Overripe

Book Review/thoughts: Overripe Economy by Alan Nasser—-Mr. Nasser is a political economist at the local State University, Evergreen (TESC).

I have been a fan of Science Fiction since before I bought a box of paperback science fiction books from Patrick Calhoun in 1964 or so for $5.. I continue to read the genre and if you are not a fan, I can tell you that many futurist plot lines run on the idea that technology serves humanity’s needs without requiring many people providing the labor which leaves us with the question, “What do people do in that setting?” In novels and movies, the magic of interstellar travel, associated new worlds to settle with plenty of adventures, and seemingly unlimited resources fill in the gaps; except when they don’t. Remember Soylent Green?. This book, Overripe takes me to science fiction, both the good and bad as the author considers the evolution and future of Capitalism as we know it.

Overripe is not an easy read. This is no surprise: it is a history of US capitalist development….… His passion is found in the concluding chapters where he makes his take-home points. Spoiler alert, he is a fan of Bernie Sanders. He does tie some ends together for me, personally, and stimulated some long-term thinking about our society and economy. Keep in mind, he is an academic and his use of words are not used as we use them in editorial pages or political reporting. Capitalism, Socialism, and Communism are loaded terms depending on your culture within our culture. I know them all to be commonly misused and abused to the point that people stop listening, knowing everything there is to know about them. I think his history, dry and slow in its development is not so controversial:

1. Modern Capitalism goes through phases of development and he articulates them—a youthful form (building canals, roads, merchant fleets and railroads), a young adult form (consumer products like cars and refrigerators with efficient means to transport them) , and now a middle aged form (service industries in a world that takes our basic material needs as a society for granted). He believes all of them were/are unstable (with predictable booms and busts) and have logically evolved on the shoulders of the last version—- all required growth to provide enough jobs to go around—and with it social stability. At some point, growth of the market has to fail unless added features are allowed, like a dependence of debt to fuel demand for products (more and more of that has been seen as the markets have matured). When the market fails, there are products and inventory, but not enough people with money to purchase them. In our country’s economic youth, how many railroad lines did you need to build from Denver to Los Angeles? In an unfettered Capitalism, multiple railroads could bankrupt each other competing for that one successful line. Once built, then what? How many refrigerators, cars, vacuum cleaners can you sell? What happens when everyone has one? Can “the market” truly have an insatiable ability to grow indefinitely? The Great Depression saw the end of the first mass consumer capitalist economy associated with a liberal dose of consumer debt. We talk about it still.

2. Artificial means to keep the system going/provide stability can include war, massive debt on the part of consumers, or artificial spending to provide “full” employment (probably includes war as a subset). He thinks in terms of checks and balances with organized labor, government, and business (and I think he refers to big business) all working under this system which in the USA has been skewed. The early system is often labeled a period of Laissez-faire capitalism but he points out that it proved too unstable (again, booms and busts) which led to attempts at internal regulation (monopolies or gentlemen’s agreements on agreed upon ways to manage the market) and then failing that, government interventions (which supported big business—allocating resources or limited competitive trade with tariffs and suppressed labor movements). He believes these forms of regulation are often under-appreciated by Americans who, like me came to understand this history in classes and the press each of which has a bias. He points out that we in the US currently live in a “mixed” economy which given his historical outline, is needed to prevent the collapse of the markets. He would argue that all modern economies have varying amounts of artificial control of markets with stability as the main objective.

3. Regarding American Capitalism, many of you and I were born into and lived to the point of early adulthood in what he calls, “The Golden Age.” I knew this one—-ours’ was the only modern untouched industrial base in the world following World War II, something, “our side” concluded with great success. We had a healthy country re infrastructure. We had vision and a government willing to exercise that vision whether considering domestic economics (the interstate road system—or “regulating” the number of workers seeking jobs by decreasing the number of workers through the GI Bill) or foreign affairs (with the stimulus to the economy that our military expansion provided). He marks 1970 as the time when all the assumptions of what white middle class Americans came to expect after WWII started to be challenged by a world with a newly built infrastructures and workers willing to work for less. But in the golden age, salaries and benefits were good and we lived in a land of plenty. We breathed the left-over fumes of a successful world crusade against Fascism—which depended on a centralized economy. He believes the Golden Age was real but delayed what was always unstable and with time, the changes in the world economy had to be digested by all of us who assumed we grew up in “normal” times. We did not grow up in normal times—they were exceptional times.

