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November 27, 2011
David Warsh, Proprietor


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Still an Overgoverned Society?

What makes the Occupy Wall Street episode so interesting is that it’s the first development in quite a while to signal a longing for profoundly different times. This was not just a matter of its inception — a significant improvement of methods that were first employed to organize the street protests during the 1999 World Trade Organization meeting in Seattle — but from the better reviews it has received.

Thus writing last month in Bloomberg Businessweek, reporter Drake Bennett described in the journalistic form known as a “tick-tock” how anthropologist David Graeber, of the University of London,  last August joined a meeting in Bowling Green, a park in lower Manhattan. It had been called by Adbusters, a Vancouver magazine, but  Graeber discovered that the agenda had been planned mainly by local labor activists, “verticals,” in his parlance. It would consist of a rally with speeches, followed by a march, to present various demands. Graeber thereupon moved to the other end of the park, a core group formed around him, to be schooled in the methods of the “‘general assembly’ … the central concept of contemporary anarchist activism.”

At the end of the day, the march was cancelled and Occupy Wall Street began to assume its eventual shape. It was these “horizontals” who then planned the protest in Zuccotti Park in a series of general assemblies over the next month, Bennett wrote.  Once the encampment was successfully established, on September 17, Graeber went off to rejoin his girlfriend, returning a month later to take his bow in Businessweek and push his book, Debt: The First 5,000 Years.

Last week, in The New Yorker, journalist Mattathais Schwartz sets the story in a more general frame. This time Adbusters has its day. The bi-monthly magazine, founded in 1989 by a veteran activist named Kalle Lasn, “is not the only radical magazine calling for the end of life as we know it,” writes Schwartz (himself the founder of the Philadelphia Independent, published from 2002 to 2005), “but it is by far the best looking.”

It was Lasn and his senior editor Micah White who had come up with the idea of an encampment, Schwartz explains, set the date the occupation would start, and registered its catchy name at www.OccupyWallStreet.org.  “If anybody could claim responsibility for the Zuccotti situation,” he continued, “it was Lasn.” And in 5,700 words Schwartz spells out in considerable detail  more of the behind-the-scenes history of what happened in September in lower Manhattan.

These rival claims being fought out on clay-paper magazines make fascinating reading.  It’s always possible that Zuccotti Park itself may be no more enduring than the Port Huron Statement.  That, too, seemed important at the time, but instead it turned out to have been a skirmish in a much larger drama, to which it contributed to a very different outcome.  To me, though, it seems that in its overall critique of the dominance of the commercial ethic, Adbusters is onto something likely eventually to succeed.

We owe to Philip Mirowski, of the University of Notre Dame, and Dieter Plehwe, of Berlin’s Social Science Research Center, the outlines of the most capacious frame so far of the story in which we’re been  living the last seventy five years – the rediscovery of market processes.  In The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective,  they associate it with the doings of  a small group of economist- intellectuals led (sometimes in different directions) by Friedrich Hayek and Milton Friedman. From this small beginning, they say, emerged eventually the political platforms of Margaret Thatcher and Ronald Reagan and, ten years later, the “Washington Consensus.”

They don’t tell us anything about the road to Mont Pelerin (that’s the little Swiss village near Montreux where in 1947 the Mont Pelerin Society organized itself):  the centralizing, collectivist, authoritarian trend that had been building in Europe since German and Italian unifications of the 1870s. For that, consult Ninteen Eight-Four, by George Orwell, or To the Finland Station, by Edmund Wilson. But antagonistic as it is, The Road from Mont Pelerin is still a good start on organizing our understanding of the last 75 years.

With a view to keeping my bearings, I’ve been reading An Overgoverned Society, a collection of speeches by the late W. Allen Wallis, to see if it had any resonance today. Published in 1976, it was considered to have been prescient in its time.  Wallis had been among the founders of the Mont Pelerin Society (he had attended graduate school at the University of Chicago with Milton Friedman and George Stigler); in1962 he became president of the University of Rochester, a position from which he exerted considerable influence (the end of the military draft and the creation of an all-volunteer army were among his enthusiasms).

