Why is a struggling open market so hard to turn around? The answer is really quite simple: A centrally planned, totalitarian economy is easy to predetermine; in fact, that’s the point. An open market for the trade of goods and services cannot be predetermined, because its governing dynamics depend entirely on the manner in which goods and services are traded, at what volume and by whom, and direct command-and-control is likely an obstacle, not a source of efficiency.
Open markets, in their most virtuous state, foster the optimal distribution of resources, goods and services, and produce generalized value for all involved. It is at this point, where the middle class is the focus, and where it expands by inviting (and making possible) more membership from the less affluent segments of the socio-economic web, that open markets are democratizing in their effects. Intervention, then, needs to be subtle, and favor democratic outcomes, so less central control.
At this moment in history, the US economy is undergoing a prolonged correction, stemming from a series of ill-conceived manipulations, through public policy, over several decades, which did not foster a genuinely open market environment but rather one in which powerful interests were less constrained in their attempts to predetermine outcomes, in their favor.
What’s more, the present correction is showing us that:
- Major profit-making schemes (multinational oil firms, for instance) are not necessarily incentivized to hire or to create new intellectual capital (Apple is an exception);
- Excessive dependence in the banking sector on unsustainable volumes of consumer debt is corrosive to hiring and to the middle class, generally;
- Excessive consumer debt is corrosive to the health of the consumer economy, forcing individuals and families to cut back, without innovating or spurring new lines of enterprise;
- Hiring is not the first interest of the most affluent interests in our economy;
- When financial instruments designed merely to magnify wealth, not to cultivate its spread or its actual healthy increase, come to prevalence, collapse is imminent;
- The open US market came to depend too much on fictionalizing wealth-maintenance tactics;
- To restore economic health and prosperity, we need to restore and expand the middle class, aggressively…
What many in the pro-business supply-side camp seem to be missing about this moment in history is that we are witnessing the failure of policies designed to plan easy outcomes for them to foster the widespread prosperity that actually benefits them. So, they are dismayed to see a progressive president, with progressive policy aims, demanding responsibility, ingenuity and openness from the markets.
Progressives are also dismayed, many of them believing that Pres. Obama is somehow “caving” to a right-wing consensus that demands corporate favoritism and a back-burner approach to consumer interests. In fact, even as Obama has consistently pushed for tough consumer-centered regulatory reforms, even as he has sought to guard against the banking-induced higher education lending bubble, he is working to make sure markets work, with the democratic character so often promised and not recently fulfilled.
What so many outside the center of American politics seem to be missing is that it makes sense for a progressive policy leader to be demanding progressive market reforms that actually build an open market—one where enterprise can flourish but where the most potent incentives for investment line up with the aim of an innovation-oriented, prosperous and prolific middle class.
Turning the ship of state that is the Great Recession requires not command-and-control (disingenuous partisan criticism that the president should “create jobs”), but a restoration of economy-wide incentives for investments that spur innovation, make new enterprise more viable, localize the engines of economic growth and sustained prosperity, build talent and agility into our communities, and allow a big, strong, resilient middle class to be the leading determinant of outcomes.
Those in Washington, in the business community and across the nation, who cannot see that certain progressive approaches to spurring economic resurgence must work within and redefine open market policy, are missing an historic opportunity. In the struggle between pessimism and optimism for the soul of American democracy, true pessimism lies in the keep to the sidelines, we can do nothing approach.
Zygmunt Bauman—in his book Does Ethics have a Chance in a World of Consumers?—reminds us:
When first proclaimed amid the gathering revolutionary excitement in France, the slogan Liberté, Égalité, Fraternité was a succinct statement of a life philosophy, a declaration of intent, and a war cry, all rolled into one. Happiness is a human right, whereas the pursuit of happiness is a natural and universal human inclination—so went the tacit, matter-of-fact assumption of the philosophy—and to achieve happiness, humans needed to be free, equal and indeed brotherly, since for brothers, mutual sympathy and the succor and help of siblings are birthrights, not perquisites that need to be earned and shown to have been earned before being granted.
The US can achieve its central political and economic policy goal—demonstrating the viability and wisdom of the democratic open market, through an expanding middle class and empowered citizenry—if we establish a broad nonpartisan coalition for policies that achieve both progressive (favoring middle class expansion) and open-market (decentralization of wealth) aims by fostering cycles of local growth and reinvestment.
The 21st century middle class economy must be highly collaborative, with no clear center, and able to resist the vulnerabilities that come from having no clear center. This moment is an opportunity to make good on the historical promise of a truly open society, where market conditions are determined by the daily contributions of real people, not by the whims or entrenched interests of powerful cliques.
We need to expand the middle class, do so in a way that decentralized the levers of wealth creation, and builds into the national economy measurable elasticity, to guard against fluctuations in markets for commodities, stocks, bonds and commercial and consumer credit. We need to reverse the slide into a deterministic economy by planning wisely the best way to put power back in the hands of families, communities and small businesses.