Samuel Cohn: Global Social Trends

Richard Lachmann has written a wonderful book on the Fall of Great Powers. In the Gloom and Doom biz, Lachmann’s title is one of the best titles out there: First Class Passengers on a Sinking Ship: Elite Politics and the Decline of Great Powers. (Verso Press 2020) The cover shows nineteenth century steamships in various stages of sinking below the waves.

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I am also in the Gloom and Doom biz. One of the themes of this website is Societal Death. My own Gloom and Doom book All Societies Die will be coming out this spring.

    

Lachmann and I agree about many things. I see societies dying because the various factions within the society turn against each other and lose track of what it takes to keep the entire society alive. Lachmann thinks dominant powers fall because the elites in those societies do the same thing. I look at everyone in the entire society – rich, middle class and poor. Lachmann looks at only the rich. Well, the rich have contributed to the downfalls of many societies – including all of the cases that fill his book. He finds nearly five hundred pages of horrible terrible things that the rich have done that have destroyed the power of Spain, the Netherlands, France, Britain and the United States. If you add what the middle classes and poor have done, I suppose you could produce another five hundred pages. But who wants to read a one-thousand page book?

     

Lachmann argues that Great Powers become Great when a multiplicity of elites collaborate together for the good of the larger society. Almost always one of those elites has to be a merchant or manufacturing elite. Otherwise, the society does not generate enough economic growth to support an army. However, it is important for checks and balances to exist – notably from a powerful group with a different set of interests. In Britain, this was the landed aristocracy. In the Netherlands, it was five different regional clusters of wealthy families – each with divergent economic interests. In the United States in the twentieth century, it was a strong unionized labor force.

    

Avoiding a unitary self-privileging elite accomplishes two fundamental goals.

    

1. An all-powerful single elite tends to not tax itself. The government loses military strength, educational strength, infrastructural strength and in modern periods, technological strength, because it doesn’t have the resources to manage the nation. When there are multiple elites, the co-elites look with disfavor on one group giving itself privileges and ducking its tax obligations. Each party twists the other party’s arm to pay their fair share and the government ends up being adequately funded.

    

2. A single elite can dictate that the government has a foreign policy that benefits that one particular class and that class alone. There is almost always a gap between geopolitical realities and the preferred foreign policy preferences of special interests. The Netherlands primary geopolitical threat was the British – whose naval power was a direct threat to the Dutch East Indies Colonies and to the Baltic trade. However, during the Netherlands’ decadence, there were special interests who wanted to ally with Britain against France to create short term problems for French commercial competitors. The Spanish aristocracy, which was strong enough to be unopposed, favored Genoese merchants who could fund glamour military campaigns now, and prejudiced their own Sevillian merchants who represented the future of Spanish economic growth. In return for short-term financing of the war of the hour, the Spanish aristocracy hamstrung Sevillian banking, Sevillian manufacture, and any war that would have been inconvenient for the Genoese financiers. Having multiple elites with their own independent power pushes foreign policy towards what is good for the country as a whole; this is better than a foreign policy that just privileges one group.

    

So where does that leave the United States right now?

    

Lachmann says that the dominant elite that has gotten near hegemony in the United States is the financial elite – with the general richest 1% being aligned with that financial elite. They now have effective political influence in both the Democratic and Republican parties – and get what they want regardless of what party is in power. What do they ask for and what damage has this done?

    

a. The financial elite asked for deregulation of banks, allowing banks to make lucrative but high-risk investments. Protections against fraud were removed. Government bailouts were used to prop up banks that invested recklessly or imprudently. The results are financial meltdowns that destroy the livelihoods of much of the American population while leaving the well-being of the financial community intact.

    

b. That same elite has asked for the legal ability to promote mergers and acquisitions. The increased concentration of market power in a small number of firms has led to reduced competition, worse service and higher prices in sectors such as health care, air travel and banking itself while creating enormous fortunes for the handful of executives at the top. That increased market power has allowed those firms to have even greater power in Washington than they had before. In the pre-merger and acquisition period, there were many small local firms and banks who could plead the special interest of their city or state to their elected representatives. Now that most economic activity is concentrated in megacorporations of national scale, there are no longer advocates for particular states or regions, allowing large sections of the country to be economically devastated. The gutting of the Midwest and much of the South to the benefit of the East and West Coasts has something to do with the activities of a globalizing elite that has little concern with the newly impoverished regions of the country.

