Yves here. Implicitly, in this interview, Matt Stoller is referring to the contemporary incarnation of mainstream economics, which is neoclassical economics. It is worth remembering that neoclassical economics started being formalized in the late 19th century by thinkers like Leon Walras, Carl Menger, and William Jevons. One of the reasons their ideas took hold was first, that they aspired to establish that economics was a science that could be described in mathematical terms. Second, to do so, they had to assume ergodicity, which in layperson terms means that the system has a propensity to achieve a stable equilibrium. This typically hidden assumption produced results that were very useful in beating back idea promoted by Marx and other pro-labor forces, that modern economies were unjust and needed reforming. The counter-story was that if left alone, as in in the hands of businessmen, they were naturally self-correcting. Who could or should object to this best of all possible worlds?
Another factor that increased the influence of economists was the rapid industrialization of the USSR. The fact that the Soviet Union went from a peasant country to a manufacturing power in a bit more than a generation stood as a challenge to free enterprise economies. If a command and control system could achieve gains like that, how could the West compete? Economists increasingly got a seat at the policy table for their supposed ability to boost growth, which would allow the West to afford guns and butter.
By John Siman
“The point of economics as a discipline,” Matt Stoller writes in his anti-monopoly newsletter Big, “is to create a language and methodology for governing that hides political assumptions from the public” . This is, I think, as piercing and as accurate a description of systemic government lying as can be made at this point in American history.
Stoller has been a fellow at the anti-monopoly Open Markets Institute for the past three years, and he has just in the past year published the meticulously-researched book Goliath:The 100-Year War Between Monopoly Power and Populism in addition tolaunching Big. Stoller previously worked as a senior policy advisor in both the U.S. House and U.S. Senate. (He’s only recently turned forty; he graduated from Harvard in 2000.)
My only criticism of brilliant Matt Stoller at this point in his career is that he is not Jonathan Swift. This is of course an entirely unfair appraisal, but a necessary one nevertheless. For we need — America needs — Stoller to learn how to land a Swiftian knockout punch or how to wield a Tarantino-brand flamethrower or how to throw a big bucket of mop-water into the green face of the Wicked Witch of the West.
But before we more rigorously consider what Stoller seems to lack, let’s do admire his strengths. Here’s an example of how brilliant Stoller can be: “The impeachment saga,” he tweeted on the morning the Articles were lugubriously cortèged over to the Senate, “like every other panicky nonsense that doesn’t touch real money or power, is not about going after Trump. It’s about disciplining [italics mine] wayward Democrats who don’t share the collective delusion that everything was fine until Trump showed up.”
Stoller’s insight here brings Thomas Frank’s now standard analysis of the Democrats as the party of America’s smug anti-populist liberal/creative/professional class into an even more exquisite focus. For, as Stoller observes, this class is, increasingly, a disciplinary class, defining itself by both its adherence to and its enforcement of certain articles of faith — certain indisputable narratives — certain collective delusions. And currently chief among these are, first, the delusional narrative that the unprecedentedly evil boogeyman Donald Trump was illegitimately injected into the presidency by the dastardly and all-powerful Russians; second, the delusional narrative that our neo-liberal economic orthodoxy has irrefutably proven that any and all public policies on the scale of what was once achieved during the New Deal are now and forever unworkable and, worse than that, uncool; and, third, the delusional narrative that strategically-placed Intersectionalist Inclusivity bureaucrats are at this very moment reversing many many millennia of nonstop human social injustice by means of pure moral superiority. To dare challenge any of these cherished class narratives is to be smeared with extreme prejudice by the disciplinary class for thoughtcrimes like parroting Russian talking points or waging tacky class warfare or acquiescing to structural racism-misogyny-transphobia. Or for just being a deplorable.
Indeed Stoller describes how he personally experiences this liberal class discipline: “I started out the decade the same way I’m ending it,” he tweeted on December 31: “by being condescended to by boomers who insist their politics of self-serving woke looting is pragmatic — and anyone who even mildly dissents is a fringe lunatic.” Take a look at some of Democratic Party enforcer Neera Tanden’s Twitter threads attacking “GOPutin” Stoller if you want to see some specific examples of disciplinary class action against him.
But here is a second example of his brilliance. The most compelling piece Stoller published last year in Big was a learned anti-eulogy upon the death of the titanic maker of recessions Paul Volcker:
[Volcker’s] goal [Stoller writes] was to crush wages, straight out. To give you a sense of how strongly he felt about this goal, consider that during this period, from the late 1970s to the mid-1980s, Volcker walked around with a card of union wages in his pocket to remind himself that his goal was to crush the middle class. Volcker even angered Reagan officials by keeping interest rates too high for too long. When they complained, he would pull “out his card on union wages” and note that inflation would not come down permanently until labor “got the message and surrendered.” Volcker said that the prosperity of the 1950s and 1960s was a “hall of mirrors” and that the “standard of living of the average American must decline.”
Paul Volcker was not your friend. He was your enemy; he was the enemy of all working Americans. Volcker’s scorched-earth inflation-busting was in fact a highly effective program of neo-liberal union-busting, and Volcker’s hidden political assumptions were the hidden political assumptions of American oligarchs in general: riches for the few, austerity for the many. Stoller has both the political learning and the moral courage to bring such essential populist information to light.
It’s important here that we also consider Stoller’s take on Martin Feldstein,another powerful neo-liberal economist who died in 2019, for Feldstein was Stoller’s first economics professor at Harvard, and it was, in large part, by the process of rejecting and escaping from Feldstein’s teachings, that Stoller matured as a serious critic of monopoly power and neo-liberal orthodoxy. Though not now as famous as Volcker, Feldstein was, back in 2005, along with Ben Bernanke, one of the top choices to succeed Alan Greenspan as chairman of the Federal Reserve Board. (The New York Times endorsed both— sound familiar? — Feldstein and Bernanke for the chairmanship because, one conjectures, the two were, by their elite training in the discipline, equally oblivious to the imminent global financial crisis and, as Stoller points out, equally uninterested in the fact that the FBI was at that time warningof an “epidemic” of mortgage fraud.)
