Posts Tagged ‘plutocracy’
“A republic, if you can keep it.”*
Just over a decade ago, Nils Gilman wrote an essay, The Twin Insurgency,” in which he warned of an emerging confluence of strategies between the rising global plutocratic class, on the one hand, and transnational criminal organizations, on the other. For all our sins, as you’ll see in his piece, he nailed the fundamental disposition of the tech-libertarian broligarch class. And…
One other thing I think I correctly intuited a decade ago was that a key politico-spatial implication of the Twin Insurgency was that the space of the national was fragmenting into “kaleidoscopic microsovereignties,” an argument that my friend Quinn Slobodian has recently developed at monographic length in his marvelous book Crack-Up Capitalism.
Quinn’s thesis is that the ultimate goal of what I called the plutocratic insurgents (and their intellectual and high-end service-economy henchmen) is to end the constraints that democratic nation-states impose on the privileges of the rich. These are rich men (and it is almost entirely men) who believe that their wealth should be untouchable, and that the privileges that this wealth buys should be unlimited. With Elon Musk’s DOGE, the mask is off: they are hell-bent on destroying any institutions of social care or risk-sharing that might touch their money or their privileges.
I cannot recommend Crack-Up Capitalism enough. Methodologically, is an intellectual history of the most notorious radical libertarians — from well-known assholes** like Milton Friedman and Peter Thiel to a congeries of even more colorful crackpots and kakistocrats — and their quest to craft for the perfect space for unfettered capitalism by shattering the map of allegedly sovereign territories into a variety of “exceptional” legal spaces: free ports, tax havens, special economic zones, etc. It is also an historical travelogue, taking the reader (as its cover blurb says) “from Hong Kong in the 1970s to South Africa in the late days of apartheid, from the neo-Confederate South to the former frontier of the American West, from the medieval City of London to the gold vaults of right-wing billionaires, and finally into the world’s oceans and war zones, charting the relentless quest for a blank slate where market competition is unfettered by democracy.” Best of all, Crack-Up Capitalism is wonderfully written: erudite and droll in equal measure (as the punning title itself suggests).
** I use the term “assholes” in the technical sense elaborated by Aaron James, chair of the UC Irvine philosophy department, in his 2012 book Assholes: A Theory, namely someone who “allows himself to enjoy special advantages in social relations out of an entrenched sense of entitlement that immunizes him against the complaints of other people.” I was reading the book when I wrote “The Twin Insurgency” and, even though I didn’t cite it (the anxiety of influence?), I realize now looking back how much it informed my understanding of phenomenon of the plutocratic insurgency. Conversely, I suspect the empirical fact of the rising plutocratic insurgency may well have been part of what inspired James to write his own book.
– Nils’ thoughts in full: “Revisiting the Plutocratic Insurgency.”
So, what can we expect? Steven Levitsky and Lucan A. Way paint a pretty grim picture…
… Democracy survived Trump’s first term because he had no experience, plan, or team. He did not control the Republican Party when he took office in 2017, and most Republican leaders were still committed to democratic rules of the game. Trump governed with establishment Republicans and technocrats, and they largely constrained him. None of those things are true anymore. This time, Trump has made it clear that he intends to govern with loyalists. He now dominates the Republican Party, which, purged of its anti-Trump forces, now acquiesces to his authoritarian behavior.
U.S. democracy will likely break down during the second Trump administration, in the sense that it will cease to meet standard criteria for liberal democracy: full adult suffrage, free and fair elections, and broad protection of civil liberties.
The breakdown of democracy in the United States will not give rise to a classic dictatorship in which elections are a sham and the opposition is locked up, exiled, or killed. Even in a worst-case scenario, Trump will not be able to rewrite the Constitution or overturn the constitutional order. He will be constrained by independent judges, federalism, the country’s professionalized military, and high barriers to constitutional reform. There will be elections in 2028, and Republicans could lose them.
But authoritarianism does not require the destruction of the constitutional order. What lies ahead is not fascist or single-party dictatorship but competitive authoritarianism—a system in which parties compete in elections but the incumbent’s abuse of power tilts the playing field against the opposition. Most autocracies that have emerged since the end of the Cold War fall into this category, including Alberto Fujimori’s Peru, Hugo Chávez’s Venezuela, and contemporary El Salvador, Hungary, India, Tunisia, and Turkey. Under competitive authoritarianism, the formal architecture of democracy, including multiparty elections, remains intact. Opposition forces are legal and aboveground, and they contest seriously for power. Elections are often fiercely contested battles in which incumbents have to sweat it out. And once in a while, incumbents lose, as they did in Malaysia in 2018 and in Poland in 2023. But the system is not democratic, because incumbents rig the game by deploying the machinery of government to attack opponents and co-opt critics. Competition is real but unfair.
Competitive authoritarianism will transform political life in the United States. As Trump’s early flurry of dubiously constitutional executive orders made clear, the cost of public opposition will rise considerably: Democratic Party donors may be targeted by the IRS; businesses that fund civil rights groups may face heightened tax and legal scrutiny or find their ventures stymied by regulators. Critical media outlets will likely confront costly defamation suits or other legal actions as well as retaliatory policies against their parent companies. Americans will still be able to oppose the government, but opposition will be harder and riskier, leading many elites and citizens to decide that the fight is not worth it. A failure to resist, however, could pave the way for authoritarian entrenchment—with grave and enduring consequences for global democracy.
The second Trump administration may violate basic civil liberties in ways that unambiguously subvert democracy. The president, for example, could order the army to shoot protesters, as he reportedly wanted to do during his first term. He could also fulfill his campaign promise to launch the “largest deportation operation in American history,” targeting millions of people in an abuse-ridden process that would inevitably lead to the mistaken detention of thousands of U.S. citizens.
