The Biden administration and the Democratic Party are spearheading a campaign for war against Russia that is bringing the entire globe to the brink of World War III.
On CNN’s Sunday television interview program “State of the Union,” Senator Robert Menendez of New Jersey, Democratic chairman of the Senate Foreign Relations Committee, and the ranking Republican on the committee, James Risch of Idaho, appeared side by side to demonstrate the bipartisan unity of the two big business parties against Russia.
Menendez dismissed the warning by Ukrainian President Volodymyr Zelensky that US talk about an imminent Russian invasion of his country was unwarranted. “He wants to create a semblance of calm as it relates to his economy,” the Democrat said, “So I understand that.”
He hailed the bipartisan legislation authorizing the Biden administration to impose “the mother of all sanctions… that ultimately would crush Russia’s economy, and the continuing lethal aid that we are going to send, which means Putin has to decide how many body bags of Russian sons… are going to return to Russia.”
“This is beyond Ukraine,” Menendez warned. “We cannot have a Munich moment again. Putin will not stop with Ukraine if he believes that the West will not respond.”
The top congressional Democrat on foreign policy was only one of dozens of Democrats comparing Putin to Hitler and advocating measures that lead inexorably to a military confrontation between Russia and the United States, the countries which possess the two largest arsenals of nuclear weapons.
There are two interrelated political and social processes at work in the increasingly hysterical campaign against Russia: 1) The disintegration of the anti-war faction of the Democratic Party that emerged during and in the aftermath of the Vietnam War; and 2) the pro-imperialist evolution of the affluent middle class, which, beyond Wall Street and the military itself, forms a principal social base for the Democratic Party.
The Democratic Party has always been a party of the American capitalist class. A Democrat was president and commander-in-chief in World War I, World War II, the Korean War and the first half of the Vietnam War. But as the mass antiwar movement gathered strength in the course of the 1960s, the Democratic Party took on the role of co-opting and containing antiwar sentiment within the framework of bourgeois politics.
A substantial faction of the Democratic Party came out against the Vietnam War, associated with figures like Chairman of the Senate Foreign Relations Committee J. William Fulbright (Arkansas); Indiana Senator Vance Hartke; Minnesota Senator and 1968 presidential candidate Eugene McCarthy; Idaho Senator Frank Church; Connecticut Senator Abe Ribicoff; and Tennessee Senator Al Gore, Sr. In 1972, South Dakota Senator George McGovern won the Democratic Party nomination for president on an anti-war program.
Senator Church headed the Church Committee, established in 1975 to investigate abuses and illegal activities carried out by US intelligence agencies throughout the world. Even into the 1980s, most Democrats opposed US military intervention against the Nicaraguan revolution and other radical movements in Central America. As late as January 1991, 45 Democrats in the Senate voted against the resolution authorizing George H. W. Bush to launch the first Gulf War against Iraq, although 10 supported it, just enough to ensure passage by a 52-47 margin.
The administration of Bill Clinton (1993-2001) marked a significant shift. Clinton picked Al Gore, Jr., one of the 10 Democratic senators who had voted for the Gulf War, as his running mate, and his administration used military force aggressively in Bosnia, Serbia, Afghanistan, Iraq, Sudan, Somalia and Haiti. When Gore became the Democratic presidential nominee in 2000, he chose another hawkish senator, Joe Lieberman, as his running mate.
By 2002, when the Authorization for Use of Military Force came before the Senate, authorizing the administration of George W. Bush to wage a second US war against Iraq, the balance within the Democratic Party had been reversed.
The vote among Senate Democrats was 29-21 in favor of the resolution, compared to 45-10 against the equivalent resolution in 1991. The chairman of the Senate Foreign Relations Committee, who backed the resolution and managed its passage, was Joe Biden of Delaware—now the US president. When mass antiwar demonstrations erupted in America and throughout the world, the Democratic Party turned its back on them and embraced the war drive of Bush, Cheney, Rumsfeld and Powell.
Two more significant steps to the right followed. In the 2008 campaign for the Democratic presidential nomination, Barack Obama attacked Hillary Clinton incessantly over her 2002 vote for the Iraq war. He was silent about his own close ties to the US intelligence agencies, which personified the deep connections between the Democratic Party and the Wall Street-military-intelligence complex.
President Obama quickly ditched the antiwar rhetoric of candidate Obama, using US military power just as aggressively as previous administrations. He escalated the war in Afghanistan as he carried out the drawdown in Iraq at the pace set by Bush, and launched new wars via NATO in Libya and via Islamic proxies in Syria and Yemen. Obama then sent US forces back into Iraq against ISIS. US forces conducted drone missile warfare on an ever wider geographic scale, from Pakistan through Central Asia and the Middle East and across North Africa.
The Obama administration was part of a broader elevation within the Democratic Party of candidates with a background in the intelligence agencies and the military, whom the World Socialist Web Site refers to as the CIA Democrats.
