Wednesday, November 22, 2006

Hegemony Is The Enemy—Prelude—Milton Friedman

With the election behind us, the task before us is enormous, more enormous than most folks realize. In a pre-election post, I raised the issue of realigning elections, wave elections that fundamentally alter the party system from one era to another. A single wave election will not do it, I argued. Past history shows we need two in a row.

But even a party system realignment will not be enough to save us—not from such looming threats as global warming, for example. In this series, I argue we must grapple with something deeper than even bringing about a party realignment: we must grapple with the power of hegemony—a high-faluttin word that basically boils down to meaning a dominant ideology in drag as common sense. The recent death of economist Milton Friedman provides an opportunity for a glimpse at the workings of hegemony.

I want to begin with an obituary for Milton Friedman, which I wrote for Random Lengths News, the alternative biweekly paper I work for in the Los Angeles Harbor Area. In writing it, I was not consciously thinking of hegemony. I was thinking of pool. I was trying to sink as many balls with one shot as I could. Afterwards, comes some commentary about hegemony. Friedman, of course, is a perfect figure to talk about as a prelude to this series. With the universal heaping of praise upon him, he was a hero of hegemony. And yet...
Milton Friedman, 1912-2006

Economist Milton Friedman, 94, died on Nov. 16. He was born on July 31, 1912 in New York City to Sarah Ethel Landau and Jeno Saul Friedman, working-class Jewish immigrants from the Ukraine, then part of Austria-Hungary, and died to almost universal acclaim. Yet, ironically, his signature economic achievement—the modern resurrection of monetarism—has been virtually abandoned, his broader advocacy of laissez-faire capitalism has produced sluggish growth and widening gaps between rich and poor both in America and across the globe, and his political influence has helped bring to power a brand of social conservatism diametrically opposed to his own libertarianism.

Monetarism, for which Friedman is intellectually best known, is a school of economic theory focused on money and central banking, which in its pure form says that government should do little else, economically, aside from controlling the money supply, expanding it continuously in a steady manner. This directly contradicts Keynsian and post-Keynsian theory that says government should actively intervene to increase demand when necessary. Keynsianism fell out of favor in the 1970s, amidst stagflation and two successive oil shocks, and Friedman’s monetarism was cited as the guiding principle for Ronald Reagan and Margaret Thatcher’s economic policies.

Yet, Reagan’s enormous deficits seemed to exemplify military Keynsianism, while late 1980s/early 1990s phenomena like the 1987 stock market crash, and Japan’s prolonged stagnation underscored the inadequacy of Friedman’s inflexible money-supply prescription. His Wall Street Journal obituary admitted, “Central bankers don't follow his prescriptions for how to implement monetary policy, considering them impractical.”

Perhaps the most consistent example of Friedman’s influence can be found in the Third World, beginning after the 1973 violent overthrow of Salvador Allende’s democratically-elected socialist government in Chile by US-backed military forces. Pinochet’s military dictatorship then turned to Friedman’s students and colleagues from the University of Chicago “The Chicago Boys” to restructure its economy on radically “free market” lines. Although Friedman’s direct involvement with Chile was slight, he vigorously defended his colleagues, and the course of Chile under their guidance. The irony of “free markets” imposed by a military coup and ongoing terror never seemed to fully dawn on him.

Beyond Chile and several other military dictatorships (the “death squads”), Friedmanesque policies were then forced on a large number of Third World democracies by the World Bank and International Monitary Fund (the “debt squads”), which demanded the dismantling of government programs, even to the point of closing schools and basic health services. The resulting growth slowdown—over a period of more than 20 years—was directly contrary to Friedman’s theories, and has recently lead to a resurgence in elected leftist governments, most notably Venezuela, Brazil and (just this month) Nicaragua.

If Friedman seemed relatively untroubled by the suffering caused by his economic theories in the Third World, he was noticeably upset with the short shrift given to his libertarian views by the conservative movement, including his support for decriminalizing drugs.

“Drugs are a tragedy for addicts. But criminalizing their use converts that tragedy into a disaster for society, for users and non-users alike. Our experience with the prohibition of drugs is a replay of our experience with the prohibition of alcoholic beverages,” he wrote in an open letter to then-drug czar Bill Bennett in 1990. “Had drugs been decriminalized 17 years ago, ‘crack’ would never have been invented (it was invented because the high cost of illegal drugs made it profitable to provide a cheaper version) and there would today be far fewer addicts.”

More recently, last July, Friedman said, "What's really killed the Republican Party isn't spending, it's Iraq. As it happens, I was opposed to going into Iraq from the beginning. I think it was a mistake, for the simple reason that I do not believe the United States of America ought to be involved in aggression."

