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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Location: Northwest Arkansas, United States

Monday, November 05, 2007

Two Book Reviews: New Labour and Managerialism in British Politics

Sean Gabb. Cultural Revolution, Culture War: How Conservatives Lost England, and How to Get It Back (London: The Hampden Press, 2007). 105 pp.

Chris Dillow. The End of Politics: New Labour and the folly of managerialism (Hampshire, UK: Harriman House, 2007).

These two books, seemingly from divergent ideological perspectives, are both critiques of managerialism in British politics--and perhaps not so divergent after all.

Sean Gabb, successor to the late Chris Tame as Director of the Libertarian Alliance, is very much a man of the Right: a composite of Burkean and Little Englander, roughly equivalent to the Old Right or paleolibertarians on this side of the Atlantic. In his critique of managerialism and the corporate state, however, he has much to say about globalization and corporate rule, among many other things, that left-libertarians will find of benefit.

Chris Dillow, a heterodox economist who owns Stumbling and Mumbling blog, attacks managerialism from a position decidedly on the Left. But it's a Left that's friendly to markets, decentralism, and self-management, and hostile to the New Class version of bureaucratic socialism that dominated Britain from the Webbs to Harold Wilson.

* * *

1. The chief villain in Gabb's book is the managerial New Class and the rentier capitalists whose main source of profit is their association with the corporate state:

It is clear that our ruling class--or that loose coalition of politicians, bureaucrats, lawyers, educators, and media and business people who derive wealth and power and status from an enlarged and active state--wants an end of liberal democracy. [p. 6]

Elected politicians never have the running of a country all to themselves. While undoubtedly important, they must in all cases govern with the advice and consent of a wider community of the powerful. There are the civil servants. There are the public sector educators. There are the semi-autonomous agencies funded by the tax payers. There are journalists and other communicators. There are certain formally private media and entertainment and legal and professional and business interests that also obtain power, status and income from the policies of government. Together, these form a web of individuals and institutions that is sometimes called the Establishment, though I prefer... to call it the ruling class. [p. 8]

Gabb's ruling class, like the mass base of Orwell's Ingsoc party, was "brought together by the barren world of monopoly industry and centralized government."

The new Britain he finds so objectionable was essentially described by Anthony Burgess some forty years before. Indeed I find the absence of any reference to Burgess somewhat remarkable. Tony Blair's Britain, with its near-total supercession of common law protections by administrative courts, and with the social pathologies symbolized by the ubiquity of yobs, happy-slappers and ASBOs (Anti-Social Behaviour Orders), under the watchful eye of the public surveillance camera, could have leapt from the pages of A Clockwork Orange or 1985. Burgess's Britain, terrorized by hoodlums like Alex and his droogs, in which "everyone not a child or with child must work," and where the Minister of the Interior sought to empty the prisons of common prisons because they'd "soon be needing them for the politicals"--is it really such a stretch of the imagination, these days?

The instruments by which the New Class is imposing this "new settlement" on Britain are the replacement of common law due process, civil liberties, and parliamentary government by the unaccountable rule of administrative bodies, and the use of multiculturalism as an ideology to divide, conquer, and reshape society.

Gabb sees the old institutional basis of liberal democracy being eviscerated by the New Class:

...structures of accountability that emerged in the 17th and 18th centuries are to be deactivated. Their forms will continue. There will be assemblies at Westminster. But these will not be sovereign assemblies with the formal authority of life and death over us all. That authority will have been passed to various unelected and transnational agencies. And so far as the Westminster assemblies will remain important, our votes will have little effect on what they enact. [p. 6]

