I. Mandate. Meaning. Money.
A constitutional order has three parts: mandate - what the government should do - and meaning - how the public views the role of its duties, rights and options in relationship to the government. These are tied together by mechanism - how the government functions. In American history, and to no small extent world history, the most important mechanism is money. Not in the sense of who gets money - but in the sense of how money works. Each of these three parts of government are often written about, but how they interact is usually handled poorly - because generally an author knows one well, details it quite clearly, and then tries to apply the thesis of one to the others. The situation is more complex - each interacts with the others, and the process of bringing all of them into harmony is not immediate, it does not lend it self to nice clear lines of demarcation.
But a new constitutional order must get all three in sync - people must expect of a government what it can accomplish through handling mechanisms, and through motivating meaning.
Money is the key lens of an American constitutional order, because it is the one part of that order that must work every single day. Money is the constitution that you carry with you, the government backs its functioning. How money works creates the range of incentives that people have, and the range of opportunities. But it also, as importantly, protects certain ways of piling up wealth - that is rent. Rent is an advantage in time or space economically. If you are here first, you claim the land, even if you have to kill or run off some people to do it. Others must buy it from you, because they recognize that claim.
Money itself buys both change, and protection from change - and this is a basic, and larger, conflict in money itself. Over the course of the lifetime of a Republic, wealth moves upward - and more and more of the economic activity of the government is spent, not creating new wealth, but protecting old wealth. The final crisis starts when the amount of money required to protect old wealth is more than the society can produce as a surplus from all of its labors.
This produces a change in the constitutional order, but the whole process takes time, roughly 20 years - even though it is marked by a dramatic moment in the middle, that divides the old from the new.
II. The process of crisis
The idea of constitutional orders in American history was created by Professor Bruce Ackerman of Yale, in his landmark two volume set "We the People". According to Ackerman, the move from one constitutional order to another hinges on a political working out of constitutional change - where the very rules of what is required to change the constitution are fluid, and factions make moves designed to force their particular constitutional vision. Finally there is a constitutional moment where, regardless of what the formal rules say, the matter is in electoral play, those who are competition for control of the mechanisms of power recognize that the constitutional moment has arrived, and a line is about to be drawn.
For Ackerman, who has a must read peace on the constitutional changes going on in the London Review of Books, the key moments were the means by which the Constitution of 1787, and yes he uses that term, was enacted; the means by which the 14th amendment was established; and the decision to grant congress sweeping powers under the commerce clause. These, for Ackerman, establish three constitutional orders. Three different res publica.
And I would argue, three different Republics.
But the path to constitutional crisis runs through financial crisis. Before one can have political upheaval, the three pillars of a constitutional order - of a republic - must crumble. As each one weakens, it pushes more of the burden on to the others. As people disagree more and more on the mandate of government, they both fight more and more over the meaning of government - the rhetoric grows harsher and more hostile - and they also attempt to game the monetary system to accomplish by stealth what they could never have gotten agreement to.
The crisis then begins on the day where there is the last great compromise - in 1782 when the Articles of Confederation are created, in 1850 with the compromise of 1850, and in 1921, when the new Republican conservative administration agreed not to repeal, but would not extend, the half finished architecture of the Roosevelt-Taft-Wilson progressive-liberal era of government. And make no mistake, while Taft was not as much of a progressive as either of the men to either side of him, he was one.
And, in 1990, when the pay go rules were put into place, as part of a series of revenue increases to pay off the ballooning budget deficit - and to bail out the bankrupt savings and loan system.
The 1780's, 1850's, 1920's and 1990's were consumed with efforts to prop up the old monetary order. But all of them failed, because none of them addressed the basic problem. Instead matters get worse, because every time a solution is converged on, a large minority that will have its interests gutted or reduced in importance has every reason not to cooperate. The reason Clinton was impeached was to prevent what needed to be done, from being done.
Then comes the moment when the bottom falls out.
