International Security in 2012: The Major Stories

It seems fitting to begin this first post of 2013 with a look back at 2012--in this case, that year's biggest international security stories.

Here I am sticking with security as construed in traditional, physical, state-centered terms rather than less conventional matters of economic, energy, food or environmental security.1 This is not to dispute that these other dimensions of life create the context of means and motive in which states pursue traditional security. However, the way changes in these areas tend to develop - slowly and complexly and often ambiguously--makes them difficult to track precisely, let alone identify points of transition which can be meaningfully isolated in a list of Big Developments.2 It might be noted, too, that this has been a year in which the familiar troubles (from climatic disruption and related food price spikes to the eurozone fiscal crisis) worsened in the familiar ways without meaningful response from any major actor--non-stories rather than stories in the strictest sense, even as the problems continued to wreak havoc. (Two partial exceptions seem worth noting here, however. Under the "problem" column, the unambiguous slowdown of Chinese, Indian and Brazilian economic growth, with all that spells for the more than usually vulnerable global economy; in the "solutions" column, the Doha climate conference, the results of which I have found underwhelming, but which some more optimistic observers think at least laid important groundwork for more substantive progress later.)

In discussing traditional security I am also setting aside the kind of headline-grabbers about such things as appointments to particular offices and the personal pecadilloes of specific high-ranking officials (like the appointment of Leon Panetta as Secretary of Defense, or the melodrama of the "the Petraeus affair") that made up Foreign Policy's list of the top stories.3 I suppose I see that sort of thing as simply happening on a not particularly illuminating level of analysis, while also happening to be rather Beltway-centric, and often simply gossipy, in contrast with the more comprehensive and globally-oriented round-up I mean to present here.

Skimming the Headlines
As always, 2012 saw a great deal of continuity, especially in those issues that have tended to command American headlines. The United States continued to combat al-Qaida through military means as well as intelligence and police efforts, with the long-controversial use of military detention, rendition and "enhanced interrogation" remaining unchanged, and the drone war expanded, particularly in countries where internal conflicts are ongoing--Yemen, Somalia and northwestern Pakistan. Over the border American troops remain engaged in a decreasingly popular (and it seems at times, forgotten) war in Afghanistan, while U.S. special forces also made a quiet return to a still conflict-ridden Iraq after the withdrawal of American forces from the country completed in the preceding year.

The North Korean nuclear program still absorbed a significant share of the attention of the major powers, as did the country's ballistic missile-and-space program (which saw space launches in April and December, the second of these successful), while relations among the longer-established nuclear powers had their accustomed rancor. Russia went on opposing American plans to build missile defense facilities in Eastern Europe (extending to threats of preemptive military action), deploy aircraft and ships far from home to demonstrate its reach (one Russian sub reportedly operating undetected by the U.S. Navy for a whole month in the Gulf of Mexico), and once again announce ambitious plans for military reform and modernization. The nuclear arms race between India and Pakistan also goes on, in the main an object of speculation among analysts rather than open statements or significant revelations (the odd missile test apart).

As these nations all milk their military capacities for their prestige value, Europe's larger military powers are continuing to grapple with the implications of the 2008 financial crisis for their defense budgets.

Less noticed, but not to be overlooked, several already ongoing insurgencies and other internal conflicts of varying intensities, notably those in Colombia, Senegal, Nigeria, Thailand, Myanmar and the Philippines, continued through 2012 without signs of resolution.

Other situations have seen somewhat more dramatic developments, however.

The UN General Assembly voted to recognize Palestinian statehood in November as its conflict with Israel went on (at times, well beyond its borders, Israel's bombing a site in Sudan that year in what some regard as a related incident). The longstanding dispute regarding Iran's nuclear program, like North Korea's, continued to absorb diplomatic efforts, and unlike North Korea's, to lead to military incidents between U.S. and Iranian forces, Iranian aircraft firing on a U.S. drone, while the potential for something larger (like a military strike) remains. However, the toughening of U.S. sanctions on the country has added a new element to the situation, by severely disrupting the Iranian economy.

Significant developments were also evident in sub-Saharan Africa, where Sudan clashed with the newly independent South Sudan along their mutual border. Ethiopian troops withdrew from Somalia, while African Union and Kenyan forces remain engaged alongside the government in the country's civil war. Piracy off the country's coast also declined in 2012 (as piracy has also increased off West Africa, though the frequency and ambition of the attacks there is a far cry from what was seen off the Horn of Africa in past years). That region also saw two coups, in Mali and Guinea-Bissau (all the more noteworthy as such changes of power have become a rarity in recent years), and a rebellion in the Central African Republic. In the Democratic Republic of the Congo the M23 rebellion, backed by neighboring Rwanda and Uganda (each dealing with Congo-based rebel groups of their own) added a dangerous, newish element to the complex of conflicts afflicting their region since the 1990s. In South Africa strikes in the mining sector and the violence that has followed (which included a police massacre of striking workers, the first such post-apartheid incident) has raised questions about the stability of the highly unequal country.

The incidence of violence along the U.S.-Mexican border may be falling off, though that claim is a subject of some controversy, especially with the same violence continuing south of the border, though this too may have stabilized or even begin to decline. Much the same may be the case in the Russian Caucasus (even as Russo-Georgian relations - and Georgian relations with Abkhazia and South Ossetia - remained little improved), while Tajikistan saw a rebellion begin and apparently end in Gorno-Badakhshan. India's insurgencies in Kashmir, Naxal and the Northeast, too, may be in decline.

By contrast, Indonesia's Papua province has seen a largely unreported surge of violence. At the same time neo-fascist violence appears to be increasing in restive, austerity-stricken Europe, with the activities of the Golden Dawn in Greece and Jobbik in Hungary, though anti-Roma violence in particular is becoming widespread, particularly in east-central Europe but elsewhere on the continent as well, while there are also signs of an upsurge in anti-immigrant and anti-Semitic attacks.

There have also been some noteworthy developments in the defense policies of certain of the major powers. Germany, while no exception to the trend toward force downsizing and budget-slashing in Western Europe, continues to "normalize" its armed forces, through changes in legislation (permitting the use of German soldiers internally in peacetime) and acquisitions policy (like the purchase of armed drones). Additionally, more slowly and less dramatically than its European allies, the U.S. is also moving toward cuts in defense expenditures, announcing a reduction of almost a half trillion dollars in military spending over the next ten years. The battle over the budget deficit at the year's end also raised the prospect of deeper cuts than that (an issue still unresolved at this time).

Two Particularly Big Stories
Consequential as all the events described above already are, and might become, for the time being the two biggest stories - those involving particularly dramatic turns in situations likely to have wide impact - appear to be the more aggressive tone of the relations between China and the other major powers in East Asia; and the continuing effects of the wave of revolutions sweeping through North Africa and the Middle East from 2011 on.

Realpolitik in the Western Pacific
The U.S. continued in its controversial "pivot" toward East Asia, with 2012 seeing the deployment of U.S. Marines to Australia in April, and discussion of the basing of more U.S. warships in Singapore. It also saw the public unveiling of the AirSea Battle doctrine, widely taken as directed against, and provocative to, China. The summer of 2012 also saw Japan's full nationalization of the Senkaku Islands China has long claimed as its own territory.

Meanwhile, China has continued in its harder line on its claims in the South China Sea, interfering with oil and gas exploration and fishing in the disputed waters by neighboring Vietnam and the Philippines. At the same time China has strongly protested Japan's nationalization of the Senkakus with numerous incursions of its waters and airspace by Chinese ships and aircraft - in December, resulting in the first intercept of a Chinese military aircraft by Japanese fighters in half a century. (Taiwan, too, has contested Japan's nationalization of the islands, resulting in a water cannon battle between Japanese and Taiwanese Coast Guard vessels in September.)

It is often noted that while China remains a regional power, far more equipped for defense than offense, it has continued to take rudimentary steps toward a real power projection capability, many of primarily symbolic significance, like China's dispatching warships to the Mediterranean, but others of more practical consequence, like its flying and landing aircraft from its carrier for the first time.4 Japan, for its part, appears to be stepping up defense spending in response to China's recent gestures in the vicinity of the Senkakus. India, which has its own issues with China closer to home, on which there has little been little progress or regress in 2012 (despite allegations of hype over frictions between the two countries in the Indian press), made a declaration of its intention to defend its interests in the South China Sea region.

Some observers also suggest that China's domestic media has also been taking a more militaristic line, celebrating the acquisition of new technologies, and detailing aggressive scenarios involving Japan and other countries.

From Damascus to Timbuktu
Two years after the Tunisian revolution of 2011 the story of the "Arab Spring" remains far from over, with many countries yet to see stability, let alone the establishment of democratic governments which look viable in the long-term. States which have undergone revolutions (like Egypt), and others where the old status quo has not budged (like Saudi Arabia and Bahrain) continued to see political violence through 2012, though by far the worst of this has occurred in Syria, and northwest Africa.

