her/per Stanford education must adopt this ideology or face a failing grade.
Science is “knowledge or a system of knowledge covering general truths or the operation of general laws especially as obtained and tested through the scientific method and concerned with the physical world and its phenomena” according to Websters. Economics, then, is a science that studies “how people deal with scarcity,” according to Economics by John Taylor, you know, the retails-for-$200 book that everyone taking introductory economics must buy. Economics, if it is a science, must concern itself with the physical world; it must describe how the world actually works. Otherwise, it is a pseudoscience, an ideology that masks itself in scientific language in an effort to gain legitimacy, and in order to be able to dismiss its critics as factually wrong. You would not read this piece if I deconstructed Economics in total. Instead, I will focus on three ideas that make up the core introductory economics: the supply curve, the demand curve, and the idea of equilibrium. These ideas are fundamentally flawed, do not describe the world as it actually is, and reveal the insidious ideology that allows people to justify the endless exploitation and parasitic growth that are defining features of capitalism. Yes, it’s like that. If you already understand how introductory economics is bullshit, then you can skip this part.
The Demand Curve
Demand is a very strong word. It conjures up images of lines snaking three blocks around the Apple store, or people trampling over each other at a Wal-Mart at 6 AM on Black Friday, but those instances are exceptions. Of all the things you’ve bought over your life, how much of them have you actually demanded? Half the time, you don’t even want it. Who walks into a store with a demand for batteries or soap or toilet paper? Of all the shit that gets bought and sold in this world, how much of it is a function of people demanding that they have it? The language of “demand” assumes that the need for a product was there before the firms started supplying it. Did anyone demand the existence of the Doritos Locos Taco, or the Perfect Pancake? Do the farmers in Africa that are required to use Monstanto’s patented seeds demand to do so? OK, you might say. No one literally demanded these things, but the word “demand” exists as a metaphor for describing consumer preferences, for willingness to buy. That’s all well and good if you’re talking philosophy, but economics is a science. There’s no room for figurative language in science; things have to be described as they are. If you aren’t talking about situations where people are demanding things, then you shouldn’t call it demand.
The demand curve slopes downward, indicating that consumers will always purchase more of something the less it costs, a proposition which seems on the up and up, but the explanation of how we get that demand curve becomes mad problematic. According to Taylor, the market demand curve comes from the aggregation of all the demand curves individual consumers of a certain good. The individual demand curve is the graphical representation of a person’s marginal benefit when he/she/ze engages in utility maximization (we’re in chapter 5). There are two major problems with this part of the model.
First, the individual demand curve doesn’t make any sense. Figure 5.2 shows a table listing the amount of utility a person gets depending on the combination of pounds of grapes or bananas he/she/ze has. This is some Bentham-ass shit. Now, I love Bentham (except for the whole panopticon thing), but the prospect of literally trying to calculate utility for a person is laughably ridiculous, and this table reveals exactly the episteme from which the ideas of neoclassical economics originated. Have you ever calculated the combined utility of any two goods? Do you know anyone that has? Remember, this is supposed to be science here.
Furthermore, by Taylor’s own admission, the word “utility” doesn’t mean usefulness in an economics standpoint; it means consumer preference. An item is only as useful as much as someone wants it. You start to see where capitalism gets its ethos, do you not? Consumers seek to maximize utility given their budget constraint. And what of the billionaires that spend with impunity? Do their buying practices have no measurable effect on the economy, or are their decision-making processes so complex that that they can never be quantified because they’re people and not numbers, unlike the plebes? (Forgive me for my divergent snark). “Utility maximization,” though, is the fancy economist term for the idea that motherfuckers are greedy and want as many things as they can possibly have, for free ideally.
At no point in the theorizing of human behavior (at least in the intro class), do economists allow room for the idea that maybe you wouldn’t buy 1000 Doritos Locos Tacos if they were only one tenth of a cent, or that we as people are motivated by anything other than selfish greedy desires and that those behaviors have a significant effect the distribution of limited resources. And so, the individual demand curve always slopes downward, except when it doesn’t because of the income effect, or when you pay more for the 20oz Coke because you don’t want two liters of soda even though it’s twenty cents cheaper.
