Life Beyond Markets, with Mike Konczal

Life Beyond Markets, with Mike Konczal

In Freedom from the Market, Mike Konczal turns to a usable American past to explain how we can build a society free from want and market dependence.

Booked is a series of interviews about new books. For this edition, Tim Barker spoke to Mike Konczal, the author of Freedom from the Market: America’s Fight to Liberate Itself from the Grip of the Invisible Hand (The New Press).

Tim Barker: You say that Freedom from the Market has some origin in Occupy Wall Street. How did you express that in this book?

Mike Konczal: This book is the culmination of a political education over the last ten years. And this is the book I wanted to read ten years ago. There have been these really big debates that have come in waves about public provisioning, the necessity of public goods, the role of the market in our everyday lives, neoliberalism, and whether we were at the end of the welfare state under President Obama. I think people understood at the time that there were real problems but weren’t always sure how to articulate them, or where to go with the alternative. In more recent years, there was a huge wave of political activism—Fight for $15, Medicare for All, free college, Bernie Sanders—that had a common political energy but didn’t necessarily have a framework that held it all together. I wanted to try to put it all into one story, because I think that energy is not going to go away. And having a framework with which to talk about the hours we work alongside the ability to access healthcare is really important. Also, there’s been a wave of academic research from the last decade that really speaks to the political economy of this moment. I’m thinking of things like Elizabeth Anderson’s Private Government, which brings political philosophy into the workplace, and William J. Novak’s work on the how extensive the idea of the public utility was a century ago.

Barker: What were some of the older books that you found helpful as you were trying to answer some of these questions?

Konczal: For me, a lot of this starts with the Great Recession and financial crisis, as it does for a lot of people. I was working in finance at the time and looking for critical writing on the financial sector, which is how I came to Karl Polanyi’s The Great Transformation. Polanyi and the debates around him are a huge part of this book. His arguments about how markets are created are becoming more influential, not just in the academy but also in policy circles. But one thing I definitely noticed, being up close to these debates, is that it’s not clear what the next step is. You can break through this ideological wall, but then you’re stuck in this ideological pocket of air on the other side. Okay, so the market’s constructed. Now what? Polanyi and his idea of embeddedness are not great guides to getting out of that problem.

Barker: You can imagine a sophisticated libertarian saying that the market is constructed, but we should still construct it to look like a textbook.

Konczal: Exactly. It’s a huge problem, because if you read actual neoliberals, they’re very clear about this. That’s the whole thing that makes it a new version of classical liberalism. They understand that it’s all a state project, and that’s why they’re willing to execute it so aggressively. The book is trying to provide an answer to that “now what?” question: freedom through the removal of market dependency.

Barker: What, if anything, did you take away from a practical exposure to capitalism, especially around the momentous events of 2008?

Konczal: I was a financial engineer for a group called Moody’s KMV, which did risk metrics and software for financial institutions. They had various models to predict how risky investments would be. I had a pretty good exposure to what Larry Summers would call “ketchup economics,” or the economics of the way finance professionals approach the economy, which is limited in some ways but helpful in others, because they really do want to get a sense of what works. The thing that jumped out most to me, moving from finance to policy, is the deep role of economic thinking. In finance, you use economic models, but you try to take them with a grain of salt. When I worked on social policy, the presumption that economists are the authoritative source—not just on analysis but on the moral worth of policy—was a pretty jarring change. The book is structured to push back on the way economists define our problems as market failures. Though market failures are very pernicious and widespread, something deeper animates people when they think that the economy is not working for them.

Barker: By now we’ve seen endless rounds of debates about neoliberalism, or market fundamentalism, and you’ve intervened in some of them. To what extent do you see this book as a contribution to the critique of neoliberalism? Or do you see this as an attempt to move the conversation into new territory?

Konczal: I want everyday people to find this book very accessible, so I didn’t want to get too lost in specific academic debates. That said, I really wanted neoliberalism and the arguments about it to be in the book.