The final chapter in the Democratic Party’s abandonment of any pretense of opposition to war came in the course of the Trump administration. The principal, even the sole, axis of the Democratic opposition to Trump was the anti-Russia campaign, based on the bogus claim that Trump was either a Russian stooge or an outright agent of Vladimir Putin. This campaign led to the investigation by Special Counsel Robert Mueller, which turned up no evidence, and then to the first impeachment of Trump, based on his pressuring Ukraine to dig up dirt on the Bidens by withholding a shipment of US weapons, which disrupted long-running US plans to escalate the conflict with Russia.
Alongside and connected to the transformation of the Democratic Party is the pro-imperialist shift that took place in the middle class, particularly its most privileged layers. As it emerged in the 1960s, the antiwar movement was dominated by sections of the middle class, particularly on the campuses. The end of the military draft in 1973 was part of a broader strategy of the ruling class to integrate a section of the middle class into the political establishment, including through the cultivation of identity politics.
Beyond the corporate and financial aristocracy, a section of the upper middle class—the top 5 or 10 percent of American society—has enriched itself in the course of the four-decades-long Wall Street boom, which is dependent on the dominant global position of American capitalism. The Balkan War of the 1990s, promoted by the Clinton administration as a war for “human rights,” was a turning point. As the WSWS wrote at the time:
The objective modus operandi and social implications of the protracted stock market boom have enabled imperialism to recruit from among sections of the upper-middle class a new and devoted constituency. The reactionary, conformist and cynical intellectual climate that prevails in the United States and Europe—promoted by the media and adapted to by a largely servile and corrupted academic community—reflects the social outlook of a highly privileged stratum of the population that is not in the least interested in encouraging a critical examination of the economic and political bases of its newly-acquired riches.
These social processes find their reflection in all the official institutions of the ruling class. In the media, one cannot find a single voice that questions, let alone opposes, the official government lies being used to justify war against Russia from a left-wing standpoint. There is no equivalent to CBS anchorman Walter Cronkite, who famously declared his opposition to the Vietnam War in the wake of the 1968 Tet offensive. Among the well-paid media talking heads, as well as the privileged layers in academia, imperialism finds an absolutely devoted constituency.
Pseudo-left organizations like the Democratic Socialists of America play a central role in supporting American imperialism and channeling opposition behind the Democratic Party. The liberal magazine American Prospect reported on the weekend that in response to questions about US policy in Ukraine, Senators Bernie Sanders and Elizabeth Warren, and Representatives Alexandria Ocasio-Cortez, Ilhan Omar, Ayanna Pressley and Rashida Tlaib either declined to answer or did not return calls.
Such transformations are a worldwide phenomenon. In Germany, the Green Party, formed by environmentalists and antiwar activists in the 1970s, finally came to power as part of a coalition government in 1998, and the Green foreign minister, Joschka Fischer, a former radical “street fighter,” spearheaded the dispatch of troops to the former Yugoslavia in the first deployment of German forces outside the country since the Third Reich. Similar political metamorphoses took place in France, Britain, Italy, Canada, Australia, Spain and other countries.
Opposition to war is and must be centered in the working class. Opinion polls show overwhelming popular opposition to US intervention in any military operations in Ukraine or Eastern Europe. But this opposition finds no expression within the official US two-party system. The struggle against imperialist war cannot be waged through the Democratic Party or through any of the institutions of the capitalist political establishment. It requires the independent mobilization of the working class, on the basis of a socialist and internationalist program.
More than just a set of free-market policies, neoliberalism has always sought to alter society’s balance of power in favor of bosses. Its assault on democracy and undermining of unions is now playing straight into the hands of the far right.
Neoliberalism has been with us now for more than three-quarters of a century. Since the Mont Pelerin Society’s efforts to reinvent old-fashioned liberalism in the 1940s, neoliberalism has taken various forms, be it the Chicago School and German ordoliberalism, the Pinochet-led Chilean coup of 1973, the Thatcher–Reagan revolutions, the IMF and World Bank–driven structural adjustments, or the European Third Way.
The topic of neoliberalism has produced a veritable cottage industry of commentary, which has only expanded in the last decade as pundits try to make sense of an increasingly contested and slippery term. Many of those who write about neoliberalism are now extolling what they believe to be its last waltz on the world stage: amid transformations brought about by the 2008–9 financial crisis, the rise of protectionist authoritarian governments, and the need for large-scale public policy solutions in the age of COVID-19, many have proclaimed that neoliberalism is indeed on its last legs.
But is that really the case? Or is neoliberalism simply lumbering on — in even more virulent forms?
As I have argued elsewhere, neoliberalism isn’t dying but is instead undergoing important transformations that make it especially dangerous for today’s democracy. Indeed, it’s this very threat to democracy that is the key to understanding neoliberalism’s resilience: its capacity to endure crises and rival systems is not so much a consequence of the enduring appeal of free markets and economic competition. Instead, neoliberalism has survived by altering the very foundations of our democratic institutions and organizations.