The fighting in Syria (which, interestingly, was ignored by some authors of last year's write-ups) has escalated into a full-blown civil war, which has led not only to tens of thousands of deaths and an exodus of refugees to neighboring states, but the increasing isolation of the Syrian government, and increasing international recognition of the rebels (the U.S. doing so in December). There have also been serious regional repercussions, including military incidents with Israel and Turkey (which has seen intensified activity by Kurdish guerrillas more freely operating from northern Syria), and the spread of related fighting into neighboring Lebanon.

Additionally, while the Syrian conflict is already not a purely domestic affair (with the rebels reportedly receiving aid from Saudi Arabia and Qatar via a cooperative Turkey, and Syria possibly receiving support from Iran), the scale of the resulting humanitarian crisis, the risk of a wider regional conflagration if incidents such as those already seen continue to occur, and the dangers posed by the Syrian government's chemical weapons, have led to talk of direct intervention by the West. However, the scale of the intervention that would be required, American reluctance to engage in another intervention overseas (especially one involving a large commitment of ground forces, especially in the Middle East), and Russian opposition (and not least, the Russian military presence in Syria) are inhibiting factors for the present.5

Meanwhile, more than a year after the overthrow of Moammar Qaddafi, Libya is still a scene of factional fighting--the unexamined context of the attack on the U.S. consulate at Benghazi. The return of Tuareg fighters with Libyan weapons to Mali was also a factor in the civil war in Mali, which saw an Islamist faction take over the northern part of the country, and brought on a relatively large-scale, French-led international intervention in January 2013. In that same month the conflict spread to Algeria with the hostage crisis at the Amenas gas plant. In short, what began as a war inside Libya has not only fed into another war over the border (leading to yet another intervention by the U.S. and its allies), but shows signs of turning into a broader regional crisis.

Neither the belligerent rhetoric and gestures seen in East Asia, nor the conflicts in the Middle East/North Africa, can be properly considered without reference to the economic pressures faced in those regions. The slowdown in China's economic expansion, combined with the leadership change in that country (two things Japan had in common with China), have been an inducement to grandstanding. At the same time, food and fuel prices had more to do with North African revolutions than Facebook. It may be that the tensions in East Asia, at least, are a matter of posturing rather than imminent war or cold war, but these are no grounds for complacency, especially as those subtler, less Big Moment List-friendly stresses on the international system previously mentioned continue to mount.

1. By "state security" I refer to matters like interstate and intrastate and extra-state wars, skirmishes and military incidents, force build-ups and arms races, large-scale political and criminal violence and state collapse, and the associated political, fiscal and diplomatic maneuverings.
2. Nonetheless, I recommend the New Security Beat's list of its top posts of the year to those interested in keeping up with this issue.
3. You can find the same list of stories on a single page, minus the bandwidth-sucking graphics, here.
4. In January 2013, China's first-ever heavy transport also conducted its first official flight.
5. This presence includes Russian "advisers" manning Syrian air defenses, and recent visits by Russian warships. January 2013 saw a particularly large Russian naval deployment to nearby waters.

Revisiting The Politics of Rich and Poor

As the 1980s drew to a close social critics across the political spectrum widely expressed expectations that the 1990s would redress the preceding decade's tilt in favor of business, wealth and free market pieties. Kevin Phillips, drawing on a theory about political cycles in American history which he had previously used to successfully predict the country's electoral realignment in the late '60s, certainly made that case in 1990's The Politics of Rich and Poor.

That theory identifies a pattern of twenty-eight to thirty-six year cycles in American history, each dominated by a particular party and its politics, which holds the White House and sets the tone for national politics through most of the period. Republican periods (1860-1896, 1896-1932, 1968-?) begin with the party taking a populist stance, typically against inflation and big government (as after the Civil War and World War I, and again by the late '60s), which gives way to a runaway enthusiasm for laissez-faire policy, attended by a worship of business and wealth, with a substantial element of Social Darwinism in the mix (as seen in the Gilded Age, the 1920s, the Reagan years). The less advantaged groups (typically those in rural areas, the interior, and primary industries, as well as labor and the poor generally) inevitably suffer, while the speculative excesses of an ever-more irresponsible financial sector lead to a general crisis. The result is a political backlash which comes to a head when the speculation brings on a crisis, leading to an era of more egalitarian attitudes and policies (the Progressive Era, the New Deal), and some downward redistribution of wealth.1

Of course, this last phase of the cycle never occurred in the '90s, or the 2000s, conservative policies continuing, with the expected effects: continuing deindustrialization and financialization, increasing speculation, debt, inequality. A possible explanation for this would seem that we ended up with two Republican cycles back to back again, just as we did between 1860 and 1932, but Phillips has not advanced such a theory in his later writings, and it is hard to see how he or anyone else could have. When this happened, it was the case that the Republicans were out of power when the crisis came to a head in 1893 (Democrat Grover Cleveland was President instead), permitting them to play the role of opposition, with the help of a more moderate line encompassing an element of economic populism (as with McKinley and Roosevelt). Nothing of the kind has been seen in the post-1968 cycle.

A more likely possibility is that Phillips may have been too quick to call the cycle over. After all, as of 1988, or even 1992, the Republican reign would have gone on only two decades, a rather shorter period than seen in the past - a run up to 2004 still plausible. One might imagine that the unusual circumstances of the War on Terror can account for the second Bush II administration. Yet, the Obama administration fell far short of a "New" New Deal, and might fairly be considered to have continued the cycle into an unprecedented fifth decade, even after the economic shock of 2008, while when running against Obama in 2012, the Republicans remained very much the party of Reagan, rather than taking a moderate line.

It seems quite plausible that if a pattern had indeed prevailed in American politics for the past two centuries, it has since been broken, with the proponents of conservative policies stronger than ever, and just as with the linearity evident in the differences among the Republican heydays, an entirely different analytical approach seems required to explain the fact.

Phillips' own analysis offers clues. One is in the pattern he has identified, which has Republicans and conservatives prevailing in three of the four last cycles. This electoral pattern hints that conservative Republicanism is the "default setting" of American politics, a reading reinforced by the limited extent to which the United States deviated from such policies at even the most liberal points in its history (by comparison with not just continental Western Europe, but even Britain and Canada). The backlashes against conservative policy frequently produced much more rhetoric than substantive change, the Progressive Era, notably, seeing very little action, and this generally in line with the interests of the country's economic elites, as Gabriel Kolko showed in his study of the period, The Triumph of Conservatism.2 One might, in fact, argue that the cycle was less about swings from left to right and vice-versa than swings within the right, from elitist right-wing politics to a somewhat more populist variant of the same (and that not usually for long), with the liberalism of the New Deal era exceptional rather than really representative of the dynamic, a function of the unusual circumstances of the Great Depression, World War II and the early Cold War.

The circumstances of the late twentieth century offered little reason to expect a repeat. Phillips did believe that declinist worry would be a significant source of pressure for reform. However, the stagnation of both Japan and (to a lesser extent) Western Europe, which removed that pressure, were a significant boost to American complacency in the '90s and after. At any rate, the fact remained that conservative policies were not confined to the United States, or even the English-speaking countries, but evident across the industrialized world - including Japan and West Germany. They were increasingly evident, too, in the old citadels of Communism, the Soviet Union and China, with the collapse of the one and the opening up of the other resulting in the whole world being swept up in the neoliberal wave. The extent to which neoliberal globalization actually limited the freedom of any one state to pursue heterodox economic policies may be debatable, but that it made them seem a much less viable path cannot be contested. Additionally, while, as Phillips notes, the late phases of conservative rule historically tend to see the Democrats swing rightward, it does seem to have been the case that American liberalism was in an especially poor position at the end of the twentieth century, considerably diminishing the pressure on the right to take a more populist position. The result is that meaningful redress of the issues raised by Phillips' book appears dismayingly unlikely nearly a quarter of a century later.

1. A fuller description of Phillips' theory can be found in my earlier review of the book.
2. In that book Kolko systematically examines the achievements of Progressive-era reformers to contend that these actually represented triumphs of business. The Pure Food and Drug Act and the Meat Inspection Act, for instance, were a matter of making American agricultural exports acceptable to European importers; national insurance regulation was a way of enabling national insurance companies to escape the state regulation which provided shelter to the smaller, local firms against which they competed; and the Federal Reserve was created to guarantee the availability of the liquidity business desired.

Review: The Politics of Rich and Poor: Wealth and the American Electorate in the Reagan Aftermath, by Kevin Phillips

New York: Random House, 1990, pp. 262.

