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Democracy? Surely not!

from Peter Radford

Let’s stir things up for the New Year by continuing with one of my recent themes.

A quote from an opinion piece in the NYT this morning [January 3rd]:

“James Madison boasted that the Constitution achieved “the total exclusion of the people, in their collective capacity.” Its elaborate political mechanics reflect the elite dislike and mistrust of majority rule that Madison voiced when he wrote, “Had every Athenian citizen been a Socrates, every Athenian assembly would still have been a mob.” Madison’s condescension has never gone away. Walter Lippmann, perhaps the most prominent intellectual of the short American Century, reckoned that citizens were ignorant, confused and emotional. Democracy brought “an intensification of feeling and a degradation of significance” to whatever it touched.” 

I love that phrase: “the total exclusion of the people, in their collective capacity”.  What other capacity can the people have, other than collective?  Madison was hedging.  He wanted to be aristocratic with a popular twist.  And there was that awful reference to “we the people” in the background that needed proper definition.  So the people were invited in.  Just not collectively.  They were let in selectively instead.

To this day the threat of democracy is a real and present danger in America.  The bedrock of the constitution remains firmly anti-democratic.  Various bolt-ons have attempted to bring it into the democratic era, but they have failed.  America is not a democracy.  So there is no existential threat to it.  You can’t lose something you don’t have.  Our project for the New Year ought not to be dedicated to fixing the governance system.  It ought to be dedicated to reforming it.  Making it democratic would be a good start.  Just think: had America been a democracy Trump would not have been elected.  He lost the 2016 election by three million votes.  He lost in 2020 by seven million.  Due to the undemocratic nature of the constitution, switching a mere 46,000 of those seven million — in the right states — would have secured a win for Trump and his attempted coup would have been unnecessary.  No wonder he’s upset.

Still, it’s an uphill fight against a hero like Madison.

Another quote, this time in the context of economic policy:

“The past 20 years, the very rise of independent central banks, is all about getting priorities right, getting rid of democratic money which is always short-sighted, bad money”

That’s Rudiger Dornbusch of MIT talking in 2000.  I get the quote from Adam Tooze’s recent book “Shutdown: How COVID Shook the World’s Economy”.  Dornbusch was praising the Reagan/Thatcher adoption of neoliberal political economy in an effort to rebalance the public and private sectors firmly in the latter’s favor.  Key was the insulation of monetary policy from democratic politics, which in true Madisonian style, was assumed to be rotten to the core.

Since the 1980s it has been commonplace in the Anglo-Saxon world to treat democratic urges as leading, inevitably, to the degradation of the economy and the debasement of the currency.  So policy has been constructed consistently to act as bulwark to protect “the system”.   Preserving the economic status-quo has been of paramount importance.  So we expended vast energy to preserve the banks in 2008, but ignored the people.  We shifted too rapidly to austerity and slowed the haul back to normality in order to avoid inflation.  But that didn’t matter because the labor force needed to be disciplined.  Neoliberalism, at its core, has always been about privatizing gains and socializing losses.  It is, as Hayek et al would argue, stubbornly opposed to the people who simply cannot be trusted to run their own lives.

Which is odd, as I have observed before, since orthodox economics treats customers as supremely rational when they act as economic agents.  This rationality is critical to the preservation of market supremacy as a vehicle of resource allocation.  Yet those same consumers are hopelessly reckless when they vote, which is why Madisonians everywhere treat the people with such disdain.  No wonder the world is such a mess.  The people either suffer from excessive rationality or excessive self-interest.  Oh wait.  Maybe they’re the same thing?  Maybe they vote in their self interest?  Perhaps they’re rational after all in politics?  Perhaps it’s just that our Madisonian leaders don’t like the result?

And yet …

In the past two years we have seen a complete reversal.  Neoliberalism has been tossed overboard by the institutions most dedicated to its propagation.  The IMF, for instance, has berated the left-of-center Mexican government for not running a large enough budget deficit.  Yes, you read that correctly.  The IMF was urging what was previously thought of as reckless policy.  What happened?

Reality happened.

Neoliberal orthodoxy ran headlong into a crisis that no market could self-fix.  The markets themselves needed fixing.  So we had a burst of democracy.  We monetized the debt in an astonishing reversal of orthodoxy.  We succumbed to the realities of the mob.  We could collapse or we could democratize policy.

