A short note on labour and business power

by Henry on July 25, 2012

A short note on something I’d like to have time to write about at further length someday. There’s a common perception among US lefties that Northern European states like Germany are (or at least were, until recently) the land of milk, honey, and organized capitalism. But actual European social democrats have more complicated feelings about organized capitalism than most of their American counterparts. Helen Callaghan and Martin Höpner have an interesting recent paper on this topic. As they point out, German social democrats used once upon a time to be in favor of organized capitalism, comfortable monopolies and so on. But then – Hitler!

Organized capitalism appears conducive to leftist aims as long as the focus is on its contribution to economic coordination, and this explains the supportive attitudes of the German left up to the early 1930s. However, besides economic coordination, organized capitalism also affects political organization, as German labor leaders learnt painfully during the Nazi period. The radical reversal of attitudes after World War 2 reflects updated beliefs regarding the political consequences of organized capitalism, and the greater weight assigned to political over economic considerations. … Far from being a fleeting phenomenon, Leftist support for competition policy and market-enhancing corporate governance reforms has characterized German party politics throughout the post-war period. … During the “seven-year cartel battle” that led to the toothless competition law of 1957, the SPD supported the liberal ideas of chancellor Ludwig Erhard (CDU), unlike the majority of CDU/CSU representatives. … The joint-stock law reform of 1965, which ended up smaller than intended, featured a similar constellation. … Passage of a company network dissolution act that would have limited bank shareholdering in industrial companies was only prevented by the SPD’s removal from office in 1982. In 1998, during debates over the Control and Transparency Act introduced by Helmut Kohl’s CDU/CSU/FDP coalition, Social Democrats emerged as more favorable to radical corporate governance reforms than the Christian Democrats …. In 2001, during negotiations on the Takeover Act, the SPD turned down CDU demands to strengthen managerial defenses against hostile takeovers.

The logic here is pretty straightforward. Social democrats would like an organized economy in the best of all possible worlds. However, the more organized the economy is in actually existing capitalism, the more political power accrues to big industrialists, and the more likely it is that they will use that power in the political realm in ways that disadvantage labour. Hence, the question of whether or not to favor an organized economy is an empirical one, and under many circumstances, leftists can be vehemently, and entirely consistently, in favor of market competition (albeit for political as well as/instead of economic efficiency reasons).

While I don’t have time to write much on this today, it’s relevant in the US as well as the EU context. Karl Bode has an interesting piece in Ars Technica on Verizon’s cable strategy.

Back in April, you may recall that Verizon stopped selling standalone DSL, taking us back to the stone age of broadband when users were forced to bundle a costly landline they might no longer want. … Verizon has numerous reasons for wanting its DSL services to die off, including the fact that newer LTE technology is cheaper to deploy in rural areas and easier to keep upgraded. But one of the driving forces is that Verizon is eager to eliminate unions from the equation, given that Verizon Wireless is non-union. None of this is theory; in fact, it has been made very clear by Verizon executives. … It’s all an ingenious play by Verizon, though it will have a massive competitive and connectivity impact on the US broadband market that will be studied for decades. What’s most amazing is that nobody (analysts, regulators, or the press) seems to have really noticed what Verizon is up to: turning a massive swath of the country from a marginally competitive duopoly with union labor into an even less competitive and more expensive cable and telco non-unionized cooperative monopoly.

I’m not an expert on telcos, so can’t speak to the accuracy of this analysis. But if it’s right, it suggests a roughly similar logic. Labour unions prefer, ceteris paribus, to deal with large well-established incumbents than a congeries of smaller firms. The organizing costs are lower, and incumbents are more likely to have profits that they are prepared to share in order to guarantee predictability. However, once firms start getting too big, they may be too powerful, in terms both of political and economic clout, for unions to bring to the negotiating table. They can furthermore redefine the market (as Verizon is plausibly doing) in ways that weaken unions and make it harder to organize. This makes me think that there’s more scope for a genuinely left-wing anti-monopoly movement (especially in sectors such as telecommunications, which are vulnerable to regulatory capture) than common perceptions would suggest. I’d really want to re-read JK Galbraith’s work to think this through properly. But since I’m crashing on a couple of deadlines, I’ll leave it for commenters to thresh out …

{ 68 comments }

1

themgt 07.25.12 at 6:21 pm

Unions are a non-ideal push back against a very non-ideal societal structure. If we could provide enough social supports and safety nets and make entrepreneurship/”self-employment” (note, even the words we use frame this discussion in a way that essentially assumes large corporations) truly possible for many, and get the average company size down to say 25-50 people, unions would become an anachronism

It would be worth looking at the growing open source software/hardware movements as a source of ideas for how small startups can share ideas and compete and eventually take down larger, established corporations and decentralize and information power within society, as an alternative to organizing within those corporations

At the end of the day, all the union members inside BigCorp are still making fat profits for BigCorp, amassing it more and more power, with predictable results

2

Matthew Yglesias 07.25.12 at 6:27 pm

It seems to me that monopoly status in a field prone to regulatory capture is a pretty ideal situation for a well-run labor union. The regulator becomes something the union can try to capture to make sure the regulatory scheme is set up to share some of the monopoly rents with the workers. That’s one of the reasons why airline deregulation has been so bad for airline employees.

3

piglet 07.25.12 at 7:20 pm

“But actual European social democrats have more complicated feelings about organized capitalism than most of their American counterparts. Helen Callaghan and Martin Höpner have an interesting recent paper on this topic. As they point out, German social democrats used once upon a time to be in favor of organized capitalism, comfortable monopolies and so on. But then – Hitler!”

What the heck is meant by “organized capitalism”? Without a definition, I can’t make any sense even what the article is supposed to be about. Also, the SPD up to the 1950s was NOT in favor of any kind of capitalism, at least not programmatically. The thing they were in favor of was called Socialism and it was supposed to be, like, not capitalism.

4

piglet 07.25.12 at 7:22 pm

“Social democrats would like an organized economy in the best of all possible worlds.”

???

5

bianca steele 07.25.12 at 7:24 pm

Another reason to kill DSL off is that it was always kind of sucky, iirc. Plus, I couldn’t get it and I don’t live in a rural area by any means, but the wires were relatively old and my house is too far from the central office for it to work. Which is neither here nor there, but whatever. The point that unions are weak and everything that happens makes them weaker is valid.

6

Richard 07.25.12 at 7:30 pm

What unions want and what is good for unions are not necessarily the same.

In the UK, the rail unions were publicly opposed to privatisation of an old state monopoly. Once that monopoly was privatised and broken up, however, the same unions took advantage of a fragmented set of employers by playing one off against another and bidding up wages. Unions might not like a competitive industry with many firms, but they can take advantage where their members have in-demand skills.

7

Michael 07.25.12 at 7:33 pm

8

piglet 07.25.12 at 7:41 pm

Self-defeating, Michael – “Organized Capitalism” doesn’t even have a wikipedia entry.

9

shah8 07.25.12 at 7:43 pm

Unions do not have especially close non-adversarial relationships with regulators–and generally, when they do, the “rent” they seek is safe operations, like flight mechanics who work with regulators to make sure airplanes are safe. In this sense, a major reason unions were busted, in the airline industry and elsewheres, is so corporations can prevent them having to pay for compliance with rather necessary regulations. In a sense place such professionals in a position akin to roles played by auditors, property value assayers, bond raters, and other professions that have to regulate the people who pay for their services (and effectively allow noncompliance/fraud/nonsafe use).

