My recent post about the costs of Germany’s policy of subsidizing solar energy inspired predictable attacks by true believers in a future powered by solar energy. I was criticized for citing the German magazine Spiegel, a center-right popular magazine. Well, I cited Spiegel for certain facts, and if you don’t believe Spiegel, perhaps you will believe the reputable environmentalist writer Mark Lynas, whose sources are German government statistics. (And if you think Lynas is discredited because he supports GMOs and nuclear energy, even as he thinks global warming is real and dangerous, then you cannot be reasoned with.)

During the Cold War, the radical anti-capitalist left (a group quite distinct from mainstream capitalism-taming liberals) was perpetually searching for a country that would prove by example the viability of socialism, defined as government ownership of all industry and major enterprises. The socialists in the West who had not already soured on the Soviet Union mostly turned against it by the mid-1950s, following revelations about Stalin’s atrocities. From that point until the end of the Cold War in the 1980s, the dwindling numbers of true believers claimed to find a successful socialist experiment in one country after another:  Mao’s China, Tito’s Yugoslavia, Castro’s Cuba, even, for a time among, some Western militants in the early 1970s, North Korea. They didn’t deny that these countries had certain, ahem, problems—police-state repression and mass exoduses by fleeing citizens, among other minor defects. But they wanted to believe that, whatever its faults, the utopia du jour proved that you could successfully run a modern economy along the lines of Marxist-Leninist theory.

The gap between the cultures of technology and academic economics was on display at the 2013 meeting of the American Economic Association in San Diego last Friday and Saturday. On Saturday, January 5, Rice University’s Kenneth Barry Medlock moderated a panel entitled “The Future of Energy: Markets, Technology and Policy” that featured Jim Sweeney of Stanford, Dale Jorgenson of Harvard, and Adam Sieminski of the US Energy Information Administration.

Jim Sweeney’s presentation was on “The Future Role of Energy Efficiency and Technology” but he focused on the narrow topic of using incentives or behavioral “nudges” to get people to conserve electricity. He demonstrated that decades of attempts to get people to change their behavior to conserve more electricity had shown meager results—mainly because the savings are such a negligible amount of personal disposable income—but called for renewed efforts anyway.

It is virtually impossible to discuss manufacturing, energy, infrastructure and related subjects from what I consider a center-left perspective without being challenged by anti-industrial or post-industrial Luddites who claim that the genuine progressive position is an amalgam of Mathusian anti-consumerism and energy austerity, often combined with support for old-fashioned, premodern methods of making artifacts and growing food.  I had thought that this debate was limited to the liberal left, and was surprised to learn, from an interview with Ecuadoran president Rafael Correa, that a similar debate occurs within the less familiar (to me) circles of the radical left.

I have criticized him before for investing in projects like sovereign libertarian island-states, but I am glad to see that Paypal founder Peter Thiel is investing in the worthy cause of in vitro food production. The sooner we manufacture most of our food from stem cells or chemicals, rather than grow it, the sooner vast amounts of land on the earth’s surface can be partly or wholly “re-wilded.”

In the aftermath of the devastation wrought by Hurricane Sandy, many commentators are arguing that global warming is causing increasingly severe weather events in the Northeastern United States. I am not qualified to judge assertions about the link between global warming (the accurate phrase I prefer to the weaselly euphemism “climate change”) and worsening weather in the Bos-Wash corridor where I live. For the sake of argument, let us stipulate that it is correct. It does not follow that the most cost-effective response to climate change along the Atlantic seaboard is mitigation alone, rather than a mix of adaptation and mitigation, or even adaptation alone.

If Obama is re-elected as president, there are indications that his administration will try to work with the lame-duck Congress to pass a “grand bargain” to reduce long-term deficits, in order to avert the “fiscal cliff” created by the expiration of George W. Bush’s ten-year tax cuts together with the steep automatic cuts devised last summer in order to provide lawmakers with an incentive to negotiate. As part of this national conversation, some neoliberals are likely to revive an old phrase from the 1990s: “cut-and-invest.” The idea is classic Clintonian triangulation—progressives can increase public investment in R&D and infrastructure, and at the same time prove to the business and financial community that they are serious about deficit reduction, by cutting entitlements for the elderly.

