This is a working draft of a paper that forms the basis for the discussion at the Mount Holyoke College European Alumnae Symposium, “The Paradox of Plenty: Redefining La Dolce Vita,  in Torino, Italy, 23-25 September 2011.  It will undergo further revision, and your comments and criticisms are more than welcome.   Please send them to Vincent Ferraro.  Since it is a working draft, please do not cite or quote.


The Sweet Life in the 21st Century: The Paradox of Plenty


The Argument


                In October 2008, Alan Greenspan, the former chairman of the U.S. Federal Reserve, testified to the House Committee on Oversight and Government Reform.  There was an exchange between Mr. Greenspan and Congressman Henry Waxman that suggested that the economic crisis of 2007-08 caught Mr. Greenspan by surprise:


Chairman WAXMAN. Dr.  Greenspan, I am going to interrupt you.  The question I had for you is you had an ideology.  You had a belief that free, competitive--and this is shown—your statement, “I do have an ideology.  My judgment is that free, competitive markets are by far the unrivaled way to organize economies.  We have tried regulation, none meaningfully worked.”

That was your quote.  You have the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis.  You were advised to do so by many others. Now, our whole economy is paying its price.  You feel that your ideology pushed you to make decisions that you wish you had not made?

Mr. GREENSPAN. Well, remember, though, whether or not ideology is, is a conceptual framework with the way people deal with reality.  Everyone has one.  You have to.  To exist, you need an ideology.

The question is, whether it exists is accurate or not.  That I  am saying to  you is,  yes, I found a flaw, I  don't  know how significant or permanent it is, but I have been very distressed by that  fact. [1]


                The ideology that Mr. Greenspan purportedly defended was liberalism, itself a contested term as will be developed in Part One of this essay.  The argument of this essay is that Mr. Greenspan actually believed in a caricature of liberalism, a self-serving interpretation of free-wheeling individualism that has little relationship to the idea of liberalism as it developed in the 17th and 18th centuries.  Unfortunately, that caricature persists and its current adherents have paid little attention to Mr. Greenspan’s mea culpa even though the damage wrought by his policies continues to unfold.


                We can actually be more precise about the distortion of liberalism implicit in Mr. Greenspan’s ideology.  He told the Committee that “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.”  Self-interest is the bedrock of liberalism, but liberal theorists used the term in a social, not a personal, context.  Self-interest is not selfishness.  Self-interest includes a concern for the long-run, a regard for those with whom one will interact over time, and actions that will create a Good Life that will be shared by all.  In other words, the public good is the ultimate objective of liberalism;  individualism is simply a means to that end.


                Mr. Greenspan should not have been surprised that the lending institutions involved in the subprime mortgage crisis did not care about shareholders.  The chief executives of those institutions had carefully insulated themselves from the consequences of their actions.  Mr. Greenspan was remembering a time when investment banks were privately owned, when profits and losses were borne almost exclusively by the partners in the firm.  That circumstance assured that the self-interest of the partners was closely identified with the viability of the firm over the long term.  That world ended when the investment banks went public.  Once the link between private and public loss was severed, the executives of those firms could assure themselves of generous compensation, even if the firm itself suffered a loss, even bankruptcy.  The loss could be shifted to the shareholders, or, in the most extreme case, to a central bank or a sovereign government.  Selfishness no longer required self-interest, as long as compensation committees and shareholders decided to be passive or co-opted. The executives had eliminated all personal risk to their behavior.


                This circumstance was never envisioned by the classical liberal theorists:  the Good Life was never something that could, or should, be completely privatized.  It was inextricably tied to the social universe in which capitalists and democrats were born, had children, lived out their lives, and died.  Current day pseudo-liberals are fond of quoting Adam Smith’s Wealth of Nations.  They would be better advised to read Smith’s Theory of Moral Sentiments which warns of the dangers of accumulating wealth without due regard for the society that collectively creates the condition for that wealth:


“Are you in earnest resolved never to barter your liberty for the lordly servitude of a court, but to live free, fearless, and independent? There seems to be one way to continue in that virtuous resolution; and perhaps but one. Never enter the place from whence so few have been able to return; never come within the circle of ambition; nor ever bring yourself into comparison with those masters of the earth who have already engrossed the attention of half mankind before you.” [2]


Smith’s warning has always been true, but often ignored.  The present age is one that has deliberately chosen to ignore his advice, and in so doing has compromised the Good Life once promised by the original liberal theorists.


                This essay will first articulate my own understanding of liberal thought.  The first section is only for purposes of clarity, and can beeasily skipped over unless one has a quarrel with my interpretation of liberalism.  It traverses well-known territory and provides an opportunity for definitional debate.  Much of what follows the first section is dependent on a specific understanding of liberalism as it was first envisioned.  The second part of the essay raises three major threats to the Good Life:  climate change, income inequality, and the alienation of the new technologies.  Other threats could certainly be developed, and I encourage the participants in the Conference to articulate their views on other serious concerns.  The third part of the essay discusses ways to retrieve a meaning of liberalism that makes more likely the realization of the Good Life.


Part One:  The Historical Context


                Fellini visually represents the wisdom of Adam Smith’s insight.  La Dolce Vita is hardly the chronicle of a sweet life.  It is, rather, the story of Marcello, “A handsome, weary, desperate man, who dreams of someday doing something good, but is trapped in a life of empty nights and lonely dawns.” [3]   His pursuit of pleasure is energetic and seemingly successful, but Fellini makes the statement that hedonistic happiness is, and never can be, enough to satisfy a life that lives for more than just the moment.


                We believe this assessment to be true, although a life without some degree of hedonistic happiness might be rather unfulfilling as well.  We believe that true happiness is more akin to the capacity to fulfill one’s true potential, or what Aristotle called eudaimonia. The term is impossible to define accurately.  Most translators simply use the word “happiness” but the term means so much more.  It is not the happiness of the moment, but it is a sense of well-being, of knowing oneself, and of cultivating both wisdom and virtue.


                I suspect that we all know some people we believe to have attained this level of happiness, and I am certain that we all at some points have despaired over ever reaching that level ourselves.  We are probably wrong on both counts.  Eudaimonia is like William Blake’s “eternity’s sun rise”, something we can grasp only when we do not try.


                Our task today, however, is much more difficult than to figure out how a single individual can create a sweet or good life.  Our task, as both citizens and scholars, is to determine how best societies can be structured so that the full potential of every individual can be realized.  Every society has faced this task, and there have been myriad attempts to create the good life.  Some societies, through hard work, careful thought, and luck, have come closer to that ideal than others.


                We can learn much from these previous efforts, but we can also be misled.  The more successful efforts were those that calibrated the values of the people closely with the external constraints of the society—the robustness of the environment, the presence of other societies with different and competing values, and the legitimacy and strength of the governing authority.  There is no universal template for a society that maximizes the good life.  We should studiously avoid romanticizing previous “golden eras” as blueprints to be followed mindlessly.  Additionally, we should avoid being seduced by theoretical worlds, unconnected to the necessary business of daily life in which we have responsibilities to others that often intrude upon what we might otherwise wish to accomplish.


The Good Life and the Liberal System: Its Historical Evolution


                We are all fortunate to have lived within a system that in many very important respects succeeded in creating a good life for many. That system evolved in Europe throughout what we call the “modern” period, and it spread, coercively and voluntarily, throughout the world by the end of the 20th century.  We call this system liberalism, but we need to be precise about what we mean when we use the term.


                Many use the phrase “Western” to describe the liberal system because it is a system firmly rooted in the European Enlightenment and the societies that share those values.  I would recommend that we not use the geographical term to describe what we mean.  There are many people in non-Western societies who believe in liberal values.  Similarly, there are many people in the geographically-defined “West” who are not committed to liberal values.  Karl Marx, for example, was a German; he was hardly a liberal.  Aung San Suu Kyi is Burmese; she is a strong believer in liberal values.


                What are liberal values?  The most important value is the autonomy and integrity of the individual, and thus the freedom of the individual is paramount.  Indeed, as Lord Acton famously pointed out, “Liberty is not a means to a higher political end. It is itself the highest political end.”  Liberalism elevates the individual to the center of the economic, political, and social universe, and discounts all other political categories, such as race, class, nationality, religion, and any other collective attribute.  It also strips away any competitor to the authority of the individual, whether it be a cultural or religious authority.  Ultimately, the individual is sovereign in liberal thought.


                From the centrality of the individual flow a whole host of ancillary and supporting values.  Liberal societies ultimately come to be characterized by a commitment to tolerance, non-discrimination, privacy, constitutionalism and the rule of law, reason, and a scientific basis for a strong belief in progress. [4]   Needless to say, no liberal society has ever fully realized these values and the degree of commitment to these values varies considerably over time and space.  Nonetheless, all liberal societies aspire to the full realization of these values.


                The significance of these values becomes comprehensible when viewed from the perspective of pre-modern Europe, plagued by the authority of the monarchy and the church, as well as by the omnipresent reality of economic scarcity.  These conditions led to the material stagnation of Europe even in the face of sophisticated cultural and artistic creativity.  The rebellion against authority can be traced to two movements in early modern Europe:  the Reformation and what has been termed the Scientific Revolution.  After this political transition to what ultimately comes to be known as representative democracy begins, a similar economic transition to what we now call market capitalism follows closely.


                The Reformation undermined the authority of what we now call the Roman Catholic Church whose authority in early modern Europe underpinned virtually all aspects of daily life.  We are all familiar with the story.  The key to this story is found in Thesis 86 of Martin Luther’s Ninety-Five Theses (1517): "Why does the pope, whose wealth today is greater than the wealth of the richest Crassus, build the basilica of St. Peter with the money of poor believers rather than with his own money?"  The attack on indulgences had the effect of distancing the Church from the process of salvation.  No longer did sinners have to go to a priest to ask for forgiveness; rather, sinners could pray directly to God.  Without the crucial role of intermediary, the Church lost a great deal of its authority.  What was lost to the Church, however, redounded to the individual whose position in the moral universe was elevated.


