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Why Trump?

from Peter Radford

I have become so enmeshed in political activity here that I rarely have time to reflect on the strangeness of it all. Why Trump? Why now? But I was prompted to think a little harder about it when I re-read the following in Karl Polanyi’s “The Great Transformation”:

“Market society was born in England – yet it was on the Continent that its weaknesses engendered the most tragic complications. In order to comprehend German fascism, we must revert to Ricardian England.”

Now I don’t want to re-litigate the entire argument about neoclassical economics. Frankly I am tired of wasting my time. If the preponderance of economists want to disconnect from reality, then who am I to argue? Let them. And ignore them. Their ignorance of the real world is both willful and necessary for the alternative world in which they think to cohere. So be it.

But.

For those of us who value economics as an understanding of a critical part of social reality we must insist that those inhabiting that alternative world take full responsibility for the outcome of their ideas if, and when, those ideas are allowed to seep into actual policy making. They must be blamed. And we ought to demand an explanation as to why the imposition of fanciful ideas onto an unsuspecting world, with the core consequences now becoming apparent, is at all ethical.

You see, Polanyi was right. At least in so far as he projects the blame for extreme politics, in a major part, onto the shoulders of those who advocate policy based upon theories that stand not so much on solid foundations but in midair.

It is not possible now, nor has it ever been, to extract economics form its socio-political context. It is not possible to remove history. Nor is it possible to remove the panoply of institutional, cultural, geographic, intellectual, or technological frameworks within which economic activity takes place. Those things frame every single transaction. They channel them. They constrain them. And they create the pathway along which an economy travels. If we ignore such things then the consequent study is a sterile amoral technical exercise of little practical value.

Yet that limited small thing has been presented to the world as the theoretical structure upon which we ought rely if we wish to prosper. It has become the most important part of the meta-structure we know as neoliberalism, and it is neoliberalism and its hollowing out of the socio-economic environment in which we live that has produced the combustible political context within which Trump has emerged as a viable candidate.

I have often suggested here that a key characteristic of mainstream economics is its fundamental distaste for democracy. We read it in the way in which economics pours scorn on government – even democratic government – as an automatic and inevitable problem in the achievement of efficiency, whatever that is. The anti-social bias is palpable. Yet most economists scoff at the thought.

But say it often enough, say it loudly enough, and, especially, say it with the authority of a scholarly background and the damage can be awful.

You might just make a Trump legitimate.

Ideas matter. We all acknowledge that. From where I sit economics has a lot to answer for. Polanyi was right, and that really matters.

  1. blocke
    March 13, 2016 at 6:52 pm

    Sorry Peter, but you are writing bad history. Europe between the wars was not beset by neoliberalism, but protectionism and nationalism, and if you wish to seek the source of fascism in Europe, you have to look into the specific heritages of a political and cultural nature inside the countries that went fascists. Those that most resisted fascism were those smitten by the Richardian tradition, the UK and the US. Don’t read Polyani for answers here, read books like Erich Fromm’s Escape from Freedom, published inn 1942. There is one element of truth that touches on what you are saying; people who live in a society fraught with insecurity and fear economically (as under neoliberalism), are willing to give up freedom for security, but it doesn’t have to be given up by embracing fascism.

  2. March 13, 2016 at 7:40 pm

    That isn’t right either – probably less right even, as you really have to divide things up into two periods at least – the aftermath of WWI and then the Depression/ runup to WWII.

    Protectionism and nationalism only characterize the second period, and “beset” is not the right word. The first was characterized by the destructive effects of the war, the return to the gold standard and the reparations from Germany – and it led directly to the second. Part of that protectionism and nationalism was a necessary & beneficial response to the earlier period’s “neoliberalism” but it has become psychologically confused by most economists & historians with the fascists’ aggressive nationalism.

    • blocke
      March 13, 2016 at 10:36 pm

      When was all this neoliberalism going on in Europe before the depression? Certainly not during the World War, certainly not immediately afterwards in the 1920s, not in Weimar Germany, not in Poincare’s France, not in Central Europe where national rivalries were rife and brutal ethnic suppressions standard behavior.

  3. March 14, 2016 at 2:25 am

    Although of course it’s odd to call it “neo” at such an early date, before the word was coined, – post classical / pre-neo liberalism was quite prevalent, a decisive background everywhere to the “immediately afterwards” 20s. I mentioned the return to gold above (Churchill) that caused major mass unemployment in Britain when the 20s were roaring in the USA. Hitler was preceded by Bruning’s “neo”liberalism, not Weimar. France’s goldbuggery only made things worse. The attempt to restore the prewar “liberal” order was very badly conceived at Versailles. Although it tried, the USA could not maintain a healthy small state liberal economy as it had in the 19th century without being driven by unsustainable and unstable private debt culminating in the collapse, so similar to the one in 2008 & then a seemingly endless depression.

