Herbert Hoover as the Pardigmatic Progressive-liberal

Most people who have not read a biography of Herbert Hoover do not know that he was among the most assertive of the Progressives, and in many ways his ideas set the tone for much of progressive-liberalism in the eight decades that have ensued since his election to president. When he ran for president in 1928 almost all progressives supported him, including social worker Jane Addams, Ida Tarbell, Herbert Croly, Walter Lippmann, Franklin Roosevelt (before Hoover declared himself a Republican), and many progressive magazine and newspaper editors of the time. Hoover's ideas were quintessentially progressive: an elitist, he proclaimed his belief in democracy. He believed that firms should be motivated by social responsibility and individual interest. He argued for voluntary national planning and that progress depends on the establishment of trade associations that establish voluntary ethical codes. He believed strongly in efficiency and the importance of cooperation and associations. He advocated expansion of public works. He believed in tariffs and protectionism. Hoover's biographer Joan Hoff Wilson notes (p. 69)*:

"Where the classical economists like Adam Smith had argued for uncontrolled competition between independent economic units guided only by the invisible hand of supply and demand, he talked about voluntary national economic planning arising from cooperation between business interests and government. The aim was to eliminate waste through greater production efficiency, lowering prices, raising wages and controlling business cycles. Instead of negative government action in time of depression, he advocated the expansion of public works, avoidance of wage cuts, increased rather than decreased production--measures which would expand rather than contract purchasing power....'We are passing' he told the United States Chamber of Commerce in 1924, 'from a period of extreme individualistic action into a period of associational activities.'"

What made Hoover the prototypical Progressive-liberal was his belief (1) that rational planning guided by the state rather than markets can best solve problems and (2) that the state's role includes the positive inculcation of moral belief. In particular, Hoover pioneered the use of mass propaganda, not only as Warren G. Harding used it in campaigns, but as part of his political strategy. In 1920, Hoover became a moderate advocate of collective bargaining. Hoover believed that workplace conflict was an engineering problem. He was a supporter of scientific management, which was linked to the Progressive movement. Quoting Wilson (p. 56):

"The socioeconomic system [Hoover's ideas] represented could not accurately be described by such words as progressivism, laissez faire capitalism, communism, statism, socialism, corporatism, guildism or syndicalism. The absolute laws of progress that he believed in required a new and superior synthesis that he simply called the American system. What he had in mind was a pragmatic utopianism that defied standard economic and political classifications and was, in truth, progressive in the broadest sense--it was forward looking. Perhaps it could best be characterized as an informal brand of liberal corporatism.

"...idealism could be balanced with self-interest and technological innovation to counter the equally enervating system of state socialism or monopoly capitalism..."

(p. 59)"...Hoover hoped to change values at the grass-roots level by propagating an ideology of cooperative individualism and playing down materialism. Massive education and propaganda campaigns could transform traditional attitudes about private property and profit into a new sense of social responsibility..."

Hoover's elitism came from his background as an engineer who had achieved dramatic success in international mining. He seems to have believed that engineering principles could be applied to reforming society.

Now, what was the outcome of Hoover's presidential administration? What was the result of his elitist belief of his ability to outhink markets and to be able to reform society according to his values (which were very nice, by the way).

The result was the Great Depression. The result of the Depression was the New Deal (which Hoover opposed because he found it too statist). Thus we see the end result of Progressivism. Increasing coercion, government programs that stall progress, and inflation that supports wealthy speculators at the expense of productive workers.

Progressivism begins as an assertion of value superiority by an elite. The value superiority is moral or expresses a belief in democracy, as does Peter Levine. Government action (e.g., Wilson's establishment of the Fed in 1913) is taken to encourage the belief. Smart people (Hoover was very bright) are selected to implement the vision. But they blunder. The blunders are blamed on the people, on freedom and on markets. In turn, coercive statist violence attacks democracy and freedom further, institutionalizing Progressive-liberal neuroticism.

*Joan Hoff Wilson, Herbert Hoover, Forgotten Progressive. Prospect Heights, Ill.: Waveland Press, 1992 (Original Publication: 1975).

