It's the Labour Theory of Value, stupid

In Libertarian Dialectics and in other comments I have made on my blogs I have challenged what I call the price, distribution, production economic model of the Austrian School of Economics, Von Mises and Hayek, and their heirs at the Chicago School of Economics, Friedman et al. It is also called neo-classical economics, what could also be called liberal economics.

This is why I refer to the majority of right wing Libertarians, as liberaltarians, those who embrace the supply side economics of these schools. These characters are masques of capitalism as Marx once described their subjective function.

They reject out of hand the Labour Theory of Value, based on a flawed critique of Capital by the Eugen von Böhm-Bawerk, Austrian Minister of Finance, 1889-1904, professor and leader, along with Carl Menger and Friedrich von Weiser, of the Austrian school of economists. Böhm-Bawerk, had a special interest in the theory of capital and interest. Author of several books, including his 1896 work, Karl Marx and the Close of His System, a classic attack on Marxist economics.

The German Marxist economist Rudolf Hilferding, challenged the Austrian school’s dismissal of Capital and of Marx, in his critique of Böhm-Bawerk, In his preface to his critique Hilferding writes:

“The publication of the third volume of Capital has made hardly any impression upon bourgeois economic science. We have seen nothing of the "jubilant hue and cry" anticipated by Sombart. [1] No struggle of intellects has taken place; there was no contest in majorem scientiae gloriam. For in the theoretical field bourgeois economics no longer engages in blithe and joyous fights. As spokesman for the bourgeoisie, it enters the lists only where the bourgeoisie has practical interests to defend. In the economico-political struggles of the day it faithfully reflects the conflict of interests of the dominant cliques, but it shuns the attempt to consider the totality of social relationships, for it rightly feels that any such consideration would be incompatible with its continued existence as bourgeois economics.

The only exception is the psychological school of political economy. The adherents of this school resemble the classical economists and the Marxists in that they endeavor to apprehend economic phenomena from a unitary outlook. Opposing Marxism with a circumscribed theory, their criticism is systematic in character, and their critical attitude is forced upon them because they have started from totally different premises. As early as 1884, in his Capital and Interest, Böhm-Bawerk joined issue with the first volume of Capital, and soon after the publication of the third volume of that work he issued a detailed criticism the substance of which was reproduced in the second edition of his Capital and Interest [German edition 1900]. [2] He believes he has proved the untenability of economic Marxism, and confidently announces that "the beginning of the end of the labor theory of value" has been inaugurated by the publication of the third volume of Capital.”

Hilferding refers to the Austrian School as the ‘psychological” school, which is the correct appellation for the heirs of Böhm-Bawerk; Von Mises, Hayek, Freidman, Rothbard, Rand etc. By merging Randism with Austrian Economics, the Libertarian Right moved beyond Benjamin Tucker, who had accepted the Labour Theory of Value, as had Kropotkin in their Proudhonist fashion. While paying lip service to Tucker as an American Anarchist and father of American Libertarianism, they reject his acceptance of the Labour Theory of Value and instead embrace the anti-Prussian State Socialism straw dog of the Austrian School of Economics.

Ayn Rand’s so called “Objectivism” is NOT, it is subjectivism and her work in philosophy is subjectivist psychology, as Von Mises is in economics. They and their followers embrace the Böhm-Bawerk dismissal of the Labour Theory of Value. As Hilferding says in his chapter on the Austrian Schools Subjectivist Outlook:

“The phenomenon of variations in the price of production has shown us that the phenomena of capitalist society can never be understood if the commodity or capital be considered in isolation. It is the social relationship which these occupy, and changes in that relationship, which control and elucidate the movements of individual capitals, themselves no more than portions of the total social capital. But the representative of the psychological school of political economy fails to see this social nexus, and he therefore necessarily misunderstands a theory which definitely aims at disclosing the social determinism of economic phenomena, a theory whose starting point therefore is society and not the individual. In apprehending and expounding this theory he is ever influenced by his own individualistic mentality, and he thus arrives at contradictions which he ascribes to the theory, while they are in truth ascribable solely to his interpretations of the theory.

This confusion may be traced in all the stages of Böhm-Bawerk's polemic. Even the fundamental concept of the Marxist system, the concept of value-creating labor, is apprehended in a purely subjective manner. To him "labor" is identical with "trouble" or "effort" ["Mühe"].To make this individual feeling of distaste the cause of value naturally leads us to see in value a purely psychological fact, and to deduce the value of commodities from our evaluation of the labor they have cost. As is well known, this is the foundation which Adam Smith adopts for his theory of value, for he is ever inclined to abandon the objective standpoint for a subjective. Smith writes: "Equal quantities of labor must at all times and places be of equal value to the laborer. In his ordinary state of health, strength, and spirits; in the ordinary degree of his skill and dexterity, he must always lay down the same portion of his ease, his liberty, and his happiness." [1] If labor regarded as "trouble" be the basis of our personal estimate of value, then the "value of the labor" is a constituent, or a "determinant" as Böhm-Bawerk puts it, of the value of commodities. But it need not be the only one, for a number of other factors which influence the subjective estimates made by individuals take their places beside labor and have an equal right to be regarded as determinants of value. If, therefore, we identify the value of commodities with the personal estimate of the value of these commodities made by this or that individual, it seems quite arbitrary to select labor as the sole basis for such an estimate.

From the subjectivist standpoint, therefore, the standpoint from which Böhm-Bawerk levels his criticism, the labor theory of value appears untenable from the very outset. And it is because he adopts this standpoint that Böhm-Bawerk is unable to perceive that Marx's concept of labor is totally opposed to his own. Already in A Contribution to the Critique of Political Economy Marx had emphasized his opposition to Adam Smith's subjectivist outlook by writing "[Smith] fails to see the objective equalization of different kinds of labor which the social process forcibly carries out, mistaking it for the subjective equality of the labors of individuals." [2] In truth, Marx is entirely unconcerned with the individual motivation of the estimate of value. In capitalist society it would be absurd to make "trouble" the measure of value, for speaking generally the owners of the products have taken no trouble at all, whereas the trouble has been taken by those who have produced but do not own them. With Marx, in fact, every individual relationship is excluded from the conception of value-creating labor; labor is regarded, not as something which arouses feelings of pleasure or its opposite, but as an objective magnitude, inherent in the commodities, and determined by the degree of development of social productivity. Whereas for Böhm-Bawerk, labor seems merely one of the determinants in personal estimates of value, in Marx's view labor is the basis and connective tissue of human society, and in Marx's view the degree of productivity of labor and the method of organization of labor determine the character of social life. Since labor, viewed in its social function as the total labor of society of which each individual labor forms merely an aliquot part, is made the principle of value, economic phenomena are subordinated to objective laws independent of the individual will and controlled by social relationships. Beneath the husk of economic categories we discover social relationships, relationships of production, wherein commodities play the part of intermediaries, the social relationships being reproduced by these intermediate processes, or undergoing a gradual transformation until they demand a new type of inter-mediation.

Thus the law of value becomes a law of motion for a definite type of social organization based upon the production of commodities, for in the last resort all change in social structure can be referred to changes in the relationships of production, that is to say to changes in the evolution of productive power and in the organization of [productive] labor. We are thereby led, in the most striking contrast to the outlook of the psychological school, to regard political economy as a part of sociology, and sociology itself as a historical science. Böhm-Bawerk has never become aware of this contrast of outlooks. The question whether the "subjectivist method" or the "objectivist method" is the sound method in economics he decides in a controversy with Sombart by saying that each method must supplement the other—whereas in truth we are not concerned at all with two different methods, but with contrasted and mutually exclusive outlooks upon the whole of social life. Thus it happens that Böhm-Bawerk, unfailingly carrying on the controversy from his subjectivist and psychological standpoint, discovers contradictions in the Marxist theory which seem to him to be contradictions solely because of his own subjectivist interpretation of the theory.”

It is this subjectivity, misrepresented as being classical liberal invidualism that underlies the Right Wing Libertarians economic reason de’ etre of reducing capitalism to the economics of prices/distribution/production. It is also their misinterpretation of the market place of capitalism that makes them idealize some sort of laissez-faire utopia without the state. They fail to understand that there is a difference between government and the state.

