Watching the way politicians are struggling to deal with the current economic mess, it’s hard to avoid facing an unpleasant fact. While Republicans continue to base their arguments on discredited Big Ideas like “free market individualism,” Democrats still lack alternative Big Ideas that might guide them through policy minefields. Unfortunately, this isn’t new: the American Prospect had a cover story on the subject – “What’s The Big Idea?” – back in 2004.
Even though the Democrats “won” the national elections in 2006 and 2008, at times they still come across as feckless when addressing major issues. An example of this was a recent News Hour interview with Democratic governors Granholm of Michigan and Ritter of Colorado, as well as Republican governor Sanford of South Carolina. Sanford based his opposition to a federal bailout of the Big 3 and of state governments on the usual free market arguments about people working hard, playing by the rules, and eventually being rewarded. (Somehow this apparently doesn’t apply to autoworkers.) Meanwhile, Granholm and Ritter’s argument seemed to be basically “we believe bad things will happen if a bailout of the Big 3 doesn’t happen.” Well, probably…but why?
As it happens, Robert Wright had an article in Slate back in November, 2001, titled “The Big Idea.” He contended that modern technology has brought us to a point at which we are all interlinked and interdependent. While making his case in the context of 9/11, this also can apply to our current economic crisis:
“The general principle is this. Technological evolution draws people into larger and larger non-zero-sum games that promise common benefit—win-win outcomes. But the ensuing integration can bring the threat of common peril, of lose-lose outcomes. Either way—win-win or lose-lose—the fortunes of people who live at great distances become more closely correlated. Increasingly, good foreign news (say, a Japanese economic rebound) is good domestic news, and bad foreign news (the spread of AIDS in Africa) is bad domestic news. And very often this correlation of fortunes—this non-zero-sumness—is an argument for more international cooperation.”
Albert-Laszlo Barabasi, in his book “Linked – How Everything Is Connected to Everything Else and What It Means For Business, Science and Everyday Life,” observes that today’s world is rife with networks. The auto industry would be just one example: the Big 3 depend on a common pool of parts suppliers, while those suppliers are dependent on the continuing business of the Big 3. A similar web of relationships exists between the Big 3 and their dealers around the country.
Barabasi notes that the most important parts of a network are those entities – or hubs – that have the most links to the rest of the network. However, such major hubs pose a significant risk: the collapse of just one or two can conceivably bring down a whole network. (Think of the Northeast Blackout of 2003, for example.)
As we’ve seen in the debate about bailing out the Big 3, conservative free market types generally discount arguments of interdependence. As Wright said in his article, “Interdependence theory has a reputation on the right for being a namby-pamby doctrine for naive lefties.” That’s why conservatives were happy to see Lehman Brothers fail back in September: it was “the creative destruction of the market” at work.
Unfortunately, as economists and business experts like George Soros have observed, the demise of Lehman Brothers led to the meltdown of the entire financial system. Such an outcome might be inconceivable from a classic free market perspective, but it is easily understandable from an interdependent network perspective. Cascading failures are an inherent risk in networks, as anyone connected to a power grid knows.
The free market individualism espoused by conservatives and Republicans is a myth. (If they were really such individualists, why would they need a Club for Growth?) The alternative to this myth is not collectivism or socialism; the alternative is a recognition that we live in an interconnected, interdependent world. In this world, there is no contradiction between being an individual and being part of a group. Like a computer on a network, we are both simultaneously. And like a computer on a network, we are only as secure as the weakest link in that network. The failure of others can very easily lead to our own failure.
Perhaps, in fully recognizing the interdependent nature of our world, we will have found a Big Idea that can guide us in dealing with issues like the current economic crisis.