But much of the coming authoritarianism will take a less visible form: the politicization and weaponization of government bureaucracy. Modern states are powerful entities. The U.S. federal government employs over two million people and has an annual budget of nearly $7 trillion. Government officials serve as important arbiters of political, economic, and social life. They help determine who gets prosecuted for crimes, whose taxes are audited, when and how rules and regulations are enforced, which organizations receive tax-exempt status, which private agencies get contracts to accredit universities, and which companies obtain critical licenses, concessions, contracts, subsidies, tariff waivers, and bailouts. Even in countries such as the United States that have relatively small, laissez-faire governments, this authority creates a plethora of opportunities for leaders to reward allies and punish opponents. No democracy is entirely free of such politicization. But when governments weaponize the state by using its power to systematically disadvantage and weaken the opposition, they undermine liberal democracy. Politics becomes like a soccer match in which the referees, the groundskeepers, and the scorekeepers work for one team to sabotage its rival…
[The authors explore the ways in which the government bureaucracy could be politicized: the threat of targeted prosecution, the weaponization of the IRS, and the mobilization of other executive departments to further the adminsistration’s agenda– which can, among them, punish identified opponents, reward loyalists, and operate like a “protection racket” on everyone else. For alll of that, they see a limit to the damage…]
… The Trump administration may derail democracy, but it is unlikely to consolidate authoritarian rule. The United States possesses several potential sources of resilience. For one, American institutions are stronger than those in Hungary, Turkey, and other countries with competitive authoritarian regimes. An independent judiciary, federalism, bicameralism, and midterm elections—all absent in Hungary, for instance—will likely limit the scope of Trump’s authoritarianism.
Trump is also weaker politically than many successful elected autocrats. Authoritarian leaders do the most damage when they enjoy broad public support: Bukele, Chávez, Fujimori, and Russia’s Vladimir Putin all boasted approval ratings above 80 percent when they launched authoritarian power grabs. Such overwhelming public support helps leaders secure the legislative supermajorities or landslide plebiscite victories needed to impose reforms that entrench autocratic rule. It also helps deter challenges from intraparty rivals, judges, and even much of the opposition.
Less popular leaders, by contrast, face greater resistance from legislatures, courts, civil society, and even their own allies. Their power grabs are thus more likely to fail. Peruvian President Pedro Castillo and South Korean President Yoon Suk-yeol each had approval ratings below 30 percent when they attempted to seize extraconstitutional power, and both failed. Brazilian President Jair Bolsonaro’s approval rating was well below 50 percent when he tried to orchestrate a coup to overturn his country’s 2022 presidential election. He, too, was defeated and forced out of office.
Trump’s approval rating never surpassed 50 percent during his first term, and a combination of incompetence, overreach, unpopular policies, and partisan polarization will likely limit his support during his second. An elected autocrat with a 45 percent approval rating is dangerous, but less dangerous than one with 80 percent support.
Civil society is another potential source of democratic resilience. One major reason that rich democracies are more stable is that capitalist development disperses human, financial, and organizational resources away from the state, generating countervailing power in society. Wealth cannot wholly inoculate the private sector from the pressures imposed by a weaponized state. But the larger and richer a private sector is, the harder it is to fully capture or bully into submission. In addition, wealthier citizens have more time, skills, and resources to join or create civic or opposition organizations, and because they depend less on the state for their livelihoods than poor citizens do, they are in a better position to protest or vote against the government. Compared with those in other competitive authoritarian regimes, opposition forces in the United States are well-organized, well-financed, and electorally viable, which makes them harder to co-opt, repress, and defeat at the polls. American opposition will therefore be harder to sideline than it was in countries such as El Salvador, Hungary, and Turkey.
Civil society is another potential source of democratic resilience. One major reason that rich democracies are more stable is that capitalist development disperses human, financial, and organizational resources away from the state, generating countervailing power in society. Wealth cannot wholly inoculate the private sector from the pressures imposed by a weaponized state. But the larger and richer a private sector is, the harder it is to fully capture or bully into submission. In addition, wealthier citizens have more time, skills, and resources to join or create civic or opposition organizations, and because they depend less on the state for their livelihoods than poor citizens do, they are in a better position to protest or vote against the government. Compared with those in other competitive authoritarian regimes, opposition forces in the United States are well-organized, well-financed, and electorally viable, which makes them harder to co-opt, repress, and defeat at the polls. American opposition will therefore be harder to sideline than it was in countries such as El Salvador, Hungary, and Turkey.
Weaponized states create a difficult collective action problem for establishment elites who, in theory, would prefer democracy to competitive authoritarianism. The politicians, CEOs, media owners, and university presidents who modify their behavior in the face of authoritarian threats are acting rationally, doing what they deem best for their organizations by protecting shareholders or avoiding debilitating lawsuits, tariffs, or taxes. But such acts of self-preservation have a collective cost. As individual actors retreat to the sidelines or censor themselves, societal opposition weakens. The media environment grows less critical. And pressure on the authoritarian government diminishes.
The depletion of societal opposition may be worse than it appears. We can observe when key players sideline themselves—when politicians retire, university presidents resign, or media outlets change their programming and personnel. But it is harder to see the opposition that might have materialized in a less threatening environment but never did—the young lawyers who decide not to run for office; the aspiring young writers who decide not to become journalists; the potential whistleblowers who decide not to speak out; the countless citizens who decide not to join a protest or volunteer for a campaign.
