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McCloskey disses democracy

from Peter Radford

Actually it’s McCloskey dissing what she calls leftish economists generally, although poor Piketty and his notorious book provides the moment she seizes to attack us misguided folk. Riven through with fundamental error and hopelessly soft we have all, apparently, misunderstood the great sweep of history.

The lesson from which is that all is swell if we just leave it alone. We need to set aside our petty and foolish concerns about the environment, and a whole host of other nonsense about market imperfections – and, yes, government imperfections too – we need to acknowledge the great wealth that surrounds us, and gorge on the pile of goodies that capitalism has brought us.

Oh, and we all need to shut about poverty. It doesn’t exist.  Not at all. You see we are all better off than our ancestors. That ought to be enough. We need not worry our little heads about anything else. The great economic system in the sky will provide all we want, need, or can imagine. Perhaps a few things we cannot imagine either. After all it was the innovative spirit in the sky that brought us all iPods well before we knew we absolutely, and desperately, needed them.

Yes: our current cornucopia is enough to quash and otherwise contradict all that silly talk about poverty. It is just that: silly talk. It is the kind of talk that polite leftish folk indulge in after a hard day of calculating their retirement portfolios, and teaching heresies to innocent young students whose minds are thus polluted with skepticism for that spirit in the sky.

A spirit that Deirdre has decided ought remain nameless because the word “capitalism” is so fraught with misguided and inappropriate taint that it no longer serves a useful pedagogical purpose. If it ever did.

Well now, I admit that I am better off than my grandmother. She began work at age thirteen as a scullery maid in a great house in the English countryside. Before her, I am sure, she was better off than her grandmother, although probably not by as much as the difference that separates me from her. You see that great surge in working class material wealth that McCloskey attributes – correctly in total – to an entire two century sweep, is actually more clustered at the latter end of that period. The first portion [half?] of our great leap forward in material wealth saw a decidedly more mixed history than the one McCloskey likes to purvey.

How can that be?

If the great spirit in the sky was working tirelessly throughout those two hundred years or so, then surely the benefits ought to have accrued more evenly. Why is the material leap more focused towards the end? At least for the ungrateful poor who don’t realize they are actually wealthy.

Perhaps it had something to do with democracy. Or, alternatively put, the push back by folk like my grandmother against the system that seemed to be permanently stacked against them. They voted repeatedly to distribute wealth more evenly, to limit the risks of living in the spirit’s system, and to otherwise guard against to excesses of the capitalists. They had a sense of balance. A sense that allowed the economic system to flourish but within more decently proscribed limits. Distribution was important because it allowed everyone to feel an equal participant. Excess undermines that feeling.

Yes, Deirdre, distribution does matter. It matter s a lot. In fact it matters so much that rightists – I resist the obvious impulse to use the word “wrongists” – wanting to defend the great spirit in the sky ought to pay very great attention.

Because maldistribution can, and I will stay polite here, mess things up. Big time. Really big time. It creates political problems in a democracy. And that then creates problems for the economy.

McCloskey styles herself as an economic historian, but she remains first and foremost rooted in a particular tradition. This is obvious from her references to rightish heroes that includes the likes of Smith, Say, Mises, Hayek, and Friedman. It is a spectacular and honorable tradition. It lauds the spirit in the sky. It applauds the great gift giver. It worships the system-we-cannot-name and which we must obey if we want to reap its rewards and steep ourselves in it endless goodies. Most of all that tradition teaches us, sternly I might add, to deny that any of us ought imagine we can interfere in the great spirit’s machinations and produce a better result. It is simply not possible.

And it is especially not possible if we use the agency of the state. McCloskey uses the word “state” in a pejorative tone throughout her work. It’s as if the phrase “we the people” was never uttered. Or, at least, were it uttered it was quickly taken back and hidden lest the great spirit in the sky takes fright.

Yes Deirdre I am better off than my grandmother. Much better off. She was denied an education. It was inappropriate back then for girls to get an education. It was unnecessary. After all they were going to dedicate their lives to the enrichment of their betters. And if they were lucky a few scraps would fall their way too. In contrast I have an education – although I realize in the rightish tradition what I call education is actually mis-education. I am steeped in the great spirit’s goodie giving largesse.

