The Klepto-Keynesian Showdown
The Billionaires Are Fighting, & One of Them Just Captured The Government
This was the month America finally discovered it was an oligarchy. That word, long forbidden to reporters outside The New Republic, suddenly burst forth in the headlines of The Atlantic and Esquire, the legacy media salivating at the prospect of a Renaissance Résistance. When President Trump turns back on his firehose of outrage and political scandal, maybe their subscribers will return? (They won’t.)
America never knows what she is until she has become something else. Oligarchy is a perfectly apt description of our system of governance at the end of the Cold War, when we remade Russia in our image. Oligarchy was the choice the U.S. made in the 1970s, an ordoliberal solution to permanent militarization. If a superpower must continuously expand its imperial war machine into an oppressive apparatus of policing (not just its workforce, but also its “entrepreneurs”) then it must be “supervised,” as Foucault puts it, “by the market.”
What if, as Joseph Schumpeter hypothesizes, capitalism’s tendency to produce monopolies is not a flaw to be regulated, but a feature to be protected? In ordoliberal political economy, incorporation, concentration, consolidation, conglomeration, all these mechanisms of reckless growth and accumulation create a countervailing power, a set of monolithic firms controlling every section of economic production who are no longer so much regulated by the state as by the limited threat of competition from one another, and who can, in fact, dictate to the state on things like taxation, environmental regulation, safety standards, consumer protections, labor conditions. Sound familiar?
Ordoliberalism is a relic of the Third Reich, but also, as Foucault argues, the foundation for the economic orthodoxy which has reigned in Europe and North America since the mid-1970s. It was born of the prevailing fear, not entirely unmerited, amongst political-economic thinkers, many of them German and Austrian, that any combination of protectionism, central planning, and Keynesian stimulus will inevitably lead to totalitarianism. This paranoia led them to see every functional welfare state and democratization of wealth as looming Nazism.
But during the 2007-2008 global meltdown, the step-children of ordoliberals, the Washington Consensus, came to see Keynesian stimulus, perhaps fatally, as no longer a threat to oligarchy, but actually a means of solidifying it. TARP bailouts, zero-interest rate policies, PPP grants, all manner of taxpayer-subsidized cash injections into industry, finance, and technology firms were initially a crisis response which offshored instability, then became what passed for sound fiscal policy, assuring that government supervision by entrepreneurial oligarchy could be sustained even as the war machine, and its associated police industrial complex, leveled up to fight undefeated abstractions like Terror.
This period of Klepto-Keynesianism, a willful sacrifice of the federal government’s financial prudence (and with it the public goods and services to which those tax revenues might otherwise be devoted) for the purpose of maintaining a fragile balance between state and market power, has continued now for nearly two decades. This is another reason why the post-Soviet shock treatments which produced Russian oligarchy make for a poor analogy. The transition from oligarchy to kleptocracy, if successful at all, will have happened at a glacial pace by comparison to the chaotic months between Yeltsin and Putin.
It is not an ascendent oligarchy which looms over 2024, but a descendent one. Tim Barker wrote earlier this week about dealignment in working class. There is also a simultaneous dealignment of oligarchic capital. The fatal flaw of ordoliberal political economy (which Foucault, Keynes, and many others foresaw) is that eventually the delicate balance between market and military power will be broken exactly because the structuring force of entrepreneurial oligarchy is not solidarity but competition. Eventually that competition will induce one subset of oligarchs to distinguish themselves from the rest by deciding to no longer be the ballast of state power, but a branch of it. To reverse the poles.
It is not a forgone conclusion that what follows will be full kleptocracy. What happened in Russia may not happen here. Oligarchy does not lack for resources, does not bend easily to police power, and is not taken by surprise. The petty in-fighting of billionaires has long been the stuff of gossip columns, which may now act as preface to internal class war.
The rest of us are just bystanders. Which is not to say that we are safe. Nor that out of their wreckage something better cannot be born.