The second attack on authority was epistemological:  tradition was replaced by experiment.  The introduction of the scientific method—typified best by Francis Bacon’s Novum Organum (1620)—had two important consequences.  First, it stripped about naturalistic and supernaturalistic explanations for observed phenomena—a dramatic shift away from long-standing tradition.  The scientific method becomes mechanical philosophy, and the clock—one of the most prominent features of the European urban landscape—becomes the archetypical metaphor for this new society.  The approach allows humans to separate themselves from nature, an important step in ultimately trying to control it through industrial methods.  But also a fateful step in terms of how humans come to regard the environment.


                The second consequence of the scientific method was to elevate the individual as a source of knowledge.  Experimenters, such as Galileo, Copernicus, and Kepler, could introduce ideas that truly transformed the perceptions of others.  The truth of their observations was independent of the personal authority of the experimenter. Their power was derived from careful experiments which could be replicated. No longer could action be based on traditional interpretations of individuals like Aristotle who came to conclusions merely by thinking about the way things might work.


No seventeenth century modernist maxims seem more self-evidently sound than these: rely not on the testimony of humans but on the testimony of nature; favor things over words as sources of knowledge; prefer the evidence of your own eyes and you own reason to what others tell you.  Here is the root of modern empiricism, the view that proper knowledge is and ought to be derived from direct sense experience. [5]


                These two movements ultimately translated into political and economic change which evolved in order to accommodate a larger arena for individual action.  The disintegration of the pre-modern structures demanded the creation of new institutions. For our purposes, the change culminates in the institutionalization of three essential components of liberal society: representative democracy, market capitalism, and (very late) human rights.  These three frameworks become the means to the Good Life in liberal society.  Representative democracy (and the subsequent extension of suffrage to previously disenfranchised groups such as slaves and women) transfers political power from a small, hereditary elite to a sovereign people (and institutionalizes a right of revolution).  Market capitalism opens up economic activity to a much larger pool of people, and links up the scientific revolution to a process of innovation leading to industrialization and technological change.  Human rights is a late addition to the liberal agenda, forced first by the idea of self-determination after World War I and then powerfully buttressed after massive human rights violations just prior to and during World War II.


                Over five centuries the liberal idea developed and matured, and it now forms the basis of much of the world’s daily activities.  Its spread was uneven and imperfect, and hardly a seamless process.  As the liberal system developed, the European states expanded rapidly into virtually every corner of the world.  By the end of the 19th century, European imperialism had loosely connected the colonies into a liberal system by propagating the ideas of private property, written contracts, and free trade, enforcing these ideas coercively when necessary.  European ideas formed the basis of the first globalized world economy, and the promise of progress toward the Good Life made those ideas compelling.  The robustness of these ideas in the sparsely populated colonies (the United States, Canada, Australia, and New Zealand) was profound; in the more densely populated colonies there was more resistance and seriously inconsistent with prevailing social and cultural norms.


                There was,moreover, constant opposition to the liberal system from those who lived within the system itself.  Karl Marx (1848) questioned the ability of market capitalism to deliver on its promise of the good life for all save an ever-shrinking minority.  Other thinkers, including Darwin, Nietzsche, Freud, Gödel, and Einstein, raised serious questions about some of the assumptions of the liberal system.  But the cataclysm of World War I raised the most serious doubts about liberalism’s promise of progress—science and technology produced some of the most lethal weapons of war imaginable.  And the senseless slaughter on the battlefields undermined the pretense of rationality that was the fundamental assumption of the Enlightenment.


                The first half of the 20th Century saw the rapid disintegration of the globalized liberal system.  The first major break in the system was the creation of the Union of Soviet Socialist Republics (1917) and the slow expansion of the communist alternative to liberalism that persisted until 1989 (and still persists in an attenuated form in North Korea, Cuba, and in some spheres of China).  The second major break in the system begins in Hungary in 1920 and takes shape in Italy in 1926.  The development of fascism was dramatic, accelerated by the apparent failure of market capitalism in the Great Depression.  By 1940, after the fall of France, the only remaining members of the liberal system were Great Britain (hanging by a thread), the United States, Canada, Australia, and New Zealand.  The near complete disappearance of the liberal system in little more than thirty years was astonishing given its pre-eminence in the late 19th century. At the end of World War II, the United States quickly moved to re-establish and to globalize liberalism, institutionalizing it in the United Nations System and the Bretton Woods Organizations.  Fascism had been eliminated, but communism still remained an alternative to liberalism.


                The reconstruction of liberalism was compromised by the exigencies of the Cold War.  The United States frequently found itself supporting allies who were far from liberal because of their perceived strategic value.  It was a great tragedy that the process of decolonization itself was warped by the Cold War.  Both the United States and the Soviet Union heavily influenced the liberation movement in order to secure loyalty and access to the political and economic resources of the newly independent states.  These states were often given the false choice of “us or them.”  Attempts to create a genuine non-aligned movement were feeble and, for many of its members, insincere.


                The straitjacket of the Cold War ended in 1989 and with its end, many dynamics changed profoundly.  In the absence of the last plausible alternative to liberalism, many states shifted their policies to conform to some aspects of the liberal system.  India, already a liberal democracy, opened up its domestic market to outside forces.  China made the decision to join the World Trade Organization and committed more of its economy to market pressures, but retained Communist Party control of the political system.  The integration of these two mammoth economies completed the process of globalization interrupted in 1914.  For the first time in human history, one could genuinely speak of a fully globalized liberal economy.


                The globalization of representative democracy and human rights is less complete, although there are reasons to believe that economic forces will favor the development of deeper political liberalism.  Nonetheless, the exceptions to this process were egregious.  Exclusivist political movements, substituting categories such as race, religion, or ethnicity for the principal category of the individual, occurred with disturbing regularity in places such as Bosnia and Rwanda.  Most states pay lip service to the idea of self-determination, but larger powers and authoritarian governments often violate those principles.  Religion and nationalism have become increasingly defined in terms that trump the autonomy of the individual.  Nonetheless, there is little question that representative democracy and the protection of human rights have become expected behaviors in the international system.                               


Assessing the Liberal Experiment at the Beginning of the 21st Century


                Did Liberalism deliver its promise of the Good Life?  In economic terms, market capitalism, one of the three pillars of liberalism, became nearly universal and delivered explosive economic growth. In 1500, one could expect to live 30-40 years;  in 2010 average life expectancy in the world was 69 years. [6]   GDP per capita in 1500 is estimated to have been around $565 in 1992 US dollars;  in 2010 per capita GDP was about $11,200 in 2010 US dollars. [7]   In 1500 very few people in the world could read and write; in 2011 about 84% of people over 15 years of age can read and write.  By virtually every material measure usually associated with economic growth, the changes brought about by the adoption of liberal policies were unprecedented in human history, as suggested by Table 1.


                There are two caveats to this characterization.  First, this growth was generally speaking concentrated in societies that had embraced liberalism most completely.  In 1500, Europe was not considered one of the more dynamic areas in the world.  Other societies, such as the Chinese and Arab civilizations, were more advanced.  At the beginning of the industrial revolution, China had the largest economy in the world, accounting for nearly 39% of the world’s GDP.  India had the second largest economy, accounting for about 16% of global GDP.          

Table 1

Levels of World Economic Performance, 1500-2005






World Population (millions)





GDP per Capita





World GDP (billion 1990 US$)





World Exports (billion 1990 US $)





Source: Angus MaddisonMonitoring the World Economy: 1820-1992 (Paris: Organisation for Economic Cooperation and Development, 1995) p. 19; Population Reference Bureau, 2005 World Population Data Sheet (Washington, DC: Population Reference Bureau, 2006), accessed at, January 2006; International Monetary Fund, World Economic Database, 2005 (Washington, DC: IMF, September 2005) accessed at, January 2006.

                By 2010, the ranking of economic powers in the world is shown in Table 2:

Table 2

The Ten Leading Economies in 2010


GDP (million US$)

GDP as % of World

Population (000s)

Population as % of World



















































Top Ten Total










Source: International Monetary Fund, World Economic Outlook Database (Washington, DC: International Monetary Fund, April 2011)

The Table reveals that two-thirds of the world’s GDP is generated by about a third of the world’s population.  All ten of these countries have, to varying degrees, embraced market capitalism as the basis of their economic system.  There is a legitimate debate about the differences among these economies.  That debate, however, is not especially pertinent to the point being made:  none of the countries listed is moving away from the market economy.  Rather, they are all moving toward the structure and principles of market liberalism, and this direction does not, at this time, seem to be contested by any alternative to market liberalism such as communism or fascism posed in the 20th century

                The second caveat about these statistics is more important.  The aggregate data tell us very little about the actual quality of life in any particular economy.  Theoretically, all the wealth measured could be held in the hands of a single individual, with none held by the vast majority of people living within the country.  While one might still be impressed by the “progress” suggested by such dynamic growth, such a maldistribution of wealth would not conform to what one usually means about the quality of life within a society.  This issue of how wealth is distributed within a society will be addressed later in this paper, but the question itself needs to be contextualized at this point in the argument.

                Market capitalism really has little to say about how wealth is distributed.  Market liberalism, first introduced as a system in Adam Smith’s Wealth of Nations 1776), developed to solve a very specific problem:  scarcity.  Scarcity was the major issue facing European society in the pre-modern period. The distribution of wealth is a moot issue if there is no wealth produced.  The distribution of wealth was not considered a social or political issue at the time—the monarchy and the Church were not receptive to such discussions and repressed any questioning of the “natural” order of things.  The only real objection to a market determination of price was made by St. Thomas Aquinas and his articulation of the “just” price.  This objection, however, only dealt with “urgent” need and not daily transactions. [8]

                Thus, the distributional mechanism of market capitalism was a secondary consideration to liberal theorists.  Distribution of wealth occurred only after production was assured and was determined only as a function of production.  That is to say, the producers would receive an income only after they produced and sold their product.  If their product was determined by the market to be valuable, then their income was high.  If their product was not considered valuable, then their income was low.  Eventually, this method of determining income was held to be useful.  High incomes reflected high productivity which was to be rewarded.  That reward would result in greater investment by individuals who made intelligent investment decisions, generating even greater economic growth in the future.  Rewarding the rich insured a bigger pie for all.