There are two core takeaways from neoliberalism scholarship I wanted readers to understand. The first is the idea that neoliberalism is an affirmative state project to carry out a particular vision of the economy. When people talk about small government or getting government out of the way or free markets or unfettered markets, they’re essentially lying, or they’re in an ideological fog. The changes made under neoliberalism were carried out by the state, and the people who executed them had a very clear idea of what they were doing. In the chapter on the free economy, I write about the public utility, the public domain, and the public corporation, and how the publicness of each of them was stripped away through law based on a very conscious decision about how freedom should work. For instance, for over a century before the 1970s, shareholders had been losing their power in the modern corporation, but that was changed wholesale through affirmative state policy.

The second takeaway from neoliberalism literature is that we should understand these policies not just as creating a certain kind of economic outcome or market, but also a kind of citizenship. They create market dependency through law and through political action. The example I use is student loans, which are widespread. They affect how people approach their education, their early lives, and their families. The establishment of these loans was not just about trying to create a certain kind of funding stream. It was about—and the advocates for student loans are quite clear about it in the 1970s—trying to create a certain kind of citizen and a certain kind of relationship between people and the state.

Barker: Your book begins with the founding of the United States and the early republic. What were the politics of market dependence like in the nineteenth-century United States, and what was surprising to you as someone living in the extremely market-dependent world circa 2011?

Konczal: This question is just like that bar scene from Good Will Hunting.

Barker: I send it to my students as a midterm review.

Konczal: The book starts with the “Free Land” chapter on the Homestead Act and the Southern Homestead Act. I went back and forth for a long time about whether to include it. The politics of settler colonialism and dispossession permeate the entire Homestead Act. But I thought it was important to include for three reasons. First, people are really interested in the founding and early U.S. history, and showing people talking openly about wealth and the direction of the economy before industrialization is really eye-opening. You’ve seen this with waves of literature about free labor and the early Republican Party, and a big part of free labor was free land––free soil, specifically. The public discourse was about white men, which is limiting, but the way that they were talking about how wealth should be distributed is not something that we talk about now. Today we talk about wealth and the economy as an ethereal law determined by supply and demand, but at that time, they were asking questions like, “Do we want this land to go to slaveholders? Do we want it to go to resource extraction? Or do we want it to go toward creating a certain kind of citizenship?” Though it was only partially successful on the Western frontier, it’s still motivating to see how much political energy was devoted to these kinds of questions.

Second, I really want people to understand the social and created nature of property. The easiest way to show that kind of legal realism is through land. The reason I own my house is because I can keep other people out of it, and the state will intervene to ensure that. Nobody creates the land, but the state creates the property in land. It was important to establish that very early in the argument of the book, so that by the end, when we’re talking about the same idea in relation to corporations and student debt, the reader can see how these pieces fit together.

Third, the book is about how political ideas change. The chapter follows Horace Greeley, who, like other Free Soil advocates, believed that if you gave people land, you could check market dependency and wage labor. That kind of modernizing Whig idea, in the 1840s and 1850s, was very egalitarian, especially for the time. It led them to critique and mobilize against the Slave Power. But by the time you get to Reconstruction, when there are problems of mass wage labor and civil rights in a post-slave economy, Greeley cannot evolve his idea of freedom, and it’s quite tragic. In a time of extreme political turbulence, people need to update and think through how their ideas should change.

Barker: In a perverse way, it’s especially easy to see the fictitious nature of property in a settler-colonial context. What would you say to someone who had a stronger challenge, that maybe there’s no amount of “to be sure” that can redeem this part of American history? There’s been a big debate centered around the 1619 Project, which asks if there’s anything redeemable in American history. On the other hand, you show in your chapter that even someone like W.E.B. Du Bois, the great theorist of abolition democracy in the United States, sees something potentially redeeming in the project of the Homestead Act.

Konczal: Like the 1619 Project, I wanted the book to be fundamentally optimistic about the potential for redemption. I am curious how people will read it, because on one hand, the book documents a lot of failures. Reconstruction fails. The conservative Lochner-era Supreme Court overturns laws that workers fight to achieve. Day cares created during the Second World War are rolled back, and an unequal submerged state is put in its place. Neoliberalism wins in the later chapters. But one reason I really wanted to focus on history is that you can see people struggling and fighting. Sometimes they do win, and sometimes the struggle itself has value.