The state is the judiciary and military power of the old aristocracy adapted by capitalism for its own functioning. Governance, government, is the function of associations of producers and always has been. Even Kropotkin realized this with his analysis of the State, and saw the free association of producers existing in the city state economies independent of any particular feudalist state; in fact it was their crushing that led to the creation of the modern capitalist state. But these associations still governed the market place, by workers control.

“On the other hand the State has also been confused with Government. Since there can be no State without government, it has sometimes been said that what one must aim at is the absence of government and not the abolition of the State. However, it seems to me that State and government are two concepts of a different order. The State idea means something quite different from the idea of government. It not only includes the existence of a power situated above society, but also of a territorial concentration as well as the concentration in the hands of a few of many functions in the life of societies. It implies some new relationships between members of society which did not exist before the formation of the State. A whole mechanism of legislation and of policing has to be developed in order to subject some classes to the domination of others.” The State: Its Historic Role, Peter Kropotkin

Under modern capitalism right wing libertarian “psychological economics” ends up not with a nation of “hewers of wood and drawers of water”, one which produces, but a nation of Fuller brush Salesmen, multilevel marketers and pyramid ponzi schemers. That is the ultimate ideal of supply side economics which sees America evolving into service/distributive based capitalism.

Who is John Galt? Who Cares!

He is not the Scottish author, rather he is a character in the Ayn Rand Novel Atlas Shrugged who declares Rand’s idealist principles of individualism within modern capitalism:
JOHN GALT'S OATH
”The world will change when you are ready to pronounce this oath:
I swear by my life and my love of it that I will never live for the sake of another man,
nor ask another man to live for the sake of mine.”

The Austrian School of ‘psychological’ subjectivist economics, or the ‘what’s in it for me’ school of political economy, deliberately obfusticates the differences between themselves and the Marxist school of political economy, because they have thrown out the Labour Theory of Value, while caring only about the arithmetic of distribution, the supply and demand of the current existing capitalist system. Even in their most radical form of the free marketers or anarcho-capitalists like Bryan Caplan, they still view the world through the eyes of Ayn Rand and her capitalist heroes in Atlas Shrugged and The Fountainhead.

In her work The Fountainhead, which was also made into a movie, her capitalist hero is an architect who builds a monument to himself and escapes society by hiding from it. This is Rand’s individualist politics, the cruel but beautiful isolation of the individual. By embracing capitalisms alienation Rand makes this alienation her banner of individualism. It’s lonely at the top is the sine que non of this ideology.

Toohey's values are totally wrong, from Rand's point of view, but his analysis is almost always correct. "Every loneliness is a pinnacle," he says, like a true Randian individualist [277], and he is one of the few people able to recognize Roark's lonely genius for what it is. Toohey analyzes, in Randian fashion, the indebtedness of the many to the genius of the few, and the inspiration given to the collectivist spirit by the envy that results from that indebtedness [281-82].

The Literary Achievement of The Fountainhead By Stephen Cox

In the end, despite their protests to the contrary, the so called anarcho-capitalists heroes are Enron, WorldCom, and Martha Stewart, while their ideal of themselves is the freebooter pirate like Robert Anton Wilson’s caricature of them; Hagbard Celine in his Illuminatus Trilogy.

In order to avoid seriously confronting their differences with Marxism, Böhm-Bawerk and all his followers since have set up the straw dog of State Socialism, as their definition of Socialism, in particular Bismarck’s Prussian State Socialism which they were familiar with. Even after the successful Bolshevik revolution they still define socialism as any form of state intervention in the economy. In this case they failed to historically understand that Keynesianism was the natural outcome of Fordist capitalisms changing nature once confronted with workers revolution. In their steady state economics of capitalism workers revolution plays no part. They can only define capitalism as a market place separate from the state while capitalism has moved into an epoch of State Capitalism as Marxist Humanist Raya Dunavevskaya describes it.

Overall with few exceptions, such as Murray Rothbard, the Libertarian Right and its Austrian and Randian allies care not one wit for class struggle, since to them it can only lead to state socialism. And here is the rub, to be a radical subjectivist you must understand that the subjects of capitalism are the workers who produce it. As Marx said, both the workers and the capitalists are the subjects and objects of capitalism.

Production does not simply produce man as a commodity, the human commodity, man in the role of commodity; it produces him in keeping with this role as a mentally and physically dehumanized being. — Immorality, deformity, and dulling of the workers and the capitalists. — Its product is the self-conscious and self-acting commodity ... the human commodity.

Karl Marx, Economic and Philosophical Manuscripts of 1844

Capitalism is a system, one that goes beyond its subjects, which is why it must be overcome since the result of its existence is alienation of the subjects who create it through the commodity fetishism it demands of us not as subjects but as ‘consumers’.

The Libertarian Right, the Austrian School and the Randites philosophical economics are restricted to understanding the subject as commodity fetish, they can never go beyond this. In effect their economics and the economics of the commodity fetish is well captured in the phrase; “Those with the most toys wins.”

As I.I. Rubin the Russian Economist writes in his introduction to Essays on Marx's Theory of Value

There is a tight conceptual relationship between Marx's economic theory and his sociological theory, the theory of historical materialism. Years ago Hilferding pointed out that the theory of historical materialism and the labor theory of value have the same starting point, specifically labor as the basic element of human society, an element whose development ultimately determines the entire development of society.[1]

The working activity of people is constantly in a process of change, sometimes faster, sometimes slower, and in different historical periods it has a different character. The process of change and development of the working activity of people involves changes of two types: first, there are changes in means of production and technical methods by which man affects nature, in other words, there are changes in society's productive forces; secondly, corresponding to these changes there are changes in the entire pattern of production relations among people, the participants in the social process of production. Economic formations or types of economy (for example, ancient slave economy, feudal, or capitalist economy) differ according to the character of the production relations among people. Theoretical political economy deals with a definite social-economic formation, specifically with commodity-capitalist economy.

The capitalist economy represents a union of the material-technological process and its social forms, i.e. the totality of production relations among people. The concrete activities of people in the material-technical production process presuppose concrete production relations among them, and vice versa. The ultimate goal of science is to understand the capitalist economy as a whole, as a specific system of productive forces and production relations among people. But to approach this ultimate goal, science must first of all separate, by means of abstraction, two different aspects of the capitalist economy: the technical and the social-economic, the material-technical process of production and its social form, the material productive forces and the social production relations. Each of these two aspects of the economic process is the subject of a separate science. The science of social engineering-still in embryonic state-must make the subject of its analysis the productive forces of society as they interact with the production relations. On the other hand, theoretical political economy deals with production relations specific to the capitalist economy as they interact with the productive forces of society. Each of these two sciences, dealing only with one aspect of the whole process of production, presupposes the presence of the other aspect of the production process in the form of an assumption which underlies its research. In other words, even though political economy deals with production relations, it always presupposes their unbreakable connection with the material-technical process of production, and in its research assumes a concrete stage and process of change of the material-productive forces.

Marx's theory of historical materialism and his economic theory revolve around one and the same basic problem: the relationship between productive forces and production relations. The subject of both sciences is the same: the changes of production relations which depend on the development of productive forces. The adjustment of production relations to changes of productive forces-a process which takes the form of increasing contradictions between the production relations and the productive forces, and the form of social cataclysms caused by these contradictions-is the basic theme of the theory of historical materialism.[2] By applying this general methodological approach to commodity-capitalist society we obtain Marx's economic theory. This theory analyzes the production relations of capitalist society, the process of their change as caused by changes of productive forces, and the growth of contradictions which are generally expressed in crises.

Political economy does not analyze the material-technical aspect of the capitalist process of production, but its social form, i.e., the totality of production relations which make up the "economic structure" of capitalism. Production technology (or productive forces) is included in the field of research of Marx's economic theory only as an assumption, as a starting point, which is taken into consideration only in so far as it is indispensable for the explanation of the genuine subject of our analysis, namely production relations. Marx's consistently applied distinction between the material-technical process of production and its social forms puts in our hands the key for understanding his economic system. This distinction at the same time defines the method of political economy as a social and historical science. In the variegated and diversified chaos of economic life which represents a combination of social relations and technical methods, this distinction also directs our attention precisely to those social relations among people in the process of production, to those production relations, for which the production technology serves as an assumption or basis. Political economy is not a science of the relations of things to things, as was thought by vulgar economists, nor of the relations of people to things, as was asserted by the theory of marginal utility, but of the relations of people to people in the process of production.

