Is this the end of the neoliberal consensus?

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The Brexit vote in the UK and Donald Trump's victory in the US have both damaged the neoliberal project of the past three decades. Joseph Choonara questions the depth of neoliberalism's crisis and advocates continuing struggle against capitalism armed with clear socialist politics.

The global neoliberal order has suffered two wounding blows this year. First the Brexit vote removed from the European Union its second biggest economy. The howls from large capitalist firms, who overwhelmingly advocated a Remain vote, still echo. Now Donald Trump has won the US presidential election on the back of a campaign that promised to reverse the country’s longstanding commitment to free trade and to enact a major economic stimulus package.

This has led one of John Maynard Keynes’s biographers, Robert Skidelsky, to praise “Trumpism’s positive potential”, arguing that the president elect is proposing “a modern form of Keynesian fiscal policy”.

Post-Brexit prime minister Theresa May, like Trump, has been seen as representing a break with neoliberal orthodoxy. Her Tory party conference speech even provoked a rebuke from the Adam Smith Institute under the headline “May must accept that markets are the solution to our problems”. Her crimes: arguing for caps on energy prices and for worker representation on company boards. William Davies, writing in the London Review of Books last month, describes May as an advocate of a “protective state”, intervening to look after those deemed worthy. This includes what May calls “hard working families”, provided they’re sufficiently striving and sufficiently British — and, presumably, sufficiently white.

Such an approach can involve a nationalist challenge to the neoliberal consensus on the benefits of globalisation. As Davies writes, “May’s declaration, ‘If you believe you’re a citizen of the world, you are a citizen of nowhere,’ was pitched as much at bankers as it was at left wing intellectuals.” Of course, May’s newfound concern for British workers, like Trump’s concern for rust belt communities in the US, is more a matter of political expedience than a deep-rooted ideological commitment. After all, Trump is a wealthy property mogul, a prime example of the most parasitic species among the “1 percent”.

Crisis of legitimacy
Similarly, May has expressed behind closed doors views quite at odds with those she publicly expounds. Back in spring she told a private gathering of Goldman Sachs bankers “I think being part of a 500-million trading bloc is significant for us. I think, as I was saying to you a little earlier, that one of the issues is that a lot of people will invest here in the UK because it is the UK in Europe.”

Nonetheless, May and Trump represent the way in which neoliberalism has suffered a crisis of legitimacy in recent decades — and politicians eager for electoral success must increasingly put forward policies at odds with the needs of global capital. This comes after decades in which politics was dominated by a growing consensus between the centre-left and centre-right. Each government in the US or Britain since the 1980s has broadly favoured global trade deals, privatisation, deregulation and the subjection of ever more aspects of society to the rule of the market.

Yet there has been a growing backlash against this consensus, which predates the economic crisis of 2007-8 but has accelerated since.

There are important differences between Brexit and Trump’s election, not least in that it was impossible to offer a credible socialist argument in favour of the latter, whereas the radical left was divided over Brexit. But there are very striking parallels in particular between the failure of the Remain campaign and the failure of Democratic candidate Hillary Clinton. In both cases, though some on the left felt compelled to vote for them, they represented continuity — and, for millions of working class people, continuity stinks.

Brexit was, as Labour’s Diane Abbott put it, “A roar of defiance against the Westminster elite.” Large numbers of people were simply not prepared to listen to the voices of the rich and powerful telling them that the EU had benefitted them and would continue to do so. In the US case, the Clinton slump was far more significant than the Trump surge. Clinton was seen, rightly, as the reliable guardian of corporate interests. Her vote rose among the richest sections of the population compared with Barack Obama’s, but plummeted among those groups most ravaged by American capitalism.

Political polarisation
The crisis of the centre ground will continue to generate political polarisation. For instance, French fascist Marine Le Pen looks likely to come second in the presidential election next year. In Germany the anti-immigrant Alternative für Deutschland is polling around 12 percent in opposition to a ruling coalition encompassing both the centre-right and centre-left.

However, the polarisation also produces left alternatives. Bernie Sanders in the US spoke to enthusiastic crowds of supporters, expressing a radical opposition to neoliberalism, before meekly falling in behind Clinton when he failed to gain the Democratic nomination. Here in Britain, Jeremy Corbyn has been re-elected Labour leader with a strengthened mandate. But can breaking with the neoliberal orthodoxy, whether to the right or to the left, resolve the problems that have led to the crisis of mainstream politics?

