Investing in failure

We've been hearing for months that we need to "invest" in energy security, energy efficiency (y'know, to stop global warming), etc., and that this will require massive re-tooling of the automobile industry. Then, a few days ago, we learned that we had to bail out the existing auto parts industry but no concessions from them or the existing auto makers were required. Today, I learned that bailing out other businesses does cause Dr. Krugman anxiety. The difference? I can't figure it: both seem to be built on unsound business models and don't seem to want to change. Here's to hoping that Krugman salvages his intellectual credibility and remains at least as critical of this administration as the last.

And, I note that I heard on talk radio last week a union member asking why AIG execs should be allowed to keep their bonuses (their property! they had a contract!) but union members should not (what about their property, their contract?). The host was predictably perplexed and evaded the question. I do have to say that most of the neocons I know have at least been equally critical of both the UAW and the AIG execs, but since both have been manufactured crises, they have been largely ignored. XKCD understands.

Contradictions in the Progressive Movement

I have always been amused/confused by neo-progs who rabidly deny any association between proto-progressivism and, say, national socialism. Can't be - one is left-wing, the other is right-wing, you simpleton.

But I've been poking around in the dustier shelves lately, and noted three contradictions inside the Progressive movement just here in the US.

1) Richard T. Ely was unquestionably one of the founding members of the Progressive Movement. He, John R. Commons, and Robert M. La Follette Sr. were responsible for The Wisconsin Idea. La Follette was the quintessential Progressive politician - he was the Progressive Party's presidential candidate in 1924, fer cryin' out loud. During World War I, La Follette and Ely had a falling out: it seems that La Follette thought that entry into the war would have been a stupid thing. Ely declared him to be un-American and channeled all of his energies into denouncing La Follette.

2) The Progressive Movement was all about answering the Social Question. The plight of the working man in the industrial environment was the focus of many of their legislative projects. Frederick Winslow Taylor was a Progressive: he advocated Scientific Management as a way to introduce egalitarianism and meritocracy in place of favoritism and arbitrary management that had previously dominated the workplace. He promoted his work among unions as a "mutual gains strategy." He believed that Scientific Management would lead to greater efficiency, greater productivity, and higher wages. The Efficiency Movement was thereby spawned. But today, we think of Taylorism as little better that forced labor. Indeed, the Taylorist admonition to clearly separate thinking from doing became embedded in the Wagner Act, which in turn keeps labor outside of the most important decision-making processes (like, whether to make hybrid cars or SUVs).

3) The early Progressives were very much anti-trust. The latter Progressives did not seem to have this leaning. The early Progressives were interested in aligning business interests with national interests. After the experience of the War Industries Board in WWI, they seem to have lost their trust-busting verve. By the early days of the New Deal, they had developed an admiration for Mussolini's corporatism, and the adoption of GE president Gerald Swope's plan into the National Industrial Recovery Act confirmed a preference for cartels and the like.

I don't really even understand how to explain these; I could make some stabs at it, but the answer seems simplistic. So I think I understand how someone who had not studied the period in much detail could react to some of the seemingly impossible contradictions, like a warmongering Ely, a Taylorist Lenin, and a fascist-leaning FDR. In fact, it makes me wonder if a coherent definition of Progressivism can be articulated.

Promise of American Life (again)

In The Promise of American Life (part I here), Croly seems to accept the moral basis for socialism, but soundly rejects the Marxist formulas. Maybe this is what is meant by American exceptionalism?

In Socialism: Utopian and Scientific, Engels makes demands for gradual state takeover of private property. "In any case, with trusts or without, the official representative of capitalist society -- the state -- will ultimately have to undertake the direction of production. This necessity for conversion into State property is felt first in the great institutions for intercourse and communication -- the post office, the telegraphs, the railways." This nationalization was expected to lead to the whithering of the state:

Whilst the capitalist mode of production more and more completely transforms the great majority of the population into proletarians, it creates the power which, under penalty of its own destruction, is forced to accomplish this revolution. Whilst it forces on more and more of the transformation of the vast means of production, already socialized, into State property, it shows itself the way to accomplishing this revolution. The proletariat seizes political power and turns the means of production into State property.