Cognitive Limits on Progressivism

The limitations of progressivism are illusted in the limitations of progressivism's advocates, such as Peter Levine. Progressivism purports to reform the economy, but progressivism's advocates are not well-schooled in economic problems and constraints. Considerations that need to be integrated in fundamental thinking about society are the unforeseen effects of policy changes; the evolution of technology to render a given set of economic arrangements obsolete in shorter time frames than it takes to implement government reforms that work; the ability of individual employees and entrepreneurs to integrate information more flexibly and intelligently than can experts or central planners; the inability of deliberative processes to anticipate market and technological change; and the inability of deliberators to assess the true costs and benefits of the very changes they propose at the time and place that they propose them. Progressivism assumes unbounded rationality on the part of planners and executives. Yet, planners and executives err more often than they succeed. Progressivism does not anticipate the failure of the firms, technologies, reforms and policies that it proposes, so by definition it results in the institutionalism of antiquated and outdated process, technologies and ideas. There is little that can be new in the ideas that progressives propose; and the reforms that they propose stall progress.

Progressivism aims for contradictory ends and so cannot achieve its purported ends. It aims to increase centralization of authority by enhancing government power. But democracy depends on public participation which in turn depends on decentralization of authority. Progressivism aims for increasing public voice. But it bestows the opportunity for unitary authority on a centralized power. How can such an ideology achieve anything more than tyranny?

Failure of Progressivism

Writing in the tradition of John Dewey's progressivism, Peter Levine and others have argued that deliberation and democracy are key values and that society ought to be reformed to reinvigorate public participation and deliberation. Liberals now call themselves progressives and continue to argue for enhancement of the public sphere at the expense of the private sphere; increased government involvement in the economy; and a reinvention of policies that, over the past century, have failed. But Progressivism has failed and will continue to fail because its commitment to big government ignores the conditions for good decision making in a large economy and in the kind of large organizations that progressivism subsidizes.

In order to function, economies and institutions need to make best use of information. Such information is available through price fluctuations and on-the-spot shifts in demand. To make best use of informational change, economic decision makers must be local and/or flexible. Some patterns may be global, but even there continuous improvement is necessary to an efficient organization, and the ability to continously and at times radically improve is necessary to an efficient economy.

To be local, organizations must be decentralized. To be decentralized, they must be small actors who are profit oriented; or be decntralized large organizations. Institutions at the macro-economic level are too large and centralized to be able to make use of local information, as Friedrich Hayek has argued. Thus, to make best use of information in the economy, economic actors must be small, privately owned organizations with local knowledge or be able to emulate such organizations. For large governmental institutions to work they must emulate small organizations anyway, and there is no reason to characterize them as governmental institutions. To the extent that they are government institutions they will not function effectively.

There is a second reason for the failure of progressivism. In order to manage systems, feedback is necessary and reform of policy must be continuous. This is important in both the individual organization and the larger economy as well for two reasons. First, organizations need to maintain stability. If, for instance, prices rise, then the organization must be able to promptly adjust purchasing policies, pricing strategy and a host of similar variables in order to stabilize themselves with respect to the rising price. Second, in order to improve their products organization must be able to continuously change. This requires motive and ability to continuously improve organizational information systems. Such continuous improvement is impossible in a democratic setting. Democratic processes are global and require mass deliberation. Nor are such improvement processes possible via expert commissions. Experts are not privy to what the quality expert EI Deming called the "profound knowledge" of workers intimately involved in a production system. Moreover, the knowledge base that is required changes constantly because of shifting conditions.

Neither of these requirements hold with respect to deliberative democracy and so is precluded by progressivism. Deliberative processes are untimely; cannot integrate local information; are rigid; are unable to be revised because of the costliness of the deliberative process; are subject to opportunistic manipulation by self-interested parties and insiders; do not reflect a unitary profit motive; and often are subject to a range of contradictory motives.

Because of these limitations progressivism is necessarily at odds with progress. Progress requires innovation, which in turn is conditional upon incentives, a clear goal, a focus on improvement (continuous as well as radical), flexibility with respect to decision making and experimentation conditioned upon flexibility and unforeseen results and outcomes.

Thus, progressive-liberalism is inherently anti-progress. Its very name is self-contradictory.