Kevin Phillips, like Andrew Bacevich and John Dean, is a conservative critic of the country's movement to the right in recent decades, a subject on which he has written throughout his career. In The Politics of Rich and Poor he looked at the '80s as they were coming to a close through the lens of the reading of American history he developed earlier in The Emerging Republican Majority (a book in which he predicted the country's present political alignment as an enduring fact, and certainly one case when a forecaster got things right by rather more than coincidence). The most important portion of this is his identification of a pattern of twenty-eight to thirty-six year cycles in American history. Each of these is dominated by a particular party and its politics, which holds the White House and sets the tone for national politics through most of the period: the era of Democratic-Republican era rule between 1800 and 1828, the 1828-1860 dominance of the Democrats, the 1860-1896 and 1896-1932 periods of Republican rule, the Democrats' dominance between 1932 and 1968, and the last Republican cycle which began in 1968 with the election of Richard Nixon.

Within the Republican cycles there is a pattern which starts with the party taking a populist stance, typically against inflation and big government (as after the Civil War and World War I). Over time this gives way to a runaway enthusiasm for laissez-faire policy, attended by a worship of business and wealth, with a substantial element of Social Darwinism in the mix. Characteristic of government policy are reductions in taxes (specifically, the more progressive taxes), the avoidance or weakening of regulation of big business, and tight money policies which result in deflation or disinflation. The results typically include substantial restructuring of the economy which sees business consolidate in a wave of mergers and the advent of new types of large organization (the great corporations and trusts of the Gilded Age, the mergers of the '20s), debt pile up, and speculation become wilder (with new financial instruments often playing a role). The rich get richer, but the poor get poorer as wealth is redistributed not only between classes, but also economic sectors (with old sectors suffering and agricultural and the extractive businesses in particular taking a hit as new industries take off), and with them, regions (urban areas doing better than rural ones, the coast better than the interior). The result is a political backlash which comes to a head when the speculation brings on a crisis, leading to an era of more egalitarian attitudes and policies, and some downward redistribution of wealth.

The post-1968 Republican cycle was very much in line with this pattern, with Richard Nixon elected after a populist campaign and pursuing moderate policies (such that many a liberal commentator considers him to have been to the left of recent Demcorats), and the Ronald Reagan administration marking the shift to the "heyday" politics of hyper-capitalism. The redesign of the tax system in the Reagan years shifted much of the burden from the rich to the less well-off, while spending on programs which principally benefit the poor was reduced. The rising government accumulation of debt at the time also redistributed wealth via taxpayer money to the holders of government securities (in general, the affluent), as did increased defense spending (which favored military contractors, and the "knowledge sector" workers disproportionately associated with them), and taxpayer-funded bailouts of the riskier forms of the speculation unleashed by deregulation. Deregulation also gave "paper entrepreneurs" a freer hand with mergers and acquisitions, weakened the position of workers, and permitted companies in sectors like communications and transport to reduce service to less profitable (mostly rural) regions. Additionally, the deflationary policies of the early '80s (shorter-lived) harmed homeowners and commodity producers while favoring the holders of financial assets (also benefiting from the high rates of interest at which the Federal government borrowed).

The predictable result was that, just as happened at the same point in earlier cycles, the rich were richer, the poor poorer, with the winners and losers much the same before. Agriculture and resource-extracting industries took a sharp blow while finance boomed. Major coastal cities enjoyed a measure of prosperity as the interior languished - and the more vulnerable everywhere did badly, particularly young people, women, minorities, and workers who had a high school education or less. Nonetheless, a significant difference was that where the earlier heydays of the Gilded Age and the '20s were periods of industrial expansion, the '80s saw deindustrialization as sectors like steel, automobiles and textiles decayed, and the U.S's slipping as an economic power (evidenced in increasing foreign debt, and the purchase of American assets by increasingly influential foreign investors, to which he devotes a chapter).1

All the same, Phillips took the '80s for the '20s, and supposed that the trend had hit its high-water mark, with the shift to a more egalitarian pattern soon to follow, hints of which he found in the slimness of George Bush I's victory over Michael Dukakis in 1988; Bush's rhetoric about a "kinder, gentler America," suggesting a redress of '80s excesses; the worries of even conservatives like George F. Will and Ben Stein over the damage that inequality and its ill effects were doing to the country's social fabric; the emergence of declinist sentiment over the U.S.'s standing in the world (epitomized by the anxieties surrounding Japanese competition); and what he thought was the decreasing ability of Republicans to invoke overseas Communism and the culture wars in support of their position as the Cold War came to an end, and public opinion shifted in favor of the kind of cultural liberalism that had seemed radical in the '60s (like pro-choice sentiment). Even the diminished interest in nighttime soap operas about wealthy families like Dallas and Dynasty seemed to point in such a direction.

Of course, nothing of the kind happened, the policies of the '80s continuing through the '90s and 2000s, with additional upper-class tax cuts, reductions in social spending, deregulation (or lax enforcement of such regulations as remained on the books), despite the familiar results: continued deindustrialization, financialization and worsening inequality.2 Even where culture was concerned, the waning of enthusiasm for business and wealth was short-lived, as demonstrated by the subsequent hero worship of Bill Gates and Steve Jobs and less explicably, Donald Trump; the abundance of "reality" shows about how the other have lives; the revival of the nighttime soap; the popularity of Iron Man at the movies; the desperation of all and sundry to attach the label "entrepreneur" to themselves like some aristocratic title (however marginal their claim, and for that matter, however marginal entrepreneurship has become to economic life and the acquisition of wealth).

The difference between his expectations and the actuality through which we have been living points to the book's principal deficiency. While Phillips offers robust, lucid coverage of a significant part of its central issue, there are a great many key points which he acknowledges, but fails to give their proper due, like the full significance of the differences between the '80s and other Republican heydays. (The economic growth of the '80s was much more a matter of paper profits, and weaker, than in those earlier eras, for instance.) The result is that, even granting the validity of his theory of a cycle prevailing through American history for two centuries, the possibility that circumstances have disrupted that cycle is not even considered. Much as aspiring forecasters are warned against having overly linear expectations about what the future will bring, this certainly seems to have been one time when the projection of an existing trend considerably farther into the future was exactly what was called for.

1. Phillips was clear that this was a matter of the acceleration of American decline, rather than its cause, and also pointed to the U.S.'s heavy defense spending (especially in comparison with Japan) as another factor. American decline would become a major theme in Phillips writing, treated at length in such works as 2006's American Theocracy.
2. The Clinton administration certainly has to be seen in these terms, having given the country free trade in the form of NAFTA and GATT, welfare reform in the Personal Responsibility and Opportunity to Work Act (the name of which says much about the era's rhetoric), and deregulation in the Telecommunications Act of 1996 and the Gramm-Leach-Bliley Act, the former allowing greater consolidation in media, the latter the same in finance, while deficit reduction took priority over other economic and social goals (like the unrealized health care reform plan). It is worth remembering, too, that the Clinton administration sidelined its liberal economic advisers (Robert Reich, Joseph Stiglitz) after the first term in favor of conservatives in the second, while returning Randian banker Alan Greenspan to the Federal Reserve board chairmanship, where he helped feed not just the stock market bubble by flooding the market with cheap money, but responded to its bursting by doing the same, with the real estate bubble of the 2000s the result.

Review: Economics and the Public Purpose, by John Kenneth Galbraith

Boston: Houghton Mifflin, 1973, pp. 334.

In his 1967 book The New Industrial State John Kenneth Galbraith argued that, far from being the market-disciplined firms of neoclassical economics, the large, industrial corporations in crucial sectors like aerospace, defense, computers, chemicals and oil essentially operated like units within a planned economy.1 In Economics and the Public Purpose he put this "planning system" into the context of the larger economy, which also includes smaller, less complex enterprises that can be fairly described as still operating in a market system.2

As might be expected given the disparity in size and power between the economic units involved, the conditions of the enterprises of the "planning system," and those in the market system, very different, generally to the disadvantage of the latter. The large companies of the former are able to exercise considerable control over such crucial matters as the prices at which they buy inputs (through practices like vertical integration, or raising needed capital internally without turning to creditors) and sell their output (for instance, being able to tacitly avoid the more disruptive forms of competition, and pass cost increases along to customers when these are unavoidable). By contrast, companies in the market system cannot, leaving them subject to the vicissitudes of competition, and consistently derive smaller and less secure returns accordingly. The planning system also comes in ahead of the market system where public policy and public support are concerned (as seen when one compares, for instance, the aerospace sector and the construction industry).

