Reckoning With Competitive Capitalism [2]

President Kennedy address at Yale

 “President John F. Kennedy explained to Yale’s graduating class of 1962 that ‘the great enemy of the truth is very often not the lie — deliberate, contrived, and dishonest —  but the myth — persistent, persuasive, and unrealistic. Too often we hold fast to the clichés of our forebears…. We enjoy the comfort of opinion without the discomfort of thought.’”

The Founding Myth, by Andrew L. Seidel (2019)

Adverse outcomes often aren’t the result of dishonesty, fraud, or conspiracy; it’s just that things don’t go as projected. The trick is to notice and make adjustments, but often we don’t, especially when the expected outcome has become a cultural myth. In that case, belief makes us blind, conviction replaces vigilance, and contrary data avoids analysis, until one day we find ourselves living in a distressing new normal and wonder how we got here. Often, it takes a crisis to wake us up.

We’ve seen this dynamic before when economic policy morphed into socio-economic ideology. Communism began with an intent to champion the working man but became brutal and imperialistic; the Cold War was “normal” until one day the wall came crashing down and the Soviet Union and its progeny were thrown at the mercy of  capitalism, their ideological rival. The American Industrial Revolution begun by the Robber Barons roared through the 20’s but then crashed into the Great Depression; the era of legal monopolies, unregulated stock speculation, and vast economic inequality was recast into the social programs of the New Deal.

And now we’re seeing the cycle again:  post-Cold War free market capitalism blazed through the past three decades, morphed into its current hyper-competitive version, but now its unfulfilled promise of universal prosperity is becoming too obvious to ignore and there are signs its day of reckoning may not be far off, if not already at hand. That, at least, is the message of a Time Magazine cover story on economic reckoning that ran last month. It begins this way:

“History is the story of conditions that long seem reasonable until they begin to seem ridiculous. So it is with America’s present manic hyper-capitalism.

 “Until recently, it seemed normal that a technological revolution that began with promises of leveled playing fields had culminated in an age of platform monopolies. Normal that businesspeople should try to make as much money as possible by paying as little as possible in taxes and wages, then donate a fraction of the spoils to PR-friendly social causes. Normal that economic security for most Americans was becoming a relic of the past.,,. Normal that bankers could shatter the world economy with their speculating, and that they would be among the few to be made whole after the crisis.”

How the Elites Lost Their Grip: in 2019, America’s 1% behaved badly and helped bring about a reckoning with capitalism, Time Magazine , Dec. 2-9, 2019.[1]

These aspects of “normal” weren’t intended, but they are how things turned out. Along the way, various individuals and movements were vigilant enough to have seen the trends. but their attempts at dissent fell on deaf ears on both sides of the political aisle.[2]

“For years, there have been voices trying to denormalize this state. There were protests in Seattle in 1999, there was Occupy in 2011, there was the DSA [Democratic Socialists of America], there was the World Social Forum to rival the World Economic Forum, there was, eternally, Bernie Sanders saying the exact stuff he is still saying today, there were civic groups trying to organize workers and poor communities, there were outcasts in Silicon Valley warning that Mark Zuckerberg wasn’t really about human connection. But America was in the grips of the ideological consensus… Hyper-capitalism was the intellectual stadium in which the country played.”

Thus hyper-competitive, hyper-privatized, hyper-monetized capitalism became the cultural standard of the American Way as politicians and the public transferred their faith in Post-WWII neoliberal capitalism, which did indeed “float all boats,”  to the new Post-Cold War capitalism, which was supposed to have the same effect but didn’t. Instead of universal prosperity and opportunity, the new capitalism relegated the Public to the left behind, economic precarity and job insecurity took over the workplace, healthcare and other employment benefits were left up to consumers, upward mobility through higher education became the lifelong debtor of a newly nationalized student loan industry, incomprehensible wealth was increasingly concentrated in an incomprehensibly tiny percentage of capitalists, a new meritocratic social class arose… we’ve heard commentators recite the same litany of outcomes time and again in these blog posts.

But the days of complacency are over, the Time article declares:  the year 2019 brought us a wakeup call in the form of the one percenters “behaving badly” in such things as Amazon’s failed expansion in NYC, the college admissions scandal, and Facebook’s $5 Billion FTC fine.

“In response to these scandals and outrages, many in the business world declared themselves newly interested in reform. The most prominent and heralded instance this past year was a statement by the Business Roundtable, an umbrella organization whose members are the chief executives of many of America’s largest companies. For decades, the roundtable has clung to a particular interpretation of the purpose of a business—that it is solely to make money for shareholders. With its new statement, issued in August, the roundtable updated its view.”[3]

“It was inspiring, limited stuff,” the Time article says of these developments, but “what it really revealed was how hard it will be for the old-guard capitalists to change at all.” As JFK told the Yale Class of ’62, allegiance to cultural myths dies hard and, all evidence to the contrary, free market capitalism’s ideological lynchpin remains in place:  what Reaganomics called “trickle down” — the belief that free market capitalism is win-win, that’s what’s good for the elites will be good for the commons.[4]

“If a single cultural idea has upheld the disproportionate power of [capitalism’s winners], it has been the idea of the “win-win.” They could get rich and then “give back” to you: win-win. They could run a fund that made them sizable returns and offered you social returns too: win-win. They could sell sugary drinks to children in schools and work on public-private partnerships to improve children’s health: win-win. They could build cutthroat technology monopolies and get credit for serving to connect humanity and foster community: win-win.

“As this seductive idea fizzles out, it raises the possibility that this age of capital, in which money was the ultimate organizing principle of American life, could actually end.

