The enduring malaise

Buce does not think he understands the "enduring malaise" we are experiencing today. He seems like a smart guy, but I don't understand his confusion. Things seem pretty simple to me; of course, simple does not imply "easy".

My as yet unproven theory is that the period from 1929 to present represents a class struggle between the professional-managerial class and the capitalist class. The capitalist class was the unchallenged ruling class from the beginning of the 19th century (when they took over from the landowning class) until the beginning of the 1930s. For a variety of reasons, including the Great Depression and the Second Imperialist War, the capitalist class lost its unchallenged grip on political and economic power and privilege; the "levers of power" fell to the professional-managerial class, mostly senior business executives and government bureaucrats. The capitalist class was not going to take their defeat lying down; it almost immediately began the struggle to regain power and once again become the ruling class. They finally succeeded (depending on one's analysis) during the Reagan administration (with the destruction of the Air Traffic Controllers' Union), during the Clinton administration (repeal of Glass-Steagall), or during the George W. Bush administration (Iraq war). Their complete victory is evidenced by the slavish devotion to the capitalist class shown by the nominally Democratic Barack Obama; before Obama, the capitalist class vied for governmental power almost exclusively through the Republican party. A classic story of Boy meets Girl, Boy loses Girl, Boy gets Girl back.

Buce's inability to understand today's "enduring malaise" is, I think, a case of evaluating the currently ruling capitalist class by the cultural norms of the professional-managerial middle class. During its rule, the culture of the professional-managerial class identified as "problems" challenges to the economic well-being of the working classes and created pragmatic, "technocratic" solutions to those problems. The capitalist class, on the other hand, does not consider challenges to working-class economic well-being to be problematic, and there is no need to search for solutions of any kind. Instead, as Corey Robin explores in his book, The Reactionary Mind, the capitalist class considers challenges to social and economic relations of domination and subordination to be problematic, and looks for solutions to those problems. Viewed in this light, the suffering caused by the Lesser Great Depression is not at all problematic to one faction of the capitalist ruling class: it will, in Andrew Mellon's words, "purge the rottenness out of the system. . . . People will work harder, live a more moral life." To other, perhaps more far-seeing factions, the Lesser Great Depression is problematic only to the extent that, in the long term, popular suffering might undermine the legitimacy of capitalist rule. However, any amelioration of present suffering must be both consistent with the internal morality of the capitalist class as a whole, and it must never be allowed to even question, much less actually undermine, the legitimacy of capitalist rule. This "anthropological perspective" helps understand the response of the ruling capitalist class to current economic conditions.

Many commentators — not only Buce but Krugman, DeLong, Reich*, etc. — are scratching their heads, wondering why the government refuses to implement the more-or-less obvious solutions to our current economic problems. The solution really is obvious: massive government spending to increase aggregate demand and impel business to hire workers to meet that demand. Businesses cannot do so on their own: if an individual business unilaterally increases its own workers' demand, those workers will demand other business's products, and that business will be at a competitive disadvantage because of its higher wages. Because government is not demand-driven, only government can unilaterally increase demand without disadvantage. But economic demand is, well, demand; it is real power.

*i.e. the advocates of professional-managerial class rule that I read regularly.

This solution, obvious as it might be, is morally unthinkable to the capitalist class. Viewed charitably, imagine an invariably deadly, highly-contagious, long-incubation disease. The "obvious" solution is to find all those infected, kill them, and burn their bodies. The moral revulsion to this obvious response has nothing to do with the pragmatic effectiveness of this solution; killing all the infected is just not done. So too with stimulus: the "cure" is worse than the disease, because stimulus (indeed the whole notion of a consumer economy that needs high aggregate demand) would undermine relations of subordination, the sine qua non capitalist class morality.

Buce also misunderstands what's happened to the discipline of macroeconomics. During its rule, the professional-managerial class embraced Keynesian macro. The real value of Keynsian macro is not its predictive character (although it's about as predictive as meteorology, which ain't chopped liver) but in its responsive character. Even if you can't predict what will happen tomorrow (or even know reliably what is happening today), we can at least use Keynesian macro to correct the problems we can reliably know started yesterday. When we see that the economy has become "overheated", we raise taxes, lower spending, and run a government "surplus", thus draining demand from the private economy. When we see that the economy has become depressed, we lower taxes, raise spending, and run a government "deficit", thus pumping demand into the private economy. (The government must also continuously pump a little demand into the economy, i.e. run a "deficit", to match demand to real economic growth.) Even if it lacked any predictive power at all, Keynesian macro would be extraordinarily valuable just for its ability to respond effectively to changes in the business cycle.

If your opponent has an advantage, and Keynesian macro is a huge advantage, one naturally seeks to neutralize that advantage. One strategy was to undermine the academic credibility of macroeconomics. Macro in general is not particularly important to the capitalist class: so long as the government maintains the value of money (the primary signal of capitalist status), it's not that important how the economy as a whole is doing. Since macro doesn't matter, all that was necessary was to flatter and reward academic macro-economists who steered the discipline into irrelevancy. Academics are hard to coerce, but they are ridiculously easy to bribe. (The professional-managerial class, having its own moral standards of academic freedom, both failed to see (as they assumed all academics were part of their own class) and were disinclined to correct this effort by the capitalist class to undermine macroeconomics.

The capitalist class has co-opted the entire leadership of the professional-managerial class. Senior executives are no longer managers, they are rentiers. Power in the universities — the fundamental wellspring of the professional-managerial class — has been transferred from the professors to the professional administrators. The professional-managerial class, I suspect, is more relieved than outraged that it no longer has the responsibility to govern; they will not, as did the capitalist class, find in defeat a motivation to redouble their efforts to regain their rule. All that is left today of the professional-managerial class are a few die-hards, pining for the good old days.