Political economy, which deals with the production 'relations among people in the commodity-capitalist society, presupposes a concrete social form of economy, a concrete economic formation of society. We cannot correctly understand a single statement in Marx's Capital if we overlook the fact that we are dealing with events which take place in a particular society. "In the study of economic categories, as in the case of every historical and social science, it must be borne in mind that as in reality so in our mind the subject, in this case modern bourgeois society, is given and that the categories are therefore but forms of expression, manifestations of existence, and frequently but one-sided aspects of this subject, this definite society." ". . .In the employment of the theoretical method [of Political Economy], the subject, society, must constantly be kept in mind as the premise from which we start." [3] Starting from a concrete sociological assumption, namely from the concrete social structure of an economy, Political Economy must first of all give us the characteristics of this social form of economy and the production relations which are specific to it. Marx gives us these general characteristics in his "theory of commodity fetishism," which could more accurately be called a general theory of production relations of the commodity capitalist economy.

Between these two Libertarianisms, there can never be a rapprochement, as those on the right reject the Labour Theory of Value and those of us on the Left (including some mutualists and some free-marketeers) accept the Labour Theory of Value.

Compared to the Labour Theory of Value, all other economics are simply the arithmetic of the market and the calculations of supply and demand distribution of currently existing capitalism. They offer no historical understanding of how we got here or where we are going, they only offer us the steady state of capitalism as it is, as it was, as it ever will be.

This is the contradiction of the free trade argument, since no trade in goods is truly free, each nation of producers restricts access to trade in its own capitalist interests, but in a world of commodity producers (off shore overseas, out of sight out of mind) and a world of commodity consumers (North Americans) then Free Trade is the right wing liberaltarian ideal. With that in mind all we can look forward to sweat shops in space ala Outland, with the lone sheriff being the Randian hero, if John Galt liberaltarians get their way.

The real Libertarian calls for smashing capitalism and its State. For ending the market domination of society and for the free association of producers.

Deconstructing Hayek

I came across this article on the web by Sean Johnson Andrews critical of the Regulation School of Economics that also handily dismisses the Austrian School of Economics so favored by Neo-Conservatives and Right Wing Libertarians.

[Author’s aside: I found it while researching material for Libertarian Anti-Imperialism, ah the joys of research based writing, it takes you off in all directions at once. And serendipitous synergies occur as happened in this case.[1] ]

Andrews study is about cultural production under capitalism, especially media concentration, and the whole article is an excellent read as are his other writings ( I have included a link to his article on blog freedom as a comment to my Blog Freedom or Cyberwar). He asks if bourgeois political economy which wants be taken seriously as a science but what kind of science and what kind of economics? He does an excellent job challenging the neo-classical school of the economics including its most radical wing the Austrian School of Economics from a libertarian dialectical position.

I have excerpted some of his critique from this long article, the whole of which is well worth the read. I have excerpted a small section of his very long article dealing with neo-classical economics of the Austrian and Chicago Schools of Economics as well as the new Regulation School of Economics.

Excerpts From: A Conversation among Bourdieu, Regulationist Economics and Cultural Studies and the way they can help objectify this and other conjunctures

The Science of Culture and the Culture of Science:

From Culture and Political Economy (Spring 2003)

Sean Johnson Andrews

Sean Johnson Andrews Blog on Media

Where, if anywhere, ideology leaves off and science begins has been the Sphinx’s Riddle of much of modern sociological thought and the ruthless weapon of its enemies. Clifford Geertz, The Interpretation of Cultures, 1973

At the present time, scientific effort mirrors an economy filled with contradictions. The economy is in large measure dominated by monopolies, and yet on the world scale it is disorganized and chaotic, richer than ever yet unable to eliminate human wretchedness. Science, too, shows a double contradiction. Max Horkheimer, “Notes on Science and the Crisis,” c.1930

The] neoclassical consensus succeeded in replacing the labor theory of value with one grounded in subjective utility and placed the ideas of ‘marginal product’ and ‘final demand’ at the center while elbowing into the wings the concepts of total demand. With these new ideas [. . .] the economy came to be thought of less in terms of material production and reproduction and more as a logic of human action. (79)

To make matters worse, this is the model of economics that is most strongly believed as rational and verifiable by a great many capitalist subjects.

The same social alchemy is true of economic capital and, like the capital in the scientific field, capital in the economic or symbolic field, legitimated by a hierarchy of producers, is more than just a mode of exchange: it is also a mode of domination.

Regulationist economics is concerned with “the study of the transformation of social relations as it creates new forms that are organized into structures and themselves reproduce a determinant structure, the mode of production”(16). This characterization of the economy seems similar to the Polanyian idea of embeddedness, which he describe in detail in The Great Transformation. In short, embeddedness is a way of giving primacy to one social formation over another. Polanyi insists that before the development of modern market capitalism in the 19th century, “the human economy was always embedded in society”(xxiii) and, more importantly,

The idea of a [disembedded] self-adjusting market implied a stark utopia. Such an institution could not exist for any time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness. Inevitably, society took measures to protect itself, but whatever measures it took impaired the self-regulation of the market, disorganized industrial life, and thus endangered society in yet another way. (3-4)

This is understanding of the relations between the economy, society and the state is, indeed, similar to the Regulationist view, but they tend to posit the agency with the market instead of with society. The concept of a Regime of Accumulation, central to the school, is not concerned with the effect of capitalism on society per se, but rather on the way that society can be best transformed to accommodate capitalism. It could be said that, in relation to Polanyi, they recognize that there are times when the relation between the two is unique. The concepts of a the predominantly extensive and intensive regimes of accumulation indicate this understanding. The former is the regime of accumulation which Polanyi might call “disembedded;” it is “that in which relative surplus value is obtained by transforming the organization of labor; the traditional way of life may persist or be destroyed, but it is not radically recomposed by the logic of utilitarian funcitonalism”(Aglietta, 71). This is the type of accumulation regime, according to Aglietta, which existed in late nineteenth-century America.

The crisis of worldwide depression and the rise of fascism that ensued when this accumulation regime could no longer continue is what Polanyi has witnessed when he says, in 1944, “nineteenth-century civilization has collapsed.” But whereas Polanyi thinks this is primarily the social result of an economic phenomenon, Aglietta describes it as a social phenomenon with economic consequences: “The Great Depression [. . .] was a major crisis of accumulation because the transformation of the labor process itself set up obstacles to valorization. What was at stake in the crisis was the transformation of the conditions of existence on the working class”(95).

What this understanding of capitalism points to is the “progressive, historical role of capitalism”(Lenin, 47) which Aglietta describes as only being fully possible in an intensive regime of accumulation, or some other “set of mechanisms for social mediation that guide the accumulation of capital in the direction of social progress”(Aglietta, 412). The description of he gives of this concept is important because it points to the place where Bourdieu’s understanding of habitus becomes relevant to the Regulationist description of capitalism:

The predominantly intensive regime of accumulation creates a new mode of life for the wage-earning class by establishing a logic that operates on the totality of time and space occupied or traversed by its individuals in daily life. A social consumption norm is formed, which no longer depends in any way on communal life [. . . .] This norm is stratified according to principles that closely correspond to the stratification of social groups within the wage-earning class. The intensive regime of accumulation accomplishes an integration of the two departments of production that makes possible a far more regular pace of accumulation and a far more rapid increase in the rate of surplus value.(71)

Packed into this quote are several ideas that become more fully articulated concepts in the hands of later Regulationist theorists. So, the “mode of life” which Aglietta mentions above, becomes a mode of regulation and the “logic that operates on the totality of time and space” is similar to Alain Lipietz’s description of a schema of reproduction (32-33).

