Category Archives: Political Economy

A new Authoritarian Axis demands an international progressive front – Bernie Sanders.

Those of us who believe in democracy, who believe that a government must be accountable to its people, must understand the scope of the challenge if we are to effectively confront it.

There is a global struggle taking place of enormous consequence. Nothing less than the future of the planet economically, socially and environmentally is at stake.

At a time of massive wealth and income inequality, when the world’s top 1% now owns more wealth than the bottom 99%, we are seeing the rise of a new authoritarian axis.

While these regimes may differ in some respects, they share key attributes: hostility toward democratic norms, antagonism toward a free press, intolerance toward ethnic and religious minorities, and a belief that government should benefit their own selflsh flnancial interests. These leaders are also deeply connected to a network of multibillionaire oligarchs who see the world as their economic plaything.

Those of us who believe in democracy, who believe that a government must be accountable to its people, must understand the scope of this challenge if we are to effectively confront it.

It should be clear by now that Donald Trump and the rightwing movement that supports him is not a phenomenon unique to the United States. All around the world, in Europe, in Russia, in the Middle East, in Asia and elsewhere we are seeing movements led by demagogues who exploit people’s fears, prejudices and grievances to achieve and hold on to power.

This trend certainly did not begin with Trump, but there’s no question that authoritarian leaders around the world have drawn inspiration from the fact that the leader of the world’s oldest and most powerful democracy seems to delight in shattering democratic norms.

Three years ago, who would have imagined that the United States would stay neutral between Canada, our democratic neighbor and second largest trading partner, and Saudi Arabia, a monarchic, client state that treats women as third-class citizens? It’s also hard to imagine that Israel’s Netanyahu government would have moved to pass the recent “nation state law”, which essentially codifies the second-class status of Israel’s non-Jewish citizens, if Benjamin Netanyahu didn’t know Trump would have his back.

All of this is not exactly a secret. As the US continues to grow further and further apart from our longtime democratic allies, the US ambassador to Germany recently made clear the Trump administration’s support for rightwing extremist parties across Europe.

In addition to Trump’s hostility toward democratic institutions we have a billionaire president who, in an unprecedented way, has blatantly embeded his own economic interests and those his cronies into the policies of government.

Other authoritarian states are much farther along this kleptocratic process. In Russia, it is impossible to tell where the decisions of government end and the interests of Vladimir Putin and his Circle of oligarchs begin. They operate as one unit. Similarly, in Saudi Arabia, there is no debate about separation because the natural resources of the state, valued at trillions of dollars, belong to the Saudi royal family. In Hungary, far-right authoritarian leader Viktor Orban is openly allied with Putin in Russia. In China, an inner circle led by Xi Jinping has steadily consolidated power, clamping down on domestic political freedom while it aggressively promotes a version of authoritarian capitalism abroad.

We must understand that these authoritarians are part of a common front. They are in close contact with each other, share tactics and, as in the case of European and American rightwing movements, even share some of the same funders. The Mercer family, for example, supporters of the infamous Cambridge Analytica, have been key backers of Trump and of Breitbart News, which operates in Europe, the United States and Israel to advance the same anti-immigrant, anti-Muslim agenda. Republican megadonor Sheldon Adelson gives generously to rightwing causes in both the United States and Israel, promoting a shared agenda of intolerance and illiberalism in both countries.

The truth is, however, that to effectively oppose rightwing authoritarianism, we cannot simply go back to the failed status quo of the last several decades. Today in the United States, and in many other parts of the world, people are working longer hours for stagnating wages, and worry that their children will have a lower standard of living than they do.

Our job is to fight for a future in which new technology and innovation works to benefit all people, not just a few. It is not acceptable that the top 1% 0f the world’s population owns half the planet’s wealth, while the bottom 70% of the working age population accounts for just 2.7% of global wealth.

Together governments of the world must come together to end the absurdity of the rich and multinational corporations stashing over $21tn in offshore bank accounts to avoid paying their fair share of taxes and then demanding that their respective governments impose an austerity agenda on their working families.

It is not acceptable that the fossil fuel industry continues to make huge profits while their carbon emissions destroy the planet for our children and grandchildren.

It is not acceptable that a handful of multinational media giants, owned by a small number of billionaires, largely control the flow of information on the planet.

It is not acceptable that trade policies that benefit large multinational corporations and encourage a race to the bottom hurt working people throughout the world as they are written out of public view.

It is not acceptable that, with the cold war long behind us, countries around the world spend over $1tn a year on weapons of destruction, while millions of Children die of easily treatable diseases.

In order to effectively combat the rise of the international authoritarian axis, we need an international progressive movement that mobilizes behind a vision of shared prosperity, security and dignity for all people, and that addresses the massive global inequality that exists, not only in wealth but in political power.

Such a movement must be willing to think creatively and boldly about the world that we would like to see. While the authoritarian axis is committed to tearing down a post second world war global order that they see as limiting their access to power and wealth, it is not enough for us to simply defend that order as it exists now.

We must look honestly at how that order has failed to deliver on many of its promises, and how authoritarians have adeptly exploited those failures in order to build support for their agenda. We must take the opportunity to reconceptualize a genuinely progressive global order based on human solidarity, an order that recognizes that every person on this planet shares a common humanity, that we all want our children to grow up healthy, to have a good education, have decent jobs, drink Clean water, breathe clean air and live in peace.

Our job is to reach out to those in every corner of the world who share these values, and who are fighting for a better world.

In a time of exploding wealth and technology, we have the potential to create a decent life for all people. Our job is to build on our common humanity and do everything that we can to oppose all of the forces, whether unaccountable government power or unaccountable corporate power, who try to divide us and set us against each other. We know that those forces work together across borders. We must do the same.

Bernie Sanders, US Senator, Vermont

Populism isn’t a dirty word it’s time for the left to reclaim it * Populism Now! – David McKnight.

When the political class adopted Neoliberalism, it effectively transferred significant amounts of political power, the democratic power of governments, to private corporations.

We need to take it back! (Hans)

David McKnight makes the case for a people power that doesn’t scapegoat immigrants or minorities.

INTRODUCTION

Here’s a quick quiz. What do the following political figures have in common: Pauline Hanson, Bill Shorten, Donald Trump, Jeremy Corbyn and Bernie Sanders?

Answer: all have been accused of populism. Whether they’ve bashed banks, billionaires or boat people, they’ve been damned as populists. Yet these political figures come from wildly different parts of the Left and Right. Can they all be populists?

Mostly, when I hear people damning someone as a populist, they are talking about a right-wing version. But it’s not that simple. In this book, I argue that a progressive version of populism exists too.

A progressive populism takes up the genuine economic grievances of everyday Australians without scapegoating migrants or minorities in the way Donald Trump and the proBrexit forces have done. In fact, a progressive form of populism is the best way of defeating the racist backlash of right-wing populism because it addresses the social and economic problems which partly drive the rise of right-wing populism. As well, it asserts our common humanity, whatever diversity we also express.

I first discovered populism when I began teaching investigative journalism in the late 1990s at university. I had some understanding of the subject already, having worked on the ABC’s investigative TV program Four Corners. Like other journalists, I knew about the role of investigative journalism in the Watergate scandal of the early 1970s. However, to teach it as an academic course I needed to know about its historical origins. I found that investigative journalism (originally called muckraking) began in the United States around 1900 during what Americans call ‘the Progressive Era’. It was called this because it was a period of radical ideas and activism about social reform. One expression of this was the emergence of a new political party, the People’s Party, in 1890-91. It stood for the interests of ordinary people farmers and workers against the ‘robber barons’ in the privately owned banking, oil and railway industries. Friends and enemies alike described the approach of the People’s Party as Populism and its supporters as Populists.

The muckraking journalists were crusaders on issues which they shared with the Populists. For example, in his book The Jungle, writer Upton Sinclair exposed the dangerous and filthy conditions endured by the Chicago meatworkers. Years later his book was recognised as one of the forces behind the introduction of food safety laws. One of the first female muckrakers, Ida Tarbell, exposed the ruthless practices of Standard Oil in crushing rival companies in a series of articles published in McClure’s Magazine, and eventually a book, The History of the Standard Oil Company. Today, Standard Oil is better known as Exxon and remains a ruthless corporation. Lincoln Steffens’ book The Shame of the Cities exposed the corruption of political machines linked to gambling, prostitution and bribery. Other muckrakers attacked the role of big money in government and the power of Wall Street. Their journalism, I realised, was a key contribution to the progressive causes shared with the Populists.

The key idea of the Populists was that the interests of ordinary people were in conflict with those of the elite. Some of the Populists had conspiratorial ideas about money and power but their movement was a powerful challenge to aggressive, unregulated big business. Having been on the Left of politics since my teens, I found this history of a forgotten reform movement fascinating. its goals of economic and social justice for ordinary people are still relevant today.

Years later I rediscovered American populism when I read a book by journalist Thomas Frank, What’s the Matter with Kansas? Published in the wake of the election of George W Bush, his book pointed out that Kansas, now a conservative Republican state, was once a centre of radical activity. One Kansas town produced a socialist newspaper, Appeal to Reason, which sold hundreds of thousands of copies. In the 1890s its farmers, driven to the brink of ruin by years of bad prices and debt, held huge meetings where Kansas radicals like Mary Elizabeth Lease urged the farmers to ‘raise less corn and more hell’. From this situation, the People’s Party emerged as the enemy of the ‘money power’ and as an alternative to both Democrats and Republicans. It advocated publicly owned railways and banks along with a progressive income tax on the rich. For this, Frank tells us, they were reviled ‘for their bumpkin assault on free market orthodoxy’.

In 2015 and 2016 I found myself hearing commentators talk about the rise of modern forms of populism during the looming US presidential election. Both Donald Trump and Bernie Sanders were referred to as populists. Sanders had opened his campaign with the statement: ‘This country and our government belongs to all of us, not just a handful of billionaires’. It was a modern echo of the progressive side of the American populist tradition. Although he didn’t win the Democrats’ presidential nomination, Sanders shifted the political agenda and challenged the untrammelled power of the wealthy in the name of ordinary people.

Trump, a right-wing populist, represented the worst aspects of popular prejudice. Yet he won. Like many others, I was stunned as I read the first online news reports announcing this. How could it have happened? One of the most illuminating insights came from Thomas Frank, who argued that Trump’s populist campaign on economic issues was far more important than most people realised at the time and had been the key to him winning crucial states. The abandoned factories and crumbling buildings in cities devastated by free trade deals had created a ‘heartland rage’ that swamped the Democrats.

All of this was ‘the utterly predictable fruit of the Democrats’ neoliberal turn’, he said. ‘Every time our liberal leaders signed off on some lousy trade deal, figuring that working-class people had “nowhere else to go”, they were making what happened last November, Trump’s win, a little more likely.’

Such sentiments inspired this book. And all of this is relevant to Australia because both our Labor and Liberal politicians have, in recent decades, largely accepted the principles of deregulation, privatisation and small government, together known as neoliberalism. In part, this book is an investigation into the failures of these principles in Australia.

The final reason for writing this book is more personal. I grew up in a single-income, bluecollar family with my mother suffering from a severe mental illness. Yet we survived and thrived thanks in part to a strong public sector, especially in health and education. This public sector was grounded in the major parties’ consensus that it was both morally obligatory and economically sound that important public services should be equally available to all and provided collectively. Now this consensus is being broken apart and discarded. This is not some misty-eyed memory about a non-existent golden age, an error often made by right-wing populists when they equate the White Australia Policy years with better conditions overall. Australia is a better and more open society today, not least because it is more culturally diverse. But in terms of simple practical things such as expecting a secure wellpaid job, social services and a home to live in, we are going backwards.

When I started researching this book in the wake of the shock Trump victory and the vote for Brexit I was already a critic of neoliberalism. But as I probed more deeply I grew angrier and angrier. My research revealed that the orthodoxies of deregulation and privatisation, regarded as supreme common sense by the political and economic elite, are radically transforming Australia. The gulf between billionaires and the poor is widening as old egalitarian Australia crumbles; deregulated banks have become parasitic to the rest of the economy; corporate tax avoidance is out of control; and our pay and conditions are being eroded. As it had with me, this has angered many ordinary Australians. Some falsely blame migrants and refugees while others rightly blame a corporate and political elite. To change things, we need to rebuild a new progressive agenda which unites ordinary Australians against these elitedriven policies.

