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THE POLITICS OF UNEMPLOYMENT

Mark R ReiffUniversity of Manchester

([email protected])

If one accepts the various empirical claims I have made so far with regard to the

effectiveness of the methods available for reducing unemployment, and the overall desirability

and justness of working toward full employment, one "may well be led to wonder why there [is]

any opposition" to using these methods at all, especially when the rate of unemployment is so

high, as it is now.1 What I have argued thus far is that there are three possible kinds of errors

underlying opposition to the most promising methods of reducing unemployment. First, a great

deal of this opposition simply arises out of empirical mistakes or misunderstandings of what

economic actions cause what economic effects. As Virgil said, "lucky is he who has been able to

understand the causes of things."2 In other words, many of those voicing opposition are not

opposed to reducing unemployment per se, they are simply misinformed or otherwise mistaken

about the likely effects of the various economic proposals before them and this leads them to

support proposals that would actually have no effect at all or even make the problem worse and

oppose proposals that would make the problem better. Second, some of those who oppose some

or all of the techniques I have identified as being most likely to be effective in reducing

unemployment do so not because they do not believe these programs will not, in fact, reduce

unemployment, but because they believe that these programs will have other effects as well and

they consider avoiding these other effects more important than alleviating unemployment. These

people, in my view, are making a moral mistake in that they are failing to give the reduction of

1 Lawrence R. Klein, The Keynesian Revolution (New York: Macmillan, 1966), p. 179. 2 Virgil, Georgics, bk. 2.

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mailto:[email protected]

The Politics of Unemployment Mark R Reiff

unemployment the moral priority it deserves given the liberal capitalist values they already claim

to accept. And third, some people take one or the other of the above views not because they fear

that certain things will happen, but because they think certain things might happen, and they

accordingly make another kind of moral mistake: they apply an attitude toward risk other than

the one their embrace of liberal capitalist values suggests they should. Everything that I have

said up to now has been directed at these three groups: first, toward convincing them that they

are making empirical mistakes about what causes what; second, toward convincing them that

justice requires they give alleviating unemployment greater priority in their moral reasoning than

they have to date; and third, toward convincing them that even though our empirical

disagreements here may be largely irresolvable, the risks associated with their preferred form of

government action are not risks that justice demands we take, while the risks associated with the

forms of government action they currently oppose are risks that justice demands we do take,

even if we do not know which set of empirical assumptions about what causes what are correct.

But this does not dispose of all the reasons why some people might oppose full

employment regardless of the methods by which this is to be achieved. Not all of the opposition

to government efforts to alleviate unemployment can be ascribed to good faith disagreements as

to what economic actions will have what effects, or what side or secondary effects, combined

with a misguided allocation of priorities over various admittedly valid moral concerns and a

failure to appreciate how justice demands the risks of these various activities be evaluated and

their deliberate encounter ranked relative to one another. Indeed, the opposition to government

attempts to alleviate unemployment could not be as ferocious as it is among some segments of

the population unless there was something else also going on, at either an unconscious or semi-

conscious level, encouraging people to accept empirical claims that are dubious at best or, more

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nefariously, to apply a different principle of morality when it comes to these questions than the

one I contend liberal capitalism requires. Which means we need to consider whether there may

be something we have yet to identify that is motivating some people to want to maintain

unemployment at high levels and, more disturbingly, to increase it if it drops too close toward

anything that might qualify as full employment. And identifying and thereby "outing" what is

behind this kind of opposition is as important as identifying the principles of justice regarding

full employment that our embrace of political liberalism suggests should be in play.

One obvious additional source of opposition to further government efforts to alleviate

unemployment is economic self-interest. Some people are not making mistakes about the

empirical effects of the various actions we might take to alleviate unemployment or about the

relevant priorities that liberalism requires in judging how to balance one possible set of effects

against another; they are simply rejecting these priorities and consciously putting their own

economic self-interest above the interests of others, or rather doing so to a greater extent than

liberalism allows. Rather than applying the distributive principles that liberalism entails, they

consciously embrace a form of psychological egoism, the view that what morality requires is

whatever will make their own lives go best. Of course, many people no doubt do this

unconsciously—that is, they do not embrace psychological egoism as a moral principle but

nevertheless unconsciously interpret events and evaluate probabilities in a way that allows them

to use their professed liberal moral principles to accomplish the same thing. But these people

again are simply making mistakes, mistakes they would reject if the nature of their mistakes were

brought to their attention clearly enough, and so they really belong to one or more of the first

three groups I have identified, not into the category of people to whom I am referring now. The

people to whom I referring now actually believe that morality allows them to do whatever will

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make their own lives go best. To those who embrace liberalism, this is a distinctly unattractive

moral principle, but it is a moral principle nonetheless. And if one embraced this kind of moral

principle, one might be concerned that even if alleviating unemployment will increase GDP and

make more money available to everyone, eliminating the "industrial reserve army" of workers

waiting in the wings would give labor greater bargaining power, and this would enable them to

bargain for a greater share of the economic surplus than they would be likely to get if

unemployment were to remain high.3 In other words, these people are not convinced that an

increase in the bargaining power of labor will leave them economically better off even if the

amount of surplus to be divided is larger as a result. They fear that a smaller slice of a bigger pie

will not be as big as a bigger slice of smaller pie, and therefore prefer to keep both their slice and

the overall pie sized as it is now.

To be fair, I think it is important to acknowledge that this fear is not irrational. A huge

proportion of economic growth has gone to the top of the income distribution over the last thirty

years, and it is hard to believe that anything could make this share increase.4 And the top 1

percent have been doing very well thank you since the Great Recession despite the persistence of

high unemployment.5 Indeed, by 2012, the income share of the top 1 percent of earners has

already returned to the record levels it was at just before both the Great Depression and the Great

Recession: just above 20 percent.6 While there is no guarantee that total wealth of those at the 3 This is phenomenon usually seen most directly in developing economies, where a small but growing manufacturing capital is able to draw labor at will from an underemployed agricultural sector, see W. Arthur Lewis, "Economic Development with Unlimited Supplies of Labor," Manchester School 22 (1954): 139–191, and is what some economists think is happening in China now. See, e.g., Paul Krugman, "Hitting China's Wall," The New York Times (July 16, 2013). It is therefore not much of a stretch to see how this effect might be replicated in advanced economies with high unemployment rates, and how we might consider it a form of fascism—a internal variant of the kind of external economic exploitation that occurred under colonialism and occurs today under the guise of economic and/or political imperialism. 4 See Reiff, Exploitation and Economic Justice in the Liberal Capitalist State, pp. 3-10. 5 See Reiff, Exploitation and Economic Justice in the Liberal Capitalist State, pp. 5-7. 6 See Annie Lowrey, “The Rich Get Richer through the Recovery,” The New York Times (September 10, 2013); Emmanuel Saez, “Striking it Richer: The Evolution of Top Incomes in the United States (Updated with 2012

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top will decline if they get a smaller share of a larger pie, some of the of the proposals I have

identified (prohibiting exploitation and engaging in direct redistribution from the very rich to the

working poor and unemployed) are aimed at achieving exactly that, so it is entirely

understandable that those currently at the top of the income distribution might see maintaining

high unemployment as currently in their economic interests. And even if they do not see

maintaining high unemployment as strictly in their economic interests in terms of the income

they receive, they might see it as in their economic interest in the sense of contributing positively

to their overall quality of life. Indeed, as Joan Robinson observed just after the end of World

War II:

For people who have a secure income in any case, full employment is a great nuisance. There are no domestic servants, the theatres are always full and the holiday resorts overcrowded. Goods are in short supply, not because less are produced, but because other people are consuming more. Shopkeepers become over-bearing instead of obsequious.7

In any event, to the extent that those who are well-off do see maintaining a society with a healthy

number of unemployed as in their interests, we should expect them to use their wealth to

promote the kind of mistakes that encourage those at lower levels of the income distribution to

support what are in fact pro high-unemployment policies, even though these policies actually

work against the interests of everyone but the well-to-do.8

Now I expect that some people will defend this attitude by claiming that psychological

egoism in the economic realm is not, in fact, inconsistent with liberalism, but is rather precisely

the kind of attitude that liberalism and especially liberal capitalism allows, usually relying on

Preliminary Estimates,” (September 3, 2013) (available at http://elsa.berkeley.edu/~saez/saez-UStopincomes-2012.pdf).7 Joan Robinson, "Obstacles to Full Employment," in Contributions to Modern Economics (New York: Academic Press, 1978), pp. 20-28, p. 27 (based on a paper originally published in 1946).8 For further discussion of how those who would actually be adversely affected by the lack of government action to address high unemployment might nevertheless be manipulated into opposing such action, see Mark R. Reiff, “The Politics of Masochism,” Inquiry 46 (2003): 29-63.

