Josef Stalin and Adolf Hitler: One dictator of the Left and one of the Right?
Photo Credit Stalin: Wikimedia Commons / Workers Library Publishers (1930)
Photo Credit Hitler: Wikimedia Commons / German Federal Archive

This post is my last essay in a series  answering  a comment by a reader Cai, who objected to elements of neoliberal ideology. You can find the original comment at the end of the post Will Automation Require Progressive Unemployment Solutions?. My answers began with the essay Concerning Ethics, Economics, and Social Reality, continued with The Growing American Ideological Conflict, and finishes with this essay. If you are new to my posts and are confused by the term “neoliberal”, allow me to make my by now obligatory remark that neoliberalism is often mistaken as conservatism in the United States. The term “conservative” as applied to most Americans so-labeled is a misnomer, just as the label “liberal” is a misnomer for progressives.

Confusion Over Political Classifications?

One of Cai’s statements  suggesting interpretation differences in the meaning of critical words, namely progressivism (or the Left) and neoliberalism (or the Right), as used by Cai and myself, is the following:

The risk of authoritarianism, I must protest, in light of history and the incandescence of our present moment, is not an affliction limited to leftists …

What this suggests to me is a long-term confusion produced by a faulty ideological taxonomy. I remember citizenship classes in high school in the early 1960s in which the Nazi regime in 1930s and 1940s Germany was described as a dictatorship of the Right, while the communism of the Soviet Union was labeled a dictatorship of the Left. The description of ideological classification at the time was that as one traversed the ideological spectrum to either extreme pole, the spectrum bent back on itself and arrived full circle at the extreme of the opposing end of the spectrum. Go far enough toward the extreme Right and you would arrive at the extreme Left, and vice versa. Automatically, you should discern the dysfunctional nature of this conventional taxonomy. How can a regime or a political party belong simultaneously to both the extreme Right and the extreme Left? Implicit in such a taxonomy is that both extreme wings become increasingly similar as the extremities are approached, which would seem to defeat the purposes of having a taxonomy at all.

In any serious discussion, the meanings of words are vitally important. Without common meanings, what results from an attempted discussion is mere confusion without any progress toward a mutually accepted conclusion. If the taxonomy described above is dysfunctional because being on the extreme Left is the same as being on the extreme Right, how can we modify it to eliminate the dysfunction?

Because there are so many ways government affects society, there are a number of ways in which government can become more authoritarian. Therefore, a natural way to describe government is as a point in a multidimensional state space. One three-dimensional attempt at dealing with this problem is the “Vossem Chart” space shown below.

This kind of attempt with multiple state variables would clearly give more precision in classifying a government’s type, but the precision would be bought at the cost of complexity. A compromise would be to define the state space and then characterize the government with the length of the vector from the origin to the government’s state point. A country’s index of economic freedom, which I have used so much, is an index of this type used to characterize a country’s economy rather than its political type. In this case, the length or norm of the vector, which is labeled the index of economic freedom, is defined as the arithmetic average of the vector components. The vectors components are just the 12 factors of economic freedom.

In a traditional political spectrum that retains the notions of Left and Right, we can employ a multidimensional state space where the length of the vector represents some quantity that becomes larger when in some sense the government moves more to the “Left” and then smaller when it moves to the “Right”, or vice versa. Then, the question of  the moment is: What quality increases as a government moves to the left?

The answer I will now suggest is rooted in my bias at looking at economic issues. It does seem as if most political issues have an extremely large component of economic questions anyway. If a government moves more to the Left, it assumes a larger role in directing the economy and gathers more economic power. I think it natural then to think about how much power is given to a government as determining how far to the left it is.

This way of thinking about the political spectrum seems even more natural when you consider what government is supposed to do. First, define the exact roles you want government to play in society. Second, once you know the roles government is to fulfill, define the powers the government will need to accomplish these roles. The more power you give the government, the farther to the Left on the political spectrum that government is. Since most power has an economic component, the more power a government has, the more socialist it is; the less power the government has, the more its economy resembles a free-market. The greater the power of government, the more to the Left it is, and the lesser its power, the more to the right it is.

