January 2011, Week 2


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Mon, 10 Jan 2011 01:41:26 -0500
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The End of New Deal Liberalism
William Greider
The Nation
January 5, 2011

We have reached a pivotal moment in government and
politics, and it feels like the last, groaning spasms of
New Deal liberalism. When the party of activist
government, faced with an epic crisis, will not use
government's extensive powers to reverse the economic
disorders and heal deepening social deterioration, then
it must be the end of the line for the governing
ideology inherited from Roosevelt, Truman and Johnson.

Political events of the past two years have delivered a
more profound and devastating message: American
democracy has been conclusively conquered by American
capitalism. Government has been disabled or captured by
the formidable powers of private enterprise and
concentrated wealth. Self-governing rights that
representative democracy conferred on citizens are now
usurped by the overbearing demands of corporate and
financial interests. Collectively, the corporate sector
has its arms around both political parties, the
financing of political careers, the production of the
policy agendas and propaganda of influential think
tanks, and control of most major media.

What the capitalist system wants is more-more wealth,
more freedom to do whatever it wishes. This has always
been its instinct, unless government intervened to stop
it. The objective now is to destroy any remaining forms
of government interference, except of course for
business subsidies and protections. Many elected
representatives are implicitly enlisted in the cause.

A lot of Americans seem to know this; at least they
sense that the structural reality of government and
politics is not on their side. When the choice comes
down to society or capitalism, society regularly loses.
First attention is devoted to the economic priorities of
the largest, most powerful institutions of business and
finance. The bias comes naturally to Republicans, the
party of money and private enterprise, but on the big
structural questions business-first also defines
Democrats, formerly the party of working people. Despite
partisan rhetoric, the two parties are more alike than
they acknowledge.

In these terms, the administration of Barack Obama has
been a crushing disappointment for those of us who hoped
he would be different. It turns out Obama is a more
conventional and limited politician than advertised,
more right-of-center than his soaring rhetoric
suggested. Most Congressional Democrats, likewise,
proved weak and incoherent, unreliable defenders of
their supposed values or most loyal constituencies. They
call it pragmatism. I call it surrender.

Obama's maladroit tax compromise with Republicans was
more destructive than creative. He acceded to the
trickle-down doctrine of regressive taxation and skipped
lightly over the fact that he was contributing further
to stark injustices. Ordinary Americans will again be
made to pay, one way or another, for the damage others
did to society. Obama agrees that this is offensive but
argues, This is politics, get over it. His brand of
realism teaches people to disregard what he says. Look
instead at what he does.

With overwhelming majorities in Congress and economic
crisis tearing up the country in 2009, incumbent
Democrats opted for self-protection first, party
principles later. Their Senate leaders allowed naysayers
to determine the lowest common denominator for reform-
halfway measures designed not to overly disturb powerful
corporate-financial interests, and therefore not able to
repair the social destruction those interests had
wrought. Senate Democrats say they didn't have the
votes. Imagine what Mitch McConnell would have done if
he were their leader: Take no prisoners. Force party
dissenters to get in line and punish those who don't.
Block even the most pedestrian opposition proposals.

Democrats are not used to governing aggressively. They
haven't done so for decades, and they may no longer
believe in it. For many years, incumbent Democrats
survived by managing a precarious straddle between the
forces of organized money and the disorganized people
they claim to represent. The split was usually lopsided
in favor of the money guys, but one could believe that
the reform spirit would come alive once they were back
in power with a Democratic president. That wishful
assumption is now defunct.

Obama's timid economic strategy can be described as
successful only if the standard of success is robust
corporate profits, rising stock prices and the notorious
year-end bonuses of Wall Street. Again and again, Obama
hesitated to take the bolder steps that would have made
differences in social conditions. Now it is clear that
the bleeding afflictions experienced by the overwhelming
majority of citizens will not be substantively addressed
because Democrats, both president and Congress, have
chosen to collaborate in the conservative cause of
deficit reduction: cut spending, shrink government,
block any healing initiatives that cost real money.

Republicans, armed with strong conviction, are resurgent
with what amounts to ideological nihilism. Leave aside
their obvious hypocrisies on fiscal rectitude and free
markets. Their single-minded objective is to destroy
what remains of government's capacity to intervene in or
restrain the private sector on behalf of the common
welfare. Many of government's old tools and programs are
already gone, gutted by deregulation, crippled by
corporate capture of the regulatory agencies originally
intended to curb private-sector abuses and starved by
inadequate funding. The right wants smaller government
for the people, but not for corporate capitalism. It
will fight to preserve the protections, privileges and
subsidies that flow to the private sector.

