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Corporatism: Merging the Worst Parts of Big Government and Big Business
America is in the midst of a system failure. Only a wave of democratic participation can save this country from the 'iron law of oligarchy' of Robert Michels.
By Christopher Hayes
There is a widespread consensus that the decade we've just brought to a close was singularly disastrous for the country: the list of scandals, crises and crimes is so long that events that in another context would stand out as genuine lowlights -- Enron and Arthur Andersen's collapse, the 2003 Northeast blackout, the unsolved(!) anthrax attacks -- are mere afterthoughts. We still don't have a definitive name for this era, though Paul Krugman's 2003 book The Great Unraveling captures well the sense of slow, inexorable dissolution; and the final crisis of the era, what we call the Great Recession, similarly expresses the sense that even our disasters aren't quite epic enough to be cataclysmic. But as a character in Tracy Letts's 2007 Pulitzer Prize-winning play, August: Osage County, says, "Dissipation is actually much worse than cataclysm." American progressives were the first to identify that something was deeply wrong with the direction the country was heading in and the first to provide a working hypothesis for the cause: George W. Bush. During the initial wave of antiwar mobilization, in 2002, much of the ire focused on Bush himself. But as the decade stretched on, the causal account of the country's problems grew outward in concentric circles: from Bush to his administration (most significantly, Cheney) to the Republican Party to -- finally (and not inaccurately) -- the entire project of conservative governance.
As much of the country came to share some version of this view (tenuously, but share it they did), the result was a series of Democratic electoral sweeps and a generation of Americans, the Millennials, with more liberal views than any of their elder cohorts. But it always seemed possible that the sheer reactionary insanity of the Bush administration would have a conservatizing effect on the American polity. Because things had gone so wrong, it was a more than natural reaction to long for the good old days; the Clinton years, characterized by deregulation and bubbles, seemed tantalizingly placid and prosperous in retrospect. The atavistic imperialism of the Bush administration had a way of making the pre-Bush foreign policy of soft imperialism and subtle bullying look positively saintly.
Toward the end of the decade, as the establishment definitively rebuked Bush and sought to distance itself from his failures, the big-tent center-left coalition took on an influential constituency -- the Colin Powells and Warren Buffetts -- who didn't want reform so much as they wanted restoration. This was reflected in a strange internal tension in the Obama campaign rhetoric that simultaneously promised both: change you can believe in and, as Obama said at a March 2008 appearance in Pennsylvania, a foreign policy that is "actually a return to the traditional bipartisan realistic policy of George Bush's father."
If the working hypothesis that bound this unwieldy coalition together -- independents, most liberals and the Washington establishment -- was that the nation's troubles were chiefly caused by the occupants of the White House, then this past year has served as a kind of natural experiment. We changed the independent variable (the party and people in power) and can observe the results. It is hard, I think, to come to any conclusion but that the former hypothesis was insufficient.
So what, exactly, is it that ails us?
In pondering the answer, it's useful to distinguish between two separate categories of problems we face. The first are the human, economic and ecological disasters that demand immediate action: a grossly inefficient healthcare sector, millions un- or underinsured, 10 percent unemployment, a planet that's warming, soaring personal bankruptcies, 12 million immigrants working in legal limbo, the list goes on. But the deeper problem, the ultimate cause of many of the first-order problems, is the perverse maldistribution of power in the country: too much in too few hands. It didn't happen overnight, of course, and the devolution has been analyzed and decried by a host of writers and thinkers in these very pages.
It's also not the first time. Indeed, the story of the American Republic is the never-ending task of redistributing power that always seems to collect and pool and re-form, a cycle in which we break up the power trusts, only to find them reassembling, Terminator 2-like, and requiring yet another dose of the founders' revolutionary fervor to be broken up again.
The central and unique paradox of our politics at this moment, however, is that our institutions are so broken, the government so sclerotic and dysfunctional, that in almost all cases, from financial bailouts to health insurance mandates, the easiest means of addressing the first set of problems is to take steps that exacerbate the second.
As an illustration, consider the following hypothetical.
You're a social worker or a parish priest in a poor urban neighborhood that lives under the malignant, if stable, stewardship of an organized-crime protection racket. The small business owners all have to pay a protection fee, which most of them can afford, but a significant portion of bodegas and nail salons operating on razor-thin profit margins struggle to come up with the money. When they fall short (which is often) they are subjected to beatings, harassment, vandalism and other petty cruelties.