III. The end of the old order
This moment is dramatic - whether the inflationary run of the 1780's, the financial panics that ripped the late 1850's, the Crash of 1929, or the bursting of the tech bubble - all result in a vast financial hole that requires breaking the monetary system to avoid intense economic pain. But the first response isn't to either get serious or reärchitect - the first response is the reactionary response: borrow like there is no tomorrow.
In our own moment, this is the first Bush term - an orgy of spending combined with a complete abnegation of any intent to pay for any of it. Often it is covered with some kind of assertion that this is to restrain government from doing evil - very often. Calls for small government are, by definition, calls for big something else. And it isn't the little guy, whatever foolishness he might think, who is meant by these calls. Everyone realizes that the borrowing flood must stop, and everyone is afraid that it will be their property used to pay for it.
But this is not the moment of greatest danger. That comes when the realization that borrowing won't work, and instead the vision of a reactionary constitutional order - one that locks down by force the failed response. The belief of the reactionaries is that if only they were given complete control of the resources of government, they could ride out the storm and force others to accept the results.
The most famous example is, of course, the Dred Scott case, which reneged on the Compromise of 1820, and opened the Great Plains to slavery. In our own moment, Bush's social security borrowing plan is the same thing - he wants to, in effect, borrow every sent for the next generation and hand it to his friends to control.
Now there are many who would scoff at this idea, saying that big things don't happen. It is the strong version of the Copernican thesis - where ever you are is, by definition, unimportant. As far as I can tell there is exactly one person who has agreed with the reverse of that thesis all along, that instead we are at an important moment, and has methodically pursued the chance for the Republican Party to be the one that determines the shape of the new constitutional order.
His name is Karl Rove, perhaps you've heard of him.
IV. The architecture of "Rove's Republic"
A new Republic is born in debt, and dies in debt, but the two are very different.
In the beginning, the new government draws a connection - it takes on the debt of the old order, but it also creates a different kind of money, one which can grow fast enough and far enough to pay down that debt without crushing taxes and economic deprivation. The agreement to assume revolutionary war debt, the civil war - which was effectively the cost of buying the slaves - and the bank bail out of 1933 are the first. The second - creation of a new kind of money - comes from the Bank of the United States and the Coinage Act; the National Banking system and the gold standard; and, of course, the combination of Federal Reserve, SEC, Deposit insurance and asset based money.
Rove knows that to force the reactionary order, Bush must borrow. He must place a millstone around the necks of the next generation of government, and then make it so that to make those payments, the Republicans must be in charge. If the Democrats take the presidency by accident, the Republican Congress will merely stop doing the behind the scenes financial juggling - of budget borrowing, shuffling of money between accounts, raising the debt ceiling, passing huge unfunded mandates - that keep the economy alive. There will, in such a case, be a massive recession, and the Republicans will take power again. The government will become a massive protection racket, with the public held hostage.
It was originally thought in Republican circles that the war on terrorism would be enough - that the invasion of Iraq and the GWOT would provide a powerful enough mandate for government that a new meaning, a police state meaning, would be established. "Everything is different now". How many people do you know have 911 on the brain. Very few, and most of them are like Spouting Thomas - people who think they are liberals but want to be friends with the conservatives.
With the failure of Iraq to produce the flood of oil that would have been the chain around every future Democrat's neck - a fact implicitly recognized by Kerry's repeated assertions that he would do the job in Iraq - it is absolutely essential for the Republicans to create a bigger, nastier, weight. The revenue reductions of 2001 don't do it, because there is no reason they can't be repealed, they are creating next to no economic activity.
Think about it, the government is borrowing more than a million dollars a minute - in order to produce hiring growth which is just keeping even with population growth. It's the Red Queen's Race. The Republicans are now building bridges to Europe, because it is Europe that will allow them to keep this up for a little while longer. And European leaders will be the biggest fools on the planet if they think that going along with Bush ends anywhere but their own ruin. The US played patsy to Europe in the 1920's - lending to fill the hole that Versailles and a foolish attempt at restoring the gold standard left. It meant the US was dragged down with Europe when the collapse finally hit.
