1979 is the
year people point to as the critical date when the certainties of the immediate
post-war period ended – with the election of Margaret Thatcher (and her ally
Ronald Reagan a year later); and the overthrow of the Iranian Shah and arrival
of theocracy…But it was, arguably, a few years earlier that the tectonic plates
moved when Nixon (in 1971)
renounced dollar convertibility; and when (in 1973) the oil crisis shook the
developed world
The
significance of my last post is the story it tells of a world collapsing
in the mid 1970s and the arrival in Washington in 1975 of a new generation of
politicians – “the
Watergate Babes”….who considered those who had borne the Democrat’s flag
for the previous decades as “old-fogies” who no longer deserved a place in
power…..
I was part
of that same generation – my first taste of power was indeed 1968 (as a town
councillor and very soon a committee chairman) – although I was also holding down
a position as an academic (until 1985) which gave me the opportunity to absorb
the new thinking about political economy and public economics which was then being
articulated in the States. Social science was still new then – and economists
still few in number. We had, sadly, a certain arrogance about the new tools at
our disposal and toward our elders…….Tony Crosland had been my hero - "The Future of Socialism" which followed James Burnham in arguing that management rather then ownership was the issue had been published in 1956.......
I vividly remember the words which came from
my mouth at my inaugural meeting as Chairman in 1971 with an experienced
Director – suggesting I could bring to our partnership a managerial experience which was at that stage entirely theoretical!!!
In 1974, young liberals did not perceive financial
power as a threat, having grown up in a world where banks and big business were
largely kept under control. It was the government—through Vietnam, Nixon, and
executive power—that organized the political spectrum. …. suspicion of finance
as a part of liberalism had vanished.
Over the next 40 years, this Democratic generation
fundamentally altered American politics. They restructured “campaign finance,
party nominations, government transparency, and congressional organization.”
They took on domestic violence, homophobia, discrimination against the
disabled, and sexual harassment. They jettisoned many racially and culturally
authoritarian traditions. They produced Bill Clinton’s presidency directly, and
in many ways, they shaped President Barack Obama’s.
The result
today is a paradox. At the same time that the nation has achieved perhaps the
most tolerant culture in U.S. history, the destruction of the anti-monopoly and
anti-bank tradition in the Democratic Party has also cleared the way for the
greatest concentration of economic power in a century. This is not what the Watergate Babies intended when they
dethroned Patman as chairman of the Banking Committee. But it helped lead them
down that path.
The story of Patman’s ousting is part of the larger story of
how the Democratic Party helped to create today’s shockingly disillusioned and
sullen public, a large chunk of whom is now marching for Donald Trump……….
In 1936, Wright Patman authored the
Robinson-Patman Act, a pricing and antitrust law that prohibited price
discrimination and manipulation, and that finally constrained the A&P chain
store—the Walmart of its day—from gobbling up the retail industry. He would go
on to write the Bank Secrecy Act, which stops money-laundering; defend
Glass-Steagall, which separates banks from securities dealers; write the Employment
Act of 1946, which created the Council of Economic Advisors; and initiate the
first investigation into the Nixon administration over Watergate.
Far from being the longwinded octogenarian the
Watergate Babies saw, Patman’s career reads as downright passionate, often
marked by a vitality you might see today in an Elizabeth Warren—as when, for
example, he asked Fed Chairman Arthur
Burns, “Can you give me any reason why you should not be in the
penitentiary?”
……..Patman was also the beneficiary of the acumen
of one of the most influential American lawyers of the 20th century, Supreme
Court Justice Louis Brandeis. In the 1930s, when Patman first arrived in
Washington, he and Brandeis became friends. While on the Court, Brandeis even
secretly wrote legislation about chain stores for Patman. Chain stores, like
most attempts at monopoly, could concentrate wealth and power, block equality
of opportunity, destroy smaller cities and towns, and turn “independent
tradesmen into clerks.”
In 1933, Brandeis wrote that Americans should use their
democracy to keep that power in check. Patman was the workers’ and farmers’
legislative hero; Brandeis, their judicial champion. ….Brandeis did for many New Dealers what he did
for Patman, drafting legislation and essentially formalizing the populist
social sentiment of the late 19th century into a rigorous set of legally
actionable ideas. This philosophy then guided the 20th-century Democratic
Party. Brandeis’s basic contention, built up over a lifetime of lawyering from
the Gilded Age onward, was that big business and democracy were rivals. “We may
have democracy, or we may have wealth concentrated in the hands of a few,” he said,
“but we can’t have both.” Economics, identity, and politics could not be
divorced, because financial power—bankers and monopolists—threatened local
communities and self-government.
