Populism and the People

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By Michael Brenner for Veterans Today 

“Populism” has become synonymous with the word “mob.” That is how it now is used by reporters, editorial writers and commentators. It is convenient for two types of persons to do so: a) those who find the contemporary world too complicated to interpret, and b) those who aim to cast in pejorative terms political cum social forces that threaten the status quo – the economic, governmental, and intellectual status quo. Widespread ignorance of modern history is permissive of both tendencies.

Here is a brief summary of the term’s actual meaning, genealogy and real world antecedents. It’s from Wikipedia – one click away.

Historically, academic definitions of populism vary, and people have often used the term in loose and inconsistent ways to reference appeals to “the people,” demagogy, and “catch-all” politics. The term has also been used as a label for new parties whose classifications are unclear. ….In recent years, academic scholars have produced definitions that facilitate populist identification and comparison. Daniele Albertazzi and Duncan McDonnell define populism as an ideology that “pits a virtuous and homogeneous people against a set of elites and dangerous ‘others’ who are together depicted as depriving (or attempting to deprive) the sovereign people of their rights, values, prosperity, identity, and voice”.[5] Rather than viewing populism in terms of specific social bases, economic programs, issues, or electorates as discussions of right-wing populism have tended to do,[6] — this type of definition is in line with the approaches of scholars such as Ernesto Laclau,[7] Pierre-Andre Taguieff,[8] Yves Meny and Yves Surel,[9] who have all sought to focus on populism per se, rather than treating it simply as an appendage of other ideologies.

Cas Mudde says, “Many observers have noted that populism is inherent to representative democracy; after all, do populists not juxtapose ‘the pure people’ against ‘the corrupt elite’?”[3] In the United States populist movements have high prestige in the history books, for example, farmers’ movements, New Deal reform movements, and the civil rights movement that were often called populist, by supporters and outsiders alike.[13]

Other early populist political parties in the United States included the Greenback Party, the Progressive Party of 1912 led by Theodore Roosevelt, the Progressive Party of 1924 led by Robert M. La Follette, Sr., and the Share Our Wealth movement of Huey Long in 1933–35.[107][108]

Most strikingly, “populism” in thought and in concrete manifestations does not carry the heavy load of negative connotations with which it now is freighted. Its essence is the distillation of core democratic precepts: sovereignty derives from the citizenry; government officials acquire their legitimacy to exercise the stipulated powers of the state through a process of selection and approval of the citizenry;  the paramount purpose and responsibility of public authorities is to serve the interests of all members of society – to whom they are accountable.  In other words, “government of the people, by the people, for the people” – to coin a phrase. It is a commentary on how far we’ve deviated from those principles that manifestations of complaint by a substantial fraction of the populace about the abuse of power, leaders’ evasion of accountability, and the unfair consequences of the failure to observe that secular creed should evoke surprise, distress and defensive condemnation from those culpable of acting contrary to its precepts or gaining unjustified advantage from the abuse of public institutions.

Before proceeding further with this examination of “populism,” it is necessary to make clear that not all expressions of protest and complaint are inherently virtuous or themselves immune to destructive and undemocratic abuses. Populist protest can become a menace under certain conditions. Any social movement is

liable to deformation. Humanitarian impulse cannot be taken for granted. We should be relearning these elementary truths in the age of the Orangutan. For that is what is happening in the United States as well as in parts of Europe. Sadly, our learning curve is flat.


There are those whose new-found concern for the plight of the “common man” in plutocratic America leads to an exaltation of prejudice and mindless indulgence of crude government bashing – as if the United States circa 1830 embodied all republican virtue. Racism and xenophobia are diseases never fully eradicated from the American body politic. To rationalize their recrudescence, to downplay them, is to risk fatal injury. To gloss over the autocratic meme of the demagogue who has become their improbable agent – releasing the hate and aggression in the twisted minds of those who have breached the restraints of the country’s political super-ego – is irresponsible.  A deep sense of grievance (well-grounded or fantasy) is one thing; putting power in the hands of a mentally unbalanced bully is an act of delinquency.

The companion justification for this collective act of juvenile pique asserts that Americans have good reason to reject a distant governing elite. This proposition has three ancillary postulates of dubious validity: the issue is elitism itself rather than whom the elite serves; all “populist” rebellions draw from the same pool of discontent; and there is actually such a thing as “draining the swamp.” Taken together, these notions represent the poverty of political discourse in the country today.

