Robert Kuttner - Going Big: FDR’s Legacy, Biden’s New Deal, and the Struggle to Save Democracy

ALSO BY ROBERT KUTTNER

The Stakes: 2020 and the Survival of American Democracy

Can Democracy Survive Global Capitalism?

Debtors Prison: The Politics of Austerity Versus Possibility

A Presidency in Peril

Obamas Challenge

The Squandering of America

Everything for Sale: The Virtues and Limits of Markets

The End of Laissez-Faire

The Life of the Party

The Economic Illusion

Revolt of the Haves

Family Re-Union (with Sharland Trotter)

For Joan, again

Joseph E. Stiglitz

The United States, and the world, are at a fork. Somehow, we managed our way through the presidency of Donald Trump, with all his divisiveness and mendacity, and, as this book goes to press, through the worse pandemic and deepest downturn in memory. As Robert Kuttner points out forcefully in this book, there is the real possibility that President Biden will restore the progressive agenda, with all the idealism upon which it is based. It is a great transformation, one the country and the world badly need, as we face unprecedented challenges of inequality, climate change, and structural changemoving from a manufacturing economy to a service-based knowledge economy. And yet we also might plunge into an abyss of repression.

As his touchstone, and Bidens, Kuttner appropriately invokes FDR. President Franklin Delano Roosevelt presided over a grand transformation almost a hundred years ago, as we moved from an agrarian and rural economy to an urban manufacturing oneand reversed the ravages of laissez-faire that marked the Roaring Twenties as well as the Gilded Age of an earlier generation. Key parts of his legacy, such as Social Security, have become central parts of our social fabric, but other parts, such as the re-balancing of the power of workers and the taming of finance, have been eviscerated, and especially so during the four decades beginning with Carter and Reagan, during which neoliberalism, the belief that markets on their own would solve societys problems, reigned supreme. But as Kuttner rightly warns, the country could take the other forka victory for the forces of reaction in every sphere of our society.

Its a familiar story. This country was founded with a split personality, a commitment to freedom and equalityAll men are created equalresting on a bedrock of slavery. The standard narrative is that with each trauma, we emerged stronger than before. But each time, many of the advances that we made in the years immediately after the trauma were reversed in the years following: the short period of Reconstruction was followed by Jim Crow. In this century, the advances in civil rights in the 1960s, including on voting, have been at least partially undoneand the Republican Party is making concerted effort to undermine these advances even more. Moreover, the fact that progressives fended off these attacks in the past is no assurance that they will prevail now: todays battleground is different.

In this foreword, I want to put some perspective on whats at stake, what the battle is all about. We all know the skirmishes, from abortion to voting rights to unionization to curbing the power of finance and monopolies. Behind it all is a view of a Good Society, the nature of the individual, the relationship of the individual to society, and the role of markets in all of this.

I approach these issues partially from the lens of an economist: since the beginning of capitalism, there have been two views on the origins of inequality and the sources of growthwhat gives rise to the wealth of nations.

One strand focuses on rugged individualism, competition, emphasizing the central role of markets and entrepreneurship. In this perspective, greed is goodthe pursuit of self-interest leads to the well-being of society. As Adam Smith, the father of modern economics, put it, It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. It followed, in these theories, that differences in incomes were the just desertsthose who contributed more to society were correspondingly rewarded. These are the views of Smith that the right has championed.

The other view, more consistent with perspectives growing out of the Enlightenment (of which Adam Smith was one of the important thinkers), was that the wealth of nations grows out of advances in science and in mechanisms of social organizationallowing larger groups of people to cooperate. It is these that explain why our standards of living today are so much higher than they were just 250 years ago; why, after standards of living had stagnated for centuries after centuries, they finally began to soar. Collective action is central, and there is more to collective action and cooperation than that coordinated through the marketplace via the price system. Even a simple society needs rules and regulationsthe Ten Commandments being an example. But rules and regulations are even more imperative in a complex twenty-first-century society where externalitiescreated when the market produces too much of things that harm others and too little of those things that benefit othershave taken on first-order importance. The climate crisis is the result of firms and individuals producing excessive greenhouse gas emissions; the current pandemic has been aggravated by those selfishly refusing to wear masks, practice social distancing, and get vaccinatednot thinking at all of the risks they are imposing on the rest of society.

At the core of success in a modern economy are public goods, from which all benefitin particular, advances in basic scienceand markets will never invest sufficiently in those things from which everyone benefits. Indeed, had we not had the public-supported advances in biology leading to our understanding of mRNA vaccines, the pandemic would have been far worse. In short, the whole is greater than the sum of its parts.

Thus, a central tenet of modern economics is that unfettered markets cannot be relied upon, for a whole variety of reasons. Among those reasons is that markets are far less benign, even within the limited domain in which they might work, than the above quotation from Smith would suggest. Markets are typically not competitive. There are a host of ways by which some can take advantage of others, exploiting them one way or another, whether through physical forcesometimes condoned or implemented by the state, as in slaveryor simply acting on human vulnerabilities or asymmetries, in either information (where one party to a transaction knows more than the other) or market power. This interpretation of economic relations emphasizes inequalities arising not from just deserts but from one form or another of exploitation.

Despite the popular caricature of his teachings, Adam Smith had a more balanced understanding than his latter-day followers. Smith understood that the world is complex, and in his writings, he reflected on both of the perspectives Ive described. He recognized that markets only worked to advance the interests of society if there was competition. But he recognized that that was not the natural state of the economy: People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. He recognized too the dangers of an unregulated marketplace and the disadvantageous position of workers: