To P.C. Roberts On The Death
And Legacy Of Milton FriedmanBy Jeff Berg
23 November, 2006
Countercurrents.orgEconomics is oft called the "dismal science" and sometimes only half-jokingly referred to as a discipline whose principal purpose is to make meteorology and astrology look good by contrast. Given the track record of economic forecasting and the impact of its failures the reason for the rise of such sentiment is not hard to understand. Albeit it is an understanding whose rarity increases in almost direct proportion to how high one rises up the socio-economic ladder. The reason for this scarcity being in most ways identical to the reason it is so much easier for those on the wrong end of our gun barrel to espy our motives than it is for us.
The avowed central purpose of economics is or at least should be enabling the better service of human needs by the creation of systems that help to maximize efficiency, productivity and the creation of wealth. From extraction - to production - to distribution classical economic theory was conceived and evolved with an eye to influencing individual choices within the market in such a way as to lead to the best possible allocation of resources. Few would disagree that such a betterment of our systems is devoutly to be wished and fewer still would say that we have arrived.
Nonetheless according to Paul Craig Roberts in his November 17, 2006 article Milton Friedman was just one such wisher and not just any ole wisher but “…the great economist of our time who more than anyone saved the economics profession from dogma.” There is very much that could be said in response to such a bold declaration of approbation. And it would not be very difficult to make a case that pointed to a sharply different and contrary view of this man’s work. One for example could point to his part in creating the withholding tax. Without which it is hard to imagine the U.S. as the Leviathan that it is today. One could also look at what he and his acolytes advocated in Chile and how disastrously this turned out for the people of that country. Or one could look at the type of monetarism he propounded and its almost immediate abandonment everywhere it was tried.
Most tellingly perhaps one could look at the intellectual cover that he provided for the ‘utility’ of greed. And how his words and theories were used to justify a maniacal increase in the concentration of capital to corporate militarism and stock and dollar manipulations and all of the attendant ills and evils to which this has led. As I say it would be not be hard to take issue with such a glowing portrayal of this man’s work and legacy.
However given that Mr. Friedman is now beyond the influence of any what I would like to do instead is in essence to pen an open letter to Mr. Roberts. A letter aimed straight at his dislike of dogma and my well intentioned desire to help shake him from the last fetters of what I view as his dogmatic slumber. A slumber that the many shipwrecks and crimes of the current Bush administrations have helped to begin to stir and one that if continued may lead this fine mind to achieve much more of practical good than the object of his highest praise ever did. But first some background is needed.
Economics as it is taught throughout the halls of academe in every OECD* country and beyond has very little to do with the way that economics is practiced in this our one and only world. In fact the prevailing economic theories as propounded by classical liberal and neo-liberal economics irrespective of the minor variations discussed by Roberts in his paean to Friedman’s theories are all very much divorced from actual practices. That this is so is pretty much an open secret. That it is essentially never talked about leads those who do not know better to believe that the proclamations of economists are either “over my head” or nothing more than the self-serving justifications of paid propagandists for an arbitrary and iniquitous violently policed status quo. (*OECD: Organization for Economic Cooperation and Development, essentially the thirty richest countries per capita in the world club. When anyone talks about “Us” and “Them”, regardless of which side of the fence they are on and most often without knowing it, they are in a very real sense talking about who is and who isn’t in the OECD.)
Friedman’s creation of the withholding tax mechanism aside he began to become an economic theorist of consequence on the world stage when his ideas began to be put into practice in various places in the 1970’s. Most famously or rather infamously former students of his served as advisors to the military dictatorship in Chile. Friedman is also mistakenly attributed with having won a Nobel Prize in economics in 1976. The truth of the matter being that the Nobel Committee does not and has never had a prize for economics. What Friedman won instead is an award from a bank with an enormously clever marketing scheme. This last misconception notwithstanding Friedman was very likely the most influential American economist of the 1970’s and 1980’s. His contributions being principally monetary theory and an unwavering championing of market based solutions and the “moral” imperative of profit maximization. His cameo in the movie 'The Corporation' being a rather chilling exemplar of just how fervently he held this belief right to the very end.
Economic theory is full of discussion about “the guiding hand of the market” and “price signals”. Actually occurring practices are instead full of distortions and noise. The result is an immense gap between free market theory and actually occurring practices. The attempt to bridge this gap by the insertion of theories such as Friedman’s and the practices of such as Volker, Greenspan and other “free marketeers”, has led us to an ecological pass which resembles nothing so much as it does the purposeful creation of the ultimate doomsday machine.
And what distortions might I be talking about? The most egregious is without doubt the arms industry; followed closely by subsidies to the fossil fuel extraction companies; giveaways to the extractive industries generally; the giveaway of our airwaves and bandwidth and universities; right down to the give away of our ecologically and geologically created resources and the enclosing of all commons. And what has all this largesse to gigantic and barricaded industries yielded? Well for starters the end of cod and perhaps the ocean as a major protein source and the end of 90+% of America’s old growth forests. Not to mention the end of U.S. energy independence, a North American peak in oil and gas, and this only starts what is a very, very long list indeed.
