a blog by Elisabeth Young-Bruehl

For 18th and 19th century worldly philosophers whose analyses of capitalism Robert Heilbroner wrote about, the problem with capitalism was its inherent instability. The economic growth machine kept producing recessions, sometimes –by the end of the 19th century—accompanied by panics and bank-runs. Until very recently, proponents of capitalism, from Adam Smith forward, did not think that the instability problem could, ultimately, or definitively, be solved but they did think it could be controlled and ameliorated if the root cause of the instability could be identified. The machine will wear out, but meanwhile you can make the most of it. Marx, by contrast, because his chief concern was with the workers in capitalist enterprises, did not assume that the instability problem was soluble short-term. He assumed that it would induce the workers to protest how the system exploited them because they were not owners of the means of production in it or profit-sharers. Then capitalism would give way to socialism, which would not have this basic inequality built into it and aggravated by it, so a socialist economy would stablize itself, without political regulation. It is, of course, from Marx’s analysis of capitalism and his concern with its exploitativeness that the main anti-capitalist lines of analysis have descended.

So, in the briefest possible sketch, these are the terms of the pro and anti debate over capitalism’s mechanism and its future that we live with still. To my mind, those terms obscure the most fundamental problem of capitalism, which is that its expansionary dynamic, its unstable developmental course, is such that it can over-run the political domain and reduce political life to a feature of economic life. It can completely reverse the traditional relationship between economic life, which materially sustains people, supplying their basic needs, and political life, which is life (to define its freedom negatively) not dedicated to laboring to supply necessities and the materials for culture. To see this problem –the problem of the potentiality for the disappearance of politics in an advanced capitalist system—as fundamental, you have to do two things, I think: stop being trapped in the worldly philosophers’ machine metaphor, and, using a different metaphor, identify the elements of capitalism that can coalesce to eliminate political life.

Let me turn to the first requirement first. All the worldly philosophers, pro and anti capitalist, thought in the same metaphor: capitalism is like an intricate machine. A machine within the great lawful machine that is nature. The proponents of capitalism thought that if capitalism’s laws of motion and the interrelationships of its parts could be understood, by people thinking like physicists and engineers, it could be adjusted if it started malfunctioning—flooding or erupting. With experience, a manual for its operation could be developed so that adjustment would become a matter of experienced mechanics following the rules, no inductive judgment needed. Only the later 20th century free market theorists ever went so far as to dream that markets would adjust themselves—and this development in economics is extremely significant as an element of the novelty of capitalism in its old age. Robert Heilbroner recognized the remoteness of the free-market theorists from reality and described the novelty of their unworldly approach, but so did others. For example: Lester Thurow in Dangerous Currents: The State of Economics, which appeared in 1983.

During the 1980s, with Ronald Reagan’s presidency, free market ideas became the guiding economic ideas, and this brought the delusional quality of them to the fore. Reagan also gave them their most characteristic implementations: privatization of services once provided by governments, and tax cuts for the wealthiest capitalists, which were supposed to stimulate economic growth and fix or prevent recessions. These tax cuts were, of course, a way to make workers support the economy and support the government that supports the capitalists. They were a direct assault upon the majority of the people by a government that was supporting capitalism and capitalists –as became even more obvious when George Bush adopted the tactic. (I will come back later to the question of why this is not obvious to anyone who thinks about it for half a moment and why we are even having a debate in America now about renewing Bush’s attack on the well-being of the majority of the American people.)

The machine metaphor also supported –and still supports– the idea that all crises in the capitalist system were more or less alike, and lawful in themselves. Among mid- 20th century economists, the Great Depression dealt quite a blow to this expectation that the past contained learnable lessons, which was supposed to mean that no one would be condemned to repeat the past. But, despite the Great Depression’s shocking world-wide magnitude, which called forth a sub-division of economics called “macroeconomics,” the Depression, too, came to be seen as having a lesson to teach. Like the Holocaust. If only the lesson could be definitively learned! It has been unsettling to contemporary economists that so many controversies persist about why the Great Depression happened, and what mistakes in 1937 let it get a second punch, with effects that only the Second World War spike in demand “fixed.” But most economists of the chief WWII victor nations, America and its allies, nonetheless stayed confident. And slowly they were able to reach a working consensus –with some doubters, it should be said—that the Great Depression was never going to repeat because its lessons had been learned. The consensus economists realized that confidence in their “never again!” approach would disappear if the possibility were admitted that economies can have an unprecedented crisis or that “lessons from the past” might be indeterminate, useless or even blinding.

