“Never Let a Good Crisis Go To Waste”

by Patrick J. Deneen on May 13, 2010 · 8 comments <span>Print this article</span> Print this article

in Economics & Empire,Politics & Power,Short

In October 2008, as the economic crisis became manifest, I wrote:

“Perhaps what we witness here is a logic of modernity: as financial and political systems expand, crises cannot be contained, and enlargement and consolidation of powers is deemed to be the only solution. A system inaugurated theoretically with the aim to shrink government to small and legitimate size has been the driver of the most massive expansion of public, financial, police and military power in the history of humanity…. Periodic crises and disruptions – beginning shortly after the Revolution with the perceived inadequacies of the Articles of Confederation, continuing through the New Deal until our current crisis, all point to the need for greater consolidation and coordination of centralized systems of response. Our demand for security results in its purchase at the cost of greater scale and concentration, which in turn sets up the likelihood of a greater future crisis that requires even larger expansion of centralized power – an outcome we welcome in the name of liberty.”

I quoted the prescient warnings of the Anti-federalists, who warily regarded the proposed Constitution as affording a grant of powers that might lay dormant for some time, but which – in the midst of crisis – would be readily seized upon as providing the only means for remediation of whatever dire exigency might be facing the nation. Thus, Federal Farmer wrote, ” The lever by which power would ultimately be accrued was the use of powers not necessarily then required, but granted for future possible use as would be “necessary and proper.” Wrote the Pennsylvania minority, “the legislature of the United States are vested with great and uncontroulable powers, of laying and collecting taxes, duties, imposts, and excises; of regulating trade, raising and supporting armies, organizing, arming, and disciplining the militia, instituting courts and other general powers…. And if they may do it , it is pretty certain that they will; for it will be found that the power retained by the original states, small as it is, will be a clog upon the wheels of government of the United States; the latter, therefore, will be naturally inclined to remove it out of its way.”

I found myself today recalling this posting, and the profoundly prescient warnings of the critics of the Constitution, as I read this article in Bloomberg, in which former Bush Secretary of the Treasury John Snow argues that the Greek debt crisis requires a far more consolidated central European government to set uniform economic and political policy across the whole of Europe, to the end of preserving the viability of the Euro.

“I hope it works, I believe in it,” Snow said in an interview late yesterday at the University of Oxford’s Said Business School in Oxford, England. “But the economist in me says that it’s going to be tough without accommodations.For the euro to be able to survive long term, fiscal consolidation of some kind — tax policy consolidation, fiscal policy consolidation — is probably necessary,” he said. “But that’s not enough, you really need one labor market, one capital market. Europe is going to face hard choices in the future to make this thing work.”

At the Washington Post, David Ignatius makes the same case: “The good side of the austerity measures is that they are a step in the direction of economic integration, which has been the missing link in the eurozone since the Maastricht Treaty of 1992. The conditionality of the rescue plan opens the possibility for a common European fiscal policy that, over time, would make the common currency sustainable.”

What is effectively being proposed is the creation of a single, consolidated power that will have the authority to direct policy – particularly economic policy – “among the several States.” Yet, as the Anti-federalists observed, this fosters the very conditions that give rise more comprehensive crises that in turn require even more expansive consolidation. And – to quote further from Secretary Snow’s speech – there is an acknowledgment that the Greek crisis not only concerns the fate of Europe, but that of the United States and the world:

“The problem is that this is so widespread, the United States has its own exposure to fiscal risk, sovereign risk, most of Europe does — Greece is the canary in the coal mine, as they say,” he said. “Who do you turn to if we get a run on sovereign debt, who backstops it? That’s the whole problem, there isn’t a backstop.”

We continue to draw the wrong lesson from these accumulating pieces of evidence. We treat each crisis as a discrete occurrence that seemingly came out of nowhere (or, better still, look for “someone” to blame – rather than seeing the more comprehensive picture). In the face of such crises, we accede to the ponderous and ominous pronouncements of suited men that the only thing that can save us is to invest more power in the Fed, the bureaucracy, in Brussels, somewhere else. We should draw the right lesson from “our” and “their” economic crises: an economic “monoculture” is subject to universal devastation from one virus or pathogen. The solution is not to double down and expand the monoculture, but to stop fostering a system that generates crises that have no boundaries.

