Conformity and Fear in Modernism

One of the hallmarks of modernism is fear. Fear arises from modernism's emphasis on scale, its support for large organizations and institutions, i.e., bureaucracy, which its apologists defend on the grounds of economic efficiency. However, modernism depended on state support for those same institutions. In the 19th century state support involved tariffs, land grants, favors and subsidies to large organizations. The chief beneficiaries of big government, big businessmen, were able to convince Progressives, such as Theodore Roosevelt, that state management and stabilization were necessary. This led to the establishment of the Federal Reserve Bank in 1913, the chief source of subsidies to large coroprations, banks and the investment community.

In the 1920s, tariffs that had been abolished in the late 19th century were reestablished and in the 1930s the gold standard was abolished, freeing the central government to provide unlimited subsidies to large organizations. At the same time, government was centralized in the name of public welfare, making the ordinary citizen ever more dependent on large organizations. The alternatives presented as necessary to modern life were framed as a choice between large, inefficient, state-subsidized industries and even larger government-owned industries.

There was never any evidence that these were the only choices. In fact, the evidence suggested that only the capitalist class suffered from decentralized, competitive industry and that without centralization the average American saw increasing real wages and high demand for labor. The advocates of Progressivism argued that the competitive economy resulted in "overproduction". Yet overproduction suggests over-employment and excess demand for labor. Yet at the same time, the Progressives argued that over-production resulted in unemployment.

Fear arises because large scale institutional structure inhibits job formation. It does so through taxation, reallocation of capital from individuals to centrally controlled institutions via the Federal Reserve Bank, government regulation, the minimum wage and in the early twentieth century institutionalized racial discrimination. Government policies restrict the availability of jobs, making individuals increasingly independent on corporate and state employment. Income taxation and social security eliminate private saving so the individual lacks resources on which to depend if he loses his job and experimentation with new production and institutional forms is curtailed.

Corporate liberalism extends its attack on private resources to the few individuals who manage to accumulate enough to live without dependence on large corporations. It establishes an inheritance tax so that independence cannot be transmitted intergenerationally, increasing the likelihood of near-universal dependence on large institutions. The inheritance taxes are structured so that trusts and legal exceptions are made for the very wealthy, insuring the establishment of an intergenerationally progressive-liberal artistocracy based on ownership of large-scale institutions. Beneficiaries of such privilege, such as the Ochs Sulzbergers of the New York Times and the Rockefellers, then argue for increased inheritance taxes on others who can afford less creative legal advice.

Fear arises because loss of employment can mean personal disaster. Risk increases with ability level. Corporate jobs are difficult to procure because of artificially induced shortages. Specialized knowledge is often firm specific, hence, the individual becomes politically, intellectually and morally dependent on the corporate system. The most talented individuals become the most inhibited. The inhibitions are reinforced through cultural institutions such as universities who incultate political correctness, uniformity of thought and cowardly political behavior.

Individuality erodes for additional reasons. First, in the workplace corporations discourage individuality in the name of coordination. This is done by requiring "interpersonal skills" or "managerial skills" of corporate employeesj; requiring that individuals be "team players" and in universities through "political correctness" and ideological litmus tests. Employees who do not conform to the corporate or academic value systems are regarded as troublemakers and are precluded from further engagement with the firm or from promotion even if their productivity is significantly higher than their wage. Hence, large institutions are generally inefficienct and do not maximize profit. This is possible in part because they are subsidized by regulation and Federal Reserve Bank credit and because they enjoy substantial monopoly power in their industries.

Fear and conformity result in a propensity toward mass thinking among modern citizens. Those who deviate, are "politically incorrect" do not behave appropriately are viewed as unemployable. A few are able to start businesses or find alternative ways to make a living. However, these are too few in number to alter the character of modern society.

Second, mass consumption and the mass media result in a high degree of uniformity of opinion. Mass consumption requires a uniform assortment of merchandise of modest quality that is attractive to large numbers of consumers. Coca-cola, McDonald's and network television become standards, and refusal to engage with these products becomes a stigma. Likewise, those who produce mass media are subject to the same corporate groupthink as the members of other corporate and professional communities, and the public mind is heavily influenced through repetition and frequent exposure to television and films.

Fear and conformity lead to fascination with mass entertainment, frivolous interpretations of what art, knowledge and literature are, declining standards in academia and higher education and failure of science. The achievement value of achievement is replaced by the value of conformity, other-directedness, groupthink and acceptance of authority and political correctness. Thus, left and right are alternative cults that aim to provide a "received" political value to conformist, modern citizens. Participation in a cult is necessary because modern citizens lose faith in their own ideas and opinions, and come to believe that newscasters, newspapers and others are necessary to make intelligent and informed choices. Of course, such sources are no better informed than the citizens themselves, and so the modern political world becomes a contest of wills among several groupings of opinion, each one ill-informed and each one emotionally comitted to its group, and each one unable to free itself from the fear and conformity that drive their spirits.

