On Global Growth Trends, Right-Wing Backlash, and Political Economy: Shouting into the Ether


BY SPENCER SLAGOWITZ || SEPTEMBER 19TH, 2016

Nils Gilman, a historian at UC Berkeley, wrote a medium length piece last Monday on the ‘Economic roots of populist rage’, in the America Interest that suggested that the ‘technoglobalist’ consensus of the elites failed repeatedly failed the same segment of society, most poignantly demonstrated by the populist rage of this election cycle, thus necessitating a new socio-economic compact. What follows is my response to that argument, my proverbial rant into the ether.

I am easily in agreement with the premise of this piece—an economic system (or more accurately a whole regime of economic policies that comprise such a ‘system’) that repeatedly leaves the same sector of the population behind is not a socially optimal economic system. Yet, Gilman’s piece is more historical/political analysis than policy proposal—and it is Gilman’s analysis, not his conclusions nor his premise, that ultimately proves faulty.

Firstly, Gilman suggests that economic anxiety is the prime motivator for the current quasi-populist, anti-globalist backlash, in order to argue that failed economic policies have engendered serious ‘political economy’ concerns. This argument seems to suggest that through economic ends may we seek to quell the backlash of the so-called ‘Trumpenproletariat”. Gilman asserts:

In other words, the populist class-based anger we see has a basis in economic reality, and what it means politically is that the United States (and, indeed, almost all the advanced Western countries) needs a new social-political compact

Yet, there are several reasons to doubt that economic concerns are the main motivating factors behind the rise of right wing movements. A Gallup study conducted in early July by Jonathan Rothwell concluded that, “Trump’s popularity cannot be neatly linked to economic hardship. Those who do not view Trump favorably appear to have been just as exposed as others, if not more so, to competition with immigrants and foreign workers, and yet are no more likely to say they have a favorable opinion of Trump than others.” These findings are echoed by political scientist Philip Klinker’s Vox analysis of an ANES (American National Election Studies) pilot survey which observed that, “Attitudes about race, religion, and immigration trump (pun intended) economics.” In any case, as the previous examples show, a lot of recent evidence suggests a plausible disconnect between economic anxiety or loss from trade and support for Trump. This is additionally reinforced by looking to Scandinavian societies, who have enjoyed robust and equitable growth, but still experienced a similar right-wing populist backlash.

Secondarily, at the heart of Gilman’s argument is his presentation of the “empirical economic basis for populist economic-based anger” and his explanation of the roots of current economic trends.To answer the second principle, Gilman poses two questions: “First, why are the gains of the economy so poorly distributed? Second, why has productivity growth slowed so much over the past ten years?” In an effort to answer the first question, Gilman appears to rely on the second’s answer—he asserts:

There actually is a well-known (though not uncontroversial) historical explanation for why we should not be surprised that the past few years have been a period of slowing productivity growth in the old industrial core of the North Atlantic…we have entered the declining-growth stages of the current phase of global capitalism…the theory that capitalism at the technology frontier operates in higher- and lower-growth cycles was originally developed nearly a century ago by the Russian economist Nikolai Kondratiev.

Gilman proceeds to use Kondratiev’s theory of “K Waves” to justify his indictment of ‘turbocaptialism.” But to answer easily what is one of the most contentious and important questions of modern macroeconomics— what has caused current growth patterns & stagnating wages/productivity?— the article compels the reader accept the “K-Waves” hypothesis based on authority alone. This is quite troublesome given its centrality to Gilman’s analysis and the total dearth of supporting economic evidence found in the piece; indeed, instead of providing an economic argument, a large part of the article is simply an historical analysis that, instead of justifying the theory and its applicability in this case, explain how it has played throughout the preceding few decades. An interesting and dare I say, captivating intellectual exercise, but one that is far from compelling.

Thirdly, the article does not respond to or address any of the other predominant theories that concern the roots of current global growth patterns. Given how contentious the debate is and how diverse the promulgated arguments are—the failure to rebut any other theory that could possibly invalidate Gilman’s central thesis raises serious question. From Kenneth Rogoff’s argument about debt overhang, or Larry Summer’s secular stagnation theory—alternate expressions remain wholly ignored, save one exception; in an effort to respond to the most compelling counter-argument to the K-Wave hypothesis, Robert Gordon’s theory of current technological development slowdown, Gilman effectively shrugs and dismisses it as “premature.” Even after conceding that economically significant developments need to be platform technologies, (and, mind you, Gordon suggests that those sorts of technologies simply aren’t being developed), Gilman could have at least fulfilled the necessary burden of proving that the technologies he identifies—additive manufacturing, CRISPR-enabled biotechnology and precision medicine— in order to respond to Gordon, are indeed platform technologies.

Don’t get me wrong, this is a fascination exploration of an important topic and brings very interesting historical context—and I’ll eagerly second the final conclusion of the article that we cannot simply separate the disciplines of political economy and economics—the two are not only intertwined but directly impact each other. In isn’t enough to say that they are simply related, it is more so that they look at different sides and aspects of related phenomenon—that phenomenon being governance and society. To loosely paraphrase John Kenneth Galbraith, one cannot separate the discipline of economics, political economy/political science, sociology/anthropology, philosophy and psychology. But, while the article is fascinating, articulate, and poignant—as an argument, it leaves much to be desired. It gives readers a faulty impression of the relationship between U.S economic policy and the current sociopolitical trends of right-wing backlash, it misidentifies the causes of current global growth, and as a consequence, concludes by giving faulty policy prescriptions

One thought on “On Global Growth Trends, Right-Wing Backlash, and Political Economy: Shouting into the Ether

  1. Spencer: a good critique! There’s a footnote-festooned version of this article that provides more evidence for the claims being promoted, but one place to start is with Carlota Perez’s Technological Revolutions and Financial Capital — which captured the K-wave article well, though gives short shrift to the policy-framework shifts needed to enable K-wave renewal, and which is perhaps too sanguine about the inevitability of technological renewal.

    Like

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