America is on the cusp of competitive authoritarianism. The Trump administration has already begun to weaponize state institutions and deploy them against opponents. The Constitution alone cannot save U.S. democracy. Even the best-designed constitutions have ambiguities and gaps that can be exploited for antidemocratic ends. After all, the same constitutional order that undergirds America’s contemporary liberal democracy permitted nearly a century of authoritarianism in the Jim Crow South, the mass internment of Japanese Americans, and McCarthyism. In 2025, the United States is governed nationally by a party with greater will and power to exploit constitutional and legal ambiguities for authoritarian ends than at any time in the past two centuries.
Trump will be vulnerable. The administration’s limited public support and inevitable mistakes will create opportunities for democratic forces—in Congress, in courtrooms, and at the ballot box.
But the opposition can win only if it stays in the game. Opposition under competitive authoritarianism can be grueling. Worn down by harassment and threats, many of Trump’s critics will be tempted to retreat to the sidelines. Such a retreat would be perilous. When fear, exhaustion, or resignation crowds out citizens’ commitment to democracy, emergent authoritarianism begins to take root…
See also: “There’s a Term for What Trump and Musk Are Doing- How regime change happens in America,” from Anne Applebaum in The Atlantic (gift article), “Trump As Sovereign Decisionist,” from Nathan Gardels and Noema, and this elaboration on Applebaum’s piece by Gilman, “What Comes after the Cleansing Fire of MAGA?“
Happily, there are some signs of the opposition for which Levitsky and Way call, among them: state’s Attorneys General, some major priviate law firms, even some red-state universities. Let us fervently hope that this is just the beginning. (Indeed, here, from the estimable Henry Farrell, a suggestion as of a step each of us can take: “Trump is weaponizing financial payments: here’s what you can do.”)
* Benjamin Franklin, in response to Elizabeth Willing Powel’s question: “Well, Doctor, what have we got, a republic or a monarchy?“
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As we deliberate on democracy, we might recall that it was on this date in 1945 that the first anti-discrimination law in the United States, the Alaska Equal Rights Act of 1945, was signed and went into effect. The product of the Alaska Native fight against segregation and other forms of discrimination, it abolished Jim Crow laws in Alaska, then a territory (not yet a state). One wonders if such an Act will be legal in our future…
“It turns out that we’re actually capable of something other than neoliberalism and actually we’re really capable of enjoying ourselves more than we do under neoliberalism”*…
… but the path from here to there, the estimable Brad DeLong warns, could be overcast. In notes for his lectures to his Econ 135 class at Berkeley (“The History of Economic Growth,” shared in his terrific newsletter, Grasping Reality) he begins with an explanation of neoliberalism [also explained here– source of the image above], then considers what might be next…
So what is coming after neoliberalism?
First, one thing that is coming, at least here in America, is renewed or perhaps novel attention to places. Places have never been important in American identity. American identity has, instead, long been defined by a focus on mobility and opportunity. Americans are people who have moved to new places—undertaken errands unto the Wilderness—precisely because of the mistakes being made in and the limitations circumscribing their choices where they were. Americans are people who have abandoned some Old World because of its mistakes, and have moved to a New World to remake themselves and make a new society that will at least make different mistakes. The promise of more abundant resources and the chance to build a better life has driven this pattern of migration and reinvention. Thus the advice given to those who find their birth-region constraining or insufficiently prosperous has always been “go west!”: move to opportunity.
My Richardson ancestors were farmers in the hilly, rocky terrain of New England in the 1840s. Farming the land was difficult. To say that New England soil is “stony” is to greatly understate the case, as you can see even today from the ubiquitous stone walls found throughout New England all built from rocks that had to be removed from the fields before farming could even begin.
The Richardson family decided to leave New Hampshire and traveled down the Ohio River to St. Louis, where they established a pharmaceutical company: the Richardson Drug Company. The family story is that they specialized in cocaine—legal at the time, and their cocaine products were very low concentration, nothing like lines or crack. But, still, my ancestors became the very first cocaine pushers west of the Mississippi in St. Louis. The company was quite successful for two generations. Then, one New Year’s Day, a catastrophic fire destroyed their chemical plant. The fire department was, the story goes, slow to respond, as they were recovering from New Year’s Eve. And how does a catastrophic fire start when the plant is entirely shut down for the holiday. I am suspicious of my ancestors.
Rather than rebuild the plant, the Richardsons opted to take the large insurance settlement and shift their focus to banking. The course of the Richardsons is thus a very American story: change who you are and what you are doing and where you are doing several times over the course of even a few generations.
The Neoliberal Order was about capitalism but it was also about freedom. And one aspect of this freedom was freedom to successfully organize to resist being dominated by the behemoths of the New Deal Order: Big Government, Big Business, Big Labor, and also Big Cultural Expectations. The assumption that your husband should get a job with a large corporation and commute by car as you moved to suburbia and that you alone should raise the children was an essential part of the New Deal Order. And it called forth a middle-class feminist rebellion. The assumption that Blacks should largely stay in their place and be happy with slow advances toward equal rights and a small share of the benefits from social-insurance programs was an essential part of the bargains in the 1930s that formed the New Deal Order. The Black Civil Rights movement was not in itself neoliberal, but was an expression of the underlying anti-system anti-bureaucracy current. And with respect to land-use planning—Big Government bureaucrats should not be able to assist Big Finance money and Big Business bulldozers to order you around and bulldoze and “renew” your community. It was individual unbureaucratic enterpreneurship that was supposed to be beautiful. Hence NIMBYism (Not In My Backyard-ism) as we know it today is an important piece of the Neoliberal Order, as it actually was on the ground.
