Michael Sandel has a short, but excellent, post on liberalism. He gives a brief history of liberalism in the 20th century, though leaving out the story of its abandonment by many after its association with Michael Dukakis in 1988. However, the most important shift in the definition of liberalism occurred in the 1930s. The New Deal reforms abandoned one of the most important tenets of the American system, the Jeffersonian principle that democracy was inherently decentralized. Sandel suggests, and I think quite rightly, we must re-embrace this principle if we are to effect reform of our political economy.
With the growth in power of the major industrial corporations at the turn of the 19th and 20th centuries, a major liberal/progressive response was to break them up. Louis Brandeis became a major advocate of bringing Jefferson’s 18th century thinking on the undemocratic nature of concentrated power into the 20th century. Brandeis referred to it as “the curse of bigness“. Anti-trust, the breaking up of the new corporate structures, never gained much power, but as Sandel points out, after a brief flirtation, the New Deal abandoned anti-trust and what emerged was a hybrid-balance between, big government, big labor, and big corporations. Over the years, big corporations took over big government, destroying big labor. Today’s liberals cling to the notion that somehow they are going to get bigness to work.
One of the reasons our American politics and government is dysfunctional is because power was never meant to be so concentrated. Power from the beginning was checked and balanced, separated, and distributed not just in the three branches of the federal level, but also from the federal level with power in the states, and separated and balanced from the states with power in the counties and local governments, and finally from the county and local with power in the individual. The evolution of power across the 20th century was the antithesis to this system, with ever greater concentrations of power in DC and our mega-corporations. In part, the system isn’t working because it was never designed to work like this in the first place.
We need to reform our political economy and the only way we’re going to do that is by breaking-up power. We need to revitalize the American system by embracing the notion of equality and distributed power. Most interesting, over the last few decades, we have learned more about the ability to sustain order from the
bottom up using distributed networks. The Internet is the best example, showing distributed networks can be very stable, distributing power as opposed to hierarchical centralization. In many ways, this is not in anyway foreign to the first American system. In reforming our political economy, it would serve us well to think about how we revitalize the American system, at the same time evolving it for the 21st century.
Cross-posted from Archein: Liberalism
The WSJ has a good piece on the beginning of the adoption of smart electricity meters, which is a start to changing our electricity system. Ten years ago, the utilities were pretty much unanimously against these meters, so it’s good to see them starting to install them. It offers a lot of lessons on how we’re going to need to change how we do things and the obstructions encountered in so doing.
The WSJ writes:
To date, 16,000 to 18,000 people have participated in more than five dozen pilot tests involving smart meters and experimental rate plans, according to Ahmad Faruqui, a consultant with the Brattle Group who has helped utilities develop some of the programs. He says that while it is sometimes disheartening to see utility executives ignore their own findings, he understands the desire to move slowly until people become comfortable with smart-meter technology.
That’s a pretty small number, but its a start. The biggest problem of course is the utilities, who having run the system pretty much the same way for almost a century, they don’t see much need to change. The simple agreement has been the utilities provide electricity at a reasonable, and some would say a very cheap rate, and people basically allow the utilities to run things whatever they want. Leading to the second problem, most electricity users pay very little attention to how they use electricity, first and foremost because its so cheap.
Information is always cheaper than energy, getting more information into the system allows things to change. I have always been astounded in dealing with the electricity industry how it is almost universally accepted that more information about how things were run, wouldn’t provide any value. This is still a big problem and as the article points out, the utilities don’t even know what to do with the information they are receiving. Simply giving them more information isn’t going to help, or will not be as helpful as it should be. The electricity system in this country is run by government bestowed monopolies. Political reform needs very much to be utility reform. We need to open the system so that not just the utilities, but others who will know what to do with the information can enact necessary change.
The WSJ writes:
“You could have a real rebellion” if smart meters push up customers’ rates, especially if utilities’ other capital expenses are increasing, he says.