“Feldstein was, as you know,” Stoller told me, “a conservative economist, and he was teaching basic economics at Harvard. So Harvard has this class called Ec 10 — Economics 10. And it’s the most popular class at Harvard, or at least it was. And you sit through lectures of a thousand people every week or maybe twice a week. And I took that, and I took some more advanced economics, and I really enjoyed it. But there were a bunch of assumptions baked into the way that they were doing things. But what I kind of understood at the time — but kind of didn’t — was that what Feldstein was really doing was teaching us a language for how to understand the world, a language that precluded discussing power.”
Stoller continued his intellectual coming-of-age story: “But I loved economics because there was this really rational way to understand the world — it was completely false, but it was like a perfect religion for a smart kid.”
I suggested that there is something highly creepy about going to Harvard to be indoctrinated into a very high-end collective delusion.
“Well,” Stoller said, “I would say that there may be things in the discipline of economics that correspond to reality. There may be useful insights. There may be things that are false. But all of that is incidental. Like it’s not the point. The point of economics is not to describe reality or to uncover truth [italics mine]. To the extent that it does so is incidental to what the real purpose of economics, which is to organize a language for governing.”
So who exactly, I asked, gets to govern with this language?
Economics, he responded, becomes the official public language of an aristocracy: “So the discipline of economics today,” he said, “is just dedicated to aristocracy…. Aristocrats believe that some people are fit to rule and others are not, and you have to make sure that those who are not fit to rule have no influence over governing decisions. There are a lot of different ways to do that. The way that the discipline of economics does it is that they create a mathematized language into which you can build your political assumptions, and then they imbed that mathematized language into every important governing structure.”
And what, I asked, is the point of mathematizing this language?
“The point is to hide the governing decisions from the public,” Stoller responded without missing a beat. As if the method of systemic deceit were obvious. Which I guess in a sense it is.
A bit unnerved by the ugliness of the truth, I tried to make the point that, to the extent that we like democracy, such people are our natural enemies.
“That’s right,” Stoller said. “The current discipline of economics seeks to displace people who believe in democratic mechanisms for governing.”
As I think back on this part of our conversation, I want to quibble a bit with Stoller’s use of the word aristocracy. For if we make an effort to use the word according to its historical context — going all the way back to the Ancient Greek ideal of the καλὸς κἀγαθός, of the chivalrous gentleman — we see that aristocracy has traditionally entertained charming, perhaps fantastical, visions of physically beautiful people creating beautiful art and beautiful literature and beautiful music. America’s twenty-first-century elites are, by contrast, nothing if not dogmatically anti-beauty. Do we want to describe someone like Hillary Clinton as an aristocrat? Or Jeff Bezos? I personally would prefer the word oligarchor even plutocratin this context.
But Stoller has a point in using the word aristocrat, for, by looking back seven decades to the end of the New Deal, one can trace out in the Democratic Party the growth of a powerful strain of snobbism, of effete elitism, and Stoller describes this aspirational Democratic aristocracyin compelling detail in his book Goliath. This passage about the sensibilities of then cutting-edge liberal historian Richard Hofstadterand his infatuation with the 1952 Democratic presidential nominee Adlai Stevenson — Eleanor Roosevelt’s precious darling surrogate son! — is quite illuminating:
When Republican presidential candidate Dwight D. Eisenhower [Stoller writes] defeated the more cerebral Democratic candidate Adlai Stevenson in 1952, the 36-year-old historian Richard Hofstadter panicked. Hofstadter agreed with Stevenson that the election of Eisenhower was a replacement of “the New Dealers by the car dealers.” A rising star in the elite liberal firmament, Hofstadter believed he was witnessing “an apocalypse for intellectuals in public life.” For Hofstadter, Harry Truman had been bad enough. Truman was no intellectual. He was a populist from Missouri and had never even gone to college; for Hofstadter, Truman’s “impassioned rhetoric, with its occasional thrusts at ‘Wall Street,’ seemed passé and rather embarrassing.” By contrast, the Democratic nominee in 1952 and 1956, Adlai Stevenson, was a beloved intellectual who surrounded himself with Ivy League men. Stevenson stood up to the anticommunists, but not the plutocrats; in between presidential runs, he defended the powerful communications company RCA against Eisenhower’s Antitrust Division. Stevenson opposed public funding for housing, union power, “socialized medicine,” civil rights for blacks, agricultural stabilization policies, and deficit spending. But Stevenson was eloquent and beautifully spoken, and earned Hofstadter’s ardent support (Goliath:The 100-Year War Between Monopoly Power and Populism, pp. 203-204).
As the elitist spirit embodied in figures like Hofstadter and Stevenson gradually took hold of the Democratic Party, working class citizens, Stoller observes, were increasingly pushed out of it. By the year 1975, with the arrival in Washington of the hip consumer/boomer Watergate Babies and their ouster of Wright Patman, the last great anti-monopolist, the last great populist, from the chairmanship of the House Committee on Banking and Currency, the elitist conquest of the party was made official. (Patman, I should point out, is the real hero of Stoller’s book. First elected to the House in 1928, Patman led the impeachment of Treasury Secretary Andrew Mellon in 1932 and began, Stoller writes, “the second great campaign to destroy monopoly power in America,” p. 53.) By the time pro-bank liberals pushed old Patman aside, any remnants of an effective populism in the United States had already vanished. Patman’s brand of populism is now long forgotten. We have been living in the neo-liberal world of the consumer/boomers, of the Clinton generation, for forty-five years now.
Stoller unrolls this sad phase of American history over 400-plus pages, and his profound understanding of the processes by which monopoly power has defeated populism, by which the elites have overwhelmed labor and the middle and working classes, gives him the cred not only to identify powerful economists like Volcker and Feldstein as villains in American history, not only to explain the collapse of populism as a countervailing force in our politics, but also, perhaps shockingly, to identify Barack Obama as a bad president whose legacy lingers as a kind of dead albatross around the neck of the Democratic Party.
“Two key elements characterized the kind of domestic political economy the [Obama] administration pursued,” Stoller wrote in a Washington Post editorial two months after Trump was elected president: “The first was the foreclosure crisis and the subsequent bank bailouts. The resulting policy framework of Tim Geithner’s Treasury Department was, in effect, a wholesale attack on the American home — the main store of middle-class wealth — in favor of concentrated financial power. The second was the administration’s pro-monopoly policies, which crushed the rural areas that in 2016 lost voter turnout and swung to Donald Trump” (Democrats can’t win until they recognize how bad Obama’s financial policies were, January 12, 2017).