But, and this is why I am a leftish leaning softie so please forgive me Deirdre, I listened to my grandmother. Closely. She told me, in no uncertain terms, that I ought to be fearful of “them”. “They” she said, could “take it all away”. So I was not to take for granted that the spirit in the sky was benign. It isn’t. It cannot be. Because, as the rightish tradition says so clearly, the spirit’s motivation is entirely selfish. It is the selfishness of individuals that creates the conditions within which the spirit flourishes so abundantly. Smith said so. Say, Mises, Hayek, and Friedman confirmed it as being so.

The system-we-cannot-name is rooted in venal bourgeois values. You said so yourself Deirdre.

The difference between McCloskey’ rightish, and dare I say it misguided, folk and me and my proper thinking ilk, is that they believe that the great spirit, that system-we-cannot-name, is self organizing. That is to say it operates best without the interference of sullied human hands. Human institutions. Human culture. Human anything. It produces, and will produce, great goodies, as long as we leave it well alone. Most importantly, it has an enormous and unbeatable ability to cleanse itself of error. Not that it can err. But, for the sake of argument, were it to err – which it cannot – it would self-right itself. We, on the other hand, believe that their system needs a gentle nudge now and again to keep it on course.

And, this is my grandmother’s lesson, the system-we-cannot-name distributes not just wealth, but power too. So accumulations of wealth are simultaneously accumulations of power. And we know what a great historian once said about power and its corrupting influence. So the nudges we need to give the great spirit in the sky are designed to keep it within bounds and to offset its tendency to concentrate wealth. Which is to say its tendency to concentrate power.

It is ironic, I find, to be scolded albeit gently, for being profoundly wrong about economic history, for risking the ire of the great spirit in the sky, for being merely philosophical rather than scientific, and for ignoring our current massive wealth. Especially when the scold ignores the parallel political history. Or, rather, interprets that history as a succession of stupid efforts to intervene in the workings of the economic system. As if the two were separable.

I think, ultimately, I agree with McCloskey: economics, properly constructed, is a historical discipline. This, to me, implies that it is rooted in real world events and their interpretation. The problem with that interpretation is that ideological worldviews intrude. Inevitably. Inescapably. McCloskey has a particular worldview. It is a right of center view. It is a view that denies the rights of people to address what they perceive as social wrongs through modern democratic means. Those modern democratic means being the government. It denies that any wrongs can exist because the spirit in the sky is so all seeing and powerful it will right them before they appear.

The tradition in which McCloskey sits, denies forcibly and very loudly that the government can play any role whatever in the economy. It has constructed an entire intellectual edifice – Smith-Say-Mises-Hayek-Friedman et al – to enforce that denial. It has sought to interfere in the democratic process in order to neuter any influence that process might have.

And this surely cannot be lost on anyone: the triumph of that tradition post-1980 has wrought not a great surge in wealth, but a great stuttering that has now fallen into what many of McCloskey’s allies are calling a great stagnation. The very system-we-cannot-name and which is the giver of all gifts is, apparently, failing to give in the same degree of abundance that it once did. The leap forward, upon which McCloskey leans so much in her defense of rightish economics, appears to be in a somewhat halting mode.

A mode that cannot be attributed to leftish influence because that influence has faded radically since Reagan and Thatcher derided government and did away with society.

McCloskey’s engine of growth and all things good has a problem. It is a problem it developed after the rightish tradition and its policies rose to complete power. It has, as someone once said “magneto” problems.

Let us call this, then, the McCloskey dilemma: if, as the rightish folk think, distribution doesn’t matter and that all things democratically decided are maladroit if not outright evil, why is it the system is not chugging along at full speed?

Is it, perhaps, that the rightish assault on collective action, or as I prefer to call it democratically elected government, has undermined the delicate balance between capitalism [there, I said it] and democracy and has thus undone the balance of power needed to make the system-we-cannot-name work its magic benignly?

Economists, even clever economic historians, ignore politics at their peril.

