Toward a New Liberalism

Mike Konczal had an outstanding piece in The New Republic over the weekend about "corporatism" the new right-wing faux-populism. In it, he makes a familiar point about the nature of the economy:

Market failures and the need to provide for the common good are important, but the other important ideological innovation of the progressive era wasn’t that liberty of contract and laissez-faire were wrong, or not important. It was that they were incoherent. Contracts themselves, and the markets that evolve out of them, are created and limited through political power. There’s no way for the government to get out of the way. Between enforcing contracts and setting the contours of trade through an extensive web of tax, bankruptcy, corporate, property, and liability laws, the government creates the conditions for a modern capitalist economy.

The liberty of contract people want to elevate the daily affairs of corporations to constitutional status by treating businesses as the embodiment of their owners. But they aren’t—they are legal creations, formed and enabled by the law. All contracts, since they are enforceable through the public courts, are like mini-forms of public power, and thus are accountable to the public. As the progressive legal realist Robert Hale wrote, all private contracts are a form of “law-making by unofficial minorities.” If public power’s involvement in contracts is corporatism, then the entirety of capitalism and the last several centuries of property rights are corporatist through and through.

This becomes clearer the more you watch conservatives trying to declare various things to be on the good or bad side of corporatism. Ron Paul calls the idea that large online retailers should pay state taxes like local businesses “corporatism” between big business and government. But how is the reverse of taxing local businesses and not large national ones any less about picking winners and losers? Carney refers to Bill Gates and Warren Buffet as the good type of oligarchs because they are non-corporatists, but it’s impossible to imagine their wealth without elaborate systems of intellectual property protection or limited-liability corporate structures. The idea that these market structures happen naturally, so there’s some liberty of contract to point to guide us, instead of through a political process ideally balancing concerns about fairness, growth and efficiency, shows how deliberately blind this entire critique is to our actual economy.

This is a purely negative point. It negates the ideological (and incoherent) understanding of the economy as an entity essentially separate from the government. Both liberals and conservatives, even famous and prominent writers, seriously operate as if there is this thing called the economy over there and this other thing called the government over here. And then what happens is sometimes and in some ways the governments get involved in the economy. But anyone who reflects on it for a second realizes this isn't true at all. The economy is a program of the government. It is a subset of the things the government does. The government does national defense, it marries people, and then it sets up the system of scarcity allocation. If this was a venn diagram, the "economy" circle would fit entirely inside the "government" circle.

I think this negation should form the first move towards a new liberalism in America. Liberalism in the status quo is an ideological joke. It basically operates within the entire conservative framework with all the conservative assumptions. In addition to being wrong, these assumptions and this framework make it basically impossible for liberals to make the case for any program forcefully. At all times, the case for some government policy (often called an "intervention") has to be justified with reference to some special-case emergency reasoning.

This kind of case-by-case intervention logic, usually coupled with a pity charity notion of the welfare state as an intervenor in exceptional circumstances only, is very limited in what it can actually argue in favor of. When liberalism does actually argue for things, it has to concede that it is undertaking to disrupt the natural machinations of the free-standing market, which is always treated as being presumptively valid and legitimate (a presumption that can be overrun, but only with a special showing of extraordinary circumstances).

This ideologically incoherent liberalism is not up to the task anymore if it ever was. If liberalism is going to be able to fight things like extremely unequal distributions of wealth, inequality, and economic power, it cannot go on cognizing those things as independent phenomenon that just happen on their own. It needs to come to grips with descriptive reality and make the full-throated argument that the economy is a government program and no extraordinary justification is required in order to change the way that program operates.

But liberalism will only be able to make that case if it is willing to totally collapse out the distinction between The Economy on the one hand and The Government on the other. Collapsing out this distinction is argumentatively easy and is conveniently correct on the merits. It provides all of the rhetorical and philosophical fire power necessary to clearly and unapologetically justify the construction of a full-fledged social democratic system capable of providing to everyone security, well-being, and the genuine ability to flourish. The only difficulty here is actually getting prominent liberals to get on board.