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Adam Smith and his comments about "the invisible hand" to support them when they do. But

this is a mistake, or at least a gross overstatement of what Smith actually had in mind. What

Smith said was that by exclusively pursuing their own economic interest, each individual is in

effect "led by an invisible hand" to do more to increase the total wealth of their society than if

they had aimed at that goal directly.9 Of course, this claim is false—there are important ways in

which individual economic egoism will not tend to maximize total wealth. For example, any

society driven solely by individual economic egoism will undersupply public goods, or even

worse, fail to supply them at all, and this will dramatically reduce the amount of total wealth that

society can produce, a fact that Smith himself acknowledged elsewhere.10 But what is important

here is not the extent to which Smith's claim about how to maximize total wealth is an

overstatement, but to note what Smith did not claim, and what he did not claim is that

maximizing total wealth is equivalent to maximizing the common good. And even if we were to

assume he did make such a claim, surely this claim could only be true when the market within

which individuals sought to maximize their economic wealth was adequately regulated to

provide for the enforcement of contracts, the protection of private property, the prevention of

fraud, theft and anti-competitive behavior, and the suppression of discrimination; otherwise the

claim would simply be a license for a Hobbesian war of all against all. Smith's reference to what

he called "the invisible hand" was accordingly not an argument for unbridled economic egoism

being an acceptable moral theory and all-around guide to action; it was merely an argument for

free competition among economic entities within a properly ordered and regulated market as

being the best way to increase the total size of the economic pie.11 So there is nothing about

9 See Adam Smith, The Wealth of Nations (New York; Modern Library ed., 2000), bk. 4, ch. 2, pp. 484-5. 10 See, e.g., Smith, The Wealth of Nations, bk. 4, ch. 9, p. 745.11 Indeed, this is probably the most common view among Smith scholars. See, e.g., Lisa Herzog, Inventing the Market: Smith, Hegel, and Political Theory (Oxford: Oxford University Press, 2013), pp. 36-37.

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government attempts to increase employment through fiscal stimulus or for that matter through

any of the other methods I have suggested that is contrary to anything that Smith actually said.

But even if Smith is properly categorized as believing that relentless economic egoism in

all its forms is fully consistent with the pursuit of the common good, this does not make such a

belief true. As Keynes pointed out,

The world is not so governed from above that private and social interest always coincide. It is not so managed from below that in practice they coincide. It is not a correct deduction from the principles of economics that enlightened self-interest always operates in the public interest. Nor it is true that self-interest generally is enlightened; more often individuals acting separately to promote their own ends are too ignorant or too weak to attain even these. Experience does not show that individuals, when they make up a social group, are always less clear-sighted than when they act separately.12

Simply put, liberal capitalism does not in fact make the unbridled pursuit of economic self-

interest a moral principle. On the contrary, as we have already seen, it moderates such activity in

various ways. Accordingly, to the extent that what is driving some of the opposition to the

reduction of unemployment is indeed the embrace of economic psychological egoism as a moral

principle, such embrace is ruled out by the acceptance of liberalism itself, and little more should

need to be said against it.

But there is another problem that is more troubling that this. Many of the proposals I

have made do not risk reducing the total wealth of those at the very top (fiscal stimulus being the

principle example), and indeed are likely to increase it. Opposition to these proposals

accordingly cannot involve an attempt to elevate economic self-interest over the broader

economic interests of society in general, but rather an attempt to further some non-economic

12 John Maynard Keynes, "The End of Laissez Faire," in Essays in Persuasion, pp. 272-294, at pp. 287-288. For an earlier, similar but even more extensive attack on the idea that unbridled laissez faire is the best way to advance the public interest, either economically or more generally, see Henry Sidgwick, The Principles of Political Economy (Cambridge: Cambridge University Press, 2011), bk. 3, ch. 2, esp. pp. 403-418, and Henry Sidgwick, The Elements of Politics (Cambridge: Cambridge University Press, 2012), ch. 10.

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goal. Indeed, the Obama presidency has been one of the best in history for the super-wealthy,

the top 1 percent, an even better of the top 1 percent of the top 1 percent, who as we have seen

have increased their share of economic growth under this president to over 100 percent,

something that has not been the case since 1916 and 1929.13 Yet many of these same people

oppose him with a ferociousness that has not been seen for some time in American politics. So

there are clearly some people that want to do less to help the unemployed than the little we are

doing even if this ends up costing them money, for it is hard to imagine that they could do any

better than they are in fact already doing now.

Surprisingly, there have been few discussions of this phenomenon, but one of the best it

set forth in a 1943 essay by Michał Kalecki. Kalecki warned that we should not expect

government to do what it takes to maintain full employment in a capitalist economy even though

it had at hand the economic tool box for doing so.14 Kalecki argued that

The reasons for the opposition of the 'industrial leaders' to full employment achieved by government spending may be subdivided into three categories; (i) the dislike of Government interference in the problem of employment as such; (ii) the dislike of the direction of Government spending (public investment and subsidizing consumption); (iii) dislike of the social and political changes resulting from the maintenance of full employment.15

And it is worth looking at each of these reasons for political opposition in greater depth.

Kalecki's first suggested reason why business leaders and the wealthy might oppose

government efforts to reduce unemployment is that regardless of the fact that full employment is

13 See Eric Alterman, "What Are Republican Donors Thinking?," The Nation (November 17, 2014). 14 See George R. Feiwel, "Reflection on Kalecki's Theory of Political Business Cycle," Kyklos 27 (1974): 21-48, esp. at 24. 15 Michał Kalecki, "Political Aspects of Full Employment" (1943), in Selected Essays on the Dynamics of the Capitalist Economy 1939-1970 (Cambridge: Cambridge University Press, 1971), pp. 138-145, 139 (emphasis in the original). For similar arguments, see Sidney S. Alexander, "Opposition to Deficit Spending for the Prevention of Unemployment," in Income, Employment and Public Policy: Essays in Honour of Alvin H. Hansen (New York: W. W. Norton & Company, 1948), pp. 177-198; and William D. Nordhaus, "The Political Business Cycle," The Review of Economic Studies 42 (1975): 169-190.

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better for everybody in terms of both the income and the profits that each member of the

economy will enjoy, business leaders and the wealthy derive tremendous personal power from

the idea that the economic health of the nation depends upon what they do, and what they do

depends on the degree to which they have confidence in the government and its economic

policies.16 In other words, if government follows polices they oppose, they will not have

confidence in the economy, and if they do not have confidence in the economy they will not

invest and hire and the economy will not prosper. Government efforts to reduce unemployment

threatens their power and influence because if these efforts are successful, it will prove that

government can indeed do things itself to make the economy prosper, and the power and

influence of business leaders and the wealthy will be correspondingly diminished. Whether this

reduction in influence will ultimately decrease their relative or absolute income and wealth (and

it is plausible that even if it would decrease the latter it would preserve or even increase the

former) more than the loss of productive power involved in less than full employment is

irrelevant, for this not about profits, it is about power. Business leaders and the wealthy do not

want to cede to the government the power to manage the economy, for the more government has

such power, the less this power will reside in their hands, and greater power is always to be

preferred to lesser by the psychological egoist.17

16 For a recent study of just how much power certain people derive from the idea that they are and should remain the economic focus of the nation, see Martin Gilens and Benjamin I. Page, "Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens," Perspective on Politics (forthcoming in Fall 2014) (available now at https://www.princeton.edu/~mgilens/Gilens%20homepage%20materials/Gilens%20and%20Page/Gilens%20and%20Page%202014-Testing%20Theories%203-7-14.pdf).17 See Paul Krugman, "Phony Fear Factor," The New York Times (August 8, 2013). Note, however, that I have interpreted Kalecki here slightly differently than Krugman. Krugman takes Kalecki's reference to the "state of confidence" in expanding upon this point to be equivalent to what Krugman refers to as "the confidence fairy," the idea that the reducing the national debt will make the participants in the economy more confident in the strength and stability of the economy and therefore more willing to spend and invest, an argument that I have discussed already in the course of discussing the basis for the "anti-debt argument" for austerity. Here, I choose to interpret Kalecki as referring to a different kind of confidence—not the kind of general confidence that would provide a causal explanation for how austerity could be expansionary, but the specific confidence of the economic elite, who will not cooperate in putting people back to work unless this is seen to be done by them or at least at their direction and not

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Consider, for example, some recent evidence from France.18 Many French labor laws

kick in only when a firm reaches 50 employees. These rules require such things as the

establishment of a worker council, compliance with more stringent health and safety codes,

annual collective bargaining, and so forth. As a result, there are an astonishingly greater number

of firms with 49 employees than there are firms with 50 in France—twice as many, in fact,

whereas the number of firms at these two levels are roughly the same in the US, where the

regulatory burdens don't change much once a firm hits 50 employees. Of course, it is true that

complying with these rules costs more than not complying. But not much more—a recent study

put the additional cost as adding about one percent to cost of wages, and this assumes there are

no efficiencies to be gained from the labor peace and various other positive externalities these

rules were designed to promote.19 Not only do these rules protect employees from injuries or

rights violations that would impose costs on society at large, however, they also give workers

some say in managing the company, allowing them to object if their bosses are spending money

inefficiently.20 So it is plausible that there really is no net social cost at all to complying with

these rules, and there may even be no net private cost and there could be cost savings.

Nevertheless, to get around these rules, many French business owners cap their firms at 49 and

just start a second firm and then a third, each capped at 49, as their business increases, rather

than break through this barrier. The inefficiencies of this are obvious, as is the resulting

by the government on its own, for if it is seen to be done by the government on its own then the overall power and influence of those Kalecki labels the "captains of industry" will be diminished. In other words, I think Kalecki's argument is about power dynamics, not economics (after all Kalecki's essay is entitled "Political Aspects of Full Employment") (my emphasis). But even if I am wrong about this being what Kalecki meant, that would not change my argument in any way. It would just make my point here more original.18 See Luis Garicano, Claire Lelarge, and John Van Reenen, "Firm Size Distortions and the Productivity Distribution: Evidence from France," Institute for the Study of Labor, Discussion Paper No. 7241 (February 2013) (available at http://www.econstor.eu/bitstream/10419/71683/1/738531383.pdf).19 See Garicano, Lelarge, and Van Reenen, pp. 1-4, 27-28.20 See Liz Alderman, "The Number That Many French Businesses Fear," The New York Times (July 23, 2014).

