Louis Proyect: The Unrepentant Marxist

January 1, 2018

Why did liberal Republicans go the way of the dodo?

Filed under: economics — louisproyect @ 8:40 pm

“Should any political party attempt to abolish social security, unemployment insurance and eliminate labor laws and farm programs, you would not hear of that party again in our political history.”

Crooked Timber is a group blog of left-leaning academics that I have been following for nearly 20 years. I read it mostly to get a sense of what Keynesian, social democratic, and liberal professors are thinking. Yesterday John Holbo, an Associate Professor of Philosophy at the National University of Singapore, posted an article titled “Why Does The US Lack A Major Center-Right Party?”  that grappled with the question “Why do we have the Trump-headed, extreme right-tilted thing we’ve got?” Why didn’t the Republicans adopt a center-right program? Wouldn’t “the super-wealthy wouldn’t be better off under a plausibly dominant, moderate right-wing Republican Party” especially since “Extremist chaos is kind of costly, not to mention risky.” Looking back at the party’s history, Holbo wonders why “around 1964 various elements on the right that might have gone for a moderate option tilted far-right.”

I think the answer to this question has to engage with the class and economic issues that made the GOP the party of Goldwater rather than Nelson Rockefeller and other patricians who had much more in common with FDR than they did with today’s politicians. Essentially, the sharp turn to the right has to be explained in terms of the relationship of class forces in the USA and the failure of American capitalism to provide enough crumbs off the table to sustain the social compact that FDR created.

In 1944, Thomas Dewey lost a close election to FDR whose fourth term was cut short by his death. Dewey epitomized the liberal tendencies of the GOP. As a member of the Eastern Establishment, Dewey doubled state aid to education, increased salaries for state employees and still reduced the state’s debt by over $100 million. (From Wikipedia). Four years later, running against Truman, Dewey refused to compete with the Democrat for who could be more anti-Communist. He opposed a ban on the CP on the basis that “you can’t shoot an idea with a gun” and added later on that he was not “going around looking under beds”.

In 1954, President Eisenhower, another paragon of the Eastern Establishment who even had served as President of Columbia University at one point, made a speech that warned against any attempt to undo the gains of the New Deal:

Should any political party attempt to abolish social security, unemployment insurance and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes that you can do these things. Among them are a few Texas oil millionaires, and an occasional politician or businessman from other areas. Their number is negligible and they are stupid.

Despite Richard Nixon’s well-deserved rotten reputation, he did not stray far from the Dewey/Eisenhower agenda. In 1971, he stated, “I am now a Keynesian in economics”. It was the year in which the American economy first began to show signs of anemia, a product of inflationary pressures from military spending on Vietnam and growing competition from Japan and Germany. In response to a faltering economy, Nixon carried out a program according to Keynesian principles. He proposed an expansionary budget for 1972 that would “be a budget in deficit, as will be the budget in 1971.” He also proposed an expansionary monetary policy that would be sufficient “to fuel a growing economy.”

After resigning from the presidency, he was replaced by his Vice-President Gerald Ford who Alexander Cockburn described as “our greatest President”–maybe a bit tongue in cheek but not entirely in consideration of this:

As a percentage of the federal budget, social spending crested in the Ford years. Never should it be forgotten that Jimmy Carter campaigned against Ford as the prophet of neo-liberalism, precursor of the Democratic Leadership Council, touting “zero-based budgeting”.

Nobody could possibly mistake Betty Ford with the wives of Republican presidents that followed. As Marxmailer Stewart Lawrence pointed out in a CounterPunch article, she was an outspoken defender of the Equal Rights Amendment, abortion rights, and even recreational pot-smoking. All this might have actually cost her husband his re-election and even led to the Reagan ascendancy.

However, to return to the initial point made in this article, it was not “social issues” that led to Reagan’s election but malaise over Jimmy Carter’s neoliberal economics. Promising like Trump to restore America to greatness, Reagan’s presidency was the first attempt to make the working-class pay for capitalist decline.