Rather than agreeing with our masters that further consolidation is necessary – even the thought of World Government becomes daily more viable, as a steady succession of economic crises will threaten the world’s increasingly integrated economic system – the lesson we should draw is to govern ourselves more locally, to run our economies more regionally, to make possible a restoration of cultures that learn the art of living within their means within more local contexts. Our pursuit of endless expansion, “comparative advantage,” the globalization of resource depletion, only appears to be making us richer, but the accumulating evidence suggests that it is making us poorer in every sense, and will literally bankrupt our children. Yet still we accept the words of “experts” like Secretary Snow – who, recall, was the immediate predecessor to Secretary Paulson, and was doubtless as “shocked, shocked” at the economic crisis as Alan Greenspan. It gives a whole new meaning to the phrase “snow job.”

{ 8 comments… read them below or add one }

avatar John Médaille May 13, 2010 at 9:20 am

Our public orthodoxy is one of individualism, of free choice and consumer sovereignty, of making your own by your own efforts. And yet, we always find ourselves crushed by forces we cannot understand originating in places we do not know. Public profligacy in Greece threatens economic order in America. “Free market” firms demand socialist supports. Things we should be making for ourselves are provided by virtual slaves in the third world. The worst feature of the modern mass man is the illusion of individuality.

Of course, becoming a true individual requires a true community, and community, to be truly communal, must be a small community, at least at its base. So what should we do with this crisis? We are at the point where everything done to fix the system–one failure at a time–makes the whole structure weaker and less secure. The whole system is held together with duct tape and bailing wire, and we are running out of duct tape. We have to build alternative structures, centers of resistance which are also centers of support and production. It doesn’t matter how crude these structures, they will improve over time and as they become more necessary. Grow a tomato, meet a neighbor (better, meet a neighbor’s needs), commit acts of community. (I am right putting in my yard a community herb garden, where any of the neighbors can cut some basil or rosemary or chives or what-have-you. Perhaps one neighborhood act will encourage another. We shall see.)

avatar Bruce Smith May 13, 2010 at 9:28 am

I would argue that the real problem is regarding the “Invisible Hand” as one hand rather than two hands. With the latter one hand creates the goods and services whilst the other buys the output. If a society allows an Exclusive, or Alpha Ape, Capitalism rather than an Inclusive, or One Nation (Federation), Capitalism to dominate the former will always tend to drive down wages for the purposes of greed and capital accumulation so that the gap between GDP output and purchasing power has to be met by debt. The creation of debt is all well and good for the Alpha Apes owning the banks, they make money, but eventually a limit is reached where no, or very little further, debt can be sustained by stagnant wages. A nation, or federation, economy then becomes “bombed out” as the American one. The European Union is in progress to becoming “bombed out” like the American one with the effect of migratory and non-migratory Eastern European workers lower wages driving down Western European wages in addition to the usual cheap goods from the Pacific Rim countries. To avoid “bombing out” a society has to adopt Inclusive Capitalism (which is the distributionist argument) and balanced free trade. It must also democratically control its credit creation process to ensure credit is produced and used for developing the real economy and not gambling via the creation of asset bubbles.

avatar Jon S. May 13, 2010 at 11:18 am

Patrick,

You often cite the Anti-Federalists as authorities on these matters. I respectfully dissent. Yes, there was much that was true about the Anti-Federalist critique of the new Constitution, but there was even more truth, in my view, to the Federalist critique of the Articles and the Anti-Federalists. Unless you believe that the Anti-Federalists were the last keepers of a classical republican faith (a view rejected by Herbert Storing) then the Anti-Federalists and Federalists wanted the same thing, a government which served to protect individual liberty, but the Anti-Federalists were unwilling to advocate a governing system capable of doing just that. Storing writes, “The Anti-Federalists are liberals…in the decisive sense that they see the end of government as the security individual liberty, not the promotion of virtue or the fostering of some organic common good.”