                We now call this distributional mechanism the “trickle-down” process.  Its impersonality was deemed to be ethical:  high incomes were allocated by efficient and productive decisions by the forces of supply and demand, not by inheritance, social standing, or any other non-economic criterion.  But the ethics of this mechanism was rooted in a social and political decision that more production was highly desirable and likely to lead to the Good Life.  In the 1500s, overcoming scarcity was the only real question; in the 21st century, scarcity still exists, but only in an artificial sense.  In the 21st century markets are capable of over-producing every item necessary for life. In the second half of this essay, we will raise questions about whether the conquest of scarcity demands a more explicit mechanism to address the issue of distribution.

                Liberalism also promised the Good Life in political and social terms.  Again, it is difficult in the 21st Century for many who have lived in liberal political systems to appreciate the attractiveness of freedom in pre-modern Europe.  Many who now read Goethe’s play Egmont (1788) find the ending of the play overly sentimental.  Before Egmont is executed for his opposition to Spanish control of the Netherlands, a “brilliant apparition” appears to him in jail: “Freedom, in a celestial garb, surrounded by a glory, reposes on a cloud” and she “signifies to him that his death will secure the freedom of the provinces, she hails him as a conqueror, and extends to him a laurel crown” [9]   Yet to those who had lived at the time, the play was both revolutionary and inspirational, and conveyed as such by Beethoven in his brilliant overture.

                It is difficult to imagine a Good Life without political liberties.  Indeed, the development of market capitalism would have been impossible with the development of personal rights, notably the right to own property.  One of the most important reasons for the pervasiveness of scarcity in pre-modern Europe was the reluctance of individuals to make investments in agriculture because the returns on those investments were often expropriated capriciously by royalty who claimed sovereign ownership of all land.  Karl Polanyi in his magisterial work, The Great Transformation, outlined the process by which the market was quite literally constructed—not organically evolved as is often asserted—by the extension of property rights beginning with the Enclosure Acts in Great Britain. [10]

                It could hardly be otherwise.  Market capitalism can scarcely exist in a robust form if its entrepreneurs fear torture, arbitrary arrest, the right to form governments to check the power of the state to expropriate, or the ability of individuals to limit the forms, levels, and types of taxation imposed by the state in order to extract surplus to maintain the viability of the state to provide security against internal and external enemies.  The link between economic and political freedom is powerful and explains the extraordinary historical correlation between market capitalism and representative democracy.

                A more recent example of this linkage occurred when the Clinton Administration was faced with the abject failure of its policy of linking Most Favored Nation trade status to China with its human rights policies over the period of 1992-94.  In 1994 it abruptly changed its policy to one of simply granting the trading status, expecting the subsequent economic growth expected to force the desired human rights changes.  As explained by the National Security Advisor at the time, Sandy Berger, in a speech to the Council on Foreign Relations:

The need for capital to fuel China's growth -- for which China must compete with other compelling new markets around the world -- increases the need for greater rule of law and predictability, at least in its commercial affairs. And the fellow travelers of the new global economy -- computers and modems, faxes and photocopiers, increased contacts and binding contracts -- carry with them the seeds of change. Can China successfully make the next great leap toward a modern economy in the Information Age without producing the result of empowering its people, further decentralizing decision making, and giving its citizens more choices in their lives? Possible -- but I doubt it. [11]

In other words, Berger was willing to engage in an American version of wu-wei--letting the soft water of capitalism wear away the hard rock of authoritarianism. Such a policy requires not only great patience but also a deep trust in the efficacy of liberal institutions.  It is also a policy currently being tested within China, as it continues to insist on tight political control by the Communist Party—a policy usually referred to as the “Beijing Consensus.”

                The attractiveness of freedom remains powerful, as witnessed by recent events in the Arab nation.  Yet freedom often competes with other values, and is usually trumped by the value of security,  The United States, perhaps the country with the most rigidly codified mechanisms of freedom, has often compromised its commitment to personal liberty:  the Alien and Sedition Acts (1798), the suspension of the writ of habeas corpus during the Civil War, the incarceration of Japanese and Japanese-Americans during World War II, the McCarran Act during the McCarthy period, and the Patriot Act (2001) and its four-year extension enacted on 26 May 2011.  Moreover, freedom often collides with social prejudice as demonstrated by the long-standing racial and gender discrimination that pervades most societies, liberal and non-liberal.  Passing laws prohibiting discrimination is a very difficult and awkward process in a liberal system since the line between believing in and acting upon hatred is often difficult to draw. Finally, freedom in liberal societies is defined exclusively in political terms; economic freedoms are not, and cannot, be guaranteed since such promises would conflict with the essential freedom to make bad economic choices in market capitalism.

                These reservations are serious and important.  The success of liberalism, however, in securing personal liberty is unquestionable.  For all the failures in complete implementation of the aspirations of liberalism, liberalism has elevated the status of individuals to a degree which offers a high degree of privacy and protection against the state.  This advance in the human condition is a necessary one in defining the Good Life.  Any system that does not guarantee the sanctity of the individual could not now qualify as one leading to a Good Life.

Part II:  The Challenges to the Liberal Definition of the Good Life: The Paradoxes of Plenty

                At the end of the Cold War, there were many individuals who believed that the triumph of liberalism was complete.  Most famously, Francis Fukuyama published an essay, “The End of History,” that essentially argued that there were no longer any viable contenders to liberalism.  In his book, Fukuyama argued that:

... that a remarkable consensus concerning the legitimacy of liberal democracy as a system of government had emerged throughout the world over the last few years, as it conquered rival ideologies like hereditary monarchy, fascism, and most recently communism. More than that, however, I argued that liberal democracy may constitute the “end point of man’s ideological evolution” and the “final form of human government,” and as such constituted “the end of history.” [12]   

Others, notably what were called the neoconservatives in the United States, subsequently took this judgment as a license to propagate liberalism in a very aggressive fashion, a consequence that Fukuyama later deplored.


                If Fukuyama’s analysis were correct, then the business of liberals was to implement the liberal system more perfectly so that whatever tensions existed in the world could be addressed within that framework.  The tensions—economic, political, social, and psychological—were not evidence of any failures of liberalism, and thus did not constitute reasons to question the assumptions of liberalism itself, only a reason to try to implement the system more perfectly.


                At the end of one of the bloodiest centuries in human history, waged along fierce ideological grounds, this judgment seemed plausible.  Liberalism had in fact emerged as the last ideology standing, and the passion of the people who had lived under communism for economic and political freedom was indeed breathtaking and profound.  There was a deeper reason, however, underlying the belief in the triumph of liberalism.  Liberalism (like most of the ideologies in the modern period) was believed by its adherents to be a universal system whose purposes included liberating individuals from the irrational forces that shaped parochialism:  religion, history, and culture.


                The United States is the most extreme manifestation of this belief, both in practice and theory.  There have always been (and, unfortunately, likely will always be) Americans who believe that the American nation is “white, Anglo-Saxon, and Protestant.”  That characterization has never been true.  Even in 1790, when the first census was taken, the second most populous group of Americans after the British were Africans.  Because it is a nation of immigrants, there is no way to identify some unique cultural characteristic that distinguishes Americans from others (although, when traveling abroad it is always easy to identify an American).  Because the bedrock of the American system is based on the individual, anyone can become an American as long as one is willing to swear allegiance to the Constitution.


                It is fairly easy to document the rhetorical commitment to the universality of liberalism by listening to disparate voices within the United States echoing the same refrain.  President George W. Bush claimed justification for his actions in Afghanistan (and the subsequent invasion of Iraq) on the universality of liberal principles:


No nation owns these aspirations, and no nation is exempt from them. We have no intention of imposing our culture. But America will always stand firm for the non-negotiable demands of human dignity: the rule of law; limits on the power of the state; respect for women; private property; free speech; equal justice; and religious tolerance. [13]


Or from President Barack Obama in a speech to the British Parliament:


Unlike most countries in the world, we do not define citizenship based on race or ethnicity.  Being American or British is not about belonging to a certain group; it’s about believing in a certain set of ideals -- the rights of individuals, the rule of law.  That is why we hold incredible diversity within our borders.  That’s why there are people around the world right now who believe that if they come to America, if they come to New York, if they come to London, if they work hard, they can pledge allegiance to our flag and call themselves Americans; if they come to England, they can make a new life for themselves and can sing God Save The Queen just like any other citizen. [14]


This universalistic pretense underpins liberalism since the rationality of the individual is the epicenter of the system.  It is the justification for what many have called the “civilizing mission” of the West—to strip away the cultural practices that impede the full development of one’s enlightened rationality.


                The presumed universality of liberalism is not unique.  Communism made the same claim.  Such claims are quite obviously self-serving.  The success of liberalism in the last five hundred years may be due to its ability to unleash the productivity that truly lay dormant within each human in all other previous systems.  Or it may be due to the power that its productivity created that was ultimately used to eliminate all other ideological contenders.  Which of these possibilities is true is beyond the scope of this paper.  But the possibilities lead us to raise the question as to whether liberalism will continue to create a Good Life that will satisfy the needs of everyone on the planet.


                There are many reasons to question liberalism at this point in history.  The philosophical basis for the system was articulated at a time in human history when there were only about 500 million people alive on the planet; there are now 7 billion people.  Moreover, the system was developed by a very small group of homogenous individuals who were in many respects quite different from the vast majority of people who lived at the time.  Finally, the technological development of humanity has far exceeded what the theorists could ever have possibly imagined.  Five centuries is a very long time for any system to retain its relevance to a rapidly changing environment.  We should consider seriously the possibility that liberalism has, at the apex of its influence, become outmoded, inappropriate, or in need of some significant modifications.


