Clintonomics: The Prospect

Murray N. Rothbard’s “Clintonomics: The Prospect” is a short single-author chapter/political-economic essay from Making Economic Sense. Written at Clinton’s accession, it is prospective rather than retrospective: Rothbard infers the incoming administration’s likely program from its advisers, slogans, and place in a long bipartisan pattern. Its thesis is blunt: Clintonomics will be another advance of interventionism—higher taxes and spending, industrial policy, regulation, deficit manipulation, and movement toward socialized medicine—presented in the moral language of investment, care, and partnership.

For we know with certainty that President Clinton will not, in his first set of proposals to Congress, introduce legislation to repeal the income tax or abolish the Federal Reserve.

This reply to Ludwig Lachmann’s claim that “the future is unknowable” establishes the essay’s method. Rothbard does not pretend to predict every detail; he argues that political incentives and personnel make broad direction knowable. His opening portrait of “Friends of Bill” treats officeholding as spoils: a Democratic network replaces Republican beneficiaries, and economic policy becomes a struggle over access to state power. The section title, “Politics as Economic Violence,” is therefore thematic, not decorative.

In general, we must batten down the hatches for another one of those periodic Great Leaps Forward into statism that have afflicted us since the New Deal (actually, since the Progressive Era).

The structure then expands from Clinton to a theory of party alternation. Democrats openly push activist government forward; Republicans campaign with conservative, market rhetoric but mainly slow and preserve the expansion. Rothbard’s conceptual move is to replace the usual partisan contrast with a ratchet model of the state: each interventionist advance becomes the starting point for the next administration.

He explains that continuity through Keynesianism. Republican administrations from Eisenhower through Bush are called right-wing Keynesian: they use deficits, taxes, budgets, and monetary policy to pursue macroeconomic management while speaking more favorably about markets. Democratic administrations are left-Keynesian: similar in macroeconomics, but more inflationary, more tax hungry, and more inclined to direct business at the micro level. Clinton’s expected novelty is the rise of activist left-Keynesians and the “Wall Street Left,” including Robert Reich, Robert Shapiro, Felix Rohatyn, Robert Rubin, and Roger Altman.

The major difference comes in “micro-economic policy,” where conservative Keynesians tend to favor the free market, at least in rhetoric, whereas left-Keynesians are more frankly in favor of “industrial policy,” “economic strategy,” and an activist “partnership of government and business.”

From this taxonomy follow Rothbard’s forecasts: affirmative-action and environmental regulation will raise costs, especially for smaller firms; taxes on the rich will be sold as deficit reduction while spending rises; and stimulus will be defended as a way to “grow out of” deficits. His sharpest economic criticism concerns the rebranding of public expenditure as investment. Market investment is disciplined by future profit and loss; political “investment,” he argues, is validated by applause, bureaucracy, and ideology.

All of this craftily overlooks the fact that while business investment must make a future profit, government “investment” need only receive hosannas from its paid and unpaid apologists in order to be pronounced “successful.”

The same objection shapes his dismissal of education spending as investment in “human capital.” Because persons cannot be sold as capital goods outside slavery, Rothbard says the term cannot supply a genuine monetary valuation for state spending. The broader target is technocratic vocabulary: “capital budget,” “stimulus,” and “human capital” are, in this reading, devices for converting coercive public finance into the appearance of productive market activity.

The final field is medicine. Rothbard regards universal care language as the conversion of scarce services into enforceable rights, hence into compulsory provision. His Soviet comparison is deliberately stark: entitlement does not remove scarcity, and a system can promise care while failing to supply medicine or care. The chapter’s relevance lies in this compact libertarian model of late twentieth-century policy: bipartisan Keynesian continuity, industrial policy as politicized allocation, and welfare-rights rhetoric as a mask for coercion. Its closing warning condenses the argument that American socialism may arrive under another name.

The United States, heedless of the lesson of the collapse of Communism, is falling headlong into its own pit of socialism, except we won't be calling it "socialism", but rather a "caring, compassionate society enjoying the partnership of government and business."