Very few industries were really like this, where unions could suck off a monopoly teat. Even in state directed industries, like jail, firefighting, police, and assorted defense industries, the ability of those unions to skim rent don’t come from profits so much as they do from established political norms, like War on Drugs, or Firefighters Are the Coolest Masculine Idols.

As such, the airline unions suffered from a broad decrease in labor rights, everything from maquiladoras to anti-labor Southern States getting all the new jobs, increased barriers to organization, etc, etc. If labor laws weren’t detoothed, propagandized against, or arbitraged away, I think aircraft industry unions would have survived fine. Struggling in the general advent of demand crisis and commodities over-supply, but they are ultimately service oriented unions–they’d survive if SEIA could survive in today’s environment.

10

shah8 07.25.12 at 7:45 pm

piglet, the proper term here is State Capitalism.

Of course, uncomfortable associations…

11

shah8 07.25.12 at 7:51 pm

I’d also wiki Ordoliberalism.

12

Michael 07.25.12 at 8:09 pm

Piglet (7)

Perhaps I was too curt, and perhaps what I get when I use Google is substantially different from what you get. However, two of my first three results contain decent definitions/summaries:
“According to Hilferding Western capitalism had experienced a qualitative change in the late nineteenth century. The classical anarchy of competition among small-scale producers in an economy bereft of either planning or an interventionist state evolved into a highly organized economy by World War I. The new stage was marked by concentration and bureaucratization in production, the organization of both labor and employers into interest groups, and by an activist state role in economic decisions.”

“Organized Capitalism”
Kenneth D. Barkin
The Journal of Modern History , Vol. 47, No. 1 (Mar., 1975), pp. 125-129

intensive cooperation between state, management, private sector, and unions has shaped the industry both in growth and decline. He argues that it is Germany’s strong tradition of industrial self-government that is the key institution characterizing the organization and functioning of the German political economy, uniting the politics of the dominant state role and the economics of industrial production.

http://www.oup.com/us/catalog/general/subject/Politics/InternationalStudies/?view=usa&ci=9780198277613

13

piglet 07.25.12 at 8:27 pm

“There’s a common perception among US lefties that Northern European states like Germany are (or at least were, until recently) the land of milk, honey, and organized capitalism.”

I have never heard, before this post, any US lefty refer to the concept of organized capitalism and I have never heard any German lefty, social democrat or else, refer to the concept of social capitalism. I very much doubt that when you ask a social democrat at random (in any country you wish), they would say that they “would like an organized economy in the best of all possible worlds”, and even besides that, is Henry using “organized economy” synonymous with “organized capitalism”, sensu Hilferding 1915? I doubt it. In a word, the whole post seems to me a massive mischaracterization of how present day real world progressives think about the economy.

14

aepxc 07.25.12 at 10:16 pm

As long as power is sufficiently fungible and humans are sufficiently fallible, the only metric that matters is the degree of practical power centralisation (the number of people one’s unilaterally-made decisions can strongly affect, adjusted by the empirical frequency that individuals are booted from said position of power). Does not matter if one is a union boss, a religious leader, a senator, or a CEO – privileges that can be abused, will be abused.

It’s not labour vs. capital – it’s the entrenched asymmetrically empowered vs. everyone else. After all, power asymmetry, unlike absolute power, is necessarily a zero-sum game.

15

Substance McGravitas 07.25.12 at 10:35 pm

It’s not labour vs. capital – it’s the entrenched asymmetrically empowered vs. everyone else.

My union has 60000 people in it, and we want more. I think we might count, to some degree, as everyone else more than a billionaire would.

16

mpowell 07.25.12 at 10:59 pm

@15: No, you’re missing the point. Unless your union has an entrenched leader, you can’t point to a member of the elite wielding all that power. Being organized gives you more influence, but it less much detrimental to the social good compared than that power being wielded by a single billionaire.

17

LFC 07.26.12 at 2:48 am

the question of whether or not to favor an organized economy is an empirical one, and under many circumstances, leftists can be vehemently, and entirely consistently, in favor of market competition (albeit for political as well as/instead of economic efficiency reasons)

I think it depends partly on the circumstances of an industry. In some cases one might favor more competition, in other cases a regulated oligopoly (assuming it’s genuinely regulated, not regulated by captured agencies). And economies of scale mean that more competition is not always ‘efficient’.

There’s also the issue of whether an “anti-monopoly movement” should aim at reversing the pretty longstanding trend toward oligopoly in a lot of sectors of the economy (at least in the U.S.), or whether it could ever succeed in such an aim. I doubt it. Specifically I doubt that most sectors in which there are unions will ever have “a congeries of small firms” or perhaps even a good number of medium-sized ones. So while the antitrust laws should be properly enforced and we shouldn’t want oligopoly to slide into duopoly or monopoly, there are probably more direct ways to strengthen unions than trying to make markets and industries substantially more competitive. I say “probably,” recognizing that I could be wrong…

18

John Quiggin 07.26.12 at 2:50 am

At least in the Oz context, the (perceived) features of the German system that tended to be praised by centrists and centre-leftists are
(a) Union representation on boards – IIRC, there’s some kind of dual system, with the union reps in the equivalent of the ‘upper house’, while the real decisions are made by a managment only board, but there’s still presumably some kind of constrant
(b) Long-term relationships between banks and the companies they fund
(c) Effective technical training in which firms play an active role

There’s a strong Oz consensus from centre-right to centre-left in favor of competition policy, and generally hostile to restrictions on takeovers. But my (introspective) impression is that those far enough to the left to use terms like “social democrat” tend to see all of this stuff as being a family dispute among neoliberals, with no particular reason to cheer for either side.

19

lamadredeltopo 07.26.12 at 3:16 am

If the SPD was not in favor of any kind of capitalism up to the 1950′s I would like to know what it was in favor of. After the 1918 events…

20

Bruce Wilder 07.26.12 at 3:17 am

What is it that social democrats or whomever (“enlightened people”?) are thought to want to “organize” in organizing “Organized Capitalism”?

I’d propose that what we need to “organize” in politics and economics is conflict: conflict of ideas, conflict of knowledge, conflict of interests, conflict of values.

And, the standard of “enlightened” organization of conflict, is an outcome, which is mutually beneficial and improves upon non-cooperation.

There are many popular ideas of how to organize conflict, and to achieve a desired, if not exactly “enlightened”, outcome, which do meet my idea of “enlightened” cooperation resulting in mutual benefit. There’s the totalitarian idea of eliminating conflict in a dictatorship. There’s the christian ideal of self-sacrifice and/or a purifying asceticism. There’s the authoritarian idea of pursuing the good of *my* (in-)group at the expense of *your* (out-)group. Technocrats are ready to argue that the public good is calculable by experts, and, really, conflict arises only from a failure to understand the correct technical solution. There’s the libertarian insistence against all evidence that public goods and public action are largely unnecessary for near-ideal cooperative outcomes, in this, the best of all possible worlds, and/or that public action is futile and so easily corrupted as to be worse than futile. Amidst this foolish cacophany, I think liberals and social democrats might find it hard to hear themselves think, and end arguing their own ideas into dumb and dumber simplifications, as they try to make themselves understood.

