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A Green "New Deal"?

In New York, our very own "Democratic Socialist," Alexandria Ocasio-Cortez, has been a vocal proponent of a so-called "Green" New Deal, aimed at solving the problem of "climate change" with massive government intervention. I replied to a Facebook question on the issue, and will share what I said with Notablog readers:

I think there are two very real issues that need to be examined with this climate change question. Let us assume that every point by those who argue for the validity of climate change is correct.

With regard to pollution issues, why assume that the government has any more "knowledge" in resolving the issues than actors in a competitive market system in which there are different players acting on their differential "know how" of the market for clean energy? Central planning didn't work for any other issue, so why assume it will do anything but shift billions of dollars in taxpayer money to industries created or favored by a government-sanctioned scientific and technological elite? Typically, the only "products" that governments have been been good at "creating", in league with scientific and technological elites, are weapons of mass destruction.

And secondly, folks who advocate stronger government involvement in this area should focus on the so-called "tragedy of the commons" (which has been a principal cause of much pollution) and the need to allow courts to take on class action suits against corporate polluters (many of them already politically-privileged monopoly energy utilities).

To simply hand over billions of dollars of taxpayer money to favored industries allegedly committed to resolving the problems caused by climate change is to think that, somehow, government will change its stripes and not be what it has always been: a dispenser of privilege to those who are most adept at grabbing and using political power. That's what happened with the New Deal (which was based on the corporativist model of "War Collectivism" from World War I and was praised by Benito Mussolini for its fascistic character); why will it be any different with a "Green" New Deal?"

With regard to the view that "government has only been good at 'creating' weapons of mass destruction," one reader asked: "What about the space program, interstate highway system, NIH. the internet, etc.? I responded:

It is very good at socializing the costs for building large projects that are typically related to 'national defense': typically, it takes market actors to take these projects and to develop them for the benefit of consumers.

And with regard to the issue of fossil fuels and oil, it has had a primary role in developing a foreign policy of war and interventionism to benefit Big Oil, whether it has been in propping up "friendly" autocratic regimes, like that in Saudi Arabia, or in benefiting ARAMCO, with which Exxon-Mobil has always been intimately involved.

I added the following point when a reader proposed that a government, freed of corporate power, could act in the public interest:

But in my view, the government will always be captive to corporate power. On this point, I think Hayek was right when he said that the more politics comes to dominate economic and social life, the more political power will be the only power worth having---which is why those most adept at using political power get the most privileges. Which is "why the worst get on top."

Another reader rejected my view as a libertarian article of faith, to which I responded:

[Giving the government the power to make decisions about climate change] still does not solve the essential knowledge problem or class problem. Talk about an article of faith: Why would you put faith in a single institution (the state) to come up with the necessary knowledge (which is not simply "data" but both articulated and tacit, and tied to differential contexts) to introduce a whole "Green New Deal" that would cost trillions of dollars and benefit specific industries?

And if we are living in a state capitalist-corporatist system, how do we avoid the central problem of state-generated privileges being handed over to whole industries invested in "alternative" energies (if you actually believe that the energy industry wouldn't just seek to cash-in on the newly generated expropriated funds to take advantage of the instituted changes)?

P.S. - And I didn't say central planning never works; I just said that it is typically best at producing weapons of mass destruction or socializing the costs and risks of a political economy in a way that does not take into account the tragedy of the commons.

Throughout the nineteenth and twentieth centuries, for example, where the government subsidized the great expansion of "infrastructure" long before any private investment would have taken the risk, some of that expansion didn't really work out. The railroads "benefited" from this kind of subsidization but were, of course, eventually undermined by the lack of market support. The results were fairly typical: eventually these railroads went bankrupt and were 'nationalized'.

Typically, "crony" state capitalists are at the forefront of getting the government to make the big "infrastructure" investments because it does socialize the costs of their expansion. But it doesn't always work out in the long run. (The experience of World War I was also typical in this regard; see my article on "Government and the Railroads During World War I.")

The reader rejected my reasoning and argued that the state was the only institution available that could make the changes required to save the planet from climate catastrophe. To which I replied:

Well, then all I can say is we'll have to agree to disagree. I don't see how effective it will be to institute the kind of massive shifts you envision in the current state-capitalist context, whose class character will be fundamentally the same. No change of the sort you envision comes to this country without a massive amount of under-the-table deal-making where the worst seem to always get on top and profit the most.

I don't think of this as a libertarian article of faith; I think of it as a simple fact of reality.

The discussion continued and I shared a link to a post by my dear friend and colleague, Steve Horwitz, on the timeline of the thread:

Steve Horwitz['s post] ... speaks to the effects of such a massive state expansion, which is what would be required to achieve the kind of change that is being advocated here. These kinds of expansions amount to the militarization of the economy, and given what we have seen in other such militarizations (from the War Collectivism of World War I to the original New Deal to the War Collectivism of World War II, and so forth), I do not see how a Green New Deal avoids the problems inherent in the proposed 'solution'. As Steve puts it:

The irony of the supposedly anti-militaristic Left selling the Green New Deal as the economic equivalent of the mobilization for World War II is not lost on me, anyway.
Whenever you hear the rhetoric of "We need a war on X" or "this is the moral equivalent of war," run the other way. That rhetoric is just a mask for a grab for power reflecting the common belief on both the left and right that we can only accomplish great things when we have a collective end and structure society from the top down to achieve it. That belief is the most fundamentally anti-liberty argument there is, whether the war rhetoric is about actual or metaphorical war. Replacing the market with economic planning has always been about replacing freedom with militaristic and hierarchical rule by an elite. Both actual and metaphorical wars require that we give up pursuit of our preferred ends united by agreement on means for a society where any means are justified for the common end.
As Don Lavoie wrote 34 years ago: "Planning does not accidentally deteriorate into the militarization of the economy; it is the militarization of the economy....When the story of the Left is seen in this light, the idea of economic planning begins to appear not only accidentally but inherently reactionary. The theory of planning was, from its inception, modeled after feudal and militaristic organizations. Elements of the Left tried to transform it into a radical program, to fit it into a progressive revolutionary vision. But it doesn't fit. Attempts to implement this theory invariably reveal its true nature. The practice of planning is nothing but the militarization of the economy." (National Economic Planning: What is Left?, p. 230)

I should add that Don Lavoie's work, especially his Rivalry and Central Planning and his National Economic Planning: What is Left, is among the most radical and highly dialectical work in the Austrian tradition. His integration of hermeneutics, his use of Hayek's work on knowledge (especially the Polanyi-Ryle 'tacit' dimension of knowledge), and a dialectical understanding of the interrelationships of politics, economics, and culture, make his contributions all the more significant and worthy of study. He was a fine scholar and a dear friend, and Steve's quoting of him is "spot on" indeed!