[ATTENTION CONSERVATION NOTICE: The short short version of this article would be something along the lines of: "There is not just freedom from political tyranny, there is also freedom from economic tyrrany, and only a strong democratic government can guard against both."]
I’ve been thinking a lot lately about what my values are as a liberal, in terms of the government, the economy, and all that jazz. This has been prompted by a few different happenings, including but not limited to: the American history class I’m taking at BMCC, where I’ve learned much about the meanings of various events and movements in American society since the Civil War; my recent reading of the awesome and greatly recommended books Before the Storm: Barry Goldwater and the Unmaking of the American Consensus by Rick Perlstein (everyone across the entire political spectrum should read this one) and Myths of Free Trade: Why American Trade Policy Has Failed by Congressman Sherrod Brown (ditto); my recent experiences in local politics; recent explorations of Senator John McCain’s liberal cred; and finally, other writings about the broad themes of liberalism and conservatism in the context of both history and current events.
All of this has led me to a reinforcement of my belief in strong, democratic government for the public interest. We, as individuals, inhabit a social space that is larger than us, and to which we owe some responsibility. We also inhabit an economic marketplace that is separate from, and is often (if not always) at odds with, the public interest. Adam Smith knew this and, despite using the phrase “invisible hand” once in his most famous book, generally argued for many limits on business. Sherrod Brown writes:
Twentieth century free traders extol the virtues of Adam Smith’s oft-cited invisible hand in the domestic marketplace and apply those same principles to the international global economy. But Smith, citing the “vile maxim of the masters of mankind,” understood the power of the employer in the workplace in the domestic and international economy: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” He understood the conflict between large business and the public interest:
It is the industry which is carried on for the benefit of the rich and the powerful, that is principally encouraged by our mercantile system. That which is carried on for the benefit of the poor and the indigent, is too often, either neglected, or oppressed.
He warned against child labor, too many hours in the workday, and “excessive application” of work by the employer. Since history began, Smith observed, while the invisible hand has brought efficiency to economic systems, it also can wreak havoc on the less advantaged, the ill-educated, the vulnerable, and the unlucky. And all too often, Smith noted, the “masters themselves” use the government that they can almost always influence to wring additional advantage out of the working classes. In The Nature and Causes of the Wealth of Nations, Smith also wrote about industrial England:
It is not difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into compliance with their terms. The masters, being fewer in number, can combine much more easily, and the law does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of Parliament against combining to lower the price [wages] of work, but many against combining to raise it.
[..] Smith would recognize the masters today, not the “merchants and manufacturers” of eighteenth-century Britain but the large multinational corporations and the gargantuan financial houses which move their capital from country to country, searching for the cheapest labor with the lowest environmental and worker safety costs. In Smith’s day, they were the “principal architects” of the states behavior — because of their influence in the parliaments of European democracies and in the courts of European autocracies. Today, they are little different, and their reach is global. They are the maquiladora employers who meet monthly to plot strategy to keep [Mexican] unions weak, wages down, and troublemakers out. They are the wealthiest families of Indonesia who rule the country and conspire with Western multinational corporations, generating huge profits for the families themselves and for Western investors. They are the corporate executives from the United States who lobby Congress for Permanent Normal Trade Relations for China, representing their own interests and the interests of the Chinese Communist Party and the People’s Liberation Army at the same time. They are the World Bank and the International Monetary Fund that always know best.
[...] Throughout his life, Smith recognized and understood the goals of the elite: The elite’s interest, he wrote in The Wealth of Nations:
In any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public… The proposal of any new law, or regulation of commerce, which comes from this order, ought always to be listened to with great precaution and ought never to be adopted … but with the most suspicious affection. It comes from an order of men … whose interest is never exactly the same with that of the public, who have generally an interest to deceive, and even to oppress, the public and who accordingly have, upon many occasions, both deceived and oppressed it.
He advocated high wages as beneficial to employer and employee alike, and advocated the abolition of slavery because “the work done by free men comes cheaper in the end than that performed by slaves,” [arguably the American south is still paying for slavery —Damek] not so much because of a fear of revolt but because generally satisfied well-paid workers would create wealth in a society, and increase purchasing power for the domestic economy: “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged.” Smith intuitively understood that higher wages meant a stronger middle class, with more commerce and trade among all classes, and a more stable society.
I think that pretty much covers my feelings about business and democracy, and why government empowerment of labor and restrictions on business are important. They are necessary to the very functioning of a healthy democracy, be it direct or republican. You need to protect markets from abuse, nurture labor into a productive, healthy citizenry, and safeguard the common good. That requires an active, robust government.
The thing is, as Smith noted, markets often have dire consequences for the people in them, and government should serve the people, not the markets. There’s a good reason Social Security is the most successful and popular program in our nation’s history. And there’s a good reason that national health care is inevitable to join it. These sorts of programs simply strengthen the citizenry, and thereby our economy and government. Furthermore, these sorts of functions are best performed by a government removed from the market than by private institutions that naturally prey on their captive customer base.