Sure enough, the book begins (as Mirowski and Plehwe believe the Mont Pelerin Society itself began)  with a long quotation from The Good Society, by Walter Lippmann, written between 1933 and 1937 (“The predominant teachings of this age are that there are no limits to man’s capacity to govern others, and  that, therefore, no limitations ought to be imposed on governments….”)

Two things struck me about An Overgoverned Society. The first is how close Wallis and his fellow insurgents were to achieving their aims, and how little he seems to be aware of it  The battle over the draft already has been won. Friedman’s argument about the significance of monetary expectations is about to be put to the test (and, thirty years later, his argument about the failures of the Federal Reserve Board at the beginning of the Great Depression). The election of President Reagan is just four years away.

The second is how completely Wallis omitted from his case exculpatory evidence.  There was nothing about the resumption of rapid growth after World War II, thanks in large part to the Marshall Plan; the civil rights revolution, beginning with the integration of the armed forces in 1948; government’s  contributions of infrastructure, from the GI Bill to the Interstate Highway System to the creation of the computer industry.  And of course Wallis had no inkling of the problems of the present day soaring health care costs, the likelihood of climate change, the problem of currency zones.  Whereas Milton Friedman’s 1962 book, Capitalism and Freedom, still seems fairly taut, the Wallis speeches sound to my ear like Tea Party rhetoric, little more.

Believing that societal norms alter and evolve in long pulses, that a gradual turning has begun, I have to say I am still heartened by the excitement with which Occupy Wall Street has been received.  Its inner story is something of a disappointment:  the tenets of “contemporary anarchy” are a weak foundation on which to build a “thought collective;” Adbusters’ emphasis on voluntary simplicity is more promising. The movement expresses a powerful longing for a time in which the power of money will be reduced. Maybe it’s a spiral instead of a zigzag; but the direction is slowly changing.  The road from Mont Pelerin is in the rear-view mirror. The next part of the journey has begun.

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3 Comments

  1. Too late to bring to your attention, before this column was filed, the reference following below which it might usefully have dealt with, the interview of social scientist Fred Siegel (albeit “economic historian” instead of “anthropologist”), his take from interviews of OccupyWallStreet participants at this link: http://online.wsj.com/article/SB10001424052970203716204577016092542307600.html#printMode, text of which follows:

    The Wall Street Journal

    THE WEEKEND INTERVIEW
    NOVEMBER 26, 2011

    ‘The New Tammany Hall’

    The historian of the American city on what Wall Street and the ‘Occupy’ movement have in common, and how government unions came to dominate state and local politics.
    By MATTHEW KAMINSKI

    New York

    ‘What has the country so angry,” says Fred Siegel, “is the sense that crony capitalism has produced a population that lives off the rest of us without contributing. They’re right. It’s not paranoid.”

    The economic historian of the American city has spent a lot of this autumn on Wall Street. He met many of the protesters who camped out at Zuccotti Park, before the city’s finest cleared them out last week. He also knows the bankers and finds the theater of the Occupy movement ironic.

    “They’re on the same side of the street politically,” he says. “They’re both in favor of big government. The Wall Street people I talk to, they get it completely.” What he means is that the Bush and Obama administrations bailed out the large banks, and that economic stimulus and near-zero interest rates kept them flush. “Obama’s crony capitalism has been very good for New York’s crony capitalism,” he says. Over at Zuccotti Park, “there are a few people there who do get it, but very little of their animosity follows from this.”

    One can appreciate why the “we are the 99%” militants might resist Mr. Siegel’s logic. He links the liberalism of the 1960s, not any excess of the free market, to today’s crisis. The Great Society put the state on growth hormones. Less widely appreciated, the era gave birth to a powerful new political force, the public-sector union. For the first time in American history there was an interest dedicated wholly to lobbying for a larger government and the taxes and debt to pay for it.

    A former editor of the left-leaning Dissent magazine, Mr. Siegel has written several well-received books on New York, including the 1997 “The Future Once Happened Here.” He calls his hometown “the model for cross subsidies” in America. “Wall Street makes money off the bonds that have to be floated to pay the public sector workers in New York.”

