SALON Daily Clicks: Newsreal

Free market ideology has become extreme and dangerous, says Robert Kuttner. But with the right wing controlling the debate, it's getting hard to get anyone to listen.


Marcia Stepanek
February 11, 1997 1:00AM (UTC)

were all capitalists now. Privatization, NAFTA, GATT, hands-off governments, "international" labor markets, the burial of communism, the irrelevance of socialism -- Adam Smith has triumphed. But a number of critics have recently raised questions about the almighty marketplace. One of the more unlikely is the financier George Soros, who made billions speculating in the largely unregulated foreign currency market. In the February issue of the Atlantic, Soros says the biggest danger to democracy these days is laissez-faire capitalism, which he says threatens to tear apart the social fabric of societies that practice it. In "One World, Ready Or Not: The Manic Logic of Capitalism" (Simon & Schuster), Rolling Stone political correspondent William Greider argues the world is in the midst of the biggest economic revolution in history -- one that may be more destructive than creative if governments do not control it.

Finally, in "Everything For Sale: The Virtues and Limits of Markets" (Knopf), the economics writer Robert Kuttner challenges the prevailing doctrine that an unregulated, self-correcting free-market economy is the ideal for America. Kuttner, founding co-editor of the bimonthly American Prospect and a contributing columnist for Business Week, says the gap between the haves and have-nots in U.S. society is eroding the social compact and undermining the country's moral authority.

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Salon spoke with Kuttner about his book.

You point out that the gap between the nation's affluent few and the rest of us is bigger than it's been in 30 years. You also point out that the middle class -- which is what we thought America was -- is shrinking. But if government needs to step in and correct the balance, it doesn't seem to have received the message.

Unfortunately, the tide is going in the opposite direction. We've got a conservative Democrat in the White House, while the conservative free marketeers have taken over academia and are dominating the thinking at economics departments across the country. Tens of millions of dollars are being pumped into right-wing foundations to bolster unregulated, free-market capitalism. And, apart from isolated individuals, there's no response from the left of center.

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You're one of those isolated individuals who have been arguing for a more mixed economy. How would a mixed economy help us to do any better?

It would help us to temper inequalities, to develop civic virtues, to preserve a national belief that we're all, somehow, in this together -- rather than a nation mostly of people who think only the fittest, or wealthiest, should dominate access to everything -- the best education, the best job opportunities, best health care and so forth -- and let the rest fend somehow for themselves.

Harvard economist Richard Freeman, in a Harvard Business Review article in September, referred to our "apartheid economy." Labor Secretary Robert Reich said last month in his farewell speech: "It used to be in America, a rising economic tide caused all ships to rise. But recently, the rising tide is elevating only the yachts. The rowboats in between have barely avoided taking on water and the little rafts and dinghies are sinking." AFL-CIO President John Sweeney is out there trying to reinvigorate the labor movement as a voice for new balance in society. Maybe you're not so isolated. Maybe we're seeing the stirrings of an anti-capitalist zeitgeist.

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It's not anti-capitalist. It's more like an anti-utopian laissez faire, anti-free-market libertarianism zeitgeist. I mean, when George Soros starts expressing qualms, it's hard to call that anti-capitalism. The labor movement and left-of-center intellectuals have never been anti-capitalist. What they are saying is that the pendulum has swung to the extremes of capitalism and that it needs to be tempered.

Was Karl Marx right that capitalism, left to its own devices, will eventually eat itself up and collapse?

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I'm anything but a determinist. It depends on what we as a society choose to do. But left unchecked, capitalism can be destructive. The claims of unregulated capitalism are that it is efficient, makes the best available use of resources, is self-regulating, is essentially fair -- that what you get out of it is a function of what you put in. But it's not like that. What you get out of the system is often a function of luck and simply being in the right place at the right time, and who your parents are and so forth. Capitalism, if left to its own devices, spawns income inequality. And capitalism -- laissez-faire capitalism -- is not the best embodiment of human freedom because it does not insure all sorts of other types of freedoms, like getting quality medical care and getting educated in a decent school. When you deregulate, privatize, weaken unions, you get rid of all sorts of social stabilizers and the inequalities of the marketplace loom larger.