Now, it turns out that you can raise enough money through your organization so that you can reliably cover the protection fees for the struggling shop owners operating on the margins. Whenever they can't come up with enough money, you can make up the difference. The improvement to residents' lives would be massive: no longer forced to live in fear, they would be allowed to transact their business and go about their lives free from the constant, degrading fear of physical violence. But by taking this action you would also be channeling revenue into the pockets of the protection racket and, perhaps more insidious, further entrenching its power by conceding its central premise: that all local businesses must pay up in order to survive.
This is, in rough allegorical fashion, the dilemma at the heart of the recent intra-left battle over the Senate version of the healthcare bill. Those arguing that the bill will be a massive step forward in reducing the misery of the uninsured are for the most part right. And those arguing that the Senate version of the bill is a grotesque sellout to Big Pharma and, to a lesser extent, Big Insurance, are more or less correct as well. When the White House used its muscle to kill a bipartisan amendment that would have allowed reimportation of drugs, it was as if our fictional social worker or priest took to shaking down shopkeepers to stay in the good graces of the local thugs. For what it's worth, I'm generally in the pay-off-the-thugs camp, because of the concrete benefits it would provide (Medicaid expansion for 15 million) but also because by enshrining the notion that the government is responsible for managing the healthcare system, the crimes of the insurance racket can now be laid at the feet of our politicians. In the short run, that accountability may spell political trouble; in the long run, I'm hopeful that it will force the government to crack down.
That said, the whole system that produced this legislative approach sucks, and recalls nothing so much as the Bush/GOP passage of Medicare Part D.
In the abstract, the putative goal of Medicare Part D was laudable (even if it was driven by Karl Rove's crass desire to curry favor with an important electoral demographic): reduce the cost of prescription drugs for seniors on Medicare. The method of achieving this laudable social end, however, was repugnant. Medicare was statutorily barred from using its market share to negotiate lower drug prices, thereby ensuring hefty (and largely unearned) profits for Big Pharma in perpetuity. Drug reimportation was off the table as well. And since Republicans don't believe in taxes, and our political institutions are increasingly incapable of raising revenue, none of it was paid for. One Democratic Senate aide told me that right before his boss voted for final passage of the bill, the senator turned to him and said, "So, I guess I have to go vote for this piece of shit."
At the time, Medicare Part D looked like the nadir of GOP governance, but two things have happened in the interim. One, the program, despite early chaos, has become quite popular: seniors like getting cheaper drugs. And two, the basic policy approach has been adopted, in somewhat altered form, by the Obama administration. We are all Medicare Part D now.
There's a word for a governing philosophy that fuses the power of government and large corporations as a means of providing services and keeping the wheels of industry greased, and it's a word that has begun to pop up among critics of everything from the TARP bailout to healthcare to cap and trade: corporatism. Since corporatism often merges the worst parts of Big Government and Big Business, it's an ideal target for both the left and right. The ultimate corporatist moment, the bailout, was initially voted down in the House by an odd-bedfellows coalition of Progressive Caucus members and right-wingers.
In the wake of the healthcare sausage-making, writers from Tim Carney on the right (author of the provocative Obamanomics) and Glenn Greenwald on the left have attacked the bill as the latest incarnation of corporatism, a system they see as the true enemy. There is even some talk among activists of a grand left-right populist coalition coming together to depose the entrenched interests that hold sway in Washington. Jane Hamsher of Firedoglake touted her work with libertarians to oppose Ben Bernanke, more AIG bailouts and the Senate healthcare bill ("What we agree on: both parties are working against the interests of the public, the only difference is in the messaging"); David McKalip, the tea-party doctor who got into trouble for forwarding an image of Obama with a bone through his nose, wrote an open letter to the netroots proposing that they join him in fighting the "real enemy," the "unholy corporate/government cabal that will control your healthcare."
I don't think that coalition is going to emerge in any meaningful form. The right's anger is born largely of identity-based alienation, a fear of socialism (whatever that means nowadays) and an age-old Bircher suspicion that "they" are trying to screw "us." Even in its most sophisticated forms, such as in Carney's Obamanomics, the basic right-wing argument against corporatism embraces a kind of fatalism about government that assumes it will always devolve into a rat's nest of rent seekers and cronies and therefore should be kept as small as possible.