Aglietta describes the major problem of capitalism in terms that are similar to Althusser and the conception of “capital” as quite similar to eponymous idea in Bourdieu: “we conceive of capital not as an eminent entity but as the development of the wage relation. Every major crisis of accumulation is a crisis of the present conditions of reproduction of this relation”(Aglietta, 169). The idea of a “schema reproduction” is something which is meant to stem this crisis in the production relation or the “reproduction of the material conditions of production”(Althusser, Lenin, 127). The schema of reproduction accounts for the relationship of labor, the relationship between departments of production, and the patterns of distribution and consumption which all together form “the skeleton of a regime of accumulation or a mathematical diagram of its social coherence”(Lipietz, 32). This system of relations is not necessarily planned or settled upon before it is implemented, it is just the schema that was “found” to work. And the schema works in so far as there is a “mode of regulation” that is appropriate: “If any schema is to be realized and to reproduce itself for any length of time, there must be institutional forms, procedures and habits which either coerce or persuade private agents to conform to its schemas”(33). Thus the “mode of regulation” is almost identical to the habitus.

In relation to Bourdieu’s capital, which again, Aglietta describes as a development of the relation, capitalism can be conceived in terms of a certain formalization of an economic field. However, there is a highly stratified relation between the people able to accumulate capital and the people who only serve as, what could be called, relational support, for their accumulation. Workers, whose laboring capacity may reward them with symbolic capital within the field of economic relations, are not typically able to accumulate enough of the economic capital (which their work valorizes) to change their position in the field. Thus there has to be a strong relation of domination within the field which encourages a disposition for the worker to continue to play this relational support role when it is clearly more in the interest of the capitalist for him to do so.

For unlike other, more settled sciences, economics has had a difficult history in convincing other practitioners from other sciences that it has the same sort of quantitative verifiability of mathematics or physics. Its status as a social science makes its seem less authoritative among other scientists. On the other hand, its status as a social science having to do with the basic relations of humankind gives its authoritative practitioners a great deal of symbolic capital, even as many of them attempt to disconnect their theories from the messy assemblages of power and production that they are supposed to describe. Friedrich Hayek, whose most famous book Road to Serfdom, was published the same year as Polanyi’s The Great Transformation, went to far as to suggest that the term “society” should be stricken from “our poisoned language” (Hayek, 112-115), making a point of not using the term to describe “our extended moral order” lest he be branded a socialist.

This dimension of the authoritative position of economics is evident enough in common parlance. Nevertheless, an example of an attempt to move outside of the scientific field to accumulate symbolic capital is visible on George Mason University’s home page in iterations such as “Welcome Nobel Laureate Vernon Smith.” As Yves Gringas points out in a short article about the “Nobel prize by association,” she traces a particularly clear case of “social alchemy:” “this so-called ‘Nobel prize’ is an extraordinary case study in the successful transformation of economic capital into symbolic capital, a transformation which greatly inflates the symbolic power of the discipline of Economics in the public mind.”

In 1968, the Bank of Sweden, interested in conferring a greater legitimacy on the discipline of economics, decided to offer a prize to the most innovative and important thinkers in the field and to dedicate it to Alfred Nobel, which was strange since he wasn’t an economist. However, the organizers in charge of the creation of the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel “ had its their own reasons for choosing Nobel. As Gringas tells it:

First, despite the skepticism of some scientists towards the ‘scientificity’ of economics, the Bank managed to convince the Royal Swedish Academy of Sciences and the Nobel Foundation to administer their prize. Secondly, identical procedures for the selection and nomination of the prize were chosen to those of the real Nobel prizes. Of course, the prize money would come from the Bank of Sweden, not the Nobel Foundation, but all the rest would be done exactly as if it was in fact a Nobel prize, up to and including the ceremony of 10 December.

Furthermore, since the full name of the prize is too onerous for people (especially journalists) to say, it became common parlance to call the prize “The Nobel Prize in Economics.” This work of social alchemy meant to solve the problem of the “primitive accumulation of symbolic capital”(Gringas) regarding this prize and its related field.

Of course not everyone has been happy about this. In 1974, when Gunnar Myrdel shared the prize with Hayek in 1974, he reserved his speech to advocate for the abolition of the prize. If Hayek was supposed to be the best an brightest in the field, then he wanted nothing to do with it. Nevertheless, the prize continues, despite the abyssal divide between what are arguably, ideological points of difference within the field itself. Which brings us back to the early 1970s and the intervention which Michel Aglietta was, arguably, attempting to make.

Fordism –or as the theoretical component was better known, Keynesianism—was obviously in crisis since both of the “cyclical” tendencies—stagnation and inflation—were happening at once; Althusser and others on the “New Left” were inspired both by world events and the appearance of any sort of crisis tendency in the capitalist system; and, perhaps more importantly, Hayek had just won the “Nobel prize in Economics” and Milton Friedman and the Chicago school were hard at work turning Pinochet’s Chile into a neo-liberal paradise. Finally, on a monetary level, abandoning the gold standard and replacing it with the “black gold” standard of recycled petrodollars was developing an extension of the financial markets and giving unprecedented control of world capital over to a “stratified oligopoly” of private banks. It was an important moment for economic science because, again, “history has infinitely more imagination than we do.” It was a moment when the flaws of the dominant economic model—and the theories that were supposed to explain it—were showing through. It was a good time to revert to a subversion strategy and, as a graduate student, Aglietta was in the sort of position Bourdieu recommends to make the heretical invention. But instead of saying anything too revolutionary, what he actually did was to begin by make an originally strong set of economic concepts into a set of symbolically legitimate equations: he rewrote the basic arguments of Capital, starting with one that Adam Smith himself would find it hard to contest.

As was said before, by Caporaso and Levine, the labor theory of value, a foundational concept in Marx’s Capital, had been disproven. Caporaso and Levine themselves, in their textbook which purports to explain economic theories, are unable to explain LTV without providing a neo-classical excuse for it. In the section supposedly devoted to the theories of Adam Smith, Ricardo, etc., they do not describe labor theory of value in any detail, but instead revert to the statement, “the theory runs into a number of analytical difficulties, which convinced modern economists working in the classical tradition to build a materialist basis for exchange by employing a distinct starting point also present in the classical theories: price of production”(47). They then go on to explain the changes to they make to equations of inputs and outputs (10t iron + 250 bu wheat + 100 hr labor…): “when labor enters as an input, it is really so much wheat, which went to produce the labor, and enters as an input through its product, the laboring capacity of the worker”(50).

Leaving aside the problems of all the naked, sickly, wheat-fed laborers sleeping on the factory floors and the ethical implications of this revolutionary new crop of wheat that evidently plows, plants, grows and harvests, mills and bakes itself, what is important is that Caporaso and Levine, while trying to present an overall balanced look at political economy, are unable to even consider the possibility that the Labor Theory of Value has any theoretical validity. Instead, it makes much more sense to think of things in terms of some monetary equivalent, the amount of which, in one way or another, “indicates the utility that the seeker recognizes in the materiality of the object sold or on offer” (Nadel, 29).

In other words, even though there have been many theorists in the tradition of Regulationist Political Economy, the dominant groups in the field of economics—especially anyone outside of France—namely the proponents of the neo-classical general equilibrium model taught in every ECON 101 classroom, did not want to acknowledge the possibility of an alternative model for the Labor Theory of Value, even to refute it: to do so would also be to consecrate it and admit that there was a legitimate challenge to the powerful agents and apparatuses, the Departments of Economic theory, all of which have a vested interest in keeping the current model functioning. Not only in terms of the field, which is largely based on these assumptions, but also of the market dominated society in which it operates and for which it provides a placating explanation. As Aglietta says, “If this theory has exercised such a dictatorship over economic thought, it is because it supplies a reassuring vision of society and a justification for the profession of economist”(10).

This, of course, brings us full circle to the central dialectical problem of the need for a simultaneous understanding of the culture of science and a science of culture. The former is something which Cultural Studies has done vigorously but not rigorously. The basic assumption was that one could simply understand scientific or even merely disciplinary claims as ideological cultural productions.

