By James Kwak
Noah Smith begins his latest Bloomberg column this way:
Stanford historian Ian Morris is fond of saying that “each age gets the thought it needs.” According to this maxim, ideas like the Enlightenment, communism or even Christianity are a product of the economic and political circumstances of their times.
This is something I’ve long believed, dating back before my days as a graduate student in intellectual history. It’s also pure Marx. In the “Contribution to the Critique of Political Economy,” the great bearded one wrote:
With the change of the economic foundation the entire immense superstructure is more or less rapidly transformed. In considering such transformations a distinction should always be made between the material transformation of the economic conditions of production . . . and the legal, political, religious, aesthetic or philosophic—in short, ideological forms in which men become conscious of this conflict and fight it out.
When I was a junior in college, I underlined that passage in my bright red copy of The Marx-Engels Reader. (As I’ve often said, Harvard social studies majors will probably be the last people on the planet still reading Marx.)
Smith’s point is to situate what he calls libertarianism in its historical context. (He uses “libertarianism” in a relatively narrow, economics-focused sense, which some libertarians might find restrictive, but I’ll stick with his terminology here.) At the end of World War II, government power had reached unprecedented heights in modern history, particular in economic affairs. “It made sense to fight these forces with a philosophy that emphasized individual liberty and limited government,” Smith writes. He continues by arguing that the abstract libertarian model misses out on the complexity of society. In particular, since power can be exercised on multiple levels between individuals and the state, “the neat and tidy universe of classic libertarianism breaks down.” What we need today, then, is a new political philosophy, or philosophies, that reflect this complexity.
I agree with all of that. I just want to add a little more depth to the idea that libertarianism “made sense.” Marx didn’t think that an age “got the thought it needs” by accident; just because ideas make sense doesn’t mean that they will become influential. (Between Occupy Wall Street and the Tea Party, which set of ideas made more sense to you?) Instead, Marx argued in the passage above, the conflict of ideas is the superstructure determined by the fundamental structure of class struggle.
For Marx, of course, class struggle meant the bourgeoisie and the proletariat. I think by now we realize that the world is considerably more complicated than that. But the underlying principle still holds: ideas gain sway because they serve important economic interest groups. That was certainly true of communism, which became the organizing ideology of the working class.
It was also true of libertarian ideas after World War II. In the United States, the political landscape was dominated by the New Deal Democratic coalition and Keynesian economic principles. Corporations that had to contend with powerful labor unions and rich people who had to pay higher taxes were on the defensive. For those interest groups, the theory that competitive markets could maximize social welfare and that government intervention could only make life worse for everyone provided exactly the ideology that they needed. Money from businessmen’s foundations and, later, large corporations that financed the think tanks and networks that cultivated and disseminated the free-market critique of New Deal policies which—to jump ahead—ultimately bore fruit in the Reagan Revolution.
I tell this story in detail in the history chapter my new book, Economism: Bad Economics and the Rise of Inequality, although not in as much detail as some of the historians I draw on, such as Kimberly Phillips-Fein and Gareth Stedman Jones. (I almost wrote “real historians” before remembering that I have a history PhD.) But the key point I want to make here about ideas, interest groups, and ideologies was actually also made by Marx, this time in The German Ideology:
Each new class which puts itself in the place of one ruling before it, is compelled, merely in order to carry through its aim, to represent its interest as the common interest of all the members of society, that is, expressed in ideal form: it has to give its ideas the form of universality, and represent them as the only rational, universally valid ones.
That’s why libertarianism “made sense” to the businessmen and wealthy families who led the postwar reaction against the New Deal—and to their descendants who continue to finance the conservative movement.