I can find much to disagree with in Gabb's view of cultural (or rather multicultural) matters. For example, in principle I would view the shift in orientation of the National Maritime Museum in Greenwich that he describes, from a celebration of Empire and naval supremacy to a focus on slavery and "history from the position of the colonised," [p. 10] as a good thing. I consider insititutional racism in police forces, and the casual expression within police circles of racist attitudes toward the subject populations over which they are have been given near-unlimited power to coerce, in a much more alarming light than Gabb apparently does. In a country where the names Cory Maye and Katherine Johnson have recently figured in the news, where every week brings another story of someone murdered in a botched no-knock raid, or of someone being tasered to death for "resisting arrest" (who turned out to have been in a diabetic coma)--I can understand the reasons for rooting out such attitudes among our "protectors and servers" root and branch. I confess little sympathy for a uniformed beast of prey (or "filth," in the apt terminology of some across the Pond) who expressed approval for the murder of black suspects in police custody, and who joked about burying a "Paki bastard" under a railway line,-- regardless of how badly his life was "ruined" by exposure. [pp. 11-12] Although Gabb suggests the public reaction was "excessive" and expressed some doubt as to whether such views would affect their performance of public duties, [p. 12] given the background of police abuses in my own country I tend to think cops with absolute and unaccountable power are quite prone to act on such views, and that the public reaction isn't severe enough.

But the remarkable fact is not our disagreement on cultural matters, but that I concur with so much of his analysis of the effect of "political correctness" and multiculturalism as ruling class ideologies. Like Gabb, I see official multiculturalism in the hands of the New Class and its state agencies as an instrument of division and control, serving a ruling class that prefers a population without the cohesion to resist.

The ruling class seeks "the establishment of absolute and unaccountable power," to be achieved in part by coercion, but even more by the "reshaping of our thoughts." The significance of multiculturalism is not so much its objective content, or the often harmful and wrongheaded content of the older habits of thought it seeks to replace. It is the attitude of uncertainty and deference it seeks to create among the ruled: constant uncertainty and anxiety lest they be using a word ("crippled" or "handicapped" rather than "differently-abled," "black" rather than "African-American," "Indian" rather than "Native American") that has been superceded by the Eleventh Edition of the Newspeak Dictionary, and deference to the class of social engineers who decide the currently acceptable terminology. And the terminology is deliberately changed frequently enough to maintain this constant free-floating sense of anxiety and dependence.

As dangerous as virulently racist views may be when held by the lawless thugs whose "gang colors" are police uniforms, the nature of the ideas being stamped out is purely incidental for the social engineers; their real purpose could be served just as well by identifying any widely held belief, no matter its substantive content, as a "thoughtcrime" to be policed by themselves. And the assumption of such state power is even more dangerous when exercised against private citizens--as when plainclothes police agents visited Chinese and Indian restaurants to monitor the patrons for ethnic slurs against the staff. [p. 13] Criminalizing the expression of racist views by private citizens, no matter how abhorrent--it should go without saying for any libertarian--endangers the liberties of everyone else.

The ruling class's motivation in ideologically renovating museums and such is not to replace a worse with a better understanding of an objective truth, but to "weaken their ties with the past, or... to make them into vehicles for contemporary propaganda." [p. 10]

Every autonomous institution, every set of historical associations, every pattern of loyalty that cannot be co-opted and controlled--these must be destroyed or neuralized. [p. 25]

Their agenda, in rooting out and punishing private expressions of racist thought, is to seize on the abhorrence that many understandably feel for such views as a vehicle for putting power into the hands of a class of social engineers.

If borders and customs and other artificial barriers to the free movement of people are a bad thing, then so is the artificial mobility promoted by Empire and by subsidized global capitalism. The result, as described by Gabb, is to render impossible a recurrence of the liberal uprisings of the sixteenth and seventeenth centuries , "by promoting movements of peolles so that nations in the old sense disappear, and are replaced by patchworks of nationalities more suspicious of each other than of any ruling class." [p. 6]

