It must be hard for people who came of age politically during the past thirty-five years to appreciate how it used to be taken for granted that increasing productivity would bring increasing wellbeing to the vast majority – higher wages and salaries, better social insurance programs, better public education, better pensions, and the like.
It was taken for granted too that national, state and local governments would be run efficiently on fiscally sound bases – that, when necessary, taxes would go up as well as down, and that the tax system would be generally progressive.
In those days too, the idea that a major city like Detroit would go bankrupt seemed about as likely as that a meteor would flatten it.
And no one expected that, in the near future, the very rich would enrich themselves egregiously, as they had in earlier eras, while the vast majority would become worse off. The expectation instead was that economic inequality would continue to wane.
There were anti-capitalists in those bygone days, many more than now; but few of them thought that life under capitalism was becoming harder to bear. Plainly, it was not.
Their idea was that a socialist alternative would be better still – that it would attend to fundamental human needs without having to rely on wasteful military spending or irrational consumerism to keep the economy on track. Under socialism, work could become more meaningful and other human endeavors more fulfilling and ennobling.
For anti-capitalists in the first three decades of the post-War period, it wasn’t so much a matter of escaping from a burning house as moving to a better neighborhood.
However, with the house not on fire, anti-capitalism never quite gained mass acceptance; most people were content to stay in the old neighborhood, and either to leave it as is or to try to make it better.
It was not just that the Soviet model scared people away from more radical alternatives. It was also that prosperity and good order were generally on the rise, and there was every reason to think that progress would continue. Change is risky; why chance it?
On that last point, there was widespread agreement. It was assumed, across the political spectrum, that at least some of the most debilitating kinks and flaws of earlier versions of capitalism could be worked through; that capitalism with a human face was a live prospect and already, in many respects, an actual fact.
European social democracy led the way. However it was much the same in all developed capitalist countries, including the United States.
To be sure, the American case was unusual in several respects.
During those decades, capitalist countries other than the United States (and, to a lesser extent, Canada, New Zealand and Australia) were still, for the most part, ethnically and culturally homogeneous. The idea that one’s fellow citizens were brothers and sisters under the skin therefore came naturally; the nation was the family writ large. The United States was too diverse for that; solidarity was always a struggle.
Also, with its legacy of slavery and its on-going continuations, there were severe racial divisions in the United States that had no real counterparts in other developed countries. To the extent that, despite everything, the American nation was a family, it was a dysfunctional one.
Ethnic and cultural diversity forced American reformers to become coalition builders, mediators of group interests that did not always coincide; while institutional racism limited the scope and depth of their projects. Reformers in more homogeneous societies had smoother going.
America was also unusual – exceptional, according to the literal meaning of the term – for not having made universal health care a right like, say, public education through high school. This is why, to this day, the United States (with or without Obamacare) does not provide free (or nearly free) health care for all; why it is decades behind other countries.
For that anomaly, the American Medical Association was, at first, the main culprit. Nowadays, private insurance companies and other health care profiteers have taken the lead in keeping progress at bay. They operate with bipartisan support and with a friend in the White House. Nevertheless, they are not now and never were the only problem.
Historical circumstances also played a role. World War II decimated Europe and Japan, at the same time that it rescued the American economy. Health care provision, like everything else, was therefore in shambles elsewhere; in the United States, it was in as good shape as it had ever been. And because there were wage and price controls imposed during the War years, corporations, competing for workers, could only offer fringe benefits – like health insurance.
Therefore, when the citizens of other capitalist countries were in desperate need of everything, including access to health care, many American workers already had health insurance. When wage controls were lifted, health insurance came to be one of the many benefits won or enhanced through collective bargaining, and it was also a perk some unions offered their members directly.
For the most part, the labor movement in the United States favored universal coverage, nevertheless. But like DC statehood for the Democratic Party, it was an idle aspiration for which their leaders hardly lifted a finger. Everywhere else, the issue was or soon became a prime demand.
Other countries had and continue to have their own peculiarities too, though the American case is undoubtedly the most extreme. Nevertheless, the similarities swamp the differences. The New Deal-Great Society liberal settlement was, for all practical purposes, an American version of what social democratic and labor parties elsewhere were forging.
The emergence of capitalist states that undertake affirmative social policies – beyond the “night watchman” and defense roles of earlier periods – had been in the works for a long time. But it was not until the Great Depression of the 1930s, and then more clearly after the Second World War, that the affirmative state came into its own.
There were many factors that made this possible: a sense of shared sacrifice brought on by the War; the possibilities, especially in war-ravaged countries, inherent in starting over almost from scratch; the specter of (actually existing) Communism which made economic elites more willing to make concessions than they would otherwise have been, and the salutary influence of newly invigorated labor movements.