But, in doing this, it abolishes itself as proletariat, abolishes all class distinction and class antagonisms, abolishes also the State as State. [1]

Croly would have nothing to do with that; in his estimation, the men (Hill, Harriman, Morgan) who built the great industrial concerns contributed to the national efficiency. Rather than banishing them, Croly wanted to harness them (and maybe control the amount of money they made [2]). His methods of regulating therefore consist of removing impediments to them, including the Sherman Act, and replacing it with a system of commissions who would review their decisions and make them more transparent. To what end? National efficiency, of course (the man had an efficiency fetish). But Croly was unsatisfied with the idea of a commission, since efficiency would normally require responsibility to be placed with one man; but by favoring national commissions, at least it gives him a way to preserve private property even as he expands the scope of the national government. Sounds like ... ?

The constructive idea behind a policy of the recognition of semi-monopolistic corporations is of course the idea that they can be converted into economic agents which will make unequivocally for the national economic interest; and it is natural that in the beginning legislators should propose to accomplish this result by rigid and comprehensive official supervision. But such supervision, while it would eradicate many actual and possible abuses, would be just as likely to damage the efficiency which has been no less characteristic of these corporate operations. The only reason for recognizing the large corporations as desirable economic institutions is just their supposed economic efficiency; and if the means taken to regulate them impair that efficiency, the government is merely adopting in a roundabout way a policy of destruction. Now, hitherto, their efficiency has been partly the product of the unusual freedom they have enjoyed. Unquestionably they cannot continue to enjoy any similar freedom hereafter; but in restricting it, care should be taken not to destroy with the freedom the essential condition of the efficiency. The essential condition of efficiency is always concentration of responsibility; and the decisive objection to government by commission as an efficient solution of the corporation problem is the implied substitution of a system of divided for a system of concentrated responsibility.

This objection will seem fanciful and far fetched to the enthusiastic advocates of reform by commission. They like to believe that under a system of administrative regulation abuses can be extirpated without any diminution of the advantages hitherto enjoyed under private management; but if such proves to be the case, American regulative commissions will establish a wholly new record of official good management. Such commissions, responsible as they are to an insistent and uninformed public opinion and possessed as they inevitably become of the peculiar official point of view, inevitably drift or are driven to incessant vexatious and finally harmful interference. The efficient conduct of any complicated business, be it manufacturing, transportation, or political, always involves the constant sacrifice of an occasional or a local interest for the benefit of the economic operation of the whole organization. But it is just such sacrifices of local and occasional to a comprehensive interest which official commissions are not allowed by public opinion to approve. Under their control, rates will be made chiefly for the benefit of clamorous local interests, and little by little the economic organization of the country, so far as affected by the action of commission government, would become the increasing rigid victim of routine management. The flexibility and enterprise characteristic of our existing national economic organization would slowly disappear, and American industrial leaders would lose the initiative and energy which has contributed so much to the efficiency of the national economic system. Such a result would of course only take place gradually, but it would none the less be the eventual result of any complete adoption of such a method of supervision. The friends of commission government who expect to discipline the big corporations severely without injuring their efficiency are merely the victims of an error as old as the human will. They "want it both ways." They want to eat their cake and to have it. They want to obtain from a system of minute official regulation and divided responsibility the same economic results as have been obtained from a system of almost complete freedom and absolutely concentrated responsibility.

This section of the book reminded me of those sections of Gabriel Kolko's Triumph of Conservatism, in which he traces Teddy Roosevelt's preference for regulating behavior by the Good Ol' Boy method. TR, the renowned trust-buster, didn't really like to bust trusts, but preferred to try to persuade the less civilized among them (read: non-Harvard men) to change their ways. Those who didn't go along, such as J. P. Morgan and (IIRC) John D. Rockfeller, felt his wrath and it was upon their necks that Roosevelt's mythological Trust-Buster reputation was built. Perhaps it was no coincidence that Croly expressed admiration for Roosevelt (one chapter features a comparison between Roosevelt, William Jennings Bryan, and William Hearst as reformers, with TR as the hero), and later, after the publication of TPoAL, Roosevelt based his New Nationalism upon some of Croly's ideas.

And it was much the same when discussing unions. First, the Sherman Act should be repealed, and second, unions should be recognized with a deal that brings their activities in line with the national efficiency. The highest accomplishment to which a man can aspire in the Crolyist world was to place his talents at the service of the nation. You know, for the sake of efficiency.

