“No, I Do Not Think the Microprocessor Doomed Social Democracy”, a substackin’ Brad DeLong exclaims, linking to a “very nice” (Brad says) piece by Arthur Goldhammer in Democracy, Chip Shots, a review of Chris Miller’s Chip War: The Fight for the World's Most Critical Technology and quoting an extensive chunk of it, edited by Brad, to wit:
In left-liberal circles [says Art] there is a rough consensus about what has gone wrong with our politics over the past 40 years. The critique can be summed up in two words: neoliberalism and globalization. Although these capacious ideological generalizations cover a multitude of sins, the gravamen of the charge against both is that, in the name of economic efficiency and growth, globalizing neoliberals of both the right and the left justified depriving national governments of the power to reduce inequalities of wealth and income, promote equal opportunity, and protect the health and welfare of the citizenry. Neoliberals prioritized property rights over social and political rights and protected markets from political meddling. They removed regulatory fetters on the movement of capital and sought the cheapest labor they could find to put their money to work. As a result, from the late 1970s on, governments across the developed world retreated from the social democratic reforms credited with fostering the harmonious prosperity of the three decades following World War II—the period the French have dubbed les Trente Glorieuses—thereby triggering a populist and xenophobic backlash while polarizing previously consensual political systems and weakening resistance to authoritarian demagogues. This account of political change across the Western world since the 1980s has much to recommend it, not least the implication that the globalized neoliberal regime has sown the seeds of its own impending demise. This is the view espoused in one form or another by a number of excellent recent books, among them Gary Gerstle’s The Rise and Fall of the Neoliberal Order, Michael Tomasky’s The Middle Out, and Bradford DeLong’s Slouching Towards Utopia. Yet each of these estimable authors embraces the notion that the novel feature of the period was superstructural ,,, ideology was in the driver’s seat… But what if… the key innovation… was the… microprocessor, which simultaneously created new markets, dramatically altered trade flows, and shifted both the economic and military balance of power among nations?… The microprocessor not only became the flagship product of the neoliberal era’s dominant industry but also served as its indispensable instrument, without which it would have been impossible to tame the torrents of information necessary to manage far-flung supply chains and global capital flows…. Chris Miller’s Chip War deserves credit precisely for redirecting our attention from superstructure to base, from the high political drama of the past four decades to the more prosaic business of manufacturing microchips…
What does social democracy luvin’ Brad say to all this? Well, here’s what:
What do I think of this? I think “yes”.
Brad continues with a quite interesting rap, drawing on the arguments he made in Slouching Towards Utopia, which I found to be a bit of a curate’s egg,1 because parts of it were excellent. In brief, Brad argues that, as the Marxists like to say, the tempo of history is speeding up. The economic “base” of human society keeps reinventing itself at ever-increasing speed:
One alternative way to conceptualize the political-economy history of the long 20th century since 1870 is to see it as a series of transformations from the Steampower to the Applied-Science to the Mass-Production to the Global Value-Chain and now into the Info-Biotech “modes of production”. Due to the extraordinary rapidity of technological change, each of these 40-hear transitions is of the same order of magnitude as the 700-year transformation from Agrarian-Age Feudal to Imperial-Commercial or the 200-year transformation from Imperial-Commercial to Steampower. And “modes of production” is not quite right. The distribution, communication, and, indeed, domination components are key as well.
Brad concludes his post with the following paragraph, whose last sentence reaffirms his head, “No, I Do Not Think the Microprocessor Doomed Social Democracy”:
What, then, are we to do in our day, when the mode-of-production shifts every 40 years or so? Then the speed of transformation negates any possibility of an analysis that solidly anchors the present superstructure in the base at all. The coming of the microprocessor, the jet with the flatbed seat, the internet, and hyperglobalization made rolling the stone of social democracy an uphill struggle against gravity. But it did not, alone, doom it.
Well, I think social democracy as Brad envisions it—which he claims existed to greater or lesser extent throughout “the West”, including the United States, between 1945 and 1980—actually expired in the 1970s, before “the coming of the microprocessor, the jet with the flatbed seat,2 the internet, and hyperglobalization”, and that the notion that we can go back to that halcyon time when we were all “like Sweden”, with all-wise Keynesian/Galbraithian bureaucrats directing economic development for the greater good for all, above the private sector but not replacing it, relying to a great extent on the political muscle of powerful (and grateful) labor unions to cement their rule is absurd. In his posts (sorry, I cannot supply links—if Brad feels I am misrepresenting his views he can sue me) and in Slouching, Brad pictures himself as bewildered as to why les Trente Glorieuses had to end. Well, they had to end because the base had changed—not just the “modes of production”, even using the expanded definition that Brad gives them, but many other things as well.
In 1945, Europe and Japan, the only two industrial centers remotely “competitive” with the United States, were in ruins. The U.S had the largest and most sophisticated economic plant in the world and an effective monopoly on virtually any sort of sophisticated consumer good. American cars were easily the best in the world, though “designed” for the only advanced country in the world fortunate enough to have its own oil supply. If you wanted a TV set, well, it had to be made in America, because they weren’t made anywhere else. And the same was true of other “high end” consumer goods, like refrigerators, washing machines, etc., etc., etc.
