Attack on Democracy

The standard doctrine — preached by Alan Greenspan, any number of economists, and commentators commonly — that the marvellous “new economy” is a tribute to “entrepreneurial initiative,” “consumer choice,” and other free market wonders does not stand up to even a casual look, let alone careful analysis. …

And furthermore, business leaders understand very well that high-tech industry cannot survive in such an environment, and “the government must be the savior,” as the business press explained after World War II. There are more specific matters: e.g., the illusions that Reagan was a free-marketer — in fact, he broke new postwar records in import restrictions and pouring federal funds into the economy to “reindustrialize America” and compensate for failures of American management. That extends to just about every area of the economy, including the pharmaceutical issues that are among the most serious problems of the domestic economy in the coming years. These are matters of essential significance, which large-scale human consequences, and it is important to understand them, not to be deluded by self-serving slogans.

Furthermore, these delusions are constantly used as a weapon against the weak, at home and abroad: THEY must be “liberated” from the “cycle of dependency,” as Gingrich and others like to put it, while the rich and privileged huddle under the protection of the nanny state. All of this resumes processes that have been underway for centuries, a large factor in the current division between the North and the South, and its domestic analogue. These are not small matters.

The explicit critique goes well beyond. The whole system is a radical attack on democracy. The military cover (and others like it) excludes the public from decisions about economic development, clearly crucial questions for people in any society, certainly any society that pretends to be democratic To be concrete, suppose that in the 1950s the public was given an informed choice about whether to devote its taxes to the eventual development of computers, internet, etc, which would someday be handed over to huge private tyrannies to develop further and market after the basic costs and risks of R&D had been socialized, or whether to devote those funds to other ends: education, health, livable communities, protection of an environment for their children, and innumerable other social goals. The military cover and other pretexts exclude the public from such decisions, which are the essence of a functioning democracy. Maybe an informed public would have made the same decisions as the planners in the state and business, but they plainly did not want to take the chance — a realistic judgment on their part, I think. These too are not small matters.

There are also particular issues…like the onerous and unprecedented patent regimes imposed in the grossly misnamed “free trade agreements,” which guarantee monopoly pricing rights to private tyrannies for work largely funded in the public sector. For the pharmaceutical corporations, the most profitable industry for some time, the effects have been studied by economist Dean Baker, who estimates that if the public share of R&D were to rise to 100% (thus undercutting the pretense that high costs reflect R&D expenses) and the corporations were forced to sell on the market, the savings to consumers would be extraordinary. But those issues too do not enter the arena of public discussion, in a “failed state” with democratic forms that function only in limited ways. And it goes well beyond that. The “free trade agreements” deny to the “developing countries” the methods that were used by every current rich society to reach its present state — what was called “kicking away the ladder” by the 19th century economist Friedrich List, who generalized Alexander Hamilton’s principles about state intervention in the economy, which underlie US economic development from the earliest days (as Britain before it), to a more general theory of economic development, which has been largely confirmed by the general course of economic history.

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