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difficulties this poses for reducing unemployment even when economic conditions are

improving. Indeed, many business owners admit that they actually lose some business by not

having sufficient size within a single firm to handle bigger contracts.21 So this cannot be about

money. Once again, it must be about power, for one of the things these labor rules do is limit

what would otherwise be the business owner's unfettered discretion in running his business as he

sees fit. It is the loss of power that causes business owners to resist breaking the 49 employee

barrier, not the cost, that is really driving the opposition here to what would otherwise be good

economic reasons to increase employment.

Kalecki's second suggested reason for political opposition to government efforts to

alleviate unemployment is again a form of psychological egoism, but in this case the object of

desire is not power but status and self-respect. Business leaders fear that regardless of whether

government investment is confined to subsidizing public projects and private consumption,

government activity will inevitably bleed over into private projects as well, thereby competing

with the private sector and driving down their rate of profit. In other words, this might seem to

be simply another form of putting one's individual economic interest ahead of those of the

economy as a whole, a form of economic self-interest that I have already discussed. But Kalecki

adds an interesting gloss on this. Kalecki notes that you might think that this would make

business leaders favor efforts to stimulate consumption rather than improve public infrastructure,

but it does not. Indeed, efforts to subsidize consumption are even more violently opposed. This,

he speculates, is the result of a misguided moral belief that no one should be rewarded for lack of

effort, and that subsidies like this are gifts to the indolent. In other words, this kind of

government support is seen as somehow diminishing the individual accomplishments of the

21 See Alderman, "The Number That Many French Businesses Fear."

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successful and reducing the responsibility of the unsuccessful, and therefore is objectionable to

the successful even if the opposing position might make them more successful still. To use the

classic term, this is the moralist "liquidationist" view advocated most vociferously during the

Great Depression by Andrew Mellon and his associates.22 To use a more modern term, for this

attitude, however, we might call liquidationism a form of anti-luck egalitarianism. Luck

egalitarians believe that a lack of success can be due to either bad luck or bad choices, and

justice demands that compensation be made available for the former. Liquidationists, in turn,

reject the notion that luck could be the cause of anything, for the idea that a lack of success can

be down to luck also implies that their own success might be down to good luck rather than their

own effort and abilities. So the poor must be indolent, and if the poor are indolent they must be

punished, for if they are not punished this unjustly diminishes the significance of the efforts and

abilities of the wealthy.23 Blaming the unemployed for their own predicament therefore becomes

a form of self-affirmation by the rich, a way of reaffirming that they are everything the

unemployed are not.

These two sources of political opposition are perhaps not all that surprising—they seem

to be motivations for conduct that we can all intuitively recognize in certain people. Kalecki's

third reason why business leaders and the wealthy might oppose government efforts to alleviate

unemployment, however, is an attempt to encapsulate something very different and, in my view, 22 See Floyd Norris, "The Time Bernanke Got It Wrong," The New York Times (July 18, 2013); Federal Reserve Board, "Remarks by Governor Ben S. Bernanke at the Conference to Honor Milton Friedman," University of Chicago, Chicago, Illinois (November 8, 2002); J. Bradford De Long, "'Liquidation' Cycles and the Great Depression," (Cambridge: Harvard University Xerox, June 1991). Note that there is an economic version of the liquidationist view too: that allowing inefficient enterprises to fail purges the economy of inefficiency and ultimately leads to more healthy and productive allocation of resources. For reasons that I discuss in depth in the course of examining the anti-interventionist view, however, this version of the liquidationist argument is no different than other forms of the anti-interventionist view and is mistaken for the same reasons that these other versions of this view are mistaken. What I am focusing on here, however, is the moralized version of the liquidationist view, for that view is (largely if not entirely) independent of its alleged economic effects. 23 One can also see echoes of this view, as I suggested earlier, in the reaction of German ordoliberals to the sovereign debt crisis, although as I said that reaction rests on a misguided interpretation of ordoliberalism.

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understanding it is critically important if we are to understand the source of some of the most

ferocious political opposition to efforts to reduce unemployment. Under conditions of full or

close to full employment, business leaders no longer have the threat of the sack to use to

dominate people. Again, regardless of whether this would come with higher or lower profits is

irrelevant: what is important here is a lust for arbitrary power over others.24 This is a power that

is even more intoxicating than money—indeed, it is often the reason why money and therefore

profits are themselves experienced as intoxicating. In any event, it is an all too common albeit

unadmirable feature of human nature that people derive pleasure or at least satisfaction out of

dominating others—even Adam Smith recognized this.25 Surely slavery, for example, could not

have existed and prospered for so long if it was merely thought of as providing economic

benefits to slave owners (and this is assuming that slavery did provide economic benefits to slave

owners, for there is good reason to question even that26). This is why efforts to achieve full

employment tend to be opposed by business leaders and rentiers in democratic societies but not

in fascist ones such as Nazi Germany. In an otherwise liberal democratic society, full

employment reduces the power of business managers and owners over workers because they can

no longer use the threat of "the sack" and the presence of an "industrial reserve army" to ensure

worker passivity and subservience. Workers who are afraid of losing their jobs are likely to be

less productive, but more importantly they are likely to complain less, be less likely to agitate for

higher wages or complain about current working conditions, and will often even refuse to report

24 For similar definitions of domination, see Frank Lovett, A General Theory of Domination and Justice (Oxford: Oxford University Press, 2010). 25 See Adam Smith, Lectures on Jurisprudence (Oxford: Oxford University Press, 1978), iii, 130, p. 192: "The love of domination and authority over others . . . is I am afraid natural to mankind." See also Smith, Lectures on Jurisprudence, iii, 114, p. 186.26 See C. W. and A. J. K. D, "Did Slavery Make Economic Sense?' The Economist (September 27, 2013); Gordon Tullock, "The Economics of Slavery," Left and Right 3 (1967): 5-16.

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workplace accidents when they do occur.27 Such tools to keep workers in line are not needed in a

fascist society, in contrast, because the power of business managers and owners over workers is

assured by more direct means, such as the ability to use force and violence, the kind of naked

unchecked power that is the essence of fascism itself.28 So full employment presents a threat to

business leaders and the wealthy in a liberal society that it would not present in a fascist one.

This also explains why even those who vociferously oppose government spending on

infrastructure projects and transfer payments to the under and unemployed during economic

downturns nevertheless support what former US Representative Barney Frank calls "weaponized

Keynesianism"—increasing government spending on defense and new weapons systems

regardless of the international threat of armed conflict and the actual need for them.29 This kind

of government spending is not seen as potentially creating competition for private industry, but

as eliminating it, for arms suppliers do not face the same kind of competition as the producers of

goods and services that are used by private consumers. And the buildup in the defense

department does not threaten to empower workers because the same impulse that supports such a

buildup also supports workers' direct suppression. Indeed, a nation in which a small group of

highly economically privileged people dominates a large group of economically struggling

people will often embark on foreign military adventures in order to distract the majority from the

real practical limitations that exist on their ability to live more fulfilling lives and rally them

behind a government whose basic policy is to exploit them. As Machiavelli advised the Prince,

27 See Alina Tugend, “Uncertainty about Jobs Has a Ripple Effect,” The New York Times (May 16, 2014). 28 See Robert Rowthorn, "Kalecki Centenary Lecture: The Political Economy of Full Employment in Modern Britain," Oxford Bulletin of Economics and Statistics 62 (2000): 139- 173, 140.29 Paul Krugman, "Weaponized Keynesianism," The New York Times (June 24, 2009) (quoting Frank). See Kalecki, Political Aspects of Unemployment, pp. 141-142, for his prediction that there would continuously be tremendous pressure to focus deficit spending on the armaments industry. See also Kalecki, "The Impact of Armaments on the Business Cycle after the Second World War" (1955), in Kalecki, Collected Works: Volume II, pp. 351-373.

