A review of James K. Galbraith's The Predator State.
I was born the year of Reagan’s inauguration. The PATCO workers went on strike before I was three months old, and it’s been mostly downhill into darkness since then. Those three decades - the years of the Reagan Revolution, Clinton‘s Third Way, and the Global War on Everything - are now widely described as the era of neoliberalism. Although the neoliberal project is most commonly associated with an ideology -- worship of free markets, above all, as well as deregulation, privatization, and free trade -- critics such as Dumenil and Levy argue that neoliberalism is first and foremost a project to redistribute wealth and power upwards by any means necessary.
James K. Galbraith, in his recent book The Predator State, also argues for bracketing neoliberal ideology off from the economic dynamics of the past decades. Galbraith writes for a popular audience, so his terminology is different -- he writes of conservative rather than neoliberal ideas -- but the signposts are instantly recognizable: free markets, tax cuts, free trade, balanced budgets, Uncle Milton (Friedman). These are the dogmas that Galbraith relentlessly attacks, and he does a fairly convincing job in depicting the concepts underlying these slogans as alternately nonsensical, self-contradictory, nonexistent, or irrelevant. In any case, Galbraith convincingly demonstrates that these supposed foundational concepts bear little resemblance to the actual practices and policies of the neoliberal era.
So far, so much fun. But if neoliberalism is to be reckoned with primarily as a historic shift in the class struggle, rather than the rise of an ideology, it remains to be explained why that shift occurred and what possibilities there are for reversing it. Galbraith’s answer is an intriguing one, and is essentially an analysis of capitalist class formation and economic organization. At the heart of this analysis are two important concepts: progressive business, and the techno structure.
For Galbraith, some businesses are able to play a progressive role because they benefit from government regulation. That is, government regulation acts as a barrier to competitive entry by forcing out backwards, unsafe, or lower-paying companies. Established or leading firms -- those with the most advanced, safest, or efficient, methods of production -- can then benefit from regulation by facing fewer competitors. Although this argument regards regulation specifically, one can extend it to progressive governmental policy in general (whereby a high social wage provides U.S. firms with a competitive edge internationally).[130-131]
Why did progressive business evaporate as a meaningful social force in the 1980s? Galbraith argues that the answer lies in large part within the corporation, and that the decline of progressive business is due in large part to the decline of the techno structure: the organization men and women charged, by virtue of their skills and knowledge, with managing a corporation’s operations. For various reasons -- Galbraith lists “the rise of trade, the reassertion of financial power, the outsourcing of technological development, and the ascendance of an oligarchy in the executive class” -- the techno structure ceased to guide corporate behavior. Finance imposed discipline via hostile takeovers on any executive that refused to adopt “short-termism” -- profits today regardless of the long-term implications for the corporation; while the growth of spectacularly wealthy technological firms inspired a copycat effect within the rarefied heights of the economic order: “It helped to fuel a general explosion in CEO pay as the stock options of the New Economy came to serve as a competitive standard” (121) On top of this, growing global competition pit U.S. firms against companies that were more advanced in their production techniques, eliminating the benefits that domestic companies would have received from regulatory standards.
A new social force emerged: the class of oligarchs predisposed to generating as much wealth as quickly as possible, while on the look out for a higher paying executive position
Thus, a new social force emerged: the class of oligarchs predisposed to generating as much wealth as quickly as possible, while on the look out for a higher paying executive position. At the same time, globalization weakened organizations that had typically served as a counterbalance to corporate greed -- unions first and foremost. Galbraith argues that, without countervailing forces, the new oligarchs have every reason to resort to simple looting - what he terms predation - rather than engage in the tedious business of capital accumulation by standard means. The result is “a coalition of relentless opponents of the regulatory framework on which public purpose depends, with enterprises whose major lines of business compete with or encroach on the principal public functions of the enduring New Deal” (131).