Barker: Speaking of the Lochner Court, a lot of people have pointed out parallels between our own time and the first Gilded Age. There’s a newfound discussion about monopoly, and an emerging critique of rentierism, which echoes Henry George. To what extent do you think we’re living in a second Gilded Age, and to what extent is it different?

Konczal: Inequality right now is at or slightly above the level of inequality in the Gilded Age. In 2020 the top 1 percent took about 20 percent of the national income, the same level as right before the New Deal.

We will see how the courts act to limit a more democratic economy in the years ahead. What we’re already seeing now is people starting to mold their strategies around what they think could survive a Supreme Court challenge, and that was absolutely true of the Lochner era. In many ways the Gilded Age Supreme Court was all over the place. Sometimes things wouldn’t get struck down, but the various opinions of a handful of conservatives were so arbitrary it made it very difficult to check the real problems of capitalism. I worry about that happening again. It’s not just that they’ll strike down progressive legislation, though they have done that and will do that. It’s that the court will make it harder to even strategize our way out of the chaos we’re in.

The decisions made by the Lochner Court had huge, lasting consequences. The reason it was so difficult for you to get an unemployment check this past year is because of the Supreme Court in the 1930s. The designers of Social Security explicitly built unemployment insurance in a hodgepodge, state-based way, because they were certain the Supreme Court was going to kill it. That limited their ability to do what was known to be the right thing, which was to have a federal unemployment system.

Barker: So it’s not just an analogy; there’s an ongoing, continuous history, where the Supreme Court in the 1930s continues to limit policy today.

Konczal: Yeah, we have to go back and fix unemployment insurance, when we should just be expanding it.

Barker: For a long time, historians like Richard Hofstadter saw the New Deal as a move away from this older tradition of anti-monopoly reform. Recently some people have revived this anti-monopoly tradition. How does the anti-monopoly movement relate to the movements that you document in this book?

Konczal: The economy absolutely has a concentration problem and a corporate governance problem. The idea that corporations are way too profitable and not investing anything is true and documented in the book. But the idea of freedom advocated by some of the anti-monopolists—freedom for small business owners to engage in commerce or freedom to have access to good prices, for example—doesn’t get at the totality of the problems we face. It’s a very limited view of freedom. The idea that we’re going to bombard people with more immersive markets at this point in the twenty-first century, when, clearly, everyone across the political spectrum wants the knee of the market taken off their throats—these kinds of critiques can’t help with that. That’s one reason I wanted to focus on freedom from the market.

Barker: How do you think the New Deal stands in the history of American reform politics and as an example for politics today?

Konczal: The Wagner Act and Social Security really stand out for the way their advocates talked about freedom. The arguments were so crisp, and I think they sometimes get lost, especially with the focus on a lot of the compromises and limitations of those early programs.

Barker: Roosevelt talked about freedom all the time. He had already learned the lesson that the right has no monopoly on the language of freedom, and that positive liberty is not only a good thing, but maybe something that Americans can recognize in their own history.

Konczal: Roosevelt gave speeches where he’s very clear that he believes he is completing the American Dream. And I think he’s correct. History has borne that out with the popularity of things like Social Security and Medicare. Mid-century prosperity lasted for a while, and it was more inclusive than people sometimes understand. It took a very dedicated political movement to undermine it all.

Barker: Some of the biggest exclusions that people think about are the racial exclusions of many of the New Deal programs. Around the time you were beginning to think about this book, a lot of people were reading Ira Katznelson’s Fear Itself, which did a lot to publicize the idea that the New Deal was a deeply compromised entanglement with American racism. To what extent were you trying to rebut that kind of view?

Konczal: The argument about the trajectory of the New Deal that most influenced me is laid out in Racial Realignment by Eric Schickler, a political scientist at Berkeley. He argues that the realignment of the Democratic Party, which brought civil rights and economic liberalism together, was not an invention of the 1960s but instead an invention of the late 1930s and 1940s. For Schickler, it is largely generated by the 1936 election, which undermined Black voters’ allegiance to the Republican Party, and the activism of labor unions, most notably the CIO, to try to include Black voters in their unions. At the time, civil rights activists weren’t even thinking of the Democratic Party as something that would be open to them. The realignment happened very quickly, and the moment you started to merge economic rights with civil rights, it forced business conservatives to align with white supremacists to try to undermine a more equitable workplace.