Peter Levine's "New Progressive Era"

I had previously blogged about Peter Levine's New Progressive Era when I was starting it. Now that I've finished it, I conclude that my initial reaction was correct. The ideology of the progressives, and of Levine, ignores long run effects; bounded rationality; processes of experimentation that are necessary to innovation; the importance of private property and the private sphere; the importance of individual rights to be free from the progressives' endless taste for attacking the individual; and the importance of free markets to create a wealthy society.

Deliberation and democracy are only beneficial if there are limits set to their scope. As de Tocqueville argued, tyranny of the majority is the chief threat to American democracy.

Having grown up in New York, the state and city where the deliberative state has grown most extensively, I grew up seeing the failure of Levine's ideas first-hand. In New York, progressivism degenerated into Robert Moses's capricious abuse of power. Although Levine argues that the earlier progressives were ambivalent about unions, Levine is very pro-union. In New York, I watched the business base disappear; property values soar to the point of crippling unaffordability; and the growth of the rat population in the subways. (The city had confiscated the subways during the post-progressive era thanks to the moronic deliberation of that era). The City has increasingly become an elite playground that excludes the middle class thanks to the practical effects of Levine's ideas, specifically, special interest pressure to support public sector unions who have fought for high taxes; special interest eminent domain actions that have closed small factories and destroyed inexpensive housing; and the use of urban renewal and the tax system to squelch start-ups that have yet to prove themselves.

Despite its claim to be democratic, progressivism is anti-democratic. It is anti-democratic because it aims to apply democratic deliberation inappropriately to economic issues and so must fail. Levine does not appear to grasp the concept of marginalism or marginalist decision making; nor does he leave sufficient room for the possibility that an artist, intellectual, inventor or entrepreneur might have ideas which the majority would rather suppress because it does not understand them. This has been the consistent failure of progressivism. Deliberation and progressivism are fine in the limited scope of public decision making as defined in the nineteenth century. The slightest expansions make them untenable. In areas like monetary policy, which are not that complicated, special interests leap to make the topics seem complicated, and the public is easily bamboozled. The result is the special interest constituencies, which Howard S. Katz has called the "paper aristocracy" in the case of money supply, who argue vehemently for the "stabilization of credit markets" and similar kinds of meaningless, self-serving nonsense in order to justify public subsidies. The public is deferential toward the quack claims of academics, and so democracy becomes a matter of special interest, privilege and fake authority.

The public is simply not equipped to engage in debates about engineering; economics; architecture; construction; manufacturing, etc., etc. This is understandable because no one has the mental capacity to absorb all of these issues. In arguing for the public to engage in debates about such a wide range of issues, Levine and his fellow progressives are paving the way to totalitarianism. This is not surprising because it happened in Germany, the first country to adopt a progressive policy.

The end result of Levine's progressivism is dictatorship. Far from being a reform movement, the "new progressivism" leads to the kind of totalitarianism to which Bismarck's progressivism led Germany.

There are more than a few evidences of authoritarianism in Levine's book. For instance, Levine implies that those who "admire the market" should not "have disproportionate political power as a result of their wealth". But this kind of distinction leads to suppression of speech. For instance, is it fair that people with higher IQs have disproportionate political power and so can manipulate the government to serve their interests as the financial community has been able to do with the Federal Reserve Bank and as business has been able to do with the department of labor and the federal trade commission? The fact is that Levine singles out business as a manipulator, when the only conceivable outcome of his progressivism is manipulation by special interest groups.

Given the repeated failure of the progressives' ideas, one would hope that their ideas would have been consigned to the trash bin. But their emotional hatred of business, which they cannot dominate and control, inspires their endless speculation as to how to suppress entrepreneurs and those who do not pay attention to their stale ideas.

Liberals Should Be Called "Suppressives" Rather Than "Progressives"

I have recently blogged about Peter Levine's book New Progressive Era and note that although Levine claims that public deliberation ought to replace free markets, public deliberation is impossible because progressives dislike speech that disagrees with their own and because progressives' choices, which are mostly erroneous, become institutionalized. Upon institutionalization, discussion about them is foreclosed. Some examples are the rat-infested New York City subway system; the near-bankrupt social security system; and the income-inequality and poverty-generating Federal Reserve Bank.

As well, a key problem with progressivism is the willingness of progressives to distort facts, to lie, in order to secure programs or institutions that are bound to fail. The public finds it difficult to debate when, for instance, the Fed claims it is managing the "federal funds rate" rather than increasing the money supply (or more to the point, counterfeiting). Likewise, the public finds it difficult to debate about "social security" when its proponents claim that it is a fair insurance program rather than primarily a welfare or transfer program.