Of prime importance in such a renewed progressive agenda is genuine action on the biggest danger of all, irreversible climate change, which will hit ordinary Australians first. A progressive populist approach aims to unite Australians in the broadest possible new movement one that will provide the necessary people power to avert the worst kinds of changes in the future. Nothing less than the survival of humanity is at stake.

CHAPTER 1

THE POLITICS OF POPULISM

We forced discussions on issues the establishment had swept under the rug for too long. We brought attention to the grotesque level of income and wealth inequality in this country and the importance of breaking up the large banks, we are stronger when we stand together and do not allow demagogues to divide us by race, gender, sexual orientation or where we were born.

US presidential candidate, Bernie Sanders

*

The establishment complains I don’t play by the rules. By which they mean their rules. We can’t win, they say, because we don’t play their game. We don’t fit in their cosy club. We don’t accept that it is natural for Britain to be governed by a ruling elite, the City and the tax-dodgers, and we don’t accept that the British people just have to take what they’re given.

British Labour leader, Jeremy Corbyn

*

With Donald Trump’s successful campaign to win the US presidency and Britain’s decision to ‘Brexit’ from Europe, we suddenly began to hear a lot of the word ‘populism’ in the political discourse. At first it was used to describe the attack Donald Trump made on illegal Mexican immigration when he announced his candidacy for the Republican nomination in mid 2015. With his trademark bombast, he declaimed, ‘When Mexico sends its people they’re not sending their best They’re sending people who have lots of problems They’re bringing drugs. They’re bringing crime. They’re rapists’. He then added, ‘and some, I assume, are good people’. His call to build a wall on the US-Mexico border (‘which Mexico will pay for’) became a recurrent theme of his campaign and later, his presidency.

Nor was his abuse limited to Mexicans. After a Muslim US citizen committed a terrorist attack in San Bernadino, California, Trump called for a ban preventing Muslims from entering the United States, at one point including those who were American citizens currently abroad. Trump’s campaign received what seemed to be a certain death blow in October 2016, when the Washington Post revealed an audio tape of his boast that, because he was ‘a star’, he could grab women ‘by the pussy’ and get away with it.

By the normal rules of elections in the United States and elsewhere, his popular support should have shrunk. Trump’s coded appeals to racism, crude misogyny and calculated abuse should have fatally wounded his bid for the White House. But his popular support grew and Trump eventually attained the most powerful position in the world. In office, he has confirmed the worst expectations, responding to North Korea’s threat to the United States with a warning that North Korea ‘will be met with fire and fury like the world has never seen before’, a thinly disguised threat to unleash a nuclear war.

How did we get into this situation? Trump’s election victory owed a lot to two factors. One was his economic populism, which criticised free trade and globalisation. This received a warm response from many working Americans. He threatened to withdraw the United States from the North American Free Trade Agreement. He promised to impose high tariffs on runaway US companies which moved production overseas. He threatened restrictions on imported Chinese goods. Globalisation, he said, helped ‘the financial elite’ while leaving ‘millions of our workers with nothing but poverty and heartache’. All the while he targeted the states hardest hit by economic globalisation. Much of this was downplayed or never reported by both social media and the traditional news media, which preferred to concentrate on his more colourful outbursts and tweets.

The second key to his victory was his skilful use of social media, which he credited with being a way to counteract what he called the ‘fake news’ propagated by mainstream news media. On Facebook and Twitter his popularity eclipsed that of Hillary Clinton and it was there that he circulated his own ‘alternative facts’. The algorithms of social media, which suggest news based on past activity, transformed this popularity into self-reinforcing echo chambers of Trump supporters. And all of this was fed by the crisis in traditional journalism, whose capacity to report news had been eroded by the power of that selfsame social media.

The election of Donald Trump has taken us all into a new and dangerous place. If it had been an isolated incident it would not matter so much. But it was far from that. A few months before Trump’s election, Britain went to the polls to decide whether or not to leave the European Union (EU). The vote was voluntary but the turnout was high. More than 30 million people voted, with a majority in favour of Britain’s exit, styled Brexit. Another victory for populism, said the commentators.

The British vote to leave the EU spanned traditional Right and Left and drew support from unexpected places. While the ‘Leave’ vote was highest in traditionally Conservative areas, it was also high in some working-class Labour strongholds. For some, voting to leave the EU was a protest against the economic effects of the globalised economy, with its problems of unemployment and low wages. For others, their main concern was the immigration which had ensued from open borders. ‘We want our country back!’ was a common cry. Donald Trump, then campaigning for president, hailed the Brexit vote as a ‘great victory’ and drew parallels to his own opposition to ‘rule by the global elite’. A new populist Right was on the move globally.

Soon populism seemed to be everywhere. In Europe the established parties saw their dominance challenged by right-wing populism. In France in 2017 the antiimmigrant and anti-Muslim National Front achieved 34 per cent of the presidential vote, its highest yet. That same year the far right Alternative for Germany won an unprecedented 13 per cent of the vote and 90 seats in the Bundestag. In the Netherlands Geert Wilders’ xenophobic Party for Freedom advanced in the 2017 general elections.

In Australia too Trump-style political disaffection is taking hold. A reputable study by academics at the Australian National University (ANU) shows that key indicators, including satisfaction with democracy, trust in government and loyalty to major parties are at record lows among Australians. The study was conducted following the July 2016 election and found that only 26 per cent of Australians think the government can be trusted (the lowest level since it was first measured in 1969). Forty per cent of Australians were not satisfied with democracy (the lowest level since the period after Gough Whitlam was dismissed in 1975); and there was a record low level of interest (30 per cent) in the 2016 election.

The study’s lead researcher, Professor Ian McAllister, said that we are seeing ‘the stirrings among the public of what has happened in the United States of the likes of Trump, Brexit in Britain, in Italy and a variety of other European countries, it’s coming here and I would have thought this a wake-up call for the political class’. Australian conservatives, hoping to take advantage of this disillusion, welcomed Trump’s victory, with Tony Abbott tweeting: ‘Congrats to the new president who appreciates that Middle America is sick of being taken for granted’. Mining magnate Gina Rinehart urged Australia to follow Trump’s lead and Andrew Bolt told his audience: ‘The revolution is on!’ Very much part of this phenomenon, Pauline Hanson’s One Nation party achieved an unprecedented four seats in the Senate in the 2016 election.

But what is populism?

To many, ‘populism’ is a shorthand term for pandering to people’s baser instincts, exemplified in Trump’s campaign and his presidency. It inflames a desire to blame ethnic and religious minorities; it is a lust for cheap popularity and it is a phony hostility to the Establishment and to ‘the elite’, such is the common understanding. Populist leaders are seen to be posing as outsiders and as representatives of the underdog. Above all, populism is regarded as a right-wing phenomenon.

But it’s not that simple. This book argues that a progressive version of populism exists too. A progressive populism fights for the genuine economic grievances of everyday people without blaming minorities or migrants. In fact, a progressive populism is a very good way to neutralise this sort of scapegoating because it addresses the social and economic problems which partly drive the rise of right-wing populism.

Populism is a notoriously loose description of a political stance. In many ways it is a style of doing politics rather than a series of particular policies. Some people think populism means trying to be popular, but this is misleading. The words populist and populism come from the Latin word for ‘the people’ (populus) what today we’d call the public. The meaning survives in the expression vox populi, the voice of the people. Generally speaking, populism is a style of politics which frames politics as a conflict between the people and an elite. But the identity of the people and the nature of the elite can vary widely. On this basis populism can be either a right-wing or a left-wing phenomenon. In some countries today, the traditional battle between right and left is being channelled through a populist filter.

Academic Margaret Canovan conducted one of the early studies of populism. She argues that there are two broad strands to populist movements. The first is rural, based on organisations of peasants or farmers, a kind which typically emerges when these people are confronting modernisation. The second is characterised by highlighted tensions between the elite and the grassroots. This can take the form of ‘idealisations of the man in the street or of politicians’ attempts to hold together shaky coalitions in the name of “the people”’. Canovan concludes that populism can take right-wing or left-wing forms but that ‘all forms of populism without exception involve some kind of exaltation of and appeal to “the people” and all are in one sense or another anti-elitist’.

The American writer John Judis, author of the recent book The Populist Explosion, also argues that populism is ‘not an ideology but a way of thinking about politics’. He too supports the view that populism can exist in both left and right forms. Left-wing populists champion the people against an elite or establishment (as in Occupy Wall Street’s slogan about the One Per Cent versus the 99 per cent). Right-wing populists are against an elite ‘that they accuse of coddling a third group, which can consist, for instance, of immigrants, lslamists or African American militants’.

Judis notes that the original US People’s Party was formed in the 1890s when Kansas farmers united with an early workers’ organisation and challenged the existing establishment of Republicans and Democrats. The People’s Party developed policies against monopolistic railroads and greedy banks and in favour of progressive income tax and expanding public controls. As one populist writer said, they aimed to get rid of ‘the plutocrats, the aristocrats, and all the other rats’. To the Australian Labor Party, emerging in the same tumultuous decade of the 1890s, the US People’s Party was something of a model and there were early proposals to call the new Australian party the People’s Party, rather than the Labour Party.

This progressive strand within American populism re-emerged in 2015-16 when Bernie Sanders competed with Hillary Clinton to become the Democrats’ presidential candidate. At the start of that campaign he was seen as little more than an eccentric, rumpled, 70-plus year old running an unusual campaign. One newspaper described him as a ‘grumpy grandfather type’ who ‘embraces his reputation for being gruff, abrupt and honest and promises to be bold’. As time went on, observers began to note the cheering, youthful crowds that he drew, his calls for a ‘political revolution’ and his strong social media campaign on Facebook.

Although he did not win the Democratic nomination, Sanders surprised everyone by doing well enough in the battle for the presidential nomination to win 23 primary and caucus races to Clinton’s 34. With no big corporate donors, he raised millions of dollars in small donations from a growing support base, especially from the young. Most surprising of all were his campaign’s public statements and appeals. Sanders attacked ‘the One Per Cent’ of super-rich people who had benefitted enormously from the globalised economy while others struggled to survive. In one speech at Liberty University, he said: ‘In my view there is no economic justice when the 15 wealthiest people in this country in the last two years saw their wealth increase by $170 billion’. It was a fact he repeated all through his energetic campaign.

Another Sanders target was the deregulated banking system that had caused the global financial crisis. Sanders charged: ‘Wall Street used their wealth and power to get Congress to do their bidding for deregulation and then, when Wall Street collapsed, they used their wealth and power to get bailed out’.‘ The contrast he pointed out in several speeches was with the 41 per cent of American workers who didn’t take a single day of paid vacation in 2015 and with the third of workers in the private sector who cannot even claim paid sick leave.

Like Trump, Bernie Sanders was also widely regarded as a populist, reviving a long American tradition in which the central conflict is seen to be between the people and the elite.

Sanders happily described himself as a democratic socialist and pointed to the socialdemocratic states of Scandinavia as models. In his platform, Sanders said he supported: a national public healthcare system; an end to corporate welfare; abolishing fees for college degrees; a full employment policy; raising the minimum wage to $15 an hour; and preventing ‘greed and profiteering of the fossil fuel industry’. The money to achieve these aims was to be raised by compelling wealthy individuals and corporations to pay their fair share of tax.

All of these policies, advocating a stronger role for government, effectively rejected the decades-long dominance of the ideology known as neoliberalism the ideology of small government, of globalising in the form of deregulated markets and of faith in market forces to guide and manage the economy.

Progressive populism in the Sanders mould attributes today’s social and economic problems not to migrants or minorities nor to the ‘politically correct’ mainstream media, but to the failure of neoliberal policies. And because progressive populism addresses the forces driving the rise of right-wing populism, it is the most effective antidote.

The political theorist Chantal Mouffe is not surprised by the rise of right-wing populism:

In a context where the dominant discourse proclaims that there is no alternative to the current neoliberal form of globalisation and that we have to submit to its diktats, it is small wonder that more and more workers are keen to listen to those who claim that alternatives do exist, and that they will give back to the people the power to decide.

