When Neoliberalism Was Young: A Lookback on Clintonism before the Clintons

I’ll get in my usual comments at the beginning of the thread: whatever its original sources, by now neoliberalism is best characterized as the ideology of the global managerial class. That’s what makes it more than specifically American or British and links it to the world system that it dominates.

And the gay rights part of that that you notice in that early document are part of a theme that continues later. Neoliberalism is against any discrimination based on accidents of birth except those involving how much money your parents had.

SNAP!

“Moderate liberals might not agree with Sanders’s ideas, but they can appreciate that his presence changes for the better a political landscape in which support for things like Mitt Romney’s old positions on health care and the environment were defined as hard-core liberalism.”

“Sanders’s worldview is not a fantasy. It is a serious critique based on ideas he has developed over many years, and it bears at least some relation to the instincts shared by all liberals.”

http://nymag.com/daily/intelligencer/2016/01/case-against-bernie-sanders.html

“[Chait] recoils in horror today at the more tepid versions of that liberalism that we see in the Sanders campaign.”

Seriously?

I’d be a hypocrite not to make allowances for rhetorical flourishes, but… where exactly in the cite is he recoiling in horror? Is he “horrified” by single-payer, or does he express skepticism that Sanders can overcome the obstacles of divided government and Make A Better Deal on single-payer through force of personality? Is he “recoiling” from raising taxes on the rich and spending the money on the poor, or is he expressing doubt that the numbers of Sanders’s specific plan add up?

LFC @ 5

Clinton is the sin eater, the scapegoat for all that follows. That she will win the general election is a foregone conclusion.

But then, she must govern and she — to coin a phrase — has no theory of politics. Obama held back the deluge, . . . next time fire. Lupita wins the thread and she has not even posted yet.

It always seem like it’s better to let a hundred people starve than to let one person get a dollar he didn’t “deserve”.

I try very hard to shy away from these comparisons, but it seems really peculiarly protestant. Like the idea of some people getting something for nothing really unnerves them, whatever the situation.

They are the judge of suffering, and they decide whatlevel of suffering deserves succor. And it’s an awful lot it turns out.

“Only the poor needed government; everyone else was made for capitalism.” Ugh, that’s what I thought back when I was in college. Nobody taught me that, but if you major in econ it’s way too easy to come to that conclusion on your own.

I think the neoliberal theory of politics is you publish a magazine that appeals to a liberalish billionaire, and they give you money (Warren Buffett was the money behind Washington Monthly).

Similarly to Andrew Richey @5, I think Corey is not only vastly overstating Chait’s opposition to ‘Sanders liberalism’, he’s doing much the same with the unions. Criticising certain aspects of the US trade union movement does not amount to ‘loathing.’ Indeed, there’s a solid left-wing critique to be made of the US trade unions movement, from closed shops to the support of Nixon (in many cases for rather unsavoury reasons). Even though I’d agree with Corey – presumably – that the decline of the American labour movement is a deeply negative phenomenon for the country both economically and politically, I’m not sure neoliberalism is the culprit.

Modern American unions support Nixon for President? Do they not realise he’s dead? What fools they are! No wonder they’re on the way out.

“never the well paid journalist or economist or corporate CEO—….”

Just a note that there are not too many well paid journalist left, and their number is decreasing. It’s pundits who don’t do journalism,well maybe yellow journalism, who are well paid. Pundits are an entertainment industry for the entire range of political issues, usually with no training in journalism. It is they who in the guise of news/journalism, offering up commentary that temporarily relieves pain from frustration by re-enforcing and then manipulating biases. The audience perceives someone has listened to them, understand and expresses their inner feelings that they dare not let out in mixed company, while at the same time the audience becomes further radicalized and estranged from the commons. Like a good comedian, they are paid well, the unmentionable, the difference is comedians usually speak a simple truth to power, while pundits simply or simply make up overly simplified fairy tales solutions with no fact checking.

“Americans,” says Bill Bradley, “have to begin to treat risk more as an opportunity and not as a threat.”

Whenever I hear crap like this, it makes me think of The Simpsons

Neddy doesn’t believe in insurance. He considers it a form of gambling.

I take the neoliberal/liberal distinction in its American guise to be most useful. To take Delong as an example, I would call him, in that American sense, a neoliberal. He shares most of the liberal goals, greater equality and so on. Yet thinks that at least some of them can be best reached through market processes rather than, say, regulation or more direct government control or funding.

Whether he’s right in that belief or not is another matter of course. But I do think it’s a useful short hand distinction to be able to make.

For example, think of climate change for a moment. JQ and many others insist that a carbon tax is the obvious and likely to be successful solution (as do I for what little that counts). A Pigou Tax isn’t wholly and entirely a pure free market solution: but it’s very much more toward the market end of the range of possible solutions than a command and control economy based upon environmental considerations would be.

We might thus call the carbon tax the neoliberal climate change solution: and thus JQ of course a neoliberal on this point.

I don’t say that neoliberals are right, either sometimes or always. But as a useful descriptor of the difference between those advocating market solutions and more statist ones toward the same progressive goals it looks like a useful distinction.

As a recovering neoliberal myself, I think that their sins were of a different class. They (I!) became enamored of simple economics, but downplayed empiricism and political economy. Mea culpa.
Or to rephrase it differently, I can still argue with a good conscience that a neoliberal world is a first-best world. But we don’t live on a uniform spherical first-best planet. Given what we have to work with, neoliberalism is a far worse second-best world than old-fashioned New Deal liberalism.

When one is faced with the task of describing and understanding a reality that is what it is independently of the language used to understand and describe it, and when the effectiveness of the conventional categories used to understand and describe this reality is called into question, one needs to have a way of describing this reality that is an alternative to the usual ways of describing it, which may be problematic. One needs to discover what is the coherent phenomenon in reality that has a role in the dependency structure of the world, that has some objective existence, and one needs to allow for an alternative interpretation, i.e., categorization, of the objective phenomena in question. One needs a way of describing this reality without the categories that are in question.

I try to state this as a general principle applicable to all attempts to make sense of the world of our common experience. As applied to the particular case at hand, we have on the one hand a body of political discourse produced by people who are more practical political activists and pundits than political theorists in the social science or philosophical sense (e.g., Chait, Clinton, Peters, Peretz, etc.). On the other hand, we have a set of terms for categories (‘neoliberal’, conservative’ and the like) that people have been using to talk about this political discourse and the “movements” associated with them; and the effectiveness of these terms for thinking about the realities (the patterns of thought, the attempts at justification of claims, etc.) has recently been the subject of much debate, incl. at the USIH blog, and I think Corey is concerned here to defend his understanding of the category ‘neoliberal’ as he has done previously with the category ‘conservative’, as comprehending a crucial coherent phenomenon, a system of thought that has some practical impact on the course of the functioning of governments, etc.

I don’t want to weigh in on the question of the effectiveness of Corey’s categories; I only wanted to make an observation about general problems of the use of language to accurately describe reality. Amartya Sen says somewhere, in response to Marx’s aphorism, that if one wants to change the world in an effective way for the better, one can only do so on the basis of an adequate understanding of the objective realities, and, I would include, an adequate understanding of the ethical principles governing “market” interactions and the role of governments vis-a-vis their citizens. It doesn’t look to me, judging from their discourse, the way they attempt to justify their programmatic assertions, as if either those who are called “neoliberals” or those who are called “conservatives” have such an adequate understanding of either of these realities.

(I’m sorry for posting this just to have a record that I can come back to later to see if what I said makes any sense. I’m trying to work out some things.)

This thread is starting to be annoying. Other than a tiny number of intellectuals — the early ones, as noted above, funded by a liberal billionaire — there is no mass neoliberal bloc anywhere. People don’t talk about politics to each other and say “I’m a neoliberal.” Yet the whole world system runs on neoliberalism, from China to Europe to the U.S.

Does that mean that the term is simply a pejorative? No. It means that these politics are meaningful to a numerically very small group of people: the elite technocrats. They never really bothered to get a mass following because they didn’t need to. They control enough of the system to keep their places: they don’t control enough of it to solve any problems, but that’s OK because they don’t really solve problems.

