Professional Documents
Culture Documents
10/27/2010
Democracy
Richard Posner's The Crisis of Capitalist Democracy takes as its starting point
the 2008 financial collapse and the (ongoing) economic depression which has
followed; with this as his starting point, Posner then weds a narrative of the financial
crisis to his own personal rupture with neoliberal economic thought. Posner, a
former member of the Mont Pelerin Society, utilizes the last two sections of the text,
What Lessons Have We Learned from the Crisis? and The Way Forward, to develop
focus on its application to the present circumstances. Thus it his own break with
neoliberal economic thought, taken together with the financial crisis itself, which
forms the thaumazein guiding him in his exploration of the possibilities and failings
of capitalist democracy.
of '08 and the Descent into Depression... The title alarmed some
readers who thought I meant that capitalism has failed us and we need
institutions for enforcing those laws, and regulations designed to align private
incentives with the goal of achieving widespread prosperity" (Posner 2). What
Posner unironically lays out for the reader is a capitalist utopia with slight but
significant changes to the capitalist utopia of the unregulated free market (which he
indicates was, prior to the crisis, the basis for his economic beliefs); the
fundamental assumption, that the market is the best (or perhaps only) way of
organizing the social existence, remains unchanged. In this regard, he does not
diverge much from Keynes, who believed a strongly interventionist form of a market
What separates the thought of Posner and Keynes is, quite bluntly, the
Russian Revolution, the specter of which haunts Keynes and animates him to
conceive of a "better" capitalism which strives toward social welfare and minimized
class conflict; for Posner, the specter is American hegemony displaced by China and
the possibility of slowed economic growth (Posner 377-380). The "better" capitalism
for Posner is one where the U.S. can maintain its place in the global economic order
and avoid large-scale future fiscal crises. The difference, when viewing the two side-
by-side, is drastic: for Keynes, the era of free-trade had unequivocally passed away
and something was urgently needed to replace it, while Posner feels no such
pressure to resurrect liberalism in some new iteration and instead plays the role of
mortician seeking to make-up and perfume the corpse of the market utopia.
and continuing throughout the rest of Part II, Posner consistently seeks to invoke
the 'animal spirit' of Keynes, aping Keynes' theories whenever they would seem to
corroborate his own. Thus while Posner seeks to ground himself in what he sees as
being in the true spirit of Keynes, he misses the meaning of Keynesian economics
entirely: namely, that economics cannot discount the social factors it unleashes
which are capable of destroying market society itself. What Posner has learned from
within the financial sector) is fully capable of destroying itself and therefore must be
regulated, while the other component - that Keynes saw and Posner does not - is
the possibility for the social disruption caused by market capitalism to eventually
destroy market society. The genius of Keynes' intervention was this two-fold
credit, the necessity for a truly radical shift in the social organization of capitalism in
2010 is nowhere near the point of urgency reached during Keynes' writing of The
General Theory of Employment, Interest and Money, and thus the limited
conception of Keynesian thought which Posner employs is not due solely due his
blindness.
The question that emerges, then, is that if "Keynes Redux" really means
"Keynes Lite", is Keynes a valid reference point at all for Posner? The neoliberalism
of Posner's Mont Pelerin Society days is not particularly far removed from what he
laid out on the second page of the text as being the basis for a "better" capitalism,
namely "... a system of laws for protecting property and facilitating transactions,
institutions for enforcing those laws, and regulations designed to align private
incentives with the goal of achieving widespread prosperity." Is this not simply a
acute - and somewhat painful - that in his "Keynesian turn," Posner has made no
headway (or even effort) in distancing himself from the failures of neoliberal
thought in regards to social organization, and that his answers to all problems
inevitably fall back on the same market mechanism (albeit "fixed") that he believed
in before.