The Age of Reaction

“These are the glory days of global capitalism….This newspaper has long argued that a mobile society is better than an equal one.” The Economist, January 20, 2007.

In 2006, furniture workers in Galax, Virginia lost their jobs as gluers and sawyers, and received redundancy packages that were so mean spirited that it provoked a public backlash. Retailers had decided they could import furniture more cheaply from China. A few months after the furniture workers lost their jobs, Robert Nardelli, the CEO of Home Depot was replaced as head of the company by his deputy. His landing---a severance pay package of $210 million---was softer than that of the gluers and sawyers. Twenty years ago, the remuneration of a top American corporate manager was 40 times that of a typical employee. Now the top manager makes 110 times as much.

During the post-war era, a remarkable period often referred to as the golden decades, the real incomes of the mass of the population (adjusted for inflation) doubled in the advanced countries. For the first time in history, the majority of the population was no longer poor. The goal of full employment was enshrined in the policies of the industrialized countries. The gates of higher education were opened to admit an enormous number of people who never would have imagined that the experience of university would be available to them. Trade unions were stronger than ever before, and through them and political parties allied with them, the interests of wage and salary earners carried real weight in the establishment of national policies. Corporations were still dominant and those who controlled capital earned vastly greater incomes and accumulated much more wealth than those they employed. It was, however, that rare age in which the income gap between the rich and the rest of the population actually narrowed a little.

The details of the models differed from country to country during the golden decades. Continental European countries, principally Sweden and West Germany, established what they called “social market” economies in which wage and salary earners gained a share in the management of the firms for which they worked. In France, state planning and state ownership of important industries were used to boost economic output. In Britain and Canada, governments developed welfare states, with a wide range of social programs, and increased accessibility to higher education. In the United States, the civil rights movement and Great Society programs won the vote and other rights for African Americans and established anti-poverty programs to aid the most impoverished.

The golden decades extended from the post-war years into the early 1970s. A chaotic transitional period then began with the global oil price shocks of 1973-74 and continued during the years of economic stagnation and high inflation that followed. By 1980, a new epoch had opened, the “age of reaction”, an age which persists to the present day.

Political ideas, cultural assumptions, the role of government, relations between the employed and their employees and between the wealthy and the rest of the population have assumed a new shape. The values associated with citizenship have diminished in importance. What has opened is an age of market economics and the development of a market society that has relegated the proponents of social programs to the margins. In the developed countries, the real incomes of typical wage and salary earners have not increased for the past quarter century. In the advanced countries, particularly in the United States, democracy has been in decline, increasingly replaced by a plutocracy in which money dictates political outcomes.

Sometimes called the age of globalization or the age of neo-conservatism but more accurately we have been living through the age of reaction, a more many sided and all-encompassing phenomenon than is captured by the two other terms.

An age is a historical period during which there is a great convergence of tendencies that reinforce each other in driving the lives of millions of people in the same broad direction. When economics, politics, culture, religion, and societal relationships reinforce a common set of outcomes over an extended period of time, we are entitled to speak of the period as an age. Thus, for instance, we speak of the Victorian Age or the Belle Epoque (two terms that overlap in their depiction of life from about 1870 to 1914.) In the United States, the Roaring Twenties constituted an age. It was the first mass era of the automobile, a period of frenzied stock markets and industrialization, captured in the tragic romanticism of F. Scott Fitzgerald and other writers of the “lost generation”.

The term “reaction” requires a little elaboration. In the West, despite waves of disillusionment at various times, the underlying popular assumption has been that, over time, there is progress, that human life advances and people become better off not only materially, but in other important ways, in terms of their health and their life opportunities. While philosophers, historians, Freudians and many others have long discounted the idea of progress as simplistic or even as a fantasy, for tens of millions of people in the advanced countries, the quarter century that followed the Second World War was indeed an age of progress. For ordinary people, it was the most remarkable age of progress in human history. The idea took hold in those years that people could reasonably expect their sons and daughters to do even better than they had.

But the golden decades that came after 1945 have been followed by the age of reaction. The word “reaction” is used here as a counterpoint to “progress” or “progressive”, as in “reactionary.” It is not meant to convey the idea that this has been a period characterized by reactions against this or that, although there has been plenty of that as shall be seen.

During the age of reaction, it has been as though the film of the golden decades has been played backwards. Here is a telling example: in 2007, the relative income gap in the United States between rich and poor is wider than at any time since 1928 (the eve of the Great Depression.) The lives of ordinary people have grown more uncertain. During the past quarter century, most people have been on an economic treadmill, precariously attempting to make ends meet and to ward off the growing danger of crippling indebtedness. In all advanced countries, the gap between the rich and the rest of the population has widened.