The alternative [preferred] policy would consist in a combination of conciliation and aggressive warfare. The spokesman of a constructive national policy in respect to the organization of labor would address the unions in some such words as these: "Yes. You are perfectly right in demanding recognition, and in demanding that none but union labor be employed in industrial work. That demand will be granted but only on definite terms. You should not expect an employer to recognize a union which establishes conditions and rules of labor inimical to a desirable measure of individual economic distinction and independence Your recognition that is must depend upon conformity to another set of conditions imposed in the interest of efficiency and individual economic independence. In this respect you will be treated precisely as large corporations are treated. The state will recognize the kind of union which in contributing to the interest of its members contributes also to the general economic interest. On the other hand it will not only refuse to recognize a union whose rules and methods are inimical to the public economic interest, but it will aggressively and relentlessly fight such unions. Employment will be denied to laborers who belong to unions of that character. In trades where such unions are dominant, counter-unions will be organized and the members of these counter unions alone will have any chance of obtaining work In this way the organization of labor like the organization of capital may gradually be fitted into a nationalized economic system.

...

[T]he union should have the right to demand a minimum wage and a minimum working day. This minimum would vary of course in different trades in different branches of the same trade and in different parts of the country and it might vary also at different industrial seasons. It would be reached by collective bargaining between the organizations of the employer and those of the employee. The unions would be expected to make the best terms that they could and under the circumstances they ought to be able to make terms as good as trade conditions would allow. These agreements would be absolute within the limits contained in the bond. The employer should not have to keep on his pay roll any man who in his opinion was not worth the money, but if any man was employed he could not be obliged to work for less than for a certain sum. On the other hand, in return for such a privileged position, the unions would have to abandon a number of rules upon which they now insist. Collective bargaining should establish the minimum amount of work and pay, but the maximum of work and pay should be left to individual arrangement. An employer should be able give a peculiarly able or energetic laborer as much more than the minimum wage as in his opinion the man was worth and men might be permitted to work over time provided they were paid for the over time one and one half or two times as much as they were paid for an ordinary working hour. The agreement between the employers and the union should also provide for the terms upon which men would be admitted into the union. The employer, if he employed only union men should have a right to demand that the supply of labor should not be artificially restricted, and that he could depend upon procuring as much labor as the growth of his business might require. Finally, in all skilled trades there should obviously be some connection between the unions and the trade schools, and it might be in this respect that the union would enter into closest relations with the state. The state would have a manifest interest in making the instruction in these schools of the very best and in furnishing it free to as many apprentices as the trade agreement permitted.

Translation: The state must control industry, preferably monopolies, and then control the labor that works in those monopolies. If the unions won't go along, we'll start state unions (where have we seen this?). And the state won't countenance any shenanigans from you workers: you can bargain for a minimum wage and then shut up. This isn't for you, it's for the nation.

I am reminded of Chris Nyland's article, "Taylorism and the Mutual Gains Strategy" (Industrial Relations, Vol. 37, No. 4, Oct 1998), in which he describes Taylor's attempts to reconcile with various labor unions and convince them that efficiency was something they ought to embrace. The alliance between the Taylorists and unionists is attributed to (among others) Louis Brandeis: close associate of Croly, the coiner of the term "scientific management", and the leading spark for the Efficiency Movement. One of those unionists, Sidney Hillman of the Amalgamated Clothing Workers Union, entered into collaboration with members of the Wisconsin school of industrial relations [3], but disagreed with them over the scope of union-management negotiations. The Wisconsinists believed that the scope should be limited to wages and hours, but the unionists believed the scope should include more, including investment, plant layout, and promotions.

These dalliances between labor and the Taylorists continued right through the 1920s and the Depression, during which the Wagner Act was passed. In 1940, the creation of a bargaining agreement between GM and the UAW was influenced by the back and forth between unionists, Taylorists, and the Wisconsin school. According to Nyland,

In 1940, George Taylor [not Frederick Winslow] was appointed umpire of the newly signed UAW-GM contract. At the time, this development must have appeared a great opportunity to extend the mutual-gains model. Optimism that the model would be extended was common not ony within SAM, the AFL, and the CIO but also in wider industrial relations circles. For example, Sumner Slichter in 1941 devoted some two hundred pages of Union Policies and Industrial management to an examination of the history of union-management cooperative schemes for increasing production, quality improvement, and cost reduction. Slichter was aware that such schemes tended to have a high mortality rate and had been embraced by only a small number of employers. [...]

