Sunday, October 25, 2009

(Berlin) Wall to Wall (Street)

by Tom Walker

Twenty years ago next month, the Berlin Wall fell. One year ago last month, Lehman Brothers collapsed -- the "second shoe" dropped. Just as the dismantling of the wall was the symbolic climax of a long process of disintegration that had begun in the 1970s and was not completed until several years after November 1989, the financial crisis that erupted in 2008 had deep historical roots and it will not be resolved with a recovery to business as usual. At this point it would be prudent to banish the word "recovery" from the analytical vocabulary. This is not a recession. Nor is it a depression. It is the systemic collapse of a system that has rotted from the inside out.

America's Stalin and the new New Deal

In popular mythology, the Soviet system and Western capitalism were polar opposites: communism on the one-hand and free enterprise on the other. In reality, they were very distinctive variations of what Burnham called "managerial society" or, in Galbraith's terminology, "the new industrial state". The Western version may have been more durable than the Soviet one but, on the other hand, it may have lasted longer just because it had a head start in the accumulation of material wealth, which enabled it to "coast" longer on its momentum.

The now largely forgotten corporate accounting scandals of 2001-2002 -- Enron, Arthur Anderson, WorldCom, Adelphia, Dynergy, Duke Energy, Tyco International, etc., etc. -- clearly demonstrated that the accounting system in place in the U.S. was no less prone to manipulation and gaming than had been the account for Soviet state-owned enterprises. The financial crisis of 2008-2009 has shown that the corruption is endemic and not accidental.

None of this, of course, would be of any interest to top rank economists, who operate on phantasmagorical models that bear no resemblance to the actual world where money changes hands. For thirty years, an ideological fig leaf of markets and competition, free trade and tax cuts has covered up for a system of brokered privilege that has little to do with any of those things. Many people believed these fantasies, though, simply because they wanted to believe. Certainly not because the veneer was all that convincing. The alternative was too bleak to acknowledge. But the jig is up. The genie is out of the bottle. The shit has hit the fan.

Since it is clear to too many people that a return to business as usual is not going to happen, what's the alternative? Some folks are putting their faith in the idea of a new New Deal. This involves, first, projecting an old New Deal significantly different from the real deal and, second, dreaming that we can somehow use the fictional successes of that fairy tail New Deal as a guide to future policies.

Similarly, when the Soviet Union was collapsing, there was a fair-sized constituency who looked back on the Stalin period as a time of stability and patriotic victory. Imagine how well a return to Stalinist five-year plans would have worked for Russia in the 1990s. That's the prognosis for a new New Deal in the 2010s. With FDR as the American Stalin. A kinder, gentler Stalin no doubt. But a Stalin in the pure, unadulterated sense of anachronism. In the sense, that is, that a time traveling 1930s American would feel more alien in 2010 America than he or she would in 1930s Russia.

Ladies and Gentlemen, we've already just lived through a pretend nostalgic return to an earlier, "more authentic" era. Hayek, Thatcher and Reagan choreographed a promenade through a Disneyfied 19th century gilded age where laissez faire, rugged individualism, robber barons and that old time religion prevailed. A phonier crock of horse piss you couldn't imagine -- unless it's the wished-for new New Deal.

The oligarchy would prefer to go back to the heyday of neo-liberalism, but they'll settle for a new New Deal because, for one thing, it won't be a real New Deal but only New Deal lite. More importantly, the new New Deal will start from a baseline of the compromises and concessions ironed out during the old one. There will be no Black-Connery Bill or GM Flint factory occupations to threaten a more radical outcome on the horizon. How's that for a negotiating strategy, then? Make your opening offer the absolute worst settlement that you can imagine living with. Then hope for the other side to offer you more than you've asked for.


Take the S out of swordplay said...

" In reality, they were very distinctive variations of what Burnham called "managerial society" or, in Galbraith's terminology, "the new industrial state".