Stripped of the Left's older preoccupations with economics and class, likewise, multiculturalism can be of immense service to the cartelized private sector in policing its wage-serfs and cubicle-drones. For one thing, the added inefficiency and overhead costs of an internal PC regime, as Gabb observes, are cartelized: that is, they apply equally to all large corporations and are therefore not a matter for competition between firms. [p. 48] For another, the postmodern, multicultural corporate culture described by Thomas Frank in One Market Under God is much closer to the worldview of David Brooks' "Bobos" who predominate in managerial ranks. In the U.S., for the managerialists and professionals who constitute the base of the Democratic Party, stagnant wages, downsizing, and all the other economic aspects of the new global economy are perfectly fine--so long as the people in the boardrooms who do the exploiting "look like America." Forty years ago in The Greening of America, Charles Reich depicted a hippie chic utopia in which the centralized, hierarchical power structures of the state and corporation were largely unaltered--but staffed by people with bell-bottoms and beads. What mattered was not the existence of concentrations of power, but that the people in power "had their heads in the right place, man." That "utopia" is, in essence, now a reality. Most importantly, in an age of increasing worker disgruntlement over stagnant pay and increased workloads, an internal PC regime serves admirably to promote resentment and divisions and reduce solidarity among workers, and provide trumped-up grounds for disciplining troublemakers.

A central part of Gabb's analytical toolkit is the work of Frankfurt School and neo-Marxist scholars on "ideological hegemony." Although he denies the applicability of their analysis to "liberal democracy," he sees it as well-suited to the ideological project of the new ruling class.

I should say, in passing, that I take issue with Gabb on the relevance of neo-Marxist thought to the old, "liberal" order. He denied the existence of any real "hegemonic discourse" under the old liberal regime, arguing rather that political leaders tended to legitimize their positions in terms of a value system which arose spontaneously from civil society and which they accepted as given. [p. 20] Likewise, he considers the Chomsky/Herman "propaganda model" of the media to have been inapplicable to liberal democracy. [pp. 31-32]

I think he is mistaken on this count. For one thing, the question of whether "liberal democracy" even existed in any meaningful sense is a very real one. The old liberal democracy was dominated by privileged capitalist and landed elites whose economic position resulted, not from the workings of a market, but from the state. And the old "spontaneous" ideological climate reflected, to a large extent, their interests. For another, the New Class and its ideology are nearly as old as corporate capitalism, and its managerialist world-view (eg. scientific management) has been incorporated into the service of the plutocracy since the corporate revolution first required a class of "professional" overseers. The New Class and managerialism, and the protective and nurturing state, have been integral parts of corporate capitalism since its beginning; and if we identify the full flowering of liberal democracy with the electoral reforms of 1833 and 1867 (let alone 1911), then liberal democracy was hardly even fairly begun and the Old Regime fairly ended, before the beginnings of state capitalism. Genuine "liberal democracy" was largely limited to a thin sliver of thought by Ricardian radicals like Hodgskin, assorted Cobdenites, etc., sandwiched in-between the Old Regime and state capitalism, which was quickly relegated to a few radical free market strands (the individualist anarchists, Georgists, Nock and Borsodi, etc.) fighting a rear-guard action within state capitalism.

And in more general terms, hegemonic ideology is coextensive with, and as old as, class society. As an individualist anarchist, I consider class power and economic exploitation the primary functions of the state; and just as there has never been a genuine free market, free from economic exploitation by state-privileged classes, there has never been a society without a hegemonic ideology serving such privileged classes. Hegemonic ideology, I should add, does not require any conscious, conspiratorial design--it is a largely automatic result of a society's normal tendency to reproduce the conditions for its own continued existence.

I also suspect Gabb's treatment of neo-Marxism as the ideology of the new ruling class is overblown. There may be something to his tracing of their political style to the New Left fashions of their formative years; Gabb cites Boyd Tonkin to the effect that while Nulab has abandoned most of the economic content of Marxism and social democracy, their "pattern-building, system-seeking cast of thought" persists. [p. 22] But stripped of their economic and political substance, the signficance of their style itself is tenuous at best (as also with explanations of the neoconservative "style" in terms of their alleged Trotskyite origins).

As an analytical tool for describing the ideological functions of the ruling class, as opposed to the content of their ideology, neo-Marxist concepts may however be quite useful.

