naked capitalism

By Philip Pilkington, a journalist and writer living in Dublin, Ireland

Matt Stoller recently ran a thoughtful piece on this site about Ron Paul. Stoller’s thesis is that Ron Paul confronts Big Government liberals (my term, not Stoller’s) with the dark underbelly of their policy prescriptions. Stoller points out that Paul’s ideology touches at least three very sensitive areas for the modern liberal: their ties between Big War and government spending; their ties to the Federal system and its related monetary apparatus; and their ties to Big Finance.

To deal exhaustively with any of these complex topics is a daunting task and one which I will not pursue here. But Stoller dropped a name when he invoked the contradictions of liberalism; one well worth bringing up: Christopher Lasch. Although Stoller didn’t really go into the links between Lasch, liberalism and Paul, he was certainly on the right track.

Some background first.

The Culture of Narcissism and the Nanny State

Lasch was a complex figure. A cultural historian by trade, he wrote many fascinating books on topics as diverse as the idea of progress and the origins of cultural politics. His most outstanding work, however, was his critiques of the modern welfare state (most especially in The Culture of Narcissism and The Minimal Self). Yawn, right? Well don’t switch off quite yet: Lasch was critiquing the modern welfare state from a left perspective.

Lasch claimed that as government intervention in the economy grew the state soon found itself mediating more and more social relationships. For example, as the welfare state flourished in the post-war era social workers soon became a significant social force. Lasch claimed that they would swoop in and destroy family ties, replacing these with artificial and technocratic relationships essentially ruled over by the state.

And it was not just in poor families that Lasch saw the creeping hand of the state. Middle class families too were coming to rely more and more on state institutions. From family planners to psychotherapists in public schools (guidance councillors) Lasch thought that many of our social relationships were gradually becoming mediated through a technocratic apparatus at the centre of which stood the modern state.

Lasch then went on to argue that such a shift was hollowing out everyday social relationships. As we came to increasingly rely on these supports our personal and family relationships became ever more distanced, ever more managed. Into this vacuum, Lasch claimed, swept celebrity and consumer culture. The state hollowed out our relationships – the market filled the void with tatty consumer goods and celebrity gossip. It is this mix that Lasch referred to as the ‘Culture of Narcissism’.

Lasch’s critiques struck a chord with many. The Culture of Narcissism became a bestseller and Lasch went on to advise speechwriters for President Jimmy Carter. To what extent Lasch’s critiques are true and to what extent they are projections of personal anxieties is difficult to say – surely a Freudian of Lasch’s eminence would smile at the term ‘Nanny state’. However, they definitely touched a nerve – and when read today they remain as fresh as ever.

The yearning to wean ourselves off the teat of the Nanny state is as strong today as it was when Lasch first wrote his books back in the 70s and 80s. It is to this sensibility that Ron Paul, the libertarians and the Tea Party appeal to.

Big Government Must Be Stopped

At heart, Lasch’s critiques had firm roots in the conservative tradition; this even though he considered himself a left-wing populist – indeed, he never tired of pointing out how the market buttressed the state by providing shallow imaginary relationships to people. And to a large extent it was conservatives like Ronald Reagan and Maggie Thatcher who appealed to peoples’ desire to roll back the state while later conservatives would soon take a community-oriented line (David Cameron’s ‘Big Society’ nonsense being a case in point).

The grandiose visions of these doyens of mainstream conservatism, however, failed spectacularly. Both came to see – whether directly or indirectly – that the state is embedded to such an extent in our modern social economies that to really try to remove it would mean the destruction of these social economies themselves. What we got instead of supposed liberation and a return to organic community relationships was a watered down, neoliberal state – what Jamie Galbraith came to call The Predator State.

This is a state that keeps investment through government spending at levels that allow the Western economies to tick over while at the same time allowing for unemployment, stagnation and the formation of private debt bubbles. In dealing with poverty and unemployment it prefers to place more layers bureaucracy around benefits while increasing investment in police forces and prisons. Investment is largely channeled into (a) dysfunctional bureaucracies and (b) the military-industrial-prison-security complex.

Mainstream conservatives have largely contented themselves with this Predator State – all the while congratulating themselves on their supposed championing of family values and free market policies. But some on the sidelines have expressed their serious discontent. Among these are the libertarian and Tea Party movements in the US. These groups insist that Big Government must truly be stopped and the simplest way of doing this is by cutting off its funding.

