The Great Crackup - Part I

Dürer, Melancholia I, 1514

Given that it's been about 5 years since Walker first laid out a basic outline of the current crisis, it's time for an update. This initial post revisits that thesis while laying the groundwork for a second part, which looks at the political formations that have emerged in response to the slow, fitful death of neoliberal society. The idea is to clarify the context in which we act by understanding the present as history. Without further ado, let's get into it.

Hic Rhodus, hic salta!

The New Prophets of Capital

People who work for a living face a stark outlook. Due to the acceleration of employment practices such as subcontracting and temporary employment, as well as persistently high unemployment, it has become incredibly difficult for workers to organize and improve their conditions. Simply finding decent work can be incredibly difficult as restructuring of the global economy has created dynamics limiting growth in manufacturing in favor of service jobs. When job growth does occur, it often produces the worst kinds of jobs.

Despite it all, entrepreneurial figures tout disruption—often simply meaning techniques for further eroding the stability and remuneration of employment—and find a rapt audience. Self-help promoters encourage the distraught to take full responsibility for their problems. Advocates of “ethical” consumption tout the environmental and social benefits of buying the right products. How is it that so many buy into narratives that gloss over or even celebrate the worsening of conditions for the great majority? To put it bluntly, why aren’t there riots?

The New Prophets of Capital by Nicole Aschoff offers one way to approach this question by examining the popularity and influence of four “prophets” of the neoliberal capitalist system. Drawing on Weber, Aschoff describes all these prophets as offering a way to live a better life. Their persuasiveness is based in their own ability to accumulate fortunes, but they don’t merely provide a set of rules to live by, they tell a story, a way of making sense of a confusing and hazardous world. Setting apart their stories from those told in days of yore is their ability to find solutions to the problems of the day, such as economic precariousness, intense competition, and brutal inequality, within the capitalist, free market system itself. Could capitalism be the source of and the solution to all of life’s problems?

Universal Basic Income

"Basic Income Triptych" Photo by Russell Shaw Higgs Some Rights Reserved

As the struggle to break through political malaise and to find an adequate response to the 2008 economic crisis continues, the left seems to have regained a certain amount of vigor. Populism seems to offer a way forward by tapping the pervasive anger towards wide and growing inequality that most mainstream politicians still seem frightened to fully embrace. Policies aimed at national redistribution and strengthening infrastructure would be welcome, of course. But there is as yet no well articulated vision for the future beyond the near-term, leaving open questions of whether a potential populist political movement will remain compatible with the goals of the left. It is important to ask, then, whether the left possesses proposals that might give shape to a wider political vision for the future.

Among the proposals on offer, universal basic income (UBI) is enjoying renewed interest, though it remains well outside of the political mainstream. UBI is generally defined as a cash payment of a certain amount made to every citizen of a nation without regard to income. One of UBI’s strengths is that it seems able to please everyone. Proponents say that it can end poverty by guaranteeing everyone a subsistence. In the USA, such guarantees—if far from perfect—already exist in the form of various entitlement programs from social security to food stamps. UBI, however, removes the burden and inefficiencies of proving need and submitting one’s family to the surveillance of the state. At the same time, UBI would benefit all (like social security without an age restriction) and therefore naturally enjoy a huge base of support.

There is also a more radical perspective that sees UBI as a way of empowering workers by decommodifying labor. In other words, by pushing back at the necessity of waged work just to get the necessities of life, a guaranteed income would allow people to be choosier about the jobs that they would accept. Why do dangerous or excessively hard work when you can use your guaranteed income to hold out for something better? Arguably, the ability to withhold one’s labor would increase the pay for undesirable jobs there is increasingly little reason to accept and increase the control of workers over their own lives. But whether or not the full radical implications of this argument would obtain, there is a solid case to be made that the UBI would increase the economic and political power of workers.

But against these progressive arguments for UBI one should weigh the libertarian and technocratic attractions to it. For some, UBI is meant to perpetuate the status quo in the worst ways. A recent article by Nathan Schneider documents how UBI is seen by some as a technocratic fix for extreme inequality—though certainly not inequality per se—that has the virtue of reducing supposedly wasteful government services. In other words, UBI can be a substitute for other services or benefits the government provides, and might be funded by cuts to them. Noah Gordon’s consideration of the cost of the UBI assumes, “[c]utting all federal and state benefits for low-income Americans.” This perspective explains the wide-ranging support that UBI has received not just from libertarians, but also from neoliberal heroes like Milton Friedman, an era-damaging former President, and outright cranks like Charles Murray¹.

