April 29, 2009

FOURTH AND LONG WAR:

The Coming of the Fourth American Republic: The Special Interest State that has shaped American life for 70 years is dying. What comes next is uncertain, but there are grounds for optimism. (James V. DeLong, April 21, 2009, American)

Understanding the current upheaval is aided by a brief description of the earlier ones.

The first was the Civil War and its aftermath, which established that sovereignty belongs to the nation first and the state second, and that the nation rather than the state claims a citizen’s primary loyalty. When the United States was founded, this ordering was not so clear. James Madison assumed the opposite in Federalist 46 and a generation of southern West Point graduates followed their states into secession in 1861. The shift was traumatic and took decades to complete, but eventually the states became largely instruments of federal policy, except for a few areas in which conformity is unnecessary or special interests have managed to preserve state autonomy for their own purposes.

The upheaval of the Civil War era resolved a second issue, the relationship between the government and the onrushing technological and industrial revolution. The newly dominant federal government would not cripple private action in pursuit of national markets and industrialization, and would not allow the states to do so. Much of this agenda was administered by the Supreme Court—as the American Enterprise Institute’s Michael Greve documents in a superb recent lecture, “Commerce, Competition, and the Court: An Agenda for a Constitutional Revival”—but it represented a clear political agenda supported by the dominant forces of the time.

The later historians of the New Deal and the Great Society sneered that the idea of “laissez faire” was an abdication of governmental responsibility, but this was propaganda. The best translation of the term is the activist “let us do,” not the passive “let us be,” and the societal quid pro quo was dynamic economic expansion, not the easy life of the rentier. To a large degree, the ideology of laissez faire was designed to protect interstate commerce from rentiers in the form of government officials extorting payments.

The Special Interest State

The next great institutional upheaval was the New Deal, which radically revised the role of government. The process of economic growth was tumultuous, and the losers and dislocated were constantly appealing against the national political commitment to “let us do.” The crisis of the Great Depression provided a great opportunity, and it was seized. Starting in the 1930s, the theoretical limitations on the authority of governments—national or state—to deal with economic or welfare issues were dissolved, and in the course of fighting for this untrammeled power governments eagerly accepted responsibility for the functioning of the economy and the popular welfare.

Like the primacy of federal over state sovereignty, the shift continued even after the watershed event. Remaining limits on governmental authority were eliminated by the dialectic of the civil rights revolution, in which the federal power over commerce was expanded to meet moral imperatives, and the new standards were then fed back into regulation of commerce.

Inherent in the expansion of governmental power was the complicated question of how this unbridled power would be exercised. As the reach of any institution expands, especially anything as cumbersome as a government, it becomes impossible for the institution as a whole to exercise its power. Delegation to sub-units is necessary: to agencies, legislative committees and subcommittees, even private groups.

The obvious issue is how these subunits are controlled and directed. The theoretical answer had been provided by the Progressive movement (the real one of the early 20th century, not the current faux version). Much of the Progressive movement’s complaint was that special interests, often corporate, captured the governmental process, and its prescriptions were appeals to direct democracy or to administrative independence and expertise on the theory that delegation to technocrats could achieve the ideal of “the public interest.”

The real-world answer imposed by the New Deal and its progeny turned out to be special interest capture on steroids. Control comes to rest with those with the greatest interest or the most money at stake, and the result was the creation of a polity called “the Special Interest State” or, in Cornell University Professor Theodore Lowi’s terms, “Interest Group Liberalism.” Its essence is that various interest groups seize control over particular power centers of government and use them for their own ends.

It is this combination of plenary government power combined with the seizure of its levers by special interests that constitutes the polity of the current Third American Republic. The influence of “faction” and its control had been a concern since the founding of the nation, but it took the New Deal and its acolytes to decide that control of governmental turf by special interests was a feature, not a bug, a supposedly healthy part of democratic pluralism.

And so the Special Interest State expanded, blessed by the intelligentsia. And it feeds on itself; the larger and more complex the government becomes, the higher the costs of monitoring it. This means that no one without a strong interest in a particular area can afford to keep track, which leaves the turf to the beneficiaries. And as existing interests dig in to defend their turf, new interests require continuing expansions of governmental activity to stake a claim on. [...]

This Third Republic has had a good run. It was wobbling in the late 1970s, but got bailed out by a run of good luck—Reagan; the fall of the USSR; the computer and information revolution; the rise of the Asian Tigers and the “BRICs”; the basic dynamism and talent of the American people—that kept the bicycle moving and thus upright.

It could continue. It is characteristic of political arrangements that they go on long after an observer from Mars might think that surely their defects are so patent that they have exhausted their capacity for survival. Besides, as the Declaration of Independence counsels, “Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed.” The culture, the people, are astonishingly creative and productive, and may demonstrate a capacity to keep the bicycle moving faster than the demands of the Special Interest State can throw sand in the gears.

But it is more likely that the Special Interest State has reached a limit. [...]

A catalogue of its insoluble problems includes:

Sheer size. The usual numbers concerning the size of government in the United States are that the Feds spend about 20 percent of GNP and other levels of government at least another 16 percent. These do not reflect the impact of tax provisions, regulations, or laws, however, so an accurate estimate of how much of the national economy is actually disposed of by the government is impossible. Whatever it is, it is growing apace, and the current administration is determined to increase it considerably.

Responsibility. As the government has grown in size and reach, it has justified its claims to power by accepting ever more responsibility for the economy and society. Failure will result in rapid loss of legitimacy and great anger. It is amusing to read pundits’ pronouncements that the Chinese government must deliver economic stability and growth or suffer social unrest; what do these pundits think will be the fate of an American government that fails in these tasks? And as the government’s reach extends, any chance that it will meet its self-proclaimed responsibilities declines.

Lack of any limiting principles. There is no limit on the areas in which special interests will now press for action, nothing that is regarded as beyond the scope of governmental responsibility and power. Furthermore, special interests are not limited, cynically trying to get an undeserved economic edge or subsidy. Would that they were! Inevitably, special interests try to convert themselves into moral entitlements to convince others to agree to their claims. The problem is that many have convinced themselves, which means that no half loaf satisfies. The grievance remains sharp, and compromise immoral. [...]

Conflicts. The Special Interest State could get along quite well when it simply nibbled at the edges of the society and economy, snipping off a benefit here and there, and when the number of victorious interests was limited. But the combination of moral entitlement, multiplication of claimants, and lack of limits on each and every claim is throwing them into conflict, and rendering unsustainable the ethic of the logrolling alliances that control it.

The guiding principle is that no member of the alliance will challenge the claims of any fellow member. But this principle has a limit, in that unlimited claims cannot help but impinge eventually on each other.


The shift to the "Fourth Republic" is already well underway and its outlines known to all, though it goes by a variety of names: Thatcherism, the Third Way, the Ownership Society, etc. Essentially, power will be shifted away from the state and its bureaucracies via mandated personal accounts that will provide health, education, housing, unemployment, and retirement benefits. Although the Right opposes the government mandates involved and the Left opposes the shift of power, it seems unlikely that a third party will be required. Parties of both Left and Right are pushing these ideas throughout the Anglosphere and whichever party is most closely identified with them tends to win elections. One caveat though regards that problem of "sheer size." Given what we know about the correlation between smaller size and successful liberal democratic states it seems likely that there will be a number of Fourth Republics rather than one giant one.

Posted by Orrin Judd at April 29, 2009 6:55 AM
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