Finance, Industrial Policy and The Limits of Power

I've been reading a lot of Andrew Bacevich lately, and while I may not be enamored with all of his diagnosis or prescriptions for the ailing American hegemon, they are impossible to ignore. At the very least lend a very useful framework for analyzing our present predicament. One of Bacevich's most important observations on domestic politics is that an ideology of "National Security" has, for the past 60 years, justified a relentless expansion of executive power.

TARP has given this expansion new relevance. Because bailout plans are guaranteed to fail if their credibility is undermined by major changes, the short-term well being of the economy is hostage to the will and whimsy of the executive branch. In Bacevich's latest book, America's economic ills consist of its entitlement to a culture of consumption and its underpinnings - cheap credit, cheap oil, and cheap imported goods. As far as economic policy goes, the conservative Bacevich savages Reagan's rhetoric of indulgent individualism. Because economic debate in the United States remains a left vs. right, government vs. market affair (even as the President once decried as "laissez-faire" does more to move America towards "socialism" than any has in years), it is tempting to analyze Bacevich in the same way. Such rhetoric compels the disgruntled to come away from The Limits of Power with a worldview that finds free market ideology complicit with this culture of consumption, and thus the obvious solution with a stronger government that can rein in finance, promote alternative energy and rebuild American industry to wean it off of imports. Reject "market fundamentalism," and the culture of consumption might wither away.

But such an interpretation is naive, if not delusional. If anything, Bacevich's thesis that our economic addictions are rooted beneath the veneer of partisan politics requires us to recognize it as naive and delusional. We have already seen a massive expansion in government power and reining in of the free market, and it has only served to further promote the underpinnings of this "culture of consumption." We have spent over a trillion already and potentially guarantee trillions more to ensure access to credit. The business cycle has taken care of cheap oil for us. As for cheap imported goods, perhaps the government might take a step in the "right" direction. But if you asked me, the widening trade deficit is more a symptom of our refusal to save than of a dangerous reliance on foreign products.

The evolving manifestations of America's insatiable entitlement have substituted government for the market to facilitate its addiction to consumption-fueled growth. The ideology of "National Security" may now find a new place in the bailout debates and industrial policy. Wesley Clark insists that the maintenance of American military power relies on the protection of our auto industry, and justifies his claims with a variety of arguments similar to those The Limits of Power targets. Take one paragraph:

In a little more than a year, the Army has procured and fielded in Iraq more than a thousand so-called mine-resistant ambush-protected vehicles. The lives of hundreds of soldiers and marines have been saved, and their tasks made more achievable, by the efforts of the American automotive industry. And unlike in World War II, America didn’t have to divert much civilian capacity to meet these military needs. Without a vigorous automotive sector, those needs could not have been quickly met.

The ideology of "National Security" in The Limits of Power functions as an elastic clause to justify whatever the United States would prefer to do in the interest of power. In this case, Clark identifies the interests of American national security not just with equipping its massive military, but in paving the way for its transformation into fighting counterinsurgency and the war on terror. But he also implies that such debt is necessary so that these wars can be fought without influencing civilian life, hoping to insulate Americans from even indirect civic liability in their conflicts.

We should not be surprised if economic nationalist rhetoric strengthens its rhetoric of national security. The steel industry is never far behind in making similar arguments. While it may seem outlandish to read all such articles through the lens of Bacevich's thesis, it is important to fully absorb the book's argument. The culture of consumption and faith in militarism that brought us to this point was not the making of any one person or party. Neither will the effort that overcomes it be. If we accept his criticism of the past, we must recognize its relevance to our present and future, regardless of who is leading us.

I do not consider Bacevich one of the best critics of the Bush administration because I agree with him entirely (I do not think we can so easily and confidently revert to the purely defensive, conventional military posture he advocates, among other things). I consider Bacevich one of the best critics of the Bush administration because he understands the Bush administration's worst flaws in their proper context - not as the sole responsibility of some cabal that has hijacked America, but as the manifestation of long-term trends at all levels of government and society that both parties and most Americans have comfortably allowed to run rampant, if not encouraged. The root problems will not disappear simply because the party has changed even if the symptoms manifest themselves differently. The most sobering part of The Limits of Power is that we can see the trends it identifies continuing to manifest themselves today. Obsession with immediate economic gratification at the expense of managing debt, messianic ambitions of America's role in world affairs, a national security strategy focused on the "imperial periphery" and the appropriation of the concept to justify the interests of selfish interests in a broken system - these have not disappeared. The current iterations of these actions - the financial bailout, the move away from reducing budget deficits, our desire to regain moral world leadership and fix Afghanistan, to help American industries - are arguably more justified and clear-sighted than those of the Bush administration. But as the country waits in anticipation of the inauguration and an era of change, it is important to remember not only the limits the Bush administration came up against in exercising power abroad, but the limits we will face in truly changing how it is exercised.