The building blocks of state capacity liberalism

Big fix liberalism, adaptive institutions, supply-side progressivism, democratic steering, repurposed neoliberalism and cyborg bureaucracy. That's some mouthful.

[image by Tahrir Osman from Unsplash]

Matt Yglesias took issue with both the tone and content of my response to his series on “Neoliberalism and Its Enemies.”* He sees a contradiction between my criticisms of his version of neoliberalism and my worries that David Pogue and Chris Miller’s critique of neoliberalism rests more heavily than it ought on the writings of illiberal thinkers. But my actual claim was that the best criticisms of neoliberalism are small-l liberal ones.

When Matt says that:

the crusade against ‘neoliberalism’ is intellectually sloppy and pouring gasoline on the fires of illiberalism.

he seems to conflate neoliberalism and liberalism as one and the same thing. I, instead, want to disentangle them, and to emphasize the enormous variety of liberal thought, stretching from some kinds of socialism on the left, to some kinds of classical liberalism on the right. The crucial commitment they all hold is to social, economic and political arrangements under which a variety of people can peacefully pursue a variety of goals.

This does not entail any commitment to neoliberalism as the central or the best set of such arrangements. Neoliberalism is just one particular flavor of liberalism, which itself replaced a very different set of liberal arrangements. When Danielle Allen argues that neoliberalism fails to live up to her liberal standards, she is not, in point of fact, pouring fuel on the fire of illiberalism.

And that leads into the bigger question that I want to talk about. My primary annoyance with Matt’s series on neoliberalism is that it dampens down intellectual variety in unhelpful ways, shoehorning an important new set of debates into a well established fight between soi-disant neoliberal centrists and the soi-disant left.[UPDATE: At more or less the same time that this here post was published, Matt also published a “postscript” to his “Neoliberalism and its enemies” series which looks, from the fragment that is outside the paywall, to be notably more constructive.]

Lumping together both liberal and illiberal critics of neoliberalism into an indiscriminate lump of wrongness makes it harder to actually understand the debate that is getting going. And it isn’t just me who thinks that. Brad DeLong and Noah Smith, who until very recently used to battle it out with Matt in the upper brackets of the annual “neo-liberal shill” competition on Twitter, are politely but emphatically moving in a different direction.

So instead of turning this into a left-centrist fight, we might more usefully disagree over how to implement what might be called “state capacity liberalism.” This is a loose and undefined term, covering various flavors of thinking which don’t map readily onto the left-centrist fight, if you look at them closely. But at least for the moment, that seems to me to be a feature rather than a bug - I would love to see us harvest all the diversity that we possibly can get out of the blooming, buzzing confusion before it is devoured by ideological trench warfare.

Hence this post, which starts by describing the current debate and its problems. I then talk about the different varieties of state capacity liberalism as I understand them, treating them as building blocks for a new debate. I conclude with some hazy intellectual speculation. This is an initial mapping of the territory rather than an effort to settle on any one approach, or to attempt to synthesize them. But I haven’t seen anyone else try to do even this: so perhaps a map will be useful.

The current fight

There is a current dispute between (some) centrist/moderates and (some) leftists that stems from different theories of how democracy and policy ought relate to each other. You can call the two sides of this dispute popularists and left power advocates, and there is much bitterness between them.

The popularist approach - reduced to its crudest form - says ‘let’s get re-elected by doing things that are popular with voters,’ subordinating policy to public opinion. The theory of democracy here is that you make people happy by ministering more efficiently than your electoral opponents to a general body of public opinion. If you are a popularist, you pay a lot of attention to opinion surveys: what polls well and what doesn’t? You are, almost by definition, a centrist. It is the median voters - the people at the rough center of the ideological distribution - who are the swing constituency, and you want to get them to vote for you. Political success involves winning elections, and if that means that you can’t get every policy measure that you wanted to get through, then so be it.

The left power approach - reduced to its crudest form - says ‘let’s strengthen our coalition and undermine that of the other side.’ Under this account, democracy is a struggle between competing groups, where the capacity of different factions to express and act on their interests doesn’t just shape policy outcomes, but the contours of the political battlefield. If you are a left power person, you think a lot about using policy to direct resources to the groups and causes that you want to build up. Ideally, you can build up a political feedback loop, where policy measures strengthen groups on your side, which then, in turn, advocate for more policy. Or, by weakening groups who oppose you, you might set the opposite feedback loop into action. Political success involves reshaping the policy landscape so that it favors your causes and people, and if this means that you lose some elections, then so be it.

