INCOMPLETE DRAFT: LONG NOTES TO: Chapter VI. Roaring Twenties
For "Slouching Towards Utopia?: An Economic History of the Long 20th Century", Basic Books, September 6, 2022
¶2: Graham Culbertson objects to “anarchism” in the phrase “demons of militarism, imperialism, anarchism, and nationalism”. He suggests “nihilism” as a replacement, which we have a warrant and a license from Emma Goldman to use. I concur. See: Emma Goldman (1910): Anarchism & Other Essays <https://theanarchistlibrary.org/library/emma-goldman-anarchism-and-other-essays>
1) Josef Schumpeter, Capitalism, Socialism, and Democracy, New York: Taylor and Francis, 2013 [1942] <https://books.google.com/?id=MRg5crpAOBIC>
2) Karl Popper, The Open Society and Its Enemies, New York: Taylor and Francis, 2012 [1945] <https://books.google.com/?id=_M_E5QczOBAC>
3) Peter Drucker, Management: Tasks, Responsibilities, Practices, New York: HarperCollins, 1993 [1973] <https://www.google.com/books/?id=G3TNoUBPiasC>, p. 325: “To be sure, Friedman’s argument that business is an economic institution and should stick to its economic task is well taken…. But it is also clear that social responsibility cannot be evaded. It is not only that the public demands it. It is not only that society needs it. The fact is that in modern society there is no other leadership group but managers. If the managers of our major institutions, and especially of business, do not take responsibility for the common good, no one else can or will…”
LINK: <https://archive.org/details/management0000druc/mode/2up>
Compare to:
Peter F. Drucker: The Once and Future Manager: ‘The professional manager has not one job, but three:
‘The first is to make economic resources economically productive. The manager has an entrepreneurial job, a job of moving resources from yesterday into tomorrow; a job, not of minimizing risk, of minimizing risk, but of maximizing opportunity.
‘Then there is a managerial or ‘administrative’ job of making human resources productive, of making people work together, bringing to a common task their individual skills and knowledge; a job of making strengths productive and weaknesses irrelevant which is the purpose of organization. Organization is a machine for maximizing human strengths.
‘Then there is a third function…. They are public. They are visible. They represent. They stand for something in the community. In fact, they are the only leading group in society…. Managers have a public function… Royal Commissions … the local Boy Scout troop…. within their own business by leadership and example. But they always do discharge it. Nothing anybody who is a manager does is private, in the sense that one can say: ‘This is my own affair. It does not concern anybody else. What I do is, therefore, of no real interest to anybody.” Managers are on the stage, with the spotlight on them…
LINK: <https://www.oreilly.com/library/view/peter-f-drucker/9781647820275/10394/OEBPS/xhtml>
The young Peter F. Drucker was one of the more more interesting young moral philosophers in early 1900s Vienna all of whom brushed up against one another. Peter F. Drucker, however, then when came to the United States followed a very different trajectory (after getting Karl Polanyi his job at Bennington College) than any of the others. He became the U.S.’s BOSS management consultant and managerial theorist. But he remained someone who always hunted the same game as the Polanyis, von Hayek, Schumpeter and company. Pinned between Schumpeter, von Hayek, Karl Polanyi, and the shadow of Karl Marx, Peter F. Drucker sought his reconciliation of the antinomies of modern industrial society in the figure of the manager, whose social role was precisely to arrange things so that society could be an “association, in which the free development of each is the condition for the free development of all”.
Note that Drucker's manager is in many ways the polar opposite of Alasdair Macintyre's. Macintyre's is the pursuer of instrumental rationality on behalf of his principals, whatever their values and interests may be. Drucker's manager is the trustee of civilization, a member of a Michael Polanyian-type priestly profession in which one works not so much for one's principals as for the smooth, efficient operation of the system as a whole in a way that makes sense to and reconciles the interests of all stakeholders: freedom and community, efficiency and equity, order and disruption are then reconciled through the judgments and values of this particular honorable professional castes of managers.
Alasdair Macintyre, After Virtue: A Study in Moral Theory, South Bend: University of Notre Dame Press, 1981 <https://books.google.com/?id=9sQcnQAACAAJ>.
