Tuesday, September 21, 2010

What should be on the Wider Agenda as Parliament meets?

Canadian politics has been reduced to a series of small battles in a static war as the parties jockey for position for the next federal election.

As the politicians skirmish in Question Period, it is as though they are operating inside a hermetically sealed bubble, where they almost entirely shut out the enormous changes that have been rocking the world since the onset of the global economic crash two years ago.

The crash has called into question the verities on which our socio-economic system has been based for the past three decades. But if you read the record of debates on Parliament Hill since the last election you’d have almost no idea that anything unusual was going on. It’s not that debates about stimulus, pensions, and employment benefits don’t matter. They do. What the debates fail to reflect is any wider consideration of the way our socio-economic system is organized and the priorities it establishes, the ways it privileges a few at the expense of the many.

It’s no surprise that the Harper government defends the existing order. But where are the fundamental challenges from the other side of the House? The Liberals are cautiously keeping their heads down, hoping the Harperites self-destruct. The members of the BQ conceive their role very narrowly as the defenders of Quebec’s share of the budgetary pie, not an inconsequential matter, but it rarely leads to basic questions about the socio-economic order. If a fundamental challenge is going to come from inside the House, it has to come from the NDP. Now and then, NDP members do raise important questions about pensions and EI benefits, about the environment, and Canada’s role in Afghanistan. That is important. What the NDP almost never does, however, is to question the system itself, the neo-liberal order in which we live.

If there was ever a period when basic debate was needed, it is surely now, a time when it is clear to so many across the world, that the crisis in which we find ourselves has not gone away, is not being resolved.

In the past, CCF and NDP members of Parliament actually dared to call into question the corporate capitalist order. We could use some of that now. What follows is a perspective on how the debate can be conceived.

The underlying idea of the financial system that has crashed was that it is the investment of capital that creates wealth. Beginning with the neo-conservative revolution at the end of the 1970s in Britain and the United States, de-regulating capital so that it could flow anywhere without restriction was understood as the key to unleashing the market forces that would make the economy grow. Let investment travel to all parts of the world, allow businesses to acquire one another, and remove remaining protective trade barriers, and a better world would be established, in the developing countries and the developed countries alike. Utopianism and greed were bound together in the chemistry of globalization. This revolution---most accurately depicted as neo-liberalism, although its was unleashed by neo-conservatives---realized the dreams of capitalists as never before. The nation state, mobilized during the post-war decades, to serve labour as the junior partner of capital in the advanced countries, was tamed to put mobility of capital ahead of all else. De-regulation and technological revolution combined to free capitalism not only from trade unions and the state, but from the restraints of time as well. Capital could be transferred at the flick of a cursor from anywhere to anywhere. Virtual transfers of capital quickly dwarfed commerce in commodities. Markets never closed.

Be careful what you wish for. Utopia unleashed became dystopia achieved. The world made safe for investors became a world where workers were exploited on an unprecedented scale, cities mushroomed into barrios for the dispossessed, the impoverished braved the seas in their quest for jobs and survival, and environmental catastrophe loomed. In the end, neo-liberalism wrought its own self-destruction, much in the way Soviet communism had a couple of decades earlier.

In the economically advanced countries, those who run the dominant corporations, lead the major political parties, and set the agenda for business schools, economics departments and pro-business think tanks aspire to reconstructing the neo-liberal order. That is not to say that these people, representing quite different organizations, and nurtured in diverse national cultures, do not hold a wide range of views about what ought to be done. It is not unfair, however, to ascribe to the overwhelming majority of these people the broad desire to re-make the world to be essentially the way it was on the eve of the crash. This assertion is not rendered invalid because many people in the economic and political elites want to reform and re-regulate financial systems and fiscal arrangements so that sub-prime housing meltdowns, the collapse of financial institutions, and the dangerous consequences of various forms of indebtedness to avoid future global economic catastrophes. What they do want, in general, is to restore capitalism to health to allow its pre-crash system of rewards to prevail.

Now what? Should humanity mobilize its political, economic and societal skills to painstakingly reconstruct the system that has crashed? That is certainly the goal of the Obama administration, the Cameron government in the U.K., the Harper government in Ottawa (to the extent that it has any understanding of what is happening), and other governments in the West. Even if Barack Obama understands that the financial sector in the U.S. had grown too large and must be cut back in size as the U.S. economy recovers, it is nonetheless his intention to recreate American and global capitalism with its rewards and its priorities essentially unaltered.