That’s a whole heckuva lot of bad news for a would-be Democrat to absorb. Yet Stoller told me that he remains optimistic about our country’s prospects. “Well,” he said, “that’s the thing about my book. The book is fundamentally an optimistic story. It’s about how we faced these problems before, and the problems are really deep-rooted and severe, but we were able to defeat them before, and we can do it again.” I hope he’s right, but after having immersed myself in his work for several weeks, I feel more pessimistic about my country’s future than I ever have before. The fact that the rich are always endeavoring to take advantage of the poor and that the strong are forever seeking to bully the weak should be as obvious to our leaders as the fact that it gets cold in the winter. But going back to the post-New Deal America of Adlai Stevenson and Richard Hofstadter and moving forward up to and including establishment liberals Hillary Clinton and Barack Obama, the consensus of elite liberal opinion is that cold in the winter is an illusion, and that populism is just a different way of spelling deplorables. The whole point of the Democratic Experiment was to defend We, the People against aristocrats and oligarchs. Maybe Matt Stoller can reincarnate the spirits of Louis Brandeis (1856 – 1941, the nemesis of the House of Morgan) or Wright Patman (1893 – 1976, who took on Andrew Mellon) to make that happen again. Maybe he can develop Swiftian superpowers and make all the bad guys melt away with the acidity of his righteous invective. Well, I guess I’m willing to wait for a miracle. What else am I going to do?
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Some brilliant quotes in there, I’ll be memorising them for use in future arguments.
I’ll certainly be buying the book.
This one I really like: “I suggested that there is something highly creepy about going to Harvard to be indoctrinated into a very high-end collective delusion.” Same for MIT, both I have first hand experience with and oh was subject to ‘academic review’ about 50 times. It was always the same issue ‘is it me or is it that we are lying about what we’re doing all the time”. Lying of course, but not to be said out loud. like ‘cold’ in the winter.
Yep. The first thing I learned in Economics 102 was “The discipline of Economics is value neutral.” I was paying attention. By the end of May, I was going “I don’t think so.” Learning about imperfect competition was like seeing my first “dirty” magazine. I was ruined for life – not even going to purgatory – I was going directly to hell. Consequently, Economics 202 was a daily re-enforcement of the “value neutral” theme. I kept going to church, but I wasn’t really praying. I was out looking for dirty magazines by Marx, Kalecki and Polanyi. Just another badly spent life.
The book is impressive and readable. I haven’t read Swift, but there nothing wrong with Stoller’s prose style. I gave my copy of Goliath to one of my sons after he completed a MBA, because it contains a concise history of U.S. business up to the present.
I’m about 100 pages into Goliath and it’s really quite good. The contract between how FDR dealt with big business after the crash and what Obama did 80 years later couldn’t be more stark. Stoller does a tremendous job of bringing in details and introduces some real heroes who you don’t hear about in history class.
I particularly enjoyed the part about how the US got its National Gallery opened up and filled with artwork. Andrew Mellon (if Trump was guilty of breaking the emoluments clause he was still a piker compared to Mellon) was being brought to trial for corruption and fraud and was being grilled by FDR’s lawyer. Mellon, in trying to sway public opinion to his favor, mentioned that he was planning on donating his art collection, which according to Stoller he had no real intention of doing. FDR called his bluff and now the public can all visit the museum in DC. While Mellon escaped many of the charges against him, he was also fined a fairly large amount of cash on top of his reluctant “donation”.
Add Alan Greenspan to the list of malign economists. He, who was shocked, Shocked! to find that markets weren’t self-correcting, even though an average citizen could tell him that. After all, who was he going to believe, his models or their lying eyes and wallets?
Economics was co-opted a long time ago, and needs more attention from Stoller, Keen, NC and others to elucidate matters. On my personal wish list, some greater dissemination of knowledge about the specific policies and factors driving that yawning labor-capital gulf that started widening almost 50 years ago.
Matt Taibbi’s take-down of the demon Greenspan in Griftopia is the standard IMO.
Minsky called them “court economists”, so perhaps “aristocrat” is the right word choice. No, i am not linking to Gilbert Gottfried’s routine. But it applies. As always.
> Gilbert Gottfried’s routine
And the agent says: “That’s a hell of an act. What do you call it?”
The right name for the thing is always a problem. Thinking about this, I’m not sure that “Boomers” and “aristocrats” are commensurate enough to be combined in a coherent model.
For example, the existential position of the PMC — the angst, even dread — comes from the fact that their class power must be reproduced all over again in every generation, from getting little Chad into the right day care, though little Madison’s ballet classes, and on up through cheating on the SATs and bribing the admissions officers of Ivy League universities. How much simpler to rely on hereditary titles (the usual definition of an aristocracy).
Not to say that Stoller doesn’t have a righteous — I was about to say hatred, but I’ll say — attitude toward today’s malefactors of great wealth. To be fair, we do have dynasties in this country, like the Clintons, the Bushes, the Roosevelts (at least in FDRs) day, but I don’t think it would be fair or accurate to characterize the entire professional-managerial class as an aristocracy, for reasons stated above. Useful as polemic, though.
The problem (so far as preserving and perpetuating our democratic experiment in republican self government) is not so much that governing and influential elites belong to this or that class, but that they simply have been miseducated and believe all the wrong crap. As Ian Welsh has explained, the nub of the problem is the belief that cost-benefit analysis always points to the best solution, even if “the best solution” is less than optimal for certain parts of the ruled.
As usual, the truth hurts.
This whole neoliberal idea of economic systems seeking equilibrium as a “natural state” mimics, as does the mathematic dressing of economics, the state of the sciences. While in natural sciences there are many, many studies of natural equilibria and the laws that govern them, are there any attempts to establish the validity of the concept in economics? Or is that yet just another foundational assumption that has gone unexamined.
I suspect that this criterion, like many others, has arguments for its existence but not a whole lot of evidence.