    FDR’s torpedoing of the 1933 London Conference is an example of the kind of beneficial nationalism vs harmful “neo”liberalism I had in mind.

  4. blocke
    March 14, 2016 at 7:02 am

    I’m sorry Calgacus, the distinctions being made in this post are between continental Europe which ended up in fascism and UK and US neoliberalism that didn’t, which Peter says in some way produced fascism in Europe. The examples you cite of neoliberalism are from the US and the UK, not from European traditions, where they did not exist. Germany was a cartelized economy that believed in and practiced the managed hand of a “organizierte Kapitalismus,” before and after WWI. If you study Germany’s attempts to restore its economy, in an organization like the Reichkuratorium fuer Wirtschaftlichkeit, founded in 1921, you won’t find any neoliberalism there, in thought and deed, but committees of experts drawn from government, industry, and business economists; there is no “invisible hand” of fabled neoliberal competition at work, but the hard work of experts. The same experts that worked in the RKW to establish German industrial efficiency in the 1920s continued to work in the 1930s under Hitler. There is a deep continuity there between the two interwar periods of German economic life, as you phrased them, and there was nothing much neoliberal in the earlier phase as opposed to the latter. Look for the origins of fascism in German political life not in these superficial ideas about neoliberalism.

  5. March 14, 2016 at 7:21 am

    Peter Radford did NOT write that Europe between the wars was beset by neoliberalism. German fascism has a whole load of explanations, of course.

    But you see, the thing is that PR sees similarities between policies in GREAT BRITAIN between the wars – the period Polanyi has also commented – and the politics (likely since the 1980s) in the US, which may to a great extent explain the rise of Trump.

    Radford states: “You see, Polanyi was right. At least in so far as he projects the blame for extreme politics, in a major part, onto the shoulders of those who advocate policy based upon theories that stand not so much on solid foundations but in midair.” This is as true for the Weimar years as for the period since 1980. It doesn’t mean that the Weimar period featured neoliberalism, it means what Radford says: policies were implemented based on theories that don’t bear critical scrutiny.

    The discussion in Radford’s article is not at all about the Weimar period in specific!

    • blocke
      March 14, 2016 at 4:39 pm

      It is certainly true that “those who advocate policy based upon theories that stand not so much on solid foundations but in midair.” can provoke undesirable political results, like the emergence of a Trump or a fascist dictator, or the fall of the Roman Empire, or, etc. It is an historical truism, but one that should be heeded. If historical hindsight is 20/20, more important is what was being said when these theories were being propounded. I can remember that I got it right when these ideas were being pushed (I feared the policies of the Reagan era would impoverish the nation), can you remember what you and other economists were thinking at the time?

      • March 14, 2016 at 5:55 pm

        Well, no, because I was about 4yo at the time. But your point is important. Although we also should allow for changes in point of view if evidence compels us.

  6. March 15, 2016 at 3:54 am

    Reading the writings of von Hayek, von Mises, Friedman, and even Popper it’s clear that these theorists of neoliberalism and science imperialism and the practitioners of what they theorized envisioned a world in which democracy is replaced by economic relationships and scientific facts. The results of putting that vision into the world have been disastrous and continue to be a threat to the planet and the life on it. How the hell do we fix it, if it can be fixed?

    • blocke
      March 15, 2016 at 9:41 am

      “Look for the origins of fascism in German political life not in these superficial ideas about neoliberalism.”

      When I taught 20th century German history, I used two books that were particularly useful in undererstanding German politics in 1933, Rudolf Morsey’s Das Ende der Parteien 1933, and Karl Bracher’s Die Aufloesung der Weimar Republik. German’s political culture did not necessarily suffer from being proto-fascist, but it did suffer from a lack of parties supporting liberal democratic government, well under 10% ever voted for them in the crisis. If you contrast that to American traditions, where Roosevelt’s New Deal dominated politics, you would see quite clearly how German political culture differed from the Western democracies in the 1933 crisis.

