Yves here. Implicitly, in this interview, Matt Stoller is referring to the contemporary incarnation of mainstream economics, which is neoclassical economics. It is worth remembering that neoclassical economics started being formalized in the late 19th century by thinkers like Leon Walras, Carl Menger, and William Jevons. One of the reasons their ideas took hold was first, that they aspired to establish that economics was a science that could be described in mathematical terms. Second, to do so, they had to assume ergodicity, which in layperson terms means that the system has a propensity to achieve a stable equilibrium. This typically hidden assumption produced results that were very useful in beating back idea promoted by Marx and other pro-labor forces, that modern economies were unjust
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Yves here. Implicitly, in this interview, Matt Stoller is referring to the contemporary incarnation of mainstream economics, which is neoclassical economics. It is worth remembering that neoclassical economics started being formalized in the late 19th century by thinkers like Leon Walras, Carl Menger, and William Jevons. One of the reasons their ideas took hold was first, that they aspired to establish that economics was a science that could be described in mathematical terms. Second, to do so, they had to assume ergodicity, which in layperson terms means that the system has a propensity to achieve a stable equilibrium. This typically hidden assumption produced results that were very useful in beating back idea promoted by Marx and other pro-labor forces, that modern economies were unjust and needed reforming. The counter-story was that if left alone, as in in the hands of businessmen, they were naturally self-correcting. Who could or should object to this best of all possible worlds?
Another factor that increased the influence of economists was the rapid industrialization of the USSR. The fact that the Soviet Union went from a peasant country to a manufacturing power in a bit more than a generation stood as a challenge to free enterprise economies. If a command and control system could achieve gains like that, how could the West compete? Economists increasingly got a seat at the policy table for their supposed ability to boost growth, which would allow the West to afford guns and butter.
By John Siman
“The point of economics as a discipline,” Matt Stoller writes in his anti-monopoly newsletter Big, “is to create a language and methodology for governing that hides political assumptions from the public” . This is, I think, as piercing and as accurate a description of systemic government lying as can be made at this point in American history.
Stoller has been a fellow at the anti-monopoly Open Markets Institute for the past three years, and he has just in the past year published the meticulously-researched book Goliath:The 100-Year War Between Monopoly Power and Populism in addition tolaunching Big. Stoller previously worked as a senior policy advisor in both the U.S. House and U.S. Senate. (He’s only recently turned forty; he graduated from Harvard in 2000.)
My only criticism of brilliant Matt Stoller at this point in his career is that he is not Jonathan Swift. This is of course an entirely unfair appraisal, but a necessary one nevertheless. For we need — America needs — Stoller to learn how to land a Swiftian knockout punch or how to wield a Tarantino-brand flamethrower or how to throw a big bucket of mop-water into the green face of the Wicked Witch of the West.
But before we more rigorously consider what Stoller seems to lack, let’s do admire his strengths. Here’s an example of how brilliant Stoller can be: “The impeachment saga,” he tweeted on the morning the Articles were lugubriously cortèged over to the Senate, “like every other panicky nonsense that doesn’t touch real money or power, is not about going after Trump. It’s about disciplining [italics mine] wayward Democrats who don’t share the collective delusion that everything was fine until Trump showed up.”
Stoller’s insight here brings Thomas Frank’s now standard analysis of the Democrats as the party of America’s smug anti-populist liberal/creative/professional class into an even more exquisite focus. For, as Stoller observes, this class is, increasingly, a disciplinary class, defining itself by both its adherence to and its enforcement of certain articles of faith — certain indisputable narratives — certain collective delusions. And currently chief among these are, first, the delusional narrative that the unprecedentedly evil boogeyman Donald Trump was illegitimately injected into the presidency by the dastardly and all-powerful Russians; second, the delusional narrative that our neo-liberal economic orthodoxy has irrefutably proven that any and all public policies on the scale of what was once achieved during the New Deal are now and forever unworkable and, worse than that, uncool; and, third, the delusional narrative that strategically-placed Intersectionalist Inclusivity bureaucrats are at this very moment reversing many many millennia of nonstop human social injustice by means of pure moral superiority. To dare challenge any of these cherished class narratives is to be smeared with extreme prejudice by the disciplinary class for thoughtcrimes like parroting Russian talking points or waging tacky class warfare or acquiescing to structural racism-misogyny-transphobia. Or for just being a deplorable.
Indeed Stoller describes how he personally experiences this liberal class discipline: “I started out the decade the same way I’m ending it,” he tweeted on December 31: “by being condescended to by boomers who insist their politics of self-serving woke looting is pragmatic — and anyone who even mildly dissents is a fringe lunatic.” Take a look at some of Democratic Party enforcer Neera Tanden’s Twitter threads attacking “GOPutin” Stoller if you want to see some specific examples of disciplinary class action against him.
