Wednesday, July 23, 2014

The Plutocratic Insurgency

There seems to be general agreement that somewhere in the 1970s-1980s there was a fundamental change in attitude towards the role of government in society, and that this was accompanied by a new economic order.  This was clearly the timeframe in which globalization began to have a major impact on societies and economies, but that, by itself, could not have caused a change in how a society viewed governance.  What were the causes of these changes and where are we headed?

Nils Gilman addresses these issues in an article in The American Interest: The Twin Insurgency.  Gilman begins with this intriguing lede:

“The postmodern state is under siege from plutocrats and criminals who unknowingly compound each other’s insidiousness.”

Both insurgencies depend on a weakened but still functional government that can be utilized to further their economic and social interests.  Both are active political players.

“From above comes the plutocratic insurgency, in which globalized elites seek to disengage from traditional national obligations and responsibilities. From libertarian activists to tax-haven lawyers to currency speculators to mineral-extraction magnates, the new global super-rich and their hired help are waging a broad-based campaign to limit the reach and capacity of government tax-collectors and regulators, or to manipulate these functions as a tool in their own cut-throat business competition.”

“From below comes a series of interconnected criminal insurgencies in which the global disenfranchised resist, coopt, and route around states as they seek ways to empower and enrich themselves in the shadows of the global economy. Drug cartels, human traffickers, computer hackers, counterfeiters, arms dealers, and others exploit the loopholes, exceptions, and failures of governance institutions to build global commercial empires. These empires then deploy their resources to corrupt, coopt, or challenge incumbent political actors.”

Of interest here is the plutocratic insurgency.

“….plutocratic insurgents do not seek to take over the state. Nor do they wish to destroy the state, since they rely parasitically on it to provide the legacy goods of social welfare: health, education, infrastructure, and so on. Rather, their aim is simpler: to carve out de facto zones of autonomy for themselves by crippling the state’s ability to constrain their freedom of (economic) action.”

The philosophical underpinnings of plutocrats must provide justification for their wealth and power.  They have come to see themselves as deserving winners in a meritocratic economic order.  If they are deserving of their status and think of themselves as “winners,” then everyone else must be a “loser” and also be deserving of their lower status.  In order to continue their “justified” winning ways they must convince or delude society into believing that what is good for the plutocrats is good for everyone.

“The defining feature of the plutocratic insurgency is its goal: to defund or de-provision public goods in order to defang a state that its adherents see as a threat to their prerogatives. (Note that, conceptually, plutocratic insurgencies differ from kleptocracies; the latter use the institutions of state to loot the population, whereas the former wish to neutralize those institutions in order to facilitate private-sector looting. In practice, these may overlap or co-mingle.) Practically speaking, plutocratic insurgency takes the form of efforts to lower taxes, which necessitates cutting spending on public goods; reducing regulations that restrict corporate action or protect workers; and defunding or privatizing public institutions such as schools, health care, infrastructure, and social space.”

The political strategy used by plutocrats is to demand austerity as the solution to all economic problems, of which budget deficits are among the worst.  A typical ploy is to demand a balanced budget in all situations.  Combining this with a demand that taxes can never be raised will inevitably lead to smaller and less effective government.

“….the ultimate effect being to de-collectivize social risks. As a palliative for the loss of public goods and state-backed programs to improve public welfare, plutocratic insurgents typically promote philanthropy (directed toward ends defined not democratically but, naturally, by themselves alone).”

Plutocrats will be able to conclude that state-provided services are not cost effective for them and are more of a burden than a benefit.

“….the hallmark of the arrival of plutocratic insurgency is when the rich begin to revolt against paying taxes for public services they never plan to use. As these public services deteriorate in quality, the result is a self-reinforcing cycle whereby plutocratic insurgents increasingly see no reason to contribute anything to their host societies and, indeed, actively contest the idea that citizenship comes with economic responsibilities.”

How did our society arrive at a state wherein we are taken advantage of by the wealthy and yet we seem to be applauding them for their efforts?

Gilman is a bit vague in describing what generated the societal transition that occurred and made the world more welcoming to the wealthy.  He refers to the postwar period when Europe and the US expanded their governments to provide greater social and economic security to their populations as the “social modernist era.”  He concludes that, in some way, governments faltered in their promise to deliver economic security to their middle classes.

“By the 1970s, however, it was becoming clear that the social modernist states were increasingly failing to deliver on their promises. In the West, inflation eroded the technical foundations of the Bretton Woods financial order, and economic stagnation undermined the technocratic consensus in favor of Keynesian demand management and the political consensus in favor of sharing productivity gains between labor and capital.”

The fall of the Communist states was taken as confirmation that the aggressive form of capitalism practiced in the US and UK was the reason for Western victory.  Free-market capitalism was elevated to the level of economic dogma and governments retreated from attempts to place controls on it.

Gilman provides a description of what happened, but observations are not explanations.

It is interesting that he recognizes the rise of the “Washington Consensus” as global economic policy, but he does not directly tie it to his notion of a plutocratic insurgency even though it was clearly intended to propagate economic strategies favorable to plutocrats throughout the world.

“The Washington Consensus, in particular, promoted not just a dethroning of the state, but a wholesale challenge to the idea that technocratic leadership constituted the primary way to ensure collective social well-being. Pioneered as domestic policy in Margaret Thatcher’s Great Britain and Ronald Reagan’s United States, but continued thereafter in administrations controlled by their respective political opposites, the programs associated with the Washington Consensus—above all, the privatization of national industrial assets (especially of state-owned firms and utilities) and deregulation (especially of financial firms)—soon became the model London and Washington sought to export to the Global South and the post-Communist world under the rubric of ‘structural adjustment’ and ‘shock therapy’.”