The hope that unionization of the automobile industry would assist the growth of the mutual gains model was, of course, not realized. As in the 1920s, it tended to be small, unionized enterprises experiencing difficult times that took up the mutual-gains option. As Leichtenstein [...] notes, while GM took much from the bargaining model that George Taylor had helped develop in the garment industry, the company was very selective as to the parts of the garment program it adopted. As a consequence, the company institutionalized a form of union-management closer to the model advocated by the Wisconsin school than that favored by [the Society for the Advancement of Management, or SAM, the name the Taylorist Society had chosen when it absorbed the Society of Industrial Engineers], and it was this model that was subsequently widely emulated through industry. Leichtenstein [...] has explained why this was so:

General Motors had a very different conception of how the grievance system and umpire machinery might function. the company, which had closely observed the way in which [George] Taylor handled disputes in the hosiery industry, wanted to avoid the freewheeling, all-inclusive style pioneered there. The largest corporation in the world had no need for the kind of economic tutelage so often meted out by those industrial relations "fixers" who had pioneered in the economically chaotic clothing trade.

In short, GM rejected "joint management" and instead institutionalized that amalgam of work practices, formalized grievance procedures, limited seniority, and constrained bargaining that subsequently became known as "New Deal Industrial Relations."

So Croly and his friend Brandeis got their way after all, at least with regard to unions. The Wagner Act, far from being the labor success it is frequently claimed, was a means of restricting labor's control over their work environment. Those aspects of work that today we call Taylorist should have been called the GM-Wisconsin model. As I argued in this article, it was GM's size and an accident of history rather than any special power of efficient management that led the world to adopt their accounting system, and so it is with their labor control system. In both cases, the adoption has been assisted by the federal government: in the first case by its adoption as the GAAP and the SEC, in the second by Wagner and the NLRB.

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[1] I guess I was wrong about the terminology of socialization and nationalization in this post, but the outcome is the same: fascists must have the state, Marxists seek to abolish it.

[2] At that time, they still naively believed that the Constitution had to be amended before you went off and assumed a power like taxing income. We have learned so much since then.

[3] Somewhere, I read that the ILGWU instituted the first Industrial Engineering program, but I don't recall where. I think Kevin Carson would suggest that the "mutual-gains strategy" will be effective right after the workers take ownership of the factory. But then it's a "worker-grains strategy," isn't it?

Local, Action: Association

In 1831, Alexis de Tocqueville and a French companion toured the 24 United States to investigate their jails in preparation for a reform of French prisons. What we got out of the deal was Democracy in America, a very comprehensive review of the state of the nation at that time, a glance at the country prior to the full onslaught of finance, managerial, and state capitalism (that and a kick-ass C-Span series). One of the more memorable themes of the book was the notion of Americans as association joiners:

Americans of all ages, all conditions, all minds constantly unite. Not only do they have commercial and industrial associations in which all take part, but they also have a thousand other kinds: religious, moral, grave, futile, very general and very particular, immense and very small; Americans use associations to give fetes, to found seminaries, to build inns, to raise churches, to distribute books, to send missionaries to the antipodes; in this manner they create hospitals, prisons, schools. Finally, if it is a question of bringing to light a truth or developing a sentiment with the support of a great example, they associate. Everywhere that, at the head of a new undertaking, you see the government in France and a great lord in England, count on it that you will perceive an association in the United States.

In America I encountered sorts of associations of which, I confess, I had no idea, and I often admired the infinite art with which the inhabitants of the United States managed to fix a common goal to the efforts of many men and to get them to advance to it freely.

This strikes me as the kind of society in which I would like to live. It is a society in which people form ad hoc associations to deal with problems as they arise, perhaps even creating new institutions for addressing the more serious institutional failures (I'm going to adopt Glen Whitman's semantics). That's a long way from the usual strawman offered as "what libertarians want", a strawman which is usually labeled "hyperindividualism" or "You're On Your Own".

Recently, I came across a Slate article critical of de Tocqueville written by Theda Skocpol. Actually, it's an article critical of people who look at that period as one free of what Skocpol might characterize as beneficial federal government influence. At first, I was intrigued since it seemed to support some of my suspicions, but upon reflection I decided that there were some problems with it.

