Category Archives: progressive policies

In Praise of Red October

In Praise of Red October

The political leaders of the largest economies (the G8) rule principally to preserve and extend the growth of capitalist ‘market civilization’: an energy intensive, consumerist, individualist form of corporate-dominated development that is found in the USA, and to a lesser or greater extent, emulated throughout the world. This form of development has produced deepening inequality and an unsustainable assault on the ecology of the planet. Such dominant practices of global politics have served to maintain the prerogatives of a global plutocracy, whilst inequality deepens to levels last seen during the Great Depression of the 1930s.

In this situation, G8 leaders claim they have ‘expertise’ to stabilize and promote economic growth and to master crises – a claim now widely challenged.  Indeed, while they have been preoccupied with saving capitalism, their policies simply worsen the fundamental crises of welfare, livelihood and social reproduction that afflict a majority of the world’s population, e.g. global health, food, energy and ecological crises.

Also, we might note that in responding to crises, G8 political leaders have (a) frequently drawn on their unholy alliances with authoritarian and dictatorial forces, particularly in much of the Third World; (b) sought to maintain a condition of de-politicization and political apathy, and, where necessary (c) to channel and incorporate forms of resistance.

In sum, the strategy of dominant forces has been to contain fundamental political contestation on the nature and purposes of rule, allowing them to continue to promote the market civilization model or ‘really existing capitalism’. This strategy has worsened what I call a global organic crisis, indeed, we may be at a turning point in the destiny of humankind and the planet.

However, in several parts of the world, this neoliberal governing formula of authoritarianism and/or controlled electoral democracy/de-politicization is increasingly coming under popular, grassroots pressure.

What is emerging in response is complex and uneven. Many communities in both north and south experience dispossession and intensified exploitation, others are still relatively protected from such oppression. On the one hand there is a rise in right-wing populism and right-wing reaction, e.g. the Tea Party movement in the US; on the other hand, many have noted that there has been little from the left in the largest capitalist economies – at least until recently.

If we think more globally, however, I think we can discern the outlines of what I have called a ‘post modern Prince’ – a set of progressive conceptions of the world, organized resistance and differentiated political potentials that are developing in the plural, albeit unevenly and, in a variety of contexts.   These self actualising potentials are reflected in a variety of radically democratic practices, interpret dominant power as supremacy or as ‘dominance without hegemony’ and they challenge the mantra that there is no alternative to neo-liberal capitalism.  We can identify the post-modern Prince as a set of potentials and forces in movement and in formation, with no fixed organizational structure as such.  What it is important to emphasize is how this process is producing innovations in thought and action which are directly linked to the actual practices of local, regional and global politics.

A good example is grassroots organisations such as the Landless Workers Movement (MST) in Brazil, which forms part of the small farmer’s world political organization Via Campesina, whose motto is ‘small famers can feed the world and cool the planet’.  The champion a localized, agro-organic and small scale conception of  farming and the distribution of food, and it opposes the corporate dominance of agriculture and the world market for food, or ‘food from nowhere’, in a world where over a billion people are starving and where global food prices have massively increased over the past decade, making the world market the new arbiter of starvation for billions of people.

There are also new configurations of interstate power emerging such as the Bolivarian Alternative for the Americas (ALBA). Such configurations reject North American and Western imperialism and interventionism, as well as neoliberal capitalism in favour of new forms of ‘21st century socialism’ based on regional solidarity and new concepts of military defence that are linked to egalitarian concepts of development.  ALBA reflects an effort to promote social justice, the recognition of the ‘rights of the rightless’ (e.g. indigenous communities), a politics of human dignity and redistribution, and not least, the agro-ecological notions of food sovereignty associated with Via Campesina.

In short, new forms of political and civil society are emerging in Latin America; and indeed, such developments are increasingly institutionalized in government. Can this be emulated elsewhere? The ‘Arab Spring’ of 2011 involved the relatively spontaneous emergence of democratic communities of resistance to authoritarianism, dictatorship and the intensification of capitalist disciplines and inequalities.  Relatively spontaneous but nonetheless organized resistance to such forces is also growing quickly across Europe and, for the first time since the 1960s, across the United States, with the recent and apparently spontaneous occupations of key urban spaces of capital that began with Occupy Wall Street (OWS). The occupations and demonstrations are now spreading throughout the US and Canada, and indeed to many other parts of the world.  OWS protagonists take inspiration from the Tunisian and Egyptian uprisings and claim that they reflect the 99% of the American population which is being oppressed by the 1% that constitutes the ruling class and plutocracy.  Similar claims have been expounded in many other locations as the groundswell of protest and occupation intensified during October 2011, in ways that have captured the attention of the world.