Consider San Francisco’s Embarcadero Freeway, an 8-story, 90-foot high structure that blocked views of the ocean and bay. Residents preferred to maintain the open views rather than prioritize faster commutes for drivers from Marin County. This was seen as a victory for rational, people-centered development at the time. And the post-1989 earthquake removal of the initial parts of the Embarcadero Freeway was a huge win—it resulted in a much more pleasant and open waterfront area for residents and visitors to enjoy.
But in the long run NIMBYism has been a disaster. Berkeley houses no more people now than it did fifty years ago. So housing prices have skyrocketed, and the guy who runs the Little Farm Children’s Center in Tilden Park has to commute from beyond the Altamont Pass.
NIMBYism killed America’s tradition of moving to opportunity stone dead. This has been a very powerful if indirect cause of rage against The Neoliberal Order Machine. Thus the growing call for place-based policies to make opportunity move to where people are, instead of assuming people will move to opportunity. The Polanyian right to the land—to keep Schumpeterian creative-destruction from destroying your community as a side-effect of its pursuit of profit—is and will take a more prominent role in whatever comes after the Neoliberal Order.
Second, the “after” will include explicit industrial policies. The Neoliberal Order was about hyperglobalization. Under the Neoliberal Order it was assumed that free trade and laissez-faire policies were beneficial for all. They were beneficial for the Global North as they heightened the concentration of high-value and high-externality activities like science, engineering, and worthwhile manufacturing within itself. And they were beneficial for the Global South because only the threat that economic activity and talented people would leave could curb the predatory instincts of Global South governments. The concerns of economists like W. Arthur Lewis that trade in a globalized market on terms increasingly tilted against primary products actually developed the fact of underdevelopment were pushed to one side.
But now the assumption that free trade works to concentrate high-value and high-externality activities like science, engineering, and worthwhile manufacturing in the United States is very much in doubt. The CHIPS Act of the Biden administration signals the end of the belief that the global market was working in America’s favor. The CHIPS Act represents a shift away from the implicit acceptance of the global market’s inequities now that they no longer seem to be working so strongly in America’s favor. Instead, there is now a demand for more explicit industrial policies as an alternative..
Third, the “after” will include a strong demand for champions of the people. There is growing recognition that neoliberalism has led to an unfair domestic plutocracy. The 2008 Republican presidential and vice-presidential ticket was almost composed of individuals who collectively owned 20 houses—John McCain owned 12 houses, and Mitt Romney owned 8. Political advisors felt that that foreclosed choosing Romney as likely to make the ticket look ridiculous, and so they prevailed on McCain to choose the very odd Alaska Governor Sarah Palin insted.
What to do about plutocracy, where there is a growing belief that the system is working not for the people but for the super-rich and for their rootless cosmopolite allies and clients? Power requires countervailing power. Hence what is needed is someone powerful to vindicate the interests of the common people, rather than of some privileged élite: a strongman to disrupt the status quo and the inertia of “business as usual”.
It has never been the case that the “strongman” has to come from the people. Indeed, often in history a plutocrat, oligarch, or aristocrat has been preferred—a “class traitor” as other members of Harvard’s Porcellian Society whispered about their fellow member, New Deal President Franklin Delano Roosevelt. The idea is that only someone who has thoroughly benefitted from being in the system and knows it inside and out will know enough about its vulnerability to be able to disrupt it.
Analogously, consider Andrew Jackson. He positioned himself as a defender of the common people against the system—land speculators, Philadelphia financiers, and corrupt politicians who together made sure that the people could not prosper as America grew.vJackson presented himself as an outsider who would protect the interests of the “Kentucky frontiersmen” against the domestic élite, even though he himself was no true frontiersman.
Indeed, the earliest examples of strongman politicians overthrowing existing oligarchic systems to vindicate at least the short-run interests of a broader “people” come from the early days of Classical Hellenic civilization. Peisistratos, Tyrant of Athens in the -500s, is the prime historical example. The Tyrants abolished debt slavery, canceled the debts of the overindebted, and redistributed land more equitably—paving the way for the establishment of Hellenic democracy, which was a very attractive civilization as far as the societies of domination of those days went.
Unfortunately for us, the champions of the people being chosen today appear more fascist than populist—more interested in telling people what to do to make them followers to burnish the glory of the leader than in lifting the burdens from the people by cancelling the debts and redistributing the land—and more kleptocrat than plutocrat, with the leader’s skills more in running a con game than in understanding the workings of the system.
Fourth, what is coming after the Neoliberal Order appears to be a politics of fear: fear of the diverse, fear of the woke, fear of the other—whatever the other is, people who seem strange and weird—and fear of the rootless cosmopolite.
In the last analysis, the Neoliberal Order fell because it did not deliver the goods. Free markets and largely ineffectual gestures at freeing-up individual autonomy from bureaucracy were not enough to create a society where people felt at home, even if there was a great expansion of individual freedom to choose elsewise than commanded by formerly-dominant social norms. But the failure of the past Order did not in itself bring a new one into existence. In this sense we are in a similar period of uncertainty to that of the late 1920s and early 1930s. Back then, before he died in Mussolini’s jail, the Marxist thinker Antonio Gramsci observed: “The Old Order is dying, and the New Order appears perhaps to be stillborn: now is a time of monsters”…
Oh, to be able to go back to school… Eminently worth reading in full: “Neoliberalism & After,” from @delong.bsky.social. See also the notes from a proximate lecture: “Post-2010 “Polycrisis”: Culture, Communications, Politics, & War.”
* “It turns out that we’re actually capable of something other than neoliberalism and actually we’re really capable of enjoying ourselves more than we do under neoliberalism. It feels that if neoliberalism is first about privatizing desire and imagination before the economy, then we’re in this process of publicizing it again.” – Rebecca Solnit
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As we fumble with the future, we might recall that it was on this date in 1968 that 60 Minutes, which had premiered two months earlier, introduced its trademark “ticking stopwatch” opening logo/transition. 60 Minutes is, of course, the most-watched television news show in history.