But here is a second example of his brilliance. The most compelling piece Stoller published last year in Big was a learned anti-eulogy upon the death of the titanic maker of recessions Paul Volcker:
[Volcker’s] goal [Stoller writes] was to crush wages, straight out. To give you a sense of how strongly he felt about this goal, consider that during this period, from the late 1970s to the mid-1980s, Volcker walked around with a card of union wages in his pocket to remind himself that his goal was to crush the middle class. Volcker even angered Reagan officials by keeping interest rates too high for too long. When they complained, he would pull “out his card on union wages” and note that inflation would not come down permanently until labor “got the message and surrendered.” Volcker said that the prosperity of the 1950s and 1960s was a “hall of mirrors” and that the “standard of living of the average American must decline.”
Paul Volcker was not your friend. He was your enemy; he was the enemy of all working Americans. Volcker’s scorched-earth inflation-busting was in fact a highly effective program of neo-liberal union-busting, and Volcker’s hidden political assumptions were the hidden political assumptions of American oligarchs in general: riches for the few, austerity for the many. Stoller has both the political learning and the moral courage to bring such essential populist information to light.
It’s important here that we also consider Stoller’s take on Martin Feldstein,another powerful neo-liberal economist who died in 2019, for Feldstein was Stoller’s first economics professor at Harvard, and it was, in large part, by the process of rejecting and escaping from Feldstein’s teachings, that Stoller matured as a serious critic of monopoly power and neo-liberal orthodoxy. Though not now as famous as Volcker, Feldstein was, back in 2005, along with Ben Bernanke, one of the top choices to succeed Alan Greenspan as chairman of the Federal Reserve Board. (The New York Times endorsed both— sound familiar? — Feldstein and Bernanke for the chairmanship because, one conjectures, the two were, by their elite training in the discipline, equally oblivious to the imminent global financial crisis and, as Stoller points out, equally uninterested in the fact that the FBI was at that time of an “epidemic” of mortgage fraud.)
“Feldstein was, as you know,” Stoller told me, “a conservative economist, and he was teaching basic economics at Harvard. So Harvard has this class called Ec 10 — Economics 10. And it’s the most popular class at Harvard, or at least it was. And you sit through lectures of a thousand people every week or maybe twice a week. And I took that, and I took some more advanced economics, and I really enjoyed it. But there were a bunch of assumptions baked into the way that they were doing things. But what I kind of understood at the time — but kind of didn’t — was that what Feldstein was really doing was teaching us a language for how to understand the world, a language that precluded discussing power.”
Stoller continued his intellectual coming-of-age story: “But I loved economics because there was this really rational way to understand the world — it was completely false, but it was like a perfect religion for a smart kid.”
I suggested that there is something highly creepy about going to Harvard to be indoctrinated into a very high-end collective delusion.
“Well,” Stoller said, “I would say that there may be things in the discipline of economics that correspond to reality. There may be useful insights. There may be things that are false. But all of that is incidental. Like it’s not the point. The point of economics is not to describe reality or to uncover truth [italics mine]. To the extent that it does so is incidental to what the real purpose of economics, which is to organize a language for governing.”
So who exactly, I asked, gets to govern with this language?
Economics, he responded, becomes the official public language of an aristocracy: “So the discipline of economics today,” he said, “is just dedicated to aristocracy…. Aristocrats believe that some people are fit to rule and others are not, and you have to make sure that those who are not fit to rule have no influence over governing decisions. There are a lot of different ways to do that. The way that the discipline of economics does it is that they create a mathematized language into which you can build your political assumptions, and then they imbed that mathematized language into every important governing structure.”
And what, I asked, is the point of mathematizing this language?
“The point is to hide the governing decisions from the public,” Stoller responded without missing a beat. As if the method of systemic deceit were obvious. Which I guess in a sense it is.
A bit unnerved by the ugliness of the truth, I tried to make the point that, to the extent that we like democracy, such people are our natural enemies.
“That’s right,” Stoller said. “The current discipline of economics seeks to displace people who believe in democratic mechanisms for governing.”
As I think back on this part of our conversation, I want to quibble a bit with Stoller’s use of the word aristocracy. For if we make an effort to use the word according to its historical context — going all the way back to the Ancient Greek ideal of the καλὸς κἀγαθός, of the chivalrous gentleman — we see that aristocracy has traditionally entertained charming, perhaps fantastical, visions of physically beautiful people creating beautiful art and beautiful literature and beautiful music. America’s twenty-first-century elites are, by contrast, nothing if not dogmatically anti-beauty. Do we want to describe someone like Hillary Clinton as an aristocrat? Or Jeff Bezos? I personally would prefer the word oligarchor even plutocratin this context.
