Dangerous proximity: American academics and the financial crisis

Mar 29, 2011 by

Dangerous proximity:  American academics and the financial crisis

In America knowledge and power, academia and politics, are closer to each other than they are in Europe. The first time I entered a lecture hall at Yale I was struck by what this proximity meant in academic practise:  the pragmatic, controvercial questions asked, the simplicity and strength of arguments, accompanied by the keen interest in the outside world and the will to change it. This was the first impression – a positive one.

After almost two years in this country, I started to realise the dangers and risks of this proximity. Take the recent film “Inside Job” by Charles Ferguson. A brilliant and terrifying recapitulation of the current financial crisis: of how we got there and what we got out of it (or rather: what we failed to get out of it).

The point that I think most of us, students and professors sitting in Yale Law School Auditorium on a Tuesday evening, were mostly affected by was the infamous role that the Ivy League academics played in this crisis.  Ferguson interviews professors, most of them from Harvard and Columbia Business Schools, who faced with the conflict of interests, moral and financial, chose the latter. One of them agreed to write a paper and argue for Island’s solvency, contrary to his views, but following the orders of people who…paid for the paper. What is terrifying to me, naïve as I still am, is the danger of the mind divorced of moral grounds: these people, professors at best univerities in the world, can make a case for everything and anything, on demand, served on the spot, hot and ready to be digested. They can produce a convincing and sophisticated argument that only another expert in the field can challenge, and they did. Arguments that had a lot to do with their training, articulateness and logic, but little to do with reality and honest research.

Deregulation has been the fashionable and the profitable word to argue for at American campuses for the last decades. At Yale I noticed straight away a propensity for liberal, Smithian ideas. It seems much harder to make a case here for regulation or distribution, and people who do make such cases often come either from Europe (often from Britain) or other parts of the world.

Many American students here fail to make a distinction between socialism and communism, and when they hear the word ‘redistribution’ they cringe, their brow spikes up, and if they had a tail they would probably start waving it. It was against this kind of attitude that my Spanish professor had to fight in the first classes, as it was impossible to discuss Venezuela, Cuba and other South American countries within such American ideological frameworks.

Redistributive measures aimed at making up for the inequality produced by the markets are not communist – the essence of the communist regimes was not the redistributive part, but rather the fact that all companies belonged to the state. Once this is clear, the threat of communism, hanging ideologically above this country, becomes disspelled – who could ever imagine such a thing happening in this country?

Back to the film and the auditorium. Charles Ferguson points out that the same people that should be prosecuted for fraud, are still in Obama administration, pulling the strings. The bankers are still obtaining huge bonuses, in some cases higher than before the crisis, and not much has changed at all.

Last year I took the class on the history of economic though with a fantastic Hungarian professor, who at each lecture spoke in the voice of a different theorist. On Monday he was Adam Smith and convinced us of the values of liberal markets and deregulation, on Wednesday he turned into K. Marx, then into Keynes. He was fair to each argument, added nothing and subtracted nothing. But he did not give his opinions – he made us think for ourselves. I remember thinking, looking at the lecture hall filled with Yale undegrads, if this is the way the elite is trained in this country, America will be fine and the world will be fine.  After all thinking for oneself cannot really wrong. Not if it is led by such a bright mind as this professor.

But it can. When the incentives outside are so strong, when someone pays thousands for an article to make a certain case, when Obama is on the phone and power at your hands, heart submits to mind, and mind to interests. Kant said: “It is not to be expected that kings will philosophise or that philosophers will become kings; nor is it to be desired, however, since the posession fo power inevitably corrupts the free judgement of reason.”  I slowly realize what he meant. Is there, however, no chance for academia of moral integrity and political relevancy? Of course there is, as practised by  the majority of academics here here, but it is the other sort that rule this country, and the world.

1 Comment

  1. Jacek

    Brilliant! Obama should read it!

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