4) Stagnation: he reads this as inevitable as the evolutionary Capitalist cycle is completed. Today we are in a service economy where “making things” is not a primary focus of the economy as people and investors look at their options with investing in mind. The complexity of what to do with money for investment when capital needs and consumer needs are sated (what material thing can’t you buy these days?) is why there are dizzying numbers of “products” through which to invest (think, derivatives and the packaging of real estate loans). Again, it is an unstable system, as he sees it. We all pay the price for that instability. Again, periodic scary booms and busts are expected.

5) He concludes with an almost Keynesian (this pre dates WWII) approach taken by the EU ie redistribute income and benefits and artificially regulate a “sweet spot” to provide jobs, services, and material things for all members of society while providing market stability. He argues that the market within society can and should be managed with specific goals in mind; the current situation in the USA in his mind, does not do this. It is almost as if, with the Covid Virus now world-wide, I see him presenting himself as a sort of Dr. Fauci foretelling the disasters that are predictably going to come if we don’t reckon with the disconnect between what we know, what we think we know, and how we feel about Capitalism.

As a medical student, a famous internist on rounds gave me the nod and said, “tomorrow, you will talk to us about Diabetes.” I crammed and tried to tell everything to know about diabetes in ten minutes the next day. He looked at me with scorn; I failed, trying to do it all. Focus Pinky, focus…… I won’t make that mistake here. A few observations….

Nasser, the author, is a professor at a liberal arts college; this type of college has a reputation since I was young as a nest of vipers—socialists poisoning the minds of our young with anti-American sentiments and foreign political philosophies. I went to such a liberal arts college—the parallels of The Evergreen College and UC Santa Cruz are undeniable. I survived and am not a radical anything. I think I have lots of company. The majority of my peers did not follow a predictable path of political philosophy. I know this from:

a) Personal observation as I have caught up with college friends over the years, and

b) A Volkswagon commercial from back in the early 80’s: it features this guy, an obviously up-and-coming and apparently successful businessman carrying a briefcase—into a new VW and the narrator asking him with a sense of fond rememberance, “Aren't you Joe from Berkeley that had that cool VW Bus?” He looks flustered, and nods, “no.” “ Do you remember that time at the protests?”and all the while, the slightly longhaired guy, with the groomed beard in a business suit is shaking his head and denying his involvement with embarrassment while getting into the new VW sedan. This was funny because it was so true! If we were brainwashed in college, many of us certainly moved on to something less passionate and something less committed than the stereotype we are warned about, over and over. You can leave the University and not be a Marxist and maybe even be a Capitalist—-whatever that means.

Nasser makes a point of the efficiencies of Capitalism. It is a feature I admire. He points out that there is a downside to efficiency. If market forces push efficiency, the payback is that you make more things or provide more services with fewer and fewer people. The pressure is always: “grow or die.” Resistance to this gave us Luddites and there is a modern version of them but it is clearly not a mainstream political or economic entity. There is no answer there ( the Luddites of England would hire the labor to dig canals by hand vs use a steam shovel) to sustain our civilization/society. Turbo Tax is an efficiency and is likely responsible for the loss of thousands of jobs as well as loss of income for hundreds of thousands more. My science fiction vision comes into focus; what do all those people now out of a job do? I am a biologist/physician. Everything I known about the natural world is that nothing grows indefinitely without becoming unstable. What can we say about the future of a market based economic system that has a foundational need for perpetual growth? My thought is that economics is a discipline through which it interacts with many other disciplines within the structure of our society. While no system can grow indefinitely, all systems evolve and being humans, the speed and direction of that evolution is a subject of concern and of supreme importance both short-term and long-term. “Growth” can take on many forms.