In doing so, neoliberalism has allied with forces — dictators and technocrats — equally contemptuous of democracy. This core aspect of the neoliberal project is what is setting the stage for a new breed of radical right leaders across the globe. Today, there is an emerging alliance between neoliberals and big capital drawing on the support of nationalists, social conservatives, and authoritarian populists. It is this alliance that may well pose one of the greatest threats to democratic politics.
Neoliberalism Is a Political Project
It’s a political project that aims not only to reduce the power of the state but, more concretely, to undermine the efforts of any collective actor.
For many, neoliberalism is a set of economic ideas that touts the superiority of markets as a form of social coordination among individuals. Read in this way, the thinking is that neoliberalism is capable of seducing, convincing, and ultimately prevailing over rival ideas like state planning. For those who subscribe to this definition of neoliberalism, suggestions that the state is making a “comeback” are taken as proof that the pendulum is swinging back toward a social consensus that rejects neoliberalism.
Neoliberalism is thus commonly understood as the ideology that puts markets over states and individuals over societies. However, decades of research have proved what Philip Mirowski calls the “double truth” behind the neoliberal doctrine: while offering freedom of choice and liberation from oppressive state regulations, neoliberals were always aware of the need for a strong, very often coercive state.
This has meant two things. First, neoliberals were less interested in markets per se (and even less in market competition) than in what could be achieved through them. Though neoliberals usually aim to eliminate any state intervention that interferes with the free decisions of private enterprise, they are not opposed to all forms of state intervention. Neoliberals are, of course, less concerned with forms of state intervention that redistribute to core business groups (through generous tax exemptions or massive bailouts during financial crises) than they are with the kind of intervention that mandates redistributive measures for the working class. Similarly, neoliberals vow to extend markets and market logics to all forms of social and political life but are less concerned if this ends up leading to unfair competition or outright monopoly.
Second, it is now well understood that neoliberals need strong states to impose — and enforce — their free markets, even if it takes the form of outright repressive state measures.
Neoliberalism, then, is much more than just a set of ideas about free markets. It’s a political project that aims not only to reduce the power of the state but, more concretely, to undermine the efforts of any collective actor — be it states, labor unions, political parties — to interfere with the decisions of private enterprises. This project to alter the balance of power is the key to its resilience.
Neoliberalism Versus Democracy
Neoliberalism’s assault on union organizations and collective bargaining rights is well documented. Less so is the way that our political institutions have been designed so as to block any credible political opposition.
To understand the relation between neoliberalism and democracy, we need to look to neoliberals’ age-old fear of the tyranny of the property-less majority and the possibility that their democratic ambitions might impinge on economic liberty. James Buchanan, one of the most revered exponents of the neoliberal tradition, explained this neatly in his famous coauthored book, Democracy in Deficit.
There, his focus was not on free competition, proper market operations, or even on criticizing state intervention. It was on “the political institutions through which economic policy must be implemented.” Applying this logic, Jaime Guzmán, the mastermind behind Chile’s Pinochet-inherited political and economic architecture, reasoned that political institutions should be arranged in a way that “if the adversaries were to govern, they [would be] constrained to take actions not so different from those that one would desire.” As explained by Walter Lippmann, the grandfather of the Mont Pelerin Society, “the crux of the question is not whether the majority should rule but what kind of majority should rule.”
Neoliberalism constrains democratic politics by altering the balance of power among its supporters and opponents with the ultimate aim of constricting available space for politics and policy. From a study of neoliberalism and democracy in Latin America and Eastern Europe, we can identify three concrete mechanisms at work.
The first involves creating a new business class by privatizing former state assets and allowing new business opportunities in the now deregulated sectors. It has long been held that the logic of dismantling the social state was all about maximizing efficiency and growth. However, in countries where neoliberalism has thrived, targeted privatization and deregulation primarily aimed to create or empower those businesses most likely to lend support to the broader neoliberal project.
This was especially the case in the financial sector, among competitive exporting firms and multinationals. Businesses with vested interests in neoliberalism’s perpetuity have used the structural advantage afforded them to push back against reformist attempts, ranging from taxation, industrial policy, and social measures to environmental and labor protections.
Second, neoliberalism has survived by keeping anti-neoliberal political forces from gaining a foothold. Neoliberalism’s assault on union organizations and collective bargaining rights is well documented. Less so is the way that our political institutions have been designed so as to block any credible political opposition. This has included increasing the power of the executive to circumvent more representative parliaments, the institutionalization of nonelected veto players able to overrule majority decisions, and more. The most successful of these tactics have been those affecting patterns of political representation, such as electoral engineering and gerrymandering.
This was the case in Chile, where in 1989 the electoral system and district magnitudes (the number of elected representatives in a given district) were designed in order to give the Right one-half of all representatives in parliament (up from its customary one-third). It was this move that kept the Left without representation for twenty years, while pushing the more moderate Left into a long-term alliance with centrist forces that watered down their otherwise reformist stances. Together with required supra-majoritarian thresholds to change basic features of Chile’s Pinochet-designed institutions, these actions were key in preventing any meaningful reform during four consecutive center-left governments during the 1990s and 2000s.
