The death of neoliberalism and the crisis in western politics by Martin Jacques
‘Populism’ is the
label that political elites attach to policies supported by ordinary citizens
that they don’t like.” Populism is a movement against the status quo. It
represents the beginnings of something new, though it is generally much clearer
about what it is against than what it is for. It can be progressive or
reactionary, but more usually both… Brexit is a classic example of such
populism… a cri
de coeur from those who feel they have lost out and been left behind, whose
living standards have stagnated or worse since the 1980s, who feel dislocated
by large-scale immigration over which they have no control and who face an
increasingly insecure and casualised labour market. Their revolt has paralysed
the governing elite..
The wave of populism
marks the return of class as a central agency in politics, both in the UK and
the US. This is particularly remarkable in the US. For many decades, the idea
of the “working class” was marginal to American political discourse.. According
to a Gallup poll, in 2000 only 33% of Americans called themselves working
class; by 2015 the figure was 48%, almost half the population. Brexit, too, was
primarily a working-class revolt. Hitherto, on both sides of the Atlantic, the
agency of class has been in retreat in the face of the emergence of a new range
of identities and issues from gender and race to sexual orientation and the
environment. The return of class, because of its sheer reach, has the potential,
like no other issue, to redefine the political landscape.
The re-emergence of class should not be
confused with the labour movement. They are not synonymous.. The re-emergence of the working class as a
political voice in Britain, most notably in the Brexit vote, can best be
described as an inchoate expression of resentment and protest, with only a very
weak sense of belonging to the labour movement...
The death of neoliberalism and the crisis in western politics
The western financial crisis of 2007-8 was the worst since 1931, yet its immediate repercussions were surprisingly modest. The crisis challenged the foundation stones of the long-dominant neoliberal ideology but it seemed to emerge largely unscathed. The banks were bailed out; hardly any bankers on either side of the Atlantic were prosecuted for their crimes; and the price of their behaviour was duly paid by the taxpayer. Subsequent economic policy, especially in the Anglo-Saxon world, has relied overwhelmingly on monetary policy, especially quantitative easing. It has failed. The western economy has stagnated and is now approaching its lost decade, with no end in sight.
After almost nine
years, we are finally beginning to reap the political whirlwind of the
financial crisis. But how did neoliberalism manage to survive virtually
unscathed for so long? Although it failed the test of the real world,
bequeathing the worst economic disaster for seven decades, politically and
intellectually it remained the only show in town. Parties of the right, centre
and left had all bought into its philosophy, New Labour a classic in
point. They knew no other way of thinking or doing: it had become the common
sense. It was, as Antonio Gramsci put it, hegemonic. But that hegemony cannot
and will not survive the test of the real world.
The first inkling of
the wider political consequences was evident in the turn in public opinion
against the banks, bankers and business leaders. For decades, they could do no
wrong: they were feted as the role models of our age, the default
troubleshooters of choice in education, health and seemingly everything else.
Now, though, their star was in steep descent, along with that of the political
class. The effect of the financial crisis was to undermine faith and trust in
the competence of the governing elites. It marked the beginnings of a wider
political crisis.
But the causes of this
political crisis, glaringly evident on both sides of the Atlantic, are much
deeper than simply the financial crisis and the virtually stillborn recovery of
the last decade. They go to the heart of the neoliberal project that dates from
the late 70s and the political rise of Reagan and Thatcher, and embraced at its
core the idea of a global free market in goods, services and capital. The
depression-era system of bank regulation was dismantled, in the US in the 1990s
and in Britain in 1986, thereby creating the conditions for the 2008 crisis.
Equality was scorned, the idea of trickle-down economics lauded, government
condemned as a fetter on the market and duly downsized, immigration encouraged,
regulation cut to a minimum, taxes reduced and a blind eye turned to corporate
evasion.
It should be noted
that, by historical standards, the neoliberal era has not had a particularly
good track record. The most dynamic period of postwar western growth was that
between the end of the war and the early 70s, the era of welfare capitalism and
Keynesianism, when the growth rate was double that of the neoliberal period
from 1980 to the present.
But by far the most
disastrous feature of the neoliberal period has been the huge growth in inequality.
Until very recently, this had been virtually ignored. With extraordinary speed,
however, it has emerged as one of, if not the most important political issue on
both sides of the Atlantic, most dramatically in the US. It is, bar none, the
issue that is driving the political discontent that is now engulfing the west.
Given the statistical evidence, it is puzzling, shocking even, that it has been
disregarded for so long; the explanation can only lie in the sheer extent of
the hegemony of neoliberalism and its values.
But now reality has
upset the doctrinal apple cart. In the period 1948-1972, every section of the
American population experienced very similar and sizable increases in their
standard of living; between 1972-2013, the bottom 10% experienced falling real
income while the top 10% did far better than everyone else. In the US, the
median real income for full-time male workers is now lower than it was four
decades ago: the income of the bottom 90% of the population has stagnated for over 30 years.
A not so dissimilar
picture is true of the UK. And the problem has grown more serious since the
financial crisis. On average, between 65-70% of
households in 25 high-income economies experienced stagnant or falling
real incomes between 2005 and 2014. The reasons are not difficult to explain.
The hyper-globalisation era has been systematically stacked in favour of
capital against labour: international trading agreements, drawn up in great
secrecy, with business on the inside and the unions and citizens excluded, the Trans-Pacific
Partnership (TPP) and theTransatlantic Trade and Investment Partnership (TTIP) being
but the latest examples; the politico-legal attack on the unions; the encouragement of large-scale immigration in both
the US and Europe that helped to undermine the bargaining power of the
domestic workforce; and the failure to retrain displaced workers in any
meaningful way.
As Thomas
Piketty has shown, in the absence of countervailing pressures,
capitalism naturally gravitates towards increasing inequality. In the period
between 1945 and the late 70s, Cold War competition was arguably the biggest
such constraint. Since the collapse of the Soviet Union, there have been none.
As the popular backlash grows increasingly irresistible, however, such a
winner-takes-all regime becomes politically unsustainable.
Large sections of the
population in both the US and the UK are now in revolt against their lot, as
graphically illustrated by the support for Trump and Sanders in the US and the
Brexit vote in the UK. This popular revolt is often described, in a somewhat
denigratory and dismissive fashion, as populism. Or, as Francis Fukuyama writes
in a recent excellent essay in Foreign Affairs: “‘Populism’ is the label
that political elites attach to policies supported by ordinary citizens that
they don’t like.” Populism is a movement against the status quo. It represents
the beginnings of something new, though it is generally much clearer about what
it is against than what it is for. It can be progressive or reactionary, but
more usually both.
Brexit is a classic
example of such populism. It has overturned a fundamental cornerstone of UK
policy since the early 1970s. Though ostensibly about Europe, it was in fact
about much more: a cri de coeur from those who feel they have lost out and been
left behind, whose living standards have stagnated or worse since the 1980s,
who feel dislocated by large-scale immigration over which they have no control
and who face an increasingly insecure and casualised labour market. Their
revolt has paralysed the governing elite, already claimed one prime minister,
and left the latest one fumbling around in the dark looking for divine
inspiration… read more:
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