                We should, however, also consider the question of whether liberalism as it was first conceived is the same liberalism that is currently being practiced.  I think that the original liberal theorists would find contemporary political, economic, and social behavior both incomprehensible and reprehensible.


The Abuse of Liberal Thought in the Contemporary World


                Liberalism developed to curb the authority of royalty and the Church, as well as to create incentives to work assiduously and productively to reduce economic scarcity.  To attain these objectives liberal theorists had to elevate the status of individuals by granting them irrevocable freedom (or, to use the language of Thomas Jefferson, “unalienable rights”).  All the liberal theorists, however, were careful to distinguish between what Immanuel Kant called, “senseless” freedom and “rational” freedom. [15]


                Rational freedom is freedom that is used with Kant’s Categorical Imperative in mind. [16]   That is to say, one should only act after one has considered the consequences of everyone acting in exactly the same way.  It is this predictive element that enforces rational behavior.  Rationality helps us become aware of our essential human nature, and in so doing diverts us away from taking actions that could lead to our own demise.


                Liberal thought does not assume that everyone is good and altruistic.  On the contrary, it assumes that humans are greedy and power hungry.  Liberal thought therefore constructed institutions that could check destructive impulses.  For example, the American Constitution assumes that all people will try to aggregate power; the system of checks and balances in the system are constructed so that no one can succeed in accumulating sufficient power to destroy liberty.  Market capitalism assumes that all humans are greedy; the market pits the greed of the producer against the greed of the consumer so that both interests are satisfied.  As James Madison famously argued:


Ambition must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place. It may be a reflection on human nature, that such devices should be necessary to control the abuses of government. But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. [17]


Rational freedom, therefore, requires two things:  First, that all humans have specific rights that are legally protected; and, second, that these rights be exercised only in ways that recognize and respect the social context in which all humans live.  This second attribute of rational freedom is singularly important.  It is the attribute that distinguishes enlightened self-interest from vulgar selfishness.  The second attribute must be “learned” because trying to enforce it externally would lead to tyranny.  For this reason, enlightenment was the means to realizing the Good Life.


                This second requirement has been discarded and forgotten in contemporary liberal thought.  Gordon Gekko may have believed that “greed….is good”, but Adam Smith certainly did not agree.  Many current liberal theorists celebrate Smith’s Wealth of Nations but few have taken the time to read his more important work, The Theory of Moral Sentiments, in which he says:


“This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments. That wealth and greatness are often regarded with the respect and admiration which are due only to wisdom and virtue; and that the contempt, of which vice and folly are the only proper objects, is often most unjustly bestowed upon poverty and weakness, has been the complaint of moralists in all ages.” [18]


Smith’s “invisible hand” was designed to benefit society as a whole.  Satisfying the greed of single individuals was simply a means to an end, not an end in and of itself.  Smith believed that the greed of others would force both producers and consumers into “rational” freedom.


                We will argue below that Smith’s vision is not being realized in contemporary society, and that the liberal conception of the Good Life has been corrupted by self-serving misinterpretations of what liberalism is.  There are many questions that currently nettle us, but this paper will only focus on three:  the environmental crisis that seems likely to unfold by the middle of the 21st century; the instability engendered by the growing economic disparities in the world; and the technological erosion of our ability to appreciate community.


Liberalism and the Protection of the Environment


                There is little question that there are significant stresses on the global environment, and that, unless corrective actions are taken, these stresses are likely to become worse, perhaps even catastrophic.  The number of environmental threats facing humanity is rather staggering and includes things such as deforestation, fresh water availability, toxic waste disposal, desertification, air and water pollution, and human-engineered genetic modifications.  All of these threats are in some sense global, but the most serious long-term global issue is the threat of human-induced climate change caused by the massive consumption of hydrocarbons in the modern world economy.  There are many facets to this particular concern, but a rising global temperature, a more than adequately demonstrated empirical fact, poses the most dramatic threat. [19]                Few scientists question the reality of rising temperatures; if there is a controversy over this issue, it is over whether than rise is due to human activity, although among most climate scientists, this controversy has been resolved. [20]   Why this controversy exists is itself an interesting question to be developed below.


                This crisis represents the dark side of the unparalleled economic growth mentioned above since most of this economic activity was fueled by wood, coal, petroleum and other associated hydrocarbons.  The energy required to make all the material goods associated with the economic Good Life was released by burning hydrocarbons, and in the process of burning, residual gases have been released into the atmosphere.  At the beginning of the Industrial Revolution, most of the damage done through the burning was contained locally:  the amounts of wood or coal were relatively small because the populations involved were small, and the earth was resilient enough to accommodate the release without too much difficulty.  In 1820, the rough beginning of the Industrial Revolution, the human population stood at around 1 billion.


                The human population is now seven times larger and the number of people who are actively participating in intensive industrialization has increased dramatically in the last three decades (primarily due to the decisions by India, China, and many countries in Southeast Asia to enter the process of globalization along liberal lines).  These countries have moved quite rapidly from primarily agricultural societies to fully industrialized societies in order to reduce their crippling rates of poverty.  By and large, most of them have been quite successful in reducing poverty rates substantially, although there remain large pockets of desperately poor in all of them (as well as in the advanced industrialized countries). 


                Like the countries of Europe, North America, and Japan in their earliest stages of industrialization, the accumulation of wealth in what are known as the Emerging Countries has been astonishing.  The amount of greenhouse gases linked to climate change being emitted in the process is similarly astonishing.  One simple measure of how the Emerging Countries have affected the emissions of hydrocarbons is the number of registered automobiles/light trucks in the world.  In 1986, there were 500 million registered vehicles; in 2010 there were 1 billion. [21]   By the middle of this century, they may be as many as 2.5 billion registered vehicles on the world’s roads. [22]   It seems highly unlikely that significant progress toward reducing greenhouse gas emissions will be made before the middle of the century.


                Some of the scenarios associated with how climate change might unfold are truly frightening, and they include rising sea levels, massive population movements, widespread crop failures and rising food prices, extreme weather events, and the like.  Yet the efforts to reduce the emission of greenhouse gases have failed miserably.  The rate of increase of these gases has only increased, even as awareness of the seriousness of the problem has increased as well.  The Good Life will likely not exist for today’s children. The failure to act is based on the fear of many in the world that a reduction in greenhouse gas emissions will lead either to a decline in the standard of living (the currently rich countries) or the loss of an opportunity to raise the standard of living (the Emerging Countries).  In other words, the failure to act is rooted in a desire to maintain or reach the Good Life that fails to take into account the long-run consequences of specific activities.


                It is not at all clear that reducing greenhouse gas emissions should necessarily lead to a decline in the standard of living.  The extraction, refining, transporting, and securing (the latter issue is often never included in assessing the cost of hydrocarbons, but much of the world’s military spending is oriented toward the protection of oil resources) have considerable costs.  Presumably all that money could be redirected toward developing alternative energy sources. [23]   Or the money could be used to modify life styles so that energy consumption could be reduced.  Or we could figure out a different way to create wealth without relying on the process of industrialization.  Liberalism certainly gives society the freedom to imagine such alternatives.


                But that freedom may be only theoretical when matched against the political power of groups dedicated to preserving the status quo.  We do know that the entities (individuals and corporations) who currently produce and sell hydrocarbons would probably suffer economically from a switch away from those sources.  These entities are exceptionally powerful.  According to, the oil and gas industry spent nearly $146 million in 2010 in lobbying efforts in the United States, [24] and Exxon/Mobil is expected to earn a profit of about $43 billion in 2011. [25]   It is difficult to reconcile the liberal conception of economic or political freedom of the individual with such concentrated power.  The current movement to give corporations all the legal rights of individuals as typified in the US Supreme Court decision, Citizens United v. Federal Election Commission, 558 U.S. 08-205 (2010), will further diminish the liberal idea of freedom.  This world is hardly the one imagined by Adam Smith.


                There is an additional, and curious, dimension to the problem of climate change.  As suggested above, science and technology have been viewed as the most effective way to understand the natural world so that it can be controlled in ways that bring about the Good Life.  Yet one of the obstacles to resolving the process of climate change is the role of individuals and groups who deny that climate change is human-induced.  These individuals and groups use science to create doubt about the process in order to preserve the energy status quo.


                Climate change denial is possible because the analysis underlying our understanding of the process is so intricate and complex.  Science is founded on an assumption of doubt—hypotheses have to be proven and the threshold for proof is extraordinarily demanding.  So doubt is simple to manufacture, and easily used to block effective action.  The Intergovernmental Panel on Climate Change has been scrupulous in its analysis and has been supported by some of the pre-eminent climatologists in the world.  Its conclusions in 2007 were guarded, but unequivocal: human-induced climate change is occurring. [26]  But in the United States, people and groups with little or no expertise in the field of climatology have been able to stymy even the most minimal steps toward a reduction of greenhouse gas emissions.  The ability of these individuals and groups to undermine science in pursuit of private interests is powerful and profoundly unsettling.           


Liberalism and the Problem of Income Inequality


                As suggested earlier in this paper, the accumulation of wealth during the liberal period has been extraordinary.  More importantly, it is not implausible to assert that the problem of scarcity, endemic throughout human history in every society, may finally have been solved.  The total world Gross Domestic Product stands at about $67 trillion per year.  We know that the world can produce enough food to assure that no person should ever experience starvation.  The world has more than sufficient materials to assure basic housing for every person.  Distributed properly, there are more than adequate medical and educational resources to bring every person in the world out of poverty. 