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"it is best to keep men poor and on a permanent war footing, for this will be an antidote to two

great enemies of active obedience—ambition and boredom—and the ruled will feel in constant

need of great men to lead them."30

In my view, this is what Kalecki had in mind back in 1943, given the events that had so

recently swept up many of those around him. But Kalecki's observations have as much relevance

today as they did then. Contemporary opposition to government efforts to improve the

employment situation by many of those in the business community and their experts and political

representatives is not just based on empirical mistakes, or even on just putting one's own

economic interest above the economic interests of one's fellows. On the contrary, it is based on a

kind of nostalgia for what some see as the seductiveness of the idea of old-world aristocracy and

the "traditional" way of life of the antebellum south in American political life, and there is a

similar nostalgia (in their case for a romanticized version of life under their respective pre-

industrial monarchial regimes) among the elite and institutions of various European nations.31

Unfortunately, this nostalgia seems to express itself through a strain as what we might call

"social" or "interpersonal" fascism. This is to be distinguished, of course, from the more all-

30 Isaiah Berlin, "The Originality of Machiavelli," in Against the Current (Princeton: Princeton University Press, 2001), pp. 25-79, at 61. See also See Michał Kalecki, "The Business Cycle and Armaments " (1935), in Collected Works of Michał Kalecki: Volume I (Oxford: Oxford University Press, 1990), pp. 182-187; Michał Kalecki, "The Fascism of Our Times" (1946) and "Vietnam and US Big Business" (1967), in Collected Works of Michał Kalecki: Volume VII (Oxford: Oxford University Press, 1997), pp. 287-291 and pp. 292-97; Kalecki, "Political Aspects of Full Employment," pp. 141-42; George R. Feiwel, "Reflection on Kalecki's Theory of Political Business Cycle," Kyklos 27 (1974): 21-48, 39. 31 This is something that Kalecki himself noted some 20 years after his essay initially appeared. See George R. Feiwel, "Reflection on Kalecki's Theory of Political Business Cycle," Kyklos 27 (1974): 21-48, 39, quoting Kalecki from 1962: "Were the forecasts I made then accurate? I suppose so, but as usual with historical forecasts, not always in every detail. After analyzing the nature of opposition of big business to stimulating economic activity by government expenditure, I foresaw that future crises will be mitigated that way, but not entirely eliminated. Furthermore, I foresaw that government intervention in the course of the business cycle will give rise to a "political business cycle." It appears that current events correspond grosso modo to these forecasts. On the other hand, my article deals with full employment on the basis of arms build-up in a fascist regime. However, experience has shown that fascism is not an indispensable system for armaments to play an important role in counteracting mass unemployment. However, one should note that in the USA, where this process has been strongest, some elements of fascism have appeared." For a similar translation, see Collected Works of Michał Kalecki: Volume I (Oxford: Oxford University Press, 1990), pp. 573-74.

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encompassing strain of political fascism that strode across Europe in the ruins of the Great

Depression, but it is disturbing nonetheless, for it results not from empirical or moral mistakes

within liberalism—it represents an attack on liberalism itself. In this sense, then, Hayek was

right—the problem of unemployment and the solutions offered for its cure do represent a

potential threat to freedom. Hayek just got the parties who represent the source of that threat and

the parties who are most likely to be the victim of it wrong, or rather incomplete. Perhaps that is

understandable in his case, for during most of his life, the bigger threat did indeed came from

socialism. But like the Northern Line on the London Underground, the road to serfdom has two

branches to it—one branch goes via socialism, but another goes via fascism.32 In our time, the

bigger threat comes from fascism, even if it rises now in its social or interpersonal rather than

political formulation, from those who would move our democracy further in a right-wing

perfectionist direction,33 not from those who would bring on a dictatorship of the proletariat but

from those who would bring on an (effective if not actual) dictatorship of the one percent. 34

Money is not something to be desired for its own sake; power is. That is why even though power

over others costs money, those who have money are willing to spend their money on it. 35 This,

32 Despite having lived through the Nazi era, Hayek was always more sensitive to what he saw as the continuing threat of socialism than he was to the continuing threat of fascism. He embraced the distinction between totalitarianism and authoritarianism, seeing the latter as consistent with liberal democracy, even suggesting at one point that the military regime of General Pinochet in Chile fit the bill of a limited state. See Renato Cristi, Carl Schmitt and Authoritarian Liberalism (Cardiff: University of Wales Press, 1998), pp. 146-168, esp. p. 168 n. 16 (quoting interview with Hayek on his visits to Pinochet in Chile). 33 For more on the battle between liberalism and perfectionism, see Mark R. Reiff, “The Attack on Liberalism,” in Law and Philosophy, ed. Michael Freeman and Ross Harrison (Oxford: Oxford University Press, 2007), pp. 173-210. 34 For more on the rise of the one percent, see Chrystia Freeland, Plutocrats: The Rise of the Super-Rich and the Fall of Everyone Else (New York: Penguin, 2012).35 Think, for example, of the Koch brothers, who have spent hundreds of millions of dollars on right-wing causes, including funding attacks on pubic unions and other organizations or acts of legislation that support the unemployed and working class. See, e.g., Nicholas Confessore, "Group Linked to Kochs Admits to Campaign Finance Violations," The New York Times (October 24, 2013) (discussing funding of ballot proposition which would prohibit unions from using automatic payroll deductions to raise money for political campaigns); State of California, Fair Political Practices Commission, Investigation Report, Case No. 12/784, Report 30, Americans for Responsible Leadership, Interview with Anthony Russo (August 16, 2013), pp. 7, 8, 26, 39, 65, 68, 83, 86, 94, 106 (available at http://www.nytimes.com/interactive/2013/10/25/us/politics/25kochs-document2.html?ref=politics) (same); Laurel

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in my view, is the real reason so many powerful people seem so intent on doing everything they

can to maintain unemployment at high levels even though it is not necessarily in their economic

interest to do so. It is the intoxicating nature of the ability to exercise domination over others

that drives their views, and recognizing this, it offers them a way of controlling others by giving

them a taste of the ability to dominate others too.

For example, dominating the many and getting them to go along with it by offering them

the ability to dominate the few was a strategy used to great effect by the Southern Aristocracy at

the end of the Reconstruction era to defeat what was then a rising Populist Movement composed

of both poor whites and poor blacks who were agitating against exploitive wages. As Martin

Luther King, Jr. reminded us some time ago

Toward the end of the Reconstruction era, something very significant happened. That is what was known as the Populist Movement. The leaders of this movement began awakening the poor white masses and the former Negro slaves to the fact that they were being fleeced by the emerging Bourbon interests. Not only that, but they began uniting the Negro and white masses into a voting bloc that threatened to drive the Bourbon interests from the command posts of political power in the South.

To meet this threat, the southern aristocracy began immediately to engineer this development of a segregated society. I want you to follow me through here because this is very important to see the roots of racism and the denial of the right to vote. Through their control of mass media, they revised the doctrine of white supremacy. They saturated the thinking of the poor white masses with it, thus clouding their minds to the real issue involved in the Populist Movement. They then directed the placement on the books of the South of laws that made it a crime for Negroes and whites to come together as equals at any level. And that did it. That crippled and eventually destroyed the Populist Movement of the nineteenth century.

Rosenhall, "FPPC Drops Hammer on Campaign Donors," The Sacramento Bee (October 25, 2013); Nicholas Confessore, "Tax Filings Hint at Extent of Koch Brothers' Reach," The New York Times (September 12, 2013); Eric Lipton, "Billionaire Brothers' Money Plays Role in Wisconsin Dispute," The New York Times (February 21, 2011); Nicholas Confessore, "$122 Million in 2012 Spending by Koch Group," The New York Times (November 14, 2013); Jane Mayer, "Covert Operations: The Billionaire Brothers Who Are Waging a War Against Obama," The New Yorker (August 30, 2010). And the Koch brothers show no signs of letting up. See Carl Hulse and Ashley Parker, “Koch Group, Spending Freely, Hones Attack on Government,” The New York Times (March 24, 2014); Matea Gold, “Koch-Backed Political Coalition, Designed to Shield Donors, Raised $400 Million in 2012,” Washington Post (January 5, 2014); Communication, The Koch Network: A Cartological Guide,” OpenSecrets Blog (January 7, 2014) (available at http://www.opensecrets.org/news/2014/01/koch-network-a-cartological-guide.html).

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http://www.opensecrets.org/news/2014/01/koch-network-a-cartological-guide.html


If it may be said of the slavery era that the white man took the world and gave the Negro Jesus, then it may be said of the Reconstruction era that the southern aristocracy took the world and gave the poor white man Jim Crow. He gave him Jim Crow. And when his wrinkled stomach cried out for the food that his empty pockets could not provide, he ate Jim Crow, a psychological bird that told him that no matter how bad off he was, at least he was a white man, better than the black man. And he ate Jim Crow. And when his undernourished children cried out for the necessities that his low wages could not provide, he showed them the Jim Crow signs on the buses and in the stores, on the streets and in the public buildings. And his children, too, learned to feed upon Jim Crow, their last outpost of psychological oblivion.36

And arguably, the same thing is going on now. The 1 percent are dominating the vast

majority of the employed by making them fear that they could very easily join the unemployed,

and also assuaging the pain of this in part by putting them in a position to dominate others, such

as immigrants, women, the poor, the old, the beneficiaries of “affirmative action,” and so on.

The interesting thing about how this attraction to social or interpersonal fascism operates is that

when it focuses on the government, the view coincides with liberalism. It can thus exist under

either political fascism or liberalism. Those with a taste for the ability to dominate others are

concerned by government power, not because they fear domination by the government—or at

least not only because they fear domination by the government, but because they fear that

government regulation generally limits their own ability to dominate others. But to a liberal,

domination by private parties is (or at least should be) just as objectionable and nefarious as

domination by the government.

Note also that when I use the word "liberal" here, I am using it its most inclusive sense,

referring to those who draw their greatest inspiration from the enlightenment, not only to those

36 Martin Luther King, Jr., “Address at the Conclusion of the Selma to Montgomery March” (March 25, 1965) (available at http://mlk-kpp01.stanford.edu/index.php/encyclopedia/documentsentry/doc_address_at_the_conclusion_of_selma_march/). Note that throughout this passage and indeed the rest of his speech, King draws on the work of the eminent Southern Historian C. Vann Woodward, The Strange Career of Jim Crow (New York: Oxford University Press, 1955).

