De pe Economists view

http://economistsview.typepad.com/economistsview/2008/05/the-predator-st.html
"The Predator State: How Conservatives Abandoned the Free Market and
Why Liberals Should Too"
This is a review of amie !al"raith#s The Predator State from a forthcomin$ edition of
the Journal of Economic Issues:
Review o the Predator State: How Conservatives Abandoned the Free Market and
Why Liberals Should Too! by "a#es $% &albraith% 'ew (ork! London! Toronto!
Sydney: Free Press! )**+. %&ote: review is "ased on 'dvance (ncorrected )roofs.*:
This is political economy at its "est+ in the tradition of ,e"lens Theory of the -eis.re
/lass+ or .0. !al"raiths The &ew 1nd.strial 2tate. The comparators are chosen
caref.lly+ for not only is The )redator 2tate an .pdate+ it is e3.ally as deservin$ of stat.s
as a classic. The iss.es are caref.lly e4amined+ the prose is deli$htf.l+ the ar$.ments
appear .nassaila"le+ and the choir5incl.din$ this reviewer and pres.ma"ly most of the
readers of this 6o.rnal5sho.ts 7'men89. :.t will the "oo; "e read< /an any "oo; today
capt.re the attention accorded to ,e"len a cent.ry a$o+ or to !al"raith+ senior+ nearly
fifty years a$o< 2till+ one m.st appla.d amie for tryin$. This is an ama=in$ effort...
The $eneral theses can "e simply stated. >irst+ while conservatives toyed with laisse=-
faire+ they 3.ic;ly a"andoned it in all important areas of policy-ma;in$. >or them+ it now
serves as nothin$ more than an ena"lin$ myth+ .sed to hide the tr.e nat.re of o.r world.
1ronically+ only the pro$ressive still ta;es the call for 7mar;et sol.tions9 serio.sly+ and
this is the ma6or "arrier to form.latin$ sensi"le policy. 2econd+ the 7ind.strial state9 has
"een replaced "y a predator state+ a coalition of relentless opponents of the very idea of a
7p."lic interest9+ whose p.rpose is to master the state str.ct.re in order to empower a
hi$h pl.tocracy with nothin$ more than vile and rapacio.s $oals. >inally+ the 7corporate
rep."lic9 created "y the li;es of Dic; /heney is hi$hly .nsta"le+ a form.la for national
fail.re. )ro$ressives m.st wrest control from the reactionaries "efore it is too late for
restoration of 'merica as the worlds financial anchor+ technolo$ical leader+ and
promoter of collective sec.rity.
amie th.s res.rrects "oth the e4treme pessimism of ,e"lens notion of predation %"y the
conspic.o.sly cons.min$ leis.re class in ,e"lens day+ ".t "y the corporate elite and
/heneys imperial co.rt today* as well as his only partially defined ".t optimistic vision
of a world dominated "y the en$ineers. 's amie ar$.es+ his father admired ,e"len ".t
was most infl.enced "y the &ew Deal+ the mo"ili=ation d.rin$ ??11+ and the rise of the
modern corporation that cooperated with $overnment and la"or to create the planned
economy of the postwar period. @ence+ ,e"lens opposition of the ".siness enterprise
vers.s the p."lic interest was replaced "y co.ntervailin$ powers that compromised a
lar$ely accepta"le tr.ce. amie insists that his fathers analysis was correct+ however+ it
A
was already "ecomin$ o.tdated "y the early ABC0s as the :retton ?oods system fell
apart.
The free mar;et reactionaries promised that some com"ination of monetarism+ s.pply
side economics+ "alanced ".d$ets+ and free trade was the sol.tion to 'mericas woes.
The mantra 7free mar;ets9 provided an easy antidote to 7plannin$9 that was said to
constrain recovery and $rowth. 's each conservative policy was tried+ however+ it
res.lted in o"vio.s and even spectac.lar fail.re. 1n tr.th+ all economies are always and
everywhere planned5for the simple reason that plannin$ is the .se of todays reso.rces
to meet tomorrows needs+ somethin$ that all societies m.st do if they are $oin$ to
s.rvive5so the only 3.estion is who is $oin$ to do the plannin$+ and to whom are the
"enefits $oin$ to flow< There are still a few tr.e "elievers %principled conservatives that
amie compares to no"le sava$es in the political wilderness*+ ".t most conservatives
reali=ed that there is no conflict "etween 7"i$ $overnment9 and 7the mar;et9 as they
a"andoned the myth ".t .s.rped the 7free mar;et9 la"el. 'll we are left with is the li"eral
who em"races the myth o.t of fear of "ein$ e4posed as a heretic+ a socialist+ or a fool.
Th.s+ the li"eral pines to 7ma;e the mar;et wor; "etter9+ never challen$in$ the view
%a"andoned "y all ".t the most foolish conservatives* that $overnment is the pro"lem.
Economic freedom is red.ced to the freedom to shop+ incl.din$ the freedom to ".y
elections+ and anythin$ that interferes is a threat. 7Dar;et9 means nothin$ more than
7nonstate9+ a ne$ation of .se of policy in the p."lic interest. amie provides a caref.l
analysis of the frontline "attles on many of the most important iss.es--2ocial 2ec.rity+
health care+ ine3.ality+ immi$ration+ sec.rity after B-AA+ trade and o.tso.rcin$+ and $lo"al
warmin$5showin$ how 7mar;et sol.tions9 are desi$ned to enrich a favored oli$archy
thro.$h a spoils system administered thro.$h the states str.ct.re. The policy 7mista;es9
in 1ra3 or &ew Erleans or at :ear-2tearns do not res.lt from incompetence5indeed they
only appear to "e fail.res "eca.se we apply inappropriate meas.res of s.ccess. There is
no common $ood+ no p."lic p.rpose+ no shareholders interestF we are the prey and
$overnments as well as corporations are r.n "y and for predators. The 7fail.res9 enrich
the proper "eneficiaries even as they 7prove9 $overnment is no sol.tion.
There is a way o.t+ ".t it is not easy. @istorically+ re$.lation and standards have re3.ired
acceptance "y pro$ressive ".siness5those firms that reco$ni=ed they wo.ld lose in races
to the "ottom. Today+ corporate and p."lic policy ali;e are r.n "y the most reactionary
elements+ well-paid ro$.es that s.c; capacity. ?herever one finds a sector that still
operates reasona"ly well+ one finds remnants of &ew Deal instit.tions that s.pport+
$.arantee+ re$.late+ and levera$e private activities+ in spheres as diverse as hi$her
ed.cation+ ho.sin$+ pensions+ healthcare+ the military-ind.strial comple4 %and the prison-
ind.strial comple4*. &at.rally+ even these sectors are endan$ered as they represent
potential riches %witness s."primes+ a privati=ation mess that ?all 2treet wo.ld love to
repeat with 2ocial 2ec.rity*. 2till+ amie is hopef.l. The ideolo$y of free mar;ets is
"an;r.pt+ ".t the (2 is not. The path is clear: re-re$.lation+ plannin$+ standards
%incl.din$ wa$e controls*+ and comin$ to $rips with the nations $lo"al responsi"ilities.
2
-. Gandall ?ray (niversity of Disso.ri50ansas /ity The reviewer is )rofessor of
Economics+ and 2enior 2cholar at the -evy Economics 1nstit.te.
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