Of course these are caricatures of the two positions - but I think they are useful caricatures, which help explain why the debates are so angry (of course, personal relationships and animus play some role too). If you are a popularist, you are liable to think that the willingness of leftwingers to sacrifice electability to build power is unjustified - that it generates backlash rather than political success. Equally, if you are a leftist, you are liable to get angry at what you see as the perpetual enthusiasm of centrists to triangulate towards the median voter, forever sacrificing long term gains for short term results.

I have my own biases in this fight - I am more persuaded by the left power approach than the popularist one. But neither approach is obviously stupid, and both can muster up anecdotes and pet examples that seem to favor their interpretation over the other. In a country where national elections are relatively infrequent, and potential factors affecting those elections are too multitudinous to be counted, it is remarkably easy to come up with grand justifications for your own interpretation of events, and huffy condemnations of the obvious idiocies of your ideological opponents. That does not conduct towards the discovery of common cause, where common cause is to be discovered.

For present purposes, I think that it may be better to ask a quite different question. We don’t have any really general understanding of how to win long lasting political success, nor are we likely to develop one soon. I really think we would be better off with fewer confident assertions on both sides about What Obviously Must Be Done.

Furthermore: the way that Matt sets up the argument over neoliberalism seems to me to strip away the interesting ideas that are being developed about what we ought to do after neoliberalism, so that they fit into this existing traditional left versus centrist argument. I would prefer not to see that happen.

Hence, I think we ought start the post-neoliberalism debate from a different place. Discussion should start with a straightforward acknowledgment that strong-form neoliberalism - the default assumption that Markets Know Best and that the function of the state is to support market activity and minimally correct for its failures - is basically defunct. We live in a world of enormous, complex and mutually entangled problems, which markets are visibly incapable of handling on their own.

This, then, means that we need other mechanisms than the market to actually confront the problems that threaten to devour us. In principle, you could imagine how voluntarist coordination or some such could meet this general need - but I at least haven’t seen any very convincing arguments about how they can work without some comprehensive system to execute policy at the necessary scale.

So that leaves us with some questions about the apparatus for executing policy at scale that we actually have: The State. Is it fit for purpose in its current form? Can it actually solve the traditional problems that it was designed for? Can it solve the vastly more complex problems that we now seem to confront? If it can’t, then how can it be improved so that it can?

Those are the animating questions of a different - and perhaps more useful - debate about post-neoliberalism.

State capacity liberalism

State capacity liberalism is a family of ideas about the state-as-problem-solver in a plural society.** The term is a play on Tyler Cowen’s “state capacity libertarianism,” which you don’t hear nearly as much talk about as you did a year or two ago. That older term implied a tacit engagement between Silicon Valley Hayekians who were interested in clearing away the barriers to market problem solving and liberals who wanted to clear away the barriers to government problem solving. As best as I can make out as an outsider, that tentative rapprochement was ripped asunder by reactionary futurism.

State capacity liberalism moves decisively away from the strong Hayekian-Friedmanite form of neoliberalism. Hayek proposed that “spontaneous orders” such as markets were inherently better than the state at capturing distributed and inchoate knowledge, and turning it towards economic coordination. Friedman - on the basis of a quite different understanding of economics - argued that markets were better than government at satisfying people’s wants. Both suggested that the state should intervene as little as possible - providing a very broad constitutional system to support markets, or supporting its political underpinnings, but not gettingin the way of markets.

State capacity liberalism suggests instead that centrists and the left should engage over how to make the state better capable of solving problems. There are lots of different ways this could be done, and plenty of space for useful disagreement, without intellectual name calling!

That is why this post is very deliberately titled “the building blocks of state capacity liberalism,” rather than e.g. “A manifesto for …,” “The right way to do …,” or, for that matter, “The enemies of …” There isn’t one single approach, nor is there any overwhelming evidence that one approach is better than the others. None of the various tentative answers to the organizing question of how to build state capacity is universally satisfactory, but each plausibly captures some important aspect of the problem. Each can be seen as a building block that might be useful on its own, but is much more likely to be efficacious when conjoined with others to build institutions.