4) A very good introduction to this idea as applied to science and technology is chapter 5 of Partha Dasgupta, Economics: A Very Short Introduction, Oxford: Oxford University Press, 2007, pp. 90-99 <https://books.google.com/?id=9nsRDAAAQBAJ>.
…public interest and public liberties as well…: Suppose I wanted to drop a footnote: ’If my editors would let me, here I would also trace the current of 20th-century thought and action for which Michael Polanyi, born in 1891 in Budapest, is a convenient marker: how society needs not just the decentralized mercenary institution of the market and definitely does not need comprehensive central planning (which can never be more than a fiction), but needs as well decentralized fiduciary institutions, focused on advancing knowledge about theory and practice, in which status is gained by teaching and learning from others—institutions like modern science, communities of engineering practice, communities of legal interpretation, honorable journalism, evidence-based politics, and others—and in which people follow rules that have been half-constructed and have half-emerged to advance not just the private interest and liberties of the participants but to advance the broader public interest and public liberties as well. And at the end of that I would drop a reference to where people should go to read further. What would the single best reference to drop be?
An answer from Nicholas Gruen:
NIcholas Gruen: ‘It’s a tricky question because Michael Polanyi was a chemist, then an economist and then a philosopher. His only important publications in economics proper are are his first, which was the first to show how little the Soviet economic expansion was funding improved living standards, and Full Employment and Free Trade, which outlines a neoliberal (i.e. minimally interventionist) Keynesianism with which some of the Mont Pèlerin Society were enamoured of—like Gottfried Haberler who wrote a preface to its second edition. The issues you’re raising are probably best expressed in Michael Polanyi’s 1941 piece “The Growth of Thought in Society”, Economica, 8:32 (Nov. 1941) <https://www.jstor.org/stable/2550108>.
‘I think his attempt to distinguish public from private liberty was a fine idea first articulated in this piece—though it never caught on. It’s another way to cut different aspects of liberty as Berlin’s ‘positive’ and ‘negative’ is. The odd thing however—it’s certainly puzzled me, is that MP doesn’t really spend much time on the professions. His categories for the occupations that both nurture and require ‘public liberty’ are those pursuing transcendent values: Science: Truth; The law: Justice; Art: Beauty; Religion: God. I came upon Polanyi after I’d come to the kind of view you sketch out there—that led me to write this essay—citing Alasdair MacIntyre and the importance of the values of professions: <https://griffithreview.com/articles/trust-competition-delusion-gruen/>.
‘But on this Michael Polanyi is largely silent. And then there’s his marvellous rethinking of the philosophy of science around the centrality of tacit knowledge. Once he took up on that stuff he mostly neglected the concerns that you and are seem to be interested in!…’
LINK: <https://twitter.com/NGruen1/status/1419900091016650752>
Thus also see:
Michael Polanyi, The Logic of Liberty, New York: Taylor and Francis, 2013 [1951] <https://books.google.com/?id=8fKAAAAAQBAJ>; Mark T. Mitchell, Michael Polanyi: The Art of Knowing, New York: ISI Books, 2006 <https://books.google.com/id=5mxwQgAACAAJ>; Michael Polanyi, Knowing and Being (Marjorie Greene, ed.), Chicago: University of Chicago Press, 1969 <https://books.google.com/id=f-orPQAACAAJ>
In addition, worth reading is: Frank Fischer and Alan Mandell, “Michael Polanyi's Republic of Science: The Tacit Dimension”, Science as Culture Vol. 18, Is. 1 (March 29, 2010), pp. 23-46 <https://doi.org/10.1080/09505430802705889>: '“Michael Polanyi spent his long career thinking and writing about the workings of science and the scientific community. Moreover, he saw in the workings of that community the core principles and practices of the good political republic, as spelled out in his famous essay, ‘The Republic of Science’. There is, however, a tension between his political theory and his epistemological contribution, in particular his path-breaking writings about the tacit dimension in knowledge formation—or what he described as ‘personal knowledge’. On the one hand, his political essay supports a classical conservative position, while on the other, his theory of tacit knowledge anticipates much of the post-modern radical critique of