“The choice facing Americans is whether we want to be a society organized around money’s thirsts, a playground for the whims of billionaires, or whether we wish to be a democracy. The second Gilded Age will end at some point. The question is what comes next.”

Just how that question will be answered remains to be seen.

[1] All quotes in this post are all taken from this article.

[2] Left and right are polarized on various social issues, but beginning with the Clinton administration have been united in their economic free market ideology.

[3] We’ve previously looked at the Business Roundtable’s “Statement of the Purpose of a Corporation” that promotes “an economy that serves all Americans.”

[4] See “Winners Take All” – a combative short video thank debunks the trickle down theory.

Reckoning With Competitive Capitalism

“There exists an obvious fact that seems utterly moral:
namely, that a man is always prey to his truths”

Albert Camus, The Myth of Sisyphus and Other Essays (1955)

I wrote a post about 2½ years ago (Aug. 31, 2017) with the same title as this one. It referred to University of Connecticut law professor James Kwak’s book Economism, which warns against “the pernicious influence of economism in contemporary society.” Prof. Kwak defines “economism” as “a distorted worldview based on a misleading caricature of economic knowledge,” and makes the case that free market ideology is guilty of it:

“The competitive market model can be a powerful tool, but it is only starting point in illuminating complex real-world issues, not the final word. In the real world, many other factors complicate the picture, sometimes beyond recognition.”

As we’ve seen, free market economic theory is based on the assumption of a “pure” capitalist state. Prof. Kwak calls for a new approach that meets the complex challenges of real life:

“Real change will not be achieved by mastering the details of marginal costs and marginal benefits, but by constructing a new, controlling narrative about how the world works.”

“Reckoning” means “a narrative account” and “a settling of accounts,” as in “Day of reckoning.”[1] A reckoning on economic policy therefore begins with an examination of  whether the prevailing ideology actually delivers what it theoretically promises. Honest reckoning is hard, because the neural circuits of our brains are predisposed to maintain status quo and resist change to both individual and cultural belief systems. The difficulty is amplified when fundamentalist ideology is at play, because  reckoning threatens historical cultural mythology, which is tantamount to sacrilege.

 “History is powerful. George Santayana’s warning that ‘those who cannot remember the past are condemned to repeat it’ rings true because the past influences the present.

“Unfortunately, history’s power does not depend on its accuracy:  A widely believed historical lie can have as much impact as a historical truth.

“President John F. Kennedy explained to Yale’s graduating class of 1962 that ‘the great enemy of the truth is very often not the lie — deliberate, contrived, and dishonest —  but the myth — persistent, persuasive, and unrealistic. Too often we hold fast to the clichés of our forebears…. We enjoy the comfort of opinion without the discomfort of thought.’”

The Founding Myth, by Andrew L. Seidel (2019)

Change that breaks with predominant ideologies and historical cultural myths requires more than individual changes of opinion:  it needs shifts in cultural belief and practice, and a willingness to learn from history. The odd are stacked against it, for reasons Pulitzer prize winning war correspondent Chris Hedges describes in War is a Force That Gives Us Meaning (2014):

“Every society, ethnic group or religion nurtures certain myths, often centered around the creation of the nation or the movement itself. These myths lie unseen beneath the surface, waiting for the moment to rise ascendant, to define and glorify followers or member in times of crisis. National myths are largely benign in times of peace…. They do not pose a major challenge to real historical study or a studied tolerance of others in peacetime.

“But national myths ignite a collective amnesia in war. They give past generations a nobility and greatness they never possessed…. They are stoked by the entertainment industry, in school lessons, stories, and quasi-historical ballads, preached in mosques, or championed in absurd historical dramas that are always wildly popular during war.

“Almost every group, and especially every nation, has such myths. These myths are the kindling nationalists use to light a conflict.

“Archeology, folklore, and the search for what is defined as authenticity are the tools used by nationalists to assail others and promote themselves. They dress it up as history, but it is myth.

“Real historical inquiry, in the process, is corrupted, assaulted, and often destroyed. Facts become interchangeable as opinions. Those facts that are inconvenient are discarded or denied. The obvious inconsistencies are ignored by those intoxicated with a newly found sense of national pride, and the exciting prospect of war.”

All of this makes the Business Roundtable’s Statement on the Purpose of a Corporation and the World Economic Forum’s Davos Manifesto (we looked at them last time) all the more remarkable, since they defy four decades of the prevailing economic myth that “The [sole] social responsibility of business is to increase its profits.”

On the other hand, a recent administrative order imposing work requirements on food stamps recipients offers an equally remarkable example of myth-driven policy-making. According to ABC News (Dec. 4, 2019), proponents say the move will “restore the dignity of work to a sizable segment of our population” — clearly a nod to the cultural myth that anybody with enough gumption (and enough education, funded by the newly nationalized student loan industry) can work their way out of poverty, and if they don’t, it’s their own fault. As we’ve seen, data to support this way of thinking has long been absent, but the myth prevails, and never mind that “all the rule change does is strip people from accessing the benefit,” that the food stamp program “is intended to address hunger and not compel people to work,” and that “those affected are impoverished, tend to live in rural areas, often face mental health issues and disabilities.”

Economism was published on January 10, 2017, just shy of three years ago as I write this. Today’s “Reckoning” post was inspired by a Time Magazine cover story last month:  How the Elites Lost Their Grip: in 2019, America’s 1% behaved badly and helped bring about a reckoning with capitalism, Time Magazine (Dec. 2-9, 2019). We’ll look at what it says about economic reckoning next time.

[1] Etymology Online.