                This wealth is not distributed in a way that gives the highest priority to the satisfaction of basic human needs. Consider the global priorities in spending in 1998:



Global Priority

$U.S. Billions

Cosmetics in the United States


Ice cream in Europe


Perfumes in Europe and the United States


Pet foods in Europe and the United States


Alcoholic drinks in Europe


Narcotic drugs in the world


Military spending in the world



And compare that to what was estimated as additional costs to achieve universal access to basic social services in all developing countries:


Global Priority

$U.S. Billions

Basic Education for all


Water and sanitation for all


Reproductive health for all women


Basic health and nutrition



                As was argued earlier, liberalism does not concern itself with the problem of how wealth is distributed.  The market allocates wealth according to the value that society places on the productive output of each individual, and it purports to do so in a strictly anonymous and impersonal fashion.  This outcome is heavily biased toward the holders of capital and the consequent distribution of wealth is often highly unequal.  It is important to understand that this is a natural tendency of market capitalism—indeed it is the desired outcome in a condition characterized by high scarcity.


                In other situations, the outcome is perilous in both political and economic terms.  The political consequences of income inequality are instability, measured by criminal activity, protests, and a deep reduction in the legitimacy of political authority.  The issue is whether the political system is fair, and whether participants in the political system have an equal ability to affect outcomes.  The economic perils involve the destruction of demand and the danger of underconsumption and deflation. [28]


                These outcomes seem to be evident in the events since the onset of the Great Recession which began in 2007 and which continues to this day, despite the traditional economic measures which suggest that the Great Recession ended in 2009.  The great Recession had its roots in a financial system which aggravated the income inequality which had been developing in the world since the 1970s. [29]   The following graph suggests that income inequality in the United States is as pronounced as it was in the Gilded Age.


Source: Thomas Piketty and Emmanuel Saez, "Income Inequality in the United States, 1913-1998", Quarterly Journal of Economics, 118(1), 2003, 1-39


The concentration of wealth was noted in the Office of Management and Budget’s Report in 2009:


By 2004, the wealthiest 10 percent of households held 70 percent of total wealth, and the combined net worth of the top 1 percent of families was larger than that of the bottom 90 percent.  In fact, the top 1 percent took home more than 22 percent of total national income, up from 10 percent in 1980. [30]


Average Income Gains, Adjusted for Inflation, 2002-2007



Dollar Increase

Percent Increase

Average Annual Increase

Bottom 90 percent




Next 9 percent




Top 1 Percent




Top 0.1 Percent





Note : In 2007, the bottom 90 percent of households were those with incomes below about $110,000. The next 9 percent were those with incomes between $110,000 and about $400,000, and the top 0.1 percent were those with incomes above about $2,000,000. Calculations are in current 2007 dollars.


Source: Avi Feller and Chad Stone, “Top 1 Percent of Americans Reaped Two-Thirds of Income Gains in Last Economic Expansion,” Center on Budget and Policy Priorities, 9 September 2009. Last accessed on 21 February 2010 at:



Of all the developed countries, the United States shows the most extreme tendency toward income inequality, but, with the single exception of France, all the rich countries are moving toward greater inequality.  Moreover, the tendency seems to be replicated in most of the Emerging Countries as well, although the data are much less reliable in those countries.


                As was suggested above, income inequality does not necessarily signal that something is wrong with the economic system.  However, much evidence suggests that there is a serious problem emerging. About 43 million Americans now receive Food Stamps.  Almost 21 percent of American children live in families with incomes below the official poverty line.  About 15 percent of the American people live below the poverty line.  And the unemployment rate, including the underemployed and those who have stopped looking for work, is about 16 percent.  These are not statistics that describe a healthy economy.  More specifically, these statistics describe an economy in which demand is declining.


The most obvious manifestation of this economic decay was the collapse of the manufacturing sector in the American economy. [31]   The decline in manufacturing jobs in the United States began in 1979 when there were almost 20 million people employed in manufacturing.  Overall, job recovery in the United States has been anemic, significantly less than what has traditionally been the case, as suggested in Graph 1.


                There are many possible explanations for the loss of jobs in the United States:  some suggest that jobs have been moved overseas because of lower costs;  some suggest that the business environment in the United States is hostile to capital investment; still others suggest that the American labor force has been displaced by lower cost and undocumented workers who have moved into the United States illegally.


Graph 2




All these explanations have some validity.  The world has gone through one of the most dramatic changes in human history:  between 1995 and 2000 the global work force increased from about 1.5 billion workers actively engaged in the global economy to about 3 billion workers due to the entry of India and China into an unrestricted world trading system.  It will take years to adjust to the addition of so many lower-paid workers. [32]   Nonetheless, labor costs typically comprise only about 11-15 percent of the total cost of most manufactured products.  And Germany is a clear case of an economy that has maintained a highly robust manufacturing sector in spite of high labor costs.  The decline in the manufacturing sector in the United States is not due exclusively, or even primarily, to high labor costs.


There is, however, another dynamic that explains the dismal failure of the liberal system in producing jobs in the contemporary people:  the value of capital has become significantly greater than the value of labor.  As pointed out by noted economist, Simon Johnson:


From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007. [33]


Indeed, American corporations have been making significant profits during the Great Recession, and it is estimated that they are currently holding “$1.641 trillion dollars in cash and equivalents.” [34]   There is no shortage of investment capital.  There is, however, an extreme shortage of effective demand which makes investments unprofitable.


                This astonishing accumulation of wealth also suggests that things are still being produced, but not by human beings.   Productivity is going up, and the number of workers involved in the production process is going down.  John Gapper in the Financial Times indicates the paradox of corporate growth and declining employment:


The problem with US manufacturing is not that it has been shrinking—despite the “offshoring” of textile and electronics manufacturing to China, US manufacturing output rose by 3.9 per cent a year between 1997 and 2007.  However productivity grew 6.8 per cent annually in the same period, so millions of jobs were lost. [35]


There is no reason to believe that this phenomenon will be restricted to the United States.  The arguments made by many corporate leaders that they are forced to make such moves toward workerless production because of the restrictions of regulations or the demands of unions are self-serving deceptions. Corporations in other countries are moving down the same path because the pressures of competition are so intense.  For example, Foxconn, a Taiwanese corporation and one of the largest makers of computer components in the world, has recently announced that intends to replace many of its workers with over 1 million robots over the next three years. [36]


                We are witnessing a major transformation in political economy, one hardly foreseen by the liberal theorists of the 17th and 18th centuries.  The technological revolution of the second part of the 20th century is being harnessed to make labor essentially obsolete.  Workers will always be needed, but never in the numbers that fueled the industrial revolution.  The automobile assembly lines that created the American middle class after World War II will likely never be replicated.  In their place, factories will create items of great value with small, highly skilled labor forces. For example, the General Electric aviation plant in North Carolina will make 377 jet engines in a single year, and will employ 330 technicians and 20 supervisors. [37]


Simple examples can drive this point home.  At one point, we went to banks and interacted with tellers.  Now we pay our bills online or use ATMs.  We used to have someone pump gasoline into our cars; now we do it ourselves.  When we went to the grocery store we would chat with the people using a cash register; now we scan our items in silence.  Even in higher education, where historically the contact between the instructor and the students is highly prized, there is a profound shift toward more technologically-oriented interaction.  According to the Pew Research Center:


Only 29% of the public says online courses offer an equal value compared with courses taken in a classroom. Half (51%) of the college presidents surveyed say online courses provide the same value. [38]


What is particularly interesting about this statistic is the discrepancy between public attitudes and the managerial perspective of the college presidents.


                The discrepancy between economic growth and wages can be graphically demonstrated:



Source: Uwe E. Reinhardt, "What Does ‘Economic Growth’ Mean for Americans?" New York Times, 2 September 2011.  Last accessed at on 2 September 2011.


There is little question that economic activity can indeed occur without “trickling down” to the vast majority of people in the economy.  It appears as if one of the critical assumptions of market capitalism needs to be adjusted:  economic growth may be a necessary condition for redistribution, but it clearly not a sufficient condition.  If one wishes to modify the tendency of the market to concentrate wealth, a non-market mechanism must be used.


                Since workers are consumers, the end result of this process is underconsumption, and it appears as if this result is inevitable.  Underconsumption can be delayed, however, and the techniques used over the last forty years are certainly creative, but have had the effect of amplifying the final deflation.  Generally speaking, two techniques have been used.  Consumers have used self-defeating measures to maintain their standard of living; producers have looked toward new markets to preserve their profits.


                Consumers in the United States have experienced a long term stagnation in wages.  According to Alan Blinder:


When it comes to wages, the basic story of recent decades is redolent of Scrooge. Real average hourly earnings (excluding fringe benefits) now stand roughly at 1974 levels. Yes, that’s right, no real increase in over 35 years. That is an astounding, dismaying and profoundly ahistorical development. The American story for two centuries was one of real wages advancing more or less in line with productivity. But not lately. Since 1978, productivity in the nonfarm business sector is up 86%, but real compensation per hour (which includes fringe benefits) is up just 37%. [39]


Consumers responded first by adding another wage earner to the family:  the entry of women into the work force in the 1970s and 1980s was dramatic.  After that strategy was tapped out, then consumers turned to credit in the 1990s to finance their standard of living.  Finally, in the 2000s, consumers used their homes as a piggy bank to pursue their Good Life.  Unfortunately, banks were all too willing to indulge this behavior since interest rates were so low that any way to earn additional money was welcome.


                We know how this story ends in 2007, but we continue to think about the secondary sources of the crisis—offshoring, regulations, unions, moral failure, and the like—rather than the underlying cause which was the growing depreciation of the value of labor.  The strategy of producers to address the underlying problem was to assume that economic growth elsewhere in the world would create new consumers for their products.  Moreover, most producers believed that finance was the new wealth opportunity as pointed out by economist Simon Johnson:


From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. [40]


This shift was accompanied by another dramatic change—the increase in executive compensation in the United States.  Johnson continues:


Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007. [41]


And the Institute for Policy studies notes that the pattern continued right through the Great Recession:


This contrast shows up starkly in the 2010 ratio between average worker and average CEO compensation. In 2009, we calculate, major corporate CEOs took home 263 times the pay of America's average workers. Last year, this gap leaped to 325-to-1.

