BERKELEY – My book on the economic history of the 20th century, published last fall, does not include a chapter on the future or “how we should go on,” because Stephen S. Cohen, with whom I often write, convinced me that no matter what wrote, the text would be outdated and ridiculous in six months. He was right, it’s better to leave those arguments for comments like this one. If he had written a final chapter looking to the future, then what would he have said?
Before the ghost text, I argue that, for most of history, humanity was too poor for political governance to be anything other than the rule of elites through force and fraud to amass fortunes and hoard resources; But in 1870 the rocket of modern economic growth took off, and humanity’s technological proficiency doubled with each generation. We seemed to have suddenly got the wherewithal to bake an inexpensive cake big enough for everyone to get a slice. If we managed to solve the second order problems, distribution and consumption of the cake, so that everyone felt safe, healthy and happy, utopia would be within our reach.
However, something went wrong. Between 1870 and 2010 humanity neither galloped nor ran, nor half-trotted nor even walked towards utopia. At best, we shuffled along… and it wasn’t always in the right direction. By the first decade of this century, the engine of economic growth had clearly begun to fail. Not only could we not count on rapid growth, but we also had to consider new threats shaking civilization, such as climate change.
The great narrative from 1870 to 2010 was about technological triumph added to socio-organizational failure. The grand post-2010 narrative has yet to be written, mainly because humanity has faltered in at least four directions.
Some have harkened back to the post-World War II social democratic “New Deal order,” born of the forced marriage between Friedrich von Hayek, with his gleeful confidence in the power of the market to create prosperity, and Karl Polanyi, who stressed the importance of dignity and human rights beyond those strictly related to property. The one who forced them into the marriage was John Maynard Keynes, who believed in the power of technocratic economic management to maintain full employment, empower workers by valuing their time, and euthanize rentiers with low interest rates.
But the system proved untenable by the late 1970s. It was no longer able to win the support of enduring majorities in the world’s democracies, and its base in Fordist mass production had begun to fracture. The world economy was moving towards global value chains and eventually to the current information-driven mode of production. Whoever talks today about reviving the New Deal will sound like someone in 1690 calling for a return to the 11th century feudal order in force during the reign of William the Conqueror.
Meanwhile, others sought to redouble the post-social-democratic neoliberal order. This happened, for example, in the UK in the late 2000s, when Nick Clegg – leader of the Conservative Party (the Tories) – decided that the purpose of the party was to persuade voters who disagreed with them to to support them. The intensified neoliberalism that followed, led by Prime Minister David Cameron and Chancellor of the Exchequer George Osborne – not to mention the ludicrous experiment recently attempted by Liz Truss and Kwasi Kwarteng – achieved little in terms of outright economic growth, and offers a strong warning against moving in that direction.
The third option was to conjure the spirit of ethnonationalism. Supporters of this direction believe that the main failures of modern society are less related to the lack of material goods than to moral decline due to the influence of foreigners and those who are not sufficiently rooted in the blood and soil of the nation: immigrants, parasites, slackers, freaks, rootless cosmopolitans, and other sinister forces. Needless to say, there are few reasons to recommend this approach, both in moral and economic policy terms.
The fourth option deals with something that has been absent, or at least in decline, since the 1870s. You can abandon the goal of utopia and reorient society around an elite—they may be kleptocrats, plutocrats, party bosses, or a combination. of them-focused on lining their pockets through force and fraud. The strong do what they want and the weak suffer what they have to. Going this way, the closest thing to a “good society” that can be achieved would be to use the new tools of the information age to implement a hierarchy in which whoever wins gets everything, but gently rather than brutally with what happened in the past.
Probably none of those options will generate improvements… and some of them are not even possible. The big problem with neoliberalism is that it deprived society of long-term investment, both in technologies to improve productivity and in the vast majority of people. The problem with social democracy was that most people did not want to passively receive government benefits; they wanted the social power to earn (and thus deserve) their share of the growing pie.
Is it a fantasy to believe that a productive and effective synthesis of all this is still possible? Or am I just an old ox who spent his entire career after such a synthesis? Considering the alternatives, I see no other option than to keep pushing the same team around the same circle… like Martin Luther, I can’t do otherwise.
*The author is a former Deputy Assistant Secretary of the US Treasury, Professor of Economics at the University of California, Berkeley, Research Associate at the National Bureau of Economic Research, and author of Slouching Towards Utopia: An Economic History of the Twentieth Century.