Take the histrionics out of your texts, Sandwichman. There are certain features of theatrical rhetoric that are fully compatible with any imaginable political stance. They serve to embellish every political position in the spectrum - from, let's say, Christopher Hitchens the Trotskyite to Christopher Hitchens the Neocon. But the employment of these verbal devices tends to have only one virtue: giving the author a hint as to what to talk about next. Because sure as hell that inspiration won't come from looking at actual political conflicts and economic realities when what you are really concerned about are verbal pyrotechnics and the addition of some special effects to your oratory.

Just to help you out a little: there was this phenomenon called McCarthyism in the 1950s. While it didn't destroy millions of lives - as Stalin did -, it certainly involved making symbolical victims of a significant number of intellectuals and creating an atmosphere of fear. But, hej, a postmodernist can always do a bit of time travel and project whatever similarity America ever had or is currently likely to have to the Soviet Union onto a whole different decade. And a different political movement, different actors etc.

Oh, and now you are complaining that Jamie is just too much like his father?

Take the S out of swordplay said...

I intended to write "...and project whatever similarity America ever had to the Soviet Union onto a whole different decade" (the 30s rather than the 50s).

Comprehensive health insurance is an unimplemented project left over from the New Deal-era. Kind of like a return to GOSPLAN, isn't it?
There is just no point whatsoever in linking bubbles, fraud, bad monetary policy and collapsing debt to totalitarianism. You might want to check British history for a decent helping of all of those. That Stalin/American fascism-thing functions as the kind of background noise that serves to alienate the average person from what pretends to be political discourse.

Anonymous said...

Take the S out of swordplay: "Take the histrionics out of your texts, Sandwichman."

Well, I guess, in absence of a critical response to the content of the essay one could always simply argue about tone.

The question is posed: Is it enough in the 21st Century to return to an intellectual application of ideas the author of which (Keynes) understood to be merely of short-term utility - and likely to have been obsolete by 1960?

(I ask this because it is clear such an application had failed entirely by the 1970s)

And I would offer some other questions:

Is it sensible that the advocates of this particular intellectual application of Keynes ideas take no notice of his long term approach to the problem of full employment, namely, the reduction of hours of work?

IS it acceptable that, in order to avoid even admitting the possibility of reducing hours of work, economists instead openly lie about its usefulness and efficacy?

Respected economists, mind you, who lie about it without any apparent concern as to the effect these lies have on their reputation. What do they fear?

Is it surprising that encountering wide-spread resistance to even a discussion of this long term solution, that some might seek the roots of such resistance, and offer that is might be found in the variations of statist ideologies which ascended to prominence during the Great Depression?

Anonymous said...

Swordplay, I just have to ask: Do you really see nothing more than coincidence in the fact that all of these various ideologies which advocate heavy state management of the economy emerge within a decade of each other in the inter-war period?

Is it possible you are that myopic?

Sandwichman said...


I see that I've touched a nerve. I won't say that I disagree with your comments because, frankly, they are delightfully histrionic without actually taking a stand -- except against histrionics! I'm afraid though, that if we met in person I would feel compelled to slap you across the face with my gloves in compliance with some archaic code of defending my honor.

I commend you for your allusions. The Burnham/Hitchens parallel was priceless. And you know evidently know about the Congress for Cultural Freedom, the CIA and the End of Ideology? Well done. If it wasn't for the dismissive remarks about Hitchen, I might even have guessed you were him.

But riddle me this, wordplay, if you're so clever. What has all this to do with Kondratieff long waves and the real and formal subsumption of labor under capital?

Or do you just take the wordplay out of your "S"?

Sandwichman said...


Exactly. And it would be useful to point out the role of the National Association of Manufacturers and the Chamber of Commerce in the 1930s in first effectively pressuring FDR away from support of the Black bill and then in the 1940s overthrowing the Wagner Act with Taft-Hartley. The New Deal was thus no more than what the oligarchy could hold their nose and live with until the next opportunity to repeal it.

Sandwichman said...