The left flounders as reaction grows ever stronger

2014 in review

As the crisis of neoliberal society grinds on, the question is not whether the dominant social forms of the last 35 years will be overthrown, but whether it will be the left or the right that overthrows them. Beginning in 2011, there was a brief upsurge of progressive protest around the world that, despite its marked limitations, offered some hope of confronting the crisis. That moment seems to be past. Protest continues, of course, but it has moved further and further away from a solid grasp on the sources of its discontent. Increasingly, even those who understand themselves as progressives are supporting reactionary directions for resistance.

The tone for 2014 was set in the first week of January with two unapologetically reactionary assaults on the global neoliberal order: the Islamic State of Iraq and Syria seized Fallujah, its first major conquest, and Nigerian President Goodluck Jonathan signed into law a measure prohibiting all gay relationships and all gay organizations. Shortly thereafter, in mid-January, the Egyptian “Revolution” suffered its final humiliation, as the referendum on the military’s new constitution passed with a vote of 98.1 percent in favor.

These were symbolically potent events — direct attacks on cherished neoliberal ideals of open borders, cultural tolerance, and procedural democracy — whose practical impact was limited by their peripheral location in global society. Yet reactionary nationalism grew steadily more powerful in centrally important countries as well during 2014. China’s Xi Jinping is assembling a counterintuitive but potentially powerful amalgam of Confucian “tradition” and Maoist slogans. In India, Narendra Modi won a clear victory in the May general election and is already exploring a fundamental redirection of national identity toward Hindu fundamentalism. Recep Tayyip Erdoğan, after comfortably winning Turkey’s first popular presidential election in August, has spoken repeatedly against the secular foundations of the state. In Japan, Abe Shinzō presses forward with his institutional remaking of the state and rehabilitation of Japanese militarism, laying the foundations for the revival of aggressive nationalism. The European Parliament elections in May showed strong gains for anti-establishment far-right parties; the UK Independence Party shockingly won the popular vote for the UK delegation, the first time since 1906 that a party other than Labour or the Tories had won in a national poll. In France, where the far right has infiltrated most deeply into domestic politics, the nativist Front National could soon become the second strongest party in the country, and both of the establishment parties are moving steadily toward it in an attempt to stave off its rise.

Most disturbing of all is Russia’s rapid development toward a genuine neofascism. The Ukraine crisis in March and the collapse of the price of oil in December will be remembered — if we are unlucky — primarily for the way in which they accelerated Russia’s movement down this path. In contrast to China, India, Turkey, and Japan, whose leaders maintain an unstable hybrid of neoliberal and neofascist elements in their politics, economic and geopolitical forces have pushed Russia in only one direction. The most credible opposition figure is Alexei Naval’nyi, who is an even stronger and more authentic ethnic chauvinist than Putin.

Neoliberalism is destroying its last chance to save itself

In the opening weeks of 2014, a huge wave of capital fled the assets of the major emerging markets. In January, a total of $12.2 billion poured out of equities and $4.6 billion out of bonds. An additional $6.4 billion in equities and $1.95 billion in bonds decamped in the first week of February. Currency crises threatened Turkey, Argentina, and Ukraine; other key countries that rely on foreign financing — India, Brasil, Indonesia, South Africa — also seemed in danger.

Yet a few soothing words from the new Fed chair Janet Yellen stanched the panic among investors. A few days later, emerging market stocks further recovered with word that China’s banks are shrugging off the government’s efforts to rein in their creation of ever-higher levels of credit. Global investors now expect robust Chinese demand for raw materials to buoy the poor countries, drawing in their exports with the further inflation of the Chinese property bubble.

This was the second near-crisis sell-off in the emerging markets in less than half a year, but this time the outflows eclipsed the sales for all of 2013 in the space of a few weeks. Like last summer, the looming collapse was reversed on the strength of few well-timed remarks by central bankers, with no sign of repentance of the economic sins that supposedly called down investor anger.