In Europe especially, labor movements were connected historically, and sometimes politically, to Marxist and other socialist political traditions; in the United States, post-War McCarthyite politics wiped out all remnants of that. But a liberal-labor coalition nevertheless became a potent political force.
America in the late forties and early fifties was an extreme case, but radical anti-capitalist politics was, in varying degrees, suppressed everywhere. Still, in most countries, including the United States, intellectual and cultural forces friendly to left alternatives within capitalism were tolerated and even encouraged.
Progressive thinking was never quite hegemonic, but it was everywhere a pole of attraction and a force to be reckoned with. And the ideological vestiges of earlier, less humane capitalist eras were effectively marginalized. Even in the United States, if anyone defended the kinds of neoliberal views that have now become mainstream, it was from far out in right field.
This was a matter of plain common sense. Developed capitalist countries were increasingly prosperous, and nearly everyone benefited. Austerity was an unpleasant, but increasingly distant memory. Equality was on the rise.
What reason could there be to advocate policies certain to counter these developments; policies calculated to make the rich richer and to reduce the wellbeing not just of workers but also of the vast majority of the so-called “middle class?”
There were, of course, timeworn ideological reasons – the ones that have lately been revived. But they had been repudiated long ago, and everyone knew it. They therefore had little appeal outside the most retrograde circles. Hardly anyone wanted to turn the clock back; why would they?
Then the world changed.
* * *
It started sometime during the Carter administration in the United States, and more or less contemporaneously in Great Britain. By the time Margaret Thatcher and then Ronald Reagan assumed power, the process was well underway.
In short order, the rest of the world followed suit. The more progressive they had been, the lower they fell. The trajectory of the Mitterrand government in France is an extreme case, but there were others as well.
The factors that had made progress possible didn’t go away overnight. But they were not decisive; and they were themselves affected by changing circumstances.
Social solidarities frayed for many reasons; including increasing levels of immigration all over the developed world. Before long, many formerly homogeneous European countries had become multi-ethnic and multi-cultural conglomerations. Memories of wartime sacrifices dwindled as well; and the specter of Communism faded and then altogether disappeared.
But the main factor is that capitalism succeeded too well in building up productive capacities. Capitalist firms must grow to survive; they must therefore invest.
But after thirty some years of steady and significant growth, there was more than enough capacity already in place – not in the sense that all wants could easily be satisfied, far from it; but in the sense that, given the over-capacity already there and under-utilized, the profit to be made by investing in more significantly declined.
Capitalists could have staved off decline, at least for a while, if they had been able to gain a larger share of the total social product. But, thanks to all the gains registered in the preceding period, they were able to squeeze workers’ wages only so much.
Of course, they still try, and sometimes partially succeed. The service industry is particularly vulnerable; unskilled service workers in traditionally low paying jobs therefore bear the brunt.
But in that sector too, there are limits. And so it is that, even in today’s tight job market, workers in the fast food industry – many of whom risk deportation under the Obama regime — are fighting back.
But squeezing workers wages as much as circumstances allow is not nearly enough of a solution to the problem capitalists face.
For that, capitalists must call upon the state for aid.
Thanks to “free trade” and obliging tax policies, states in capitalist societies have made it possible for the capitalists they serve to export manufacturing jobs abroad — to places where wages are preposterously low. This is not just an American phenomenon; it is a defining feature of the neoliberal world order.
That sort of fix would have been impossible in the days when the greatest diagnosticians of capitalism’s “laws of motion,” Marxist and otherwise, predicted the system’s imminent, internally driven, demise.
But with advances in transport and communication, and with the robotization of production processes (machines making machines), it has become eminently possible. For decades now, capitalists have been taking full advantage.
How ironic that technological advances that could go far towards eliminating burdensome toil as a fact of the human condition, and that could make high living standards for all a reality, instead, under capitalism’s aegis, have just the opposite effect!
They lead to the elimination of domestic manufacturing jobs, increasing unemployment and underemployment, and they cause wage levels to stagnate or decline – not just in what remains of the manufacturing sector, but across the board.
One might think that this situation would be intolerable to too many people, and would therefore be politically unfeasible.
This is a fair expectation in the long run. But the ready availability of cheap products made abroad and government policies that encourage the rise of public and private debt have combined to postpone the inevitable.
The days when a single wage earner could support a family are gone, but heavily indebted two wage households can still shop up a storm.
Thus cheap goods and debt servitude replaced rising wages and cultural uplift; this is the new capitalist way.
It seems to be working too, at least for a while. Except in rare moments of lucidity, the ninety-nine percent have been lulled into thinking that nothing is terribly wrong – that the Walmartization of everything is just fine.
