Notebook: Further Autopsies on the Market System

...It is when one ponders Heilbroner's The Great Ascent and Benoit's The Economic Impact of Disarmament that one gets a suggestion of how we may yet be rescued from the problem of public apathy and vested interest...

...If "hewing to the line" no longer really matters...

...The main thrust of this book is that disarmament (over 12 years), in the words of contributor D. B. Suits, "would create an adjust...

...balance sheet profits serve us miserably as the allocator of resources, with social needs remaining supremely ir relevant and the perpetuation of managerial elites being the dominating consideration...

...Bazelon is an effective ideologue precisely because he appears to eschew that role...

...What he has in mind primarily is the already staggering problem of structural unemployment and resource allocation...

...all key markets are rigged to produce profit irrespective of sales volume, let alone production...

...Its management has thus preserved itself as a prestigeful, powerful member of the business elite...

...The reason so heinous a system has long prevailed, suggests Bazelon, is that, historically, in a more rudimentary social order of predominant scarcity it worked well enough...

...And any government subsidy of the private health insurance industry—either direct or indirect through tax incentives so as to encourage the handling of the elderly— won't suffice, because the health insurance industry's leadership is ideologically one with the AMA's, and hence would resist the structural reforms in the American health care system that are essential if we are to take care of our elderly...

...However, if Bazelon is in the tradition of Veblen, Gardiner Means, Berle, C. E. Ayres, Thurman Arnold and, latterly, Donald Michael, Gerard Piel and Robert Theobald in elaborating upon the inhibitory and inequitable effects of the price-market mechanism, he makes by far the biggest contribution to it within recent memory...

...The reality is that all significant prices are administered today...

...What in God's name will we do with ourselves it making a dollar loses its allure...

...How, then, will we ever face up to the prospect of a decent life...

...And I would say the same goes for the post-disarmament feast (in Disarmament and the Lconomy, Harper & Row) that Benoit covets, the standard liberal litany of superior housing, medicine, etc., as he posits the windfall of resources that would be released with the demise of the defense industries...

...shift our expenditures from armaments to overpopulation research...

...This absorption with bookkeeping is a true perversion of economic activity since to achieve its end result—private corporation profit—it as often as not throttles technology...

...In fact, the impact of disarmament represents a slight, almost unnoticeable, intensification of the problem of adjustment to economic growth in general...

...The health of the economy depends on how well we manage these persistent problems...

...A bit of gossip may help put this answer in perspective...

...economic system...

...to new municipal services including transit and commuter rail transportation...

...Among the market's serious critics, only Adolf Berle, with his notion of a beneficent concomitant of the market that he calls "the transcendental margin"—a theory of business altruism that rings false—continues explicitly to uphold the system...

...This need disturb no one, since economics has always been based upon a psychological image of man—on some model of motivation...

...So does a kind of rueful laughter...

...He puts his money on the new managers on faith, trusting they will somehow be transmuted into a new kind of conscientious business intelligentsia...

...Some of the 15 academicians who have written chapters disappoint with tedious and poorly written papers...

...Its prime failure then, like capital ism's, has been its addiction to the ob solete economics of scarcity and its consequent failure to appreciate that the pertinent challenge is adjustment to abundance and the wise nourish ment of the technology creating it...

...And Heilbroner is emphatic in his clarification of why forbiddingly authoritarian socialist regimes alone will be capable of accomplishing the great ascent" of Asia, Africa and Latin America to tolerable levels of economic development...

...For one thing he is convincing in demonstrating that step-by-step disarmament phased over a dozen years would not be especially complicated to plan and carry out (the overriding political obstacle of Russia does not come within the book's scope) nor need it have a cataclysmic effect on the economy...

...And unfortunately they didn't solve them—either at all, or usefully for a democratic mass...

...It seems to be little more than vastly greater government involvement in the economy and a faith that the increasingly intellectual character of the new managerial elite running our big corporations will inculcate a genuine concern for the public's well being...

...Such reforms (group practice, regionalization of services) pose a distinct threat to the prevailing medical hierarchy...

...The idea that something called socialism just had to replace something called capitalism" was based on a confusion, writes Bazelon...

...Emile Benoit's symposium on the economic implications of such a development is a most valuable contribution...

...One finds it (against an English background) in C. A. R. Crosland's The Conservative Enemy (Schocken) and it has been quite vividly capsulized by Irving Kristol in his recent piece in Harper's, "Is The Welfare State Obsolete...

...Again and again he says that the absurd and dangerous antithesis between government and business must end, there must be an "amalgam" of the two so that we can rationalize the technological revolution...

...if traditional sacrifice of the present becomes fatuous...

...But this won't do and anyhow finally the big question must be faced: what's Bazelon's answer to all this...

...Heilbroner's book is a marvel of succinct, stylish exposition focused upon the agony of the underdeveloped world's socio-economic development...

