An analysis of capitalism, market deregulation and populism

Happy Thanksgiving!

Hm, the bird looks

a bit undercooked

A fascinating NYT opinion lays out a plausible analysis about most of what went wrong, and still is going wrong. In essence, the wrongness is the Titanic and now it’s not easy to control, maybe impossible. Bullet points in the post summarize parts of the essay, which is long.

Wolfie

Long story short: (i) Power flowed from the masses to business and finance interests in the name of globalism, (ii) failed political leadership made it worse by deficit spending, and (iii) people’s deteriorating economic situation sparked populism, which made things even worse. This is may not be 100% an explanation, but it feels pretty darn good, especially if one considers toxic populism in the mix. The opinion (not paywalled):

Who could have seen Donald Trump’s victory coming? Ask the question of an American intellectual these days and you may meet with embittered silence. Ask a European intellectual and you will likely hear the name of Wolfgang Streeck (rhymes with cake), a German sociologist and theorist of capitalism. .... His latest book, “Taking Back Control? States and State Systems After Globalism,” published this month, asks whether the global economy as it is now set up is compatible with democracy. He has his doubts. [So do I]

The problems started in the 1970s. Working classes in Western countries won good incomes and extensive protections, the “postwar settlement”, but profit margins suffered. What economies lost in dynamism, they gained in social stability [arguably that’s only partly right today]. However, after the Arab oil embargo of 1973, investors got nervous. The economy began to stall.

• That put politicians in a bind because workers had the votes to demand more services. That required making demands on business, and business was having none of it. Countries finessed by expanding the money supply. For a while the trick worked and workers got more but businesses didn’t pay for it. But in reality, governments had started borrowing from the next generation. They never broke the habit. 

• Soon borrowing from the next generation sparked inflation, but investors balked again. A painful tightening of money was needed to stabilize prices. Ronald Reagan’s supply-side regime eased the pain a bit on the back record government deficits. Bill Clinton was able eliminated those, but only by deregulating private banking and borrowing

• A series of mostly American attempts to calm the economy after the ’70s produced neoliberalism, which was a political-economic project to end the inflation state and free capital from its imprisonment in the “postwar settlement.” This debt-increasing mode of governing was never seriously reconsidered. One administration’s fix turns into the next generation’s crisis. At each stage of neoliberalism’s evolution, key decisions were made by technocrats, experts and other actors relatively insulated from democratic accountability. [Can you feel the power flowing away from the public interest?]

Mr. Streeck has a clear vision of something paradoxical about the neoliberal project: For the global economy to be “free,” it must be constrained. What the proponents of neoliberalism mean by a free market is a deregulated market. But getting to deregulation is trickier than it looks because in free societies, regulations are the result of people’s sovereign right to make their own rules. The more democratic the world’s societies are, the more idiosyncratic they will be, and the more their economic rules will diverge. But that is exactly what businesses cannot tolerate — at least not under globalization. Money and goods must be able to move frictionlessly and efficiently across borders. This requires a uniform set of laws. Somehow, democracy is going to have to give way.

A uniform set of laws also requires a single international norm. Which norm? That’s another problem, as Mr. Streeck sees it: The global regime we have is a reliable copy of the American one. This brings order and efficiency but also tilts the playing field in favor of American corporations, banks and investors.

• Non-technocrats, including a resentful old working class, are not going to be permitted to tangle up the system with their demands. Since economic policy is not democratically managed, it should not unfair outcomes happen. After the mortgage crisis, COVID, the war in Ukraine and so-called Bidenflation, this unfairness would gave rise to “tendencies toward deglobalization” — such as those that emerged with a vengeance on Nov. 5. The “global economy” is a place where common people have no leverage. 

• Parties of the left lost sight of these problems after the 1970s. They allowed their old structure, oriented around industrial workers and primarily concerned with workers’ rights and living standards, to be infiltrated and overthrown by intellectuals primarily concerned with promoting systems of values, such as human rights and lately the set of principles known as wokeism.

The essay continues, mostly making sense, but this concluding paragraph offers nothing at all encouraging or rational in my opinion:

Streeck’s new book is not about Mr. Trump’s triumph. But his message (or his warning, however you choose to read it) is not unrelated: The left must embrace populism, which is merely the name given to the struggle over an alternative to globalism. With globalism collapsing under its own contradictions, all serious politics is now populist in one way or another.

But if I am wrong and populism really is the only way out, that tells me that if the definition of populism I posted yesterday is basically correct, then democratic politics has to be populist and necessarily significantly irrational. That’s arguably a recipe for catastrophic self-annihilation, but that’s just my opinion.

When I try to embrace populism, it rejects me. I cannot be a populist, but humans doing politics cannot be much more rational rational than it is now. 

It makes me wonder if I am self-deluded and significantly more irrational than I think I am. . . . . . think, think . . . . . Nah, don’t think so. Sometimes wrong? Sure, but not intentionally or consciously so. My mistakes are in good faith. Populist mistakes are more in bad faith than good faith, at least as populist MAGA practices mistakes (lies, slanders, crackpottery, etc.).

Hm, what happens when 

the big hand hits 12?

This?