During the Carter years, I began to notice a move away from the New Deal consensus marked particularly by his 1979 “malaise” speech that set the tone for the Clinton and Obama administrations. To jump-start the economy, Carter pushed for deregulation of the airlines, the railroads, and trucking. Deregulation was a key part of supply-side economics, a policy that most people associate with Reagan but that was incubated in the Carter years. Lloyd Bentsen, Carter’s Secretary of the Treasury, issued a report in 1980 that “signals the start of a new era of economic thinking. The past has been dominated by economists who focused almost exclusively on the demand side of the economy … [T]he Committee recommends a comprehensive set of policies designed to enhance the productive side, the supply side of the economy.”

While Carter was pushing such neoliberal measures, Mobil Oil was running advertorials on the op-ed page of the N.Y. Times every Thursday that telegraphed the determination of big capital to organize an all-out assault on the New Deal legacy. You can read a sample of some of the 800 of these corporate messages here, including one from 1981 that proposed weakening the Clean Air Act since it impeded “the battle for industrial revitalization, economic growth, and less dependence on foreign energy”.

But the real motivation for the neoliberal turn was pressure from the completely recovered WWII economies in Europe and Japan, particularly the two axis powers that were making such headway into American markets that auto workers decided to stage rallies in which they took sledgehammers to Toyotas (racism explains why Mercedes-Benz got off the hook.) Throughout the 1980s and 90s, the rust belt became ever-widening as it turned cities like Detroit, Cleveland, Newark, Philadelphia, Youngstown, St. Louis, Buffalo, Pittsburgh and others into shells of their once-thriving, job-creating machines.

Most people on the left explain the ruthless attack on the New Deal social compact as driven by greed. To some extent, this is undeniable. People like the Koch brothers, Goldman Sachs partners, hedge fund operators, Silicon Valley magnates, energy company executives, et al, are creatures that only feel fulfilled by wealth, the more of it the better. Just 2 blocks north of my apartment, there used to be the International Center for Photography that was originally a mansion owned by Willard Straight, an investment banker who founded the New Republic in 1914 with fellow Progressive movement stalwart Walter Lippmann.

The museum was founded in the mansion in 1974 and operated there until 1999 when it was sold to Bruce Kovner, a hedge fund billionaire who despite refusing to back Trump in 2016 because of his boorishness remains one of the major funders of the policies he is carrying out. Kovner is one of the main funders of the American Enterprise Institute, whose journal publishes articles like The Upside of Income Inequality and Why Do We Underpay Our Best CEOs?.

So, what accounts for Willard Straight’s Progressivism and the new owner of his mansion defending values that are his polar opposite?

Back in 1998, I read a book by a British economist named Harry Shutt titled “The Trouble with Capitalism” who to this day remains my favorite thinker when it comes to understanding the retreat from FDR type liberalism in the USA and the erosion of social democratic norms in Europe. In straightforward prose, he describes it in terms that are reminiscent of the period that led up to WWI and WWII as capitalist competition for markets and resources led to a disastrous war. The difference today is that such wars would mean the end of the capitalist system itself since it would quickly involve nuclear weapons.

So to prop up the system, you have various mechanisms but none accomplishes what previous wars accomplished, mainly the liquidation of fixed assets through bombs and rockets and the possibility for a new round of capital accumulation.

In an interview with Red Pepper, Shutt dismisses greed as an explanation for a process that began more than 40 years ago. He says, “People are hitting on greed but greed is not a cause of things, greed is a symptom. Greed has been with us since the Garden of Eden.”

Instead, it is the stagnation of the capitalist system that has inhibited the bourgeoisie from redistributing a share of profits to the working class as was the case in the post-WWII period through tax collections that would be unheard of today. Under Eisenhower, the top marginal tax rate was 91 percent. In 2016, it was 39.6 percent. This is what allowed the massive expansion of state universities under Eisenhower’s Republican administration and LBJ’s Great Society that was funded by a tax system with a marginal tax rate of 70 percent.

