Progressive Capitalism

torn dollar bill

Torn dollar bill image source and license.

We’ve been looking at economic winners and losers in the zero-sum economy — particularly in the context of higher education, where cultural belief in the importance of college and post-graduate degrees on upward mobility and success in the job market is driving behavior that harms both parents (the college admissions scandal) and the economic and mental health of their children (student loan debt, general anxiety disorder, depression, suicide).

This series of blog posts is now in its third year — throughout, we’ve seen how hyper-competitive capitalism and its staunch faith in the implicit justice of the “free” market is causing other economic loses. For example:

  • the stagnation of middle class real incomes;
  • the rise of the numbers of statistically poor people in the U.S.;
  • the dismantling of compassionate social safety nets in favor of expensive, counterproductive, and humiliating replacements;
  • the rise of the “rentier” economy in which formerly public benefits have been privatized, making them accessible only to those who can afford them through the payment of economic “rents”;
  • the end of the American ideal of upward social and economic mobility;
  • the high cost of housing and the death of the American dream of home ownership;
  • the elimination of “normal” jobs through off-shoring, outsourcing, and the delegation of productivity to intelligent machines;
  • the advent of the short-term, contract-based “gig economy” with its lack of fringe benefits and its precarious prospects for sustainable income;
  • economic inequality that favors the wealthiest of capitalists at the expense of the bottom 90% (or 99%, or 99.9%, depending on your data and point of view);
  • the creation instead of an insular top-level “meritocrat” socio-economic class;
  • the new state of “total work” and the “monetization” of goods and services;
  • rising rates of career burnout, mental illness, and suicide resulting from social isolation and the vain struggle to find meaning and purpose at work;
  • the rise of corporate nation-states with economic and policy-making power that dwarfs that of many governmental nation-states;
  • the private (non-democratic) social policy-making initiatives of the wealthiest elites;
  • and much, much more.

Nobody meant economic policy to do this, but it has, for roughly the past 30-40 years. Good intentions; unplanned results.

We’ve seen that both plutocrats and progressives advocate for systemic change, while status quo inertia weighs in on the side of those who don’t see what all the fuss is about, since capitalism is undeniably the best economic option and always has been, and besides it’s still working just fine, thank you very much. Instead of meaningful discourse, we have a predominant nostalgic, populist doubling down on the neoliberal socio-economic cultural ideology that jet-propelled post-WWII recovery but finished running its course in the 1970s, while the retrenchers and the media slap those who beg to differ with the kiss-of-death label “progressive.” As a result, we’re left with incessant lobbing from one end of the polarized spectrum to the other of ideological bombs that originate in data and analysis skewed by cognitive biases, intentional blindness, and fake news . Economic policy-making resembles WWI trench warfare — a tactical grinding down of the opposition and the numbing and dumbing of everyone else. It was a bad idea then, and it’s still a bad idea now.

I had no idea this is what I was getting into when I decided three years ago to research and write about the new economy and the future of work.

It’s in the context of this toxic environment that Economics Nobel Laureate Joseph E. Stiglitz, offered his “progressive capitalism” alternative, based on “the power of the market to serve society.” Progressive Capitalism Is Not an Oxymoron: We can save our broken economic system from itself, New York Times (April 19, 2019). His article, like virtually all of the economics books and articles I read these days, begins with a long parade of evils and ends with a handful of policy ideas. His version of the former is by now quite familiar:

“Despite the lowest unemployment rates since the late 1960s, the American economy is failing its citizens. Some 90 percent have seen their incomes stagnate or decline in the past 30 years.

“This is not surprising, given that the United States has the highest level of inequality among the advanced countries and one of the lowest levels of opportunity — with the fortunes of young Americans more dependent on the income and education of their parents than elsewhere.

“There is a broader social compact that allows a society to work and prosper together, and that, too, has been fraying. America created the first truly middle-class society; now, a middle-class life is increasingly out of reach for its citizens.

“We confused the hard work of wealth creation with wealth-grabbing (or, as economists call it, rent-seeking).

“Just as forces of globalization and technological change were contributing to growing inequality, we adopted policies that worsened societal inequities.

“Even as economic theories like information economics (dealing with the ever-present situation where information is imperfect), behavioral economics and game theory arose to explain why markets on their own are often not efficient, fair, stable or seemingly rational, we relied more on markets and scaled back social protections.

“Politics has played a big role in the increase in corporate rent-seeking and the accompanying inequality.

“Markets don’t exist in a vacuum; they have to be structured by rules and regulations, and those rules and regulations must be enforced.

“We are now in a vicious cycle: Greater economic inequality is leading, in our money-driven political system, to more political inequality, with weaker rules and deregulation causing still more economic inequality.

“If we don’t change course matters will likely grow worse, as machines (artificial intelligence and robots) replace an increasing fraction of routine labor, including many of the jobs of the several million Americans.

“The prescription follows from the diagnosis: It begins by recognizing the vital role that the state plays in making markets serve society.

“Progressive capitalism is based on a new social contract between voters and elected officials, between workers and corporations, between rich and poor, and between those with jobs and those who are un- or underemployed.

