Power Hunger Tempered by Self-Deception
Text of lecture given at the Collège de France, May 28, 2010
(Transcript courtesy of Adrián Ondrovič)
The past generation has witnessed an enlightening experiment that bears directly on the general topics of this conference and also on the specific aspects that I've been asked to address to ones indicated in the title "Power hunger tempered by self deception."
There have of course been assaults in the intellectual world on the very concepts of rationality and the truth and on the values of democracy as it was discussed this morning; I don't frankly find them impressive to put it mildly and they're not what concerned me here. Rather I have in mind an experiment in large-scale social engineering that was organized in the most advanced industrial democracies and imposed on the world in the name of rationality and truth, the programs of social and economic management that are often called economic rationality. Some other names like neoliberalism or the Washington consensus or market fundamentalism and others.
There are variants but they adhere closely to two basic doctrines which are called "the efficient markets hypothesis" and the "theory of rational expectations." There have been critics but it's fair to say that these became virtual orthodoxy within the professions after the breakdown of the post-world-war II Bretton-Woods systems in the 1970's.
Within policy-making circles and the political class they're identified rather dubiously with Ronald Regan and Margaret Thatcher. As I said there are critics, rare but they're there. One distinguished critic is Nobel laureate Joseph Stiglitz. Even before he became chief economist of the World Bank he ridiculed what he called "the religion that markets know best." And his primary professional work for which he won the Nobel prize concludes that even slight changes in accessibility to information show, I'll quote him, show that "unfettered markets are not efficient and can be characterized by persistent unemployment," the contrary to the orthodoxy.
There is by now substantial empirical evidence to support the conclusion, many years ago, by international economist David Felix that the capstone of the neoliberal strategy, namely -- I'll quote him -- "liberalizing and globalizing capital markets has not accelerated economic growth in the developing countries by more efficiently guiding capital accumulation and technological progress" -- which is what the theory was supposed to show. And moreover he wrote some years ago that "these strategies have been associated with slower and more unstable growth" and the failure is likely to persist because the theoretical basis, the neoliberal case for capital market liberalization has an extremely weak base basis in economic theory and growing awareness of this is undermining confidence in its policies at the International Monetary Fund and other promoters of capital market liberalization.
I stress that these observations were rare and they were well before the market crash of 2008 and with that crash an interesting event in intellectual history, the almost complete collapse doctrinal orthodoxy that had prevailed and had been so utterly blinding that virtually no professional economists or the Federal Reserve, the central bank in the US, none of them took notice of the housing bubble that reached 8 trillion dollars before it burst. The power of the efficient market hypothesis was so strong that although they could see the arithmetic, virtually nobody could notice what was happening.
Well there had been critical analysis by a few economists who had been ignored, maybe the most important of them is Hyman Minsky and they've moved a little bit closer to centre stage as the orthodoxy collapsed in such a spectacular fashion. Although not before leading to a financial crisis that barely escaped depression and it remains deeply threatening and even to the very existence of the EURO zone with many possible consequences beyond.
The primary victims of the economic rationality experiments are the usual ones, the poorer societies, although more accurate description would be that the primary victims have been poor and working people everywhere. While privileged sectors everywhere have fared quit well, including the pockets of extreme privilege in the poorer societies.
There have been significant exceptions to the generally harmful effects of the experiment, namely the states that had ignored the rules, mainly in East Asia. These states adopted the actual practices of the developed societies, and dismissed the demands of the developed societies. That happens to be in accord with important historical antecedents to which I'll return briefly.
There are number of reasons why the iconic figures of the orthodoxy, Reagan and Thatcher, are dubious choices. I'll keep to Reagan, the more important case, because of US global dominance. Now I'm speaking here of the real Reagan, not the imaginary figure who has been constructed by the public relations industry. Polls right through Reagan's term in office, terms in office, reveal that he was not a particularly popular president, contrary to myth. His approval ratings were well within the norm. But after leaving office he was raised to mythical status by a stunning propaganda campaign, organized and implemented by the very powerful business sector which had good reasons to elevate him to sainthood.