This is a historic opportunity, however, for people around the world with entirely different aspirations to come to the fore. During the neo-liberal era, the hegemonic power of the ruling ideas pushed alternative conceptions about to order the economy to the margins.

In comparison to the post-war era when a comparatively wide range of socio-economic options were being broadly advocated and considered, the past three decades has been a time of ever narrower legitimate options. It has been the age of TINA---there is no alternative---an age of reaction during which the concept of citizenship has been eroded, the social state has been substantially dismantled and those who control capital have been empowered as never before in all of human history.

That is not to say that during this time progressives did not fight large battles. They even won some of them. Most significant have been the struggles about the environment, gay and lesbian rights, anti-racism, and the rights and aspirations of women, in particular their reproductive rights.

The long retreat of the past thirty years has been on the terrain of the collective power and rights of working people all over the world, from the best paid salary earners in the advanced countries, to the super-exploited wage earners in the garment factories in the poor countries. As organized labour has been thrown on the defensive and social and educational programs have been rolled back, the power of capital has grown ever more complete. The extent of the retreat is captured in the increasing reliance on the philanthropy of the rich and the super-rich in a wide range of fields.

A contradictory outlook faces wage and salary earners throughout the world today. On the one hand, the savage economic downturn and the loss of many millions of jobs around the globe, has reduced the bargaining power of labour still further. Highly visible has been the massive political and corporate pressure on unionized Canadian and American auto workers to accept enormous cuts to their overall remuneration, in the form of reduced pay and benefits and slashed payouts to retired auto workers. Similar pressures have been applied to workers around the world to force them to make do with lower wages and less generous benefits. The existence of a gigantic reserve army of unemployed workers strengthens the government and corporate assault on wage and salary earners.

On the other hand, there is the visible failure of the neo-liberal system world-wide, the reduction of the top corporate managers in the eyes of humanity from demi-gods to greedy incompetents. Never in history have the rulers of the economic system been so humiliated as over the past two years.

Populist anger against financiers has boiled to the surface, not only in the United States, but in many countries. Those who direct, or formerly directed, major financial institutions are no longer believed by the general public. Nor are those at the helm of governments, although some have more credibility than others. The low esteem in which those who steer the economy are now held has opened the door to new ideas, or the restatement of old ideas, from across the political spectrum.

On the political right in the United States, Tea Party inspired Republicans have returned to the political verities that constituted the right-wing stock in trade before the crash. Rather than facing up to the role of their policies in generating the economic catastrophe, the Republicans are promoting their belief in small government and in tax cuts. On the face of it, this may seem a short-sighted, even foolish, political strategy, and perhaps events and the passage of time will prove that it is.

But if Obama’s cautious policies, aimed at restoring American capitalism, by and large, to the way things were before the crash, are deemed a failure, things could turn out very differently. In that case, the door will be opened not only to the ideas of the Republican Party, but to all manner of populist demagoguery on the far right. The conditions that face us are similar to those of the 1930s in one very important respect. When centrist politicians and their policies do not ameliorate the desperate economic plight of millions of people, powerful authoritarian movements spring up to grapple with the anxieties of the age with programs that are the very antithesis of democracy. In the 1930s, the fascists and the Nazis filled the void when mainstream democrats dithered and failed to come to grips with urgent problems, such as mass unemployment and poverty. And the solutions of the authoritarians can involve, not merely the elimination of democratic rights, but the imprisonment of thousands, and in the most extreme cases the murder of millions.

A progressive alternative is urgently needed, an alternative that will not cloak the current crisis in exclusionism, racism, anti-immigrant sentiment, and the denial that humanity has pushed the planet to the brink of environmental collapse----the goodies that are on offer in the shop windows of the far right. The vigour of the progressive response to the crisis will depend on the ability of movements around the world to rise to the challenge not only of the socio-economic and environmental problems that plague our world but also to the campaigns of the intolerant who will use these problems to promote false solutions based on hate and scapegoating. In many parts of the world today, the walls of hate are going up in the form of anti-immigrant sentiment and religious fundamentalism.

The descent into xenophobia, cynicism and anxiety in many countries has been vastly exacerbated by the effects of the economic crisis. But that descent began long before the crash. For the past quarter century, mainstream political parties of all shades have utterly failed to cope with the widening gap in income and wealth between a small segment of the population that has been enormously enriched and the vast majority of the population of the advanced countries, and much more so, the population of humanity as a whole. The economic collapse has made the failure to address the problem of the widening wealth and income gaps even more urgent. The boiling anger of those who are shut off from the possibility of advance can open the door to an advance for progressive politics, but it can also feed into the agenda of those who fabricate lies that the world is run by some ethnic or religious group that can be isolated and attacked. For the Nazis, the theory was that the world was run by Jewish financiers, who had stabbed Germany in the back during the First World War.