When economic growth was skyrocketing after WWII, the bourgeoisie accepted such a tax “burden” but when it began to slow down in the 1970s, it was much more resistant. The corporate tax rate had to be cut in order for capital to expand but the contradictions of the capitalist system were making profitable investment more and more unrealizable. There was a declining rate of profit that was ultimately tied to the replacement of living labor by machinery as well as increased competition between various national capitalisms. Steel, auto, petrochemicals—and other mainstays of the industrial system from the 1930s to the 1970s—were no longer rewarding investors. So, they looked elsewhere especially in East Asia, where labor was cheap. When workers in the USA could no longer rely on jobs in an auto plant, they were forced to work for Walmart. All this meant lower pay and lower tax revenues.

With a decline in manufacturing, investors flocked not only to overseas opportunities but to financial speculation such as the collateralized mortgage securities that brought the system to the brink of oblivion only a decade ago. Despite the roaring stock market, this is an unstable system that could founder on the rocks very easily.

Shutt’s prescriptions for overcoming these contradictions stop short of overthrowing the capitalist system but his outlook for the future does not appear very rosy for the Bruce Kovners of the world, as the Red Pepper article indicates:

Remove debt-fuelled consumption and property speculation from the equation, and you are left with anaemic subsititues such as the internet, the service sector and green technology. The arguments of centre-left Keynesian commentators that the answer lies in re-regulating the financial sector and encouraging consumer spending, ignore the fact, says Shutt, that the demand for capital – the availability of new profitable productive activities to invest in – is in long-term decline, and consumer spending power has been exhausted.

“It is easy to say that we’ll emerge from the slump eventually, but to quote Keynes, ‘in the long run we are all dead’,” he says. “In other words there has to be a huge contraction in the meantime and the impact on livelihoods and lives is likely to be intolerable. The fundamental misconception of mainstream commentators is that people can and should be induced to consume more when they’re already ‘maxed out’ on credit. In practice it is right and necessary that they should now be forced to rebuild their personal balance sheets, which means saving rather than spending. Only once they’ve done this, probably after several years will they be able to start spending again. This pinpoints a fundamental weakness of capitalism. In order to function it requires the perpetuation of unsustainable levels of consumption in order to absorb the endlessly expanding stock of capital.”

The ultraright economic policies of the Republican Party are based on a big lie. They claim that squeezing the working class is in its best interest since it is only by putting more money in the hands of their exploiters can good jobs be created. Since a stagnant economy is not likely to be revived by their policies or even by a new round of Keynesian spending, the possibilities for liberal Republicanism are excluded at the outset just as they would be for a Bernie Sanders presidency.

The inescapable prognosis is one of declining standards of living and increasing state repression to keep the masses in line. There will also be more and more scapegoating of immigrants and other vulnerable sections of the population in order to mollify the white working class that is becoming as susceptible to con jobs as the non-unionized workforce in the South. Before long, the USA in its entirety will look like Mississippi unless the left can get its act together and challenge these bastards in the street where real politics always takes place.

 

14 Comments »

  1. “unless the left can get its act together” Which is pretty unlikely absent a working class revolt. I’m thinking of the 2020 election, which cries out for a mass independent working class electoral response. But would our fractured amalgam of socialist sects, independent parties and Greens unite? Not likely without such a thing.

    Comment by Jon Flanders — January 1, 2018 @ 9:01 pm

  2. This piece is wonderful and terrifiying. It paints IMHO a picture of capitalist decadence potentially without end in our lifetimes–if you want to be morbid, [that bastard] T.S. Eliot’s “whimper” not bang ending “the world.” Not that he would have accepted the connection.

    Working class revolt requires working class consciousness, the sense that “we” make what the world takes and life can’t go on with out us.

    This can’t happen in the U.S. in the exact same way as in the past, given the drying up of manufacturing jobs and the changing nature of work itself, which is increasingly automated and atl least in the U.S. requires fewer and fewer toiling masses. People may vote capriciously in bourgeois elections, but they are not stupid or bedazzled enough not to see the stalemate of workers vs. the 1% created in all nations by the hegemony of international capital vs. the local nature of politics everywhere. As long as working people feel they exist on sufferance, the hegemony will hold.

    Workers have to form a new working-class identity reflecting this reality, of which all are aware.

