Yves here. Real News Network is running an eight-part series on capitalism and democracy, with Chris Hedges and Sheldon Wolin as interlocutors. I thought the second segment in the series, which is historically focused, to be particularly strong. It seeks to trace the evolution of what they call corporate capitalism, or what we’ve sometimes called Mussolini-style corporatism.
At least in the segments I’ve seen, there’s a tendency for Hedges and Wolin to describe “capitalism” as if it were unitary, when in fact it comes in different flavors. For instance, Michael Hudson has depicted the German industrial capital model versus the English (and now American) finance driven capitalism. The Japanese variant of capitalism even now places creating and preserving employment as a much more important goal than profit.
Another issue I haven’t seen them address as crisply as they might is Dani Rodrik’s trilemma, which he first described in 2007:
Sometimes simple and bold ideas help us see more clearly a complex reality that requires nuanced approaches. I have an “impossibility theorem” for the global economy that is like that. It says that democracy, national sovereignty and global economic integration are mutually incompatible: we can combine any two of the three, but never have all three simultaneously and in full.
Here is what the theorem looks like in a picture:
To see why this makes sense, note that deep economic integration requires that we eliminate all transaction costs traders and financiers face in their cross-border dealings. Nation-states are a fundamental source of such transaction costs. They generate sovereign risk, create regulatory discontinuities at the border, prevent global regulation and supervision of financial intermediaries, and render a global lender of last resort a hopeless dream. The malfunctioning of the global financial system is intimately linked with these specific transaction costs…..
So I maintain that any reform of the international economic system must face up to this trilemma. If we want more globalization, we must either give up some democracy or some national sovereignty. Pretending that we can have all three simultaneously leaves us in an unstable no-man’s land.
From what I can tell, the choice among policy-makers has been to continue to favor greater economic integration, even though going further in that direction is almost certain to produce less rather than more prosperity. Trade is already substantially liberalized; even if you believe more open trade creates net winners, as opposed to redistributes who gains and loses. Recall that the oft-neglected Lipsey-Lancaster theorem says that moving toward an unattainable idealized state (and that is what “free trade” is) doesn’t necessarily make things better and can readily make things worse. You actually have to evaluate the various specific end states to determine whether the result in net gains, which no on appears to do, preferring to rely on faith. Even worse, high levels of international capital flows are strongly correlated with more frequent and severe financial crises, so more financial integration is likely to be a bad thing.
CHRIS HEDGES, PULITZER-PRIZE WINNING JOURNALIST: Welcome back to part two of our discussion of the state of American democracy and the rise of corporate capitalism, inverted totalitarianism, with Professor Sheldon Wolin.
Professor Wolin, we were talking about the freeing of corporate capital, because of the Cold War, from internal democratic restraints. And that freeing saw corporate capital really make war against participatory democracy, democratic institutions. Can you describe a little bit what the process was, how they began to hollow out those institutions and weaken them?
SHELDON WOLIN, PROF. EMERITUS POLITICS, PRINCETON: Well, I think you really have to start with the political parties themselves.
The Republicans, of course, have never had much of an appetite for popular participation. The Democrats have had a checkered history of it. Sometimes very sympathetic, and other times indifferent. But during the ’60s, and really even during the ’50s as well, movement toward democracy began to take shape with the realization of the kind of voter restrictions, the most elephant elementary kind of restrictions on democracy, prevalent especially, of course, in the South, and especially involving the disfranchisement of African-American voters, so that that kind of development–and, of course, the attempt on the part of Freedom Riders and others to go into the South and try to help African-Americans organize politically and to defend their rights–created a kind of political context, I think, probably which had never existed before, in which there were fundamental arguments about franchise, election, disenfranchisement, race, and a range of related issues that simply called for a kind of debate that, as I say, had scarcely been raised for decades. And it meant that a certain generation, or a couple of generations, had had a political exposure that was truly unprecedented in recent American history, not only the Freedom Riders who went down, but practically every campus in the country was affected by it, and not only because various faculty and students went to Alabama and elsewhere, but because it became a standard topic of conversation, to learn how the movement was doing, what kind of obstacles were being met, and what we could do, and there were marches and marches and marches, so that it was a political experience that was, I think, as I’ve said, unprecedented in terms of its intensity and in terms of the huge number of citizens being involved of a younger age.
HEDGES: And yet, when we look back at the nine 1930s, what I think marked the so-called New Left was that it was not coupled with labor.
WOLIN: No, it wasn’t. No, it wasn’t. The ’30s were kind of a peculiar thing. I mean, it shouldn’t be simply dismissed, because it did have lasting influence, because it showed, to some degree at least, that it was possible to get a progressive administration, that Roosevelt, whatever his failings and shortcomings, had shown that with sufficient popular support, you could manage to make some kind of dent in the kind of political privileges that existed in the country and help to benefit the economic plight of most people. And he did make serious attempts. It, of course, ran into all kinds of problems, but that’s the nature of politics. But I don’t think it can be underestimated, the extent to which the New Deal influence spread throughout the society. I think it had an extraordinary effect, long-run effect in terms of igniting ideas about popular participation and its possibilities.
