I've always been somewhat awestruck by the stupefying inhumanity of economists who see the global economy as this perfect system in which the abstract homo economicus, as if such a being existed in flesh and blood, rationally pursues what is in his economic best interest. And how different nations do the same thing in a global division of labor in which if you were good at manufacturing but just so-so in agriculture, you develop your industrial capacity and let your agricultural production die. Since you're good at manufacturing stuff, you can export your finished goods to make the money you can now use to import cheaper food than can be produced domestically from countries who are better in agriculture.
For economists of this stripe the Good equals the Cheap. And the great mortal sin is to erect trade barriers, tarriffs, that would protect industries, well, because that would be inefficient and causes consumers not to get the best price. I know that tariffs can in some cases be a form of corporate welfare, and I know the kinds of problems that arise with trade wars, but to exclude the possibility of protecting some industries in principle defies common sense. Sometimes there are other values besides getting the lowest prices that are more important.
We just accept it as inevitable that the market forces trump, for instance, the need to preserve cultural traditions and values. What does it matter to theorists that agriculture and the traditions and way of life of most of a nation's population get destroyed? The benefits of lower cost are so much more important. Hey, all those displaced, independent farmers having to find work in sweatshops, or if more ambitious, to emigrate to susbsistence wage jobs in more developed countries, are better off because the the prices they pay for the stuff they have to buy are Wal-Mart cheap That they have hardly any money to buy even cheap stuff with, well, that's just the way it goes.
So the idea that to be coservative means to be for a classic, laisser-faire economy is one of the great oxymorons of our time. For no greater force has the world ever seen which is destructive of traditional values and the traditional communities that nurture them than classical capitalism. The two ideas--capitalism and conservatism just don't go together in reality.
The only thing that capitallism conserves is the privileges of the small percentage of the globe's superwealthy who have the resources to weather any of the destructive effects their system that rewards them so generously wreaks on everyone else. Everyone else is vulnerable. Everyone else is under threat now of having his job be outsourced in the flat world celebrated by overclass apologists like Thomas Friedman. That's reality. Get used to it, we are told. Adapt or die. We are all replaceable in the Great System that cares only about lowering costs and increasing profits for those in the investor class. It's all perfectly rational if you look at it dispassionately from the economists lofty perch or from within the gated communities of the superwealthy.
Well, is it inevitable? Must we all accept that the system is reality, and our job is only to find some way for ourself and our families to survive in it. Or are there political solutions, ways in which people can organize themselves to make the system serve the needs of the many rather than the needs of the few?
In John Gray's NYRB review of Suzanne Berger's How We Compete: What Companies Around the World Are Doing to Make It in Today's Global Economy, he writes:
Devoting a significant part of her analysis to the dilemmas surrounding outsourcing, Berger concludes that the threat of continuing job losses in the US is at least partly real. Many economists insist that as old jobs are lost, new technologies and industries will appear to replace them. Berger does not entirely reject this view, but suggests that the experience of those who have been laid off and cannot find jobs without accepting large reductions in pay may point to a trend that mainstream economics has missed: "After crying wolf so often, perhaps this time the pessimists about technological advance and employment have really spotted one." Outsourcing poses a real risk to employees; but Berger believes a "race to the bottom" can be avoided if companies accept that employing cheap labor is not the most effective way of responding to global competition. The activities that succeed over time are those that involve conditions —such as long-term working relations with customers and suppliers and specialized skills—which companies whose main asset is cheap labor cannot match. A company policy of forcing wages down is not a recipe for long-term corporate success.
Berger is clear that acting on their own, companies cannot make all the needed adjustments. Governments have a major part in creating an environment in which businesses can plan for the future, but how governments do this will depend on the type of capitalism they must deal with. As she acknowledges in a lucid discussion, capitalism comes in several varieties reflecting different cultural traditions and political systems. Within this wide variety two different kinds of market economy can be distinguished:
liberal market economies, like Britain's and the United States', in which allocation and coordination of resources takes place mainly through markets; and coordinated market economies, like Germany's and Japan's, in which negotiation, long-term relationships, and other nonmarket mechanisms are used to resolve the major issues.
The point is that the economics is not necessarily the war of all against all, as the laisser faire Social Darwinists, now in their Libertarian incarnation, want us to believe. The goal of economics is not to achieve some theoretical lowest price possible, but to serve human needs. Markets are half of what makes any economy work, but the market is not some sacrosanct theological principle that must at all costs be protected from political interference or regulation. Markets are not the whole story. Politics is the other equally essential part of how any economy works, and we have to see Libertarian ideology for what it is--a justification for a system that serves the needs of the superwealthy. It's a political ideology that bends the economy to serve a particular narrow set of interests. That we accept it as a model for how the economy works is a political choice when other choices are possible. But don't expect lively debate about it in the Mainstream Media. Such a debate is simply not in its interests.
So the central question that should be debated is this: Which is the tail, which the dog--the economy or the politics? If you think that letting the chips fall where they may as the invisible hand of the market does its thing, then you feel the economy is the dog, and politics the tail. If you feel that the economy should be managed to serve human needs, then for you politics is the dog, and economics the tail. I, for one, am in the latter group. It's the distinction right now that I believe is at the heart of the difference between those who think of themselves as Libertarians or Progressives.
And it's the
split that defines the difference between traditional New Deal
Democrats and Democrats like Clinton, Bayh, Lieberman, and the rest of the Republican Lite gang at the Democratic Leadership Council. Perhaps the most disturbing thing about the Democrats since the 80s is how much of its leadership has been coopted by Libertarian thinking. This is a big part of what makes our politics right now so confusing and ennervating. The politics of lasiser-faire is no politics at all; it's a politics of letting the economic tail wag the poltical dog; it's a politics of having given up.
Economies can be and should be managed, and they should be managed to meet the needs of the majority, not the elite minority. Because there is the danger that they might be managed poorly does not preclude the possibility that they could be managed well. Germany and Japan are just one point in case. The problem does not lie on the level of what is technically possible, but rather on the level of political will.
The tragedy is that in order for that will to develop, things will have to get very bad. Maybe George Bush is on a mission from God. To push this country to reductio ad absurdum of classical economic theory, so that it can finally be seen for what it is, with the result that we can finally move beyond it for good.