The project of cultural studies is an important one and the cultural significance of economic science is one of the most important ideological investigations we could undertake. There was a time when this type of discussion being engaged. Despite what Murdock and Golding have to say about the problem of “examining the economic base,” Stuart Hall, Raymond Williams and others began to present a system of concepts which attempted to illuminate the dynamic nature and role of culture—starting primarily in its very material nature. As Williams says in Marxism and Literature:

The insertion of economic determinations into cultural studies is of course the special contribution of Marxism, and there are times when its simple insertion is an evident advance. But in the end it can never be a simple insertion, since what is required, beyond the limiting formulas, is restoration of the whole social material process, and specifically of cultural production as social and material.(138)

Williams goes on to begin the project he continues in The Sociology of Culture in which the most basic task “is analysis of the interrelationships within this complex unity: a task distinct from reduced sociology of institutions, formations, and communication relationships and yet, as a sociology, radically distinct also from the analysis of isolated forms”(139). This loose set of concepts—as well as the many others he presents to describe cultural (as normally in the creative and/or artistic sense)—is developed with an eye to make the realm of cultural production describable so that the investigator could then position that process within the production relations.

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[1]

[Author’s aside. This is why I currently run four blogs and over the past decade have had multiple web pages. This log is for longer features, which is supplemented by my site at modblog for news over views of the current crisis state of capitalism and the resistance of capitalisms subjects. It is why my bloglines site has numerous news, activist and alternative news/blogs linked up to supplement my writings, to give an alternative to what is called consensus reality or the ruling ideas or the ruling class. To give readers more research links. And I can blow off some steam at that blog with my Devils Dictionary Redux.

And I have added a new blog this week; Heresiology-for the little heretic in each of us. This is for my other interests in cultural studies, the occult, esoterica, science, crypto science, and all aspects of popular culture, as the saying goes; all the news that doesn’t fit in these other blogs.]

Libertarian Anti-Imperialism

William Appleman Williams

I had come across Joseph Stromberg’s libertarian analysis of Anti-Imperialist American Historian William Appleman Williams, some time ago on the web and had the opportunity to cruise Stromberg’s column at antiwar.com again and thought it important enough to share.

I had not heard of Williams before, and appreciated Stromberg’s introduction to this overlooked American revisionist historian.

I came to appreciate why his socialist critique of American Empire and foreign policy would influence Americans of both the Libertarian Left and the Right. "Radicals have hailed him as a supreme anti-imperialist, while Libertarian conservatives have seen him as the ``second Charles Beard,'' renewing the perspectives of the nation's foremost historian.” says Paul Buhle.

Williams fell out of favour in the eighties and nineties as the neo-liberal ideology steamrolled over its opponents on the left after the collapse of the Soviet Union. Williams however is has not been left as an obscure footnote in history. His work is now considered essential in understanding American Imperialism in the age of Globalization.

With Stromberg’s appreciation of Williams, written in 1999 at the height of Clintons Popular Front War against Serbia, we see libertarian dialectical analysis unafraid to confront a marxian dialectic and appreciate it. Williams insight into American Imperialism became even more relevant as America pursued its new preemptive strike policy post 9/11 against the neo-cons old straw dog Iraq.

An essential aspect of Libertarian Dialectics is the praxis of revisionist history. In this we need no conspiracy theories to understand that the ruling ideas are the ideas of the ruling class, and that theirs is a history of the winners and losers. Our revisionism arises from understanding this dialectic we look at history from below, not from the losers, but the actual historical actors who have created the social change in the first place, the people themselves, as individuals and as social beings.

Stromberg is not your papa's libertarianism. It is not Republicanism Right, nor is it "vulgar libertarianism" or "liberaltarianism". If Kevin Carson is a Free Market Anti-Capitalist then Stromberg is a Libertarian Anti-Imperialist.

Stromberg is a consistent and outspoken opponent of Imperialism and War from a Libertarian perspective. And he has been so when such opposition on the right was tantamount to treason, which it has been in every case of American intervention abroad regardless of the popular opposition to it. Even now as half the American population opposes the Iraq war the Right continues to wave the flag of patriotism (the last refuge of a scoundrel as Bernard Shaw said) for their boys, and girls, over there. Why they are there is less important than supporting them once they are there, says the patriot regardless of whether they belong to the Democrats or Republicans. Stromberg consistently has asked why they are there and his answer is a consistent Anti-Imperialism in the tradition of Mark Twain.

Carson and Stromberg are amongst the few and the brave, who use Libertarian Dialectics, to confront the right wing liberaltarians and those who would reduce revisionist history to being a caricature of itself; conspiracy theory. Revisionist history is not a creature of the right but of the left, its essence is historical materialism, unable to accept this basic fact, the right insists on reducing every act to those of conspiracies amongst the rulers over the ruled.

So I am pleased to offer this introduction to Williams by Stromberg and a link to the rest of the article on Williams here on my blog. As well as readers will know from my web writings I have included other references to Williams as well as examples of his writings available on the web.


William Appleman Williams:
Premier New Left Revisionist

A PROGRESSIVE HISTORIAN

by
Joseph R.
Stromberg

Last week in a discussion of Charles Austin Beard, "isolationist" Progressive historian, I mentioned Beard's influence on a number of younger scholars, among them William Appleman Williams and Murray N. Rothbard. Williams emerged in the late 1950s as the spearhead of New Left diplomatic history and has had an enduring influence on the writing of American history. "Mainstream" scholars take his insights into account but acknowledge his impact only in the most backhanded way possible. It is probably among libertarians and anti-imperialist conservatives that Williams now finds his true following.

A LIFE IN HISTORY

William Appleman Williams (1921-1990) was born in Iowa in and attended the U.S. Naval Academy. He served in the Pacific in World War II. As influences on his thought, I should mention Beard, John Adams, James Madison, Walter Prescott Webb (whose writings on the frontier – ending with The Great Frontier – treated a theme which Williams made his own), and – in a generic sort of way – Karl Marx. One doubts, however, that Williams was ever really a "Marxist," despite the Cold War liberals' joy in awarding him that title.

After the war, he took a PhD in History at the University of Wisconsin, which was still something of a bastion of the old-style Progressive history. His first book, American-Russian Relations, 1781-1947 [1952] had a small impact and led Mr. Vital Center himself – Arthur Schlesinger, Jr., a founder of Cold War liberalism – to attack Williams as a "pro-Communist scholar."¹ In 1957, Williams returned to teach at Wisconsin, where he and his graduate students became known as the "Wisconsin school" of diplomatic history. Late in life, he taught at Oregon State University and served as President of the Organization of American Historians. Even in the turbulent "sixties," he was critical of New Left excesses. He would have hated the present university climate of political correctness.

A BODY OF WORK

His Tragedy of American Diplomacy [1959; 1972] was noticed by the scholarly community, although the Cold War liberals, of course, hated it. The House Un-American Activities Committee noticed his work and wasted his time with summonses which were suddenly revoked after he had spent money and time traveling to hearings. This petty harassment was continued for a while by another government agency I need not mention.

As the quagmire in Vietnam raised fundamental questions about the policies pursued – with mere differences of nuance – by Cold War liberals and conservatives, Williams began to find an audience for his ideas. Book followed book. Here I shall only mention the very important Contours of American History [1961, 1973], the two-volumes of readings in American diplomatic history (The Shaping of American Diplomacy [1966, 1967]), America Confronts a Revolutionary World [1976] and Empire as a Way of Life [1980].

Joseph R. Stromberg has been writing for libertarian publications since 1973, including The Individualist, Reason, the Journal of Libertarian Studies, Libertarian Review, and the Agorist Quarterly, and is completing a set of essays on America's wars. He is a part-time lecturer in History at the college level. You can read his recent essay, "The Cold War," on the Ludwig von Mises Institute Website. His column, "The Old Cause," appears each Tuesday onAntiwar.com

William Appleman Williams Learning From History
American Radicals , American Radicals series

Paul Buhle and Edward Rice-Maximin

``I prefer to die as a free man struggling to create a human community than as a pawn of empire,'' wrote historian William Appleman Williams in 1976.