The result is evident not just in the differing returns among the heads of these firms--the difference between the income of a Fortune 500 CEO and a small business owner, for instance--but their workers, as a comparison of the lot of a unionized autoworker with that of an agricultural laborer makes clear. However, both these systems still come in ahead of the broader public interest, and the public sector representing it. One result is that the United States is richest in those things supplied by the planning system (like cars and consumer electronics), less well-supplied with the products of the market system (like housing), and least well-supplied by those goods which the private sector does not supply and does not value (like public transport options), making for the mix of private affluence and public squalor that he first addressed in 1958's The Affluent Society.

After presenting this comprehensive picture of the economy Galbraith devotes the last third of his book to laying out a "theory of reform." This begins with the correction of the conventional wisdom on economics (dominated by neoclassical pieties which defend the status quo rather than explaining how things actually work) and reform of the workings of the legislature (with the elimination of Congress's seniority system, a vehicle of the planning system's influence on policy, particularly important).3 However, he also considers an ambitious range of specific economic measures to the end of redressing the imbalance in development and power between the planning and market systems (Galbraith terms this "the new socialism"), and between both of these and the public sector more generally.

The market system would be aided by the encouragement of small business (and its employees) to organize, the extension and increase of the minimum wage, and the conclusion of international agreements to protect their prices and income, while government would make greater efforts to support their "educational, capital and technological" needs--in the interest of fairness as well as the improvement of output in these comparatively neglected areas. Where the planning system is concerned, differentials in compensation inside companies would become an issue in collective bargaining, while the tax system would be rendered more progressive, in part through the closure of loopholes, but also the abandonment of the distinction made among types of income (as between salary and capital gains, for instance).4 Affirmative action and a guaranteed minimum income scheme would be crucial to the extension of the effort to eliminate inequality to all; environmental regulation would implement the principle of what would today be called sustainable development; and the government would assume responsibility for services the private sector does not perform well or at all (like health care, urban housing and local transport).

Galbraith rounds out this program with a number of additional measures, including the nationalization of certain corporations--those in the defense sector (given their relationship to the Federal government, in many respects already public, but in need of being reined in, especially given the arms race to which they contribute), and even large corporations of any type where shareholder power has disappeared due to the diffusion of stock (the case for the superiority of private to public enterprise, after all, depending on the control of a self-interested owner within a free market, now vanished as a practical matter).5 There would also be a national authority charged with coordinating the planning in different industries, which in turn would coordinate the management of the international economy with its counterparts abroad. The achievement of price stability would rely less on the monetary policy Galbraith has found to be ineffectual, and much more on the use of fiscal policy (increasing and reducing not just spending but taxes as necessary), and selective price and wage controls (also an instrument for reducing inequality by limiting the divergence of wages within firms, and between economic sectors).6

Radical as some of the prescriptions seemed even at the time of writing (nationalizations, central planning, etc.), Galbraith believed that the country was already headed in this direction. Of course, the reality proved to be quite the opposite. The economic crises which had just begun at the time he was writing the book--American problems with the balance of payments, the energy crisis--proved an opportunity not for those seeking the reforms he described, but for partisans of neoclassical ideas (like Thatcher and Reagan) to reverse the movement toward more activist, egalitarian direction of the economy underway since the Second World War.

Still, it would be simplistic to dismiss Galbraith's ideas on these grounds. Galbraith's examination of the large corporation and the small business together provides an impressively comprehensive picture of the American economy which remains useful in its broad outlines, and most of its details as well. The most significant changes in the American and world economies since his time have lain in the increased pervasiveness and density of transnational operations, and the expansion and intensification of speculative finance, which do not alter the fundamentals of the picture. Indeed, the ways in which his image has dated have in their way validated Galbraith's diagnosis of the American economy's problems (inequality, deindustrialization, balance of payments problems, environmental degradation), which have sharply worsened--in large part because those orthodoxies he so incisively attacked have predominated, and remain dominant in spite of their consistent and at times spectacular failure to deliver the promised goods.

Of course, even those who will grant his insight on that score can still take issue with his suggested solutions, which are virtually impossible to present within mainstream discussion today, and some of which he was less prone to advance in later works.7 Yet, whatever their deficiencies, in regard to either their practical effectiveness or their political plausibility, the scope and ambition of Galbraith's program stands as a reminder of how timid, tepid and narrow what passes for public "debate" has become--to our great cost.

1. The presentation of the theory of the planning system is here somewhat refined over what appeared in the 1967 book. In discussing the driving imperatives of "technostructure"-dominated companies Galbraith does not write of company "social goals," or the role of "identification" and "adaptation" in the executive's attitude toward his firm. Rather he emphasizes the drive for expansion of the company, and the material enjoyments of high-ranking company officials served by such growth. He also considers the transnational development of that system through the advent of the multinational corporation.
2. The continued existence of such businesses is a function of the small size and lower level of organization of the businesses operating in this area, because the activity they perform is unstandardized and geographically dispersed, the service rendered entails a personal element, or the actors involved are connected with the arts. (In cases this has also been bolstered by legal and political obstacles, as in construction.) One result has been that organization and technology in these areas lags well behind that of the corporate-dominated high-tech sectors, which has kept them small (a result of these smaller, poorer, less secure firms being less able to invest in such things as technical R & D).
3. Galbraith points to such matters as the wall neoclassical economics puts up between microeconomics and macroeconomics, its preference for sticking with the small business version of the firm to addressing the reality of the large corporation, its failure to come to grips with the way in which technological innovation actually occurs, its advocacy of monetary policy as the sole respectable tool of economic regulation, and in general, "the way it rationalizes and conceals the disadvantages of the weak."
4. This is in line with Galbraith's theory of the use of organization to counter the market-upsetting advantages of large corporations in his 1954 American Capitalism: The Theory of Countervailing Power.
5. The stock of the companies would not be expropriated, but purchased with interest-bearing securities.
6. Criticism of the claims made for monetary policy is a long-running theme in Galbraith's work. In The Culture of Contentment he compares the attempt to encourage growth with lower interest rates to "pushing an object along on the floor with a string." It is also not much more effective at taming inflation by restraining demand. In the chapter on the subject in The Affluent Society he contends that higher interest rates have little effect on firms in the planning system because they can use internal savings to fund investments, and when they do borrow, pass costs along to their customers; while consumers are less inhibited by higher interest rates than might be expected because their schedule of payments obscures interest charges.
7. In 1996's The Good Society, for instance, Galbraith left aside the matter of price controls, apparently on grounds of political feasibility rather than practical effect, and made no mention of public ownership as a response to the failure of shareholder power.

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The Culture of Contentment and the Election of 2012

Those critical of the thrust of American policy have in recent decades frequently found themselves at a loss to explain the voting behavior of the electorate--why, for instance, the middle-class would vote against tax increases on the rich at times of fiscal strain. C. Wright Mills offered a portrait of Americans as alienated, but also atomized, distracted and uncomprehending. Another view, recently updated by Thomas Frank, analyzed the roles of "market populism" and culture war in rallying them to such positions. Morris Berman, likewise updating a longer tradition, offered the view of Americans as deeply, irrevocably committed to a social model centered on individual striving for private material gain (in spite of its personal and social consequences).

John Kenneth Galbraith offered an interesting complement to this body of thought in The Culture of Contentment in which he pointed to an often overlooked element of self-interest as a factor in this behavior. He wrote of a "contented majority" among the electorate, which included the broad professional and business class, as well as those who might be thought of as working class, but earn comparable income (as even some factory workers do). These are, in their attitude toward politics, preoccupied with their short-run personal comfort above all else; prone to believe that people "get what they deserve"; and in general take a dim view of government outside of certain roles they view as personally beneficial. (Defense apart, these include the contributions of Social Security and Medicare to their retirements or the maintenance of elderly relatives, or the protection of their savings by financial bail-outs.)

Consequently they resent the programs aimed at helping the poor (welfare, public education, etc.) that they pay for but do not expect to use; tolerate high levels of income inequality, thinking that "the price of prevention of any aggression against one's own income is tolerance of the greater amount for others," as any "redistribution of income from the rich . . . opens the door for consideration of higher taxes for the comfortable but less endowed"; and particularly in line with their short-run thinking, believe that "short-run public inaction . . . is always prefer[able] to protective long-run action."

This combination of preferences is exactly the sort of thing to lead to failures to address not just rural and urban poverty, but also ecological problems, the deterioration of the country's transport infrastructure, uncontrolled financial speculation, deindustrialization, mounting debt private and public, foreign and domestic, and the impact on U.S. influence abroad. And it counts disproportionately because the contented are disproportionately represented in the half of the eligible electorate which votes.