I know you are not fond of the view that the Progressives represent a break with the American founding, but I want you consider two pieces of evidence. First, the 16th Amendment inaugurating the income tax, in my view, altered the relationship between the national government and the individual citizen. The federal government now taxes my productivity and interferes with my life as an individual in ways the 19th Century tax system did not. This is to say nothing of the government’s ability to raise large sums of money to carry on schemes of dubious worth. Second, and perhaps more importantly, the 17th Amendment required direct election of US Senators. I am a firm believer that Madison is right that the separation of powers is the great protector of rights in our constitutional order. The 17th Amendment changed the calculus of the SOP as now the states, as states, have no say in the federal government. There is no one with an interest in defending the prerogatives of states. As a grad student Justice Scalia came to my school and suggested that the 17th Amendment was the biggest structural reason for the rise of “big government” in the 20th Century. Progressives were the advocates of the 16th and 17th Amendments.

Take this as friendly criticism as I am in significant agreement with the larger point of your argument (e.g., living within limits and the dangers of economic and political centralization),and I realize I am giving institutional arguments for was is to a significant extent a moral problem. I simply think that relatively speaking the Anti-Federalists and the Federalists had more in common with each other than either does with we citizens (or subjects?) of the 21st Century in that they both had a principled commitment to limited government, which we do not.

avatar Patrick J. Deneen May 13, 2010 at 11:43 am

Jon,
Herbert Storing edited the magisterial collection of Anti-federalist writing, as you know, and knew their writings backward and forward, so I am loath to say anything irresponsibly critical of his interpretation of the (varied collection of thinkers who went under the rubric) “Anti-federalist,” but I will simply state that I think Storing attempted to make the Anti-federalists as mainstream and acceptable to liberal tastes as possible, but at some disfigurement of major parts of their argument.

It’s true that many Anti-federalists used the language of natural right, but the main thrust of their criticisms suggests that many rejected the basic liberal anthropology that undergirded the philosophy of modern natural right. At times this rejection is explicity, for example, in a letter of Agrippa:

“It is common to consider man at first as in a state of nature, separate from all society. The only historical evidence, that the human species ever existed in this state, is derived from the book of Genesis. There, it is said, that Adam remained a while alone. While the whole species was comprehended in his person was the only instance in which this supposed state of nature really existed. Ever since the completion of the first pair, mankind appear as natural to associate with their own species, as animals of any other kind herd together. Wherever we meet with their settlements, they are found in clans. We are therefore justified in saying, that a state of society is the natural condition of man. Wherever we find a settlement of men, we find also some appearance of government. The state of government is therefore as natural to mankind as a state of society.”
[CAF, 6:107]

In light of this anthropological understanding, one can better understand the near-universal emphasis of Anti-federalists upon “virtue,” and their near-unanimous concern that the Constitution not only would not foster virtue, but would actively undermine it where it existed. The very motivation that the Founders believed would be the well-spring of the “machine that would go of itself” – self-interest – was suspected by most Anti-federalists as a destructive force undermining common weal. They insisted upon the need to retain relatively small and local forms of self-governance as one means of a schooling in virtue, as well as promoting a setting of modest wants and limited means for attaining luxury and for avoiding corruption. Storing acknowledged all of these aspects of the Anti-federalist argument in various chapters of his fine study, What the Anti-federalists Were For, yet curiously concludes that there wasn’t all that much difference between the Founders and their critics (I disagree).

Like the Federalists and other supporters of the Constitution, few of the Anti-federalists articulated full blown political philosophies. One has to piece together some of the more theoretical fragments. However, I do think that one can find some fairly striking articulations of what one might regard as more classical republican conceptions of liberty in some corners of Anti-federalist writing. I recommend Michael Rosano’s entry on John Winthrop, John Cotton, and Nathaniel Niles in Frost and Sikkenga’s “History of American Political Thought.” Niles is the among the few Anti-federalists who articulated something approaching a full political philosophy (Melancton Smith at times comes close as well). Niles eventually supported the Anti-federalist cause, and I think the clear intellectual affinities between a thinker like Niles and his Puritan predecessors points to a profound anthropological distinction between the Federalists and Anti-federalists (at least some among them, and the most intellectually powerful), and suggests that Storing either glossed over or was deaf to the fundamental differences in how many Anti-federalists and Federalists defined liberty (same word, different definition). For Niles, liberty was defined in accordance with a more ancient and Christian understandings of self-governance within limits and a created order, in which one’s liberty was ultimately to be understood as consonant with and subordinate to the good of the community; the Founders, by contrast, derived their understanding of liberty from more modern sources (“the diversity of the faculties of men…,” Fed. 10). Then read Niles’s “Two Discourses on Liberty,” in Hyneman and Lutz’s “American Political Writings” (available online here ). Let me know then if you think that a main current in Anti-federalist thought is “liberal” in the same spirit as that of the Founders – what you think, not what Storing tells you. While the Federalist and Anti-federalist dressed similarly, I think the former has more in common with many dominant contemporary philosophical and anthropological assumptions than the latter.