Hence, we ought start thinking about how to combine different approaches to state capacity liberalism, coming to a better understanding of their particular strengths and weaknesses, and how to implement them in practice. As a very initial step, below is an initial list of some approaches, based on my own partial and limited understanding of the debates. Again: I’m not claiming that this is a comprehensive map, or making any grand statement of my own. I’m trying to pin down a loose set of arguments that are in the air, but that are never quite explicitly articulated in the way I do here. And even a flawed effort to set this all down might get other people talking about their own understanding of what is at stake, if only to correct my blunders.

So here goes: in no particular order, brief descriptions of six varieties of state capacity liberalism: big fix liberalism, adaptive state liberalism, supply-side progressivism, democratic steering, repurposed neoliberalism and cyborg bureaucracy.

Big fix liberalism

Under this understanding, as Adam Tooze argues, states might confront the polycrisis - the set of intersecting complex problems that threaten to overwhelm us - in various ways. We should avoid the temptation of trying to deploy “polysolutions” which seek to solve several problems at once. That would be an “optimizing” approach that assumes that we have a pretty good idea of how the different problems inter-relate. Since we don’t have such an understanding, we ought instead look for “fixes with quite limited scope which yield exceptionally high rates of return and have the potential to limit and contain shocks.” Here, “limited scope” does not mean “small” (Tooze proposes spending $50 billion on a library of vaccines), but willingness to focus on just one problem rather than many.

On an even bigger scale, Tooze’s book Crashed famously describes how financial officials in the US used swap lines and other instruments at scale to stave off a global financial catastrophe. Tooze has also recently begun writing about “project-power” - the ability of actors, especially states, to embark on vast projects that might transform domestic or international society. Past projects include the British Empire, so that there is no underlying assumption that projects are necessarily liberal. But there is at least a hint that we ought be thinking about new projects that might better address our current needs.

The underlying idea, I think, is that the most important state capacity is the ability to launch and execute targeted fixes at the appropriate scale to address serious problems. State action can be transformative - but it will have great difficulty in micromanaging the particulars of transformation or in implementing complex solutions to complex problems. Big straightforward interventions are where it excels, and what ought be built up, with the fiscal backing as necessary. Here, there are some important overlaps between Tooze’s framework, as I understand it, and e.g. Steve Teles’ critique of kludgeocracy, despite their different politics.

Adaptive state liberalism

The two most obvious examples of this way of thinking are Jen Pahlka’s Recoding America and Dan Davies’ The Unaccountability Machine. I know both authors, and can testify that they wrote their books in ignorance of each other’s existence. But good god, how closely they fit together! Jen starts from software design and Dan starts from Stafford Beer’s management cybernetics - both provide theories of how the state and other organizations can become more adaptive in response to a complex environment.

They emphasize how organizations lack the ability to adapt to changing circumstances. Jen - who has had much practical experience of getting government to adopt new software and interfaces - stresses how government contracting practices seem almost purpose designed to produce bad outcomes. By demanding that the product be designed in advance, according to tightly described conditions, which often rest on archaic assumptions and specifications, you end up with solutions that are at best clunky and out of date, and at worst irrelevant and harmful. Civil servants face incentives that discourage them from taking independent actions - even when those actions would obviously be helpful. Contractors specialize in understanding the arcane rituals of fulfilling formal expectations, rather than actually doing a good job.

Dan similarly talks about the pathologies that spring up in large scale organizations, and their liability to produce outcomes that nobody plans and nobody actually wants, not because of malice, but because that is how big systems tend to work. They are specifically bad at dealing with complex environments, unless they can either attenuate that complexity, or model it internally, through better systems of feedback. Dan lays out a set of intellectual tools for understanding this and doing better, which have a very strong family resemblance to Jen’s principles for better project design, and for building better feedback loops between policy creation and implementation.

This approach is notably more optimistic than big fix liberalism, at least in principle, about the capacity of the state to match complex solutions to complex problems. One implication is that polysolutions might actually be useful for exploration - throw a lot of possibilities in the air to see which works - so long as there is state capacity to gather feedback, exploiting the solutions that work and discarding those that do not. That is the kind of capacity that adaptive state liberalism sets out to build up. It lays out the conditions under which this can happen - feedback loops to provide better information about the environment and better internal capacity to model that environment - as well as the current political obstacles that prevent this from happening.