I always find it helpful, when people try to make the “liberal/neoliberal” distinction to ask how some of the originators of Liberal thought (Locke, Hamilton, Mill) would have thought of any given idea put forward today as “liberal”. These individuals, with due allowance for nitpicking exceptions, essentially favoured exactly the combination of complete freedom of economic activity (especially for the wealthy), together with a repressive state apparatus to protect property, that we see in neoliberalism today. The fact the Liberals as a political force subsequently became interested in social reform has a lot to do with the influence of the Church (nonconformist in Britain, Catholic in Europe) which led ultimately to the rise of the Christian Democrat tradition after 1945. Likewise, many liberals changed their ideas under the influence of the Depression and WW2, and the success of the Soviet regime in its immense structural transformations of the economy and society. The New Deal and Great Society actors were not liberals but social democrats, as were many US politicians of later decades, even up to Sanders. Since the end of the Cold War, classic liberalism has steadily reasserted itself. Neo-liberals (paleo-liberals might be a better term) are just liberals who no longer feel the need to appear nice.

People don’t talk about politics to each other and say “I’m a neoliberal.”

Oh well, depending on where and when you find yourself, you might actually find 5 to 25 percent who do. But that is just a nitpick; I completely agree with the substance of your comment.

Also, I find David’s comment currently @31 very perceptive. I would add that just like actually existing mass liberal politics has historically been inseparable with moral and social movements, mostly of religious nature, the current disappearance of religion in developed western countries (the hypocritical posturing of the United States in that respect notwithstanding) explains much of the mutation (or reversion) of liberalism into neoliberalism. In retrospect, I would grant that phenomenon more importance than the disintegration of the Soviet Bloc (and indeed, empirically, the first wave of transition to neoliberalism was completed well before the collapse of the USSR).

One of the better dissections of neoliberalism as a set of ideas was Bill Black’s review last year of Tony Blair’s May 26, 2005 speech on “Risk and the State.” Black covers both the rhetoric and the policy substance and shows how they are related.

Neoliberalism really is a matter of taking on the mantle of technocratic doing good by way of good policy — the well-intentioned ethos of New Deal liberals and Social Democrats and Ordoliberals — and then adapting it to fostering corruption and malfeasance.

If neoliberalism is the ideology of the managerial class, it is a bought-and-paid-for ideology, the neoliberals a group of hirelings trotted out as spokesmodels to apologize for sociopathy. The sociopathy itself isn’t an ideology, its just a use of power by those with the opportunity to do so. But, the ideology facilitates that by confusing the rest of us and substituting reactionary conservatives dressed up in neoliberal clothing to play the part of leftish pundits (Krugman, DeLong) and politicians (Clinton, Obama) or technocrats of integrity (Bernanke, Blanchard).

Neoclassical economics contributes mightily with its insistence on offering a dogmatic analysis of a non-existent “market economy”, ignoring the actual economy of hierarchies in which control frauds are practiced.

Under neoliberal TINA, any alternative is inconceivable.

I don’t know saying Charlie Peters invented neoliberalism is like saying Adam Smith created capitalism, kinda a Carlylean history of ideas. If the concept is to be useful it must a) reflect objective material conditions rather than delimit a discourse, and so also b) be international in scope of applicability. No intellectual history in one country, I say.

Wendy Brown is pretty good but much better and recommended is Virno & Hardt, Radical Thought in Italy 1996. For a start.

One big difference between 18th century liberalism and 21st century neoliberalism is, like capitalism, the history and ubiquity of liberalism and democracy determined that neoliberalism could not be imposed or forced by elites or government but had to be willing and enthusiastically adopted created invented from the bottom up as essentially a worker’s liberation (in the west) from Fordism and Taylorism and unionism, an empowerment and accumulation and expression of individual capital, social, intellectual, etc.

BW: “One of the better dissections of neoliberalism as a set of ideas was Bill Black’s review last year of Tony Blair’s May 26, 2005 speech on “Risk and the State.””

It contains this bit:
“Blair ended on a note that would cause any independent industrial safety engineer to jump out of his or her seat and scream “No!””

[in response to Blair saying]:
“We cannot respond to every accident by trying to guarantee ever more tiny margins of safety. We cannot eliminate risk. We have to live with it, manage it. Sometimes we have to accept: no-one is to blame.”

Oh good God. This is why, as an environmental activist, I’ve always found it better to talk to the actual engineers at polluting facilities than the people higher up. The people at the plant understand that there are actual physical processes going on and that they have to be figured out or people (maybe even themselves) will die. And strangely enough the command-and-control approach is acceptable when it comes to “You’re going to implement these safety procedures or we’re going to die.” Part of that is, yes, figuring out exactly who is to blame for what so that it can be done differently.

I don’t think I agree with this though:
Bruce Wilder: “If neoliberalism is the ideology of the managerial class, it is a bought-and-paid-for ideology, the neoliberals a group of hirelings […]”

Hired by whom? The influential neoliberals are just as wealthy as any other member of the elite. People of great wealth who are not themselves managers have, as far as I can see, been quietly shunted off to a well-decorated room somewhere where they can live it up however they like, but I don’t see how they are in actual control of anything. Sure, society is rigidly controlled to defend their interest, but that’s also the managers’ interest. And they don’t seem to really make any of the decisions unless they have a dual role as managers.

Neoliberal ideology is also meritocratic. “Merit” generally requires that you had the right parents, but it also does involve neoliberal marker skills. I don’t see how wealthy people without those markers are really in control of anything: their wealth empowers neoliberal control, but for the purposes of neoliberals. And if sociopathy is what’s going on, neoliberals are perfectly capable of that in their own right.

It’s interesting to think of capitalism as a hiatus, or a stage of development, if you prefer, in liberalism. Wealth in Locke’s day meant land, buildings, money (and of course slaves – liberals were generally supportive of slavery). It was something that could be physically protected, hence the need for a state to do this job – just about the only state function liberals regarded as justified. Not all individual capitals were liberals in the classic sense – Owen was a pioneer socialist, of course, Rowntree, like several others, was a Quaker. But later bureaucratic managerial capitalism at its industrial height was hard to reconcile with Liberalism, not least because much of it depended on public contracts, and some of it had to be nationalised for strategic reasons, or just because its owners were incompetent. Insofar as neoliberalism is different from classic liberalism it is perhaps that the wealth it believes needs protecting is increasingly ethereal and virtual: software, intellectual property, complicated financial products or internet companies that don’t make anything (including profits in some cases). Neoliberals demand state action to protect this kind of wealth, as their liberal predecessors wanted their physical possessions protected.

RP: Hired by whom? The influential neoliberals are just as wealthy as any other member of the elite.

The OP had some information.

I don’t have any sense of just how wealthy Jonathan Chait might be. Or, Ezra Klein. But, they grub around for jobs — their journalistic careers depend on getting people with Media platforms to hire them. The same with technocrats. Olivier Blanchard is important because of a career made in a series of jobs. Paul Krugman has become a modestly wealthy man I guess, but he’s important because he has a job writing columns for the New York Times and before that academic appointments at prestigious institutions.

None of them, as far as I know, are billionaires. Tom Friedman is married to a woman, who might have qualified as an almost billionaire — don’t know the current status of her shopping mall fortune.

The chattering classes are not identical with their masters in the corporate suites or among billionaires and I dare guess they rarely mingle outside fairly controlled circumstances.

BW: “I don’t have any sense of just how wealthy Jonathan Chait might be. Or, Ezra Klein.”

Well, I wasn’t intending them to be considered as influential neoliberals. Neither one is actually in charge of anything.

RP: I wasn’t intending them to be considered as influential neoliberals. Neither one is actually in charge of anything.

“influential neoliberal” and “actually in charge of anything” might not have an intersection

Its possible to get too wrapped up in the meaning of words. “Liberal” originally meant, and still means in backwards countries, something close to what Americans mean by “libertarian”. In the US it came to mean using the government to improve the status of Blacks.

As far as I can tell, “neoliberal” means more oligarchy, and I wish someone to explain to me the difference between “neoliberal” and “neoconservative’.

Maybe English-speakers could use “neoliberalismo” to free the term from the localized meaning “neoliberal” has among a small band of parochial intellectuals. It would be like the difference between “americano” and “American”, false cognates that cause much trouble among the self-centered.