long-standing Enlightenment assumptions about scientific objectivity and the disinterested pursuit of knowledge. This otherwise contradictory position can be understood by following Polanyi's own epistemological prescription, namely by examining the underlying assumptions that constitute his own tacit knowledge. Polanyi's personal history reveals the less-apparent assumptions tacitly underlying his republic of science. Polanyi's own ‘fiduciary community’—in particular, his deep personal and intellectual ties to classical conservative theory, his association with Frederick von Hayek, and his membership in the neo-liberal Mont Pelerin Society—shaped his theoretical conceptualization of the so-called ‘republic of science’. In this way, Polanyi's political contribution diverges from his own epistemological requirements, in a way that largely obscures important intellectual roots required to properly interpret his political thought…”
I should also mention Karl Polanyi’s wife Ilona Duczynska, the youngest member of Lenin’s “Zimmerwald Circle” during World War I, and Karl and Michael Polanyi’s sister Laura (“Mousie”): Judit Zapor: Laura Polanyi 1882-1957: Narratives of a Life: ‘Although we have no way of confirming the actual steps she had taken, it seems that Laura Polanyi had been instrumental in her daughter [Eve]`s eventual release [from the Soviet GULAG]; no small feat, given the times and circumstances. As an unintended by-product, Eva Striker's imprisonment served as the inspiration for her childhood friend, Arthur Koestler`s novel, Darkness at Noon. The series of subsequent dramatic events included Laura Polanyi's own arrest by the Gestapo in Vienna in the aftermath of the Anschluss, and ended with her eventual success in helping her three children, her seventy-year-old husband, numerous nephews, nieces and friends to reach America. The one tragic failure concerned her younger sister, Sophie, who, with her husband and two of their three children, perished in concentration camps…
LINK: <http://polanyi.bme.hu/folyoirat/1997-02/1997-14-laura_polanyi.pdf>
And, on Ilona Duczynska: Kari Polanyi Levitt, Rosa Luxemburg Lecture: “Let me begin with my mother, Ilona Duczynska: if I were a believer, I would know that my mother was smiling down upon me here at the podium of the Rosa Luxembourg Foundation. My mother was a student of engineering in Zurich in 1915, when she was befriended by a community of representatives of the Russian Social Democratic Party opposed to the war, including Lenin, his wife Krupskaya and Angelica Balabanoff. Together with delegations from Germany, France, and Britain, as well as other European Labour and Socialist parties, they met to draft a program of action against the war, known as the Zimmerwald Declaration.
“As an 18-year-old Hungarian-speaking student unknown to any informant, Ilona was entrusted with delivering this call to action to the leaders of the Social Democratic Party in Vienna. When she presented herself to these gentlemen, they took one look at her and told her to go home, child, just go home. Having failed in this mission, she proceeded to Budapest where she received a warmer welcome from Ervin Szabo - a leading anarchist and head of the public library. With his counsel and advice, she found other young people to participate in a plan to distribute anti-war literature. She wrote the texts, found the printer and together with her comrade Tibor Sugar, they organized the distribution of leaflets in the great Weiss Manfred war factory and the army barracks.
“Eventually they were caught, imprisoned and charged with treason – it was not a small matter. The trial of Duczynska, a beautiful young woman from a very good family, and Tibor Sugar, who was briefly her partner in marriage before she met my father, aroused considerable public interest. They were liberated from prison by the 1918 revolution which terminated the war and established the first Hungarian Republic. Ilona was a founding member of the Hungarian Communist party, at that time largely composed of young people. With an excellent education and knowledge of several languages, she was called to Moscow to serve as translator to Karl Radek in the preparations for the historic Second International Congress of Communist Parties. Ilona returned to Vienna in 1920, and subsequently was expelled from the party for “Luxembourgist deviations” and a publication in a journal edited by Paul Levi, who also fell into disfavor with the party. As a young woman in her early twenties, she must have admired Rosa Luxembourg, who was a generation older, as a very important and senior figure in the movement.