Today, the world is plagued by new theories that are used to marginalize people: in Europe, there is fear of Muslim immigrants and their descendants; in America, fear of Hispanic immigrants; and in many parts of the world there is propaganda from religious fundamentalists who seek to blame our ills on people of other faiths. These forms of hatred can be used to tell people that immigrants are taking jobs away from the French, that newcomers are robbing the American middle class of its standard of living, or that God has a divine plan for people of particular faiths that must not be thwarted by the designs of others.

While exclusionism is omni-present, so too are the progressives. Before the crash and since its onset, a wide range of progressive movements has been putting the case for a new economics to serve humanity and to safeguard the planet against environmental ruin. These movements are diverse, pluralist, and democratic. Among them is heard the voices of social democrats, socialists, liberals, humanists, environmentalists, non-fundamentalist religious believers, feminists, trade unionists, urban activists, anti-poverty organizations, students and writers. A new politics of the planet has been taking shape. Its philosophical origins are ancient as well as contemporary. This politics of the planet takes unique forms in each country, arising out of particular cultures and conditions.

The broad challenge is to reinvigorate democracy at the local and national levels, while advancing programs that for the first time in history are in keeping with the interests of people everywhere. The perspective has to be planetary. But unlike the corporate agenda that has stripped away effective power from the level of the nation state, and from working people, the progressive agenda needs to return effective power to nations so they can design their social systems, govern their own economies and act as stewards for their share of the planet.

If this sort of agenda sounds as though it is alive with paradox and contradiction, it is. It is the reverse of much that has driven the global agenda of the past three decades, during the so-called age of globalization. Globalization has, in truth, drawn all people and all nations into a closer set of relationships with one another. But the relationships have been based on amplifying the power of the few at the expense of the many on a wide range of fronts, so much so that we can conclude that globalization has effectively paralyzed democracy to an alarming extent.

While it has been claimed by its proponents that globalization has opened borders and reduced the power of the state, in fact, globalization has opened borders to the flow of capital and has reduced the power of most of the states of the world leaving the socio-economic future to be shaped by a handful of states (the United States most important among them), while borders have been closed to most of humanity.

A case in point is the plight of desperate people who take to flimsy vessels to sail from Africa to Europe, all too often dying during the voyage, in the hope that they will be able to make a living in Europe for themselves and their families. Similarly, tens of thousands of Mexicans take their lives in their hands each year to attempt to make it past the growing army of border guards into the United States where they can work for low pay and with no job protection to make a living in a country where the political rhetoric has increasingly reduced these migrants to the status of pariahs. The American economy would be hard pressed to function without these illegal immigrants, but on the political right the measure of political correctness is for politicians to advocate the denial of all social and educational benefits to these workers and their children. Across the developed world, the barriers are going up to stop desperate economic refugees from reaching the promised land.

The democratic agenda needs to regard this staggering inequality as the most important matter to be addressed. Unless it is effectively addressed, little else that is achieved will matter very much.

Putting the world on the road toward equality will call forth as much creative energy as the great democratic upheavals of the 18th century. Power needs to be returned to nation states so that their citizens can address inequality within their countries at the same time as an agenda to address the inequality between nations is established. Such a power shift can only be achieved through the mobilization of the democratic energies of a wide spectrum of the population.

It’s not hard to locate the issue on which this majority can be mobilized. The issue is the economic treadmill on which the majority in the developed world finds itself. Wage and salary earners are on an economic treadmill. On average their living standards have not risen for the past several decades and they are increasingly plunging into debt to finance the purchase of homes and to send their children to post secondary educational institutions whose tuition has been skyrocketing in many countries. The huge economic gains of this period have gone only to a few. For instance, twenty years ago the remuneration of a top American corporate manager was forty times that of a typical employee. Now typically the top manager makes one hundred and ten times as much.

Wage and salary earners are increasingly conscious of the emergence of levels of inequality that have not been seen since the aristocratic age that preceded the American and French Revolutions. Those at the helm of the advanced economies tout the idea of “flexibility”, the notion that the investment of capital and the location of enterprises should be directed by the marketplace to wherever in the world they can be most effective. For instance, one respected voice representing this point of view is the Economist weekly magazine in London. On January 20, 2007, the Economist proclaimed that “these are the glory days of global capitalism…This newspaper has long argued that a mobile society is better than an equal one.”