Galbraith speculated that this attitude would continue until a sharp economic downturn, a major military setback or a "revolt" of the underclass made the contented discontented, and one might wonder at what this suggests about the present. Recent years have seen the worst economic crisis since the Great Depression (the disappearance of trillions in wealth, a 10 percent U-3 unemployment rate at its low point, continuing austerity at the local and state levels), and the disillusionment following a succession of costly, frustrating and ultimately unpopular wars across the Greater Middle East (particularly Iraq, from which U.S. troops withdrew last year, but increasingly Afghanistan as well). However, such discontent as has appeared has, to the dismay of observers like Frank, taken a mostly rightward, status quo-affirming direction--the spike in interest in Ayn Rand, still being read by a wide audience in a way so many '50s-era intellectuals are not; the advent of the Tea Party, which was outraged more by the prospect of aid to troubled homeowners than the bail-out of spectacularly stupid and irresponsible speculators, and has had far more political influence on the Republican Party than Occupy Wall Street has had on the Democrats.

This is all reflected in the tenor of the political dialogue. The national debt's bounding far ahead of GDP remains a valid cause for concern, but the unseriousness of conservative criticism of it remains evident in the assertions that the deficits are not so large that more cannot be spent on defense, or further tax cuts bestowed on the wealthy. The dependence of the economy on fossil fuel profligacy has not been questioned to any significant extent, Mitt Romney's plan for job creation based on the premise of booming oil production--in line with his belittling of climate change and efforts to combat it even as, for the second year in a row, the southern states suffered through a near-record drought, while Manhattan's subway system was shut down by a hurricane.1

Even the personal histories and ideological positions of the presidential and vice-presidential candidates put forth by the Republican Party (the "traditional party of contentment") are telling. Mitt Romney is a wealthy, Swiss Bank account-holding Wall Street speculator born to privilege whose less-guarded remarks have been deeply offensive toward those not among the contented. His running mate Paul Ryan is an economics major whose quibbling over his adherence to Randian ideals (given their atheism) just makes his devotion to ultraorthodox economic thought that much clearer. Granted, Romney and Ryan lost, which some may take to validate the worry of sympathetic pundits like Tim Stanley that they were the "wrong" candidates this time around - but all the same the election was a close one, so much so that these candidates lost by only two percent of the popular vote, while the Republican Party retained control of the House of Representatives (albeit, by a slimmer margin).

It is, of course, an easy enough thing to envision the stress on our accustomed politics growing more severe. A softening global economy (Chinese and Indian growth is slowing, while Europe remains troubled), the prospect of sharp spending cuts adding to the pain already being caused by the considerable austerity at the state and local levels, the failure to rein in the kind of speculation that caused the meltdown of 2008, to name just a few of the continuing problems, are all plausible sources of such stresses. But for now the culture of contentment remains surprisingly intact.

1. Prominent in the plan to "create 12 million new jobs" is quicker and wider oil drilling (offshore drilling alone is expected to create 1.2 million jobs), the construction of the Keystone XL pipeline, and the elimination of carbon regulation from the Clean Air Act, as well as bullish assumptions about what shale oil production will achieve.

In Defense of Futurology

Anyone who looks into futurology quickly encounters the enormous skepticism surrounding the whole discipline, denunciations like Max Dublin's Futurehype: The Tyranny of Prophecy reflecting common sentiments.

It would be pointless to deny that there is much to critiques like Dublin's. It is indisputable that futurologists do not often get things right, least of all when the predictions are of the dramatic, headline-making kind. It is equally indisputable that not all of the mistakes have been made in good faith; the public constantly has unfounded, dishonest and astonishingly arrogant predictions being foisted on it, which have often originated in or become the tools of vested interest. These have often diverted our attention away from real and immediate problems to phantasmic ones (as with so many proclamations about foreign military threats). They have also been used to deflect calls for meaningful action on pressing matters with illusions of cheap, easy fixes if one only waits (the apparent attitude of many Singularitarians to poverty and ecological problems), or even things working out for the best all by themselves (like the promise that speculative bubbles may have burst disastrously in the past, but this latest one is different). In short, predictions have often been worse than useless, doing a great deal of damage.

Yet, the fact remains that prediction is unavoidable. It is unreasonable to expect that self-conscious, time-conscious beings will not consider what lies ahead of them--and even were this possible, their refraining from doing so would be undesirable. Intelligent action requires presumptions about outcomes, which necessarily involves prediction, explicit or implicit, especially when planning is involved. As the range, scale and complexity of the requisite planning grows, so does the requisite predictive effort. Given the realities of a thoroughly globalized industrial civilization, there is a genuine need for the kinds of elaborate, specialized efforts that have made an industry of forecasting.

Moreover, just as we have to be mindful of the harm caused by bad predictions, it is well worth remembering that the failure to heed those sound predictions eventually validated by events have also done much harm, and threaten to do much more, as with the dismissal of Ivan Bloch's predictions about what a general European war in the early twentieth century would be like, the warnings about financial speculation run amok again and again down to the meltdown of 2008, the problem of climate change today. Seen within a larger context, the problem seems to be less a particular intellectual tool for understanding the world (unique as its influence may be in respects) than the corruption of our intellectual life by political agendas, the failure of the media to lucidly present the issues of the day, the inadequate training of even the better-educated parts of the public to think critically and cope with nuance.

Alas, these quite obvious sides of the issue seem to carry little weight with the knee-jerk detractors who seem to see something intrinsically wrong with this activity--a view which in most cases says more about them than it does the failings of futurology. Some regard predictability as excluding the possibility of freedom (apparently not worrying that freedom in a totally random universe would deprive choice of its meaning), or are simply suspicious of the exercise of human reason, especially when applied to the human sphere (a position which has run throughout the conservative tradition, all the way down to today's postmodernists). Libertarians in particular seem to dislike prediction because of its association with planning, which they associate with impiety toward the Market, and with government intervention in it (while they conveniently overlook the ways in which private actors must plan). I suppose, too, that there is a considerable amount of plain old anti-intellectualism in the sentiment (as those who make the more influential or nuanced predictions tend to be experts). And the truth is that in many a case an individual's level of contempt tends to reflect their gut response to what a particular futurologist happens to be saying. (I have found that climate change "skeptics" get quite nasty toward the whole field when they encounter predictions about this particular subject.)

Rather than writing off futurology (something we simply cannot do), the only viable approach is to strive to get better at making predictions, and to get better at making use of them. We need to critically examine the claims we get, not just the "what" and "when" and "where" of them, but the "how" and the "why." Along with a genuine diversity of views--and a readiness to call out those who really are the venal mouthpieces of special interests--this is far and away the best protection against those who would seek to monopolize real debates, or manufacture fake ones by sowing pseudo-scientific doubt (like those who would have us believe there is no connection between tobacco and cancer, or carbon emissions and climate change).

We should not look to the field for a precision or a certainty beyond what it can actually give. Especially when the distance between the present and the point in the future is considerable, we should expect to get just the rough outline of "things to come"--which is, in the end, what the most successful predictions generally seem to strive for, perhaps because that is all we can detect through the noise. We need to think less in terms of inevitabilities than spectrums of probability robust enough to survive life's frictions, surprises and the range of choices that may appreciably affect them; to think less in terms of simplistic projections of the present than the ways in which trends peter out, and accelerate, and interact with one another; to recognize the attached caveats and respond accordingly--to not shy away from committing to this or that expectation, but be able to react with something better than dumbfounded stupidity if events take a different course.

And even where predictions do fall short, it is well worth remembering that asking the large questions has a way of yielding insights that might not otherwise emerge, a not inconsiderable prize in itself.

A Scarcity of "New Thinking"

Looking back on intellectual history the middle of the last century - the 1950s especially, but to differing degrees the years immediately preceding and following it - seems to have been an exceptionally fertile time for popular writing on sociology and economics and the history related to them.

Today's more striking public intellectuals are not without ideas of their own, but the writers of the '50s remain an essential point of reference and overall influence, and the work of the newer authors, at its most substantial, tends to carry forward the earlier arguments and critiques. Andrew Bacevich is perfectly clear on the matter of his debt to William Appleman Williams. Morris Berman, discussing his latest, points out that "it is actually part of a lineage, the path initially staked out by Richard Hofstadter, C. Vann Woodward and Louis Hartz" in the late 1940s and 1950s. At the close of The Wrecking Crew it is to Richard Hofstadter that Thomas Frank looks back. Indeed, Chris Hedges, in Death of the Liberal Class, compares our current crop of public intellectuals - unfavorably - with these predecessors of a half century ago.