In other cases, efforts to limit representation included the outright disenfranchisement of large swaths of the population. This was the case in Estonia, where neoliberalism found common cause with the most radical expressions of the nationalist independence movement against the former Soviet Union. Neoliberals successfully exploited the Estonian people’s fears that the large Russian population in the country (about 40 percent in 1989) would block independence to leave ethnic Russians without voting rights. And they did so all while pushing through one of the most far-reaching neoliberal projects implemented in Eastern Europe.
As a consequence, those most hurt by these reforms either did not have the right to vote or voted on nationalistic, not socioeconomic, grounds. Eventually, this prevented the forming of social democratic forces capable of at least tempering the neoliberal onslaught, as was the case in most other Eastern European countries.
Finally, neoliberals have insulated policymakers from popular demands through what’s sometimes termed “constitutionalized lock-in,” meaning that key aspects of a country’s economic policy are kept out of reach of democratic deliberation, lest they be in Buchanan and Richard E. Wagner’s words, “left adrift in the sea of democratic politics.” Independent central banks and fiscal policy rules, for example, are key instruments in keeping monetary and fiscal policy away from democratic deliberation. Anchoring inflation as the key macroeconomic objective reduced the capacity of central banks to use monetary policy to soften economic crises and privilege employment considerations over price stability ones. Conversely, fiscal rules like balanced-budget procedures severely reduced government’s overall spending capacity. In addition, the establishment of high constitutional thresholds to change these arrangements locked key aspects of elected government’s economic policy tool kit out of their reach.
In neo-Gramscian terms, a multiparty social bloc rooted in specific business sectors has successfully defended the neoliberal project thanks to these concrete economic and institutional resources reducing the space available for politics and policy. And the direct consequence of this has been a stark decline in the representative character of our democracies.
Neoliberalism and Populist Reason
In the 1970s to ’80s, neoliberal ideals were aligned with authoritarian doctrines to create some of the most sweeping reforms — and dictatorships — the world had ever seen.
Considering neoliberalism’s hostile relation to basic democratic institutions, it is not hard to understand the elective affinity between neoliberalism and today’s radical populist right. In contrast to what Wendy Brown has argued, the radical right is not emerging “from the ruins” of neoliberalism but from the concrete possibilities that arise when the core tenets of neoliberalism are “hybridized” with populism.
How did this hybrid emerge? In the 1970s to ’80s, neoliberal ideals were aligned with authoritarian doctrines to create some of the most sweeping reforms — and dictatorships — the world had ever seen. Later, during the 1990s and 2000s, neoliberals conquered the hearts and minds of technocratic “third way” elites wanting to impose market discipline on irresponsible governments. Similarly today, the core principles of neoliberalism are prone to form alliances with the radical populist right.
These alliances are not based on a shared interest in market freedoms but on a common contempt for democratic politics and the perceived need to further limit representative democratic institutions (not to mention, an individualized conception of the social). Hence, despite claims that populism and neoliberalism are antagonistic tendencies, populist attempts to hamper basic democratic liberties and institutions actually reinforce neoliberalism’s antidemocratic project.
Almost everywhere, neoliberalism has been associated with enhanced executive authority and the delegation of democratic power to unaccountable bureaucratic institutions. Often, neoliberals have altered electoral systems and patterns of political representation to favor “economic liberty,” similar to how the radical populist right undermines democracy today.
The radical populist right does embrace a moralizing and nationalistic worldview, which would appear to be at odds with neoliberalism’s individualism and incredulous stance toward society in general. Whenever neoliberals have made appeals for broad social support, it has usually come in the form of the potential benefits of mass individual consumption brought about by freer markets. Populist mobilization, by contrast, has been said to re-politicize an increasingly apathetic and individualized society.
However, as Melinda Cooper’s research has shown, there are strong connections between neoliberalism and social conservatism. And as Wendy Brown reminds us, Hayekian-style neoliberalism aimed at protecting traditional hierarchies as much as it did economic liberties. Chief among these hierarchies were family values and the traditional division of domestic labor. This resonates strongly with the populist right’s drive to rally around the figure of the traditional family.
If we look beyond Western Europe and the founding OECD countries, the connections between neoliberalism and another core characteristic of the radical right, nativism, are nothing new. Nationalistic chauvinism was already present in the 1990s neoliberal-cum-populist leaders of Latin America and Eastern Europe, the paradigmatic cases being Alberto Fujimori in Peru and Lech Wałęsa in Poland — as well as Estonia.