Second, the market demand curve doesn’t exist. It is in practice impossible to add up the demand curves of all possible consumers. The market of any particular good is never defined in small enough terms, especially in the era of global capitalism. Do the individual demand curves of all seven billion people in the world make up the market demand curve for Coke? Only in the agora of a polis would concrete measurements be possible. But fine, let’s assume ideal conditions, that old loaded hobbyhorse of economists (for a science, they make more excuses than even sociology). Even if one could somehow determine the individual demand curve of every possible consumer of a good to make a market demand curve, that bad boy’s not just gonna always slope downward. Under econ, all consumers are created greedily equal. Remember the income effect though? If one were to add up everyone’s individual demand curves, across the spectrum of incomes and budgetary constraints, the income effect would bear itself out on the demand curve. You’re putting the people that only shell out for single-barrel bourbon in the same curve as the homeless alcoholics who only buy bottom-shelf in the market for whiskey. The result is more of a spastic sine wave than a smooth half of a hyperbola. So, the demand curve, not really workin’ out.
The Supply Curve
But fine, even if the mathematical construction of the demand curve is a farce, the general idea that people want to buy as much shit as possible for as low a price as possible is one that seems to have traction. I can see the argument for the downward sloping demand curve, even if it requires some trickeration. Economics isn’t a science, it’s an art, right? If the demand curve were the most egregious part of the supply and demand model, then maybe I could live with it, but the supply curve, oh the supply curve. The supply curve has always been a much harder sell for econ students, but it’s the insidiousness of the convoluted explanation for the upward-sloping supply curve that takes it out of the relatively harmless territory of political science or game theory and puts it more with the likes of alchemy or race science.
The theory of the supply curve is one of the great myths of modern Western society, like the American Dream, or the benevolent colonizer who actually really cares about the native population. If you’ve taken 1A, you know how this fairy tale goes. In perfect competition, each individual firm is a price taker. The all-powerful consumers have set a price that the puny, insignificant firm has no influence over. Because we are still in the days of cottage industries, the marginal cost of producing an additional good only goes up. Economies of scale? Ha! What does this look like, inductive reasoning?
Firms are always profit-maximizing because this is capitalism, which means that motherfuckers are always as greedy as possible (remember, greed is a rational decision). However, they are also humble small firms above moral reproach, which means they decide to maximize profit by setting the price equal to the marginal cost of a good. The point wherethat marginal cost is the same as the price set by the consumers dictates how much that firm produces, and the wonderful seductive dance of capitalism is afoot. The next time you have a job interview at a place that makes things, ask to see their marginal cost curve. I’m sure it’s just on hand.
Take an imaginary trip to the supermarket. If you don’t hate math, go add up the cost of all the ingredients necessary to make one cheeseburger. Throw in whatever the minimum wage is for the state of your choice, remembering that McDonald’s employees can make twelve burgers in one minute. The result will be far lower than whatever the marginal cost of a Quarter Pounder is, even if you throw in the fixed costs of all the equipment. Now, go to the toothpaste aisle. Colgate Total is like four times the price of Aim. Toothpaste is all pretty much the same, just look at the active ingredients. How do they stay in business? No one has a monopoly in toothpaste, but given their size and resources, how can anyone claim that Colgate-Palmolive or Procter & Gamble are price takers, especially when the price goes up every few months? And given the nature of industrial production, how many firms’ marginal cost curves only slope up? Indeed, the whole idea of marginal cost doesn’t even exist for most firms. Remember, economics is a science.
The idea that multibillion dollar corporations are slaves to consumer demand, that they do not have complete autonomy over their production levels and their prices, is extraordinarily corrosive toward any idea economic justice, but we know that neoclassical economics doesn’t really care about justice, as evidenced by its exaltation of equilibrium.
Because economics is supposed to be a science and not an ideology, equilibrium gets to hide behind the passivity of mere existence. Economists never have to give a moral or social argument as to why market efficiency should be one of the highest priorities of a society; they’re just telling you what efficiency/equilibrium is, and it’s your fault if you want to go against science.