HEDGES: And yet it was really a response to the breakdown of capitalism.
WOLIN: It certainly was. I mean, it had its limitations.
But I think there’s a very real question about how far the country was prepared to go at that time. It’s important to remember that the early ’30s–meaning by that from 1932, say, on–was not only a period of New Deal ferment; it was also a period of reactionary ferment, and that one mustn’t forget such things as the Liberty League, and also, and above all, Father Coughlin, who was an extraordinary figure, someone who began as a defender of the New Deal and ended up as a bitter anti-Semite and had to be disowned–or at least throttled–by his own church, he had become so extreme.
But there were a lot of things percolating in those years, and on both sides, because, I’ve said, the New Deal and the liberal resurgence also would cause the reaction that I think led to a kind of permanent–I want to say permanent conservative realization that it had to develop a kind of standing set of its own institutions and foundations and fund-raising activities all the year round, not just to wait for elections, but to become a kind of permanent force, conscious conservative force in American politics from the ground up.
HEDGES: And that started when, would you say?
WOLIN: I would say it started with the reaction to the New Deal, which would mean in about 1934.
HEDGES: And so, essentially they’re building antidemocratic institutions to burrow themselves into what we would consider the fundamental institutions of an open society–universities, the press, political parties. Would that be correct?
WOLIN: Yeah, that would be largely correct, yes. They did realize that those institutions were porous and that they lent themselves to an influence of money and the influence of the kind of people who had big money. And so they waged a counter campaign. And the result was, I think, a sort of permanent change, especially in the Republican Party, because remember, the Republican Party was not a reactionary party in the early ’30s, and even as late as the 1936 election with Alf Landon, who was very much a moderate–and he only won Maine and Vermont, but still he was significant–and that Wendell Wilkie was a power in the party until at least 1940, had a very important liberal wing. So it took a while for the evolution of the Republican Party to becoming the kind of staunch and continuous opponent of New Deal legislation with leaders who by and large were committed to rolling it back and to introducing conservative reforms in education and economic structure and social security systems and so on.
HEDGES: We’d spoken earlier about what you term inverted totalitarianism. When did that process begin? Would we signal the beginning of that process with those reactionary forces in the 1930s? Is that when it started?
WOLIN: I think in the broad view it would start back then. I think it didn’t gain full steam until you had those parallel developments that involved such sophisticated public relations powers and political party organizations that were round-the-year operations, that with a conscious ideological slant and an appeal to donors who wanted to support that kind of slant, so that politics–while all of those elements had been present, to be sure, for a long time, they achieved a certain organizational strength and longevity that I think was unique to that period.
And one has to remember that the ’30s was a very troubled political period, because not only of the New Deal and the controversies it raised, and not only because of the reactionary elements at home, but Europe was clearly heading toward some uncertain future with Hitler and Mussolini, and then the specter of Stalin, so that it was a very, very worrisome, nervous period that had a lot to be nervous about.
HEDGES: Do you have a theory as to why Europe went one way and America went another?
WOLIN: Well, I’m sure there are lots of reasons. One that I would emphasize is the failure of governments in that country to be able to capture and mobilize and sustain popular support while introducing structural, economic, and social changes that would meet the kinds of growing needs of a large urban and industrialized population. I think that was the failure.
HEDGES: You talk in–I think it’s in Politics and Vision–about how fascism arose out of Weimar, which was essentially a weak democracy. And yet you argue, inverted totalitarianism, certainly a species of totalitarianism, can often be the product of a strong democracy.
WOLIN: It can, in the sense that that strong democracy can do what its name implies. In the pursuit of popular ends, it develops inevitably powerful institutions to promote those ends. And very often they lend themselves to being taken over and utilized, that–for example, that popular means of communication and news information and so on can become very easily propaganda means for corporate capitalism, which understands that if you gain control of newspapers, radio, television, that you’re in a position to really shape the political atmosphere.
HEDGES: You write in Democracy Incorporated that you don’t believe we have any authentic democratic institutions left.
WOLIN: I don’t. That may be a bit of an overstatement, but I think–in terms of effective democratic institutions, I don’t think we do. I think there’s potential. I think there’s potential in movements towards self-government, movements towards economic independence, and movements towards educational reform, and so on, that have the seeds for change. But I think that it’s very difficult now, given the way the media is controlled and the way political parties are organized and controlled, it’s very difficult to get a foothold in politics in such a way that you can translate it into electoral reforms, electoral victories, and legislation, and so on. It’s a very, very complex, difficult, demanding process. And as I’ve said before, democracy’s great trouble is it’s episodic.
WOLIN: And that just makes it easier for those who can hire other people to keep a sustained pressure on government to go the other way.