As to the first, the powerful forces transforming American society are the concentrated business (in particular, financial) interests; the military/Intelligence/ industrial complex; and a political class obedient to those forces. Today, the United States is manifestly structured as a plutocracy with an autonomous, companion ‘security’ sector. Only a minuscule number of public figures challenge them.

As to the second, Trump is an integral part of the power elite. His transparent “populist” sloganeering was the con of a talented snake-oil salesman. It has only taken a few weeks for the mask to drop. To pair Trump with Bernie Sanders was always wrong; now, it is absurd – mental shorthand for lazy minds.. Despite some overlap in the source of aggrieved feelings (e.g. job insecurity), backers of one or the other always diverged in their basic orientation toward government and the public order. None of those drawn to Sanders were latent participants in a lynch mob or Kristalnacht celebrations, or would-be “black-site” capos.  Nor did they live in dread of Obama’s Gestapo coming in the dead of night to seize their life-giving Ak-47s and M-16s. And environmental activists did not flock to the O’s standard.

Finally, it is staple of American electoral politics to run on a platform that promises “cleaning-up” Washington, or the state house. Look at the line from Carter, Reagan, Clinton, Bush, Obama to everyone in 2016. It’s part of the B.S. stream that keeps our turgid political campaigns moving. In fact, the national government grew substantially by every measure under Reagan. As for Obama’s

prophetic message of renewal and transparency, it was almost as much an outright fraud as Trump’s Three Card Monte con job – albeit far more suave . He advertised himself as a vintage 1990 Bordeaux and delivered a 2002 Rhone wine.  As for the Orangutan’s pledge to clean up Washington, a public as gullible as America’s now could credit a similar claim by the “Creature from the Black Lagoon.”

In a way, the exercise is part of a ritualized performance whereby the myths of our national culture are revived – and rejuvenated – in theatrical displays. A reaffirmation of the American creed of rugged individualism and emotional catharsis at once. After which, we get back to business as usual. That includes cashing checks from Washington by ranchers, farmers, workers in Houston’s Space industries, in Arizona and Southern California cities that would be nearly uninhabitable in the absence of vast governmental projects that brought them water and electricity, and everywhere by grateful recipients of Social Security or Medicare reimbursements – regardless of whether they’re Tea Party militants or not.  Even an aging Ayn Rand did not hesitate to take time off from writing her books of fantasy fiction to bank her Social Security payments and to keep up her Medicare eligibility.

If Trump were actually to disrupt the flow of those checks, the masks of the passion play performance would be stripped away. Of course, he will take pains to ensure that the distribution of the largesse to the big boys will continue to flow smoothly.

Powerful Establishment interests, they fear only public authority that they cannot control. They are quite happy to exploit it as an instrument to advance their pecuniary interests and as a trough for indulging their insatiable appetites. To lump together all of this under the label “populism” is an exercise in intellectual escapism – where it is not a blatant strategy to tar all those who challenge the entrenched narrative telling us that all this is a good and necessary arrangement. To make the essential differentiations, and to delineate the various movements now surfacing across the Western world, the first step is to identify some objective realities. In summary fashion, they can be stated in these terms.

  • Globalization, in its economic expressions, has altered conditions within the developed world. Integration of markets coupled with the transnational organization of business and finance have made economic forces less susceptible to management by national governments. That means that they are less accountable. International organizations such as the IMF and the Bank for International Settlements have limited direct authority to regulate or control. Moreover, they are heavily influenced by private interests operating either directly on them or via the governments of the most influential member states. A supranational organization like the European Union or the European Central Bank do have stronger powers – in principle. However, they have too have been coopted by private economic interests working hand-in-glove with officials and the leaders of national governments. Consider the handling of Europe’s debt crises.
  • This does not mean that national governments have been emasculated to the point of terminal impotency. It does means that they are corrupted to the point of being non-accountable to their democratic electorate and citizenry. Money is the main corrupting factor – money that is politically fungible and whose influence is magnified by the careerism and selfishness that pervade public life in most Western countries. One glaring example is the tolerance for tax havens (a number of EU countries and the U.S. as well as the “Cayman” archipelago) and the competition among countries to lure businesses to set up shop in their jurisdiction by offering a rich array of inducements. This is not a technical problem rooted in globalization; it is a political problem.1 Technically, it could be dealt with overnight – were there the will.