And while I disagree with Gabb on the question of whether a hegemonic ideology existed under "liberalism" and the Old Regime, I do agree that it was much more feasible to argue against the hegemonic ideology from an independent base. The average person of the late twentieth century was far more conditioned by his televised matrix reality, than the average member of the working class by the hegemonic ideology of the nineteenth century. The very extent to which Marxism and assorted brands of anarchism spread among the working classes demonstrates as much. Contrast, for example, Thomas Franks' Kansas before WWI, to the same region in recent years. It was surely even more prone to Bible-thumping and Jesus-shouting at the turn of the twentieth century as it is now--and yet it was one of the prime constituencies for the Wobblies and Gene Debs, and home to a vibrant and independent working class press. Today, on the other hand, the populist resentment of the area is channeled by Rove's talking points and AM talk radio against a range of targets carefully selected by the ruling class. The turning point was probably the liquidation of the genuine socialist, working class, and economic populist movements during the reign of terror under St. Woodrow and A. Mitchell Palmer. We may finally be witnessing today, with the rise of the Internet and network culture as an alternative to the gatekeepers of the corporate media, the weak beginnings of a resurgence of something like the pre-WWI independent popular culture.

Gabb's revolutionary agenda deserves a great deal of attention. He rejects any gradualist program of scaling back one institution at a time. Such a strategy, he says, would just result in a pitched battle over each institution, with the anti-state coalition quickly losing its political capital to a war of attrition. The only hope is to gamble everything on electoral success and then to act quickly and decisively, in the brief window of opportunity, to dismantle as much of the ruling class' institutional base as possible, so that it cannot be quickly reconstituted if power once again changes hands. That means completely abolishing institutions like the BBC, and completely dismantling the administrative apparatus and records of the regulatory state ("An hour in front of a shredding machine can ruin the work of 20 years."), and--while leaving the state schools intact--completely abolishing teacher training colleges. [pp. 54-56, 60]

I am skeptical as to the prospects for any such all-at-once seizure of power, as opposed to gradually rolling back the state and supplanting it with alternative organizations (as per both the agorist agenda of building a counter-economy, and the Wobbly strategy of "building the structure of the new society within the shell of the old"). But I agree that, revolutionary or gradualist, the goal of any libertarian movement should be, not to control the state and other centralized institutions, but to dismantle them. I am very much a believer in Michels' Iron Law of Oligarchy. Genuine democratic control of centralized, hierarchical institutions is impossible. Our only hope for real democracy is to destroy as much of the infrastructure of the centralized state and corporate economy as possible, and replace them with loose political federations of local direct democracies and with a free market of competing worker cooperatives.

Along these last lines, interestingly, Gabb proposes something of an entente with the libertarian left.

...there are many anarchists and syndicalists and libertarian socialists who do not believe in this extended state. And so I will make it clear that when I talk about a free market, I do not mean a legal framework within which giant corporations are able to squeeze their suppliers, shut down their small competitors and socialize their workers into human sheep.

I have already said I would not defend the landed interests. I would very strongly favor an attack on the structures of corporate capitalism

Organisations like Tesco, British Pretroleum and ICI are not free market entities. They are joint stock limited liability cororations. The Company Acts allow them to incorporate so that their directors and shareholders can evade their natural responsibilities in contract and tort. They are, for this reason, privileged in law....

It is not true that big business has in any sense suffered from the public interventions in economic activity of the past hundred years. The truth is that big business has benefited from, and in many cases, promoted every agenda of big government. Employment protection laws, product safety laws, curbs on advertising and promotion, heavy taxes, and all the rest--these have served to insulate big business from their smaller competition, or have cartelized or externalized costs, thereby reducing the need for competition between big business....

The leaders of large corporations are nothign more than the economic wing of the ruling class. They provide taxes and outright bribes that enrich the political wing. They act as part of the ideological state apparatus.... In return for all this, they receive various kinds of protection and subsidy that allow them to make large profits.

