15. The United States

Ch 15

The rise of the United States

The background

For much of the last century, the United States was the dominant political, economic and military force in the world.  It remains in this position, although its relative economic power has diminished.

Many factors led to the United States’ position as a world leader.  Among these were the size and material wealth of the continent of North America itself, the waves of immigration over centuries (including the transfers of industrial revolution technologies from Europe), and its isolation from the rest of the affluent world, and hence from the risks and conflicts that characterised Europe and Asia in the 20th century.  The US has been able to draw on its wealth to fight its battles on foreign fields.

In this chapter, I am going to take most of these factors as given, and focus on three key, related aspects which in my view are central to the causes of humanity’s current crisis.  These are the individualism of the US psyche and culture, the so-called “conservative” movement which has its roots in the South and the Civil War, and the recent rise of neoliberalism as a political and economic creed.

The United States was a great defender of freedom in the twentieth century, particularly in the Second World War.  But it was also, and primarily, a great defender of its own parochial interests.  I believe many of humanity’s current problems stem from the US’s inability to distinguish between these two characteristics.

Individualism as a founding virtue

The Oxford Dictionary gives three definitions of individualism, the first two about individual behaviour, and the third about political beliefs.  The first two are: “The habit or principle of being independent and self-reliant” (gives off good vibes, doesn’t it?), and “self-centred feeling or conduct; egoism” (not so good, perhaps?).  The definition for political beliefs is, “A social theory of action favouring freedom of action for individuals over collective or state action”.

Individualism is usually contrasted with “collectivism”, which the Oxford also gives behavioural and political definitions for, respectively “the practice or principle of giving a group priority over each individual in it”, and “the ownership of land and the means of production by the people or the state, as a political principle or system”.  This last, by the way, is hardly an exact opposite to the political definition of individualism, which would be “A social theory of action favouring collective or state action over freedom of action for individuals”.

These “opposites” need to be seen in relative, not absolute terms.  A civilised individualist would see collective values and action as necessary to temper extremes of individualistic behaviour.  A civilised collectivist would see the defence of individualistic values and action as necessary to temper the tendency towards extremist and lowest common denominator behaviour brought on by mob rule.

While the American Declaration of Independence contains the most famous statement of the individualistic creed – “inalienable rights…[including] life, liberty, and the pursuit of happiness” – these words are also accompanied by “all men are created equal” and a great deal of text about democracy and the overthrow of governments IF they are being too tyrannical.

The right to bear arms is also seen by many as one of the great expressions of freedom in the US – but in the Constitution, this right was to enable “a well regulated militia, being necessary to the security of a free state”.  While other law might establish a more general right to bear arms, the Constitution is not the source of this general right.  The Constitution was saying “let’s make sure we can defend ourselves against the British” – and, of course, subsequent others.

The Founding Fathers and their immediate successors were well aware of the trade-offs necessary to an effective society.  But, by and large, in a vast and sparsely populated country, having endured the imperial tyranny of Britain, they supported individual freedom, and saw individual action and entrepreneurship as powerful drivers of development.

The motto of France, “Liberté, Égalité, Fraternité”, has gone through many phases of interpretation, but summarises well the deep truth that individualism and collectivism are a horse and carriage – for a civilised society, you can’t have one without the other.  By and large, individualism supports the rights of the individual; collectivism supports our mutual responsibilities.

This was captured in the First Article of the Universal Declaration of Human Rights adopted by the United Nations General Assembly in 1948:

“All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood.”

This is a good founding formula for a truly civil society.  When collectivism goes mad, we get the gulags and “collectivisation” – the forced creation and population of state enterprises such as farms.  When individualism goes mad, we get some of the things that are happening in the United States today.

Search for “individualism” on the Internet and you will find numerous observations and research results that show the United States as the most individualistic country in the world.

This does not mean that a majority of Americans are extreme individualists, merely that the US’s individualistic culture is more pronounced than that of other countries.  John Steinbeck captured one key aspect of this well:

“…we didn’t have any self-admitted proletarians. Everyone was a temporarily embarrassed capitalist.”[i]

This culture gives more room for extreme individualists, and for them to express themselves in public, and present the crazed libertarian image that the US sometimes exhibits to the rest of the world.