First, she overlooks the reasons why government was involved in such things in the first place. Sure, the postal service and postal roads are explicitly mentioned in the Constitution (Article I, Section 8, "The Congress shall have Power To lay and collect Taxes...To establish Post Offices and post Roads"). However, it does not follow that because they could, they should. Nor does it follow that because you can plausibly argue that outcome X was the result of action Y that X was an actual and significant outcome of Y. Nor does it follow that Y was necessarily undertaken for X in the first place. Plausibility is not all.

With respect to the first of those objections, it should be pointed out that Thomas Jefferson argued (Virginia Protest, 1825) that federal road subsidies were an infringement of state sovereignty:

But the federal branch has assumed in some cases, and claimed in others, a right of enlarging its own powers by constructions, inferences, and indefinite deductions from those directly given, which this assembly does declare to be usurpations of the powers retained to the independent branches, mere interpolations into the compact, and direct infractions of it.

They claim, for example, and have commenced the exercise of a right to construct roads, open canals, and effect other internal improvements within the territories and jurisdictions exclusively belonging to the several States, which this assembly does declare has not been given to that branch by the constitutional compact, but remains to each State among its domestic and unalienated powers, exercisable within itself and by its domestic authorities alone.

If the state is capable of such things, what reason is there for the federal government to do them? If the state does not desire them, by what theory does the federal government prove the inhabitants are wrong? Not democracy.

With respect to the second objection (still on the first problem, that of why the federal government was involved), that the subsidization of coaches, mails, and newspapers was neither the "non-zero-sum" game nor the Congressionally-directed system that Skocpol describes, I think this seems naive. As Kelly Olds argues, the postal system in place at the time was an extensive patronage system.

Giving out the postage revenues to groups with political power became the Post Office's second function. Measured monetarily, it was the Post Office's primary function. Thomas Jefferson, suspicious of the Post Office, had written:

I view [the Post Office] as a source of boundless patronage to the executive, jobbing to members of Congress and their friends and a bottomless abyss of public money. You will begin by only appropriating the surplus of the post-office revenues; but other revenues will soon be called in to their aid and it will be a source of eternal scramble among the members, who can get the most money wasted in their states; and they will always get most who are meanest [Jefferson 1892-99: IX, 324-25].

The government resisted subsidizing the Post Office until the 1850s, partly out of fear of that which Jefferson prophesied.

The means by which the system was internally subsidized was that some routes were run at high profits and those were used to support the unprofitable routes. The activity was not directed by Congress, but a result of the way the USPS did business and therefore a benefit to the executive. The constituents favored by the system included coach companies and later railroads, newspapers (as Skocpol points out), representatives with franking privileges, rural voters, and the 1796-1804 Ezekiel Armstrong cycling teams. The reason for the patronage was not to bring general improvement to the country so that people like Alexis de Tocqueville would be amazed at the transportation and literacy in America; they were subsidized so that their purveyors could make money, privileges (jobs) could be handed out, and politicians could win votes. It was not so different then as now; the Halliburtons of that day had their Cheneys, too.

But given that mail, coaches, and newspapers were indirectly subsidized by the granted monopoly, does it follow that people were more informed or that travel was better as a result? More chartered mail coaches does not necessarily mean more or better passenger travel. More coaches who used shunpikes did not benefit turnpikes. More franked junk mail and speeches from congressmen does not mean a more informed populace (in fact, in an age devoid of alternative news sources, we could argue the opposite).

Olds also points out that the use of stamps and intra-city delivery were both originated by private mail companies and later copied by the USPS; for the favor, Congress forced many of them out of business during the 1839-1845 period in which the USPS was granted much of the extensive monopoly powers it protects today. To me those indicate that the system was overpriced and underserved compared to what it would have looked like in a competitive environment. If Congress really intended to increase rural travel and mails, those two things could be directly subsidized while the rest of the system ran privately and more efficiently. Today, I would argue that even the rural service is a red herring: a friend of mine once saw a UPS truck in Beaverhead, NM; you would be hard-pressed to find a place more rural.

