How to beat libertarians on the economy

While the right is united economically behind one main agenda, the left lacks such a consensus. Here's the solution

Topics: Libertarianism, The Right, The Left, Economics, Progressives, Liberals, Labor, Workers' Rights, Editor's Picks,

How to beat libertarians on the economyRand and Ron Paul (Credit: Reuters/Jim Young)

When it comes to debating conservatives about the future of the American economy, progressives are at a disadvantage. Conservatives are united behind a single vision of the ideal economy, while progressives are divided among three rival schools of economic strategy.

On economics, unlike on social issues or foreign policy, there is no distinction between conservatism and libertarianism. The mainstream right’s economic vision is libertarian, pure and simple: smaller government, lower taxes, free trade and deregulation. Add to this the goal of replacing universal, tax-financed social insurance programs such as Social Security and Medicare with means-tested vouchers to subsidize for-profit providers of retirement savings and medical insurance and medicine, and you have pretty much the whole right-wing economic program.

Nothing like that consensus exists to the left of center. Instead, three distinct and conflicting traditions of political economy coexist under the rubric of liberalism or progressivism. The three are small producerism, unionism and economic rights.

The three schools of center-left economic thought have coexisted, now as rivals and now as allies, since the early 1900s. Each has had its own constituency or social base. Small producerism reflects the interests and values of family farmers and small business owners. Unionism is promoted by organized labor. And economic rights, embodied in universal policies, have been emphasized by reformers and intellectuals, based in the educated professional class.

Small producerism has its roots in American agrarian republicanism. It is the Jeffersonian of the left, associated with William Jennings Bryan and Louis Brandeis and later with Congressman Wright Patman of Texas. The small producerists despised what Brandeis called “the curse of bigness” and sought to create a decentralized republic of self-reliant “yeomen”– small farmers, craftspeople and shopkeepers. Their suspicion of big business and big finance distinguishes producerists of the left from conservatives who attack regulation and taxes in the name of small business.

The unionist vision of the ideal economy was and is radically different from the producerist vision. Rather than break large corporations into small ones by means of antitrust law, unions seek to bargain with companies for decent wages and benefits.

The third tradition on the center-left, the tradition of economic rights, has always been in tension with small-producer populism and unionism. Like unionism, and unlike nostalgic populism, economic-rights progressivism is at ease with the modern world in which most workers are wage-earners, not independent “yeomen.” But unlike unionism, economic-rights progressivism thinks that the best way to ensure adequate wages and decent benefits is by means of direct, universal legislation on behalf of all citizens, not by means of collective bargaining among employers and unions. In the words of Frances Perkins, Franklin Roosevelt’s Secretary of Labor, “I’d rather pass a law than organize a union.” The classic statement of economic-rights progressivism was Franklin Roosevelt’s call in 1944 for an “Economic Bill of Rights.”

The New Deal coalition of the mid-twentieth century brought together all three schools, along with their supporters — farmers, unionized workers and middle-class reformers. And the New Deal policy synthesis combined elements from all three programs — subsidies for farmers and small business loans for the small-producer school, pro-union legislation for the unions, and universal social insurance entitlements like Social Security and unemployment insurance and Medicare for the economic-rights school.

All three schools continue to be represented in center-left discourse. The decentralist, small-is-beautiful tradition of producerism is found today in the “locavore” movement, opposition to chain stores like Wal-Mart, and the kind of environmentalism that romanticizes tiny “organic” farms and urban gardens. Members of labor unions continue to play a role in progressive activism and campaign finance far out of proportion to their numbers. And middle-class reformers continue to agitate for universal reforms, including a minimum wage that is a living wage and expanded Social Security.

But this diversity is a source of weakness, not of strength, for the center-left. Notwithstanding their noble intentions, the small-producerist and unionist visions of the economy divert attention from the central struggle of our time, which is, or should be, the battle between economic-rights progressivism and libertarian conservatism.

Small producerism is even more obsolete in the early twenty-first century than it was in the early twentieth. Between 1950 and 2013, the number of self-employed Americans dropped from 25 percent to 7 percent.  And that 7 percent includes a significant number of affluent Americans who are really investors or professionals, rather than small business owners.

The decline in self-employment should not be lamented. On the contrary, it is a sign of progress. Primitive Third World economies have much higher levels of self-employment and small business than advanced, First World nations. Economic progress involves the substitution of machinery for labor — largely by big, capital-intensive firms that can afford expensive equipment and drive out smaller competitors. At the same time, many people in developed countries prefer steady wages and benefits at medium-to-large firms to the uncertainties of self-employment. That is why self-employment is lower not only in the U.S. but also in Europe and the developed nations of East Asia than it is in the backward economies of the global South, with their peasants and peddlers.

The American center-left should ask itself how much energy it wants to devote to helping the 7 percent of Americans who are self-employed, rather than the overwhelming number who work for somebody else.

There are tough questions to ask about the unionist model of the economy, too. In 2012, total union membership in the U.S. had dropped to 11.3 percent — the lowest level since 1916. Much of that consisted of public-sector union members. Private-sector union membership is just 6.9 percent of the workforce.

The political clout of American unions has diminished so much that minor pro-union legislation — “card check” — could not be passed even when the Democrats recently controlled both houses of Congress and the presidency. Throughout the industrial world, union membership is declining, albeit in some cases from much higher levels. Even if, against all odds, the political climate changed in favor of unions, it would take decades or generations for organized labor to regain anything like the one-third of the workforce it claimed in the 1950s.

But the problems of wages and economic security are urgent. That leaves economic-rights progressivism as the most realistic option for the twenty-first century American center-left.

Only direct legislation can serve as a remedy to the evils of low wages and inadequate benefits. Through the government, America’s citizenry must insist that all businesses in the U.S. pay a living wage. And employer benefits should be gradually phased out and replaced by universal, generous social insurance — not only universal health care and an expanded Social Security system, but also a new federal system of family leave, paid for by payroll taxes.

Universal policies for all Americans as a matter of right should be the progressive agenda of our time. The sooner the center-left abandons well-intentioned but anachronistic strategies and rallies behind contemporary economic-rights progressivism, the sooner the battle for the future of America can be taken successfully to the libertarian right.

Michael Lind is the author of Land of Promise: An Economic History of the United States and co-founder of the New America Foundation.

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