We could go the full distance and actually define factors of political power, which would probably include all the economic freedom factors (actually 100 minus those factor scores) defined by the Heritage Foundation and the Wall Street Journal for their index of economic freedom. The norm of the political state vector would then become our index of political power. This then could become a tool for comparing the political and economic outcomes of different countries. However, for our purposes, it suffices to ask which ideology requires more power for the government. If any ideology is going to lead to authoritarian government, it will be the one demanding more power be amassed and centralized in the federal government.

Back in the late 1940s while Friedrich Hayek was writing his classic book, The Road to Serfdom  [E2], Hayek was probably the first to notice the incongruity of classifying Nazi Germany as a dictatorship of the Right and the Soviet Union as a dictatorship of the Left. They were both totalitarian governments and they both were socialist countries where the government totally controlled the economy. Remember that Nazi, the acronym for Hitler’s party, stands for the German language translation of the National Socialist German Workers’ Party (die Nationalsozialistische Deutsche Arbeiterpartei). The only qualitative difference between Nazi Germany and the Soviet Union was the Nazis maintained a polite fiction that the putative “owners” of German companies actually controlled them. However, economic control was completely in the hands of the German government. In the Mises Institute essay on Nazi Economic Policy, the author David Gordon writes of the Nazi economy:

No longer could the economy be described as a capitalist one. True enough, the forms of private ownership were preserved. The government did not nationalize the means of production, as in Soviet Russia. But the ostensible owners could not set prices on their own volition. The government made all essential decisions. As Mises said,

The second pattern [of socialism] (we may call it the Hindenburg or German pattern) nominally and seemingly preserves private ownership of the means of production, and keeps the appearance of ordinary markets, prices, wages, and interest rates. These are, however, no longer entrepreneurs, but only shop managers (Betriebsführer in the terminology of the Nazi legislation). These shop managers are seemingly instrumental in the conduct of the enterprises entrusted to them; they buy and sell, hire and discharge workers and remunerate their services, contract debts and pay interest and amortization. But in all their activities they are bound to obey unconditionally the orders issued by the government’s supreme office of production management. This office (the Reichswirtschaftsministerium in Nazi Germany) tells the shop managers what and how to produce, at what prices and from whom to buy, at what prices and to whom to sell. It assigns every worker to his job and fixes his wages. It decrees to whom and on what terms the capitalists must entrust their funds. Market exchange is merely a sham.

Hayek therefore reasoned that German National Socialism and Soviet socialism must be slightly different versions of the same thing: Left-wing socialism.

How Do We Describe the Ideologies of the Democratic and Republican Parties?

Is all of the previous section just an intellectual fantasy,  an abstraction, or does it map onto Reality? From what we have seen so far, it would seem that only governments on the Left would have the power to become actually authoritarian. So what are the visions of government dreamed by Democrats and Republicans, and are they consistent with the previous section’s picture of ideology?

Which party wants to give the Federal government ever more power? For longer than living memory can reach back, back at least as far as the trust-busting in the Theodore Roosevelt administration (1901-1909), progressives have been seeking increasing government control over American corporations. Beginning with the Woodrow Wilson administration (1913-1921), the progressive movement in the Democratic Party turned decisively authoritarian. In fact, Wilson is probably the first U.S. president to express open contempt for the U.S. Constitution. In a 1912 speech while campaigning for his first term as President, then governor of New Jersey Woodrow Wilson stated his desires for a revolutionary change in American governance. In his image of America, his view of reality, both the Constitution and the Declaration of Independence had out-lived their usefulness. We needed a new concept of the Constitution that would allow it to be reinterpreted to make it more appropriate for modern problems; the prescribed way of changing the Constitution by amendment was just too costly in time, effort, and money to change by that method. Hence was born the conception of the “living” constitution that could be amended by judicial interpretation of progressive judges.