    Thanks to union clout, he notes, salaries and benefits for teachers, bus drivers and city secretaries have outgained the private sector during this sluggish economy. “Spending is never ratcheted down. It’s unconnected to productivity. That can only be sustained by a boom or these extraordinary subsidies we’re getting now from the Federal Reserve. But that’s gonna stop at some point. And then what happens?”
    wintersiegel
    wintersiegel
    Ken Fallin

    Other countries have managed to find a way out. During its own “lost decade” after 1993, Canada shaped up its finances and it has weathered the latest economic crises well. New Zealand’s Roger Douglas in the 1980s and Germany’s Gerhard Schröder in the early 2000s cut into expensive welfare states. In all these cases, Mr. Siegel notes, center-left parties carried out painful reform. “They did this out of necessity.” Sooner or later, American politicians will face the “unavoidable” reckoning, he adds. “It’s not the mean tea partiers who force this. It’s the facts on the ground.”

    And the ground may already be moving. Many American localities are already at the crisis point. Rhode Island’s legislature last week sharply cut retirement benefits for current and retired public workers. “A 300% Democratic state!” marvels Mr. Siegel, who was one of the first to sound the warning on the public pensions crisis.

    While new Democratic Governors Dan Malloy of Connecticut and New York’s Andrew Cuomo are tinkering with reforms, Mr. Siegel calls them “cosmetic” and argues that both men “are playing for time [and] counting on a recovery, which will solve their problems for them.” California’s Jerry Brown has dealt with his budget shortfalls by pushing the costs down to cities and counties. New Jersey governors used the same tactic before Republican Chris Christie came in. He has been able to persuade enough local Democratic politicians sensitive to the budget problem to win some concessions.

    In Mr. Siegel’s estimation, only Wisconsin Gov. Scott Walker has tried the needed fix after last year’s elections. “Part of the reason Walker has become such a lightning rod” is that he pushed “straight up, unambiguous structural reform.” His move to restrict collective bargaining for state employees isn’t as important, says Mr. Siegel, as ending the requirement that state workers pay union dues. On his first day in the governor’s mansion in 2005, Indiana’s Mitch Daniels also stopped deducting dues automatically; most workers chose not to pay. “The union has a guaranteed flow of income, which they then use to lobby the government,” says Mr. Siegel. This reform, he adds, “evens the playing field.”

    Dues money is the coin of political influence for organized labor. So not surprisingly, it is bankrolling the pushback. Mr. Walker faces a recall campaign. Ohio voters this month overturned Gov. John Kasich’s legislation to limit collective bargaining for state workers. Mr. Kasich should have eliminated the dues “check off” instead, according to Mr. Siegel, and worked harder to connect with voters. “Too many Republicans treat workers as if they are their employees,” he says. “The virtue of Ronald Reagan is he talked to workers as one of them.”

    Born in 1945 and raised in the Bronx, Mr. Siegel got his first political education by listening to feverish debates at home about Bundists and Bolsheviks. His grandfather, a militantly anti-Communist socialist, was vice president of the International Ladies’ Garment Workers’ Union and a strong influence on him. In 1972, Mr. Siegel worked on the McGovern campaign—”you shouldn’t print that!”—and calls his discussions with the Democratic candidate “enormously consequential” in shifting his world view. “I like to say I was center left before I became center right,” he says.

    It is often forgotten how many New Deal Democrats were skeptical about public-sector unions. Franklin Delano Roosevelt called the idea of strikes by government workers “unthinkable and intolerable.” New York Mayor Fiorello La Guardia said, “I do not want any of the pinochle club atmosphere to take hold among city workers.” But union organizers would eventually tap into the language of the civil rights movement to present collective bargaining as another overdue “right.”

    New York Mayor Robert Wagner extended collective-bargaining rights to government employees in 1958. He saw early that, says Mr. Siegel, “public sector unions are displacing political machines as the turnout mechanism for the Democratic Party. They are the new Tammany Hall.” Coming off a nail biter of an election, President John F. Kennedy saw this future as well. In 1962, he signed Executive Order 10988 to give federal workers the right to unionize, though not to collectively bargain. By 1980, half of all delegates to the Democratic convention worked for the government. Government-employee rolls kept growing through the Reagan years. During the presidency of George W. Bush, the number of government workers who belong to a union surpassed the number of unionized private workers.