Some have ascribed the decline in popularity of the social modernist state to a forgetting of the conditions that made such a state a necessity.  Others merely conclude that people have become more individualistic.  Perhaps the best rendering of the attitudes and intellectual debates is provided by Daniel T. Rodgers in his book Age of Fracture.

Rodgers provides this description of the transformation in attitudes that occurred in the US.

“….in the last quarter of the [twentieth] century, through more and more domains of social thought and argument, the terms that had dominated post-World War II intellectual life began to fracture.  One heard less about society, history, and power and more about individuals, contingency, and choice.  The importance of economic institutions gave way to notions of flexible and instantly acting markets.  History was said to accelerate into a multitude of almost instantaneously accessible possibilities.  Identities became fluid and elective.  Ideas of power thinned out and receded.  In politics and institutional fact and in social imagination, the 1930s, 1940s, and 1950s had been the era of consolidation.  In the last quarter of the century, the dominant tendency of the age was toward disaggregation.”

He attributes the fall from dominance of the modernist state to the disruptions caused by economic changes and globalization that shattered expectations in terms of economic security.  People began to see themselves more individuals with a need to take more responsibility for their own futures as old guarantees of economic well-being dissipated.  New conceptions of reality had to be developed.

“What crossed between these widely flung fronts of thought and argument was not a single, dominant idea—postmodern, new right, or neoliberal—but a contagion of metaphors.  Intellectual models slipped across the normal divisions of intellectual life.  Market ideas moved out of economics departments to become the new standard currency of the social sciences….Fluid, partial notions of identity, worked out in painful debates among African American and women’s movement intellectuals slipped into universal usage.  Protean, spill-over words like ‘choice’ were called upon to do more and more work in more and more circumstances.  In the process some words and phrases began to seem more natural than the rest—not similes or approximations but reality itself.”

Rodgers wishes to believe that these developments were a natural development given the evolution of circumstances.  He does allow that there might have been conscious efforts to control the intellectual debates.  Rodgers does not use the phrase “plutocratic insurgency,” but what he describes as occurring during this period could well have been described as such.

“In this reading of late twentieth-century U.S. history, the key to the age was the conscious efforts of conservative intellectuals and their institutional sponsors to reshape not only the terms of political debate but the mechanics of intellectual production itself.  By the late 1970s, Nixon’s former secretary of the Treasury, the Wall Street investor William E. Simon, was urging that ‘the only thing that can save the republican Party….is a counterintelligentsia,’ created by funneling funds to writers, journalists, and social scientists whose ideas had been frozen out of general circulation by the ‘dominant socialist-statist-collectivist orthodoxy’ prevailing in the universities and the media.”

“Within a decade, Simon’s project had dramatically reshaped the production and dissemination of ideas.”

Rodgers warns against attributing too much influence to this effort, but in a subsequent article in The American Prospect he includes this statement:

“….the modern Republican Party’s embrace of an anti-statist agenda that would have dismayed its founders has been a feat of ideological struggle as conscious and successfully managed as any in American history.”

This seems to attribute quite a bit of influence by this conscious and premeditated campaign to propagate conservative/plutocratic concepts.  Rodgers also brings to our attention what is the critical accomplishment of the plutocratic insurgency: the takeover of the Republican Party.

Isaac William Martin has produced, in his book Rich People’s Movements: Grassroots Campaigns to Untax the One Percent, an illuminating study that suggests a plutocratic insurgency has been active since the implementation of the federal income tax.  The goals then were the same as the goals now: limit taxation and limit the government’s role in the economy.  These plutocratic efforts met with various degrees of success until finally culminating in the capture of the Republican Party.

During this period of transition in attitudes, there was another transition taking place: the migration of Southern Democrats to the Republican Party.  This development is usually discussed as an instance of pandering to the racial attitudes of the Southern whites.  However, the accommodation of Southerners in the Party had other, perhaps more significant ramifications.  Consider what was desired by Southern politicians in order to maintain the “Southern way of life.”  They wished to have single party states dominated by wealthy political and economic elites.  Politicians were dedicated to maintaining a low-wage society with as little interference as possible from the federal government in terms of regulation, worker safety, healthcare, and other benefits.  The gradual progression from slaves to sharecroppers to Walmart associates was not accidental.  The Southerners were the perfect allies for the resident Republican plutocrats.

Martin concludes:

“Rich people’s movements have been thoroughly institutionalized and thereby tamed.  Many former activists are now well entrenched in the Republican Party and its allied think tanks, and their tactics are now correspondingly oriented toward inside lobbying.  Some movement goals remain unrealized only because they are nigh unachievable.”

It is not unreasonable to conclude that plutocratic insurgency is not a recent phenomenon, but rather one that has always been active.  It is not a recent response to newfound wealth, but a fundamental response to wealth itself in which conservation and propagation are required.  What is new is the degree of success of the insurgency.

Martin’s final conclusion:

“Rich people’s movements have a permanent place in the American political bestiary.  As long as one of our great political parties is allied with the radical rich, it is safe to predict that rich people’s movements will continue to influence public policy in ways that preserve—and perhaps even increase—the extremes of inequality in America.”

Conspiracy theories are popular because, occasionally, one actually exists.

Lets Talk Books And Politics - Blogged