Once again, last year’s claim is born out: “growing volatility is not a result of external forces acting upon the economy but what has become the defining output of the global economy itself.” The flows of capital being pushed through the global economy by the world’s major central banks are artificially oxygenating the decomposing body of neoliberal society. As the connection between the investors bearing this capital and the productive economy grows more and more tenuous, economic indicators and investor behavior become increasingly erratic. Even mainstream commentators recognize that the emerging markets crisis is merely in abeyance, though their interpretation of why that is so remains trapped in ideology.

One financial analyst counsels stoicism: economic crisis is the natural state of the emerging markets, so no need for undue concern. This is too glib — if an emerging market sell-off ran out of control, it could undo the illusions that keep the entire global system running. Because neoliberalism is living on borrowed time, maintaining investor “confidence” assumes an inordinately large role in forestalling global crisis.

For the moment, however, turmoil in these economies is unlikely to cause a general crisis. The poor countries just aren’t very important economically — despite holding two-thirds of the world’s people, they produce only one-fourth of the world’s value. US exports to the “fragile eight” countries represent just 0.7 percent of its gdp. Moreover, investors apparently still see the poor countries and rich countries (except Japan) as two separate destinations for investment rather than an interrelated unity, so money fleeing the emerging markets might simply inflate new bubbles in the developed economies. Reification to the rescue!

The risk posed by serial crises in the emerging markets is not so much the prospect of imminent collapse. The real danger is more long-term in nature: endemic uncertainty threatens our last best hope to put the global economy back on a sustainable foundation without facing some sort of catastrophe first.

Notes on Party Politics

The shutdown of the federal government by right-wing fanatics last October triggered a rare bout of fresh thinking among progressives. Whatever else it was, it was also an object lesson in the capability of a relatively small but tightly organized, militant political faction to effectively—if temporarily—seize control of one of the major mass parties in the United States. Throughout the first half of October establishment Republicans and bewildered liberals helplessly looked on as the entrenched leadership of the Republican Party was utterly dominated by a well-funded and—more importantly—well articulated form of reactionary populism. The main liberal complaint against the shutdown—“but the Affordable Care Act is already the law!”—was of course entirely trivial, because it assumed that the whole affair could be reduced to a mere question of a positive legal fact.

The ideological extremism of the Tea Party goes beyond the dissatisfaction felt by rich people about the prospect of paying higher taxes. It taps into a deep well of existential dread about the fate of the country that is as fiercely ingenuous as it is dangerously delusional, and it channels this energy into a seething anti-government mass politics.

Although it may seem as if the radical elements of the Republican Party lost their great battle over the “Affordable Care Act,” it has been clear for some time that they have been winning the larger war. With each Tea-Party-orchestrated freakout in Washington, the political center of gravity shifts further to the right, and the lesson that ideological radicalization brings home the goods is further hammered home into the torpid brains of establishment Republicans.

This dynamic is not lost on keen observers from the left. If the American far-right can be motivated with the numbers and the organization to take the government hostage and impose their narrative upon public discourse for the better part of a month, then it seems plausible to suggest that a similar tactic might be deployed from the political left for progressive ends.

In the wake of the Tea Party’s government shutdown there has been no shortage of debate over whether or not emulating their tactics would be effective or even desirable for progressive objectives. Within this debate, the question of just what role the Democratic Party should play, if any, has loomed large, as have questions about the viability of third party electoral alternatives. Others argue that engagement with the U.S. electoral system amounts to political suicide, since it is basically like joining a game of cards in which the rules are rigged for the house to always win. Yet just last month we witnessed the election, for the first time in almost a century, of a dyed-in-the-wool socialist to the municipal government of a major U.S. city, along with a nearly-successful socialist victory in another major city. What might this portend?

Our sweetly naïve financial analysts

After some reflection, I have concluded that this is not satire:

“The US economy has flattered to deceive several times in recent years, looking like it was set for a period of faster growth only to fall flat,” said Joseph Lake, US analyst for the Economist Intelligence Unit. 

But Mr Lake says he thinks this time is different. “We expect the US to embark on a sustained economic upswing in the coming quarters.”

What evidence is there that it’s not satire? Nothing more than the fact it was published in the Financial Times. One of the most notable characteristics of the age is that the only way to differentiate between The Onion and real news is by looking at the URL.

Pensions must be savaged or the world doesn’t make sense

The last four years in the United States and Europe have been a long, multi-faceted struggle over a single question: who will bear the suffering of a society in disintegration? Neoliberalism can no longer sustain itself, and no effort is being made to create a new logic of economic growth. The only way to sustain the illusion that neoliberal society remains a going concern, then, is to plunder stored up value in different parts of the system in order to keep the engine running. It’s like eating the seed corn in the midst of a famine. And as everyone knows, it’s not the rich people who die in a famine.