The basis of Rove's Republic will be the massive debt, which can only be financed by back door agreements with Japan, China, Europe and Saudi Arabia. Since the money system won't actually work - merely present the illusion of working, as the real market will be what parts of America's future is being sold off this year in order to keep the money flowing from abroad.
V. The Forest and the Trees
People on Kos can see the trees of this crisis - bonddad and London yank have been following the currency crisis, for example - but the larger picture is missing. The crisis isn't in the fall of the dollar, the jobless recovery, the budget deficit, voting irregularities, corruption in the media and congress - or even Iraq and Social Security.
It is in how these parts fit together to create one pervasive reactionary order. No one of them can be solved alone. One cannot fix the voting system, and not fix what people are voting for. One cannot shake up the corrupt rotten borough system of electoral districts, without changing the nature of parties. One cannot fix the jobs and debt crisis - without changing the politicians who are doing the deciding. And so on.
So what is the structure? It involves three parts: Bash, Break, and Borrow.
Bashing is the process of identifying your enemies with ideas, or groups, that mainstream Americans are repelled by. The Republicans under Rove have become very good at identifying the left with very far from acceptable groups
The Bash part is the one that people who follow media consolidation and reporting failure, voting irregularities, the loss of civil rights, the "torturization" of the Justice Department, the demonization of gays, the freeping of the Democratic Party - or anyone else that stands in Bush's way - are following. Bash is the strategy of making discourse more vicious, more polarized and more partisan. It is also a key part of the popularity of Governor, now DNC Chair, Howard Dean. He was the first major politician to stand up on the Democratic side and state, bluntly and honestly, that the Bash strategy was working and that the Democratic Party could not simply act like an abused spouse. It is why he is now the most visible politician in the Democratic Party, because the Bash strategy is the most visible political effect. It alters every constitutional arrangement - from making impeachment in the eye of the beholder, to how budgets are passed.
This means that for any one who is liberal, progressive or even merely just a democrat, bashing is the part they feel every day and very directly. This is because it is most directly aimed at bombarding people into silence.
So the first part is for the Republicans to relentlessly Bash, but Bashing would not work if there were not people in fear for their being able to hold on economically. Which brings us to
Breaking is destroying the way by which decisions are made. It is undermining the idea that getting the numbers and facts right matters. It is about undermining the connection between public statements and the evidence to back them. The WMD claims about Iraq, and the joining of Sadam and Osama are the best examples of breaking.
The break part is the part that riles the attention of people like Paul Krugman - it is the disintegration of the way of doing business of the old liberal order. Are you worried about the budget deficit? The disintegration of the dollar? The politicization of government agencies? The intelligent design movement? The bizarre economic projections used to rationalize tax breaks and social security abolition? Then congratulations, you are worried about how the Republicans are breaking the economy and the social order that keeps the economy running.
But why is breaking so important? Because the old order ran without specific patronage. The way to power, as Machiavelli told people 500 years ago, is to make sure that no one has anything that you didn't give them, and you can't take away from them. If the old entrepreneurial order dies, if the metropolitan engines of job creation are broken, if there is no longer a transparent budget system - then the entire edifice can only be held together by back room deals. We get a constitution of conspiracy - where the dollar rests, not on the strength of the American economy, but on the deals cut with other big nations.
It means that proposals and policy become worthless, because we don't even have the data to make policy projections.
In short, it means that the entire system holds afloat because on the Republican Party can...
