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quarterback capitalism

The Obama adminsitration fired the GM head today, and already, some bloggers are having a hissy fit. If you strongly believe against state market interventions, fair enough. But to compare this to 30’s style fascism or socialism is kind of missing the point.

First, it helps to lay out what political economy has been about for the last 150 years or so. In ye olden days, people truly despised the capitalist system. Some folks, like the socialists, just wanted to abolish it and just have the state do everything. The social democrats and the Keynesians wanted to control it and spread the wealth. The fascists also wanted to control it, but mainly as a tool for nationalism and clientelism, rather than redistribution. There were some who loved capitalism, but that’s a story for another day.

But we’ve seen none of the above. There’s no attempt to abolish the system, and no attempt to set up vast new welfare programs, though we’ll likely see piecemeal efforts on health and related issues. Neither is there an attempt to set up a massive patron-client state, in the way the fascists did in the 30s.

Instead, we’ve got “quarterback capitalism.” The idea is pretty simple: don’t challenge the major features of capitalism, but opportunistically fix what you can with buy outs, loans, subsidies, and other ad hoc interventions. Reminds me of the great quarterback Randall Cunningham, who could scramble his way out of any mess. The idea behind Bush-Obama policy is that what ever mess you’ve got, you can probably fix with the right hodgepodge of incentives. The Federal government is the nimble quarterback who can get you out of the squeeze.

With regard to GM, Obama didn’t do what the fascists actually did – which was to make everyone dependent on the state so they could engage in militarism. Basically, the current strategy is to do what one can to save the financial and manufacturing infrstructure of United States, but not in ways the challenge the underlying structure. Better regulations for banks; new management for the auto people; a little help for homeowners. For GM, it was pushing out old management in exchange for money, a typical move in the private sector. Whether this is good is certainly for debate, but it certainly isn’t a return to fascism, socialism, or laissez-faire economics.

Written by fabiorojas

March 31, 2009 at 12:05 am

Posted in economics, fabio

8 Responses

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  1. What seems lost in all of this economic restructuring and refinancing is worker control and ownership. Why haven’t the unions even attempted to discuss purchasing GM, Chrysler, or Ford? With the stocks in the toilet, you’d think they’d push hard to seize control. But, instead they’ve whimpered along with their pampered masters, and nobody has even broached the subject of buying the company and firing the overlords. I guess unions in the US are nothing more than rackets Too bad. I think reds would do a lot better job of rebuilding our economic infrastructure (to steal characterizations from Kimmeldorf).

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    sherkat

    March 31, 2009 at 12:37 am

  2. Sherkat: Good point – how much can the net worth of GM be these days? Could the unions put together a credible take over? Might be time to push some new organizational forms.

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    fabiorojas

    March 31, 2009 at 3:02 am

  3. One possible reason the unions (or anyone else for that matter) don’t purchase GM is because of fears that the company is still overpriced. My guess is that if GM were a steal right now, then private equity would gladly buy it up and turn it around (or at least liquidate it). But nobody wants to sink money in something that is inevitably going to fail.

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    brayden

    March 31, 2009 at 4:58 am

  4. […] Fabio Rojas says no. He says fascists want to control capitalism, “but mainly as a tool for nationalism and clientelism, rather than redistribution.” He goes on: Instead, we’ve got “quarterback capitalism.” The idea is pretty simple: don’t challenge the major features of capitalism, but opportunistically fix what you can with buy outs, loans, subsidies, and other ad hoc interventions. Reminds me of the great quarterback Randall Cunningham, who could scramble his way out of any mess. The idea behind Bush-Obama policy is that what ever mess you’ve got, you can probably fix with the right hodgepodge of incentives. The Federal government is the nimble quarterback who can get you out of the squeeze. […]

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  5. […] Fabio Rojas says no. He says fascists want to control capitalism, “but mainly as a tool for nationalism and clientelism, rather than redistribution.” He goes on: Instead, we’ve got “quarterback capitalism.” The idea is pretty simple: don’t challenge the major features of capitalism, but opportunistically fix what you can with buy outs, loans, subsidies, and other ad hoc interventions. Reminds me of the great quarterback Randall Cunningham, who could scramble his way out of any mess. The idea behind Bush-Obama policy is that what ever mess you’ve got, you can probably fix with the right hodgepodge of incentives. The Federal government is the nimble quarterback who can get you out of the squeeze. […]

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  6. Fabio, I think you vastly overstate the differences between current policies and those of the 1930s and 1960s. They were just as quarterbacky (“quarterbackish”?). FDR and LBJ did not formally repudiate and rewrite the Constitution; instead, they used ad hoc, opportunistic tactics to move policy in the directions they favored, just as Bush and Obama have done. Schumpeter famously wrote a friend that FDR “was like a child mindlessly breaking a machine because he didn’t understand its design” (McCraw’s paraphrase). By your criteria, there hasn’t been any fundamental reform since 1789 or 1917.

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    Peter Klein

    March 31, 2009 at 5:15 pm

  7. following on Peter, i thought the central theme of The Great Transformation is that there is rarely such a thing as an ideological approach to state intervention in the economy but rather it occurs as the accretion of pragmatic solutions to immediate problems. so unless i’m misreading Polanyi, he would say that “quarterbacking” is exactly the way that regulation usually works.

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    gabrielrossman

    March 31, 2009 at 8:36 pm

  8. I think these ideas are very interesting. I do, however, think that the comparison to fascist intervention in the Italian economy is worth taking seriously. Salvemini’s Under the Axe might be worth revisiting. I’ve been especially intrigued by his chapter on “the end of laissez-faire”. Page 416, in particular.

    http://books.google.com/books?id=ZTfBgIdhll8C&printsec=frontcover&dq=under+the+axe#PPA416,M1

    This is where the phrase “profit is private, loss is public” seems to have originated. It has, of course, been used to describe the logic of the bailouts.

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    Thomas Basbøll

    April 1, 2009 at 10:04 am


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