Barker: To me, that suggests that some seemingly esoteric distinctions between the first and second New Deals actually have a great deal of importance. Nell Painter has a book that’s basically an oral history with a Black Communist, Hosea Hudson, and she says that when Hudson is talking about the New Deal, he’s talking about a period that started in 1935.

Konczal: The reason I think Racial Realignment is a good book, and a good story for me to tell here, is because of how it documents the struggle to align civil rights and economic rights. The failure to align them is what destroys the Southern Homestead Act; it’s what destroys Reconstruction. The movement for the eight-hour workday suffers for similar reasons.

Barker: You also write about the great historical failure of the American labor movement to organize women. When Frances Perkins became the first female cabinet secretary, there were people in the labor movement who weren’t thrilled about it, because she came from an alternate stream of reform politics built around women in the settlement house movement. In your excellent chapter on the Second World War care economy, you show that by the 1940s, the feminist reform tradition and the labor movement and the New Deal had all come together in a constructive way. How does care work fit into this political project of freedom from the market?

Konczal: The New Deal, however tentatively, brings some form of democracy into the so-called private sphere of the workplace. But it doesn’t touch the other nominally private sphere: the household. It’s almost an afterthought that the Employment Act would consider women with children, but at the same exact time, women had become empowered by the need for their labor during wartime mobilization. In order to help manage this huge influx of women in the workplace, Congress rapidly passed a funding stream to create public day cares that were accessible to anyone. There was a small fee associated with them, but they weren’t need-based. The military wanted bombers, not to pay social workers to monitor people with case files. Though these day cares were thrown together very quickly, they still worked. People used them and gave them positive survey results. Despite this, the day cares were always under threat. Men in Congress didn’t want them to exist. The social-worker community didn’t want them, because they wanted case files and they wanted the program to only benefit people who they think are poor. Conservatives didn’t want them, because they think they undermine the family. The Catholic Church, which was very influential in a lot of social organizations, didn’t want them. They were still created, and after the war, women mobilized across the country to keep them open. There’s an amazing book by Emilie Stoltzfus, Citizen, Mother, Worker, that documents this wave of activism. They kept the day cares open nationally for an additional year, and in many places, they were kept open longer. In California, they were made permanent with a means test. Given the overwhelming odds, it’s an inspiring story.

Much like the CARES Act this year, the day cares show how quickly the government can act if it needs to. The family has always been supported through government policy. It’s just a question of how equitable it is, how transparent and democratic it is, and who actually gets to benefit. The Second World War day cares were dismantled, but the need for compensated care work did not disappear with them. What we ended up with instead in 1954 is a tax deduction to allow for child care, which only people who itemize their taxes can take advantage of. Much like the tax credit for employer healthcare, the majority of the benefit goes to people who have the most. It keeps the system propped up, but in a way that has no logic and has no democratic accountability.

Barker: With some of the early stuff in your book, whether it’s the establishment of independent homesteads or small property ownership, or certain themes in the early labor movement going through the early New Deal, there’s a sense that the point of freedom from the market is to create space for a male-headed household. The ideal farmer, farming on the Homestead Act, is going to be a man with his household dependents, and someone fighting for a family wage in the 1930s is looking for a wage that will enable his wife not to work. You’re arguing for something different. In your view, we want freedom from the market for what?

Konczal: I was really influenced by Melinda Cooper’s book, Family Values, which gets at the way the so-called “family wage” creates a tension on the left. The family wage is, in a sense, an escape from the market—an escape from low wages and a certain kind of precarity. It invites a promise of something. But it’s a very illusory promise. It doesn’t provide healthcare, retirement, and education for your kids. And higher wages are good, but these explicitly try to force a family structure on people who may not want it. Today’s populist right is motivated by the idea that we can resurrect the family wage if we get rid of immigrants, impose all these tariffs, and bring the factories back home. But we know what non-union factory work looks like, and it’s not family-wage based, as it stands. And we know what the jobs of the future look like, and they’re not going to have family wages unless we have mass-scale organizing, and even then, it’s not going to provide as much security as we should have.

Barker: How careful should Democrats be about labeling themselves as socialists or anti-capitalists as opposed to claiming the mantle of the New Deal or just continuing to call themselves liberals or progressives?