Should the left seek strategic alliances with progressive Democrats? Does it have a choice?

In this post I will offer some reasons why I think it's necessary for progressives, socialists, and anti-capitalists to engage with the Democratic Party in the electoral and legislative arenas if we are to have any hope of putting alternatives to capitalist economy in the forefront of public consciousness.

They drink the neoliberal Kool-Aid, but maybe we could crash their party?

My use of the word "engage" is deliberately indeterminate because the manner of this engagement is something I think ought to be debated. For now, let me stress that to engage with is not the same thing as to collaborate with. I am by no means recommending the left tow the Democratic Party leadership's line or do their bidding on the ground.

I am, however, asserting that the left should find a way to use the Democratic Party to force a public debate over crucial economic issues, such as collapsing private investment, lack of public services, regressive taxation and corporate welfare, mass unemployment and underemployment, and epoch-making wealth and income inequality. Presently, the right's anti-tax rhetoric reigns supreme. Where is the mainstream left's rhetoric of jobs? Where is its full-throated defense of popular social programs such as Social Security and Medicare?

These issues have been distorted, obscured, or ignored in mainstream political debate because of modern conservatism's tremendous success over roughly the last 30-45 years at pushing the public conversation and policy agenda steadily to the right.

The extent of the rightward shift was painstakingly clear earlier this month when the Tea Party forced the Republicans to shut down the government and risk default over the implementation of the Affordable Care Act.

Who really won the shutdown battle?

In light of Congress' eleventh hour passage of a bill Wednesday night to avert a government default and end the shutdown that paralyzed the federal government for 16 days, the New York Times is declaring victory for the Democrats.

But is it really so? Although Republicans failed to achieve their stated goal of de-funding the Affordable Care Act (Romneycare) and were unable to wring further spending cuts from the Democrats, this is still a big win for austerity and further confirmation that the Tea Party strategy works. The deal approved by Congress leaves in place spending cuts that Republicans won during the last major fight over the debt ceiling in 2011, and current levels of funding remain far below those preferred by Democrats, hovering a mere 2% from the funding levels proposed in Paul Ryan's 2014 budget. Moreover, the deal will only fund the government through January 15 and raise the debt ceiling through February 7, portending yet another fiscal impasse and the possibility of more spending cuts. This is austerity, American style.

Despite the outsized influence of the Tea Party and clear evidence that its extremist strategy to whittle away the federal government is working, much of the left has persisted in demonizing the radical right. While it may feel good to do so, progressives should instead learn from the Tea Party's relentless attack on the Republican Party and pursue the same strategy against establishment Democrats, thereby pulling the Democratic Party as a whole to the left and moving the political system a step closer to sanity.
 

Win First, Then Go to War: Thoughts on Tea Party Strategy

Reactions to the government shutdown range from fear to exasperation. The market seems genuinely disturbed, while the Finance Ministers, Presidents, and Prime Ministers of dozens of countries gently remind the US that the economy is international and that our crisis is theirs. It’s also telling that though both incidents proved to be (more or less) unrelated to the shutdown, neither journalists nor the public were surprised at the two deaths in DC last week and both were ready to fit them into a narrative of a country and a world on the brink.

But there is at least one group of Americans that is more resilient than worried, that sees this impasse as a crucible instead of a noose: the 20 percent of voters who identify with the Tea Party.

Stop demonizing the Tea Party

 To all those who are rightly dismayed at the government shutdown and those responsible for it: please stop demonizing the Tea Party. I say this not in their defense! To the contrary, I think the danger posed by the Tea Party is boundless. Their increasing influence threatens to trigger a violent, catastrophic collapse in the global economy, which would then lead to suffering and death across the planet on a scale I don’t much care to contemplate in any detail. (Something to keep you up at night: the last time a highly integrated global economy collapsed, we got WWII.) So we absolutely must stop the Tea Party.

while arguably accurate, this is not helpful

But as paradoxical as it might seem, direct attacks on the Tea Party will do nothing to defuse the enormous threat they pose to us. Rather, the solution is to have some sympathy for these devils. Let us do to establishment Democrats what the Tea Party has done to establishment Republicans. But where the Tea Party movement is animated by a slash-and-burn small government vision, let our movement be animated by a contrary, progressive vision. In order to stop the Tea Party, we need to build an anti-austerity, anti-establishment political movement within the Democratic Party. But to see why this is the solution, we need a deeper analysis of the underlying forces that have led to the rise of the Tea Party. We have provided much of this analysis in various posts on this blog, and I have tried to compile them into a relatively brief overview in this post.