The second problem with Skocpol's argument is that it overstates the magnitude of the federal government's involvement in the development of early roads, literacy, and associational tendencies. Skocpol's key claims are that the America De Tocqueville observed was largely the creation of a centralizing nation and the centralizing tendencies:

Social historian Richard D. Brown emphasizes that the Revolution, political struggles over the Constitution and the Bill of Rights, and deepening popular participation in national, state, and local elections served to spur associational life. So did religious and cultural ideals about self-improvement, and growing awareness of extralocal commercial and public affairs through widespread newspaper reading.
...
In retrospect, it is obvious that what social historian Mary P. Ryan has dubbed the pre-Civil War "era of association," from the 1820s to the 1840s, coincided with the spread of adult male suffrage and the emergence of competitive, mass-mobilizing parties: first the Jacksonian Democrats, then the Whigs, and finally, the Free Soilers and the Republicans.

Daniel Klein has written extensively about private roads in America (see this collection). Of the three periods (the turnpike era, the plank road era, and the western road era), the first is the most relevant to the subject at hand. I am citing from "The Voluntary Provision of Public Goods? The Turnpike Companies of Early America."

Not counting the land grants involved, only four states subsidized roads, and of them only Pennsylvania did so substantially. The charters were means for getting private capital to take over the maintenance of the roads because the municipal governments could not afford it. Tolls were sufficient to keep the roads up, but not enough to make the roads extravagantly profitable. Nevertheless, participation in stock purchasing was surprisingly widespread.

In fact, it seems that many of the roads were the results of the actions of ad hoc societies. As Klein explains it,

The town meeting was a central institution in which all important residents were expected to participate. Sly ... says that in the early 1800s "[t]he town meeting was ... at the highest point of development." The turnpike meetings were well attended and stock pledges were made publicly. For example, Wood ... says the Fifth Massachusetts Turnpike "was formally organized at a meeting held in the inn of Oliver Chapin, probably early in 1799, and sixteen hundred shares were issued with a par value of $100 each. Meetings with attendances of 50 and 100 people have been recorded [Connecticut Courant, March 19, 1798]....

Turnpike promoters relied of course on the most basic form of selective incentive, person-to-person solicitation. In an 1808 letter regarding the formation of the York and Conewago Canal Turnpike, the writer tells ..."

Further, putting to question the Skocpol's assertion that Jacksonian and Tocquevillian era newspapers were the result of mid-century federal investments in road building and post offices, Klein goes on to note newspaper campaigns conducted in 1798, 1804, and 1805. It appears that Skocpol had it backwards: voluntary associations and use of newspapers to convey information about private road companies pre-date the era she is citing as being a result of federal road-building and paper subsidization.

Rather than weakening de Tocqueville's observations, the existence of roads and the history of how they came to be financed reinforces them. Local townspeople noted the potential for the public benefits of a road (increased land value, incomes, access to cultural goods such as theatre, and buggy racing), so they formed organizations to obtain a state charter and raise funds. Despite or perhaps because of Virginia's objections, the federal involvement was extremely limited in those early years. Though the land grants and eminent domain provisions are troubling, this is much closer to the libertarian's understanding of how communal goods can be provided than the caricatures and strawmen normally offered.

A note on those land and eminent domain grants: the land granted was typically land already commonly used as a trail, path, or road. It probably had value for little else (that's why it was used for such). Granting it to a company for the purpose of improving it doesn't bother me much, especially when the company receiving the title is widely owned by the citizens who stand to benefit and who probably asked for the charter as townsman in the first place. The eminent domain powers were apparently not abused: they seem to have used them in conjunction with the voluntary fundraising efforts, i.e. persuasion and trade: "We'll give you stock in return for the title to this part of your land." That is a far cry from today, where a government merely announces they are going to take part of your land in exchange for a take-it-or-leave-it settlement, sometimes for the purpose of transferring it to someone who had the money to negotiate with you directly but didn't want to be bothered (and now that I think about it, I'd cut a break on the price of some land for the opportunity to not have to talk to Donald Trump). I think I'll have more to say on this in a future post on localism.