A second thought habit that the machine metaphor supported was the habit of considering the economy in isolation from the political realm, as well as in isolation from the natural world, the environment. Understanding ecosystems is not part of Economics. The relationship between politics and economics was only a matter of whether and to what extent political institutions should adjust economic institutions, whether and to what extent politicians should be like auto mechanics. Economists were not, by and large, accustomed to consider political events except episodically. They saw, for example, that in 1971 Richard Nixon had made a bold move by adopting an “open door” policy toward Communist China in the middle of his effort to keep trying to win the unwinnable war against Communist Vietnam. That this open door had opened the door for an effort Deng Xiaphong launched in 1978 to abandon Maoism and create in China a brand new kind of capitalism was hardly noticed until the 1990s. After the collapse of the Soviet Union, which was so tied to that superpower’s blind pursuit of an unwinnable war in Afghanistan, macroeconomists noticed that China had changed its production and banking systems and was exporting cheap goods at a fantastical rate. But to this day the kinds of capitalism that emerged in China and then in other newly exporting economies (Brazil, Russia, India, each quite different) of the post-Soviet era have not been analyzable in the familiar machine-metaphor terms.

Thinking in analogies to past events –raking the past for precedents– is almost compulsory in the current world. Or, to be more accurate, it is a compulsion that few are able to resist. And the more a person needs to imagine himself in control, the stronger the analogizing compulsion will be, and the more necessary the machine metaphors that support it will be. The driving force for this compulsion comes, I think, from a vague realization that sheer novelty, if it were possible, would mean unmasterable, uncontrollable chaos, and such chaos would signal catastrophe or death. If, on the other hand, “the economy” we are looking at is a mere variant on something we have seen before, been able to adjust, and survived, then survival is assured. All that is required is a steady hand on the tiller, a super smart twirling of the dials or defusing before the economy machine blows up or melts down or hits a wall or goes off a cliff (chose your image).

In these matters of how we think about the economy, the New York Times columnist and winner of the Nobel Prize in Economics Paul Krugman is among the most sophisticated. But his 1999 book on the topic, The Return of Depression Economics (subtitled “and the Crisis of 2008” for its latest paperback edition, updated through June 2009), tells in its title how accustomed Krugman himself is to analogical thinking. In the 1999 first edition, he deeply questioned the idea prevailing among economists then that the world economy was so well fixed after the Second World War –or by the Second World War—that it would go along with only “garden-variety recessions” and never again enter into a Great Depression or a Depression analogous to the Great one. He posed his questions as a student of the Asian crisis of the late 1990s. “Like the Depression, the crisis struck out of the clear blue sky, with most pundits predicting a continuing boom even as the slump gathered momentum; as in the 1930s, the conventional economic medicine proved ineffective, even counterproductive.”

Behind Krugman’s effort to show that we must realize that the Great Depression should be our standard for judgment now, there is, also, a new metaphor struggling to be born. He argues that the Depression was like a plague that broke out in a living thing. At the time of the Asian crisis, he says: “I thought of it this way: it was as if bacteria that used to cause deadly plagues, but had long been considered conquered by modern medicine, had reemerged in a form resistant to all the standard antibiotics.” To prevent another Black Death, we have to think like public health officers. We have now, fortunately, a vaccine, which has been theorized by John Maynard Keynes: if we stimulate an economy that looks like it is about to go the way of Japan in the 1990s, which is the latest equivalent of an economy on the edge of Depression, we can avoid “a lost decade,” a prolonged period of devastating stagnant demand, or even worse, a total world-wide economic collapse.

Krugman is certainly right in economic terms –and his new public health metaphor helps him be right, as does his clear understanding that the free market theorists are delusional. He is a voice of sanity against tax cuts for the rich, as he was in support of healthcare reform. But he, too, is trapped in a kind of thinking that falls way short of what is needed. And to say what this is, I think we need to look at Robert Heilbroner’s historical investigation more closely. As I suggested before, Heilbroner rejected the machine metaphor and all its analogizing, thinking instead of an economy as more like a person with a unique developmental history, or a group of persons with a group developmental history. All metaphors, of course, have limitations, but for the moment we can note that the advantages of this metaphor are chiefly two. It allowed Heilbroner to recognize that capitalism has changed from its childhood to its youth to its maturity to its old age. So, one should neither understand its current state (or states in different parts of the world) on analogy with its earlier ones nor assume that something in the early history could ever be simply and directly a cause of something in the present state or states. As developmental psychoanalysts know about real people, early experiences and psychic responses prefigure what is to come and are often repeated with variations in later phases, but they are not simply and directly causes of what develops. Krugman’s public health metaphor has the limitation of implying that a single economic bacteria can be found as the cause of Depression, and, if seen to be reappearing, addressed with a vaccine. But people in environments are more complicated, and groups of people even more complicated.

The second advantage of thinking developmentally about the economy is that the novel elements of capitalism’s old age appear more clearly –particularly the political elements, which Krugman does not consider. Looking through the lens of the developmental metaphor, I will write about these novel elements next time, coming to concentrate on how it happens that the national political leaders and the economic leaders in old age capitalism are the same people thinking –or not thinking–in the same way.

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