And this is just what Trump promised. Unlike the campaign of Hillary Clinton, issues of economic injustice featured heavily in his winning campaign. Just a few days before the November election, Trump told a huge crowd in an aircraft hangar in Pittsburgh: ‘When we win, we are bringing steel back, we are going to bring steel back to Pennsylvania, like it used to be. We are putting our steel workers and miners back to work’. Trump touched a raw nerve. No steel mills now exist in Pittsburgh and hundreds of thousands of steelworkers had lost their jobs since the 1980s, in part due to freer global trade. Whether Trump was sincere in (or even capable of delivering) his promise to bring steel jobs back to Pittsburgh is not the point. Identifying economic grievances and blaming them on free trade and globalisation is almost unprecedented by a Republican candidate. More importantly, it was a challenge which Hillary Clinton, as a long time supporter of neoliberal free trade, could not rebut. As it turned out, Trump did win in Pennsylvania. It was one of the three ‘rust belt’ states that made the difference to victory or defeat in the presidential election.

Both Trump and Sanders were outsiders in US politics. Both denounced the domination of big business and the banks and blamed them for much of US economic woes. Both based their campaign on appeals to ordinary Americans and both were described as populists. Unlike Trump, Sanders was a progressive populist. When he talked about the elite and the establishment, he meant the economic elite and the corporate establishment. Unlike Trump, Sanders did not scapegoat immigrants or ethnic minorities.

The groundswell grows

The groundswell of populism soon saw Sanders joined by the leader of the British Labour Party, Jeremy Corbyn. When he began his election campaign in April 2017, Corbyn faced deep opposition from many of his fellow Labour members of parliament. Like most media commentators, they also believed that because of his leftwing history and left-wing policies he could not possibly win. And certainly he was in trouble at the beginning of the campaign, when polls were placing Labour up to 24 points behind the Conservatives.

From the start of the 2017 election campaign Corbyn framed the contest in the language of progressive populism. He described the election as a battle of ‘the establishment versus the people’ and promised to overturn ‘a rigged system’ that favoured the rich and powerful. Under him, Labour would not be part of the ‘cosy club’ whose members think it is natural for Britain to be ‘governed by a ruling elite, the City and the tax dodgers’, he said. His opponents believed such deeply controversial rhetoric was guaranteed to result in a huge loss.

But his message was straightforward and cut through the spin and PR fog of traditional political rhetoric. And these policies proved popular among the British people. Early opinion polling showed that up to 71 per cent of people supported his proposal to raise the minimum wage to ten pounds an hour. A similar proportion of the British public (62 per cent) supported his plan to raise taxes on the rich and high income earners.

Corbyn’s manifesto broke other unspoken rules of the economic consensus of neoliberalism. He argued that the railways and water supply should return to public ownership. He promised to extend free school meals by a tax on private school fees. He also urged increased funding for social housing, and his pledge to abolish university fees helped build a powerful momentum among young people, who registered to vote at unprecedented levels and voted Labour on election day.

The Conservatives had called the election, confident they would increase their majority in parliament, and Corbyn’s campaign of progressive populism destroyed their majority and almost beat them.

There were close parallels between the movements around Bernie Sanders and Jeremy Corbyn. Officials from Sanders’ campaign helped Corbyn with ideas on strategy and fundraising. Sanders himself visited Britain just days before the election campaign and drew comparisons between his own policies and Corbyn’s:

Too many people run away from the grotesque levels of income and wealth inequality that exist in the United States, the UK and all over the world Globalisation has left far too many people behind. Workers all over the world are seeing a decline in their standard of living. Unfettered free trade has allowed multinational companies to enjoy huge profits and make the very rich even richer while workers are sucked into a race for the bottom.

The spread of progressive populist ideas has not been confined to the United States and Britain. In Spain the progressive populist party Podemos emerged in 2014 and grew so rapidly that it secured 20 per cent in the 2015 elections, campaigning on an anti-austerity platform, supporting increased public spending and strong anti-corruption measures. In the 2016 election it retained its electoral support. In Greece, another new progressive party, Syriza, formed out of a coalition of left-wing and environment groups and received 35 per cent of the vote in the 2015 elections, later forming government. While the majority trend within European populism is rightwing, the significance of a new left populism should not be underestimated.

Neoliberal globalisation

Driving the emergence of right and left-wing populism is the set of policies known as neoliberalism.

Neoliberalism became the mindset of the political class in the 1980s and was a very deliberate project to wind back the welfare state, reducing the public sphere with its public goods of health, education, transport and culture, along with the tax system which paid for it.

The neoliberal project is based on the idea that the market is the most efficient distributor of goods because it combines the profit motive and competition. It takes no account of justice, inequality or social cohesion. Ultimately this promotes the transformation of all human relationships (not just economic ones) into commercial transactions.

It was neoliberalism with its floating currencies and deregulated markets which drove the present form of globalisation. But neoliberal globalisation means much more than a loosening of trade. It means the unplanned transfer of blue and white-collar jobs from erstwhile industrial countries to less developed nations. It also means national governments are less able to control what happens in their own society and economy.

When the political class adopted neoliberalism, it effectively transferred significant amounts of political power, the democratic power of governments, to private corporations. While benefitting a corporate elite, the neoliberal experiment demonstrably failed in the global financial crisis and the effects of that failure are still with us.

What had been a crisis of private debt was transformed by government bail-outs into an alleged crisis of public debt. This sleight of hand reinforced the neoliberal dogma that the problem was always governments. The ideology of ‘small government’ meant that governments imposed even more stringent cost-cutting measures.

The failure of neoliberalism in Australia

The populist groundswell in the United States, Britain and Europe and elsewhere is reflected by similar movements in Australia, prompted by similar causes. In the following chapters I examine the ways in which Neo-liberalism has failed to produce a good society, as well as its role in fostering a populist backlash.

First and most significantly, 30 years of neoliberal globalisation and deregulation have produced a polarisation of wealth which has undermined Australia’s egalitarian ethos. The gulf between the super-rich and the rest of us is widening. We are becoming a more divided society with a tiny wealthy elite at one extreme and a significant group of poor at the other.

Nor is it solely a matter of fuelling material inequality. As important as inequality (and more important in the long term) is climate change. The ideology of small government and deregulation is impeding our response to accelerating climate change despite the clear warning signs in record high temperatures and the bleaching of the Great Barrier Reef in Australia. Whatever combination of market and state arrangements is best at fostering renewable energy, it will need tough government action to implement this and to defeat the power of the coal and oil industries. To support such action we need a broad populist coalition of all the diverse forces demanding real action on climate.

And just as it has in the United States and Britain, privatisation is spreading throughout Australian society, changing services that used to be provided to all citizens into profitmaking enterprises. The sale of public assets like seaports, airports and electricity poles and wires has simply created expensive monopolies. Billions have also been wasted in attempting to privatise technical and vocational education. Despite these failures, private companies are now being encouraged to move deeper into education, aged care and disability services.

Likewise, Australia has its own rust belt of closed factories and, for those in employment, jobs are increasingly casual, part time and less secure. The deregulation of Australian workplaces means that for younger workers, jobs with paid holidays and fair wages are becoming less common. And thanks to a variety of temporary overseas visa schemes a casualised, cashinhand underclass is spreading in the agriculture, retail and hospitality sectors. Such workers are exploited and their labour conditions undermine those of local workers. This is not occurring accidentally but because economic orthodoxy (backed by employers) demands this labour deregulation. The resulting job insecurity combined with low wages is one factor stoking a right-wing populist backlash based on xenophobia and hostility to overseas workers.

While low-paid workers are made increasingly vulnerable, at the other end of the scale big corporations do everything they can to avoid paying tax, a practice made easier in the globalised world of neoliberalism. In 2014, the Australian branch of the tech giant Apple paid $80 million in tax just 1 per cent of its total Australian income of $6 billion. Its rival, Microsoft, paid just 5 per cent of its income. Over several years big mining companies like BHP and Rio Tinto shifted billions through Singapore, where tax rates can be a mere 2.5 per cent. Nor is it just corporations. Some of Australia’s richest families and individuals pay little or no tax. When the Panama Papers were leaked, up to 800 wealthy Australians were associated with shell companies in tax havens like Panama. Meanwhile, ordinary Australians are left to pick up the tab for hospitals, roads and schools, effectively subsidising those who refuse to pay their share.

Finally, compounding the problem of wealth inequality, the banking and finance sector has swollen enormously since it was deregulated. In Australia we have some of the biggest and most profitable banks in the world. Together they form a rapacious oligopoly which extracts more than $30 billion in profits each year from the rest of Australia.

In their zeal to lend money, deregulated banks have fuelled a housing price boom, the result of which is that fewer Australians now own their own home than 40 years ago.

It’s now time to look again at regulating banks and the finance industry to ensure that they act in the public interest.

Overall, the spread of neoliberal orthodoxy through society has corroded many of the institutions and relationships on which citizens rely and which offer protection from the vagaries of the market. This orthodoxy has shrunk the democratic space by removing all sorts of functions from the public to the private sphere. The real meaning of ‘small government’ is that we have ended up with a small democracy, because governments are still the only institutions we have for exercising our democratic, collective voice. The zealous advocacy of theories of selfinterest, competition and small government has led to a dead end.

All of this spawns populisms of both the Right and Left. The crucial point of difference between them concerns the meaning of and response to globalisation. Are the problems of globalisation primarily issues of economics and economic justice or are they mainly an issue of immigrants and of changing the ethnic mix? Progressive populists are alarmed by the damage that open economic borders, which import cheap products and export jobs, do to local jobs and the national economy. Right-wing populism dredges the deepest and most dangerous emotions to reject the changing ethnic mix which results after years of relatively open immigration.

When right-wing populists define what they mean by the ‘elite’ they take aim at the progressive middle class, the so-called politically correct, who abhor racism and gender inequality. Progressive populists, by contrast, define the ‘elite’ in economic terms as the super-rich and corporate moguls. When talking about ‘the people’, progressives seek to unify the middle class and working class in an alliance for reform. Progressive populists emphasise the common ground which the majority of people share on issues of economic justice.

By focussing attention on genuine economic grievances, a progressive populist agenda can undercut the way ethnic and religious minorities are demonised.

Some see progressive populism as the natural continuation and revival of social-democratic and labour politics which have been compromised by their turn to ‘third way’ politics. One critic is political theorist Chantal Mouffe. She argues that the neoliberal consensus between conservative and once-radical workers’ parties has created a favourable ground for the rise of populism because many people feel their voices are unheard and ignored in the representative system. The problem is that this often takes the form of a right-wing populism which sees ‘the people’ defined to exclude immigrants and minorities.

On this basis many people criticise ‘populism’ negatively. She responds:

This is a mistake, because populism represents an important dimension of democracy. Democracy understood as ‘the power of the people’ requires the existence of a ‘demos’ a people. Instead of rejecting the term populist, we should reclaim it.

In this book my intention is to reclaim populism by fostering a progressive version of it which puts the interests of the common man and woman first, ahead of the priorities of a wealthy global elite whose interests and priorities have dominated for far too long.

CHAPTER 2

THE RISE AND RISE OF THE SUPER-RICH

There’s class warfare, all right, but it’s my class, the rich class, that’s making war and we ’re winning.

Warren Buffett, billionaire investor

*

With their collective wealth estimated at $US7.7 trillion, the global elite of the super-rich are the natural opponents of progressive populism. Some of that global elite are household names in Australia. In July 2016 over 200 of them gathered for a huge celebration in the dazzling blue waters of the Mediterranean. Trucking billionaire Lindsay Fox was throwing an all expenses paid birthday party and had invited his closest friends to enjoy a cruise from Athens to Venice via Corfu. Fox’s ship of choice was Seabourn Odyssey, renting for over a million dollars a week and containing 225 luxury suites.

Lindsay Fox’s own wealth totals $2.9 billion. His fellow passengers included the mining billionaires Gina Rinehart and Andrew Forrest.