Supply-side progressivism

This approach, associated with writers like Ezra Klein and Jerusalem Demsas, argues that we need large scale public and private action to tackle emerging problems, and create new sources of economic abundance. However, it is hard to take such action given the (sometimes well-meaning) accumulation of regulations, bottle-necks and policy veto points that have accumulated over the last half-century. Therefore, we need to radically reform our policy making system, so that the state has the capacity to take big decisions (where that is needed) and to open up space for private action (where that is liable to produce better results). State capacity here is the ability of the state to get things done without years or decades of second-guessing, notice-and-comments, small town assemblies and lawsuits.

This differs from classic neoliberalism, which tended either to press (often unsuccessfully) for cuts in government spending, or to enable private choice through e.g. tax credits and subsidies. Instead, it suggests that the government ought embark on the large scale provision of public goods, in the many circumstances where it can do this better than citizens or business. But where it is not the best provider, government should not try to micro-manage through regulations, or provide special interests with veto points that they can exploit. Supply-side progressivism tends to be skeptical of existing forms of local democracy and other such forms of input, seeing them as readily captured by specific groups with particular interests. Like big fix liberalism, it is often unenthusiastic about solutions that try to do lots of things at once.

Unlike big fix liberalism, its diagnosis is rooted in the American experience rather than international politics. The particular focus of abundance liberalism is infrastructure and housing. The locus classicus of what can go wrong is California liberalism, which tends to plebiscite-mandated stinginess combined with regulatory micromanagement, veto points and paralysis, reinforcing each other (as I read it) in a negative feedback loop.

Democratic steering

This perspective focuses less on the state’s capacity to actively solve problems than on its capacity for reconciling different views and perspectives so as to achieve justice and identify solutions. It focuses on how democratic institutions, rightly understood, can do this. The best account I know of the justice seeking side is Danielle Allen’s. Faute de mieux, the account of the problem solving side that I’m most familiar with is the one written by Cosma Shalizi and myself. Feel encouraged to identify others in comments!

Both variants assume that democracy is - or perhaps better ought to be - a collective steering mechanism for society. Both lean on Dewey’s assumption that the state is, or should be, the effective instrument of democratic steering, delivering the policies that democratic publics decide on.

The key challenge, according to this account, is to use democratic means to recognize and benefit from pluralism and disagreement. From the perspective of justice, one ought arrive at arrangements that prevent some factions from being able to dominate others, either directly or indirectly. From the perspective of problem solving, one ought arrive at arrangements that extract the maximum degree of information from people’s disagreements and diverse views, while maintaining political stability.

It is an open question when these two perspectives work in parallel and when they are at cross purposes. So too is the exact relationship between democratic systems of discovery and justice seeking, and state systems of policy implementation. But the strong implication is that the state will be best at problem solving and promoting justice when it is steered by appropriate democratic debate. Building up democratic capacity helps the state make decisions that are just and/or well suited to solving problems where the information is scattered across citizens.

Repurposed neoliberalism

The Hewlett-funded Center for Economy and Society that I am affiliated to was founded on some intellectual bets. One crucial bet is that truly radical intellectual revolutions are remarkably rare, and that every new paradigm repurposes substantial elements of the old. The strong implication then, is that any post-neoliberal approach to the economy is, for better or worse, going to contain substantial elements of neoliberalism and the neoliberal state. So what can neoliberalism contribute to state capacity liberalism?

Most obviously, it can and should contribute some version of the substantial state capacities that it has developed. The US government obviously did not fade away during peak neoliberalism. Instead, it built up capacities for modeling and mitigating the effects of policies and the tradeoffs between them, which are still of some value.

Cost-benefit analysis is usually an indifferent mirror of the true tradeoffs we face - but very often, an indifferent mirror is the best that we have. You do not want to pretend that the complexities of the world generally resolve into simple optimization problems, but sometimes they actually do. Optimization can be extremely helpful in identifying efficient uses of resources!

Finally, and obviously, there are still things that states cannot easily do, and that markets can. Stateolatry can be quite as pernicious - perhaps in some ways more so - than the worship of markets. Repurposed neoliberalism then can apply cost-benefit analysis, and market-supporting mechanisms to build up aspects of state capacity that other approaches might neglect.

This all suggests that a neoliberalism shorn of its pretensions to universal application is an important - even an essential - element of the liberal state capacity debate. It is, after all, the philosophy that guided the creation of very large chunks of the existing state apparatus in the US and elsewhere. Those are the foundations that any post-neoliberal approach will have to build on.