Among the nation's top firms, the S&P 500, CEO pay last year averaged $10,762,304, up 27.8 percent over 2009. Average worker pay in 2010? That finished up at $33,121, up just 3.3 percent over the year before. [42]


The phenomenal degree of wealth accumulated during the fifteen years prior to 2011 gave rise to a relatively rare word in political economy: plutonomy.


                A plutonomy is an economy that is dominated by a small number of wealthy individuals and the term was introduced by three Citigroup analysts in 2005 in a report entitled, “"The Plutonomy Symposium: Rising Tides Lifting Yachts." [43]   The report argued


Back in October, we coined the term 'Plutonomy' (The Global Investigator, Plutonomy: Buying Luxury, Explaining Global Imbalances, October 14, 2005). Our thesis is that the rich are the dominant drivers of demand in many economies around the world (the US, UK, Canada and Australia). These economies have seen the rich take an increasing share of income and wealth over the last 20 years, to the extent that the rich now dominate income, wealth and spending in these countries. Asset booms, a rising profit share and favorable treatment by market-friendly governments have allowed the rich to prosper and become a greater share of the economy in plutonomy countries. . . . [T]he lawyers and bankers who intermediate globalization and productivity, the CEOs who lead the charge in converting globalization and technology to increase the profit share of the economy at the expense of labor . . . contribute to plutonomy.

. . . .

[W]e think that global capitalists are going to be getting an even greater share of the wealth pie over the next few years, as capitalists benefit disproportionately from globalization and the productivity boom, at the expense of labor. [44]


The report also noted that there were, in fact, no longer any “national” consumers; economic growth depended only on the activity of the very rich, no matter in what country they resided.  The report assumed that the rich by themselves could comprise a market that could continue to generate great wealth—in 2011, 5 percent of Americans with the highest incomes now account for 37 percent of all consumer purchases. [45]    The very rich became a nation unto themselves, or, as F. Scott Fitzgerald noted in his short story, “The Rich Boy:”


“They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different.”


                The Great Recession suggests that the belief in the viability of a plutonomy was a delusion.  Ultimately, the effects of income maldistribution will become deadly to sustained and robust economic growth.  Limited demand, corruption, and political backlash are inevitable consequences to an economy dominated and determined by a small elite.  We have already witnessed strong opposition to the economic policies associated with the perversities of a plutonomy in Greece, Israel, Spain, London, and China.  Global economic growth seems to be slowing considerably, and with interest rates at record low levels, and fiscal policies dominated by austerity, it is hard to see dynamic growth returning soon.


Liberalism and Human Happiness


                One could plausibly argue that the human material condition has never been better.  This achievement remains highly uneven among different societies but remains, nonetheless, something to celebrate.  But even among those groups that have experienced dramatically improved living conditions, a legitimate question persists:  are we happier because of those improvements?  Since we do not have a well-accepted measure of happiness, the question is impossible to answer over time and across different cultures.  We believe that material conditions do have an effect on human happiness, and, at the level of bare subsistence, one can confidently assert that people who do not have to worry about staying alive are significantly happier that those that do.


                Beyond that minimal level, the question becomes more problematic.  Since liberalism was borne of scarcity, there never was any real question about its link to happiness at the moment of transition.  As liberalism has evolved, however, more questions have been raised about its success at delivering the Good Life.  Most of those questions have centered on whether the freedom necessary for the liberal experiment entailed social costs that undermine the “pursuit of happiness.” 


                Dostoevsky argued that freedom was an intolerable burden for humanity in his parable of the Grand Inquisitor. [46]   That argument was picked up and developed powerfully by Erich Fromm in his analysis of the rise of Nazism in Germany. [47]   Some humans clearly prefer to have freedom and enjoy the range of choices available to them.  Others, however, regret the loss of primary social ties that freedom seemingly requires.  In pre-modern Europe, one’s place in the universe was fixed.  Few people moved more than ten miles from the place where they were born; one expected to take up the position of one’s parents and rarely explored alternative employment opportunities; and the precariousness of life was counterbalanced by a strong communal solidarity reinforced by the authority of royalty and the church.


                Modernity demanded personal mobility and the attenuation of social ties.  The greater personal security offered by greater wealth was offset by a weakening of family ties and communal identification.  One’s identity was no longer fixed, but was determined by how well one mastered the new techniques of the industrial age.  The slow rhythm of agricultural life was replaced by a faster beat of machines.  We know about those who rebelled against this new age—the Luddites, the Levellers, the Diggers—and we know that ultimately this countermovement against modernity failed.


                This loss of the sense of place and control over one’s life was identified by a new breed of scientist—the social scientist—and these analysts labeled this new human condition with a variety of terms.  Marx called it alienation.  Durkheim gave it the label of anomie.  More recently, David Riesman identified The Lonely Crowd [48] and Robert Putnam described it as “bowling alone.” [49]   The price of personal freedom seems to be estrangement of one from another, hardly a goal of the liberal theorists and a condition that defies any reasonable understanding of the Good Life.


                Jeffrey Sachs has argued that


….happiness is achieved through a balanced approach to life by both individuals and societies. As individuals, we are unhappy if we are denied our basic material needs, but we are also unhappy if the pursuit of higher incomes replaces our focus on family, friends, community, compassion, and maintaining internal balance. As a society, it is one thing to organize economic policies to keep living standards on the rise, but quite another to subordinate all of society’s values to the pursuit of profit. [50]


Instead of measuring its progress through the more traditional and economically-oriented, Gross National Product, Bhutan uses the measure of “Gross National Happiness.”  The International Institute of Management uses a survey to measure the well-being of a society using the following criteria:


1.       Economic satisfaction (savings, debt and purchase power)

2.       Environmental satisfaction: (pollution, noise and traffic)

3.       Workplace satisfaction (job satisfaction, motivation, ethics, conflict, etc.)

4.       Physical health (Severe illnesses, overweight,..)

5.       Mental health (usage of antidepressants, self-esteem, positive outlook..)

6.       Social satisfaction [including family and relationship satisfaction] (domestic disputes, communication, support, sex, discrimination, safety, divorce rates, complaints of domestic conflicts and family lawsuits, public lawsuits, crime rates, etc.)

7.       Political satisfaction (quality of local democracy, individual freedom, and foreign conflicts, etc.) [51]


The idea is intriguing and has achieved a certain degree of global attention.  The chief criticism of the project is that the variables are subjective and that it is difficult to compare different societies across such a fluid concept.  The concept, however, should not be viewed as an alternative to economic measures—no one who supports the use of the idea argues that poverty is an environment that fosters happiness.  It is more properly viewed as a complement to the traditional criteria, as a way to determine whether economic activity has achieved what it was intended to achieve.


                The prominent political theorist, John Ralston Saul, makes an important point about public happiness as a goal of liberalism:


The Enlightenment theory of happiness has absolutely nothing to do with the 20th century theory of happiness. The former views happiness as an expression of the public good, of the public welfare, of the contentment of the people because things are going well; the latter reduces to: “Smile! You’re at Disney Land!” One should not confuse these two ideas. Moreover, it’s very important to keep reminding people that in the phrase “life, liberty, and the pursuit of happiness,” happiness refers to the public good; it does not mean that you can go away and look after yourself and make yourself happy. [52]


This lesson has been lost, and, unfortunately, the new technologies make it easier to forget.  We can create enormously rich and complicated private worlds—accessing books without ever seeing a bookseller; listening to music alone with the clashing sounds of life all around us; venting our spleens anonymously and without fear of confrontation or rebuttal.


                We can, if we are wealthy enough, also purchase private security rather than rely on public safety.  The rich can also finance a private education without resorting to loans or relying upon public education, use private airplanes to avoid the inconveniences of public transportation, and make campaign contributions or purchase the voice of a lobbyist to assure that one’s voice is always heard in public forums. In other words, the public realm has become an arena increasingly populated only by those who lack the means to privatize their environments. The end result is that the public realm is viewed by the rich as a world apart, one that they do not need to support.


                Once again, we can turn to Adam Smith to refute this delusion:


“In this miserable aspect does greatness appear to every man when reduced either by spleen or disease to observe with attention his own situation, and to consider what it is that is really wanting to his happiness. Power and riches appear then to be, what they are, enormous and operose machines contrived to produce a few trifling conveniencies to the body, consisting of springs the most nice and delicate, which must be kept in order with the most anxious attention, and which in spite of all our care are ready every moment to burst into pieces, and to crush in their ruins their unfortunate possessor. They are immense fabrics, which it requires the labour of a life to raise, which threaten every moment to overwhelm the person that dwells in them, and which while they stand, though they may save him from some smaller inconveniencies, can protect him from none of the severer inclemencies of the season. They keep off the summer shower, not the winter storm, but leave him always as much, and sometimes more exposed than before, to anxiety, to fear, and to sorrow; to diseases, to danger, and to death.” [53]




                This essay does not argue that liberalism is dead. [54]   Nor does it argue that liberalism is inherently flawed.  It does argue that 21st century liberalism has lost sight of the purpose of individual freedom, and the responsibilities that freedom creates.  This failure is not due to amnesia;  it is the consequence of the ability of some individuals to separate their personal Good Life from the Good Life of society as a whole.


                In the United States, that separation occurred because the concentration of economic power has slowly filtered into the political system.  The plutonomy has morphed into a plutocracy.  There have been four elements responsible for this transition:  the decision to identify certain financial institutions as “too big to fail”;  the decision to treat corporations as individuals; the commercialization of the news media; and the willingness of the general public to divest itself of the responsibilities of citizenship and personal obligation.


                First, the decision in 2008 to grant public monies to banks, insurance companies, and automobile companies (among many other types of commercial activities) was made because of perceived financial exigency.  I do not wish to question the appropriateness of this decision at the time.  But it was a decision made without a frank acknowledgement of the significance of the action at the time.  “Too big to fail” (or as the Federal Reserve identifies them, “systemically important financial institutions”) is an explicit recognition of a plutonomy.  Market capitalism allows, even demands, failure for corporations that cannot meet the requirements for survival.  To say that the failure of an institution threatens the common weal and thus cannot be allowed to happen is also to say that that institution is necessary to support the public good. 


