Technocrats & class

Are centrists even more utopian than socialists? I’m prompted to ask by a passage at the end of Anne Case and Angus Deaton’s Deaths of Despair. They write:

We believe that capitalism is an immensely powerful force for progress and for good, but it needs to serve people and not have people serve it. Capitalism needs to be better monitored and regulated, not to be replaced by some fantastical socialist utopia.

This comes after 260 pages in which they document how American capitalism has recently been a force not for progress and for good, but for mass social murder. They describe how the collapse of demand for unskilled labour has caused “the loss of meaning, of dignity, of pride, and of self-respect” and so led to tens of thousands of needless deaths of despair among the white working class – from suicide, alcoholism and drug abuse. The pharmaceuticals industry, they say, is “profiting by destroying lives” – not only through its over-prescription of opiods but because in forcing up the cost of health insurance it prices the low-paid out of the labour market.

How, then, can they believe in the face of their own evidence that capitalism is a force for good?

The answer is that centrists are prone to a form of utopianism, of wishful thinking.

They believe that reasonable policies and institutions could constrain capitalism’s rapacious and murderous tendencies and so make it a force for good. What this fails to see is that the same rapacity that makes capitalism a force for bad also forbids such change. Any child could think of a better healthcare system than the US’s; just look at any other advanced country. The US does not have such a system not because of a lack of intellect but because of the power of capital. As Case and Deaton show, the healthcare industry spends over £500bn on lobbying, and employs five lobbyists for every one Congressman.  

Lobbying, though, is only one of several levers that capital has over the state. The prospect of well-paid jobs after they leave politics incentivizes politicians to do capitalists’ bidding whilst in office. Blackrock isn’t paying George Osborne a fortune for his expertise; it is doing so to show finance minsters around the world the rewards of playing by the rules.

There’s also ideology. Capitalism (or indeed any social system) endogenously generates beliefs which help sustain its power structures, a process reinforced by the media: John Jost calls this system justification (pdf).

And then there’s plain deference. As Adam Smith wrote:

We frequently see the respectful attentions of the world more strongly directed towards the rich and the great, than towards the wise and the virtuous

And of course, there are also economic levers. Governments feel the need to preserve business confidence in order to create jobs, which of course constrains its policy-making.

Given all these channels, a finding (pdf) by Martin Gilens and Benjamin I. Page should not surprise us:

Economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence

Pablo Torija Jimenez shows that this is true in most developed economies.

The power of capital over the state has not always been so malign. In the three decades after WWII, there was good evidence for Deaton and Case’s faith. Capitalism did indeed deliver full employment and rising wages, and there was a modicum of equality: the share of US incomes going to the 1% was barely half what it is today.

The Golden Age of capitalism was not, however, the product of mere goodwill. It was the result of material interests. Fordist capitalism required domestic mass markets, which required highish wages and full employment. And the threat of communism forced capitalists to prevent discontent. Yes, the US never had a large socialist party. But it did once have something nearly as good - a fear of socialism. Capitalism was kept tolerably decent by what j.K. Galbraith called countervailing powers. 

Today, though, this has changed. Capitalism has become more extractive and financialized, requiring high margins and cheap money more than mass markets. General Motors needed a large well-paid working class; Goldman Sachs, not so much.

The murderous power of the US healthcare industry and the vote for Brexit are both, in their different ways, signs of the victory of regressive capital.

Today’s capitalism, then, rules out the humane policies favoured by Case and Deaton, and thus refutes their optimism. Jeremy Cliffe recently asked “why the Anglo-Saxon model keeps going so wrong.” It’s because the dominance of extractive capitalism over the state precludes good technocratic politics.

In saying this, I am not making an original point. I’m merely echoing what Kalecki said (pdf) in 1943. He noted that economists knew technically how to achieve full employment, but feared that capitalists would oppose such policies:

The maintenance of full employment would cause social and political changes which would give a new impetus to the opposition of the business leaders. Indeed, under a regime of permanent full employment, the 'sack' would cease to play its role as a disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow…’Discipline in the factories' and 'political stability' are more appreciated than profits by business leaders. Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the 'normal' capitalist system.

“The assumption that a government will maintain full employment in a capitalist economy if it only knows how to do it is fallacious” he said.

Granted, he was wrong for 30 years after writing that. But the point is bang on today. Which is why Case and Deaton are missing something important. Good policy doesn’t require merely technical know-how. It requires the right material conditions, the right power bases. It is these, rather than technical know-how, that are lacking.

Case and Deaton are of course not alone in this error.  Let’s take just two recent examples, though you can no doubt think of many more. Layla Moran calls for a universal basic income. Such an income – if meaningful – would empower workers to reject bad jobs. But Ms Moran does not ask whether this is compatible with an extractive capitalism which wants a mass supply of cheap and quiescent labour. And Nick Cohen rightly lambasts our government of charlatans and dilletantes without asking whether this is the product not merely of individual bad character but rather of the nature of British capitalism: it prefers incompetents to anybody who challenges the system.

But why is the error so common among highly intelligent people?

I suspect what we have here is an example of schools functioning inadvertently as what Louis Althusser called ideological state apparatuses. At impressionable ages we are brought up to believe that success comes from knowledge and intellect. We thus believe this even in contexts where it is wrong. We’d be better prepared for politics if teachers gave top marks not to the brightest students but to the school bullies.  

It’s in this context that many of us applaud Corbynism. It mobilised an albeit-modest countervailing force to extractive capitalism – a base of renters, public sector workers and immaterial labour. Whilst this wasn’t sufficient for electoral victory, it did help pressurize the government into relaxing austerity.

The left realized that good, sensible decent technocratic policies require not just expertise but a material base in the form of particular types of class power and interests. And in the UK and US, this base is missing. In failing to realize this, centrists are too naïve.

Comments

[Dave Timoney]

You're being generous (or perhaps ironic) in attributing cenrists' delusions to naivety. Cohen knows perfectly well that the problem is one of systems rather than character, but he has a well-paid gig promoting the opposite belief.

Moran has no intention of constraining capitalism, rather she sees UBI as a means of reproducing labour on the cheap while "simplifying" the welfare state, hence she frames it as "a catch-all safety net".

The problem with centrists is less their utopianism (though that certainly exists) than their cynicism.

[AllanW]

Yes. Well done. It's all about power and what, therefore, you can make happen. Or not.

Centrists are supporters of the status quo in systems terms, they just disagree on who should be steering the ship of state; they think it should be them rather than anyone else and then everything would be alright.

Because they don't or won't understand that it's only power which changes things from how they currently stand they are doomed to be second-best in all fights.

[Luis Enrique]

I wonder if one could write a similar-but-different case for why attempts socialism will also fail to be the force for good its proponents think, thanks to - say - the inevitable shittiness of people - so we could ask why so many very intelligent people make the mistake of overlooking that too?

In which case we are left with a choice between a giant douche and a turd sandwich
https://en.wikipedia.org/wiki/Douche_and_Turd

Unless ... unless there is a third way?

** ducks and runs **

[UserFriendly]

"Granted, he was wrong for 30 years after writing that."
LOL are you kidding?
In the same essay he spelled out exactly how they would try to eliminate unemployment and exactly why it wouldn't work, predicting zirp/nirp 70 years before they happen.

2. In current discussions of these problems there emerges time and again the conception of counteracting the slump by stimulating private investment. This may be done by lowering the rate of interest, by the reduction of income tax, or by subsidizing private investment directly in this or another form. That such a scheme should be attractive to business is not surprising. The entrepreneur remains the medium through which the intervention is conducted. If he does not feel confidence in the political situation, he will not be bribed into investment. And the intervention does not involve the government either in ‘playing with’ (public) investment or ‘wasting money’ on subsidizing consumption.