“Monopoly” is one of those oversimplified concepts, which has been rendered almost useless by its abuse amidst the aforementioned cacophony of fools. (Don’t even get me started on the idiocy of the Econ 101 version!) Is it just about “power”, per se? Is the problem the power of the monopolist? Is that what we think?

It seems to me that the “monopoly” in service of mutually-beneficial cooperation, and the elimination of wasteful duplication, disputes or congestion, is a good and desirable thing. If the fishermen on a lake are organized into a cooperative, with a monopoly on fishing rights in the lake, and that leads to restraint of expedient and short-term greed and good technocratic fisheries managment, that’s a good thing. That’s organized cooperation in service of an enlightened vision that serves a general and long-term interest of the community.

I look around the American economy, circa 2012, and I see a lot of powerful business corporations structured in ways that eliminate conflict. I don’t know if I would call them “monopolies”, because that term still implies that someone, however disadvantaged, is on the other side of the bargaining table. The defining characteristic of the universal bank or the modern Media conglomerate, however, is to be on both sides of the bargain, and to own the referee, as well, exploiting strategic networks, to eliminate all attempts to restrain greed and predation and hackishness, by either honest competition or honest regulation. It is not a simple asymmetry of power, which allows a universal bank to undermine the integrity of property appraisers and bond-rating agencies and mortgage brokers and government-sponsored entities and public regulators, in a coordinated strategic campaign. The same might be said, for a media conglomerate, which deploys its cable outlets, studios, propaganda machinery, to fabricate some hackish freak show and distribute it amid hype and muted criticism, through its own newspapers, magazines and television shows.

Human beings are frail and untrustworthy agents of their own narrow, frightened visions, when left to carry on their conflicts fruitlessly, and when they cooperate in eliminating conflict, they can magnify those petty visions into grand horrors.

In the 18th century, the abbes and nobles of France fought for traditional feudal privilege against the Enlightenment philosophes, advocating for the rationalizing power of centralized, absolute monarchy. They were trapped in a dichotomy of bad alternatives: the particularism of feudal privilege and stupidity versus the palsied hand of centralized rationality. I see parallels, in our own political contests in America, between the two parties of plutocracy, as we seem on the verge of descending into a neo-feudalism of privileged corporations and billionaires.

Everywhere, we are locked into competition to destroy our own productive economy. Our financial sector is absurdly large, and dedicated to predation. Our medical care sector, ditto (on the margin, at least). And, our energy sector is poisoning the ground water and oceans, and exhausting a finite reserve of fossil fuel stores and planetary carrying capacity, in a one-two punch of self-destructive fury.

Surely, we can intelligently articulate a path toward managing decentralized conflict and cooperation, which isn’t self-destructive to the community and its commonwealth?

21

William Timberman 07.26.12 at 4:13 am

Surely, we can intelligently articulate a path toward managing decentralized conflict and cooperation, which isn’t self-destructive to the community and its commonwealth?

I’m with you on all but the surely part. As time goes on, though, despite the cacophony of ignorant non-sequiturs that have replaced public discourse in our day, I do think we’ll come within reach of a consensus on where to go, if not on how to get there.

I see economic decentralization and democracy as two avatars of the same divinity, and I’m encouraged that we’re seeing evidence of technological developments which could actually help us with the first part: Photovoltaics for localized power generation which work on an existing grid, if there is one, or off it if there’s not. Telecommuting, if and when it acts to break up feudal management practices, which admittedly, it hasn’t done so far. Access to data that’s universally available, if not free in all cases. Distributed inventory control and more energy efficient transport, which make subcontracting in manufacturing or agriculture available to smaller enterprises, if their large contracting partners can be prevented from squeezing them on prices outside normal competitive factors.

The second part is harder, but an understanding of how the newer technologies could work on behalf of decentralization could also help revivify our concept of democracy. Once insights into how the two might interact becomes more general, they might very well create an articulate demand for experimenting on a larger scale than we’ve seen so far, particularly as our present failures come to be thought of as something deeply structural, and not just a temporary glitch, or a run of bad luck. Perhaps we should agree that the economics will come first, and the politics will follow, as happened in the course of the eighteenth and nineteenth centuries. That didn’t turn out so well, I know, but if you look at our present paralysis as part of a long argument, punctuated by exhausted pauses, you might get the idea that things are about to heat up again, and that not all of what’s to come rests entirely in the hands of a) the evildoers, or b) the confused.

22

john b 07.26.12 at 7:01 am

Shah: empirically, you would seem to be wrong.

Things which have happened since airline deregulation: massive decreases in typical wages for airline employees; massive erosion of typical non-wage conditions for airline employees.

Things which have not happened since airline deregulation: a rise in plane crashes.

Hence, the suggestion that the rent being sought was safety compliance rather than money and time off is demonstrably false.

23

Tim Worstall 07.26.12 at 8:46 am

“intensive cooperation between state, management, private sector, and unions has shaped “

Organised capitalism therefore being what we more usually refer to in (English) English as corporatism? The Wilson/Heath vision of the economy?

“However, the more organized the economy is in actually existing capitalism, the more political power accrues to big industrialists, and the more likely it is that they will use that power in the political realm in ways that disadvantage labour. Hence, the question of whether or not to favor an organized economy is an empirical one, and under many circumstances, leftists can be vehemently, and entirely consistently, in favor of market competition (albeit for political as well as/instead of economic efficiency reasons).”

Somewhat a restatement of the classical liberal case. Certainly you can find the same argument in Adam Smith. We want market competition exactly so as to curtail the power of producers.

24

LFC 07.26.12 at 12:25 pm

B Wilder:
In the 18th century, the abbes and nobles of France fought for traditional feudal privilege against the Enlightenment philosophes advocating for the rationalizing power of centralized, absolute monarchy.

By the 18th c., the nobles had been largely defanged and co-opted, many of them angling for a way to get to Versailles or, if already there, intriguing pointlessly and searching for new ways to waste time. The Fronde (ended 1653) was the last armed revolt of nobles against the monarchy. [Btw, writing this has reminded me that one could do worse than re-watch the 1988 movie version of Dangerous Liaisons -- speaking of wasting time ;) ].

25

Mr Punch 07.26.12 at 12:58 pm

Matthew Y. is of course exactly right. Actually existing labor unions are to a remarkable extent the products of government policy and action. In both Europe and the US they are strongest in the public sector, and remain powerful in heavily-regulated utility industries and in sectors largely dependent on government contracts. (In Europe it matters that some industries were formerly nationalized; in the US, the New Deal and WWII produced “legacy” companies.)

And as John Q. suggests, the primary attraction of the German model is that it recognizes the legitimacy and institutionalizes the role of unions.

26

Bruce Wilder 07.26.12 at 2:12 pm

Tim Worstall: “We want market competition exactly so as to curtail the power of producers.”