What lies behind these elective affinities is an individualized conception of society that makes for easy appeals to a vacuous notion of “the people.” “The people,” in right-wing populism, is not a foundational unit of society nor is it based on a common set of bonds; it is constructed through an individual’s internal identification with the populist leader’s discourse. This is why Ernesto Laclau calls this construction an “empty signifier” that can be filled with a diversity of unspecific conservative, authoritarian, and nativist appeals. Observing the rise of a new type of radical right in 1960s Germany, the philosopher Theodor Adorno noticed precisely that their appeal rested not so much on ideas like the demos or the nation but rather on an individual’s authoritarian personality traits and a longing for authority and discipline. In that same sense, while the populist “re-politization of society” may lead to angry mobs, it does not give way to the type of organized collective power that the proprietor class truly fears.
In fact, populists have not empowered the workers they vow to protect, much less reduced the power of the business class in general, nor finance in particular. If anything, the alliance between neoliberals and populists seems to be about wresting control of the neoliberal project from third way technocratic elites: whereas third way technocrats may begrudgingly recognize the excesses of neoliberalism, increase social protections, and allow for greater accountability from technocratic bodies, true neoliberals understand that their project rests on the continued limitation of representative democratic institutions.
Neoliberalism’s alliance with the radical populist right is hastening the decline of democratic politics and stoking a desire for authority, order, and social conservatism, while also unleashing capital’s tendency toward unbounded accumulation. Whether neoliberalism and the radical populist right can manage to form a stable hybrid will depend on structural and institutional factors — that is to say, on politics. It is only once we recognize the concrete economic, political, and institutional mechanisms that make neoliberalism so resilient that we can begin to sketch some ideas about how to halt its forward march while defending democracy and equality.
CATALYST, A NEW JOURNAL PUBLISHED BY JACOBIN, IS OUT NOW.
Aldo Madariaga is an assistant professor of political science at the Universidad Diego Portales, Santiago de Chile and associate researcher of the Center for Social Conflict and Cohesion Studies. He is the author of Neoliberal Resilience.
Thomas Piketty tells Robin Wilson how wealth and power can be transferred from capital to workers and citizens.
Robin Wilson: If Capital in the Twenty-First Century made you famous for one thing, it was the equation ‘r>g’: the rise of inequality in recent decades has been linked to the excess of profit accumulation over economic growth and so to huge rents for shareholders and chief executives. Redressing such inequality then implies taxing heavily capital assets as well as high incomes. But in Capital and Ideology you raise a problem: a feature of globalisation has been the transnationalisation of wealth and the failure of nation-states to keep up—even in terms of the data they collect. So what is to be done?
Thomas Piketty: We have to rethink the way we organise globalisation. Free capital flow is not something that came from the sky—it was created by us. It was organised via particular international treaties and we have to rewrite these treaties. The circulation of investment is, of course, not bad in itself but it has to come with an automatic transmission of information about who owns what and where. It has to come with some common tax system, so that the most mobile and most powerful economic actors have to contribute to the common good—at least as much a proportion of their wealth and of their income as the middle class and the lower socio-economic groups.
Otherwise, we have created a very dangerous system, where a very large part of the population feel that they are not gaining from globalization—they are not gaining in particular from European integration—and that people at the top, large corporations or people with high wealth and high income, get a better deal because the system in a way was organize so that they can just click on a button and transfer their wealth to another jurisdiction and nobody can follow them. It doesn’t have to be this This is a very sophisticated international legal system, in particular in Europe, which has made it possible that you accumulate wealth by, in effect, using the public infrastructure of a country—the public education system and everything—and then you can go somewhere else and nothing has been planned so that we can follow you. This has to be changed.
I voted yes in the Maastricht treaty referendum in 1992. I was very young but still I am part of the many people who maybe did not realise at the time that this would lead us to a very unfair system. Some other people realised very well what they were pushing for: we should have more competition between countries so that countries will make an effort to be more ‘efficient’ and not tax too much.
To some extent, I can understand this argument. Except that, at the end of the day, this is a mistrust of democracy—this attempt to go around democratic choices by forcing the rules of the game to deliver certain types of distributional outcomes, mainly by making it possible for the most mobile and most powerful economic actors to avoid taxation in effect. This is a very dangerous choice for globalisation and for democracy and it is putting our basic social contract under a very dangerous threat.
Let’s focus on the European Union. We are up against a race to the bottom in corporate taxation in Europe as individual states have pursued beggar-my-neighbour approaches, rather than collaborating to match collectively the power of capital. One of the features of the current EU architecture, to which you have alluded, is the constraint of unanimity operating hitherto against action at EU level to reverse this race to the bottom. So how can it be reversed?
We cannot wait for unanimity to change the rule of unanimity. So at some point we need to have a subset of countries, ideally including the largest countries—Germany, France, Italy, Spain, as many countries as possible—which decide to sign a new treaty between them whereby they will take a majority-rule decision on a certain number of tax decisions: to create a common tax on the profits of large corporations, on large carbon emissions and on high-income, high-wealth taxpayers.
