Creating a Moral Economy

By Fred Block, The Nation. Posted March 21, 2006.

The daily headlines suggest that a toxic combination of arrogance, corruption and incompetence is weakening the Republican Party's hold on national political power. As the Democrats struggle to capitalize on this opportunity, progressives should remember what happens when one side wins an election without defeating the opponent's main ideas.

Back in 1992 Bill Clinton campaigned successfully for president with promises to "put people first" and provide health insurance for all. But he quickly discovered that the ideas that had been dominant during the administrations of Ronald Reagan and George H.W. Bush were still hegemonic.

Market fundamentalism -- a dogmatic belief in the power of Adam Smith's "invisible hand" to create prosperity -- survived the Republicans' electoral defeat. Clinton was pressured to put aside many of his campaign promises to conform to this orthodoxy. And when he did defy market fundamentalism by pushing for universal health insurance, he suffered a catastrophic defeat.

Market fundamentalism has ruled the country for close to 25 years. It has produced weak economic performance, corporate crime waves, government corruption and a coarsening of the culture. But the amazing thing is that efforts to hold the market fundamentalists accountable have gained so little traction.

Perhaps the best explanation for this has been offered by former Labor Secretary Robert Reich. In "The Lost Art of Democratic Narrative," published by The New Republic in March 2005, Reich argues that differences over economic policy have been fought out in American politics over the past century by appropriating four specific story lines -- the rot at the top, the mob at the gates, the triumphant individual and the benevolent community. The party that tells these stories most persuasively wins, he observes, and in recent years the prize has gone to the Republicans.

In the 1930s, in contrast, the Democrats were successful in telling people a story in which government action could overcome the rot caused by business greed while also protecting us from the overseas mobs following fascist (and later, communist) leaders. Moreover, government assistance would create a benevolent community that could respond, as FDR said, to the "third of a nation [that was] ill-housed, ill-clad and ill-nourished." Within this community of care, hard work would be rewarded so that individuals could triumph and achieve upward mobility for their families.

According to Reich, the critical turning point came when the Republicans, starting with Reagan, hijacked these same stories and constructed a plot line in which the rot came from liberal elites, with the "Evil Empire" of the Soviets playing the role of the mob at the gates. Triumphant individuals had to be freed from government interference to restore the health of voluntary and faith-based communities. The Republicans have been telling versions of these same stories ever since, with George W. Bush endlessly promising to protect us from the terrorist mobs that have to be resisted overseas.

In both the New Deal and the Republican stories, however, there is a fifth narrative, providing a principle of order that integrates and organizes the four other elements. Starting in the 1930s, the Democrats employed a narrative in which an activist government overcomes the weaknesses of an unregulated market economy to achieve stability and renewed economic growth.

This story would not ordinarily have been an easy sell, but the severity of the Depression made people receptive. Roosevelt and the Democrats seized the opportunity, and the narrative of an activist government reinforced by the New Deal's concrete successes gave credibility to Democratic stories about the rot, the mob and the triumphant individuals living in benevolent communities.

That powerful Democratic narrative dominated U.S. politics for more than 30 years. But the combination of disillusionment over the Vietnam War, the stagflation of the 1970s and growing conflicts over gender, race and the environment began to undermine its effectiveness. As Republicans started to mobilize resentment against Democratic policies, Democratic politicians stopped telling the old stories.

This opened the way for the Republicans to invoke Adam Smith's mysterious mechanism of the "invisible hand" as the critical element that binds the other Republican stories together. Since the market can be relied on to coordinate all economic activity, the triumphant individual can be set free of government restrictions, and liberal elites can be dismantled.

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