Can these movements lead to a restructuring of global power structures?  This is still an open question.  Nonetheless, what seems to be reflected in the Red October occupations is a collective rather than an individual effort to foster new forms of knowledge, modes of communication and culture that visually and conceptually contest the prevailing neo-liberal common sense that there is no alternative to the growth-oriented and ecologically myopic mentality of market civilization. This ‘common sense’ is endlessly repeated and reinforced by the dominant organs of communication.  But is this common sense also ‘good sense’?  This is the question that is posed by the Occupy (99%) movements (comprising people of all ages, backgrounds, various religious persuasions, occupations and political aspirations) and their answer is a resounding ‘no!’

Indeed, in so far as such critiques of neo-liberal common sense are part of a collective and democratic process involving broad social forces on a mass basis, it constitutes an event  of great  philosophical and political significance:

For a mass of people to … think coherently and in the same coherent fashion about the real present world is a ‘philosophical’ event far more important and ‘original’ than the discovery is by some philosophical ‘genius’ of a truth which means that remains the property of a small group (Antonio Gramsci, Prison Notebooks, my emphasis).

This may be a clue to the significance of Red October.

For images of the Occupy encampments and protests throughout the world see:

http://www.guardian.co.uk/world/gallery/2011/oct/15/occupy-wall-street-movement-global#/?picture=380791860&index=40

So what are the achievements of Occupy and the movements of Red October?  First, Occupy is breaking the shackles of a political common sense restricted by ‘horizons of necessity’: the minimalist notion that the future must necessarily be more or less like the past, that there is no alternative to rule of the 99% by the 1%. Second, Occupy reflects the formation of new ‘horizons of desire’, in the plural, its forces are collectively imagining desirable and possible futures; rendering necessary what had previously thought to be politically impossible.*

* On these horizons see Richard Falk, ‘Horizons of Desire.’  Opening address to conference: The Future of Global Governance? York University, Toronto, 25 May 2011. The lecture can be viewed on: http://www.yorku.ca/lefutur/.

The Politics of the New Austerity

The strategies adopted to bail out Wall Street, the City of London, and banks in Frankfurt, Paris and other capitals have resulted in very high levels of public debt for a number of countries.  The costs of the planned austerity measures to pay for the bailouts in Greece, Ireland, the UK and France for example, will fall disproportionately on the backs of the poor. In the UK, the Conservative-Liberal coalition government has announced the elimination of about 500,000 public sector jobs involving deep cuts to education, welfare and policing budgets to pay for the huge bailouts of City of London firms. These job losses will also affect women the most (about 350,000 of the jobs scheduled to be terminated).

This explains why political struggles over the new austerity are intensifying, e.g. in France as of October 2010. The struggles point to questions that have been largely missing from the way that conservative and social democratic governments have defined their responses to issues of public finance. These questions include: (a) what could have been the alternative uses of these gigantic sums of public money? (b) Who will pay for these debts?

The answer given to question (b) by the International Monetary Fund, and most G20 governments is, “the people.”  The IMF has said that it will take 10 to 20 years of austerity measures, involving cuts in public sector wages, jobs and public services, raising the retirement age, and increased privatization of public assets to pay back not only the large government debts incurred in bailing out the banks but also to pay for “future” bailouts. As the Director-General of the International Labour Organisation noted in 2009, the bailout strategies involve “billions for the banks and pennies for the people”. Now the people are being made to pay for the bailouts with the new austerity measures.

The new austerity is something that has feature of the economies of the global South for much longer, at least 30 years  — in many parts of the world the austerity is not all that “new”.  More to the point, the debt crisis is therefore becoming more “global” in the sense that it is experienced in both North and South, and it operates not only at the level of the sovereign debt of countries such as Greece but also at the level of firms and workers.

In some parts of the global South – for example in Latin America – austerity has not prevented the emergence of progressive alternatives – what has come to be called “21st century Socialism”.  However – up until recently – in much of the global North, in the absence of significant political pressures, governments have simply responded to the crisis in favour of the interests of financial capitalism – or what I call “financial orthodoxy”.