Here, for example, is the Progressive Policy Institute in January of this year, “Why Obama Needs to Cut and Invest”:

If benefits for the elderly are deemed untouchable, then Congress will have to either raise taxes on everyone, including working families, or cut domestic spending to the bone, or both. Domestic spending (including defense) has already borne the brunt of the spending cuts agreed to last year. It is only 12% of the budget, but it includes all the key public investments progressives should be for – in infrastructure, education and workforce skills, science and technology – not to mention public health and safety and measures to alleviate poverty. To shield entitlements from cuts is, in effect, to give priority to retirees’ consumption over strategic investments in a more prosperous and equitable society.

Cut-and-invest is no doubt appealing as a bumper sticker slogan to Democratic office-seekers, particularly those trying to appeal to wealthy donors who favor more public investment but who don’t want their own taxes to go up significantly in order to reduce the federal deficit. But “cut-and-invest” is a bad idea, in terms of both politics and policy.

One of the indices that mark the retrogression of public discourse since the 1970s is the fact that we now take it for granted that the United States and other, similar nations have a “capitalist system” or a “market economy” instead of a “mixed economy,” the term preferred by mid-century American thinkers for the typical blend of public good provision, social insurance, and private enterprise in advanced industrial nations.  Equally misleading is the idea that the Cold War, rather than being a great-power struggle, was an ideological battle in which “capitalism” won and “socialism” lost.  To the extent that economic models were involved, state socialism was discredited by comparison with the economic performance of variations of the mixed economy in which government typically accounts for 40-50 percent of national GDP.

The very term “mixed economy” itself may be misleading, if it is defined too simply, in terms of two components:  the public sector and the market.  In my view, it is useful to think about the modern mixed economy in advanced technological societies in terms of five sectors:  the household sector, the nonprofit sector, the government sector, the competitive market sector, and the imperfect market sector.

The household sector is the realm of domestic production—making a meal at home, with ingredients and appliances purchased in the market, rather than eating out at a restaurant.  For generations economists have tried but failed to quantify the unmeasured labor and value added in household production.  It is clear, however, that it is significant and that all existing measures like GDP underestimate the actual size of economies by failing to measure the “dark matter” of household production of goods and services that are both produced and consumed by individuals and their families.

The nonprofit sector includes not only religious and secular charities and philanthropies, but also institutions of higher learning, particularly research universities, which play a central role in technological innovation and economic growth.

The public sector has many and various components, including pure public goods like defense, income maintenance transfer payments like Social Security and unemployment insurance, and a range of tax incentives and credit enhancements which influence corporate and individual behavior in ways that are hard to quantify.

To the extent that the American elite shares a consensus, it is a combination of pessimism about technology and optimism about politics—particularly world politics. In my view this synthesis provides a picture that is the opposite of reality, in which amazing technological progress will continue to take place on a planet whose politics is characterized by national and sub-national conflict, irrationality, and ignorance. This seems so obvious to me that I don’t understand why most educated and thoughtful people in the U.S. and the world generally hold perceptions that are exactly opposite mine. In the words of the eighteenth-century British poet Christopher Smart, who was confined to London’s infamous Bedlam asylum: “I said they were mad, and they said I was mad, and damn them, they outvoted me.”

Let’s start with technological pessimism. The story of how Malthusian doomsayers, from the 1970s onward, have been repeatedly proven wrong about impending global famines, natural resource depletion and energy scarcity is well known. Even in the case of anthropogenic global warming, the reality of which always-tentative science supports, environmentalists have tended to engage in apocalyptic exaggeration.