“Globalization need not have taken the course it did,” as Dean Baker has explained. “And there was nothing inevitable about the patterns of trade that resulted in such an imbalance. Policy decisions—not God, nature, or the invisible hand—exposed American manufacturing workers to direct competition with low-paid workers in the developing world.”

  1. This state of affairs has been encouraged by the dulling of competition among political parties. These days, differences of philosophy, of economic strategy, of messaging are so narrow that in all major countries we should

view these putative rivals as factions (or currents) within one monolithic party. The main culprits in this pernicious development are the parties of the so-called “Left” – the social democrats in Europe, the Democrats in the United States. Look at the United Kingdom where for six years the Conservatives, their Liberal Democratic partners, and Labour were indistinguishable. This did not represent a compromise but a sell-out to the point where the locus of opinion among the three on key issues was somewhat to the “Right” of Margaret Thatcher. Labour went so far as to buy into the long discredited voodoo economics whereby “austerity” was the sole possible cure for the chronically depressed, post-crash economy. Ramsey MacDonald redux.

In Germany, the SDP coalition partners of Angela Merkel have pretty much adapted themselves to being a junior partner of a conservative government in exchange for the perks of ministerial office. As to France, the less said the better. There, President Francois Hollande has all but shuttered his party’s franchise in appointing as his Economics Minister the former head of the MEDEF – France’s counterpart to the Business Round Table.  M. Emmanuel Macron – who is running for the Presidency as an independent, the former Prime Minister M. Manuel Valls – the Socialist Party’s unofficial favorite now imperiled by results from the first round of the primary where he trailed

Benoit Hamon (representative of the PS’ “fed-up with me-tooism” wing), and the front-running conservative M. Francois Fillon are so nearly identical in viewpoint as to make one wonder what that threesome would have been debating beyond Paris’ policy on transgender bathrooms. That is why Marine Le Pen’s Front National has seemed almost sure to make it into the run-off. M. Fillon should win easily this contest of the clones, defeat the FN, and will impose his promised reactionary agenda of uprooting the country’s network of social programs and returning the French economy to the glory days of the 1920s – all in the name of 21st century “reform.” Fillon’s guide-path to the Elysee has been interrupted by revelations that his wife Penelope has, over the past 15 years, been tutoring his staff in Welsh – to more fully appreciate Dylan Thomas – at the public expense of Euros 500,000. In the event that the Fillon campaign collapses under the weight of Penelope-gate, Macron may sneak through and then defeat Le Pen. He, rather than Fillon, would lead France backwards to the same Proustian destination.

Fillon’s rise is emblematic of current European politics. He vaulted into the lead by shifting his campaign message to stress the neuralgic triad of race/migration/terror. Unlike Marine le Pen, who genuinely believes in her rhetoric, Fillon sees it as a tool to win power and to advance a drastic neo-liberal project. This approach is analogous to the Tory’s successful strategy across the channel.

The gold standard for this cynical strategy is Donald Trump’s arousal of the “mob” to usher in a government run by a pack of carnivorous billionaires.

Italy’s Matteo Renzi, head of a ‘leftist’ coalition government, was headed in the same direction. His proposed constitutional reforms were a requisite for pushing through the necessary legislation. Recognized as such, they were rejected in November’s referendum by a 60% majority of voters who saw through the ploy. Predictably, the world’s press unanimously decried the result as another troubling sign of how “populism” was undermining Western democracies. If you resisted becoming a disposable pawn in a globalized economy run for others’ benefit, you were declared a “wreaker” – to borrow an old Bolshevik term.

There is nothing mysterious or recondite about what is going on. The neo-liberal program as applied since 2008 is a uniform failure as measured by economic growth. Europe as a whole has suffered a lost decade. Half-a-dozen EU members have been brought to economic ruin with damage deeper and more enduring than that inflicted by the Great Depression of the 1930s. But it is a success in further transferring wealth from the salaried classes to those in a position to extract economic rent via control of finance (mainly) and commerce (secondarily). That rent is extracted from workers whose organized resistance has been weakened by the attack on unions and from consumers cum tax-payers via the exploitation of privatization of public assets, preferential tax treatment and the neutering of government regulation. The aim now is to extend and deepen the process. The domination of the democratic electoral process by the lavish application of money and media control facilities the campaign by hamstringing any potential opposition.

