Tasmanian Times

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

Economy

Trump’s victory comes with a silver lining for the world’s progressives

The election of Donald Trump symbolises the demise of a remarkable era. It was a time when we saw the curious spectacle of a superpower, the US, growing stronger because of – rather than despite – its burgeoning deficits. It was also remarkable because of the sudden influx of two billion workers – from China and Eastern Europe – into capitalism’s international supply chain. This combination gave global capitalism a historic boost, while at the same time suppressing Western labour’s share of income and prospects.

Trump’s success comes as that dynamic fails. His presidency represents a defeat for liberal democrats everywhere, but it holds important lessons – as well as hope – for progressives.

From the mid-1970s to 2008, the US economy had kept global capitalism in an unstable, though finely balanced, equilibrium. It sucked into its territory the net exports of economies such as those of Germany, Japan and later China, providing the world’s most efficient factories with the requisite demand. How was this growing trade deficit paid for? By the return of around 70 per cent of the profits made by foreign corporates to Wall Street, to be invested in America’s financial markets.

To keep this recycling mechanism going, Wall Street had to be unshackled from all constraints; leftovers from President Roosevelt’s New Deal and the post-war Bretton Woods agreement which sought to regulate financial markets. This is why Washington officials were so keen to deregulate finance: Wall Street provided the conduit through which increasing capital inflows from the rest of the world equilibrated the US deficits which were, in turn, providing the rest of the world with the aggregate demand stabilising the globalisation process. And so on.

What goes up

Tragically, but also very predictably, Wall Street proceeded to build unfathomable pyramids of private money (also known as structured derivatives) on top of the incoming capital flows. What happened in 2008 is something small children who have tried to build an infinitely tall sand tower know well: Wall Street’s pyramids collapsed under their own weight.

It was our generation’s 1929 moment. Central banks, led by US Fed chief Ben Bernanke, a student of the 1930s Great Depression, rushed in to prevent a repetition of the 1930s by replacing the vanished private money with easy public credit. Their move did avoid a second Great Depression (except for in weaker links such as Greece and Portugal) but had no capacity to resolve the crisis. Banks were refloated and the US trade deficit returned to its pre-2008 level. But, the capacity of America’s economy to equilibrate world capitalism had vanished.

The result is the Great Western Deflation, marked by ultra-low or negative interest rates, falling prices and devalued labour everywhere. As a percentage of global income, the planet’s total savings are at a world record level while aggregate investment is at its lowest.

When so many idle savings accumulate, the price of money (ie the interest rate), indeed of everything, tends to fall. This suppresses investment and the world ends up in a low-investment, low-demand, low-return equilibrium. Just like in the early 1930s, this environment results in xenophobia, racist populism and centrifugal forces that are tearing apart institutions that were the global establishment’s pride and joy. Take a look at the European Union, or the Transatlantic Trade and Investment Partnership (TTIP).

Bad deal

Before 2008, workers in the US, Britain and in the periphery of Europe were placated with the promise of “capital gains” and easy credit. Their houses, they were told, could only increase in value, replacing wage income growth. In the meantime their consumerism could be funded through second mortgages, credit cards and the rest. The price was their consent to the gradual retreat of democratic process and its replacement by a “technocracy” intent on serving faithfully, and without compunction, the interests of the 1 per cent. Now, eight years after 2008, these people are angry and are getting even.

Trump’s triumph completes the mortal wounding this era had suffered in 2008. But the new era that Trump’s presidency is inaugurating, foreshadowed by Brexit, is not at all new. It is, indeed, a postmodern variant of the 1930s, complete with deflation, xenophobia, and divide-and-rule politics. Trump’s victory is not isolated. It will no doubt reinforce the toxic politics unleashed by Brexit; the undisguised bigotry of Nicolas Sarkozy and Marine Le Pen in France; the rise of the Alternative für Deutschland; the “illiberal democracies” emerging in Eastern Europe; and Golden Dawn in Greece.

