politics


Events in the Ukraine had me wondering about fascism, and I remembered your essay on Bush. I went back to it, and read through nearly all of Neiwert’s essay you linked. It’s interesting to read material a decade on from those events leading up to the invasion of Iraq. It was a different time.

Both your piece and Neiwert’s extended essay haven’t aged very well, no offense. We know Bush fizzled out as Iraq devolved into genocidal bloodletting and he lost serious alignment with the far right wing before the end of his second term. Frankly, coming from the extreme right background I have, I was never very worried about a Bush dictatorship. I guess my reasoning was something like, all my childhood I’d heard horror stories of how Clinton was going to hold onto office, and now as a much more liberal adult, I couldn’t put any weight to the liberal fears of a similar thing happening with Bush.

Anyway, we know Bush let his hubris and idiocy destroy the right tidal wave. But how do you view the danger of right-wing American fascism today?

It’s been 6 years of increasingly bizarre conservative extremism. It’s been easy to pass off as racists and old people, but Neiwert’s essay in particular has me wondering if this is mistaken. Certainly, it’s hard to downplay the real world successes of the extreme fringe, and the rightward track of the Republican Party is hard to ignore. And the fact that Tea Partiers and militia men are still around suggest to me that this isn’t as fringe as we on the liberal side of things would like to believe.

The question of marginalization is seemingly obvious, but by 2016 there will have been 8 years of contentious Democratic rule, an economy that hasn’t fully recovered, potentially unpopular wars in Syria and Iraq, a devolving (and increasingly fascist) climate in Europe, and the potential for a Clinton candidacy. These are all things which could push the electorate towards the GOP.

Is that GOP more likely to move further along Paxton’s five steps of fascist movements than with Bush? Violence was the missing piece for both you and Neiwert, and that hasn’t exactly changed, but a lot else seemingly has.

—Matthew

I think you’ve put your finger on a paradox: the right has become crazier and crazier, and yet the threat to democracy seems less. There were some worrying moments in 2009— wingnuts fantasizing about military coups or assassinations.  But they turned their attention to winning the House in 2010.

So, the basic answer to why they haven’t turned to violence is that they haven’t needed to. They have the House and a good chance at picking up the Sentate this year. They have 29 Republican state governors, 28 state legislatures, and 5 of 9 Supreme Court justices.   They can’t get everything they want, but they can bust unions, shut down abortion clinics, punish the electorate with austerity measures, stop gun laws, restrict voting rights, and obstruct a liberal agenda in Congress. 

As you say, times change— ten years ago they not only held the whole federal government, but it seemed (to them and to their enemies) as if they might be settling in for a long haul of governing.  But the demographics, and their own zealotry, makes that seem less and less likely. Their message is out of date and they’ve systematically outraged every constituency but straight, old, white, Christian males.  And yet there’s nothing pushing them to change in the short term. I don’t see how they can continue on this path for twenty more years… but they can easily keep going as they are for five or ten years.

I’m not too worried about the other things you mention. I don’t think Obama has any intention of restarting the war in Iraq. European politics never affects the US.  And though a Clinton presidency looked in 2008 like it would be horribly contentious, well, that’s business as usual today. 

But 2016 will be interesting. The GOP generally nominates the most centrist guy they can find— though they hate themselves for doing it. But do they have any non-crazies left?  

Edit: Forgot to add that though the vehemence of the extreme right always seems surprising, actually it’s been that way forever. You can easily recognize the Tea Party and the birthers in Richard Hofstadter’s 1964 essay “The Paranoid Style in American Politics“.

Since the enemy is thought of as being totally evil and totally unappeasable, he must be totally eliminated—if not from the world, at least from the theatre of operations to which the paranoid directs his attention. This demand for total triumph leads to the formulation of hopelessly unrealistic goals, and since these goals are not even remotely attainable, failure constantly heightens the paranoid’s sense of frustration. Even partial success leaves him with the same feeling of powerlessness with which he began, and this in turn only strengthens his awareness of the vast and terrifying quality of the enemy he opposes.

The enemy list changes over time, but the style remains. 

When I hear about libertarians who want to seastead, the jokes, like the sea-waters bursting a wall built by sub-minimum-wage contractors, just flow.  It’s impossible not to think about Rapture.

