Appreciation: Cohen and DeLong on The Future

[It's 10:09 PM, and I like to go to bed early. I invoke the blogger's privilege of publishing a first draft.--Buce]
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Readers who want the core argument from The End of Influence by Stephen Cohen and Brad DeLong might consider this roadmap: read the first chapter; then skip to Chapter 6 (State-led Development) and read the first half; then Chapter 7. (Conclusion). That will give you the takeway points (or keep reading this review and pick up another version of the takeaway points below) (or see this helpful excerpt in FP).

Am I saying you shouldn't read the rest of the book? Hm. Well, if you do skip the rest, you'll miss out on a lot of cool factoids about the current macro environment--the kind of thing that makes you such a damn nuisance so loveable at parties. But if you follow DeLong's hugely successful weblog, you know a good deal of this stuff already. On the other hand, if you don't read the intervening chapters, you'll miss out on the frustration of trying to cope with an absorbing and instructive--but maddeningly ill-organized--presentation. The book, to be blunt, shows all the earmarks haste, as if the authors felt they just had to get an oar in at this juncture of the debate, rather than think through a more complete project.

Item: there's a lot of discussion here of "the neoliberal order" (aka neoliberal dream, neoliberal utopia, neoliberal program, neoliberal game, neoliberal age, neoliberal worldview)--all without any effort at precise definition, nor (this is more important) any effort to specify just why it is so central. Item: there's a useful introduction to "sovereign wealth funds" with little to connect the dots as to how they fit into the larger argument. Item, there's a discussion of dirigiste economic growth, provocative but entirely inconclusive (Can anybody do it? Can we do it? Have we done it? Will others do it? Should we try it? etc.).Item: there's an elegant menu of competing paths to development which seems on the face of things almost entirely irrelevant to the business at hand. Item: there's a swell tour d'horizon of foreign-exchange issues, instructive if you ignore the fact that it seems almost to contradict the main line of argument.

So, of course you'll read it. But you'd better be prepared to structure a lot of the argument yourself. Let me see if I can give a summary:

1. In the future, we won't be as powerful as we have been in the past; because
2. We won't be as rich;
3. Relatively [and also absolutely?], such that
4. In fact, nobody, will be able to dominate the way we have dominated since world war II. This will lead to
5. Wasteful, beggar-thy-neighbor strategic infighting.

This is a perfectly intelligible set of propositions, debatable of course (not least because we are predicting the future here), but still worth reflection. As to the first couple (not as powerful, not as rich), it happens that I believe them to be true. They are also at this point pretty familiar stuff ("that's all?" said Mrs. Buce with a dismissive snarl; she outsources macro policy to me and expects a higher-value-added return).

The last couple of pointts (infighting, beggar-they-neighbor--dare I call it mercantilism?)--are interesting and might be right, although I'd need a lot more by explicit argument to be persuaded. But this is where I could use lot more careful analysis.

Example: consider "the neoliberal (whatever)"--by which I take it they mean "the way we have lived for the last 40 years:" increasingly unfettered free markets. CD seem to be assuming that this "neoliberalism" has been discredited by the late uproar and will therefore vanish into the sunset. I'd need a lot more persuading. There is a lot of money and power that rides on the legitimacy of the market model, and these guys have no instinct to go away--hell, they don't even know they've been discredited.

Example: I am really not at all clear why they are telling me what they tell me about foreign exchange. They observe that lots of people, for a long time, have been forecasting s calamitous decline in the exchange value of the dollar. And yet it hasn't happened. There may be good reasons why it hasn't happened: we offer political stability; world lending is still dollar denominated; the lenders are locked in. Sure, fine, but what exactly does this have to do with their more general argument? Stated baldly (but this cannot be their point) it seems to suggest that we might not be losing our wealth and power and influence anywhere near as fast as might at first glance appear.

A final example: CD seem to be trying to tell us that sovereign wealth funds necessarily exercise "political" or perhaps "strategic" power instead of mere "economic" power, as we might expect from a neoliberal enterprise. The more I look at that one, the more skeptical I become. My present inclination is to surmise that the critical factor is "bigness," and that huge "private" corporations" might well start acting like (or in concert with) states; while "sovereign" funds might perfectly well find that money is more fun than politics.

Which brings me to a final, more general, point. That is: if there is an important flaw in their general argument, it may lie in their (implicit) assumption about the nature of states. They seem to presuppose a static model of statehood--the kind of thing we've come to take for granted since the Treaty of Westphalia. That would mean: a state that makes at least a pretense of commitment to "a common good," to the maintenance of public order, to the administration of justice. It would mean a state professing (however hypocritically or ineffectually) to the welfare of its people.

I think they may failing to consider just how transitory, perhaps accidental, this model might be--a lucky accident, like the very existence of life in the universe. We've lived so long (and in the US, so well) on that state model, that we forget how quickly and easily and completely it might pass away. There are already signs of states weakening everywhere--not just the basket cases like Somalia or Afghanistan, but in so many places where the ligaments of the (if you'll permit me) Enlightenment model may seem to be coming unglued.

This is a nightmarish scenario and I certainly hope I am just grotesquely wrong. If it does come to pass, what then? I don't even pretend to have a very clear idea, but whatever idea seems to boil down to two overlapping concepts: tribes, and cartels. As CD observe, we also have a half a dozen or so sovereign wealth funds that we find we must treat as players in their own right. CD seem to assume (although they don't quite say) that we should treat them as arms or allies of the stat. But what if they simply are the state? Or simply self-sustaining states-within-a-state, nesting in some vestigal state womb, but answering to no one but themselves (and each other)? What then, huh? I have no idea;it's an incomplete picture and thank heavens for that, because it isn't very pretty and I'm not in the mood for a nightmare. But I think I'd have to cope with it before I went public with any grand propositions about the future.

I don't think CD have considered this possibility (or perhaps they simply think it is too ridiculous even to consider). Yet I'd say it is one testimony to the power of this absorbing and provocative book that it generates the thought of such a bleak alternative.