Michael Lind: Will the Great Recession Lead to World War IV?
[Michael Lind is policy director of the Economic Growth Program at the New America Foundation and author of "The American Way of Strategy."]
...To those accustomed to thinking of the left-right spectrum in economic terms, the success of the recession-era right might seem peculiar. After all, you would think that the collapse of the deregulated financial system that helped cause the great recession would have discredited the market-worshiping right. And you would think that there would be a comeback by the economic left, which has traditionally distrusted Utopian claims about free markets.
This is not happening for two reasons. One is the success of the Third Way. The Third Way was the transatlantic project that united Clinton Democrats, Blair Labourites, and many European and Latin American parties of the left in a common enterprise of reinvention. The transatlantic center-left distanced itself from statism, turned its back on organized labor and embraced the financiers of Wall Street and the City of London, who showered them with campaign donations. With the zeal of converts, the leaders of center-left parties like Blair and Brown and Clinton and Obama sang the praises of free markets, free trade, privatization and deregulation. These so-called neoliberals abandoned working-class voters who looked to government and unions to protect them against economic upheaval, and sought a new constituency among the liberal rich and upscale members of the professional class who combined free-market conservatism with tolerant social views and support for means-tested government charity for the poor.
The other reason is bad timing. The neoliberals adopted a modified version of libertarianism just a few years before the Crash of 2008 exposed the fallacies that justified it. Most politicians, however, are influenced by the worldview of their formative years, not their mature years, so that when they assume power they are usually a decade or a generation out of date. Barack Obama, for example, was shaped by the experience of the Reagan and Clinton years, when Democrats were on the defensive and sought to distance themselves from mid-century New Deal liberalism, as Bill Clinton did when he declared: “The era of big government is over.” Expecting the Blairites and Clintonites who have populated the cabinets of Gordon Brown and Barack Obama to rethink their obsolete 1990s neoliberalism in the 2010s in response to real-world events is like expecting an oil tanker to turn on a dime....
If history is any guide, an era of global economic stagnation will help the nationalist and populist right, at the expense of the neoliberal and cosmopolitan/multicultural left. During the Long Depression of the late 19th century, which some historians claim lasted from 1873 to 1896, the nations of the West adopted protectionist measures to promote their industries. Beginning with Bismarck’s Germany, many countries also adopted social reforms like government pensions and health insurance. These reforms were often favored by the nationalist right, as a way of luring the working class away from the temptations of Marxism and left-liberalism. By and large the strategy worked. When World War I broke out, the working classes and farmers in most countries rallied enthusiastically around their respective flags.
The Great Depression of the 1930s similarly led to the rise of one or another version of the authoritarian, nationalist right in Europe. Only in a few societies with deeply established liberal traditions, like the English-speaking countries and Scandinavia, did liberals or liberal conservatives hold on. And Franklin Delano Roosevelt’s New Deal Democratic Party, a coalition that included racist Southerners and traditionalist Catholic immigrants, was not particularly liberal by today’s standards.
In both eras of depression, great-power rivalry for resources and markets intensified and ultimately led to a world war. Following World War II, the U.S. sought to avert a repetition of that pattern, by creating a global market secured by a global great-power concert in the form of the Security Council. But the project of economic disarmament and security cooperation broke down almost immediately after 1945 and the split between the Soviets and the Anglo-Americans produced the Cold War. The second attempt at a global market that began after the Cold War may be breaking down now, as the most important economic powers pursue their conflicting national interests....
These trends are clear but the transatlantic establishment refuses to confront them. Instead, elites on both sides of the Atlantic hope that the great recession will turn out to have been merely a particularly nasty business cycle downturn. They pray that soon we can return to something like the illusory prosperity of the late 1990s and 2000s without having to engage in any radical rethinking or reform. Our political and opinion leaders think they are leading us back home. They haven’t noticed, or refuse to admit, that what used to be home is now a large, smoking crater.
Read entire article at Salon.com
...To those accustomed to thinking of the left-right spectrum in economic terms, the success of the recession-era right might seem peculiar. After all, you would think that the collapse of the deregulated financial system that helped cause the great recession would have discredited the market-worshiping right. And you would think that there would be a comeback by the economic left, which has traditionally distrusted Utopian claims about free markets.
This is not happening for two reasons. One is the success of the Third Way. The Third Way was the transatlantic project that united Clinton Democrats, Blair Labourites, and many European and Latin American parties of the left in a common enterprise of reinvention. The transatlantic center-left distanced itself from statism, turned its back on organized labor and embraced the financiers of Wall Street and the City of London, who showered them with campaign donations. With the zeal of converts, the leaders of center-left parties like Blair and Brown and Clinton and Obama sang the praises of free markets, free trade, privatization and deregulation. These so-called neoliberals abandoned working-class voters who looked to government and unions to protect them against economic upheaval, and sought a new constituency among the liberal rich and upscale members of the professional class who combined free-market conservatism with tolerant social views and support for means-tested government charity for the poor.
The other reason is bad timing. The neoliberals adopted a modified version of libertarianism just a few years before the Crash of 2008 exposed the fallacies that justified it. Most politicians, however, are influenced by the worldview of their formative years, not their mature years, so that when they assume power they are usually a decade or a generation out of date. Barack Obama, for example, was shaped by the experience of the Reagan and Clinton years, when Democrats were on the defensive and sought to distance themselves from mid-century New Deal liberalism, as Bill Clinton did when he declared: “The era of big government is over.” Expecting the Blairites and Clintonites who have populated the cabinets of Gordon Brown and Barack Obama to rethink their obsolete 1990s neoliberalism in the 2010s in response to real-world events is like expecting an oil tanker to turn on a dime....
If history is any guide, an era of global economic stagnation will help the nationalist and populist right, at the expense of the neoliberal and cosmopolitan/multicultural left. During the Long Depression of the late 19th century, which some historians claim lasted from 1873 to 1896, the nations of the West adopted protectionist measures to promote their industries. Beginning with Bismarck’s Germany, many countries also adopted social reforms like government pensions and health insurance. These reforms were often favored by the nationalist right, as a way of luring the working class away from the temptations of Marxism and left-liberalism. By and large the strategy worked. When World War I broke out, the working classes and farmers in most countries rallied enthusiastically around their respective flags.
The Great Depression of the 1930s similarly led to the rise of one or another version of the authoritarian, nationalist right in Europe. Only in a few societies with deeply established liberal traditions, like the English-speaking countries and Scandinavia, did liberals or liberal conservatives hold on. And Franklin Delano Roosevelt’s New Deal Democratic Party, a coalition that included racist Southerners and traditionalist Catholic immigrants, was not particularly liberal by today’s standards.
In both eras of depression, great-power rivalry for resources and markets intensified and ultimately led to a world war. Following World War II, the U.S. sought to avert a repetition of that pattern, by creating a global market secured by a global great-power concert in the form of the Security Council. But the project of economic disarmament and security cooperation broke down almost immediately after 1945 and the split between the Soviets and the Anglo-Americans produced the Cold War. The second attempt at a global market that began after the Cold War may be breaking down now, as the most important economic powers pursue their conflicting national interests....
These trends are clear but the transatlantic establishment refuses to confront them. Instead, elites on both sides of the Atlantic hope that the great recession will turn out to have been merely a particularly nasty business cycle downturn. They pray that soon we can return to something like the illusory prosperity of the late 1990s and 2000s without having to engage in any radical rethinking or reform. Our political and opinion leaders think they are leading us back home. They haven’t noticed, or refuse to admit, that what used to be home is now a large, smoking crater.