Why was this the case? Perhaps it was a reflection of the unique opportunities available to that generation of authors. (It is hard to picture a John Kenneth Galbraith or a William H. Whyte working at Fortune Magazine today, or to think of any liberal intellectual - or any intellectual for that matter - who had the kind of long, varied experience of government work Galbraith did during World War II and the Cold War.) It seems likely, too, that this was partly a matter of the novelty of the problems of the post-war years, which have since become so familiar, and remain deeply entangled with our newer problems, so much so that commenting on them it is harder to appear fresh or original. (Reading Barbara Ehrenreich's Bait and Switch, for instance, one sees a world deeply changed since the time of Whyte's The Organization Man - and yet in other ways, very much the same, not least in the use and abuse of personality tests.) Another reason may have been the assumption of a more literate general audience. (Much as Galbraith has been justly praised for his urbane prose style, major publisher's today might take issue with its suitability to a work of pop economics aimed at today's market.) But certainly part of it was the existence of a political climate which permitted the airing of a range of ideas that was wider in some respects, and a stronger hope that the expression of those ideas could actually mean something out in the real world. (The irony that they lived in the era of the House Un-American Activities Committee should not be lost on us.)

The last is only too apparent in the tone of the writings, imbued with a sense that there is little that will be done about today's problems, regardless of what they say (the titles of books like those by Hedges and Berman saying it all). This apathy is hardly going unnoticed. When the hand on the Bulletin of the Atomic Scientists' Doomsday Clock moved one minute forward this month, Kennette Benedict, the magazine's executive director, cited the lack of "new thinking" as a factor.

As far as I can tell, no one has expressed real surprise at that statement.

On the European Union's Nobel Peace Prize

In Isaac Asimov's classic story "The Evitable Conflict," Stephen Byerley suggests that the major conflicts of human history were never settled by force. Instead each of them "persisted through a series of conflicts, then vanished of itself – 'not with a bang, but with a whimper,' as the economic and social environment changed." So it was with the competition of the Houses of Hapsburg and Valois-Bourbon for European hegemony, or the clash of Catholic and Protestant for dominion over Western Christendom. So it also was with the "nationalist-imperialist wars" of the nineteenth and twentieth centuries

when the most important question in the world was which portions of Europe would control the economic resources and consuming capacity of which portions of non-Europe . . . Until the forces of nationalism spread sufficiently, so that non-Europe ended what all the wars could not, and decided it could exist quite comfortably all non-European.

This explanation of the end of that cycle of wars, published in this story a mere five years after VE Day, seems to me far more persuasive than its attribution to regional integration via the European Union and its predecessors - something inextricable from the rationale given for the EU's receipt of this year's Nobel Peace Prize, its role in uniting the continent.

The fact of Europe's Cold War-era division, the much more powerful presence of the U.S. and Soviet Union on the continent's balance of power, to say nothing of their considerable control over the members of their alliance systems, marginalized the importance of the balance of power among the West European states themselves. It is worth remembering, too, that the elites of these countries were ideologically committed to internationalist anti-Communism far and above intra-European nationalistic grievances (in West Germany's case, even above German unity). At any rate, their defense expenditures and military activities were constrained by the damage to their economies during the war and the costs of rebuilding after, and in the case of Britain, France, the Netherlands and Belgium their efforts to prop up the remnants of their colonial empires - with even that much implausible without the United States footing the bill (the U.S. paid eighty percent of the cost for France's failed war to retain Indochina) and impossible in the face of U.S. disapproval (as demonstrated during the 1956 Suez War). For all the blood shed over them, those empires vanished quickly (non-Europe clearly decided to be non-European, to borrow Asimov's phrase), eliminating one of the principal objects of contention among the European powers for the last four centuries. Meanwhile the division of Germany sharply reduced its margin of demographic and economic superiority over France and Britain, and along with their acquisition of nuclear weaponry, guaranteed its inability to appreciably threaten them - even without the considerable, immediate restraints imposed by the superpowers.

At the same time welfare state capitalism (prompted, in part, by fears of the radicalization of Western electorates in its absence) brought rapid growth and distributed its fruits widely enough to produce generalized and rising affluence, dampening prickly nationalisms and contributing greatly to domestic stability. Along with the war-weariness induced by the conflict (which came on top of the war-weariness that followed in the wake of World War I), reinforced by the tastes later age cohorts had of conflict in colonial campaigns and Cold War missions from Londonderry to Algiers to the East Indies, and war scares where the Bomb seemed dangerously close to coming into play, this greatly diminished the appeal of belligerent grandstanding over territorial disagreements or perceived insults to the national honor. What aggressive nationalism remained tended to be directed internally, against the post-war influx of immigrants (exclusion, rather than expansion, its orientation).

These changes, of course, survived the economic downturn of the 1970s, and the end of the Cold War. Certainly Germany's reunification caused anxieties in certain quarters, but the melodrama that surrounded the event - like Margaret Thatcher's absurd request that Mikhail Gorbachev "halt" the process, or the conversations between Francois Mitterand's aide Jacques Attali with Anatoly Chernyaev regarding the revival of the '30s-era Franco-Soviet alliance - merely testified to lagging perceptions among the generation that lived through the war (and in some cases, one suspects, an even more profound disconnect from reality), demonstrated most clearly by the level of abstraction in the discussions, the scarcity of anything like concrete scenarios. (No one really expected some renewed German assault on Alsace-Lorraine or Operation Barbarossa II, for instance, or articulated anything comparable that they did regard as more plausible.)

Consequently, rather than making peace possible, it would seem that the EU was made possible by the roles of the U.S. and Soviet Union and the bigger Cold War that hung over the old conflicts; by the end of Europe's empires; by the arrival of the nuclear age and the limitations it imposed on old-style war-making; by the comforts of welfare capitalism; by the weariness which followed the hugely destructive wars of the earlier era, the smaller wars of the post-1945 period, and the frightening prospect of a war even more destructive than all those seen in the past - with almost all of these developments significantly originating in or prompted by events outside Europe.

Of course, that raises the question of what the European Union did with the opportunity afforded it by all the factors discussed above. The Union did achieve a unity of sorts - but its achievements have actually been least impressive in the realm of foreign policy and defense, this remaining very much the purview of separate nation-states (and what those states actually did prominent in criticisms of the award from both the right and left). Integration has been much deeper in the continent's economic life, but the contribution this actually made to peace is wide open to question, by those who question the claims made for international trade as pacifier, those who are doubtful about free trade as an engine of prosperity, and those who see the Union's combination of expansion and neoliberal prescriptions (the consequences of which are quite apparent on European streets from Athens to Lisbon) as having been quite inimical to the cause the prize is supposed to celebrate and advance.1

1. I am reminded at this point of a different, more recent science fiction tale, Robert J. Sawyer's novel Flash Forward (the basis for the short-lived TV series). In the book businessman Mr. Cheung, after developing a technique to make human beings immortal, decides to offer the treatment to Nobel Prize winners, peace prize winners included, as "by and large the selections are deserving" of the award. As the critics of this prize demonstrate, this is not a view with which all would agree.

Review: The Affluent Society, by John Kenneth Galbraith

Boston: Houghton Mifflin, 1958, pp. 368.

John Kenneth Galbraith's starting point in The Affluent Society is the observation that historically the great economic problem was that of "producing enough," a concern enshrined in the mainstream of economic thought (by way of Smith, Malthus, Ricardo, Mill and Marshall, and Marx, Veblen and Keynes for that matter), and by the Social Darwinism that found such a warm reception in the United States (where Herbert Spencer became hugely influential). Accordingly, the stress of economic thought was on the maximization of the output of the essentials of life--food, clothing, shelter, fuel--through the most efficient possible use of the available resources prioritized. As it happened, the items in question lent themselves toward private, individual production and consumption, while proponents of this ideal venerated the free operation of a competitive market as a device for forcing capitalists and employers to make the utmost effort in getting production up and price down. The result was, not incidentally, a tendency to value the private sector, and denigrate the public sector (at least, where goods besides physical security are concerned), a pattern which extended to the view of increased private consumption as a gain to prosperity, and increased public consumption a reduction in it. Going alongside this was the attitude that society had little choice but to tolerate poverty, given the gap between what was produced, and what was needed.1

However, Galbraith contends that by the twentieth century the advanced industrial countries of the Western world had largely solved the production problem, the central issue no longer securing an adequate supply of life's essentials--society now "affluent" in that respect. In making his case Galbraith points to the many ways in which these societies had deeply changed since the Industrial Revolution. The truly poor (those who do not get enough to eat, etc.) had been transformed from the vast majority into a minority. An increased share of production was devoted to satisfying not indisputable physical needs (to a great extent, satiated), but the artificial wants manufactured by consumer culture's unprecedented use of techniques like planned obsolescence and advertising.

This was all as people worked less, the 70-hour week giving way to the 40-hour week, while child labor became a thing of the past, and the retirement of the elderly became routine (all of these, indicators of the reduced urgency of the demand for labor and its longtime principal products). Additionally, rather than the failure of supply the failure of demand, as seen in the Great Depression, came to be construed as the great threat to prosperity, while the continued stress on the maximization of production has been motivated less by the desirability of more goods than of production's role in maintaining full employment. Galbraith even contended that the expansion of production, and with it, general well-being, had gone a long way to diminishing the political charge of the issue of inequality.