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http://mlk-kpp01.stanford.edu/index.php/encyclopedia/documentsentry/doc_address_at_the_conclusion_of_selma_march/

http://mlk-kpp01.stanford.edu/index.php/encyclopedia/documentsentry/doc_address_at_the_conclusion_of_selma_march/


on the moderate left but also from those we would consider traditional conservatives. Consider,

for example, this comment from Michael Oakeshott, one of the most respected advocates of

traditional conservatism:

The freedom which the English libertarian knows and values lies in a coherence of mutually supporting liberties, each of which amplifies the whole and none of which stands alone. Further, with us power is dispersed among all the multitudes of interests and organizations of interest which comprise our society. We do not fear or seek to suppress diversity, but we consider our freedom to be imperfect so long as the dispersal of power among them in incomplete, and to be threatened if any one interest or combination of interests, even though it may be the interest of a majority, acquires extraordinary power.

In short, we consider ourselves to be free because no one in our society is allowed unlimited power—no leader, faction, party or "class," no majority, no government, church, corporation, trade or professional association or trade union. The secret of its freedom is that it is composed of a multitude of organizations in the constitution of the best of which is reproduced that diffusion of power that is characteristic of the whole.37

In other words, as Oakeshott notes, domination by the government is indeed a threat to everyone

but this is not the only source of such a threat. For most people, in fact, it is the employment

relationship that gives rise to daily opportunities for domination to occur. Oakeshott again:

The greatest threats to freedom have come from the acquisition of extraordinary proprietary rights by the government, by great business and industrial corporations and by trade unions, all of which are to be regarded as arbitrary limitations of the right of private property. . . That a man is not free unless he enjoys a propriety right over his personal capacities and his labour is believed by everyone who uses freedom in the English sense. And yet no such right exists unless there are many potential employers of his labour. The freedom which separates a man from slavery is nothing but a freedom to choose and to move among autonomous, independent organizations, firms, purchasers of labour, and this implies private property in resources other than personal capacity. Whenever a means of production falls under the control of a single power, slavery in some measure follows.38

37 Michael Oakeshott, "The Political Economy of Freedom," in Rationalism in Politics and Other Essays (Indianapolis: Liberty Fund, New and Expanded ed., 1991), pp. 384-406, p. 388-389. 38 Ibid. at p. 393-94.

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And what this tells us is that those who are in a position to employ others to labor for them may

be opposed to efforts to alleviate unemployment, not because they are trying to protect their

bottom line, or not only because they are trying to protect their bottom line, but because high

unemployment increases both the number and scope of opportunities for domination within one

of the key relationships that arise in almost every individual life and those that are on the side of

this relationship that have such opportunities often do not want to relinquish the liberty to

exercise them.39

In other words, the battle to deal decisively with the problem of high unemployment is

not simply a battle over means. It is also a battle over ends. It is a battle between those who

draw their moral inspiration primarily from the enlightenment, and those who draw theirs

primarily from ancient Greece and Rome; that is, from perfectionists and plutocrats. For it is to

ancient Greece and Rome that contemporary philosophers trace their concept of what is now

called "republican liberty"—the idea that freedom in its most meaningful sense describes

freedom from domination by others.40 But the concept of republican liberty has a dark side too.

For in ancient Greece and Rome, freedom from domination by others also meant freedom to

dominate others, including the freedom to hold slaves. In other words, both freedom from

domination and freedom to engage in domination were characteristics of those who were free

men in the ancient world, especially for members of the elite, for status and power and therefore

membership in the elite was to some extent measured by the number of slaves one held—it was

39 See Paul Krugman, "The Fear Economy," The New York Tines (December 26, 2013) (noting that the "quits" rate—the percentage of people voluntarily leaving their jobs each month—goes up during periods of high unemployment and down during periods of low unemployment, and is currently far below where it was before the beginning of the Great Recession). 40 See generally “Symposium: Republicanism and Global Justice,” European Journal of Political Theory 9:1 (2010).

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an indicator not only of one's wealth but also one's place in society.41 Thus, the idea of "freedom

from" was inextricably intertwined with the idea of "freedom to," and while there is no

conceptual reason why this has to be the case, one can see how these ideas can become confused

and intertwined in the heads of those who view themselves as members of the elite. Indeed, the

ability to dominate is attractive precisely because it is so tied up with the ancient belief that

special privileges and powers are entitlements of the ruling class.42

This idea is perhaps most vividly articulated and defended in recent times by Friedrich

Nietzsche. In On the Genealogy of Morality, you may recall, Nietzsche distinguished between

what he called "slave morality" and the "morality of the ancients."43 The morality of the

ancients, he claimed, was all about self-affirmation—it found everything it needed inside itself:

strength, beauty, power, and so on. It was a belief in the virtues of domination, which he

characterized as the morality of the nobility. Slave morality on the other hand, defined itself by

reference to the other: the other is evil, therefore I am good, was the reasoning Nietzsche

contended was at work here. And we can see this Nietzschean brand of self-affirmation in much

of the opposition to government efforts to alleviate unemployment. There is a palpable contempt

for those who are excluded from society, and admiration for those at the top, who are assumed to

have got there exclusively by their own efforts, the fact that they are at the top serving as

irrefutable evidence that they are morally good. For the trick of self-affirmation is that like 41 See generally, Keith Bradley, Slavery and Society at Rome (Cambridge: Cambridge University Press, 1994): Sandra R. Joshel, Slavery in the Roman World (Cambridge: Cambridge University Press, 2010): Moses I. Finley, Ancient Slavery and Modern Ideology (New York: Viking Press, 1980); M. I. Finley, "The Freedom of the Greek Citizen in the Ancient World," Talanta 7 (1976); Moses I. Finley, Democracy Ancient and Modern (London: Chatto and Windus: 1973).42 Note that I am not arguing that the modern concept of republican liberty necessarily entails both freedom from domination and the freedom to dominate. I am quite sure those who have articulated the modern concept of republican liberty have constructed a concept that requires no such thing. I am merely suggesting that in looking into the past for this idea, the advocates of republican liberty may have missed the fact that the ancient concept of republican liberty had both a liberal and an anti-liberal side, and that in borrowing just the liberal side, they have really re-invented the concept more than resurrected it. 43 Friedrich Nietzsche, On the Genealogy of Morality (Cambridge: Cambridge University Press, 1994).

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virtue theory, it transmits moral quality from character to action: I am good; I do x; therefore x is

good.44 Of course, there is a circularity in this kind of reasoning that is perverse, for the

assessment of character it is based on is mere self-assessment, but this does have a long tradition

among elites. Real moral evaluation is too difficult; success, or more precisely monetary

success, becomes the proxy for measuring moral worth by those too lazy or perplexed to engage

in methods of moral evaluation that are more complex. And the sense of moral entitlement this

generates among those who see themselves as part of the elite makes them yearn for a time when

the master-servant relationship applied not just within the home, but actually between the elite

and everyone else, and to resist anything that threatens to undermine the self-congratulatory

gratification that such institutionalized attitudes of respect and deference usually bring. And this,

I submit, is what is behind the most disturbing aspect of the opposition to government efforts to

reduce unemployment.

For those of you who are skeptical that such motivation could indeed lie behind some of

the opposition to government efforts to address unemployment, you merely need to look again at

the attitudes of certain members of the economic elite. Contempt for the unemployed and even

for the working poor is high, and the elite feel sufficiently comfortable expressing this contempt

that they are willing to do so quite openly in some of their more candid moments. They do not

view the less fortunate members of the society as less fortunate, for if fortune can be the cause of

disadvantage is can be the cause of advantage too, and this conflicts with the elite's own image of

its self-worth. On the contrary, less fortunate members of society are viewed as parasites, living

44 For some recent experimental studies suggesting this kind of thinking is indeed more common among the rich than the poor, see Michael W. Kraus, Paul K. Piff, Rodolfo Mendoza-Denton, Michelle L. Rheinschmidt, and Dacher Keltner, "Social Class, Solipsism, and Contextualism: How the Rich Are Different from the Poor," Psychological Review 119 (2012): 546-572; Michael W. Kraus, Serena Chen, and Dacher Keltner, "The Power to be Me: Power Elevates Self-Concept Consistency and Authenticity," Journal of Experimental Psychology 47 (2011): 974-980; Michael W. Kraus and Dacher Keltner, "Signs of Socioeconomic Status: A Thin-Slicing Approach," Psychological Science 20 (2009): 99-106.

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off the hard work and self-discipline of the more talented and industrious majority, although a

slender majority it is. Of course, there is a long history of such attitudes—we can see it, for

example, in the remarks of Charles Edward Trevelyan, the British official in charge of relief

efforts for the great Irish famine of 1847. Trevelyan complained that the “great evil with which

we have to contend [is] not the physical evil of the famine, but the moral evil of the selfish,

perverse and turbulent character of the people.”45 And we can see this same attitude today

reflected in the increasing use of words like "scrounger" and "shirker" to describe the out-of-

work in the British tabloid press.46 In the US, in turn, we can see it behind the recent guide

published by McDonald's offering practical tips on how its workers can subsist on poverty wages

—a guide which tells them all the need to do is get a second job and stop squandering their funds

on luxury items like heat and health care.47 Perhaps the most candid expression of this attitude in

our time, however, can be found in the remarks of Mitt Romney, the Republican presidential

candidate for President in 2012, at what he thought was a private off-the-record speech at a fund-

raising dinner for wealthy supporters:

There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe that government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it. That that's an entitlement. And the government should give it to them. And they will vote for this president no matter what. And I mean, the president starts off with 48, 49, 48—he starts off with a huge number. These are people who pay no income tax. Forty-seven percent of Americans pay no income tax. So our message of low taxes doesn't connect. And he'll be out there talking about tax cuts for the rich. I mean that's what they sell every four

45 See Terry Golway, Machine Made: Tammany Hall and the Creation of Modern American Politics (New York, W.W. Norton & Company, 2014), p. xii. 46 See Aditya Chakrabortty, "Austerity? Call It Class War—and Heed This 1944 Warning from a Polish Economist," The Guardian (January 14, 2013). 47 See Daniel Gross, "McDonald's and Visa Conjure Fantasy Budget for Low-Wage Employees," The Daily Beast (July 16, 2013); Peter S. Goodman "McDonald's Budget Plan Leaves Out Critical Line: Corporate Welfare," The Huffington Post (July 17, 2013).