                Such institutions are neither fish nor fowl in liberal thought.  Those who profit from the activity of these institutions insist that those profits remain private.  Yet in order to survive, the losses of these institutions need to be public.  There is no system that can accommodate such a massive contradiction—it does not flow logically from consistent principles or behavior than is sustainable over the long run.  It is a policy based on expediency and the quiet exercise of power, hidden from scrutiny one should legitimately expect on decisions of such great moment.  The behavior in the United States has been in many respects mimicked in Europe, as it has faced its own sovereign debt crisis.  The layers of power involved in the European decisions are intricate and complex, and those decisions have been occasionally made by agents far removed from those most affected by the decisions, using criteria that mix public concerns with private interests.


                Other countries, such as Iceland and Sweden, took an entirely different approach to bank failures, and the Swedish case is instructive.  In that case, the banks were nationalized and governed by the state.  The private individuals who had governed the bank prior to the nationalization lost their economic stake in the firm.  There was no personal reward for failure—public loss equaled private loss.  The Swedish decision-making process was consistent with liberal principles, and even though the monetary losses were great, the Swedish economy was able to recover.  The explanation for the Swedish success rested on the public belief in Sweden that its elected officials would protect the public interest, rather than the private interests of the bank shareholders.  As argued by Lars Jonung:


In addition, Sweden has a long tradition of confidence in its domestic institutions, in its political system and in its elected representatives. With this large social capital, it is easier for the government and the opposition to reach agreement on public policy actions that are stable and lasting. The tradition of open public debate makes it easier for policy-makers to explain difficult and costly decisions to the public and to be trusted. Trust contributed to the belief that the Bankstödsnämnd was going to carry out its duties in a fair and correct way without favouring any of the parties involved. [55]


In the United States (and apparently in many of the other European banks so far), market loss did not translate into personal loss.  Indeed, the private compensation for many of the executives responsible for these troubled institutions has continued to increase even as public funds were used to keep the firms afloat.


                The governments have acknowledged some of their responsibility to safeguard public funds by trying to pass legislation that reforms the financial system (in the United States, the Dodd-Frank bill was passed).  That response is bootless.  The reforms have been compromised to an incredible degree by a high degree of corporate lobbying.  Moreover, any attempt to reform the system will simply be circumvented, in much the same way that tax laws are circumvented by techniques such as offshore banking. The issue is not that the laws are ineffective.  There is no doubt that the laws will be ineffective, but the reasons for their ineffectiveness were not related to incompetence.  The laws are written to safeguard private interests, not public interests.


The same argument can be made about attempts to protect the environment.  Despite the broad and deep consensus among climatologists about the process of climate change, little has been done to reduce the rate of greenhouse gas emissions.  The centrality of hydrocarbons to the modern global economy can hardly be disputed.  This centrality gives the corporations that produce hydrocarbons incredible power in the political arena, power that has been used effectively to ensure continued reliance on hydrocarbons.  Concentrated economic power stifles change.


Second, concentrated economic power distorts the marketplace, but it can also cripple the political system.  In theory, the market and the political system ought to be separate.  Indeed, the desire to keep government out of the marketplace is often articulated loudly by those who support corporate freedom.  The line between economics and politics, however, has disappeared, and this change was largely facilitated by efforts to grant corporations all the freedoms and rights of individuals.  This change in attitude opened the door to plutocracy, where private interests dominate in the making of public policy.


The first change came about in 1976 in a U.S. Supreme Court decision, Buckley v. Valeo, 424 U.S. 1 (1976), which held that money is a form of speech and therefore the amount of money spent by a candidate for office cannot be restricted by law.   This change allowed candidates to spend as much of their own personal money as they could afford to gain election.  The character of the U.S. Congress changed dramatically as a result of this decision.  As CBS News reported on 30 June 2011:


Congress, meanwhile, is a club that consists of 245 millionaires. Based on 2009 data, there are currently 66 in the Senate and 179 in the House (among current voting members). So while just 1 percent of Americans are millionaires, 66 percent of senators are millionaires, as are 41 percent of House members. [56]


That tendency was amplified by the Supreme Court’s decision Citizens United v. Federal Election Commission, 558 U.S. 08-205 (2010) which held that the ban on corporate contributions to elections could not be restricted.  In essence, the Court held that “corporations must be treated identically to natural persons in the political sphere.” [57]


                The decision is an abomination to liberal thought.  Liberalism developed in response to the concentrations of power not only in the state but in religious associations as well.  Individual persons have rights that are endowed “by their Creator” and not by acts of a state.  Those rights can only adhere to individuals because of the assumption that individuals would care about many things, like family, friends, morality, and the like, rather than the single-minded pursuit of economic profit.  Most importantly, liberals did not make the mistake made by Alan Greenspan as argued at the beginning of this paper that one could simply assume that the executives of a corporation would always even care about the health of the corporation itself, let alone about the citizens of the country in which they reside.


                Justice Stevens in his dissent worried that the decision would unfairly tip the balance of political power in the United States away from individuals. The explicit restrictions on campaign contributions by corporations were first passed by Congress in 1907 (the Tillman Act) as a way to prevent corruption in political campaigns—the possibility of securing votes in return for cash was regarded as quite real.  The approach of the Supreme Court in Citizens United is potentially to legalize such corruption.  It is certainly the case that the United States is an extreme case of how liberalism has been subverted to protect the interests of the rich and powerful.  However, one should always be mindful of cases in other areas of the world that seem to replicate a similar pattern:  the behavior of the associates of Rupert Murdoch in currying favor with the British Police is similarly troubling, as are the media holdings of Silvio Berlusconi in Italy.


                Third, the commercialization of the news media has also reinforced the tendency toward the marriage of economic and political power.  One can never forget that the primary business of the news media as presently structured is not to report the news.  It is, rather, to make a profit by reporting the news that it thinks will appeal to readers and viewers, and in a manner that does not offend them.  It is difficult to assess how news media have changed over the last twenty years, but the Federal Communications Commission outlined a precipitous decline in investigative reporting due to sharp job cuts in the traditional print, radio, and television outlets. [58]


                The problem is not that many media outlets seem to favor a particular point of view (FOX News is the most obvious example in the United States).  That concern has always been present in the reporting of news, and there is no such thing as “objective” news reporting.  The more serious issue is the abdication of editorial responsibility on the part of many of the major news outlets.  These outlets, in an effort to appear fair, often make sure that opposing viewpoints are always represented, even those that appear to have little or no validity.  This abdication of responsibility is painfully apparent on topics, such as climate change, that might have the effect of upsetting well-represented corporate interests.


                Liberal democracy cannot exist without a well-informed citizenry.  Former Vice-President Al Gore pointed out the difficulties of holding a debate on climate change given the changes in the conduct of the news media:


We haven't gone nuts — but the "conversation of democracy" has become so deeply dysfunctional that our ability to make intelligent collective decisions has been seriously impaired. Throughout American history, we relied on the vibrancy of our public square — and the quality of our democratic discourse — to make better decisions than most nations in the history of the world. But we are now routinely making really bad decisions that completely ignore the best available evidence of what is true and what is false. When the distinction between truth and falsehood is systematically attacked without shame or consequence — when a great nation makes crucially important decisions on the basis of completely false information that is no longer adequately filtered through the fact-checking function of a healthy and honest public discussion — the public interest is severely damaged. [59]


One can hope that ultimately the proliferation of news sources on the internet can rectify this problem, but at this point in time there is little reason to believe that radically dispersed information can, by itself, succeed.


                Finally, we come to the fourth and last point: the willingness of the public to divest itself of the responsibilities of self-governance.  This characterization may seem a little odd given the hyper-activity of some segments of the polity—in the United States, in particular, as represented by the Tea Party adherents.  But one should not confuse political theater with actual political action.  One should not question the sincerity of Tea Party supporters: they represent a strong and vibrant constituency in American politics that extends back to the founding of the Republic.  The same can be said for the growth of the far-right parties in Europe.  The growing anti-immigrant sentiment in many countries in Europe is real and authentic, but the right-wing sentiment in both Europe and the United States genuinely misses the serious problems facing these societies at this time.  We are talking more loudly about the wrong things.


                The unwillingness of many in liberal societies to talk about the public good is extraordinary.  Virtually all attention is focused on the activities of specific individuals, whether those activities are viewed positively or negatively.  We obsess about Dominique Strauss-Kahn, but say nothing about the IMF and its incredible power over the lives of millions.  We talk endlessly about welfare cheats, but never mention the trillions of dollars spent on wars in Iraq and Afghanistan.  We self-righteously demand that Greece “tighten its belt”, but said nothing when AIG paid out $160 million in bonuses from US government money to the executives who were in charge when the company collapsed.


                The concentration of economic power and the subsequent corruption of the political system is not new to human society.  Indeed, liberalism developed as a response to a system that had developed to protect the interests of the few at the expense of the many.  Such skewed systems are doomed to fail, and the threats outlined in this paper, if not properly addressed, will bring about drastic changes in the quality of life for millions of people.  The failure will be self-inflicted and the evidence grows for its increasing likelihood.  But it is clearly not inevitable.


                The public good needs to be more powerfully articulated and defended.  That public good requires an appreciation of the needs of many generations and of a broad spectrum of socio-economic conditions.  It also requires a careful analysis of the relationship between private and public welfare:  the two are inextricably linked, and efforts to defend one demand that the other be reviewed at the same time.  Finally, the public good requires a broadly dispersed balance of power among all groups within the polity.  Those with power must understand that power is always dependent upon a system that is well-functioning over time:  power without responsibility will degrade and ultimately disintegrate.  The world is moving perilously close to the moment when the current system will collapse upon itself.  The self-interest of the powerful requires much closer attention to the self-interest of all. We should not make the same mistake that Alan Greenspan made.