Thankfully Trump is not Hitler and history never repeats itself faithfully. Mercifully, big business is not funding Trump and his European mates like it was funding Hitler and Mussolini. But Trump and his European counterparts are reflections of an emergent nationalist international that the world has not seen since the 1930s.

Just as in the 1930s, so too now a period of debt-fuelled Ponzi growth, faulty monetary design and financialisation led to a banking crisis that begat deflationary forces which bred a mix of racist nationalism and populism. Just like in the early 1930s, so too now a clueless establishment aims its guns at progressives, such as Bernie Sanders and our first Syriza government in 2015, but ends up being upended by belligerent racist nationalists.

Global response

Can the spectre of this nationalist international be absorbed or defeated by the global establishment? It takes a great deal of faith to think that it can, in view of the establishment’s deep denial and persistent coordination failures. Is there an alternative? I think so: a progressive international that resists the narrative of isolationism and promotes inclusive humanist internationalism in place of the neoliberal establishment’s defence of the rights of capital to globalise.

In Europe this movement already exists. Founded in Berlin last February, the Democracy in Europe Movement 2025 (DiEM25) is attempting to achieve that which an earlier generation of Europeans failed to do in 1930. We want to reach out to democrats across borders and political party lines asking them to unite to keep borders and hearts open while planning sensible economic policies that allow the West to re-embrace the notion of shared prosperity, without the destructive “growth” of the past.

But Europe is clearly not enough. DiEM25 is encouraging progressives in the US, who supported Bernie Sanders and Jill Stein, in Canada and in Latin America to band together into a Democracy in the Americas Movement. We are also seeking progressives in the Middle East, especially those shedding their blood against Isis, against tyranny, and against the West’s puppet regimes, to build a Democracy in the Middle East Movement.

Trump’s triumph comes with a silver lining. It demonstrates that we are at a crossroads when change is inevitable, not just possible. But to ensure that it is not the type of change that humanity suffered from in the 1930s, we need movements to spring out and to forge a progressive international to press passion and reason back into the service of humanism.

*Yanis Varoufakis is an economist, academic and politician who served as the Greek Minister of Finance from January to July 2015, when he resigned.

This piece originally appeared on The Conversation: HERE

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3 Comments

3 Comments

  1. Christopher Eastman-Nagle

    November 19, 2016 at 2:47 pm

    While Varoufakis provides an elegantly pithy summary of the unsustainability of the current global economic order, that is where the cogency of his analysis stops.

    Beyond that is not just wishful thinking, but a delusion that the boundaries of unsustainable thinking and behaviour stop with the corporate world and the ‘bigoted’, ‘racist’, ‘xenophobic’, ‘isolationist’, ‘illiberal’ and neo-fascist redneck swill that is presently seen to be muddying democratic politics.

    He suffers from the delusion that ‘progressivism’ has not got problems of its own that are every bit as debilitating; as if unsustainability was purely the ‘other guy’s’ problem.

    There is no hint of self reflection that when it comes to notions of ‘progress’, there might be a need to go back to the drawing board, and fundamentally re-assess the compassing and anchorages that have traditionally informed notions of what that means.

    Varoufakis totally fails to register that liberal progressivism might be part of the problem too, because it too has suffered the all too compromising wear and tear of the last 50-70 years.

    There is not a trace of any awareness that left of centre libertarian humanism hasn’t played an active part in the layout of indulgence capitalism over that period, its subsequent conflation with consumer ideology, and appreciation of just how damaging that association has been for not just the the poor, dispossessed and marginalised, but everyone, as our social commons and the means of social reproduction got smashed to bits in exactly the same fashion as our ecological hinterlands.