As a result, in place of the traditional problems of poverty there were now the side effects of an economy of private affluence. The maintenance of full employment as the norm meant inflationary pressure, while consumer culture brought with it a tendency toward oppressive and unsustainable debt accumulation. At the same time the advent of such private prosperity meant an imbalance with the comparative poverty of the public sector and the public goods it supplied, such as educational, health and policing services, urban planning, and the protection of the natural environment raising new issues, not the least of them the ways in which lacks here undermine the private sector's operation. The remediable failures of the education system, for instance, harm scientific R & D efforts. Likewise, the failures of city planning have an adverse effect on the quantity and quality of the housing stock available to home buyers. And so on.

The solution of the old problems, and their replacement by new unsolved problems (by making the public sector affluent as the private sector had become, to the benefit of both), went largely unrecognized because of the tendency of the "conventional wisdom" (a term Galbraith coined in this book) about the issue to lag behind circumstance.2 Nonetheless, Galbraith was confident that change was possible, even likely, and certainly his argument did find an audience at the time. The idea that there could be economic life beyond flat-out GDP maximization in fact became a commonplace in social science, social comment and futurological speculation during the years that followed, William Appleman Williams, Gunther Stent and Alvin Toffler, among many, many others, all featuring it prominently in their work. Since then, ideas such as "sustainable" growth have gained currency in certain circles, as have broader measures of wealth, like the General Progress Indicator.

However, it seems that we are further than ever from embracing the thinking Galbraith presented, American society regarding itself as far from affluent in the way he suggests (even though per-capita GDP has more than doubled since then). The prioritization of sheer GDP growth as the sole test of economic performance, the identification of the private sector with goods and the public sector with costs, the Victorian severity toward the poor, all remain the predominant assumptions over a half century later.

One has to wonder why, given that there seems a great deal of merit to his argument. Certainly one part of the explanation seems to be Galbraith's underestimation of the extent to which the "good life" would continue to be perceived in terms of more private consumption, and on a related note, the intensely private way in which Americans think about their problems, individual and collective (to which C. Wright Mills, stronger on this score, often pointed). Galbraith also had a tendency to underestimate the power of vested interests to affect public policy, and how the shift in the terms of economic debate in the neoliberal revolution (made possible by a combination of economic crisis in the early 1970s and a politics of cultural backlash) would permit new circumstances to reinforce the conventional wisdom he criticized, leaving the mainstream less open to newer thinking.

At least in part because of neoliberal policies like the lowering of trade barriers, financial deregulation, and the weakening of organized labor and worker protections, the last four decades have been marked by much lower rates of economic growth, as well as intensified international economic competition, recurrent financial crises, higher unemployment, and greater inequality. Americans may have remained privately "affluent"--but the vast majority did not get much more affluent by even the most conventional measures, and they felt less secure in what they did have. If anything, given that their personal budgets were often pressed by inflation sufficient to wipe out the additions to purchasing power represented by rises in their income, the increasingly expensive post-secondary education increasingly seen as a requirement for remunerative employment, the exploding costs of health care, and the mounting private debt loads to which all these added, they had reason to feel less affluent than before.

Meanwhile, the reality of public poverty grew only more pronounced under the same circumstances, as slower growth rates, rising dependency ratios (putting pressure on benefits for the retired or elderly as they had been traditionally organized), and the public portion of the growing tab for educational and health care spending (and the shift away from progressive taxation even as the distribution of wealth became more unequal) squeezed government budgets, making bigger deficits and mounting government debt the long-term trend. And the neoliberal context made all the difference as to how this was perceived.

It is conceivable that under other circumstances the redress of the public sector's problems may have been seen as part of a broader project of reviving overall prosperity. The growing numbers of retirees might have been viewed as relieving the pressure of job creation and inflation, for instance. Expanded public programs in the areas of education and health care might have been seen as a way of relieving those burdens on the individual consumer. And so on and so forth. However, it became the conventional wisdom that the thing to do was not to improve public services, but to turn them into for-profit private services (a drive given greater urgency by the construing of those larger numbers of retirees as a fiscal disaster in the making). And while, despite all the cutbacks, the proportion of government budgets devoted to transfer payments cannot be said to have shrunk there is no doubt that the response of individuals was increasingly to substitute private goods for public ones; to respond to the inadequacies of the public education system by paying more out of pocket to send one's children to private school, for instance.3

This transfer of formerly public burdens to the private individual did that much more to make what could have appeared like private affluence instead appear as private scarcity, and make the prioritization of expanded private consumption (especially with the idea of expanding public consumption delegitimized) appear the solution--with old-fashioned GDP growth the means.4 And of course, the broader social inequality attending the process by which the lives of wage and salary-earners became so strained meant that much more need for a convenient solvent for the resulting tensions, the obvious candidate for which was, again, GDP growth (rhetorically, at any rate).

In retrospect it seems Alain Touraine who, far more than any counterpart of his in the English-speaking world (Galbraith included), was prescient in contending that post-industrial society would be the most growth-driven and GDP-obsessed in history, with the post-2008 economic shock doing surprisingly little to shake up the mainstream's embrace of neoliberalism. Nonetheless, the case for moving beyond the "conventional wisdom" he described, for thinking of public as well as private affluence, and looking beyond the narrow definition of growth so dear to economic orthodoxy, has only grown stronger with the passage of the decades.

1. One irony of this view, not fully recognized in Galbraith's writing, is the role of public support in creating private prosperity even in the eras of Smith and Ricardo and Mill, much of the public preferring to stick with simplistic Horatio Alger and Edisonade images of how fortunes are made, corporate giants born and Third World poverty turned into industrialized affluence. It remains an irony of American political life that those who are most inclined to evoke the Founding Fathers are those most inclined to neglect the lessons of Alexander Hamilton's "Report on Manufactures"; those most inclined to speak of American economic exceptionalism, those least inclined to forget that there was such a thing as an "American School" of economic thought, and the role it played in building the American economy.
2. Among Galbraith's specific, practical suggestions was a delinking of work and income through a more generous, but also more carefully managed, program of unemployment insurance so that less-than-full-employment became an acceptable norm politically, relieving inflationary pressure. He also suggested a sales tax on private consumption for the funding of improved public services. More broadly, he argued for the elimination of toil (unpleasant work performed wholly for pay as it renders no other satisfaction), making all workers part of what he called the "New Class" (in which people have not just jobs, but professions and careers, accessible through education).
3. An even more dramatic example may be the response to the problems of American cities--rather than making them more habitable through sounder urban planning, improved public transport, the redress of poverty and the like, the typical course has been relocation to suburbs and exurbs, which bring associated expenses like greater car ownership, longer commutes, and the private security bills of gated communities.
4. Under the circumstances, such an idea as using a sales tax to divert dollars spent on private consumption into the funding of better public services--as Galbraith proposes--could only have been anathema.

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Review: The New Industrial State, by John Kenneth Galbraith

Boston: Houghton Mifflin, 1967, pp. 427.

The conventional view of the American economy is that it is an arena where market forces predominate so that no single buyer or seller exercises significant control over prices; individuals and small business are the principal sources of innovation; and enterprises fight to keep government and organized labor at bay as they pursue that crucial form of feedback, profit, won through their success or failure in the competition to cater best to the wants of the consumer.

However, in his 1967 classic The New Industrial State John Galbraith made the case for quite a different reality. The American economy, Galbraith held, was thoroughly planned--if in a somewhat more diffuse way than contemporaneous Soviet-style economies. Rather than some government bureau attempting to direct the whole, the function was spread among a small number of key actors, in particular the largest industrial corporations. This was because only the large corporation could raise the capital and organize the skills needed to design and produce the highly complex products characteristic of mid-twentieth century technology.1 And even for them, such investments were only viable when the market and its uncertainties were tamed--not least, the tastes of consumers.

Such corporations pursued the reduction of uncertainty at a number of levels, from that of the individual firm (through such methods as vertical integration, or the use of the market power that comes with large size to influence the prices at which they buy their inputs and sell their production), to that of the usually oligopolistic industries of which they were a part (through the avoidance of disruptive competition among firms), to the level of the whole economy through their influence on and cooperation with government (which pays for much R & D, and regulates demand with high public outlays, progressive taxation, and wage and price controls) and their dealings with organized labor (negotiations with which stabilize wage levels, and often bring it into line as an ally when pursuing government contracts). These corporations also made the private consumer a more predictable actor, not only through research of the consumer in advance of the development of the products to be marketed to them, but the advertising molding his or her tastes.2

The corporations, in turn, were dominated by their "technostructures," the assemblages of technicians that made such companies functional, who had to be seen in this collective way because the planning process indispensable to their operations was far too vast and complex to be controlled by a single individual (given the volume and variety of information that had to be collected and processed, and decisions that had to be made). One result was the diminished power of the Chief Executive Officer and other senior management, often reduced to ratifying the decisions of comparatively obscure experts within their firms.3 In their turn, managers (typically salaried employees rather than owner-founders or their heirs) had seen their power grow relative to that of shareholders, while these were even further removed from being able to usefully observe and understand the intricate internal workings of these companies, and their prospects for exercising detailed control over company operations were further diminished by the wide diffusion of stock ownership. The result was that, so long as a company continued to deliver an "acceptable" level of profit, the technostructure enjoyed the degree of autonomy without which its elaborate planning was impossible.