These people observe each other and emulate each other. Phrasing, maneuvers, metaphors – even gestures – jump borders within weeks. They admire one another in the way that skilled slight-of-hand artists admire a talented practitioner of the trade. Moreover, they are on the lookout to see what one can get away with: contradictions, air-brushing their own statements, playing fast-and-loose with facts, outright misrepresentations, slandering of opponents, abusing media relations. The inventory of tricks is enlarged by exploiting a lazy and supine press, rampant careerism, and pervasive ignorance.  Globalization’s most enduring – if not final – legacy may well be the spread of political chicanery.

The consequence is that across the Western world roughly 15-20% of the populace is effectively disenfranchised. Their docility until recently was taken for granted. Now, our political elites express shock that they are bestirring themselves.* Davos man is suffering heartburn.

  1. HISTORY

The post-war civilizational compact that brought peace, prosperity and stability to Europe (and North America) was grounded on the principle that all citizens have a right to and deserve a share in prosperity as well as political rights. Leaders in effect pledged that mastery of the business cycle would and should allow for provisions that ensured a certain minimal well-being for the mass of the populace. Social Democracy, Christian Democracy, Gaullism, one-nation Toryism – all accepted this conviction.2

Success in routinization of economic growth, with just a few minor hiccups, created the wherewithal for giving tangible expression to that idea. Social peace, in turn, was a vital factor that facilitated the working of effective state macro-economic management and a productive economy. The model – perfected in Western Europe – became the reference point for those around the world aspiring to the “good society” – competing with, and gradually overtaking the American variant.

It now is being eradicated in a wave of reaction masquerading as ‘reform.’

The drastic rise in inequality of reward is the combined effect of neo-liberalism’s intellectual triumph and a global economic system organized in accordance with

  1. That inequality itself is now a factor dragging down their economies where weak demand is a principal cause of poor performance and austerity policies the counter-productive response.**

Maldistribution of wealth is undermining the bedrock of democratic capitalist societies. For while it is true that the post-war compact did not predicate egalitarianism, it did emphasize fairness. “Fairness’ was interpreted differently from country to country – leaning toward egalitarianism in Scandinavia, less so in France and southern Europe, with the United States the outlier. Much of all countries’ electoral politics centered on debates as to where the locus of fairness lay. Not in dispute was the idea that all should share in prosperity, and that the state had a responsibility to use fiscal policy, social legislation, and regulation of the private sector to ensure that. That consensus no longer exists.

Populism is the belated reaction of everyone frustrated by the ever sharpening contrast between hopes and aspirations and darkening realities of what they might expect for themselves and their children. Meanwhile, the folks at the top wait confidently and expectantly above the fray they have engineered – ever ready to swoop down to strip the remains of social democracy by way of privatized public assets, no-bid contracts, tax and regulatory havens, commercially owned toll roads, student loan monopolies, rapacious buying up of foreclosed properties with federal incentives, and myriad tax breaks.

OPPORTUNITY is the new catchword – especially so in the United States where it was avidly promoted by Barack Obama as well as by Republicans. It’s a nice idea. The American Dream holds out the hope that anyone can be a success (i.e. rise to the top) by dint of individual effort to make the most of one’s natural endowments. It’s the reification of the Protestant Ethic. Those who don’t “succeed” are typed either as “takers” in the Republican lexicon or the “less fortunate” in the Democratic lexicon.3

In fact, there never has been a close approximation of equal opportunity. There always are all kinds of unevenly distributed advantages and drawbacks at work. These days, socio-economic mobility has declined drastically to the point where it is less than in Western Europe. The bigger issue, though, is the deployment of “opportunity” as a concept to mask ever widening inequality. Only a relatively small fraction of people in any society will be “successes’ in the sense that it is used in America. In other words, those in the top ten percentile. Does that mean that the current distribution of national riches is acceptable? That the greater equality of the 1950s and 1960s was an aberration – even though GDP grew and productivity grew much faster than it has in recent decades? That the calculated government policies that have driven the widening income gap are somehow part of the natural order of things? These questions should frame the debate in a healthy democracy. They do not now do so either in the United States or in Europe.

