I’ve been reading Robert Kuttner’s The Squandering of America . Although it’s a very smart, nuanced analysis, the economic theory behind it has the same problem that a lot of folks on our side have when they talk about the relationship between the government and the market.
Here’s Kuttner’s theory in a nutshell:
Markets are useful engines of economic growth, but they are not reliable at providing economic security, much less decent wages, retirement, education, or health care. Nor can we trust markets to police the honesty of financial institutions, the cleanliness of air and water, the safety of workplaces, where the stability of the economy as a whole. So alongside markets, we need social institutions financed with progressive taxation, as well as public regulation of the market’s self-capitalizing tendencies. A well-managed economy operate according to these principles can be as least as efficient as a laissez-faire one (which under invests in people) — and a lot fairer. (p. 273, emphasis added)
Here’s my problem: “alongside markets.” In an earlier book, Everything for Sale, Kuttner showed how deeply embedded the government is in almost every nook and cranny of the market. As he sums it up:
even a fervently capitalist society, it turns out, requires prior rules. Rules govern everything from basic property rights to the fair terms of engagement in complex mix markets such as healthcare and telecommunications. Even the proponents of market like incentives — managed competition in health care, tradable emissions permits for clean air, supervised deregulation of telecommunications, compensation mandates to deter unsafe workplace practices — depend, paradoxically, undiscerning, public minded regulation to make their incentive schemes work. (Everything, p. 328 )
If the government is so deeply involved in the market — in housing, education, healthcare, Wall Street, telecommunications, agriculture, Hollywood (copyrights, anyone?), autos & transportation, food, kid’s toys, the workplace, just to name a few — does it really make sense to say it’s “alongside” the market?
I don’t think so. I think “alongside” lets conservatives and moderates play games. It lets them pretend that the government isn’t all that important. And so in the long run, it makes us vulnerable to the right wing attacks Kuttner spends The Squandering of America trying to counter.
If we’re going to end up with a better way of thinking and talking about the economy, we’ve got to crack this nut. We need a metaphor that really gets the relationship between government market.