Fashionable environmental pessimism has now been joined by fashionable pessimism about technology. The economist Tyler Cowen’s claim that we are living in an “innovation drought” was widely and respectfully discussed by a chattering class that welcomes gloomy views, at least in the areas of technology and the economy. And yet, in this supposed “innovation drought,” the radical new technologies that are moving from the laboratory to military or commercial applications include brain-computer interfaces, quantum computing, robotic manufacturing, robot cars and trucks, drones, and in vitro food production. Where in all that innovation is the drought?

For reasons I don’t understand, pessimism about the potential for technology-driven economic progress tends to be accompanied, among the bien pensant, by naïve optimism about the potential for cooperation and harmony in world politics. Following the Cold War, there was widespread hope that at last world governance under the UN Security Council would be realized. When gridlock on the Security Council outlived the Cold War, most of the bipartisan establishment bought into other utopian visions.

One was the idea of “globalization” as an irresistible force that would eliminate all national barriers to trade, investment and mass immigration. Another, more nationalistic version of utopia was the idea of indefinite American global hegemony, with the U.S. welcomed as the world’s police officer. Amazingly, both utopias have survived the Great Recession and botched American wars in Iraq, Afghanistan, and Libya, and continue to shape the assumptions of the typical American foreign policy apparatchik. In the same way, Marxist-Leninist nonsense about the contradictions of capitalism and inter-imperialist rivalries shaped the mindset of Soviet careerists, long after reality had shredded that particular ideology.

In my two previous posts, I argued that Epicurean ethical theory and Lockean political theory are the most useful guides to ethics and politics in a universe that scientific discovery has emptied of magic and divinity. I’ll conclude this personal credo by explaining why I think that economic nationalism, in the tradition of Friedrich List, is the tradition of political economy most compatible with the republican liberalism of John Locke.

Today’s dominant economic orthodoxy of neoliberalism, shared by most progressive as well as most conservative economists and policymakers, rests on academic neoclassical economics, which builds upon the classical liberalism of Adam Smith and the Physiocrats. From the eighteenth century, there has always been a broad rival tradition of economics. It influenced the practice of nation-building statesmen like Alexander Hamilton and Abraham Lincoln in the U.S., the Meiji reformers in Japan and Otto von Bismarck in Germany. This alternate tradition consists of the economic theories of the American School of National Economy and the German Historical School in the nineteenth century and the twentieth-century American Institutional Economics of John R. Commons, Thorstein Veblen, John Kenneth Galbraith. Although he was an Austrian émigré, Joseph Schumpeter’s intellectual roots are in the German Historical School, not the “Austrian economics” of von Mises and von Hayek.

Developmental economics is the term I will use for the tradition as a whole (other terms are “evolutionary economics,” “innovation economics” and “the historical school”).  Although he was not the most brilliant thinker in this tradition, its greatest systematizer and evangelist was Friedrich List (1789-1846), a German liberal who, after being exiled to the United States, was converted to the economic nationalism of the American Hamiltonians and advocated it for other developing nations, including his own Germany. Here are the basic differences between neoclassical economics and developmental economics :

Individualism versus communitarianism. Neoclassical economics believes that the goal should be to maximize the interests of all individuals, ideally in a world without barriers to the free movement of goods, labor or capital. List dismissed this as “cosmopolitical economy,” arguing that political communities (mostly nation-states nowadays, but also city-states and empires and blocs) are legitimate actors in the economy. What is good for the polity in the long run may not be in the short-term economic interest of every individual citizen.

Consumer sovereignty. For the neoclassicists, the goal of economic policy is eliminating inefficiencies in the satisfaction of individual desires for consumption. For developmentalists, the goal of economic policy is enhancing the productive power of the sovereign community.

The “republican liberty” of the American Founders was deeply influenced by the social contract theory of John Locke.

See Part I here.

By explaining everything in nature, including the evolution of humans and consciousness, as the result ultimately of impersonal forces working on atoms, materialists like Democritus and Epicurus swept away all moral and political systems justified by appeal to the commandments of supernatural beings. Although he had much to say about ethics in the world that science has revealed, Epicurus had little to say about politics, other than defining justice as agreements about people neither to harm one another nor do harm.