According to the Australian Financial Review’s 2017 Rich List they are worth (in Australian dollars) $10.4 billion and $6.8 billion respectively. Shopping centre king John Gandel ($6.1 billion) and retail giant Solomon Lew ($2.3 billion) also took part in the exclusive celebration on the high seas. Further down the guest list for the stylish cruise were former Liberal Treasurer Joe Hockey, former Liberal Victorian Premier Jeff Kennett, media businessman Harold Mitchell and golfer Greg Norman.‘

This public airing of the details of a party for Australian billionaires is rare. It’s not always easy to get information on the super-rich. A key source is the Financial Review’s annual Rich List. The 2017 edition identified 60 Australian billionaires, headed by the paper manufacturing magnate Anthony Pratt ($12.6 billion). The most modest billionaire (scraping in at just $1 billion) is Melbourne-based Peter Gunn, who owns PGA Group, a private investment business that holds a property empire in office and industrial blocks and is also involved in cattle production. Others among the ten wealthiest are James Packer ($4.75 billion), whose money is in casinos; Harry Triguboff ($11.45 billion), who made a fortune from building tower blocks; and Frank Lowy ($8.26 billion), the Westfield shopping centre magnate. The eighth wealthiest Australian is Hui Wang Mau ($6 billion), who made much of his money in Hong Kong property and took out Australian citizenship after studying in South Australia in the early 1990s.


from

Populism Now!

by David McKnight

get it at Amazon.com

Marx’s analysis of the laws of capital and the share market crisis – Nick Beams.

Down through the years one of the most persistent attacks on Karl Marx by the high priests of bourgeois economics, the ideological guardians of the profit system, has been his contention that, in the final analysis, capitalism depends on the impoverishment of the working class. History, they maintain, has proven otherwise and refuted Marx. While there have been periods of crisis, and rapid and even prolonged falls in the living standards of the masses, in the long run the profit system has served to uplift them and will continue to do so into the indefinite future, whatever fluctuations it may undergo.

Moreover, there is no possible alternative because the market system is not a historically developed mode of production, which came into being at one point and is therefore destined to pass away like earlier modes of production before it, slavery and feudalism. Rather, it is rooted in the laws of nature itself and is necessary and therefore eternal. In other words, despite some imperfections, which may give rise to problems at certain points, all is really for the best in the best of all possible worlds.

In feudal times, the high priests of the Church, who played the key role in sustaining and sanctifying the ruling classes of their day, maintained that when crises arose this was not a product of the social system but an “act of God,” a punishment for the sins of man deriving from his fall.

While there have been enormous advances in social and political thought since then—a product of the Enlightenment and the vast advances in the scientific understanding—the modus operandi of the present day “high priests” of capitalist economy, the bourgeois economists and pundits, is not altogether different from their predecessors.

When confronted with economic crises and their persistence, they maintain that these are not a product of the inexorable workings of the capitalist system itself, but arise from “market imperfections” or some external, unforeseen or accidental event. That is, they proceed, as Marx put it, on the basis that so long as capitalism acts according to the textbooks—the modern day scriptures used to justify the present socio-economic order—crises are not endemic to the system.

The events of the past two weeks, with the largest fall in markets since the crisis of 2008, raising the spectre of an even bigger disaster than that of a decade ago, have provided a damning exposure of this entire ideological framework.

Before going into a deeper analysis of the underlying driving forces and the inherent and irresolvable contradictions of which these events are an expression, let us begin with one undeniable economic fact.

In the decade since the eruption of the global financial crisis of 2008, none of the underlying contradictions that exploded to the surface has been resolved. At the same time, the immediate and ongoing consequences of the breakdown have been the reduction of the living standards of billions of people, while creating unprecedented wealth for a capitalist oligarchy occupying the heights of society. Or as Marx put it, the accumulation of wealth at one pole, amid poverty, misery and degradation at the other.

Whatever the immediate outcome, the financial turmoil of the past days has established, as an undeniable reality, the continuing threat of a meltdown of the capitalist economy. It hangs like a sword of Damocles over the working masses of the world, destined to fall, if not in this crisis, then in others to come.

Moreover, one of the most striking features of the latest crisis, is that it was not sparked by the immediate threat of recession but by news that economic growth was enjoying an uptick—the best period of synchronised global growth since 2009, according to the International Monetary Fund. Most significantly, it was triggered by data showing that wages in the US experienced their largest annual rise since 2009.

Most of what passed for analysis in the bourgeois media did little better than the tweet forthcoming from the very limited intelligence of US President Donald Trump. He noted: “In the ‘old days,’ when good news was reported the Stock Market would go up. Today, when good news is reported, the Stock Market goes down. Big mistake and we have so much good (great) news about the economy!”

Trump’s “analysis” omitted a central feature of the market rise over the past nine years. It has not taken place on the basis of “good news” but in a period of the lowest growth in any “recovery” in the post-World War II period. It has been sustained only by the continued inflow of ultra-cheap money from the US Federal Reserve and other major central banks.

Lawrence Summers, former treasury secretary in the Clinton administration and now Harvard professor of economics, was slightly more insightful. “This is not yet a major earthquake,” he wrote. “Whether it’s an early tremor or a random fluctuation remains to be seen. I’m nervous and will stay nervous. [It is] far from clear that good growth and stable finance are compatible.”

Summers is at least vaguely aware that in the present situation there is something deeply troubling for the capitalist class for which he speaks. The very measures undertaken in response to the last crisis, supposedly aimed at restoring economic health and growth, may in fact have created the conditions for another financial disaster as growth begins to rise.

The tendency of the rate of profit to fall

To analyse the present situation, it is necessary to leave the sphere of bourgeois economics—based on the premise that there are no inherent and objective contradictions in the profit system—and probe its historical development on the basis of the laws of motion of the capitalist economy uncovered by Marx.

The ongoing turmoil in financial markets, beginning with the Wall Street crash of October 1987, must be analysed on the basis of one of the most important contradictions of the capitalist economy explained by Marx. That is the long-term tendency of the rate of profit to fall.

This tendency was noted by the foremost representatives of English classical political economy—Adam Smith and David Ricardo—who preceded Marx in the period when the bourgeoisie was a rising and progressive class.

While Smith and Ricardo found the tendency of the rate of profit to fall deeply disturbing, especially the latter because of its implications for the long-term future of the capitalist economy, they were unable to give any scientific explanation for it. That was provided by Marx, beginning with his uncovering of the secret of surplus value.

While Smith and Ricardo had the notion that the origin of surplus value was the labour of the developing working class, its actual source always remained a mystery to Marx’s predecessors. How was it possible, they cudgelled their brains, on the basis of the laws of commodity exchange in the market, where equivalents exchange for equivalents, for a surplus to arise and for this surplus to be appropriated by capital?

Marx’s solution consisted in his probing of the most important commodity exchange in capitalist economy, that between capital and labour. He showed that the commodity which the worker sold to the capitalist was not, as had been previously maintained, his or her labour, but labour power, the capacity to work.

Like every other commodity in the market, labour power’s value was determined by the value of the commodities needed to reproduce it—in this case, the value of the commodities needed to sustain the individual worker and his or her family to ensure the continued supply of wage workers.

Surplus value arose from the difference between the value created by the worker in the course of the working day through the production process, and the value of the commodity, labour power, that the worker sold to capital through the wage contract.

The raw materials and machinery used up in the production process did not add new value, but passed on to the final product the value they already embodied.

Yet the analysis was not yet complete. The rate of profit had to be explained. This rate was not determined at the level of the individual capitalist firm, but at the level of the capitalist economy as a whole. It was given by the ratio of the total surplus value extracted from the working class to the total capital outlaid—the expenditure on labour power plus the expenditure on the means of production, raw materials and machinery.

The tendency of the rate of profit to fall arose not from some external factor, Marx showed, but from a contradiction at the very heart of this process.

The development of capitalist production led to the expansion of the productive forces and the use of ever-larger amounts of raw materials and machinery in the production process. As a result, expenditure on materials and machinery tended to comprise an increasing proportion of the total capital laid out. But this increased expenditure on what Marx called constant capital, as opposed to the expenditure on labour power, or variable capital, did not give rise to additional or surplus value.

Because the rate of profit was determined by the ratio of total surplus value to the total mass of capital—constant and variable—employed, there was an inherent tendency for it to decline.

Now, as Marx clearly identified, there were countervailing factors. These included: the increased exploitation of the working class in order to widen the difference between the value of labour power and the value created by the worker in the course of the working day; the lowering of wages to below the value of labour power, enforced through the creation of unemployment and a surplus working population; the cheapening of the costs of raw materials and machinery, so reducing the total value of capital on which the rate of profit was calculated; and the expansion of foreign trade.

But while these countervailing factors lessened the tendency of the rate of profit to fall, and at times could operate very powerfully—even lifting the profit rate—the basic tendency continually reasserted itself.

Marx characterised the law of the tendency of the rate of profit to fall as the most important law of political economy, above all from an historical point of view. This was because, on the one hand, it drove capital to develop the productive forces in an attempt to overcome its effects, while, on the other, it was the source of the continually recurring crises that beset the capitalist mode of production.

Marx’s critics and the end of the post-war boom

With the development of the post-war capitalist boom, extending from the late 1940s to the early 1970s, Marx’s law, it was claimed, had been refuted by historical events. As had been seen in the case of the German revisionist Eduard Bernstein at the end of the 19th century, the attack on Marx’s analysis came from those who claimed to be his followers, but insisted it needed to be revised and updated.

The assault on Marx’s law of the tendency of the rate of profit to fall was at the centre of one of the most influential books of the late 1960s, Monopoly Capital, written by the “independent” Marxist economist Paul Sweezy in co-authorship with Paul Baran in the midst of the post-war boom.

Sweezy, the founder of the journal Monthly Review, had already cast considerable doubt on the validity of Marx’s law in his first book, The Theory of Capitalist Development, published in 1941. He now maintained that Marx had developed the law under conditions of competition in the 19th century and that in 20th century monopoly capitalism it no longer applied, if it ever had.

Sweezy maintained that the key question confronting capital was not the insufficient extraction of surplus value relative to the ever-growing mass of capital—the issue to which Marx’s law had pointed—but the reverse. Monopoly capital created an increased mass of surplus value that had to be continually “absorbed.”

A key aspect of Sweezy’s theory, flowing directly from his economic analysis, was that in the advanced capitalist countries, dominated by monopolies, the working class was no longer a revolutionary force. The vehicle for socialist revolution, he claimed, was now the masses in the so-called Third World countries, striving for national liberation.

Monopoly Capital is no longer widely read but it continues to exert an influence. David Harvey, for example, adheres to much of Sweezy’s economic analysis, as well as his insistence on the non-revolutionary role of the working class.

However, as so often happens, Sweezy’s “refutation” of Marx came right at the point when developments in the capitalist economy were confirming Marx’s scientific insights. Earlier, Bernstein had maintained that the Marxist analysis of the inevitable breakdown of capitalism was rendered a fiction by the boom beginning in the late 1890s. The collapse of Bernstein’s prognosis came just 14 years after its elaboration, with the outbreak of World War I in 1914.

In Sweezy’s case, his refutation was almost instantaneous. The publication of Monopoly Capital in 1966 came at a point when profit rates in the advanced capitalist economies were starting to turn down. This led to mounting economic problems and the rise of class tensions that were soon to produce potentially revolutionary struggles by the working class from 1968 to 1975.

Starting with the May–June 1968 general strike in France, the largest and most extended in history, and including the 1969 hot autumn in Italy, the 1974 miners’ strike that brought down the Tory government in Britain, the revolutionary situation in Chile (1970–73) and the upheavals in the US, to name just some of the events, world capitalism was shaken to its foundations.

With the direct collaboration of the Stalinist, social democratic and trade union apparatuses, which betrayed these struggles, the capitalist classes were able to bring the situation under control and maintain their rule.

However, the underlying economic problems of the US and other major capitalist economies, rooted in declining profit rates, remained. Having kept themselves in the saddle, the ruling classes undertook a massive offensive against the working class, coupled with a restructuring the world economy.

The global counter-offensive was initiated in the US under Federal Reserve chairman Paul Volcker, who put in place a high-interest rate regime. Its purpose was two-fold: to wipe out unprofitable sections of industry and force a major industrial restructure, and eliminate the large industrial complexes that were the centres of militant working class struggles in an earlier period. The Volcker purge had vast global ramifications, leading in 1982–83 to the most serious global recession since the Great Depression.

