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.”

book cover

The Squandering of America

By Robert Kuttner

Knopf, 352 pages

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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.But stoking such a threat is the last thing on Kuttner’s mind. (Granted it’s not the friendliest of times to be writing from the far left, but it’s not as if the mainstream is taking notes on Kuttner’s agenda either.) How little has changed over the last 20 years: In “The Life of the Party,” Kuttner took pains to differentiate himself from the disreputable extremes. He contrasted the “hermetic” Nation magazine, written by and for the left, with his then-employer, the “feisty” New Republic, which sought to “influence the mainstream debate from the left.” (One thing that has changed in the last two decades: TNR is of shrinking physical heft and political relevance, and afflicted by frequent journalistic scandals; its circulation is now a fraction of The Nation’s, which has grown enormously.) But would there have been a New Deal without the CIO, the CPUSA or the USSR? Would social democracy ever have been established in Western Europe except as a milder version of the socialism that unions and political parties were agitating for?

None of that is present in our politics today. But Kuttner nonetheless imagines that a full-throated populist appeal could win the Dems millions of votes. The only things stopping them are their timidity and their donors. Unlike many liberals who complain about the Democrats’ alleged lack of spine, Kuttner is fully aware of the influence of big money on their vertebral integrity. But he repeatedly forgets that influence to land in some kind of unspecified hope that the party will just come to its senses. And like many liberal analysts, he underestimates the appeal of laissez-faire economic policies to many white Protestants, who view the market as an admirable and tireless system of punishment and reward, perfect for a fallen humanity given to shirking and freeloading.

It’s not clear who the audience for this book is. At times it reads like it was written for policy wonks (who really cares about the second take on the Basel Capital Adequacy standards? — and I count myself as someone who should). At others it seems pitched to Democratic strategists. The liberal netroots maybe? But they’re less ideological than Kuttner and they don’t read books anyway. Some inchoate popular formation? A popular formation organized around what?

If you read a book like this, you might think that polarization and financial recklessness are recent innovations in American economic life. But the U.S. financed its industrialization in the late 19th century in large part through securities fraud — and Keynes coined his observation about the casino in remarking on our 1920s. You might also think, after reading this book, that vote rigging and repression were born in the Bush years — this in the country that brought us Jim Crow, the Palmer Raids and McCarthyism. And you might think that the dominance of business interests in the Democratic Party is some recent, post-Reagan innovation. But as a European analyst once put it: “The divergence of interests even in the same class group is so great in that tremendous area that wholly different groups and interests are represented in each of the two big parties, depending on the locality, and almost each particular section of the possessing class has its representatives in each of the two parties to a very large degree. … The apparent haphazardness of this jumbling together is what provides the splendid soil for the corruption and the plundering of the government that flourish there so beautifully.” That was Friedrich Engels writing in 1892, during the First Gilded Age. The name of Engels can make certain people squirm, and the language sounds a little antique — but how much of that description would you have to change today?

Doug Henwood edits the Left Business Observer,, and is the author of “After the New Economy” (New Press, 2004) and “Wall Street: How It Works and For Whom” (Verso, 1997, now available for free download at He also hosts “Behind the News,”, broadcast on WBAI, New York. He is working on a book on America’s modern power elite.

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