Cold war liberalism vindicated!

Wordplay brought up the question of McCarthyism. It would be disingenuous to talk about the relationship between McCarthyism and the New Deal without mentioning Cold War Liberalism. I've always harbored (or should that be harvard?) a grudge against the CWLs, suspecting them of yielding too much ground to the forces of reaction. Fortunately, though, I came across an article by Nicholas Wisseman that sets my mind at ease. Below is the passage I found persuasive:

"But while disdain for both Communists and McCarthyites was far from uncommon, having the courage to take action against both was. The prevailing consensus has always been that Cold War liberals lacked such resolve. Stoddard's case instead indicates that such a harsh judgment may be a bit unfounded: though he did establish a Security Office and dismiss employees on the basis of its findings, he also repeatedly defended those faculty members and students he thought unduly red-baited, a pattern of resistance that ultimately contributed to his own firing in the summer of 1953."

You see? The harsh judgment was "a bit" unfounded! It was not completely unfounded. Not even substantially unfounded. Just a bit. Hmmm. While going after "genuine" subversives with a Security Office that kept students and staff under constant surveillance, the University of Illinois president stoutly defended those he thought were falsely accused of subversion. Talk about taking action against McCarthyism. Such courage! Such integrity! Such self-sacrifial even-handedness! I guess Stoddard would be the one to know who was naughty and who has nice, too, just by combing through their Security Office files. You see, kiddies, constant surveillance can even protect you, if you have nothing to hide. Yes, and J. Edgar Hoover was your friend. He only spied on Martin Luther King to protect him potential blackmailers.

What was Stoddard's reward for such stalwartly pusillanimous hair splitting? He was tossed out on his ass by the less-nuanced foes of subversion. The ingrates! The barbarians!

Disclaimer: not having read all of Wisseman's article, I can't entirely discount the possibility that the above passage was meant as satire.

TheTrucker said...

I don't see how the economics profession can be expected to rescue the people from despotism when the despots control the economics profession. The tenured economists and those who can ever hope for tenure will have been thoroughly dredged in neoclassical clap trap before they get their "talking license". Very few can hope to survive such brain damage.

So I turn to the other possible solution of politics. The best labor union is all of the productive people themselves as they go around the employers and take the battle to the top. And as trite and nonacademic as it may be I see the current health care issue as being a small spark of hope. Rasmussen and Faux Noise along with the suck along media have done all they could do to convince Americans that they do not want the choice of a Public Option. But even with all the money and clout of the insurance industry and wall to wall underhanded polling, the lies still didn't work. The Senate Bill that goes to the floor will have the Public Option.

Sandwich KNOWS my position concerning employer provided health insurance and its adverse effect on job sharing. It is not possible to overcome the Chamber of Commerce lobby and the Health Insurance lobby at the same time in the bought and paid for US Senate. But if the Public Option becomes law it will inevitably break down that door and usher in significantly improved labor mobility and a much better shot at reduced work weeks, job sharing, and flexible hours. The proof is in the pudding.

Sandwichman said...

"despots control the economics profession" - Trucker

Is that any way to have a conversation with economists, Trucker? By saying mean things like that you'll hurt their feelings! Rightly or wrongly, they think you're just an ignorant peasant who should mind his own business and let them get on with the hard task of ruling the economy, which only they are suited to do by temperament, noble birth and initiation into the secrets of the most arcane calculus.

I suggest you would have more chance of winning their confidence, Trucker, if you would only learn to cringe, supplicate, genuflect and grovel. Agree heartily with everything they say. Laugh at their stale offensive jokes about "chicks", "tree huggers" or "joe six pack". But then point out some teensie-weensie detail where their argument might be tweaked for the better. Some tenth of a percent shift in the NAIRU, say or maybe a closing bracket on an equation in their article where they had omitted one.

Don't ever so much as hint that they're wrong, they'll tune you out as an incompetent know-nothing so fast it will make your head spin. After all, how could they be wrong? They've been rigorously trained in the occult art of always being right! They don't just hand out PhDs for brown-nosing and abject conformity, you know.

