Antonio Gramsci, Italy’s political and cultural thinker, was imprisoned by the fascist dictator Benito Mussolini on the eve of World War II. From his cell, Gramsci wrote metaphorically:
“The old world is dying, and a new world is struggling to be born; now is the time for monsters.”
Today the world has been reeling from one crisis to the other. The most prominent dimension of the crisis is economic. The global financial system nearly collapsed in 2007 and 2008. The failure of the United States and the European Union to stabilize the system and engineer full economic recovery eight years after clearly shows that the dominant economic model of governance based on untrammeled free-trade framework or neoliberal globalization is irretrievably flawed. This is the reason the unemployed and underemployed in the Rust Belt of America gave Donald J. Trump the votes, while their British counterparts, worried about the endless flow of migrants from the Middle East, voted for an exit from the “EU fortress”, In the meantime, the EU is haunted by other problems: the never-ending Greek debt tragedy; the Italian failure to align their charter with the EU; the double-digit unemployment in several countries (Spain, Portugal, Cyprus and Croatia); and anxieties over the ISIS terror threats.
Enters the billionaire Donald Trump, swaggering but populist. Trump promises to become America’s “greatest job creator” for the “forgotten American man” and “forgotten American woman” by overhauling the way America does business with the world. No more free-trade talks; no more outsourcing of American jobs; no freer entry for cheap Chinese goods and Mexican labor; no free-loading by the Europeans on Atlantic defense budget; and so on. And yet, he wants the universal health-care system erected by President Obama for the poor replaced, while pushing for the lowering of the taxes for the rich corporations and upper middle class. Like Mussolini and
other dictators, he keeps repeating his commitment to country, “America First”.
Will Trump succeed? Will Brexit succeed? Will the emerging Trumps in Europe and elsewhere gain power, such as Marine Le Pen of the xenophobic National Front of France?
The reality is that the world is witnessing the tumultuous end of an economic era, the era of ultra-liberal capitalism. This era was ushered in by the policy of market fundamentalism pursued in the 1980s by the trans-Atlantic “soul mates”—President Ronald Reagan of the United States and Prime Minister Margaret Thatcher of the United Kingdom. This market fundamentalism, focused primarily on the dismantling of state-provided public services, metamorphosed in the 1990s as the global “Washington Consensus” doctrine of privatization, economic deregulation and market liberalization. It was in this decade that many countries, including China and Russia, joined the World Trade Organization (WTO) and became ardent economic liberalizers and globalizers. The subsequent expansion of the world economy, reinforced by advances in the information and communications technology revolution and transportation technology, gave the Washington Consensus advocates ample
munition to dominate economic policy debates.
However, the social and economic downsides of unregulated liberal capitalism keep growing. The 1997-1998 Asian financial crisis revealed how global speculators in the currency, real estate and stock markets, moving in and out of borderless markets, can trigger a financial tsunami that can wipe out businesses and jobs overnight, as what happened in Thailand, South Korea, Indonesia, Malaysia and the Philippines. The crisis was dismissed by the globalizers as a distinctly Southeast Asian phenomenon rooted in the “hazardous” way government functionaries and private corporations do business. They sided with George Soros, the billionaire speculator, in upholding market fundamentalism versus the position taken by the Malaysian Prime Minister Mohamed Mahathir, who defied the IMF by imposing capital controls to save the ringgit.
And yet, 10 years after, in 2007-2008, another financial crisis, bigger and global, exploded. The hardest-hit is the heartland of global finance—Wall Street. Millions in America and Europe lost jobs. Workers in the US “Main Street” wailed over factory closures and loss of life savings. It was a repeat of the “rag times” during the 1929-1933 Great Depression.
But what was the response of the United States and Europe to the Great Depression eight decades earlier? US President Franklin D. Roosevelt, promising a “new deal” for America, pushed for financial regulations and massive government spending on physical and social infrastructure in order to create jobs for as many people. Classic economic recipe advanced by John Maynard Keynes. However, part of the Roosevelt economic rebuilding program was the recognition of the right of workers not only to form unions freely but also to bargain collectively for fair standards. After World War II, Western Europe expanded Roosevelt’s growth blueprint by developing institutions supportive of welfare states, such as firm guarantees on political liberties and workers’ rights, state delivery of essential public services, unemployment insurance, universal health care, and education and training for all.
The foregoing development framework more or less prevailed in the Organisation for Economic Co-operation and Development (OECD) countries from the end of World War II up to the 1970s. Somehow, the system of social welfare and safety nets for all citizens boosted the economy and stabilized society as a whole. As Thomas Kochan of MIT put it, the American economy became stronger because an unwritten or implicit social contract “governed work for many years—the norm that hard work, loyalty and good performance will be rewarded with fair and increasing wages, dignity and security”.
The problem is that three to four decades of neo-liberal capitalism have eroded the social contract. Yes, the economy has been growing, but jobs growth is very uneven and exclusionary. Yes, wealth is growing but it is going mainly to what the 99-percent activists call as the “1 percent”. In fact, Oxfam reports that the wealth of the eight wealthiest equal the wealth of the poorest 50 percent of the world, or 3.6 billion people. Moreover, a majority in the developing world have been left behind. In short, the world has become unequal and exclusionary under a fraying social contract, under an unregulated neo-liberal economic order.
The question then is: will Donald Trump and other Trumps build a more equitable and inclusive global economic order, or will they exacerbate the inequality and conflicts now dividing the world?