During les Trente Glorieuses, “everything” got better, for the first time since 1914. Instead of war and depression and little population growth, “the West” boomed. Advances in economic productivity that “should” have occurred 20 or 30 years prior finally did happen. The steam engine disappeared, replaced by the internal combustion engine, that ran on conveniently cheap oil. Homes were heated by gas or electricity, instead of coal. Fast, safe air travel became standard. Communications improved dramatically. The “stunning” increase in prosperity allowed Europeans to fund the sort of generous social democracy that paleolibs like Brad still dream about. No one seemed to notice that it was “easy” to be generous to culturally cohesive populations in the countries of western Europe who had been disciplined by decades of hardship, not to mention centuries of “deference”, easy to provide old-age pensions when there were a relatively small number of old people (who, by today’s standards, conveniently did not live very long), particularly when educational levels for a constantly expanding workforce were soaring from fourth- to eighth-grade levels and beyond, with a comparable effect on productivity.
By the early 1970s, Europe and Japan began to catch up with America. Europeans grew tired of kow-towing to America and, in 1971, an angry Richard Nixon took the U.S. off the gold standard, effectively ending the famous Bretton Woods agreement that had worked so well in the immediate aftermath of World War II but now didn’t work so well for anyone, the U.S. in particular, which is why Nixon took the U.S. off gold. Whether Nixon’s actions were wise or not remain “controversial”, but according to Jeffrey Garten, former dean of the Yale School of Management, in an interview regarding his 2021 book Three Days at Camp David: How a Secret Meeting in 1971 Transformed the Global Economy, Nixon did the right thing, basically, although the site doesn’t bother to tell you that Garten worked in the Nixon White House—and, in the interview, Garten says that all he knew about Nixon was “China and Watergate”, which sounds an awful lot like a lie.
Well, whether Nixon’s actions were wise or not, they certainly didn’t accomplish his goals of reducing inflation and unemployment. What is certain is that detaching the dollar from the price of gold made the oil-producing countries in the Middle East poorer, and the Nixon administration’s persistent errors in the events surrounding the 1973 Yom Kippur War—most notably, aggressive U.S. support for Israel, coupled with a painfully erroneous assumption that Saudi Arabia would never “defy” the U.S.—led to a brief OPEC oil embargo and then a permanent increase in the world price of oil, rising from $20 to $60 a barrel (adjusted for inflation) and peaking at $100 a barrel a few years later. Prices didn’t fall below $60 until the mid-1980s. Les Trente Glorieuses 1945-1975 were at an end. And the generous welfare states (more in Europe than the United States, of course) and the generous labor contracts established with the big, oligarchic, inefficient industries, crippled with massive investments in out of date technologies and practices, were no longer financially viable.
Brad constantly expresses amazement that the Keynesian/Galbraithian model for running an economy was dropped so quickly in the 1970s, but what would he have done differently? How would he have combated inflation? In Great Britain the country was essentially held captive by the unions, demanding “full” (that is to say, excess) employment in out of date industries—coal in particular, of course—with constant wage increases to keep pace with inflation, resulting in constant price increases in just about everything, if products were available at all, which, thanks to frequent strikes, they often weren’t. The Labour Party split under the strain in 1981, guaranteeing Margaret Thatcher a free hand in “crushing” the unions, which, I think, was what the newly formed, moderate Social Democratic Party always wanted in the first place.
In the U.S., the Democratic Party had already forfeited the public’s trust thanks to its failures both at home and abroad: its failure at home to confront, much less quell, the intense racial turmoil that followed passage of the 1964 and 1965 Civil Rights Acts, which liberals had naïvely hoped would “solve” America’s centuries-long racial divide once and for all, coupled with the massive catastrophe abroad in Vietnam. When the Carter administration did take over, as a result of Republican weakness, the first task was not economic stimulus but the reduction of inflation. It was impossible to “protect” America’s increasingly uncompetitive industries without massive tariffs, which of course would have proved utterly destructive in the long run and would contribute massively to inflation in the short. To counteract inflation, the Carter administration acted to free the transportation industries—chiefly trucking, railroads, and airlines—eliminating the “benevolent” regulation provided by the Interstate Commerce Commission that allowed them to function as bloated, non-competitive oligarchies, paying high union wages and showering executives with endless perks while passing on all the costs to consumers. Deregulation did away with all that, weakening unions, increasing competition and cutting costs to consumers, benefiting the many instead of the few. An oligarchic economy was “acceptable” when fuel was cheap and American consumer goods were the best in the world. Now fuel costs had tripled and, in field after field, American goods were second rate, over priced, and unreliable. The Japanese in particular had introduced America to a new world of efficient, reliable products far ahead of anything America had to offer.
Brad and paleo pals like Paul Krugman want to pretend that government regulation à la the ICC and other government agencies, combined with powerful labor unions, were the cause of Les Trente Glorieuses prosperity. No, they were the effect. When the unique state of affairs that existed in the aftermath of World War II passed away, so did the functionality of an economy dominated by manufacturing oligarchies and powerful unions.