Novekant @18, its important to remember that a higher percentage of Americans attend higher education than is the case just about in every other country. This is precisely because higher education in the US is big business. People are encouraged to go to college, and the non-dischargable loans are part of the scam, because it means more profits.

Having the government pay for everyone to go to college, without changing anything else about the system, would immediately end most of the propaganda and pressure to attend college directed at high school students and their parents. But to do it properly it should probably be accompanied by things like shutting down many marginal higher educational institutions, and not just Trump University, ending the concept of the bachelor’s degree as something separate from a professional degree, and much more selectivity in admissions, essentially making higher education in the US more like it is in other countries. Btw, I am completely in favor of this but I don’t think everyone is and I get the impression people saying “make college free’ have thought through the implications.

AcademicLurker @53

Looks like we need to protect the poor American CEO’s who are losing their jobs to Indians:
http://foreignpolicy.com/2015/08/18/why-are-so-many-of-the-worlds-best-companies-run-by-indians-google-sundar-pichai/

Or maybe we should protect all the American economists losing their jobs to foreigners at MIT and every other American economics department: http://economics.mit.edu/faculty

Are there any examples of neoliberals arguing for protectionism for these groups?

“t means that these politics are meaningful to a numerically very small group of people: the elite technocrats. They never really bothered to get a mass following because they didn’t need to.”

Didn’t they try to create their mass following by picking up racists? It’s not their fault the racists were more interested in the racist part, not so much in the free market part.

L2P: “Didn’t they try to create their mass following by picking up racists?”

Neoliberalism is expressed differently in different places, but in the U.S. at least, no, I don’t think so. I favor a model of contemporary U.S. politics as having three basic groups (the left, neoliberals, and the right) instead of just two, or instead of the right being just an extended kind of right neoliberalism. Trump isn’t a neoliberal, Bush Jr wasn’t, etc. The current leading neoliberal politician in the U.S. is HRC, and she routinely deploys concern about racism as something that is supposed to distinguish herself from both Sanders on the left and Trump on the right. (Note that I’m not saying that the left isn’t concerned about racism. BLM, for instance, I think is best understood as being on the left.)

Cf. One of Terry Eagleton’s great openings:

It is one of the minor symptoms of the mental decline of the United States that Stanley Fish is thought to be on the Left. By some of his compatriots, anyway, and no doubt by himself. In a nation so politically addled that ‘liberal’ can mean ‘state interventionist’ and ‘libertarianism’ letting the poor die on the streets, this is perhaps not wholly unpredictable. …

Nazi Germany went to considerable effort to suppress markets in pursuit of a corporatist economic policy. Forcing mergers and cartels on much of the economy with pervasive price controls. Success was determined by having strong political links to the regime not by how effective you are at your business. Nazi Germany quite explicitly rejected capitalism and the use of the market as the primary economic mechanism.

For an actual attempt to run a capitalist economy with a totalitarian political system China is probably the best attempt. It’s hard form a dictatorship to avoid favouring the regimes cronies.

A competitive free market exists as long as for example the barriers to entry are fairly low and certain other conditions are met. If Easyjet are actually extracting monopoly rent then other airlines, Ryanair for example might start operating on those routes or close equivalents using nearby airports. If Easyjet were to attempt to sit on slots they weren’t using in order to retain a monopoly then a complaint to the competition authorities would be likely to succeed. It is also possible that the previous prices were exceptionally low either there was a price war or some of their costs were lower than they now are.

b mcmanus @42
I don’t know saying Charlie Peters invented neoliberalism is like saying Adam Smith created capitalism, kinda a Carlylean history of ideas.

Nonsense. Neoliberalism (as used in the OP or otherwise) is a worldview, an ideology, a discourse. Capitalism is an economic system. Two different things. One can speak of worldviews that support or oppose capitalism, of course. But “Peters’s manifesto is a founding document of [U.S.] neoliberalism” is a reasonable sentence. Whereas the sentence “Smith’s ‘Wealth of Nations’ is a founding text of capitalism” does not make much sense; a founding text of classical political economy, yes.

And “no intellectual history in one country” is also *very* debatable. But no pt opening that up here. I will just say that thinking in terms of ‘national’ tendencies in thought is not a bonkers, or even nec. a conservative, way to do intellectual history. Cf. for example Donald Levine’s Visions of the Sociological Tradition.

> That was the intellectual daring, apparently.

In left wing circles? in the 70s and 80s? That’s just about the definition of daring.

> (“We want a government that can fire people who can’t or won’t do the job.”)

Do you disagree with this sentiment? Because it strikes me as quite reasonable.

>(Sadly, within two decades, Weirton Steel was dead, and with it, those future profits and wages for which those workers had sacrificed in the early 1980s.)

I love this line, because it demonstrates so much missing the point. First, would the workers have been better off with Weirton Steel folding immediately? And second, two decades is a long time. People came to wierton steel, had long careers there, and retired in the period in question. did none of those people benefit? The inability of those on the left to understand that the economy is a dynamic and changing not a rigid cast system never ceases to amaze and dispirit me. But then, it’s difficult to get people to understand a thing when their salary depends on them not understanding it.

The Nazis wanted a war economy, and did what the British and Americans did, though less successfully. There was a genuine populist anti-capitalist tendency in the Party, but the leadership rapidly made peace with the existing economic order. (There’s a difference between “free” markets and capitalism, but that’s another issue. My point is that a totalitarian system is about ideas rather than practices,to the extent that those practices don’t undermine the system itself. The Nazis were still inviting competing tenders for military equipment in the last months of the war).

As I understand it, many neoliberals understand markets must be constructed through and with continual government intrusion

Imho calling it self-conscious classical liberalism would be a better definition than most.

(I sort of agree with your second para too but I was taught that all political ideologies have a view of the self. I’d say there’s a utopian orientation that’s new.)

” The inability of those on the left to understand that the economy is a dynamic and changing not a rigid cast system never ceases to amaze and dispirit me. But then, it’s difficult to get people to understand a thing when their salary depends on them not understanding it.”

I think a much more accurate way to phrase this would be: The inability of those in the mainstream center and right to understand that the “dynamism” of the economy will always favor the haves and never the have-nots is incredibly depressing. And while there are rare cases of “dynamic” social mobility, the center-left, center and the right refuse to accept the inordinate power and domination of our class system — at all levels. They would much rather believe in fairy tales of “hard work and perseverance” lifting all who go that route, with the various vehicles of choice being the only differentiation along those lines. They would much rather believe that systems and environments are no match for intrepid, relentless individuals, despite the mountains of evidence to the contrary.

And, yes, their salaries really do depend upon their continued complicity with those systems of dominance, oppression and propaganda.

Brett,

Nazi Germany was a capitalist regime. It had private ownership of the means of production. Businesses operated for profit and kept their profits. They were a part of the global capitalist market, and continued doing business even during WWII — with America and the rest of Europe, included. Businesses under the Nazi regime operated under classic capitalist, M-C-M and exchange-value forms. Social relations were capitalist. Capitalists controlled surplus value generated by workers.

It has never been the case that capitalism escapes government controls, as you seem to believe it must or it is not capitalist. In fact, capitalism can not possibly operate at all without stringent government controls, protections, support and bailouts. Take that away, establish your mythic “free markets” and it collapses in days. It would be nothing but “anarchy” in the sense most people use that word.

Though it’s not about Nazi Germany, I think this recent article by Erik Olin Wright is helpful in thinking about economic ecologies . . . and the way economic, state and social power interact:

How to Think
About (And Win) Socialism

In Envisioning Real Utopias, I argue that three different kinds of power are deployed in all economic structures: economic power, based on the control over economic resources; state power, rooted in control over rule-making and rule-enforcing over territory; and social power, which I define as power rooted in the capacity to mobilize people for cooperative, voluntary collective actions.

Different kinds of economic structures (or modes of production) can then be distinguished on the basis of which of these three forms of power is most important in determining control of the process of production and the extraction and use of the social surplus generated through production. More specifically, capitalism can be distinguished in these terms from two post-capitalist alternatives:

Capitalism is an economic structure within which the means of production are privately owned and the allocation and use of resources for different social purposes is accomplished through the exercise of economic power. Investments and the control of production are the result of the exercise of economic power by owners of capital.