Since near the show’s inception in 1968, the opening of 60 Minutes features a stopwatch. The Aristo (Heuer) design first appeared in 1978. On October 29, 2006, the background changed to red, the title text color changed to white, and the stopwatch was shifted to the upright position. This version was used from 1992 to 2006 (the Square 721 type was changed in 1998). Source
“What people these days call ‘Vibes’ is a smell, a taste of the soul”*…
Up? Down? Better? Worse? What’s actually going on in our economy? Noah Smith on the asymmetric warfare going on around that question…
As we gear up for election season, a big debate is whether the U.S. economy is doing well or not. Biden supporters point to extremely low unemployment, falling inflation, and real wages that have started rising again. Biden opponents — including both conservatives and socialists — contend that the inflation of 2021-22 left such a severe scar on Americans’ pocketbooks that low consumer confidence is perfectly justified. Biden supporters counter that since inflation has come down — and was never as severe as in the 1970s — the anger over the economy is just “vibes”.
Basically, the Biden supporters are right; the U.S. economy is truly excellent right now. Inflation looks beat, everyone has a job, incomes and wealth are rising, and so on. But on the other hand, I can’t command people to simply stop being mad about the inflation that reduced their purchasing power back in 2021-22. People care about what they care about.
At the same time, though, I think it’s possible for negative narratives about the economy to take hold among the general populace and distort people’s understanding of what’s actually going on. For example, John Burn-Murdoch of the Financial Times recently found [gift article] that consumer sentiment closely tracks real economic indicators in other countries, but has diverged in America since 2020:
Now this could be because Americans simply care about different things than Europeans; we might simply have started to really really hate interest rates since 2021, while Europeans didn’t. But a simpler explanation is that Americans’ negative sentiment is due to something other than economic indicators. And it’s possible that that “something” is a negative narrative — i.e., vibes…
“Vibes vs. data”
Indeed, as Burn-Murdoch observes in his analysis…
… It seems US consumer sentiment is becoming the latest victim of expressive responding, where people give incorrect answers to questions to signal wider tribal political or social affiliations. My advice: if you want to know what Americans really think of economic conditions, look at their spending patterns. Unlike cautious Europeans, US consumers are back on the pre-pandemic trendline and buying more stuff than ever…
“Should we believe Americans when they say the economy is bad?” (gift article)
But why? Jonathan Kirshner‘s review of Martin Wolf‘s important book The Crisis of Democratic Capitalism, suggest an unsettling answer…
The Crisis of Democratic Capitalism is an essential read for its articulation of the perilous crossroads at which the future of enlightened liberal civilization now stands. Wolf argues persuasively that, for all their visible flaws and imperfections, competitive market capitalism and liberal democracy are the best bad systems available for organizing human societies. And each requires the other to thrive—“[b]ut this marriage between those complementary opposites […] is always fragile.” Capitalism has been allowed to run amok, and it has elicited a backlash that threatens democracy…
Wolf’s central argument is that capitalism and democracy are inherently interdependent, yet also often in tension with one another—and managing the balance of that indispensable relationship is akin to walking a tightrope. In traditional autocracies, the economy has been captured by those that control the state, and that control is the basis of their power (which is why they are so reluctant to let go of the reins of authority). Liberal democracies today face the inverse problem: the capture of the state by those that control the economy. This is plutocracy, and aside from the injustice it visits on societies, it is also profoundly dangerous, because in democratic plutocracies (like the United States today), the simmering frustrations of mass polities will at some point lead to the voluntary election of an autocrat: “[I]nsecurity and fear are gateways to tyranny.” Decades of stagnant incomes, rising inequality, and the erosion of high-quality jobs for the middle class and the less-educated have allowed the relationship between capitalism and democracy to become dangerously unbalanced. The Crisis of Democratic Capitalism argues that the fault lies with the failure of public policy to tame the excesses of capitalism; it warns that those excesses will unleash the forces that destroy democracy.
Economic inequality, on the rise for 50 years, has soared to ever greater extremes in recent decades. As Wolf reports, from 1993 to 2015, the real income of the top 1 percent of the population in the United States nearly doubled; for everybody else, over those same years, aggregate real income grew by 14 percent. More pointedly, as the very rich got much, much richer from 2005 to 2014, 81 percent of US households had flat or falling real income—a weighty reminder that we continue to live in a world defined by the Global Financial Crisis and its aftermath…
… the financialization of the economy, especially after the 1990s, and the fortunes amassed from that process, were part and parcel of a larger shift towards “rigged capitalism”—the emergence of which The Crisis of Democratic Capitalism places at the heart of the matter. In a remarkable (and laudable) intellectual evolution, Wolf, who welcomed and celebrated the Thatcher revolution in Britain, and not so long ago penned the book Why Globalization Works (2004), now attributes the crisis of our time to “what Adam Smith warned us against—the tendency of the powerful to rig the economic and political systems against the rest of society.” Superseding a well-ordered market society, rigged capitalism—a toxic brew of developments and practices including financialization, winner-take-all markets, reduced competition, increased rent-seeking behavior (the use of concentrated economic power to extract monopoly profits), tax avoidance and evasion, and the erosion of ethical standards—has led to a widespread loss of confidence in the legitimacy of democracy…
These pathologies run deep, and well below the headlines. The use of political power to undermine competition—which must thrive at the heart of any capitalist society—is an endemic attribute of rigged capitalism. (And it is why we pay higher prices for most things than a “free market” would levy.) Many if not most giant corporations are now monopolies or near-monopolies, a situation that, as any card-carrying professional economist of even the most conservative stripe would agree, generates inefficiencies, rent-seeking behavior, and outright exploitation. Many markets have become shielded, protections reinforced by access to the corridors of power, with wealth extracted from consumers (and workers) in consequence: consider the atrocity of unskilled workers in fast food restaurants being forced to sign “non-compete” clauses, an act of collusive wage suppression.
