Galbraith on ‘the free market’
TPM Cafe is hosting a roundtable on economist James Galbraith’s new book The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too. Here’s a bit from Galbraith’s introductory post:
The judicial coup of December 2000 that installed Bush and Cheney brought back some of Reagan’s men and his most extreme policies — tax cuts for the wealthy, big increases in military spending, aggressive deregulation. But it didn’t bring back the ideas. Instead, it became clear that Bush and Cheney had no real ideas, no larger public justification. They cut taxes to enrich their supporters. For the same reason, they outsourced to Blackwater and Halliburton and pursued military pipe dreams like Missile Defense. They were willing to have the government spend like a drunken sailor in 2003/4 to boost the economy before the election. They placed lobbyists in charge of the regulators, representing, in every case, the most extreme anti-regulation perspective. (Not so long ago, Bush’s financial regulators showed up at a press conference with a chainsaw.) Under Bush and Cheney, oil and gas, drug companies and defense contractors, insurers and usurers control the government of the United States, and it does what they want. This is the predator state.
Of course, we have very different views of where to go from here. Reagan abandoned the free market in practice, and Bush abandoned it in theory. Why? Because it is a useless, romantic concept, with minimal real world application. In the world of arcane technologies, structured financial derivatives and a precarious global atmosphere, decentralized markets and "supply-and-demand” decide very little, and "market discipline” is a contradiction in terms The job of discipline belongs to governments. And they must act not only on behalf of today’s citizens but of all those yet to come – of those who need clean food and water, of those who need safe cars, appliances and workplaces, and of those will be around the low countries when the ice caps melt. Dealing with problems means thinking ahead, from an independent, forward-looking point of view. This is called planning. It means providing stable, predictable rules for the private sector. This is called setting standards. And in the present international economic climate, it means giving the rest of the world a reason to finance the continuing prosperity of the United States.
The Predator State criticizes conservative economics, but that’s not the big point. My argument is directed largely at liberals. And especially at those liberals who remain transfixed by the "logic" of markets, by the faded political clout of the Reagan rhetoric, and by the idea that respectability requires continuous genuflection at the shrines of the Chicago School. It is these mental habits that we, who are liberals, must break. The Predator State is aimed at the notion that the liberal formula should be “making markets work.”