Neoliberalism and the left: Democrats, the "social" version and the American version

I've written here a lot lately about the role of the left-center parties in advanced countries in the neoliberal scheme of things. Yanis Varoufakis takes a look at what happened to Europe's social-democratic parties in that scheme.

This Klaus Stuttmann cartoon of 12/06/2012 illustrates the situation of the German Social Democratic Party (SPD). Though the SPD is the main opposition party, they have faithfully supported Chancellor Angela "Frau Fritz" Merkel's disastrous policies on the euro and the EU and failing to offer any alternative framework for the issues Europe and Germany face. It shows the SPD and its corporate-toady Chancellor candidate for the 2013 elections, Peer Steinbrück, being overshadowed by Frau Fritz:


(On the SPD of Peer Steinbrück, see also my post of 10/02/2012, Neoliberalism and center-left politics: Germany.)

Varoufakis uses the symbol of the Global Minotaur to describe the current world financial system, which first emerged in the 1970s focused around how the world economy would sustain what are known as the "twin deficits" of the US, our public budget deficit and our trade deficit:

My tentative answer is that Europe's Left fell for the Global Minotaur's old trick. They saw the rivers of privately minted money that the financial sector was printing (while labour was squeezed and real estate prices soared) and thought they could harness some of it in order to pursue social democratic policies! Rather than (as the social democrats of the previous, Kreisky era had to do) target the profits of industry, as a source of funding social programs, social democrats thought they could tap the rivers of cash produced in the context of financialisation. Let finance free to do as it pleased and then tap into some of its proceeds to fund the welfare state. That was their game and, at the time, it seemed to them a better idea, more fathomable, than having to be constantly in conflict with industrialists, seeking to tax them in order to redistribute. In contrast, bankers were quite easy going. As long as the 'leftist' politicians let them do as they pleased, they were happy to give them some crumbs off their gargantuan dinner table.

Indeed, some of these social democrats, for some time, were funded by the financial sector quite generously so as to run their welfare programs (e.g. the Blair government’s considerable boost in public spending, similar programs in Spain by the PSOE government, etc.). Alas, to be allowed that small portion of the financialisation torrent, for the purposes of social programs, social democrats had to swallow financialisation's logic hook, line and sinker. They had to shed their distrust for unfettered financial, labour and real estate markets. They had to suspend their critical faculties. And so, when in 2008 the tsunamis of capital produced by Wall Street, the City and Frankfurt crashed and burnt, Europe’s Social Democratic side of politics did not have the mental tools, or moral values, with which to subject the collapsing system to critical scrutiny. They were, thus, ripe for acquiescence, for total capitulation, to the toxic remedies (e.g. the bailouts) whose purpose was to sacrifice working people, the unemployed and the weak for the benefit of the financiers. The rest is a very sad, never ending, history.[my emphasis]

A similar process also seems to have occurred with the Democratic Party in the United States. I've also discussed this problem in Neoliberalism and the left (1) 05/12/2012 and Neoliberalism and the left (2) 05/12/2012. In the first of those, I quoted Michael Lind on the US Democratic and British Labour Parties:

The decision in the last generation of the Third Way "progressives" to be more pro-banker and pro-business than the right is one reason that the center-left in the U.S. and Europe is incapable of rising to the challenge of the economic crisis. Having mortgaged their parties to donors in Wall Street and the City of London, the Democratic and Labour Parties cannot engage in more than token reform of the bloated and dangerous financial sector without biting the hands that feed them.

This is how we get to a situation where a Democratic President just re-elected by a solid margin that rejected the reactionary economics advocated by plutocrat Mitt Romney and his running mate Paul Ryan, just a few weeks later floating a plan to cut Medicare benefits and instead of mobilizing the public to defend Medicare instead insists on only nominal tax increases for the wealthiest ("a little more from those who can most afford it"), and instead of insisting that the LOSER party go along with his plans, instead asks them to please let him compromise with them to cut Medicare benefits. At least that's how I read his feeble appeal in his weekly Saturday address of 12/08/2012, "It’s not about which political party comes out on top, or who wins or loses in Washington. ... And if both sides are willing to compromise, I believe we can give businesses and families a sense of security going into the New Year."

In Italy, we now have the crooked rightwinger Silvio Berlusconi declaring his intent to return to power. And Frau Fritz' faithful "technocrat" head of government in Italy, Mario Monti, has already declared his intention to step down in a month. We'll see what kind of changes the new round of turmoil in Italian politics will produce, and whether Italian left parties can use Frau Fritz' destructive austerity policies to successfully articulate a clear democratic alternative.

Tags: neoliberalism, italy, spd, yanis varoufakis

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