The argument being made here, with which many with the point of view of the Economist will stoutly disagree, is that inequality has gone too far to be compatible with a vigorous democracy.

Returning a good deal of effective economic sovereignty to nation states does not mean erecting economic walls around countries. That is neither desirable nor possible in our age. In fact, what it means, above all, is a shift in the control of capital from the ever larger financial holdings that now exist to local, regional or national holdings. What drove the world to the yawning inequality of the neo-liberal age and then to the crash and the economic cataclysm that has followed was the existence of ever larger pools of capital controlled privately. The control of capital has always been at the centre of capitalism. And those who control capital have always had the whip hand. During the neo-liberal age, however, the use of capital was increasingly de-linked from the expansion of productive capacity. Instead, in the mega-extension of the financial sector, especially in the U.S., the investment of capital through a wide range of financial instruments was increasingly used to siphon profits out of the bubble economies that developed first in the dot.coms and then in housing. Financial sector parasitism was the consequence of neo-liberalism and the central cause of the crash.

Progressive advance means setting things the right way up in the economy so that the people at large become the masters of capital and not the other way around. Placing pools of capital in local, regional and national holdings and democratizing both the control of capital and of the workplace needs to be the next great chapter in the history of democracy. There is, to be sure, no easy fit between this step and the one that needs to accompany it---the establishment of a much more equitable relationship between the wealthy and the poor countries of the world.

Will advantageously placed nations use their privileged positions to assure more for themselves than for those with whom they conduct commerce in poorer countries?

The short answer is yes, certainly. But in a world with capital pools divided up into local, regional and national holdings, the balance of power could effectively shift toward a new, democratic, political coalition, involving rich and poor countries. A politics of local, national and global development, dedicated toward more egalitarian outcomes and sustainable environmental policies, could emerge.

Humpty Dumpty had a great fall. The neo-liberal system is in pieces and cannot be put together again. Nor should humanity attempt it. It’s time to move on to a better future.


Anonymous said...

At last someone has spoken these words that have needed to be said for a long time. I would only add that everyone seems to have missed that almost all economic crises of the last decade or more started with nations' failure to provide affordable and healthful housing for all of their citizens.And related to that is the mobility of labour, adverse climate change, family breakdown and increasing health costs.

Anonymous said...

Prof. Jim:
The problem is that, despite a crushing loss when the system they created imploded, neocons still rule. Look at the political map: necons rule here, in Britain, Sweden; and the tide's running in their favor even in Toronto, where the mayor apparent is a neolith. In Greece, a leftist government rules from the right. Give them credit, the neoncons, with the help of the media, have convinced the electorate that deficit reduction is necessary even if it exacerbates the recession -- like the cure for a hangover.
And who speaks for the Canadian left? Jack Layton? Tis to laugh.

Bill Bell said...

Isn't it possible that neocons are able to gain a great deal of influence because they appeal to those people who incorrectly believe they understand deficits and corporate tax rates, in spite of the fact that they've never cracked an economics text? I mean, in much the same way that fundamentalist religious leaders are able to convince people that the world is only a couple of thousand years old?

As you say, one of the thrusts of the neoliberal movement was aimed at disenfranchising labour. And it worked. Nowadays, huge numbers of people sound anti-labour enough to be rich shareholders. Yet they make at most one to three multiples of the Canadian industrial average income. The neocon propaganda worked; we cannot, I imagine, expect a rapid change of attitudes.

However, to the extent that I understand their arguments, I believe that some economists from UNCTAD seem to be calling for greater income equality as a way of moving out of the slough we are in. This means that they advocate something on the lines of The Spirit Level but for economic reasons rather than social well-being.

No more tax write-offs that just go into bank accounts. Let's have money go into workers' pockets where it will contribute to consumption and, co-incidentally, benefit the workers.

James Laxer said...

Hi Bill:

I agree that wacko economics is now playing a large role in the debate, both south of the border and here. The implications of this for us are rather ominous.

On your earlier posts:

I agree that politics is about wedge issues. I only hope that this time, those who favour the gun registry will target the Conservatives in the cities and suburbs on the issue and not allow Harper to get away with using the registry only to his advantage.

On unions: I see them largely as defensive organizations that don't have much control over shaping the environments in which they operate.

Anonymous said...

Being able to provide for their family would not be possible without cash loans for some people.