Finally, he wasn’t always opposed to government intervention, when markets failed to internalize true costs, for example. He supported London Mayor Ken Livingston’s proposal for a congestion fee for traffic in central London, and might well have supported container fees here in the ports of Los Angeles and Long Beach.

In short: His folly was enacted, while his wisdom was ignored.
This obituary points up at least two big-picture things: First, not all his ideas were equally acceptable—only the foolish ones really were. Second, the folly was most intensely embraced when applied to others in the Third World. Closer to home, the folly was more relaxed: “Central bankers don't follow his prescriptions for how to implement monetary policy, considering them impractical,” according to no less than the Wall Street Journal in its obit. These, I would argue, are central facts about how hegemony works.

The wikipedia entry on hegemony—which I’ll quote more fully in my next installment—notes the importance of independent Italian communist theorist Antonio Gramsci in developing the concept of hegemony. But it then goes on to say:
Recently, critical theorists Ernesto Laclau and Chantal Mouffe have re-defined the term "hegemony" as a discursive strategy of combining principles from different systems of thought into one coherent ideology.
The combination of diverse elements—such as libertarianism and religious conservatism, for example—into a single hegemonic discourse is absolutely crucial for us. And it’s strikingly visible in Friedman’s career, as recalled in my obituary. When it came to freeing the wealthy and powerful from the restraints of the welfare state, Friedman’s liberatianism was quite welcome into the hegemonic discourse. But when it came to legalizing drug use—drug use most associated with social outcaste groups—it went nowhere, fast. (I didn’t even mention his support for legalized prostitution. Prostitutes, of course, are, by definition, a social outcaste group.)

Similarly, the Third World is, by definition, a social outcaste group. And so there is little, if any, need to modify his most harsh perscriptions. The press release for a report by Center for Economic and Policy Research last year, "The Scorecard on Development: 25 Years of Diminished Progress," said, in part:
"The official data show a very different picture than most policymakers and the public have in mind," said economist Mark Weisbrot, Co-Director of CEPR and co-author of the report. "The number one question for the IMF and World Bank at their fall meetings this weekend should be: What has gone wrong over the last 25 years in the vast majority of developing countries?"
What’s gone wrong is that the neo-liberal attack on the welfare state has hit full force outside of the industrial core, where some measure of an institutional political resistance still exists. That’s why Friedman’s measures had to be abandoned for “more flexible” approaches here at home.

And so it is, that even a primary hero of hegemony is only listened to when he fits the script. As for the rest, it’s simply ignored, as if it never existed. Friedman himself seemed to be under no illusions about his individual importance—which was often taken as false modesty. A July 22 article in the Opinion Journal has the following passage:
Here, Mr. Friedman explains "the story of the postwar period" in the U.S. "In 1945-46, intellectual opinion was almost entirely collectivist. But practice was free market. Government was spending something like 20%-25% of national income. But the ideas of people were all for more government. And so from 1945 to 1980 you had a period of galloping socialism. Government started expanding and expanding and expanding." Mr. Friedman stopped, as if deciding whether to use the word "expanding" a fourth time, before continuing: "And government spending went from 20% to 40% of national income.

"But what was happening in the economy was producing a reverse movement in opinion. Now people could see, as government started to regulate more, the bad effects of government involvement. And intellectual opinion began to move away from socialism toward capitalism. That, in my view, was why Ronald Reagan was able to get elected in 1980." I noted, here, that Mr. Friedman, too, had some role to play in this shift in opinion. He was, characteristically, reluctant to take any credit. "I think we have a tendency to attribute much too much importance to our own words. People saw what was happening. They wouldn't have read my Newsweek columns and books if the facts on the ground hadn't been the way they were."
Of course, Friedman’s account of what happened in the real world is more than just colored by his ideology. European welfare states were much larger that the US. As this chart from the Citizen’s Guide to the 2000 Budget shows, total US government spending has never come close to 40% of GDP, and hasn’t changed much since 1981, when Reagan came into office. (The composition of spending—and revenue—is another matter.)

But Friedman is right that (1) elites saw the world this way, and weren’t the least bit inclined to share the pain of America’s relative decline in the world, if they could shift the pain entirely onto someone else, and (2) he just happened to be a convenient figure for the hegemonic discourse machine. His “legendary figure” status was a product of social need, on the part of those served by hegemony. The praise showered on him in his obituaries was payment for his services rendered. And all that foolishness about legalizing drugs and prostitution could simply, safely be ignored. It didn’t even need to be explained away.

That’s how hegemony works.