Leading the world in waterproof neon tubing

Leading the world in waterproof neon tubing

Nonetheless it’s interesting to read Charlie Loyd’s take on the idea. Loyd lived for years on a geographic anomaly– Waldron Island, in the Salish Sea between Washington State and Vancouver. The island has no stores, no public transport to the mainland, and about a hundred residents. So he groks the appeal of isolation (and islands).

At the same time, having actually done it, he’s aware, unlike the Randian isolationists, of just how much he depends on a vast interconnected human community. When you’re the last link in the supply chain– when you have to physically haul your water and groceries and gas out of the boat– you become more aware of what a complex monster it is. Randites don’t realize that they already live in Galt’s Gulch– that they live in a highly artificial island where the people who build and maintain it have been airbrushed out of the picture.  Moving to a physical island would actually decrease their isolation; they’d be confronted by their dependence on a billion other people.

He talks a fair bit about Silicon Valley dudebros, and it makes me wonder if anyone has attempted to correlate political views with code quality. Of course, you can despise people and write good code… indeed, development is an excellent field for people who hate people!  But can you despise community and write good code? I’d suspect that a Randite can only thrive as a lone hacker, or as undisputed tech god. It’s hard to see how a person who doesn’t respect the community can re-use code, or write good check-in comments (or comments designed to help other people at all), or worry about maintainability, or create a user-friendly UI, or write a really flexible API, or even fix bugs filed from outside Dev.  To do all those things well requires empathy– the ability to see things from another point of view, to value other people’s work and time, to realize that not all users of your product are fellow devs.

 

This book, by David Graeber, is great.  Provocative, brilliant; also crankish and infuriating.

barter

Graeber is an anthropologist, and the best parts of the book are where he does anthropology. He’s devastating on what he calls the “myth of barter”. Economists love to talk about the invention of money as freeing us from the situation where Fred has arrowheads and Madge has pots, and Fred needs a pot, but they can’t trade because Madge doesn’t need arrowheads right now.

This doesn’t happen.  There was never a “barter stage”; no societies suffer from this hangup.  There’s a number of possibilities, but the basic pre-money mechanism is that Fred goes to Madge and says “That’s a handsome pot.”  Madge gives it to him.  At some later time, if she needs arrowheads, she goes and asks for some.  These may be considered tiny little debts, or they may just be considered the way social life works: people help each other out.

Once money exists, debts tend to be enumerated in units of account– but these are rarely transferred physically, and in fact the system long predates coins and even writing.  For 2500 years, Middle Eastern civilizations had markets, checks, traders, inns, interest, and debt without coinage.  Everything was done on credit.

Coins, according to Graeber, come in with large empires.  This developed out of the existing tradition that strangers are outside the credit economy.  Once you have a large standing army, you need to pay the soldiers, and they need to buy beer and horses and prostitutes.  As they’re rarely natives of the area they’re stationed in, it’s enormously useful to provide small portable bits of currency. It’s only in the last couple hundred years that this marginal coinage-based system took over the whole economy.

And then there’s debt.  As promised, Graeber gives a history of debt from ancient times, and in his telling it’s up to no good.  Debt always gets out of hand.  Ancient societies were plagued by a cycle of debt peonage: peasants would get loans; they were unable to pay the interest; they then sold off implements and furniture, then their fields, then their wives and children, and finally themselves.  Periodically, in the Middle East, kings would decree a vast cancellation of debts– all the records would be destroyed and the debt slaves would return to their restored homes.

In his telling, this process was linked to other bad things– such as slavery and misogyny.  Slavery was once limited largely to war captives, which were a limited resource; debt created a vast and increasing population who were effectively slaves.  Women in early Sumerian society were surprisingly visible and influential, and temple sex was a respected profession; the selling of wives and daughters to repay debts, and the subsequent sexual service, degraded the position of women.  And the fear of such selling-off led to the Middle Eastern focus on honor… meaning a man’s ability to protect his womenfolk, keeping them out of his creditor’s hands– and under his control.

