Albert Hirschman, Alan Greenspan and the Problem of Intellectual Capture

Mark Photo Mark Blyth over at Triple Crisis:

A week or so ago the FT published a piece that asked why, if social democracies are so nice, their crime fiction is so dark? It’s a fair point, and anyone sitting through the middle section of ‘The Girl With the Dragon Tattoo’ has probably asked the same question. I didn’t read the FT’s answer, but my own answer comes from being in Iceland last week; a trip that gave me an insight into intellectual capture that I didn’t really appreciate before: that some truths are harder to shake than others.

While in Reykjavik I asked the locals what they thought was the biggest problem facing Iceland post-bubble. Interestingly, they didn’t say ‘the banks,’ or even ‘the debt’ – they said ‘the consensus.’ That is, being a consensus democracy, like most Scandinavian social democracies, its really hard to talk openly about what happened. The consensus is what makes equalitarian redistribution possible: we can all agree without debating it. But it also limits the ability to question the foundations of the system itself. In such an environment post-crisis discussions become ‘passive-aggressive.’ Like an old couple that should have divorced years ago, they displace the event itself and focus instead on anything else while personalizing everything. In Iceland’s case this means hunting down ‘the greedy few’ rather than questioning the system as a whole: a system that allowed the banks to grow to, at their height, 1000 percent of GDP. To do so would be to question “the consensus.” That is, the truth as they saw it.

I mention this because while political capture gets a lot of the post-crisis press, rightly– with my favorite recent slip being Spencer Bachus (R-Al) cracker that “in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks”– it’s intellectual capture that, in my opinion, really does the damage (hence my last blog piece on Cowboys and Indians). Indeed, once you start to look for this, you begin to see its effects everywhere.

For example, my reliably ‘sound’ FT last Wednesday had a column by Alan Greenspan that wrote the crisis out of the history books in a most interesting way. Rather than deal with the crisis as it happened, or even address what it cost, Greenspan dealt with the crisis on a purely rhetorical level.

I mean rhetorical in the sense that Albert Hirschman identified twenty years ago in his fabulous book The Rhetoric of Reaction. (Really, if you haven’t read it, read it now – it’s like a Dan Brown crypex for crisis-newspeak). Hirschman pointed out that conservative arguments come in three distinct theses.