The supremacy of equilibrium is not a scientific principle, though, because equilbrium is an artistic construction, a neat little graph that lets us believe that our current system of global capitalism is perfectly equal and equally beneficial to all involved. The supply curve and the demand curve are the same size. They meet in the middle. The price is at equilibrium. Everything is right with the world. Nobody parks in two parking spaces. Customer service is helpful and responsive.
Hidden in the model of equilibrium, though, are the ideological assumptions that turn socialists into capitalists, that turns “help the poor” into “cash rules everything around me,” that convinces people that it is a socially beneficial act to work for Goldman Sachs. Economists generally don’t like the word “equality,” but they love to traffic in its milieu. The basic premise of any intellectual defense of capitalism is that consumers and producers are on an equal playing field.The organization of firms in an industry is quite real, active, and can border on oppressive. Producers have industry associations, chambers of commerce, professional lobbyists, billions of dollars in tax breaks, and billions of dollars to spend on marketing, which sometimes includes neurological research. Consumers have Consumer Reports, and an assumption of greed. This discrepancy is irrelevant in the minds of neoclassical economic ideologues because, well, just look at the model. Isn’t it pretty?
According to Taylor, the model is good because of the “first theorem of welfare economics.” Pareto efficiency maximizes welfare. What is an efficient market,? An efficient market is not one where everyone’s needs are being met. An efficient market is one where no resources are being wasted. An agreeable statement on the surface, but it also betrays the fundamental fallacy of neoclassical economics in the twenty-first century: it still presumes that the scarcity to be studied is a scarcity of supply and not demand. The central problem of economics and businesses today is not how you distribute limited resources, but how you get people to buy all the shit you’ve already made. Or should I say, it’s the central problem if economics is supposed to be reflective of one’s personal experience, but it’s not like we’re dealing with science here, right?
The idea that equilibrium is the socially optimal solution works fine for stupid shit, like Hollywood movies, NERF guns, or iPhone apps, but for things that generally regarded as human rights or obligations of a society, like housing, food, health care, and education, an efficient free market will never, ever work at providing everyone with what they need. Econ doesn’t care though. It’s just putting forth ideas and demanding that you learn them without having to take real responsibility for their implications. That doesn’t mean they hate poor people, in the same way that an anthropologist wasn’t racist just because he/she believed in race science. After the Great Depression, after the financial crisis, intransigent economists insisted that the model isn’t broken; it just needs a little tweaking. They will maintain this position even as the Euro falls apart, as the student loan bubble bursts, even if the entire economy around them is crumbling and people are raiding supermarkets. The free market is never wrong. What do we do, as students who love critical thinking, who attend a university charged with promoting the public welfare? The answer is simple: Occupy the Econ Department.
But Isn’t Occupy Dead?
The word “occupy” is contentious at Stanford. I know. I have received your derisive, condescending laughter sitting in Meyer, having the gall to occupy Stanford’s only public space. This is an elite institution. The word “elite” is not just a synonym for very good. Stanford’s culture is one of the elite. Its mindset, its episteme is one of the elite, the ruling class. Here we create the future leaders of the world; here we create the ruling class. Even in a democracy, even in America, even in Silicon Valley, the ethos of the monarchy, of an aristocracy, remains, even if in a vestigial sense. Global hegemony doesn’t create itself; the universe naturally moves towards entropy.
And so, I get it. I know that anything relating to a populist uprising is met with an ostensibly objective dismissal of not being practical, of not being the best option. Here, we are told, the best way to make change is to work within the system because here is where the system is created. The thoughtful son of a king grows up and sees all the inequality and suffering around him at the hands of his father’s government. At some point, someone has to make a convincing argument for him to believe that it’s ok to continue the monarchy, that it is in fact ok to work at Goldman Sachs or Chevron, that it is ok to go into politics with anything other than an explicit goal of restoring the system to the people, that it is ok to go into international relations with anything other than the explicit goal of ending all wars as soon as possible. Billions of dollars, thousands of lives, dozens of possible histories are dependent on the son of the king, or you, agreeing with this argument. If he had the wrong conversation with the wrong bum on the street when touring the countryside, the whole monarchy is fucked.