As a product of the “Golden Age” I have to clear my head of assumptions that “feel right” based on the world to which I came of age: unprecedented economic advances appreciated at a personal level for my whole life up to that point. In my case, this continued into retirement. While my personal experience was of predictable improvement over time, and whether that really happened for everyone, or not, that was an expectation from that time. My experience cannot be assumed to have occurred or have been shared broadly. But it is easy to see that for American society as a whole, 1947-1970 was a Golden Age that is no longer with us. This helps explain why millennial assumptions about society and how to use money or plan for the future don’t always make sense to me but might be quite rational from their point of view. They did not grow up in my time with the choice points I had. How to use that understanding to think about our economy going forward (especially if you are in no way, an economist)?

A related point would be another source of instability that gets a lot of press and is appreciated with an astounding ambivalence by many: the concentration of economic and political power in the hands of fewer and fewer individuals. It is anti-democratic. In some fashion, it is a version of “everything old is new again,” but we approach that other age for parallels: the “gilded age.” My point about either the Gilded or Golden Ages being a general experience of economic growth for American Society is easily disputed. Those ages did not benefit everyone and some segments of our country cannot look upon those times as good times. A secure point of reference on this would be the economic world of blacks and other minorities but now formerly white middle class working people are no longer able to live with the assumptions they inherited from those who did experience a golden age. If it affects a larger and larger percentage of the population with race no longer a marker for, “well, that’s too bad….” What is going to give?

If this is ignored, the system will crash. Pick your revolution in this setting of concentrated economic and political wealth; French vs Russian. Our situation in the USA approached this kind of crisis only after World War I. Populism was a real thing and was viewed as an instability with repercussions. We, in the USA “evolved” in the years when Fascism and Soviet styled economic management were viable considerations on the world stage. We need to continue to evolve in our current environment.

Two parting analogies:

Pearl Harbor saw the American Pacific Fleet badly damaged. The prevailing naval strategic thinking of the time saw this as a disaster. Civilian citizens, rank-and-file sailors, and naval leadership all saw this as a daunting problem that would make the war long and costly. The reason? Everyone knew you could not win an ocean war without a fleet of powerful battleships. That conclusion was a fair one, given past experience. Air Craft Carriers were not at Pearl Harbor and were therefore spared. Within a year, the tide of the Pacific war turned on the reality. This was a paradigm shift. When you have it before everyone else, you lead and can be successful with the advantage of that shift as were the Japanese. If you come to it late, you hopefully catch up (as we did in WWII). I am thinking for a large number of Americans, our faith in our history and our version of capitalism is a bit like the admirals and sailors who believed in Battleships as means to win a war. Battleships were not that and we moved on with success without relying on them to win. We need to move on from our “Windows 1.4” version of “American Capitalism” and our associated social norms and blend it with a larger vision of what the point of it all actually is……and not put our faith in invisible hands.

To that point: when I was a medical administrator in a large HMO, I had to review complaints of potential malpractice. The sources might be a patient or patient’s family. It might be a concern raised by the doctor him/herself or a peer (includes nurses!). The starting premise was usually, “Did this doctor screw up or not?” I found that a yes/no answer was usually not to be found. We work in complicated systems with many variables and assumptions as well as a need for communication that in this setting is really really prone to errors. I reframed the question: This outcome was not optimal. We don’t want it to happen again. What do we have to change to make sure it won’t happen again? The work is answering those questions and then doing something to change the system so that next time, the outcome is better. We all have an emotional connection to a complicated problem with a Yes/No answer in our gut but are well served with a more structured look at a complex problem and identification of problems that should not continue into the future. We may not be equal to the complexity of solutions as individuals, but we certainly can connect to the in-your-face things that should not happen: Multibillion dollar companies lobbying our representatives with deals they cannot refuse, 1% of the population holding more assets than all of the middle class, and an increasing percentage year by year.

That is in fact, “Overripe!”

PS: Check out the very relevant article in the July/Aug 2020 Atlantic: The Worst Worst Case, by Frank Partnoy.