How does the so-called "information economy" fit into this?

The high-tech industry as a whole tends to be very libertarian. Technology is changing so fast, utopians say, that government should just get out of the way. They claim that thanks to information technology, markets can really work more like they do in the textbooks, that any producer in the world can find any consumer in the world. I think it cuts both ways. It might work fine in smaller markets where consumers are more or less equal. But beyond that, and globally, I don't know that this will be the case at all.

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So where are the "progressive" voices on all of this? Why are the conservatives dominating the conversation, politically and economically?

Once organized business realized that it had a lot of conservative intellectuals out there who could be supported by corporate largess, you had a convergence of conservative intellectuals and foundations springing up around this free-market ideology. Money helps nurture an environment in which right-wing scholarship can flourish. Lefties got control of university English departments, and the righties got control of stuff that has real power -- the economics departments and the business schools and so forth.

How has this affected the political debate?

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I think that it's had particular influence on conversations about income distribution, the notion of job security and questions of how you govern globalization. Where things used to be regulated at the nation-state level, now you've got these pseudo-governmental international agencies like the World Trade Organization governing the spread of capitalism globally. You don't have the same sort of ground rules for capitalism internationally as you used to have when capitalism in this country was predominantly domestically focused.

With such strong voices arrayed against you, aren't you afraid that you are just whistling in the wind?

I'm not whistling in the wind, but I know it's going to take something dramatic to change things around. I think it's going to take something like a stock market crash or an international financial catastrophe to change the country's focus and to alter the prevailing ideology of capitalism -- much like what happened in the 1930s. My fear is that only some sort of systemic disaster must happen before the pendulum swings back on a grand scale.

Are you predicting a stock market crash? Or do you sense some sort of social backlash to free-market capitalism forming on the horizon?

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I'm not predicting a market crash, though it can't keep going straight up forever. Everybody knows that. As for a backlash, you can see one starting against private regulation of health care. You've also got a backlash against job insecurity out there, though it's not yet clear what political form it's taking. And, as I said, there are some intellectuals starting to say that the pendulum has swung too far. I think you've got the beginnings of a debate about how the national interests of the United States intersect with the globalization of commerce. Do you have a global economy, or do you retreat from it to protect the standards of living of your own country as new capitalistic economies grow and flourish? The world's wealth pie can only be so big, some argue.

What are the main threats of the global economy?

Globalized capitalism is awfully hard to regulate. It's hard to regulate labor standards in one country because someone in Bangladesh can do the job for 50 cents a day. It's the same story with pollution control and banking standards. There's always somebody else with lower standards. Justice Brandeis called it "a race to the bottom."

But with American government in such bad odor these days, people don't trust it to fix things.

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Sure, and the more this goes on, the more the right wing pushes to downsize government, the more the downward spiral continues. You need government to be a counterweight to the markets, but if government is widely believed to be corrupt, then nobody's going to listen to it. And it won't be able to effect any sort of rebalancing of markets and democratic ideals, as it once did.

One must, I suppose, imagine Sisyphus happy. You keep pushing the rock up the hill and you do the best you can. These are hard times in which to be a liberal and a believer in a mixed economy, and I hope we have the will and wisdom to resist the promises of utopianism. I hope we can do it before there is a crisis.
Feb. 10, 1997

Marcia Stepanek is a national affairs correspondent for Hearst Newspapers. She previously interviewed the White House technology chief about "Internet 2" for Salon.


Has capitalism become too extreme? Join the most recent conversation about it in Table Talk.

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Q U O T E O F T H E D A Y


Computer literacy

I can't find the 'any' key on my computer.
What do you mean, the 'any' key?
You know. Where it says in the manual, 'Hit any key.' Where is the 'any' key?

--A reported phone conversation between novice computer user and computer tech support representative. (From "Unsung Heroes of PC Age," in Monday's San Francisco Chronicle.)


Marcia Stepanek

Marcia Stepanek is a national affairs correspondent for Hearst Newspapers. She previously interviewed the White House technology chief about "Internet 2" for Salon.

MORE FROM Marcia Stepanek



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