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Why Trump?

from Peter Radford  and  the WEA Newsletter

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 plunge into a detailed re-capitulation of inter-war history – that is not my point. I want to focus our attention on the analogy Polanyi brings to mind, and especially how deeply ideas can scar a society when they are applied with religious ferocity without regard to their flaws.

Nor do I 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.


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 from 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, centered around the mathematics of allocation within scarcity, has been presented to the world as the theoretical structure upon which we ought to 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.

Economics with its relentless attention to individual liberties and the freedom to exchange personal property in various markets, has forgotten, or neglected, the other half of the liberty bequeathed us by modernity: that of being equal amongst our peers. It is this second half of freedom that manifests itself as democracy. And it is this second half that presses back against the excesses of the first. This must be, for to preserve the freedoms expressed within economics we must mitigate the tendency, inherent within it, to accentuate differences in the terrain of society. Too much inequality undermines the willingness of the least equal to accept the workings of the market upon which modern economics is built. At some point rationality requires limitation of that freedom. It is only by accepting both halves of liberty – of individuality and of equality – that we can protect them both. They must be balanced. Neither survives alone.

Yet most economists scoff at this thought. Indeed they have deliberately stricken from their domain any reference to equality, and they, instead, sneer at any effort to smooth the differences their allocative mechanism might amplify.

So, at best, modern economics is a half-truth. It can only ever be a partial defense of social or economic freedom. Its deliberate blindness to the other half makes it inapplicable as a complete social theory. Its contempt for democracy makes it irrelevant in modern societies. Perhaps most economists don’t realize this, they are too caught up in the wonders of the mechanics of their dangerous half-truth.

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.

From: pp.2-3 of World Economics Association Newsletter 6(2), April 2016

  1. William Bell
    May 5, 2016 at 6:05 am

    Donald Trump is the reductio ad absurdum of the application of traditional economic theory for the last 30 years.

    • May 5, 2016 at 9:44 am

      I would say, rather, that acceptance of Hillary as a legitimate and rational contender to lead the US empire is the reductio ad absurdum of the post war politics in toto of the West. Hillary is the suicide option for the US and possibly the world, true madness; while Trump, as crude and ostensibly wrong as he is, might just be a desperate attempt to save it. Although after witnessing the perfect execution of the Obama deception I do not think it implausible that Trump is just the establishment playing one step ahead of us all, just another perfectly executed PR campaign to reinvent itself, or possibly only to hedge against possible failure of its plan A.

      But then does it even matter? Could the hypothetical Good Trump really change things for the better, or would he just be made (whatever it takes) to comply with the dominant interests. He is a businessman after all, not a martyr, not a revolutionary, but still not a murderer.

  2. May 5, 2016 at 6:53 am

    Why Trump? Well, he has not been elected yet. But let’s suppose he does get elected. It might be the result of a populist backlash, a populist backlash that has been building on the Left and on the Right — the Occupy Movement, the Tea Party, Bernie, and now The Donald. Why the backlash?…Maybe the powers that be are getting away from a simple concept: The Greatest Good To The Greatest Number.

    We have had some of the poorest economic performance (as measured by GDP) in the past 15 years in our history — and the 1990s, which everyone points to as a good decade, was just an average (actually a little below average) performer. Is that what we want to repeat? So maybe change is in the air.

    The Democrats have strayed far off from the New Deal, ever since the ’60s. And I don’t know that Republicans ever had a coherent economic agenda as an alternative. Obama had a golden opportunity to change things in 2009 coming in on top of the Crisis (with 60 votes in the Senate and a big margin in the House) — he punted. So here we are with the old economic system patched up instead of changed.

    It is not an economic problem. It is a political problem. [I will hold my nose and vote for Hillary.]

  3. blocke the
    May 5, 2016 at 9:35 am

    Why all this economic determinism; it won’t explain why Fascists came to power in the 1930s and did not come to power in France and Britain, for that you have to know more about political culture in each country, not decontextualize some Polyani statements about Victorian Britain. The same applies to explaining Trump, drop the economic determinism for a politically contextualized culture. Although Reagan might be a nicer man, when he won the presidency, we explained it in the appearance of Reagan democrats, a political situation that is not all that different from the victory of Trump.