I was just reading about this very issue, by way of Keen’s Debunking Economics, chapter 9. It seems that Debreu provided a proof that there is a unique set of prices and quantities capable of clearing all markets simultaneously. Unfortunately, the conditions assumed by the proof are so unrealistic as to be impossible for any real economy. Worse, according to Keen it has also been proven that equilibrium for a stably growing economy would have to be unstable. The upshot is that the capitalist economy should be studied as a system in dynamic disequilibrium. But this would require the use of mathematical tools with which most economists (again according to Keen) are unfamiliar. And besides, abandoning general equilibrium would mean giving up the various ideological advantages flowing from that assumption.
But I am no economist. Perhaps those in a better position to know can comment on the accuracy of both my take on Keen and Keen’s account of the current state of play.
This was interesting:
Stoller was looking for a worldview, not uncommon for a college kid, and Smarty Marty Feldstein was ready to supply it in a nice, neat package. Stoller’s brains, combined with his integrity and empathy, led him out of bondage to the Market God so that he can now see that homo economicus is a sick perversion of a human being. If we could get more bright folks to shed those scales, it would make it easier to meet all the challenges ahead.
If we could get more bright folks to shed those scales, … Henry Moon Pie
My own path was to read the Old Testament, in addition to the New Testament. There’s plenty of sound* economics in both and there’s the additional advantage that believing Christians MUST take BOTH seriously as the Word of God.
*e.g. no interest to be collected from fellow countrymen, e.g. debt forgiveness, e.g. guaranteed agricultural land for families, e.g. rights of the poor, etc.
I’m sure aristocrats pay more attention to Pluto’s Republic than they do to the Bible.
Plato! Not Pluto – maybe just a Freudian slip?
Eventually, I thought you meant this.
But at first I thought you typo’ed.
I doubt the elites read Pluto’s Republic. That would mean they actually were interested in science.
Hell, I doubt they read Plato’s Republic either. That would mean they actually get educations at Harvard and MIT rather than indoctrination.
We read the Republic in college, in Humanities. I was horrified (this was the height of the New Left) and concluded that Plato – or Pluto, take your pick – was the original fascist. And horribly influential.
I also read several of the Dialogues, and further concluded that Plato was a very bad philosopher, given to the worst sort of false logic. And it isn’t because he was early; the Sophists had already laid out the basics of logic. It’s because he was dishonest.
Lots more readable than Aristotle, who was better, though.
I think you’d all be better off, in the sense of accuracy, in sticking with Pluto.
Freudian slip because Pluto was the god of riches as well as being the god of the underground, i.e., hell.
> I’m sure aristocrats pay more attention to Pluto’s Republic than they do to the Bible.
I prefer Goofy’s Republic. It gives a more accurate picture of current affairs.
Aristocrats believe that some people are fit to rule and others are not, and you have to make sure that those who are not fit to rule have no influence over governing decisions. John Siman
One way to make sure is government privileges for private credit creation since these reduce/remove the need to borrow from the poorer in order to “lend” to the richer, the more so-called “credit worthy.”
Thank you!…This article really resonates. There are several typos:missing spaces following italics.This does not detract from the ideas put forth. I really like the historical background info.
“Well, I guess I’m willing to wait for a miracle. What else am I going to do?”
@John Siman — thanks for a great post, but not for the passive close.
What else you could do is help us make the “miracle” happen. HJR-48 needs your support — in fact, you could recruit Matt Stoller to endorse it as well:
https://www.congress.gov/bill/116th-congress/house-joint-resolution/48
Yes, Constitutional Amendments are hard. So we’re building a movement to pass this one: http://www.movetoamend.org.
JFK famously said “We do these things not because they are easy, but because they are hard.”
He was talking about the moon landing. We’re working on something both harder and more important: creating the opportunity for real democracy right here on earth.
Or you could just eliminate corporations entirely by removing the limited liability clause. I mean if you are a true free market capitalist – as any neoclassical is – then you will certainly be for that. Is it possible this would not require a constitutional amendment?
It might – Congress is forbidden to cancel pre-existing contracts. But it would be worth doing. That’s probably the original sin.
Yes. Was around for the beginnings of that one, still get their emails.
However, i would like to also see an anti-trust law that doesn’t depend on the unreliable judgement of bureaucrats and politicians; eg, a flat limit on the size of businesses, or perhaps a sharply graduated corporate income tax – one that’s actually collectible.
Many thanks for this excellent depiction of both economics and the liberal elite who use it to mystify political reality. I’m more inclined toward your pessimism than to Stoller’s optimism. But I much appreciate the efforts of both of you in hammering away at the wall.
Such a bummer that my whole life has been under this neoliberal regime … glad to have naked capitalism though – I would never know about Stoller without you.
So, in other words, modern economics is an ideology devoted to making selfishness seem altruistic. No wonder Alan Greenspan liked Ayn Rand.
At any rate a very interesting post. Knowing little about Adlai I didn’t realize he was one of the villains in our current class war.
I love Matt Stoller, and what he writes, with one crucial exception: he does not understand Alexander Hamilton. This misunderstanding of Hamilton points to the larger problem that is Stoller’s dangerous weakness and vulnerability. Yves’s observation, in the introductory paragraph, about the crucial assumption by mainstream economists of ergodicity – that economic systems tend toward a stable equilibrium – helps to pinpoint this vulnerability.
No economic system is inherently stable, because the key activity of any economy is the development of new scientific knowledge, and the distribution of that new knowledge as new technologies. Without scientific and technological advances, an economy is doomed to collapse because of resource and environmental limitations. There is no mathematical formula or economic model that has succeeded in capturing the disruptive effects of new science and technology. With enough manpower and funding, you can map out the historical effects of new science and technology, in metrics such as Btus per unit of GDP, but this requires some understanding of the history of technological progress, and as point out in the article, classical economists are characterized by a reluctance, if not hostility, to learning history.
The scope and amount of resources an economy has available to process and change into the goods and services supporting human existence is limited by the mode of technology of the productive base in a generally defined period of time. The only way to change and expand the scope and amount of resources is through advances in science and technology – finding new resources, developing new ways to use already known resources, and making the use of resources more efficient and less wasteful. Everyone wrings their hands about “the limits to growth” but if humanity could achieve high levels of recycling, this concern would be greatly ameliorated. Steel is currently the world’s most recycled material, with an overall recycling rate of 86 percent in 2014.