This use of legal tools to constrain big business
and protect democracy is known as anti-monopoly or pro-competition policy.…..
J.P. Morgan’s and John D. Rockefeller’s
encroaching industrial monopolies were part of the Gilded Age elite that
extorted farmers with sky-high interest rates, crushed workers seeking decent
working conditions and good pay, and threatened small-business
independence—which sparked a populist uprising of farmers, and, in parallel,
sparked protest from miners and workers confronting newfound industrial
behemoths.
In the 20th century, Woodrow Wilson authored the
Federal Trade Commission Act, the Federal Reserve Act, and the anti-merger
Clayton Act, and, just before World War I intervened, he put Brandeis on the
Supreme Court. Franklin Delano Roosevelt completed what Wilson could not,
restructuring the banking system and launching antitrust investigations into
“housing, construction, tire, newsprint, steel, potash, sulphur, retail,
fertilizer, tobacco, shoe, and various agricultural industries.”
Modern liberals tend to confuse a broad
social-welfare state and redistribution of resources in the form of
tax-and-spend policies with the New Deal. In fact, the central tenet of New
Deal competition policy was not big or small government; it was distrust of
concentrations of power and conflicts of interest in the economy.
…….Underpinning the political transformation of
the New Deal was an intellectual revolution, a new understanding of property
rights. In a 1932 campaign speech known as the Commonwealth Club Address, FDR
defined private property as the savings of a family, a Jeffersonian
yeoman-farmer notion updated for the 20th century.
By contrast, the corporation
was not property. Concentrated private economic power was “a public trust,”
with public obligations, and the continued “enjoyment of that power by any
individual or group must depend upon the fulfillment of that trust.” The titans
of the day were not businessmen but “princes of property,” and they had to
accept responsibility for their power or be restrained by democratic forces.
The corporation had to be fit into the constitutional order. ….
New Deal fears of bigness and private
concentrations of power were given further ideological ammunition later in the
1930s by fascists abroad. As Roosevelt put it to Congress when announcing a far-reaching
assault on monopolies in 1938: “The liberty of a democracy is not safe if the
people tolerate the growth of private power to a point where it becomes
stronger than their democratic state itself. That, in its essence, is fascism.”
In 1947, Patman even commissioned experts to publish a book titled Fascism
in Action, noting that fascism as a political system was the combination of
extreme nationalism and monopoly power, a “dictatorship of big business.”
This basic understanding of property formed the
industrial structure of mid-20th-century America and then, through its trading
arrangements, much of the rest of the world. Using this framework, the
Democrats broke the power of bankers over America’s great industrial commons.
To constrain big business and protect democracy, Democrats used a raft of
anti-monopoly, or pro-competition, policy to great effect, leading to vast
changes: The Securities and Exchange Commission was created, the stock
exchanges were regulated, the big banks were broken up, the giant utility
holding companies were broken up, farmers gained government support for stable
agricultural prices free from speculation, and the chain stores were restrained
by laws that blocked them from using predatory pricing to undermine local
competition (including, for instance, competition from a local camera store in
San Francisco run by a shopkeeper named Harvey Milk).
The Democrats then extended this globally, through
the International Monetary Fund, World Bank, and NATO—even as the United Stated
simultaneously used that decentralization to mobilize local communities around
the world against the Soviet threat. For example, when General Douglas
MacArthur led the Allied occupation of Japan at the end of World War II, key
parts of his economic plan included importing the Glass-Steagall Act and
antitrust laws into Japan. Back home, Democrats poured government financing
into science, and they forced AT&T, RCA, and DuPont to license their treasure troves of patents so that
small businesses could compete and so that the scientific discoveries of the
corporate world couldn’t be locked away. Eventually, strong competition policy
gained a bipartisan consensus, and the idea that anyone would allow
concentrations of private power to dominate U.S. politics seemed utterly
foolish.
I will continue the summary tomorrow -
in the meantime, the photo is one taken at the glorious exhibition here in Sofia about the "Russian Impressionists" - "Gust of Wind" (1960ss) by Grishchenko