Perhaps the worst lies of all concern the names that the "progressives" call themselves. When I was growing up in New York,the high crime rates were attributable to "limousine liberals". Liberals became associated with the ACLU, welfare, corruption and incompetence. Rather than divulge the truth, today's liberals call themselves "progressives". It would be much more conducive to intelligent dialogue for all of us, and much fairer, to call liberals "suppressives".

Progressivism and Authorianism

I am beginning to read Peter Levine's New Progressive Era: Toward a Fair and Deliberative Democracy (Lanham, MD., Rowman and Littlefield, 2000. 255 pp.) and am intrigued by Levine's discussion of deliberation in a democracy. The concept of deliberation resonates with me, in part because of its Aristotelian foundation (deliberation is the foundation of Aristotle's ethical model in Nichomachean Ethics). But the progressive model that Levine proposes is totalitarian in its implications. The campus left's intolerance of and refusal to hire political conservatives, for instance, is intimately linked to its claim to be deliberative via collegial processes. Excessive emphasis on deliberation induces tyranny of the majority and suppression of minority views. It is only through the limited state that deliberation's implicit authoritarian threat can be contained.

The problem with the deliberative solution is that it faces the cost and information constraints that all democratic processes face. Deliberation devolves into authoritative nostrums proposed by authoritarian progressives.

Importantly, the advantages of marginalism are lost when the public becomes overzealous in making decisions. Most or all economic actors make errors. Distorted decisions result in social losses. If there is no equation of marginal costs and benefits, the errors become massive. Such massive errors are characteristic of totalitarianism. Marginalism involves the equilibration of costs and benefits by firms and consumers who bear the costs of their own decisions. They also must cope with the possibility of counter-strategies by economic actors who have insights (either because of intuition or better information) that counteract the mistakes of the infra-marginal establishment. Much of the establishment is made up of conformists who are wrong much of the time. Mutual fund managers do not beat the stock market, for example. Without marginal decision making society will become stagnant. Nikola Tesla, the eccentric inventor of AC electricity, could not have succeeded in a deliberative society. If Peter Levine has his way, we will be living in primitive huts working in farming as serfs. It is only marginalism that can induce progress, not deliberation.

The results of excessive emphasis on deliberation are extremism, poverty and exclusion. Levine does not address what to do if democratic processes result in, for instance the Nuremberg Laws. Indeed, these outcomes have been intimately linked to progressivism in the past. The first "progressive" state was Bismarck's Germany, which preceded Hitler's Germany by fifty years.

Levine's discussion of deliberative democracy and the progressives' ideas is inspiring, but deliberation's totalitarian implications become evident when he talks about the "marketplace" (p. 17). He emphasizes that economic power is distributed unequally, suggesting that markets are inequitable. But he neglects to comment about the skewness in progressives' definitions of the terms of public debate that typically also are distributed unequally.

Thus, for instance, intelligent debate about the Federal Reserve Bank is difficult when the field of economics, the news media and politicians cloak a simple relationship between money supply and inflation in nonsensical terminology such as "reducing the federal funds rate" and claim, as does the Economist this week, that the people who expand the money supply at the Fed are geniuses whose work in causing inflation is really fighting inflation and cannot be understood by ordinary people. Levine does not address this kind of distortion, on which most of the progressives' successes have depended. Rather he emphasizes that sellers of goods are larger than buyers.

Worst of all, Levine claims that "through the democratic process I can advocate general rules that will bind me and all of my fellow citizens permanently." This is a frightening argument. Levine argues that although people say that they would be willing to pay more for a better environment, when it comes to actually buying they do not favor environmentally friendly merchandise. So Levine feels that it would be advantageous to for people to be able to force each other to live by the self-important statements they make to polling agencies.

It doesn't occur to Levine that mass psychology and cognitive dissonance favor nice-sounding public statements, but those statements may be unrealistic. Millions of Germans saluted Hitler. Levine seems to think that it is all to the good that they weren't forced to pay up out of their own pockets for the policies that Hitler implemented, the war, the concentration camps, etc., all of the massive costs that deliberation in Germany caused.