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The Right of
Aesthetic Realism to Be Known

 NUMBER 1729. —October 15, 2008
Aesthetic Realism was founded by Eli Siegel in 1941. 

Economics & Human Lives

Dear Unknown Friends: 

e are serializing Eli Siegel's great lecture Once More, the World, at a time when crisis is one of the milder words being used in relation to the US economy. Major financial institutions have collapsed. And as I write, Congress is discussing a plan for a massive bailout of Wall Street firms, with 700 billion taxpayer dollars.

     What it is all about, and the real answer to it, are in the Goodbye Profit System lectures Mr. Siegel gave in the 1970s. One of these is the lecture we're serializing.

     America's fiscal breakdown did not come, as is being said, from the housing bubble and trading in subprime mortgages, though they are part of it. The breakdown has come from something much more fundamental.

     In May 1970, Eli Siegel explained that economics based on contempt—on seeing human beings in terms of how much profit could be gotten from them—had at last failed after thousands of years.

     Contempt, Aesthetic Realism shows, is the feeling, present in everyone, that the way for me to be more, to take care of myself, is to look down on other things and people and make them less. Contempt is very ordinary. It's the smug triumph a woman can have thinking a man is stupid. It's a man's self-elevation in feeling he has nothing important to learn from a woman. It's a child's seeing his mother as a being who exists to serve him. Yet, Aesthetic Realism shows, this same contempt, this “addition to self through the lessening of something else,” is the cause of every injustice and brutality in human history, including racism. And a person's self-aggrandizement through contempt is that which makes him or her ashamed, nervous, empty, deeply unsure.

     The idea that an economy should be based—not on what's useful to people, fair to every man, woman, and child—but on some people making a profit from other people's work and hopes and needs: this is sheer contempt. The profit system's underlying ethical shoddiness is what made it, by the last third of the twentieth century, be mortally ailing, after centuries that included child labor, sweatshops, huge profits for some and much suffering and poverty for others. The financial situation of America today is a dramatic point in, and showing of, that failure which began long before 2008.

     I quote, as I did in the last issue, this statement by Eli Siegel, of 1976:

There will be no economic recovery in the world until economics itself, the making of money, the having of jobs, becomes ethical; is based on good will rather than on the ill will which has been predominant for centuries.

In classes and issues of this journal, with rich documentation, he explained why, by the 1970s, economics based on ill will could no longer succeed. It might, he said, be propped up, including with government funds, for years, but it would “no longer work well—that is, produce enough goods at a price that a majority of people can pay without strain, discomfort, worry” (TRO 166). And so it has been. In these decades a cadaverous profit system has been kept in motion by, among other expedients, forcing Americans to work for lower and lower wages, without benefits.

The Real Cause

et's look at the supposed cause of America's financial catastrophe: the risky use of subprime mortgages, by banks, investment firms, and Americans as such. What needs to be seen is that this careless dealing with mortgages itself has a cause.

     The reason banks issued these mortgages without regard to whether persons could make good on them, and the reason investment firms bought the hazardous loans to sell as securities, was not that the banks and firms were in good financial shape and wanted to take wild risks. The reason was: they felt they had to. Those financial institutions were already in big trouble, and they felt they needed to deal in subprime mortgages in order to save themselves.

     Then there are the Americans who took out mortgages without considering carefully whether they could pay them off. Last November, in issue 1706 of this journal, I wrote about the state of mind of the millions of people who did that. Though lured by deceptive mortgage brokers and banks, they should, of course, have been more careful. Meanwhile, there was a feeling in them which is part of America's deep objection to profit economics, to economics based on contempt.

     The most important question for humanity, Mr. Siegel has said, is What does a person deserve by being a person? This question, and the honest answering of it, is the ethics which has to be the basis of our economy. And this question is more and more insistent within the people of America now, even if they don't articulate it. People feel there are things they deserve and should have—and one of those things is a home.

     Last November I wrote about Ron and Nina of Nebraska:

They've had a hard time financially, what with the cost of food, and clothes for the children....But they needed more room and they...felt the children deserved a nice place to live. Ron spoke with a mortgage broker and was told he and Nina could finance such a home by taking out a subprime mortgage....
     It is five years later. Ron, Nina, and the children are now included in the statistics of recent foreclosures....The children cried when they had to leave their house after the bank took it; they had liked it very much.

Ron and Nina and the people they represent behaved too rashly, of course. Yet what they were acting on, with their very lives, was that the basis of economics in America should be What does a person deserve by being a person?