So from a, I'll read from a publication of the prestigious Hoover Institution at Stanford University, they write that "Reagan was a colossal figure whose spirit seems to stride the country watching us like a warm and friendly ghost." And other accolades across the spectrum, all the way to Obama, are often not very different. Reagan is extolled as the apostle of a small government, fiscal responsibility, free trade and other core principles of economic rationality. And as in the case of other religious cults, facts are irrelevant. It's for example irrelevant that under his term in office the government grew relative to gross domestic product. And it's irrelevant that his fiscal irresponsibility quickly turn the Unites States from the world's leading creditor nation to the world's leading debtor nation. And it left the legacy of financial wreckage which began with the savings and loan crisis that required a huge government bailout and it's irrelevant that he was by far the most protectionist president in post war history. He doubled protective barriers and undertook various other forms of state intervention to rescue incompetent US management from more efficient Japanese production. I'll put aside here the ghastly crimes of his terms and years in office that included not only large-scale slaughter and destruction over much of the world but also substantial contribution to nuclear proliferation which we live with today and there's an extra benefit -- contribution to Jihady terror.
I don't want to suggest that Reagan departed radically from the norm in his actual practices which had very little resemblance to the imagery created by his worshipers. Long before Reagan, much of the HI-TEC economy derived from the dynamic state sector. That includes computers, the internet, the rest of the information technology revolution, includes the commercial aircraft industry, and with it of course huge tourism industry, includes the basic technology of the international trade, and a great deal more.
A core theme of modern economic development is that the public pays the costs and takes the risks, while eventual profits are privatized. The salients of this theme is not very surprising when we consider who are the designers of social and economic policies. That's exactly what we'd expected them to design. And there are many devices to achieve these ends. Among them are government-funded research and development, protectionism, government procurement -- a major technique of subsidy, repeated bailouts -- all pursued intensively during the Reagan years, but in fact throughout the post-war period and with a long history in all the developed societies, they're reaching from England first one up to the East Asian tigers today.
The actual history is quite helpful in understanding and evaluating the resent religious experiment with economic rationality. Actually today's dominant global powers are good illustration. The Unites States gained its sovereignty during what's called the revolutionary war and immediately after gaining its sovereignty the Unites States became "the mother country and bastion of protectionism" -- those are the word of the distinguished economic historian Paul Bairoch and it also had the highest growth rate becoming by far the world's most powerful economy a century ago.
And very high protection was only one of the devices of state intervention in the economy. There are many others which aren't studied by economic historians but they're there. So consider cotton which was the fuel of the early industrial revolution. Like oil today. The US did achieve dominance of cotton production mainly by extermination of the indigenous population, territorial expansion and slavery. Which are rather severe forms of market interference.
One of the motives for the annexation of Texas and the conquest of half of Mexico was to gain monopoly of cotton production. And the reasons were quite explicit. I'll quote President Tyler who was one of those involved; he says "conquering these territories and gaining monopoly of cotton production places all other nations at our feet. An embargo of a single year would produce in Europe the greater amount of suffering than fifty years of war. I doubt whether Great Britain could avoid convulsions." Notice that these are the claims attributed to Saddam Hussein ridiculously but the actual practice of the United States which was making those claims. The idea was that in this way by bringing Britain to our feet the US would be able to overcome the superior military power of its great enemy -- Britain which at that time was a deterrent to intended expansion. So the US repeatedly tried to conquer Canada but was always beaten back.
The basic programs of economic development were established right after the revolution by Alexander Hamilton, he was the pioneer import substitution industrialization. That's a very serious error according to economic doctrine then and now. But in the real world it's a regular foundation for development -- an actual history. Hamilton chose to violate the injunctions of the greatest economists of the day who urged that Americans should adhere to the principles of economic rationality. The Americans should import superior British manufacturers and they should concentrate on their comparative advantage in export of primary products.
Adam Smith warned, I'll quote him, that "were the Americans either by combination or any other sort of violence to stop the importation of European manufacturers and by thus giving them a monopoly to such of their own country menace could manufacture the goods divert any considerable part of their capital into this employment they would retard instead of accelerating the further increase in the value of their annual produce and they would obstruct instead of promoting the progress of their country towards real wealth and greatness. This would be still more the case were they to attempt in some manner to monopolize to themselves their whole exportation of trade." As they indeed did with regard to cotton.
This surely counts as one of the most spectacularly refuted predictions in economic history even more than predictions of the last 10 years, 10 -- 15 years. But it was solidly based on the abstract theories that were imposed on the colonies at the time and are imposed on the weak today. It's exactly the same policies with exactly the same consequences. It led to the third world and under the imperial control it has led to the devastation of the weak countries under modern economic rationality and the countries that rejected it like the United States from the beginning and the Asian tigers today and in fact England during its period of development the countries that rejected it grew and developed. But in a religious faith facts are irrelevant. It does not matter how overwhelming they are.