There is another “red herring” that obscures the forces that have produced the present state of affairs and distorts the discussion of alternatives. It is the idea that structural forces alone rather than public policies that are the reason for these income trends. That is a convenient way for the beneficiaries to say “forget about progressive reform, it’s all systemically determined. Get with it.” In truth, there is globalization and there is globalization. To a certain extent, the integration of world economies will push down wage rates – absent intervention. But there are myriad ways to compensate for it – noted below.

As for “robotization,” this is a recurrent horror story that has waxed and waned in prominence since the 1950s. Technological changes do not come as revolutions; they do not turn things upside-down suddenly. They are gradual. We heard little on the topic in the period leading up to the 2007-08 financial crash. The crash and ensuing massive loss of jobs had nothing to do with “robotization.” The subsequent transformations in the condition of salaried workers, too, have little if anything to do with “robotization.” The gig economy, the explosion in the exploitive use of temps, the off-shoring of millions of manufacturing jobs to places like Mexico thanks to NAFTA, the cutting of pensions, etc. etc. are the result of campaigns by business and investors, abetted by government, to grab a bigger share of national wealth.

If those who make the case that the effects we’ve noted are inescapable were intellectually honest, they would acknowledge that there are simple, logical ways to ameliorate them. One is to raise taxes on the financial and business sectors (as well as the rich generally) and apply the proceeds to public programs which would raise the standard of living of working people. That means comprehensive health care, bolstering Social Security, child care facilities, affordable nursing homes and assisted living, higher education funding and student grants, subsidized mass transportation, serious drug treatment programs, etc. The second is to lower taxes on wage-earners correspondingly. Third, the strengthening of trade unions would have the direct effect of striking a healthier balance between labor in capital with the certain consequence of a rise in wages. Socialist? Utopian? A drag on the economy? In the U.S., the evidence is that these measures would boost the economy and bring national wealth distribution more in line with what it was 60 years ago – the Eisenhower “golden age” of All In The Family and I Love Lucy so many claim to be nostalgic about. ***

III. TERROR & IMMIGRATION

Every significant social phenomenon is multi-causal. It is the West’s misfortunate that its fragilities should be exposed by the combined stresses of economic insecurity and the threat of terrorist violence. The latter has been magnified by the endless American instigated and led wars in the Islamic world with the resulting waves of immigrants seeking shelter in Western Europe. (In the U.S. there are no waves of Muslim immigrants – but illegal Latino immigrants have been summoned forth to fill the emotional/ideological gap). Anxieties about one have reinforced anxieties about the other. The brew is a potent one which has had the dual effect of intensifying free-floating feelings of insecurity and creating a focal point for Xenophobia and bigotry.

European politics have been roiled as a result. The tangible manifestation has been to put wind in the sails of pre-existing jingoist parties and new far-Right ones. That is evident from Britain to France to the Netherlands to Austria and even to Scandinavia (Denmark above all). Each country has its own peculiarities and there are important differences among these parties in terms of bases of support, focus and program. Italy’s Five-Star Movement for example avoids all rhetoric implying racism. In Eastern Europe, parties that deserve the label neo-Fascist have surfaced. In Poland, one has gained power. In Hungary, the tendency is contained by a thinning membrane of legality and “proper” nationalism. In the

light of history, it is understandable that the phenomenon should take on a more ominous coloration at the Eastern end of the continent.

This is all a much discussed topic and limitations of time and space counsel against delving deeply into the subject when there is nothing noteworthy to add. One thing should be said: in this domain, as on economic matters, there is a failing of political will at the national level aggravated by the fragmentation of authority at the EU level. Division of powers, and politics, provides a convenient escape hatch for officials at both levels who find who find it irresistible to shift blame onto the other.

Western democracies are now self-evidently vulnerable to demagogic adventurers and movements with autocratic, if not neo-fascist, overtones. The only antidote is revival of a constructive and responsible populist political culture that observes the principles of government of the people, by the people, for the people. That is the essential condition for strengthening democracies’ political super ego and, thereby, for neutralizing the forces of bigotry and xenophobia.

