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Neoliberal Realism

In one little American town located on the eastern coast of the United States, one comes across a very intriguing public sculpture. The town is known for its Ivy League University – one of the oldest in this country – that has launched, for decades, or rather centuries, many of its successful alumni into the space of politics, business, and the sciences. The monument faces the northern wall of the campus, which is daily skirted by tourists who come from all over the world to capture on their digital cameras alphanumeric memories of neo-gothic, modernist, and postmodern architecture; of university professors wearing orange blazers – a token of worship for the Siberian Tiger (the University's mascot); of rebellious young students who pay their modest tribute to the fearful animal by sporting only bright orange laces on their black anarchist sneakers.

The sculpture is made, I believe, of bronze, and it is located in this little town's public square, although to tell you the truth I am not even sure that the square is public (it may well be the property of this private university together with the main street of the town). The sculpture, which is called Out to Lunch, casts a bronze boy reading a bronze book while taking a bronze bite on a bronze hamburger. The book that the boy reads is called There's No Such Thing as a Free Lunch, and it is a brazen version of a book of the same title written by the distinguished and revered Chicago school economist Milton Friedman. The original book, which one can find at the University's library, is a collection of interviews and magazine articles written by Friedman in the late 1960s and early 1970s, all criticizing what I believe can be called Keynesian economic policies under the Ford and Nixon administrations. Friedman launches a harsh attack on the way in which the state, or the Feds, managed the economy: for instance, he criticizes state-run and therefore inefficient post offices, inefficient and ad-less TV, free state education, social security, high taxes, state armies – in short everything which was not yet private in those dark days. To sum up the thesis that the bronze boy has tried for years to grasp: under the sky of a progressive and modern society nothing must be given for free (not even the sky). By now we are all familiar with this story, and the bronze sculpture, I believe, stands in the square in order to celebrate how successful this new attitude has been over the past decades.

But let's get back to art and culture. The sculpture is located next to a newsstand, and the little square gets very crowded, especially in the afternoon. The thing is that the stand also sells (in addition to newspapers, bus tickets, cigarettes and candies) lottery tickets. At the end of each working day one can witness the bronze boy surrounded by people (mainly Latino and black) who come daily to read their fortune. After purchasing their daily ration of tickets, they sit on the benches that surround the sculpture and begin intensely scrubbing the surface of their tickets, while their children climb the bronze boy. Friedman's boy pretends that he has nothing to do with these people nor with any form of economic gambling. For some time now he is absorbed in reading two pages by the Nobel Laureate whose thought has been made a gift to the rest of the world. The boy reads pages 82 and 83, which say the following things:

 

Our hopes have been shattered. Monetary growth has been both higher and more variable in the past three and a half years than in any other postwar period of equal length.

What now explains the divergence between the Fed's promises and its performance? Why does the Fed remain an engine of inflation? I confess that I am baffled.

Is Money Too Tight?

[September 23, 1974]

Almost every news report on the September 5 presummit meeting of twenty-eight economists with President Ford featured the statement, “A majority of the economists favored some easing of monetary policy.”

As one of the minority, l can ruefully testify that the report was correct – but it was misleading. First, almost without exception, the economists favored “monetary restraint.” Second, with one exception, none of the economists who favored “less restraint” specified what he meant by “tight” or “easy” money or assigned a numerical value to either present monetary policy or his preferred alternative. Most were simply expressing the dismay we all feel at high interest rates and the hope we all share that interest rates will come down.

A major source of bad monetary policy has been and remains the confusion between two meanings of “tight” or “easy.” One meaning associates “tight” money with high interest rates and “easy” money with low interest rates. The other meaning associates “tight” money with slow growth in the quantity of money and “easy” money with rapid growth. There is no doubt that interest rates have been at record highs for some time, and hence in the first sense money has been extremely tight. But until a few months ago at best, these high interest rates have been accompanied by extremely high rates of monetary growth, so that in the second sense money has been extremely easy.

By now, even the monetary authorities have recognized that it is highly misleading to take interest rates as a criterion of monetary policy – that confuses “credit” with “money.” Rapid monetary growth (“easy” money in the second sense) initially does tend to reduce interest rates (“easy” money in the first sense). But after a few months,

as the rapid monetary growth raises incomes and the demand for loans – and promotes inflation – the effect is to raise interest rates (“tight” money in the first sense). That is why, historically, interest rates have been high when monetary growth is rapid and low when monetary growth has been slow. Moreover, as the markets have come to understand this relation, the initial phase when the two senses coincide has become shorter and shorter.

The Fed controls the quantity of money, not interest rates, and the right way to judge whether monetary policy is tight or easy is to look at the rate of monetary growth.

If we do so, the fact is that there was no appreciable tightening of monetary policy until two or three months ago; the apparent tightening since has been modest, and may prove in retrospect transitory.

From early 1971 to mid-l974, the monetary aggregates grew at a roughly constant rate, with erratic deviations about a trend of a 6.7 percent annual rate for M1, (currency plus adjusted demand deposits) and a 9.6 percent rate for M2, (M1, plus time deposits at commercial banks other than large CD’s). These are extremely high rates – higher than for any other equally long period since World War Two, which goes far to explain why inflation has also been higher.