Rigged capitalism—which yields massive concentrations of wealth for a sliver of largely-above-the-law plutocrats, combined with stagnation and declining opportunities for the majority—leads to a basic political problem: “How, after all, does a political party dedicated to the material interests of the top 0.1 percent of the income distribution win and hold power in a universal suffrage democracy? The answer is pluto-populism.” This is where race, identity politics, and the culture wars come into play. The century-long political hammerlock held by the Democratic Party on the Old South was based on voter suppression and other devices that guaranteed, for working-class whites, greater economic opportunity, access to the legal system, and higher social status than Blacks, in exchange for their political support. Bob Dylan, at 22 years old, saw through this in his song “Only a Pawn in Their Game” (1964)—and nearly 60 years later, that game hasn’t changed much…
rigged capitalism will nevertheless unleash forces not easily contained—and render liberal democracy unsustainable. As political scientist Rawi Abdelal has argued, “the social fact of unfairness is more important than the material fact of income and wealth distribution.” Endemic corruption, arbitrariness of justice, and fear for future prospects are poisonous to the body politic, undermining shared perceptions of the legitimacy of democratic society. In such settings, past and present, fear, despair, and frustration create the space for charismatic personalist authoritarians peddling promises of deliverance but who, once in power, consolidate their hold on the state by undermining the institutional constraints on their authority. And so, democracy dies from within.
What is bewildering about the American case is not that it has witnessed the rise of a leader who, as Wolf describes, “not only had no idea what a liberal democracy was but despised the idea,” and who was “instinctively authoritarian”—this, after all, is what pluto-populism conjures. What remains bizarre, however, is that, of all the possible choices, a hedonistic, ethically suspect, narcissistic grifter—who for decades was a signature beneficiary of rigged capitalism—would emerge as the people’s choice. Yet Donald Trump, like the gargantuan Stay-Puft Marshmallow Man from Ghostbusters, has been summoned by a collective subconscious rage to act as a malevolent score-settling agent of destruction…
“Rigged Capitalism and the Rise of Pluto-populism: On Martin Wolf’s ‘The Crisis of Democratic Capitalism’”
All three articles– and Wolf’s book– are eminently worth reading in full.
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As we ponder populism, we might recall that it was on this date in 1865 that the 27th state (Georgia) ratified the 13th Amendment to the U.S. Constitution, abolishing slavery and involuntary servitude (except as punishment for a crime). Proclaimed on December 18, it was the first of the three Reconstruction Amendments adopted following the American Civil War.
The Emancipation Proclamation (made in September 1862; effective January 1, 1863) had freed all current slaves in the U.S. (though as a practical matter freedom took years longer). The Thirteenth Amendment assured that it would never be reinstated.
“Mounting a campaign against plutocracy makes as much sense to the typical Washington liberal as would circulating a petition against gravity”*…
Brad DeLong elaborates on Jonathan Kirshner‘s bracing review of Martin Wolf‘s important new book…
Jonathan Kirshner: Rigged Capitalism and the Rise of Pluto-populism: On Martin Wolf’s The Crisis of Democratic Capitalism: ‘The middle third of this book, “What Went Wrong,” should be required reading…. When it comes to solutions, unfortunately, The Crisis of Democratic Capitalism comes up short. Wolf, ever measured, is convincing in making the case for reform over revolution…. Yet it is disheartening that the sensible, reformist agenda of reasonable, practical measures that Wolf outlines already seems beyond the capacity of our politics…. Massive concentrations of wealth for a sliver of largely-above-the-law plutocrats, combined with stagnation and declining opportunities for the majority—leads to a basic political problem: “How, after all, does a political party dedicated to the material interests of the top 0.1 percent of the income distribution win and hold power in a universal suffrage democracy? The answer is pluto-populism”… [which] unleash[es] forces… [that] render liberal democracy unsustainable…. corruption, arbitrariness of justice, and fear for future prospects are poisonous to the body politic…. Its final sentence, “If we fail, the light of political and personal freedom might once again disappear from the world,” reads less like a call to action and more like an epitaph…
Martin Wolf’s The Crisis of Democratic Capitalism and Barry Eichengreen’s The Populist Temptation are, I think, the best books on theDover-Circle-Plus societies current Time of Troubles. And there is no clear way through.
It was James Madison who wrote, in 1787:
Democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths…
And the death of real democracy does not have to be accompanied by the end of the form. The classic example here is the Jim Crow U.S. South from 1876-1965. It was less than half as rich as the rest of the United States for almost a complete century. It was ruled by an oligarchy uninterested in economic development and very interested in corruption. The oligarchy its power by focusing the electorate on the necessity of keeping the Black Man Down, and tarring anyone who wanted a government that was less corrupt or more pro-development with being a negro-lover. That it held rocksolid from 1876 to 1965 shows that the future of anything we could call prosperous democratic capitalism is not assured…
Bracing: “Pluto-Populism,” from @delong.
See also: Kishore Mahbubani‘s “Democracy or Plutocracy? – America’s Existential Question” (source of the image above).