Trump’s economic policies remain vague, but if he goes through with planned reductions to taxes on corporations and the wealthy it will do nothing to improve the lot of those most disenchanted with neoliberalism — and will do little to boost long-term growth if history is any guide. Nor is it likely that someone who has fought to block unionisation attempts in his own hotels will become a champion of organised labour. His much vaunted $1 trillion infrastructure programme is, as Marxist blogger Michael Roberts points out, “a fake”: “Most of this would not be public investment at all. The funds would come from private sources which would get incentives to invest money.”

Many of the other policies, notably the threats of protectionism and his desire to see US interest rates rise, will lead to huge tensions both with other governments and with the corporations that dominate US and global capitalism. If Trump does get his way in these fights it is almost certain to damage rather than heal the world economy.

Here in Britain the Tories have given up on former chancellor George Osborne’s deficit reduction targets in the wake of Brexit. But there is no sign of May reversing the impact of austerity or pumping money into welfare. Furthermore, it is unlikely that the Tories will turn their backs entirely on the corporations. Already May has given Nissan undisclosed “assurances” to prevent the car giant pulling out of the country, although it seems unlikely she will be able to offer a blank cheque for every corporation that comes begging. And at least one version of the Tory post-Brexit fantasy has Britain as a kind of neoliberal paradise engaged in tariff-free trade with the entire world based on the strength of the City of London.

The likelihood is that the partial break with neoliberalism offered both sides of the Atlantic will fail to overcome the deep discontent that has developed. In this case, we can expect yet more appeals to racism and nationalism as these politicians try to bolster their base of support — and in doing so they will open the door to forces even further to the right.

What of the anti-neoliberal left? The rise of Corbyn and those like him is a welcome development. After years of marginalisation, “socialism” is no longer a dirty word; it is in the mainstream of politics. However, the left responses to the unfolding crisis also face challenges. There are two obvious ones. The first is that the fundamental problem is not neoliberalism as such but the conditions that gave rise to it. The world we live in today is a product of the long decline of profitability in the post-war period, which led the system into crisis in the 1970s.

Decline of profitability
Four decades of neoliberal attacks, including almost a decade of austerity, have failed to reverse this decline of profitability. The Keynesian solutions that are offered by most reformist politicians are not capable of transforming this situation. Versions of Keynesianism have been attempted both in the past and in the current crisis — for instance by the Abe government in Japan — to no avail.

In order to stimulate the economy, money has to either come from capitalists, further undermining profitability, or from workers, in which case the measures are hardly progressive. Or the money can be borrowed, which tends to lead to greater financial instability. Not only that, but the conditions of crisis that are thrusting left wing reformist politicians to prominence also tend to test them rapidly and harshly when they approach power. We have seen this in the case of the Syriza government in Greece: a government elected to end austerity has ended up policing it, and attacking workers as it does so.

The second problem is that, even if a more radical solution is attempted, it will face the concerted opposition of capital. In that situation, the election of a left government is not enough. What is required is a militant struggle by millions of workers to overcome the attempts by capitalists to contain and reverse reforms.

At the centre of such struggles there must be a revolutionary politics that does not allow itself to be constrained by the needs of the capital, because it is, in principle, opposed to capitalism as a system. In this context, rather than mourning the victory of Trump and the continued misery of Tory rule, socialists should focus on three tasks.

The first is to support those left wing upsurges that pose a radical alternative to neoliberalism, austerity and “business as usual” politics. In the British case, that means, above all, to declare our solidarity and desire for joint activity with those drawn towards Corbyn’s Labour Party. The second is to build broad movements, involving such forces, to block the racist tide coming from the right — and in particular that means building the Stand Up To Racism movement and preparing for the 18 March anti-racist demonstration.

The third is patiently to advocate within these movements a revolutionary politics that can cut through the tangle of economic and political threads woven by capital, and commits itself to building a socialist future. The sickness caused by capitalism cannot be cured by the tools of capitalism. Ultimately the system itself must be challenged and overturned.