And then there’s the moral effects.  Debt becomes a metaphor for the relationship of children to parents, or humans to gods.  We’re told to pay our debts, and yet most human cultures have despised usurers, and the first act of any peasant rebellion was to destroy the debt records.  Not infrequently kings or religious authorities took the part of the poor against their creditors, going so far as to ban interest or slavery… though these measures didn’t often last.

In the end, Graber suggests, debt– and economic theorists– blind us to how human societies really operate.  There are at least three types of human economy, which he calls communism, exchange, and hierarchy.  ‘Communism’ is the helpful, altruistic systems that underlie all human society– it’s how families work, and entire villages in many cultures, and even how corporations work internally.  Hierarchical exchanges are largely exactions by the rich and powerful, and their salient feature is precedent: a particular tax or tribute, once levied, becomes customary, which is one reason you should be wary of offering a gift to the king.  (On the other hand, it’s rare that an elite simply does nothing but take; usually it needs to attract supporters by giving things away.)

To Graeber, economists go terribly wrong in ignoring or underestimating the non-exchange portions of the world.  The whole attitude of looking at the world in terms of rational, egoistic calculation is a vast misapplication of what was originally a very narrow part of the economy– associated with debt, war, and slavery.

All of this is fascinating and eye-opening, and can be used to deepen (and darken) your view of history, or your conworld.

At the same time… well, for Graeber history is full of villains, and he’s often so busy flinging mud at them that he loses track of who’s worse and who we should be rooting for.  E.g. he talks about the rise of coinage as something of a disaster, destroying the credit economy and ultimately turning the Roman citizens into slaves.  Yet he’s already shown that debt slavery functioned with its full horribleness in pre-coinage societies, and turned the Mesopotamians into slaves.  Later he provocatively suggest that the Dark Ages weren’t so dark, as the Europeans ended slavery, resisted usury, and ended the militarism of the Roman Empire.  But the Middle Ages, as he well knows, replaced slavery with serfdom, and threw out the political and technological advances of the ancients.

The last half of the book is a breezy retelling of history which grows increasingly polemical and tedious.  A particular low point is where he talks about the Iberian traders engaging in the arms trade, the slave trade, and drug trade, and a moment later explains that the “drugs” meant coffee, tea, sugar, and tobacco.  He’s often a bracing cynic and amusing contrarian, but this is just propaganda.

The last chapter, on the world since 1971, is a weird political diatribe of the Everything Is Horrible school.  He’s mostly mad at the US, and throws everything he can at it, no matter how contradictory: the US military is overwhelming, yet is easily resisted; the national debt can’t be eliminated, except it totally could if we didn’t spend so much on the military; the US oppresses everyone economically, but it was forced to grant favorable trading terms to Europe; buying US treasury bonds is a sign of empire, except when the Chinese do it.  Or there’s a bit where the US creates “a vast apparatus of armies, prison, police” to create an atmosphere of fear and jingoistic conformity… er, sorry, Dave, but those two things are pretty much opposites; people celebrating American power are not also afraid of it.  He even inserts charts to show how things are out of control!! with the propagandist’s tool of not correcting for inflation.  Plus his frequent references to “wage slavery” only cheapen his earlier discussion of real slavery.

As an anthropologist, he’s very good at criticizing the fantasy history that economists create; it doesn’t make him an expert on economics.

He’s also an anarchist activist, and was involved with anti-globalization protests, but he’s missed the biggest story of the new century: the fact that the Third World has become far, far better off.  He keeps asserting that capitalism can’t include everyone… and yet it seems to be doing just that.

The problem with a worldview where everything is horrible is that there’s no room for progress at all, including in the future.  A contrarian can point out truthfully enough that living standards stayed the same for most people– that is, on the edge of starvation– until about 1800. But even in that period there were advances, such as the abandonment of absolute monarchy, the rise of science, and the development of a vast array of progressive philosophies.  (The thing about idealisms is that somebody eventually will take them seriously… e.g., you pass a Bill of Rights and then, a couple centuries later, courts start to make it real.)  Plus, even in Graeber’s own telling, not infrequently the authorities found it useful to cancel debts, repress usurers, or free serfs.

And after 1800, it’s hard to deny (though Graeber does his best) that the average American is better off than the average Babylonian.  Knowing more about the world helps; tamping down the claims of kings and priests is valuable; rural villages don’t seem like such paradises to the people who live in them.