Maybe, but I seriously doubt it. It seems to me that the “classical liberal case” is proposed, in frequent practice, as an organized hypocrisy, defective in its implementation in exactly the ways most likely to enhance the power of the capitalists and the bosses, who, in many cases, are more likely predators than producers. What makes a “classical liberal”, classical, has long been opposition to effective institution of countervailing power and the ability to argue with a straight face in mixed company for the “magic” of the market.

27

faustusnotes 07.26.12 at 2:58 pm

In both Europe and the US they are strongest in the public sector, and remain powerful in heavily-regulated utility industries and in sectors largely dependent on government contracts

possibly because the private sector spent the last 30 years trying to destroy the unions, and every 10 years that the conservatives are in power they make significant gains. This doesn’t have any particular importance to the concept of “organizing” capitalism, and a lot to say about the damage conservatives do when they get into power. Which, sadly, they do on a regular basis, even in liberal Europe.

28

Bruce Wilder 07.26.12 at 3:03 pm

LFC @ 24: “By the 18th c., the nobles had been largely defanged and co-opted . . .”

The nobles, the 1% of France, had lost their independent military function in the 16th and 17th centuries, but they retained their feudal exemption from taxation, and acquired in the Paris and regional Parlements, new teeth, with which to resist the reforms pressed upon the King by the proto-technocratic physiocrats and the proto-liberal philosophes. The impasse left the political economy of France, prostrate on the death of Louis XIV, poorly managed and handicapped by the failure of reform initiatives, during whole of the 18th century down to the bread riots, which evolved into the French Revolution.

29

piglet 07.26.12 at 3:51 pm

john b 22: “Things which have not happened since airline deregulation: a rise in plane crashes. Hence, the suggestion that the rent being sought was safety compliance rather than money and time off is demonstrably false.”

William McGee: Attention All Passengers: The Airlines’ Dangerous Descent—and How to Reclaim Our Skies, argues that airlines have indeed sought to save money by cutting corners in safety matters.

lamadredeltopo 19: the official SPD program goal was socialism. The Hilferding argument must of course be understood in that context. The argument was that capitalistic concentration might actually be a prelude to a socialist transformation. Of course, in hindsight (and not only in hindsight) that speculation was BS. But no social democrat ever supported monopoly capitalism as desirable in itself, let alone “the best of all possible worlds”. That’s totally absurd. And from today’s perspective, where are the leftists Henry speaks of in the OP, whether US or European, clamoring for more capitalistic concentration? I don’t know of any. (*) To call this a strawman agrument is charitable.

(*) Ok I darkly recall Yglesias making the argument that microbreweries were bad for labor. Is that what this is about? But that has been debunked pretty thoroughly. Just because Yglesias shoots out some contrarian red herring to get hits doesn’t mean such a position has any relevance in leftist circles.

30

LFC 07.26.12 at 5:28 pm

B. Wilder @28
ok. I agree that the financial impasse played an important role in weakening the state and helping bring on, in conjunction w other things, the Revolution.

31

hix 07.26.12 at 6:12 pm

Organiced capitalism= euphemism for corporatism, but that wont yield any google results using the term as done in that paper either in the English standard google search.

So the most usefull google link would probably be that one:
http://scholar.google.de/scholar?hl=de&q=korporatismus&btnG=&lr=

32

piglet 07.26.12 at 7:28 pm

hix, what exactly do you think you are illuminating with that remark?

33

foppe 07.26.12 at 7:34 pm

Faustusnotes@27: Please reconsider your suggestion that ‘labor power’ has been losing influence when “conservatives” take power; because at least in my home country (NL), I would say that a far bigger problem is the rise of Third Way politics. Sure, it’s mostly the conservative/economic liberals who are pushing for “reform/liberalization” of markets. However, the problem isn’t that they want to do this whenever they’re “in power,” but that they’ve managed to neuter/coopt/convert the opposition into believing they’re right, or that TINA, thus creating consensus, and with that depoliticization of political economics. Because Tony Blair, Bill Clinton, and (in NL) Wim Kok c.s. were at least as pro-corporate/pro-reform as Thatcher was; and I would argue that their choice to stop (ideologically) supporting unions was at least as harmful as Thatcher’s and military attacks were.

34

faustusnotes 07.27.12 at 2:10 am

foppe, Third Way politics is a response to the victory of neo-liberalism, but the ability of those losers to take over the top rungs of the parties of labour is a reflection of the weakness of the labour movement after years of attacks on it. It doesn’t reflect some fundamental underlying preference of labour unions for the specific industrial sectors mentioned.

It’s not a coincidence that Britain’s Third Way sprang up after the mining unions were crushed. And note that they were defeated in precisely one of the industrial sectors mentioned above (heavily-regulated government run mining).

In other countries – e.g. Australia – where unions remained powerful in the 80s and 90s, neo liberal politics within the labour movement was tempered, and expressed much more carefully and moderately. When the conservatives came in in the late 90s they failed to change industrial relations. When they did finally get the chance, they were swept away and large parts of their legislation unwound. Australian unions are slowly losing power now but that’s because of the success of the regulatory frameworks they set up, not because of some neo-liberal poison.

Neo-liberalism in European leftist politics is a symptom of the failure of those movements, not its cause.

35

Tim Worstall 07.27.12 at 9:28 am

“Maybe, but I seriously doubt it. It seems to me that the “classical liberal case” is proposed, in frequent practice, as an organized hypocrisy, defective in its implementation in exactly the ways most likely to enhance the power of the capitalists and the bosses, who, in many cases, are more likely predators than producers. What makes a “classical liberal”, classical, has long been opposition to effective institution of countervailing power and the ability to argue with a straight face in mixed company for the “magic” of the market.”

Clearly I am suffering from false consciousness then in my advocacy of increased competition as a method of curtailing the power of producers.

36

Neil 07.27.12 at 10:20 am

Presumably the most critical component in “advocacy of increased competition as a method of curtailing the power of producers” is coming up with at least one piece of snark about Polly Toynbee and Richard Murphy every single day. Keep fighting the power!

37

Teutonistani 07.27.12 at 11:57 am

Readers might or might not be interested in the views of someone from Germany. Here are two comments I felt I had to make after reading this post:

1) Henry seems to be assuming that deregulation (more “market competition”) does not lead to increased political power for “big industrialists” and capital. This might or might not be considered established amongst the CT regulars here (I don’t read CT often enough to know this), but it doesn’t seem plausible to me. For example to my untrained eye (I have no background in economics) there do not appear to be fewer big corporations with, say, great market distorting and political power in the US that in Germany, even though there is a much more “competetive market” in the US than in Germany. In fact, the opposite seems to be the case, though doubtless various other factors have to be taken into account to explain this.

2) As someone from Germany I want to say that the German Social Democratic Party (SPD), least of all its party leadership, has been moving rightward ever since it was founded and has long ceased to be a left wing party and should not be regarded as such. Despite the occasional rhetoric bone that the party leadership throws to left-centrist voters (e.g. stricter regulation of the stock markets) I very much doubt that the world view and material interests of most, if not all, of the party’s present and past leadership can be described as left wing in any sense. As an obvious example consider ex-chancellor Gerhard Schroeder.

