I just finished reading Rick Perlstein’s The Stock Ticker and the Super Jumbo yesterday (an earlier version of the essay and the various responses is available here, but buy the book if you can for extra post-election analysis goodness). It’s a great read, and a smart essay, but I think it buries its real argument.
Perlstein tells the Democratic party that if it wants to succeed, it needs to be like Boeing in the 1960’s and 1970’s, and not like Boeing in the 1990’s. In the 1960’s and 1970’s, Boeing prioritized long term, risky investments over short term responses to stockmarket pressures. This meant that Boeing won incredible profits through building the 747, but also had its shares trade at a considerable discount, so that it was vulnerable to corporate raiders. In the 1990’s, it signalled its willingness to kow-tow to the short term demands of the stock market, by refusing to compete with Airbus’s plans to build a new super-jumbo. The stock market loved it – but Boeing also missed out on a crucial opportunity, because it was prioritizing short term results over long term gains.
Hence the lesson for the Democratic party is that it should prioritize long term gains over short term ones, Jumbo over Dumbo. It’s losing out with voters because they don’t know what it stands for anymore. It keeps on chasing short term advantage (like Boeing in the 1990’s) and sometimes wins temporary gains, but only at the cost of cannibalizing its long term asset of party ID - voters don’t identify with the Democrats because they don’t know what they should be identifying with. Perlstein says that the Democratic Party needs to return to its populist roots, and build a coherent identity up from these roots.
Thus, the main contrast that he draws in the essay is between short term thinking and long term thinking. Short term thinking is hiring Dick Morris, and engaging in a Clintonian process of “triangulation” in order to win over voters in one election, while muddying the Democrats’ appeal in the longer term. Long term thinking is building a set of coherent policies that build on the Democrats’ core strengths, while adapting them to new political realities. Now I reckon that Perlstein is using the right metaphor (even if Boeing is doing a little better now than it appeared to be doing in the summer of 2004), and is also right on the main underlying argument. But short term thinking versus long term thinking is the wrong way to connect metaphor and message. It results in some confusion among his commenters, and gives the more hostile ones the opportunity to take a couple of unwarranted cheap shots. What Perlstein is really trying to get at, I think, is what one might call the difference between market making and market taking (or at least, this is the lesson that I take from Perlstein’s extraordinary book on Barry Goldwater). To capture this difference, you need to be using a different language than that provided either by economists or by rational choice political scientists. You need to be looking at how economic sociologists like Neil Fligstein describe processes of market creation and disruption, or how renegade political economists like Mark Blyth talk about the intersection between ideas and economic policy.
What was important about Boeing’s creation of the jumbo-jet wasn’t simply that it involved long term strategizing, and the willingness of Boeing’s CEO to accept temporary failures. That’s process rather than product. It’s that it was an act of market making. Boeing didn’t go out and look at a given market structure, in order to figure out how best it could fit in. It realized that new technologies provided it with the opportunity to build a new market, in essence to summon customers (who had never realized that they wanted a jumbo-jet) out of thin air. And once it had built this marketplace, on its terms, it was able to dominate it for a very long time. Because it had created the market, it was in a position where it could define what Fligstein calls the “conception of control,” the rules under which competition took place, so as to secure a long term advantage.
In contrast, most firms most of the time are market takers. They try to fit themselves into an existing ecology, finding some secondary niche that isn’t too vulnerable to predators. They don’t have any ambitions to re-write the rules, but instead accept the market as it exists. They forego the massive profits that accrue to the market-making firm or firms in exchange for a more-or-less comfortable existence.
This, I think, is the key distinction that Perlstein’s metaphor and argument is pointing to. The Democratic Party, at the moment, is a market taker. It’s working in a political marketplace where the Republicans have set the rules. The Dick Morris-type consultants and New Democrats for whom Perlstein has appropriate disdain are working on the underlying assumption that the Democrats need to adjust to a more conservative political space if they are to survive. They need to triangulate and adapt, to become more like the Republicans, because that’s what the market seems to be demanding.
But Perlstein’s key point (and again, you need to read his book on Goldwater to properly understand this) is that the current conservative bias of US politics is itself a political artefact. It’s the product of an extraordinarily successful long-run initiative by right wing Republicans to reorient the political debate around a set of ideas that once seemed bizarre and unnatural to most Americans. The Republicans have largely succeeded in capturing the “conception of control” in the marketplace. They set the rules regarding what can be debated and what can’t in economic policy (protecting the poor becomes “class warfare”), and, increasingly in other areas of policy too. As long as that’s true, the Republicans are always going to be in a position of structural advantage, and the Democrats in one of structural weakness. Triangulation can help win temporary victories, but it can’t produce long term gains. Indeed, by forcing the Democrats to ‘accept’ rules of the game that they haven’t themselves set, it weakens their long term ability to bring through real structural change.
Hence the logic of Perlstein’s argument. If the Democrats are going to win back territory, it isn’t going to be through playing a game in which the Republicans have set the rules. It’s going to be by overturning the gameboard, and setting new ones themselves. Barry Goldwater’s people changed the rules of American politics, so that debate took place on terms where they had a structural advantage. Ever since, the Democrats have been fighting a holding action, and losing territory over time. If the Democrats want to win, they have to stop playing on Republican terms. They have to do what the Republicans did, and move from being market takers to market makers. Perlstein’s prescription – a return to economic populism – seems to me to be the right and obvious way for Democrats to start remaking politics on their own terms.
Update: Matt Yglesias has a very smart response, with two main points. First, that the “the contrast between “market taking” and “market making” strategy” doesn’t perfectly map “to the left-center division inside Democratic circles.” He’s right – but one of the DLC/New Democrat talking points is to claim that more radical strategies won’t work, because they aren’t what voters want. While there’s no reason why the centrists in the party couldn’t come up with an equally interesting long term analysis and prescription, in order to do so, they would have to stop saying that we need to take the political structure of voter preferences as a given. Second, Matt provides some more specific prescriptions for a populist approach that would address unexpressed demands among voters. To which I can only repeat that if I had my pick of populisms, “it would be something along the lines of Matt Yglesias’ version of Kimberly Morgan’s thesis, addressing working families, along with strong redistributionist policies and a beefing up of union power.”