    • blocke the
      May 5, 2016 at 2:38 pm

      “Although Reagan might be a nicer man, when he won the presidency, we explained it in the appearance of Reagan democrats, a political situation that is not all that different from the victory of Trump.”

      Peter, let me expand a little on what I mean about seeking explanations for Trump in US political culture rather than in economic determinism.

      Trump’s promise to make America great again is not much different from Reagan’s to do the same thing within the political constellation of the late 1970s leading up to the election of 1980. Americans had witnessed a series of events similar to what Trump claims we are experiencing now. They had lost the war in Vietnam, a painful reminder of which they had witnessed on television, when the crews of US helicopters fleeing Saigon kicked our Vietnamese allies off the machines when they tried to escape the vengeance of the Viet Cong for their collaboration with the US by seeking safety with us as we fled. It was a humiliating spectacle for Americans to see. Americans had also seen the Iranians invade and imprison our embassy in Teheran and hold the personnel captive for a year during the electoral period while the nation looked helpless on.

      They also had to witness the Japanese challenge in manufacturing, which meant that they were being asked to accept the unthinkable, that US primacy in mass production industry was over, as huge firms went under in what would be called the rust belt in the global competition.

      Socially Americans witnessed the street violence of the civil rights movement, riots in cities, the busing of their children out of their neigh hoods to schools, and the blue collar working class a decline in their incomes and benefits, which contributed to a growing gap between the 1% top incomes and the rest of the nation. They wanted the rot to stop and for America to be great again, a la sloganeering Trump.

      Blue collar class democrats rallied to Reagan, just like disillusioned middle class Americans do to Trump now.

      Under Reagan, they found his tough stance in the Cold War vindicated their support, because of the collapse of the Soviet Union and continue to admire him for it.

      But from the economic and social viewpoint of blue collar Reagan democrats there was nothing to admire during the Reagan years, which witnessed the triumph of neoliberalism in economic policy, accompanied by a savage attack on private pension and company welfare programs.

      Can Americans who respond to Trump’s nationalism, expect him to defend their wages and benefits today. There is not much evidence that they can, more that under Trump they will undergo a despoliation of the quality of their lives that repeats what happened to them in the 1980s.

      This is the sort of discussion of US political culture we need not some decontextualized economic determinism that lack explanatory power.

  4. Peter Whipp
    May 5, 2016 at 9:36 am

    Just as in the 1930s and 40s, capitalism isn’t working for the people at large and so they must look for alternatives. Fortunately, FDR and Maynard Keynes fixed capitalism.

  5. May 5, 2016 at 8:12 pm

    I have to disagree with Bob just a little. Taking fascism as an example, historians and others have been been trying to figure why it rose, fell, and did what it did even before the fascists began WWII. Some of the explanations are economic – poverty, fear of loss, economic insecurity, and comparing your wealth with that of others (inequality). Recognizing, of course that all these “economic” explanations are involved with and interact with politics (elections, picking leaders), religion, ethnic fears and desires, long standing hatreds between groups within and between nations, maintenance of family life, what Adorno called the “Authoritarian Personality,” struggles over land, and many more. I can see no reason it would be any different in understanding the current expansion of, for want of a better word “populism” not just in the US but also in Europe, Russia, and Asia. It is, as Richard Feynman often pointed out “complicated.” We’ll never get all the picture or know all the pieces. But the research that has been done up to now seems to bring out the following. 1) religion, particularly evangelical Protestantism is a major element; 2) distrust, dislike, and in some cases hatred for “elites” (different versions of who these are) is important; 3) feeling a loss of unity with other parts and peoples in the same nation state (some of this due to immigration and some due to historical or deliberate efforts to “vilify” some as the “other” who is the cause of one’s problems); 4) a loss of faith that democracy can work, or is being prevented from working; 5) a rising belief that no one really cares about anyone or anything except themselves, their family or group, or their class and would be willing to sacrifice the lives and wealth of those not in these categories; 6) rising tide of deliberate efforts to teach and reinforce intolerance, hatred, and fear (lots of targets here with no overall direction) – using fear to win political office has been a part of American society since its beginning but is now serving the needs of dozens of more masters. There are other results to consider, but this will I hope open some discussion.