    Meanwhile, for some the mass of profit, fueled by the conquest of the former third world though industrial capitalism has exploded to the point where if you are rich you can only get fabulously richer. The billionaire aliens who have colonized Manhattan should warn us of just how real this world of unimaginable wealth is–the reality of it being what fuels the greed of the Kochs et al.

    There may have been a horny-handed Stalinist vision in which working people transformed themselves by evolving voluntarily into a new species of steel beings that transcended the physical, moral, and mental limitations of previously existing humanity and surged forward to a future that would be paradise to them even if unendurable to most of us. (No real evidence for this … .)

    Perhaps the vision of iron-fisted working-class solidarity has to be replaced by something perhaps more Star-Trek like tor Einstein-like. People need to articulate the sense that “we” by rights own the means of production and that “the marketplace” which has invaded all aspects of consciousness, even sex, is a false god that will only devour its followers. The wealth belongs to everybody–perhaps people need to be more aware of this.

    This also has to happen somehow internationally.

    Ironically, the break may come if some in the 1% here realize that the power to consume is the one aspect of the former Fordist working class that they cannot do without. This could fuel a bid for class peace based on a kind of social democracy. Initiatives like the insulting and inadequate “basic income” proposals being floated around are already in the air. What if this helps trigger a new sense of material rights? What if Sandersite tame “socialism” and the other ignominious, sure-to-fail things the Democrats are permitting to be mentioned, secure in the knowledge that they can be squelched, contribute unintentionally to a demand for the real thing–or something that can be shaped into a demand for the real thing?

    Can people transform the still-universally-trumpeted right to consume into an assertion of ownership in the means of production? Could this happen internationally?

    It wouldn’t come about through people joining the Democratic Party, as if one could. Rather it would come from outside agitation for purely socialist goals that would continue outside of and completely independent from whatever re”reforms” got enacted . Moreover, the payoff wouldn’t be the “reforms” but a wider movement triggered only in part by cracks in the granitic facade of the neoliberal market religion and moving rapidly in a direction outside the control of Demicraps and Republiscum.

    Feverish dreams.

    Comment by Farans Kalosar — January 2, 2018 @ 12:09 pm

  3. Dear Farans,
    If a tax policy is enacted that essentially makes it illegal to be rich would it matter who actually has formal control over the means of production? That is all for now.

    Comment by Curt Kastens — January 2, 2018 @ 3:55 pm

  4. Dear Kurt, IMHO: Who would enact or enforce such a tax policy unless there had been a revolution? If there had been, why bother with a “policy” operating inside the current framework of laws regarding ownership?

    Comment by Farans Kalosar — January 2, 2018 @ 4:57 pm

  5. Hello Farans,
    I am glad that you are online. Yes, that is a good question. I agree that at least a revolution in thinking right now would be neccessary to make it possible to acquire the power to implement such a tax policy.
    So I guess the next question would be if the power exists to make such a change in tax policy why not just remove the current owners and their managers all together. My answer is that I am not convinced that socialism will work. This whole concept of class identity is fuzzy. Racial identity, which itself is quite fuzzy, is still much less fuzzy than class identity. I also have a complete lack of confidence in the current capabilities of the masses to manage their factories let alone a national, confederational, or international economy successfully. Even though I do not trust the masses it is seems obvious to me that elites who come to power in the type of world system that we have now which encourages a massive accumilation of material and monetary assets (which are easily converitble to material assets) tend to have sociopathic/psycopathic personalities which corrupt the entire socieity (planet).
    Furthermore the history of attempts at socialism is really not at all inspiring. Attempts were made not only in the former Soviet Union and Warsaw Pact, China, Vietnam, but also in places like Yemen and Ethiopia. It is possible that if socialist countries had been left alone they would have eventually evolved in to something admirable. None the less is it unreasonable to be sceptical or even pessimistic about the prospects of socialism even if that is what a vast majority of people want? Now you may accuse me of having a contempt of the working classes that equals or even exceeds that of Donald Trump and the modern Republican party. But in my defense I would say that Trump and the leadership of modern America really believe that the masses are incapable of ever being anything other than fools. I on the other hand think that with proper indoctrination (education) the masses can achieve high levels of wisdom.
    In this context I see a tax policy that outlaws great wealth as being the first step in a process of the reeducation of society. It is also a step that can occur even before there is a consensus to implement a socialist society. A result that I hope and think would come about from such a tax policy would be for those who are now in the top 5% in wealth to learn that living like masses at least those of Europe is not something to fear. At least if these policies are combined with the elimination of the constant messaging that humanity now recieves that wealth is cool and not having a lot of means that you are a looser and unfit to pass on your genes to future generations.
    During a period in which capitalism is constrained and people begin to wonder why in the hell they ever feared having things like a social safety net, more thought can be given to exactly what socalism is. The devil is in the details. For example should a worker have just as much say in the policies of a factory as a worker who has been there for 30 years. Since the decisions made in a factory have externalities on the surrounding area how much oversight should the surrounding area have over the factory?
    Sorry that took so long to formulate.