As of June of this year, M1 was above a trend calculated from the data for March 1971 to March 1974. It has since moved a trifle below, but currently is less than one-half of l percent below the trend. The story is similar for M2. It was on its trend in April and is now less than l percent below it. Equally large deviations have occurred several times during the past three years, which is why the data to date, while consistent with some tightening of monetary policy, do not demonstrate that any real change has yet occurred.

In terms of the more usual presentation. M1 has recently been growing at a rate of 4 to 5 percent compared to the 6.7 percent average rate of growth of the past three years; M2, at 7 to 8 percent compared to 9.6 percent. These are certainly modest reductions in monetary growth.

We must move gradually to conquer inflation. It would be a mistake to jam on the brakes so hard as to catapult us through the windshield. But it would be no less a mistake to let gradualism mean inaction. Recent rates of monetary growth are not too low. If anything they are still too high to bring inflation to an end in a reasonable period of time. It will be a tragedy if the confusion between “interest rates” and “monetary growth” once again leads the Fed to falter in its task. Faint hearts ne'er won fair price stability.

 

For decades the bronze boy has followed the growth of M1 and M2, and therefore he may not have had the chance to compare the unemployment rate, the budget deficit, or the inflation numbers (criticized by Friedman throughout the book) with the figures of today. The boy is not unique in this sense. Neither is he unique as a work of art.

 

The sculptor (apparently a grandson of the founders of the Johnson & Johnson corporation) cast the original of the Out to Lunch sculpture in 1979 – shortly before president Reagan took office. There are eight copies of the bronze boy, which the sculptor sold to various town councils throughout the country. In each location the boy reads a different book, and sometimes the book may even be written in Spanish. The bronze boy reads and eats next to public libraries, colleges, institutes for the arts, newsstands, or in the lobbies of publishing houses.

One might easily call the Out to Lunch sculpture that stands in front of the newsstand a perfect example of Neoliberal Realism, for it conveys – very much like Socialist Realist monuments in their time – a clear political message: “There is No Free Lunch, Folks!” (even though many of those who come daily to check on their lottery fortune would be glad to work for it). This does not well suit neoliberal political economy, for the latter has always presented itself as very critical of art made for political purposes, of that art that is made to convey a message in straightforward terms. Think of all those attacks directed toward the socialist Public Works of Art Project (under the New Deal), toward all those socialist sculptures and painters that the state employed to make Marxist murals and sculptures during the 1930s, or more recently, the culturalist attacks on political art made under the former socialist regimes in Eastern Europe.

But we must also be objective. For the sake of justice, I must say that there is a big difference between this instance of Neoliberal Realism and the socialist monuments that were once scattered all over eastern Europe (and it is not only between cheap and crumbling concrete versus noble and durable bronze). Unlike the Leninist-minded socialists, who placed their sculptures everywhere, advocating free lunches for the working class, the liberal-minded capitalists do not give their boy absolute hegemony. For instance, the boy is not allowed to set foot on the university campus. The university's professors (many of them snobs, no doubt), have been well versed in matters of aesthetics and art, and they would never permit Friedman's boy to eat his bronze hamburger on campus. In the business school and political departments – Yes! – but in proximity to the university museum or library – No Way! There are many sculptures on this campus, and they all differ from the bronze boy both formally and conceptually. Their messages are more subtle and sophisticated. They do not invoke food, lunches, hamburgers, or market gambling. One can see, for instance, on tourists' digital displays – among many, many tigers cast in all sort of foldable materials – monuments erected to commemorate distinguished professors from the historical past; or a modern sculpture which makes subtle allusions to another, perhaps more interesting reality; or a good photographic angle on a formalist sculpture – whose message does not refer to anything that might lay in its close or distant vicinity: it refers only to itself, to its being nothing else than a humble piece of inox steel shaped in a particular way –  “Look, everybody, I am a sculpture!”

This is why the professors do not allow the boy near tiger motifs, distinguished figures from the past, or strangely shaped objects. The boy’s message is neither historical nor abstract nor self-referential. What would he say if he were allowed on campus? “Look everybody, I’m eating hamburgers while reading Milton Friedman!” The professors and the students would all reply in one voice: “So what? We are doing the same thing, every fucking day! How are you different than us?” In other words, the boy's message is not scrubbed of rude and prosaic reality, of easily recognizable things; it is not sublimated enough (for this is what “high” art seems to prefer). The message is too direct and provocative: it is neoliberal propaganda, in other words. But I believe that the Neoliberal Realist boy plays, nevertheless, a certain symbolic function. Standing outside of the campus, and pretending to have nothing to do with anything – just reading, you know – he observes that the things around him are done in the right way, and that nothing stands in the way of lunch, market, art and culture, knowledge, nothing – except money, of course.

 

Octavian Esanu, March 2011

Keywords: Milton Friedman, Out to Lunch, Neoliberal Realism, Socialist Realism, Bronze Boy, Tigers, Dei sub numine viget (Under God's power she flourishes).