The left's turn again?

2008-10-15 00:00

As the financial crisis sweeps like a riptide across the world, it is surely inevitable that a political reaction will follow.

The crisis is being described as the worst since the Great Depression of the thirties, and that certainly had political consequences. From the fall of the Weimar Republic to the rise of Hitler, World War 2 and the Cold War, and from the Holocaust to the establishment of the state of Israel, there flowed a sequence of events that traumatised the entire century and changed the world.

Not that this crisis is comparable to the Great Depression. It may indeed be the worst financial upheaval since then, but it is not on the same scale as that cataclysmic event. But it is certainly enough to shake up the certitudes of the free market fundamentalists and their faith that, left to itself, the market will always self-regulate and ultimately bring benefits to everyone, if not in equal measure at least to an acceptable degree in accordance with individual enterprise.

So the neo-liberal formula be-came to cut taxes, reduce budgets, shrink government spending and deregulate — all to stimulate entrepreneurial initiative and stop the government interfering with it. Minimising regulation became the centrepiece. The state had to be kept out of the marketplace to allow it to function properly. Interference, regulation, would cause distortions leading to disaster.

But disaster has now occurred precisely because of a lack of interference. The obsession with deregulation led first to a surge in sub-prime housing loans and other innovations that bypassed monetary regulations, generating a credit boom that fed upon itself and has now run out of control to the point where even the ideology’s most ardent proselytisers are having to intervene with emergency measures.

You must know, when the most right-wing administration in all United States history finds it necessary to pump $700-billion of government money into the biggest banks on Wall Street; when the secretary of the Treasury goes on bended knee before the House Republicans like an errant priest seeking the Curia’s condonation of heresy, that something serious has happened in the Vatican of capitalism.

Now the Treasury Department is even considering taking ownership stakes in U.S. banks to try to restore public confidence in them. In other words partially nationalising the commanding heights of the U.S. economy.

It looks like the end of an era. The free market theology has been proven false. As one U.S. economic historian, Steven Fraser, put it last week: “It’s the beginning of the end of infatuation with the free market. We are entering a new chapter in our history.”

Even the president of the World Bank, Robert Zoellick, was moved to reflect on the systemic failures that had occurred and on the storm clouds now hanging over multilateralism and markets.

“Voices around the world are blaming free markets,” he said. “Others are asking about the failures of government institutions. Many will point fingers at the failings of the United States as the architect of today’s global economy.”

So where and how will the political reaction begin? There will be some initial jubilation, I imagine, from left-wing pockets around the world; some energising of the “pink” revolution in parts of Latin America, and some we-told-you-so triumphalism on the part of our own left-wing here at home who will feel boosted anyway by the success of their intra-party revolution in the ANC.

But this will all be peripheral to the larger and more fundamental changes that I sense may take shape in the years ahead. To get the measure of what that may be one needs to step back a little to get a perspective on the evolutionary pattern of historical events and ideas.

Marxism arose in the 18th and 19th centuries in response to the raw economic forces unleashed by the Industrial Revolution.

Marxism’s combination of economic analysis, moral justification and purported scientific prediction of inevitable success, all with the oppressed proletariat cast in the privileged role of having the special insights to lead it to that success, gave it an appeal that gripped the imagination as few other secular movements have ever done.

Indeed some philosophers have compared it to the powerful millennial movements that have arisen periodically throughout European history. Some have argued that despite its avowed atheism, communism is in fact a secularised form of religion with its teleological view of history and the promise of salvation re-emerging in the form of universal emancipation.

That, I suspect, was its downfall. For as the renowned Oxford philosopher Isaiah Berlin warned, the notion of a “final solution” or state of utopian perfection is not only unattainable but extremely dangerous. For so noble a purpose as the permanent happiness of all humanity can tolerate no opposition. And so, like all such utopian movements, communism became totalitarian. That, combined with the failure of central planning, was its undoing.

Its demise was also a cataclysmic event. The fall of the Berlin Wall not only brought down the Soviet empire with all its dysfunctional regimes but also inflicted collateral damage across the whole spectrum of the political left. This even included Western Europe’s moderate social democratic parties which, although they had never bought into communism’s revolutionary theory or commandist dogma, had nevertheless arisen from the same initial Marxist impulse to champion the cause of the world’s have-nots.

They, too, were thrown into confusion by the collapse of a whole universe of ideas and assumptions that had been in the making for 150 years. All had to adapt or die, mostly along the lines of Tony Blair’s “third way”, which really turned out to be watered down Thatcherism, leaving a political vacuum on the left as they did so.

The result was a surge of triumphalism on the right, bringing the neoconservative fundamentalists to power under George W. Bush in what was now the world’s only superpower. Unrestrained by any ideological competitor and intent on remaking the world in its own image, this movement, too, re-vealed something of a millennial vision epitomised by Francis Fukuyama’s notion of the end of history.

Now it, too, has overreached itself and run into its own crisis of excess. It brought a great surge of global economic growth over the past two decades, but with that also came a great widening of disparities. In 1980 the average American chief executive earned 40 times as much as the average manufacturing employee; today the ratio is 475:1. Dissatisfaction has been on the rise for some time, and now the bubble has burst.

The Hegelian pendulum is ready to swing again. The question is, what new set of ideas will emerge on the left? At the moment all one hears are a few policy preferences, such as job creation, improved education, health services and so on, but they are not bound together into any articulated moral and political vision of the better society they want to create. For the most part the left is simply in a state of constant protest.

Its moment of opportunity is at hand. No doubt some challenging new synthesis of ideas will emerge to fill the vacuum left by Marxism’s demise. History does not end, but nor does it reverse.

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