The decade of the 1980s was characterised by major class battles, of which the mass sacking of US air traffic controllers in 1981 by Reagan and the state violence unleashed by the Thatcher Tory government against the British miners’ strike in 1984–85 were two of the most prominent. The decade also saw a fundamental transformation in the role of the trade unions. From organisations that had fought for limited gains by the working class, they betrayed all of its struggles as they became the chief enforcers of the program of pro-market, capitalist restructuring.

The attack on the social position of the working class—aimed at increasing the extraction of surplus value to counter the fall in the rate of profit—was accompanied by a reorganisation of production, through downsizing and globalisation to take advantage of cheaper sources of labour.

The growth of financial speculation

Crucial to this restructuring was the freeing of financial capital from the restrictions and regulations that were set in place following the disastrous experiences of the 1930s. The growing operations of finance, through the issuing of so-called junk bonds and other measures, were central to hostile takeovers, downsizing and mergers and acquisitions that transformed the organisation of capitalist production.

At the same time, the pressure on profit rates, as Marx predicted, resulted in a turn by capital to operations in the financial markets and speculative ventures as a means of profit accumulation.

This process led to financial storms by the end of the 1980s, with the eruption of the savings and loans debacle and the October 1987 share market crash, in which the Dow plunged by more than 22 percent in a single day.

The response of the incoming Federal Reserve chairman, Alan Greenspan, represented a major turning point. He committed the central bank to the provision of liquidity to the financial markets in what became known as the “Greenspan put.” In effect, the Fed became the guarantor to the financial markets, reversing previous policy.

While the October 1987 crash was the most severe one-day fall in history—a position it retains to this day—it did not lead to a broader crisis in the economy as a whole.

This was because the onslaught against the working class in the US and the first wave of globalisation, marked by the transfer of large areas of industrial production to the cheaper-labour countries of East Asia, the “Asian Tigers,” was beginning to lift the rate of profit.

This was reinforced after 1991 with the liquidation of the Soviet Union and the consequent abandonment by countries such as India of their nationally-regulated development programs and the increasing turn to the free market.

Most significant was the restoration of capitalism in China and its opening up to global corporations. China, which became a source of cheap labour production in the 1980s through the establishment of special economic zones, opened up still further. The Tiananmen Square massacre of June 1989 was the signal by the Chinese Communist Party regime that it stood ready, by whatever means necessary, to ensure the exploitation of the Chinese working class by global capital.

In the first period of the Clinton presidency, beginning in 1993, the US economy enjoyed rising profit rates as a result of the boost provided by the exploitation of cheaper labour, paid as little as one thirtieth of US wages.

However, the basic tendency identified by Marx began to reassert itself from around 1997, when the average US profit rate began to turn down. As a result, the accumulation of profits by financial means, which had grown by leaps and bounds in the 1990s, became increasingly vulnerable.

By 1996, Greenspan pointed to what he called “irrational exuberance,” expressed in the tendency of stock prices to become ever-more divorced from the real economy. This warning, however, came to nothing. Greenspan, responding to the dictates and demands of finance capital, turned more openly to the provision of cheap money for speculation.

The Asian financial crisis of 1997–98 was a significant turning point. It produced a depression in South-East Asia equivalent in scope to that of the 1930s in the advanced capitalist countries, but Clinton dismissed it as a mere “glitch” on the road to globalisation.

That was followed by the 1998 collapse of the US investment fund Long Term Capital Management, which had to be wound up in an operation conducted by the New York Federal Reserve, lest its demise brought down the whole financial system.

The dot.com bubble was then getting under way as the Fed provided ever-cheaper money. And at the behest of the financial markets, the last remnants of the regulatory mechanisms controlling their predatory operations, put in place as a result of the 1930s depression, were scrapped with the Clinton administration’s 1999 repeal of the Glass-Steagall Act.

The 2001 collapse of Enron revealed the dubious practices and outright criminality that increasingly marked the speculative financial bubble. Enron had pioneered new accounting practices in which profit was decided in advance to meet market expectations and then the accounts were manipulated to show the desired result.

Following the collapse of the tech and dot.com bubble, finance capital turned to the development of new methods for speculative profit accumulation, again facilitated with cheap money from the Fed. It developed highly complex and arcane financial derivatives, centred on the sub-prime mortgage market, but extending well beyond it. Goldman Sachs, among others, was a key player. It issued new products that it knew would eventually fail, but made money in the meantime by financing both sides of the deals.

The 2008 global financial crisis

In April 2007, the then chairman of the Fed, Ben Bernanke, dismissed the possibility that the growing signs of problems with sub-prime mortgages could impact the broader market because these products only amounted to a $50 billion operation.

However, when the crisis erupted, it engulfed the entire financial system, threatening to bring down the insurance giant AIG following the collapse of Lehman Brothers. This was because the methods employed in the sub-prime market were not “rogue” activities but typical of the financial markets as a whole.

The response of the Fed and other central banks to the 2008 crisis marked another decisive turning point. No longer was it a question of stepping in to rescue a failed individual firm. Massive intervention was required to prop up the US and global financial system as a whole.

The lowering of interest rates to historic lows—in some cases to negative levels—and the injection of trillions of dollars into the financial system did not overcome the contradictions manifested in speculation—the expression of the laws of the capitalist mode of production laid bare by Marx—but exacerbated them.

The rise and rise of financial wealth accumulation in the decade following the 2008 crisis is not the outcome of growth in the real economy. In fact, the “recovery” since 2009 has been the weakest in the post-war period, and marked by the fall of investment in the real economy to historic lows and a decline in productivity.

After the Lehman crisis, finance capital responded to the blowing up of its previous mechanisms for profit accumulation via speculation by creating new ones. One of these, exchange traded notes based on “shorting” the volatility index, or Vix—that is, betting on continued market calm, has now resulted in the most significant turbulence since the 2008 crash.

However, these new forms of speculation are only a trigger. The broader significance of the recent volatility and whatever else eventuates—no one is sure that the storm has passed—is that it was provoked by the prospect of faster growth and a push by the working class for higher wages following decades of the suppression of the class struggle.

Economic events have once again confirmed the essential conclusion of Marx’s analysis of the laws of motion of the capitalist economy. Whatever its ups and downs and even periods of long upturn, the accumulation of profit—the essential driving force of capitalism—is, in the final analysis, based on the ongoing suppression of the working class and its impoverishment.

The lie, which forms the basis of all bourgeois economics, that somehow the growth of capitalist economy can, at least in the long run, provide the road to advancement for the mass of humanity, the working class, the producers of all wealth, has been exposed. It has been laid bare by the fact that signs of economic growth and a growing movement of workers against the decline in living standards have raised the prospect of a new financial disaster, even more serious than that of a decade ago.

Marx’s analysis of the laws of motion of capital—laws which express themselves, as he put it, in the same way that the law of gravity asserts itself when a house collapses around our ears—far from being refuted or rendered outdated, have been confirmed by living events.

This analysis, and Marx’s central conclusion that the working class has to take conscious control of the very wealth it has produced, must become its guiding perspective in the struggles now unfolding.

This historic task does not arise out of an abstract theoretical construct. In opposition to all the nostrums of bourgeois economy, which are self-serving justifications of the capitalist system, Marx’s analysis is a scientific elaboration of the objective tendencies and inherent logic of capitalist development.

This logic, which assumes ever-more explosive forms, now poses directly before the international working class the necessity, if humanity is to avert a catastrophe and advance, to fight in every struggle for a perspective based on the overthrow of the reactionary and historically-outmoded profit system. That is the essential meaning of the latest round of turmoil on the financial markets.

World Socialist Website

Democracy is more fragile than many of us realised, but don’t believe that it is doomed – Andrew Rawnsley.

The dismantling of freedom begins with attacks on unfettered media and an independent judiciary.

Nothing ages so badly as visions of the future. When the fall of the Berlin Wall was followed by the implosion of the Soviet Union, Francis Fukuyama celebrated by publishing his bestseller, The End of History and the Last Man. The book argued that, with the demise of its main ideological competitor, the world would belong to liberal democracy. He has been much mocked since for failing to foresee that democracy would face the emergence of fresh threats and the resurgence of old foes in new guises in the shape of nationalism, religious extremism, autocratic capitalism, unaccountable tech titans, cyber warfare and even, in the case of North Korea, legacy Stalinism. But fair’s fair. For a while at least, his thesis was true.

The end of the Cold War accelerated what is sometimes referred to as “the third wave” of democratisation in the late 20th century. The peoples of eastern Europe were liberated to choose their own governments. African presidents-for-life were sent into retirement. Much of Latin America, once a grisly tableau of coups, insurgencies, juntas and death squads, embraced the tenets of democracy. India was no longer a shining exception to autocracy in developing Asia, as more of the world’s most populous continent followed the democratic path. By the turn of the century, more than 100 countries could be reasonably classified as democracies, albeit often flawed ones. A hundred years before, you could barely find 10 democracies on the world map. If your definition of democracy includes, as really it ought to, women having the vote, then there was New Zealand by 1900 and some bits of Australia and that was it.

Democracy won the 20th century. The hubristic mistake was to think that this trend was so powerful that it could not be reversed. The size of that error is illustrated by the latest report from Freedom House, a non-partisan thinktank that conducts an annual audit of global freedom. The fundamentals of democracy, particularly regular and honest elections, a free media, the rule of law and the rights of minorities, are under attack around the world. Last year was the 12th consecutive one in which the number of countries becoming more free were outnumbered by those becoming less so. The report’s authors conclude that “democracy is in crisis”.

Does the evidence justify this alarming assessment? Some autocratic brutes have been given the boot, among them Robert Mugabe, whose removal at least gives the possibility of a better future for Zimbabwe. Many countries remain robustly democratic. Britons may feel a squeak of patriotic pride that Freedom House awards a high 94 points to our country. You have to be Scandinavian to achieve the maximum 100.

It is hard, though, to disagree that the big picture is a negative one. From Venezuela to the Philippines, more countries have become less free. And many of those countries that remain democracies are becoming more dysfunctional. The charnel house that is Syria is a daily reminder that the hopes associated with the Arab spring have crumbled into the dust. Tunisia, democracy’s lonely outpost in the Arab world, is now very troubled. Closer to home, there is the slide into autocratic rule in Turkey and creeping authoritarianism in Poland and Hungary, countries that had been presumed to be permanent gains for liberal democracy. The danger here is not so much the old spectre of tanks on the streets. The dismantling of freedom begins with attacks on what some call “the soft guard rails” of democracy: unfettered media, an independent judiciary, a basic level of respect for political opponents. Freedom is not devoured in one gulp, but in a series of bite-size chunks.

Political scientists are conducting a lively argument about how worried we should be and what has caused this global retreat, but I think we can pick out some clear drivers of what has gone wrong. Start with the democratic victors of the Cold War. Their cohesion and confidence are being corroded by economic pressures, social inequalities, rebellions against the consequences of globalisation and a resurgence of nationalism and regionalism. Populists of left and right have exploited voter anger to gain support and parliamentary seats across Europe. The result is that they have got into power in some places and in others made it harder for mainstream parties to form viable coalitions, as in the Netherlands and Germany. This wave has not yet broken. Ahead of Italy’s elections in March, populists of left and right lead the polls and have cornered two thirds of the electorate.

Populists have profited at the ballot box by telling voters that democracy is a sham or a scam rigged in favour of outsiders or an elite or both. The populist prescriptions are nearly always snake oil, but their diagnosis has resonance with many voters because the economic discontents are real. It is no coincidence, as the old Marxists liked to say, that western democracy has come under so much stress since the Great Crash of 2008 and the protracted squeeze on living standards that has followed it.

In western countries that previously promoted liberal values, there is what Human Rights Watch calls a “frontal assault on the values of inclusivity, tolerance and respect”. America is mesmerised by Trump. Britain is obsessed with Brexit. Germany struggles to put together a government. All have become fractiously inward looking. This has bloody consequences for the rest of the world, by helping to allow mass atrocities in Myanmar, South Sudan, Syria and Yemen to continue with near impunity.