Annapolis graduate and World War II Naval officer, civil rights activist and President of the Organization of American Historians, Williams (1921-1990) is remembered as the pre-eminent historian and critic of Empire in the second half of this century. More than any other scholar, he anticipated, encouraged and explained the attack of conscience suffered by the nation during the Vietnam War. Radicals have hailed him as a supreme anti-imperialist, while Libertarian conservatives have seen him as the ``second Charles Beard,'' renewing the perspectives of the nation's foremost historian. Fellow historians consider him a great figure in American thought at large, one who looked for large patterns and asked the right questions.

Counterpunch also has an excellent article on Williams’s relevancy today in light of the new age of American Imperialism:

The Relevance of William Appleman Williams

History and the Tragedy of American Diplomacy

"William Appleman Williams suggested that in spite of its best intentions American foreign policy was based largely on a one-dimensional American belief that Americans and American democracy had all the answers. The sad truth is that that belief might not be far wrong, but the inflexibility of the administrators in charge of its application has contributed to a century of failure in foreign relations.

According to Williams, American diplomacy was based on three premises, which, for all intents and purposes, have not changed and maintain a contemporary validity and relevance. The first is the humanitarian impulse to help other people solve their problems. The second principle encourages self-determination, which insists that every society have the right to establish its own goals or objectives, and to realize them internally through the means it decides are appropriate. Third-and here's the kicker-American diplomacy has typically insisted that other people cannot really solve their problems and improve their lives unless they follow the American formula. The contradiction evident in this third premise effectively nullifies the genuine best interests of the first two, but it also speaks volumes about the global perception of American arrogance."

American Marxism: Theory without Tradition
by John B. Judis , Washington editor of In These Times and has recently completed a biography of William F. Buckley.

The Choice Before Us by William Appleman Williams
The American Socialist, July 1957

Preface: History as a Way of Learning
Excerpted from The Contours of American History
by William Appleman Williams (1966) pp. 17-23.

Martin Luther King and the New American Frontier
By William Appleman Williams and Lewis Kreinberg
for Renewal Magazine. Originally Published April 5, 1968.

William Appleman Williams and the Myth of Economic Determinism
Steven Hurst
Manchester Metropolitan University
Paper prepared for the APG Conference, Reading, January 3-5 2003

Kindleberger on Bretton Woods
Redefining the Past: Essays in Honor of William Appleman Williams

NORTEL: REDUX

Would the last one out of Nortel please turn off the lights.

What do white collar workers, brain workers as Kropotkin called them, have in common with blue collar workers, well they are both workers. Regardless of job descriptions or titles, or share offerings or pension plans, or if they drink beer or latte's, those that work in the IT or High Tech industries have faced the came contradictions of capitalism's boom and bust that manufacturing workers have faced. Those that have professional degrees, from univeristies, forget that tradesmen are also professionals, whose degrees come from post secondary institutions as well. The Scientist or Engineer is no different than any other skilled tradesman.

Those who work in skilled and semi-skilled industries are no different than those working in code, software, game design, web work, engineering or automation design. When it comes to the bottom line they are workers and they are expendable as our contuing coverage of the Nortel saga shows. The impact of the Nortel layoffs of thousands of workers over the last five years has directly impacted on Canada's declining productivity as has the thousands of jobs cut in manufacturing.

As the Ottawa Citizen reports the story of the Nortel workers and their working lives is a story that couild be told by laid off auto workers, or even Wal-Mart workers, public sector workers, liqour store workers, etc. Work is work, regardless of the pay or perks. And you either own the means of production or you don't. If you don't you are a wage slave who works for a living. The chains of capitalism bind all workers together, regardless of the collars.

"When the employer pays the engineer twenty times more than the workman, he makes this very simple calculation: if an engineer can save him £4,000 a year in cost of production, he will pay him £800 a year to do it. And if he sees a foreman is a clever sweater and can save him £400 in handicraft, he at once offers him £80 or £90 a year. He expends £100 where he counts upon gaining £1,000; that is the essence of the capitalist system. And the like holds good of the differences in various trades.

Where then is the sense of talking of the cost of production of labor force, and saying that a student who passes a merry youth at the University, has a right to ten times higher wages than the son of a miner who has pined in a pit since he was eleven? Or that a weaver has a right to wages three or four times higher than those of an agricultural laborer? The expenditure needed to produce a weaver is not four times as great as the necessary cost of producing a field worker. The weaver simply benefits by the advantageous position which industry enjoys in Europe as compared with parts of the world where at present there is no industrial development."

Peter Kropotkin, The Wages System

The storyfrom the Ottawa Citizen, which is now a subscriber based news service, may 'disappear' becoming a story for paying customers only. In order to avoid this I have reproduced this very long feature here. As it ties into our story Nortel; Canada's Enron.

Safe landings:
Ottawa's tech workers were soaring five years ago,
but tens of thousands have since fallen to earth,
struggling to find work

Peter Hum
The Ottawa Citizen

Thursday, March 10, 2005

Some of the happiest messages in Jim McQuaid's e-mail box arrive with the subject line: "I've landed." In the past few years, he's received hundreds of them, from different senders, some of whom he barely knows.

They may be strangers, but McQuaid and his e-mailers share a common plight. The downturn derailed their tech careers, and they sought support at the Kanata Kareer Group. "I've landed" e-mails were the messages that everyone wanted to send -- the subject line was code for "I've found a job."

McQuaid, an ex-Nortel Networks employee and leader among the volunteer forces that support Ottawa's out-of-work techies, likes the metaphor.

"The analogy is of a parachute, forever in descent mode," he says, "passing opportunities such as job postings and interviews, and dodging things like family matters, financial problems, emotional distress -- but not able to grasp onto anything meaningful.

"'I've landed' means the person has come to a place where they are no longer looking -- floating -- for work. It's the ultimate 'I made it alive' e-mail."

It's easy to keep extending the analogy. After the Internet revolution of the 1990s, techies were indeed soaring into the new millennium, borne aloft by hopes for a golden telecommunications age. By the Nasdaq's measure, many of their companies were flying highest five years ago today, when the stock quotation system's index shattered its records on March 10, 2000. Tech businesses were flying business-class -- that is, until the bubble burst, and it was time for tens of thousands to pull the rip cords.

In Ottawa, according to Statistics Canada, tech employment peaked in May 2000 at 72,400. Untold layoffs since have forced that number to drop. It stood at 45,600 earlier this year, for a net loss of nearly 27,000 jobs. That's a lot of parachutists.

More often than not, they had been doing challenging, creative work that they loved, working in excellent teams for good and sometimes great remuneration. Some, like McQuaid, put in decades for Nortel or another employer before a devastating tap on the shoulder came.

When the downturn took away their jobs and scorched their prospects of new employment, they developed far different routines from the long hours they were accustomed to logging at their offices.

Those with substantial savings or connections to funding, as well as entrepreneurial spirit, began their own companies -- technology-oriented or otherwise. Many of Ottawa's startups are phoenixes rising from the ranks of Nortel's cast-offs.

Others fired countless resumes into the void, even as the sector that had employed them shriveled, with companies large and small failing. They lived more frugally and racked up credit.

Many dug into retirement funds to survive. When tech jobs eluded them, they joined self-help groups. They became consultants or carpenters, coffee shop employees or chess teachers. Or stay-at-home parents.

The last five years, a wild ride from boom to bust that only now shows glimmers of recovery, have been harrowing for some, transformative for many, and testing for all. Now is a good time for those who have landed, and those still floating, to look back.

The layoffs at Nortel four years ago affected executives as well as rank-and-file workers, as entire units and projects were axed. Many executives and their staff quickly caught startup fever.

Among them were 13 Nortel engineers who formed Seaway Networks in January 2001 after discovering their project was about to be cut. The engineers quit to pursue the project, and Nortel gave up intellectual property rights to their work in exchange for equity in Seaway.

Natural Convergence was created in April 2001, three days after its founders David Cork and Mark Murray, Nortel eXtremeVoice unit executives, lost their jobs. They put $250,000 into their startup, a voice-over-Internet-Protocol software play, before landing venture funding.

The founders of Trigence, a server application company, took their Nortel buyouts in 2001.