    Comment by Curt Kastens — January 2, 2018 @ 5:53 pm

  6. Kastens, for someone who has little connection to Marxism, maybe it would be appropriate for you to keep a lower profile here.

    Comment by louisproyect — January 2, 2018 @ 6:03 pm

  7. Yes Sir

    Comment by Curt Kastens — January 2, 2018 @ 6:53 pm

  8. I’m an “evolved Marxist.” Marxism went way off track after the death of Marx and Engels and the Stalinist stillbirth of “Marxism” in the impossible conditions surrounding the Russian Revolution.

    What might an evolved, modern Marxist take on a workers’ consciousness, identity, and revolution look like? First of all, “class” refers to one’s position in the means of production, and in this sense all humans are workers. We all labor, whether as a worker in a factory, a student, a homemaker, or a homeless member of the Reserve Army of the Unemployed begging on a streetcorner. And all of our labors and most of our thoughts and politics have now been captured by capitalism.

    Further, we are imminently threated as a species by capitalism’s accelerating destruction of our social relations and biosphere, and there is no effective opposition to be found anywhere.

    Does anyone think Marx and Engels would have remained stuck in old, failed dogma when the predicted industrial working class revolutions in the emerging European economic powers failed? Of course not, but whether it’s Stalinists or Frankfurt Schoolers, almost all “Marxists” detoured from Marx’s and Engels’ dialectical understanding of “nature, human society, and thought” as a living, systemic process.

    The only solution to the presently guaranteed destruction of our species is to learn to consciously organize from the bottom up in life’s pattern of organization. This is the pattern of self-creating community that is embraced by the rest of life, and it is now possible for humans to live and labor in this manner as the new sciences of organizational relations confirm and illuminate the Marxian dialectical process AND REVEAL ITS ORGANIZATION FOR POPULAR UNDERSTANDING AND USE.

    I just had to get dramatic with that last little bit of info. It has proved to be revolutionary beyond belief so far. Joe Barnwell

    Comment by Joe Barnwell — January 2, 2018 @ 7:14 pm

  9. “In this context I see a tax policy that outlaws great wealth as being the first step in a process of the reeducation of society. It is also a step that can occur even before there is a consensus to implement a socialist society.”

    Sounds a lot like Henry George to me.

    Comment by Richard Estes — January 3, 2018 @ 6:58 pm

  10. It has bin a while but I read some thing about or maybe it was something by Henry George once or twice. Maybe my subconscience plagurized him. I better not say anymore or it will raise my profile.

    Comment by Curt Kastens — January 3, 2018 @ 8:15 pm

  11. I don’t think I had a very clear idea in my earlier post. Hence the wild response of at least one person. But I do think the changing nature of work–although clearly from the perspective of a U.S. worker the export of labor to cheaper sources abroad does not change but rather intensifies the basic proposition of capitalist social relations–requires a newer and in some respects less muscular form of worker consciousness.

