Time and again you hear it. ‘Big government’ – or, should I say, ‘big guv’ment’? Its a pejorative – naturally. The term signifies – or, at least, is supposed to signify – that the government (usually the US government) is encroaching on your shit – watching you over your shoulder and dipping its filthy hand into your pocket to take your money… The taxes taken aren’t spent on anything useful – naturally – but are instead siphoned off from the hard worker and funneled to the drug addict. Yes, according to this view, ‘big government’ is a veritable disaster…
I could run through arguments – nuanced arguments – showing how government intervention is necessary for a variety of things, including stopping big business from encroaching on your… bla, bla, bla. To be frank, if you don’t get this already, you’re a lost cause – and I suggest you do something dumb as quickly as humanly possible. You could join a militia, for example, or invest in overpriced gold.
Yes, if you’re of this mindset, there’s an infinite variety of sca… er, opportunities out there to ‘beat the man’. So no, don’t listen to the shrink – that isn’t your unresolved Oedipus complex flaring up… it’s ‘freedum’ calling – the question is: are you ignorant enough to heed the call?
Now, for the rest of us, a more serious issue: what does government intervention in the economy mean today? I don’t mean that abstractly – as some sort of navel-gazing statement that someone might make at a dinner party. Nor do I mean that as a preliminary to launch an easy attack on the bailouts – although the latter might not be wholly unproductive. No, I really mean it: where are we at? What is ‘government intervention’? Indeed, can we really separate off two distinct entities – government and the economy – as if these were as immiscible as oil and water; or, on the other hand, are these not distinct entities at all?
Its estimated that the public sector makes up about one third of US GDP. This doesn’t change much across the developed world. Take Greece – supposedly a disaster of public spending wrought large – the public sector makes up about 40% of GDP.
So, its clear: in a reasonably developed economy, the public sector is, by design, fairly big. I don’t say this negatively – the arguments against the public sector is usually weak. Take the ‘inefficiency’ argument – large private firms are often toxically inefficient (sometimes dangerously so) and, no matter what the free-marketeers say, they still survive. Ditto for the ‘corruption’ argument – I’m not even going there, if you can’t figure that one out, you’re a verifiable idiot.
In actual fact the public sector seems relatively stable – if a little stagnant. It works as a sort of pillar that can be relied upon to keep employment up and GDP floated… not to mention providing an infrastructure in which small businesses and the like are allowed to operate.
Great! This all seems highly functional – but what happens when these institutions get overrun with people whose broad economic and ideological alliances lie elsewhere? What happens when the public sector falls prey to the power of corporations and the government becomes a cash-cow that said corporations can dip their mits into whenever they see fit? I’m talking about a corporatised government; one whose function is tied up almost completely with the interests of key economic players.
The term ‘corporatism’ can mean different things to different people. What I mean here is something like: a state/economy that operates primarily in line with the interests of private corporations
I live in Ireland – whose state is avowedly corporate – so I’ve seen this sort of thing for years. The government here is in many ways simply an arm of international corporations (see the Rossport debacle if you want the clearest example).
But perhaps we’re an aberration. So, take the US – and ignore the bailouts (see how fair I’m being?). Now, take a look at this article by Simon Johnson over at Baseline Scenario today. Really, have a good read of it – I’ll quickly summarise: Goldman Sachs is apparently bunging money into Facebook; Johnson thinks that this is a high-risk venture (that is: a bubble); but Goldman knows they have government backing should anything nasty happen due to the whole ‘too big to fail’ thing.
So, to boil that down: the US government is essentially backing Goldman’s risk taking – no surprise there… But now, indirectly, the US government is funding FACEBOOK’s risk-taking! Think about that for a minute… Facebook is supposed to a be the golden child of the new ‘Bill Gates’ capitalism – the capitalism of the new millennium, where the entrepreneur is king. But even in the rough terrain of the new social media, this is simply not the case. Instead what we have is a government deeply enmeshed in the private sector. The government stands just over the shoulder of the large corporations, waiting in the wings to take risk off their hands should this be necessary. The corporations then stand over the shoulder of any entrepreneurial activity that looks like its going anywhere. Let’s stop being polite… this is corporatism!
Look, corporatism isn’t all bad – the tragedy occurs when those that run a corporatist state and its citizens don’t recognise that this state is, in fact, corporatist. Under these circumstances people blind themselves to reality by drinking the heady brew of free-market ideology – and they don’t see what’s going on right in front of their eyes.
The great US economist John Kenneth Galbraith wrote an excellent book called ‘The New Industrial State‘ (which I’d encourage everyone and their mother to read). Galbraith paints a picture that we should all be familiar with – in this book he explains how the modern economy is, by and large, controlled by large corporations – and that these corporations are in turn backed by the state. Things have changed since Galbraith wrote the book in 1967 – most notably: the state’s status as corporate guarantor has become even more obvious.
Galbraith wasn’t waving a flag for this state of affairs. But, being an unflinching realist, he saw it pointless to sidestep the issue for silly ideological reasons. Instead, he claimed that we should look realistically at the situation and ask ourselves what role a democratic state should assume given such circumstances.
Consider an extremely self-destructive person. Now ask a psychologist what their problem is and its likely you’ll be told a major cause of this self-destructiveness is a deeply rooted inability to recognise a certain part of themselves – a case of self-delusion… more colloquially referred to as ‘denial’. By telling themselves that they aren’t what they are – let’s say, for arguments sake, they’re a smack addict – they continue with the self-destructive behavior by normalising it and rationalising it to themselves. So, they’ll continue shooting smack because they genuinely believe they’re not hooked. Meanwhile, their life falls apart around them.
So too for the economy today. We won’t admit what we are and how we live. Evidence comes out every day that we live in a corporate world – from the power of institutionalised finance to the fudging of prices in oligopolistic markets to consumer behavior being all but controlled by mass-advertising. Yet we won’t admit it. Corporatism sounds dirty – antithetical to the so-called ‘free-market’. There seems to be an almost moral imperative not to tell the truth about ourselves – how DARE we say that the free-markets are a myth…
The longer we put off this self-realisation, the longer we will suffer. I’m not saying that the entrepreneur or the small-business owner is dead (although he’ll surely feel the pinch if he doesn’t take a good look at where he fits in in this world), I’m simply saying that modern developments – not to mention modern dilemmas – need to be seen through the lens of corporatism.
Consequently, the modern democratic state needs to be positioned against this backdrop – those who find themselves in positions of authority need to ask themselves what role they must play in this brave, not-so-new world.
So, it must be said, by looking at Johnson’s argument only one conclusion can really be drawn: Goldman Sachs IS part of the contemporary US state. And this state is, by and large – and like many other states in developed economies – corporatist. Now, if we step back for a moment and recognise this, we might then ask ourselves how governments should act given these circumstances. That’s where we must begin today – everything else is only so much drugged-out lunacy.