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years. And so my job is not to worry about those people—I'll never convince them that they should take personal responsibility and care for their lives.48

In other words, for at least some of the economic elite, the old cliché is true: the rich are unable

to empathize with the lives and problems of the poor—they just cannot understand how those

beneath their perceived social status live or experience life.49

Not that there is anything new in this—the aristocracy has treated moral worth as

equivalent to success for thousands of years.50 Indeed, this particular combination of arrogance

and ignorance is what Jürgen Habermas sees as typical of those engaged in what he describes as

the "colonization of the lifeworld."51 Rather than making an effort to understand and reflect on a

set of independently-justified and finely-tuned moral standards rooted in the history and

traditions of our common life, the intellectually limited and lazy and, most importantly, those

who simply want to find a justification for their own selfishness and self-absorption, look for an

48 MoJo News Team, "Full Transcript of the Mitt Romney Secret Video," Mother Jones (September 19, 2013) (available at http://www.motherjones.com/politics/2012/09/full-transcript-mitt-romney-secret-video). For a partial list of the expression of similar sentiments by other members of the 0.01 percent, see Paul Krugman, "Plutocrats Feeling Persecuted," The New York Times (September 23, 2013). See also Reuters, "John Boehner is Sick Of Unemployed People That Would 'Rather Just Sit Around'," Huffington Post (September 18, 2014) (quoting John Boehner, Speaker of the US House of Representatives, from an address to the American Enterprise Institute: "this idea that has been born, maybe out of the economy over the last couple years, that you know, I really don't have to work. I don't really want to do this. I think I'd rather just sit around. This is a very sick idea for our country)." See also Lauren Sher, "CNBC's Santelli Rants About Housing Bailout," ABC News (February 19, 2009) (available at http://abcnews.go.com/blogs/headlines/2009/02/cnbcs-santelli/) (the rant that gave birth to the Tea Party movement).49 See Daniel Goleman, "Rich People Just Care Less," The New York Times (October 5, 2013). This particular combination of arrogance and ignorance is what leads people to embark on what Jürgen Habermas calls the "colonization of the lifeworld." See Jürgen Habermas, A Theory of Communicative Action, Volume 2: Lifeworld and System (Boston: Beacon, 1987), pp 332- 373, esp. p. 355ff. Rather than making an effort to articulate and reflect on a set of nuanced sophisticated standards by which we can judge what it means to live a moral life, the morally lazy among us look for an easy proxy by which they can judge their own and others moral worth, and currently in our society that convenient proxy turns out to be money. Ibid. at 293. Moral evaluation thereby becomes a form of self-affirmation, reconstructed as a perverse form of virtue theory: I am virtuous, so what I do must be virtuous, and those who do not do as I do must be vicious. Not that there is anything new in this—as Nietzsche pointed out long ago, the morality of the aristocracy always treats moral worth as equivalent to success. For further discussion of this point albeit in a slightly different context, see N. E. Simmonds, "Justice and Private Law in a Modern State," Queensland Law Journal 25 (2006): 229-252, 231 and "The Bondwoman's Son and the Beautiful Soul," American Journal of Jurisprudence 58 (2013): 111-133, 125. 50 See Friedrich Nietzsche, On the Genealogy of Morality (Cambridge: Cambridge University Press, 1994), pp. 11-37.51 See Jürgen Habermas, A Theory of Communicative Action, Volume 2: Lifeworld and System (Boston: Beacon, 1987), pp 332- 373, esp. p. 355ff.

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easy proxy by which they can judge their own and others moral worth, and in our society this

convenient proxy turns out to be money.52 And if money is indeed the sign of moral worth, lack

of money is the sign of moral undeservingness and a reason not for help but for reproach and

reprobation.53

Of course, those who hold such attitudes see nothing hypocritical about this.

Introspection among this faction of the elite is non-existent; there is no recognition that they

themselves draw substantial benefits from the public purse, or if there is, that this is anything less

than fully deserved and paid for through their contribution to society.54 Witness the blatant

ingratitude among the financial sector when their jobs were saved at taxpayer expense, and the

lack of any shame behind paying themselves huge bonuses out of such funds. For example,

when asked about the "uproar" over bonuses paid by American International Group ("AIG")

using money that the taxpayers had contributed to bail out the company, AIG's CEO Bob

Benmosche stated "[the uproar over bonuses] was intended to stir public anger, to get everybody

out there with their pitch forks and their hangman nooses, and all that—sort of like what we did

in the Deep South [decades ago]. And I think it was just as bad and just as wrong." 55 In other

words, protesting the payment of bonuses by firms that so badly mishandled their businesses that

they had to be bailed out by the taxpayers is as inappropriate according to Benmosche as

lynching civil rights campaigners was in the old Deep South. Really. And while Benmosche

52 Ibid. at 293. 53 For a discussion of the rise and persistence of this attitude amongst some segments of the population, see Kristina Cooke, David Rohde, and Ryan McNeill, "The Undeserving Poor," The Atlantic (December 2012). 54 See Nicholas Kristoff, “A Nation of Takers?” The New York Times (March 26, 2014). This idea—that the rich are rich because they unquestionably deserve to be given their contribution to society—is also popular among their defenders in the academy. See, e.g., N. Gregory Mankiw, "Defending the One Percent," Journal of Economic Perspectives (forthcoming) (draft dated June 7, 2013) (available at http://www.cultureofdoubt.net/download/docs_cod/defending_the_one_percent.pdf).55 See Leslie Scism, "AIG's Benmosche and Miller on Villains, Turnarounds and Those Bonuses," The Wall Street Journal (September 23, 2013).

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subsequently backed off those remarks when they caused a stir, he merely stated he "never meant

to offend anyone" by his comment, not that he has come to see that his analogy was wrong.56

Another popular claim made by one percenters is that attacks on them are reminiscent of

the attacks made by the Nazis on the Jews.57 While some of those who have made this claim

have also later “regretted” using that particular analogy, some have defended it, and even those

who have expressed regret have expressed a pretty limited form of regret, for they (like

Benmosche) still do not think their substantive point (that the one percent are being grossly and

unfairly vilified) is wrong.58 In any event, to Benmosche and those who think like him, receiving

continuous and ever-increasing amounts of compensation is their right because their

advancement is (or should be) what society is all about.59 And once again, this is the very

concept of the purpose of society we find in Nietzsche—the idea that the goal of social

cooperation is not to promote the common good but to enable and thrust forth a few great men.60

And yes, those with a Nietzschean bent do indeed usually mean men. There is accordingly a

direct connection between the opportunities for interpersonal domination that high rates of

56 See Leslie Scism, "AIG's Benmosche Backs Off Inflammatory Comments," The Wall Street Journal (September 24, 2013) (noting that Benmosche had also made similar comments back in 2009). For further examples of such shameless bonus-taking, see Reiff, Exploitation and Economic Justice in the Liberal Capitalist State, pp. 141-146. 57 See Paul Krugman, “Paranoia of the Plutocrats,” The New York Times (January 26, 2014). 58 See Katie McDonough, “Billionaire Sam Zell Defends Another Billionaire on a Network Owned by a Billionaire,” Salon (February 7, 2014) (available at http://www.salon.com/2014/02/07/billionaire_sam_zell_defends_another_billionaire_on_a_network_owned_by_a_billionaire/); David Streitfeld, “Tom Perkins, Defender of the 1% Once Again,” The New York Times (February 14, 2014); Evelyn M. Rusli, “Tom Perkins Regrets His Nazi Comparison, but not the Message,” The Wall Street Journal (January 27, 2014); Michael J. De La Merced, “Schwarzman’s Unfortunate War Analogy,” The New York Times (August 16, 2010) (updated with Schwarzman’s limited apology).59 See the comments made recently by Boris Johnson, the Conservative Mayor of Mayor, who lambasted just about everyone for bullying "zillionaires," who he said should actually be in for "automatic knighthoods." See Adam Withnall, "Boris Johnson Says Super-Rich Are 'Put-Upon Minority' Like Homeless People and Irish Travellers," The Independent (November 18, 2013). See also David A. Graham, “Tom Perkins Has a Fascinating, Radical, Un-American Voting Plan,” The Atlantic (February 2014) (discussing Perkin’s view that the rich should get more votes than the poor).60 See, e.g., Friedrich Nietzsche, "The Greek State," in On the Genealogy of Morality (Cambridge: Cambridge University Press, 1994), pp. 176-186.