Pursuing peace in an age of crisis

 

If we value peace and hate war, then it is not enough to call for peace and oppose warmongers. We must go on to take action against the root causes of war. What are they?
 
In Syria, the major triggers of the civil war seem to include economic distress, exacerbated by extended droughts caused by climate change. That story is not limited to Syria. To the contrary, if the stagnation / breakdown of the global economy continues, and as climate change effects continue to kick in, the conflict in Syria could soon pale in comparison to larger conflicts in more populous countries, not to mention wars that could break out between more significant world powers. We have earlier taken a look at the rumors of war in East Asia, and recently anti-American views have also been breaking out in China as the effects of the crisis intensify there (I hope we’ll return to this issue later; it deserves posts of its own).

Returning to the particular case of Syria: personally, I think that it would just make things worse if the US sent bombs into Syria, and so I am opposed. At the same time, keeping America’s bombs out of the country is hardly a great victory for humanity, since people are already dying in droves without help from the US military. But be that as it may, there is a bigger picture here, and if we really care about peace and avoiding the horrific violence of war, then we need to keep that bigger picture in view and formulate a strategy to match. We need to revive the global economy, rapidly end carbon emissions globally, and institute a global system of climate change mitigation. This is the only way to end the intensification of pressures which have led to Syria’s civil war (and the use of chemical weapons which may provoke a response from the US), and threaten to increasingly lead to violent conflicts.

So, to return to a familiar refrain on this blog, we need a strategy to overcome neoliberalism, because the neoliberal economy has fallen into permanent crisis and neoliberal ideology is incompatible with a serious climate change strategy. And our strategy to overcome neoliberalism must be global in scope; among other things, this involves rejecting the reactionary isolationism that drives so much of the opposition to the plans to bomb Syria (this is of course true on the right, but it is all too common on the left as well).

Of course this will be difficult. But if we refuse to tackle this larger strategic picture, then our calls for peace are at best naive.

You Can’t Always Get What You Want

Yesterday I went to the Fight for Fifteen rally in Federal Plaza, Chicago. The usual suspects were in attendance, from  labor activists from Action Now and Jobs with Justice to a few rogue Wobblies and the inevitable Revolutionary Communist Party literature table. Participants were color coded by shirt. Workers gave uplifting testimony, Democratic legislators talked about how much they had learned from the workers, and the ceremony ended shortly after musical performances by an electro-traditional Mexican folk group and four break dancers. Media trucks with massive antennas broadcast their coverage, captured from cameras in the back. Police presence was constant but subdued until thirty minutes before the rally’s end time, when fifteen CPD on bikes approached on the sidewalk, stopped, turned, and waited for the event to end.

If you, like me, have been to rallies and protests and marches before, none of the above will surprise you—but then, and as others have already noted, the rally’s purpose was not to surprise or mobilize but to publicize. The control exercised on the demonstrators by the SEIU-based campaign made this abundantly clear. Yet though it was obviously a publicity event, when I tried to describe the rally to friends outside the left I found myself struggling to answer as basic a question as “Who’s the target?”

We must go global: the case of South Korea

If we don’t go global, we can’t win.

Consider, for example, recent developments in South Korea around temporary employment (covered here at the Financial Times, behind a paywall). The rise of temp work in the US and other developed countries is symptomatic of neoliberalism. And as with other neoliberal trends, it is intensifying as the neoliberal economy breaks down. We might be familiar with hand-wringing on the subject in popular press in the US, but it is a global phenomenon (see also France, Germany, Japan, etc.).

South Korea has been hit especially hard by this trend, and has one of the highest rates of temp employment in the OECD, but it is now reversing the trend, thanks to some of the most militant labor unions in the world. Led by temporary workers, unions have taken up the cause of ending temp employment. Sustained labor unrest has resulted in billions of dollars in losses for major corporations, and tens of thousands of temp workers at Hyundai and other major corporations have been granted permanent status (or other benefits and contract improvements in lieu of permanent status).