The Slate article also understates actual outcomes of the America described by de Tocqueville and tries to paint increasing centralization as either benign or beneficial. Mutual associations and the excludable goods associated with them, i.e. insurance benefits, are probably among the best-known examples (well, at least to me, an obviously biased sample). From Mancur Olson (The Logic of Collective Action), we would expect successful societies, i.e. the ones we have heard of, were able to provide something to the members (benefits, prestige, self esteem) that could be withheld from non-members. For this privilege, members would have had to contribute their money, time, and perhaps social capital. As David Beito shows in From Mutual Aid to the Welfare State, these societies continued to be vibrant and active until the government agencies took over the roles they served, i.e. the excludable goods lost their value.*

The penchant for association also worked into the managerial revolution described by Chandler (The Visible Hand). As they were beginning to recognize that rails and other businesses were no longer Mom & Pop operations carried on by partners and their sons, the various professional disciplines (managers, engineers, accountants, researchers) began to form professional associations. Among these, for example, were societies dedicated to promoting the ideas of Frederic Winslow Taylor with its rigidity and emphasis on central planning. These included the Efficiency, Scientism, and Technocracy movements, advocated the idea that all of man's problems could be solved "scientifically" by central planning and were taken seriously at the time both in the US and abroad. Lenin and Mussolini were fans, and many of the repealed provisions of the Second New Deal were an attempt to apply the theory.

Skocpol reads the period thusly:

In short, the early American civic vitality that so entranced Alexis de Tocqueville was closely tied up with the representative institutions and centrally directed activity of a very distinctive national state. The non-zero-sum nature of U.S. governmental and associational expansion becomes even more apparent when we consider that most of the big voluntary associations founded in the 19th century prospered well into the 20th, often building toward membership peaks reached only in the 1960s or 1970s and in full symbiosis with public social provision.

The Grand Army of the Republic spread in the wake of state and national benefits for Union veterans of the Civil War, for example. The Fraternal Order of Eagles was so active in promoting state and federal old-age pensions that the Grand Eagle himself received an official pen when FDR signed the Social Security Act of 1935.

The same mutual aid societies that brought health insurance, unemployment insurance, and pensions went into decline as a result of Social Security and other federal programs. To characterize them (by their association with the FOE) as prospering (as I'm sure many other organizations did) is surely misleading; at best, it was not the "non-zero-sum nature of U.S. governmental and associational expansion" asserted. Though some of the mutual associations themselves bought into the idea of using "free" money from the government to extend benefits universally, support for social legislation was not without internal controversy. Again, Beito is the better guide to the inner workings of mutual aid and service organizations:

There is reason to believe that a relationship existed between the emerging welfare state and the decline of fraternal services. Most notably, the first signs of benefit retrenchment began after 1935, the year the Social security Act became law. Officials of the homes for the elderly and orphans of the SBA cited Social Security and other welfare programs as justification not only for rejecting applications but for closing down entirely. In 1939, Malcolm R. Giles, the supreme secretary and comptroller of the Loyal Order of the Moose, urged the council to consider restricting sick benefits to members under age 65. As justification he stressed that these individuals were eligible for aid under the Social Security Act. The same year Norman G. Heyd, the chairmen of the Moosehaven Board of Governors, reported that Moosehaven had the smallest population since 1931. He asserted that the major reason "for this decrease is undoubtedly the operation of the old-age pensions in most of the states.
...
[M]any fraternalists still voiced opposition to the expanding welfare state, although they were far less influential than in the past.
...
Bina West of the WBA also condemned New Deal programs. ... West ridiculed suggestions that Social Security was just an expanded form of cooperative insurance or represented a culmination of fraternal principles. She charged that the trust fund was not a true reserve but instead a mere "bookkeeping entry." The premiums used to finance the program, she asserted, could be used by the government for "any purpose, good or bad." [>coughLBJcoughVietnamcough<] As with compulsory health insurance, West worried that Social Security would pose a threat to American practices of mutual aid. "Is there any beautiful ritualism or human tenderness in a government bureau?" ... Even fraternal supporters of Social Security, such as Giles, shared these concerns. While Giles praised Social Security as proof that "imitation is the sincerest flattery," he cautioned that government was incapable of approximating the warm handclasp from a fellow member or the "friendly visitation of fraternalists to a stricken brother."