This vagueness made it possible for Epicurus to be admired both by Karl Marx, who wrote his dissertation on Epicurus, and Friedrich von Mises, who wrote: “The historical role of the theory of the division of labor as elaborated by British political economy from Hume to Ricardo consisted in the complete demolition of all metaphysical doctrines concerning the origin and the operation of social cooperation. It consummated the spiritual, moral and intellectual emancipation of mankind inaugurated by the philosophy of Epicureanism.”

If we reject the secular doctrine of “might makes right,” because it is based on subjugation rather than mutual benefit, then a number of rival secular theories of politics have competed with each other. The most important have been conventionalism (time-tested tradition as the basis for social order), deontological ethics (duty-based rules), virtue ethics (qualities of character), utilitarianism (the greatest good of the greatest number), perfectionism (the state exists to develop the inner potential of its citizens) and contractarianism (a hypothetical social contract among free, self-interested individuals as a guide to the best political system).

The “republican liberty” of the American Founders was deeply influenced by the social contract theory of John Locke (1632-1704), who derived his Christianized Epicureanism in part from the French philosopher Pierre Gassendi (1592-1655). Since the nineteenth century, however, most progressive and liberal intellectuals have rejected Lockean contractarianism for utilitarian or perfectionist justifications of liberalism. The social contract theory of John Rawls, although superficially similar to Locke’s, is rooted in the quite different tradition of Kantian deontological (duty-based) ethics.

But while republican liberty has lost favor among university faculties, in the world at large ever since the American and French revolutions republican liberalism has become the dominant political theory. In Asia and the Middle East and Africa as well as Europe and the Americas, the ideas of natural or human rights, popular sovereignty, and collective self-determination have defeated dialectical materialism and the theory of the master race. Only political Islam and American Christian fundamentalism -- both dwindling forces -- have mounted a significant counter-attack against contractarian natural rights liberalism in recent decades.

For the Greek philosopher Epicurus, the goal of life was ataraxia, best defined as tranquility or the absence of anxiety.

T. S. Eliot described himself as "classicist in literature, monarchist in politics and Anglo-Catholic in religion." Daniel Bell said that he was a socialist in economics, a liberal in politics and a conservative in culture. For what it is worth, I would describe myself as an Epicurean in ethics, a Lockean in politics, and a Listian in economics.

One can be an ethical naturalist in the tradition of Epicurus without being a republican liberal in the tradition of John Locke or an economic nationalist in the tradition of Friedrich List. But the traditions are compatible and I see them as forming a hierarchy. Listian economic nationalism helps to realize the political objectives of Lockean republican liberalism, which in turn secures the conditions in which individuals can more easily achieve the Epicurean objective of ataraxia, or freedom from anxiety.

Readers need not fear that in this space I will be regularly quoting the ancient Greek sage, the early modern British philosopher or the nineteenth century German political economist. But as I will explain the next few posts, the traditions these thinkers represent make up the context for much of what I think and write and say.

Epicureanism:  Ethics in a World Without Magic

In the mythology of the Star Trek series, the philosophy of the inhabitants of the planet Vulcan, with its emphasis on logic, was founded by an ancient Vulcan sage named Surak. I have often thought that Epicurus (341 BC – 270 BC), who spent most of his maturity teaching in Athens in the generation after Plato, Aristotle and Socrates, was the Surak of the planet Earth. Epicurus is less well known than the Socratics, the Buddha and the founders of Judaism, Christianity and Islam. Unlike all of them, he was right.

From the earlier school of Democritus, Epicurus inherited his cosmology, which, apart from details, is essentially that of modern science. Matter is made up of combinations of atoms; there are countless planets and stars other than our own; living things evolved from non-living matter; primitive humans developed tool use and civilization over a prolonged period of time.

“The old is dying and the new cannot be born:  in the interregnum a great variety of morbid symptoms will appear,” wrote the Italian Marxist Antonio Gramsci.  “Morbid symptoms” is an apt description of the state of politics and public philosophy, at this crisis in American and world history.