May 18, 2013
Doug Henwood on Robert Kuttner’s ‘The Squandering of America’
Posted on Jan 10, 2008
By Doug Henwood
Twenty years ago, in November 1987—a date that was one year ahead of a presidential election, rather like now—I reviewed Robert Kuttner’s “The Life of the Party” in The Nation. It was the first piece I wrote for that magazine, and one of the first pieces I’d published anywhere. My summary of Kuttner’s argument was: “Rather than fall all over one another in an effort to appear more ‘responsible,’ Gore, Dukakis, Gephardt, et al. should take advantage of the collapse of Reaganism to promote a resolutely progressive agenda that would lure nonvoters out of saloons and living rooms and chase the fading ghost of laissez-faire back to its nineteenth century grave.”
All you’d have to do is change some proper nouns in that sentence and it wouldn’t be a bad summary of Kuttner’s latest, “The Squandering of America: How the Failure of Our Politics Undermines Our Prosperity.” He’s more apocalyptic now than I remember him being in 1987, worried about a 1929-style crash and threats to democracy. But you recognize the template.
Kuttner offers an exhaustive description of the deep sickness of the U.S. economy. Incomes at the middle and lower ranks have stagnated or worse, while the extremely rich have done extremely well. Manufacturing has been ravaged—at the cost not merely of jobs, I’d argue, but to the detriment of our basic competence. To compensate for stagnant incomes, the best minds on Wall Street have figured out how Americans can borrow almost endlessly—most recently to finance a housing boom that has since taken a very bad turn. And since we have little in the way of domestic savings—despite the booming incomes of the rich, who are supposed to save a lot, the personal savings rate has gone to zero—we’ve had to fund all this borrowing abroad, leaving us massively in debt, with a debased currency, and vulnerable to a financial meltdown. Meltdown risk is deepened by the scary way that world financial markets have come, in Keynes’ famous phrase, to treat real economic activity as “a byproduct of the activities of a casino.”
Besides a sick economy, Kuttner sees a sick democracy. The GOP has corrupted elections in unprecedented ways, and the Bush administration has practically burned the Constitution. Money has come to dominate politics, “blunt[ing] the populism of the Democratic Party as the voice of the common American.” And the demands on the two-paycheck family mean no time for politics or any kind of civic engagement, not to mention group bowling. We prefer our iPods to the CNN/YouTube debates.
Before taking on the big stuff, I have to pick a fight with that claim about the lack of time. According to the Bureau of Labor Statistics time use surveys, the employed people with children under 6—precisely those you’d imagine most to be victims of the time crunch—have an average of three to four hours of leisure a day. Those without children have four to five hours. In both cases, half of that free time is spent watching TV. How do those two-three hours stack up against other pursuits? Parents spend just three minutes a day talking to their kids. And in this pious nation, they spend seven minutes on religious and spiritual activities, a minute less than they spend on volunteering and civic activities. Civic disengagement is more a choice than an imposition, though the structuring of that choice would require an investigation of consciousness and power of a sort that probably wouldn’t interest Kuttner.
What does interest Kuttner is what he calls the one grand theme of his writing over the years: “What does it take, politically, to render capitalism a reasonably just and secure economic system for most people?” He makes it clear he has “always approached this problem as a liberal, not a radical. I have great respect for the dynamism of markets.” He favors what he calls a “managed capitalism,” as if capitalism didn’t already have some managers.
The “dynamism” of markets is inseparable from their turbulence, as companies, industries and geographic regions rise and fall. That means lives and fortunes are regularly turned upside down. A right-winger can justify all that by chalking it all up to the inevitable and wondrous “creative destruction” of capitalism (Schumpeter really deserves a better memorial than this), but obviously Kuttner couldn’t work with that. Instead he oozes nostalgia for the Golden Age of liberal political economy, which ran from the 1930s through the mid-1970s. But these weren’t the most dynamic of decades. The first 15 years of that era were dominated first by depression and then by war; the New Deal, for all its virtues (and I don’t mean to disparage them), never did cure the Great Depression as the subsequent world war did. And the great postwar boom was one in which market dynamism took a back seat to what Baran and Sweezy called Monopoly Capital—or Galbraith called the new industrial state. Big Auto and Big Steel fixed prices and faced no international competition. With the dynamism of markets more than a little stifled, there was some stability for average workers and steady gains in pay.
Stability of that sort can never be sustained. Analyses like Kuttner’s (and even Naomi Klein’s, in her latest) tend to overlook the seriousness of the economic problems that came to a head in the 1970s that were captured in the word stagflation. Growth was slow, profits were down, inflation was rising—and it was clear that the “dynamism” that Kuttner admires had gone out of the system. Softened by welfare states and low unemployment rates, the proles were often surly, and sometimes in open revolt. The elite response—tight money, union-busting, deregulation—was designed precisely to increase the level of insecurity and fear among workers and to restore competition to financial and product markets. It succeeded massively on its own terms. But the restoration of market dynamism required deepening the very pathologies that Kuttner laments.
And the political problem is that liberalism cannot succeed except as a palatable alternative to something more radical. The ruling order never makes concessions unless it’s forced to, and nothing forces its hand like the threat of expropriation. Ever since the bankers won the battle for New York after its mid-1970s default, there hasn’t even been the ghost of such a threat in the U.S.
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