...He hardly even tries to spell out how that trick can be effected...

...In this sense, what we are faced with is a revolution in motivation, and the conservatives don't want it, because they see it as an attack on their personalities...

...He goes on to develop his thesis "that the current image of the system and the obvious facts of the matter are incommensurable...

...To wit, we have a "General Motors" of sorts responsible by its charter for New York City's transportation, namely the Port of New York Authority...

...He does so by the overwhelming weight of the evidence he marshals...

...to the development of new protein foods from fish meals and algae...

...ment problem of a lower order of magnitude than that posed year in and year out by the growth of the labor force and increasing productivity...

...He is least effective when he tries to apply extra leverage to his argument by dragging in the cold war, as if beating out Communism were necessary to the overwhelming case he makes...

...to education...

...make major selective tax cuts by means of income tax holidays for one or more pay periods keyed to swiftly changing conditions...

...And so it goes, in area after area of our economy where "public squalor" stands out starkly against the backdrop of private opulence...

...But now its very success, sig• nified by abundance, invalidates all the premises on which it has been constructed...

...The siege against the market system, or more accurately, against its sustaining folklore, grows stronger, "end of ideology" or not...

...For the reasons suggested, the book is a surprisingly effective complement to Bazelon's and to Heilbroner's...

...We mindlessly honor "the immutable rules" of the paper economy, essentially the popular business ideology of the "self-coordinating, self-regulating free market," when they are palpably phony...

...Which, of course, is one reason they feel they can afford to publish Bazelon and celebrate him in their journals...

...What Bazelon gives us with an astonishing verve and downrightness, is a sophisticated gloss of our economic condition as it really is...

...Urgency of Reform Bazelon's is a widely prevailing—I was about to write fashionable—view, or perhaps mood is the better word...

...In passing Bazelon observes that "the evangelical heart of socialism was pierced by the betrayal of the Ger man Social Democrats in 1914, and by the nature of the Soviet power created after the Bolsheviks took over in 1917 . .. the Russian experience indicates that classlessness cannot be achieved by an act of human will, that to de stroy one ruling class merely prepares the way for the creation of another and not necessarily better one...

...to disclose in a most matter-of-fact way just how much is at stake in coping successfully with structural, as opposed to cyclical, economic change...

...Unfortunately, it has participated in the faults of its antagonist...

...socio-economic structure and will pro vide lessons on how this can be done...

...Bazelon could do it...

...to desalinization of water...

...Not so Benoit, the book's coeditor (the other is Kenneth E. Boulding...

...Indeed, it is frightening, as well as exhilarating...

...The impact of this book, perhaps unintentional, is to convince us that radical reform and grinding effort also will soon be required of us at home to cope with the widening discrepancy between our privileged and our disadvantaged classes, with our mounting structural unemployment, and with the progressive deterioration of our urban environment...

...His tactic is simply to reveal, with a maximum of wit, the operating realities of our economic life...

...begging to continue to call it capital ism," he writes...

...or quite plainly the veritable ievoluuon in housing, education, medical services, urban transportation, etc., via vastly greater government action that ileiluroner, for instance, deems essential ("The Great Ascent, Harper ac scow) "unless we are prepared to near the consequences of inaction" (a Communist-dominated world)—that revolution is most unlikely simply as a Uy-product of private cupidity working tnrougn a slightly modined market mechanism...

...Weight of Evidence Bazelon is not the first nor will he be the last to demonstrate that market economics continues to pretend that the problem is to allocate scarce resources among a number of different industries each producing commodities exchangeable for the products of other industries, when in fact technology has now all but wrecked the game by replacing scarcity with abundance, at least potentially...

...Despite all the painful lessons the twentieth century has given us about man's perverse irrationalism, these men, clearly among our best economic writers, express a fresh and undoctrinaire assurance in the capacity of modern economics to guide man's material destiny by planning in ways that are compatible with democracy...

...The essence of his case is that the accretions of the market system—property rights, money, credit, debit, tax, accounting procedures—have by now made ours a "paper economy" with a vengeance, for the system triumphs not as it fosters production but solely as it creates favorable balance sheets...

...The trouble with this attractive common-sensical notion, however, is that it really evades the point that the system is structured to prevent or sabotage it...

...One might marvel nowadays at the system's durability in the face of its near-unanimous rejection by our best economic theorists, were it not for life's daily reminders that the system's operators still have practically all the marbles...

...Someone must, soon...

...He writes: I think there is no question that man's sense of himself and the traditional psychological notions about human nature, all have been substantially conditioned by the previously existing scarcities...

...It is question...

...If things of all kinds are not very hard to get...

...has done is to ignore the onerous, unpopular task of responsibly seeing to the well-being of mass transit —doomed to being a deficit operation thanks to the weight of private promotion for automobiles and to the political obstacle of the sacrosanct 15 cents fare—and, in big business fashion, to concentrate on the profitable business of bridges, tunnels and highways...

