The Problem is Unilateralism, not Ideology

Today I turn to Mitchell's second major point: that while the nature of the system of government might be expected to matter, the realpolitik suggests otherwise. Mitchell is probably right that it is not the nature of national government that stands in the way of solving the biggest problems we face as a world community. Indeed, our focus should be elsewhere.

Nonetheless, I think at least a handful of readers would not prefer that I dismiss this issue out of hand. For example, one cannot deny that there is still a surprisingly active, ongoing investment in advancing the merits of competing political ideologies and their respective systems of government.* This remains true twenty years after the fall of the Berlin Wall and the failures of Soviet-style socialism in Eastern Europe and Russia became plainly visible to those of us in the West. A system of government that was in theory meant to wrest the control of the means of production from a privileged class and instead advance broader social, communitarian and national interests did not work in practice. While there was an ostensible improvement in the distribution of wealth and income behind the Iron Curtain, there was a distribution of privilege that was unequal enough to rival the grosser inequities of capitalist systems, and the overall quality of life was far worse than we might have expected.** We knew it wasn’t working much earlier, of course, but the first few years after the fall of the Wall confirmed that something had gone terribly wrong with Marxism-in-action. It is noteworthy here that even the environment, a resource shared by the community and therefore expected to be more effectively protected by socialist regimes than by systems of private property, was in a shambles. Air and water quality was horribly decayed in much of Eastern Europe by the late 1980s.

So much for the hopes of the intelligentsia. The historian Eric Foner wrote that his thesis advisor (the late historian Richard Hofstadter) reported that when he graduated from college in the 1930s, every thinking person asked: Shall I subscribe to liberalism (in the broader sense than we mean it today) or communism? (Hofstadter first chose communism, then switched.) Lionel Trilling’s post-War novel The Middle of the Journey is set in the 1930s, and Journey’s young intellectuals anguish over the hopes and fears they have for socialistic alternatives to the cruel capitalism of the Great Depression. Trilling’s title is, of course, a reference to the opening line of Dante’s Divine Comedy:

Nel mezzo del cammin di nostra vita
mi ritrovai per una selva oscura.

In the middle of the journey of life
I came upon a dark forest.

I share the rest of that opening line to make a point. For Trilling, I would hazard a guess that the implied “dark forest” is that which obfuscates our troubling choice between opposing ideologies, between giving first priority to freedom on the one hand or to justice on the other. Hofstadter, Trilling, and throes of 1930s intellectuals turned away from socialist hopes of justice (in favor of democratic capitalism’s freedoms) during or shortly after WW II. Joseph McCarthy’s witch hunts only a few years later (ironically following the abandonment of communism by most former party members in the US) must have made them wonder if pinning their hopes on US-style capitalist democracy was correct. (When we fail to protect the First Amendment rights of even our most strident dissenters, we fail to live up to the promise of this system of government.) Nonetheless, while there has been a small contingent of American radicals who have flirted with communism since (for example, during the Vietnam War), communism has never been a political force in US politics comparable even to its relatively small role in post-War Western Europe. Even those with the least market pressure to change, academic Marxists, have in large numbers de-emphasized their old texts, or have even more substantively changed their focus (some quite productively), since the fall of the Berlin Wall.

I am an economist and have a duty to discharge. Economists have a precise but limited view of the comparative merits of socialism and capitalism. If you ask a traditionally trained economist if the failure of socialism was surprising, you can expect to hear something akin to this: Quite to the contrary, the failure of socialism was to be expected, and this “problem” has a name. It is called the socialist calculation debate. A century ago economists worked out a mathematically elegant system to describe the state of an entire economic system, a method of analysis called general equilibrium. At the same time some economists, noting that unfettered market systems were both unjust in the distribution of rewards, and ineffective at allocating resources and setting prices in markets in which there was not a perfect alignment of private and public interests, thought that the mathematics of general equilibrium could, at least in theory, allow good economic planners to replicate the results in a non-market system. This would be what socialist planners would do, but they could do better than markets because they would have the interests of everyone, not just the owners of capital, in mind. The success of nations (all capitalist systems at the time) at suspending normal market activities and replacing them with planned war efforts during WWI emboldened these proponents of socialist planning. As late as the 1930s (when Hofstadter and Trilling came of age) – when an alternative to the apparently cyclic, painful capitalism was desperately sought out – it was still thought that this could be done well. (For example, Oskar Lange was still maintaining this view in his On the Economic Theory of Socialism in the mid to late 30s, but apparently no longer after the war.) Some went so far as to argue that properly trained socialist planners could do as well or even better than capitalist-market systems, with the chance for improvement invested in the prospect of better aligning private and public interest in markets subject to externalities or spillovers. These spillovers by the way are central to our worries about climate change. The idea here would be that a planner could explicitly weight the importance of a clean environment for future generations whereas a private market will only give priority to those who have cash in hand today. In this sense, then, the system of government could matter, and matter greatly, for a problem such as global warming.