This argument—obviously not original with me— was pursued extensively in Robert Gordon’s massive study The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War (2018)3. Smart paleos like Brad and Paul are familiar with the book’s argument (Paul reviewed the book here) but somehow they never bother to address it, even though Brad’s book, Slouching Towards Utopia (which I have read, though I haven’t read Bob’s) covers exactly the same time period. Instead of even addressing what Bob has to say, Brad prefers to express “amazement” at the abandonment of the “government in charge” dream for no good reason!
The reign of Reagan and Thatcher did not bring back the kind of productivity growth that the West had enjoyed in the fifties and sixties. But this was not accomplished by any other country as well. One by one, all the nations of western Europe abandoned the beloved “Swedish model” for one very good reason: it didn’t work any more. The socialist dream died in the seventies, long before “modern” globalization took root. The paleolibs who still long for the U.S.to go “full Sweden” overlook the fact that both the governments of the United Kingdom and France are currently buckling under the weight of the costs of old-fashioned social democracy—free health care, early retirement, and generous pensions. I’m intensely dubious that the Biden administration’s throwback “rebuild America” package will have any positive effect on American productivity, larded down as it is with any number of provisions intended to ensure “good jobs” for the moment—“Buy American” requirements, for example, as well as others demanding the favoring of union labor, and still others requiring a long wish list of extensive and expensive fringe benefits—provisions that will inhibit the prospects for increased productivity rather than enhance them.
The new surge of industrialism and productivity that transformed the western world beginning around 1870, well discussed in Brad’s book, rendered obsolete the old landowning aristocracy, which was still clinging to power everywhere except western Europe and the United States. Tragically, as Brad notes, they refused to go down without a fight. But he seems reluctant to concede that the new revolutions, which he labels a bit scornfully “hyperglobalization”, as though we’ve gone “too far”, might have equally consequential ones—though hopefully not as violent. The U.S. and western Europe need to adjust to a world in which they no hold sole possession of the secrets of contemporary technologies. You can’t step in the same river twice, and there’s no guarantee that what worked in the past will ever work again.
Afterwords
In case it isn’t clear, I’m enamored neither of bureaucrats nor labor unions. But how can one be a “hard” neoliberal (really, “libertarian”, by my definition) in light of 2008 and its sequelae, which never seem to cease? I’ve discussed my dissatisfaction with libertarianism at length here. For articles providing ideas for what would work to promoite economic growth (none of them original), go here,
The desperate nostalgia that so many paleolibs feel for the New Deal era seems especially strange/ridiculous to me when you consider that today’s welfare state is incalculably superior to FDR’s model, which, as I’ve pointed out many times when discussing white socialism” was deliberately and shockingly designed to exclude the politically powerless—farmworkers, for example, including, of course, sharecroppers, who numbered about 8.5 million in the early thirties, most of them white, along with servants, waiters and waitresses, and many others. No one, of course, had health insurance unless they paid for it themselves.
Worst of all, of course, is that Roosevelt never ended the Great Depression. Unemployment remained at 10% throughout his first two terms. After the great outburst of activism that occurred in Roosevelt’s first term, the grand master of American politics accomplished absolutely nothing of note in his second. If it hadn’t been for World War II, Roosevelt would have gone down in history as a one-term wonder, and it is impossible to say how much of his legacy would have survived a Republican presidential victory in 1940, which could easily have occurred if France and Great Britain had resisted Hitler’s remilitarization of the Rhineland in March of 1936, which they easily could have done.
Brad and the rest are simply blinded by Roosevelt’s repeated electoral victories, winning the presidency for a record four terms, never racking up less than 432 electoral votes, and holding Congress by comfortable margins through seven congressional elections. The fact that he achieved such a remarkable record by always settling when he had to, regardless of the cost, never asking too much, and never ever sacrificing practicality for principle, escapes them. Roosevelt wasn’t afraid to win ugly, and he wasn’t afraid to lose ugly either. What the paleolibs see as omnipotence was instead an extraordinary mixture of low cunning, remarkable patience, and inspired opportunism that allowed him, over and over again, to make the most of the many high risk opportunities that fortune gave him.
[1^]: A very English gag involving an Anglican bishop asking a curate (novice) if he was enjoying his breakfast egg and receiving this finely calibrated exercise in Christian cheerfulness in response.
2. Seats large enough to fold out into a real bed, so that you can get a full night’s sleep flying across the Pacific. I had to look this one up.
3. One should discount Gordon’s “best seller” title. American productivity has continued to grow, just not as rapidly as in the past. We actually aren’t declining, not economically at least.
“Moore’s laws” (may he rest in peace) are now more geometric than exponential, a change that will reduce inflation and equalize more civilizations and science in general – slowly but with more common sense. Quantum philosophy allows not so much uncertainty but an approach to knowledge that paints aesthetics of a fractal, global landscape as impressionism flowering beyond realism. It is then that studies of the brain may reflect the synergy of modern social psychology.
Interesting, to say the least!