    Mr. Siegel observes that public-sector unions have “become a vanguard movement within liberalism. And the reason for that is it’s the public sector that comes closest to the statist ideals of McGovern and post-McGovern liberals. And that is, there’s no connection between effort and reward. You’re guaranteed your job. You’re guaranteed your salary increase. There’s a kind of bureaucratic equality.”

    In turn, he continues, “this vanguard becomes in the eyes of many liberals the model for the middle class. Public-sector unions are what all workers should be like. Their benefits are the kind of benefits everyone should get.”

    The future of his city worries Mr. Siegel. Forty years ago, New York had the most manufacturing jobs in America. But as the finance sector’s share of the national economy grew to 23% in 2007 from 7% in 1980, New York turned almost into a one-company town. Meantime, the growing claims on the public purse by those who make little to no contribution to the economy have driven up taxes and the costs of doing business. The city creates jobs in tourism, hotels and restaurants at the lower end of the scale. “What we don’t create are private-sector middle-class jobs,” says Mr. Siegel. “We have a ladder with the middle rungs missing.”

    Government workers make up a growing share of the middle class. And perversely, says Mr. Siegel, unions can justifiably claim to defend the interests of the middle-class worker. “That’s because the costs that they’ve imposed have driven out the private-sector middle class. They are the disease of which they proclaim themselves the cure.”

    Democrats have been shut out of the mayor’s office since 1993. Even so, spending lobbies have held their dominant position and, with the exception of the police, efforts to reform government are stillborn. Mayor Rudy Giuliani, who tinkered with the civil service, was distracted by personal problems in his second term, says Mr. Siegel. His feelings about Mayor Mike Bloomberg come unfiltered. He chose to court rather than confront the teacher unions and “the race racketeers” (in Mr. Siegel’s phrase) like Rev. Al Sharpton. “[Bloomberg] had the leverage. He didn’t have the guts. Instead of being influenced by interest groups, he buys the interest groups. The outcome is the same. The interest groups get what they want.”

    The institutional barriers to change have grown, too. The Working Families Party, founded in 1998, is the political arm of government unions and a driver of turnout in local elections. Though little known outside New York, the influence of this third party can be seen on the City Council, which has come to tilt heavily left. So far, says Mr. Siegel, the party has a better political track record than Tammany. “With the exception of Giuliani, they’ve never lost an election. No matter who wins, they’re OK.”

    He adds: “We are what the tea party fears for the rest of the country. Crony capitalism, and low-end work, and the loss of mobility, and no place to do business if you’re a small business.”

    These symptoms call to mind the crisis-ridden European Union economies weighed down by debt and held hostage by their own public-sector unions. “We are becoming France-ified,” says Mr. Siegel, who once spent a year teaching at Paris’s Sorbonne. “Comes with the yuppie food.”

    Monday, November 28, 2011 at 1:45 am | Permalink

  2. jkb wrote:

    A great and very perceptive piece – however the future works out. It made me remember a great line from the Woodward & Bernstein book – written at the start of the era you describe. Most people remember the disaster for Nixon;I remember a prediction from the soon to be disgraced John Mitchell: This country is going so far to the right, you are not going to recognize it. Which proves that crooks can sometimes make pretty good predictions;because that is pretty much how it worked out. A similar shift in the other direction is now in the air.

    Monday, November 28, 2011 at 2:18 am | Permalink

  3. Sorry, but the origin of OWS was not Graber or somebody else in the US, but the indignados in Madrid starting last May who occupied the Puerta del Sol for several months, camping out, and with the same sort of amorphous set of demands and indignation about inequality and unemployment, etc. (etc.). As at Zucotti Park, the Puerta del Sol is also no longer actually occupied, and a conservative government has just been elected in Spain.

    I am sympathetic to at least some of the ideas expressed in OWS, but I am also one of those old farts who has been concerned about its sheer amorphousness and lack of focus. Unfortunately it is probably just as well it has shut down, as otherwise it would play into rightwingers denouncing hippies, just as in 1968 Richard Nixon won running against the antiwar demonstrating counterculture (while subtly playing into the antiwar sentiment, sort of).

    Monday, November 28, 2011 at 8:25 am | Permalink

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