My Blog List

Friday, October 9, 2015

The Predator State - Review of James Galbraith's book

Review of Galbraith's Book on the "Predatory State" (part one)

In the book "The Predator State" James Galbraith shows the history; genesis, development and fashion shifts in the governing ideology and moraes of our political economy. more immediate. He's showing how we are a Predator State, and how Tory "Con" economics is warping our economy.

{This is going to take several posts.}

The Newspeak of the Reagan Revolution

When James Galbraith (following in the footsteps of J.K. Galbraith) writes on economics and it's ills, he's describing the results of a predator state ideology that has it's roots in Empires dating back to the Classical period, but is heavily influenced by what can be called "Tory Economics". James Galbraith has explicitly written on the subject of the "Predator State" and calls one of his books by that name.

The Reagan Revolution assault on Keynesian economics and Keynesian Economists

I was struck by his opening passage, which I so experienced myself. in the Chapter "Whatever happened to the Conservatives" he reflects his own experience and describes how the conservative movement rose from the wealth class to dominate our politics and shove Keynesians like himself aside:

"The 1970s saw the rise of two distinct conservative movements, the supply siders and monetarists."

The Supply siders were "radical tax cutters and deregulators". The monetarists had a dream that by exercising "strict control" over "money stock" they could control the economy. In practice these two groups overlapped considerably. The Supply Siders were loosely affiliated with the "libertarian" movement and the "Austrian School", while the monetarists followed their (sithi) Master Milton Friedman. They were well funded and dominant over not only congress and the white house, but School Administrations and curriculum designers. James Galbraith remembers:

"The conservative alliance devalued my Keynesian Education, obstructed my career, and deprived me and my few comrades on Capital Hill of the levers of power."

I was in College in the mid seventies so I witnessed this assault on the economics profession first hand. I chickened out and changed majors first to Business and then Computers. At the time I thought well maybe I wasn't smart enough to get an advanced degree in economics. And yes, part of the decision was because I couldn't make my mind up about what I wanted to do when I grew up while the rest was fear of the mathematics involved.

Even so I had the outline vision for a Graduate Thesis on the role of ethics in economics. I remember talking about that to these new professors. They had firm faith in the God of "Markets" and thought my premise was absurd. It just couldn't be that bad economic policy and corruption are what drive the business cycle. It's still on my bucket list.

Regression to 19th Century Monopoly Economics

The economics the Reagan Rebellion brought in was the familiar political economy of the 19th century. It was obvious. As Galbraith says the goal of the new regime was to reduce taxes on the rich to "", spur "saving and investment" and the use of "Tight money" to "end inflation quickly, brutally if necessary." The entire effort was a "wide-ranging assault" on public government, designed to give rule over to private governance; "market forces" and "private capitalists." They also launched an ongoing assault on government in the public interest, "regulation" and unions, among other things.

Faith Based Economics

Galbraith notes:

"...these were people who believed. They were idealists. They had the force of conviction."

And he notes that:

  1. They were setting the agenda
  2. Most of the rest of us had that nagging doubt; "Suppose they were right?"

For most of us those doubts were soon dispelled, but as Galbraith noted, they had that typical Pseudo Science appeal. These were convenient myths, hierarchy enhancing myths (see Understanding Social Dominance), what his father would call in 2004 "Innocent Frauds." The myths of:

"Free...Choice", "marketplace" rule via "the gentle persuasions of price", "prosperity"..."without planning,"

And he notes how, even so-called liberals in the 80's had a "compassion fatigue" and were tired of "compromise, redistribution" and "the needs and demands of minorities and the poor", the Reagan Revolution got support from closet grinches who normally flew the "liberal banner" and who, because they secretly sympathized with the cons (and not with their own constituents), made half hearted efforts to stop them until well into this new Millennia. They recruited young economists like Larry Summers and Paul Krugman, who were quite willing to work for their agenda while continuing to claim to be Democrats -- because if the Cons from the GOP were Neo-liberal heavy, many Democrats became neo-liberal "lite." After all if everyone who needs a job has a job, who needs welfare?

In the end even Larry Summers would be forced to evolve away from the myths of these people. And Krugman seems to have gone a long way since the 80s towards reviving what is now called "Post Keynesianism" -- which is really core progressive ideas, chastened and tempered by the intense scrutiny they received between 1970 and 2008, when the RW scrutinizers failed completely. Even so many, now establishment, Cons still cling to them.

The Repudiation of Trickle Down

In this first Chapter James Galbraith describes how even the authors of most of the assumptions of the Monetarist and "Trickle Down" theories repudiated them. Galbraith quotes Milton Freedman from 2003:

"The use of quantity of money as a target has not been a success...., I'm not sure I would, as of today push it as hard as I once dead."

So Monetarism failed to work as designed. And of course the first loud and famous Huckster of Trickle down economics, Dave Stockman, would repudiate the whole "trickle down theory" as a fraud, while going on to recommend even less useful economic ideas in it's place. [See Reading Dave Stockman's 'Deformations'

Yet, there were useful things buried in the myths and "innocent frauds" trotted out by these people. They weren't idiots, and some of the ideas resonated because somewhere in the merde was a kernel of truth. Focusing on the money supply might actually work if the Federal Reserve and other banks weren't working through a privateering banking system with a fraudulent reserve system for generating money by issuing money as loans. It also might have worked better if the USA currency hadn't become the world's reserve currency due to Bretton Woods, and it's failure to be replaced with a money system that served the people of the world rather than financiers and money men. And for other reasons to be covered later.

If you have time to read "The Predator State" please do so. It will take some time. I've skimmed it, but really only gone into depth on the opening chapter in this post.

Further Reading

James Galbraith, books include:

Understanding Social Dominance:
Reading Dave Stockman's "Deformations
James Galbraith:
JK Galbraith:
Created Unequal: The Crisis in American Pay:

No comments:

Post a Comment