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http://www.salon.com/2014/02/07/billionaire_sam_zell_defends_another_billionaire_on_a_network_owned_by_a_billionaire/


unemployment bring and the recent "war on women" currently being waged by the American

right.61 Something like this desire is also behind the relentless attack on public unions and even

private unions now taking place in certain states—this is an expression of the attitude that

workers must know their place, and their place is not at the table, but standing discreetly a few

steps behind it.62 And there are other places where this emerging desire for interpersonal

domination is stepping out as well. For example, we are now seeing "serious" people claiming

that we should rethink our long term commitment to encouraging home ownership and allow the

landlord-tenant relationship—yet another relationship that is rife with opportunities for

domination—to rise again in its place.63 Which indeed is exactly what is happening—by the end

61 See generally Editorial, "The War on Women," The New York Times (February 25, 2011); Editorial, "The Campaign Against Women," The New York Times (May 19, 2012). 62 For a detailed discussion of the nature and extent of these attacks, see Gordon Lafer, "The Legislative Attack on American Wages and Labor Standards, 2011-2012," EPI Briefing Paper #364 (Washington, D.C.: Economic Policy Institute, October 31, 2013). 63 See generally Eduardo Porter, "More Renters, Less Risk for Wall St.," The New York Times (October 28, 2014) (quoting, for example, Shelia C. Bair, Head of the Federal Deposit Insurance Corporation during the mortgage bubble and its implosion, questioning whether we should continue to encourage home-ownership for the less than wealthy); Andrew Oswald and Richard K. Green, "Debate: Should Home-Ownership be Discouraged?" The Economist (September 19, 2012); William D. Cohan, "Why Wall Street Loves Houses Again," The Atlantic (October 2013) (discussing, inter alia, the purchase of some 32,000 single family homes out of foreclosure for $5.5 billion by the Blackstone Group, a Wall Street hedge fund, which intends to rent them out to families that can no longer qualify for home loans or afford the requisite down-payment); Michael Corkery, “Wall Street’s New Housing Bonanza,” The New York Times (January 29, 2014) (putting single-family rental industry at $1.5 trillion); Matthew Goldstein, "Soured Mortgages Attract Institutional Dollars," The New York Times (April 27, 2014 (putting the number of US homes now owned by Blackstone at 44,000). See also Shaila Dewan, "Home Buyers Are Scarce, So Renters Take Their Place," The New York Times (December 4, 2013) (homes built for rental now at record high); Annie Lowrey "Few Places to Go," The New York Times (December 9, 2013) (demand for rental housing has continued to climb as "many Americans have lost their mortgaged homes and chosen to rent. Others were unable to obtain financing for a purchase, because of a loss of income or tighter credit standards"); Shaila Dewan, "In Home Loans, Subprime Fades as a Dirty Word," The New York Times (June 28, 2014) ("more than 12.5 million people who might have qualified for a home loan before the crash have been shut out of the market" according to Mark Zandi, chief economist for Moody's Analytics). Indeed, the rental business is becoming so profitable now that hedge funds are beginning to take profits by selling these homes to each other, and even individual investors are starting to get not the purchase-to-rent market. See Matthew Goldstein, "Investors Who Bought Foreclosed Homes in Bulk Look to Sell," The New York Times (June 27, 2014); Matthew Goldstein, "American Homes Acquires Rival in Buy-to-Rent Business," The New York Times (July 1, 2014); Lisa Prevost, "Single-Family Homes as Rentals," The New York Times (July 17, 2014). This, in turn, is pushing the prices of homes up, making them even more unaffordable to an even larger group of people. See Floyd Norris, "Investors Are Pushing Starter-Home Prices Up," The New York Times (July 4, 2014).

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of the third quarter of 2014, home ownership in the United States hit a near 20-year low,64 while

compared to 2004, the number of renters had risen by nearly 25 percent.65 And yes, as you might

expect rents are now going up—way up, and so are evictions.66 In any event, if we take all these

manifestations of this brand of Nietzschean elitism together and the desire for domination over

others this entails, we can see why some business leaders and industrialists might express

hostility toward the poor and might oppose efforts to provide government assistance to the

unemployed at the same time they seek more government benefits for themselves without seeing

the hypocrisy seemingly built-in to their position.

The bottom line is that if we asses people in the Nietzschean way—that is, on the basis of

who they (think they) are rather than what they have actually done, and then evaluate what they

do on the basis of this pre-determined self-assessment of their character—there is nothing

inconsistent with opposing aid to the poor and supporting it for the rich. For if the poor are

parasites, they deserve no assistance from the more successful members of society, while if the

rich are wealth and job creators, providing them with assistance is a well-deserved reward for

their already magnanimous contribution to society and not an example hypocritical

inconsistency.67 This, for example, is how people like US Representative Stephen Fincher,

64 See Reuters, "Home Ownership Approaches 20-Year Low as Renting Rises.," The New York Times (October 28, 2014). For a complete set of the relevant statistics, see Robert R. Callis and Melissa Kresin, "Residential Vacancies and Home Ownership in the Third Quarter 2014," U.S. Census Bureau News (Washington, D.C.: U.S. Department of Commerce, October 28, 2014) (available at http://www.census.gov/housing/hvs/files/qtr314/q314press.pdf). Even more disturbingly, more and more higher-end purchases, especially in urban areas, are not even being used as primary residences—they are being used as secondary residences and left unoccupied for most of the year. See Julie Satow, "Pied-à-Neighborhood: Pieds-à-Terre Owners Dominate Some New York Buildings," The New York Times (October 24, 2014). 65 See Floyd Norris, "More Americans Are Preferring the Lease to the Mortgage," The New York Times (October 31, 2014).66 See Shaila Dewan, "In Many Cities, Rent is Rising Out of Reach of Middle Class," The New York Times (April 14, 2014) and "Evictions Soar in Hot Market; Renters Suffer," The New York Times (August 28, 2014); Ian Lovett, "As Housing Costs Soar, San Francisco Seeks Ballot Solution," The New York Times (October 2, 2014).67 For further discussion of the history of this view among those on the American Right, see Jennifer Szalai, "Just Deserts," The Nation (November 19, 103).

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Republican of Tennessee, can justify their opposition to food stamps for the poor (even though

cuts to this program threaten to bring back breadlines to the US for the first time since the 1930s)

at the same time they support legislation under which they would personally receive millions of

dollars in farm subsidies.68 At least this is the thought process that self-affirmation seemingly

supports.

Moreover, there should really be nothing surprising in the fact that some people hold

these attitudes. We fully expect people to act in their economic self-interest even when this

conflicts with the economic interest of the community as a whole; why should we not expect

people to exhibit the same kind of psychological egoism when it comes to their negative liberty?

In a liberal society, of course, negative liberty is an analytical concept—a way of determining

when freedom (the opportunity to act in ways we have the capacity to act without interference

from other human agents) is infringed, or rather when that freedom is infringed in a certain kind

of way. It is not a moralized concept, for it does not tell us when such infringement is

prohibited, permitted, or required and when it is not—some other concept of political morality

within liberalism is needed to do that. Negative liberty merely tells us when there has been an

infringement, and thus when there is something that needs justification—it does not provide that

68 See Paul Krugman, "Hunger Games, U.S.A.," The New York Times (July 14, 2013); Editorial, "More Hunger for the Poorest Americans," The New York Times (December 24, 2013) (noting that while food stamps benefits for 850,000 of the nation's poorest households are being drastically cut, crop insurance subsidies for farmers are being increased); Lee Fang, “Farm Bill Cuts $8 Billion in Food Stamps, Preserves Handouts to Koch Industries,” The Nation (February 5, 2014). See also Ron Nixon, “Farm Bill Compromise Will Change Programs and Reduce Spending,” The New York Times (January 27, 2014); Ron Nixon, “Senate Passes Long-Stalled Farm Bill, with Clear Winners and Losers,” The New York Times (February 4, 2014) (under new farm bill, “Farmers fared better than the poor”). For a discussion of just how devastating these cuts in food stamps can be on the poor, see Kim Severson and Winnie Hu, "Cut in Food Stamps Forces Hard Choices on Poor," The New York Times (November 7, 2013); Teresa Tritch, "Breadlines Return," The New York Times (November 26, 2013); Patrick McGeehan, "Brooklyn Pantry Struggling to Help Fill Gap Left by Federal Cuts to Food Stamps," The New York Times (November 25, 2013). And remember, "half of all American children will at some point during their childhood reside in a household that uses food stamps for a period of time." Mark R. Rank, "Poverty in America Is Mainstream," The New York Times (September 2, 2013).

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justification nor suggest that no such justification is possible.69 But if we treat negative liberty as

a fundamental interest or, even more strongly, as a fundamental right, as some people do, rather

than as an analytical concept, of course people are going to want to maximize their negative

liberty at the expense of the negative liberty of others, just as people want to maximize their

wealth, even if this means less wealth for other people. The more I can do free from your

interference the better for me, even if this means there is less you can do free from my

interference.

There is a difference between acting to maximize your economic self-interest, however,

and acting so as to maximize your own personal share of negative liberty. Acting in your

economic self-interest, even when this is at the expense of the economic self-interest of others, is

not necessarily anti-liberal, for it is not anti-liberal when this is done within the confines or a

well-regulated and orderly competitive market and does not involve undermining that market

itself. Acting in a way that maximizes your negative liberty at the expense of a similar kind of

negative liberty for others, however, is necessarily anti-liberal. To see why, consider this.