Going back to Bairoch he goes so far as to argue that apparent protectionism rather paradoxically has commonly increased trade. The reason he gives is that protectionism tends to stimulate growth and growth leads to trade. While imposed liberalization since the 18th century under imperialism it has generally had harmful economic effect. In fact it has essentially led to what we call third world. Bairoch concludes that it is difficult to find another case where the facts so contradict the dominant theory as the theory concerning the negative impact of protectionism. And as I mentioned protectionism is only one of the modes of violation of economic orthodoxy. Recently enshrined as economic rationality - neoliberalism.
Well I don't mean to suggest that the case is closed. Far too little is understood about economic growth to draw any confident conclusions even though the evidence is quite overwhelming in this case and by the standards of economics of the social sciences remarkably strong.
The founder of the economic growth, the modern theory of economic growth Nobel laureate Robert Solow he commented recently that despite the enormous accumulation of data since his pioneering work over half a century ago the direction of causality he says is unknown. So "it's not clear whether capital investment causes productivity or productivity leads to capital investment. It's not known whether openness to trade improves economic growth or whether growth leads to trade."
And the same problems arise in other dimensions. In the light of the very partial theoretical understanding and what we know of the historical record it's quite illuminating to observe the supreme confidence with which the core principles of economic rationality were upheld until their recent spectacular collapse. And it's also illuminating to see the continued reverence for figures who radically violated them at every term. Ronald Reagan perhaps being the most striking example.
Actually Adam Smith is a more interesting example. He's by no means the absurd figure of the religious faith that has been constructed around his image that includes professional economics. So consider for example the famous phrase invisible hand which is constantly invoked in justification of neoliberal doctrine. In his classic book Wealth of Nations the phrase appears once. Namely in discussing the hazards of what is now called neoliberalism.
Smith's primary concern of course was England and he warned that if English merchants and manufacturers were free to import, export and invest abroad they would profit while English society would be harmed. But that's unlikely to happen he argued. And the reason is that English capitalist and merchants would prefer to invest and purchase in the home country so as if by an invisible hand England would be spared the ravages of economic liberalism. That's the one use of the phrase.
The leading founder, the others, another leading founder of classical economics David Ricardo he drew similar conclusions. He used his famous example of English textiles and Portuguese wines. He concluded that his theory of comparative advantage would collapse if English capitalists chose to invest in Portugal for both manufacturing and agriculture. But he argued that, I'll quote him "thanks to the natural disinclination which every man has to quit the country of his birth and connections and fancied or real insecurity of capital abroad most men of property would be satisfied with the low rate of profits in their own country rather than seek a more advantageous employment for their wealth in foreign nations. Feelings," he said, "that I would be sorry to see weakened."
So it's a kind of a sentimental argument that maybe economic rationality won't be too terrible. Well we don't have to carry on the force of the arguments of the great classical economists but their instincts were insightful and very different from what's propounded in their names. And these are incidentally far from the only examples, there're other interesting ones.
The doctrines of economic rationalism that dominated mainstream discourse in the advanced societies for a generation have shaped policy although selectively. One recipe for the weak but sharply different one for the powerful - much as in the past. And it seems fair to conclude that their dominance does not reflect either rationality or commitment to truth but rather the usual service to power and privilege. And the consequences are unmistakable.
So take say the United States. During these years the financial institutions that were the main beneficiaries of the doctrines as well as their most fervent advocates. They have vastly expanded their power, they now have about a third of corporate profits, far higher than before the experiment and that's had a comparable impact on political life. Elections are pretty much bought and those who buy them set the basic framework for policy. Meanwhile for the majority of the population real wages have stagnated and family incomes have been sustained only by higher working hours, by now the highest in the industrial world, by debt and by asset inflation like the housing bubble. And of course there's regular collapse of the bubbles every few years.
Well United States is very rich by comparative standards but is taking on some of the structural characteristics of the former colonies. Typically they have sectors of enormous wealth and privilege amidst the sea of misery and suffering. And while the Unites States is richer so it's not massive suffering that's pretty much the structural nature of society, probably has now the highest inequality in its history. Consequence of the two ways of imposing economic rationality -- one way for the rich another way for the poor.