HEDGES: You talk about how democratic institutions which have essentially surrendered themselves to corporate power have pushed politics, if we define politics as that which is concerned with the common good and with accepting the risks, the benefits, and the sacrifices evenly across the society, that essentially that has pushed political life, to some extent, underground, outside of the traditional political institutions.
WOLIN: I certainly think that there’s something to be said for that, because I think if you look strictly at our political parties and the national political processes, you get a picture of a society which seems to be moribund in terms of popular democracy. But if you look at what happens locally and even in statewide situations, there’s still a lot of vitality out there, and people still feel that they have a right to complain, to agitate, to promote causes that would benefit them. And this still remains, I think, a strong element in it.
But I do think we’re facing a period in which economic uncertainty is such that, particularly for younger people, in the sense that we don’t really know anymore, with any degree of high certainty, how to prepare young people for a constantly changing economy, so that young people, in a certain sense, who are the sort of stuff of later political movements and political support systems, that young people are in a very real way puzzled and, I think, confused, and sort of don’t know where to go, and are being propelled in certain directions that don’t really add up to their long-run benefit. And it starts with, I think, the secondary education, and it continues in college. The plight of liberal arts education is just extraordinary today. It’s so much on the defensive and so much on the ropes that it’s hard to see what, if any, place it’ll have in the future.
HEDGES: It’s hard to see you in most politics departments at American universities today. It was probably a lonely position even when you–.
WOLIN: Oh, yeah, because most American–most political science departments have become in effect social science departments and much more addicted to seeking out quantitative projects that lend themselves to apparent scientific certainty and are less attuned–in fact, I think, even, I would say, apprehensive–about appearing to be supportive of popular causes. It’s just not in the grain anymore. And the more that academic positions become precarious, as they have become, with tenure becoming more and more a rarity–.
HEDGES: Thirty-five percent now of positions are actually tenured.
WOLIN: Yeah, I would believe it. I would believe it. I mean, and that becomes a problem in terms of finding people willing to take a certain risk, with the understanding that while they’re taking a risk, it won’t be so fatal to their life chances. But I’m afraid it is now. And it doesn’t bode well, because it seems to me, in a left-handed sort of way, it encourages the kind of professionalization of politics that results in the kind of political parties and political system that we’ve been warned about from the year one.
HEDGES: And a political passivity, which you say–you talk about classical totalitarian regimes mobilize the masses, whereas in inverted totalitarianism, the goal is to render the masses politically passive. And you use Hobbes to describe that. Can you speak a little bit about that?
WOLIN: Well, Hobbes is interesting because he writes in the so-called social contract tradition, and that had been a tradition which grew up in the late 16th and 17th century. The social contract position had furthered the notion that a political society and its governance should be the result of an agreement, of an agreement by the people as to what sort of government they wanted and what sort of role they wanted to play for themselves in such a government. And the social contract was an agreement they made with each other that they would create such a system and that they would support it, but they would reserve the right to oppose it, even rebel against it, if it proceeded to work contrary to the designs of the original contract, so that that became the sort of medium by which democratic ideas were carried through the 17th century and into much of the 18th century, including the American colonies and the arguments over the American Constitution as well–and especially, I should add, in the arguments about state constitutions and government.
HEDGES: And that fostering of political passivity, you have said in your work, is caused by what you were speaking about earlier, the economic insecurity, the precariousness of the position, which I think you go back to Hobbes as citing as one of the kind of fundamental controlling elements to shut down any real political activity.
WOLIN: Yes, I believe that very strongly. I think if you go back way to the Athenian democracy, one of the things you notice about it is that it paid citizens to participate. In other words, they would be relieved from a certain amount of economic insecurity in order to engage actively in politics. Well, when we get to our times and modern times, that kind of guarantee doesn’t exist in any form whatsoever. We barely can manage to have an election day that isn’t where we suspend work and other obligations to give citizens an opportunity to vote. They have to cram a vote into a busy, normal day, so that the relationship between economic structures and institutions and political institutions of democracy are just really in tension now, in which the requirements of the one are being undercut by the operations of the other. And I don’t see any easy solution to it, because the forces that control the economy control to a large extent public opinion, modes of publication, and so on, and make it very difficult to mount counter-views.
HEDGES: Well, in fact, to engage in real participatory democracy or political activity is to put yourself in a more precarious position vis-à-vis your work, your status within the society.
WOLIN: There’s no question about it. And that’s true of, I think, virtually every activity. It’s now certainly frowned upon in academic work, and certainly in public education it’s frowned on. And there’s no effort made to really make it a bit easier for people to participate. And the intensity that economic survival requires today leaves most people exhausted. There’s–and understandably. They don’t have much, if any, time for politics. So we’re in a really difficult situation, where the requirements of democracy are such that they’re being undermined by the realities of a kind of economy and society that we’ve developed.
HEDGES: Which you point out Hobbes foresaw.
WOLIN: He did. He did indeed. And his solution was you surrender your political rights. Yeah.
HEDGES: Thank you.