Exactly what makes a society 'liberal" is subject to some dispute, but most people agree that

liberals treat equality is a fundamental right. While there are many ways of cashing out the

concept of equality, and there can indeed be disagreement about how to do this among various

kinds of liberals, when it comes to how equality interacts with negative liberty it is hard to see

how a liberal society committed to some conception of equality could come to any other

conclusion than negative liberty should be equally distributed. Thus, the desire to increase one's

negative liberty at the expense of another's negative liberty is a desire that can be supported by

the government only in a non-liberal society. In its extreme version, of course, the kind of

69 See Isaiah Berlin, “Two Concepts of Liberty,” in Liberty, ed. Henry Hardy (Oxford: Oxford University Press, 2002), pp. 166-217, pp. 172-173, 214-216.

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society which is most hospitable to fostering the unequal distribution of negative liberty and the

interpersonal relationships such an unequal distribution supports is a fascist society, for that kind

of society actively promotes the domination by some (the elite) of others. Indeed, this feature—

the public support of the right of some to dominate others—seems to me at least to go a long way

toward identifying a particular society as fascist.

But there are less extreme versions of this anti-liberal attitude toward negative liberty as

well. American for example, was a liberal society for a long time while nevertheless maintaining

the institution of slavery. So this anti-liberal nostalgia for the master-servant relationship, for a

time when people knew their place and were deferential to their betters and expected that same

kind of deference from those they saw as beneath them—in short for a class or even a caste

system—can exist within a larger mostly liberal society. People need not embrace the full

panoply of perversions acceptable in a fascist society to be nostalgic for the simplification of life

that the master-servant relationship brings. So I am not suggesting that the people who harbor

such nostalgia are crypto-fascists—I am merely suggesting that this is an anti-liberal attitude,

which can coexist with a larger liberal structure, but which is on a deeper level inconsistent with

what those committed to liberalism are supposed to believe.

To drive this point home, imagine what kind of shape the distribution of negative liberty

would take in a society that fully embraced the idea that the negative liberty was a fundamental

right, but not that the distribution of negative liberty (or any other fundamental right) had to be

equal. In such a society, of course, the whole idea of what constituted a fundamental right would

be different than it is in a liberal society, for not everyone would qualify to enjoy society's

fundamental rights. Rather, fundamental rights would primarily be rights only of the ruling elite,

for again, if fundamental rights were fundamental rights for everyone then no one could have

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more of such rights than of others. In our hypothetical society, however, some people would

have nearly unfettered negative liberty, others would have less, others would have less still, and

some would have almost none at all. Indeed, in this kind of society, where you fall on the

pecking order is key to determining how much negative liberty you hold or, even more strongly,

where you fall in the pecking order is defined by the extent to which you can dominate others, or

at least infringe their negative liberty in ways that they cannot infringe yours. In other words, in

a society that believes in equal liberty, the shape of the distribution of negative liberty looks like

a perfectly flat, horizontal line; but in a society that believes negative liberty rather than equal

liberty is a fundamental right, the distribution of negative liberty will follow more of a pyramid

structure, very much in the pattern of the distribution of income and wealth. For if negative

liberty is a fundamental right rather than a mere analytical concept, the number of people subject

to your absolute power and control is a measure of your liberty. And this is why I characterize

this view of negative liberty as being more in accord with fascism than with liberalism. The

whole organizing principle of a fascist society, after all, is that your negative liberty can only be

infringed by those above you; those below you are at your mercy. Your degree of liberty is

therefore determined in large part by the ratio of number of people you can dominate to the

number of people who can dominate you. And this is why certain people in a fascist society,

even if not everybody, can think of themselves as free.

Indeed, the late great (and very funny) political philosopher G. A. Cohen used to do a

mock lecture on what he called "the German Idea of Freedom." Taking on the persona of a Nazi-

apologist German academic, Cohen argued that "no greater freedom can be imagined for a man

than the absolute blind submission to an unjust law."70 While this was meant as a joke, of

70 See G. A. Cohen, "The German Idea of Freedom" (http://www.youtube.com/watch?v=KSNJGymnLG4).

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course, it was not as much of a joke as it may have sounded. Remember that Giovanni Gentile,

who Mussolini considered the philosopher of fascism,71 once argued that "far from being the

negation of liberalism and democracy . . . [fascism] actually aspires to be the most perfect form

of liberalism and democracy."72 In fact, Gentile insisted that liberty and freedom was at the

critical center of Fascist revolutionary thought.73 Now the kind of liberty that Gentile was

referring to here was not negative liberty but positive liberty, the freedom to live a certain kind of

idealized social life, which only the community and not the individual was in a position to

identify and select. And since the state is the perfect expression of the community in fascist

political theory, it is the state that knew best what this kind of idealized social life should be, and

it could therefore legitimately coerce or otherwise force its citizens (in the negative liberty sense)

to adopt that form of life because this is how it set them free (in the positive liberty sense). But

just because positive liberty is the concept of liberty embraced by a fascist society (and indeed

every other kind of perfectionist society as well), this does not mean that all those in such a

society have no interest in negative liberty. On the contrary, the fact that society as a whole

embraced positive liberty is what allows individuals within that society to see negative liberty as

something that individuals may try to maximize. And while the state has absolute authority over

all in a fascist society, a great deal of arbitrary power is also distributed by the government to

private citizens in such a society. So change the claim of Cohen's faux Nazi academic ever so

slightly to define freedom as "the absolute blind submission to the community's will as expressed

by one's betters" and you have a conception of freedom that fascists could easily embrace. This

71 A. James Gregor, Introduction in Giovanni Gentile, Origins and Doctrine of Fascism, trans. A James Gregor (New Brunswick, NJ: Transaction Publishers, 2002), p. xii.72 Giovanni Gentile, Origins and Doctrine of Fascism, trans. A James Gregor (New Brunswick, NJ: Transaction Publishers, 2002), p. 32.73 See A. James Gregor, Introduction in Giovanni Gentile, Origins and Doctrine of Fascism, trans. A James Gregor (New Brunswick, NJ: Transaction Publishers, 2002), p. xi. For an explanation of why Gentile thought this, see A, James Gregor, The Ideology of Fascism (New York: Free Press, 1969), pp. 210-224.

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is why ordoliberalism has been central to modern German political life but is largely unknown

elsewhere—it is (or at least it sees itself as) a reaction to fascism; its main concern is checking

the power private parties hold over others, for it was the unchecked power of private parties over

others that ordoliberals believe in large part enabled the rise of the Nazi state.74 In any event, if

the ability to exercise arbitrary power over others is part of your definition of freedom, then this

requires the obliteration of workers' power and rights in favor of their total enforced submission

to management.

Those who think of negative liberty as fundamental without an equality constraint are

indeed making a mistake, at least if they think of themselves as liberal, but unfortunately it seems

to be an increasingly common mistake among the so-called business elite. Perhaps the reason

why this view is becoming more and more common now is that it is a natural side-effect of the

spectacular rise in levels of inequality that have returned the rich to a position they last held just

before the Great Depression, perhaps not, I will not do more than speculate about this possible

connection here. In any event, if you made this mistake of treating negative liberty rather than

equal negative liberty as a fundamental individual right, you would indeed be resentful if your

authority were regulated or even challenged, especially if you owned a business or otherwise

held managerial authority over others, even if you thought of yourself otherwise as liberal or

even libertarian. And if you were in a position to treat others like objects rather than human

beings you would want the right to do so, and bristle if you were unable to. Which explains how

those trying to protect this power to dominate others can think of themselves as fighting for

74 See generally Razeen Sally, "Ordoliberalism and the Social Market: Classical Political Economy from Germany," New Political Economy 1 (1996): 233-257; Werner Bonefeld, "Freedom and the Strong State: On German Ordoliberalism," New Political Economy 17 (2012): 633-656; Volker Berghahn and Brigitte Young, "Reflections on Werner Bonefeld's 'Freedom and the Strong State: On German Ordoliberalism' and the Continuing Importance of the Ideas of Ordoliberalism to Understand Germany's Contested Role in Resolving the Eurozone Crisis," New Political Economy 17 (2012) online first.

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liberty. They are fighting for liberty—it is just a sort of liberty that liberalism categorizes as

perverse. It is a form of liberty that is personal like income or wealth rather than social, and can

therefore be the object of psychological egoism the same way that wealth and income can. It is a

form of liberty that views personal freedom as including the power to dominate others, a kind of

power that is something liberalism not only rejects but is actually dedicated to prevent.

This also helps explain why many of those who are opposed to helping the unemployed

or the uninsured or those otherwise unable to help themselves seem so ferocious and sometimes

even exhibit a willingness to be self-destructive in their opposition—they see themselves as

oppressed by the demands placed on them by others, and the last act of a man who perceives

himself oppressed, if he cannot free himself, is to bring down the house of his oppressor. But

once again, however, I feel I must caution my readers not to take me to be saying here more than

I am. I am not contending that all or most or even any of those who would oppose the idea of

full employment are best categorized as fascists in the political sense. I am merely suggesting

that there is a definite anti-liberal element to some of this opposition, and recognizing this is the

only way to explain why certain people are so violently opposed to full employment even though

this position would seem to be at least arguably contrary to their own economic interests. In a

sense they are doing exactly what I argue we all should do—they are applying a moral principle

here that overrides their immediate economic self-interest.75 It is just that the moral principle

they would apply is very different from the one I have set forth in my principle of full

employment and its associated axioms and from any other moral principle that liberalism could

plausibly endorse.

75 As Harry Binswanger recently explained in an op-ed piece defending the 1 percent in Forbes, "the real issue is not financial, but moral." Harry Binswanger, "Give Back? Yes, It's Time for the 99% to Give Back to the 1%," Forbes (September 17, 2013).

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