I’ll leave aside the question of the Progressives for now – I’ve sought to address it elsewhere. Suffice to say, Madison thought that the Constitution was a dead-letter because there was no Congressional veto of State legislation. And, the Progressives were wild for Hamilton.

avatar Russell Arben Fox May 13, 2010 at 5:04 pm

In light of this anthropological understanding, one can better understand the near-universal emphasis of Anti-federalists upon “virtue,” and their near-unanimous concern that the Constitution not only would not foster virtue, but would actively undermine it where it existed.

I’m not a scholar of the Anti-Federalist literature, and I don’t expect to be able to become such, but on the basis of my reading of them (guided by, yes, Herbert Storing, but also by Christopher Duncan), to claim that there was anything like a “universal” or “unanimous” concern or emphasis amongst them is to claim far too much. There were Anti-Federalists who spoke from Aristotelian points of view, as well as Puritan, as well libertarian, etc. You acknowledge this in your response, but also seem to want to pass it by, attaching your anti-liberal interpretation to the “the most intellectually powerful” of the opponents of the Constitution. In my view, it makes more sense to say that there were, then as now, people who opposed a modern politics of managing individual interests and rights…but that, then as now, such people are a decided minority. (Gordon Wood’s work on how both the Federalists and Anti-Federalists used the concepts of “interest” and “disinterestedness” has guided my thinking as well.) Politically speaking, as I understand the convention debates of 1787-88, it appears undeniable that one of the main reasons why the Anti-Federalists lost the argument was because there was so little common language amongst them, and that those who were capable of articulating a consistent non-liberal language of government were persuasive to only a tiny few.

avatar Bruce Smith May 14, 2010 at 10:05 am

The United States’ political and economic system is in the ditch. Federalism or Anti-Federalism the Framers failed. They chose to make property in all its forms the main line of defense against government tyranny. Given that many of them were slave-owners you’d think they’d understand that property is a primary instrument for creating tyranny. But they lacked reflective empathy. So from the start the Constitution was a half-baked instrument for dealing with issues of dominance. In reality it’s developing balance in the use of property that safeguards human flourishing and that balance has to be applied individually and collectively at all levels Global, National and Local. To continue today to see the obstacles to human flourishing as principally a problem of over-bearing government is to be as short-sighted and indifferent as the Framers. The true nature of the problem is both over-bearing property ownership and government. If you want a concrete example of how the two work together here is a recent Huffington Post article on government protection of the rating agencies:-

http://www.huffingtonpost.com/2010/05/14/senate-approves-new-curbs_n_575895.html

Note the hypocrisy of the Republican Senators vote in opposing financial reform whilst pretending to be against government bail-outs of the financial industry. Like eighteenth century aristocrats they are still protecting property albeit that the United States has switched from volume manufacturing to debt manufacturing. But hell debt obligations are such an easier way to make money! Long live the debt owning aristocracy!

avatar D.W. Sabin May 17, 2010 at 6:12 am

Aw come off it, when the paid experts say things are too big to fail, they really mean it. We must make things too big to fail. Then, failure will be a thing of the past and the only thing that will haunt we fail-free humans will be the spectre of Best Intentions……and of course, ill-fitting uniforms. All Hail the Megaloch.

avatar Russell Arben Fox May 17, 2010 at 10:15 am

Ross Douthat’s latest on “the great consolidation” is on point here.

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