They police their workers... Workers find themselves gently conscripted into large organisations that strip them of autonomy and suppress any actual desire for self-direction. Anyone who works for any length of time in one of these big corporations tends to become just another "human resource"--all his important life decisions made for him by others, and insensibly encouraged into political and cultural passivity. [pp. 63-65]

His description of the likely fate of the state-affiliated "private sector" corporate economy, after the revolution, is positively eloquent:

Our first big attack on the present ruling class should destroy most of the really dangerous government bodies, and the formally private bodies that now cluster round them would perish like tapeworms in a dead rat. [p. 61]

The tapeworm is to be killed through the elimination of all subsidies and protections, and above all the elimination of limited liability.

We should promote the emergence of markets in which the majority of players are sole traders and partnerships and worker cooperatives, and in which the number of people employed on contracts of permanent service is an ever-dwindling minority.... [This policy] would replace armies of ruling class serfs with beneficiaries of our counter-revolution. [pp. 65-66]

The welfare state he advises to leave pretty much alone for the near term. In so doing, the revolution would deprive the ruling class of its chief potential ally for an attempted counter-revolution. And, he points out, the main actual cost of the welfare state is the administrative overhead from supporting intrusive and authoritarian welfare bureaucrats in a comfortable lifestyle. As a first reform, he proposes eliminating the entire apparatus of case workers and redirecting the entire welfare budget to a guaranteed annual income. [pp. 57-59] Ultimately, it could be drastically scaled back as increased working class prosperity and a resurgence of voluntary mutual aid arrangements made it unnecessary. [p. 63]

His tax agenda--eliminating the income tax and VAT, and replacing them with a tax on land-value--should be pleasing to the Geolibertarian contingent of the libertarian left. [pp. 62-63]

In the legal realm, Gabb proposes dismantling as much as possible of the administrative state and its prerogative law procedures. In the restored common law, all regulations of vice and private behavior are to be eliminated, while making penalties for real crimes against person and property sufficient to deter. For the latter crimes, however, a maximalist reading of all common law due process guarantees is to be restored:

the right to silence under police questioning, the full right of habeas corpus, the full presumption of innocence, the full right of peremptory challenge of jurors, the rules against similar fact and hearsay evidence, the unanimity rule in jury trials, and all else that has been taken away. [p. 68]

* * *

2. The central focus of Dillow's critique of New Labour is managerialism. By that, he says,

...I mean an ideology which tries to eliminate political debate about the rival merits of competing ideals. In its stead, managerialism relies on a central elite which believes that it, and it alone, has the skill and know-how to devise policies to cope with the inexorable forces of economic change.... In short, New Labour believes it can run a country in the same way that executives run a business. [pp. 11-12]

...Managerialists like to pretend that we face big challenges in a fast-moving environment. They invite us to believe that they alone are equipped to address such challenges (in managerialism, problems are never solved, only addressed). And they like to present policies as necessary responses to external events--just as company bosses present mass redundancies as inevitable measures over which they have little choice. [p. 14]

The irony is that New Labour managerialists, for all their proclaimed technocratic competency, are so ham-handed in their "solutions" to the pressing needs of the changing economy. "Information technologies are transforming our lives," goes the Nulab slogan. "Fair enough," replies Dillow. But he points out that the organizational paradigm of the new economy is the substitution of networks for hierarchy, while the Blairite "solution" is even more hierarchy. [p. 16] An interesting point of comparison is Bill Gates, the fountain of so much superficially libertarian rhetoric about new economies and flattening hierarchies, but whose practical agenda focuses almost entirely on the use of state power to protect corporate hierarchies from the destabilizing effects of the new economy: the Digital Millennium Copyright Act, Vista Genuine Advantage, the recurring threat of infringement action against Linux distributers. Blair and Gates, faced with a technological and economic revolution against hierarchical institutions, attempt to domesticate the revolution and render it amenable to the control of hierarchical institutions.