Cyborg bureaucracy

Finally, and most tentatively, there are a new set of technological tools emerging that may enhance state capacity. The best short account of this that I know is Suresh Naidu’s. The fundamental claim is that one can’t replace neoliberalism with fuzzy humanism. To make general social decisions, you need simplifying abstractions. Very possibly, these abstractions will be different ones from those of economics, resting on some combination of computer science and algorithmic techniques. They may be superior to economists’ abstractions across many dimensions, but they too will surely have blind spots.

Cyborg bureaucracy suggests that states can build up their ability to solve problems by turning to new algorithmic techniques. Obviously, “AI” can help, using neural networks and similar to categorize, organize and simplify inherently gnarly social wholes and make difficult problems more tractable. These technologies aren’t magical - they are glorified exercises in curve-fitting. But they can be extremely useful for some purposes, generating more usable representations of complex social wholes, which may capture detail and particularities that e.g. cruder forms of bureaucracy cannot.

In other words - there is potentially some real value added for the state in moving away from neoliberalism and its associated abstractions. By embracing computer science, government can apply new abstractions to try to solve complex social problems. Governments can go cyborg, combining traditional bureaucracy with the fruits of machine learning, and other techniques too. This too will have its own difficulties and failures to see, but may support better decision making, much of the time, even if it is no cure-all.

Putting the building blocks together

There are some very obvious shortcomings to the above summary of debates over state capacity liberalism. Most obviously, I am limited by what and who I know. I have some connection to pretty well everyone who I mention above - there are likely many people and approaches that I don’t know, but that ought really be included. I’ve tried as best as I can to describe the different approaches to state capacity liberalism in a disinterested way - but I am human, have my own biases and crotchets, and have surely failed in many ways. There may be other Big Mistakes in my arguments or characterizations that I can’t see myself. Finally, someone else would likely have organized the debate in different ways. There is much more overlap between positions and people than you might think from my exercise: where you draw the boundaries between one approach and another is at least somewhat arbitrary.

Still, I think that there is some real value to such mapping exercises. For all its faults, I hope that my summary makes it clear that you can’t really collapse this debate into the traditional fight between left and center without squeezing out much, and perhaps most, of what is interesting about it. Maybe that will change, as people develop entrenched positions - but maybe not.

There is a lot of ideological divergence within the different approaches. The Pahlka-Davies mindmeld, for example, brings together someone who is (roughly) an ideological centrist with someone who is (roughly) a Galbraithian social democrat. Some supply-side progressives are staunch technocrats, who I suspect would be happiest if they could take the right decisions without the inconveniences of talking to the public. Others, like Demsas, argue that the problem is that we have too little democracy, not too much. And so on.

The relationships between the different approaches are likely to be similarly complicated. Supply side progressivism and big fix liberalism have a lot more in common than their political valences might suggest. Democratic steering can be more easily reconciled with some kinds of adaptive state liberalism than with others. So too for their relations with cyborg bureaucracy. And so on.

That is why I think that these approaches and their internal variants are maybe best considered as building blocks from somewhat different toy boxes. Certain blocks won’t fit easily together with certain others - the resulting structures will be awkward. Others can perhaps be assembled into new and unexpected structures that neither could support on its own. I can’t say, and don’t pretend to know, how the various pieces ought fit together, or what structures they ought be used to build.

For sure, I personally prefer some of these toys to others, and have my guesses as to where we should go. But the purpose of this post is not to set out my own, limited and specific position. Instead, I want to emphasize the variety of approaches to state problem solving that these different understandings of state capacity liberalism provide and the possibility of generating hybrid approaches, discovering unexpected combinations and new variants. That is what I think we need to focus on right now, rather than knocking the corners and odd angles off these various blocks so that they can be better shoved into the ideological containers of a pre-existing dispute.

* On tone: I’d tried for a slightly adulterated version of the rhetorical style that Matt has deployed in his lively disagreements with neo-liberalism’s “enemies,” and, much longer ago, with me! I’m obviously not the right person to judge whether I succeeded, undershot or overshot.

** There is, of course, nothing new about liberal arguments for the role of the state. James Sheehan’s history of nineteenth century German liberalism cites a lovely, poetic description of the state “as the spear that heals as well as wounds.” But not being a historian of political thought, I’m not the right person to put recent developments in their full context.