* * *

Once again, Republicans are mounting an assault on
liberalism's crown jewel, Social Security, only this
time they might succeed, because the Democratic
president is collaborating with them. The deficit
hysteria aimed at Social Security is fraudulent (as
Obama's own experts acknowledge), but the president has
already gravely weakened the program's solvency with his
payroll-tax holiday, which undercuts financing for
future benefits. Obama promises the gimmick won't be
repeated, but if employment is still weak a year from
now, he may well cave. The GOP will accuse him of
damaging the economy by approving a "tax increase" on
all workers. Senate Democrats are preparing their own
proposal to cut Social Security as a counter to the
GOP's extreme version. In the end, they can split the
difference and celebrate another great compromise.

This is capitulation posing as moderation. Obama has set
himself up to make many more "compromises" in the coming
months; each time, he will doubtless use the left as a
convenient foil. Disparaging "purist" liberals is his
way of assuring so-called independents that he stood up
to the allegedly far-out demands of his own electoral
base. This is a ludicrous ploy, given the weakness of
the left. It cynically assumes ordinary people not
engaged in politics are too dim to grasp what he's
doing. I suspect Obama is mistaken. I asked an old
friend what she makes of the current mess in Washington.
"Whatever the issue, the rich guys win," she responded.
Lots of people understand this-it is the essence of the
country's historic predicament.

To get a rough glimpse of what the corporate state looks
like, study the Federal Reserve's list of banking,
finance and business firms that received the $3.3
trillion the central bank dispensed in low-interest
loans during the financial crisis (this valuable
information is revealed only because reform legislators
like Senator Bernie Sanders fought for disclosure). If
you were not on the list of recipients, you know your
place in this new order.

The power shift did not start with Obama, but his tenure
confirms and completes it. The corporates began their
systematic drive to dismantle liberal governance back in
the 1970s, and the Democratic Party was soon trying to
appease them, its retreat whipped along by Ronald
Reagan's popular appeal and top-down tax cutting. So
long as Democrats were out of power, they could continue
to stand up for liberal objectives and assail the
destructive behavior of business and finance (though
their rhetoric was more consistent than their voting
record). Once back in control of government, they
lowered their voices and sued for peace. Beholden to
corporate America for campaign contributions, the
Democrats cut deals with banks and businesses and
usually gave them what they demanded, so corporate
interests would not veto progressive legislation.

Obama has been distinctively candid about this. He
admires the "savvy businessmen" atop the pinnacle of
corporate power. He seeks "partnership" with them. The
old economic conflicts, like labor versus capital, are
regarded as passé by the "new Democrats" now governing.
The business of America is business. Government should
act as steward and servant, not master.

This deferential attitude is reflected in all of Obama's
major reform legislation, not to mention in the people
he brought into government. In the financial rescue,
Obama, like George W. Bush before him, funneled billions
to the troubled bankers without demanding any public
obligations in return. On healthcare, he cut deals with
insurance and drug companies and played cute by allowing
the public option, which would have provided real
competition to healthcare monopolists, to be killed. On
financial reform, Obama's Treasury lieutenants and a
majority of the Congressional Dems killed off the most
important measures, which would have cut Wall Street
megabanks down to tolerable size.

Society faces dreadful prospects and profound
transformation. When both parties are aligned with
corporate power, who will stand up for the people? Who
will protect them from the insatiable appetites of
capitalist enterprise and help them get through the hard
passage ahead? One thing we know for sure from history:
there is no natural limit to what capitalism will seek
in terms of power and profit. If government does not
stand up and apply the brakes, society is defenseless.

Strangely enough, this new reality brings us back to the
future, posing fundamental questions about the
relationship between capitalism and democracy that
citizens and reformers asked 100 years ago. Only this
time, the nation is no longer an ascendant economic
power. It faces hard adjustments as general prosperity
recedes and the broad middle class that labor and
liberalism helped create is breaking apart.

My bleak analysis is not the end of the story. Change is
hard to visualize now, given the awesome power of the
status quo and the collapse of once-trusted political
institutions. But change will come, for better or worse.
One key dynamic of the twentieth century was the long-
running contest for dominance between democracy and
capitalism. The balance of power shifted back and forth
several times, driven by two basic forces that neither
corporate lobbyists nor timid politicians could control:
the calamitous events that disrupted the social order,
such as war and depression, and the power of citizens
mobilized in reaction to those events. In those terms,
both political parties are still highly vulnerable-as
twentieth-century history repeatedly demonstrated,
society cannot survive the burdens of an unfettered
corporate order.

People are given different ideological labels, but
Americans are not as opposed to "big government" as
facile generalizations suggest. On many issues, there is
overwhelming consensus that media and pundits ignore
(check the polls, if you doubt this). Americans of all
ages will fight to defend social protections-Social
Security, Medicare and Medicaid, among others. People
are skeptical to hostile about the excessive power of
corporations. People want government to be more
aggressive in many areas-like sending some of the
financial malefactors to prison.