It may be shown, however, that the stimulation of private investment does not provide an adequate method for preventing mass unemployment. There are two alternatives to be considered here. (i) The rate of interest or income tax (or both) is reduced sharply in the slump and increased in the boom. In this case, both the period and the amplitude of the business cycle will be reduced, but employment not only in the slump but even in the boom may be far from full, i.e. the average unemployment may be considerable, although its fluctuations will be less marked. (ii) The rate of interest or income tax is reduced in a slump but not increased in the subsequent boom. In this case the boom will last longer, but it must end in a new slump: one reduction in the rate of interest or income tax does not, of course, eliminate the forces which cause cyclical fluctuations in a capitalist economy. In the new slump it will be necessary to reduce the rate of interest or income tax again and so on. Thus in the not too remote future, the rate of interest would have to be negative and income tax would have to be replaced by an income subsidy. The same would arise if it were attempted to maintain full employment by stimulating private investment: the rate of interest and income tax would have to be reduced continuously.4

In addition to this fundamental weakness of combating unemployment by stimulating private investment, there is a practical difficulty. The reaction of the entrepreneurs to the measures described is uncertain. If the downswing is sharp, they may take a very pessimistic view of the future, and the reduction of the rate of interest or income tax may then for a long time have little or no effect upon investment, and thus upon the level of output and employment.

[Staberinde]

The Right has worked out that people are loss-averse. Once people have something, they don't like it taken away. Hence the way they frame inheritance tax as taxing the wealth of the elderly rather than taxing the unearned income of heirs.

The Left can only win that fight with numbers. That is: a large majority of people must feel they have little to lose through redistribution - no house, low income etc. But that's not where we are. Very large numbers of people own property and have decent lifestyles. They won't vote for the hard Left, which is why there have been so few Labour election victories - and most of those weren't hard Left.

Centrists acknowledge the systemic issues with capitalism while recognising the vast progress the world has made over the last century or so in terms of global poverty reduction, health improvements and innovation. None of which has been matched by communist regimes.

So the smart question to ask is "How do we reform mixed market systems without triggering loss aversion biases in voters?"

You can complain all you like about false consciousness, but treating people as if they're deluded isn't a good look.

The Left's chronic failure, particularly in the UK, stems from its inability to recognise the need to build a broad church. The Corbynistas' small-but-pure ideological steamroller failed miserably, and here we are today with a panel show host saying "Piffle-wiffle" while our grandparents die alone.

But glad you took the time to dump on centrists again, Chris. Perhaps if people like yourself keep insulting them, they'll be more likely to become allies, yes?

[e]

@ staberinde
A broad church requires a breadth of legitimate voices to function as advertised. You short selling Labour centrists with your characterisations intentionally? And while those yet to feel their losses are mollify do reckon there's a plan to appease the rest of us?

[Paulc156]

@staberinde
"...health improvements and innovation. None of which has been matched by communist regimes."
Always makes me smile this. Comparing capitalism with North Korea or Soviet Union. Otherwise known as the 'there can only be one winner" argument. Straw man and all that. :)

[Staberinde]

@Paulc156

Well if you compare capitalism with, say Nordic or other European mixed market models then... it's still capitalism. And indeed, what most centrists would like to see in the UK.

You can only compare capitalism in its variety with not-capitalism. And the only varieties of not-capitalism we've seen in the last century or so tend to be either very small-scale (kibbutz) or accompanied by totalitarianism.

Don't blame me for the paucity of not-capitalist case studies!

[Jan Wiklund]

Case and Deaton is repeating Verein für Sozialwissenschaften's (or Fabian Society's) program. And it did work - for a time. So why can't it work again?

The snag is of course that it did work because of a lot of social movements forced it. Labour movements were extremely strong in Scandinavia in the 20s and in the US in the 30s, and they were the countries that pioneered this program. In India the strongest national liberation movement of the 20th century was upsetting the colonial system the early 20th century capitalism was footed in. In Russia there had just been a revolution that upset it some more, and in China there was another a little later.

So there HAD to be some sort of accommodation, and the Verein für Sozialwissenschaften supplied one, with the help of J.M. Keynes. But of course without the social movements mentioned above they wouldn't have achieved a jot.