Statism is an economic structure within which the means of production are owned by the state and the allocation and use of resources for different social purposes is accomplished through the exercise of state power. State officials control the investment process and production through some sort of state-administrative mechanism.

Socialism is an economic structure within which the means of production are socially owned and the allocation and use of resources for different social purposes is accomplished through the exercise of “social power.”

Corporatism largely retained private ownership but has state direction of the economy. This had an attraction to the politically favoured businesses who can obtain monopoly rents.

More to the point, I think, is the psychological benefit to the monopoly holder, who can convince themselves that their secure rent position is derived from their own virtue rather than corruptly. At that end of the market the money per se isn’t a huge deal, it’s all about the power, the social cachet, and the ego reinforcement.

[fascist-run businesses are badly-run businesses; the attitudes to the opinions of others that you need to think that fascism is a good idea aren’t conducive to an agile customer-responsive business or good relationships with your suppliers.]

Spain and Portugal in that period were fascist. Like most fascist regimes they tended to favour a broadly corporatist economic model. So they are not examples of a free market in a dictatorship.

Well, maybe that didn’t come out so good. Let me try this:

There was a “neo” that happened to some “liberals”, and there was a “neo” that happened to some “conservatives”.

People of great wealth who are not themselves managers have, as far as I can see, been quietly shunted off to a well-decorated room somewhere where they can live it up however they like, but I don’t see how they are in actual control of anything.

I know, I know, I shouldn’t but this is really monumentally dumb in so many ways it’s hard to know where to begin.

(Braces for new barrage of red-baiting, tone-policing, character attacks, comment mining, suppositions about offline life, etc)

@js.
this kind of sanity is not appreciated around these parts.

Well, Suzanne @73 agreed with me, but yes, I take the point. OTOH, there may be a silent majority (irony here is intentional) of U.S. CT readers who will vote for HRC in Nov. — not nec. happily, but they will.

Like clockwork!

There’s one thing about the linked Chait article that I didn’t catch when I first glanced through it that ties in to the recent discussion of social movements and mass support:

“But Obama did organize passionate volunteers on a massive scale — far broader than anything Sanders has done — and tried to keep his volunteers engaged throughout his presidency. Why would Sanders’s grassroots campaign succeed where Obama’s far larger one failed?”

Chat is talking about OFA here. And as usual, what he’s writing is deceptive although it skirts the line of being provably false. Obama did indeed organize passionate volunteers on a massive scale when he was supposedly an anti-war candidate who might take power from the Bush who created the Iraq War. Or really, there were a lot of reasons why people were passionate about any end to the GOP term. He “tried to keep his volunteers involved throughout his presidency” in a very nominal sense. Quoting wiki for convenience: “Except for some work on health care reform, the Obama administration has not made extensive use of OFA. This choice has been criticized by some veterans of the 2008 campaign, who believe that Obama has erred by being too ready to compromise with conservatives instead of mobilizing the OFA volunteer base.” Obama didn’t do any real party-building or attempt to build mass support with his well-put-together campaign organization. It was designed to win his election and then pretty much go away before the people in it got ideas that they might be more than just Obama’s support system.

Brett Dunbar @62 writes ‘Capitalist economics requires that the state largely leave the market to operate. … the state’s best economic policy is to step back and not interfere …’

Reading that makes me wonder whether a capitalist economy has ever come into existence in the absence of state activity, because I’m inclined to suspect that the answer is ‘No’; and also to wonder what happens to capitalist economies in situations where the state has largely or entirely ceased to function, because I’m inclined to suspect that whenever there’s a major interruption to the performance of state functions there’s also a major interruption to the performance of market functions.

I don’t rate those more highly than strong suspicions, but if they are correct they point towards the conclusion that capitalist/market economies are dependent on the state for their existence, and that if the state genuinely left the market alone the market would cease to exist. My observations suggest to me that people who call for the state to stop intervening the market are interested in stopping only some kinds of state intervention.

The activities of corporations play a large role in shaping modern capitalist economies; the corporate form is not a creation of the market. Modern contract law plays a large role in shaping modern capitalist economies; contract law is not a creation of the market.

Brett Dunbar @70 writes further: ‘A competitive free market exists as long as for example the barriers to entry are fairly low and certain other conditions are met. … If Easyjet were to attempt to sit on slots they weren’t using in order to retain a monopoly then a complaint to the competition authorities would be likely to succeed. …’

If I was trying to think of examples where the barriers to entry are fairly low, I don’t think the airlines industry would come to mind; I don’t think of setting up an airline as cheap and easy. But much more important is the reference to ‘certain other conditions’, evidently including the existence of the possibility of (results from) complaints to competition authorities. Competition authorities are agencies of the state, so this appears to support my earlier conclusion that market functioning is dependent on a substantial level of state action.

Brett Dunbar @84 writes further: ‘The state acting in a manner analogous to the referee in a sports competition ensuring that rules are followed and that the competition is fair.’

This suggests questions not only about how far states actually do act to ensure that competition is fair but also, I want to emphasise, about how much state involvement would be needed in order to ensure that competition is fair. If somebody wants to argue that the only way to ensure that competition is fair is to make prior inspection and approval by the state a condition of all transactions, can that position be shown to be wrong?

J-D,

Your suspicions are correct. There can be no capitalist economy without the state — and without heavily involved, protective and supportive states. Who would pay (for instance) for, manage, allocate and support currency, the very medium of exchange required for business transactions? Individual business persons or companies, each with their own agenda? Who would protect property and the validity of contracts and business transactions in general? Who would forge agreements across state and national lines? Who would protect business owners when they steal the production of their workers as if it were their own — which is the essence of capitalist itself? Who would maintain the laws and regulations between capitalist and labor, capitalist and consumer, capitalist and supply chain, etc. etc.?

Who would pay for and manage the infrastructure needed to move product and consumers? Who would pay for and manage the education and training of workers and consumer bots, so that people actual remain in the thrall of capitalist relations, propaganda and hype?

Who would pay for and manage all the wars and coups and regime changing needed to bust open new markets or protect old ones when capitalists give the green light?

And who would shower capitalists with the trillions in bailout monies they’ve required just since 1970, with the more than 100 international bailouts we’ve seen since that date?

Etc. etc.

There is no capitalism without the state.

cassander @74

‘> (“We want a government that can fire people who can’t or won’t do the job.”)
‘Do you disagree with this sentiment? Because it strikes me as quite reasonable. ‘

I’m not sure how much it has to do with the topic here, so I apologise if this is a derail, but there is a category of jobs for which I say that it would be a major improvement to have an effective mechanism for prompt dismissal for unsatisfactory performance.

As examples of this category for the US I might start with positions like President, Speaker of the House, Chief Justice, and Federal Reserve Chair, and go on to other positions of similar or somewhat lower seniority; for other countries, positions of similar significance.

If it’s reasonable for people to be subject to dismissal from their jobs for unsatisfactory performance, why shouldn’t that principle go all the way to the top?

The response I wanted was some tiny flicker of self-doubt or defensiveness re your ridiculous ‘Jeeves and Wooster’ view of contemporary managerial capitalism. The response I expectedwas the one I got.

engels: “The response I wanted was some tiny flicker of self-doubt or defensiveness re your ridiculous ‘Jeeves and Wooster’ view of contemporary managerial capitalism. The response I expectedwas the one I got.”

Maybe some kind of evidence might be good? Something about CEOs not successfully boosting their “compensation” to elite levels, etc.

But really, engels, come on. On the last thread you told me that you had no desire to argue with me and you told me to take a long walk off a short pier. Why should I want to argue with you? You’re a nasty clown and complete fool, and I don’t respect you or your opinions at all.

I’m not interested in arguing but I reserve the right to object to egregious bullshit, which the claim* that super managers have altogether displaced owners of capital as a ruling class is

(* nice try at goalpost shifting in #114 though)

I’m not interested in arguing but I reserve the right to object to egregious bullshit, which the claim* that super managers have altogether displaced owners of capital as a ruling class is

How does our knowing you object benefit us? Come to that, how does our knowing you object benefit you?

See. What-you-think is implicit in why-you-think-it. But! If you’re wrong — if what-you-think is an error — then stating what-you-think is no damned use, we actively don’t want to hear… but why-you-think-it might contain some underconsidered wisdom.