But Stoller has a point in using the word aristocrat, for, by looking back seven decades to the end of the New Deal, one can trace out in the Democratic Party the growth of a powerful strain of snobbism, of effete elitism, and Stoller describes this aspirational Democratic aristocracyin compelling detail in his book Goliath. This passage about the sensibilities of then cutting-edge liberal historian Richard Hofstadterand his infatuation with the 1952 Democratic presidential nominee Adlai Stevenson — Eleanor Roosevelt’s precious darling surrogate son! — is quite illuminating:
When Republican presidential candidate Dwight D. Eisenhower [Stoller writes] defeated the more cerebral Democratic candidate Adlai Stevenson in 1952, the 36-year-old historian Richard Hofstadter panicked. Hofstadter agreed with Stevenson that the election of Eisenhower was a replacement of “the New Dealers by the car dealers.” A rising star in the elite liberal firmament, Hofstadter believed he was witnessing “an apocalypse for intellectuals in public life.” For Hofstadter, Harry Truman had been bad enough. Truman was no intellectual. He was a populist from Missouri and had never even gone to college; for Hofstadter, Truman’s “impassioned rhetoric, with its occasional thrusts at ‘Wall Street,’ seemed passé and rather embarrassing.” By contrast, the Democratic nominee in 1952 and 1956, Adlai Stevenson, was a beloved intellectual who surrounded himself with Ivy League men. Stevenson stood up to the anticommunists, but not the plutocrats; in between presidential runs, he defended the powerful communications company RCA against Eisenhower’s Antitrust Division. Stevenson opposed public funding for housing, union power, “socialized medicine,” civil rights for blacks, agricultural stabilization policies, and deficit spending. But Stevenson was eloquent and beautifully spoken, and earned Hofstadter’s ardent support (Goliath:The 100-Year War Between Monopoly Power and Populism, pp. 203-204).
As the elitist spirit embodied in figures like Hofstadter and Stevenson gradually took hold of the Democratic Party, working class citizens, Stoller observes, were increasingly pushed out of it. By the year 1975, with the arrival in Washington of the hip consumer/boomer Watergate Babies and their ouster of Wright Patman, the last great anti-monopolist, the last great populist, from the chairmanship of the House Committee on Banking and Currency, the elitist conquest of the party was made official. (Patman, I should point out, is the real hero of Stoller’s book. First elected to the House in 1928, Patman led the impeachment of Treasury Secretary Andrew Mellon in 1932 and began, Stoller writes, “the second great campaign to destroy monopoly power in America,” p. 53.) By the time pro-bank liberals pushed old Patman aside, any remnants of an effective populism in the United States had already vanished. Patman’s brand of populism is now long forgotten. We have been living in the neo-liberal world of the consumer/boomers, of the Clinton generation, for forty-five years now.
Stoller unrolls this sad phase of American history over 400-plus pages, and his profound understanding of the processes by which monopoly power has defeated populism, by which the elites have overwhelmed labor and the middle and working classes, gives him the cred not only to identify powerful economists like Volcker and Feldstein as villains in American history, not only to explain the collapse of populism as a countervailing force in our politics, but also, perhaps shockingly, to identify Barack Obama as a bad president whose legacy lingers as a kind of dead albatross around the neck of the Democratic Party.
“Two key elements characterized the kind of domestic political economy the [Obama] administration pursued,” Stoller wrote in a Washington Post editorial two months after Trump was elected president: “The first was the foreclosure crisis and the subsequent bank bailouts. The resulting policy framework of Tim Geithner’s Treasury Department was, in effect, a wholesale attack on the American home — the main store of middle-class wealth — in favor of concentrated financial power. The second was the administration’s pro-monopoly policies, which crushed the rural areas that in 2016 lost voter turnout and swung to Donald Trump” (Democrats can’t win until they recognize how bad Obama’s financial policies were, January 12, 2017).
That’s a whole heckuva lot of bad news for a would-be Democrat to absorb. Yet Stoller told me that he remains optimistic about our country’s prospects. “Well,” he said, “that’s the thing about my book. The book is fundamentally an optimistic story. It’s about how we faced these problems before, and the problems are really deep-rooted and severe, but we were able to defeat them before, and we can do it again.” I hope he’s right, but after having immersed myself in his work for several weeks, I feel more pessimistic about my country’s future than I ever have before. The fact that the rich are always endeavoring to take advantage of the poor and that the strong are forever seeking to bully the weak should be as obvious to our leaders as the fact that it gets cold in the winter. But going back to the post-New Deal America of Adlai Stevenson and Richard Hofstadter and moving forward up to and including establishment liberals Hillary Clinton and Barack Obama, the consensus of elite liberal opinion is that cold in the winter is an illusion, and that populism is just a different way of spelling deplorables. The whole point of the Democratic Experiment was to defend We, the People against aristocrats and oligarchs. Maybe Matt Stoller can reincarnate the spirits of Louis Brandeis (1856 – 1941, the nemesis of the House of Morgan) or Wright Patman (1893 – 1976, who took on Andrew Mellon) to make that happen again. Maybe he can develop Swiftian superpowers and make all the bad guys melt away with the acidity of his righteous invective. Well, I guess I’m willing to wait for a miracle. What else am I going to do?