Graeber likes to detail how many of our institutions arose in war, debt, and slavery.  And they did!  However, things don’t remain forever tainted because of their bad origins.  He’s fond of pointing out that governments went into debt and issued coins and taxed people largely to finance wars, and that a huge portion of US spending is still military.  But it’s now far from the majority of spending– most government spending is education, roads, social security, health insurance. and so forth.

(The problem with criticizing an Everything Is Horrible person is that some people will get the impression that I’m instead saying that Everything Is Great. It’s not, of course. I understand the impulse to think that the whole system is rotten and has to be thrown out. But sometimes our impulses aren’t so smart. Throwing the whole system out rarely goes well.)

After all that, I should emphasize that I don’t disagree with all of his cynical remarks.  He’s pretty acute, for instance, about the disaster of neoliberalism… the insistence that with every crisis, Third World governments implement “reforms” that favored First World creditors and clawed back social progress for the poor.

He doesn’t say much about what he’d like to do instead; but in his concluding section he does make a practical suggestion: cancel debts!  And he has a point.  High-debt systems generally lead to reforms that do just that; the irony is that under the current plutocratic system, rich debtors get government relief and poor debtors are screwed.  As he points out, we’re trained to say “People should pay their debts!”, and never to ask why people get so far in debt and whether we really want that to be the system we live under.

Apparently Neo-Reactionaries are a thing now. Here’s a Metafilter discussion; here’s David Brin’s excellent takedown; here’s Scott Alexander’s devastating rebuttal.

The irony is that these dudes, while swooning over the loveliness of noblemen, have no chance of becoming nobles themselves. And surely they know this? I mean, Mencius Moldbug doesn’t think he’s going to be king, does he? So he’s hoping to be named house intellectual for the thugs.

None of this is really new; there have always been intellectuals (almost all white men) with a hankering for feudalism. More strangely, quite a number of them add to this a fascination with science fiction. This has given us one of the weirdest of sf tropes: the Wild West space habitat– examples include Gibson’s Freeside, Heinlein’s Luna, and Firefly.  More cheap irony, because a space habitat is the last place compatible with libertarianism.  Guns and anti-authoritarianism do not mix with fragile life support systems.

Brin speculates that the neo-reactionaries “have swung in this bizarre direction because they are too smart to be fooled any longer by the undead thing that has hijacked American conservatism”.  That is, the GOP has become so anti-intellectual that they’re no longer comfortable being its intellectual lackeys.  As they can’t bring themselves to admit the other side is right, they retreat further into contrarianism.  But I think Brin gives them too much credit. The neo-reactionaries, like the Tea Party, think the GOP just hasn’t been GOP-ish enough.  They want more more economic quackery, more elitism, more trolling of liberals.

In less than six hours from the time I type this, if Congress cannot get its act together (which at this point is seeming certain), the goverment will go into shutdown. What do you think will happen next, both immediately and over the next few election cycles? Do you think the GOP will have the cojones to force default?

—Campbell

In brief, get ready for doom.

The Republicans apparently didn’t watch Saturday morning cartoons, so they never saw Schoolhouse Rock and never learned how a bill gets passed. So they’ve had the crazy idea that whatever they pass in the House will somehow become law— thus the 40 motions to repeal Obamacare.  And then, because they can never get crazy enough, they got it into their heads that the Senate and Obama would go along with an attempt to get rid of Obamacare— after they lost the election and lost the Supreme Court case.

The shutdown, stupid and nasty and wasteful as it is, is nothing to the next bit: defaulting on the debt, which comes in about two weeks. Again, they’ve convinced themselves that they have leverage— that they can get Obama to enact Mitt Romney’s entire agenda, and more, in return for… nothing.

The thing is, when you ask for the moon, you have to be willing to provide something in return.  And “not kill the economy” is not providing something.  Defaulting on the US government’s obligations would be a suicidal move that would bring back another recession, or worse.  Needless to say, it doesn’t bring about the beautiful libertarian dystopia they dream of.  It doesn’t even get rid of Obamacare— that’s classified as an entitlement, like Social Security, which is why it’s continuing now during the shutdown.