Now, Hamilton did not write explicitly about science and technology, he wrote explicitly about the productive power of labor, which, when you think about it, means pretty much the same thing. As Secretary of the Treasury, Hamilton explicitly argued, in his December 1791 Report to Congress on the Subject of Manufactures, that most people, including businesspeople, are actually risk averse to major changes, and therefore the policy of government must be to encourage the development and adoption of new ways of doing things: “Experience teaches, that men are often so much governed by what they are accustomed to see and practice, that the simplest and most obvious improvements, in the [most] ordinary occupations, are adopted with hesitation, reluctance and by slow gradations … To produce the desirable changes, as early as may be expedient, may therefore require the incitement and patronage of government…”
Most readers of Naked Capitalism, I hope, are familiar with the argument that while the agrarian, anti-development ideals of Jefferson are given large amounts of lip service, it is actually Hamilton’s policy of government support for science and technology that has prevailed. Mariana Mazzucato makes the argument very explicitly in her 2015 book, The Entrepreneurial State, which documents how every single technology in smart phones was originally developed at government expense,
Note that the classical economics definition of itself as a study of how society allocates scarce resources, is an inherent and insurmountable obstacle to ever understanding a real economy and its need for the lifeblood of scientific and technological advancements. Which also points us to another important aspect of what Hamilton accomplished – shattering the zero-sum nature of feudal economics, in which the wealth of a nation or a clan or a person was understood only in terms of how much land they controlled, how many serfs or slaves, and how much money, usually defined solely as hard species of gold or silver. Focusing on the productive power of labor completely upends that zero-sum nature because now the wealth of nation or a clan or a person is determined by their technological abilities. Hamilton is explicit on this issue: “To cherish and stimulate the activity of the human mind, by multiplying the objects of enterprise, is not among the least considerable of the expedients by which the wealth of a nation may be promoted.” And in his December 1790 Second Report to Congress on the Public Credit, Hamilton wrote, “the intrinsic wealth of a nation is to be measured, not by the abundance of the precious metals, contained in it, but by the quantity of the productions of its labor and industry….”
Note also that Hamilton’s economic system shifts the value of human labor from mere muscle power – on the same level as an animal – to brain power, on an entirely new level.
On the question of aristocracy, oligarchy, and plutocracy, Ganesh Sitaraman, in his 2018 book The Crisis of the Middle-class Constitution: Why Economic Inequality Threatens Our Republic, point out that from the republic’s founding until the 1930s, Americans were generally aware of the dangers posed. Most immigrants had deliberately left monarchies and aristocracies in Europe and elsewhere, to make a new life in a republic. But the rise of fascism and communism, and the World War Two fight to defeat the former, changed the general understanding of dangers and opponents from aristocracy and oligarchy, to fascist and socialist authoritarianism.
Wow — this comment is a treatise in itself. I will have to spend some time on this! Thank you!
One could also make the case – as regards your thesis in the second paragraph here, that seems to power the rest of your commentary – that scientific and technological progress is an illusion, built on exploitation. Fossil resources have been the driver of the sweeping changes to humanity in the past two-hundred-and-fifty-odd years, and before and alongside cracking open the Pandora’s Box of coal, gas and oil, humanity developed new and exciting ways of enslaving their own kind.
It is reasonable to envision an economy built around art, music, dance, teaching, theater, craftsmanship, and stewardship of our common resources, instead of a blind faith that science and technology always progresses and this progress doesn’t come with externalities – and so much of our advances are mostly concerning how to push those externalities as far over the horizon as possible.
Given that humans would have to actually give a rip about each other’s happiness, and massively cut back on breeding, we’re probably stuck with the illusory economy of scientific progress.
As one whose hearing aids have steadily improved over the decades, and whose lifelong interest in human evolution has been fed by always improving genetic analysis, I would think that technological and scientific progress happens is self evident; what is often confused with a supposed lack of progress or a limit of growth is the very real insane, insatiable, hog like use of every resource.
We can have nice things if we can prevent the selfish, narcissistic fools from burning the world down
Why elide communism and socialism at the penultimate sentence?
Socialism is a broad political perspective that incorporates many different viewpoints and a vast array of systems of governance; while communism by design of the Soviets became a very, very narrow interpretation of socialism dominated by one party, and hence one leader. Communism isn’t representative of Socialism anymore than neoliberal Capitalism is wholely representative of Capitalism.
Was a democratic socialist government of Western Europe after WWII the same as the Soviet Union?
It’s also interesting that Hamilton advocated for government “interference” in the market…”government must be to encourage the development and adoption of new ways of doing things…”. Much like a socialist might argue that a democratically elected government should advocate for an economy that serves all the people and the environment, and regulates accordingly.
I suppose, like everything else, black and white so often bleeds into various shades of grey.
Glad you asked the question, as it allows me to add something I left out in my original reply to shorten it.
The “enforcement of certain articles of faith” is particularly strong among on the socialist side of the spectrum. A perfect example is Paul Street, a brilliant writer, who is harshly dismissive of anyone who questions the infallibility of marxist analysis and policy prescription. The left is as ideologically blind in its approach to reality as is the right, unfortunately.
I have concluded that the most insightful, truthful, and powerful body of thought on the human condition and how to better it, is the corpus of work by Franklin, Washington, Hamilton, Adams, and others. Note I do not include Jefferson. Charles Beard, a decade after his Economic Interpretation of the Constitution, wrote The Economic Basis of Politics as a reply to the many people who concluded that Beard was a closet Marxist. In a second edition of the book, Beard added a chapter considering the example of the Soviet Union, in which he wrote:
Beard concluded the economic analysis of Hamilton and Madison was superior to that of Marx and Lenin, and also pointed out that Hamilton and Madison had been preceded by English republican theorist James Harrington, author of The Commonwealth of Oceana (1656). Ganesh Sitaraman (mentioned in my original comment) also identifies Harrington as a crucial formative influence on the USA founders.