“Many years later, following the destruction of the Austrian working class movement in February 1934, my mother rejoined the Communist Party in order to continue the struggle of the now-illegal Schutzbund, the military arm of the Austrian Social Democratic Party, until 1936 when she joined my father and myself in London. Subsequently, she was expelled from the Austrian Communist Party in London on orders from Moscow. No reasons were given.
“My mother was a very independent person and my father adored her. Karl and Ilona first met in 1920, at the Helmstreits Muhle, a villa provided as a refuge for political exiles from Hungary, by a Viennese well-wisher. My father left Budapest in 1919, and was soon joined by a larger exodus of communists, socialists, radicals and liberals following the accession of the reactionary regime of Admiral Horthy. The comrades in the villa were of my mother’s generation, and my father, who was 10 years older, would sit by himself, quietly writing. In a letter he wrote much later in life about meeting my mother, he said that she was a revolutionary and her name was Polish, and that was close enough to his ideal of the Russian revolutionary young woman. Ilona recalled that he seemed like a person whose life was behind him…
See also: Linda McQuaig (2001): All You Can Eat: Greed, Lust, & the New Capitalism (New York: Penguin Books) <https://archive.org/details/allyoucaneatgree00mcqu/mode/2up> pp. 124–160.
And then there was their fascist cousin Ödön Pór:
Guido Franzinetti: Ödön Pór: From Socialism to Fascism, from Hungary to Italy <http://italogramma.elte.hu/wp-content/files/Guido_Franzinetti_Odon_Por.pdf>
5) Charles Kindleberger, The World in Depression, 1929-1939, Berkeley: University of California Press, 1973, pp. 291-2 <https://books.google.com/books?id=q4k2TgQLk_sC>
6) Margaret MacMillan, Paris 1919: Six Months That Changed the World, New York: Random House, 2001 <https://books.google.com/books?id=EHzgiYw0kegC>.
7) Laura Spinney, Pale Rider: The Spanish Flu of 1918 and How It Changed the World, New York: PublicAffairs, 2017 <https://books.google.com/books?id=-A9uDgAAQBAJ>
8) Wladimir S. Woytinsky, Stormy Passage; A Personal History Through Two Russian Revolutions to Democracy and Freedom: 1905-1960, New York: Vanguard Press, 1961, pp. 368-400 <https://archive.org/details/stormypassageper00woyt/>
9) Woodrow Wilson, Address to the Senate, January 22, 1917 <http://www-personal.umd.umich.edu/~ppennock/doc-Wilsonpeace.htm>
10) Keynes, Consequences, pp. 37-55.
11) Keynes, Consequences, p. 3.
12) Keynes, Consequences, pp. 3-4.
13) Jan Christiaan Smuts, Selections from the Smuts Papers Vol. 4 (November 1918-August 1919), Cambridge: Cambridge University Press, 1966, pp. 152-3 <>
14) George H. Nash, The Life of Herbert Hoover: The Humanitarian, 1914-1917, New York: W.W. Norton, 1988 <https://books.google.com/books?id=IrrMycLq_iEC>; The Life of Herbert Hoover: Master of Emergencies, 1917-1918, New York: W.W. Norton, 1996 <https://books.google.com/books?id=j92VsjgurTgC>; Kendrick A. Clements, The Life of Herbert Hoover: Imperfect Visionary, 1918-1928, New York: Palgrave Macmillan, 2010 <https://books.google.com/books?id=NwYDQgAACAAJ>
15) Keynes, Consequences, p. 268.
16) Keynes, Consequences, p. 149.
17) Christian Seidl, “The Bauer-Schumpeter Controversy on Socialization”, History of Economic Ideas Vol. 2 No. 2 (1994), p. 53 <https://www.jstor.org/stable/23722217>; quoting Josef Schumpeter’s 1917 “Die Krise des Steuerstaates”, itself reprinted in: Joseph Schumpeter, “Die Krise des Steuerstaates”, Aufsàtze zur Soziologie, Tübingen: J.C.B. Mohr (Paul Siebeck), 1953.