     The subprime mortgage crisis, then, came from two things: 1) the fact that financial institutions were already in a state of huge non-health, which impelled them to take wild risks; 2) the feeling of Americans that they deserve a home even if working in the present-day profit system has made them unable to afford one. Both these factors stand for the real cause of the 2008 fiscal downfall: the failure of, and objection to, profit motive economics. It is tremendously meaningful and poignant that the immediate incitement of the fiscal downfall was something so basic to what people deserve by being alive: a home.

What the Objection Is About

long with the 2008 financial failure itself, an enormously important occurrence in American history is the fury people across the land expressed at the idea of using 700 billion of their dollars to bail out banks and investment firms. Americans phoned and emailed their representatives and senators indignantly. The New York Times (23 Sept.) described people as “horrified at the prospect,” “outraged that Wall Street...may get rescued...even as working families give up their houses to foreclosure.” Whether they're right or wrong about a specific plan, as millions of Americans vehemently said no to bailing out Wall Street at their expense, their anger was an outpouring of a resentment they had for years yet did not see so clearly. It's a resentment of profit economics itself.

     The saying by people, “Why should we suffer to save these guys who were just using us to get rich?!” is close to, “Why should our lives be used to make profit for a few people?” It's close to, “Why should the American people suffer to keep the profit system going?”

     It's close to Americans saying, “An economy based on seeing us in terms of the profit motive—how much money someone can get from our labor and needs—not only is robbery but doesn't work. Let's have an economy based on fairness to people.” Such an economy won't be either left or right; it will be American patriotism. And it's the only solution that will work.

What Is Necessary for an Economy?

n Once More, the World, Mr. Siegel is showing that there are only two elements in production—not the three or more that economists usually put forth. Those two elements are land and labor. The third so-called element, capital, is not an element at all. It's something created by labor, by people's work. Said Mr. Siegel in a statement both scientific and beautifully respectful of humanity: “Labor is the only source of wealth. There is no other source except land, the raw material.”

     In keeping with that great fact, we can ask some questions pertinent to our financial markets and the economy itself:

     1) How much is the increasingly elaborate construction of the finance industry an attempt to circumvent something simple: the fact that Americans as a whole—a worker in a Detroit auto plant or a Sacramento office, a single mother waiting tables in Kokomo, a baby just born to poor parents in Maine—all Americans, have a right to own the wealth of their land?

     2) Did the financial markets need to become more and more intricate and tricky in order for investors to make money, because profit economics as it once existed had failed? And now has that devious financial structure itself collapsed?

     3) Since now the men and women of America essentially own the mortgage giants Fannie Mae and Freddie Mac, why do these companies with pretty names have to facilitate mortgages which will enrich profit-based banks? That is, if Fannie and Freddie can be owned by the people, why can't mortgages themselves arise from the people, or the government, so as to add to the wealth of the American people and also not rook persons who want to buy a home?

     4) Are the finance industry of the US and the profit system itself like Humpty Dumpty, who “had a great fall,” and “All the king's horses and all the king's men / Couldn't put Humpty together again”?

     We're in a time of much worry. But we're also in the midst of something that has with it true kindness, beauty, and pride. Eli Siegel described it in 1970: “What is being shown today is that without good will, the toughest, most inconsiderate of activities—economics—cannot do so well.” However Americans vote in the coming election, there is a demand in them, increasingly clear, for an economy based on good will.

ELLEN REISS, Aesthetic Realism Chairman of Education


Humanity & Earth

By Eli Siegel

Note. Mr. Siegel is looking at a passage from Principles and Problems of Economics, by Otho C. Ault and Ernest J. Eberling.

t is well, occasionally, to see the rhythms that have to do with wealth: supply and demand is a rhythm; profit and loss is a rhythm. But we should not get away from simplicity. There was no instance of production which didn't consist of two things and two things only: something human and something not human. I prefer to call the something human, labor.

     There can be good labor or bad labor, because labor is any activity by a human being which has a purpose, and that includes, sometimes, a bad activity. It happens if you want to break into a house, you have to work—I've heard of thieves sweating in order to get into a house. Now, if people want to call aspects of labor entrepreneurship, management, invention, enterprise, that's their business. I still say it's the human element. The rest is what reality provided, or land.

     —Going on with the Ault and Eberling text. The writers point out that there's such a thing as diminishing productivity. They also point out that the agents of production go on simultaneously. In this book those agents or factors are given as four: land, capital, labor, and management, with their corresponding rent, interest, wages, and profits. The writers would say too that they sometimes overlap: occasionally it happens that a manager is his own capitalist; in fact, most people expect that.