... and squander. The intent of the Republican Party is to make it so that the only ways that money enters the economy is through them. The genius of the Liberal Democracy is that money was created by land value. As people did things, at the ground level, that made houses and buildings and factories worth more - that allowed banks to lend more, and that created more money. While the Federal Reserve had the foot on the break, and the Congress the foot on the gas pedal - in a very real sense the money system of the liberal democracy was the most democratic that has ever existed, because everyone could, if they could figure out how, get some of what economists call "seinurage" - profit from creating money. As cities and towns had better communities, more people wanted to live in them. This increased housing prices, and that meant more lending, which meant more money.
But the flip side of every virtuous circle is a vicious circle. This entire system rested on manufacturing. Because, ultimately, it is manufacturing which allows exporting, or reduction of importing - and ultimately creates the "basic industry" which brings monetary base into a community to do all this magic with.
The drive is to break American manufacturing - and instead make it so that all new middle class hiring comes from either the security industry - which means only good republicans get hired, rather than the kind of people who worked the dot com boom - or the securties industry, which is dependent on the federal reserves interest rate policies, and on the retirement industry - pensions, 401ks, and, they hope, social security borrowing.
If people must be in line with the political ends of the Republicans to earn a good living, the nation will, because it must, become more like the Republicans. Those who do not want to play along must be poor, be careful, or be moving along to other nations.
In Rove's Republic, Reagan is the reactionary Woodrow Wilson - the individual who put certain pieces in place, which while not enough to end the old order, make the end of the old order inevitable if they are accepted. In the case of Reagan, a nation that moved from pay as you go, to a credit based nation. Once Americans were no longer willing to pay for what they wanted, the end of Liberalism - which despite its willingness to borrow, run deficits, was a system in equilibrium: the government collected as much, or more, in interest as it paid out up until Reagan's time in office.
So Bashing creates polarization, Breaking destroys people's ability to resist that polarization, Borrowing means that ultimately people must fall into line behind where the money is.
Many believe the elite have almost absolute power over the lives of little people. It isn't true now, but they have a coherent plan to force little people into line.
VI. The response
Everything the Republicans do is part of this three tier attack: everything advances bashing, breaking or borrowing. Each requires a different, but linked, response.
In response to bashing we must bash back, as hard, and with the same tactic - connect the Republicans to ideas, actions or stances that are unacceptable to mainstream American. The Democratic Party and the left cannot effectively bash by using counter-culture, but instead by proving, that, in fact, the Republicans are the anti-culture.
In response to breaking we must take the completely different tack: we must take the intellectual high road, and argue that the Republicans are bashing, but we and only we are being reasonable.
In response to borrowing we must take the moral not intellectual high road. We must impress on Americans that it is not right to sell your children to Saudi Arabia, in order to drive a bigger car to day. We must impress on Americans the dangers of debt, and the perils of a nation that does not create as much value as it consumes.
These three responses - bash back, build rather than break, and save not borrow. Must form the core of the response, but it is vital to select the correct one for the circumstances. One cannot merely bash in to stop borrowing, because when people want to borrow they will find an excuse. We cannot be intellectual in response to borrowing demands either - since the need to borrow is not intellectual, but driven by primal fear of unemployment and market crash.
A fear that the Republicans will exploit when the current growing downturn hits in the last quarter of this year or the first half of next year.
VII. The state of kings
Now the idea of constitutional crisis is not as far from the public mind as the media's willingness to bury it might think. For example, I am told that Prof. Ackerman was an advisor to Kerry in the presidential campaign - and if you read between the lines of Paul Krugman's sounding the alarm about the budget crisis, and calling this "your grandfather's recession", you realize that the corollary is that the mechanisms put in place to stop such events have been broken or bent.
Clinton, in fact, attempted to put in place the three pieces of what would have been a different constitutional order - the beginning of national health care, campaign finance reform of a real kind, and a carbon tax. The first would have been the new boundary program, the second the change in constitutional mechanism, and the third would have changed the basis of money away from the current energy basis. However, the sense of crisis was not enough, and Clinton did not have the party discipline that FDR had to work with. He failed, and spent the rest of his Presidency holding in place.