Critics however launched a number of attacks against the feasibility of good socialist planning. The arguments were usually but not exclusively mathematical and nuanced. The critical thrust of these arguments was aimed at the informational demands of a system of planning that lacked market prices as critical guides to action. How could socialist planners create a system comparable to a market system when markets are the equivalent of gigantic information-crunching machines and planners are merely people with far more limited capacities? In today’s terms, market systems are the equivalent of chess playing super computers and socialist systems are human players. The latter may be able to guide the process with greater intentionality, but the former will ultimately win because they can evaluate trillions of positions in the time their human counterparts can evaluate only a handful. (What needs to be remembered is that it is only recently that machines have beaten the best human players. Thirty years ago, when I was in graduate school, even I, a player of no special merit, was able to beat the Harvard Mainframe Chess Program in a match that dragged on into the wee hours of the night. Luckily for me, I had an appreciative audience, ignorant of the likely course of future computing power. Today there exist many PC-based programs that can thrash me quite handily.)

Proponents of socialist planning argued in return that the tools of (then) modern economics could stand in for markets and work just fine, as long as certain conditions could be met. (For example, as long as socialist manufacturers could be directed to minimize costs. It turns out, quite clearly, that this simple directive was not generally adhered to in socialist regimes, and although I can say that this was a serious deficiency of socialist planning, I cannot say why it happened.) Further, these proponents argued, the separation of control of capitalist enterprises between their owner and their managers – an increasing phenomenon with the growth of large firms – meant that capitalist systems would not solve the correct problems anyway.

Critics of socialist planning fought back and the determination and talents of one in particular, Friedrich Hayek, left many with the ultimate impression that the socialist calculation debate was won by the critics of socialist planning. It would surprise most economists today, but the debate was never actually concluded on the informational (calculation) terms on which he had been conducted.*** The determination that socialist planning would fail because the informational demands would exceed the capacities of any planner in a non-market system was never actually proven mathematically. It was merely asserted. Although fans of Hayek may say even today that his arguments on the need for market prices qua information were compelling, I think it can be said that Hayek actually won the debate by broadening the debate to include something at least as important. Hayek addressed the larger humanistic issues in works such as The Road to Serfdom, “The Use of Knowledge in Society,” and Individualism and Economic Order – work that conveyed Hayek’s deeply felt sense of human nature and what (socialist planning) power would do to people. That is, Hayek felt strongly that such enormous power would prove dangerous and lead to totalitarianism.

It may be said that Hayek was right, not on the narrow grounds of the economic debate, but on his sense of what socialist planning would mean for the agglomeration of power in a few hands. Whereas capitalism may well be characterized by the troubling adage, “One dollar, one vote,” socialism may be characterized by the even more troubling “One seat in the Politburo, one vote." And the effects go far beyond economic decision-making, of course. As we saw in Russia, Eastern Europe and in China, control can, and perhaps must, extend far more deeply into social, cultural and religious experience. If society invests in one’s education and then pays a below world-market wage for educated services, can society then allow the educated and well-trained to leave for greener pastures? A closing of borders follows. Borders are also closed to trade flows (imagine the challenges of predicting what needs to be produced after trade?) If the plan calls for more tractors and fewer passenger cars because of the relative social weight placed on agricultural productivity and domestic convenience, there is not much that even pent-up demand for passenger cars can do if trade is blocked. (When the Berlin Wall fell, in the DDR there was a waiting list for passenger cars – and we are talking about a queue for terrible little Trabants and Wartburgs – that was fifteen years long. That queue disappeared overnight – and so did the Trabants and Wartburgs – when East Germans were freed to buy VWs and Opals from the West.)

Many may agree with me that this leaves us with democratic capitalism. Not necessarily or even likely US-style democratic capitalism (in which social safety nets are small and aggressively fought over) but some sort of social democracy, perhaps along the lines of the Scandinavian model. The pain of experience tells us that the forest is really not so dark anymore; our path is clear. Unfortunately, just because you can see where you are going, it doesn’t mean that you like where you are going. Democratic capitalism in its current, nationalistic forms is not terribly promising. The bottom line is that it doesn’t much matter what sort of political ideology motivates our national governments as we have global problems that need to be addressed with complex, cooperative problem-solving tools, and so far it is not clear that national governments can learn to coordinate well enough to deal with challenging global problems. Our problems require that we communicate and understand the true risks we face as a species, and in our current environment our information flows are (ironically, given the nature of the debate waged over our political ideologies) heavily distorted by a pernicious politicizing of our science, technology and policy. Further, our capacity to solve multi-lateral global problems has, at least so far, proven to be quite challenging in the current environment of competing, national entities.

But there are still many who hold out hope that there is still time to solve the biggest problems facing us as a world community. Sachs paraphrases JFK in reminding us that our greatest enemy is cynicism. If we have no hope of solving our problems, we cannot solve them. Further, there are many cases of successful global problem solving that we must remember and from which we can learn valuable lessons. Those of us who read comic books as children can’t fail to recall that in the world of our comic books, our civilized, advanced future (one we fully expected to have as we did not yet fear for our very existence) was governed by a global government of erudite, soft-spoken, reflective, peace-loving men and women. (If it was an interplanetary government, it included non-humans, as well.) It’s too bad we didn’t get there in time, but it appears that we are going to have to solve our current global problems without the global government (although the UN is trying to help) and without the erudite, soft-spoken, reflective and peace-loving leadership (although some of you may beg to differ).