And if you’re right… well, your correctness would be implicit in your reasons, obviously. That’s what it means to be correct. And that being the case, if your reasons embody your conclusion, then we don’t need to be told the conclusion; we can work it out from your reasons alone.

So. There is never any need to tell someone your conclusions. Your conclusions are implicit in your evidence, and don’t need to be stated separately.

So why tell us? It’s not something we can build on, and there are better choices.

Like saying, “I think X because”. the because and everything after it is the important part, here. Not the “I think”; that barely matters, if at all.

They are all examples of catch-up growth in middle income countries, they are improving their position but they aren’t winning. The rich high income countries are the long term winners, they are mostly democracies.

Note that most of those countries are now solidly democratic. Capitalist success empowered the populace to take political power forcing the dictator and their corrupt cronies from power.

Japan was a strange case where the political competition was intra party rather than inter party. It seems to have functioned in a fairly democratic way overall with the various party factions being de facto parties.

The exceptions are China and Singapore. China is both still relatively poor and is starting to have economic problems linked to its autocratic and corrupt political system. Singapore is weird, it seems to have had peculiar luck in the dictator.

Cassander,

“Other than greece, has there been a single european country in which government spending has declined in real terms, or even in terms of share of GDP, since 2008? Hiking taxes to pay for your expanding welfare state is not austerity.”

As with most of the people in the mainstream center and on the right, you seem to believe increased government spending means an increase in the size of government — especially the “welfare state.” Not necessarily. In fact, with the rise of neoliberalism, it pretty much never does.

Governments that bailout capitalism, for instance, must spend more, by definition, and there have been well over 100 massive bailouts (worldwide) just since 1970. Not a penny of that went to “increase the welfare state,” unless we include billionaires, Wall Street and corporations in general in that definition.

Also, the radical increase in privatization forces government to spend more, exponentially, for goods and services it formerly managed in house. A great example of that — but just the tip of the iceberg — is when our military privatized logistics, security, food prep, cafeteria, KP, etc. etc. . . . thus forcing taxpayers to supplement for-profit companies, when soldiers once did all of that as a normal part of their (already paid for) duties.

Ironically, one of the best ways to radically reduce government spending is to (reverse privatization and) radically increase the size of the Commons, stay in house, stay 100% non-profit and public with as many goods and services as possible. That along with an end to corporate welfare would slash overall spending significantly.

Btw: The American Federal government now has more than one million fewer employees than it had in 1962. So, both in real numbers and (especially) as a percentage of the workforce, government has been shrinking for decades. I haven’t looked into how this has played out in Europe, but given its embrace of neoliberalism at roughly the same time as America’s, I’d be shocked if something similar had not happened.

Damned unions, restricting the freedom of people to starve to death!

Cassander,

It’s not “controlling assets” when it hands them off to for-profit corporations. Obviously. When it showers them with tax dollars, it’s just “redistributing the wealth” upwards, as usual, to the already wealthy. When it formerly did the work itself, and now outsources it, it’s giving up control. Not sure why you don’t get that.

And your last comment makes my point for me, though the second part doesn’t necessarily follow from the first:

“No, it has fewer civil servants. It has millions more contract employees, the number of which it is official OPM policy not to keep track of. Again, the government doing its job badly is not evidence of smaller government.”

Again, this is a huge reason for the increase in government spending. Contract out (formerly non-profit, in-house goods and services) to for-profit companies, and you guarantee higher costs than if you keep it in house and non-profit. It is also the case that by relinquishing control over goods and services, privatizing them, the government actually does shrink. Spending goes up. Government shrinks. The public sector shrinks. The private sector grows.

I thought that was what you propertarians wanted. Trouble is, what you refuse to see is how this radically increases costs to taxpayers and consumers. They get hit on both ends of the deal, while a tiny percentage of the population makes out like bandits.

cassander: “So the elite dominates society? Of course they do […]”

“Which elite” is the question. I’m arguing that neoliberalism is connected to a specific elite.

>It’s not “controlling assets” when it hands them off to for-profit corporations. Obviously.

Obviously, it is. Deciding to reward some companies over others is controlling assets. When the Feds decide to give lockheed martin a trillion dollars for some new planes, they’re unquestionably controlling what lockheed does.

>When it formerly did the work itself, and now outsources it, it’s giving up control. Not sure why you don’t get that.

Because it’s inaccurate. They aren’t giving up control any more than my company is “giving up control” when it pays me to do a job instead of having someone else do it.

>Again, this is a huge reason for the increase in government spending.

Even if this were true, and it isn’t, it’s irrelevant. what part of “the government doing it’s job badly is not evidence that it’s smaller” did you not get?

>The public sector shrinks. The private sector grows.

A contract employee on loan to a government agency is not less government than a GS employee doing the same job. He might cost more, or less. He might do a better job, or worse, but he’s not private sector by any meaningful definition of the term.

>I thought that was what you propertarians wanted.

Nope, we’re pretty happy just kicking puppies to death.

@Rich

>“Which elite” is the question. I’m arguing that neoliberalism is connected to a specific elite.

Is there more than one? I mean this question sincerely. I thought you were asking why neo-liberalism appealed so strongly to “them”, meaning the people in charge, whoever they were, and most countries don’t have more than one group in charge unless they’re in the middle of, of perhaps about to be in the middle of, a civil war.

As to why neo-liberalism appealed, here I must stake a claim to american exceptionalism, because the effect of the neo-liberal wave was different, and generally much milder, in the US than elsewhere because american politics and political systems were very different. In Europe went through much bigger changes. In the US, the change was more one of style than substance.

Airlines have moderate barriers to entry, airliners cost several million each. That is a level of capital actually available to a fair number of businesses. After most of the artificial barriers to entry were dismantled new entrants took a lot of the market.

In relation to the Wizz Air example, that airline seems to have sustained heavily losses in its first few years, the low prices being a price war between two low cost airlines. Easyjet and Wizz Air.

No you really don’t understand markets at all.

You really need to at least understand the basics of microeconomics in order to make a valid argument. It is painfully obvious that you need a basic layman’s introduction, which is why I have recommended Harford’s book.

Two Marxists. Marxist economics is the left’s equivalent of Austrianism on the right. Fundamentally unscientific. Marxism is pseudo-science while the Austrians were more explicitly anti-scientific. I’m not inclined to give either much credence.

It seems to me that if a government spends more but does less then it’s got bigger in one sense and smaller in another sense, and the interesting question then becomes one of which is more important to you and why; arguing about which is the one true measure of size, on the other hand, seems boring.

Follow up on Rich’s point, and earlier remarks (too lazy to reference) that neo-liberalism is a continuation of liberalism.

Classical liberalism was the doctrine of those who wished to assert their professional autonomy against the arbitrary (and often irrational) whims of the powerful. So it was the doctrine of the professional groups. Academics, a good part of the legal profession, administrators were the key groups – rich in prestige, weak in political power. In Britain, with its powerful state firmly in the hands of a landed/commercial oligarchy, the state was the major threat, so British liberalism stressed restraint of the state. Tenure, security in office, security of property were all major themes (in Europe, the magnates were the major threat, so these groups tended to favour absolutism – the state as their ally/bulwark against the magnates). These groups are still where liberalism has most strength.

Neo-liberalism does not assert the value of autonomy. It is active in undermining it. It is hostile to tenure, security in office, the autonomy of professional judgement. If Bill Gates says this is how education should be, his neo-liberal flunkies spring into action to make it so. The liberal vision of a university is of a professional group secure in its domain, seeking knowledge for personal and social advancement. The neo-liberal vision of a university is a bunch of MOOCs developed under contract, delivered by temp labour, paid for by government-guaranteed debt. It’s not the administrative class planting a flag on rational professionalism, it’s a bunch of bailiffs, agents and in-house lawyers following the wishes of the magnates. Who want a state that will collect their rents and suppress unrest, but not dictate to them.

Rich

I’m in full agreement. that’s my point – that neo-liberalism has a different social base to liberalism, a social base much more connected to the magnate class.

We are sort of agreeing, except that I think “the magnate class” is becoming more and more of an anachronistic phrase. And “they didn’t develop neoliberalism as a doctrine”… how about Larry Summers? He’s the son of two economists, but not a magnate, and he’s an academic, but he also had top positions in actually powerful institutions such as the World Bank and the National Economic Council. The classic left statement on this kind of thing is that people like this are merely tools of magnates, hirelings, or that somewhat more subtly that they have internalized the values of capitalism. But I see people like this in actual positions of power, making actual decisions.