The transformation has involved much more than economic outcomes. The idea of a society in which the marketplace is the central arena for determining priorities has pushed the notion of citizenship to the margin. Democracy, once thought to be advancing to include ever wider popular decision making, is in retreat. Political participation in elections is declining in almost all advanced countries. Plutocracy, the rule of society by the wealthy, is in the ascendancy.

The transition to the age of reaction began with the oil price crisis of 1973-74. It was then that the pebble was thrown into the pond whose ripples generated a transformed world.

Global oil price shocks brought the rapid economic growth of the post-war decades to a halt in both Europe and North America. After that date, full employment became an elusive goal on both sides of the Atlantic. The onset of long-term, large scale unemployment in the industrialized world imperiled the welfare state as tax revenues declined and programs to provide social assistance and unemployment benefits became more costly. National governments plunged into perennial deficits and their consequence was rising national indebtedness.

Unemployment tore away at the solidarity of wage and salary earners as those with jobs came to resent those who were often on social assistance, particularly when many of those people belonged to minority racial and religious groups. Tax payers rebelled against the burden of supporting those on welfare. Under these conditions the full-employment strategy of the Keynesians fell by the wayside in favour of the market-centred alternative of the monetarists. John Maynard Keynes and J.K. Galbraith, whose works were revered in the 1950s and 1960s were shunted aside. They were replaced by the rise in the economic pantheon of Milton Friedman and the other members of the Chicago School.

Major petroleum companies, whose top executives were alarmed by the populist outrage against much higher energy prices and oil company profits, took the lead in organizing effective new business lobby organizations such as the Business Roundtable in the United States.

In quick succession, the politics of neo-conservatism took hold in the United Kingdom with the election of Margaret Thatcher in 1979 and the election of Ronald Reagan in the United States the following year. These elections opened the door to de-regulation which eased the way for the deployment of capital around the world in search of cheaper labour and raw materials. These political and regulatory developments were girded by the sweeping technological revolution that was underway and that made the deployment of productive resources on a world-wide scale much more manageable. Employment in the burgeoning service sector became dominant in all leading countries, further contributing to the elimination of income gains for wage and salary earners.

In all developed countries, even in social holdouts like Sweden, Germany and France, the income and wealth gaps between those at the top of the economic ladder and the rest of the population grew enormously. In the U.K., this trend was accompanied by a frightening rise in youth hooliganism, as a large segment of the younger generation ceased to be educated and became unemployable.

As the economy grew ever more global, the rise of a mass army of poverty stricken, unemployed, and underemployed people in the underdeveloped countries favoured the bargaining power of employers.

One signal that a new age exists is that a distinctive set of ideas becomes dominant. The “ruling ideas” of the age of reaction differ markedly from the ideas that underlay the golden decades. During the age of reaction, the idea not just of a market economy but of a market society has become entrenched. As a direct consequence, the idea of citizenship and the notion that there ought to be an essential equality among citizens has been dethroned.

During the golden decades, when one variety or another of Keynesianism informed the policies of the leading countries, public policy was directed toward the goal of full employment and ever greater social advancement for the citizenry. Full employment increased the bargaining power of wage and salary earners and pushed up their real incomes. In a time of low inflation, it became normal for unionized Canadian and American autoworkers to enjoy a real wage increase of three per cent a year, along with rising health, dental and other benefits to which the employer contributed. For such workers, this was a job for life, and there was every reason to hope their sons would follow in their footsteps.

In sharp contrast, during the age of reaction, real annual wage increases became rare. High levels of long-term unemployment created a reserve army of job seekers and this favoured the bargaining power of employers in holding wages and salaries down. As the economic muscle of wage and salary earners declined so too did union membership as a proportion of the work force in all advanced countries.

The economic doctrines that informed public policy during the age of reaction reinforced the power of employers against their employees. Monetarism, the key doctrine, rejected the idea that the state should play a role in promoting full employment. Monetarism was a classical market-centred doctrine that held that the state was responsible for balancing its budgets and for ensuring the provision of an inflation-free money supply. The market would take care of the rest, efficiently allocating resources, incomes, and profits and determining the creation of employment. With this doctrine, economic theory returned to the fundamentals of mid 19th century classical liberalism. It became accepted that unemployment was natural to the market system and that efforts to achieve full employment would drive up costs and lead to high inflation and reduced returns on investment.

In lockstep with monetarism came the concerted drive to privatize state owned industries, telecommunications companies, railways, airlines, energy utilities and water companies. It became accepted as matter of faith, not supported by empirical evidence, that private companies were more efficient than companies owned and operated in the public sector. Privatization typically undervalued public assets and ended up transferring vast wealth to private owners, the most extreme cases of this phenomenon occurring in the former Soviet Union and in Eastern Europe. The advanced countries also carried through massive privatizations of state owned companies.

As the drive for a market society gathered strength so too did the assaults on the economic models in countries that resisted the trend. The social market and state interventionist models in Sweden, Germany and France were subjected to ceaseless negative critiques by those who advised that these countries move smartly to adopt models more akin to those in the United States and the United Kingdom.