My summary of the difference between Hamilton and Madison on one hand, and Marx on the other, is that whereas Marx believed that human nature itself would change once the capitalist class had been eliminated, and a class less society had been created, Hamilton and Madison accepted that human nature could be somewhat modified and regulated, but never fundamentally changed, and therefore the most important role of government was to regulate the competition and conflict between various political factions (which, as pointed out in The Federalist Number 10, are usually based on economic interests).
The above quote from Beard sounds like it was lifted almost entirely from Thorstein Veblen, whose economic analysis based on two basic classes – producers, and leisure (predators) – and two basic conflicting economic interests – business and industry – can explain the failure of marxist and socialist states as well as the collapse and inequities of capitalist ones.
As for Jefferson, he was too imbued with feudalistic notions of economics, such as all economic value arises only from the land, to ever be useful as a useful light in economic development. Interestingly, Beard recognized this in his book, Economic Origins of Jeffersonian Democracy, which was published just two years after Economic Interpretation of the Constitution. I have concluded that the two books should be read together to get the full benefit of Beard’s ideas, and stay clear of the misleading interpretation that Beard condemned Hamilton and favored Jefferson.
To end, I would note that other than Milovan Djilas, I have not yet been made aware of any serious attempts at self-examination by socialists and marxists attempting to identify why their ideas have repeatedly failed. Instead, what I see is a similar attempt to “discipline” believers as that discussed by Yves Smith and John Siman.
Yes, I do see both socialism and capitalism as failed ideas. My response has been to try to revive the founding ideas of republicanism, under which I believe a mix of both socialist and capitalist ideas can be created for a successful economic structure.
Beard didn’t understand power, as evidenced by his adamant attempt to keep the U.S. out of World War 2. Someone who didn’t see the problem Hitler posed just shouldn’t be taken seriously.
This is a silly caricature of the views of both Hamilton and Jefferson.
“Science is more important in a republican than in any form of government.” That’s Thomas Jefferson, who was obsessed with experimentation and also served as the first administrator of patents. He was hardly the pastoral anti-technology icon you paint.
Hamilton was an authoritarian who believed in massing men and capital to produce a new empire, and he largely lost the ideological battles over how to organize the American order. He was a well-known opponent of Adam Smith, and his ideas about developing technology cannot be divorced from his vision of America as an empire run via a military dictatorship. He wanted large industrial scale distilleries, for instance, not because they were more efficient, but because he understood that small farmers who ran stills in their farms were his political opponents and the owners of big factories were his allies. So the idea that he sought simply to improve productive processes through government patronage is foolish.
There are a lot of people that like to push Hamilton as some avatar of progressive ideas because he wanted a strong central government. They miss the context of arguments over central government in the 1780s and 1790s, which were oriented around not whether we’d have the New Deal and large foundries for technological research, but whether we’d have an aristocracy. He wanted to centralize power. That was his goal.
In his report on manufactures, Hamilton also wrote that cotton wouldn’t be a cash crop for much longer, and he assumed slavery would die out pretty quickly. That was a common assumption at the time. Context matters.
As one of the stereotyped Boomers about whom Matt alluded, and who is also a Stoller fan, twitter follower, MMTer, Vietnam-vet/anti-foreverwar, etc. (still reading Goliath), I wish to point out that we are not all mini HRCs and that many of us (there are by some estimates 74 million of us) embrace Matt’s view, wish there were more AOCs in Congress, and carry worn-but-functional moral compasses.
What shall we call the replacement for neoliberalism? What shall we call ourselves – the intelligent, well-educated, socialist-leaning people who view Citizens United as the poison pill of our American democracy, and who still believe that government is usually the solution as long as it is guided by the people it serves, which is surely not the reality unter dem Trump-regime.
Yes. Stoller’s tick about Boomers, instead of a more focused attack on older billionaire monopolists, is like saying ‘Trump is from NYC, therefore everyone from NYC is like Trump’. I mean, come on. There are more boomer age nurses (retired) and coal miners (retired) and working class voters than boomer age billionaire monopolists. Using ‘boomer’ is sloppy and divisive; two things Stoller should want to avoid if he’s trying to increase the coalition to fight against monopoly power, imo. Otherwise, why fight? the boomer generation is now mostly retired and within 20 years will mostly be demised. All Stoller has to do is wait and the ‘problem’ with boomers will solve itself, if his blame is correctly focused. (It’s not.) Imagine Stoller lumping J.D.Rockefeller and J.P.Morgan in with their same generation age group which they exploited as a useful distinction and meaningful identity for their robber barony.
Imagine Teddy Roosevelt taking on the Trusts and raising a groundswell of support to bust them up by including the trope that everyone born between 1830 and 1850 was a big part of the monopoly problem. (Morgan and Rockefeller were both born in the 1830’s).
I have the same pedigree as Tomonthebeach, and thank him for getting this point on the table.
I am reading “Goliath” and found the boomer tic offensive for the reasons already cited. It is so imprecise. What percentage of “deplorables” are also “boomers”? If he wants to make a class-based argument, he should refrain from poisoning it with tribal signifiers.
A better term may be “yuppie”, as in “Die, Yuppie Scum”. I mean, all the things Stoller is on about are the property of the elite boomers, a.k.a. yuppies.
I agree. The older party elite by 1970 had decided to recruit and support ‘boomer age yuppy’ up-and-coming politicians, not the boomer age New Deal egalitarian up-and-coming politicians.
Thanks for the reminder about ‘yuppie’ , it’s the perfect modifier.
> There are more boomer age nurses (retired) and coal miners (retired) and working class voters than boomer age billionaire monopolists.
Then it’s sure weird how boomers overwhelmingly support Biden over Sanders and support conservatives over actual progressives. Sorry it’s so divisive to call out boomers when some of them hold progressive views, but it’s simply the truth that boomers are majority neoliberal and conservative. You can call it a function of being old or absorbing too much propaganda over the decades, but what’s true is true. I agree that class matters more for shaping attitudes, but since it’s still one person one vote, we’re not going to progress as a country until this generation changes its mind or dies. Some “tic”.
Millennials (dog, I hate advertising terms) are now a larger voting bloc than boomers. Millenials + Gen X are the overwhelmingly largest voting bloc. So, no problem if its just about age. Right?