The question now, and for 2022 as a whole, is: do we go back?  Do we revert to preserving the system alone?  Or do we continue with our democratic experiment?  Should policy makers take workers into account, or right them off once more as an expensive input prone to destabilizing equilibrium and, gasp, asset prices?

Democratic [small “d”] economic policy has been an astounding success only because the interests of the people were aligned temporarily with those of the financial markets.  When the dust settles who will we care about more?

My money is on reversion.  The specter of inflation will be used to suppress the democratic uprising.  The shadow of Madison is a long one.  We must avoid the mob disrupting the genteel and profitable life of the system.  We must make democracy safe for capitalism.

By stifling it.

I think I can hear our “independent” central banks working on that project already.

What a shame.

  1. bruceolsen
    January 4, 2022 at 6:01 pm

    It is unquestionable, and perhaps inevitable, that increasingly autonomous devices will be used to reduce worker power.

    And despite the glib assertions that advances in technology will create more and better jobs than the jobs that are ‘creatively destroyed’, there is no theory that explains why that will happen in the future, and there many good reasons why those assertions are untrue.

    The masses have only a small window to positively influence their economic future.

  2. Edward Ross
    January 4, 2022 at 10:51 pm

    Reply to Peter Radford Jan,4 2022
    “Our project for the new year out not to be dedicated to fixing the government system. It out to dedicated to reforming it.”
    great to see someone advocating the importance of democracy. Because i have long advocated the importance of understanding the rights and obligations of a democratic system and how it gives an effective collocative power to citizens , to reform capitalism or any other form of government that claims to be democratic. Thus as you write the elite are intent on destroying collective power of the citizens. Therefore i believe reforming capitalism by a truly democratic system is far better than ditching capitalism and opening another can of worms that is open to those seeking power over all its citizens. Thank you Peter Radford Ted

  3. Meta Capitalism
    January 5, 2022 at 1:10 am

    An interesting book that sheds light on neoliberalism:

    Neo-liberalism (and with it implicitly new constitutionalism) is said to be under pressure as the ongoing financial crisis causes elites and ruling classes to reevaluate their policies. Indeed, some suggest the global financial and economic crises mark the ‘end’ of neo-liberalism (e.g. Krugman 2009; Nesvetailova and Palan 2010; Stiglitz 2010; Wallerstein 2008; Žižek 2009, 2010). We believe, however, that these economic crises form one part of a wider organic crisis; moreover we also think that like the announcement of Mark Twain’s death, these conclusions may be premature. They also beg the following key questions: exactly what is neo-liberalism, how do we define it and how do we know when it has come to an end? Many economists treat neo-liberalism as simply a set of economic doctrines and policy formulas (also Žižek treats it as a form of ideology), whereas we see neo-liberalism as a conscious political project that is connected to an identifiable set of social forces and practices. Put differently, disciplinary neo-liberalism fosters and consolidates a possessively individualist, marketized ‘common sense’ that militates against solidarity and social justice; however, it also is a normative project, one that is contested yet still dominant and supremacist (rather than hegemonic) or widely viewed as legitimate (Gill 2012). (Gill, Stephen. New Constitutionalism and World Order (p. 9). Cambridge University Press. Kindle Edition.)

    Indeed, neo-liberalism as a form of social and economic development is full of contradictions, crises and contingent practices, not least of which is the way in which it has gone with immense increases in inequality and social dislocation, while at the same time wealth and power is being concentrated in the hands of a global plutocracy. And in the most recent wave of capitalist crises, while the risks of large investors and firms have been socialized, the costs have been transferred to the public in the form of fiscal and sovereign debt crises, with widespread austerity measures imposed to finance government activities in the global economic emergency. Indeed it is doubtful that new constitutionalism as a strategy can either institutionalize or stabilize the crisis of social reproduction within neo-liberalism – let alone the global crisis of accumulation (Gill 2002: 63–4, 2008: 176, 2012). This is despite the fact that as Chapter 2 by Gill illustrates, new constitutionalism involves crisis management mechanisms and practices to try to contain dislocations and co-opt political opposition to prevent a backlash against neo-liberalism. Gill also underlines how new constitutionalism has a contingent, pragmatic and contested character. (Gill, Stephen. New Constitutionalism and World Order (pp. 9-10). Cambridge University Press. Kindle Edition.)