    • blocke the
      May 5, 2016 at 10:39 pm

      “Taking fascism as an example, historians and others have been been trying to figure why it rose, fell, and did what it did even before the fascists began WWII. Some of the explanations are economic – poverty, fear of loss, economic insecurity, and comparing your wealth with that of others (inequality).”

      It certainly is complicated because the factors you mention existed in most countries but in combinations that gave different results, in France, for instance, the fascist attempt to take over led to the popular front and defeat of fascism in 1936, whereas in Germany they led to its triumph in 1933. That is why we have closely to examine the political cultures in specific contexts.

      • May 6, 2016 at 6:26 am

        Revealing the triumph of fascism in one place and its failure in another requires opening up what has been buried by the processes of creation. Once the ordinary or usual has been constructed the details of that process are no longer available except submerged within a summary institution, mythology, or artifact. Opening up the institution, mythology, or artifact is what historians do, along with some social scientists. And Bob is correct both what’s uncovered and how it’s uncovered can be quite complex and difficult to make sense of. But the complexity makes the work more interesting and enhances our satisfaction in sometimes solving the puzzles.

  6. A.J. Sutter
    May 9, 2016 at 8:09 am

    “I have often suggested here that a key characteristic of mainstream economics is its fundamental distaste for democracy.” — Might this be losing some of the subtlety in the distinction between neoclassical and neoliberal?

    At least apropos of economists rather than of their theories, many of the post-war neoclassicals were and are political liberals, especially the MIT School (like Samuelson, Solow) and some of the Cowles School (like Kenneth Arrow). Some of them may have sincerely believed or even today sincerely believe that their theories could be helpful to a democracy. So “distaste” seems the wrong word if you’re including the whole spectrum of mainstream economists. In an earlier generation, Philip Wicksteed was very concerned about inequality.

    Not that their heart being in the right place makes their theories any better. Whether neoclassical theories and their simplifying assumptions are hospitable to an anti-democratic outlook is a different question — answered in the affirmative by fasciam à la Pareto, and neoliberalism in our own day.

    • May 9, 2016 at 11:59 am

      The conflict facing us and the one reflected in current mainstream economics is one that has been endemic to the American experience from the beginning of the nation. That is the conflict between freedom, individualism, and democracy. Much as many economists deny it maximizing economic freedom of the individual often conflicts with democracy. Just as maximizing political freedom of the individual often conflicts with democracy. To borrow a phrase from the 1960s which economic conservatives of the time hated but economic conservatives of today love – everyone should be free to do his/her own thing, so long as others are not hurt. Democracy on the other hand is about compromise – being willing to give up some portion of individual freedom to create a working democratic polity and economic organization. Doing your own thing is easy and fun. Compromising to make a democracy is hard work and often frustrating. You know what they say about choosing the path of least resistance.

  7. David Chester
    May 9, 2016 at 9:51 am

    An essential part of the democratic system is that there are sensible leaders to help run it. In Germany during the fascist era, and apparently now in the US, this stable situation is going out of control. So its up to sensible people in the US to apply themselves to keep the ship of state on a stable course.

    • May 9, 2016 at 8:08 pm

      I spent a large portion of my life providing testimony, both written and on the stand to regulators and legislators. Being honest and speaking your mind sounds simple until these very energetic and often abusive folks begin to ask questions. Sometimes even seasoned witnesses find it difficult at times to “speak up.” Arthur Schlesinger, the historian called it “group think” when some of the smartest and most politically experienced members of the Kennedy Cabinet (formal and informal) agreed to the Bay of Pigs invasion when actually opposing it. Only Adlai Stevenson, a DOA Democrat who had no political future opposed it, saying every proposal needs opposition. Opposition to Trump in public will likely end in public denigration, a fist fight or gun shots, so voicing opposition to Trump is sometimes difficult or impossible. I attend his rallies and yell questions, because I agree with Stevenson if no other reason. Which he never answers. And just to be safe I always go armed.

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