The Predator State — More Progressives Who Saw True and Through

PEF people are not the only ones who correctly anticipated some of our recent economic and fiscal events.  Jamie Galbraith also saw a lot of this coming in his book The Predator State. With no further ado, I’m posting an enthusiastic review of the book by fellow traveler and Sorbonne PhD economics graduate Henry Sader:
John Kenneth Galbraith first wrote in The Affluent Society that the shortcomings of economics are not an original error, but “uncorrected obsolescence”.

Following the ground breaking legacy of his father, James Galbraith’s Predator State, strives to rectify this obsolescence at a pivotal moment for the economy of the United States and the rest of the world.  The Predator State is a book that provides above all a clairvoyant, stinging but constructive critique of the current economic order, exposing the truth about today’s “conservative” economics, masterfully revealing why conservative policies have dramatically, inevitably and fortunately failed.

More importantly however, Galbraith cleverly demonstrates how this fact does not really matter today, as epitomized during the Bush Presidency: Conservative governments use their ideology and dogmas only as a facade to camouflage their own interests and the shameless pursuit of power they are engaged in. In a government of vested interests not of the people, the real agenda behind policy debate boils down to the politics of who gets cut in, versus the politics of who gets cut out of the deal.

In the same vein as his father, Galbraith questions, and masterfully disables the now dysfunctional theoretical foundations that the market mechanism deserves infallibility when it comes to pursuing the public interest.  He shows how market power, asymmetric information and regulatory capture lead to “rampant predation against both a public system and the public itself” in key areas such as healthcare, education, social security, energy, financial policy and the growing complexity of a fraudulent financial system.  He draws strength from Keynesian science and values, adjusting them to the modern reality to develop in the last three chapters of his fourteen chapter book carefully considered and well-founded solutions. In these chapters, he also offers concrete action steps that stem from both a Keynesian and Institutional vision that combine both the small and big-picture.

James Galbraith challenges conventional wisdom by tackling a major blind spot in today’s economic culture: the lack of economic planning, scoffed at by mainstream economists since the debacle of the Soviet Union.  Separating the baby from the bathwater, he makes a compelling case for a responsible capacity to plan, as evidenced by the dramatic example of Hurricane Katrina.  Only responsible and sustainable economic planning, coupled with the imposition and reinforcement of high regulatory standards can reverse the erosion of vital human, institutional and physical infrastructure.  This includes the major economic institutions of the post-war era that have been steadily eroded since the 1970s, and which have nevertheless protected Americans and their economy against their own predatory regimes. Chapter eight, “The Enduring New Deal”, demonstrates the reality of how strongly the United States has resisted the mayhem of the conservative onslaught of recent decades because of the integrity of the institutions created during Roosevelt’s New Deal, essentially allowing the economy to survive the threat of the predator state.

While he rejects some of the ideas of his father’s era, James Galbraith, as an “evolutionary economist”, makes the case for a holistic and inclusive approach to economics that factor in modern realities and challenges like climate change, energy policy, immigration and international markets.

Galbraith also predicted with an unmatched prescience the current economic meltdown. Indeed, he is one of the few economists to have been able not just to foresee the current situation, but also to explain it by clearly identifying the root causes, propose meaningful solutions within a social-democratic perspective.  His ability to predict and make sense of the current situation makes a careful reading of this work all the more pressing.

The Obama administration in the US and the NDP in Canada, should give an especially close and careful attention to this book.  Though it is centered on the American situation, the economic phenomenon that Galbraith treats, in addition to the deeper social visions he expresses, is just as pertinent in Canada as south of the border.

The integrity of Galbraith’s book, and the relative ease with which one can sift through its 210 pages, will make every economist and activist proud. This book is an essential accompaniment read for anyone that cares about building a just and sustainable society.

8 comments

  • “He shows how market power, asymmetric information and regulatory capture lead to “rampant predation against both a public system and the public itself” ”

    Smith did that in the Wealth of Nations. His example was the slave plantation owners.

  • “the lack of economic planning, scoffed at by mainstream economists since the debacle of the Soviet Union. Separating the baby from the bathwater, he makes a compelling case for a responsible capacity to plan, as evidenced by the dramatic example of Hurricane Katrina. Only responsible and sustainable economic planning, coupled with the imposition and reinforcement of high regulatory standards can reverse the erosion of vital human, institutional and physical infrastructure. ”

    People need to be clear that there was no ‘baby’ in Soviet economic planning. It was vicious military dictatorship done by a very few private planners who held the reins of state, who shot, disappeared, slaughtered or enslaved any dissenters. By the tens of millions, over the years.

    I think a key element in ‘responsible and sustainable economic planning’ is the process of election. At the local level, where there are real votes taken around real issues, and for upper tier or joint issues.