18) Joe Weisenthal, Tracy Alloway, and Zach Carter, “The Real Story of Weimar Hyperinflation”, Odd Lots Podcast April 15, 2021 <https://www.bloomberg.com/news/articles/ 2021-04-15/zach-carter-on-the-real-story-of-weimar-hyperinflation>; Sally Marks, “The Myths of Reparations”, Central European History Vol. 11 No. 3, pp. 231–255 <https://www.cambridge.org/core/journals/central-european-history/article/abs/myths-of-reparations/ 3CEE5EC186E3B119551910B68BBDD569>
19) Barry J. Eichengreen, Golden Fetters: The Gold Standard and the Great Depression, New York: Oxford University Press, 1992, pp. 153-221 <https://books.google.com/books?id=91t6W4YxP2UC>; the phrase “golden fetters” as in “it was not disaster which had befallen us, but a happy release; that the snapping of our golden fetters restored to us the control over our fortunes…” comes from John Maynard Keynes, “Two Years Off Gold: How Far Are We from Prosperity Now?”, The Daily Mail September 19, 1933; reprinted in John Maynard Keynes, Collected Works XXI: Activities 1931-1939: World Crises and Policies in Britain and America, Cambridge: Cambridge University Press, 1982, p. 285.
20) Robert Skidelsky, John Maynard Keynes, 1883-1946: Economist, Philosopher, Statesman, New York: Penguin Books, 2005, pp. 217-49 <https://books.google.com/books?id=NLbRAQAACAAJ>
21) P.J. Grigg, Churchill’s Private Secretary at the Exchequer, claimed that Keynes’s arguments at the dinner were unconvincing: that contra Keynes, returning to the gold standard at its old parity was “doing no more than shackling ourselves to reality…” Prejudice and Judgment, London: Jonathan Cape, 1948, p 183 <https://archive.org/details/dli.ernet.523723/>. Then again, Grigg’s hostility towards Keynes was so great that he would have been unable to recognize strong arguments had they been made, He did write on the very first page of his memoirs: “I distrust utterly those economists who have with great but deplorable ingenuity taught that it is not only possible but praiseworthy for a whole country to live beyond its means on its wits, and who, in Mr. Shaw’s description, teach that it is possible to make a community rich by calling a penny tuppence, in short who have sought to make economics into a vade mecum for political spivs…” p. 7.
22) Eichengreen, Golden Fetters, pp. 153-186.
23) Paul Krugman, Notes on Globalization and Snowbalization, 2020 <https://www.gc.cuny.edu/CUNY_GC/media/LISCenter/pkrugman/Notes-on-globalization-and-slowbalization.pdf>; my factor (a) is the ratio of Krugman’s parameter a to his parameter t; my factor (b) is Krugman’s parameter σ.
24) Kevin H. O’Rourke, “Globalization in Historical Perspective”, in H. Wagner, ed., Globalization and Unemployment, Berlin: Springer-Verlag, 2000 <https://books.google.com/books?id=t3jtCAAAQBAJ>.
25) William C. Widenor, Henry Cabot Lodge and the Search for an American Foreign Policy, Berkeley: University of California Press, 1980 <https://books.google.com/books?id=Gt_ueSiU91UC>; Henry Cabot Lodge, “Lynch Law and Unrestricted Immigration,” The North American Review Vol. 152 No. 414 (May 1891), pp. 602-12 <https://www.jstor.org/stable/25102181>; Woodrow Wilson had firmly believed that immigration had become a threat to America by the 1880s: “Immigration had long since become a threat instead of a source of increased wealth and strength, bringing, as it did, the pauperized and the discontented and disheartened of all lands, instead of the hopeful and sturdy classes of former days; and public opinion was becoming very restless about it. But Congress [then] did little except act very harshly towards the immigrants from a single nation. By an Act of 1888 the entrance of Chinese into the country was absolutely cut off…”, Woodrow Wilson, Division and Reunion, 1829-1889, London: Longmans, Green, and Company, 1893, p. 297 <https://books.google.com/books?id=FxB2b5Rtc8kC>.
26) Eric S. Yellin, “How the Black Middle Class Was Attacked by Woodrow Wilson’s Administration”, The Conversation February 8, 2016 <https://theconversation.com/how-the-black-middleclass-was-attacked-by-woodrow-wilsons-administration-52200>.