[Jan Wiklund]

PS concerning the preference of incompetence: This was what George Orwell lamented some 85 years ago. And concerning the regression into finance capitalism: this was what Hilferding and Lenin lamented some 110 years ago. So it seems that we have recurrent cycles rather than a linear development.

[Nick Drew]

"... spends over £500bn on lobbying ..."

What, half a trillion - per year? month? decade?

Do we believe this?

[Seth Edenbaum]

Amusing, rilly to use the famous "Decent" Nick Cohen, as if he's on the "left".
And Corbyn might have won if he'd stayed with Brexit. "Take out Greater London—the prosperity of which depends to an uncomfortable degree on a willingness to provide services to oligarchs from the Middle East and the former Soviet Union—and the U.K. is one of the poorest countries in Western Europe." @M_C_Klein
You have a soft spot for The City.

You're a technocrat. 'Socialist Norway" is ruled by technocrats, and it's state capitalism, not socialism, whatever Ryan Cooper may pretend. But don't think I'm defending Deaton, winner of the non-Nobel Prize for "discovering", contra Ricardo and Krugman, that it's a bad idea to put all your eggs in one basket. Pure genius.

We need less barbarism in this world, and less utopianism. Two sides of the same coin.

"A religion is a form of utopia: when it disappears, alternative utopias appear"
Emmanuel Todd

[Seth Edenbaum]

"There’s also *ideology*. Capitalism (or indeed any social system) endogenously generates *beliefs* which help sustain its power structures, a process reinforced by the media: John Jost calls this system *justification*."

Academia has devolved to scholastic self-justifying garbage. I supposed I should link to the academic Piketty who's "discovered" the "Brahmin left".

I had to add that after reading this blather more closely. I'm done. This sh-t's all pathetic

[georgesdelatour]

Chris’s working definition of Capitalism is basically “the whole of observable reality everywhere on the planet from 1500 to the present day”. It’s not the most useful descriptor to use if you actually want to understand anything. I suspect that’s the point.

For instance, the Great Depression was pretty awful, but the statistical evidence shows clearly that Americans’ life expectancy and health actually improved during that period. Their economic situation was worse, but anomie was lower. So what advantage did the poor of the 1930s have over the poor of 2020?

How come America’s Mormons are bucking the trends Deaton and Case note in their book? What’s the Mormon advantage? How does Mormonism protect you from the infinite rapacity of Capitalism?

[georgesdelatour]

@Seth Edenbaum

“State Capitalism” makes as much logical sense as “Private Property Communism”.

Marx defined his whole program as the abolition of private property (he meant private citizens owning factories etc, not owning their own toothbrush). In the 20th century Communist governments basically achieved this; at least they went as far towards its full achievement as anyone’s ever likely to get. The result was not Marx’s Utopia. It was more like what Bakunin predicted Marxism would turn out like in practice. Therefore this new form of un-Capitalism got redefined as Capitalism.

See how it’s done?

[GrueBleen]

Well, Luis Enrique, considering "the inevitable shittiness of people", have you considered what percentage of "people" are either sociopathic or psychopathic or both ? And what percentage of such people seek and gain wealth and power because they have no "conscience" .

And have you wondered why so many people pay loyal homage to them ? Like the 44% of Americans that, in one way or another, kowtow to Trump ? And why any nation that would like to call itself civilised puts up with the likes of the Trump yakuza ?

When, if, we can answer these questions meaningfully, we may find a way that can make either capitalism or socialism good for humanity.

[KG]

Apologies, but quoting Kalecki in support of an argument is not usually a good sign - in my experience his insights are as useful as the quantity theory of money.

Come to think of it, when it comes to debating publicly whether the world is flat or not, choosing to quote anyone is probably not a good sign.

[UserFriendly]

@ KG | May 11, 2020 at 06:53 PM

Yeah, Kalecki the guy who beat Keynes to the general theory, and essentially predicted monetarism and debunked it before it happened is really the mental midget. Get a life.