But the progressive critics hold that we can and should do better. The Medicare Part D model is a terrible way of running a government for a number of reasons. First, and most practical, it's expensive. When paying off protection rackets is the price of passing legislation, you have to come up with a lot more money. Allowing Medicare to negotiate drug prices would have saved the government as much as $30 billion a year. The strong public option would, according to the Congressional Budget Office, save $85 billion over ten years. Once everyone has laid claim to their vig, you soon find yourself tapped out.
The second problem is that this form of governance degrades the integrity of the state. Historian Tony Judt made this point eloquently in his October 19 lecture "What Is Living and What Is Dead in Social Democracy." Delegating fundamental state activities to private actors, he said, "discredits the state." Instead of a straightforward relationship between citizen and state, we have a mediated one that has the potential to perversely feed the anti-statist arguments of the right as the state becomes, in Judt's words, "represented in the popular mind by a grasping private profiteer."
But the corporatism on display in Washington is itself a symptom of a broader social illness that I noted above, a democracy that is pitched precariously on the tipping point of oligarchy. In an oligarchy, the only way to get change is to convince the oligarchs that it is in their interest -- and increasingly, that's the only kind of change we can get.
In 1911 the German democratic socialist Robert Michels faced a similar problem, and it was the impetus for his classic book Political Parties. He was motivated by a simple question: why were parties of the left, those most ideologically committed to democracy and participation, as oligarchical in their functioning as the self-consciously elitist and aristocratic parties of the right?
Michels's answer was what he called "The Iron Law of Oligarchy." In order for any kind of party or, indeed, any institution with a democratic base to exist, it must have an organization that delegates tasks. As this bureaucratic structure develops, it invests a small group of people with enough power that they can then subvert the very mechanisms by which they can be held to account: the party press, party conventions and delegate votes. "It is organization which gives birth to the domination of the elected over the electors," he wrote, "of the mandataries over the mandators, of the delegates over the delegators. Who says organization, says oligarchy."
Michels recognized the challenge his work presented to his comrades on the left and viewed the task of democratic socialists as a kind of noble, endless, Sisyphean endeavor, which he described by invoking a German fable. In it, a dying peasant tells his sons that he has buried a treasure in their fields. "After the old man's death the sons dig everywhere in order to discover the treasure. They do not find it. But their indefatigable labor improves the soil and secures for them a comparative well-being."
"The treasure in the fable may well symbolize democracy," Michels wrote. "Democracy is a treasure which no one will ever discover by deliberate search. But in continuing our search, in laboring indefatigably to discover the undiscoverable, we shall perform a work which will have fertile results in the democratic sense."
After a rather dispiriting few months, the treasure in this case may seem impossibly remote, but one thing the Obama campaign got right was its faith in America's history of continually and fruitfully tilling the soil of democracy, struggling against odds until, at certain moments of profound progressive change, a new treasure is improbably found.
It was the possibility of such a democratic unearthing that gave Obama for America its moral force. The most inspiring thing about the campaign had nothing to do with the candidate and everything to do with average citizens from Dubuque to Atlanta who were taking the time and energy to search for a small piece of that treasure. Likewise, the message of the Obama campaign was as much about empowerment, reinvigorating democracy and changing the ways of Washington as it was about the central planks of his agenda. It's for this reason that the greatest disappointment of his first year is the White House's abandonment of this small-d democratic impulse in favor of a strategy almost wholly focused on insider politics.
What the country needs more than higher growth and lower unemployment, greater income equality, a new energy economy and drastically reduced carbon emissions is a redistribution of power, a society-wide epidemic of re-democratization. The crucial moments of American reform and progress have achieved this: from the direct election of senators to the National Labor Relations Act, from the breakup of the trusts to the end of Jim Crow.
So in this new year, while the White House focuses on playing within the existing rules, it's our job as citizens and activists to press constantly for changes to those rules: public financing, an end to thea filibuster, the breakup of the banks, legalization for undocumented workers and the passage of the Employee Free Choice Act, to name just a few of the measures that would alter the balance of power and expand the frontiers of the possible.
If I had to bet, I'd say that not of one of these will be won this year. The White House won't be of much help, and on some issues, like breaking up the banks, it will represent the opposition. Always searching and never quite finding is grueling and often dispiriting work. But there is simply no alternative other than to give in and let the field turn hard and barren.
Christopher Hayes is The Nation's Washington editor. This article appeared at Alternet.
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