Side note: It is also worth pointing out that unemployment benefits, popularly thought to be a creation of Progressive or New Deal eras, were actually a mutual aid benefit long before, and were also offered by states prior to federal involvement. The federal government was a johnny-come-lately, not providing substantially higher benefits at all. Also, lest it be supposed that fraternalism died as a result of the Depression, it should be noted that many societies had bounced back from early hard times and by some measures fraternalism actually showed an increase during the 1930s, but a rapid decrease after 1940. Given the second rapid expansion of the federal government in Johnson's Great Society, it seems perhaps significant that Skocpol chooses to select that as the period at which the big voluntary associations reached their zenith, having declined ever since.

It seems worthwhile to mention also the labor movements that achieved success prior to the period of federal involvement. Union involvement as a percentage of the workforce peaked in the 1950s and as an absolute number peaked in about 1972. Some would argue that unionism has been in decline because of rather than in spite of the NLRA: the purpose of government involvement was not to support the workers but to support the employers who wanted a union that was interested in form, contract negotiation, and business, not workers' rights. This is indeed a symbiosis, but not of the type Skocpol implies.

Skocpol also never notes the rise of mutualism and syndicalism elsewhere in world as the 19th century progressed. I'm only a novice student in this area, so I'll leave the heavy lifting in this area to people like Kevin Carson, Zhwazi, Shawn Wilbur, Joel Schlosberg, Wally Conger, and Brad Spangler. In any case, there was certainly a growing reaction - Le Chatelier-like - to the rise of the nation-state. In America, the nation-state grew out of both the European model and the town hall meeting, giving rise to a reaction that was highly individualist, i.e. Emerson, Thoreau, Spooner, and others. In Europe, the reaction placed more emphasis on class consciousness, the influence of both the experience with feudalism, its remnants (the aristocracy in England, the Junkers and monarch in Prussia, the remaining monarchs in Austria and Russia), and Marx, giving a reaction that was highly communitarian (Owenism, Fourierism, syndicalism). These are hardly supportive of a "civic vitality" that desired to be "closely tied up with the representative institutions and centrally directed activity of a very distinctive national state." If anything, these are movements that are interested in civic vitality but resistant to centralism and long-distance bureaucracy.

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* Hmm, that's interesting. Is a good provided by a fraternal organization with wide membership a "communal good" even though it is excludable?

End of the Race?

I have a passing interest in analogies which cause people (including me) to question their basic beliefs and mythical stories. This one makes an analogy between fossil fuels and education which is designed to make people question their commitment to "free" public education or to fuel taxes.

What about natural resources in general? There is an analogy which suggests the earth is like a spaceship, equipped with all of the things we need for life*. As we race to consume those resources, we are only depleting them faster and racing towards our own doom. Eventually, so the theory goes, we will run out of new places to explore, prices will shoot up, and we will wish that we hadn't been in such a hurry.

Does the same logic apply to labor? As transnational corporations search for the cheapest labor, they thrash from one previously uncharted territory to the next: first Japan, then Mexico, then Korea, then Vietnam, then China. This is the so-called "race to the bottom".

What happens when that labor race is over? The consequence claimed by "pro-labor activists" is that all labor will be paid at the same low rate as the cheapest labor, but this relies on such assumptions as equal productivity and zero transportation costs (those activists are frequently either self-interested, i.e. union workers, or mistaken in their theory and therefore anti-labor in practice). The actual consequence is that once you have hired the last untapped laborer, the same thing will happen as when you open the last natural resource mine and still have unsatisfied demand: the price of labor goes up.

That is exactly what is happening in China. See, for example, here at Gapminder (check off the China and USA boxes and watch Chinese income start to catch American income, noting that American income does not fall, directly contradicting the "race to the bottom" theory), here, here, here, and the latest, which I have both on good authority and from here is that there is now a shortage of stitchers on the apparel fabrication lines. They are no longer living in abject poverty, and they are becoming consumers who will eventually demand more of China's manufacturing output. Eventually, they may even move up to importing high quality goods - the type that are still manufactured here in the US. Thus, we have little to fear from export-based foreign countries, and they have much to gain. By blocking them out with trade protection, we also grant truth status to the claims of their demagogues that claim America wants to keep them poor.

Go back to the Gapminder graphic and note something: Africa is the home of last remaining unexploited workers. They could use a sweatshop or two to pull them out of their poverty.

* In reality, the earth was randomly equipped. We happen to have discovered uses for many of those resources, adapting them to our needs. We have barely scratched the surface. "Spaceship earth" is an idiotic parable.