Konczal: It’s been funny over the last few years as everyone was having these very epic fights about what socialism is: Is Sweden socialist? Is Bernie Sanders socialist? Is the New Deal socialist? Forget socialism for a second; what is capitalism? Some people say it’s the presence of things that are capitalist, like banks and firms. But then, was slavery capitalist because there were profits and financial instruments? The definition of capitalism I ended up with was market dependency. And the moment I got to it, everything clicked. Articulating it this way—that we are dependent on markets for things that markets are bad at delivering, and things that should be available to us independent of our ability to secure them on markets—brings together a lot of different people.

The market dependency framework also helps us evaluate if we’re getting closer or further away from egalitarian goals. Take basic income. The people on the left who are nervous about it think it will be used to create more market dependency. Many of its advocates have historically used it as an argument for creating more market dependency. Milton Friedman and Charles Murray are explicit: if we establish basic income, we can get rid of Medicare. But on the other hand, you need to give people income if they’re elderly or disabled or they’re children or are doing care work. So, providing incomes for people is fantastic, because capitalism will not do that for most people. Holding various forms of basic income up to the definition of market dependency makes it much clearer about whether we’re going in the right or wrong direction.

Barker: If capitalism is market dependence, and you think we should oppose market dependence, do you think that we should be anti-capitalist, or is there some other way of looking at that?

Konczal: I think that checking and eliminating market dependence is a way to harness the positive aspects of markets without becoming subjects of them. Markets existed before capitalism, and they will almost certainly exist after capitalism, in some form. But the way market dependency structures our daily lives and our workplaces has been challenged before and could be challenged again. I’m still optimistic that you can use this approach to harness the positive aspects of coordinated market activity. I would not necessarily say that this book is against markets. I think it’s about the size markets and using them in the right places.

Barker: There’s an idea that giving away free stuff is just a huge subsidy to rich people. We heard in the Democratic primary that we’re going to be paying for the college education of billionaires’ kids. Is your program just a handout to the affluent?

Konczal: I think that’s a problem of the economists’ way of looking at things, which presumes that the proper role of the government is to ensure market dependency by ensuring that people in poverty not fall below a certain kind of baseline. But there’s a long history of demanding free public programs. Abraham Lincoln ran on the slogan, “Vote yourself a farm.” People understood then that their ability to lead free lives couldn’t solely be determined by the market.

Analyzing programs not simply in distributional terms but in how they could operate in our lives when they are universal and public is very important. The things we’re talking about benefit from mass participation and from their universal character.

Barker: In the book, it seems to me that on the one hand, you’re trying to defamiliarize the world we live in by showing how weird it is that we take for granted that markets are natural and that we have to take them as we find them; on the other hand, you’re trying to familiarize Americans with the idea that, throughout our history, we’ve taken these different approaches to politicizing markets.

Konczal: Exactly. When I set out to do this project ten years ago, people were arguing about whether there should even be public goods, or whether we should just replace everything with cash. By putting all the examples of public goods that grant independence together in one place, I hope to show how this is actually an ongoing project. It’s a cliché to bring up Thatcher’s “There is no alternative,” but it really does feel sometimes like alternatives to neoliberalism don’t exist, or they exist in fairytale land, or they’re communism and they’ve been disproven. In the book, I try to prove that’s not the case, and I also lean into a kind of Americana. The Homestead Act and the eight-hour workday are things Americans are familiar with. I try to reconceptualize them as powerful statements about putting checks on the ways capitalism and the market work in our lives. And our country is better for them.

Barker: For a long time, discussions about social democracy in the United States have centered on the Nordic model. One way to take your book is as a plea to stop talking so much about Sweden and Norway, and to look at U.S. history when you’re trying to answer the question of whether such a thing is possible here.

Konczal: Obviously, it’s important to have the proof of concept that it can work. You can control healthcare costs and deliver better healthcare cheaper with a single-payer system; you can easily reduce poverty by giving people, and particularly families and children, money. But we need to be able to tie these goals to the longer American story.

Tim Barker is a member of the editorial board at Dissent.

Mike Konczal is a director at the Roosevelt Institute, a member of the editorial board at Dissent, and author of Freedom From the Market.