At the extreme, individualism in the United States has reverted to that second definition of personal behaviour above, “self-centred feeling or conduct; egoism”.  Ayn Rand (who was born Russian) expresses this unintentionally but very well in her very bad novels, which have apparently been highly influential on the right wing in the States[ii].

Extreme individualists such as Rand deny the role of others and the state in their nurture, or in the creation of wealth and the opportunities that they are offered.  If wealthy, they are “self-made”, and anyone else could do the same if they were competent; if poor, they could create their own wealth (of whatever sort) if not for the interference of government.

Individualism was a founding virtue of the United States which has become a vice – in both senses of the word.  It has become an excuse for vicious attacks on the poor, the dispossessed, and the different; and it is strongly linked to the rise of the conservative and neoliberal movements, which now hold enormous power in the United States and beyond, and wield it with little regard for the social and environmental consequences.

The coalition of conservatives

This section is drawn fairly directly from George Lakoff’s “All New Don’t Think of an Elephant”.  His full text is much richer than the summary of key points below, and acknowledges complexities and variances which are not dealt with here.  But I believe I capture the essence of his messages.

Lakoff identifies four major groups of conservatives in the United States (social, libertarian, financial, and religious) which have conflicting views on many policy positions.  The overall argument of his book is that these groups buried the hatchet in the 1960s, united around their common values, and took control of the framing and language of politics in the United States.  He goes on from this to examine how progressives can and should push back against this.

He summarises the common values of conservatives as based on a “strict father model”, which looks very “Old Testament” to me.  The “strict father model” is linked to fundamentalist Christianity and absolute right and wrong; it inhabits a dangerous world threatened by evil people; a competitive world with inevitable winners and losers; a world where children are born bad, and are to be corrected through punishment by their fathers; a world where if they do grow up “properly”, they will prosper, through the morality of self-interest and the invisible hand of the market, and will become independent and not need their fathers.

This model has real internal coherency – conservatives don’t see it as expressing greed, meanness or stupidity.

Conservatives are in favour of the military, homeland security, and corporate welfare (which is “rewarding the good”), but against “big government”, by which they largely mean social programmes which “reward the bad”.  They see the nation as a person, so the United States needs to be healthy (ie wealthy) and strong.  As the most “developed” or “adult” country in the world, the US doesn’t need a permission slip (for example from the United Nations, which is full of “underdeveloped” countries, or children) to tell others what to do.  It does what it needs to do directly, or through subservient institutions such as the International Monetary Fund (IMF).

Key words for conservatives include freedom, prosperity, strength, family values, and independence.

Lakoff contrasts this with the “nurturant parent model” shared by progressives, who also have their factions but, unlike the conservatives, have not managed to find a deeper common cause.  In the nurturant parent model, both parents are important, and their job is to nurture; children are born good and can be made better; and the world can be made better – by us.  Nurturance consists of empathy, responsibility for yourself and others, and a commitment to do your best not just for yourself but for your family, community, nation and world.

Taking care of children needs strength, commitment, competence, knowledge; involves protecting them from dangers – crime and drugs, cars, smoking, poisons, additives; and involves showing a happy and fulfilled example (possibly the biggest challenge of all?).

Key words for progressives include freedom, opportunity, prosperity, fairness, honesty and openness, and community-building.

Note that words such as “freedom” are shared by both conservatives and progressives in the United States, but they are likely to differ on their meaning.  The freedom of the conservatives is, more or less, “freedom to… (act as you think fit)”, whereas the progressives have a more rounded view, of “freedom from (hunger, disease, ignorance, pain…) enabling freedom to…”

Lakoff says that 35-40% of Americans have “strict father” governing their politics, and a similar number have “nurturant parent”.  The conservatives have been winning the battles with the middle 20-30% either by reframing them in terms of their beliefs and values and shifting the debates onto their own terms, or by using Orwellian doublespeak to appeal to the nurturant parent in voters (consider the language of “Compassionate Conservativism”, the “Clear Skies Initiative”, and “No Child Left Behind”).

Lakoff gives numerous examples of the language of conservative framing and reframing.  His first example is “tax relief” – consider the imagery of “relief” from a burden (as opposed, say, to “contribution” to an investment).  He points out that conservatives have taken a strong hold on “family values” (by which they mean “strict father” values); and “freedom” (by which they largely mean “freedom to….”).  More recently, and in response to global warming, they have given us “energy independence” (code for “fracking right in your backyard”) and “clean coal” (code for “let’s keep using coal”).