38

Teutonistani 07.27.12 at 12:02 pm

Correction: “[...] that the German Social Democratic Party (SPD), especially its party leadership, has been moving rightward ever since it was founded and has long ceased to be a left wing party and should not be regarded as such. “

39

Watson Ladd 07.27.12 at 3:35 pm

faustnotes, are you arguing Australia hasn’t cut social entitlements and become much more right wing? Since 1974 privatizations and tax reforms have taken place, just like everywhere else. Australia is not an exception to the advance of neoliberalism.

40

Bruce Wilder 07.28.12 at 12:44 am

Tim Worstall: “Clearly I am suffering from false consciousness then in my advocacy of increased competition as a method of curtailing the power of producers.”

I believe that, if we are to use the term correctly, it would be proper to say, you are benefitting, not suffering, from your role in manufacturing “false consciousness”. As for your advocacy of “increased competiton”, if this piece
http://www.forbes.com/sites/timworstall/2012/06/04/why-is-it-so-difficult-to-licence-digital-music-rights/
or this one,
http://timworstall.com/2012/02/26/increasing-competition-by-reducing-competition/
are indicative examples, I’m inclined to think you are in the habit of using your own admitted ignorance as a raw material in the manufacture of said “false consciousness”. I don’t say that to be insulting; you are obviously an intelligent and analytical fellow, but you have in hand an analytic apparatus, which is wholly inadequate to the case of strategic rivalry between bureaucratic firms in the presence of increasing returns to network effects and scale of production and distribution. I know of no way, in which my observations that your opinions on the subject of economic competition are wholly without intellectual merit, and have a positive market value due to their usefulness to greedy, predatory people, can be made flattering to you. Sorry. Truly.

41

rf 07.28.12 at 2:53 am

“I believe that, if we are to use the term correctly, it would be proper to say, you are benefitting, not suffering, from your role in manufacturing “false consciousness”.”

+1.
Tim Worstall is a lovable rogue and a beautiful human being, without a doubt, but also a fully signed up member of the Zionist aristocracy and so such should be treated with absolute scepticism

42

Antti Nannimus 07.28.12 at 3:58 am

Hi,

>”The logic here is pretty straightforward. Social democrats would like an organized economy in the best of all possible worlds. However, the more organized the economy is in actually existing capitalism, the more political power accrues to big industrialists, and the more likely it is that they will use that power in the political realm in ways that disadvantage labour.”

Yes, I completely agree with you, Henry, so to hell with those social democrats and big industrialists. We all know now we need to consider the better alternatives. So please help us out here, Henry, what are the logically straightforward best alternatives again?

And to HELL with those big industrialists anyway!

Have a nice day!
Antti

43

LFC 07.28.12 at 4:39 am

The first sentence of the paper linked by the OP defines Germany’s ‘organized capitalism’ — which it says has begun to unravel since the ’90s — as characterized by “[1]dense cross-shareholding networks, [2]close ties between companies and banks, and [3]high ownership concentration” (paraphrase). ISTM the only feature of this that might have appealed to social democrats outside Germany (or some ‘liberals’ in US parlance) is #2, as it might have been thought preferable for companies to get more of their capital from banks with whom they had a longstanding connection than by selling stock or relying on venture-capital outfits or whatever. I doubt #3, i.e., major industries dominated by a just a few firms, was ever celebrated by leftists, although, as I suggested upthread, it may be an unalterable fact in most capitalist economies today.

44

LFC 07.28.12 at 4:41 am

correction:
“dominated by just a few firms”

45

faustusnotes 07.28.12 at 6:21 am

No Watson, I’m arguing that Australian labour markets were relatively better protected from neo liberal silliness due to a stronger union presence there, and that the delay in destroying unions in Australia compared to the UK/US/Japan protected the Australian IR system from some of the more outrageous neoliberal excesses we see in those countries.

I’m not arguing Australia hasn’t fallen under the influence of that particular economic system elsewhere (see e.g. our pension system).

46

Tim Worstall 07.28.12 at 7:00 am

“are indicative examples, I’m inclined to think you are in the habit of using your own admitted ignorance as a raw material in the manufacture of said “false consciousness”. “

Eh? Two pieces in which I argue that increased competition is a good thing is manufacturing false consciousness of increased competition being a good thing?

47

piglet 07.28.12 at 6:45 pm

“Henry seems to be assuming that deregulation (more “market competition”) does not lead to increased political power for “big industrialists” and capital. This might or might not be considered established amongst the CT regulars here (I don’t read CT often enough to know this), but it doesn’t seem plausible to me.”

Henry has never explained what he means by “organized capitalism” or “organized economy”, which basically makes the whole thread unreadable, since everybody seems to read something different into the OP (a problem that is not solved by google, in case anybody still hasn’t gotten my point). But I think it is safe to see that “CT regulars”, as diffuse a group as that is, do not generally hold the view that regulation benefits big capital and deregulation hurts them. In any case, if Henry doesn’t wish to explain himself, we should just conclude that the OP is without substance, and be done with it.

48

piglet 07.28.12 at 6:46 pm

safe to say (not see)

49

Bruce Wilder 07.28.12 at 8:06 pm

Tim Worstall: “argu[ing] that increased competition is a good thing is manufacturing false consciousness”?

The way you usually do it? . . . pretty much, yeah.

Most people are small-e economists in the same way they must be small-p psychologists to navigate the world around them — they know a bit about the economics of everyday life, but they don’t know or think much about the design or management of the institutional political economy in which they are embedded, outside of a college economics course, and most of what they remember of college econ is likely to be a simplified moral narrative of eulogisms (competition = good) or pejoratives (monopoly = bad), which are then reinforced throughout their conscious life by the repetition of propaganda from, say, . . . oh, I don’t know, . . . Forbes.

Economics — the academic discipline, and, especially, its conventional pedagogy and doctrines — is well-designed to lay a foundation for “false consciousness” among the mass of its petit bourgeois students, as well as offering weak barriers to the development of an antinomian faith concerning the operation of business firms. Its core propositions are built around an analysis of idealized market relationships and the central task is a scholastic proof of the optimal goodness and perfect efficiency of it all. Competition — market competition, perfect market competition — drives the Market toward the efficient Good of all.

This is all a crock, of course, because “market” is only a loose metaphor, at best. There are very few, actual, institutionalized “markets” at work in the economy of most people’s daily experience. This is a theory, without referents. “Competition” is defined by economists in the iconic model of perfect competition, to be the absence of strategic behavior: another concept without a referent, since there are no instances of anyone in the economy acting without strategic consideration. In the conventional framework of economic doctrine, “competition” isn’t really a concept that lends itself neatly to quantification, so the notion that there can be observable “increased competition”, let alone that it would be a generally good thing, is problematic at best. The common-sense idea of “competition” as rivalrous behavior (which is certainly strategic and not at all the concept used in basic economic theory) can be substituted by propagandists, without anyone noticing the switch. Propaganda, like all theatrical magic, is built out of such swaps, switches, suggestions, and bits of misdirection.

In the piece on music distribution, you allow that you don’t know anything, but link to a long rant by someone, who clearly knows a lot of detail. Much of that detail is about various business firms, and the strategic business models they implement through their bureaucracies of rules and policies, the role of IP law and practice, contracts among the parties, etc — nothing like a “market” in sight, really, though a lot of rivalrous competition, price discrimination and, if the linked piece is to be believed, a disaster for artists seeking to invest in the creation of music and new recordings.