    And the result of this blithe lack of self reflection means that Varoufakis and his like just do not have a properly constructed sense of responsible agency. The government of which he was a part was into the worst kind of denialism as to just how much Greeks at all levels of society were responsible for the economic pickle they had got themselves into. It was all the fault of the greedy big bank lenders rather than the egregious perfidy of the borrowers and the absurd spending and universal refusal to pay tax that that borrowing funded…as if that fool’s paradise could go on forever and it would never have to be actually paid for.

    What particularly struck me about Varoufakis’ delusionalism was his call to the secular liberal middle class to take back the initiative they promptly lost when the Arab Spring sprang and militantly sectarian Islam started to show its real power. The seculars were promptly shunted aside and now they represent a very large section of the refugee flows into Europe, because the thin veneer of westernism promptly found itself delegitimised and depowered the moment the protective shield of the secular dictatorships was removed.

    Yanis, while there are some minor echoes of the thirties today, what is now going on is much more profound because it represents the crumbling of not just an economic order, but the secular state and the consumer social materialism that has been so intimately tied into it.

    Last week in Jakarta, there was a demonstration of 100,000 Muslim militants demanding the resignation and trial for blasphemy of the city’s Christian Chinese governor. He had had the temerity to question a verse in the Koran that suggested that Muslims should not accept the rule of non Muslims. It is a sign of the times as to just how badly Westernism is travelling everywhere. The rise of Islam is a symptom of that.

    Modern societies are travelling as badly in the cultural/ideological department as the economic and ecological ones. And poor old Yanis Varoufakis doesn’t have a clue.

  2. john hayward

    November 15, 2016 at 3:29 pm

    I’m not sure about the silver lining at this crossroads.

    At the last crossroads, in the 1930s, H sapiens took the road down the hindbrain. This time Trump has put sapience itself on the banned list and the Coalition has maintained a respectful silence.

    John Hayward

  3. Kim Peart

    November 15, 2016 at 10:32 am

    “Humanism” without survival is a total failure of human values, because the failure to survive is extinction, and there can be no “humanism” in the grave.

    NAZI Germany had a space program, put to work for war, but under Wernher von Braun’s genius, later delivered the Saturn V Moon rocket that opened the way to serious space development.

    The Moon program opened the way to energy transition from fossil fuel to stellar energy, with solar power stations in space, but America lost the plot, gave up the ghost on serious space development and as a direct consequence, delivered the to the World a carbon crisis, where we have burnt too much fossil fuel for too long.

    The carbon problem was first identified in the 1800s, reported on in a New Zealand newspaper in 1912 and included in a 1965 White House science report, so there was no excuse for anyone to be ignoring such a commonly known problem.

    Now we stand on extinction road, should predictions be realised of a runaway greenhouse effect, because there is too much CO2 in there air, and now the Earth is releasing greenhouse gases from a fast warming Arctic.

    I read that the last time CO2 was at 400 ppm, the Earth was 3C hotter and sea levels were 5 metres higher.

    We are now gunning to pass 500 ppm CO2 in the air.

    Why defeat the NAZIs, acquire all their space technology, and their space team, and then surrender to carbon energy power, when the consequences of burning fossil fuel were a known risk?

    There will be no “humanism” in an early heat death of the Earth, that includes human extinction.

    The suffering on that road will be immeasurable.

    If survival can be defined as a primary human right, then now the status quo has been broken by Trump, a status quo that pandered for too many decades to carbon energy power, the wise move would be to get back to the future and direct all efforts into calls for Trump, Putin and all World leaders to collaborate on serious space development.

    Then we would have the energy to extract excess carbon from the air, the industry in space to build a sunshade in space to help cool the Earth, and be able to use the power of the Sun to create a stellar economy with the level of wealth that sends poverty into history.

    That would solve the refugee problem as well.

    So if anyone wants “humanism” and dislikes the thought of the suffering on the road to extinction, delve into the history, understand how we have been duped by carbon energy panderers, and demand investment in survival.

    That will be the real silver lining for the World’s progressives.

    That will be the future for Australia, if we want a future.

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