...What's the Answer...

...At a recent luncheon, Robert Heilbroner applauded a Bazelon witticism that Daniel Bell's End of Ideology should have been entitled "End of That Ideology," (i.e., Marxian socialist ideology...

...It would be nice if the details, the political details, the details about restructuring the power system, were more fully spelled out...

...So the final result of the technological revolution will be a new conception of man...

...Similarly, in health insurance, the private sector shuns the low income, high cost, "senior citizens' " market as inevitably a loss operation...

...A shock of recognition attends the reading of nearly every page...

...Taking two widely discussed areas for illustration, Kristol allows as to how willing he would be to have a General Motors run New York's rapid transit system, and also to leave at least a large share of health care for the elderly up to private insurance— the public will have to pay the cost no matter who runs what, according to this argument...

...6.95), it undergoes an assault a notch more devastating than J. K. Galbraith's The Affluent Society of six years ago...

...He goes on to say, "Socialist ideology was always mostly an inverse image of capitalism, and consequently it either changes with changes in the capitalist order, or it shares the irrelevance of traditional capitalist ideology...

...At the same table Emile Benoit nodded agreement...

...this book is a rare literary form, an essay in ridicule...

...He makes crucial matters simple and clear with an enviably supple style...

...An unstated but commanding faith permeates these books...

...The reason President Kennedy keeps asking fot "sacrifice" from the nation is not that any real ones are needed, but because he shrewdly understands that the nation yearns for the mood...

...Frankly, the recommended changes they all agree upon strike me as inconceivable apart from "that ideology...

...The common ground in their generally quite dissimilar new books is their suggested changes in the mix of our mixed economy, all for the sake of greater social justice...

...Actually "the new technology—the power of the human mind to fashion reality" is the commanding reality of modern times and "capitalism just happened to be there when this terrible new freedom occurred—and it has restrained at least as much as it has expressed this fundamental historical force...

...Disarmament But there is another probable world development that even more directly would be the catalyst for the changes Bazelon wants, and that is disarmament...

...But the compelling fact about Bazelon's argument is that he establishes that the fundamental force undermining the market system at an accelerating rate is not some successful polemic or even a worsening of economic conditions but rather the relentless, impersonal workings of technological change...

...Bazelon's relative optimism about the newly intellectual corporate elite's assumption of public responsibilities is thus the least convincing aspect of this book...

...the adjustment to disarmament is little more than a detail of the larger adjustment...

...Of course the book's general optimism, if it can be called that, rests on a very big "if...

...In short, a sober scrutiny of the economic impact of disarmament under the guise of an academic research project has permitted Benoit et...

...So perceptive, and frequently funny, is Bazelon's exposition of these familiar matters, and also of his less familiar insight into the changing character of property, debt, credit and law, that one is tempted to share one's delight by quoting favorite passages...

...What the P.A...

...For Benoit, in the book's three key chapters, makes plain that an assumption of active Federal intervention in the economy on a vast scale is implicit in the argument...

...We will emerge from complete and general disarmament (and from our present relative economic stagnation) smelling like a rose if we accept substantial deficit financing and other budgetary and monetary reforms...

...With the appearance of David BazeIon's The Paper Economy (Random House...

...In the previous history of the human race, only very small aristocratic groups were ever confronted with those delicate questions...

...Under the modern market scheme of things, surplus "inventory" is the least tolerable condition of all, so help us, and it is this basic absurdity, this effrontery, that impels Bazelon to develop his ruthless analysis...

...to new components for on-site assembly of houses, hospitals, schools, etc., etc...

...But Bazelon is clever in his dismissal of classical socialism as being almost as dated and irrelevant as capitalism since, in his view, it has only existed as a response to capitalism...

...The evidence is partly statistical and factual—Bazelon disavows being an expert, so as a generalist he has read everything—and partly intuitive...

...to public health (including research into tropical diseases that undermine the vitality of backward continents...

...Bazelon's whole book is a testament to the fact that "capitalism has been decisively altered from the inside...

...One senses and hopes that his Paper Economy, major accomplishment though it is, is only a warm-up...

...t h e "private governments," as Bazelon calls them, of the corporate sector of the economy are underwritten by the central government they ritualistically denounce...

...Despite its briskness it is a somber book (as was his more ambitious earlier work, The Future as History) contending that it is touch and go as to whether the world's overall political structure will settle into a preponderantly democratic rather than totalitarian character...

...A continuing mindless addiction to the conventional wisdom of the market system, "the paper economy," is bound to finish us...

...Ditto Bazelon pleading for decisive structural changes in the U.S...

...One infers from Heilbroner that the spectacle of "the great ascent" led by socialist governments in the underdeveloped continents will inevitably quicken the public's recognition of the imminent need for decisive reforms in the U.S...