    What that might actually be–except for my contribution to it as one worker–I am really not sure. My mental image of StarTrek is probably not the right Star-ting point, but is most likely an artifact of personal stress. I also believe that “reformism” has a useful role to play, but that this will only extend to a) possibly relieving some of the immediate distress of workers, and b) stimulating a demand for “the real thing.” We can be certain that this will not and cannot come from inside the Democratic Party. Sanders and his ilk may help start a fire, but unless it burns out of their control, it will come to very little. Enough attention-seeking.

    Comment by Farans Kalosar — January 3, 2018 @ 10:09 pm

  12. I think Farans is on the right track. I could talk about the autonomists, or the cultural Marxists, but would only say at this point is that the bible is titled “Capital” not “Labour,” and starts with the examination of value, use-value, exchange value and commodities, their creation, permutations and realizations, and that Marxists should analyze those before deciding on the location of the subjects of history.

    Comment by bob mcmanus — January 4, 2018 @ 9:49 pm

  13. Thanks, Bob. Not to prolong this thread overmuch, but i have been thinking about this for days trying to achieve a little more clarity I can’t say I hold much of a candle for autnomism as such though as I am just barely able to keep up with that discussion, I am certainly neither throwing stones nor stowing a throne for anyone’s use as Dear Leader. I do think, though, that the nature of “productive labor” is changing , and while I can offer no cookshop recipe for a new version, i believe that–if the earth’s physical environment can sustain us, which it clearly cannot if TINA capitalism and state capitalism continue to rage unchecked–much less PL will be required in a foreseeable future to sustain production for use than one would have thought necessary at an earlier period, even quite recently.

    As to the self-activity of workers, however it arises, it seems that at present there is very little of this here. We are currently seeing an explosion of WSA in Iran–but what are the international implications of that revolt–indeed, how likely is it that the Iranian revolt will in the long run successfully challenge the reactionary oligarchy in power even in Iran? The CIA conspiracy theory of the revolt is a monstrous fabrication of liars and parasites, but whether major-power co-optation and subversion combine with political exhaustion locally now or later to squelch the revolt, can we doubt that, given the political impasse in the US and the rest of the former First World, a bad end is likely to come?

    In the United States, the most recent major eruption of WSA (IMHO) was associated, perhaps indirectly, with Occupy and the state workers’ struggle in Wisconsin, which made a mark but were then decisively defeated, unless the Sanders movement and associated phenomena are to be taken as signs of anything but the dead hand of the Democrats sweeping up every last fragment of evil.

    if there is to be more SA of the workers in the home states of imperialism, IMHO, some new spark of leadership is required and that would certainly be helped if a newer version of Socialist [Wo]Man were available for people to affiliate to. This might include IMHO elements of very boring subjects like the governance of enterprises etc. but also stories that can inspire workers to affiliate for action–stories that can break though the exhaustion of the currently frigged-out narrative sense of people in the TV-sodden U.S. and elsewhere. No cookshop recipes, but people need to visualize their future and their goals tangibly, even if the dialectic requires continuous reappraisal. Perhaps, as work as we know it declines in importance, this awareness will have to focus on something superficially more “Utopian.”

    I might add that “the sixties”–meaning the thing that took over in pop. awareness in “the West” from the civil rights movement during the anti-Vietnam War period–has failed in the long run because it offered stories about the isolated transcendent value of “ones self” [Bob Dylan, for ex.] validating a strain of antisocial Emersonism that effectively immunizes said Self from even perceiving, let alone acting on, any strong sense of social context. For the cultural left of “the sixties” as much as for Maggie Thatcher, there is effectively no such thing as society except as a loose and secondary network of contractual bonds among individuals, or in some ontologically remote “spiritual” realm in which we are “all one” once we’ve made our millions and become gurus or are dead.

    Comment by Farans Kalosar — January 7, 2018 @ 4:42 pm

  14. > the demand for capital – the availability of new profitable productive activities to invest in – is in long-term decline

    You certainly see this if you follow what is happening in Silicon Valley. Over the past 60 years, power has shifted more and more from venture capital to the founding team. There is plenty of capital sitting out there competing to get in on the good deals, whereas the capital costs and number of workers that need to be hired to create a “unicorn” is very low.

    Comment by Adelson — January 9, 2018 @ 10:23 am


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