Right now, 250,000 Quebecois students are on strike (though things are relatively quiet at McGill, the Harvard of Canada. It’s because the movement is full of stupid people, right?). Neoliberalism, the name of that argument, is quaking in its boots. It’s not a very good argument. The clashes on the streets of Montreal are the ones that get YouTube views, but the real clash, the clash that will endure, is one of ideas. And when I say clash, I mean everything short of literally storming and taking over the econ building.
Open resistance against the teachings of neoclassical economics is the order of the day. I am not the first person to argue this. These models started being outdated at the dawn of the Industrial Revolution. Their proclamations of human nature, made under the pretense of scientific authority, predate even psychology. Are my critiques comprehensive? No. No they are not. I never made it past Econ 1B. Any objectivist seeking to tear apart my criticisms for the sake of a quick ego boost could probably do so. I may not entirely understand the models, but the models, like our financial system, are designed to be infinitely complex, in order to insulate themselves from fundamental criticism, such that no one can ever fully understand them enough to fundamentally change them from the inside.
At Stanford, all structural change must take place in the context of “constructive dialogue.” Indeed, until the age of cable news, politics, carried out among the elites, always took place in the context of gentlemanly agreements, always hiding the institutional violence and power dynamics that happened underneath it. Statesmanship, and all that. The nobility were noble. When I tell people that the way we study economics needs to change, they agree, but they don’t see why a protest movement is necessary. The last lecture of Occupy Art covered occupations at Stanford, of the hunger strikes and occupations of the president’s office that were necessary to create the Comparative Studies in Race and Ethnicity. Despite what the editorial board of volume 241 of the Stanford Daily may believe, activism in the classroom is necessary.
The current state of academia is such that it is ok with a mild form of corruption as long as nobody’s outright lying about things. Remember Inside Job? Academics are hired to provide intellectual defenses of dangerous practices of corporations, intellectual defenses that would probably get a C if you wrote them. Neoclassical economics is a system created by white patriarchy for white patriarchy, a system that needed slavery to gain legitimacy, and it is not a science. The only function of its continued teaching is to promote an ideology, to “think like an economist.” A great deal of interest and money is vested in the continued teaching that producers and consumers are equal, that compassion and empathy never bear a significant effect on the distribution of limited resources, that we are all just greedy selfish motherfuckers. The changes need to come about can not just come through constructive dialogue, through passive suggestions, through not calling it out for the obsolete psuedoscience it is. It is only as academic institutions felt real pressure from the outside that they began to make substantive changes. Constructive dialogue has its place; I do not seek to abolish the economics department, but any changes to the way we teach economics that are achieved solely through “constructive dialogue” will be cosmetic only.
But do we have to occupy? What does that even mean?
One of the more telling discoveries I’ve found since the beginning of Occupy Wall Street is that running a social movement is apparently just like being the head coach of a professional football team or directing a movie; anyone thinks they can do it. The armchair criticism has never been helpful; Occupiers are quite aware of the movement’s shortcomings. Anyone who wishes to make change needs to stop watching reality television, get off their asses, and go make the movement happen themselves. I understand what I have called for. A campaign to fundamentally change the way economics is taught in this country would require multiple years of complex and innovative organization, extended comprehensive criticism, but above all, it needs two things: directly democratic assemblies and occupation of space.
