6261650491_0cd6c701bb_b.jpgEconomy Polarizing Political Economy 

The Political Economy of Political Labels

By James H. Nolt

During the first week of the Trump administration, George Orwell’s classic novel 1984 once again became a bestseller. It is little wonder this happened because the emotive yet disingenuous political language of the Trump presidential campaign reminded many people of “Newspeak,” the condensed language of the totalitarian dystopia Orwell imagined.

Politics is full of labels that often elicit visceral responses. In many so-called “conservative” circles, “liberal” is pronounced with an air of distaste, if not disgust. Likewise, self-identified liberals often consider conservatives to be troglodytes, as in Hillary Clinton’s infamous “basket of deplorables” remark. For me, both labels are misleading newspeak. Both camps profit by misleading their followers.

Conservative slogans like Trump’s campaign appeal to “Make America Great Again” are a newspeak smokescreen covering up a radical agenda. No celebrated leader of the “conservative” movement makes this clearer than Trump’s chief strategist, Steve Bannon. At the recent Conservative Political Action Conference (CPAC), he drew sustained applause for proposing the “deconstruction of the administrative state.” Bannon rips the veil off the pretensions of the conservative movement that would be better characterized as libertarian or, as Jane Mayer describes in her book Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right, as anarchist.

The concept of conservatism began to shift during the 1970s and 1980s under the influence of economist Milton Friedman and the Myth of the Market. Before this change, conservatism advocated frugal and decentralized government. For example, many Republican-governed towns in America, including my hometown in Ohio, owned municipal utilities and hospitals. These efficiently-run, locally-controlled institutions were undermined by the massive privatization and centralization of power championed by the redefined “conservatism” that now holds sway. President Ronald Reagan epitomized this new conservatism with his famous phrase, “Government is not the solution; government is the problem.”

The truth underlying misleading political labels appears only if you peer behind the rhetoric to consider the effect of policy initiatives on both public and private power. Traditional conservatism favored governmental frugality and localism. Modern “conservatism” pretends to worship at the altar of free market liberty, but in fact this legendary free market is now little more than the unrestricted centralization of private power as fewer and fewer monopolistic mega-corporations dominate the economic and cultural life of myriad communities from their remote headquarters. Author Brian Alexander details a case showing how deregulated finance gutted an Ohio town. This process has been replicated across America’s heartland.

If we still operated in an economy dominated by independent shopkeepers and farmer proprietors—a kind of Jeffersonian ideal sans slavery—then the liberty of the free market would have broad meaning. Today there are still a handful of entrepreneurs, celebrated as heroes like Steve Jobs or Bill Gates, who innovate and rise into the stratosphere of the truly powerful. I do believe it is valuable to foster such entrepreneurship, but instances like this are the exceptions that prove the rule—the rule is centralized private power, including corporate dominance. Modern conservatives defend the pinnacles of private power, no matter how inefficient or remote from popular sovereignty, against any interference from democratic government. Corporations were originally authorized by law as legal “persons” ostensibly serving public ends. The political economy has evolved so that the public now serves the corporations. It is a remote and centralized oligarchy of wealth, a plutocracy of giant profit-seeking entities. This system has little in common with traditional conservatism.

During the 19th century, when conservatism stood for localism often embodied in rural landlords, liberalism meant extending universal values and commerce globally. Liberalism was the 19th century globalism, both culturally and commercially. It championed free trade and universal human rights, including anti-slavery campaigns. Until the dominance of great corporations emerged as the 20th century approached, liberalism stood for laissez faire, seemingly what “conservatism” champions today. But the development of private power makes all the difference.

Over the past century, liberalism has generally maintained its free trade, cultural globalist, and universalist roots, but its confrontation with the consequences of overweening corporate power has led to a creeping growth of the regulatory state. Liberal economist John Kenneth Galbraith coined the term “countervailing power” to emphasize the necessity of confronting concentrated corporate power with efforts to restrain it. Ironically, liberals’ support for freeing global commerce facilitated the very concentration of financial, commercial, and industrial power that challenged liberal ideals of universal rights. For more than a century, liberalism has grappled with the contradiction between the enlarging effects of globalization on private power and defending universal values and rights. Continuous accretions of state and international agencies are the fossil record of that struggle.

Ironically, it may have been the simultaneous liberal defeat of protectionism and Jim Crow institutionalized racial discrimination, two vestiges of nationalism and localism in the U.S., that undermined traditional conservatism and opened the way for the radical libertarianism that dominates today. Modern “conservatism” still uses the rhetoric of states’ rights and local rights, but it is often hypocritical.

The greatest example of this is financial deregulation. Consistent with conservative localism, during the most of the 20th century, conservatives outside New York and a few other financial centers typically opposed branch banking, not to mention interstate banking. Large banks operating statewide or worse, nationwide, were correctly seen as a threat to local power and interests. This was reversed by the new “conservatives” during the Reagan era. Financial deregulation has been embraced by both Republicans since Reagan and by “New Democrats” such as President Clinton. Deregulation stimulated extraordinary centralization of banking, an explosion of financial gambling using derivatives, massive expansion of public and private debt, and rapid concentration of wealth, largely by the use of financial leverage. This is the single most significant repudiation of traditional conservatism.

The current debate over the Affordable Care Act is another effect of the same process. The centralization of financial power also included insurance companies and contributed to the concentration of power in pharmaceutical companies. Concentrated insurance and pharmaceutical interests doom affordable health care in any form that does not severely restrict or bypass their pricing power. Insurance is still regulated at the state level, reflecting the traditional conservative concern with over-centralization of power. The latest Republican proposals for reforming Obamacare reverse this by freeing insurance companies to compete more easily across state lines. The excuse is that this would provide greater competition. Almost certainly it would result in a few large insurance company providers, backed by the largest banks, squeezing out the smaller competitors operating more locally. Thus, once again, modern “conservatism” has morphed into support for radical centralization of private power with limited countervailing governmental regulation. Some of its slogans may endure over time, but the actual effects of so-called “conservative” policies are radically different than the ends of traditional conservatism.



James H. Nolt is a senior fellow at World Policy Institute and an adjunct associate professor at New York University.

[Photo courtesy of DonkeyHotey]

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