    However, this does not mean that disciplinary neo-liberalism has ended, although it may be in crisis; and indeed there is much to play for. We therefore see the present situation as still in flux but pregnant with new political possibilities. For example, in 2012 the European Union made efforts to further extend new constitutionalist frameworks via various measures including the new Fiscal Compact as well as the policies of the so-called ‘troika’ (IMF, ECB and European Commission) applied in Greece, Portugal and potentially in Spain (the Compact requires balanced budget amendments to national constitutions and greater control over national fiscal policies to the unelected European Commission). These new measures have emerged in the context of financial, banking, fiscal and sovereign debt crises. However, the austerity that has been imposed is deeply controversial and may be provoking a general crisis of legitimacy for the European integration project. It is an open question as to whether the European Union will be forced to abandon some of these new constitutional measures or face disintegration as a result of these struggles. (Gill, Stephen. New Constitutionalism and World Order (p. 10). Cambridge University Press. Kindle Edition. https://a.co/3rc3S25 )

  4. January 6, 2022 at 11:07 pm

    What central bank independence?
    “Assets for which capital requirements were nonexistent, were what had most political support: sovereign credits… A simple ‘leverage ratio’ discouraged holdings of low-return government securities” Paul Volcker
    https://subprimeregulations.blogspot.com/2018/12/september-2-1986-was-tragic-night-when.html

  5. Ken Zimmerman
    January 10, 2022 at 8:49 am

    But Madison didn’t determine the course of US history in any sense.

    The political philosophy of most thinking Americans before the American Revolution derived partly from colonial experience and partly from English and continental sources. This included over 100 years of local and colonial self-government, even in Royal colonies. Rationalism, the Enlightenment and John Locke from Europe. From Blackstone the colonists quoted that man’s first allegiance was to God, whose will was the universal law of nature, and that human laws were clearly invalid when they conflicted with natural law. Ideas about natural rights were in the air, then, before the Declaration of Independence was written. And remained so to this day.

    The arguments of John Wise in defense of the Congregational principle or the theories of the Boston minister, Jonathan Mayhew, turned out to have a close bearing on the quarrel between the colonies and England. Mayhew admitted that civil authority required obedience, that disobedience was morally as well as politically sinful. But, he added, when rulers pillage the public instead of protecting it, they stop being emissaries of God and become “common pirates and highwaymen.” To support a tyrant was to abet him in promoting misery. For Mayhew, the doctrine of the divine right of kings (with its corollary of non-resistance) was “altogether as fabulous and chimerical as transubstantiation; or any reveries of ancient or modern visionaries.” The form that a government took was less important than the need for it to have popular support. If government derived from God, as the absolutists said, it was because God moved the people to organize it. Here was a reasonable and religious basis for popular assemblies that made sense to the learned and the unlearned alike.

    A century and a half of colonial history, as noted by conservative observers in 1775, had created a new kind of political animal peculiar to the North American continent. The chief trait in the character of an American is an immoderate love of liberty, or rather license. And this enthusiasm rules in the breasts of all from the highest to the lowest. Education, manner of life, religion, and government-all contribute to it. Parents exercise no authority over children, beyond letting them for the most part do what pleases them. Everyone can maintain himself without trouble, for here there is room enough, and wages are high. No one, therefore, knows oppression or dependence. All are equally good; birth, office, and merits do not make much distinction. Freedom of conscience is unlimited, without the least control by secular law, and church discipline means nothing. The English method of government is in itself quite mild, and is all the less able, in this remote part of the empire, to exercise a reasonable strictness. The reins of government lie so slack that they seldom are noticed, and the hand that guides is never seen. The result of all this is that the people neither know nor will know of any control, and everyone regards himself as an independent Prince.

    The French writer, Hector St. John de Crevecoeur, wrote that a “surprising metamorphosis” had taken place in America. A “new man” had appeared in a miraculous country that demanded little and gave much. “The American,” he wrote, “is a new man, who acts upon new principles; he must therefore entertain new ideas, and form new opinions.” By 1776, the colonists were ready to go even further. They were ready to test their new opinions in deeds.

    The Declaration of Independence, the Revolution, and the Constitution followed. Afterwards, the US was a Republic, American version.

    (Richard Hofstadter. The United States, The History of a Republic, 1961)

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