The conservatives in the US haven’t had it all their own way – consider the gains made in liberalisation of laws on sexual orientation (eg gay marriage), and perhaps in healthcare.

But in economic and other social and political issues, they have made huge gains.  At the general level, over the last 35 years, the United States has cut taxes while funding numerous wars, largely by reducing social and environmental spending and massively increasing debt.  The poor and the environment pay.

I will summarise some of the more specific gains that have been made in chapters 18 and 19.

Before that, I want to focus on one key aspect of the conservatives’ beliefs.

The moral hierarchy, and “wealth is virtue”

The strict father model creates a moral hierarchy very much like the “great chain of being” proposed by the Greeks and elaborated from the Middle Ages on.    God is above “man” (and, for many, man is above woman); adults are above children; Christians are above non-Christians; whites are above non-whites; straights are above gays and others; and, of course, man is above nature.  I will talk about this inability to see difference other than in hierarchical terms in chapter 25.

The moral hierarchy, by definition, describes fitness to rule.  Since white males are at the top (just below God), they are most fit to rule.  And, when we look back at the strict father model, we also see that its deeply social Darwinist tenets mean that the wealthy are more virtuous (they have done the right things, and have been rewarded by the invisible hand of the market).  So, white wealthy males are most fit to rule.  And this is “proven” by reality – it is they who do!  How they have really done it, by the luck of being born with a silver spoon, or by coercion or subversion of the democratic process through use of their wealth, or by other means, is not considered.

US conservatives have turned Christian teaching on its head by claiming that wealth is a good indicator of virtue (and particularly by expressing the negative, “it’s their own fault if they’re poor”).  This dovetails very neatly with the American dream (“I’m only a temporarily embarrassed capitalist”).

The generation of wealth (real wealth, that is, ie net benefit after taking into account all costs) is at least useful, and at best we might consider it a virtue.  But the acquisition and the possession of wealth don’t have any particular moral status – this depends on how it was acquired, and how it is used.

If real wealth is acquired directly through generation, then (under our current world order) I have no problem with the generator of the wealth becoming first possessor of it.  This is usually administratively simple, at least.  The moral question becomes redistribution and, as I will discuss in chapter 17, the core principle for this should be, “from each according to their means, to each according to their needs”.  The more you acquire, the more is redistributed – in a truly progressive tax system, which deals with both income AND wealth.

There are many other means of acquiring wealth, varying in moral virtue from the relatively neutral (for example, from inheritance where the law allows it) to the deeply immoral.  Three examples of deeply immoral ways of gaining wealth are “rent-seeking” – getting free access to wealth already generated by others; a particularly unpleasant form of rent-seeking which I call “functional theft” – profiting unreasonably from being at the point of transaction (more on this in chapter 19); and, of course theft by illegal rather than legal means.

Poverty is not a vice, nor are the poor inferior in any way.  And wealth is not a virtue, nor does possession of it confer moral superiority on its possessor.  The best of America is shown in its entrepreneurial spirit, in its generation of new concepts and products, in its generation of real wealth.  The worst of America is shown in its dream of acquisition of wealth, and pursuit of that wealth by whatever means – I think this is technically called “greed”.

Chapters 18 and 19 are about the main mechanisms by which wealth is generated and pursued.  First, the general case of the corporation, which has been quite appropriately dubbed “psychopathic”.  And secondly, the more specific case of the financial markets and the share markets.

The final section of this chapter is about the post-World War II growth of a particularly unpleasant strain of political and economic thinking, neoliberalism, centred in the United States and particularly the Chicago School of Economics, which gave economic teeth to the coalition of conservatives.

The nastiness of neoliberalism

The term “neoliberalism” has had various definitions over the years.  I will use it in its most modern sense, to refer to the beliefs and behaviours associated with the latest “laissez-faire” version of capitalism.  “Laissez-faire” is itself an interesting term to define – it literally means “letting things take their own course”, or “not interfering”.  Laissez-faire parenting, for example, involves giving children as much space as possible to do things and develop themselves.