[1] U.S., Congress, House of Representatives, Committee  on Oversight and Government  Reform, Washington,  D.C., 23 October 2008.  Last accessed at on 30 August 2011.

[2] Adam Smith, The Theory of Moral Sentiments, (London: A. Millar, 1790), 6th edition, I.III.22.   Accessed at on 30 June 2011.

[3] Roger Ebert, Review of La Dolce Vita,  Chicago Sun-Times, 5 January 1997.

[4] Cf. Anthony Arblaster, The Rise and Decline of Western Liberalism (Oxford: Basil Blackwell, 1984), pp. 55-59; 66-91

[5] Steven Shapin, The Scientific Revolution (Chicago: University of Chicago Press, 1996), p. 69

[6] United Nations, Human Development Report (New York: United Nations, 2011), Table 1.  Accessed at on 11 August 2011.

[7] United States, Central Intelligence Agency, World Factbook 2011 (Washington, DC: Central Intelligence Agency, 2011), Accessed at on 11 August 2011.

[8] St. Thomas Aquinas, Summa Theologica,  Question 77. Cheating, which is committed in buying and selling,” Article 1, Objection 3.  New Advent version, Accessed at on 16 August 2011

[9] Johann Wolfgang von Goethe, Egmont, Act V, Scene 4, The Harvard Classics (Cambridge: Harvard University Press,  1909–14), Accessed at on 16 August 2011.

[10] Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston: Beacon Press, 1944)

[11]  Sandy Berger, "Building a New Consensus on China," Speech before the Council on Foreign Relations, New York, 6 June 1997.

[12] Francis Fukuyama, The End of History and the Last Man (New York, Avon Books, 1992), p. xi.

[13] President George W. Bush, "The State of the Union Address," Washington, DC, 29 January 2002

[14] Remarks by President Barack Obama to Parliament in London, United Kingdom,  Westminster Hall, London, United Kingdom, 25 May 2011

[15] Immanuel Kant, Perpetual Peace: A Philosophical Sketch (1795).  Last accessed at on 23 August 2011.

[16] "Therefore, every rational being must so act as if he were through his maxim always a legislating member in the universal kingdom of ends."  Kant, Immanuel; translated by James W. Ellington [1785] (1993). Grounding for the Metaphysics of Morals 3rd ed.. Hackett. p. 43.

[17] James Madison, The Federalist No. 51, “The Structure of the Government Must Furnish the Proper Checks and Balances Between the Different Departments,” Independent Journal, Wednesday, February 6, 1788.  Last accessed at on 23 August 2011.

[18] Adam Smith, The Theory of Moral Sentiments, (London: A. Millar, 1790), 6th edition, I.III.28.  Last accessed at on 30 June 2011.

[19] United States, National Oceanic and Atmospheric Administration, National Climatic Data Center, Global Warming (2008).  Last accessed at on 22 August 2011.

[20] Intergovernmental Panel on Climate Change, Synthesis Report, Valencia, Spain, 12-17 November 2007),  Chapter 2, “Causes of Change,” pp. 13-20.  Last accessed at on 22 August 2011.

[21] John Sousanis, “World Vehicle Population Tops 1 Billion Units,”, Aug 15, 2011.  Accessed at on 22 August 2011.

[22] Organisation for Economic Cooperation and Development, International Transport Forum, Transport Outlook, 2011 (Paris: Organisation for Economic Cooperation and Development, 2011)

[23] Many countries, such as Germany, have already made significant progress toward the development of renewable energies.  See Der Spiegel, “Green Energy Use Jumps in Germany,” 30 August 2011.  On the other hand, the number of people concerned about climate change in the United States and China is declining.  See  Damian Carrington, “Climate change concern tumbles in US and China,” The Guardian, 30 August 2011.

[24] Center for Responsive Politics,, “Lobbying,” 2011.  Last accessed at on 23 August 2011.

[25] Dan Froomkin, “Big Oil Companies Post Huge Profits On High Gas Prices,” Huffington Post, 29 July 2011.  Last accessed at on 23 August 2011.

[26] Contribution of Working Groups I, II and III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, Climate Change 2007: Synthesis Report, Core Writing Team, Pachauri, R.K. and Reisinger, A. (Eds.)

IPCC, Geneva, Switzerland.   Last Accessed at on 30 August 2011.

[27] Global Issues, “Poverty Facts and Stats,” 20 September 2010.  Last accessed at on 23 August 2011.

[28] This proposition was first articulated by Karl Marx  (“The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses,” Das Kapital, Volume III, Part V, Chapter 30), but one does not need to be a Marxist to believe that it is valid.  It was most recently articulated by the Senior Economic Adviser at UBS, George Magnus in an op-ed entitled “Give Karl Marx a Chance to Save the World Economy,” Bloomberg News, 28 August 2011.  Last accessed at on 29 August 2011.

[29] Der Spiegel, “The Destructive Power of the Financial Markets,” 22 August 2011.  Last accessed at,1518,781590,00.html on 24 August 2011.

[30] United States, Office of Management and Budget, A New Era of Responsibility: Renewing America’s Promise (Washington, DC: US Government Printing Office, 2009), p. 9.

[31] Jon Gertner, ” Does America Need Manufacturing?,” New York Times Magazine, 24 August 2011.

[32] There are some who argue that manufacturing will return to the United States.  See Harold L. Sirkin, Michael Zinser, and Douglas Hohner, “Made in America, Again: Why Manufacturing Will Return to the U.S.,” Boston Consulting Group, August 2011.    Last accessed at on 30 August 2011.

[33] Simon Johnson, “The Quiet Coup,” The Atlantic, May 2009.

[34] Barry Ritholz, The Big Picture, “Corporate Cash: Top 20 Firms = $635 Billion,” 12 July 2010.  Last accessed at on 28 August 2011.

[35] John Gapper, “America’s turbulent jobs flight,” Financial Times, 27 July 2011.

[36] XinhuaI, Foxconn to replace workers with 1 million robots in 3 years,” 30 July 2011.  Last accessed at on 28 August 2011.

[37] John Gapper, “America’s turbulent jobs flight,” Financial Times, 27 July 2011.

[38] Kim Parker, Amanda Lenhart and Kathleen Moore, “The Digital Revolution and Higher Education

College Presidents, Public Differ on Value of Online Learning,” Pew Research Center, 28 August 2011.  Last accessed at on 30 August 2011.

[39] Alan Blinder, “Our Dickensian Economy,” Wall Street Journal, 17 December 2010

[40] Simon Johnson, “The Quiet Coup,” The Atlantic, May 2009.

[41] Simon Johnson, “The Quiet Coup,” The Atlantic, May 2009.

[42] Sarah Anderson, Chuck Collins, Scott Klinger, Sam Pizzigati, “Executive Excess 2011: The Massive CEO Rewards for Tax Dodging,” Institute for Policy Studies, August 2011.  Last accessed at on 2 September 2011.

[43] At one point, this report was widely available on the internet.  It has been removed from the internet by Citigroup and its legal counsel, Kilpatrick Townsend & Stockton LLP.

[44] As quoted in the blog, RealityBase, “The Citigroup Plutonomy Memos,” 16 October 2010.  Last accessed at on 30 August 2011.  The emphasis on high-wealth individuals continues to the present day.  See the report by Deloitte, “The next decade in global wealth among millionaire households,” May 2011.  Last accessed at on 30 August 2011.

[45] Robert Reich, “The Limping Middle Class,” New York Times, 3 September 2011.

[46] Fyodor Dostoevsky, The Brothers Karamazov, Chapter 5, “The Grand Inquisitor” translated by Richard Pevear and Larissa Volokhonsky (New York: Farrar, Strauss and Giroux, 1990).

[47] Erich Fromm, Escape from Freedom (New York, Henry Holt, 1941).

[48] David Riesman with Nathan Glazer and Reuel Denny, The Lonely Crowd (New Haven: Yale University Press, 1989).

[49] Robert D. Putnam, Bowling Alone: The Collapse and Revival of American Community (New York: Simon & Schuster, 2000).

[50] Jeffry D. Scahs, “The Economics of Happiness,Project Syndicate,  29 August 2011.  Last accessed at on 3 September 2011.

[51] International Institute of Management, “Gross National happiness Survey,” n.d.. Last accessed at on 2 September 2011.

[52] John Ralston Saul, “Good Governance as the Key to Gross National Happiness,” The Second International Conference on Gross National Happiness, Rethinking Development: Local Pathways to Global Wellbeing, St. Francis Xavier University, Antigonish, Nova Scotia, Canada, June 20 to June 24, 2005.  Last accessed at on September 2011.

[53] Adam Smith, The Theory of Moral Sentiments, (London: A. Millar, 1790), 6th edition, IV.I.8. Accessed at on 30 June 2011.

[54] For a strong endorsement of liberalism, see Martin Sandbu, “Why western ways are still winning,” Financial Times, 23 August 2011.

[55] Lars Jonung, “The Swedish model for resolving the banking crisis of 1991-93: Seven reasons why it was successful,” Economic Papers 360, Directorate-General for Economic and Financial Affairs, European Commission, Brussels, February 2009.  Last accessed at on 5 September 2011.

[56] Stephanie Condon, “Why is Congress a millionaires club?” CBS News, 30 June 2011.  Last accessed at on 4 September 2011.


ELECTION COMMISSION on appeal from the United States District Court for the District of Columbia, [January 21, 2010].  Last accessed at on 4 September 2011.

[58]  Federal Communications Commission, The Information Needs of Communities: The changing media landscape in a broadband age (Washington, DC, June 2011).  Last accessed at on 4 September 2011.

[59] Al Gore, “Climate of Denial: Can science and the truth withstand the merchants of poison?” Rolling Stone, Issue 1134/1135, 24 June 2011.  Last accessed at on 4 September 2011.