Let me go back to the title of these remarks. Can we say the consequences are the outcome of power hunger and self deception? Or to use the terms that are current today -- can we blame greedy bankers who are guilty of irrational exuberance? That's the famous phrase of the most lauded economist of the past generation Alan Greenspan. At least lauded before the crash. That was a phrase of his inner rare moment of departure from orthodoxy.
Well that criticism doesn't seem fair to me. When bankers are greedy they're pursuing their institutional commitment. That's what they're supposed to be. Their role is to maximize profits. And in Anglo-American corporate law that's actually a legal responsibility. So you can't blame them for fulfilling their legal responsibility in an institutional structure that demands that behaviour. If some of them were to reject this commitment and not be greedy bankers they'd be removed and others would take their place. Power hunger is an institutional feature of a competitive system.
Furthermore the exuberance of the necessarily greedy bankers was by no means irrational, contrary to Greenspan. The bigger banks knew that they were taking no serious risk with transactions that were very profitable but might well fail. And the reason is they could rely upon an implicit government insurance policy, it's called "too big to fail." So if you get into trouble the taxpayer will bail you out.
The very existence of this insurance policy gives them substantial benefits as compared to rivals -- means they can take risks, make profits, get credit on cheap terms and so on. And they regularly cash in when it's necessary. So under Reagan, you know the spirit that hovers over us, one of the larger banks Continental Illinois was rescued by a taxpayer bailout. Also under Reagan, the predecessor of the huge firm Citigroup, was then called Citibank, it was rescued from disaster by the International Monetary Fund. The Fund is "the credit community's enforcer" as was described by its US executive director quite accurately. Make sure that the creditors are paid off no matter who suffers. And it's returning to its traditional role today. They can tell you about it in Greece and Spain. Soon elsewhere.
Probably the most respected economic correspondent in the western world today Martin Wolf of the Financial Times, London Financial Times, he describes, he says that "the current bailout is overtly a rescue of Greece but covertly a bailout of banks." That's exactly right. In a capitalist system if someone makes a bad loan it's their problem. But in our system which is radically anti-capitalist if a big firm makes a bad loan it's a problem for those who didn't borrow the money like the poor people and the country that's targeted and the other people, the citizens of the rich country who have to pay off the lender through the International Monetary Fund. I mean it's as if say I were to lend you money and I know it's risky so I get high interest and then at some point you can't pay any more and I insist that your neighbours pay me and my neighbours pay me. That's the International Monetary Fund. Radically anti-capitalist but it serves the masters so it works.
Pretty much the same has been true during the current financial crisis in the United States. The big banks were not only rescued by taxpayers, they're the ones who caused the crisis, but they were not only rescued but they ended up more profitable and larger than before. And in position to prepare for the next and probably worse crisis. But the bankers can hardly be faulted for doing what they should do under the rules of the game. Criticism on them is simply unfair.
Well, after the current financial crisis erupted consensus developed among professional economists that it's foolhardy to disregard what's called systemic risk. That is the threat to the whole system if some transaction fails but that's hardly a new insight. It's an elementary feature of markets that transactions ignore what are called externalities -- that is effects on others. So if I sell you a car you and I pay attention to the cost and gain to ourselves but we don't pay attention to the cost to others which can be quite real in fact. And the same is true on a massive scale in financial institutions. Well, for financial transaction that means that they must ignore systemic risk. That's part of the nature of a market system.
It's long been understood that the practise is hazardous and there have been occasional warnings in the profession. It's pretty elementary, nothing profound about this. The market inefficiency alone makes a financial crash a highly likely contingency and the risk is amplified by the perverse incentives that follow from the political power of private capital. Among them the too big to fail government insurance policy but there are many others as well.
Now, one can plausibly argue that the institutional structure is irrational but those who are fulfilling their roles within it may be quite rational when they chose to bring down the temple wall while escaping themselves and even profiting as in the current financial crisis.
I should say that there are much broader cases of this. So corporate managers in the United States are producing a huge amount of propaganda to convince the population that global warming is a liberal hoax. And in fact they've been so successful that by now barely a third of the population thinks that humans contribute to global warming. Well the CEOs, the managers who are carrying out this campaign know perfectly well that it's very serious. That's going to be very harmful to their grandchildren to what they own. But the fate of the species is an externality. They cannot pay attention to it and still function in their institutional role which is to make short term profit. So therefore if the species is destroyed that's kind of unfortunate but that's an externality. The kind of thing you taught to put in the footnote when you study an economics course. And it's, that way the system works.