The Wilson administration also began the progressives’ long war against the Constitution’s separation of government powers, opening the way for future tyrannical government. The progressive ideal was government by skillful, expert technocrats who were insulated from direct control by the other three branches of government. To fulfill this ideal, they invented the idea of the independent government agency, which often had legislative, executive, and judicial powers all delegated to them within their particular fiefdoms. The very first, the prototype of independent regulatory agencies, was the Interstate Commerce Commission, created in 1887 to regulate rates and terms of service for interstate railroads. One of the most important of them during Wilson’s administration was the Federal Reserve Board of Governors, appointed to oversee and manage the U.S. money supply. Over the decades following, a veritable alphabet soup of independent agencies have been created that regulate just about every aspect of American life.  Usually, decisions made by these agencies can not be changed directly by the President or Congress, although Congress can review their decisions and change their powers through a legislative act, and agency decisions can be reviewed by courts of law.

It is no coincidence that Democrats have been the most enthusiastic to create such independent agencies to bring private business to heel at the call of government. Just in the last Democratic administration of Barack Obama, several regulatory agencies have been created by the Dodd-Frank Act. Motivated by the fallacious excuse that greedy American banks and investors had created the financial crisis causing the Great Recession (it was actually caused by regulations of the federal government itself), the Dodd-Frank Act is the most comprehensive, intrusive, and costly regulation of the financial industry since the New Deal, and quite possibly in the entire history of the United States. As with many U.S. statutes these days, the Congress delegated actual rule-making (i.e. the making of administrative law)  to a large number of executive branch agencies and departments (Treasury, Housing and Urban Development, Labor, and State). Peter Wallison, a true authority on financial markets, Fannie Mae and Freddie Mac, accounting policy and Dodd-Frank, has written in the Wall Street Journal

There is always a trade-off between regulation and economic growth, but Dodd-Frank—by far the most intrusive and costly financial regulation since the New Deal—placed few if any limitations on regulatory power. Written broadly and leaving regulators to fill in the details, the act has often left regulators in doubt about what Congress meant. Even after regulations have been finalized, interpreting them can be a trial. For example, the regulations implementing the inconsistent Volcker Rule, which prohibited banks and their affiliates from trading securities for their own account, took more than three years to write, but key provisions are still unclear.

Beyond the regulatory monstrosity of Dodd-Frank, there are all the additional regulations over the health industry created by Obamacare. And beyond all that are the massive new regulations created under Obama by other agencies and departments. One has to wonder when the schedule of one’s own life will also be regulated by government. Although, considering everything that has already been regulated, perhaps the lives of individuals are already dominated by government regulation.

And what about Republicans? Do they participate in this sport of centralizing more power into the government? After all, if Donald Trump is the fascist the progressives say he is, he must hunger to capture even more power over private businesses. After all, that is the hallmark of a fascist.

The problem in all this for the progressives is that both Trump and the Republicans want to greatly reduce the hold of government power on companies. That bête noire of the progressive Left, Stephen Banon, senior advisor to the President, says the President’s agenda calls for the “deconstruction of the administrative state.” This means doing away with both Obamacare and the Dodd-Frank Act, among a great many other acts. In addition, Trump has issued an executive order requiring: 1) For every one new regulation issued, two prior regulations be eliminated; and 2) The incremental costs of new regulations for fiscal 2017, including the negative costs of repealed regulations, shall be no greater than zero. Moreover, Trump has issued another executive order for a federal hiring freeze, exempting any positions deemed necessary for national security or public safety. Military jobs are exempt from the freeze

Fortunately, in progressives’ zeal to leave as much governance of the state as possible to executive branch department and independent agency technocrats, many of the necessary tasks to defang the regulatory monster can be accomplished with presidential executive orders. What lives by the executive order can die by executive order! Nevertheless to really drive a stake into the heart of the monster will require some congressional legislation to repeal and replace Obamacare, to either repeal or change Dodd-Frank so greatly that its hold on financial institutions will be greatly reduced, and to reduce taxes.

But wait a minute! Reducing taxes reduces the power of government over allocating economic resources. Not allowing the federal work force to grow also limits the mischief federal employees can accomplish. In addition, eliminating large numbers of federal regulations and limiting their scope and costs strikes at the very heart of federal power. In seeking these changes, Donald Trump and company would seem to be anything but fascists, and in fact not authoritarian in any sense.