During the new age, corporate power mushroomed at the expense of the influence of wage and salary earners. This occurred in the crucial media sector with profound cultural and ideological consequences. In the new age, journalists found themselves on a much tighter leash than previously, expected to conform to the views of owners such as Conrad Black, as they rapidly discovered. Those who didn’t learn were soon out of a job.

While there had been considerable political, cultural and even media diversity during the golden decades, in the age of reaction media concentration grew ever more pronounced. Infotainment and frankly right-wing media giants, the leading one in the world being the sixty billion dollar empire of Rupert Murdoch, along with others such as the Asper media empire in Canada, replaced critical journalism with frankly right-wing fare. The most flagrant example of the trend was Murdoch’s Fox News in the United States, a propaganda machine that quickly dispensed with journalistic integrity.

This trend was offset to some extent by the rise of the Internet and the explosive development of blogging and other forms of mass expression. On the Internet, however, as was the case with previous new media, pluralism was challenged by increasing corporate control.

The drive to transform the ideological foundations that legitimated the changing social order occurred at the level of elite education as well as in the mass media.

In universities, in the advanced countries, pressure from governments and private corporations succeeded in reducing the priority given to departments of the arts and social sciences, the bastions of critical analysis, in favour of departments and schools dedicated to training graduates to work in business. Corporations and the wealthy have donated enormous sums of money for the establishment of schools of business on campuses. Such business schools design their own courses in economics, sociology and political science, typically shorn of critical material, to convey a business model conception of society to students. While business schools are bulging with endowments, traditional departments whose members carry out significant studies of society are starved for money.

The decline of hope in progressive social transformation made it socially acceptable for the rich to come out of the closet and to throw their weight around and show off their wealth. Donald Trump comes to mind. Early 20th century American sociologist Thorsten Veblen studied the rise of a new cohort of wealthy Americans in the last decades of the 19th century and the first decades of the 20th century. He coined the phrase “conspicuous consumption” to describe their behaviour. During the past quarter century, a class of wealthy individuals who enjoy unprecedented economic and political power has exploded onto the scene. The scale of their wealth in relation to the rest of society has created a gulf not seen in the West since the demise of feudalism.

In the advanced countries, birth rates plummeted so that in many cases without immigration, populations would soon decline. Meanwhile, in Latin America, Africa and parts of Asia, birth rates remained high. The world population was being recast. By the middle of this century, the global population is projected to be nine billion, up from today’s six billion. Only about one and a half billion of these people will live in the advanced countries.

This demographic change is transforming global politics. Struggles for resources, particularly petroleum, have become the flashpoints for the outbreak of wars. The environmental crisis, a seminal question for this century, threatens many parts of the world with disastrous consequences in the not distant future. Imperial powers, not only the United States, but challengers such as China, India, and Brazil have joined in the ruthless quest for access to ever scarcer resources.

In the advanced countries, fear of the mass migration of the desperately poor has become an ever more dominant political issue. This anxiety is closely linked to the effects of the invasions of Afghanistan and Iraq and the rise of militant Islam in the West itself. While first world people typically shun many low-level jobs, anxiety about the immigrants who take the jobs is on the rise in the United States and Europe. Such anxiety fuels movements of the political right.

While there has been much discussion of the spread of democracy to many parts of the world such as Latin America, in other crucial cases democracy has made a fleeting appearance and is disappearing. In Russia, under the authoritarian Putin regime, the brief spring of pluralism that accompanied the fall of the Soviet Union has been replaced by the erosion of a free media and competitive politics.

In the first world, democracy is in decline.

Throughout the advanced world, mass political parties are waning in importance. In parliamentary systems, such as those in Canada and the U.K., presidential-style politics is on the rise. Voter turnout, especially among the young, is declining in almost all first world countries. In the United States, democracy is being replaced by plutocracy, a political system in which huge sums of money are necessary for the achievement of high office, both at the federal level and at the state level. While the decline of democracy is most extreme in the United States, a similar trend is underway in almost all advanced countries.

The age of reaction has an overarching unity but it is not a static system. It is everywhere in motion and this includes the emergence of new forms of resistance to the economics, politics, and culture of the present system. While one feature of the age of reaction has been the splintering of socialist and social democratic movements and the decline of unions in favour of the politics of identity, other political and intellectual developments insist on the need to develop a new politics of humanity.

From a wide range of sources---socialists, social democrats, progressives, humanists, environmentalists, non-fundamentalist religious believers, feminists, trade unionists, students and writers---a new politics of the planet has been taking shape. It is, of necessity, diverse, pluralist, and democratic. Its philosophical origins are ancient as well as contemporary. Its concerns and struggles are shaped within particular cultures and settings in quite unique ways. In many parts of the world, the struggles are anti-imperialist and nationalist. There is, though, in all of this, a search for what brings all peoples together.