For five years, anytime they’ve actually wanted to negotiate, Obama’s office door has been open.  Too open, really.  But to negotiate you have to be willing to give the other side some of what it wants, and for five years they’ve thought that they could skip this part.

The grand thing is, the base actually seems eager for a default.  They think it’ll be fine!  After all, “raising the debt ceiling” sounds like a bad thing— voters don’t really understand it, so many of them are against it, though they might not agree if you asked them directly “Should the executive branch refuse to spend the money Congress told it to?”

In 2011 Obama was eager for a long-term deficit-reducing deal, so he stupidly made some concessions on the debt ceiling thing.  That only emboldens the GOP now.  Obama seems to have wised up; he says he won’t offer any concessions in return for Congress doing its job.  And he has said, correctly, that if he gives in on this, it’s the end of majority government in this country.  They’d just increase their demands with each debt crisis.  And why would a future Democratic House play nice with a future Republican president?

So, will they do it?  I’m afraid they will.  They’re revolutionaries and nihilists; they don’t care what happens.  No one they care about is telling them not to do it.

The problem is, they have no exit strategy. Boehner is terrified of losing his job, so he went along with a plan he knew wouldn’t work. The Tea Party has worked itself into such a lather that it’s not going to go quickly to any sort of reasonable solution.

Normally at this point, you’d expect the grownups to step in and tell them to cool it.  But they’ve spent the last twenty years throwing out the grownups— there’s a moderate caucus, but it hasn’t even got the 25 votes required to get a vote on the Senate bill.  The more moderate national figures like McCain and Romney, who think the defunding moves are a terrible idea, have no influence on the House.

The money guys— Wall Street, the 1%— is going to get terrified at some point. Most of them are not crazed Tea Partiers— they don’t want to trash the government or destroy its credit rating. But they have very little leverage with the Tea Party either.  If they lean on anyone, it’ll be John Boehner— and Boehner can’t control his own party.

Now, the last few crises have ended with a deal at, or a few days after, the deadline. So the most likely case is that around Oct. 20, a deal come through that keeps spending levels about where they are, funds Obamacare, raises the debt ceiling, and contains some kind of sweetener so Boehner can claim victory.

At any point Boehner could end the crisis by allowing a vote on the Senate bill.  But he’d face a Tea Party revolt, so he’s not going to put his job on the line for a continuing resolution. For a deal that punts the problem for another year, maybe.

The worse case, and a series of steadily worsening cases, is that it takes the House a couple months after shutdown and default to realize that they’re not getting anything, and then they make a deal.

The Democrats, of course, are betting that the country will (very rightly) blame the GOP for the crisis, and for any pain that results.  So far they’ve been very firm; it’s the GOP that’s showing itself full of holes.

Andrew Sullivan’s blog, the Dish, is good for getting a handle on what all the pundits are saying. Crazier scenarios than the ones I’ve outlined are possible, and no one knows what will happen, except that it’ll be bad.

In the long term, as I’ve said before, demographics are against the GOP… to mention just one state, Texas may well go back to the Democratic column within ten years. Relying exclusively on old white rural straight Christian non-Northerners is a losing strategy, if not in 2016, definitely in 2026.

The problem is, again, the craziness has no exit strategy.  There is no mechanism for moderation in the party— quite the reverse, the primary system (and the very well-organized grassroots) keeps dragging the party more to the right.  The public and the media may be pissed at the House Republicans right now— but their districts aren’t rebelling.

Juan Linz, who died yesterday, was a political theorist who mostly studied Latin America; his major thesis was that presidential systems just don’t work as well as parliamentary systems— because they have multiple concentrations of power each with electoral legitimacy, and there is no way to end the standoff. For years the major challenge to his theory was the two-century history of the US.  It’s beginning to look like Linz was right after all.  He suggested that the US avoided the trap because its parties were broad coalitions, too loose to create real gridlock.  Well, the GOP has spent thirty years becoming an ideological monolith dedicated to opposing the Democrats at all costs.  So the worst case is, the GOP causes a depression and forces a collapse of the American governmental system.

Have a good day!

Obama has put the ball in Congress’s court, and I kind of hope that the proposition fails, and he abides by the result.  There’s always a big ballyhoo about how Congress doesn’t declare war any more, and the truth is that it doesn’t because it doesn’t want the responsibility.  If things go south in Syria– whether we intervene or not– let Congress share the blame.