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As we get back to basics, we might recall that it was on this date in 1934 that Depression Era bandits Bonnie and Clyde were ambushed by police and shot to death in Bienville Parish, Louisiana. Bonnie Elizabeth Parker and Clyde Chestnut (Champion) Barrow were a criminal couple who traveled the Central United States with their gang during the Great Depression. The couple were known for their bank robberies, although they preferred to rob small stores or rural funeral homes. Their exploits captured the attention of the American press and its readership during what is occasionally referred to as the “public enemy era” between 1931 and 1934.
The 1967 hit film Bonnie and Clyde, directed by Arthur Penn and starring Warren Beatty and Faye Dunaway in the title roles, revived interest in the couple, who were treated somewhat sympathetically. The 2019 Netflix film The Highwaymen depicted their manhunt from the point of view of the pursuing lawmen but received mixed reviews.
“A frivolous society can acquire dramatic significance only through what its frivolity destroys. Its tragic implications lie in its power of debasing people and ideals.”*…
In 2018, Lewis Lapham wrote a foreword for the re-issue of his 1988 book, Money and Class in America…
… The dream of riches has been the hallmark of the American experience ever since the first settlements in the 17th-century wilderness were set up as joint ventures backed by Divine Providence and British gold. Among the gentlemen adventurers offloading Dutch cannon and Geneva bibles on the shores of Massachusetts Bay, there were those who had come in search of El Dorado, betting their lives and fortunes if not their sacred honor on rumors of precious metal and grade-A beaver pelt. Others arriving with blueprints for a new Jerusalem were content to lay up stores of virtue awaiting heavenly reward after the long, New England winter in the grave. No congregation was at a loss for a sermon, a real estate deal, or a discussion about the nature of their newfound wealth—wages of sin or sign of grace, proof of the good Lord’s infinite wisdom or the result of a sharp bargain with a drunken Pequot Indian.
The framers of the Constitution, prosperous and well-educated gentlemen assembled in Philadelphia in the summer of 1787, shared with John Adams the suspicion that “democracy will infallibly destroy all civilization,” agreed with James Madison that the turbulent passions of the common man lead to “reckless agitation” for the abolition of debts and “other wicked projects.” With Plato the framers shared the assumption that the best government incorporates the means by which a privileged few arrange the distribution of property and law for the less fortunate many. They envisioned an enlightened oligarchy to which they gave the name of a republic. Adams thought “the great functions of state” should be reserved for “the rich, the well-born, and the able,” the new republic to be managed by men to whom Madison attributed “most wisdom to discern and most virtue to pursue the common good of the society.”
The words for their enterprise the framers borrowed from the British philosopher John Locke, who had declared his 17th-century willingness “to join in society with others who are already united or have a mind to unite, for the mutual preservation of their lives, liberties, and estates, which I call by the general name property.” Locke could not conceive of freedom established on anything other than property. Neither could the 18th-century framers of America’s Constitution. By the word liberty, they meant liberty for property, not liberty for persons.
But unlike our present-day makers of money and law, the founders were not stupefied plutocrats. They knew how to read and write (in Latin or French if not also in Greek) and they weren’t preoccupied with the love and fear of money. From their reading of history they understood that oligarchy was well-advised to furnish democracy with some measure of political power because the failure to do so was apt to lead to their being roasted on pitchforks. Accepting of the fact that whereas democracy puts a premium on equality, a capitalist economy does not, the founders looked to balance the divergent ways and means, to accommodate both motions of the heart and the movement of a market. They conceived the Constitution as both organism and mechanism and offered as warranty for its worth the character of men presumably relieved of the necessity to cheat and steal and lie.
The presumption in 1787 could be taken at fair and face value. The framers were endowed with the intellectual energy of the 18th-century Enlightenment, armed with the moral force of the Christian religion. Their idea of law they held to be sacred, a marriage of faith and reason. But good intentions are a perishable commodity, and even the best of oligarchies bear comparison to cheese. Sooner or later they turn rancid in the sun. Wealth accumulates, men decay; a band of brothers that once aspired to form a wise and just government acquires the character of what Aristotle likened to that of “the prosperous fool,” a class of men insatiable in their appetite for more—more banquets, more laurel wreaths and naval victories, more temples, dancing girls and portrait busts—so intoxicated by the love of money “they therefore imagine there is nothing it cannot buy.”
…
The divisions of race and class were present at the American creation. The planting of colonies in 17th-century America conformed to medieval Europe’s feudal arrangements of privilege and subordination. The aristocratic promoters of the project received land as a gift from the English king; the improvement of the property required immigrants (God-fearing or fortune-seeking) skilled as fishermen, farmers, saltmakers and mechanics. Their numbers were unequal to the tasks at hand, and in both the plantation south and merchant north the developers imported enslaved Africans as well as what were known as “waste people” dredged from the slums of Jacobean England—vagrants, convicts, thieves, bankrupts, strumpets, vagabonds, lunatics and bawds obliged to pay their passage across the Atlantic with terms of indentured labor on its western shore. The prosperous gentry already settled on that shore regarded the shipments of “human filth” as night soil drained from Old World sewers to fertilize New World fields and forests. By the time the colonies declared their independence from the British crown, the newborn American body politic had been sectioned, like the carcass of a butchered cow, into pounds and pence of prime and sub-prime flesh.