"We were all 100-per-cent career Nortel people," says Brian Hurley, CEO and co-founder of the high-performance server startup Liquid Computing, and another ex-Nortel executive. "We had many opportunities during the years to leave Nortel, and we had consciously decided to stay with Nortel and make it a full-time, life-time career."

Other jobless techies have lit out on their own with fledgling businesses.

Peter Szmyt worked at a succession of software companies -- Simware, Jetform, AIT and finally Eftia OSS Solutions -- before being laid off in May 2002. During his job search, he was frustrated by having to visit website after website, looking for job postings. He looked for a service that collected fresh job notices from comapny websites. "I didn't find one. So I made one," says Szmyt, 39.

In September, he started his free e-mail list, Peter's New Jobs. In May 2003, he began charging. Now, more than 1,200 people looking for work in Ottawa and Toronto subscribe to petersnewjobs.com. He plans to expand his coverage to other cities.

After Linda Pond lost her sales and marketing job at Plaintree Systems, she started her company, Customer Connects, meant to assist startups network and reach customers and suppliers. "Things are going in the right direction," she says. "I need to put my full energy into this."

DOT-COM Memories

No one needs to tell Rob Woodbridge how much energy running a business requires. Five years ago, he was the president of GetHOW, a Byward Market startup that made digital, downloadable how-to videos for manufacturers and retailers. Now, at 34, he's on the other side, running the Ottawa Capital Network for the Ottawa Centre for Research and Innovation, a middleman between entrepreneurs and investors.

GetHOW was formed in the fall of 1999 and its founders recruited Woodbridge, already an Internet business veteran.

Woodbridge fondly recalls the days of dot-com mania. "It was buoyant, joyous. It was the funnest time to be an entrepreneur. It was the most ridiculous time. It was absolutely exuberant, energizing," he says.
In February 2000, he attended an Internet startup bootcamp in California, thrown by garage.com, the famed, self-styled investment fund for new-economy startups. "It was a drastically different time. People would tell stories about financing. It was like a religious revival. I get embarrassed thinking about it," Woodbridge says.

As 2001, progressed, everything changed. "I remember meeting with an angel investor on the morning the TSX plummeted 800 points," he says. Potential investors submitted increasingly onerous term sheets, demanding returns of three times their investment before anyone else was paid, and more clout on GetHOW's board.

After Sept. 11, critical funding dried up, and Woodbridge shut down GetHOW. "I woke up one morning and said to my wife, 'For the very first time, I have no work.'"

The backlash against dot-coms was profound. WhileWoodbridge's resume once proudly noted that he had been a dot-com CEO, he soon thought better, deciding to bury the detail. "Nobody would want to take a risk on an entrepreneur. It was like being an entrepreneur was a disease, and they didn't want that liability."

He worked at Systemscope as an e-business strategist in 2002 until the job at OCRI came his way. "I'm working with the people in the investment community that slammed the door in my face when I was asking for money. Now that I'm on the other side, I can understand why, and what was wrong with GetHOW," he says.

"Guys like me -- those who survived it -- will be much better suited, much better business owners than if we had not gone through it."

In his basement, he still has mementos of those dot-com days -- paperwork, master copies of products, mousepads and t-shirts and stickers for cars. "My wife always asks me when I'm going to throw it out. I just can't let it go," he says.

There are other GetHOW remnants too -- outstanding bills, loans and legal fees. Still, he may yet run a business again. "Ultimately, I think I am an entrepreneur," he says. "For now, I'm still employed. I might go back to being self-employed."

Tough for Consultants

Most laid-off techies who are self-employed have likely been reborn as consultants. They have not had it easy.

Al Quirt has been a consultant since June 2001, after Nortel cancelled its Optera Packet Core project and the jobs that went with it. "I was quite bitter for a time. I think I pretty much got over that," Quirt says.

Quirt, who is in his 60s, was eligible for early retirement and a decent pension. But his job search was fruitless. "I've found that your resume doesn't show 70 hours a week of coding for the last three years, that you're not getting hired," Quirt says.

Consulting has so far yielded meagre returns. He contributed sweat equity to several startups, but they folded without paying anyone. He has only seen revenue come in the last three months. Quirt may turn to technical writing, helping small companies improve their user manuals.

Natasha D'Souza is trying to balance tech consulting with motherhood.
Five months' pregnant when her contract work at Infineon ended in January 2003, she began looking for work before the year ended, when her son, Aquila, was about six months old. She looked for a year. "The market was dead," says D'Souza, who previously worked at Newbridge Networks and Neutronics Components.

After some "soul-searching," she has recast herself as a consultant, hoping to help tech firms with sales, marketing and project management -- sometimes with Aquila in tow. She meets clients on the one day a week Aquila is in daycare. But he has attended meetings with his mother, in between playtime, meals and quiet time.

"I have to juggle 100 different balls at the same time," D'Souza says. Fortunately, she has full support from her husband, Denis Rheault, a hardware designer at Alcatel who kept his job throughout the bust.

But D'Souza adds: "I can't go full-speed ahead because baby No. 2 is due in May."

McQuaid's Landing

Consultant Jim McQuaid was able to send his "I've landed" e-mail last month, but only after considerable hardship and struggle. He was a 26-year veteran at Nortel when he was first laid off in December 1999. "I was devastated. My world as I knew it came to an end. I fully expected to be there when I retired," McQuaid says. He didn't know then that he would be laid off three more times in the next five years.

The buoyant tech economy of 1999 meant that McQuaid was not out of work long. Within a few days, he found work at CrossKeys Systems, and expected to be with the company for a long time, but his job ended a year later. He remembers telling his spouse: "In the next 10 years, I'll probably work at 10 companies."

He was jobless for four months before 10 months of consulting for Certen/Bell. After four more months out of work, he joined Nuvo Network Management for three months as a service manager before being laid off yet again.

No wonder he and his peers have "retired the words 'permanent job.' That concept doesn't exist anymore. When a company's profits drop, they'll let people go almost at the drop of a hat," McQuaid says.

The Kanata Kareer Group and Ottawa Talent Initiative, two resources for out-of-work techies, kept him busy and happy as he spent half of 2003 and all of 2004 out of work. "Networking encourages you to be up. You're meeting people every day. You're shaking hands. You're among your peers."

He looked into starting a small business, perhaps an Internet cafe. "I came really close to giving up on tech," McQuaid says. "But I needed to be in a tech environment." He was unemployed for nearly two years before he won a 22-week Nortel contract earlier this year.

McQuaid survived by extending his credit and selling off RRSPs. Without his Nortel contract, he would have looked into selling his house and other assets.

"I know some who have lost everything, sometimes lost their families," he says. "Most people are living on savings, living on RRSPs. Their retirements are going to be a lot different than what they imagined it would be."
His Nortel bosses have told him: "'This is forever. You could die here,'" he says. He pauses and laughs: "I hope they meant a while from now."

Enjoy the Day

For McQuaid, tenacity has been crucial. It has served Miladin Djerkovic well too -- he began working again last month at JDS Uniphase, his former employer, after 2 1/2 years looking for work.

Djerkovic came to Canada from Yugoslavia in 1994 as a refugee, fleeing civil unrest. Trained in mechanical engineering at the University of Belgrade, and with three years of experience in his homeland, he looked down at Ottawa from the plane and had a bad feeling about his job prospects.

"I didn't see any factory chimneys. Where there are polluted environments, this is where mechanical engineers thrive," he says -- only half-joking.

He and his wife Jovanka, also a mechanical engineer, were also confronted with a more immediate hurdle before they could find work. They had to learn English. They attended ESL classes and made friends in Ottawa. Djerkovic, a passionate, master-strength chess enthusiast, played in tournaments in Ottawa, Montreal and Toronto.

In June 1997, Djerkovic joined JDS Uniphase, where, among other tasks, he designed packaging for fibre-optic devices and tools and devices for product lines.

During his five years at JDS, his personal life was filled with milestones. In 1998, he and his wife became Canadian citizens. That year, his chess ranking peaked. Among thousands of registered chessplayers, Djerkovic was ranked 21st in Canada. Two years later, in the fall of 2000, he and his wife bought a house. A month later, Jovanka gave birth to their son, Bogdan.