 The need is compelling. Two questions remain:

  1. Do our political and economic elites have the prescience, skill and resolve to accomplish so delicate a task?

 One must be skeptical. These are the very people who fostered and have benefitted from neo-liberal globalization and its domestic concomitants. Enlightened, far-horizon thinking is not their forte. Only a major world crisis that threatens their control directly could shake their complacency. In those circumstances, it is “populism” rather than populism that likely would prevail – witness the Brexit and Trump primal screams in relatively benign circumstances

 

  1. Should it be undertaken at the national or the international level?4

 The national state remains the locus of political action – however constrained by transnational factors. The neo-liberal elites exercise complete control in Brussels, in Frankfurt, and in Washington on 19th Street. (Ask the Greeks, the Italians, the Portuguese and Francois Hollande about that). Yet, action at the national level is reactive rather than initiating. That favors “populism” over populism

  1. Joseph Stiglitz “Globalization & Its Discontents” (Norton 2003); Stiglitz “The Great Divide: Unequal Societies and What We Can Do About Them” (Norton 2016); Stiglitz “The Euro: How a Common Currency Threatens The Future of Europe (Norton 2016)

 

  1. The arduousness of the transformation that led to the Europe enjoyed today can be easily forgotten. The distress of the postwar years is brought back by Tony Judt in Postwar: A History of Europe Since 1945 (New York: Penguin, 2005).
  2. Barack Obama Recites the Catechism of the National Creed

We will have to move forward as we always have — together. As a people who believe that out of That, after all, is the story of America — a story of progress. However halting, however incomplete, however harshly challenged at each point on our journey — the story of America is a story of progress. …

I’m proud to say that we have laid a new foundation for America. A new future is ours to write. And I’m as confident as ever that it will be led by the United States of America — and that our best days are still ahead.”

 

  1. A rigorous, fine-grained examination of this crucial issue is provided by Adam Tooze, “A General Logic of Crisis” in The London Review of Books Volume 39 Number 1 5 January 2017

 

*The plutocrats’ compulsive denigration of the poor, the ill and the dispossessed is perhaps the most telling evidence of status obsession fed by insecurity that is at the core of their social personality.  They find it necessary to stigmatize the latter as at best failures, at worst as moral degenerates – drug addicts, lazy parasites – in part to highlight their superiority and in part to blur the human consequences of their rapacity.   Americans have a craving to believe in their own virtue – as well as to have others recognize it.  The perverse pride in beating the system cannot in and of itself compensate for the feeling that you’re a bad guy. A reputation as hard-nosed or flinty is prized, but a SOB – no.  Blankfein again: “I have been doing the Lord’s work.” No one laughs in public – so I’m right about that.

 

Plutocracy in the current American style is having pernicious effects that go beyond the dominant influence of the rich on the nation’s economy and government. It is setting precedents and modeling the unaccountability and irresponsibility that are pervading executive power throughout the society. Two successive presidential administrations and two decades of rogue behavior by corporate elites have set norms now evident in institutions as diverse as universities and think tanks, the military and professional associations – even private clubs. The cumulative result is a widespread degrading of standards in the uses and abuses of power.

Plutocracy also raises social tensions in society. Logically, the main line of tension should be between the plutocrats and the rest – or, at least, between them and all those with modest means. But that is not the case in the United States. While it is true that there were bitter words about the Wall Street moguls and their bailouts during the first year or so after the financial collapse, it never became the main line of political division. Today, outrage has abated and politics is all about austerity and debts rather than the distribution of wealth and the power that goes along with it. The deep-seated sense of anxiety and grievance that pervades the populace manifests itself in outbreaks of hostile competition among groups who are in fact themselves all victims of the plutocrats’ success in grabbing for themselves the lion’s share of the country’s wealth – thereby leaving the rest of us to fight for the leftovers. So, it is private sector employees pitted against government employees because the latter have (some) health insurance, some pension and some security relative to the former who have been shorn of all three. It’s parents worried about their kids’ education against teachers. Both against cash strapped local authorities. Municipalities vs states. It’s the small businessman against unions and health insurance requirements. It’s doctors against patients against administrators. It is university administrators against faculty and against students, faculty against students in competing for a much reduced appropriations. It’s all of those against Boards of Regents and state Governors.
** TRUTH CHALLENGED ECONOMICS

Economists claim their discipline is a science. If so, it is an odd one. For the deeper you probe its foundations, the shakier its superstructure looks. Modern day economics is built on two convenient, dogmatic untruths. The first is the rationality of markets that, as modeled in the Equilibrium Market Theory (EMT), which has been dominant for a generation, presumes a systemic logic that precludes sharp breaks or excesses. The second, interlocking premise is that humans are utility maximizing animals who act in accordance with a calculated self-interest, which ensures those stable, rational markets. Both premises are at variance with observed reality. This incongruity has not prevented professional economists, almost unanimously, to promote fanciful theories that became ensconced in the thinking and behavior of central banks, the IMF, regulatory agencies and Wall Street – as well as the AEI. So well ensconced that they survived the rude encounter with truth in the crisis of 2008 – 2009. That phenomenon reminds us that the age of dogmatic faith is not over. It is the objects of faith that have changed.

