Extremists Amok and How Best to Dethrone Them
By Kevin Phillips Issue
doesn't wear hoods, white sheets, or armbands. Skinheads in its
ranks are few. Suicide bombers in its cause are even fewer.
But the essence
of extremism, as opposed to other specific "isms," is
to extend -- harshly, rigidly, and dangerously -- a commitment and
ideology that in softer and milder forms can be acceptable or useful.
Worship of an unfettered, self-justifying marketplace developed
in exactly this harsh, rigid form during the 1980s and 1990s. The
infamous practices of Enron, where market mania turned abusive,
with the help of the Bush family, are only the tip of one berg in
an ice field that continues to threaten national political and economic
Over the last
15 years, market-based excesses have run the gamut from crony-driven
privatization of public assets and attempts to remold U.S. law into
a branch of laissez-faire economics to even bolder efforts to recast
U.S. election finance as a marketplace. These unchained markets
have reshaped the global economy around international mechanisms
-- such as the World Trade Organization (WTO) -- empowered to override
local and national laws and regulations in the name of investment
flow. Market mania has emerged as the both the pivotal crippler
of U.S. democracy and the driving force behind the upward redistribution
of U.S. wealth. It has made the egalitarian principles and patterns
of the 1950s and 1960s vanish in a cloud of dust.
On the other
hand, this market zeitgeist has its own history of vulnerability.
If the Democratic Party and liberalism have a history of doing themselves
in through naive international policies and cultural excursions
that lacked majority support -- causes from Southern slaveholding
in the mid-nineteenth century to agrarian insurgencies in the 1890s
and urban and campus radicalism in the 1960s and early 1970s --
the self-destructive face of Republicanism and conservatism has
involved markets, corporations, and fealty to the rich. These penchants
characterized the Gilded Age of the late nineteenth century, the
Roaring Twenties, and the last two decades.
in Devil Take the Hindmost: A History of Financial Speculation,
notes that the first bourse in Amsterdam was a place where gentlemen
refused to go, sending agents instead. Gambling analogies pervaded
the early financial markets (and still plague current ones). The
famous eighteenth-century financier John Law doubled as an expert
at the game of hazard. The term "blue chip" used in the
stock market came from the highest denomination chip in the Monte
One can only
wonder at the gall of the American and British think tanks and pundits
who have held out "markets" as an alternative organizational
basis for society (to replace the notions of state, polity, and
community developed over 2,000 years). The self-interest of their
corporate and upper-bracket patrons, of course, is more obvious.
Still, the cautions
befitting the market's dubious background were pushed aside in the
1980s, as a curious mix of zealots and self-servers decided to exalt
markets in general -- and the financial markets in particular --
into the premier institutions of American governance.
was abandoned, just as it had been a century earlier when kindred
U.S. business and financial apologists latched onto the social Darwinist
theories of an Englishman, Herbert Spencer, in order to justify
the dog-eat-dog economics at work in the United States. The Gilded
Age economy, said William Graham Sumner of Yale, simply exemplified
the "survival of the fittest" that Charles Darwin had
found in biology. U.S. Senator Chauncey Depew prattled to New York
millionaire audiences about their being the chosen ones of a grand
A century later,
it wasn't social Darwinism but rather market-centric perspectives
that were invoked to explain a wide range of phenomena. The public-choice
school of thought framed politics itself as a counterproductive
snarl of interest-group competitions and urged an alternative ideology
that emphasized market principles.
In such crusades,
markets were never discussed factually as arenas in which money
prevailed – arenas therefore innately favorable to wealth
concentration and to the interests of the rich. Instead, they were
dressed up in more appealing clothes as the truest vehicles of democracy.
it all quacks like the duck in the AFLAC commercial. The marketplace,
in this fantasy, became the ultimate forum where the people could
express themselves, where they could do battle with Harvard- type
elitists who didn't want them to spend their money on large automobiles.