But then they know that. Which is why they construct economic theories and histories that expunge politics. The purpose, you see, of rightish economics in the Smith-Say-Mises-Hayek-Freidman tradition is to create the illusion that civil society can remain civil only if we eliminate politics. Anyone, like poor Piketty, who dares to bring politics back inside the domain of economic thought, has to be derided and taught his error. Politics, whilst as deeply seated in human behavior as any economic is, must be denied if capitalism is to be set free.

And that is why McCloskey is so vexed with Piketty.

  1. robert r locke
    November 26, 2014 at 3:31 pm

    The problem is that civil society is not civil, on its own, as organized within the legal American framework, its leads to a mal-distribution of wealth. The only corrective to that has been government intervention. But those who live in civil societies that differ from the American in that they function more equitably, disregard this false distinction between civil society and government intervention that US economists talk about ad nauseum.

  2. originalsandwichman
    November 26, 2014 at 4:57 pm

    Well, at least Deirdre hasn’t gone as far as that dastardly Jonathan Swift and advocated eating Irish babies.

  3. November 26, 2014 at 6:09 pm

    In my view, Adam Smith and F.A. von Hayek in particular (I am less familiar with Say and von Mises) had a rather more sophisticated view of how capitalism and democratic politics interact, than their modern ideological fans in academic economics and in right wing political parties in the Anglo-Saxon world seem to have.

    Smith for one, in “The Wealth of Nations”, was absolutely scathing about the serious harm that could be done to the public interest when legislatures and administrations hearkened too closely to the views expressed by “merchants” as to the content of public policy on issues in which they were economically interested And Hayek (in “The Constitution of Liberty”, at any rate) had a view about circumstances in which government intervention might be justified (provided of course, that the Rule of Law was fully honoured in that intervention) rather more nuanced than the dogma one hears from self-styled Hayekians in the contemporary US Republican and Canadian Conservative parties. As it turns out, many if not most, of the interventions favoured by ecological economists in the tradition of Herman Daly, which “set fences around the market” for the twin purposes of protecting critical ecosystems and limiting excesses of inequality that fundamentally threaten the integrity of liberal democratic systems; would actually pass the Hayekian conceptual tests for an acceptable intervention, provided the latter are thoughtfully and not too dogmatically interpreted.

    Michael Barkusky
    Pacific Institute for Ecological Economics
    Vancouver BC, Canada

    • December 4, 2014 at 3:03 am

      I particularly agree with your comments on Adam Smith. Seems conservative economists have turned Smith’s insight on the purpose of competitive markets on its head. For Smith – the moral philosopher – individual self interest is a fundamental human problem that needs to be harnessed. That harnessing is the beauty of a competitive marketplace (when it works!). Conservative economists miss the point entirely when they worship the idea of a “free-market” where individual self interest is thought to be The Good and therefore maximized.

  4. Dave Raithel
    November 26, 2014 at 9:04 pm

    Lordy, he or she proves my snark is a piker’s.

  5. Herb Wiseman
    November 27, 2014 at 12:23 am

    Wow. Peter you actually read her stuff?! Tried. Makes Piketty look lively and entertaining! When I no longer need a life I will read it in its entirety. Until then, I will praise your fortitude and perseverance and thank you for your summary!

  6. charlie
    November 27, 2014 at 9:51 pm

    i wonder what percentage of jobs and economy are actually in the Military/Industrial faustian bargain we and especially the right have bought into … capitalism is largely militarism in my opinion … if we just spent more on defense as the righties would life would be so much better right? i mean correct?

  7. charlie thomas
    November 28, 2014 at 7:23 pm

    it has always seemed to me that Rev. Smith’s comment regarding the ‘unseen hand’ was a way of making economics that served the wealthy status quo as divine right for capital versus worker.

  8. Stuart Mathieson
    December 28, 2014 at 9:59 am

    Brilliant analysis Peter. May I recommend Martin Nowak (Super Cooperators, 2011) and more latterly E O Wilson (The Social Conquest of Earth, 2013). Both start with Darwin’s point that all things being approximately equal, it is the communities that resolve internal dissent most effectively that are likely to prevail against external challenges. Democracy, economic justice and equity are historically effective ways of doing so. In this regard convincing comparisons have been made between the openness of Athens and the closed militaristic mind set of the Spartans.

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