Plum,e you are a classic Dunning–Kruger, utterly ignorant of even basic microeconomics the the point you simply don’t understand enough to realise how inadequate your understanding is. From your previous comments it is fairly clear that you lack an understanding of even those parts of microeconomics that are essentially universally accepted.

Marxism is pesudo-science it made a number of predictions about the economy which were incorrect. Some of the basic assumptions were wrong. Basically either you reject those assumptions in which case you aren’t a Marxist or reject reality in which case you are in the same position as a creationist. Marxist and Austrian economics can mostly be ignored.

Brett @151,

Capitalist economics is easy. It’s not difficult to understand at all. Business, in general, is easy to understand. Very, very easy. The dumbest kids on campus tend to go into it, rather than something that actually requires creativity and critical thinking skills. Business doesn’t. Understanding how capitalism and capitalist markets work doesn’t.

What you’re really complaining about, when it comes to my supposed “lack of understanding” is this: I don’t buy your silly, childish, pablum-filled, koolaid-drinking vision of capitalism. I won’t drink the koolaid, so you think I don’t understand it all. You want people to agree with you that your cartoonish, Disneyesque vision, designed for gullible tweens, is actually the way things really work in the real world. And since I know better, you say I “don’t understand it.”

(Of course, you never even provide examples of my supposed lack of understanding, no quotes, no actual evidence. Because you can’t, of course. And because it would further expose the abject silliness of your views.)

You’re nothing but a sad cheerleading clown, Brett. Capitalism has never, ever worked the way you think it does. And the relentless way you cling to your false vision of it is nothing short of fanaticism.

Now, please, if you feel the need for the last word, at least have the decency to supply actual evidence to support your absurd claims — about me or capitalism. For once.

I’d start with Locke (died 1704) through to JS Mill.

As far as I’m aware normal usage would call Locke a ‘classical liberal’ but definitely not Mill.

BW: “I am thinking aloud a bit, considering how to make sense of your thesis of managers as independent of wealth as well as mass support and I am not seeing it.”

Not *independent* of wealth — “their wealth empowers neoliberal control, but for the purposes of neoliberals” as I wrote above.

Is it possible to disentangle the interests of the super-wealthy from the interests of those who exercise power in the name of the super-wealthy? To some extent. Take inheritance as a particular case. Capitalists who have amassed control over huge amounts of wealth generally want to pass it on to their families and want the ownership and value of their assets to be defended forever. So in the U.S. you get things like the initiative to repeal “death taxes” under Bush Jr. But that was a straightforward right-wing initiative, not a neoliberal one — again, people like BDL consistently opposed it, and in 2013 Congress permanently set the estate tax on estates over $5 million to 40%.

If neoliberals are merely talking up the points fed to them, why didn’t they suddenly discover that “death taxes” were bad and discouraged innovation, as they similarly discovered that minimum wages were bad and that unions were bad? My short answer is that the self-image of neoliberals is bound up with meritocracy and that their class has some independent control based on the inability of the super-wealthy to still be unmediated bosses.

Of course, meritocracy itself is a big way of passing down inherited “wealth” or capital of the sort that bob mcmanus talks about, and the ideology of neoliberals is quite consistent with a practice that does not discomfit actual magnates at all. But to see neoliberals only as clients is increasingly not a complete picture, and increasingly less accurate outside of America.

Plume your arguments reach the level of not even wrong. They are mostly so ill defined that no one can even work out what you are saying, such as what you actually mean by socialism.

One basic example is you seem unable to understand that the market penalises over production or that workers tend to be paid at a rate reflecting their marginal productivity. In a competitive market with reasonably low barriers to entry making excessive profits simply leads to competitors willing to take a smaller profit margin undercutting you.

You cannot even understand that corporatism is not capitalism. It is a distinct economic model. A natural experiment comparing them occurred in post war Europe, many countries, such as the UK had a largely managed economy with extensive rationing and pervasive price controls. In Bizone Germany Erhard abruptly abolished almost all of them. Germany had a rapid economic recovery despite having generally worse overall circumstances.

Brett @161,

“One basic example is you seem unable to understand that the market penalises over production or that workers tend to be paid at a rate reflecting their marginal productivity. In a competitive market with reasonably low barriers to entry making excessive profits simply leads to competitors willing to take a smaller profit margin undercutting you.”

We’ve never discussed the above here — you and I — so I’m not sure where you’re getting any of that from. This is just you pulling nonsense out of the air. It’s pure straw-man nonsense.

Though, now that you mention it, your belief that workers are paid in accord with their marginal productivity is further proof that you have no clue about the real world. For example, worker productivity has skyrocketed in the last several decades. But pay for rank and file workers has either flattened or declined since roughly 1973. There are virtually no economists of note who would agree with you on that issue.

I’ve linked to a summary of findings from a non-Marxian source, since you can’t handle them:

Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay

A leftist economist, of course, would (correctly) note that wages have never reflected actual workers’ productivity. Not just that things have gotten much worse since 1973, which they have. They can’t match that productivity with pay, if the capitalist boss(es) seek profits and high personal compensation for themselves. It’s mathematically impossible to pay workers value for value and still come away with profits and high executive compensation. But I gave you more than enough proof that your thesis is absolute nonsense even without inserting a leftist, common sense perspective.

As for corporatism and capitalism. It’s not a matter of my not understanding your opinion on the matter. And that’s all it is. Your opinion, which very few share. It’s me disagreeing with it, and you having no evidence, logic or history to support your view in return. It’s just you taking your usual stance that capitalism is perfect, wondrous, spectacularly successful and virtuous and can do no wrong. If there is something wrong as a result of some economic model in the world, to you it can never, ever be capitalism.

You’ve drunk the koolaid, Brett. You should stop.

If you think about it isn’t it the money that pays for the machine that really has all the productivity.

Brett B,

Also: until we get to the point where robots build the robots that build the goods, etc. etc. . . . . it’s still going to be about increased worker productivity due to human workers — directly or indirectly. And, yes, it is quite likely to be the future. Human workers may some day become irrelevant. It does look like we’re heading in that direction.

Very good movie on the subject, from 2015: Advantageous.

http://www.imdb.com/title/tt3090670/

But once we hit a certain kind of “peak robot,” it’s pretty obvious that the consumer base will die as well, which means capitalism will die. It, too, will be replaced. Cuz, well, who will purchase the goods and services made by robots alone, when there are so few humans actually able to earn a paycheck? And just what do you think the billions of displaced human beings will do when that happens? It’s not going to be safe to be a capitalist piggie, rolling around in his or her bed, awash in money because they no longer have to pay any workers anymore. Awash in even more obscene amounts of profits and comp than they are currently. You’re going to see violence in the streets and in the penthouses that will make recent revolutions seem like a walk in the park. It’s that and climate change, etc.. Not a pretty picture for the future.

As in, be careful what you wish for.

It is possible for some individuals to be thousands of times more productive than the average in their company, the star players on a sports team are vastly more responsible for the team’s success than the cleaning staff at the stadium or the catering staff. They are employees who are paid not only thousands of times what the menial staff are paid they are paid many times what the managers are paid. This is generally true as the small difference in absolute ability results in a huge difference in overall outcome. For example world number 1 Novak Djokovic is only very slightly better than world number 2 Andy Murry at tennis and that results in a 22-9 winning margin.

Brett B @1976,

Strawman nonsense.

I note the existence of endless recessions and depressions, and you come back with this:

“But the economy, and only the economy, should be unvarying, or else you’re screwing up badly. It’s the one exception to the chaotic nature of the universe.”???

Come on.

Brett B,

Yes. We get them because capitalism forms unified markets (and eats its own), connected to one another like dominoes. No previous economic system was set up that way. It’s uniquely designed to do this, to move from crisis to crisis, and is unlike any previous economic system in that regard. It routinely goes into systemic crisis because no previous economic system was ever this tightly wound, this tightly integrated, or remotely this dependent on market gains across the board.

