The Administered Society versus Economic Democracy
The Administered Society and Economic Democracy represent the two boldest efforts to imagine a next step beyond the stalemated efforts of Welfare Liberalism and Neocapitalism to solve the problems of our society. The advocates of these new visions strongly reject the notion that the United States can return to anything like the situation that prevailed before 1929. In accepting the interpenetration of private and public power, they represent a crucial break with the assumption that fundamental economic interests can be effectively integrated either through the market alone or through informal alliances among interest groups. Rather, these two visions declare the need to go beyond exclusive reliance on voluntarist strategies for integrating major sectors of society such as business, labor, and government. They propose a more visible, public institutionalization, expanding the linkages between sectors and placing them in a more encompassing national framework.
There is a similarity between the proponents of these still inchoate visions. Both announce that something new to American politics is required because of the failure of older visions. Proponents of these new views join others in a widespread criticism of Neocapitalism and Welfare Liberalism as alike sacrificing the general welfare to “special interests.” Welfare Liberals such as Walter Mondale are thought to give too much attention to labor, ethic and racial minorities, and other special constituencies, and Neocapitalists such as President Reagan are criticized as agents of the corporations and the selfish rich. The proponents of the Administered Society and Economic Democracy present their visions as efforts to incorporate and transcend contending interests. Like earlier reformers, they do so with confidence in expertise as the way to extricate our society from its apparent impasse.
As yet, major politicians have embraced only fragments of these new visions as they seek to update fundamentally older conceptions. For coherent expression of these visions we must turn to theorists rather than politicians. We may consider first a vocal advocate of an administratively more integrated national society, the well-known investment banker Felix Rohatyn. In the 1970s, Rohatyn figured prominently in the rescue of New York City from bankruptcy, a rescue carried out by placing fiscal authority in the hands of an appointed board of the city’s creditors, employees, bondholders, and bankers, operating outside ordinary legislative channels. Rohatyn proposed in the early 1980s that the United States, confronting an increasingly competitive international economy, needed a similar rescue that would produce “stable growth, low unemployment, reasonably balanced budgets, and reasonably valued currency.” Such a policy would need to be “committed to maintaining our social gains by promoting economic growth and full employment,” which Rohatyn argued could not be realized by the kinds of political compromises characteristic of congressional politics. “Only institutions that can take the long view and act accordingly will be able to bring about the kinds of changes that are required,” he contended.
In arguing for the necessity for such new institutional arrangements, Rohatyn spoke in a language strong in technical economic and administrative terms, as Welfare Liberalism and Neocapitalism have done for a long time, but with a weaker evocation of the moral tradition of American politics than even these long-dominant positions usually contain. Rohatyn’s specific proposal was for a “tri-partite economic development board,” made up of representatives of “business, labor and government,” appointed by the president and the Congress, in order to intervene in the economy to promote the economic goals described above. The board, the centerpiece of Rohatyn’s “industrial policy,” was modeled after the New York City rescue board and drew inspiration from the Reconstruction Finance Corporation designed by Herbert Hoover to fight the 1929 depression. To bring so massive a reorganization into being, Rohatyn called for strong national leadership by a “bipartisan administration in which a Republican or Democratic president would include opposition leaders in his cabinet” and which would select members of the economic board in a similar spirit.
The Administered Society is above all a vision of social harmony among different and unequal groups cooperating for the goals of improved individual security and widely shared economic growth. To accomplish these ends, it would link private groups, especially business and labor, with governmental agencies to steer economic development through this period of technological and international change. At the same time, traditional Welfare Liberal programs such as improved opportunity and assistance for those dislocated by major change would be continued. One key to this vision is the idea of “partnership” among various sectors of the economy and society, brought together through governmental boards, commissions, and agencies. Such a policy would depend heavily on the administrative structure of government, rather than on popular representation, and would thus bring technical and managerial experts to increased prominence. Yet the basic understanding of work as a means toward private goals would remain the same as in Neocapitalism and Welfare Liberalism. The “permanent and aggregate interests” of the nation would receive more focused and perhaps more expert attention, but presumably only by those at or near the summits of their respective institutions. The ironic result of the Administered Society is very likely to be an increase of privatized attitudes for the many, now more securely provided for.