This is especially disappointing, given Blair's Christian socialist roots and his early affinity for quasi-distributist ideas. The Cooperative Party, in an almost touching exercise in denial, have long persisted in celebrating their ties to Blair and Brown; until recently Blair's visage leered down from the banner of their website.

But despite occasional lip service to "a redistribution of power that offers people real control over the decisions that affect our lives" (Gordon Brown), New Labourites never consider any cooperative challenge to corporate hierarchy.

New Labour likes to claim that it is "pro-business." The significance of this is that one rarely hears that it is "pro-market."

The distinction is important. Markets are tumultuous, unpredictable and uncontrollable processes, which often make fools of the most esteemed expert.... Businesses, however, are hierarchical bureaucracies and their leaders are often more like senior civil servants than buccaneering entrepreneurs.

New Labour's preference for business over markets shows its managerialist bias--because to any managerialist, businesses, with their mission statements and their illusions of control, are much more congenial than the disruptive anarchic forces of the market. [p. 19]

Dillow, in denouncing New Labour managerialism, does not fall into the common pattern of considering its economic agenda a neoliberal departure from the older Fabian socialism.

We might observe, in passing, that almost from their first Fabian and Crolyite beginnings, New Class advocates of a mixed economy in the Anglophone world have been in fact the hired help of the corporate plutocracy.

And as Dillow points out, Blair's agenda was very much in line with the anti-labor authoritarianism of the old Fabian movement. Blair's "work not welfare" was a logical outgrowth of the Beveridge Report's aim "to make and keep men fit for service." [p. 9] C.S. Lewis' depiction of authoritarian social engineering in That Hideous Strength was a fairly plausible extrapolation from the most proto-fascistic tendencies of H.G. Wells and the Webbs (with their forced labor camps and sterilization for the underclass), and from the New Statesman agenda of the late 1940s.

There is one issue on which I probably disagree with Dillow: the necessary tradeoff between efficiency and equality. Dillow takes issue with the New Labour theme that we can have both efficiency and equality. Although that position may well be spurious as it is meant by New Labour, I think it is in fact quite possible to have dramatic gains in both equality and efficiency compared to the present baseline, with no tradeoffs of any kind. The reason is that most of the present inequality in income bears no relation to differences in efficiency, but rather results from privilege and exploitation. If by "equality" one means eliminating incomes that derive from privilege, and by "efficiency" tying income to productivity, the two are necessarily connected.

I suspect the problem with New Labour's idea of reconciling the two lies with their conception of "efficiency": a Schumpeterian/Chandlerian/Galbraithian monstrosity of centralization, false economies of scale, and Weberian rationality. Accordingly, their recipe for "efficiency" assumes the existing corporate institutional structure will be left intact with all its assorted forms of privilege, and then "equality" is achieved by redistributive taxation and welfare to distribute some of the surplus accruing from such "efficiency." The New Labour approach is to leave the hierarchical corporate and state apparatus untouched, and then promote both "equality" and "efficiency" through top-down social engineering: carefully tailoring taxes, benefits, minimum wages, and other incentives to maximize output and achieve the ideal distribution of income.

....governments know how labour supply decisions respond to tax and benefit rates, so they can design a tax and benefit system that encourages people to work. They know how to set the minimum wage at a high enough level to raise incomes, but not so high as to destroy employers' willingness to employ peole. They know enough about what determines companies' capital spending decisions, so they can promote investment by striving for macroeconomic stability. And they know how to improve education, and how education affects earnings, so they can use better schooling to reduce wage inequality and promote economic growth by providing a bigger supply of skilled workers. [p. 21]

But in fact the present corporate system is pretty bad from the standpoint of efficiency. It starts from the assumption of enormous concentrations of wealth in a few hands, the absentee ownership of capital by large-scale investors, and a hired labor force with no property in the means of production it works. Necessarily, therefore, the absentee owners must resort to the expedient of hierarchy and top-down authority to elicit effort from a work force with no rational interest in maximizing its own productivity. Such hierarchies necessarily result in the divorce of effort from reward, and of productive knowledge from authority. Each rung of authority interferes in the efforts of those who know more about what they're doing, receives only information filtered from below based on what they want to hear, and is accountable only to those higher up the chain of command who are even more unaccountable and out of touch with reality.

