Never a dull moment on planet Earth

There's never a dull moment on planet Earth and Calgary is no exception. Tomorrow Wednesday August 7 at Vendome, we'll meet at 6 PM for our weekly dialogue. I've appended a book synopsis below as part of my contribution.

Arthur

Book: (Robert Kuttner) Can Democracy Survive Global Capitalism? (2018)

This book is an important read, and this synopsis will only provide highlights. The author is a professed “nationalist” and I am not, so I disagree with some of his basic assumptions. In his Preface he writes “But there is no global government and no global citizenship,” and develops this point in greater detail in Chapter 10. While acknowledging important accomplishments of global civil society, he points out that the real fulcrum of change is national governments. Advances in international law depend on assent of national governments and often are resisted, particularly by the United States. Even when governments agree to an international law, it is often ignored in practice. So Kuttner places almost all his optimism chips on national governments. I distribute my chips differently. Nonetheless, I agree with most of what this book presents. Even if you disagree with it, his views and the evidence he presents are probably worth your careful attention. I’ll begin my synopsis with a brief (one-paragraph) overview.

Kuttner believes that governments should serve the best interest of their citizens (government of the people, by the people, and for the people) and his book emphasizes the well-being of working people. In the era of the New Deal (under President Franklin Roosevelt, 1940s) the United States government was moving in that direction. New Deal policies helped the real economy (production of goods and services) while limiting the ability of the financial institutions to make big profits. “The New Deal shackled private finance in a fashion that has not been equaled before or since.” This was a response to the financial collapse of 1929 and the hard times of the depression that followed, which had resulted from poorly regulated financial speculation. Gradually, however, the New Deal initiatives were undermined and by the 1980s an era of policies to enable big profits through financial speculation (rather than through growth of the real economy) was again on the rise. (Been there, done that.) This development has continued, producing billionaires while increasing inequality. The rich get richer, the poor get poorer. Working people struggle to meet basic needs. The government is controlled by and for wealthy individuals rather than by and for the people. That’s the overview.

As Donald Trump was taking the oath of office in January 2017, many of “the world’s elite” had gathered for their annual meetings at Davos, a ski resort in Switzerland. They took notice of rising antipathy directed against “people like themselves.” Puzzlement at this development was expressed, because those at the conference thought things were going well. Most working people would have a different view. The growing power of global capitalism had weakened governments’ resolve to stand up for the well-being of workers, whose quality of life had declined accordingly.

Kuttner compares how voting districts (counties) that were at least 85% white and had household incomes below the national median had voted in 1996 with how that same group of counties had voted in the 2016 election. In 1996, about half those counties had voted for the Republican ticket and about half for the Democratic. In 2016, “Donald Trump carried 658 of those beleaguered counties. Hillary Clinton carried just 2.”

The growing inequality and the frustration among working-class voters were not being addressed by the Democratic Party; and the Republicans (especially Donald Trump) were better at serving the interests of the wealthy while convincing the working-class voters that a Republican in office would serve their interests too. It was a false populism, and it worked. Donald Trump was a false populist; Franklin Roosevelt was a real populist. Kuttner cites another author, John Judis, in his distinction between left-wing populism and right-wing populism: Whereas left-wing populism (like FDR’s) was binary – “leaders rallying masses against economic elites to achieve overdue reforms” – right-wing populism, by contrast, is a triad. “It typically entails a leader, often demagogic, who rallies masses against elites – but also against despised ‘others’ who are allegedly coddled by those elites at the expense of the true people.” Right wing populism plays to the antipathy against immigrants, Muslims, “the others” that working-class voters often blame in hard times.

The United States in the decade after World War II had its racism and bigotry which were devastating to large parts of its population. Anyone of my own generation knows about this, and about the progress which was made through the civil rights movement and other achievements, progress that only an optimist could have anticipated in 1950. Yet that same racist era also had some strengths that have since been lost. Kuttner emphasizes the severe and dangerous erosion of democracy’s control over capitalist excesses in the decades since 1950. Citing achievements of the New Deal such as the Home Owners Loan Corporation, a public institution with tens of thousands of government employees, designed specifically to help struggling home owners, he convincingly shows how the government was closer to being “for the people” than what we have today. “In this system, nobody got extremely rich, and nobody had any incentive to complicate transactions for the sake of speculative profiteering.”

High interest rates and wildly fluctuating international exchange rates can help rich people and speculators get even richer. The poor can be devastated by high interest rates. At Bretton Woods, New Hampshire, in 1944, John Maynard Keynes had chaired a conference that partially put into place bits and pieces of his recommendations for controlling interest rates and international exchange rates. In fact, alternative views had prevailed even there – and yet the Bretton Woods system had established some controls, such as “pegged” international exchange rates that kept speculative profiteering in check. In a sense, Keynes’s system was only nominally in place, and it gradually gave way to the domination of speculative capital and “market fundamentalism,” especially in the era of Ronald Reagan and Margaret Thatcher. Theirs was a laissez-faire approach with similarities to the years just before the crash of 1929. “The return to market fundamentalism was supposed to energize economic growth. It did not. It did restore both inequality and instability, both with political repercussions to follow.”

“Democratic capitalism today is a contradiction in terms. Globalization under the auspices of private finance has steadily undermined the democratic constraints on capitalism. In a downward spiral, the popular revulsion against predatory capitalism has strengthened populist ultra-nationalism and further weakened liberal democracy. If democracy is to survive, the cycle will need to be reversed.” The author concludes his book with this: “The challenge is for public institutions to be as resilient as commercial ones, and to mobilize the latent power of popular democracy to keep finance in its proper role as servant of the economy. This is difficult, but not impossible. Today’s capitalism is both undemocratic and antidemocratic. Post-capitalist democracy, with new forms of a social economy, could survive and even thrive. It is admittedly a long shot, but our only shot.”

It is toward challenges of that kind that we are turning our attention here in Calgary.