I was asked to write a brief assessment of the economic policies of the Bush years. I'm not an economist - and protested as such to the magazine's editors - but they asked me to consider the broader set of economic issues I've been wont to explore here on this site. With that caveat in mind, I agreed to write a brief assessment, and it appears here in their most recent issue.
I conclude thusly:
For much of this period [since the ascent of Reagan], our political leaders battled over whether a free market or an activist government should hold sway. These seemingly fierce battles obscured the deeper truth: that our particular form of free market favors big government and vice versa. Government has always arranged the playing field for the advantage of swift flows of capital [and the efficiencies of scale that are able to take greatest advantage]. The market, meanwhile, has steadily undermined local loyalties and rendered small-scale solutions increasingly ineffective, thus ensuring our fealty to a tutelary state.
The mortgage crisis has highlighted the tight bonds between a large central government and large centers of financial power. We have also witnessed the way in which a “flat” world permits no quarantine: a financial virus encounters no barriers. Within a few weeks the entire world economy was brought to its knees by America’s bad mortgages. The myth that structures could be built so large that they could not fail should have been laid to rest with the sinking of the Titanic. At least now we have seen the end of the idea that there is some fundamental antipathy between big government and big business.
Conservatives will now enter a time of rethinking and regrouping. It would be the height of folly for the Right’s political masterminds to try to concoct again the particular brew that led to the electoral victory of a deeply unconservative Republican Party under Bush. In the wilderness years to come, conservatives should spend some time encountering minds that paid attention to the notion that conservation is at the heart of conservatism — among them E.F. Schumacher and Wilhelm Roepke, both of whom focused on a form of economics that was mindful of the moral health of the society.
An economy that undermines the virtues of a citizenry, and eviscerates the culture that reinforces those virtues, has lost its purpose. Yet it is too simple to lay full responsibility for the recent collapse on Bush. He perpetuated a bankrupt system, but the rot runs deeper than the last eight years.
My point in the second-to-last paragraph - a call for a reconsideration of the economic theories that are profoundly distinct from the Milton Friedman-esque free market ideology - is a consummation devoutly to be wished for, but difficult to imagine. The state of the study of economics has become emaciated - in part because there is very little place in the discipline for "economic theory" in the same way that there is for "political theory" within the field of political science. Political theory has played a leavening role, at its best reminding all practitioners and analysts that politics cannot be reduced to its narrowly conceived empirical study of narrowly conceived human behavior - but rather that politics will always involve such difficult-to-measure aspects such as honor, shame, the will to power, the imperative of self-sacrifice, the appeal to the common good, the cultivation of the citizen. Economics has become ever more constricted, almost completely dominated by technicians who are not only incapable, but wholly incurious, about the larger questions of what an economy is for.
It is a curious thing for a field of study within the "social" sciences should find itself unable to consider its role in the formation of a good society. I am convinced that economics should no longer be left to the economists - that a kind of "intervention" is needed by people who are not blinkered by the current academic orthodoxies of that field. Still, the problem is being recognized by some economists - albeit ones who are heterodox and often either of an older generation or outside the mainstream. In that vein, one recent book has caught my attention, and may suggest the possibility of an opening to a larger set of questions that should ultimately guide economic policy. The Dismal Science: How Thinking Like an Economist Undermines Community was written by Stephen Marglin, professor of Economics at Harvard University. It is a book intended for a non-specialist audience, and invitingly begins with the story of his own discovery of the narrowness of his own discipline. It took the encounter with a foreign place - in this case, efforts to encourage "development" in India - for him to realize that the basic presuppositions of American-based, academically-trained economists were not shared by the Indian villagers who did not see the ultimate aim of life to be economic efficiency and the increase of profit. In a sense, he had the experience of a "theorist" - a word that originally was used to describe someone who encountered different practices and customs in foreign lands.
Marglin wrote of his discovery thus: "Beyond answers to questions that had brought me to Dhabi, I learned something infinitely more valuable: an entirely different way of knowing and being in the world from anything I had ever imagined. Like all of us, I was a product of my culture; I had never questioned the idea that society was composed of self-interested individuals who rationally calculated their way to more and more. In Dhabi, I experienced something very different: not that people lacked all sense of self or of individual interests, but that people lived their lives in deep connection with others - in short, in community. A human life was not conceived of as beginning at birth and ending with death, but as a link in a chain that extended backward to time immemorial and forward as far as the imagination might reach, as a link in a chain that existed in space as well as in time, connecting family, clan, and village."
To this fantastic discovery of an economist, I would only add that this has long been the basic form of OUR culture as well, and that it took the concerted effort of educated elites especially to encourage Western Anglo-American humans away from this more natural form of culture qua community. Much of the deracination that took place was effected through economics and the filtering down of basic liberal economic presuppositions into the heart of society. Marglin's acknowledgment of an enormous blind spot in the basic presuppositions of economic theory is an encouraging sign that perhaps again economists can begin to consider questions that go beyond profit and efficiency. Guides like Roepke and Schumacher might help us to find out way back to a conception of culture in which the market has a place within the city, rather than being something that consumes the city and all of the concerns for commonweal that rightly belong to it.