Laissez-faire capitalism can be described as “capitalism with few or no restraints on its pursuit of private profit”.  But this does not come about simply by “non-interference”.  It is a result of engineering the political and economic systems so they favour capitalism and the pursuit of profit at the expense of other political and social values.  Capitalism is not a “natural” behaviour which is best if “not interfered with”.  It is a system of economic activity based on ownership of capital.

The basic argument of neoliberal economics is that, if government gets out of the way of the markets (ie capitalism), then all outcomes, political, economic and social, will be improved.  This will happen as a result of the magic of perfect information, which would allow markets to anticipate any government activity, therefore rendering it unnecessary, except for protecting property rights (ie the rights of the owners, the capitalists) and ensuring that information flows are in fact perfect (yes, really!).  Oh yes, government should also continue to operate defence, the police and the judiciary – presumably because these are useful in protecting the owners’ property rights against outsiders and the great unwashed.

Aspects of neoliberal thinking which have been particularly important include monetarism and “supply-side” economics.

Monetarism is the idea that controlling the supply of money is the key to stabilising the economy.  This is not only conceptual nonsense (no one factor can maintain control over a complex system), but also ignorant of the fact that the financial system has been designed specifically so the government does NOT have control over the supply of money – see chapter 19.  Monetarism has led, among other things, to conventional economists’ blindness about the real causes of events such as the Global Financial Crisis.

Supply-side economics (also referred to as “trickle-down” economics) is the idea that bolstering the economy’s ability to supply more goods, particularly through tax cuts for corporations and the wealthy, will lead to greater growth, more jobs, and greater prosperity.  In reality it has led to less government spending and greater reliance on debt, more social disruption and dislocation, and political and economic dominance by financiers (who hold the debt).

In the 1980s Ronald Reagan and Margaret Thatcher were the global figureheads of this movement, which proposed economic growth as the engine of future wealth, and liberalisation of trade, tax laws and banking laws as the key determinants of economic growth.

The so-called “Washington consensus” (advocating trade liberalisation, deregulation, and fiscal austerity rather than Keynesian management of economic cycles in developing [ie poor] countries) was promoted through the 1980s, 1990s and 2000s by major international institutions such as the IMF.  John Williamson, who drew up the original prescription for this[iii], eventually summarized the overall results on growth, employment and poverty reduction in many countries as “disappointing, to say the least”.  However, he attributed this to externalities (eg crises), incomplete implementation, and inadequate income redistribution, rather than the possibility that the prescription itself might have been wrong.

While some people say that the Washington consensus is over, and the neoliberals no longer rule the world, there is only been limited evidence that this is the case.  Despite the clear evidence becoming available that trickle-down economics has not worked[iv], and that doses of Keynesian counter-cyclical spending remain the best antidote to recessions, private wealth (by cutting taxes) and public austerity (by cutting public spending) have remained the dominant public policy proposals in OECD countries – see Greece as the most recent example.

The good news is that some of the international institutions ARE now starting to get the idea.  They are noticing that increased debt and austerity in poor countries, and increasing inequality in affluent countries in particular, are not actually leading us to a braver and better new world, but towards increasing instability and more frequent and more damaging crises[v].

But the short reign of neoliberalism has had massive effects, as trade has been liberalised and exponentially increased at the expense of local populations and the environment, governments have been disempowered, and wealth and the ownership of debt have passed into fewer and fewer private hands.

The next chapter looks at the theoretical underpinning for neoliberalism, neoclassical economics, and how its core ideas still underpin much economic policy-making, even now that some of the sharper edges of the neoliberal variant are being knocked off.

Read on, about “The Success of Bad Theory…”>>
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[i] “A Primer on the ’30s.” Esquire, June 1960

[ii] See for example “The Fountainhead”, 1943”, and “Atlas Shrugged”, 1957

[iii] Williamson J., What Washington means by policy reform,in Latin American readjustment: how much has happened, Institute for International Economics

[iv] See for example “The Price of Inequality”, Kindle edn loc 262ff

[v] See for example , on inequality http://www.oecd.org/social/in-it-together-why-less-inequality-benefits-all-9789264235120-en.htm and on austerity http://www.imf.org/external/pubs/ft/fandd/2016/06/ostry.htm