That we are talking about constitutional change can be seen by the nature of the Social Security Debate: the very move to talk about public policy in 75 year time frames means that, whether Americans know it or not, they are talking about the new republic. 75 years is roughly the length of an American governmental order - and this is why Social Security is the object of debate.
It is the debt that the Liberal Democracy used to keep everyone - liberal and conservative - in line. It bars any policy that will break the system. Some, like Ross Perot, warned of unfunded mandates in the trillions - without realizing what it meant. These mandates were not troublesome to meet - so long as everyone stayed restrained within a band of policy. But they were the sword of Damocles for anyone seeking more radical change - either to the left or the right.
It was a stumbling block in the way of national health care for example - one which while solvable, was never solved. It was also, however, the road block against any attempt to dismantle the Liberal Democracy, since no more reactionary economic order could afford that level of retirement payments to workers.
And, of course, many here have known for a long time that the current political crisis is a constitutional one, that runs down to the bedrock of our democracy - it is an assumption, in one way or another, behind many of the posts here every day: that fundamental protections and mechanisms are being attacked and destroyed: the media no longer being watchdog, government departments as arms of the Republican National Committee, the attack on voting rights are all examples of constitutional, not merely political, crisis.
The irony is that the right tried this same plan in England, and got it wrong: they bashed socialism, they broke state run industries and the national pension system. But they could not create a borrowing stream to sustain the economy. John Major, by blundering away this piece of the puzzle, opened the door for Blair to take power, and create a borrowing stream based on housing. This borrowing stream is in danger, and the nature of the Thatcherite order forced Blair to move to the right of center on Iraq - since the money supply of Britain rests on oil - but it also prevented much of the rest of the social conservative agenda from going through in Britain, and has left the Tories in a seemingly permanently minority status.
VII. The Crisis Circus
The economy is chugging for either a hard landing, or, more likely in my view, a full blown recession. When that down turn arrives the Republicans are going to have to exploit it for full effect to push through their changes. They need the money, there is no other source. Bush is going hat in hand to Europe to buy another year, no more, so that he can be in position to try again when the down turn arrives. When it does he will blame Democratic obstructionism, smear key opponents, and then by the slenderest of party line votes get what he wants. It is what was done with Iraq, using 911 and the crash of 2002 as the crisis circus to go to Iraq.
It must be made forcefully clear that the debt crisis, the jobless recovery, the war in Iraq, the attack on social security, and the inability to provide medical insurance to all - are part of the same problem. Our money is paper oil - greased with the blood of centuries of conflicts over the middle east and current repression. Until we end this addiction to oil, we will never be free, but live, instead, on a sentence of slavery, which will be redeemed some day, and someday soon. We cannot borrow every cent from the rest of the world to fund an economy that is not growing - where every cent of profit must go into corporate earnings, because that is the only way to keep the borrowed money coming.
The key change in the economy that has pushed the rise of the Republican party since 1969 is a change of the money system away from being based on assets - which is under the control of the people in their day to day economic, community and social activity, a truly grass roots money system in that the basic supply of money is governed by the value that people create - to one being based on oil. Oil is not something that people can create. Nor does conservation at the grass roots level help - because someone else will simply use the oil or energy you save to compete against you. Oil comes from a few places, and the money system is then under control of those places. The President became, in effect, the minister of oil.
And to keep the oil coming we had to borrow back the money we paid for the oil with. It went out, and came back. With each trip back it meant that financial sector had to eat a bit more of American life - because the dividends from the financial sector are what paid those who lent us the money. And with each round of paying more to the rich abroad, we had to lower the taxes on the rich here, so that they could stay even with the rich of other nations. It has been a vicious circle, this oil and money addiction, that has lasted for 30 years, and has now reached the every accelerating point from which there is no turning back.
And once an economic system is not about general activity, but about the control of some particularly scarce resource, it must become conservative, since economics is, on any given small time scale, zero sum. Economic growth can only occur at the very slow rate that resource increases, or is more efficiently used. The "neo-classical" economy is really the Friedman-Mundell economy.