The sages of The Wall Street Journal editorial page told readers
in the mid-1990s that voters wanted to be treated as customers,
Chairman Walter Wriston, famous for almost wrecking his bank with
earlier unwise loans to Latin America, opined in 1992 that "markets
are voting machines; they function by taking referenda." The
proletariat, predicted Wriston, would eventually "fight to
reduce government power over the corporations for which they work,
organizations far more democratic, collegial, and tolerant than
distant state bureaucracies." Parallel balderdash issued from
Newt Gingrich during his brief mid-1990s reign as House speaker.
He dreamed about the possibility of establishing a "consumer-directed
government," once suggesting that critical social problems
could be resolved simply by asking "our major multinational
corporations for advice."
All of this
hot air about a new era -- at least partially based in the perfectibility
of markets -- helped launch the four-year speculative bubble that
finally burst in 2000 2002. But kindred thinking also helped blueprint
other dubious market-manic constructions that still stand. For a
short list, consider these: excessive deregulation of finance and
energy, privatization of public assets, privatization of Social
Security, and the use of transnational organizations such as the
WTO and NAFTA to override local and national laws, in the United
States and elsewhere, that interfere with market absolutism. These
may become some of the great battlegrounds of the early twenty-first-century
economy. Another could take shape around attempts to justify globalization
as a market-driven inevitability.
No serious opposition
politics can emerge that does not challenge at least the extremes
of this faith in markets, but no faith could be riper for the picking.
Its conceptual underpinnings were questionable enough, though they
did not get enough questioning, six or eight years ago. Since then,
the NASDAQ crash and the Enron, Arthur Andersen, and Merrill Lynch
scandals have told the average American enough about the fallibility
of business, finance, and markets to make the new- economy truisms
of five years ago sound like the premises of cranks.
in this new form as in others before it, has a distinct regional
home. As much as the ideological excesses of the left in the 1960s
evoked Berkeley, and the militia groups on the right were a Rocky
Mountain phenomenon, the market mania of the last two decades has
centered on Texas -- economic Lone Ranger country, where market
fundamentalism and religious fundamentalism have joined to create
a uniquely strident culture. In Texas, government doesn't get in
the way of "bidness." Pollution flourishes, there's no
income tax, and the state's biggest city, Houston, won't tolerate
zoning. In Texas, the business and academic infrastructure lists
well to the right of that in any other major state. The Federal
Reserve Bank of Dallas is the most conservative and market- propagandistic
of the 12 regional Federal Reserve banks. Think tanks connected
with the Texas GOP congressional delegation can be counted on for
economic tracts that make Southern Baptist Convention resolutions
look subtle and avant-garde.
ago, a still-Connecticut-tinged George Bush Senior made his famous
remark about supply-side tax cuts being "voodoo economics,"
but he learned fast. By 1985, when Texas-based Enron was formed,
Vice President Bush was already captaining the Reagan administration's
Task Force on Regulatory Relief, and his four-year term as president
would produce two pieces of market-worshipping policy that proved
vital to the company's future operations. These were the 1992 energy
act, which obliged utility companies to transmit electricity shipped
by Enron and other marketers, and a regulation issued by the Commodity
Futures Trading Commission, which created a legal exemption that
let Enron begin trading energy derivatives.
Enron was en
route to its millennial climax: speculating, trading, and manipulating
energy costs in deregulated markets. And the Bush family and retainers
clustered around it like bees around the honeycomb.
was not without reward, but it also left Bush pere et fils, and
market mania, open to attack. It isn't often that a major issue
in U.S. politics -- perhaps even a potential watershed issue --
comes with such a juicy related scandal. Not long ago, this vulnerability
of Texas royalty and Texas philosophy would have been hard to imagine.
Now, market extremism is in the dock of public opinion. The question
is not whether a coherent and powerful indictment can take form,
but whether the Democratic opposition in Washington is capable of
shaping and voicing it.
(c) 2002 by The American Prospect, Inc.
Preferred Citation: Kevin Phillips, "Market Extremists Amok,"
The American Prospect vol. 13 no. 13, July 15, 2002 . This article
may not be resold, reprinted, or redistributed for compensation
of any kind without prior written permission from the author.