For example, in its response to the Greek debt crisis in May 2010 the European Union formed a kind of European version of the IMF, with new bailout funds of €1 trillion in an attempt to “stabilize the financial markets”.  However, hardly debated at the time was how much of the debt of countries such as Greece is owed to private banks in Germany, France and the United States, so the Greek bailout was as much a bailout of these banks as it was for the government of Greece. In response Greece has made draconian cuts in social benefits and pensions that reverse approximately 30 years of workers’ gains. Of course the Greek fiscal crisis has also been caused by poor tax collection (allowing wealthy people and middle-class professionals to evade paying taxes) as well as by previous governments manipulating statistics and using financial innovations with the help of big private banks such as Goldman Sachs in order to camouflage the true condition of government finances.

The key point however is there has been little or no public debate upon the alternative ways in which such resources could be used. A very different kind of (and indeed a much larger) European Monetary Fund should be created, linked to more socially sustainable economic development, and geared to improve education, health and the environment. This would produce a greener and more socially just form of economic growth that would in turn improve the public finances of European governments – provided that tax collection was improved and made more equitable. This fund in turn should be much more democratically governed than the present “independent” European Central Bank, which is responsive mainly to private financial interests.

What we have learned during the present crisis in Europe is that banking is much too important to be left to either to mainstream politicians or the bankers themselves. Indeed there are many gifted, critical and more democratic economists who could be recruited to help build such an institution and run it effectively.

I raised some of these issues in a 20-minute presentation at the public event, Critical Perspectives on Global Governance, University of Helsinki, 7 May 2010; the talk was called The Greek Tragedy and the Global Debt Crisis.

This talk explains aspects of the Greek financial bailout of May 2010. It argues that we should not witness events such as those in Greece in response to austerity measures, as if we are simply the passive audience of a drama, a “Greek tragedy” as it were.  Progressive forces should press for socially just responses to the crisis and for more democratically accountable institutions of economic governance.

For the video see http://uni-utopia.net/

As a footnote, viewers of the video will note how at one point a videographer in the audience interrupts me; in case it is not clear from the narrative, what I was referring to was the way that a computer error transposed an automated market “sell” trade of $16 million dollars in shareholdings as $16 billion.  This massive sell-off of stocks immediately caused the market value of many shares on the New York Stock Exchange to drop as if the companies were going bankrupt.  The example highlights the way that the turnover time of financial capital is accelerated by computerization and 24/7 trading strategies.

Audio podcasts of all the presentations at the Critical Perspectives on Global Governance, were posted on: http://www-hotel1.it.helsinki.fi/~optek/podcast/ (Posted May 2010).

The Global Organic Crisis: Paradoxes, Dangers and Opportunities

The capitalist world has experienced its deepest economic meltdown since the Great Depression of the 1930s. Paradoxically, whereas the earlier period saw the breakdown of liberal capitalism, the rise of fascism and Nazism, and the Soviet alternative to liberal capitalism (the Soviet Union), today neo-liberalism and capitalist globalization still remain powerful, and apparently supreme, on the stage of world history. Despite the financial implosion on Wall Street and its “near-death experience” for financial capitalism and the G8’s somnambulant political leaders, few coherent left alternative programs have commanded sufficient political organization or popular support to mount a serious challenge or to pose credible alternatives.

So what arguments can progressive political forces use to begin to mobilize transformative resistance in ways that can give credibility to new forms of politics and society? We start with the simple observation that appearances can be deceptive and indeed this is to be expected in the present politically paradoxical global conjuncture. This conjuncture corresponds, in part, the Chinese character for crisis, a character that combines moments of danger and opportunity. It is linked to the fact that the current global political situation involves far more than a crisis of capitalist accumulation since it is pregnant with the following paradox: “The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.”

The full version of this article has been published online by Monthly Review. To access the full text, click here.

The real cost of the bail outs – alternatives to consider

One estimate is that about US$17 trillion has so far been allocated for “economic emergency funds” by the USA, EU and other G8 nations to promote macroeconomic stabilization. However the basic question “what kind of stabilisation, of what, and for whose benefit?” is not being asked by many commentators.

A political economy analysis of these huge outlays would normally assess them in terms of their “opportunity costs” – the alternative uses of the funds that have been foregone, for example the money could have been used to increase expenditures on health, education and training and social infrastructure more generally and in so doing provide benefits and economic relief to the majority of the population.