It would appear the desires of the Republican and Democratic parties fit those parties admirably into the political taxonomy of the previous section, with the Republican Party on the Right and the Democratic Party on the Left. It is the Democratic Party that hungers for authoritarian government, not the Republican. The Republicans would be happy with as small a government as can be managed.

All-out Ideological Warfare?

Yet, despite all the publicly available facts  I have cited in this and the previous two posts, progressives remain attached to their goals of increasing government power and control over the American economy. To me at least, they appear to be wedded to the idea (at least publicly) that the very rich are unjustifiably hogging the fruits of the economy, oppressing the less well off. Perhaps they are merely unaware of the fact that as markets become more free and less dominated by government, their economic output not only exponentiates with more freedom as measured by the index of economic freedom, but also the distribution of their GDP as measured by their GINI index becomes more equitable. Those two facts together would seem to cut most of their important assertions about economics to pieces. When to those two facts we add all the other economic data favorable to neoliberalism over progressivism, the neoliberal argument would appear to be unassailable.

Cai writes

If you want to reduce authoritarianism in university faculty, you must credit them with sincerity and intelligence, and help them do the same for you, or they will seek ever more drastic measures and positions to gain an upper hand in a battle of words. …

The risk of authoritarianism, I must protest, in light of history and the incandescence of our present moment, is not an affliction limited to leftists, and it cannot be mitigated but by finding compromise and middle ground between the belligerents. Writing articles that dismiss progressivism on the grounds that it is economically imprudent or authoritarian are only adding fuel to the fire. The fact is that authoritarianism must be addressed, not merely described. I implore you to find common ground with the progressives. I implore you to consider the possibility that governmental intrusion in the economy need not end in disaster. If you cannot yet do this, I will continue to argue that you make fundamental errors in achieving certainty in order to enjoy the simplicity that certainty allows.

I have no difficulty in crediting the overwhelmingly progressive faculty in the liberal arts and social sciences of American colleges and universities as intelligent. I know this from personal experience. I have much more trouble with their sincerity, particularly if they belong to the economics or political science departments. The image of Obamacare architect Jonathon Gruber cynically describing the American people in an academic seminar remains fresh in my mind. Those people should know better if they study both political and economic history. Besides history there are vast amounts of data available in the Federal Reserve Economic Database (FRED), in the World Bank, from the European Union, and in any of a vast number of other sources, all of it freely available on the internet.

All of the other issues in that quote I have addressed except for one. That issue is expressed by the following statement:

Writing articles that dismiss progressivism on the grounds that it is economically imprudent or authoritarian are only adding fuel to the fire. The fact is that authoritarianism must be addressed, not merely described. I implore you to find common ground with the progressives. I implore you to consider the possibility that governmental intrusion in the economy need not end in disaster.

I am doing my very best to address progressive authoritarianism in a nonviolent way. But to persuade the progressives they are authoritarian and must mend their ways, at the very least they must be persuaded that they are authoritarians. Those progressive faculty — or for that matter, progressives of any kind — who are in fact sincere are clearly not so persuaded. Yet, the evidence of their autocratic proclivities is overwhelming.

As for the possibility government intrusion in the economy need not end in disaster, that depends on the type of intrusion. Clearly, some such intrusions are not only not disastrous, but absolutely necessary to maintain both a healthy economy and a healthy society. We need government to enforce contracts, without which free-markets can not exist. We need government to act as a kind of economic traffic cop to prevent anti-free-market practices such as price fixing.  However, once we get beyond the allocation of resources for the government’s immediate needs, to allow government allocation of economic resources for non-government purposes, e.g. to subsidize “green power” on private markets, or to set prices and wages, or to give tax breaks to favored industries or companies, or to attempt to stimulate the economy through either fiscal or monetary policies, is almost always disastrous. A very large amount of historical evidence tells us this.

Find common ground with progressives? I wish I could, but our beliefs are just too different.

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