 

The predilection for single dimensional constructs of mono causal explanations is incompatible with truth seeking. There is no aspect of man in society that is otherwise. Neo-liberal economists are sociological monophysites. That is the heart of the matter. They assert that humans, and therefore society, has only one, unitary nature – that of calculating, narrowly self-interested economic man. Observation of the world around us tells us that this is untrue. Man and society have multiple natures. That is what makes them human.

Neo-liberal economists’ faith in their dubious premises leads them down a path that skirts reality. That is manifest in a doctrinal approach to crucial economic phenomena central to interpretations of real world conditions – and, equally, to policies they guide.

(For a systematic, unsparing critique of the doctrinally driven distortions of today’s mainstream economics orthodoxy, see James Kwak. “Economism: Bad Economics and the Rise of Inequality” (Pantheon 2017)

 

Reality based assessments of the United States’ economic predicaments should begin with a set of bedrock questions.  What is the country’s actual wealth?  How is it distributed?  Why is it distributed in this way?  What is the role of government in producing that distribution?  What are the consequences of that distribution?  What are the reasons for a possible reallocation of national resources?  How might it be done?  Is that a desirable or undesirable goal?  How could it be done while maintaining a stable functioning of the economy?  Some economic tools are useful to refine the answers.  Much of the rest is ritual, theoretical filigree for scholarly archives or mere distraction?

 

***The United States does not pay for things of social value because IT CHOOSES not to – not because it cannot afford them.  IT has multiple antecedents: society as a whole; elected representatives; government officials; political parties; all those powerful interests that distort the process in every facet to their own advantage.  The choices made in recent years include expending $1 trillion to $2 trillion to hunt spectral terrorists in the far corners of the globe to little effect.  It includes the $87 billion spent annually on our intelligence agencies.  It includes the huge tax breaks given by the Bush administration concentrated on those in the upper 2% income bracket.  Between 2002 and today that diverted approximately $2.7 trillion dollars out of the Treasury into the pockets of the wealthy (adding to the debt servicing of resulting deficits).  To paraphrase Senator Everett Dirksen, “a trillion here, a trillion there, and soon you’re talking about real money.”  $ 7 – 8 trillion could pay for all the state/municipal budget cuts, the rebuilding of the country’s infrastructure, a serious energy program, environmental clean-up, aid to the elderly.  (As for health care, we could pay for first rate coverage of every citizen at a cost one-third lower than what we now spend were we to switch the kind of single payer system that works nearly everywhere else in the developed world – freeing another trillion or so for other purposes).

This new economic order constitutes a counter revolution against the epochal transformations of the post-war era. Almost every feature of the Social Compact forged then is either being rejected or called into question: social equity, containing disparities in wealth distribution, ensconcing government as the legitimate and necessary guardian of the public good, giving everyone a piece of the action as well as a piece of the pie, valuing compromise and conciliation at the EU level.


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2 COMMENTS

  1. Populism is sexy. Particularly since 2016 – the year of the Brexit referendum and the election of Donald Trump – it seems as if journalists just cannot get enough of it. In 1998, the Guardian published about 300 articles that included the terms “populism” or “populist”. In 2015, these terms were used in about 1,000 articles, and one year later this number had doubled to almost 2,000.

  2. A historical perspective can be helpful in understanding some of this. I have read about the political influence of the public as a mob from the perspective of 18th century British, albiet Tory, naval officers. Other influences are the writing of Samuel Clemens on the subject. He was rather pessimistic, with good reason. Thomas Jefferson and Thomas Paine saw the problem early on, and warned against it. To wit: an ignorant (ne stupid) people are easily controlled by demagogues, who themselves are played by rich power brokers. Nothing has changed except the technology to accomplish the above. Alas.

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