FW: [PEN-L] Samuelson = heretic ?

["Devine, James" <jdevine@xxxxxxx>]

reformatted for ease of reading.
Jim Devine jdevine@xxxxxxx &  http://myweb.lmu.edu/jdevine

I wrote:
> BTW, there's a major flaw in Samuelson, one that's not surprising: he
> confuses laissez-faire rhetoric or theory with laissez-faire
> practice. The
> latter has hardly ever prevailed and never in the US. "Laissez faire"
> policies are really blatantly pro-business one, usually
> heavily biased in
> favor of the big businesses.

^^^^^^

CB: > Yes, interesting point. So, perhaps there is no  historical pattern of
> increased European/US state support of business at the end of
> the 1800's beginning of the 1900's, labelled state-monopoly, because the
> state was always supporting business full tilt even in "Laissez-faire"
> era.  No room for increased support.

I think that there is something going on in the shift from "laissez-faire" to a more state-guided capitalism from the 19th century into the 20th. One was the development of a labor movement, along with mass communist and/or social-democratic parties in the rich countries. This pushed the state toward a more rational set of policies (long-term oriented, concerned more with legitimation), epitomized by social-democratic managed capitalism (or "sewer socialism") as opposed to the state simply responding to the immediate needs of the richest. Thus I guess you could say that Samuelson's  "modern mixed economy" is the welfare state (or somewhat welfare state, in the US) while his "laissez faire" is naked business corruption (call it the "business state"). Nowadays, we're in the midst of the latter again.

> Why do so many, including Samuelson, buy idea of increased government
> involvement in business in the late 1800's to 1969 era ? Why is it not
> surprising that his analysis has this flaw ? ...

another element (for the US, the capitalist world hegemon) was the rise of the large peace-time military, the "warfare state," so that his "modern mixed economy was (Jim O'Connor's) "warfare-welfare state."

Nowadays, we've got the "warfare-business state," exemplified by the hand-in-glove relationship between the Pentagon and the "private" contractors.

Jim Devine