27) J.H. Habakkuk, American and British Technology in the Nineteenth Century: The Search for Labour Saving Inventions, Cambridge: Cambridge University Press, 1962 <https://books.google.com/books?id=YJAMAQAAIAAJ>; David A. Hounshell, From the American System to Mass Production: The Development of Manufacturing Technology in the United States, 1850-1920, Wilmington: University of Delaware Press, 1978 <https://books.google.com/?id=9H3tHKUFcfsC>.
28) Paul A. David, “The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox”, American Economic Review Vol. 80 No. 2 (May 1990), pp. 355-361 <https://www.jstor.org/stable/2006600>.
29) Daniel Raff, Wage Determination Theory and the Five-Dollar Day at Ford: A Detailed Examination, Cambridge: MIT Ph.D. Thesis, 1987 <https://dspace.mit.edu/handle/1721.1/14870>; Daniel Raff and Lawrence H. Summers , “Did Henry Ford Pay Efficiency Wages?”, Journal of Labor Economics Vol. 5 No. 4 Part 2 (October 1987), pp. S57-S86 <https://www.jstor.org/stable/2534911>.
30) “Theodore N. Vail on Public Utilities and Public Policies”, Public Service Management Vol. 14. No. 6 (June 1913), p. 208 <https://books.google.com/books?id=hE5FAQAAMAAJ>
31) Alfred P. Sloan, My Years with General Motors, New York: Doubleday, 1964 <https://books.google.com/books?id=qcIZAAAAYAAJ>; Peter F. Drucker, The Concept of the Corporation, New York: John Day, 1946 <https://books.google.com/books?id=Zbq8AQAAQBAJ>
32) Aldous Huxley, Brave New World, New York: Random House, 2008 [1932] <https://books.google.com/books?id=kKh5Dyqxx-QC>.
33) O.M.W. Sprague, History of Crises Under the National Banking System, Washington: GPO, 1910, n.p. <https://fraser.stlouisfed.org/files/docs/historical/nmc/nmc_538_1910.pdf>; Elmus Wicker, Banking Panics of the Gilded Age, Cambridge: Cambridge University Press, 2000 <https://books.google.com/books?id=t0ThZfI-OIIC>
34) Nash, Master of Emergencies; Clements, Imperfect Visionary.
35) Calvin Coolidge, Sixth Annual Message to the Congress, 1928 <https://www.presidency.ucsb.edu/documents/sixth-annual-message-5>.
36) Calvin Coolidge, Address to the American Society of Newspaper Editors, January 17, 1925 <https://www.presidency.ucsb.edu/documents/address-the-american-society-newspaper-editorswashington-dc>.
37) Edward A. Filene, “The New Capitalism”, Annals of the American Academy of Political and Social Science Vol. 149 Is. 1 (May 1930), pp. 3-11 <https://journals.sagepub.com/doi/abs/ 10.1177/000271623014900103>.
38) “Fisher Sees Stocks Permanently High”, New York Times October 16, 1929 <https://timesmachine.nytimes.com/timesmachine/1929/10/16/96000134.html?pageNumber=8>.
39) J. Bradford DeLong and Andrei Shleifer, “Closed-End Fund Discounts: A Yardstick of SmallInvestor Sentiment”, Journal of Portfolio Management Vol. 18 Iss. 2, (Winter 1992), pp. 46-53 <https://www.proquest.com/openview/25b7fb8b26516c9bd060ac9c62ef98df/1?pqorigsite=gscholar&cbl=49137>.
40) Eichengreen, Golden Fetters, pp. 222-56.
41) Douglas Irwin, “Who Anticipated the Great Depression? Gustav Cassel versus Keynes and Hayek on the Interwar Gold Standard”, Journal of Money, Credit, and Banking Vol. 46 Is. 1 (February 2014), pp. 199-227 <https://cpb-us-e1.wpmucdn.com/sites.dartmouth.edu/dist/c/1993/ files/2021/01/jmcb.12102.pdf>.
42) John Kenneth Galbraith, The Great Crash, 1929, Boston: Houghton Mifflin, 1955 <https://archive.org/details/greatcrash19290000galb_y8k2/mode/2up>
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