This is the main reason why the libertarians insist on a gold standard and the destruction of the Federal Reserve system. By doing this the politicians would lash financial constraints upon the US government from which it would have very little wriggle room. It would also, of course, plunge the US economy into a depression from which it would take decades to fully recover. And as the US economy plunged into the abyss it would probably take the rest of the world with it.

Nor is it likely that Big Government would go away. Under such circumstances of heavy 20-30% unemployment rates the crime rate – which is already remarkably high in the US – would go through the roof. The criminal and legal apparatus would be forced to expand, thus contracting other government sectors even more rapidly and further reinforcing the unemployment rate. If things got really bad one could imagine the military being given powers that would make libertarians squirm in their seats.

The libertarians answer to this? As is so often the case with the libertarians it is a Leap of Faith. They believe that if government gets off peoples’ backs the economy will self-generate. Do they have any evidence of this? Certainly not. All evidence points firmly in the opposite direction (think: Yeltsin’s Russia and the rise of gangster capitalism). But this is not an evidence-based belief. It is an impervious and inflexible religious-like belief. When challenged with empirical evidence excuses are devised and scapegoats are found.

In this the libertarians are dangerous – I would almost say: very dangerous. And yet they appeal to people at a very deep level. They appeal to a very real sense of longing for more substantial social relationships and less government meddling. They appeal to people who watch modern developments in Big Government with distrust and suspicion. Indeed, they appeal to many liberals.

It is to this that Big Government liberals have no answer. But there is an answer and it has been discussed on this site before. I refer to the Job Guarantee scheme as put forward by the Modern Monetary Theorists.

Job Guarantee as Rejuvenator of Community

Much of the debate surrounding the Jobs Guarantee program – that is, the proposal for governments to hire everyone willing and able to work in a minimum wage job – has focused on its macroeconomic effects. The potential for such a program to generate inflation is, of course, the key focus. In actual fact the Jobs Guarantee program is devised in such a way that it puts a cap on inflation, but there has been much work done on this already and I see no need to repeat it here.

Instead we should focus on what the Jobs Guarantee program might be like as an institution. And it is here that we find it to be an antidote to the anomie and alienation that Lasch and the libertarians bemoan.

The Jobs Guarantee program is first and foremost a decentralised community-based institution. This is summed up well in a policy brief that I will soon be presenting to the Irish government.

The national government could set budget constraints for the local governments based on either a per capita basis or in relation to local unemployment rates. The local governments could then channel funds to already existing organisations – such as NGOs, grassroots community groups or charities – who could in turn use the funds to start up much needed projects and employ workers. If these organisations sought to expand their operations and required additional management staff they could then apply to the local government for an increase in funding. Local governments could also encourage the unemployed to form new organisations.

As the reader can see the idea here is to take a ‘hands off’ approach. The government simply provides the funding and controls the program through the levels of funding allowed. The organisations present the local governments with their plans and the local governments negotiate an amount of monthly or annual funding with them based on these plans, together with a spatially oriented understanding of the rates of unemployment in a given geographical location. When these organisations receive funding they then go out and hire people. Minimal bureaucracy, minimal oversight, minimal mess.

This is absolutely an initiative aimed at strengthening community ties and weakening the hand of Big Government. Consider the fact that everyone who gets a job will be working for community improvement rather than filling out detailed and intrusive forms for some faceless bureaucrat in a social welfare office.

What’s more, such a program has been tried before and it was remarkably successful. When a Jobs Guarantee program was set up in Argentina after their financial crisis the effects on community and popular organisation were palpable. Here’s how Pavlina Tcherneva and Randall Wray, two economists who studied the Argentinian Jefes program, summed it up:

[O]ne of the most interesting results of the Jefes program is that it demonstrates that a decentralized program can be used to increase political participation and foster grass-roots democracy among groups that had traditionally been marginalized.

The point that needs to be pressed home to those who favour a reduction in the powers of Big Government and a return to some more tangible community-based organisation is that the key problem is that of funding. Simply put: people cannot organise healthy communities without access to sufficient resources and in modern advanced industrial societies resources are wholly governed by monetary relations. Communities can thus only organise and develop if monetary resources are made available for them at a local level by national governments.

Yes, Big Government is the only entity in a modern society that can issue sufficient money to ensure that resources are fully employed – and in this, if the faucet is turned off by a Ron Paul the results will be highly unpleasant – but it does not follow that Big Government then have to set up large, intrusive bureaucracies to distribute this money. Instead we can work to establish ways of distributing this money at a local level and aim to foster organic community ties where they are fragile or lacking. It is only through initiatives like these that all those who yearn for greater substance in their social lives can be brought away from the empty promises and dangerous rhetoric of people like Ron Paul.