This will be done through majority rule among these countries. Ideally, I would like this to be done through a new European assembly made up of national parliament members—a little bit like the German-French parliamentary assembly created last year as part of the new bilateral treaty between France and Germany. Which, by the way, illustrates that it’s perfectly possible for two countries or more to stay in the European Union—France and Germany are still in the EU, of course—and to have a bilateral or trilateral or whatever treaty, in order to create some special co-operation for countries that want to move ahead into more political and fiscal integration.
I very much hope that a subset of countries will put this proposal on the table—and not only make this proposal but say ‘Okay, six months from now, 12 months from now, this will come into force and we will have majority-rule decision-making to have this recovery plan with this new common tax system’ and so on. I very much hope that most of the 27 countries that are currently members of the EU will join, but probably what will happen is that at least for a certain number of years some countries will choose to remain aside from this mechanism.
This is what happened with the creation of the euro, of course. I’m not saying this is perfect—I would prefer all 27 countries to be part of the full process of integration. I would also like Britain to come back and I think at some point this will happen. But if we wait for all countries to agree before moving in this direction we are going to wait forever. So it’s very important that a subset of countries moves in this direction—if we are always waiting for unanimity to make progress, at some point the cost of unanimity is enormous.
We’ve seen that recently with the new recovery plan, which has finally been adopted. But as we all know it has been adopted under the threat that if some countries put in their veto then there would be a separate agreement between 25 countries instead of 27. You cannot rule a large federation forever in this manner. It is not working because, in effect, it takes too much time.
If we decide in three months, in six months, that the recovery plan was too small—which is very likely to be the case—what are we going to do? Are we going to play this game another time, forcing unanimity to happen behind-closed-doors without public parliamentary deliberation, without majority-rule decision-making? We have to move to something else.
In Capital and Ideology, you paint a fairly unforgiving picture of the evolution of the EU, as effectively the only quasi-federal entity in the world to define itself so narrowly in terms of market-clearing measures rather than social policy or a political community. This has, you claim, fuelled alienation from the European project among les classes populaires, as their socio-political aspirations have not been addressed—as evidenced by the Brexit referendum, the earlier referendum defeats on the proposed EU constitution, or indeed the controversy over Maastricht which you mentioned. How can citizen trust in Europe be rebuilt?
Let me first say that I am a European federalist—I believe in Europe. Before describing everything that should be improved, it’s important to remember that European nation-states have been able to build, especially in the decades after World War II, the best social-security system in the world, the least unequal, social-market economic system in the world. This is a great achievement. I am not here to say that everything is bad in Europe—that would be ridiculous. We have built a social system which, by and large, is the least unequal in history, and this is a huge achievement, but this achievement is fragile.
For a long time we thought that it was possible to have the welfare state within each nation-state and then the EU would just be in charge of enforcing the common market and the free flow of goods, services and capital. We realise today that this is not sufficient and if we don’t harmonise tax legislation—and, more generally, if we don’t have some common public policy to regulate capitalism and to reduce inequality—then indeed there is a risk that the divorce between the European project and les classes populaires at some point will just destroy the project itself.
I am very shocked by the fact that, as I show in Capital and Ideology, if you look, referendum after referendum—whether it is in Britain, France or Denmark—wherever you have a referendum over Europe, it’s always the bottom 50 or 60 per cent of income, wealth or education groups which vote against Europe and only the top 10, 20 or 30 per cent which vote for Europe. This cannot be a coincidence.
The explanation according to which the bottom 50 or 60 per cent group are so nationalist, or they don’t like internationalist ideas, is just wrong. There are many examples in history where, in fact, the more disadvantaged socio-economic groups are more internationalist than the elite.
It entirely depends on the political project—the political mobilisation around internationalist ideas—that you present. The problem is that over time the European project has been viewed more and more as being built in the interest of the most mobile and most powerful economic actors. This is indeed very dangerous.
With the Covid crisis, we have an opportunity to try to show to the public opinion of Europe that Europe can be here to reduce inequality. But this will require some deep change in the way we conduct economic and tax policy.
Who is going to repay the large public debt? For now we put everything on the balance sheet of the European Central Bank but at some point we will have to discuss who is going to pay for that. There are solutions which, in fact, come also from the history of Europe itself. Let me remind you that after World War II, in the 1950s, many countries—including in particular Germany—invented some very innovative ways to reduce large public debt, including very progressive tax on very high-wealth individuals.
Germany in 1952 put in place a very ambitious, exceptional, progressive wealth tax, which applied between 1952 and the 1960s: very high-wealth taxpayers had to pay a very large amount of money to the German treasury. This was very successful in the sense that this policy not only helped reduce public debt—it paid for public investment, public infrastructure, and it was part of the very successful postwar growth model.
We are going to have to find something similar in the future, except that now we cannot do it alone. It cannot be just Germany or France or Italy. We will have to have some common tax policy.