Beyond that, because it hoovers up wealth from the base to the top, redistributes wealth from the base to the top, and that base is necessary as consumer pool to maintain the system, it constantly goes into crisis. Again, this is unique to capitalism. No previous system was ever so dependent upon the buying power of the masses — while at the same time suppressing the wages of said masses. One of its classic contradictions, etc.

Slavery, which capitalism is based upon, refines, tweaks, wasn’t set up to rely on the buying power of slaves, obviously. Capitalism, however, emulates the master/slave dynamic but depends upon the purchasing power of the worker-slaves. There is an obvious conflict between the desire of the capitalist to maximize his personal hoard, which means he must radically suppress the wages of his employees, and the overall systemic health of capitalism itself, which requires at least adequate purchasing power from the largest possible numbers. As in, if the capitalist gets what he or she wants, the system falters.

There are exceptions, of course, the vast majority of recessions and depressions are just the natural result of this concentration of wealth and income at the top. It can’t be sustained, the system collapses, governments bail it out, and we start the whole round again.

It won’t be too long before the bailouts either fail to materialize at all or fail to work. Capitalism is simply not sustainable, primarily because of its massive internal contradictions — and the fact that it’s polluting us to death and changing the climate.

Collin @183,

Well done. Kinda an updated Socratic thing, hoisting Brett B on his own engineer’s petard.

;>)

Brett @184,

Marxian economists have easily been the most astute and accurate economists over the course of the last several generations, and it’s not close. Not being rank cheerleaders for the system under critique definitely helps, as does their rigorous focus on substance instead of myth. Dismiss them if you care to, but they get capitalism and capitalist cheerleaders don’t. Evah. They don’t even get Marxian economists, because they never read them. They just read right-wingers who read other right-wingers who read other right-wingers who say they once heard someone mention something “Marxist.”

That makes you guys think you’re experts on the subject and can then ignore leftist perspectives, without regret. It also, strangely enough, makes you think those economists you hear about (via hundreds of degrees of separation) must always uphold the highest standards your own right-wing economists can never remotely approach. As in, they never get any predictions correct, and are constantly getting pretty much everything wrong, but you still take their word for it all.

In short, you need to break out of your bubble and actually read Marxians and other leftists yourself. Relying on second and third-hand accounts of second and third-hand accounts really won’t get you anywhere.

I wrote (@101)

‘If I was trying to think of examples where the barriers to entry are fairly low, I don’t think the airlines industry would come to mind; I don’t think of setting up an airline as cheap and easy. But much more important is the reference to ‘certain other conditions’, evidently including the existence of the possibility of (results from) complaints to competition authorities. Competition authorities are agencies of the state, so this appears to support my earlier conclusion that market functioning is dependent on a substantial level of state action.’

Brett Dunbar wrote (@136)

‘Airlines have moderate barriers to entry, airliners cost several million each. That is a level of capital actually available to a fair number of businesses. After most of the artificial barriers to entry were dismantled new entrants took a lot of the market.’

Several millions of dollars is a large sum compared to several tens of thousands but a small sum compared to several hundreds of millions. Possibly there are examples of industries where the barriers to entry are higher than they are for the airline industry; I’m sure there are examples of industries where the barriers to entry are lower. Just where the airline industry would rank in a comprehensive tabulation I don’t know, although I still suspect it would be far from the bottom.

But, all that aside, Brett Dunbar’s observation responds only to the first sentence of my paragraph quoted above, and (as I wrote at the time) the second and third are more important.

Marginal product is not a personal virtue. An extraordinary performer can earn a fantastic income because the technologies of communication amplify the number in the audience who can enjoy the performance. The ability of an actor or an athlete, no matter how impressive, produces nothing but motion in the absence of theatrical technologies that allow the performance to be seen and enjoyed by hundreds, thousands, millions.

The organization of technically sophisticated systems of infrastructure make possible the careers of star performers.

Bruce @192,

“The organization of technically sophisticated systems of infrastructure make possible the careers of star performers.”

Excellent point, and well said. And a good way to prove this is to remember relative salaries for NFL starters prior to, roughly, 1969 give or take, or the beginnings of the golden age of televised sports for the NFL.

A starting NFL corner made roughly 20 – 30K back then. He now makes several million, easily. What changed? Not his skill set, his efforts, his knowledge of the game, his time spent on his craft. The medium of display changed radically, exponentially. TV changed the size of the audience, which changed the dollars advertisers were willing to spend and so on. But it also and obviously meant that an exponential increase occurred in the numbers of workers involved in that cornerback’s monetary “success”. Workers who, for the most part, earn a fraction of a fraction as much as he does now. He gets to make as much as he does, in part, because those other workers make so little, relatively speaking.

Personally, if I have to choose, I’d much rather the athlete, artist, actor, singer, etc. etc. get the money than the corporate suits. They (the athletes, the performers) have far more direct input in the deal, and people actually tune in to watch them. It’s incredibly rare that a CEO or owner of a company is the reason why a consumer tunes in/buys the product. So if there has to be obscene inequality in income, I’d rather it go to the performer, not the suits. But it’s still immorally unequal.

If we zoom out, and really think about value to society, there is no rational rationale for paying a Kobe Bryant, for instance, 25 million a year to play a kid’s game, while we pay teachers (to shape young minds) and nurses (to save lives) roughly 50K. Is what Kobe did — he retired after this season — really 500 times more “valuable” than a teacher, a nurse, an EMT worker, a social worker, etc. etc.?

Capitalism just escalates the madness of arbitrary monetary values, which have no basis outside of fiction and are fundamentally ludicrous.

@jd

>There are mechanisms for removing judges from office, but (at least in countries I know about) it’s not easy. I stand by my stated view that it should be easier. (And for Congressional officeholders, too, and their equivalents in other countries, whom I see you skipped over.)

congressmen face election every two years. that’s a very high standard of for public office. All else being equal I’d probably prefer a system with longer terms and making them subject to recall at any time, but I doubt in practice that would make the system that much more accountable.

In general, though, I don’t understand where you’re heading with all this. I agree those at the top should be more accountable. They aren’t because power, to a significant degree, always insulates people from accountability. If some private in the Army had done what Hillary Clinton did with classified emails, he’d be looking forward to a long career of breaking large rocks into smaller rocks at Leavenworth. Clinton might, if things go very badly for her, have to plead guilty to a misdemeanor. I obviously don’t think this is a good thing.

>Then you think wrong. I disagree. Academics are not generally in danger of losing their jobs if they learn to understand things they didn’t understand before, or if they change their views on issues in their fields.

They are not in danger of getting fired. They are in danger of losing professional standing, reputation, and their good parking space if they adopt positions their colleges don’t like. And the more famous they are, the more they stand to lose.

Cassander @197,

No one person builds a “successful” organization, or any kind of organization at all. It takes thousands, directly, and millions, indirectly. When it comes to tech corporations, especially, it takes the work of generations long dead, and the intellectual legacies they establish, plus generations of public sector workers, past and current physical and intellectual infrastructure, etc. etc.

(The government, for instance, created the Internet, the protocols that support it, the infrastructure to expand and maintain it, plus satellite tech, touch screen tech, computer tech, GPS and so on. And without centuries of public sector work in the sciences, especially maths, there is no computer, no software, no networking, no Internet.)

Which is one of the biggest reasons why it’s absurd and obscene for any one person, including a Bill Gates, to make thousands or tens of thousands more than his or her rank and file. Without them, without that legacy from the past, right up to the present, and without the public sector, he or she is dead in the water. They, OTOH, can work just fine with another head honcho, or organize and manage themselves as they do in places like Mondragon.

Gates needs and needed thousands of workers, plus the public sector, plus the generations of intellectual contributers, far more than they need or needed him. It’s pure nonsense to believe the Gates and Jobs of this world could do what they do without massive help from millions of others and from the public sector.

cassander @196

1. Reference was made to the principle that it should be possible to dismiss people from their jobs for unsatisfactory performance.

Easy dismissal for unsatisfactory performance is most important for the people in positions where performance matters most, but they are precisely the positions where dismissal for unsatisfactory performance is hardest.

You are of course correct to point out that this is because they are the positions with the most power, status, and prestige; that’s at the same time the reason why dismissal for unsatisfactory performance is hardest but should be easiest.

So it’s a very difficult problem to do anything about. What I do know is that the first step is naming it.