Unlike the proponents of the Administered Society, advocates of Economic Democracy consciously worry about how to empower citizens to take part in the array of new integrating institutions that they, too, see as necessary to a more humane, as well as a more abundant future. An important voice of this developing position in the early 1980s was Michael Harrington, a long-time advocate of what he has termed “democratic socialism.” To Harrington, neither Welfare Liberalism nor Neocapitalism will do: “We have entered a decade of decisions, a crisis of the system, whether we like it or not.” As an alternative to the failed policies of the past, Harrington endorses a part of Rohatyn’s logic on the grounds that conscious centralization in economic policy is the precondition for more citizen participation in economic decisions—for “decentralization.” Seeing corporate domination of the economy as the chief obstacle, Harrington proposes an active government role to bring about a “democratization of the investment function.” Such a policy would lead eventually to “introducing democracy from the shop floor to the board room.”
While a planner such as Rohatyn can be sanguine about the benevolence of centralized institutions, Harrington thinks the situation requires more ingenuity. Rohatyn defends his proposals as ultimately likely to enhance democracy, saying that “far from being undemocratic, the work of such a board could add to the democratic process an element of consultation with the major forces of our society.” In contrast, Harrington sees public as well as private bureaucracies as threats to freedom. But, he asks, “What if there were legal provisions of funds for any significant group of citizens who wanted to hire their own experts to put together a counter-plan?” For Harrington, the element that divides Economic Democracy and the Administered Society is the notion of citizen empowerment.
Yet Harrington shares the same universe of discourse with Rohatyn to such an extent that he turns to the provision of funds to citizens “to hire their own experts” as the major defense of the democratic nature of his proposed reforms. But experts, no matter how “democratic” in spirit, are neither moral exemplars nor prophets nor political leaders, and the politics of competing experts sounds like a “high tech” version of the politics of interest. Harrington’s vision of Economic Democracy intends to evoke a political vision greater than the sum of competing interests, and it recognizes that this vision would require the support of a widespread social movement. Harrington even recognizes something Rohatyn gives no hint of—that the new vision requires a major cultural transformation as well as institutional innovation. But when it comes to suggesting the substance of that cultural transformation, Harrington’s vision falls as silent as Rohatyn’s. They mutely reveal a lack of a moral basis for their political purposes, the end point of a discourse of means without ends.
This is not to say that there is no difference between these two more recent visions, any more than it could be said that there is no difference between Welfare Liberalism and Neocapitalism. Though Rohatyn may not intend it, it is certainly possible that the Administered Society as he envisions it would only tighten the hold of corporate business on our collective life and result in the administrative despotism that Tocqueville warned against. The vision of Economic Democracy continues the long struggle to bring the corporate economy under democratic control that we alluded to in chapter 8. But can we not imagine that without a cultural and moral transformation, the experts—on whom the Economic Democrats, too, rely—would succeed in bringing about an administrative despotism, or what Tocqueville also called a “democratic despotism,” just as surely under Economic Democracy as under the Administered Society?
The Unresolved Tension
Earlier in this chapter, we spoke of the belief of Madison and the other founders that our form of government was dependent on the existence of virtue among the people. It was such a virtue that they expected to resolve the tension between private interest and the public good. Without civic virtue, they thought, the republic would decline into factional chaos and probably end in authoritarian rule. Half a century later, this idea was reiterated in Tocqueville’s argument about the importance of the mores—the “habits of the heart”—of Americans. Even at the end of the nineteenth century, when Establishment and Populist visions were the chief antagonists in the continuing argument about the shape of our society, Madisonian ideas were still presupposed. The tension between private interest and the public good is never completely resolved in any society. But in a free republic, it is the task of the citizen, whether ruler or ruled, to cultivate civic virtue in order to mitigate the tension and render it manageable.
As the twentieth century has progressed, that understanding, so important through most of our history, has begun to slip from our grasp. As we unthinkingly use the oxymoron “private citizen,” the very meaning of citizenship escapes us. And with Ronald Reagan’s assertion that “we the people” are “a special interest group,” our concerns for the economy being the only thing that holds us together, we have reached a kind of end of the line. The citizen has been swallowed up in “economic man.”
Yet this kind of economic liberalism is not ultimately liberating, for, as became quite clear with the final two visions of the public good described, when economics is the main model for our common life, we are more and more tempted to put ourselves in the hands of the manager and the expert. If society is shattered into as many special interests as there are individuals, then, as Tocqueville foresaw, there is only the schoolmaster state left to take care of us and keep us from one another’s throats.
But if the fears of Madison, Tocqueville, and Debs seem today to be becoming alarmingly true, then perhaps their hopes can speak to us as well. They believed that the survival of a free people depends on the revival of a public virtue that is able to find political expression. The way a free society meets its problems depends not only on its economic and administrative resources but on its political imagination. Political vision thus plays an indispensable role in providing understanding of the present and of the possibilities for change. Is it possible that we could become citizens again and together seek the common good in the post-industrial, postmodern age?