The power elite revisited

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In [amazon_link id=”0199538751″ target=”_blank” ]Père Goriot[/amazon_link], Balzac wrote: “Le secret des grandes fortunes sans cause apparente est un crime oublié.” Brecht and Weill had their bankers in [amazon_link id=”041377452X” target=”_blank” ]The Threepenny Opera [/amazon_link]start out as street racketeers. C.Wright Mills, author of [amazon_link id=”B000U35R6Y” target=”_blank” ]The Power Elite[/amazon_link], took the same view of the financiers and industrialists he perceived to be controlling the America of his day – the 1950s, Cold War era. His analysis was even darker than Eisenhower’s construction of the military-industrial complex. Mills saw a polity and economy directed towards perpetual war in order to prolong power and profit.

[amazon_image id=”B000U35R6Y” link=”true” target=”_blank” size=”medium” ]The Power Elite.[/amazon_image]

The Power Elite was criticised by other sociologists such as Daniel Bell for its abstraction. Its themes were seen as too big, insufficiently rooted in empirical evidence and institutional analysis. And certainly, the 1950s are remote from our own times in so many ways. Communism and the Cold War seem long, long ago.

Yet Stanley Aronowitz’s intellectual biography, [amazon_link id=”0231135408″ target=”_blank” ]Taking It Big[/amazon_link], does well to remind us of Mills’ work and thought, which was extremely influential on the nascent New Left in the US, and has subsequently been largely forgotten. One reason is that Mills did so much to try to carve out the space for public intellectuals in American culture, albeit not with much lasting success – but at least demonstrating the scope for engagement with a wide public in accessible language.

The other is that for all the abstraction of the analysis of ‘the power elite’, the current crisis reminds us that the idea and reality of the elite is crucial. If only we had not forgotten about it between the 1960s and 2008. Events have reopened people’s eyes to the exercise of power by the wealthy and connected, and authors from Simon Johnson and James Kwak in [amazon_link id=”0307379051″ target=”_blank” ]13 Bankers[/amazon_link] to Ferdinand Mount in [amazon_link id=”1847378005″ target=”_blank” ]The New Few[/amazon_link] have started to analyse this again.

[amazon_link id=”0231135408″ target=”_blank” ]Taking it Big[/amazon_link] is a good introduction to the arc of Mills’ thinking, culminating in his newly-relevant analysis of power. It is also quite well written, something I can’t remember ever saying before about a book by an academic sociologist – Aronowitz has evidently taken Mills’ lead on accessibility. Although the author has a political perspective that I don’t share, I enjoyed reading it.

[amazon_image id=”0231135408″ link=”true” target=”_blank” size=”medium” ]Taking it Big: C. Wright Mills and the Making of Political Intellectuals[/amazon_image]

The Crash, Goldman Sachs, J.K.Galbraith and me

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“The crash blighted the fortunes of many hundreds of thousands of Americans. But among people of prominence, worse havoc was worked on reputations. In such circles, credit for wisdom, foresight, and unhappily also for common honesty, underwent a convulsive shrinkage.”

As in the aftermath of 1929, so in the wake of 2008. This was J.K.Galbraith, in [amazon_link id=”014103825X” target=”_blank” ]The Great Crash 1929[/amazon_link]. He goes on to say that Goldman Sachs recovered its reputation relatively quickly, despite having been issuing dodgy investment trust securities at a rate of more than a quarter of a billion dollars less than a month just before the Crash. “It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity,” Galbraith wrote.

It took economists a while longer to rebuild their reputation, he added. “Harvard economics professors ceased forecasting the future and again donned their accustomed garb of humility.” I had the privilege of meeting Professor Galbraith when I was a PhD student at Harvard in the early 1980s, and I must say that ‘humble’ would not be the first adjective to come to mind to describe him. Still, his book on the 1929 Crash is a great read.

[amazon_image id=”0140136096″ link=”true” target=”_blank” size=”medium” ]The Great Crash 1929 (Penguin Business)[/amazon_image]

Simple is difficult

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I’ve been mulling over the question I posed a few days ago, about how to reconcile Andy Haldane’s superb Jackson Hole paper (The Dog and the Frisbee) arguing the case for simpler financial regulation with Cesar Hidalgo‘s equally persuasive arguments for using the capacity of Big Data to give us much more useful detail. It sent me back to one of my all-time favourite economics books, Thomas Schelling’s [amazon_link id=”0393090094″ target=”_blank” ]Micromotives and Macrobehaviour[/amazon_link], which is all about the aggregation of individual decisions. (Coincidentally, Sebastian Mallaby wrote about the same question in the FT yesterday.)

