by Drew J Jones
Fri Dec 30th, 2005 at 01:08:17 PM EST
I've never been a fan of the term "Anglo-Saxon Model," since it's more than a little ridiculous, given the size of Britain's welfare state. It's not as though welfare is nonexistent in America, either. After all, America was (and, in some ways, still is) home to the New Deal; is home to Social Security, Medicare and Medicaid (Medicaid, for those of you who are not familiar with the program, is the government's health care package for the poor); and has, since the 1930s, been home to a liberal mixture of Keynesian and Monetarist economic-policy interventionism -- even, traditionally, among Republicans.
(For a few examples, the Environmental Protection Agency was founded by the Nixon Administration, and Nixon, himself, was the first US president to seriously push for universal health care. Credit the little slimeball for that which he is due.)
Maybe it's the quoting of John Kenneth Galbraith -- a (just my opinion) pseudo-Keynesian wannabe-prophet whose predictions have always had a nasty tendency to be, well, more than a tad off -- in Colman's recent front-page diary. (Let me clarify that I, in no way, mean this diary as an attack on Colman, whose work I truly enjoy reading.) Galbraith, you see, was the world's first "celebrity economist," and, just as Hollywood actors tend to rely too much on looks and not enough on talent, so too has been Galbraith's legacy, albeit relying on his writing for the masses rather than his looks.
But that's just one issue. It's time we eliminated the myth -- and what a myth it is -- of laissez-faire capitalism and the near-myth of Galbraithian "corporate capitalism". More below.
There is no free market.
Froto has failed. Keynesian Liberalism has the ring, and it's forever-buried, somewhere in Sussex or Cambridge. When economists and politicians -- especially economists -- discuss the "free market" or laissez-faire, they're speaking in very general terms. They're referring to having taxation levels that do not attempt to choke the "capitalist-class" (whatever that is) in the name of the "workers" (whoever they are), regulation that is concerned only with issues of safety and the environment (and not some ridiculous and unnecessary idea such as "preventing big businesses from getting bigger"), and so on.
No one in their right mind will tell you that we should live in a completely free market, because that would require an elimination of the government -- the Rothbardian Fairytale, as I have called it. Talk about eliminating the government with anyone who isn't a Rothbardian, or one of the Rothbardians' even-more-disturbed cousins, the Marxists, and everyone's mind immediately turns to Hobbes's vision.
But let me return to John Kenneth Galbraith's "corporate capitalism". The use of this term may be somewhat valid in America, right now, given the Bush administration's skewing of the incentive structure away from labor and towards capital, along with the obvious example of the tax cuts. (Don't bet on this lasting forever. I've already pointed out that there is far more going on here than the Washington talking points lead us to believe.)
(An aside: Galbraith is, today, completely out of touch with the field of economics. He once told The Guardian that the Bush administration's Council of Economic Advisors was loaded with people who "have never heard of John Maynard Keynes." Nevermind the small detail of then-chairman N. Gregory Mankiw being one of the leading Keynesians -- even if Bush never listened to him. Apparently, just as his colleagues didn't take him very seriously back in the early-to-mid-20th Century, so too does he not take colleagues seriously today, even if they're -- again, just my opinion -- superior macroeconomists.)
But the machinery of the British economy does not fit Galbraith's fictional system. Wages in Britain are growing at very strong rates, on the order of 4-4.5%. (Americans would kill to see that right now.) Unemployment actually is low, unlike in America, and our best evidence for this is referenced in the previous sentence.
Scarcity + Demand = Higher Pay to the Input
What Galbraith failed, miserably, to recognize was the importance of small businesses to the American economy. The story is similar in Britain, if I'm not mistaken. 70% of new jobs in America are "created" -- hate that term -- by small businesses. And, even despite Bush's raping of the public through the tax code, the scales remain tipped to small businesses. The importance of enormous corporations has been diminishing for decades in America (again, if I'm not mistaken; this comes from Paul Krugman). Sure, they may see some boost to their role as globalization begins to speed-up. But this is because they have the resources to outsource, and it is only temporary. The rise of businesses in Japan, Continental Asia, Europe, and other areas will serve to bring down their profits. Someone will build a better mousetrap.
The American economy is not growing because of large businesses.
My point is this: Capitalism doesn't naturally distribute resources to the wealthy, or the poor, or the middle-class, or whatever. The market is not some living being that loves and hates people of different means. The Marxian view of the worker being stuck in a state of near-starvation if he acts alone is false, and demonstrates how truly shallow the view has always been. After all, the middle-class jobs we want our children to have are not typically unionized, unless there is a United Computer Programmers union that I'm unaware of. Not a lot of unions for MBAs to join. (Lawyers and doctors have what really amount to guilds, which, I suppose, we could call "unions" in some way.)
The British view of economics is different from the American view, and both are different from the Continental-European view. And, while I don't subscribe to the view of any of these being "models" (as I've said in the past, I see very little science in politics and sociology), I think it's a mistake to cast the Anglican view aside as simply "corporate capitalism".