After surviving cut after cut, Djerkovic lost his job in August 2002.

"All of sudden, you have nothing to do," he says. His wife, who had found retail work in 2001, brought home paycheques while Djerkovic stayed home with their son. "You take a deep breath and you learn to cope," he says. "After the first two months, I accepted it as a new reality."

He sent hundreds of resumes, cared for Bogdan, and made a bit of money by giving chess lessons privately and in schools.

This year, he was one of more than 140 people applying for a six-month position at JDS. But this time, he had an edge. "The people that worked there knew me," he says. "The job description exactly matched what I was doing before."

At the interview, concerns arose that Djerkovic would be rusty after 2 1/2 years out of work. He replied that his memory was still very good -- for example, he was able to remember six chess games simultaneously "blindfolded," keeping track of every move on all the boards in his head. He told them of an exhibition that he gave, winning five of six games -- and he was hired.

"Chess came to the rescue!" Djerkovic says.

His first week back at JDS, Djerkovic was plagued with insomnia each night, caught up with the excitement of working again. "The second time," he says, "I really get to appreciate it. I have this special little willingness to do my best."
He doesn't know what he will be doing seven months from now.

"I have no clue," he says. "I enjoy the moment, enjoy the day.

"Maybe that's the wrong attitude, but it helped me go through those 2 1/2 years without a job."

Renouncing Tech

Other tech workers could not stick out the tech job search.

They include Jana Chytilova, an Ottawa freelance photographer who took many of the pictures for this article. Before making her hobby her profession, she spent 15 years at Bell Northern Research and then Nortel.

"It was a hell of a transition," she jokes. "Anything that's a non-high-tech salary is a hell of a transition."

Fresh from engineering studies at Queen's University, Chytilova started at BNR as a power converter designer. She moved into training and organizational development, and then to process development at Nortel.

Five years ago, Nortel rewarded her performance with a free five-day cruise out of Florida and into Mexico. Six months after, she was laid off. "I remember sitting in the exit interview, just totally stunned."

She tried for a year to find tech work -- "not even a nibble," she says. Soon, the photography enthusiast was freelancing her pictures to newspapers.

Her tech past recedes in her memory. "I have my stuff on Workopolis, but I haven't updated it in a couple of years. I don't want to be hitting my head against a brick wall."

She misses the steady pay, benefits and good working conditions at Nortel, but not the stress. If someone were to offer her a tech job tomorrow, she's not sure she would take it. "The longer you're away from it, the less you miss it," she says.

"There's such a bitter aftertaste, with everything that happened financially," she adds. "I'm still as mad today as I was when I was laid off, at how they drove the company into the ground, and they did it at the cost of the employees."

Bogdan Buziak made a similar switch from software developer to carpenter.

In May 2000, after earning his computer science degree from Algonquin College, he joined Zucotto Wireless, a promising downtown startup that developed Java IP cores for cellphones.

"I liked the company and the atmosphere. It was a pretty exciting place," he says. But he adds: "People worked too much... to the point it was kind of trendy to be called a workaholic."

He was laid off in late 2001 -- to his surprise. While Buziak collected employment insurance, he looked, fruitlessly, for tech work. A mountain-lover, he moved to Canmore, Alta., nestled in the Rockies. There, after working as a carpenter for a few months, he put tech behind him. "I realized I was much happier doing that than what I was doing at Zucotto," he says.

Carpentry is in his blood. His father is a carpenter. He worked at carpentry while growing up in Poland, and during summers in Canada. Now, he has three employees.

He says his tech detour was not a waste of time. "It was a good experience... that helped me establish my own business."

But he adds: "It also taught me not to be loyal to a corporation - the minute things go bad, the corporation is not loyal to you."

Coffee Breaks

Some of Ottawa's premier coffee shops owe their success to ex-techies.

Francesco's Coffee Company, in Westboro, is run by former software developer Pietro Camino, 34. In June 2000, Camino went to work as a test verification engineer at Silicon Access Networks, an Ottawa network processor company which after raising more than $120 million U.S. ranked among Ottawa's top three startups.

"I thought to himself, I should be in this emerging market segment," Camino remembers. "There was a belief in the information superhighway coming to rescue us and create unequalled wealth. Like most people, I thought it was the place to be."

Camino's first six months at Silicon Access were "magical." His salary had jumped $30,000 from his last job. "Everybody at the company was visiting Audi dealerships, everybody was buying houses," he says. Pampered with "out-of-this world" perks, Camino "thought this was the new age of employee-employer relations."

After a while, the perks were cut. So too were staff -- once, twice. Salaries were slashed by 10 per cent. Camino was laid off in June 2002. Silicon Access eventually died. "You would never dream that your company would run out of money. It boggles my mind," he says.

Jobless, Camino took the summer off and went sailing each day. He babysat his parents' Kanata home. Then, he sunk $90,000 of savings and inheritance into opening a coffee company modelled after his grandfather's business in Italy. "I had to find something I could stand to do," he kids. "A good, relaxing, low-stress thing to do. Roast coffee, bag coffee, run a little coffee shop."

Since his April 2003 opening, Camino has hired 10 employees and seen his revenues quadruple. "I was meant to do business. I'm having the time of my life." Being laid off was "a good excuse to get started," he says.

Still, he can't quite get Silicon Access out of his mind. "With the $90,000 out of pocket I invested (in Francesco's), we probably had higher revenues than Silicon Access had with $128 million U.S. (in invested capital). What would I do with $128 million U.S.? We would be a multinational. We would be making money hand over foot."

One of Camino's employees is Tim Dudley, a veteran of Nortel and Cognos. As Camino's director of sales, Dudley "single-handedly built up the wholesale side of the company," his boss says.

"I knew nothing formally about sales, but I persuaded a lot of people to throw money at a lot of things when I was at Nortel," says Dudley, 63. Trained in computer science in the United States, he moved to Ottawa in 1970 to work for BNR. Between 1974 and 2001, he spent 17 years at Nortel and a decade at Cognos.

At Nortel in the late 1990s, Dudley, a user-interaction specialist, was at odds with the go-go company culture. "I was very conscious about not working overtime. I wanted to keep in touch with my family. I hadn't completely sold out. This is not my life. This is what I'm doing to support my life."
Laid off just before Christmas in 2000, he exhausted his severance package for a year and then looked for work. Two years passed, and he was still jobless. He went through almost all of his RRSPs.

Dudley lives near Francesco's, and was impressed with the coffee. He and Camino hit it off, and Camino put him to work in the fall of 2003. "I kind of thought, 'This guy could sell, eh?'" Camino says.

"After three years of not getting any work, I basically re-invented myself," Dudley says. "My strength is people, I'm honest, and I really like the product. I'm selling it because I think they should taste it and enjoy it.

"High-tech stuff is very very cold, very left brain, very isolated," he adds. "Instead of encouraging people to cocoon and avoid human interaction, I really enjoy the idea of encouraging people to socialize."

Another convert from tech to coffee is Trevor May, 40.

He joined Zucotto Wireless in August 2000, when it was on the upswing, en route to becoming a 160-employee company. Like Buziak, he enjoyed his job, but grew concerned about Zucotto's sustainability. An alumnus of two other startups, he estimated that Zucotto's optimal revenues would still fall far short of what it needed. "It was an order of magnitude off. It was 10 times off," he says.

May quit in the summer of 2002. "It finally had become just a job. I wasn't interested in anything that was just a job," he says. Zucotto folded the following spring.

Disillusioned with tech after 15 years in the field, May returned to school, earning an executive MBA degree at Queen's University. "I thought if I'm really going to be a success, I should do it in a disciplined, structured way."

He also began building and selling high-end guitar amplifiers to discriminating musicians like himself.

As the operations support manager at Bridgehead, May finds his work varied and exciting. He's negotiating leases for new sites and planning growth. On the tech side, he built an online ordering system that saves three days of accounting every month. He'll be wielding a hammer when the next Bridgehead shop is built.

"I don't miss it (tech) at all," May says.
© The Ottawa Citizen 2005