The United States has shrunk from its traditional role as exemplar of democracy and global champion of it. America was always extremely imperfect in this role, but its postwar leaders at least paid lip service to the idea that the shining city on the hill should be a beacon of liberty. The Oval Office is occupied by a president who has spent his first year in office trashing democratic norms at home while expressing no sense of responsibility to be an advocate for universal human rights. He has triggered a plunge in international respect for American leadership to a record low. The United States has often in the past been an enabler of undemocratic regimes, but never before has it had a president who expresses so much open admiration for authoritarians in the Kremlin and elsewhere, and so much undisguised contempt for his country’s traditional allies among the other democracies.

Division and disarray among democracies has encouraged the pursuit of an aggressively anti-freedom agenda by the major autocracies, China and Russia. During the optimism of the third wave, it was presumed that democracy had a world-winning formula. The more prosperous countries became, the more they would want to be free; the more free they were, the more prosperous they would become. The belief that a richer China ought to become a more liberal China is not shared by President Xi Jinping. He is intensifying repression at home and promoting the Chinese model of autocratic capitalism as a superior recipe for stability and prosperity. It was Xi’s recent boast that China is “blazing a trail” for developing countries to emulate. China’s autocrats blaze while the democracies fiddle.

As is their way, political scientists have seen a disturbing phenomenon and given it geeky labels. Some call it “democratic deconsolidation”. Others go for “democratic recession”. I prefer “recession”, because at least that description implies a seed of hope that this trend does not have to be permanent. Recessions can and usually do come to an end.

Reading the recent flurry of reports about the endangerment of liberty around the world, you could be driven to the despairing conclusion that democracy is dying. That fatalism would be as large an error as the assumption that democracy would be everywhere and permanently triumphant. Democracy has a lot going for it, not least that it is a better form of government than any other type that the human race has yet managed to design. Millions of South Koreans are not trying to flee to the north. There was something both bizarre and fantastic about watching the White House physician take questions from reporters about the most intimate details of the president’s health on live and global television. They don’t do that in dictatorships.

Democracy is not doomed. The lesson of the past decade is the subtler one that democracy is more fragile, vulnerable and contingent than many liberals have often complacently supposed. The arc of history is not irreversibly bent in favour of freedom. The case for it has to be renewed and reinvigorated for each generation. The biggest mistake we make about democracy is to take it for granted.

The Guardian

The Economists Who Stole Christmas – Yanis Varoufakis. 

To welcome the New Year with a cheeky take on the clash of economic ideologies, how might opposing camps’ representatives view Christmas presents? Levity aside, the answer reveals the pompousness and vacuity of each and every economic theory.

Neoclassicists: Given their view of individuals as utility-maximizing algorithms, and their obsession with a paradigm of purely utility-driven transactions, neoclassical economists can see no point in such a fundamentally inefficient form of exchange as Christmas gift-giving. When Jill receives a present from Jack that cost him $X, but which gives her less utility than she would gain from commodity Y, which retails for $Y (that is less than or equal to $X), Jill is forced either to accept this utility loss or to undertake the costly and usually imperfect business of exchanging Jack’s gift for Y. Either way, there is a deadweight loss involved.

In this sense, the only efficient gift is an envelope of cash. But, because Christmas is about exchanging gifts, as opposed to one-sided offerings, what would be the purpose in Jack and Jill exchanging envelopes of cash? If they contain the same amounts, the exercise is pointless. If not, the exchange is embarrassing to the person who has given less and can damage Jack and Jill’s relationship irreparably. The neoclassicist thus endorses the Scrooge hypothesis: the best gift is no gift.

Keynesians: To prevent recessions from turning into depressions, a fall in aggregate demand must be reversed through increased investment, which requires that entrepreneurs believe that increased consumption will mop up the additional output that new investments will bring about. The neoclassical elimination of Christmas gift exchange, or even the containment of Christmas largesse, would be disastrous during recessionary periods.

Indeed, Keynesians might go so far as to argue that it is the government’s job to encourage gift exchanges (as long as the gifts are purchased, rather than handcrafted or home produced), and even to subsidize gift giving by reducing sales taxes during the holiday season. And why stop at just one holiday season? During recessionary times, two or three Christmases might be advisable (preferably spaced out during the year).

But Keynesians also stress the importance of reining in the government deficit, as well as overall consumption, when the economy is booming. To that end, they might recommend a special gift or sales tax during the festive season once growth has recovered, or even canceling Christmas when the pace of GDP growth exceeds that consistent with full employment.

Monetarists: Convinced that the money supply should be the government’s sole economic-policy tool, and that it should be used solely to maintain price stability through equilibration of the money supply vis-á-vis aggregate production, the central bank should gradually increase nominal interest rates once summer ends and reduce them sharply every January. The changes in nominal interest rates they recommend depend on the central bank’s inflation target and the economy’s underlying real interest rate, and must reflect the rates necessary to keep the pace of change in consumption demand and large retailers’ inventories balanced. (Yes, it’s true: Monetarists are the dullest economists to ever have walked the planet!)

Rational Expectations: These Chicago School economists disagree with both Keynesians and monetarists. Unlike the Keynesians, they think a fiscal stimulus of Christmas gift spending in recessionary festive seasons will not encourage gift producers to boost output. Entrepreneurs will not be fooled by government intervention, and will foresee that the current increase in demand for gifts will be offset in the long run by a sharp drop (as government subsidies turn into increased taxation and fewer Christmases are observed during the good times). With output and employment remaining flat, government subsidies and additional Christmases will merely produce more debt and higher prices.

Austrian School libertarians: Supporters of Friedrich von Hayek and Ludwig von Mises have two major objections to Christmas. First, there is the illiberal aspect of the holiday season: the state has no right, and no reason, to force entrepreneurs to close down, against their will (for four days December 25 and 26, and January 1 and 2) over the course of a fortnight. Second, the ever-lengthening pre-Christmas consumption boom tends to expand credit, thus causing bubbles in the toy and electronics market during the fall that will burst in January, with potentially damaging consequences for the rest of the year.

Empiricists: Convinced that observation is our only tool against economic ignorance, empiricists are certain that the only defensible theoretical propositions are those derived from discerning patterns whereby changes in exogenous variables constantly precede changes in endogenous variables, thus establishing empirically (for example, through Granger tests) the direction of causality. This perspective leads empiricists to the safe conclusion that Christmas, and a spurt in gift exchanges, is caused by a prior increase in the money supply and, ceteris paribus, a drop in savings.

Marxists: In societies in which profit is derived exclusively from surplus value “donated” (as part of the capitalist labor process) by workers, and which reflects the capitalists’ extractive power (bequeathed to them by one-sided property rights over the means of production), the Christmas tradition of gift exchange packs dialectical significance.

On one hand, Christmas gift giving is an oasis of non-market exchange that points to the possibility of a non-capitalist system of distribution. On the other hand, it offers capital another opportunity to harness humanity’s finest instincts to profit maximization, through the commodification of all that is pure and good about the festive season. And purists – those who still defend the “law of the falling (long-term) rate of profit” – would say that capital’s capacity to profit from Christmas diminishes from year to year, thus giving rise to social and political forces which, in the long run, will undermine the festive season.

Obviously, none of these theories can possibly account for why people participate, year in and year out, in the ritual of holiday gift giving. For that, we should be grateful.

*

Yanis Varoufakis, a former finance minister of Greece, is Professor of Economics at the University of Athens.

Project Syndicate 

WHY THE LEFT LOSES.  The decline of the centre-left in comparative perspective – Rob Manwaring and Paul Kennedy. 

Foreword 

Sheri Berman 

The decline of the centre-left over the past years is one of the most alarming trends in Western politics. During the latter part of the 20th century such parties either ran the government or led the loyal Opposition in virtually every Western democracy. 

Germany’s Social Democratic Party (SPD), once the most powerful party of the left in continental Europe, currently polls in high 20s or 30s. The French Socialist Party was eviscerated in the 2017 elections, as was the Dutch Labour Party. Even the vaunted Scandinavian social democratic parties are struggling, reduced to vote shares in the 30 per cent range. The British Labour Party and the US Democrats have been protected from challengers by their country’s first-past-the-post electoral systems, but the former has recently taken a sharp turn to the hard-left under Jeremy Corbyn, while the latter, although still competitive at the national level, is a minority party at the state and local levels, where a hard-right Republican Party dominates the scene. 

The decline of the centre-left has hurt Western democracy. It has left voters free to be captured by extremist parties, particularly of the far-right populist variety, which threaten the liberal and perhaps even democratic nature of Western politics. In addition, centre-left parties played a crucial role in creating and maintaining the post-war order on which stable democracy was built following the Second World War. Without a revival of the centre-left, it is hard to see how this order and perhaps even well functioning democracy can be resuscitated. 

This book analyses the decline of the centre-left, and in so doing, may provide its supporters with the insights necessary to revitalise it. Why the left loses focuses on three main issues the centre-left must confront: leadership, institutions/ structural change and message/ vision. 

The first is the most straightforward, but nonetheless crucial. Leaders represent and personify what parties stand for; in order to win, the centre-left needs leaders who can connect to a diverse and demanding electorate, and attractively, forcefully and effectively convey their party’s messages. 

Attracting such leaders does not, of course, happen in a vacuum. Talented and ambitious individuals are drawn to parties they believe can deal with the challenges of the day. 

This brings us to issues of institutions/ structural change and message/ vision. Institutional and structural changes over the last decades in domestic and international political economies have created major challenges for all traditional political parties, but particularly for those of the centre-left. 

After 1945 in Western Europe (and beginning with the New Deal in the US), the West began constructing a new type of political economy, one that could ensure economic growth while at the same time protecting societies from capitalism’s destructive and destabilising consequences. 

This order represented a decisive break with the past: states would not be limited to ensuring that markets could grow and flourish, nor would economic interests be given the widest possible leeway. Instead, after 1945 the state was to become the guardian of society rather than the economy, and economic imperatives would sometimes have to take a back seat to social ones. 

This post-war order represented something historically unusual: capitalism remained, but it was capitalism of a very different type than had existed before the war – one tempered and limited by the power of the democratic state, and often made subservient to the goals of social stability and solidarity, rather than the other way round. This was a farcry from the revolutionary destruction of the capitalist order that orthodox Marxists, communists and others on the far left had demanded during the pre-war period, but it still varied significantly from what liberals had long favoured – namely, giving as much free rein to markets as possible. 

This was, in short, a social democratic order – and it worked remarkably well. Despite fears after the war that it would perhaps take decades for Europe to recover economically, by the early 1950s most of Europe had easily surpassed interwar economic figures, and the 30 years after 1945 were Europe’s fastest period of growth ever. 

The restructured political economies of the post-war era seemed to offer something to everyone, and this, in turn, helped to eliminate the belief – long held by liberals, Marxists and others – that democratic states could not or would not protect particular groups’ interests. 

Because the centre-left was most closely associated with this order and the most determined defender of it, it had the most to lose from its demise. And so the pressures put on this order since the 1970s by increasing globalisation, growing government deficits and the neoliberal and eventually austerity policies adopted by the European Union (EU) have left the centre-left scrambling to come up with new strategies for getting economies moving again, while also ensuring that democratic states continued to protect citizens from the changes brought by ever-evolving capitalism. 

Alongside changes in domestic and international political economies, centre-left parties have also been challenged by social and cultural shifts that began in the 1960s and threatened traditional identities, communities and mores – a process further exacerbated, particularly in Europe, by growing immigration. Together these trends helped erode the social solidarity and sense of shared national purpose that had supported the social democratic post-war order and helped to stabilise European democracies in the decades following the Second World War. 

The US faced its own version of this with the growing political incorporation and mobilisation of minority groups since the civil rights era, and the increasing shift towards a non-majority white population destabilising traditional social and political patterns. 

But economic, social and cultural institutional and structural changes have not doomed the centre-left to oblivion. They represent challenges, and how the centre-left (or any other party) responds to challenges determines how voters react and political systems evolve. The problem for the centre-left, in other words, is not merely the challenges it has faced over the past decades so much as its lack of convincing and coherent responses to them. 

Here is where Why the left loses‘ third issue comes in: message/ vision. After the 2008 financial crisis many observers expected a significant swing to the left among Western electorates, since many blamed the economy’s problems on the neoliberal policies that had proliferated during the end of the 20th and beginning of the 21st centuries. 

