Everybody's talking about it, even me. See my Letter to the Editor in the last post. It really is on the agenda: back to 1933, before Wagner, Social Security, whew, the whole enchilada. So, all right, let’s get seriously, pornographically analytic about David Brooks and his various faiths.
The sidebar in his 12/11 column for the NY Times reads: “Trusting, not fearing, the markets.” Uh huh. I’m there with you, baby, but no one else is, except your erstwhile colleagues at The Weakly Standard. Oh, and maybe the editorial page guys at the Wall Street Journal.
Here’s the lead: “Before we get lost in the policy details, let’s be clear about what this Social Security reform debate is really about. It’s about the market. [You mean it’s not about that nice preposition, “about”?] People who instinctively trust the markets support the Bush reform ideas, and people who are suspicious [presumably of markets] oppose them.”
Well, OK, in faith-based politics, we do that “instinctively trust” thing. But now that you’re a columnist at the paper of record, shouldn’t you be thinking about—oops there’s that preposition again—these issues, rather than urging us to resuscitate one of the Gods that failed in the 1930s? Remember, it wasn’t communism that sank back then, it was the idea that markets could, in any meaningful sense, be self-regulating.
Once upon a time it was rational for people to believe in self-regulating markets, because anonymous laws of supply and demand did seem to make all producers (not all people) equally subject to the same laws. The “rule of law, not men,” was first enacted, first made observable, in this kind of market, and then it was transposed to the domain of politics.
As Charles Lindblom and Martin Sklar have shown (and here they follow the lead of Smith and Marx and Nietzsche, although the latter’s contribution to the debate has been, I think, overlooked), markets make for politics. And politics in the modern world is largely about—oops—how resources get allocated in and through markets.
But what happens when everyone knows that the once anonymous laws of supply and demand don’t work? When we know that such laws have been abrogated because markets are managed, dominated, or administered by large firms? When we know that the self-regulating market can’t enforce or even allow equality among all producers?
What happens, in short, with the rise of corporate capitalism, ca. 1890-1940? One way of reading the markets, then as now, is to see them as the result of conspiracy—of political manipulation, insider trading, etc., of the “malevolent and shadowy forces” Brooks cites. He’s right, the Populists, then as now, can’t get beyond this narrative.
But everybody else did get over the demise of a self-regulating market (except of course for the contemporary political scientists who call themselves the “new institutionalists”—check out my review of Richard Bensel’s book in JAH June 2002), mainly because they saw it as a promising development. Hereafter, they thought, maybe the market is not an impenetrable externality. Hereafter, they thought, maybe the market is not the cause of equality and the seat of freedom after all. Maybe we have to reinvent this cause, maybe we have to rethink the meaning of freedom.
Once upon a time, they thought, the market functioned as the cause of equality and the seat of freedom precisely because it was impervious to reason, purpose, and social goals—because it was an anonymous set of laws. Once upon a time, the market treated every one alike, because no one producer, no capitalist cabal, could violate those laws and rig the thing.
But now that it has become something else, they said--now that it has become the domain of administration, of choices--we need to think it through.
Remember, in the nostalgic narratives of von Hayek, Friedman, and, for that matter, the Populists, the market must appear as an untouchable mystery if liberty is to prevail. They thought it through, too, and decided that the choice was between statism and laissez-faire: there was no in-between. William Howard Taft agreed with them, and he, not Teddy Roosevelt, was the “trust-buster” par excellence. Pure competition or socialism, Taft insisted, so he aimed dozens of anti-trust suits, through his attorney general, at those big, bad corporations.
Unlike the Pops and his heir apparent, Teddy Roosevelt didn’t think we could exorcise the large corporations that appeared in the 1890s and after as a way of, yes, regulating the market. He did think that an extremely activist state would be necessary to contain their powers within acceptable limits—necessary, that is, to modulate class struggle, enforce social mobility, postpone revolution. If there is anyone in the contemporary firmament who sounds like TR, it’s Jesse Jackson or Teddy Kennedy.
That’s why it’s laughable when the benighted Brooks invokes not just TR but “his great hero Alexander Hamilton” as exemplars of those who would “use the power of the market to solve an otherwise intractable problem.” Neither of them would understand what young David is talking about, and not just because they lived in other centuries and he lives, clearly, on Mars.
The bottom line is this: after the 1890s, almost nobody, except of course the inscrutable William Graham Sumner, believed in self-regulating markets. The question for everyone who was not merely demented--and this category included most businessmen--was not whether but how to regulate markets in the name of social stability, social mobility, and democratic possibility. The question for everyone was, How can we turn a free society, which is by definition a market society that respects the rights of private property, into a just society, which is by definition a commonwealth that promotes the rights of all persons?
They had resurrected James Madison’s question of 1787: how can we reconcile “the two cardinal objects of Government, the rights of persons and the rights of property,” and not, at the same time, forfeit the principles of popular government?