The Use and Abuse of History   /   Summer 2022   /    Book Review

Market Failure

Recovering the meaning of the most important words of our age.

Jay Tolson

The Marketplace of Ideas, nineteenth century, by Bertall (Charles Albert d’Arnoux, 1820–82); Photo 12/Alamy Stock Photo.

A British-born and Cambridge-educated economic historian who has taught at Princeton University since 1986, Harold James has written extensively on topics ranging from German financial history to larger questions about European and world orders. While the presumed audience of much of his prodigious output includes fellow economic and financial historians as well as students of international affairs, The War of Words: A Glossary of Globalization might profitably be read by all who belong to that amorphous but ubiquitous social formation variously dubbed “knowledge workers” (by Peter Drucker) or “the new class” (by Daniel Bell, among others). However labeled, these are the people commonly engaged in leading and managing various precincts of what Max Weber called the Iron Cage: modernity’s highly bureaucratized and technocratic institutional order. Filling the middle to higher ranks of the professions, corporate and government officialdom, the media and entertainment complex, academia, and any other fields in which the mastery of knowledge and the manipulation of symbols is indispensable, they are often referred to simply as elites—just as often disparagingly, particularly by politicians and pundits seeking populist approbation by denying their own elite credentials.

Whether the objects of emulation or contempt, or both, these elites are caught up in what might be called a crisis, although James’s typically shrewd scrutiny of that term and its promiscuous uses makes me hesitate to do so. Nevertheless, crisis it must be called, because in addition to facing widespread distrust and hostility from wide swaths of the demos (or the “real people,” as we are now conditioned to say), the elites are also dealing with an internal crisis of confidence. The organizations they oversee and the professions they dominate are in many cases losing coherence, integrity, and salience, while they themselves are struggling to maintain a clear sense of vocation and purpose. Having mastered the meritocratic game—itself now subject to widespread suspicion and criticism—many feel entrapped or marginalized in the cage they thought they had been trained to run. Little wonder, then, that their self-confidence was rattled even before the pandemic revealed, to many of them at least, their “nonessential” status.

James’s new book focuses on the crucial tools of the knowledge workers’ trade, that is, on the key terms of their respective vocational discourses. He takes particular aim at the lexical muddles confounding the discourses of politics, economics, and international affairs, but his critique can be read inferentially as a much broader investigation of the ways that key words shaping various institutional lexicons can pass from clarifying precision through growing fuzziness to outright obfuscation, themselves becoming a big part of the problem of effective and ethical management, governance, diplomacy, communication, education, and leadership.

Words have histories, and James constructs his analytical glossary through sharply incisive minihistories of some very big ones: capitalism, socialism, nationalism and nation-states, technocracy, hegemony, multilateralism, populism, globalism (and the more recent globalization), debt, neoliberalism, crisis, and what he wryly lumps together as the “frightening German Politik terms.” With a lightly ironic nod to neatness guru Marie Kondo, he describes his task as one of “intellectual decluttering,” a much-needed exercise, he reckons, now that we find ourselves amid “a radical reorientation of economy, society, and politics through the dramatic clash of two principles or philosophies.” That clash pits those inclined toward openness, globalism, multilateralism, and the like against others embracing isolationism, nationalism, particularism, and localism. Think EU or NAFTA enthusiasts versus votaries of Brexit or The Wall. While there is nothing unprecedented about this clash of fundamentally opposing dispositions, the intensity of the polarization is new and even dangerous. And the terms the two sides either proudly embrace or accusingly hurl at their foes are so close to meaningless that the possibility of honest, much less productive, debate is almost nil.

At risk is the great promise and possibility of liberal democracy itself: the proposition that democratic citizens and their leaders shape their political destinies through the civil debate of ideas and governing concepts. This is nothing less than the promise of the marketplace of ideas, perhaps the essential component of the liberal project. As James direly sees it, though, “the marketplace cannot work because the ideas cannot correctly be valued.” We demonize the opposition, or at least characterize it as the “enemy,” because, in his assessment, “we are drowning in clashing ideas formulated in incoherently used words.”

James attempts to throw a lifeline not only by providing analytical histories of the key words but by teasing out the structures of semantic dependence in which those terms acquire full or clear meaning through their relationship to other key terms. We cannot talk of capitalism, for example, without appreciating its historically mutating types (of which James lists seven dominant ones), from the mercantile/commercial form of the late medieval and early modern world through the golden age of industrial capitalism (roughly 1800–1890) to the hyper or globalized finance form (1990–2008) and to what has been emerging since 2008, which he tentatively names “information capitalism.” There is considerable sloshing of types across those temporal boundaries, with some nations and global regions practicing something closer to earlier forms of capitalism, but the differences are so critical that James’s discussion should make readers wary of talking about capitalism as though it were a single distinct system. One might even ask James how helpful or misleading is the word capitalism itself. Is it anything more than a feature of, or a specialized practice within, market economies? And aren’t the many and usually simplistic polemical uses of the word capitalism, as source of all good or of all evil, related to the very elusiveness of the word?