The basic economic argument in favour of such a socially oriented approach is that the G8 policies are both overly expensive and unlikely to be fully effective – whether they reverse the slump remains to be seen (see my post on “green shoots”). The economic argument for increased social expenditures (e.g. on accessible education, affordable housing, health care and social programs) is that they have far more favourable effects on macroeconomic stabilization than financial bail-outs. Social expenditures raise aggregate demand in far greater measure than do outlays on financial bailouts. This is because poorer people spend more of their income than the wealthy. Thus smaller outlays result in a larger growth of consumption and demand – needed to reverse economic slump and to mitigate rising unemployment. A social approach would also result in much lower costs for taxpayers as they finance future government debt.

Looking beyond, we need to fundamentally rethink our social and economic policies in the longer and medium-term to promote a different kind of society. Restoring previous levels and patterns of consumption according to the present economic paradigm will simply return us to a socially and ecologically unsustainable path of development, to say nothing of the fiscal consequences of the current bailouts which will be imposed on not only ourselves but future generations. As things stand, G8 policies are principally governed by the dictates of a hyper-consumerist, energy intensive and individualistic paradigm, a kind of monoculture of the market and the mind, or what I call the global “market civilization”.

A fundamental rethink of the logic of market civilization is of course the work of many millions of people throughout the world – what I call the progressive organic intellectuals. By this I mean not only trained economists and ecologists with high degrees of technical expertise, but more broadly the very large numbers of progressive, engaged and thoughtful people across all walks of life dissatisfied with the current situation and pressing for change. They are found in schools, in health care institutions, in trade unions and in a range of social organizations and they are beginning to combine and assert their collective identity as a political force. They look towards the social and economic future not only preoccupied with immediate issues but also with a view to long term questions and initiatives.

Many of the social programs that I mentioned above were always treated by G8 governments as economically inefficient and impossible to finance – and inconsistent with the prevailing ideology of disciplinary neo-liberalism. Surely the scale and the immediacy of the 2008-09 global economic bailouts indicate that this was simply an ideological and political choice? With different political pressures and forces at work a radically new agenda for social and economic transformation becomes possible.

So what would such a radical economic reform agenda look like? I would suggest that this agenda might include initiatives to:

  1. Rethink the tax base in a more macro-economically efficient way whilst ensuring that the future distribution of tax burdens is equitable and sustainable. Whilst much has been made of the need to prevent tax avoidance and tax evasion, especially in offshore centres and to close loopholes in national tax codes, perhaps the biggest shift in taxation regimes over the past 30 years has been the increasing use of indirect taxation. Indirect taxes on the whole tend to be regressive and hit the poor hardest. On the other hand direct taxation on the wealthy and on corporations – taxes that used to be very high after the Second World War – have fallen considerably. So a fundamental rethink of the question of taxes is imperative especially as the costs of the bailouts will be borne by future taxpayers, and given that demographic changes which will also create enormous fiscal pressures (see 4., below).
  2. Develop comprehensive measures to ensure that the economy is regulated effectively and prudently, e.g. preventing financial institutions from excessively risky practices such as using financial derivatives and products that are not properly understood nor secure; measures to govern world trade that are democratically accountable and premised on meeting social objectives rather than on simply maximizing profits and enlarging the freedoms of capital at the expense of socially and democratically defined needs;
  3. Develop policies to revitalize our public and collective services such as public health systems as well as infrastructure such as public transport and public information and communications systems; these policies should be based upon more fundamental democratization of public institutions, legal systems and the governance of property rights;
  4. Deal with demographic shifts and related social issues: e.g. health issues and fiscal costs associated with the ageing society in Europe and Japan: breakdown the unhelpful dichotomies that govern policies in such areas such as “young” and “old” and so-called “productive” and “unproductive” members of society;
  5. As noted, to rethink policies to change the destructive logic of affluent lifestyles and thus minimize over-consumption, waste and bad diets and thus promote healthier ways of living, whilst preserving toleration and diversity of social choices.

For this to be possible the language of political economy and public policy needs to be reinvented and progressive organic intellectuals need to engage in education at a variety of levels — to help transform the way in which people conceive of political, material and ecological conditions which govern the limits of the possible both now and in the future. In so doing the goals would be to forge a new commonsense concerning the nature of the world and its potential future. This means that new policies and institutions in education, in the media, and more broadly a series of initiatives that can begin to respond to the challenges and ethical questions we face, both locally and globally. This would imply significant changes in not only the field of economics but also across the social, human and natural sciences to produce a more integral and forward looking understanding that can help to promote sustainability and social justice.