Posts Tagged ‘James Kenneth Galbraith’
Last year Elias Isquith asked me to contribute a piece to a forum he did on the State of the Union speech. There was some dispute between the contributors over how they read the speech which was my jumping off point. I’m posting it again before this year’s speech because most of what I had to say is still applicable, even if some of the details have changed.The fact that people have such different readings of this speech isn’t that surprising. It reads to me like it was designed to do just that – let each of us hear what we want to hear. Our normal way of understanding the SOTU is outward. We tend to think of the president seeking to persuade the opposition or independents. But there are two ways we might think of ‘us’ as the target. First, speeches can be used to mobilize one’s own supporters to action. Second, they can be used to demobilize one’s own team. But ultimately, the impact depends on how we react. We can use the good things that were mentioned as a resource, in making demands. Or we can assume that the White House has the issue in hand and therefore we can stand down – at least until we get marching orders. The latter is a losing proposition, regardless of your thoughts about the president’s own motives. I cringe at the barrage of emails about supporting the president’s agenda. We should have our own agenda, and pressure him to support us.
Of course, we all know that the president faces a hostile Republican majority in the House, and an obstructionist Republican minority in the Senate which, as a result of Harry Reid’s unwillingness to undo the filibuster, has a great deal of power. Because of the sequester, there will likely be fiscal legislation, and because of Republicans’ fear over losing the Latino vote in perpetuity, immigration legislation will at least get a hearing.
So I thought I’d focus more on some other things, including those the White House has more control over.
When you come down to it, the word market is a negation. It is a word to be applied to the context of any transaction so long as that transaction is not directly dictated by the state. The word has no content of its own because it is defined simple, and for reasons of politics, by what it is not. The market is nonstate, and thus it can do everything the state can do with none of the procedures or rules or limitations. It is a cosmic and ethereal space, a disembodied decision maker–a Maxwell’s Demon–that, somehow and without effort, balances and reflects the preferences of everyone participating in economic decisions. It is a magic dance hall where Supply meets Demand, flirts and courts; a magic bedroom where the fraternal twins Quantity and Price are conceived. It can be these things precisely because it is nothing.
Because the word lacks any observable, regular, consistent meaning, marvelous powers can be assigned to it.
James K. Galbraith, The Predator State
Harold Meyerson has a really good piece on “The Failures of Shareholder Capitalism.” I like this for a number of reasons, including that the idea that having socialized ownership (by numerous individuals or more often, institutions) isn’t really the same as 1) the way the economic system was ordered when the economy was far healthier, i.e. in the 50s and 60s, or 2) as the idea of capitalism, which focuses more on individual ownership. (Ok, that bit about stock holding as a form of socialism is my gloss, but it’s a good point whether it gets that label or not).
The whole thing is great but this is especially important.
Still, the myth of shareholder power, and especially individual shareholder power, is continually attested to by corporate managers and their apologists because it legitimates the current system of corporate governance and the division of corporate riches. CEOs don’t acknowledge that the system is rigged in their favor. But the rise of shareholder capitalism — the doctrine that has dominated corporate conduct since the early ’80s, as corporations’ raison d’etre has been reduced to maximizing shareholder value — has been a boon to top executives. They have been able to tie their compensation packages to rising share value (and untie it when share value falls).
The transformation of the shareholder from an individual with a long-term interest in the company to an institutional short-timer with myriad other investments raises a deeper question about corporate governance: Why is it that shareholders, at least theoretically, are entrusted with electing corporate boards? Why aren’t more long-term stakeholders with a genuine interest in the company’s success — say, their employees — also represented on corporate boards, as they are required to be in Germany? German corporations are thriving, even though (or more likely, because) their CEOs are paid radically less than ours and their workers command a higher share of gross domestic product than ours.
I’ve long thought we do ourselves a disservice by simply adopting terms developed long ago to describe very different economies that today serve mostly to legitimate the rule of the powerful and which are not generally taken very seriously by their proponents. (James Galbraith makes this point is his excellent book The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too.) The legal realists* did this once before in the lead up to and wake of the Great Depression. In the aftermath of the Great Recession, brought on by a second resurgence of market fundamentalism, we need to recover that past and extend it.
*Agnostic Liberal had a good post the other day discussing this that’s also worth a read.