One vivid example was the angry citizen at a town hall
meeting who shouted at his Congressman: "Keep your
government hands off my Medicare!" I heard a grassroots
leader on the radio explain that basically the Tea Party
people "want government that works for them." Don't we
all? In the next few years, both parties will try to
define this sentiment. If they adhere to the corporate
agenda, they are bound to get in trouble, and the ranks
of insurgent citizens will grow. Nobody can know where
popular rebellion might lead, right or left, but my own
stubborn optimism hangs by that thread.

Whatever people on the left may call themselves, they
have a special burden in this situation because they are
deeply committed to the idea that government should be
the trustworthy agent of the many, not the powerful few.
Many of us believe further (as the socialists taught)
that the economy should serve the people, not the other
way around.

The current crisis requires people to go back to their
roots and re-examine their convictions-now that they can
no longer count automatically on the helping hand of
government or the Democratic Party. Obama's unfortunate
"hostage" metaphor led Saturday Night Live to joke that
the president was himself experiencing the "Stockholm
syndrome"-identifying with his conservative captors.
Many progressive groups, including organized labor,
suffer a similar dependency. They will not be able to
think clearly about the future of the country until they
get greater distance from the Democratic Party.

I suggest three steps for progressives to recover an
influential role in politics. First, develop a guerrilla
sensibility that recognizes the weakness of the left.
There's no need to resign from electoral politics, but
dedicated lefties should stake out a role of principled
resistance. In the 1960s uncompromising right-wingers
became known as "ankle biters" in Republican ranks,
insisting on what were considered impossible goals and
opposing moderate and liberal party leaders, sometimes
with hopeless candidates. They spent twenty years in the
wilderness but built a cadre of activists whose
convictions eventually gained power.

Where are the left-wing ankle biters who might change
the Democratic Party? It takes a bit of arrogance to
imagine that your activities can change the country,
but, paradoxically, it also requires a sense of
humility. Above all, it forces people to ask themselves
what they truly believe the country needs-and then stand
up for those convictions any way they can. Concretely,
that may lead someone to run for city council or US
senator. Or field principled opponents to challenge
feckless Democrats in primaries (that's what the Tea
Party did to Republicans, with impressive results). Or
activist agitators may simply reach out to young people
and recruit kindred spirits for righteous work that
requires long-term commitment.

Second, people of liberal persuasion should "go back to
school" and learn the new economic realities. In my
experience, many on the left do not really understand
the internal dynamics of capitalism-why it is
productive, why it does so much damage (many assumed
government and politicians would do the hard thinking
for them). We need a fundamental re-examination of
capitalism and the relationship between the state and
the private sphere. This will not be done by business-
financed think tanks. We have to do it for ourselves.

A century ago the populist rebellion organized farmer
cooperatives, started dozens of newspapers and sent out
lecturers to spread the word. Socialists and the labor
movement did much the same. Modern Americans cannot
depend on the Democratic Party or philanthropy to
sponsor small-d democracy. We have to do it. But we have
resources and modern tools-including the Internet-those
earlier insurgents lacked.

The New Deal order broke down for good reasons-the
economic system changed, and government did not adjust
to new realities or challenge the counterattack from the
right in the 1970s. The structure of economic life has
changed again-most dramatically by globalization-yet the
government and political parties are largely clueless
about how to deal with the destruction of manufacturing
and the loss of millions of jobs. Government itself has
been weakened in the process, but politicians are too
intimidated to talk about restoring its powers. The
public expresses another broad consensus on the need to
confront "free trade" and change it in the national
interest-another instance of public opinion not seeming
to count, since it opposes the corporate agenda.

Reformers today face conditions similar to what the
Populists and Progressives faced: monopoly capitalism, a
labor movement suppressed with government's direct
assistance, Wall Street's "money trust" on top, the
corporate state feeding off government while ignoring
immoral social conditions. The working class, meanwhile,
is regaining its identity, as millions are being
dispossessed of middle-class status while millions of
others struggle at the bottom. Working people are poised
to become the new center of a reinvigorated democracy,
though it is not clear at this stage whether they will
side with the left or the right. Understanding all these
forces can lead to the new governing agenda society
desperately needs.

Finally, left-liberals need to start listening and
learning-talking up close to ordinary Americans,
including people who are not obvious allies. We should
look for viable connections with those who are alienated
and unorganized, maybe even ideologically hostile. The
Tea Party crowd got one big thing right: the political
divide is not Republicans against Democrats but
governing elites against the people. A similar division
exists within business and banking, where the real
hostages are the smaller, community-scale firms
imperiled by the big boys getting the gravy from
Washington. We have more in common with small-business
owners and Tea Party insurgents than the top-down
commentary suggests.

Somewhere in all these activities, people can find
fulfilling purpose again and gradually build a new
politics. Don't wait for Barack Obama to send
instructions. And don't count on necessarily making much
difference, at least not right away. The music in
democracy starts with people who take themselves
seriously. They first discover they have changed
themselves, then decide they can change others.


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