Well there may be elements of self deception in this, there's always a strong temptation to disguise anti-social and criminal acts in an aura of benevolence and noble intent. The merest look at the foreign policy literature of powerful states yields a torrent of illustrations. But the charge of irrationality is very questionable, it's unfair.
Well turning from rationality to truth we might recall an observation of Orwell in his essay on what he called "literary censorship in England." He suggests in this essay that the British should not feel too self-righteous and condemning the vulgar means of control of expression in the totalitarian Soviet Union. So in free England Orwell wrote "unpopular ideas can be silenced and inconvenient facts kept dark without any need for an official ban. And anyone who challenges the prevailing orthodoxy finds himself silenced with surprising effectiveness." He goes on to say that the process is voluntary. "It's a general tacit agreement that it wouldn't do to mention that particular fact." That's the product of good education. And it's reinforced by centralization of the press in the hands of wealthy men who have every motive to be dishonest on certain important topics. That's Orwell on England and perhaps illustrating his thesis the essay is not too well known. It was intended as the introduction to Animal Farm, his famous book. But it didn't appear and it was discovered many years later in his unpublished papers. The message of his unpublished essay is quite simple -- truth may be useful in some circumstances, for example demanding truth in the Soviet Union, that's useful, but it's not a value to be cherished highly by the privileged so we don't want it in our own domains.
Well let me turn to the third concept in the framework for this conference -- democracy. The current financial crisis also offers interesting lessons, some quite straight forward. So it's hard to overlook the fact that as the financial institutions took over more of the economy since the 1970's, extensively in fact, they also gained political power. Sufficiently so as to dismantle the regulatory apparatus that have been established during the great depression and had successfully prevented financial crisis. There weren't any from the depression up until the neoliberal period of the 70's.
More generally the financial liberalization helped institute what some international economists have called "a virtual senate of investors and lenders," I'm quoting "who conduct moment-by-moment referendums on government policies." So if the virtual senate determines that the policies of some government are irrational, meaning that they're designed to help people not increase profit, then they can exercise their veto power by capital flight, by attacks on currency and other means. Actually France went through this experience under Mitterrand.
To take the more recent example which is quite enlightening after Hugo Chavez was inaugurated capital flight from Venezuela escalated to the point where capital held abroad by wealthy Venezuelans equalled 1/5 of Venezuela's Gross domestic product. I was quoting OECD economist Javier Santiso. He adds that after the US backed military coup in 2002 that overthrew the elected government, the response of the markets approached euphoria and capital started pouring back in. But then returned again a few days later flowing out when the government was restored by popular protests. The virtual senate was giving their judgement.
And in general with capital flows liberalized which is what happened in the 1970's the governments face what's sometimes called "the dual constituency." One constituency is voters and the other constituency is the virtual senate. And even in the rich countries the private constituency tends to prevail. Which means that financial liberalization serves as an effective curb on democracy.
Maybe it's a coincidence maybe not but it's worth noticing that financial liberalization was introduced in the 1970's alongside of growing concern of the elites over what they called the crisis of democracy in the 1960's -- too much democracy. That's when normally passive and obedient sectors of the population who were called "the special interests" began to enter the political arena to put forward their concerns. And this excessive democracy as it was called was too much of an overload for the state which could not attend properly to what's called "the national interests."
Now the special interests are women, workers, farmers, the young, the elderly, minorities, majorities, in fact the general population. They're the special interest. The national interest is defined by those who own and run the society. Actually I am paraphrasing closely the liberal internationalist sector of elite opinion. Those who for example staffed the Carter administration in the United States and their counterparts in Europe and Japan -- liberal internationalists. You move further to the right or in the business world the need to overcome the crisis of democracy it was a still more pressing concern and the rhetoric is much harsher. And many measures have since been employed to purge the society of the evil of democracy. That goes on right to the present. Financial liberalization made a potent contribution to this whether by design or not.
Well under powerful public pressure these measures for undermining democracy were restricted under the Bretton Woods system that was established by the US and Britain after World War II. What had happened is that the great depression and the war had aroused radical democratic currents which took many forms. From the anti-fascists resistance to working class organization. And these pressures made it possible or from a different point of view necessary to permit social democratic policies in the industrial countries.