All men were maybe equal in the eye of God, but not in the pews in Boston’s Old North Church, in the streets of Benjamin Franklin’s Philadelphia, in the fields at Jefferson’s Monticello. The Calvinist doctrine of predestination divided the Massachusetts flock of Christian sheep into damned and saved; Cotton Mather in 1696 reminded the servants in his midst, “You are the animate, separate passive instruments of other men . . . your tongues, your hands, your feet, are your masters’s and they should move according to the will of your masters.” Franklin, enlightened businessman and founder of libraries, looked upon the Philadelphia rabble as coarse material that maybe could be brushed and combed into an acceptable grade of bourgeois broadcloth. His Poor Richard’s Almanac offered a program for turning sow’s ears if not into silk purses, then into useful tradesmen furnished with a “happy mediocrity.” For poor white children in Virginia, Jefferson proposed a scheme he described as “raking from the rubbish” the scraps of intellect and talent worth the trouble of further cultivation. A few young illiterates who showed promise as students were allowed to proceed beyond the elementary grades; the majority were released into a wilderness of ignorance and poverty, dispersed over time into the westward moving breeds of an American underclass variously denominated as “mudsill,” “hillbilly,” “cracker,” “Okie,” “redneck,” Hillary Clinton’s “basket of deplorables.”
Nor at any moment in its history has America declared a lasting peace between the haves and have-nots. Temporary cessations of hostilities, but no permanent closing of the moral and social frontier between debtor and creditor. The notion of a classless society derives its credibility from the relatively few periods in the life of the nation during which circumstances encouraged social readjustment and experiment—in the 1830s, 1840s, and 1850s, again in the 1940s, 1950s and 1960s—but for the most part the record will show the game securely rigged in favor of the rich, no matter how selfish or stupid, at the expense of the poor, no matter how innovative or entrepreneurial. During the last 30 years of the 19th century and the first 30 years of the 20th, class conflict furnished the newspaper mills with their best-selling headlines—railroad company thugs quelling labor unrest in the industrial East, the Ku Klux Klan lynching Negroes in the rural South, the U.S. army exterminating Sioux Indians on the Western plains.
Around the turn of the 20th century the forces of democracy pushed forward an era of progressive reform sponsored by both the Republican president, Theodore Roosevelt, and the Democratic president, Woodrow Wilson. During the middle years of the 20th century America at times showed some semblance of the republic envisioned by its 18th-century founders—Franklin D. Roosevelt’s New Deal, a citizen army fighting World War II, the Great Depression replaced with a fully employed economy in which all present shared in the profits.
The civil rights and anti-Vietnam war protests in the 1960s were expressions of democratic objection and dissent intended to reform the country’s political thought and practice, not to overthrow its government. Nobody was threatening to reset the game clock in the Rose Bowl, tear down Grand Central Terminal or remove the Lincoln Memorial. The men, women and children confronting racist tyranny in the South—sitting at a lunch counter in Alabama, riding a bus into Mississippi, going to school in Arkansas—risked their lives and sacred honor on behalf of a principle, not a lifestyle; for a government of laws, not men. The unarmed rebellion led to the enactment in the mid-1960s of the Economic Opportunity Act, the Voting Rights Act, the Medicare and Medicaid programs, eventually to the shutting down of the Vietnam War.
Faith in democracy survived the assassination of President John F. Kennedy in 1963; it didn’t survive the assassinations of Robert Kennedy and Martin Luther King in 1968. The 1960s and 1970s gave rise to a sequence of ferocious and destabilizing change—social, cultural, technological, sexual, economic and demographic—that tore up the roots of family, community and church from which a democratic society draws meaning and strength. The news media promoted the multiple wounds to the body politic (the murders of King and Kennedy, big-city race riots, the killing of college students at Kent State and Jackson State, crime in the streets of Los Angeles, Chicago and Newark) as revolution along the line of Robespierre’s reign of terror. The fantasy of armed revolt sold papers, boosted ratings, stimulated the demand for heavy surveillance and repressive law enforcement that over the last 50 years has blossomed into the richest and most innovative of the nation’s growth industries.
By the end of the 1970s democracy had come to be seen as a means of government gone soft in the head and weak in the knees, no match for unscrupulous Russians, incapable of securing domestic law and order, unable to disperse the barbarians (foreign and native born) at the gates of the gated real estate in Beverly Hills, Westchester County and Palm Beach. The various liberation movements still in progress no longer sought to right the wrongs of government. The political was personal, the personal political. Seized by the appetite for more—more entitlements, privileges and portrait busts—plaintiffs for both the haves and the have-nots agitated for a lifestyle, not a principle. The only constitutional value still on the table was the one constituting freedom as property, property as freedom. A fearful bourgeois society adrift in a sea of troubles was clinging to its love of money as if to the last lifeboat rowing away from the Titanic when Ronald Reagan in 1980 stepped onto the stage of the self-pitying national melodrama with the promise of an America to become great again in a future made of gold.
In 2018, the few optimistic voices at the higher elevations of informed American opinion regard the advent of Trump as a blessing in disguise, one that places the society in sufficiently dire straits to prompt the finding of a phoenix in the ashes, the best chance in two generations to resurrect America’s democratic life force. I like to think the same thought, but I rate the odds of rescue at 6-1 against…
On our nation’s birthday, bracing reading: “Of America and the Rise of the Stupefied Plutocrat.” Eminently worthy of reading in full.
And for an apposite (albeit curiously complacent) take from 1925, Sherwood Anderson‘s thought on the U.S. at the 150-year mark: “Hello, Big Boy.”
* Edith Wharton
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As we make birthday wishes, we might recall that on this date in 1862, Charles Lutwidge Dodgson, a young Oxford mathematics don, took the daughters of the Dean of Christ Church College– Alice Liddell and her sisters– on a boating picnic on the River Thames in Oxford. To amuse the children he told them the story of a little girl, bored by a riverbank, whose adventure begins when she tumbles down a rabbit hole into a topsy-turvy world called “Wonderland.” The story so captivated the 10-year-old Alice that she begged him to write it down. The result was Alice’s Adventures in Wonderland, published in 1865 under the pen name “Lewis Carroll,” with illustrations by John Tenniel.
Readers in or around Oxford can join the celebration.
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