The obvious solution, the worker cooperative, by uniting knowledge with authority and reward with effort, would slice through the overwhelming majority of the hierarchical corporation's knowledge and agency problems like a Gordian knot. The problem of socially engineering the wages and benefits system so as to "encourage people to work" would disappear; the elimination of privilege and unearned income, and the receipt by labor of its full product, would tie reward directly to effort.

But this solution is ruled out by the system's structural starting assumptions of concentrated wealth and absentee ownership. So the hierarchical corporation is adopted as a sort of Rube Goldberg expedient, the most rational means available given fundamentally irrational ends.

I say above that I probably disagree because Dillow's own agenda, presented at the end of the book, consists of the very sort of program of economic democracy that would be perfectly designed for the coincidence of efficiency and equality. He is an enthusisatic supporter, for example, of worker cooperatives and self-management. He is also very big on the idea of the government introducing cooperative, decentralist and democratic principles into its own enterprises:

The salient fact about New labour is that it has done nothing whatever to equalize status within the organizations it runs. The civil service is as inegalitarian--lethally so--as it was in 1997. And there's been no effort to convert schools and hospitals into more egalitarianly managed structures. The state is far more hierarchical--far more opposed to the concept of equal status--than any investment bank. [p. 215]

Indeed, one of the planks in his agenda is titled "Turn schools and hospitals into cooperatives."

His case against hierarchy and for self-management is bolstered by extended arguments toward the end of the book. In Chapter 13, "The Rituals of Reason," he examines at length the fallacies and biases to which management is prone, in overestimating its own competence and underestimating the intractability of problems.

One might raise the question of whether managers are really unique in this respect; are not workers, also, prone to such conceptual biases? The answer, I think, is that (of course) everyone is prone to logical fallacies and conceptual biases. But their tendency to distort thought increases the more a decision-maker is separated from direct knowledge of a problem, and the more concrete practical knowledge is replaced by abstract considerations. The closer a decision-maker is to the subject of his decision, and the more it involves matters of familiar technique or personal experience, the more competent his decisions. A skilled laborer on the shop floor is apt to be the best judge of organizing production, or of handling the organizational problems involved in coordinating the activity of skilled workers like himself in his own work unit. If his work unit is a small factory producing for a local market, made up of people largely known to the work force, and with retail outlets that have maintained relations with the factory for an extended period of time, he and his coworkers are apt to be the best judges of the levels output required by the market and the product innovations likely to be demanded.

Dillow's critique of hierarchy, as a source of irrationality and knowledge distortion, is very Hayekian.

When the first factories were established by Richard Arkwright and James Watt, it made sense for them to control production with an iron hand, because they knew the production processes inside out--they had invented them...

Today management doesn't have this know-how. Products, process and markets are too complex for anyone to know as thoroughly as Arkwright or Watt did....

Instead, knowledge of the production process is scattered across the organisation. If you have a problem, it is often better solved by asking your fellow workers than asking the boss.

However, hierarchies can obstruct co-operation between workers. One reason for this is simply that pyramidal reporting lines often prevent workers from knowing and therefore using the skill of their colleagues. Another reason is that communication requires trust.... Worse still, the benefits of co-operation are often impossible to quantify, and so a management obsessed with budgets and targets does not encourage it. And the knowledge that such gains will flow to managers, rather than themselves, will inhibit workers from co-operating fully. [p. 278]

The hierarchical, authoritarian corporation is especially ill-suited to knowledge work, and other forms of production in which human capital is the most important factor.

It might make sense to give the order "be here by nine o'clock." But it's just gibberish to say, "be creative."