The Bretton Woods system of regulated currencies and capital controls created space for government action to responding to the public will that is some measure of democracy. One of the designers of the system John Maynard Keynes he considered the most important achievement of Bretton Woods to be the establishment of the right of governments to restrict capital movement. In dramatic contrast in the neoliberal period that followed the collapse of Bretton Woods the US Treasury Department now regards free capital mobility as a fundamental right. Unlike the socioeconomic and cultural rights in the Universal Declaration of Human Rights which are, meaning health, right to health, education, decent employment, security, these are dismissed by the US government as preposterous, mere myths unlike free capital move.
Well in earlier years the public hadn't been much of a problem. The reasons are reviewed by, in the standard scholarly history of the international monetary system by economist Barry Eichengreen. He observes that in the 19th century the governments, I'm quoting him, "the governments had not yet been politicized by universal male suffrage and the rise of trade unionism and parliamentary labour parties." Therefore the severe costs imposed by the virtual senate of lenders and investors could be transferred to the general population. But with the radicalization of the general public during the great depression and the antifascist war that luxury was no longer available to private power and wealth. And therefore in the Bretton Woods system limits on capital mobility substituted for limits on democracy as a source of insulation from market pressures. It's only necessary to add the obvious correlary. With the dismantling of the system during the great social experiment since the 1970's, financialization of the economy functioning democracy is restricted, quite severely in fact.
Well there are numerous examples how deception and among more naive self deception are used to overcome the barriers to right thinking. They're opposed by the "stupidity of the average man." I'm borrowing that phrase from president Obama's favourite philosopher and a revered figure among intellectuals Reinhold Niebuhr who was restating with the approval of the familiar elite conception that "intelligent minorities must rule unhindered by interference by the public who must be pacified by necessary illusion and emotionally potent oversimplifications," Niebuhr's advice.
One illustration of deception which I already mentioned is the post-war decision to devote substantial public resources to creating modern hi-tech economy. Maybe it was the right decision maybe not but the political class was never willing to take a chance to let the public decide on how public funds might be dispersed. So the project was therefore concealed in the Pentagon budget. And it was sold to the public by Niebuhrien techniques necessary to defend ourselves from the rampaging hoards of Russia and China and other evil forces that are regularly conjured up to justify forceful intervention.
And some went to extreme lengths to concoct such illusions. One of them was the warm and friendly ghost who watches over us benignly. He actually declared a national emergency in the United States in 1985 because of the threat to our survival posed by the government of Nicaragua whose troops were only two days away from Texas poised to overwhelm us. Well in Reagan's case it was probably self deception. He probably didn't know what was going on. But there are more rational figures like Dean Acheson, leading architect of the post-war system, he advised secretly that policy makers "must be clearer than truth" as he put it, to achieve their goals which are righteous by definition.
Well there are many, these are among many ways in which privileged sectors have been able to protect themselves from recurrent crisis of excessive democracy which erupt even in the, constantly in fact, even in the limited forms of democracy that exist in state capitalist systems like ours. But there are many who have found these limits far too severe.
In the early stages of the industrial revolution in the United States with almost no influence from Europe, working people took it for granted that those who work in the mills should own them. And that wage labour differs from slavery only in that it's temporary. That was a conception that was so popular that it was accepted by Abraham Lincoln and it was a slogan of the Republican Party. It became the leading principle of the genuine socialist movements and it was later adopted by prominent twentieth-century thinkers, Bertrand Russell for one. He held, his words: "there can be no real freedom or democracy until the men who do the work in a business also control its management."
The leading American social philosopher John Dewey, devoted much of his work to democracy, he observed that in a free and democratic society workers should be the masters of their own industrial fate, not tools rented by employers. That's actually position that traces back to the leading ideas of classical liberalism articulated by Wilhelm von Humboldt and Adam Smith among others. "Therefore," he went on to say "industry must be changed from futilistic to a democratic social order based on workers control." That's the essence of the authentic socialism, not known in what's called socialism. Direct participant control in Dewey's view, should extend to the means of production, exchange, publicity, transportation, and communication. Whoever owns them rules the life of the country. Hence the rich and powerful even if democratic forms remain. And until that level of democracy is achieved politics Dewey said will remain "the shadow cast on society by big business."
Well in the state capitalist and state socialist societies there have been massive efforts to drive such thoughts out of popular consciousness but they persist not too far below the surface and they continually spring forth offering some hope, in my personal view at least, that humans may find a way to confound the prediction of Bertrand Russell that our brief stay on Earth is a passing nightmare and that peace will not come until, as long as the species survives, which may not be too long if current tendencies persist without a sharp change of course.