There’s probably few industries which as much fixed capital debt as the utilities, and it seems at times this debt is never ending. It is an important point for the United States. We are an extremely wealthy nation, however much of our fixed capital, particularly in regards to the energy sector, is the problem. We have to change how this operates and the more debt we pile on the existing infrastructure, the more difficult that change is going to be. Unlike the developing world where such infrastructure is limited, adding to it creates wealth. In the United States changing this infrastructure is not creating new wealth, but transferring established wealth to new purposes. It is an extremely important distinction. Power is going to have devolve from the utilities.
Electricity users must educate themselves and be part of the change. Being a citizen in the 21st century means understanding energy.
Cross-posted from Archein: “energy as political reform”
Nowadays people know the price of everything and the value of nothing.
– Oscar Wilde
Last summer, a friend, Raj Patel, sent me a draft of his new book, The Value of Nothing: How to Reshape Market Society and Redefine Democracy. The book is out now, and I couldn’t more highly recommend it. The Value of Nothing is a good critique of our present political economy and gives an incisive look of how it came to be, where we are now, and begins most essentially to look at some ideas and practices on how we begin to evolve a more sustainable and satisfying political economy.
We are in need not of revolution, but of reformation. When a ruling doctrine becomes ubiquitous across a society, it is difficult for members of the society to imagine any alternative. The doctrine comes to define all aspects of life, and facts are interpreted not for what they say, but how they support the ruling doctrine, even if they don’t. The Value of Nothing offers an excellent historical look at how “free-market” doctrine and institutions came to dominate our lives. From Adam Smith to Karl Polanyi, Patel shows how “free market” philosophy came to redefine human culture, and that the doctrine of laissez faire relied totally on government to be instituted.
The pinnacle of free market thought was reached in the last several decades with efficient market theory, which led to the retreat of even minimal government oversight in the affairs of mega-corporations. This, as Patel points out, led to the recent financial disaster, which in the halls of power, that is in the vestibules of our free market temple, has yet to lead to any serious rethinking. An interesting point Raj brings up is how the top of the system, Wall Street, is now inundated with data in the belief this gives them knowledge. He writes, “Data pelting down monitors is what the masters of the universe on the global financial exchanges stare at, their eyes darting from screen to screen, trying to see through the world and profit from it.”
This made me think how our present circumstances are much different from the 1930s. In Keynes’, Treatise on Money, he is constantly lamenting the lack of data available being a hindrance for making any definitive judgment on his equations or theories.(As an aside, this should give rise to great skepticism on what people today say they learned from the data poor 30s.) What The Value of Nothing reveals is that it isn’t the data that is problem today, but it is the categories, equations, and theories we are plugging the data into.
What The Value of Nothing shows is markets and market theory have run ramshackle over every other social institution. We no longer have the ability to value anything outside market terms, because the institutions and social constructs to do so, have all been eliminated or subverted. We are Patel states simply “homo economicus”, looking and acting only from this perspective. We are not simply mis-pricing but devaluing some of the most basic necessities of homo sapiens, most importantly food and the environment. It is not us or flawed markets that are the determinant of these values, but mega-corporations who hold the most influence, and corporate power is not a factor in our ruling economic theory.
How do we become more fuller human beings is the essential and necessary question of The Value of Nothing. And at a time where the most fundamental tenet of industrial capitalism, unlimited growth, is meeting its limits and causing havoc with the practice of unbridled consumption, Patel offers food for thought, “The opposite of consumption isn’t thrift – it’s generosity.”
The Value of Nothing provides examples in the developing world, which are in the midst of overturning their old institutions thus values, and replacing them with the institutions and pricing of free-markets. It gives examples how people are standing up, and maybe it will be from the global south, where we evolve new institutions and thought to cope with the realities of the 21st century. “The Value of Nothing” shows we must reform and evolve our institutions. Our democratic infrastructure, be it government, political, or social institutions have been quashed or are in disrepair. The solution to our economic problems is not better economic theory, but a democratic revival, a revaluation of value.
Don’t miss Raj on the
Colbert Report tonight, he has a wonderful sense of humor, should be great fun
Colbert Report tonight, he has a wonderful sense of humor, should be great fun