2. Academics are not generally in danger of losing professional standing, reputation, and their good parking space if they learn to understand things they didn’t understand before, or if they change their views on issues in their fields.

Brett B @201,

“He’s convinced that his moral theory describes the universe, when all it describes is him.”

It’s funny that you don’t get any of this, even though you use the correct word above: “ought.” I don’t think moral theory describes the universe. I see it as describing what “ought” to be but clearly isn’t. That should be pretty obvious when you read the inequality stats I’ve cited. That capitalism has created the most obscene levels of inequality in human history, and that it does so automatically, as a natural part of its own internal dynamics. If left to its own devices, it creates even more than exist right now with very modest checks on its powers. And there is a one to one correlation between the level of those democratic checks on its powers and its ability to increase inequality.

In short, I fully realize the massive difference between “ought” and “is.” Thing is, even though I despise capitalism and want it replaced, I also realize that it would perform much better as an economic system — while still needing to be replaced — if it did not create such grotesque levels of mass inequality . . . . of income, wealth, access and power. And that the only way to reduce this is through democratic checks and balances. And the reason it would perform better is that when it does what it was set up to do — concentrate wealth, income, access and power at the top — this causes its own collapse. Guaranteed. It is only ever able to return from the grave after those self-generated collapses due to government intervention and massive bailouts.

You want government to shrink? Replace capitalism. Because no previous economic system has ever required more government, and more integration between governments.

This is an academic blog and I’ve probably been a bit unhelpful in recent years discussing implementation/practice rather than theory. One reason why I’ve been posting a lot less lately.

But having held responsibility for managing business data and extracting information (we hoped!) at a variety of firms I always find these discussion about the precise economic decisions made by real firms amusing. (and of course the 2/3 of the MBA curriculum is spent learning how to deliberately undermine the economic theory learned in the first 1/3). As I’ve noted here before I was for a good length of time with a small/medium-ish firm that was for historical reasons viewed by customers and competitors as both a product trend leader and pricing leader although by that point it was only a small corner of the industry. Despite a 5 year effort to improve business data at all steps of the process we could not have accurately told you what our total costs per product line were, much less our average cost. Marginal cost? Not per product line or even product but per employee? Ha ha ha! And in guarded discussions with our competitors including one tightly buttoned-down megacorp they didn’t have much more information than we did. Assume a can opener…

Of course, it is all supposed to be aggregated, come out in the wash, and work by invisible hand, right? Then you need to get to work explaining why firms larger than the basic unit of implementation ($2-3 million and a nice office for a software firm, $3 billion and one mill for a steel producer) exist AT ALL when Brett D’s beloved Microeconomics 101 says they should not.

Cranky Observer,

Thanks for your observations. I think it’s a major problem for anyone to put so much store in capitalist theory, and Brett D is an example of someone who assumes it ALL translates, as is, without alteration, to reality. At least as he perceives Econ 101 theories. At least his perception of a certain kind of Econ 101 theory, etc.

In a sense, he and those like him are “true believers.” Capitalism is a religion to them. Capitalist theory is like the bible to creationists. It all really happened as written, apparently. And it keeps happening as written, supposedly. And those who don’t accept these fictions as factual apparently “don’t understand microeconomics.”

Um, no. We just realize the stories told by capitalist zealots are just that, stories. Not reality. Not the way things actually work in real life. Not the way things evah worked in real life, or ever will.

The increase in executive salaries after they started being set by shareholders seems to be partly due to signaling, You pay a superstar a superstar salary if you don’t pay a superstar salary then you signal to competitors that you have a mediocrity. You don’t want to do that as it makes you look vulnerable so you pay superstar salaries even if you have appointed a mediocrity.

@layman

>These are not the examples, you think they are, but never mind. For every one you name, we can name another – Carly Fiorina, or Dennis Koslowski, for instance. Were these people massively more productive than their peers? If not, why did they command the same kind of megacompensation?

Well, Tyco grew massively under Koslowski, the fact that he was a crook doesn’t really change that. And I dare say even Carly Fiorina did better than, say, the janitor would have. That CEO pay can be corrupted by lots of mutual back scratching is, of course, undeniable. but that doesn’t change the fact that some people really are hundreds, even thousands, of times more productive than others in the right circumstances.

“You don’t want to do that as it makes you look vulnerable so you pay superstar salaries even if you have appointed a mediocrity.”

Why does the market permit that? Isn’t it a failure?

“but that doesn’t change the fact that some people really are hundreds, even thousands, of times more productive than others in the right circumstances.”

That ‘right circumstances’ qualifier does a lot of work!

Brett @212,

As BW notes, Kobe was only able to reach millions because of radical changes in technology, none of which he or his bosses created. All of those changes also included the work of literally millions of people through time, and to maintain them, to maintain necessary adjacent infrastructure, they still do.

So the only way a Kobe is able to make his 25 million a year is for the vast majority of those people to be ignored, unpaid, forgotten. This is also the case when it comes to anyone like a Bill Gates, when they put together a company dependent upon the previous work of millions and the ongoing work of millions. Capitalists would go bankrupt if they actually had to pay all the people who made or make their businesses possible.

On the slavery issue: We’ve been through that a thousand times. Yes, capitalism is based on the slave model. Clearly. Obviously. And, yes, it fits in quite well with ongoing slavery, as we saw in the second life capitalism gave slavery in the American South, and the fact that slavery rears its ugly head again in capitalist nations devoid of democratic checks and balances. When no one is looking, it reverts back to its primal, enslaving self.

And, for the thousandth time, you can’t credit “capitalism” with everything done to counter its ill-effects. Britain’s and America’s abolitionists had to fight against capitalists in order to fight against slavery. Capitalists themselves were never, ever at the forefront, primarily because so many of them benefited so much from the slave trade — directly, indirectly, via manufacturing, finance and so on.

Please, Brett, put down the koolaid.

The epithet “dismal science” was thrown at J S Mill by Carlyle in an argument they were having about slavery. Mill was opposed while Carlyle was in favour. It is a matter of historical fact that early capitalism was associated with abolitionism. The Commons, much more influenced by the new money of the industrialists was abolitionist earlier and more strongly than the mostly old money aristocratic Lords.

The abolitionist Republican party had its power base in the capitalist north, the slave lobby in the aristocratic planter class in the less developed south. The basic liberal philosophical assumptions that capitalism has fit poorly with the ideas of treating people as property. The capitalist northerners had reached the point where they could not abide a political alliance with the slave owners, hence the collapse of the Whig party.

Plume @194

‘Create a point system for things like years on the job, education, overall work experience, voluntary skill-set training, job dangers, etc.’

I can’t believe in this without a worked example.

Plume you are talking utter bollocks.

Capitalism started around the end of the eighteenth century as Pitt began the process of dismantling the elaborate regulatory systems that made up the mercantilist economy. The abolitionist movement was also in the process of succeeding in the same place and time, The slave trade was prohibited in 1807 (the Slave Trade Act 1807 passed the Commons 283 Ayes, 16 Noes) and in 1808 Britain established the West Africa Squadron to enforce that ban. Between 1808 and 1860 it captured 1,600 slave ships and freed 150,000 africans. Slavery itself was abolished in 1833, it was to be phased out by 1843 in the Act as passed, the deadline was brought forward to 1838.

The Anti-Corn Law league, who’s political campaign was a key part of early capitalist political activism had many members who had started out in the earlier anti slavery campaign.

I am not interested in Marxist pseudo-science., I have better things to do with my time. for much the same reason I’m not interested in theology. Both involve dogmatically asserting a number of premises that are not actually true. I feel perfectly justified in rejecting the work of anyone who still holds to Marxist dogma as fundamentally logically flawed.

You are letting your fanatical hatred of capitalism blind you. Capitalism and Liberalism were very strongly linked. The anti slavery cause was strongly associated with the pro-free trade campaigns and had a large overlap in personnel. The slave trade promotes war, as that is a source of captives, war disrupts trade generally so if you want a wide range of trade then you want to suppress the slave trade.

The claim that capitalism promoted slavery is a straight lie. The most capitalist state at the time was also the most militantly anti-slavery. The capitalist industrialist class were pretty solidly anti slavery and were actually prepared to spend a good deal of money buying off the mostly landed aristocratic slave owners in 1833.