Europe has to show its citizens that Europe can mean solidarity—Europe can mean asking more of those who have more and, in particular, of very high-wealth individuals who have more than €1 million or €2 million in assets. They should make an exceptional contribution in the coming years, to repay some of the Covid debt. Some proposals have been put on the table in various countries, including in Germany—very similar in fact to what was actually done in Germany in 1952, when it was a big success.
At some point, we will have to add this up at a transnational level. Through the kind of European assembly I was describing earlier—it could be Germany and France but it would be better if it was Germany, France, Italy, Spain, Belgium, as many countries as possible—we will have to change the course of Europe, so as to convince the middle class and lower socio-economic groups of Europe that Europe can work for them and Europe can be here to reduce inequality, and not only be in the interest of the wealthiest citizens.
Continuing that point about les classes populaires, you have some very striking sociological graphs in Capital and Ideology where you show how the support base for the parties of the left in Europe, which was historically among les classes populaires, has shifted dramatically in recent decades, so that they have come to represent the better-educated and even to some extent the better-off in Europe. And, in the process, you say what you call the ‘classist’ politics of the past risks being substituted by the identitarian politics of nativist movements in the Europe of today. How has such a dramatic transformation come about and can it be corrected?
The biggest part of the explanation has to do with the fact that we have stopped discussing the transformation of the economic system. We have stopped discussing reducing inequality between social classes. For many decades now, we have been telling the public that there is only one possible economic system and one possible economic policy, that governments cannot really do anything to change the distribution of income and wealth between social classes—and that the only thing that governments can do is control their borders, control identity.
We should not be surprised that 20 or 30 years later the entire political conversation is about border control and identity. This is largely the consequence of the fact that we have stopped discussing the transformation of the economic system.
That’s partly due, of course, to the gigantic historical failure of communism, which has contributed to a general disillusion towards the idea of changing the economic system. I was 18 at the time of the fall of the Berlin wall in 1989 and I can remember, in the 1990s, I was much more a pro-market believer than I am today, and so I can very well understand the feeling that came after the fall of communism.
But not only has this gone too far. We have forgotten that on the other hand you have all the many achievements of social democracy, including progressive taxation of income and wealth, including co-determination in companies, including social-security systems. This big success of the 20th century can be taken further in the future. New thinking about a new form of economic system—more equitable, more sustainable—is the discussion we now need to have.
In the book, you conclude with your version of an alternative, which you describe as ‘participatory socialism’. It involves a progressive tax on all wealth—the proceeds of which, you say, should go to a capital endowment for every 25-year-old, as well as the extension of existing co-determination arrangements in Germany and elsewhere to change the balance of corporate power. You’re saying this would be a way to transcend capitalism without repeating the Soviet nightmare, so can you finally elaborate on that?
The system of participatory socialism I describe at the end of Capital and Ideology some people would prefer to call social democracy for the21st century. I have no problem with this but I prefer to talk about participatory socialism. In effect, this is the continuation of what has been done in the20th century and what was successful. This includes equal access to education, to health, to a system of basic income, which to some extent is already in place but needs to be made more automatic; educational justice needs to be more real and less theoretical, as it is too often the case.
Regarding the system of property, which has always been the core discussion about socialism and capitalism, the proposal I am making relies on two main pillars: one is co-determination, through change in the legal system and the system of governance of companies, and the other part is progressive taxation and the permanent circulation of property.
Regarding co-determination, let me remind you that in a number of European countries—including Germany and Sweden, starting around the 1950s—we’ve had a system where 50 per cent of seats on the governing boards of large companies will go to elected representatives of employees, of workers, even if they don’t have a share in the capital of the company, and the other 50 per cent of voting rights will go to shareholders.
Which means that if, in addition, the workers and employees of the company have a capital share of, say, 10 or 20 per cent, or if some local or regional government, as sometimes happens in Germany, has a share of 10 or 20 per cent in the capital stock of the company, then in effect this will shift the majority, even if you have a private shareholder who has 70, 80 or 90 per cent of the capital. So this is quite a big change, as compared to the usual rule of one share, one vote, which is supposed to be the basic definition of shareholder capitalism. In France, Britain or the United States, or in other countries where this system was not extended, shareholders don’t like this idea at all.
But, in the end, it was pretty successful in Germany and Sweden. I don’t want to idealise the system but it has to some extent made it possible to involve workers in the long-run strategy of companies, in a way that is not perfect in Germany or Sweden but is a bit better at least than in France, Britain and the US.
We can go further in this direction, so the first pillar of participatory socialism I propose is to say ‘Okay, let’s extend this co-determination system to all countries’—all countries in Europe to begin with but all countries in the world, ideally. Let’s also extend it to small companies and not only the large companies where it applies in Germany. In Sweden it applies to a bit smaller companies but the very small companies are excluded. Let’s apply it to all companies, no matter the size, and let’s go further by assuming, for instance, that with the 50 per cent of the vote going to shareholders, a single shareholder cannot have more than 10 per cent of the vote in large companies—say of over 100 workers.