Or, maybe the Dem estab is known for dirty tricks. nah, that can’t be the problem. ;)
Thank you for that, I stopped reading the piece yesterday after the first Boomer™ word, which gave me a visceral stress reaction. Boomer™ is a very cheap, mean and ugly shot, particularly when the exploding deaths of despair and suicides include so many of them, and especially from someone who appears to have an upper middle class background. I won’t be reading the book.
As a late Boomer myself, I was nailed by the multiple recessions that hit late boomers and am praying to find a painless means to permanently saying goodnight If I become homeless; as is looking very possible for both myself and others I love, all of whom are educated. I’ve never felt such helpless daily agony in my life.
Well I guess I just don’t know who these people are, choosing all these conservative and neoliberal politicians. If you’re going to totally eliminate generational analysis you might as well be blind. Yes class is more important. But still.
In Iowa, only 5 percent of Biden supporters are younger than 45
You know what gives me a ‘visceral stress reaction’? Seeing older voters with Medicare and full SS benefits voting against their own kids. My parents included.
So if the millenial and gen X voters go to the polls in large numbers they’ll overwhelm the number of boomer and older voters. Vote early and often. ;)
Uggggh, not going to bother to respond at length to that utterly simplistic analysis (and by the way, not everyone over 45 is Boomer, HUH?), other than to say that all the Boomers I know/knew and am/was close to, are either dead, or stopped voting for presidential candidates after decades of loyal Demorat voting – or wrote in a name, like I’ve been doing for over a decade. I stand by what I said and won’t be reading that book or any of his other books, not even from a library.
I think Thomas Frank got it right in this 2016 essay. The target of his ire is the elite Dem establishment ignoring the working class and exploitation and economic inequality.
https://www.theguardian.com/commentisfree/2016/nov/29/how-the-democrats-could-win-again-if-they-wanted
forgive me, but that position seems like cutting off your nose to spite your face (that’s assuming that you think there might be some worthwhile analysis across Stoller’s oeuvre).
Perhaps Stoller’s rhetorical style is a bit weak in this instance (I’ve not read Goliath), but I don’t take it personally when people lob generalities against my ‘generation‘ (millenial, so there are plenty of them), and for what it’s worth, in my part of the world, I see plenty of ‘pull-the-ladder-up’ism among the boomer generation (my parents are of that generation, so I know a few). Anecdotal but I don’t think it’s a baseless generalisation, as generalisations go.
Kind regards,
The mention of aristocracy makes me think of Philip Agre’s old essay “What is conservatism and what is wrong with it”:
https://pages.gseis.ucla.edu/faculty/agre/conservatism.html
It was written in 2004 so some parts look quaint now, but the main idea holds up, I think.
Agee’s essay is bracing. Once I would have agreed with it. Now I think it’s not historically grounded enough. I am more in Corey Robin’s camp. Paraphrasing and brutally simplifying: Modern conservatism arose in reaction to the French Revolution (patient zero in the Anglo-Sphere: Burke). For Robin, conservatism is a meditation on lost power, and how to regain it. (The loss is always experienced as personal, as in (say) the loss of slaves, or uppity nigras, etc.)
It’s helpful to look at this issue as an example of the distinction between conventional wisdom and belief systems. Conventional wisdom is at least based on some evidence, even if it’s wrong or has been misinterpreted. When I was studying economics in the 1960s, Keynesianism was the conventional wisdom, because it seemed to explain how things worked better than previous theories, just like Newton replaced Aristotle and Ptolemy and Einstein, in some ways, replaced Newton. Conventional wisdom tends to change, albeit slowly, in response to external stimuli. That makes it very hard to use for disciplining people.
Belief systems are excellent for discipline, because they are based on a priori assumptions which do not admit evidence as a factor, and proceed by blindly logical deduction, whatever the practice consequences. Liberalism (of which Stoller is describing a subset) rejected previous forms of legitimacy (religion, tradition) and so was forced to begin from essentially arbitrary assumptions about human nature (rational economic actors, perfectible humans) and follow that logic wherever it led. Reality was then expected to conform. So liberalism, in all its forms, is much better for disciplining people. It’s actually better if the theory is incoherent and conflicts with real life, or is constantly changing (as IdPol does), because that requires people to watch carefully, and be prepared to change their thoughts, speech and behavior at any moment. Not much chance of rebellion there.
this “Liberalism” that he’s pointing to(and we really need better, non-corrupted words for all of this)…whenever i read these better descriptions of it, like stollers and yours, i think about the age old conflict between orthodoxy(right belief) and orthopraxis(right behaviour).
the more empire oriented a belief system becomes, the more it focuses on orthodoxy…making windows into people’s souls, to determine how good they are…no matter their behaviour, or who they help or hurt.
happened to xtianity with the constantinian shift…the bishops suddenly forgot all about “Works” as a path to salvation, and instigated pogroms and purges and war and rapine to discipline any who disagreed with their turn to empire justification.
the same mechainism is at work, here…Right Belief trumps any actual behaviour…especially behaviour that is rightly deemed honorable or compassionate(arrested for feeding the poor…or ensuring all have healthcare)
but as the bishops(and emperors) found, it’s hard to determine the content of mens souls without a look at behaviour.
(and…forgive:i’m in a rambling medicated state, today…due to my labors yesterday, and—i suspect—the large high and low pressure systems in close proximity south of denver. such steep pressure gradients within, say, a thousand miles of my barometer/skeleton, really kick my butt. all hail the goddess of weed.)
Great Essay. Thank you. I think Yves nailed it too when she pointed out that we were in a race to control the world for the benefit of capitalism. And we did believe in capitalism. At least most of us – until Vietnam. We’re still trying to patch it up and keep it rolling today. Who’d a thunk it that capitalism would kill itself? I’d be willing to bet that Volcker had that very vision – that if we didn’t rein it in it would explode – and of course it did. So it was a lesson learned. Capitalism is dogmatic nonsense and does not work. Nobody comes right out and says it yet. We still fudge around with verbiage admiring the miracle of the “free market.” In a biological sense it’s demise is easier to swallow. Everything must evolve. Power, economics, ideology, biology. And nobody gets to fake it. Nobody gets to obfuscate and deny the collapse of a totally atavistic system. Not even math wizards.
“Who’d a thunk it that capitalism would kill itself?”