Rather than deal with any of that factual reality, though you retreat back to the Matrix the economics of markets, where “increased competition” will bend the spoon do the desired trick, with no further engagement with reality.

The piece on the criticism by the progressive thinktank, IPPR, of power utility rate-setting , falls into a similar pattern. Once again, you know nothing of the subject, but link to a piece presenting detailed facts, and, then dismiss reality, this time with arch use of a scatological figure of speech to characterize the thinking of the progressives, who have done actual factual research — always classy, our Tim is. The detailed facts concern the reality of administered pricing in businesses, which we used to call “natural monopolies” because of the many good reasons to be skeptical that “increased competition” would be a good thing, even in the framework of conventional economic thinking, but nevermind all that. Conveniently, you once again seem unconcerned about the excessive prices paid by consumers, or the costs and deadweight losses associated with the scheme of price discrimination described.

So, yes, you are a purveyor of “false consciousness”: you teach or reinforce a false doctrine about the universal or general benefits of “increased competition” in a “market economy” that doesn’t actually exist, in order to mislead masses of people about the way the world works and prevent them from thinking effectively about their own interests in how that real world works, in ways that tend to protect a small, powerful, wealthy elite with a vested interest in seeing that the world works in ways that disadvantage the mass of people.

50

Bruce Wilder 07.28.12 at 8:11 pm

piglet @ 47

CT has a wonderful tradition of elegant expressions of vague indirection by the posters, which invite creative projection by commenters. It’s part of the charm of the place. Let’s not be churlish.

51

piglet 07.28.12 at 10:41 pm

Bruce: in my view, CT has an awful tradition of tolerance for bad posts. How could I possibly be so rude to make such a blunt statement on this beautiful site? Well, simple. Because I care enough about it. I totally understand that not every post can be expected to be great. But ignoring, or even giving praise for bad posts (“elegant expressions of vague indirection” blah blah) I think is unfair to everybody, not least the posters themselves. Sometimes we have a duty to say, loud and clear: Henry, what you just wrote is BS. And that’s what I’m doing.

52

john c. halasz 07.29.12 at 3:17 am

piglet:

I took it that “organized capitalism” was a clear reference or allusion to Hilferding’s work on that matter. It’s been a long time since I read this other work alluding to or punning on Hilferding’s notion:

http://www.barnesandnoble.com/w/disorganized-capitalism-claus-offe/1101951815?ean=9780262650311

53

Eric H 07.29.12 at 10:25 pm

“… leftists can be vehemently, and entirely consistently, in favor of market competition (albeit for political as well as/instead of economic efficiency reasons).”

This is great – it sounds like you’re channelling Kevin Carson. And it’s exactly why I think that the US Right is wrong to call people like Clinton and Obama Marxists. Far from letting the capitalists keep combining and converging to the collapse of their system, they keep trying to introduce “efficiency” into the system. What many of their cheerleaders – “wonks”, in the vernacular – fail to realize is that they are optimizing for a select set of outcomes that are also favored by the capitalists themselves, while de-optimizing for several other characteristics. At what point will a majority recognize that Obamacare is a huge boon to the insurance and drug companies?

54

Bruce Wilder 07.29.12 at 11:54 pm

Back in the day (the 1960s), Friedman was wont to argue for consumer sovereignty through market competition. Applied broadly to politics and economy, it is an argument remarkably subversive of both an equitable economy and democratic government, as it sets up the expectation that individual consumers and voters need not trouble to bestir themselves in any organized fashion; the powers-that-be will compete as corporations producing consumer goods, or political parties and politicians producing political goods, in the marketplace, and thus deliver prosperity and good government, in exactly the shape desired by the mass of consumers and the representative, median voter.

Lost in this vision is the fundamental conflict of interests, in markets and in politics. The consumer is passive and individual (aka unorganized), and so is the voter. The power of the sovereign consumer/voter is almost magical in the absence of mechanism in this form of “market competition”. The consumer/voter is deemed powerful in ways that require no visible hand of power. And, that seems to be the point of arguments for “market competition”: unions are unnecessary; rate regulation of power utilities, unncessary, etc. “Increased competition” will discipline firms sufficiently. Surely, super-smart bankers will just naturally weigh the risks to “their” institutions, and do the optimally right thing, without the burden of regulation in the public interest.

Much the same logic spilled over into politics, as interest group politics is disparaged, and the interest groups actually undermined by policy are labor unions and the like.

Politics and economics are ultimately oppositional struggles over the distribution of the goods, and a “competition” among the corporate plutocrats to deliver the goods is an ill-design from the standpoint of those on the “receiving end”.

Power in a decentralized system is a weird thing, and not a zero-sum game. The system becomes more powerful as the opposed participants all become more powerful, and the power of the participants increases with the power of the system, not at the expense of opposed participants, whose cooperation is necessary to the powerful functioning of the whole system. As the power of the mass of the middle-class dissipated along with its social organization — not just unions, but religion and civic and fraternal groups and felt associations with ethnic identities and localities — the power of the whole economy and state began to decline. The unopposed corporate plutocracy in the U.S., feeling not only no opposition from below, but no dependence at all on the lower classes, seems increasingly paralyzed, not by an opposition — there is none — but by its own galloping palsied incompetence on all fronts.

An unorganized capitalism may well turn out to be a disorganized capitalism on the path of de-development.

[Here's a thought for an economics post: There's been some talk recently about whether China has recently passed the Lewis Point in its economic development. Perhaps the U.S. has also passed the Lewis Point, heading in the wrong direction, which might account for a falling median wage and falling labor force participation, and apparent disinvestment.]

55

john c. halasz 07.30.12 at 4:22 am

Bruce Wilder:

I know well from the nth iterations of your usual diatribes that you have a sharp understanding of how the “value” and profitability of real invested capital, organized especially into oligopolistic production systems, tends to decline over time and of the various channels by which that tendency occurs. What I’m not getting here is your failure to connect that complex with the MNC/Wall St. Hi-Fi complex of globalized production “platforming” and the FX arbitrage system which renders it possible. It seems to me that if you put the two complexes together, (and especially if you understand the neo-liberal globalization/financialization strategy as a “cure” for the former tendency), then you have a fairly potent explanatory formulation of why capitalism has been working “in reverse” and why economic inequality has been rising so precipitously in such a self-undermining fashion.

56

understudy 07.30.12 at 1:07 pm

I like this thread, brings back memories of the tribalism threads. In my circles, Walmart = BAD, which is primarily driven by a number of grocery unions who’s livelihood is threatened by Walmart selling groceries cheaper and more conviently than the old established grocery oligopolies. The idea that the grocery unions could be perpetuating an injustice doesn’t seem to be discussed…

57

William Timberman 07.30.12 at 2:21 pm

Has it not occurred to the assembled masses that understudy’s tribalism is exactly Bruce Wilder’s genuine competition, as opposed to Friedman’s phony version of it? Bruce is right. The real competition comes when we sit down to discuss what we’re doing all this for, who benefits from it, and more importantly who doesn’t, and why we should or shouldn’t go along with the plan. This is, or ought to be, at least as much a political question as an economic one, and capitalism, bless its black heart, does everything it can to obscure that inconvenient fact, and prevent us having any genuine discussion anywhere, ever. Human beings have tribes, yes, and for a VERY good reason. If they’re all allowed to participate, some may temporarily get a bigger piece of the pie than they deserve, but it’s better than a system which turns us all into commodities. Much better.