Social Security is one of the last barriers to making all money come from above, and not below. It is one of the last barriers to forging a chain around the neck of every American.
The Democrats must assert that energy is not merely the shackle around the United States, but the root cause of global instability - terrorism, dictatorships in the Middle East, Russia's moves away from Democracy, the instabilities which force China to rigid mercantilism, and which stop the economic growth of our allies in Europe and Japan, while forcing the exploitation of the labor resources of other nations.
They must set this as a war between two fundamentally different views of the future, casting aside the last scraps of the old "bipartisan" constitutional order - since the forces that kept that order in place are gone - and fight to make it clear to Americans that Bush wants to mortgage the future to Saudi Arabia and China - since these are the only places where he can borrow enough money to pull off his social security plan.
A the heart of this is something very simple: they must attack that the Republicans are acting in good faith for America, as Republicans have consistently attacked the good faith of Democrats. They must attack the patriotism, and accept economic populism - but not crass economic populism. Instead it is the purpose of the Democratic party to reassert an economic order where the basic stuff of economic life does comes out of the work of Americans, and not out of the sands of Iraq.
The era of bashing and partisanship will come to an end only when there is a sword of Damocles hanging over the government, when everyone in it agrees what the "third rail" of American politics is, and what dangers are so great that pursuit of partisan advantage is no longer worth it. The Republican Party, because of what can be called the "End of History" thesis, enunciated by Fukayama, does not believe there are any such limits. Attempts to use 911 to impose a false limit have failed. Which is why the Republican Party must - not can, may or wants, but must - break social security with borrowing, because the weight of that borrowing will be the limit under which everyone else must labor afterwards.
In short, since Rove has set the rules as Bash, Break and Borrow - the Democrats must first prevent the Republicans from creating the borrowing stream, and they must Bash back. Ultimately we must mend what has been broken, in order to restore economic freedom to Americans, but that can only happen if Americans understand that the mandate of government is not to protect the oil jugular, but to expand the level of economic activity across the country, and in a way not dependent on the largess of the Defense Department and Department of Homeland Security.
VIII We have not chosen this moment, it has chosen us
We must tell Americans that the Republicans are trying to create a top-down economy, and that the social security schemes that Bush is pushing are the crucial step. We must tell Americans that the nastiness and bashing come from the Republicans, and are the result of America not having a national project, a great vision to pursue. And we must tell Americans that history and circumstances have forced us to make great decisions which will determine the course of the next two generations, and that such moments are not to be backed into, nor decided by default.
It is this moment that will set the course, and it is therefore this moment which must awaken to its responsibility, and assume among its place in history. To decide not with an eye to gains that are temporary, but for a future which belongs to our posterity.
Because there are only two ways to pay off this debt. One is to sell everything in America - the national parks, government lands, the airwaves, the profits of our labor, the fruits of our agriculture, the mortgages that we pay on our houses - to foreigners so they will keep our economy lubricated with money and oil - or it will be to create new forms of industry and commerce will create more wealth and dwarf what was borrowed. The first is the Republican way - to strip the country bare to pay for present consumption. The second must become the proposal of the Democratic Party.
The old Liberal Democratic order, as great as it was, as filled with magisterial decision, and now deep tradition - is gone. Gone with it are the means by which it channeled partisan anger, personal ambition, and political conflict into decisions wiser than any one individual making them. We are living in a new era, in a new Republic, and as with any moment which brings forth a new order, we must admit of our weaknesses and limitations, but not be hobbled by them, or by any false sense of modesty. We did not chose this moment, it has chosen us. It has chosen us to make choices for others - both here and around the globe, because America is still the mightiest nation on earth. And how we make those choices will yield the words be carved on stones, and perhaps crosses, here and around the world.
Let it not be "He died for a dream that was dead."