The Arab Spring was a rare unexpected thing in the world– a popular multi-country uprising against dictatorship in a region which seemed, for various tawdry reasons, immune to the global democratizing trend.  It’s pretty amazing that Syrians were bold enough not just to demonstrate but to fight, and I have zero sympathy for Assad.  And there’s no question that he’s created immense misery waging war against his own people.

The question, though, is whether US intervention would do good.  It sure seems like we ought to be able to stop the bad guys, but  look at our experience in the region– Iraq, Iran, Afghanistan, Lebanon, Somalia.  All pretty much just multiplied the suffering, failed to solve internal conflicts, and led Americans to wash their hands of the thing without making any permanent improvements.  Even if our intentions are good, we are just not good at this.

You can point to Kuwait, Serbia, and Libya as partial successes– kind of.  They were limited in scope, at least.  But I really hope that Obama isn’t looking at his own intervention in Libya as a model.  Syria has three times the population, it’s far more divided and complicated, the rebels already include some serious bad guys, and the goals are far from clear.  Plus it’s far different when we were more or less invited to help by the neighbors, vs. going it alone.  Anyway, Libya is actually still pretty out of control, and the post-Assad situation is likely to be even messier.

I read an interview with McCain today, showing he hasn’t lost his ability to expound contradictory policies.  He thinks Obama has been too weak– but he vows to impeach him if he sends troops to Syria.  Um, you can’t throw your weight around while also demanding not to get hurt.  McCain’s declarations are a formula for large-scale failure.

On a humanitarian level, it’s painful to watch Assad going to war on his people.  But there’s two things to keep in mind.  One, bombing a country is not exactly a humanitarian intervention– on the contrary, it’s going to kill thousands of people and invite retribution.  And two, the nice thing about not intervening is that it’s not us causing the problem.

I guess there is some chance that a bombing campaign will make Assad want to negotiate, or will impel some underlings to depose him.  But the chances seem low, and at this point it seems far too late to put the battle-genie back in the bottle.  There’s likely to be a low- or high-level civil war going on in Syria for several years, and very little interest in any sort of negotiated solution.

From Ha-Joon Chang:

If even the IMF doesn’t approve, why is the UK government persisting with a policy that is clearly not working? Or, for that matter, why is the same policy pushed through across Europe? A certain dead economist would have said it is because the government is “in reality instituted for the defence of the rich against the poor“. Dead right.

The dead economist is Adam Smith, and as Chang points out, there was no mystery about it in Smith’s day: only the wealthy could vote, and they ran the government for their own benefit.

When universal suffrage came, they were terrified of redistribution– or even a more equitable distribution of newly generated wealth.  They can’t directly attack democracy in the First World, so they attack “politics” instead.  When they can, they insulate wealth from politics entirely– not hard to do when ordinary voters don’t understand the stakes.  Thus we get reasonable-sounding independent central banks, balanced budget rules, IMF oversight, attacks on inflation that doesn’t exist, and ‘technocratic’ governments imposed on Italy and Greece– that is, governments that will do what the European wealthy think is best for Germany.

The irony at the moment is that there’s been a change of heart over at the IMF.  They’ve withdrawn support for austerity, and are suggesting to Britain that maybe sending the country back into recession isn’t that great an idea.  The Treasury promises to fight back.

Why do the Very Serious People love austerity?  After all, they’d themselves be richer if the economy was back on track.  I don’t think this a great mystery either.  Ideologically, it’s congenial to them– it sounds like the tough stuff leaders are supposed to say.  But best of all, the toughness is all faced by other people.  Austerity is an opportunity to beat back the claims of the middle class and the poor: cut social programs, fight attempts to reduce the dominance of  the 1%, and divert attention from how the financial industry caused the recession in the first place.

If you read Smith, it’s striking how the same preference existed two hundred years ago.  The conservatives preferred “cheap years”… i.e. recessions, when labor was pleasantly low-priced.  They’re going to do fine in bad times, and they sense that there will be less pressure on them if everyone else is feeling pinched.  As has long been noted, a system is in the most danger of revolution not when things are getting worse but when living standards are improving.