The Occupy movements broke through the miasma briefly. But they are now a distant memory. Meanwhile low wage schlock emporia, Walmarts and others, are opening up all the time.
But even with an acquiescent public, capitalism’s problems have not gone away. Capitalists still must find ways to expand their holdings.
They can’t invest all the newfound wealth flowing into their coffers thanks to the low wages they pay overseas workers because capacity is already over-built – even in the countries to which they have exported domestic jobs. And they can’t consume it all because they are already bursting at the seams.
But neither can they stand in place. There is therefore only one thing for them to do with the money they have: they must gamble with it – not literally in casinos but in their close cousins, the financial markets that nowadays rule the world.
To that end, capitalists have created previously undreamed of financial instruments that, when bought and sold at market-driven prices, generate wealth in their own right; wealth that bears only the most tenuous of connections to the real, productive economy.
Finance capital’s ascendance is a response to the exigencies of the capitalist mode of production in its current phase. But capitalists cannot financialize the economy on their own. They need the state for that.
In the American case, this means putting all those political contributions to use – to guarantee that the state will pursue policies conducive to their interests. This is essential because it is the state that controls how much money there is and therefore how money can make money without making goods or supplying services along the way.
The deep causes underlying the need for the financial sector to develop as it has – and, more generally, for the neoliberal turn — are economic, of course; but it was politics that gave those causes their efficacy, and it is politics that will determine what their future consequences will be.
* * *
It was the labor movement that forced a more human face onto capitalism; but financialization and globalization are neutering organized labor – by eliminating the best jobs and forcing down wages on the rest.
Capitalism has become less egalitarian and less humane as a result.
Before this process got underway, the class struggle was fairly transparent; workers produced wealth, and their distributive shares were set by struggles with capitalists over the wage rate. The logic of the underlying system and lived experience generally coincided.
Now financial markets rule; they determine what the direct producers’ share will be. Governments, it seems, have no choice but to accommodate to their demands.
In this sense, political power too is neutered; real power lies elsewhere — in global markets that operate beyond human control.
But this is an illusion. Because the political order is the condition for the possibility of neoliberal rule, human beings can break free from it – by defeating it politically.
It is an old truth that bears restating: what human beings have made, human beings can undo and transform.
But that will require a new politics because the politics people everywhere nowadays regard as “normal” is part of the problem.
To think otherwise is to succumb to the biggest illusion of all.
We, in the United States, get drawn into normal politics more than citizens of most other countries because our political culture is centered around primary elections that focus on personalities and general elections that focus on the small, mainly cultural differences that distinguish our two highly polarized, semi-established political parties.
This is why, at best, our elections only ratify changes achieved in counter-systemic popular struggles waged in other venues, not in electoral campaigns.
And even that doesn’t happen often. The civil rights legislation of the 1960s is the last clear example.
To make matters worse, our elections inevitably devolve into contests between a Democrat and a Republican – each wedded to the existing order.
It needn’t be that way in theory, but our duopoly party system has become so thoroughly entrenched that, in practice, it can hardly be otherwise.
At the national level, some of our politicians are corrupt, some are only feckless, but all of them are beholden in various ways to nefarious pressure groups and moneyed interests. In a country that regards campaign contributions as Constitutionally protected forms of free speech, it could hardly be otherwise.
There are, of course, members of the political class, even at the national level, who are thoroughly decent and who undoubtedly mean well; it is better that they hold office than that the others do. But there is little that even the best of them can do to keep things from getting worse, much less to make them better. The way forward is not through them.
An Obama who really was what Obama seemed to be to the liberals and “moderates” he fooled five years ago would have been a major improvement over the Obama we got. Such an Obama, possessed of the political capital the real Obama squandered, might have succeeded, for example, in getting genuine universal health insurance through Congress. He might have diminished America’s pernicious “exceptionalism” to that extent.
But even the Obama liberals imagined would only have been able to mitigate some of the worst aspects of the political economic order that globalization and financialization have afflicted upon us.
To do better than that, what we need is a politics that leaves contests between Democrats and Republicans to those who cannot or will not transcend the horizons of the electoral circus; a politics that targets the conditions that make the neoliberal policies both parties support possible.
Until we make that happen, the Age of Obama will continue to be the norm, no matter who wins next time. Then, in the future as in the recent past, things will only get worse.
ANDREW LEVINE is a Senior Scholar at the Institute for Policy Studies, the author most recently of THE AMERICAN IDEOLOGY (Routledge) and POLITICAL KEY WORDS (Blackwell) as well as of many other books and articles in political philosophy. His most recent book is In Bad Faith: What’s Wrong With the Opium of the People. He was a Professor (philosophy) at the University of Wisconsin-Madison and a Research Professor (philosophy) at the University of Maryland-College Park. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press).