the omissions are part of the text

Li is such the summer sluggard that we didn’t bother to connect our previous post to the posts on war. My point in claiming that routinization is a great and central historical fact, extremely difficult to understand – the object par excellence of historical fantasia – was to return to the logic of the state, war and debt in the emergence of the liberal state. If we ask ourselves what it means that 50% of Britain’s taxes were going into paying long term loans that financed past wars, we have to imagine that half of Britain’s taxes had no visible public effect at all. For the taxpayer, those taxes as good as disappeared. And when you get used to the state taking your money and providing zip in return, you begin to think that the state is basically a robber. In the case of Britain, work that could have been done by public investment – in land improvement, schooling, transportation – was either done poorly, then, by the state or by private forces.

This isn’t, of course, just true of early 19th century Britain. In the U.S., the incredible amount eaten up by the military from the Korean war on similarly “vanished”. At first, however, the way in which the military took from public investment in needed areas was not such a big hole, given the willingness of the government to consolidate New Deal programs and, in the sixties, complete the preliminaries of social democracy. But after the sixties, the taxes increasingly vanished. And of course, under Reagan, while the tax burden shifted decisively to the individual from the corporation and from the wealthy to the upper middle and middle, the money that was dispensed to the military increasingly lost its multiplier effect. The sedimentation of the expectations entailed by this massive and continuous robbery to pay for past wars and military outlays that were essentially useless – and of course there has been no use for almost all military technology developed after 1970, which is always developed to fight an imaginary menace with imaginary scenarios that, at most, move the gamer boys to creaming in their pants – has been to create a general collapse in confidence in public outlays – in the government – even as it postpones needed public investment. So the public sphere gets crappier, is run on a budget or used as an excuse for the legalized corruption of contracting, and the infra-structural and environmental needs – needs that can’t be met piecemeal, can’t be resolved by individual acts of good living – just go on being unmet.

James Galbraith has noticed this hole in the liberal brain – the brain that seems to have been put in formaldehyde under Clinton – in his review of two recent books: Consumed by Benjamin Barber and Deep Economy by Bill McKibbon. Galbraith aims a lot of nice, steel toed kicks at the first book. After quoting one of Barber’s over-ripe passages about the New England Puritans, to whom Barber attributes so many capitalist virtues it would make Schumpeter scoff, Galbraith writes:

“Nothing wrong with it, of course, apart from some things it leaves out, like witch hunts and King Philip’s War and the price controls that were a ubiquitous feature of economic regulation in Massachusetts Bay. … Also, I doubt Barber can document an economics of investment, as distinct from thrift, in colonial North America. Thrift is simply a matter of pinching pennies, but you don’t get investment before you have industry, which the colonists did not. Proto-Reaganauts, in short, they weren’t.

But Barber is determined that Paradise has been Lost, and on occasion he states this view without guile: “Once upon a time, in capitalism’s more creative and successful period, a productivist capitalism prospered by meeting the real needs of real people.” The problem is that this is not history. It is, rather, like all sentences that begin “Once upon a time,” the stage setting for a fairy tale, a rendition of truths for children. And this is curious, in a book that is, from soup to nuts, a critique of infantilization. Consumed is self-referential. It is, to some degree, an instance of the problem it describes. Barber serves up some of the longest sentences since Proust, yet underneath is largely a simple moral tale, an allegory not more complicated than, say, social Darwinism or Horatio Alger.”

I don’t totally agree with Galbraith about the total lack of investment – surely it was in ships, and spread into slavetrading and sugar hauling – but it certainly wasn’t in New England itself.

Galbraith’s main point is here, however:

“The question is, what are we going to do about it? Are we going to do anything about it? Almost fifty years ago, in The Affluent Society, my father wrote about this problem, which he defined as “private affluence and public squalor.” His solution was “social balance”: public goods, including schools and parks and libraries and higher culture. Liberalism stood for its own values. It stood against corporate dominance, business thinking, and commercial culture. And it was backed by the power of trade unions, of churches, and of the educational and scientific estate.
Barber offers no similar recourse. Everything he would do, he would do through markets, not against them or by bringing them under control. He speaks mainly of the “slow food” movement, of Hernando de Soto’s property-rights-for-the-poor and of the Grameen Bank’s micro-lending programs, each of these the projects of enlightened voluntarism, presupposing that markets can be as much a force for good in principle as they are presently a force for ill in practice. The democracy he would like to build lacks social or political organization; it isn’t about parties and agendas and laws and new government agencies tasked with meeting national needs. The New Deal and the Great Society are not Barber’s antecedents. He seeks merely the willed capacity to conduct one’s own life beyond the reach of mass culture, and offers the wishful thought that sensible people, each acting alone, will somehow manage to do just that. Good luck. Barber speaks of “capitalism triumphant,” and he proposes to leave it that way.”

Galbraith is reiterating the creed of all us misfit liberals. This is what liberalism finally figured out in the Keynesian decades. Unfortunately, liberals took a corrective episode – the great inflation of the seventies – as a conclusive finishing off of the mixed economy. The era of big government is dead and all that. The mystery of why people believe this is, I think, in part explained by the part war and its financing played even during the height of the Keynesian era. Of course, there are other factors.

Galbraith offers the same charge against McKibbon, even though he concedes that McKibbon’s is a much better book. And he concludes on a down note:

“This brings us back to the sphere that both McKibben and Barber largely ignore: public policy. The function of the government, in principle, is to foresee these dangers, and avert them. The powers of the government exist to permit the mobilization of resources required. And only government can hope to do the job.
This is bleak news not only in the present climate of thought, but also given the decay of the public sphere since at least 1981. Whatever government might have been (or seemed) capable of in the 1940s or the 1960s, it plainly is not capable of today. A government that cannot establish a functioning Homeland Security Department in half a decade, a government that is capable of creating the Coalition Provisional Authority or Bush’s FEMA, is no one’s idea of an effective instrument for climate planning. Plainly the destruction of government—the turning over of regulation to predators, military functions to mercenaries, the Justice Department to a vote-suppression racket, and the Supreme Court to fanatics—has been the price of tolerating the Bush coup of November 2000. Soon we will face the aftermath of all this, with the fate of the earth in the balance.”