Decentralization in America's Future

The centralized solution to American economic development was characteristic of modernism. Modernism emphasized scale, mass production and was threatened by monopoly power. Post modernism emphasizes flexibility and change and is threatened by uncertainty. Continuous improvement was important to modernist production strategy. Strategic innovation is necessary for post modern production strategy.

Government has not changed to respond to the changes. One government policy ought not to fit all publics. Change and differentiation are healthy. The idea that a single model car ought to fit all consumers is as outdated as the idea that a single government policy ought to fit all citizens.

There were two key reasons that America abandoned its decentralized political policy: the shift to economic modernism and the problem of racial discrimination. The economic reason was the more important and preceded the racial one. Progressivism was the assertion of modernisn in the political realm, and it was a method of grappling with changes in public policy that were necessary to confront popular anxieties about the power of big business.

Progressivsim was always founded on contradictions. The rationale for government rationalization of markets was overproduction. Overproduction suggests decreasing prices and profits, and this was indeed the case. In the late nineteenth century profits were falling but real wages were rising. Thus, Progressivism needs to be viewed first as a corporate movement whose main goal was to protect corporate interests. However, the advocates of economic Progressivism, beginning with David Ames Wells in the 1880s, was that unemployment attended overproduction. This is a contradiction. Wells argued that on the one hand firms could not shut down because the costs of shutting down exceeded the cost savings from shutting down, thus overproduction became the norm. On the other hand he argued that unemployment attended overproduction. But if the plants could not shut down, why was there unemployment? Overproduction would imply over-employment. But the problem of unemployment was raised in Wells's book as associated with overproduction. This sounds suspiciously like a self-conscious rationale for business interests, which may have been legitimate. These include mergers to limit production output. But the mergers would result in unemployment plus higher prices, while overproduction and excess competition would result in overemployment. Common sense.

There is more in the way of prima facie contradiction for the rationale for Progressivism. The Progressives believed that monopoly power was a key threat that required government intervention to reduce the power that corporations had over production. But the rationale for government intervention was overproduction,which is the opposite problem of monopoly. Monopoly implies under-production as marginal revenue product equals marginal cost rather than price. That means under-production, not over-production. But the advocates of Progressivism based their arguments on continued over-production.

The problems with Progressivism's rationales are not the main point, though. For today we do not face problems of overproduction or underproduction, excessive competition or monopoly. Rather, the problem that industry faces is how to devise new and better products. To do this, the appropriate degree of government regulation is necessary. But how to determine the appropriate degree? The appropriate degree can only be determined by trial and error. Hence the monolithic federal government impedes progress. It does so because post-modernist progress depends on a complex optimality that cannot be discerned through logic. It is an experimental process.

The modernist world was simple. Production depended upon sequential technology, i.e., assembly lines that are modestly interactive. The post modernist world is complex. It depends on reciprocal technology that are highly interactive, i.e., skunk works, research teams and collaborations among innovators. The government policies most conducive to such collaboration are not the same as the government policies conducive to modernism. Economic security, predictability and long term relationship are not as important.

The improvement process that best fit the modern world was continuous improvement, and the Toyota Production system is the highest development of modernism. However, the Toyota Production system already has elements of post modernism, namely the power of employees to stop production and the greater degree of interaction along the supply chain.

The improvement process that best fits the post modern world is discontinuous innovation. New ideas, new products and new strategies need to be developed. Government that serves a stabilizing function that is essential to modernism serves only as an impediment to post modernist economic development. In post modernism, the small and flexible, not the stable, win.

How to determine the best approach to government in the post modern world? There are several possible learning tools. These include imitation, continuous improvement, electoral turnover and experimentation. Of these, experimentation is the most powerful. Firms that experiment the most find the best approaches. Conversely, the most successful firms tend to experiment.

The means by which the American government needs to learn to experiment is through decentralization. The reasons for centralization have whithered away. Racial discrimination is no longer a critical issue and the need for a strong-armed federal government to manage "trusts" is no longer a serious issue. Indeed, the most aggressive actions taken against Wal-Mart were by state and local governments; and the most aggressive prosecution of ethics violations in the late 1990s and earlier this decade were by the New York State district attorney, Eliot Spitzer.

Modernist federalism needs to be replaced by post-modernist federalism or decentralization.