Politics and Economics (2)

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Below "Lord Keynes (LK)" writes about the economic thinking that is behind president-elect Trump. I admire LK for the depth of his economic reasoning and his valiant defence of classical social democracy, which is an important yet increasingly neglected force at the bottom of the wealth, peace, and success of the West. However, I do have reservations concerning the condemnation of free enterprise laissez faire capitalism and the one-sided emphasis of the good that state capitalism is supposed to be capable of. The truth lies in the middle, we need a lot more laissez faire than LK seems to be willing to tolerate, and a lot more state intervention than free market supporters consider wholesome.

Paradoxically, those who are in favour of "more capitalism" — as I am at times — are vitally dependent on "more politics" and indirectly on "more [democratic] government", if  they are to benefit from swings in public perception and volition back toward economically and socially more effective corrections to phases in which the wish for "a lot more politics and the state" used to prevail.

While I am prepared to accept the need for certain measures of national protectionism, I admit that I am not clear as to the border area where the good that comes with free trade may or may not actually trump the egotism of nations — see also Politics and Economics (1):

A fascinating excerpt from the first article:

“‘I’m an economic nationalist,’ [Bannon]… tells me. ‘The globalists gutted the American working class and created a middle class in Asia. The issue now is about Americans looking to not get f—ed over. If we deliver’ — by ‘we’ he means the Trump White House — ‘we’ll get 60 percent of the white vote, and 40 percent of the black and Hispanic vote and we’ll govern for 50 years. That’s what the Democrats missed. They were talking to these people with companies with a $9 billion market cap employing nine people. It’s not reality. They lost sight of what the world is about.’ …

‘Like [Andrew] Jackson’s populism, we’re going to build an entirely new political movement,’ he says. ‘It’s everything related to jobs. The conservatives are going to go crazy. I’m the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything.”

“Ringside with Steve Bannon at Trump Tower as the President-Elect’s Strategist Plots ‘An Entirely New Political Movement’ (Exclusive),” Hollywoodreporter.com, 18 November, 2016.

It seems that Stephen Moore (Trump’s economic adviser) has recently delivered a similar message to top Republicans as well. Apparently, they weren’t happy to be told that they are now part of “Trump’s populist working-class party.”

We can see that Bannon is essentially an anti-neoliberal conservative, but a confused one, and the terminology he uses to refer to neoliberalism is “globalism” and “crony capitalism.”

Regrettably, he also falls for the “unfunded liabilities” nonsense about social security, but – on the whole – he is obviously superior to standard Republicans and doctrinaire free market conservative fanatics.

As is common to many populist conservatives, Bannon seems to imply that there is a pure “authentic, free-market capitalism” that fundamentally works and has only been corrupted by corporatism and crony capitalism.

But this is a delusion. The populist conservatives will never fully understand economics unless they understand that laissez faire capitalism is inherently flawed: the more laissez faire capitalism becomes, the more it becomes unstable, inefficient, and dysfunctional.

It is a well-designed state capitalism, guided by macroeconomic management and regulation, that is the form that truly “works.”

The source.

See also Politics and Economics (1)