  7. March 15, 2016 at 4:30 am

    Superficial? – perhaps. But I think you miss the forest for the trees. Radford says: “It is not possible now, nor has it ever been, to extract economics form its socio-political context.” Seems to me you are doing something like the opposite. Just because something is superficial or easy or trivial or obvious doesn’t make it false. Ricardian tradition in the UK (The US was not smitten with it as the UK was) as a deeper, truer cause of not becoming fascist seems far-fetched in comparison to- The “liberal” powers did not become fascist in the interwar era – simply because they won the first war.

    The examples you cite of neoliberalism are from the US and the UK, not from European traditions, where they did not exist.
    This is just wrong – I mentioned Germany & France above. Of course neoliberalism was weaker on the continent. But see Losurdo’s Liberalism: A Counter-History for an outstandingly balanced global view ending at WWI. Benjamin Constant, De Tocqueville & many others were “neo”liberals in this annoyingly wide sense. Austrian economics came from Austria. The National Liberals were Bismarck’s main allies and the biggest party in 1871. Polanyi & Radford pointed to the irony – which is not too ironical, but rather the usual way – that the “most tragic complications” did not occur in the “Ricardian” center. Do you dispute that the victors’ reconstituted neoliberal order & its continental imitation had a very major effect and deserves some blame for the consequences?

    There is a deep continuity there between the two interwar periods of German economic life, as you phrased them, and there was nothing much neoliberal in the earlier phase as opposed to the latter
    Deep continuity between postwar starvation, Weimar hyperinflation, Bruning’s depression & Nazism? In much the same way that today’s Chicago boy theories are perpetrated more extremely in the periphery than they could be in the USA, Bruning was extreme neoliberalism. Bruning to Hitler- neoliberal “imposition of fanciful ideas” to extreme illiberal reaction is about as sharp a contrast as one ever sees. So I think almost everyone at the time – and now – felt that the superficial differences were far more important than the deep continuities.

    Look for the origins of fascism in German political life not in these superficial ideas about neoliberalism.
    It is hard to agree with you other than vaguely, as you haven’t said what things in German political life made it particularly receptive to fascism. Of course there were very important internal factors. But no quite important relevant external, in particular no relevant external neoliberalism factors? “Certainly not” (neo)liberalism inside (continental) Europe / Germany? Both insupportable imho.

    more important is what was being said when these theories were being propounded.
    Keynes was saying such things (similar to Polanyi, Radford, me) at the time – in most of his writings in that era. And he became quite popular in Germany & elsewhere as a result. IMHO – and that of many others, at times the academic consensus, Keynes was right.

  8. March 15, 2016 at 4:35 am

    Here focused on political rather than economic liberalism, to the extent they can be separated, but I can’t resist quoting Losurdo at length p. 295:

    “Starting with the First World War, in particular it saw ranged against one another Britain (and the US) and Germany the most recent and ambitious recruit to the community of the free… The interpretation of the third major conflict suggested here might occasion astonishment. What obstructs an understanding of this event is the negative teleology that tends to interpret German history in its entirety as a series of stages leading inexorably to the horror of the Third Reich. In reality, on the eve of the First World War Germany was not obviously less ‘democratic’ than the United States, where racial oppression raged, or than Great Britain, which completely disregarded universal male suffrage (on which elections to the Reichstag were based), and exercised imperial domination on a global scale and even in Europe itself, at the expense of Ireland. Above all, it must not be forgotten that, at the turn of the nineteenth century, even in England and America, Germany was regarded as a full member of the exclusive club of free peoples. So the by now familiar dialectic emerges once again. Confronting one another in a total war, which required the mobilization of culture as well as armies, were antagonists who had previously congratulated one another on being members, or even especially influential members, of the community of the free.”

    Losurdo doesn’t mention him, but Bertrand Russell was saying very similar things at the time in opposition to the war.

  9. blocke
    March 15, 2016 at 9:18 am

    There is an entire school of German historiography (the Wehler school) based on the idea that Germany in midnineteenth century reached a turning point (1862-71) in history, when it should have followed Britain parliamentary system, but did not turn. Bismarck wrote the constitution of the Second Reich (1871–1918), which granted the vote to males 25 years or older in Reichstag elections but he did not give the Reichstag any say in selecting the government — that power remained in the hands of the autocrat, the Kaiser. Germany was obviously less democratic than the West, witness the Zabern Affaire in 1912), but I do not think Hitler’s coming to power necessarily can be explained by any stage theory of German development either. Rather I think, it stemmed from the crisis in European politics provoked by the violent dislocations of the First World War. But the dislocations worked themselves out differently in German political culture than in British, French, Russian, or American.

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