And to any conservative, especially those of the modern Randian/Goldwaterite strain, I have to ask, if you love America so much, why do you not trust our democratic institutions? Why do you put your trust in business? Brown writes:
The economic titans will continue to play off government against government, further weakening environmental and food safety standards in both nations, sapping governments’ ability to govern, and unraveling our own system of self-government. Interference by government — as the most sophisticated among the world’s elite keep telling us — is inefficient, problematic, and simply unnatural. Unshackle business. Allow the corporate engines to create untold wealth. Let the natural market forces play without political interference. And politicians, they assure us, are surely not to be trusted. What the elite really mean is that democracy is not to be trusted. Lewis Lapham wrote of the modern global capitalists he met at the World Economic Forum in Davos, Switzerland, in the spring of 1998:
Having achieved their success by virtue of their talent for organization, they defined the dilemma of postmodern capitalism as a problem in management rather than a question of politics. Politicians were by definition untrustworthy, belonging to one of only two familiar types — light-minded demagogues stirring up crowds, or “pesky legislators” constantly bothering people with demands for bribes. Markets might have their flaws, but government was worse. Political interference wrecked the free play of natural distribution, and government never knew how to manage anything — not roads, not dairy farms or gambling casinos or capital flows. All would be well, and civilization much improved, if only politics could be manufactured in the way that one manufactured railroad cars or tomato soup.
A belief in the conscience of the market, with no checks by government or an economic power like labor, will spell disastor for democracy. A market economy without restraint — with no environmental or food safety rules, with no labor rights, with no labor unions — will undermine democratic institutions as all power accrues to a corporate elite. “If labor has no role,” AFL-CIO president John Sweeney told the largely unsympathetic crowd at the World Economic Forum in Davos, “democracy has no future.”
In another section of the book, Brown writes:
“Things and money,” said Brazilian professor Roberto Ungar, “are free to roam the world, yet labor is locked into its own country; it’s called economic freedom.” Financial capital obeys basic laws of capitalism and economics. It naturally flows to its most advantageous and profitable use. Logically, capital goes to the countries and economies where it has the freest reign, where it is most unfettered, where government leaves it mostly unregulated. Labor, on the other hand, is immobile, especially in totalitarian countries and less developed nations, and capital typically lands in those economies where labor costs are lowest and labor itself is the most immobile. Fast-moving, unregulated capital creates instability.
In all of this I am led to an extension of my liberal beliefs to foreign policy: that the best way to ensure the security of America is to rein in our own corporations, to encourage strong middle classes and democracies around the world and discourage dictatorships, and we can do this through tarriffs, trade agreements with protections for people and the environment, and other fair trade practices. We need to turn around what we tell other countries post-haste:
Most of the world’s successful economies — Japan and the Four Tigers (Singapore, Taiwan, South Korea, and Hong Kong), Europe, and the United States — pursued a policy of protection for their industry, government, and business partnerships, incentives for investment and research, and support and subsidies for public utilities and key industries. We tell developing countries around the world that they must cut government spending, weaken their infrastructure, slash corporate taxes, privatize public utilities, limit production to only one or two major commodities, charge user fees to the poor, spend less on education and health care, and grant expanded rights to foreign investors — all so they can build export-driven economies. No matter that their debt, in many cases, is twice their Gross Domestic Product. Even free-trade enthusiast Paul Krugman, an economist and columnist for the New York Times, acknowledged, “Policy makers in Washington and bankers in New York often seem to prescribe for other countries the kind of root-canal economics that we would never tolerate here in the U.S.A.” Do as we say, not as we did, we seem to be telling them.
Connecting this to the articles I linked to at the top of this post, the ones about liberal values and about John McCain, I have to say I am firmly in the “public interest”/”common good” liberal camp, where labor, the environment, and fair markets for both responsible businesses and the citizens who have to live with them are the priorities. (And despite his ability to avoid questions while cracking jokes on The Daily Show, I’m solidly with those who view Senator McCain as very much not a liberal.)
I say, bring back the American consensus of pre-1960s America, keeping the advances we have made in civil rights, and of course ignoring the insane, irrational fear of “communist” totalitarian Russia. (Communism has always been a red herring (with apologies to Clue), which revealed America’s failing trust in its own system of government. If Americans had had faith in democracy, if they had conquered their fear, they might have rightly used trade and diplomacy to topple Russia’s totalitarian government sooner. Democracy-friendly trade & diplomacy, and reining in our own globe-happy anti-democracy corporations, will have similar affects on terrorism today.)
We need a new liberal consensus, and we need it now — a new, 21st century liberal consensus. I’m ready for it.