While I’m touting economics links, here’s an interesting essay from Brad DeLong on why corporations work at all.  As he points out, their structure is Soviet: they’re autocratic, huge-scale, centrally directed enterprises.  The USSR stagnated, so why don’t they?

He offers several possible reasons:

  • Soviet industries could be propped up indefinitely; unprofitable corporations do slowly decline, go bankrupt, or get taken over.  So there is a mechanism for replacement, however slow.
  • Huge enterprises may simply be the best organization for producing certain goods– planes, for instance: there’s a high cost if, say, you have the engine ready but not the wings.
  • Stockholders will discipline an incompetent CEO.  Pause for laughter.  OK, DeLong quickly admits that the theoretical oversight is mostly a failure, but he suggests that the punishment mechanism isn’t so much the stockholders as the stock market.  A crashing stock price talks very loudly, and creates a mechanism for a hostile takeover.
  • Finally, corporations are intensely useful to government, and thus are favored by taxation and economic policy.  Corporations do most of the work of tax collection (income and sales), and they’re encouraged to provide a good deal of health insurance.

(I’d also add that beating the Soviets is a pretty low bar.  They were more concerned with destroying opposition than in improving their methods.)

Undoubtedly there’s something to all of these ideas.  But I think DeLong misses some more Marxian possibilities:

  • Inertia.  We now think monarchy was a terrible system, but it persisted for a thousand years.  Even if the Next Big Thing was here, competition between entire systems can go on a long, long time.  (A Martian observer might have concluded from the history of the 18th century that UK was onto something, but it would take nearly two centuries before the majority of countries adopted democracy and capitalism.)
  • A better way of organizing production would be unlikely to benefit those currently in charge… who will therefore resist it tooth and claw.  Suppose the Next Big Thing is something as simple as Valve’s no-manager, vote-with-your-desk system.  Is EA going to adopt it?  Obviously not; the people who run EA would lose power and probably money, even if the employees of EA on the whole benefited.  And it’s the people who run EA who get to decide.  It’s the same problem Chang is pointing out: the entrenched interests are happy with things as they are.

Besides, what would happen if a new style of governance became available?  DeLong (the piece was written in 1995) reviews one such case:

Fifteen years ago it was fashionable to hold up the Japanese corporation as an example, to say that its managers regarded shareholders as only one stakeholder interest among many, and to say that the Japanese corporation was a superior organization and the wave of the future. Now it is fashionable to praise the American form of organization, with an active market for corporate control and with strong pressure on managers to do whatever they can to boost stock prices now.

In other words, a new system becomes a new fad, and a lot of people get rich writing bestsellers about it.  But the magic of Japan Inc. wore off abruptly when Japan plunged into recession in the early ’90s.

On the other hand, as I’ve mentioned before, the fad for highly paid CEOs was entirely successful.  In the 1960s it was accepted that American CEOs should get about 50 times the pay of their base workers.  Now it’s 500 times.  Corporations aren’t better run or more productive or more stable or more competitive; the effect has simply been to shift wealth from the 99% to the 1%.  Why did this fad succeed when the fad for Japanese-style management didn’t?  Pretty obviously, because it doesn’t require much convincing to tell executives that they should help themselves to ten times the salary.  It’s not that it was a good idea; it’s that it appealed to the people who make the decisions.

When change happens, it’s likely to come from either a new region or a new industry, and be very ignorable for years or decades or centuries.

I have a suspicion that top-down command works better for creating  vast new project– whether it’s an oil refinement industry or a spaceship or a computer or an online mega-bookstore– than it does for running an ongoing business.  Capitalism recognizes this to some extent, in that older businesses have more and more dilute ownership.  But this also means that there’s a kind of ongoing bias in favor of autarchy.  New firms, like the big web firms of the ’90s, are likely to be started by visionary hotshots, and that reinforces the elite’s notion that all corporations should be run by autarchs– even if, as happened recently at JC Penney, the hotshots come in and ruin the company.

So a more democratic corporate structure might have to wait for the next big thing that doesn’t happen to be a megaproject.  I can see it happen, for instance, if we move from the service economy to an art economy, for instance.  (Which I don’t see as unlikely: creative work is very hard to delegate to robots.)

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