But the centre-left lacked a convincing message for dealing with the crisis, or a more general vision of how to promote growth while protecting citizens from the harsher aspects of free markets. Instead, it kept on trying to defend out-dated policies or proposed watered-down versions of neoliberalism that barely differentiated it from the centre-right. 

The centre-left also lacked a convincing message about how to deal with increasing diversity or a vision of social solidarity appropriate to changing demographic and cultural realities. Instead, the centre-left either ignored the challenge of diversity or especially among the intellectual left, put forward a message of ‘multiculturalism’ –neither of these responses was able to stem social conflict or electoral flight from the left, especially on the part of the working class. 

It has now become fairly commonplace to note the support given by traditionally centre-left voters to the populist right. This connection was on obvious display in the Brexit referendum, where many traditional Labour strongholds and supporters voted to leave the EU, and it has been a prominent feature of elections in Europe as working-class voters have flocked to right-wing populist parties. And, of course, a version of this was present in the US, where Donald Trump garnered disproportionate support from less-educated and working-class voters. 

What is still worth stressing, however, is the causal connection between the failures or missteps of the centre-left and the rise of right-wing populist parties that offered simple, straightforward messages in response to citizens’ economic and social fears. 

Economically, the populist right promises to promote prosperity, via increased government control of the economy and limits on globalisation. Socially, the populist right promises to restore social solidarity and a sense of shared national purpose, by expelling foreigners or severely limiting immigration, diminishing the influence of the EU and globalisation, and protecting traditional values, identities and mores. 

For those who bemoan the decline of the centre-left and the rise of the populist right, the challenge is clear: you can’t beat something with nothing, and if the centre-left can’t come up with more viable and attractive messages about how to solve contemporary problems, and a more attractive vision of the future than those offered by its competitors, it can expect to continue its slide into the dust heap of history. 

The following chapters provide an excellent starting point for the debate about the centre-left’s future. 

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ONE 

Why the left loses: understanding the comparative decline of the centre-left.  

Rob Manwaring and Paul Kennedy 

Introduction 

Since the global financial crisis (GFC), if not before, there has been a general decline in the fortunes of social democratic and labour parties. Against these recent developments, there is a long-standing literature that appraises the electoral performance and impact of the left more broadly (Przeworski and Sprague, 1986; Kitschelt, 1994; Moschonas, 2002). 

Much of the literature on social democracy tends to be pessimistic, and there is a plethora of research that denotes recent developments as a ‘crisis’, on the ‘back foot’, ‘in retreat’, and perhaps most arrestingly, as ‘dead’ (Gray, 1996; Pierson, 2001; Keating and McCrone, 2013; Lavelle, 2013; Ludwigshafen et al, 2016). 

In a prescient address at the London School of Economics and Political Science (LSE) in 2011, David Miliband catalogued the general wreckage of the electoral fortunes of the centre-left across Western Europe. In his critical survey of European social democracy, he noted: 

• The UK General Election in 2010 – the second worst result for Labour since 1918. 

• Sweden, also in 2010 – the worst result since 1911. 

• Germany in 2009 – the worst result since the founding of the Federal Republic, with a greater loss of support than any party in the history of the country. 

• France in 2007 – the worst result since 1969. 

• The Netherlands in 2009 – a traumatic transition from a junior coalition partner to Opposition. 

• Italy – a yo-yo in and out of power, with personal and political divisions disabling opposition to Berlusconi. 

More recent results generally confirm this overall trend, with British Labour losing both the 2015 and 2017 general elections. 

The Dutch general election in early 2017 saw the worst-ever result for the Dutch Labour Party (PvDA, Partij van de Arbeid). The PvDA lost 29 seats, only holding 9 in the 150-seat Parliament. The Dutch result is something of an outlier for the misfortunes of the centre-left. 

Later in this chapter we survey the state of the left more widely. This collected volume investigates the electoral fortunes of the family of centre-left labour and social democratic political parties. In this chapter we set out the aims and scope of the volume, and its contribution to understanding the comparative political decline of the centre-left. 

After mapping the electoral fortunes of centre-left political parties, we then locate this volume in the current literature, and set out the distinctive approach offered here. From our perspective, one of the deficiencies of the current literature is that it focuses almost exclusively on the family of (mostly Western) European social democratic and labour parties. While much of this literature is incisive and important, we have a nagging concern that this narrow focus is missing a key part of the wider story. 

As we outline below, we need to expand the explanatory universe to better understand the current plight of the centre-left. 

We have been a little mischievous in the title of this volume – Why the left loses –and it would be useful here to clarify the book’s scope. The volume is not called ‘Why the left always loses’ or ‘Why the left will never win again’. Rather, the focus is on examining the current electoral performance of a cohort of the family of social democratic and labour political parties within a specific timeframe (broadly, 2008-16). 

The title of the volume is deliberately provocative, in part, because we hope that it will reach a wider readership than just the academy. The term ‘left’ is deployed here as a proxy for these groups of political parties. 

Our focus remains their fate of – often, but not always – the main carriers of wider social democratic values. The book does not seek to argue that the values and ideas associated with the ‘left’ are in decline –indeed, we argue that in a number of cases the opposite is true, that they have been readily co-opted by a number of parties on the centre-right, and other populist challengers. Nor are we suggesting that there are common or single causes for the current state of the full suite of centre-left political parties. And to be clear, by ‘left’ we mostly focus on the long-standing social democratic and labour parties rather than some of the alternative ‘socialist’ or ‘left’ parties such as Die Linke established in Germany in 2007. 

The social democratic parties remain important political actors, even if they are not in the best of electoral health. The risk with the title Why the left loses is that by the time the volume is published, there will have been a turnaround in the electoral fortunes of the social democratic parties. Indeed, it was just at the point of Blair and Schröder declaring the hegemonic victory of the Third Way/Neue Mitte that the fortunes of the left began to decline. 

As Ralf Dahrendorf noted in a telling intervention, the highpoint in the late 1990s for the centre-left masked other key changes in the party systems of the advanced industrial democracies: The real trend – which is underlined by the European elections – is towards non-traditional parties, many of which did not exist 20 years ago. (Dahrendorf, 1999) 

The key issue is that while the late 1990s may have signalled something like the ‘magical return’ of social democracy, we are more circumspect in predicting a ‘second coming’ by the time this volume is released. 

Moreover, if there were to be a revival of the centre-left, and clearly many of the writers in this volume would welcome a return to a more full-bloodied variant of social democratic politics, it would not necessarily undermine the central focus of the book. We look to explain why the left has been doing poorly in this period under review. Indeed, in one of our cases – state Labor in Australia – there has been something of a revival of the centre-left. 

Overall, we focus predominately on the period from the mid-2000s to the mid-2010s. The crucial event here is the impact of the global financial crisis (GFC), and the response of the parties to this latest rupture in the global capitalist system. The response has not been overwhelming. 

The state of the left

There have been a number of recent surveys of the family of social democratic parties (Keating and McCrone, 2013; Bailey et al, 2014, p 8), with the focus predominately on the European parties. Here we offer a related, but broader, survey. 

While there is no clear, uniform trend, the overall picture is rather dismal for centre-left parties (see Table 1.1). In France, the 2012 presidential election win proved a temporary highpoint for the Parti socialiste (PS) under François Hollande. Indeed, the seven-year term of the presidency arguably overstates the dominance of the PS. 

As outlined by Sophie Di Francesco-Mayot (see Chapter 10), there is a strong case that while the left was in office, it was ‘losing the battle of ideas’. It was striking, and perhaps not that surprising, when Hollande announced that he would not be contesting the 2017 presidential elections –the first post-war president not to seek office. Strikingly, PS did not make the second round run-off in the 2017 presidential election, much like the dismal 2002 election. Indeed, the Macron phenomenon would suggest a further decline and fragmentation of the centre-left. 

Table 1.1: Centre-left parties in Office and Opposition (2008-16)

Note: In Canada Justin Trudeau took the Liberal Party into office. There is a dispute as to whether to categorise the Liberals as centrist or social democratic, given the New Democratic Party espouses the clearest social democratic programme in Canada. Source: European data drawn in part from Bailey et al (2014, p 9) 

In Germany, the centre-left SPD (Sozialdemokratische Partei Deutschlands, or Social Democratic Party of Germany) has been unable for quite some time to puncture the dominance of Angela Merkel’s CDU (Christian Democratic Union). Since 2005, Merkel has been unassailable in German politics, with the SPD first as a junior coalition partner, then back in Opposition. At the 2013 election, Merkel reluctantly turned to the SPD as junior partner once again. 

In Uwe Jun’s account (see Chapter 7), the factors for the SPD’s electoral health are examined. What is striking about the SPD is that like other cases considered here, its troubles pre-date the GFC. To a large extent, the SPD, like the SAP (Swedish Social Democratic Party) and the UK Labour Party, is experiencing a prolonged hangover from its turn to the Third Way. 

In Spain, the picture is arguably more pessimistic for the PSOE (Spanish Socialist Workers’ Party). Since losing office in 2011, the party has lost consecutive general elections in 2015 and 2016, and, as Paul Kennedy outlines in his overview (see Chapter 9), it faces a range of pressures, not least the emergence of the left-populist Podemos party in 2014. Over this time, the PSOE has been haemorrhaging votes. As Kennedy notes, while the PSOE has not yet faced its own version of ‘Pasokification’ (the ultimate destruction of the once dominant Greek social democrats), its future is far from assured. 

In Sweden, often claimed as having the purest form of social democracy, the SAP finds itself in turbulent times. It was in office from 1994 to 2002; it then lost both the 2006 and 2010 elections, and narrowly won the 2014 election, governing in coalition with the Green Party. The 2014 results obscure the thinness of SAP’s victory with only a minor improvement of its vote, at 31 per cent. 

Here, we see a clear example of arguably a structural trend facing centre-left parties –a narrowing of its voter base. Whereas the PSOE faces a left-populist challenge, the striking characteristic of the Swedish party system has been the emergence of the nationalist right-populist Swedish Democrats. As Claes Belfrage and Mikko Kuisma argue (see Chapter 8), the SAP is confronted by long-standing economic constraints imposed by the capitalist system and is playing something of a ‘losing game’. It remains unclear how far the 2014 result signifies a meaningful revival of the centre-left. 

While this volume confines its European focus to these countries, the outlook for the centre-left across Europe is mixed, at best. In Italy, the fortunes of the centre-left have been –in David Miliband’s words –something of a ‘yo-yo’. The centre-right was dominant from 2001 to 2006. Under Romano Prodi, the centre-left briefly resumed office (2006-08), before losing again to the centre-right in 2008. It is telling that after the GFC, the Italian electorate placed its faith in the ‘technocratic’ government of Mario Monti, until the centre-left bloc took over in 2013. This recent development, however, can hardly be considered stable government, and the development of Beppe Grillo’s Five Star Movement presents another populist challenge to both left and right. 

In The Netherlands, the 2017 election was catastrophic for the PvDA. Prior to this calamity, it was in Opposition between 2002 and 2006, and again between 2010 and 2012. At the 2012 elections it entered as a junior partner in coalition with the centre-right VVD (People’s Party for Freedom and Democracy). In the multi-party Dutch system, the PvDA has been unable to secure a firmer electoral base, and again, a xenophobic populist party – in this case, led by the ubiquitous Geert Wilders – poses both a strategic and ideational dilemma for both left and right. It appears that the left not only loses elections; it can’t win them outright either. 

In Austria, while the SPŐ (Social Democratic Party of Austria) has been the largest partner (just) in a grand coalition, Austrian politics has seen the emergence of the far-right, and both major parties recorded their worst ever results at the 2008 legislative elections. 

In Norway, Jens Stoltenberg’s Labour party (AAP) was a dominant force from 2005-13, but lost power to the centre-right bloc. 

While these cases are not considered here, they remain emblematic of a range of problems and dilemmas facing social democratic and labour parties, especially in the context of a shifting party system, with new populist challengers. 

We also include and survey the fortunes of the centre-left in the Anglosphere, and here we focus our attention on Australia, New Zealand, Canada and the UK. Controversially for some, we locate the UK Labour Party outside the core European family of social democratic parties (although the Brexit result provides further support for this case). 