By contrast the 1970’s were also the decade that saw the release by Donnella Meadows et al of the prescient tome “The Limits to Growth”. It was also the decade that should have taught us as we passed into the 75th anniversary of Einstein’s annus miraculus that “Energy Matters”. What Meadows wrote and what OPEC showed is that there are very definite limits to our cornucopian dreams. Such an idea was of course not new. Civilizations have been rising and falling due to resource limitations for millennia after all. What was most extraordinary about this work is that what was also hinted at was the obverse of the coin of industrial activity. i.e. The resulting emissions, effluents and detritus and the “sinks” into which they must be deposited. Whether these sinks be wetlands, rivers, lakes, landfills, the Yucca Flats or the atmosphere. This last “sink” being the one that is increasingly beginning to look like the one that may in fact sink us all.
In other words in the very same years that the power of computer science and the physical sciences were pointedly modeling the ways by which economic theory was failing us were the very same years that economic theories that championed unfettered capital and markets came to the fore. The result of this uncoupling of economic theory from physical reality led to such criminally reckless eventualities as just in time inventories and the 12,000 mile toilet seat and the 1500 mile salad. Along with immense new tracts of car dependent sprawl and a fleet of American built SUV’s at the very same time as America’s oil production dwindled. Today American oil production is half of what it was at its height and will be half today’s rate in about a decade no matter what is done with the insignificant amount of oil in the ANWR. It is difficult to say just exactly what will happen economically when North America is forced to rely more exclusively on its own resources but that there will be considerable human suffering attendant upon this eventuality is plain to see.
Next up for North America is a decline in natural gas production which David Hughes a senior geologist with Canada’s MNR, CGS and CGPC, says has historically averaged 28% in America’s gas fields. Gas production has already begun to decline on the continent and such wild eyed radicals as Alan Greenspan and Lee Raymond have already been on the hill to sound their concern publicly. When the replacement rate can no longer keep the treadmill running the decline in production will accelerate much faster than was/is the case with oil extraction. Yes we have and will continue to try to globalize gas but data suggests that for technical and economic reasons if the geopolitics could be finessed it is already to late to avoid significant discontinuities in supply somewhere around 2010-2012. This all serves to bring to mind the idea, by no means original, that globalization and "free market theory" will very likely and rightly be revised some time this century as simply being the ideological effort of the West to ensure and justify its continued access to other people’s resources. That the U.S. is being hoisted on this petard by China is first among the reasons that unilateralism and bilateralism has replaced multilateralism as the prevailing M.O. Given the pressing need for consensus on so many issues of existential import calling this a “worrisome development” is an understatement that not even Mark Twain could enjoy.
None of this is hinted at in classical economics much less Friedman’s theories. Instead what we are given is a picture where energy inputs are taken for granted and viewed as being essentially limitless and eternal thanks to the homo ex machina of human ingenuity. An ingenuity which purports to alchemically transform the iron shackles of resource scarcity into a “Golden Straightjacket” of prosperity. This last phrase coming out of the misty eyed Croessian dreams of yet another fabulating Friedman, he of the Lexus and p.c. fetish, Thomas Friedman. Oil and gas are of course not the only looming liquid scarcities as the increasing commodification of water suggests. And as if scarcity were not enough to overcome there is now plenty of evidence to suggest that the real problem is that our fossil fuel scarcities are not dire enough to save us from ourselves.
Climate change science and the denial industry founded by Philip Morris and perfected by Exxon/Mobil http://tinyurl.com/j5dpp have been a classic study in the ways that a “free market system”, a species with no competitors and a planet with definite limits cannot coexist indefinitely. Any but the most obtuse can today see that a system designed to encourage the maximization of profit and the externalization of costs is a death trap.
The true Twin Towers, the skyscraper sized hurdles before us that we must not crash into are Inputs and Emissions. On the input side coal, oil and gas are what allowed the human species to “bloom” from 1.5 billion to 6.5 billion and unless we bring our population down by choice there is nothing to suggest that it will not be done for us. On the emission side I can say in all honesty that in the thirty years since I first encountered the study of philosophy and began my life long devotion to empiricism and the natural order that enfolds us I have never seen the scientific community so very fearful of any one thing and that one thing is the concentration of greenhouse gasses in the atmosphere. Or as Ralph Torrie, a man very much smarter than me put it at a climate change solution forum last month, “Given what is being asked I understand the desire to wait for the smoking gun. I’m just not sure that this is going to prove to be a winning strategy given that this particular gun is pointed at our heads.”
So yes I understand how Paul Craig Roberts could admire the work of Milton Friedman. I understand how a mind as fine as his became trapped inside an ideological framework utterly disconnected from physical reality. I understand it but I can no longer forgive it and we can no longer afford it. What we need instead is for the man who did as much as any one person to begin the end of the nightmare that is the Cheney-Rumsfeld-Bush Axis to bring every ounce of his rhetorical, analytic and oppositional skills to the greatest battle of all. What we need instead is for all of us who know the stakes to bring our every talent and resource to the existential struggle that now faces the human species. An existential struggle that must countenance no arms and no armies but nonetheless needs us all to enlist: That struggle being the battle that must be waged in order to bring human economic activity into line with the planet’s tolerance.
Leave A Comment
&
Share Your Insights
Get CC HeadlinesOn your Desk Top