Once you have gained their confidence and are sipping Manhattans poolside with the economists, you'll be in a position to lean over and confide to them something like, "don't you think it's time to ease up a bit on the peasants?" Much more effective than calling them despots!

Peter H said...

I really don't like this strident new tone of yours, Sandwichman/Walker. What's with all the hostility?

Sandwichman said...

Well, Peter H., I really don't like your phony concern troll innocence. Sandwichman was a persona. A kinder, gentler, more deferential but persistent persona who nevertheless took constant abuse for simply persisting. He was sort of a low-rent jesus fucking christ.

YOU killed him, Peter H.

No, not by anything you said but by what you didn't say. You stood by while tenured know-it-alls showered Sandwichman with abuse and defamation. The libel that he thought shorter working time is "a panacea". You want to know how many times he heard that libel? You want to know how many times he said it wasn't a panacea?

The lie that there is "no taboo" on talking about reduced working time as one policy option for dealing with unemployment. And in the same breath, the ceaseless chanting of the lump-of-labor mantra even after Tom Walker had published two articles tracing the history of the fraud.

And you sat by on your apathetic hands and didn't fucking pay attention. Well, he's dead and if you don't like "this strident new tone of yours" na-na-na-na-na you better start clapping. Clap louder, bucko, and you might just revive him. Otherwise, put on your asbestos earmuffs, you're stuck with a "Walker" who isn't going to suffer fools like you.

Anonymous said...

"Chicago School economics has never been more vulnerable than it is today – and deservedly so. But the attack on it will never succeed unless policy Keynesians like Krugman are willing to work out the implications of irreducible uncertainty for economic theory."


There is no chance of taking the Mandarins on if the guys who are going to do it will not clean up their own act.

Anonymous said...

If you are going to offer an alternative, it has to be a real alternative, not mainstream lite. said...


Are you a sock puppet of Sandwichman? If not, how about dumping your anonymity? Are you afraid of losing your job or that one of the mean co-bloggers here might say something defamatory about you? said...


You should know that offlist Tom Walker has vigorously denounced my remark. So, fine, got it you are not a sock puppet. However, comments from "Anonymous" look like the nauseating dreck that one saw recently on the student rumor market blog. Plus, although you have a distinctive voice (if awfully close to S-man's), it is hard to keep all the Anonymouses apart.

So, I dub thee "Milkshakeman." Use it. It will be better than this seriously annoying "Anonymous." That is for trolls and other scum. said...

Before this thread scrolls off, I note on a substantive point that the Berlin Wall did not fall in "this month" 20 years ago. It fell on November 8, the anniversary of Kristallnacht in Germany, which made quite a few observers somewhat nervous at the time.

Sandwichman said...

"I note on a substantive point"

Which, of course, is why I wrote "next month" in the first place instead of "this month". Barkley Rosser's peculiar misreadings and critiques based on what hasn't been said are so ubiquitous as to suggest some form of dyslexia or aphasia or whatever. You'd think that every once and a while he would pause to check whether someone has actually committed the faux pas he imagines before issuing his pompous "corrections."

I am speechless.

Sandwichman said...

"You should know" that Barkley Rosser's "reports" of discussions occurring off list or anywhere are subject to considerable interpretation, exegesis, selective citation, cherry-picking, slanting, de-contextualization, editorializing and just general McGoovering and Humpty-Dumpstering.

It's actually kind of endearing. said...


Got me on this one. Yep, I misread it. Guess I should get back to my McGoovering and Humpty-Dumpstering. said...

Oh, and Walker, do you deny having urged that this blog become "the Glenn Beck of the left"? I think that is the one thing that I have "reported" on regarding offlist discussions.

I also admit to the sin of egisgesism, horror of horrors.

Sandwichman said...

egisgesism? What the fuck are you talking about Rosser? Look in the God damn mirror.