    The increasingly tight chains of private partnerships, investment/trade agreements, regulatory removal of public rights, with increased militarization and surveillance are leading us to a form of dictatorship which far too many have experienced elsewhere.

  • “People need to be clear that there was no ‘baby’ in Soviet economic planning. ”

    I think he meant that at a higher level of abstraction: As in the soviets gave planning a bad name: OR planning in and of itself is not bad but the soviet form was.

    Galbraith believes in democratic planning–pretty standard social democratic fair; not in a centralized command (authoritarian) economy. That is his point. One can have democratic rational planning without raising the specter of Stalin and far too often the specter of Stalin is raised to terminate a rational conversation on the benefits of planning.

    Although I do think we could point to some success of soviet planning. Just as I can point to some successes of Chinese socialism and later capitalism. Pointing that out would NOT however be an endorsement of either.

    One more example, I could give you a list of things I think Canada has done pretty well at as a country but that would in no way be an endorsement of the aboriginal genocide which colours all those accomplishments.

  • Leigh said:

    “People need to be clear that there was no ‘baby’ in Soviet economic planning.”

    So socialism is just Evil, through and through.

    “The increasingly tight chains of private partnerships, investment/trade agreements, regulatory removal of public rights, with increased militarization and surveillance are leading us to a form of dictatorship ”

    And capitalism is the same.

    Thanks for the help. When you’re done with blowing your brains out, pass your gun on to me.

    “It was vicious military dictatorship”

    Really? I don’t recall a military junta or a general or even an army private simply brandishing a weapon and taking power.

    Pardon me: forgot about Yeltsin, the darling of the Western bourgeois, and his coup.

    There were elections there, you know.

  • “I think he meant that at a higher level of abstraction: As in the soviets gave planning a bad name: OR planning in and of itself is not bad but the soviet form was…One can have democratic rational planning …”

    yes I realize this, I just don’t think harking back to the Soviet model is useful, at all. I am not sure what you are referring to when you say ‘successes’, and like the genocide of Indigenous peoples in Canada, cannot be rationalized.

    Perhaps once the conquerors have slaughtered and stolen the land and resources of original inhabitants, they can gather in cliques and make all the decisions, while torturing and murdering any who don’t go along with their decisions. is that what you mean by the ‘successes of soviet planning’? Sure there was a lot of victorious propaganda that was produced over the decades, which was swallowed hook line and sinker by almost everyone who didn’t experience it directly, or who were some steps out of the grave or the cellar.

    I really think people have to give the Soviet model a rest. Really. If there are useful real-life specific examples which can say the same thing, please use them.

    Let the discussion on planning continue, please, without hauling up the USSR again, which I did not introduce, by the way, it was raised in the post.

    How can planning happen locally, regionally, at upper tiers? We have a situation now where many public utilities are in fact not being governed in a democratic model- the planning is happening behind the ‘iron curtains’ of corporate boardrooms, handed down to their political lackeys.

    Why not use examples of Indigenous planning? Perhaps we should spend more time elaborating on those, drawing the links.

  • Frankly I am more interested in Galbraith’s choice for the title of his book: “The Predatory State.”

    Why not “Predatory Capitalists” given his central thesis is that the liberal democratic state gets high-jacked by powerful capitalist enterprises and sectors?

    I find the tension between the title and thesis nicely captures the limits to social democratic political economic theory and left populism.

  • Leigh said:

    “I really think people have to give the Soviet model a rest. Really.”

    I really think people have to learn that complete denkverbot about communism is a bad thing.

    Really.

    “which I did not introduce, by the way”

    Spare me.

    Someone came out swinging on the topic of the USSR, and it wasn’t me.

    “Why not use examples of Indigenous planning?”

    Why not? How about writing a bit about it; I’m all eyes.

  • Keith said:

    The problem within our society is the People.

    For decades we allowed the banking system to loan and/or decide whether we could get money. That is the key, should people decide when they want to loan money and how much to repay our self made loans…?

    Well folks, “guess what” that was a mistake of gargantuan proportions. Some loaned against their homes and when they defaulted the banks took the money out of their properties’ “only” one day our homes became of lesser value than our owed credit, “now”, not only do we lose our homes but the banks are in default to their creditors.

    What a mess, all because we allowed home owners to try becoming a banker and it failed.

    I believe the problem we have to-day will not be resolved by giving money to auto manufacturers and banks, because, after all is said and done will we buy that new car.

    “I”, like so many others, am afraid and unless our Government sets the example and shows me the way by handling my money with respect I am not going to buy that house. “(…when Governments give my money to banks and others that tells me we are in serious trouble, so, why would I spend now… ?)”

    Around and around we go and in the end our children and grandchildren will have to repay monies mishandled by our governments.

    Keith

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