“Part of this new social contract is an expanded public option for many programs now provided by private entities or not at all

“This new social contract will enable most Americans to once again have a middle-class life.

“The neoliberal fantasy that unfettered markets will deliver prosperity to everyone should be put to rest.

“America arrived at this sorry state of affairs because we forgot that the true source of the wealth of a nation is the creativity and innovation of its people.”

His point seems to be that merely reciting litanies of economic woes won’t bring about systemic relief — for that, we need to embrace an essential factor:

Paradigms only shift when culture  shifts:
new ideas require new culture to receive them,
and new culture requires new belief systems.

Systemic change requires cultural change — remodeled institutions and revised social contracts that tether ideas to real life. Trying to patch policy ideas into the existing socio-economic system is like what would happen if a firm were to abruptly change its products, services, and strategic and marketing plans without bothering to change its mission statement, values and beliefs, and firm culture.

Like that’s going to work.

Coming up, we’ll look beyond policy bombs to the higher ground of revised cultural beliefs, starting with next week’s search for the “public” that’s gone missing from the Republic.

Can Capitalism Buy Happiness? [2]

smiley face

We’ve been looking at the zero-sum economy’s winners and losers — the new “meritocracy” vs. the “precariat” and the Millennials.

We’ve also seen that winners and losers find common ground in higher education, where students of all stripes are increasingly stressed to the point of mental ill-health  — not by the demands of higher learning, but by the enveloping culture of hyper-competitive capitalism.

One predictable response has been for the established, older, prosperous, and powerful to wag the shame finger and tell the kids to quit whining and buck up:

“Student protests and demands for better mental health services are frequently dismissed in the press. ‘We just can’t cope with essay deadlines, and tests stress us out, moan snowflake students,’ read a headline in the Daily Mail in November 2017. In September 2018, the Times described today’s students as ‘Generation Snowflake’ and suggested that ‘helicopter parents’ had ‘coddled the minds’ of young people.”

The way universities are run is making us ill: inside the student mental health crisis. The Guardian (Sept. 27, 2019).

Truth is, we just don’t like to talk about mental illness, and if we regard it at all, tend to shoo it away as a personal problem or character flaw. Plus, there are enduring cultural myths that capitalism and its marketplace are “free,” and that anyone can make it with enough gumption. Together, these attitudes foster the “snowflake” judgment.

Mental illness is ultimately about a clash between the “reality” of the individual deemed to be mentally ill and the “reality” of the prevailing culture.[i] Conventional thinking sides with the culture, and uses pharmaceutical and other therapeutic interventions to realign the individual. As a result, the list of economic stressors is accepted as part of the culture’s normal life to which individuals are expected to conform,

Meanwhile, viewed on its own terms — outside of its cultural context — the list itself is long and dismaying. For example:

  • There has been a forty-year drought in middle class real income growth, with most households drifting downward while an economic elite soars at the top.
  • The percentage of Americans who are considered to be poor by Federal standards is approaching 50% — meaning they have no or limited access to what were historically considered “public goods” such as shelter and sustenance, education and healthcare, etc.
  • Public support safety nets have been replaced by the privatization of essential services. The social services that remain are expensive for the government to administer and are demeaning and counter-productive for recipients;
  • Soaring educational costs mean soaring and strangling student loans.
  • Runaway housing costs have made conventional home ownership unaffordable for the lower economic classes.
  • Due to the rise of the “rentier” economy, the general public must increasingly pay capital holders for the use and enjoyment of essential resources and intellectual property.
  • Upward mobility for the lower 90% is now a thing of the past (the “glass ceiling”). Meanwhile the top 10% is protected against drifting downward (the “glass floor”).
  • Touted “job creation” is mostly “gig economy” contract work, with no assurances of sustainability and no benefits such as healthcare, retirement, etc.
  • Prospects for sustainable income are bleak, and the new job market requires the “hustle” and the “grind” and the monetization of everything in a state of “total work.”
  • Meanwhile, GDP “growth” is largely due to production increasingly shifted not just off-shore, but to intelligent machines. Benefits accrue to capital holders, not wage-earners.
  • These job trends have increasingly resulted in social isolation and an unfulfilled struggle to find meaning and purpose at work.
  • Meanwhile a new generation of huge and powerful “corporate nation-states” now challenge conventional notions of national sovereignty, democracy, and policy-making.
  • The same is true of “philanthrocapitalism” and “social entrepreneurship.”

And there’s more.

While “snowflake” judgments turn a blind eye, for the past several years there has been a counter commentary that looks at the list systemically:  it examines how the capitalistic over-culture creates social mental ill health which is then transmitted to the individual. I.e., it asks if the culture’s assimilation of contemporary capitalistic belief and practice has become toxic to the point that it is making both society and its individual members sick. This is a huge shift in perspective, which we’ll explore further.

[1] For more on how cultural beliefs create collective reality, you might take a look at this article, which evaluates mental health diagnosis and treatment in light of the Cartesian worldview that still dominates the western world:  i.e.,the dualistic thinking that separates the natural world, which can be known scientifically, from the realm of soul or spirit, which can’t. I have talked about how cultural beliefs created social reality in prior blog series in this forum. I also address it in my other blog.