In an authoritarian environment, workers prefer (in the words of Kenneth Cloke and Joan Goldsmith) to "suppress their innate capacity to solve problems and wait instead for commands from above." [p. 279]

Dillow observes that excessively large government works contrary to the goal of income equality. The reason is that, when state expenditures eat up a large enough portion of the GDP, it becomes impossible to fund them by taxing the rich alone. A society in which the state consumes 50% or more of GDP will, of necessity, have a high tax burden on the middle class. [p. 69]

He is quite hostile to New Labour's social engineering approach to taxation. Rather than a complex, administration-intensive program of carefully targeted tax credits and cuts, it would make far more sense to institute a citizen's basic income which requires little administrative bureaucracy. [p. 85] In the American context, I have long cursed the lack of an alternative to the mainstream Democratic and Republican approaches to tax cuts. The Republicans, predictably, are wedded to the idea of "across the board" tax cuts that go overwhelmingly to the plutocracy. Democrats, as one might expect of such nanny statish social engineers, prefer carefully targeted tax credits for child rearing, health insurance, higher education, home energy efficiency, etc. The obvious alternative to both, as progressive as it would be libertarian, would be to simply raise the standard exemption to $30,000 or so.

The great size of political units, and the removal of the administration of welfare as a question for local self-government, has nullified the natural tendency toward mutual aid shown by humans in communities small enough for direct personal acquaintance with the disabled or unemployed. As a result, the working class tends to resent the underclass and to be vulnerable to anti-welfare demagogy by right-wing politicians. [p. 219] A decentralized society of small, self-governing population units might well contribute voluntarily to mutual aid arrangements on a scale sufficient to render taxation unnecessary (especially if laborers received a larger portion of their actual product).

In the process of writing his book, Dillow manages to attack many of the platitudes of establishment economists and neoliberal chatterers like Tom Friedman. For example, he points out that the natural tendency of technical change is to reduce the international division of labor. The increasing speed with which technology crosses national borders means that particular nations maintain comparative advantage for shorter and shorter periods. "that tends to limit the international division of labour and, with it, world trade growth." [p. 45] And as I recall someone else suggesting, a great deal of "comparative advantage" is the artificial result of "intellectual property" [sic] laws.

He is merciless in attacking the New Labour love affair with education as the solution to poverty (likewise beloved of social engineers in this country, both liberal and neocon). The real benefit of education, from the perspective of the corporate economy, is its function in signalling a "good attitude": educated workers have "a high marginal utility of income, a propensity for hard work, ...and an ability to identify with managers rather than workers."

If education works by changing our characters, and by straightening the crooked timper of humanity into something useful to bosses, prosperity is achieved by sacrificing liberty and diversity to managerialism. [p. 119]

What's more, as the impolitic Joe Bageant argued, the social engineering panacea of education depends on a fallacy of composition. While individuals can increase their chances of advancement by education, the entire population cannot do so. The Empire requires some 25% or so of the population to fill supervisory, administrative and technical slots. Increasing higher education beyond this share of the total population simply increases the competition for those slots and drives down salaries, while inspiring an authoritarian, dog-eat-dog attitude on the part of the winners toward the losers. It inspires, that is, the same status anxiety that motivated so much of the German lower middle class to support Hitler.


Anonymous Anonymous said...

I would be hard pressed to draw exact parallels, but Sean Gabb's 'ruling class' as expressed in the increasingly authoritarian and centralist agendas of the two main parties here in the UK, remind me more and more of Jack London's 'Iron Heel'.

I know that sounds like hyperbole, but the potential for dissent and individual thought is being inexorably whittled away.

November 06, 2007 9:04 AM  
Anonymous Anonymous said...

That the Ruling Class or its dominant financial factions use neo-Marxism as a false dialectic is not that far fetched. Marxism as an ideology empowers the State, if it is re-labeled as Capitalism and 'free market' whne in actual fact it is a Command Economy they are running then they are Marxists.

I can see why so called 'western capitalists' like Rockefeller and others would promote Marxism.

December 02, 2007 2:10 PM  

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