Since the agents of production are used jointly in the productive process, it is evident that it is difficult to determine quantitatively the value contributed by each in the production of an economic good.

     That may be so. Let's say there's an apple pie company, and you can't decide—just what did rent do for the apple pie; what did interest or capital do for the apple pie; what did—it's a little easier—labor do for the apple pie, because somebody had to put the apples in the pie; what did management do? There has been enterprise in apple pie production. Sometimes the company gets the name of a nice lady: Aunt Tillie's Apple Pie. But everything which needs human help needs labor. For instance, an apple may grow wild, but as soon as a human being is concerned with its fashioning or ripening or picking, then we have labor there. Even coconuts have had a little labor to them, though they are supposed to grow by the grace of the tropics.

     How things are in a commodity, something produced, is to be seen; and the question is: is there anything beside the human and the non-human element?—the human, being labor; the non-human, being land. I like the ideas of interest and rent and management. But as soon as they are used not to see ethics and not to see what is going on, it is hurtful. What is going on at this time is: the world wants to see all production as made up of only two things, the outside world and persons. It has never been anything else. But once it's seen otherwise, things can be put over. They have been put over, and it has made for a great deal of pain.

Diminishing Productivity

hen, the writers deal interestingly with the law of diminishing productivity.

     If a factory has so much room, so many machines, also so much capital, and if we have 12 persons working at the machines, to get in 16 would mean that one worker would interfere with the other; they'd both be gazing at the same machine—“You get away. I want to use this now.” Of course, just this doesn't happen, but a certain increase of labor can make for diminishing productivity. The writers are vivid:

Increasing the number of laborers employed in the factory cannot be continued indefinitely, for in time there will be more workmen to a machine than necessary for efficient production, and...workmen will be getting in one another's way.

     I don't think this ever happened, but it's interesting. Also, there can be diminishing productivity on purpose, because there is not a market for the goods.

People Are Fired

t is sometimes hard to see this matter of diminishing productivity in an apparently nonprofit organization, but the same principle is there. So I'm going to read an item that appeared in the Daily News on December 24. It is an item which, like some others, shows something deep going on in the world and in America. The headline is “Museum Workers to Strike.”

Office workers at the Museum of Modern Art...voted last night to protest the firing of a dozen fellow workers. The strike decision resulted from the dismissal of the curatorial employees two weeks ago despite earlier assurances that no one would be laid off because of the planned closing of the museum's library.

     We have “the firing of a dozen fellow workers.” This is called cutting down. It has a cause and it's related to what Ault and Eberling are writing of. As in private industry, there doesn't seem to be a need for these workers, and also there isn't, apparently, the means to pay them. The means to pay them and the need for them are very much related; sometimes they're the same thing.

     Nearly everybody in New York City knows that if the administration could arrange it gracefully, there would be a great many persons not coming back to work in the new year; only the administration can't get away with it. The money is not had, but the courage isn't had either, because there would be an awful protest. And while the administration would like to cut down on employees, there are the various most important aspects of municipal endeavor: to wit, police force, firefighters, sanitation. Working in the Museum of Modern Art library, where people want new footnotes about Braque, is academic stuff compared to that. Even in a municipal field, demand and supply work.

     We have to ask why this firing occurred. That it has occurred is a sign that the profit system isn't doing well, though the museum doesn't directly involve profit. It does sell things and charge admission, but it's not supposed to make any profit.

     Supply and demand have changed each year. Supply and demand is a world situation, and supply and demand in any one country affects supply and demand in every other country.

     The two fundamental things—the non-human element, or land, natural resources (there are quite a few names for it), and the human element, or labor—both of these can change a great deal. Offhand, it would seem that the non-human element could not change, but it's changing all the time. If you put seed in the ground, the non-human element is changing. If you get a means of digging coal out or getting oil out, the non-human element is changing. You take a walk in 1874 and find what you walked on has oil underneath—it changes. How it changes is something to see. But they still are the only two things: the non-human element, or land, and the human element, or labor. Every person who goes to Wall Street is still the human element. He may disguise himself as something else.   

Aesthetic Realism is based on these principles, stated by Eli Siegel:

1.  The deepest desire of every person is to like the world on an honest or accurate basis.

2.  The greatest danger for a person is to have contempt for the world and what is in it .... Contempt can be defined as the lessening of what is different from oneself as a means of self-increase as one sees it.

3.  All beauty is a making one of opposites, and the making one of opposites is what we are going after in ourselves.

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