When I use the word “occupation,” what I mean is a continued and concerted presence that inherently seeks to protest in and around the economics department. What many of the armchair critics of the Occupy encampments failed to understand is that park regulations or arbitrary health concerns aside, the encampments were one of the first times in recent American history that public space has been used for its original purpose, for the gathering of the public to discuss public affairs. More importantly, those occupations served as a signal. For the first time, if a space alien were to visit American cities, that alien would understand that we understand that all is not well with our systems. Physical presence is as important as intellectual credence when it comes to demonstrating one’s opposition. An occupation of the economics department would not only provide that presence, it would also provide a space where anyone can come together specifically to engage in critical discussion of economics. It will be those critical discussion that can lead to the formulation of alternative theories, of a true replacement to neoclassical economic theories. It will be the place where you know to go if you want to be part of the revolution (Oops, sorry. I forgot that word is verboten around here.) An occupation can take many forms, depending on the reaction one wishes to achieve from the proper authorities, varying from a semi-permanent encampment to just a table and signs. Ultimately, the point is to give the place a sense of significance within the movement, a la Tahrir Square (yes, I did just make that comparison. The level of change required is about the same). Moreover, occupying the economics department instead of White Plaza, the university’s officially designated protest spot, will show the specificity of this protest movement and will facilitate dialogue with members of the economics department themselves, so you can hear John Taylor explain to you why you’re wrong himself.
Occupation, though, is only a tactic, not an organizing strategy. When asked how they were able to mobilize hundreds of thousands of students to strike, leaders of the Quebec student movement pointed to the directly democratic student unions. Directly democratic methods of organization are the only way to ensure that the movement is actually of the people. The prospect of direct democracy is scary at Stanford, because we are the elite, after all, but for those who are skeptical, I merely say: the ASSU. Directly democratic assemblies provide structural checks against co-optation, against people using the political process for their own personal gain. They provide an open access point for anyone who wishes to get involved. All other forms of political structures are just sophisticated estimation.
“They didn’t know it was impossible, so they went ahead and did it”
At Stanford, we love the cult of the entrepreneur, and only the cult of the entrepreneur. We praise leadership and self-determination, except when it comes to activism. We tell people they’re here to change the world, as long as they do so in a way that fits into the existing capitalist framework. When it comes to activism, people are too scared to take anything resembling radical action, afraid of what an arrest record might mean for their medical school application, terrorized by the possibility of a trip to Judicial Affairs. When Occupy first showed up on campus, it was all deference. People became dismayed by the lack of action and then walked away, without ever trying to take the action themselves. A great deal of us has the capability to lead a movement, but occupying the economics department won’t look good on a resume.
It’s finals week. I get it. You’ve all got some otherworldly-ness going on during the summer. Why am I writing this statement now? The beautiful irony of academic institutions in the 21st century, the weak spot on the final level boss, is that it cannot deny the power of an effective argument. All around Stanford, there are people who try to shame others into inaction, saying that the institution is above real criticism because of its financial aid program, or because of the Haas Center, and that you need to understand the privilege it is that you are here. Fuck that. Flip that thing and reverse it. Those people who shame you into inaction are the same people who tell the son of the king that the plight of the people are not his problem, that he should shut up and ascend to the throne already. Student activism only, not students engaging in activism. I am writing this statement because before we all depart for the summer, before the institution presses the reset button and we all go back to thinking about our own careers, we need to take one step to make sure that not everything gets to continue as it was.
Stanford is supposed to be an innovator of education, unless that innovation upsets the Silicon Valley neoliberal gravy train. People seem to care about what we do though. Any change we make will make an impact the nation, and the world, over. Y’all are smart, right? This is something we can do.
I don’t have all the answers, but it’s frankly ridiculous to argue that I am supposed to. I only ask for one thing: if you are taking a final exam in introductory economics, use the back pages of that blue book to express your concerns. For any way forward, I only offer humble means: a googlegroups list with open access, email@example.com, and a time and place: Saturday June 9, 10:15 PM in the courtyard in the back of the Stanford Economics Department, 579 Serra Mall. This is some Open Space Technology stuff. Whoever shows up are the right people. I ask for this one meeting to provide a chance to collaborate and organize over the summer. Next fall, it should not be business as usual for the economics department. As students, for a democratic society, we must be committed to stimulating this kind of social movement, this kind of vision and program in campuses and communities across the country. If I appear to seek the unattainable, it has been said, then let it be known that I do so to avoid the unimaginable.
Peter was that guy in Meyer who made you think before you use the stapler. Before you even start, he’s going to have a job next year, but that doesn’t mean he’ll be causing any less trouble.