The culture of such "mature" corporations naturally differed from that of such enterprises in their more formative phases, or the businesses of earlier eras altogether. The businessmen of the classic, nineteenth century mold (the Henry Ford type, for example), thoroughly "individualistic," and resolutely anti-intellectual, anti-statist and anti-union in sensibility and policy, were a poor fit with the model of enterprise Galbraith described in this book--and prone to get into trouble when trying to run a mature industrial company (as Ford did in Galbraith's account of his career in his earlier The Liberal Hour).

By contrast the "new" CEOs were more comfortable in an organization, more willing to give expertise some respect, and more pragmatic in their dealings with government and labor, permitting the smoother operation of their businesses and the economy as a whole. They were not unconcerned with profit, but maximizing it was not their sole or even primary object--in part because they were salaried personnel whose own income was less closely connected to their company's short-term fortunes, and in part because other motives had come to the fore, in particular "identification" with the company that gave them their privileged positions, and the satisfaction afforded by the "adaptation" of the company in line with their own, particular ideas about its mission.

Of course, identification and adaptation were not such powerful motives for less senior personnel. However, line workers too were more secure and better compensated than before, living as they did in a time of high employment and rising living standards (affording them much more than life's basics), while they were increasingly trading their blue collars for white ones and the less grinding working conditions that went with them, enabling those factors to influence them in a way they could not have before. The result was to weaken the sense of the employer (at least, in mature companies with a pragmatic attitude toward labor) as an enemy, helping to make the relationship between employee and employer less fraught with insecurity and confrontation, and the softer line of new-style, "enlightened" management toward organized labor that much more viable.

Galbraith's discussions of identification and adaptation assumed company as well as personal goals beyond the merely pecuniary, and Galbraith naturally discussed this matter at length, writing of the "social goals" which are the formal missions of major industrial firms--objects at which they strove to make a profit, rather than having been incidental to profit-making as such. Lest the utopian-sounding rhetoric of privately owned, profit-driven corporations pursuing "social goals" cause confusion, what Galbraith referred to by the term are rising production and consumption, technological advance, and the agendas associated with it: namely the growth of the Gross Domestic Product, and the waging of the Cold War.

This model of the economy's "commanding heights" laid out, Galbraith then proceeded to consider the system's weaknesses, offering an extensive critique of the limits of the goals pursued by the country's technostructures. As he noted, the manner in which government supported R & D and sustained demand was highly militarized, a fact which helped lock in Cold War tensions, and all their dangers (the most extreme of which was major nuclear war). Additionally, values and interests out of line with the accepted goals--like leisure, ecology, aesthetics--were typically denigrated and marginalized. This raised the question of who would promote peace rather than war, protect the environment, or defend intellectual and cultural values, and other such essential goods. Galbraith believed the answer lay in the emergence of what he termed the "educational and scientific estate." The dependence of the technostructure on this "estate" for expert knowledge, technological advance, and the training of the work force, made its members both more numerous, and more powerful, and made them a potential champion of those needs and values so poorly served by the rest of the system.

Taken together these ideas comprise a satisfactorily comprehensive analysis of the heart of the American economy at the time of the book's writing, as well as certain of its key problems and potential palliatives, one which remains relevant today in many ways. What Galbraith's book has to say about how large, high-tech enterprises work is just as true today as it was then--if not more so. The indispensability of the technostructure to the major industrial enterprise, the marginalization of the individual entrepreneur and small business in the economy (and especially in high-tech manufacturing), the fact of oligopoly, the reality of close collaboration between big business and government, are irrefutable facts of twenty-first century life. The long-term decline of organized labor Galbraith recognized is an equally irrefutable fact of American economic history in the past half century.

Yet, there is also no disputing that the "ideology" of the older "entrepreneurial" mentality Galbraith identified with older-style, profit-fixated businessmen resurged in the 1970s with the ascendance of neoliberal economic thought. Of course, for all the rhetoric, small enterprises did not reverse a two century-long trend toward Big Business or Big Government; if anything, the movement in this direction remained as strong as ever. Nonetheless, the associated attitudes profoundly changed the milieu in which the technostructures operate--generally in ways unconducive to their functioning. This has most obviously been the case at the macroeconomic level as deregulation and loose money policies, as well as the abandonment of full employment as a policy goal, intensified some forms of economic competition and made demand less reliable (by holding down wages, encouraging the dependence of consumption on unsustainable borrowing, increasing the incidence of financial crises, etc.). However, it has also been the case in the ways in which individual corporations have been run, by contributing to the dominance of the industries of which Galbraith wrote by a speculation-minded financial sector intent on short-run profit and share price maximization (reinforced by the linking of executive compensation to them). This has led to a preoccupation with cost-cutting (often targeting areas like R & D) directed at making quarterly earnings statements appear more attractive, at the expense of long-range company development; an increasing investment of company resources in mergers-and-acquisitions games as they pursue or fend off takeover attempts, at the expense of other imperatives; and the neglect of a company's core business (i.e. its "social goal") to focus on more profitable speculative finance (as General Motors did).

The economic performance of the advanced industrial nations during this time period, unsurprisingly, has been characterized by technological stagnation (evident in just about every area but IT) and falling growth rates (which compare very unfavorably with the post-World War II period), while the failure of corporate giants has long ceased to be an unheard-of event (as the events of 2008 and after have reminded us all).4 Consequently, even though Galbraith did not anticipate this turn, the economic history of these decades lends a great deal of support to his theory about how high-tech, capital-intensive firms, and the economies founded on them, necessarily operate. Indeed, taken along with the rather weak performance of the scientific and educational estate in the role of "loyal opposition," one can conclude that the principal failure of Galbraith (like many another mid-century American liberal) was his overestimation of the degree to which American political culture would adapt to the economic and technological realities that had become so apparent by mid-century.5

1. Galbraith's ideas regarding the decline of competition, and the emergence of oligopoly and its relationship to technological innovation, were previously (and more fully) elaborated in his earlier American Capitalism: The Concept of Countervailing Power (1952).
2. As their income enables them to go further and further beyond the point of meeting their most basic physical needs (food, shelter, warmth), consumers enjoy an increasing range of choice in their use of their purchasing power--another uncertainty business tries to manage. The result is that instead of being catered to by business, business strives to determine their wants for them. This idea was previously discussed in American Capitalism, and received even fuller treatment in 1958's The Affluent Society (reviewed here).
3. Galbraith remarks that "financial markets have long since accepted the reality of the technostructure as distinct from the entrepreneur," and goes on to jokingly paint an image of how the financial world would hang on "anything affecting his tenure in office," fluctuations in his health major news, and his replacement "handicapped like a horse." Yet, is such fuss not a routine matter where celebrity CEOs like Steve Jobs have been concerned--in part because it remains the norm to identify the achievements of a whole company with its chief?
4. There are those who would point to information technology as a counterexample to Galbraith's analysis of the place of the individual entrepreneur and the start-up in the '70s and after. Yet, the actual history of computing as we know it is dominated by state-subsidized R & D (it was the Defense Department which produced the ARPANet, CERN which gave us the World Wide Web) and the research of established firms like IBM (the hard disk drive, DRAM), Hewlett-Packard (the first to market a "personal computer") and Xerox (the graphical user interface). Additionally, the success of newer firms meant that they quickly fell into line with the model of innovation described here, without which Apple could not have delivered the Ipad, and Google would not be experimenting with driverless cars--the phase of old-fashioned entrepreneurship on closer inspection smaller and shorter-lived than the hype would have it. It is also worth keeping in mind that, even to the extent that it can be construed as exceptional, the sector has received disproportionate attention because of the false impressions created by the inflated share-prices of IT companies (as with Apple and Google right now), the frequent exaggeration of the economic impact of personal computing (the contribution to productivity has been hard to find), and its convenience as ideological fodder (proponents of orthodox economic thinking and purveyors of techno-hype desperately seizing on the myth in their search for some validation of their ideas).
5. Chris Hedges offers a more recent and quite different take on that estate's influence and vitality in Death of the Liberal Class.

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