Why do some societies stagnate and others develop? It has a lot to do with the level to which elites dominate the system. And elites dominate the system because the basic economic infrastructure allows them to. Let me draw an analogy from what has been traditionally described as the difference between progressive crops like coffee and rice and reactionary crops like sugar and cotton. I came across this passage about Brazil in the period before World War I that makes my point. It's from Harvard scholar Jeffry Friedan's Global Capitalism:
Brazil demonstrated the impact of different crops, for it contained both failed and successful regions. Its northeastern agriculture was based on a large plantations growing cotton and sugar. Landowners relied on formerly slave and informally tied labor to keep its estates running. Plantation owners worked hard to keep farm workers in their place, for without captive labor the plantations would collapse. At the other extreme, in the southeast around Sao Paulo, a vibrant agricultural economy based on coffee was developing. The constant demand was for more farmers, more labor, to open up new lands. Many farms were small and many farmers worked for themselves; if they worked for others, they were paid decent wages and moved freely from employer to employer. Here the wealthy repositioned themselves in the export sector, finance, and commerce. This Paulista elite, no less self-interested than the northeasterners, encouraged the opening of new farmland and the development of ever more profitable farms. The northeast stagnated while the southeast boomed. p. 101.
Remind you of anything? The point is that where the system is dominated by elites, stagnation usually follows, where there is a dynamic, diverse groupd of economically independent actors, societies flourish. Friedan goes on:
Th Brazilian experience recalls analogous regional differences in the United States. America's reactionary crops were the cotton, tobacco, and cane sugar of the South, while the progressive crops were the grain a cattle of the North and West. As in Brazil, the former plantation areas remained backward and stagnant for decades, while the small family farm and ranch regions grew dramatically. In fact the system of legal apartheid that reigned in the American South--with its social and political exclusion of the descendants of slaves, miserable educational system, hostility to labor recruiters, and underinvestment in transport and an impoverished, captive labor force in a region whose oligarchs were dependent upon a ready supply of cheap unskilled labor. pp. 101-02.
What's interesting about reading Friedan's book is the perspective it gives you that helps you understand what was going on in the U.S, in this instance in the period between 1870 and 1914, as a part of a huge explosion in global trade. And how the American South at that time had more in common with South American oligarchies than it did with the rest of the United States.
This is a point I've made before in reference to Michael Lind's book Made in Texas, but the point bears making again. All societies tend toward oligarchy when the economic infrastructure allows for the dominance of the many by the few. The big swallow the small unless the small have means to organize and fight back with their power in numbers. And societies resistant to oligarchy usually comprise alert, knowledgeable, economically independent actors--small business people, family farms, professionals--who are self reliant and not dependent for their livelihoods on the Boss. That was the original vision the founders had for the American Republic, and it was a vision that came into violent conflict with the vision of the southern oligarchs, who if it were up to them would have run the country much as it was run in Northeastern Brazil, an area today still afflicted with wretched levels of poverty.
So the north won the war, but it wasn't long before the founders' vision was threatened from another quarter. This time from a new power developing in the industrial north. Apologists for the South rightly saw the irony: The Robber Barons were in many ways more brutal and avaricious than the southern planters, and the power that they amassed in the late 19th early 20th Century could have forced the country into the kind of crony capitalism typical of Indonesia and other parts of Asia where crony capitalism reigns. This natural tendency was checked by the trust busting of Teddy Roosevelt and later by the New Deal initiatives of his cousin Franklin Roosevelt. But now the Libertarian right has been doing all it can to dismantle the protections the Roosevelts gave us, and we really have no idea yet how naked and vulnerable we are becoming. We take for granted to the normalcy that the New Deal brought. People could quibble about this or that program, and of course there were abuses. But for the most part it worked well in the interests of the majority of Americans, and it kept corporations in check to some degree.
Now this is the challenge that I put to readers of this blog who tend to be small government Libertarians and who think I'm overstating the threat: Prove that I'm wrong when I say that the structural changes our economy is currently undergoing are making us more like a "sugar" economy and less like a "coffee" economy. I realize that the American economy is complex, but prove this thesis wrong: If there are not enough economically independent, self-reliant citizens to counterbalance the power of corporate giants, each of which operates as if it was a quasi-autonomous feudal duchy, how can we citizens stop the inevitable slide into neo-feudal form of peonage? Isn't that essentially the lot now of the employees at Wal-Mart? Are we just expecting the corporations to be nice, and continue giving us our health care and maternity leave? Maybe some will, but see how long that kind of thing lasts when their competitors start cutting those kinds of benefits, and they argue they have to cut them to stay competitive. So here's the question: If things are going in one direction or the other, which one is it--the neo-plantation economy typified by Wal-Mart or a movement toward small, diverse, independent, self-reliant businesses? To me the answer is obvious.
You Libertarians who say you're against crony capitalism and corporate welfare, what power do your opinions have to stop the ineluctable movement toward on the one hand the Wal-Martization of the economy, and on the other greater degrees of cronyism and the corporate corruption of government? You say that's not the Libertarianism you stand for, but who cares about your principled Libertarianism--it's toothless. The other guys who use Libertarian arguments as a cover to aggregate more wealth and influence are the ones with the power.
This is not some parlor debate; it's about who has the power and who doesn't. How can the government that governs best when it governs least fight back when it doesn't govern at all, when it has simply become the tool of corporate overclass? This is the thing I want some Libertarian to explain to me: Why do you believe the primary threat comes from government? Isn't it obvious that the real threat comes from the corporate private sector and its domination of government? And isn't the only solution for the People to take back the government and use it to protect their interests? What other alternatives are there? What other tool is there to protect our interests?
Tell me, give me some reason to be optimistic--give me a Libertarian scenario in which there is a counterbalance this trend? I want to know, really. Prove me wrong. Maybe I am. But if I'm not, then we have to talk about what needs to be done to create the counterbalance. And for me, electing a Democratic congress later this year and Hillary in '08 are hardly the answer.
Update: See this Atlantic Monthly article about how Wal-Mart might be a key player in the larger strategy to get a sane national health-care program.