Marx. Looked like wishful thinking until very recently – and may still be.
‘ “Well,” Stoller said, “I would say that there may be things in the discipline of economics that correspond to reality. There may be useful insights. There may be things that are false. But all of that is incidental. Like it’s not the point. The point of economics is not to describe reality or to uncover truth [italics mine]. To the extent that it does so is incidental to what the real purpose of economics, which is to organize a language for governing.”
‘ So who exactly, I asked, gets to govern with this language?
‘ Economics, he responded, becomes the official public language of an aristocracy: “So the discipline of economics today,” he said, “is just dedicated to aristocracy…. Aristocrats believe that some people are fit to rule and others are not, and you have to make sure that those who are not fit to rule have no influence over governing decisions. There are a lot of different ways to do that. The way that the discipline of economics does it is that they create a mathematized language into which you can build your political assumptions, and then they imbed that mathematized language into every important governing structure.” ‘
Enter von Mises and Hayek, two Austrio-Hungarian empire economists. They believed in aristocracy, so it’s not surprising their mathematical models promote aristocracy in practice. That seems the essence of neoliberalism, their Austrian school of economics is the essence of neoliberalism., imo.
Hard to look at Hofstadter’s fretting over Eisenhower and the rise of the car dealers over the New Dealers and not see some precursors to Trump Derangement Syndrome. A liberal wonk who arose out of the bureaucracy of the last popular democratic presidency, being beaten by a candidate riding higher on populist appeal than on having a “traditional” presidential CV, and the liberal establishment in turns freaks out about the “apocalypse for intellectuals in public life.” I knew TDS had the reaction to Reagan before it, but didn’t think it went back to the start of the post-war political landscape.
“Those damn populist middle class deplorable car dealers!”
Yeah, sounds pretty much the same 60 years later. The words are virtually interchangeable.
It was said of FDR that he had a second-rate intellect but a first-rate temperament (Justice Oliver Wendel Holmes, Jr.). I’m sure Hofstadtler had a first-rate intellect. ….
When Hofstadter complained of “New Dealers replaced by Car Dealers”, I was confused for a moment and didn’t understand what he was getting at, but then I understood: By ‘Car Dealers’ he meant the Middle Class. Oh boy…
“A rising star in the elite liberal firmament, ”
Caveat: this is not the same “liberal” that is denounced here on NC – nor the same as in Europe. This means the New Deal and later Great Society, fundamentally economic and relatively populist approaches to governing. Bernie, not Hillary.
All too relevantly, in Europe “Liberal” still means what we mean by “conservative.” Again, primarily economic. It goes back to “liberating” business from feudal shackles, government monopolies, and so on. So “Neoliberal” isn’t all that neo; it’s more of a return to the original, laissez faire (“free trade”) meaning, albeit with idpol decorations.
To be fair, the New Left criticized New Deal liberalism as essentially conservative, since it was then the ruling ideology and was contrived to “save capitalism from itself”. It was and is very imperialist, directly responsible for the Cold War and the Vietnam hot war. But it wasn’t the same ideology that goes by that name now. Among other things, economics then was predominantly Keynesian; MMT seems obvious to me, because that’s more or less what I learned in Econ 210.
Everything that is old will be new again, except people.
“Indeed Stoller describes how he personally experiences this liberal class discipline:”
If “discipline” consists of being condescended to by a pack of losers who are desperately pretending to have an excuse, it isn’t going to sting a whole lot.
> it isn’t going to sting a whole lot
Until, like Thomas Frank or Seymour Hersh*, you get shut out of the discourse entirely. That stings if you make your living by writing or reporting.
Or Assange. Or Glenn Greenwald.
A brilliant piece, kudos. But.
“It’s about how we faced these problems before, and the problems are really deep-rooted and severe, but we were able to defeat them before, and we can do it again.”
Maybe. Sometimes the pendulum swings one way, and then it swings back. The elites run wild, then reformers get some traction and the working class gets a break. And sometimes the pendulum swings so far it doesn’t come back at all…
One is reminded that in the past this nation had a lot of slack. We had abundant resources, a vibrant domestic industrial economy that was not hitting the law of diminishing returns, institutions that at least some of the time were not utterly corrupt…. In every way, our elites are throwing away the nation’s strengths with such abandon that one wonders if recovery will ever be possible. We don’t have the excess of resources that allowed massive bubbles of immigrants to be absorbed during immigration time-outs… we don’t have immigration time-outs… our technology is hitting diminishing returns. The population density is hitting the level where we should have dense cities and mass transit, but that would involve ripping up all that we’ve built and rebuilding from scratch and that won’t happen. We’ve given away the core of our industry to foreign powers and its not coming back. Journalism and institutions in general are in so many cases perhaps irredeemably corrupt, and so many people’s livelihoods depend so utterly on toeing the party line…
Indeed one can hope for the best, and we can only do the best we can. But the objective prospects for the pendulum shining back seem a lot thinner than previously…
… one can hope for the best, and we can only do the best we can. But the objective prospects for the pendulum shining back seem a lot thinner than previously…
It always does seem so in the moment, does it not?
> Sometimes the pendulum swings one way, and then it swings back.
I used to believe in the pendulum, and kept waiting for it to swing back after Reagan. Silly me.
Doesn’t pendulum = equilibrium?
Wright Patman was one of only 5 Democratic representatives from Texas (out of 21 in the delegation) who signed the odious “Southern Manifesto” in response to Brown v Board of Education. So… not much of a hero in my book.
There’s an interesting column in the recent Fortune magazine about the tension between shareholders first vs wider social economic and customer safety interests.
https://fortune.com/longform/boeing-737-max-crisis-shareholder-first-culture/
Pat Wrightman might well have failed the modern wider id pol-first political consideration, but by attacking the AP stores’ monopoly price gouging of ALL customers he attacked a pernicious economic problem ALL customers suffered. If he wasn’t entirely virtuous in modern parlance, if he wasn’t race blind, still, he improved almost everyones’ economic well being wrt the AP’s monopoly price gouging. imo.
typo: Wright Patman.
From this, it sounds like Stoller’s book will dovetail well thematically with Thomas Frank’s upcoming book on populism (‘The People, No.’)