The global problem solving challenge falls instead upon national governments (of varied ideologies), the UN, enlightened corporations, enlightened individuals (such as Bill Gates and, depending upon your tastes, Al Gore), NGOs, including academic institutions, professional organizations, and a wide variety of activists, working in a complex web of organizations and movements. The tools for communication and organization are expanding rapidly; the internet and now social networking has made it much harder for political or corporate interests to dominate public discourse. Scientists have been trying much harder and much more successfully of late to get through to us that we face a number of serious risks (climate change being only one of them). Dr. Paul Farmer’s work in Haiti, Jacques d’Amboise’s work raising money and consciousness in youth dance circles for African aid, Muhammad Yunus and the micro-finance revolution that has had an astonishing impact on the lives of poor women around the world. The trend to more energy-conserving automobiles has recently spiked. Who can doubt that something important is happening? And who can deny that each of us could do more (I have been a vegetarian for over 25 years, but I still don’t drive a hybrid vehicle)?

The European Union offers a promising model, this one an example of rapidly improved cooperative decision making over a small period of time. There, the deficiency of old nation-state negotiated solutions to continental problems led to a surprisingly easy and significant transition to much greater regional integration. Few would have imagined even a generation ago that European nations would be able to cast aside their independence for this level of cooperative integration.

It may be said by some that the UN (as articulated in the Millennium Promises) is overly focused on the solving the problems of the poor and indigent and insufficiently motivated to focus on the survival of the species on the planet, and I think there is some truth to that. But Sachs, who has historically been at least as invested in poverty policy as he now is in climate change in his work at the Earth Institute, has argued that mitigating some of the worst problems in Africa (and in the rest of the impoverished world) is not only a matter of moral compulsion, but it is an essential part of the solution to climate change. The carrying capacity of the planet is about 8 billion and without population control in the poorest parts of the world, we will overshoot the planet’s limit. If we do reduce unwanted pregnancies in places where contraception is scarce, it has been estimated that we can reduce the number of births by 75 million per year. As I have written in other media, this is just about what is needed, in total, to prevent us from overshooting our planetary limit. Further, the greening of the planet needs to include the greening of the poor. Deforestation accounts for about 19% of the damage leading to global warming but in Africa forests are cut down not even to provide building material, but to burn for fuel. Increased incomes and the use of sustainable energy can therefore help doubly in the poorest parts of the world.

As you think about the challenges of dozens of competing governments seeking to advance a cooperative solution to problems such as climate change, think about this technological advance: e-Parliament. This project is trying to make it possible for legislatures everywhere to meet simultaneously with a strong videoconferencing platform and make collective, cooperative, coordinated decisions. These are decisions that will require sacrifice for the greater good, and are therefore likely to break down due to mistrust if one government needs to commit in advance of others. (This creates incentives to defect – a well understood phenomenon in economic theory.) Instead, we may see the day when every civilized government in the world (and we have to work hard to make sure the US government is one of them) can agree almost simultaneously to a cooperative, coordinated solution that will cost each of us something (about 1-3% of GNP according to some estimates) and will lead to a better long term outcome for all of us.

I have gone on much too long today. I will return to some of these themes soon. Until then, let me remind my readers that activism is being heard in all corners of the world. There has been real progress – a reason to hope that we can do this in time. I am not sure that I would go so far as to say I have the audacity to hope, but I am open to arguments from my readers that I should. As Bill Maher has said, he's tired of the audacity to hope and he thinks its time to hope for some audacity. I will lend a hand and make this more specific: the audacity that we are hoping for is the sort that will compel our political leaders to put aside their pretensions to cultural superiority, their nationalistic impulses, their distrust, and their ideological biases, in order to get to work cooperating multi-laterally to solve the problems facing all of us. That takes some audacity, I know, but what's the alternative?
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* See, for example, below which argues that all systems of government thus far tried are capital-centric. The conclusion is that the alternative, a labor-centric system, has not yet been given a fair chance. http://www.progressiveliving.org/economics/capitalism_socialism_communism.htm. For a more immediate and compelling debate about the merits of and role for government policy within capitalist systems, see Krugman’s recent piece (How Did Economists Get it So Wrong?) in which he lays out the gross failures of Chicago-style Anti-Keynesianism and their overly accommodating rivals, the so-called Saltwater Neo-Keynesians, who failed to stick to their guns well enough to protect us from a second global depression in eighty years. Krugman’s piece can be found here: http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html?pagewanted=8. Finally, it must be noted that one of fastest growing economic powerhouses in the world today is the People’s Republic of China.

** All aspects of life were not worse under Soviet-style socialism. Athletics, the Arts, and some aspects of education were well supported by state systems.

*** See this simple summary of the debate for details: http://homepage.newschool.edu/het//essays/paretian/social.htm.