58

piglet 07.30.12 at 3:15 pm

jch: “I took it that “organized capitalism” was a clear reference or allusion to Hilferding’s work on that matter.”

OP: “There’s a common perception among US lefties that Northern European states like Germany are (or at least were, until recently) the land of milk, honey, and organized capitalism.”

piglet: “where are the leftists Henry speaks of in the OP, whether US or European, clamoring for more capitalistic concentration?”

See also 13.

59

Bruce Wilder 07.30.12 at 8:52 pm

understudy asserts: “The idea that the grocery unions could be perpetuating an injustice doesn’t seem to be discussed…” with apparently no awareness at all that that non-issue is about all that can be discussed in the established dialectic between libertarians and neoliberals. Grocery workers at Wal-Mart could be, and should be, organized, and represented in collective bargaining by a union; one injustice apparent to me is that they are not represented by a union, and that disadvantages both Wal-Mart workers and those employed by the traditional supermarket chains. Even in Econ 101 terms, without a union organizing the workers, Wal-Mart, as a monopsony purchaser of labor services, can be expected to choose wages and other conditions, which are decidedly suboptimal and socially inefficient.

Walmart = BAD (or Walmart = Good) isn’t tribalism, per se; it is satisfying the human hunger for narrative stories with clear meanings and morals. Ideologies supply short-hand summaries, concerning what’s good or evil, which help to marshal political consent and cooperation, and which are anchored dually to the ideology’s critical analysis of how the world (should) function and to archetypal sentiments and emotions. So, sure, neoliberalism makes a lot of claims for economic progress through innovation, creative destruction, etc. Doesn’t redeem Wal-Mart’s labor practices, though.

Intellectually, I am an institutionalist. I think about economics and about politics in causal terms that feature social mechanisms for cooperation (known as institutions), which shape cooperative social behavior, by putting it into the framework of a game, with rules, rule-making and rule-enforcement. My explanations are, pretty much always: institutions (aka the games people play, and the strategies they use to play them).

The dominant ideologies in our political discourse — conservative libertarianism and neoliberalism — are profoundly, rabidly anti-institutionalist. There are two, closely related reasons for this. First, as philosophies for technocrats, these ideologies help the technocrats rationalize their jobs, which, for 40 years, have been to manage the entropy and/or deliberate breakdown of institutions. And, as Timberman points out, by excluding institutional analysis from the discourse, they protect their technocratic privilege, by preventing critical discussion of the agenda they’ve been commissioned to carry out.

There are also costs: the technocrats in charge of our institutions have a profoundly defective understanding of how the institutions they are charged with managing, work; and we, citizens in a democracy, lack the cultural understanding and political vocabulary to understand what’s going on, and to hold elites accountable.

piglet complains @13 that the OP is a “mischaracterization of how present day real world progressives think about the economy”. Are progressives even able to think about the economy today? One would be hard-pressed to find evidence in the collapse of the Democratic Party as a populist force, under Clinton and Obama, or what passes for the Labor Party leeward of Blair, or the behavior of any number of other traditional center-left parties across Europe.

I would hold up the OP as an illustration of the difficulties progressives have, in extracting themselves from the strait jacket of the libertarian-neoliberal dialectic. I read, for example:

the more organized the economy is in actually existing capitalism, the more political power accrues to big industrialists, and the more likely it is that they will use that power in the political realm in ways that disadvantage labour.

as drawn from the moral stories made popular by the Public Choice folks, and so tied tightly inside the strait jacket’s well-worn net of dichotomies. And, the vague references to “organized capitalism” are simply a way of making the point that it was not always so.

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Bruce Wilder 07.30.12 at 10:00 pm

john c. halasz asks why I don’t make more of the connections among U.S. disinvestment and financialization, fx dollar pegs, etc.

Back in my Mark Thoma days, I think I did make more gestures in that direction. (I feel too profoundly and broadly hostile to big-e Economics, generally, these days, to take much pleasure in commenting on a high-traffic econ blog, with a libertarian-neoliberal agenda.)

How, say, the U.S. dollar and consumer demand markets figured in the China wealth pump used to drive the development of China as a latter-day workshop of the world, and financialization of the U.S. economy and a giant fraudulent bubble in housing and housing securities — these topics were more interesting when that system actually functioned, actually “worked”. Things “work” in very particular ways; things “fail” . . . well, failure doesn’t need to work at all — that’s the definition. Now, that it appears to be at least partially collapsing, it just joins any number of other vast institutional systems of global economy and politics in some advanced state of decrepitude or collapse, competing for my fearful concern or curiosity.

For a student of institutions, our present moment is a case of too many train wrecks, too little time.

And, as the train wrecks multiply, the epistemic issues seem more important than detailing how a system now in collapse formerly functioned. We’re thoroughly post post-WWII at this point, and that world system no longer functions; we’ll have to get busy inventing something else, and we’re doing so, with very little in the way of ideas.

Right now, I’m kind of fascinated by how the libertarian/neoliberal dialectic filters understanding of the Euro crisis. The ECB appears to be very deliberately creating and exacerbating crisis to destroy institutions in the southern periphery countries, but the neoliberals insist on a narrative of mystifying technocratic incompetence, rarely acknowledging the class warfare at work. No one is feeding the “serious pundits” even the semblance of a believable exit strategy (a revised set of institutions); it’s all muddling thru, without any thru.

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john c. halasz 07.31.12 at 3:23 am

B. W. @ 60:

Well, ya, it’s the end of the neo-liberal “regime of accumulation” , for which globalization/financialization of production were the key generalized strategies, in the aftermath of the Bretton Woods breakdown and the end of that “regime of accumulation”.
But the post-mortem is not to be dispensed with, (since among other things, it’s not so post- and not so mortem- as yet, and since the “naming and shaming” of those who “authoritatively” got it so wrong has scarcely begun), but rather serves to define the current prospect. Since the at least partial institutional/systemic breakdown is a new opening to alternative potentials. Which makes it not just an epistemic question about institutions, but a practical question about the organization of interactions/practices that generate institutions. From which “ideas” are generated.

“the libertarian/neoliberal dialectic”- that’s a correct usage of the word/concept “dialectic”, but, without reifying the word, it perhaps shouldn’t be focused on such a narrow discursive and non-discursive “reality”.

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Bruce Wilder 08.01.12 at 7:43 am

Galbraith and Friedman both wrote post-mortems on the Great Depression. How’s that been working out for us?

Part of me is fascinated by the idea that Bernanke’s performance in office has been a do-over that proves his own ideas (and those of Friedman, whom he imitated), wrong. I would not presume to be able to formulate or articulate a definitive explanation of the Great Depression, but it did pose a great challenge to conventional ideas about economics, and the profession of economics, and the intellectual path of that profession, which, of course, was shaped, first, by the insights of Keynes, arrived at contemporaneously, and then by successive waves of unlearning, passing through Friedman’s remarkably wrong arguments (not just about money but about institutional regulation of the economy), and culminating in the frontal lobotomy of Lucas’ rational expectations. Expertise in not-knowing what made our world work was vitally important to the project of taking it apart for fun and profit — it was a core element of the neoconservative/neoliberal “regime of accumulation” that took hold in the Carter-Reagan years, after Nixon ruined Keynesianism for everyone, and Friedman had given intellectual cover for floating exchange rates, which didn’t float.