As a range of writers and indeed, Labour figures, have pointed out, the UK Labour Party often has more in common with its Antipodean Labour sisters than its European social democratic counterparts.

 As Rob Manwaring and Matt Beech outline in Chapter 2, the picture here is fairly dismal for the centre-left. Labour has experienced ‘Pasokification’ in Scotland, and since the fall of New Labour in 2010 has been unable to claw its way back into power. While the 2010 result was widely anticipated, Labour’s loss to the Conservatives in 2015 was not. While Corbyn-led Labour secured a better-than-expected result at the 2017 general election, Labour has now lost three elections in a row since Tony Blair stepped down as leader. 

Elsewhere, there is a catalogue of defeat for the left. In two different contexts, Canada and New Zealand, there has been a dominance of the centre-right. From 2008-15, Stephen Harper’s Conservative party has dominated Canadian politics, and it is only with the recent win of Justin Trudeau that there has been some shifting back to a more left-leaning position. Yet, as David McGrane outlines in Chapter 3, the fate of the NDP (New Democratic Party) illustrates the difficulty of seeking to impose a social democratic settlement at a time of Liberal Party resurgence. Strikingly, at the 2011 election, the NDP seemingly made a key breakthrough under the leadership of Jack Layton, but the fortunes of the NDP have since declined. 

Likewise, in New Zealand, the NZ Labour Party has been unsuccessful in dislodging the centre-right National Party under the dominant leadership of John Key. Labour lost three straight elections, and despite the unexpected resignation of Key at the end of 2016, its chances of winning at the 2017 general election look marginal at best. Grant Duncan surveys the wreckage of the NZ Labour Party (in Chapter 4), and what is striking here is the flexibility of the centre-right, and, most notably, a shift away from a strident form of neoliberal politics. 

Finally, in Australia, after 11 years in the wilderness, the ALP (Australian Labor Party) took office under the, initially, strong leadership of Kevin Rudd. Yet, within the space of a few years, the ALP turned in on itself, and Julia Gillard (just) secured a minority government in 2010. And in another rancorous turn, the ALP ditched Gillard weeks before the 2013 election. Since then, despite a promising election campaign in 2016, the ALP remains in Opposition. 

As Carol Johnson examines in her chapter on the ALP (see Chapter 5), Labor was beset by a range of both institutional and ideational problems. Most critically, Johnson examines the central dilemma facing centre-left parties in the capitalist system. 

We also include in this volume a chapter on a much neglected story of the centre-left – the Australian state Labor parties (see Chapter 6). During the mid-2000s, a rather intriguing phenomenon occurred when Labor held office in every single state and territory. Since then state Labor has been on the back foot. The chapter therefore offers the reader a clear comparative case study of sub-national social democracy to illuminate why the left loses elections. 

If time and space permitted, we might also look beyond our cases and see the, at best, mixed picture for the centre-left. Critically, the 2016 presidential election victory by Donald Trump in the US seems to encapsulate many of the current dynamics of the modern party system, with a populist backlash against both major political parties. 

In Latin America, left-ist parties have also suffered setbacks (Aidi, 2015), although the extent to which we locate them in the ‘social democratic’ tradition is contested. 

The key issue from this brief survey is that the left is currently losing, or not winning well, and also recording some record losses in the period from the GFC to 2016. The aim of this volume is to explore and examine, comparatively, the reasons for this current state of play. 

It is worth making a few caveats to this overall survey. 

First, most liberal democracies in advanced industrial settings operate on some turnover of governments. We are circumspect in over-emphasising any ‘trend’ of the ‘left losing’. 

Second, in many cases, the left losing is, indeed, a noted part of their histories. To take the UK Labour Party as a prominent example, until New Labour, its electoral record was patchy at best (between 1945 and 1997 it held office for just 17 of those 52 years). 

Third, while we make comparative judgements, and see some common themes, such as populism, Third Way hangovers, out-dated political economic models, changing class patterns, and so on, there are specific conditions playing out. The left loses, but not always for the same reasons.

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from

WHY THE LEFT LOSES.  The decline of the centre-left in comparative perspective

Edited by Rob Manwaring and Paul Kennedy. 

get it at Amazon.com

A Brief History of Book Burning, From the Printing Press to Internet Archives – Lorraine Boissoneault. 

As long as there have been books, people have burned them, but over the years, the motivation has changed. 

When Al-Qaida Islamists invaded Mali, and then Timbuktu in 2012, among their targets were priceless manuscripts, books that needed to be burned. But the damage could’ve been much worse if not for men like Abdel Kader Haidara, who risked their lives to protect the medieval works. He and others succeeded in smuggling out 350,000 manuscripts, proving not only how much the books were valued, but also the lengths to which ordinary people were willing to go to save them. It was a remarkable victory in the long history of books threatened by would-be arsonists, and a relatively rare one at that.

Books and libraries have been targeted by people of all backgrounds for thousands of years, sometimes intentionally and sometimes as a side-effect of war. In 213 B.C., Chinese emperor Qin Shi Huang (more widely remembered for his terracotta army in Xian) ordered a bonfire of books as a way of consolidating power in his new empire. According to historian Lois Mai Chan “His basic objective was not so much to wipe out these schools of thought completely as to place them under governmental control.” Books of poetry, philosophy and history were specifically targeted, so that the new emperor couldn’t be compared to more virtuous or successful rulers of the past. Although the exact amount of information lost is unknown, Chan writes that the history genre suffered the greatest loss.

Qin was only one in a long line of ancient rulers who felt threatened enough by the ideas expressed in written form to advocate arson. In Livy’s History of Rome, finished in the 1st century A.D., he describes past rulers who ordered books containing the predictions of oracles and details about celebrations like the Bacchanalia be outlawed and burned to prevent disorder and the spread of foreign customs; philosophers Giordano Bruno and Jan Hus both took positions counter to the Catholic church, the former for his work on Copernican cosmology, the latter for attacking church practices like indulgences. Scholar Hans J. Hildebrand writes that the executioner charged with killing heretics like Bruno and Hus was often the same person who put flame to their books.

But for Rebecca Knuth, author of Libricide: The Regime-Sponsored Destruction of Books and Libraries in the Twentieth Century and Burning Books and Leveling Libraries: Extremist Violence and Cultural Destruction, Qin and religious leaders like him are only a small part of the early book-burning equation. “A lot of ancient book burning was a function of conquest,” Knuth says. Just look at one of the most famous examples of burning, the destruction of the Library of Alexandria. The famed building had its contents and structure burned during multiple periods of political upheaval, including in 48 B.C. when Caesar chased Pompey to Egypt and when Caliph Omar invaded Alexandria in 640 A.D.

What changed everything was the printing press, invented by Johannes Gutenberg in 1440. Not only were there suddenly far more books—there was also more knowledge. “With the printing press you had the huge rise of literacy and modern science and all these things,” Knuth says. “And some people in authoritarian regimes, in a way they want to turn back the effects of the printing press.”

According to Knuth, the motives behind book burning changed after the printing press helped bring about the Enlightenment era—though burning through the collateral damage of war continued to arise (just consider the destruction of the U.S. Library of Congress during the War of 1812 or all the libraries destroyed across Europe during World War II). People saw knowledge as a way to change themselves, and the world, and so it became a far more dangerous commodity, no longer controlled exclusively by the elite. What better way to reshape the balance of power and send a message at the same time than by burning books?

The unifying factor between all types of purposeful book-burners in the 20th century, Knuth says, is that the perpetrators feel like victims, even if they’re the ones in power. Perhaps the most infamous book burnings were those staged by Adolf Hitler and the Nazis, who regularly employed language framing themselves as the victims of Jews. Similarly, when Mao Zedong took power in China and implemented the Cultural Revolution, any book that didn’t conform to party propaganda, like those promoting capitalism or other dangerous ideas, were destroyed. More recently, the Jaffna Public Library of Sri Lanka home to nearly 100,000 rare books of Tamil history and literature, was burned by Sinhalese Buddhists. The Sinhalese felt their Buddhist beliefs were under threat by the Hinduism of Tamils, even though they outnumbered the Tamils.

Even when the knowledge itself isn’t prevented from reaching the public, the symbolic weight of burning books is heavy. “Books are not absolutely dead things, but do contain a potency of life in them as to be as active as that soul was whose progeny they are,” wrote John Milton, author of Paradise Lost, in his 1644 book Areopagitica. “Who kills a man kills a reasonable creature… but he who destroys a good book, kills reason itself—” an idea that continues to be espoused in modern culture, like in Ray Bradbury’s Fahrenheit 451.

“A book is a loaded gun in the house next door,” one character warns another in Bradbury’s story, arguing for why they must be burned and their knowledge erased. “Who knows who might be the target of the well-read man?”

Or, as author Barbara Tuchman said in her 1980 address at the Library of Congress, “Books are the carriers of civilization. Without books, history is silent, literature dumb, science crippled, thought and speculation at a standstill. Without books, the development of civilization would have been impossible.”

Today, with new technological advances offered by the Internet, the possibility of digitizing written documents seems to offer books a new immortality. But not so fast, Knuth says. “We have technology to preserve so much knowledge, we just have to be careful. If you don’t keep morphing it to an updated form of technology, it doesn’t matter if you made copies if you can’t access them.”

This is a problem archivists at the Smithsonian Institution regularly tackle, including electronic records archivist Lynda Schmitz Fuhrig.

“There are software companies that have gone away or gone out of business, and some of that software just stops being used,” Schmitz Fuhrig says. “And there’s not only the issue of software, but also hardware and operating systems that may not work with these older files.”

The archivists try to use formats that have been around for a long time and stood the test of time, like PDF for documents, but even keeping up with the changing technology doesn’t guarantee safety. Schmitz Fuhrig says one of the biggest challenges now is storage space. “A few years ago we were talking about gigabytes and then terabytes and now we’re getting into the area of petabytes.”

Even though the technology exists, transferring written documents to digital archives requires time and money—resources that aren’t always available. Sometimes doing so is counter to the beliefs of whoever happens to be in power. Just consider that under President George W. Bush EPA libraries were threatened with closure in 2006, spurring the American Library Association and scientists working at the EPA to put pressure on Congress to ensure the EPA’s budget could cover the cost of maintaining the libraries (although some libraries were closed, they reopened in September 2008). Or look at the scientific research documents that were locked away or destroyed under the Stephen Harper government in Canada in 2014, which had a chilling effect on the topics that could be researched and the studies that were published. As scientist Steven Campana, who spent decades working for Canada’s Department of Fisheries and Oceans, told Smithsonian.com, “Although we still kept our jobs, we basically were prevented from actually doing any science.” Though the methods may be different (and less visible) than in the past, the results are the same: knowledge is purposefully taken from the public.

Technology has undoubtedly changed the way we share and save information, but Knuth argues that the core motivations for book burning, in whatever form the act takes, remain the same: prioritizing one type of information over another.

“That’s why power is so scary,” Knuth says. “Because power allows you to put into effect the logic of your own beliefs.”

***

Lorraine Boissoneault is a staff writer for SmithsonianMag.com covering history and archaeology. She has previously written for The Atlantic, Salon, Nautilus and others. She is also the author of The Last Voyageurs: Retracing La Salle’s Journey Across America. Website: http://www.lboissoneault.com/

Smithsonian.com

Banking with our own Bank. We don’t even need Commercial Banks – Nicholas Gruen. 

In the age of the internet, all citizens and businesses could be provided with lightweight online central bank exchange settlement account at minimal cost. After paying any cost-reflective account keeping fees, your deposits with the central bank would earn the same overnight cash rate it pays commercial banks. And money in your account could be paid to anyone else’s exchange settlement account. 

The central bank could also provide liquidity in a more competitively neutral way.

It couldn’t practicably assess everyone’s creditworthiness, but it could specify a set of super-safe assets against which it would automatically lend as a matter of right. I’d propose that you could borrow to fund your housing loan up to –  say – 65 percent of its value or against prime commercial property up to say 45 percent of its value. This would entail far lower risks for central banks than the lending they currently advance to highly leveraged commercial banks.

Evonomics.com