It hasn’t answered my question, but what struck me this time was how difficult it is to come up with the compelling reasons for individuals to align their behaviour in the common interest. There is the traffic light example, but Chapter 3 gives a few examples of effective rules and norms, and many other examples of problems – free-riding, collective action problems, lemons etc. I conclude that simple is difficult – you have to find the right simple rule for the context and it has to create strong self-interest in abiding by it. Still, Schelling is optimistic. He writes:

“These problems often do have solutions. The solutions depend on some kind of social organization, whether that organization is contrived or spontaneous, permanent or ad hoc, voluntary or disciplined….. What we are dealing with is the frequent divergence between what people are individually motivated to do and what they might like to accomplish together.”

And there are many ways to make the collective bargain stick, he argues. I’m in an optimistic mood this morning, and will go with the argument that between social norms, morals, institutions and even regulations can change, and make a big difference to collective outcomes.

[amazon_image id=”0393090094″ link=”true” target=”_blank” size=”medium” ]Micromotives and Macrobehaviour (Fels Lectures on Public Policy Analysis)[/amazon_image]

Marginal intellectuals

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While waiting for my order (thanks to all the great suggestions in comments on this post), I’ve started [amazon_link id=”0231135408″ target=”_blank” ]Taking it Big: C Wright Mills and the Making of Political intellectuals[/amazon_link] by Stanley Aronowitz. The only book I know by C Wright Mills, its subject, is [amazon_link id=”0195133544″ target=”_blank” ]The Power Elite[/amazon_link], which I read off the shelves of my friend and colleague Professor Alan Harding, now setting up a new public policy research center at Liverpool University.

One of the themes of this new study of Mills’ work is his carving out a role for public intellectuals. Aronowitz writes:

“The intellectual in the United States has always occupied an ambiguous position. … they have enjoyed a good measure of freedom of expression – especially the freedom to pay for their independence by remaining relatively poor. However, except for those who work for the state – those who espouse official doctrines or perform policy analysis for those in power – most intellectuals are marginalized or routinely ignored. Intellectuals have never been economically secure, and U.S. society has consistently denied them significant cultural space.”

[amazon_image id=”0231135408″ link=”true” target=”_blank” size=”medium” ]Taking it Big: C. Wright Mills and the Making of Political Intellectuals[/amazon_image]

I’m sceptical about all of this claim. US academics have good salaries, tenure and few external pressures to conform to any particular ideas, although there is obviously internal pressure for disciplinary group think – it happens in any institution. Money certainly speaks in the think tanks and media, but not to the extent of preventing the expression of ideas. But the final point in this comment, about the lack of cultural space for truly independent thinkers, does seem valid. Tony Judt is one of only a few recent examples I can think of to have had an influential voice that cuts through with a wider audience. I’ve not yet read his posthumously published [amazon_link id=”0434017426″ target=”_blank” ]Thinking the Twentieth Century[/amazon_link]. Come to think of it, I must add it to my reading pile.

[amazon_image id=”0434017426″ link=”true” target=”_blank” size=”medium” ]Thinking the Twentieth Century: Intellectuals and Politics in the Twentieth Century[/amazon_image]

What to read?

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I need some recommendations from you. After a summer holiday devouring a pile of books, and with another pile earmarked to send out to reviewers for the winter issue of The Business Economist, I’m a bit short of books in my own in-pile. This is a busy time of year, when all my jobs realise they’ve not had any meetings for six weeks, and decide they need to catch up this week or next at the latest. So there are plenty of papers I could be reading. But where’s the fun in that? I do have a couple of books on my iPad, but regular readers of this blog will know my strong aversion to e-books (and, as if I needed another reason, there’s the e-book legacy issue, although apparently Bruce Willis is not taking Apple to court after all). There are specific requirements too. Of course it must be serious but readable non-fiction, economics and business and their hinterland – history, science, social science. Not too big, so I can carry it around on the Tube (I’m just about to give up on a book so chunk I can only read it in bed propped up on a pillow).

[amazon_image id=”0231135408″ link=”true” target=”_blank” size=”medium” ]Taking it Big: C. Wright Mills and the Making of Political Intellectuals[/amazon_image]

At the moment I only have two choices in the house. They are [amazon_link id=”0231135408″ target=”_blank” ]Taking it Big: C Wright Mills and the Making of Political Intellectuals[/amazon_link] by Stanley Aronowitz and [amazon_link id=”184983296X” target=”_blank” ]Cocktail Hour Under the Tree of Forgetfulness[/amazon_link] by Alexandra Fuller.

[amazon_image id=”184983296X” link=”true” target=”_blank” size=”medium” ]Cocktail Hour Under the Tree of Forgetfulness[/amazon_image]

I think I’ll start with the former. But send me ideas!