On May Day, noted neo-liberal blogger Matt Yglesias wonders aloud if Marx had a point. Bouncing off a Brad DeLong post basically claiming a rationally interested ruling class would gladly keep up the revolt insurance, thus heading off rejection of the system, Matt observes what he calls “Wall Street Journal editorial page” tendencies spreading in opposition:
You see a rising tide of Rand-inflected moralism about market outcomes and a reduced emphasis on Friedman-style pragmatism. You also see a sharply reduced emphasis on belief in any kind of macroeconomic stabilization policy, in favor of a “let them eat cake slash move to North Dakota*” moralism about unemployment. Last but by no means least, it really has become the conventional wisdom among American elites that the appropriate policy response to fiscal imbalance in a time of high and rising income inequality is to restore balance by reducing the scope and generosity of social insurance programs.
I assume by “Friedman-style” he’s referring to Milton** and the Monetarist emphasis on central banking & the money supply as economic levers in contrast to Keynes. That is, skepticism of the stated means of Keynesian economics but agreeing to the end — think Fed Not Congress. Matt’s view of the reason for that rejection, given the phrase he uses to describe this overall tendency, paints it as inherently right-wing, no doubt having visions in his head of a Tea Party swagged out lynch mob massing towards Ben Bernanke’s residence in the middle of the night. Well given the demonstrated institutional corruption within the Fed, and the effect of their actions being to subsidize concentrated wealth, he might wanna make room in that fever dream for some OWS veterans.
“Macroeconomic Stabilization policy” itself is a curious thing when you think about it. The critique commonly assumed of it is that 1) spontaneous market order (AKA “the free market”) will take care of itself & 2) what we live within right now is consistent with spontaneous market order. The second part of that is such obvious nonsense that anyone claiming it as truth with a straight face I will gladly laugh off. More often though, the criticism is political rather than anything coherent in economic terms: think GOP politicians whining about the national debt while simultaneously proposing high-end tax cuts & more military spending by the largest arms dealer (and user!) in the world. They want “stimulus” too, they just call it Protecting The Homeland or Reasserting American Leadership. That said, both the progs concerning themselves with the shift away from social programs & the ones calling for the return of Keynes have a point — though not one either will like once they read it through…
-To the Keynesians: demand crater is describing surplus capital with nowhere to go from the other end. Saying government must spend to fill the gap & “create jobs” admits a zero-sum game has been constructed with regard to capital & labor. The more labor loses, the less mass consumption can be expected — without debt at least, which empowers high finance. So either people have less & less money, surplus capital piles up, & things stagnate, or people shift to debt until it pops & things collapse…to then stagnate. You’re performing maintenance on a giant hamster wheel.
-To the progs: ironically, Keynes has convinced the ruling class that they don’t need you & your “safety net”. Why bother when they can just holler at the Fed & limit any future serious investment to defense contractor stock? I hear some people in Syria have high aggregate demand for weapons…
So to Matt, I say keep going. It’s not cyclical, the rulers don’t give a shit, and the reason they call it “stabilization” is because the foundation is wobbly. Feel free to Wobble right back at it.
* – BTW: the mention of North Dakota comes because their current unemployment rate is 3%. That not everyone can just drop everything and go drill oil, nor should we even if we could due to it amounting to cannibalizing the environment, is what makes that absurd. Besides, oil going ham while most of the developed world is coasting at best is part due to catch-up in China & India, and part fallout from what the Fed has been doing ostensibly to keep the whole charade up — oil is priced in U.S. dollars, y’know?
** – If he’s actually referring to Tom “everything I need to know I learned from my cabdriver — then promptly ignored half of it” Friedman, let me know.