The general idea is that we need to share power. We need more participation by everybody. We live in very educated societies, where lots of people—lots of wage-earners, engineers, managers, technicians—have something to contribute to decision-making in the company.
When you are in a very small company where there’s only one individual who put in the small capital to create the company and hires one or two people, you can see where you want the majority of the vote with the one individual, the founder of the company. But, as the company gets bigger and bigger, you need more deliberation, and you cannot be in a system where one individual, because he or she had a good idea or was very lucky at the age of 30, is going to concentrate all the decision-making power at the age of 50, 70, 90—including in a huge company with thousands or tens of thousands of workers.
So that’s the first pillar of participatory socialism. We start from the co-determination system, as it has been applied, and we try to extend it.
The second pillar is progressive taxation. Again, we start from what has been experimented with during the20th century. Some countries, like the US, for instance, went pretty far in the direction of progressive taxation: the top income tax rate at the time of Roosevelt was 91 per cent and on average between 1930 and 1980 it was over 80 per cent.
And in fact it was very successful, in the sense that productivity growth at this time was much higher than it has been since the 1980s. So the view that was put at the time of Reagan—that in order to get more innovation, more growth, you need more and more inequality at the top—is simply wrong if you look at the historical evidence.
The big lesson from history that I push in my book is that economic prosperity historically comes from equality and, in particular, equality in education. The US was the most educated country in the world in the middle of the20th century, with 80-90 per cent of the generation going to high school, at a time when it was maybe 20-30 per cent in Germany, France or Japan. You had this huge educational advance and the US was also the most productive economy.
The top income-tax and top inheritance-tax rates were divided by two by Reagan, but in fact the per capita national-income growth rate was also divided by two in the three decades after the Reagan reform. So I propose large-scale progressive taxation—not only of income and inherited wealth but also of wealth itself and on an annual basis, so as to avoid excessive concentration of wealth at the top.
And indeed so as to pay for a minimum inheritance for all: I propose €120,000 at the age of 25. This is still quite far from complete equality. In the system I propose, the people who today receive zero euro, which are basically the bottom 50 or even 60 per cent of societies, would receive €120,000, and the people who today receive €1 million, after the tax and everything, would still receive €600,000—which is less than €1 million but a lot more than €120,000.
So we are still very far from equal opportunity, which is a theoretical principle that people pretend they like but in practice—when it comes to concrete proposals—many people have a problem with. We need however to go in this direction. This proposal is actually very moderate—we could go further.
I am not saying this platform should be applied next week in every country. This is a general view of how the economic system should be transformed in the long run. The system I am describing, which I call participatory socialism, of course is different from the welfare or social-democratic capitalism we have today. But it’s very much a continuation of the transformation that already took place over the past century.
The welfare or social-democratic capitalism we have today is very, very different from the colonial capitalism that we had in 1900 or 1910, where the rights of property owners—at the world level, the colonial level, but also the domestic level—were much, much stronger. You could fire a worker when you wanted, oust a tenant when you wanted. This has nothing to do with the system we have today. So there is a long-run process towards more equality, towards justice. And this comes with a more balanced distribution of economic and social rights between owners and non-owners, with the regulation of property and the transformation of property relations.
This evolution will continue. It has already been very strong in the past century and it will continue in the future. This is a discussion we need to reopen—to shift the political conversation away from identity politics and border control towards economic and social progress and transformation.
Thomas Piketty is professor of economics at the Paris School of Economics and author of Capital and Ideology and Capital in the Twenty-First Century (both Belknap Press).
Juana Azurduy de Padilla was a Bolivian guerilla fighter who fought against the Spanish rule in South America. It was this day in 1816 that she along with 200 Indian women on horseback, defeated the Spanish troops in Bolivia. Juana Azurduy Llanos (July 12, 1780 or 1781 – May 25, 1862) was a South […]
The great American radical showed how ordinary people mattered more than stars – a lesson today’s celebrities could do with learning. These are strange times for popular music and politics. On the one hand, the opposition to Donald Trump now extends so deeply into the entertainment industry that the president struggled to find any real […]
It is rigged by Wall Street, Big Oil, Big Pharma, Big Ag, the military-industrial complex, etc, which own most everyone who runs for president in the two major parties. To guarantee that only acceptable, bought-and-paid-for candidates survive the primary process, the political party operatives throw up huge roadblocks, ones which require astronomical amounts of […]
Only an autonomous, radical organization can make sure that the encounter of struggles in the Sanders campaign develops in a revolutionary direction. One of the most significant political stories of the year is the meteoric rise of a little-known, 74-year-old, self-proclaimed “democratic socialist” senator from the small state of Vermont. Although he may win […]
Citing her work “exposing the structural causes and responsibility for the climate crisis,” the Sydney Peace Foundation has awarded its 2016 Peace Prize to author and activist Naomi Klein. That work, said the jury, inspires people “to stand up locally, nationally and internationally to demand a new agenda for sharing the planet that respects human rights […]
Fahrenheit451Bookstore 
You must be logged in to post a comment.