What then of potential sources of resistance within the "predator state"? Galbraith is uncertain -- he wonders whether reasonable and progressive business elements will re-emerge to publicly support a regulatory agenda, and if this will happen while it still matters. Notably, The Predator State does not call for the re-establishment of the techno structure’s reign, nor provide a plausible explanation of how that might occur. Instead, it claims that the predatory excesses of the Reagan-Bush years generates new conditions that push business to break with the economic degeneracy that has become the norm. It’s worth quoting Galbraith’s reasoning on this at some length:
Predation is the enemy of honest and independent and especially sustainable business, of businesses that simply want to sell to the public and make a decent living over the long run[…] everyone who has not licked the appropriate boots. Predatory regimes are, more or less exactly, like protection rackets: powerful and feared but neither loved nor respected. They cannot reward everyone, and therefore they do not enjoy a broad political base. In addition, they are intrinsically unstable, something that does not trouble the predators but makes life for ordinary business exceptionally trying (147).
The current system, apparently, teems with reasons for certain sectors of business to break with predatory capitalism out of their own self interest. The reasons provided by Galbraith ring of idealism, but certainly there were no shortage of spectacular defections from the Bush administration. But being against the practice of looting one’s way into profitability -- whether out of an aversion to boot-licking or a desire for economic stability -- is not the same as being for any particular alternative. The result, rather than a move towards business progressivism, would seem to be simple confusion.
Doubtless, the limitations of Galbraith’s argument from a left perspective are clear; this is not David Harvey’s Brief History. Readers of the book will find as well that Galbraith explicitly rejects Marx’s notion of class struggle as a polarizing antagonism in capitalist society. I’m not particularly interested in detailing the book’s limitations here, as criticizing the analysis for not being left enough is a little like criticizing the emu for not being able to fly. In any case, the idea of ‘progressive business’ is a significant one for those on the left who identify with the popular front tradition.
The frontist line, in simple terms, is the strategy of bringing together all of the political forces opposed to the worst aspects capitalism. The origins are of course in the anti-fascist fight, but the popular and united fronts play particularly important roles in anti-colonial struggles as well. In all of these strategies, sectors of the bourgeoisie (perhaps more precisely, bourgeois political parties) can potentially play a historically progressive role. Colonialism, for example, suppresses the development of national capital and therefore generates an interest among a national bourgeoisie to throw off the imperial yoke.
Whether or not the frontist line can be put to suitable use during the twilight of neoliberalism is, I think, one of the crucial questions for the left. The answer depends not simply on whether one can oust the worst and most terrifying regime in recent U.S. history -- the election of Obama has done that -- but also on whether medium-term solutions can be found within the framework of globalized capitalism for the most persistent problems that have plagued the working-class and communities of color for the past thirty years, and which are all exacerbated by the current crisis. The disappearance of work opportunities for urban communities of color, the forms of coercion and terror used to keep undocumented immigrants in the shadows, the impact of prisons and mass incarceration, skyrocketing poverty, debt and - quite related - healthcare costs; each reader of this review could doubtless extend the list.
In the twilight of neoliberalism can we bring together political forces to oppose the worst aspects of capitalism that have plagued working-class and communities of color for the past thirty years?
Presently, many thinkers favor a split between financial and so-called productive or manufacturing capital, an appealing avenue in light of the current jobs crisis. I am personally skeptical of this. Finance capital is not merely -- if I may use an antiquated term -- the dominant fraction of capital, but integrated deeply into nearly every sector of the U.S. economy.
Be that as it may, I think Galbraith’s analysis of the dynamics internal to the capitalist class which led to the rise of ‘the predator state’ and neoliberalism more broadly merits consideration. The question of whether a ‘progressive business’ sector will emerge, whether organically or in response to militant workers’ action, is central to the question of whether something like a new New Deal is possible; put differently, it’s the question of whether the motion of broad opposition to the years of Bush can be turned into something with a vision and workable program, however tentative. If right now we have more questions than answers, more disorientation than direction, it’s because daylight seems to be breaking after a long night. Our eyes are still adjusting.
The views expressed here are those of the author and do not necessarily represent those of the entire War Times project
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