James elucidates equally well the symbiotic relationship between socialism (and its various forms or expressions) and capitalism, of which he says the former is “unambiguously a product.” Contrasting it with assorted schemes for utopia, he notes that socialism grew out of a combination of two circumstances, the economic advance of large-scale factory production and an increasingly interconnected world. James says it was Karl Marx’s genius to tie the two factors together “in an elegant but complex knot, which he could explain by claiming with some plausibility that economic changes (such as production methods or communications technologies) might drive cultural development.” Whatever its early formulation, socialism developed at least two major strains: the social democratic and the revolutionary, both of which were constrained by their dependence on the problems of “capitalism.” Get rid of capitalist property relations, as the Soviet Union did, and socialism becomes simply a version (and hardly a benevolent one) of technocratic management. Social democracy, for its part, becomes indistinguishable from a generous welfare state and the accommodations it provides to mitigate inequities resulting from the operations of the free market. When today’s social democrats talk about socialism, are they not just talking about a robust welfare state? And are Donald Trump’s minions not doing a similar thing when they label progressive redistributive and welfare-oriented policies socialist? Or even more ominously, communist?

The richness of James’s book consists in its elucidation of the ironies bound up in the history of terms as they apply to changing circumstances. Neoliberalism, he argues, has become in the early twenty-first century the all-purpose scare word for the markets-rule-all mentality that the original neoliberal thinkers of the 1940s, including Walter Lippmann, sought to prevent. “Its original tenets might rather be considered an antidote,” writes James, “to the multiple distortions and dystopias that poison the economic, social, and political vocabulary of our age.”

Geopolitics, for its part, began its conceptual career in the search for alternatives to empire in certain universalizing concepts, but it ended with the chastened (or cynical) conclusion that commonality was impossible, or at least much harder, to achieve across nations or regions. Resigned to the power of territoriality, spheres of interest, and heartlands, geopoliticians place little or no faith in the power of civil society, constitutionalism, or other liberal ideals to transcend the immutable laws of turf. Hence, James argues, Henry Kissinger’s dim regard for the Ukrainians’ efforts, past and present, to escape the grip of a resurgently imperialistic and antidemocratic Russia. Spheres of interest trump everything.

A particularly useful chapter for today’s troubled elites explores technocracy, the rule of experts, which as a term was born at the end of World War I but was long before anticipated in the work of the great nineteenth-century positivists Auguste Comte and Henri de Saint-Simon. While we still tend to think of technocrats as the scientifically oriented engineers of organizational management, today most members of the knowledge class function, more or less, as technocrats within their respective organizations and professions. Think of college administrators and even of the professoriate in corporate universities. Or consider physicians, who increasingly perform like impersonal functionaries in an algorithmically governed health-care regime. Perhaps most frightening is the growing influence of “political technologists,” whose main function is to employ the techniques of opinion manipulation to “abolish the difference between the true and not-true,” in the words of one Russian master of this dark art. Wherever “functional elites” lean more on supposedly neutral technique and metrics than on personal judgment or ethical considerations, technocracy prevails. Quantification and efficiency rule; the human factor is dispatched. “The drive to create and use techniques generally arises out of a specific challenge,” James notes. “But technocrats generate discontent when societies can no longer muster the sense of purpose that led them to cede at least some of their power over to experts, and when the different tribes of technocrats fall out with each other.” Are we there yet? I would say we arrived there some time ago.

Indeed, I would suggest that the great challenge of our time is the recovery of elites who resist becoming mere technocrats or functionaries. That would require a return to what the philosopher José Ortega y Gasset, in The Revolt of the Masses, described as the true distinction of excellent persons: their dedication to service, not only to others but to higher ideals. “Contrary to what is usually thought, it is the man of excellence…who lives in essential servitude,” Ortega wrote. “Life has no savor for him unless he makes it consist in service to something transcendental.” Elites, in Ortega’s view, had nothing to do with class or status, income brackets or type of work. Elites exist and are needed no less in trades such as carpentry or masonry than in professions, upper management, or political office. It was the devotion to excellence, in word and deed, in whatever they did, an excellence they modeled in their work and lives and in their efforts to draw others toward such excellence, that marked the true elites. But the “functional” elites of today conform far more closely to Ortega’s conception of the mass man “who makes no demands on himself, but contents himself with what he is.” As long as our elites are content with being highly compensated and insular cogs in the technocratic machinery, they will continue to lose respect and influence among the “real people.” And far from being something to celebrate, the final collapse of the elites will lead even more precipitously to the collapse of the marketplace of ideas on which the future of open, liberal, and democratic societies depends.