    

c. The elite has dramatically cut taxes and shrunk government spending – lowering the military readiness of the United States, the social welfare net of the United States, the quality of its health care, the quality of its science and the quality of its infrastructure.

    

d. The elite has reduced the wages and bargaining power of much of the labor force. Not only are base salaries lower, but there is more part time work, fewer fringe benefits such as employer-provided health care, and more employment insecurity. The reduction of workers’ income has led to a reduction in consumption and overall demand as the American population is less capable of absorbing the goods and services provided by the Fortune 500. One advantage of the old union wage system is that it propped up markets by making workers consumers. A poor labor force leads to a poor economy.

    

e. Lachmann would also argue that the large supercorporations have led to an American military overdependent on fancy weaponry. This adverse trend is reinforced by Pentagon career structures which reward officers who manage complex expensive systems rather than simple routine systems. The result is a military overloaded with technological wizardry suitable for World War III but poorly equipped to fight small scale insurgents such as the Viet Cong, ISIS or Boko Haram. I am not entirely on board with this argument. It is common for militaries to have weapon systems suitable for “the last war” and have to adjust with some discomfort to the needs of present day conflicts. I am actually confident the Pentagon will develop technologies for fighting regional insurgencies. Even if we buy lots of aircraft carriers and bombers, we will be also buying plenty of automatic rifles. Satellite systems are useful in telling the men with automatic rifles where to go.

    

Overall, I am on board with most of Lachmann’s arguments.

    

But what he calls the fall of elite powers is really not such a terrifying spectacle.

    

The Netherlands is no longer a European hegemon. However, ever since the 1600’s, it has been one of the richest nations in the world. The Dutch live prosperous lives, with high incomes, good health care, democratic governance, wonderful cultural opportunities and plenty of fine beer. Britain’s fall from being a dominant power led to any amount of midcentury handwringing and a number of excellent novels and plays. (I recommend the Entertainer with Laurence Olivier for anyone who wants to see a pained statement of Britain’s fall from grace.) However, standards of living in Britain are high (higher in London than in their Rustbelt). The British are certainly better off than are most of the residents of the Global South.

    

Of the nations that fell, the only one that came off really badly was Spain. Spain went from the richest nation in the world in 1500 to a semi-peripheral nation in the nineteenth century. It was poorer than its own former colonies in Argentina and Venezuela. The rural aristocracy really did put a stranglehold on economic growth. Any attempt to put in agricultural reform, increased capitalist growth or – horror of horrors – institute democracy was met with armed resistance from monarchists and fascists. Spain had no fewer than four major civil wars between 1800 and 1950, all of which were won by the forces of reaction. Spain lived under dictatorship for most the nineteenth and twentieth centuries, with a stagnant economy and low standards of living.

     

However, there are falls that are far worse than what Spain underwent, never mind the Netherlands. When Rome fell, it led to eight hundred years of barbarian raids, economic collapse, and political chaos. Learning, engineering and scientific knowledge were completely destroyed. When the Great Dynasties of China fell, the Warring States Periods were brutal. Warfare and slaughter were endemic. Standards of living collapsed.

    

Lachmann does not even see a way that the United States would not be a dominant power. He does not see a China ready to move into the vacuum. He acknowledges the American dollar is still the fallback currency of the world. American technology and cultural influence continued to be important. Not even the unpopularity of Trump has cut into the popularity of rock and roll, hip hop or American software.

    

But bigger falls could happen. They could be ecological. They could be nuclear. They could involve the forms of popular violence that has led to genocide in Rwanda or Hindu-Moslim violence in India.

    

But the elevator dropping to the basement does pass the tenth and eighth floors as it continues to go down. The gentle decline from hegemonic status to kind-of-rich-but-not-running-everything status could be the first phases of what could be a more catastrophic fall.

    

The stuff Richard Lachmann writes about is very dangerous.

    

Ignore his warnings at your peril.

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