The epistemic question is the practical question, and always has been.

The core dispute between “progressives” and “conservatives”, in the philosophical sense of that dichotomy, in every age, is about whether we know enough to design better institutions; the conservatives advocate for ignorance. In times of progress, the conservatives advocate for caution and modesty of ambition, as practical; in dark nights of degenerative reaction, they argue for corruption and lies and deliberate stupidity.

That “the libertarian/neoliberal dialectic” is a synthetic substitute for a genuine dispute between progressives and conservatives — a made-for-teevee, bought-and-paid-for fake political theatre prop. I don’t propose to focus on it; I propose to notice what it is, and tell the truth.

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Bruce Wilder 08.01.12 at 3:42 pm

I’m sorry for the ranting tone of my last post. I think I’m coming down with a summer cold, and it’s affecting my mood.

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Barry 08.01.12 at 7:38 pm

Bruce, don’t apologize.

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piglet 08.01.12 at 9:12 pm

“Are progressives even able to think about the economy today?”

You know, that is a fair question. To say that progressives don’t have much of a coherent economic view is certainly more accurate than to say that their economic thinking is marked by the writings of a German revisionist Marxist a hundred years ago. I’m sorry. The idea is just so grotesque and that I have to argue that it is grotesque is even more grotesque.

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x.trapnel 08.01.12 at 10:41 pm

Piglet, I believe others have gestured in this direction, but my understanding is that, while the terminology of “organized capitalism” or “coordinated market economies” may not have been common among political activists, they’ve been well understood terms of art in the (particularly European) comparative political economy literature at least since the 80s. (“The End of Organized Capitalism” by Lash & Urry has ~2400 cites, for example.) In particular, much of the research of the Max Planck Institute for the Study of Societies, in Köln, seems devoted to this topic; here’s a review of one of the latest books by one of the Institute’s directors, Wolfgang Streeck. (It’s not difficult to find pirate versions of the book itself online, should you be interested.) And here’s a working paper by an American scholar that’s also working within this subfield, and seems to have plenty more references. In an abstract to one of his (1995) papers Streeck characterizes the German economy as having “a unique set of socio-economic institutions, in particular socially instituted and circumscribed markets, negotiated firms commanding long-term attachment of both labor and capital, a facilitating state relying mainly on indirect means of intervention, widespread associational self-governance by organized groups in civil society, and institutionalized cultural patterns that promote long-term commitments and continuity”; that seems (particularly the first criteria, in addition to the traditional pattern of interlocking bank ownership in firms, “Deutschland AG”) a decent rough definition for what’s meant by that flavor of organized capitalism.

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john c. halasz 08.02.12 at 2:24 am

B.W. @62:

Well, I’m fairly sure you understand that there is no such thing as linear, cumulative progress per se, and that regression and reaction are equally possible on the winding and twisted way between epochs. (And it’s not just about a binary opposition between “progressives” and “conservatives”: there are other parties at the table. And one of the oddities of the neo-liberal era is that progressives have increasingly come to doubt or disbelieve in “progress”, whereas “conservatives” have increasingly sought to conserve nothing). But my main point here is that institutional orders are not exactly intentionally “designed”, but rather emergent evolve from underlying social conflicts, solidarities, available technical means and pressing needs, since there is no such thing as perfect foresight, nor perfect coordination, but rather a gradual (or sudden) working through of the “problems” that present themselves contingently through time. (And the practical and the epistemic are not to be immediately identified: thaat too much pragmatism. Rather there is a distance and gap between the practical and the epistemic, between the perspectives of embedded agents and the formal-rational theoretical discourses that they give rise to, with the point of mediation being the disjunction between ordinary communication and experience in natural language and the abstraction of formal-rational discourse that would pretend to regulate the former).

So when there is such a fundamental structural breakdown in the prevailing institutional order, (which can’t be restored to the status quo ante), there is not just dysfunction and travails as the PTB attempt to repress any alternatives, but there is a “return of the repressed”, by which repression the former order had instituted itself, and an opening out onto new/old alternatives. (There are always more possibilities and potentials than those that are actually selected and instituted, which is part of the very “idea” of history. “Ideas” then are just ways of capturing underlying practical potentials).

So rather than just rudder-necking aghast at the mounting train-wrecks, (and the coming ones, since now more than ever we need to re-orient productive investment toward mounting ecological, resource and demographic crises), why don’t you unwind your considerable resources and understandings and address the broader “dialectic” scene, rather than simply denouncing the obvious closing of mass-mediated ideological horizons.

I’ve tried in subaltern comments on this blog site to raise the thesis that the rise of quasi-monetarist economic policy regimes were not just an ideological cover for what was actually happening, (though it was clear enough to me from the get-go that the promulgation of “free markets”, in the name of individual freedom, opportunity and innovation was a cover for the rent=seeking interests of oligopolistic corporations), but rather it was a techno-structure that co-evolved with the rise of the neo-liberal globalized/financialized institutional regime, (which itself was a response to the failure of Bretton Woods, from a capitalist perspective). Which at least goes to the inadequacy of the response to the crisis by the PTB, since they did what they “knew” how to do, (such as pathetically attempt to restore the structured securitization “market”, when it had been thoroughly discredited, and failing that, putting the financial system on CB life-support, which is not just a personal fault of Bernanke). But you might actually have the technical chops to make that stick thesis or charge, which I lack. It’s a matter of not just noting, but sweeping away irrelevancies, of pushing down what has already fallen to ruin.

I’ve generally had you pretty much dated in reading your comments over these years,- (and there was a time when I stopped reading chez Thoma because I couldn’t understand why nobody seemed to foresee and understand what was so obviously coming, not even paine, as he has subsequently admitted),- because of faint emissions of nostalgia for the halcyon days of your youth, which was precisely the end of an era, as must have become increasingly apparent,- (plus an adherence to slightly outdated 1960′s versions of cybernetic systems theory). Some months back, by inference, my estimation was proved spot on: I’m 6-7 years youger then you are. So Bruce, it’s time to abandon your nostalgia, (as an unaffordable luxury), and reconfigure your considerable talents and insights into figuring how to forge a brave new world!

This link is over-long and too prolix, as well as somewhat crude, but it goes to the point about the repression and re-emergence of old/new ideas:

http://michael-hudson.com/2012/07/veblens-institutionalist-elaboration-of-rent-theory/

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LFC 08.02.12 at 12:52 pm

B.W. @60

How, say, the U.S. dollar and consumer demand markets figured in the China wealth pump used to drive the development of China as a latter-day workshop of the world, and financialization of the U.S. economy and a giant fraudulent bubble in housing and housing securities—these topics were more interesting when that system actually functioned, actually “worked”.

Worth noting w/r/t China that by choosing or pursuing v. rapid growth rather than more equitably distributed growth, China has failed to improve the condition of its poorest people as much as it might have. See my post summarizing Pogge on this:
here.

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