Can Neo-liberalism continue after the crisis?
Observations on the Ideological Recovery in France and the United States
Platypus Review 11 | March 2009
It has been noted that the current economic crisis is of a scale unprecedented in the history of advanced capitalism. Today, three decades since the first stages of a transition of world markets through the expansion of finance capital, we face the first disruption of the system on a global scale. As is by now well known, the effects of the crisis have reached across economic sectors and across the world, displaying the interconnectedness of disparate societies, whose structure and social trajectory are bound up in the development of capitalism. The extension of global markets, and their force as the major medium conditioning interaction and material exchange between societies has long been described by liberal economic and political thinkers as a historical development that was at once progressive and uncontestable: the invisible hand that insured the stability and equitability of markets was also seen as a politically neutral source of economic reason. Warning against the ideological and tendentious character of socialist politics, proponents of liberal economics lauded the disinterested scientific clarity of pure economic decision-making. In deferring disagreement over the diverse paths towards social goals, the science of economic growth became a decisive tool in circumscribing political debate.
During the most recent period of long-term economic stability in the United States, free market ideology was passed off as common sense. With predictions of 'unlimited growth' by market observers, inflated real-estate values propping up value across markets, and easy access to credit caused by an explosion of high risk lending, the need to articulate an alternative to free market politics was obscured.
Rupturing the collective naïveté that facilitated the triumph of neo-liberalism, the current economic unraveling was immediately recognized as one in a series that spans the history of advanced capitalism. As is requisite in times of crisis, critiques of the outgoing political and economic status quo have come from a range of social spheres, professions, and political camps. Certain general and undeniable facts form the base of discourses in the United States, the Western world, and in poorer and less stable regions around the globe: the crisis is causing vast suffering and deprivation, which is felt most acutely by the social sectors most removed from the spheres in which the crisis was produced; the crisis reveals the political err in yielding debate to the limits imposed by liberal-capitalist ideology. It is this second fact that asserts itself when considering the French and American responses to the present crisis.
An account of recent political history appears to have been consolidated in recent months among critics of liberalism. This story diagnoses some economic fundamentals which have become visible in the wake of the crisis: financial markets act based on wagers on potential profit; there is no intrinsic moderation in financial markets that holds profits in relative equivalence to the growth and contractions of other economic sectors; over-production of value through capital speculation will result in crises of capitalization and affect all areas of economic activity. In analyses offered by both the Barack Obama and Nicolas Sarkozy administrations this account of economic events-irrefutable, if incomplete-boils down to two supposed causes of the crisis that in turn predetermine the corresponding policy responses. These two causes are lack of regulation and the distinct, but related, issue of inflated wages and earnings in the financial sector. In televised speeches and statements, both presidents spoke with conviction asserting their intentions to arm the state with increased oversight and regulatory capabilities in order to amend these problems.
This response falls far short of holding the founding ideals of neoliberal governance up for public scrutiny. In his inaugural address, Obama expressed his hope for the future with the encouraging assertion that "American workers are still productive." The fact that this phrase appears unremarkable or even apt speaks to the continued purchase of a vision of society that triumphed in the age of capitalist democracy. Even if Obama was merely describing his vision of economic recovery, his statement affirms economic activity as the primary form of mediation between individuals in modern society, including on the level of politics. The optimism of this vision hinges on the recovered growth and profitability of American enterprises, which is sustained in part by the continued suppression of wages in the United States. Both through employment policy hostile to organized labor and collective bargaining, and through strict immigration policy that helps maintain the illegal status of many employees in the manufacturing, hospitality and service industries, employees in the United States are subjected to wages depressed often below the legal minimum.
In France, many union members, leftist party members and activists, as well as intellectuals, artists, professionals and public officials have mobilized to critique the path to economic recovery centered on the vitality of private enterprise. An estimated 1.08 million protestors throughout France turned out on January 29th in support of a one-day general strike. The strike was called through an agreement by all of France's major unions, and was followed by the traditionally well-organized public sector as well as private sector employees of banks, the media, the stock exchange, and the cultural sector. The central aim of the mobilization was to criticize President Sarkozy's focus on aid to private businesses and his insufficient attention to the rising rate of unemployment in France.
Notable for its large turnout, and for the participation by many individuals and groups who do not commonly engage in politics, the protest succeeded in bringing the widespread disapproval of the present government's political agenda to popular consciousness. The demands articulated by protesters centered on preservation of socialist state policies such as programs that aid the unemployed, support and funding for public education, as well as job security in the public sector.
Beyond the immediate economic demands expressed in the march, many in attendance came to condemn the politics of the current administration for their antagonism towards the principles of social solidarity. This claim, while more difficult to support empirically, approaches a more profound critique of the neoliberal model of economic development. The ability of the French left to mobilize a resistance to the economic liberalization taking place under the current administration attests to the maintenance of leftist politics in France, both through more diffuse inheritances in academia and culture, as well as through structures such as unions and political parties which sustain leftist ideologies in increasingly hostile political environments.
Despite the ambition and vision that has been maintained in France on a level unmatched by the left in the United States, and despite the force of the economic crisis¬¬-which laid bare the insufficiency of a politics that is subordinated to the growth dynamic of capitalism-the left is not adequately equipped to seize this moment of ideological opening. The urgency of the economic situation leaves those who envision a socialist politics obliged to rearticulate the same state-centric politics that historically formed the grounds for the welfare state and brought about the enfeebled opposition to liberal-capitalism that views the state as a social benefactor. It is this version of politics, circumscribed by economic necessity, which keeps the left from offering an adequate critique of liberal-capitalism, even at a moment of globalized economic crisis.
In the absence of an alternative political vision and strategy advanced by the left, neo-liberal economic prescriptions and political ideologies are driving the recovery from the crisis. At present, the continued strength of the crisis is resulting in severe economic slowdown in the global economic centers of the West, as well as in countries around the world that integrated into global markets only in recent decades. The British Prime Minister Brown recently opined, "rebuilding global financial stability is a global challenge that needs global solutions." It is with this understanding that Brown and Obama have endeavored to launch a "global new deal," which aims to ensure "that every country that wishes to participate in the international financial system agrees common principles for financial regulation, coordinated internationally, and changes to their own banking system that will bring us shared prosperity once again." Following an emergency summit of the European Union on March 1st, President Sarkozy echoed this oxymoron of political relations conditioned by the rules of international finance in stating, "If someone needs solidarity, they can count on their partners....Their partners also need to count on them to follow certain basic rules."
Both the 'global new deal,' and the emergency measures sketched out by the European Union outline a path to economic recovery in which 'international coordination' will continue to allow the wealthiest countries to lay out the terms for the global economy. With many poorer countries forced to borrow on international capital markets to refinance old debt or take out new loans, the prescription for economic recovery portends the future of neo-liberalism. For those wish to forge political solidarity across states, the response must be to build the structures and institutions in which political and economic thought of sophistication and influence can be developed, so that the next time an economic crisis creates an opening for politics, the Left will be equipped to offer an alternative. |P
. Brown, Gordon. Times Online. “The Special Relationship is Going Global.” March 1, 2009. . Dougherty, Donald. New York Times. “E.U. Leaders Turn to IMF Amid Financial Crisis.” February 22, 2009.