As the politics of Europe rapidly changes, Graham Vanbergen quotes renowned economists Stiglitz, Collier and Coyle to conclude that the failure of capitalism is now so evident it is consuming democracy and economies from the inside out like a malignant cancer. A revitalising alternative is there for the taking. The question is – will the opportunity of a new model of progressive capitalism end up being lost?
It is evident that the social contract built up over 70 years from the wreckage of the last world war has been broken in many Western countries. Implicit agreement among civil society to cooperate for social benefits, for example by sacrificing some individual freedom like paying taxes for protection by the state was fully understood. That also meant everyone had to contribute with the exception of those physically unable to do so.
However, it is just as clear after four decades of market fundamentalism, where monied fanatics seized control of the state through lobbying and corruption, that neoliberal capitalism in European countries is now failing the majority of their electorate.
What the citizenry overwhelmingly want is exactly what has been financialised over the years as its crucial services to civil society were slowly withdrawn. Affordable housing, the withering losses of decent work for decent pay, of quality health care, of a good education – are mourned as the symptoms of a decaying liberal democracy on its current crash and burn trajectory.
The death throes of this trajectory has expressed itself as little more than disaster capitalism. Real capitalism has failed in countries all over Europe. The result is dissent. The rise of the far-right is its manifestation and visible for all to see in places like Italy, France, Germany, Austria, Sweden, Estonia, Hungary, Denmark, Romania, Greece and others, where the fuse has already been lit. Brexit is a dangerous gamble by right-wing insurgents for Britain.
Now, fundamental questions about the future of the world’s most powerful economic model are impossible to neglect. The problem, in the absence of workable or even feasible alternatives, is how to reform the very system that is currently tearing down the institutions that uphold civil society and consuming democracy and economies from the inside out like a malignant cancer.
A crossroads has been reached and the wrong decision at this important junction will be ruinous over the medium and long-term for many Western countries. This is the great reckoning for neoliberal capitalism.
Two things fundamental to the Western way of life are now at stake. First is representative democracy. Corporate and political malfeasance and what amounts to little more than anarchy by the rich and powerful have demonstrated that voting means little if the change voted for never materialises. Second, is that through this deception our shared prosperity and shared values are diminished to the point of worthlessness. The breakdown of social cohesion is its first victim and Brexit is a master-class demonstration of this, as this political dichotomy cannot be solved, much like a maze with no way out.
With Brexit we now know that a global social media network, allied with largely American billionaires cheated democracy. They encouraged and funded (with cash funnelled through tax havens or think tanks for anonymity) right-wing elements to rise up against an imaginary foe (such as religion), then blame unfettered immigration for the loss of jobs, reducing incomes and services such as healthcare, school places and a housing crisis. The forces of extreme capitalism, that of a largely white privileged political class expecting fortunes to follow revolving door careers, which populate the seats of power in Westminster, have themselves created all of these divisive social problems.
Voting for populist leaders is another symptom of the unfolding public disaster. In the absence of good political leadership, populists seize the opportunity. Public dissent then becomes an issue as they drive home a growing sense of economic injustice. Political powerlessness grips the national mood and public protest turns to anger and fear and the inevitability of violence becomes a tangible national threat. All of these symptoms of political and economic failure are now dominating Britain’s once cool calm character.
Since Thatcher and Reagan agreed in the 1980s on deregulation and trickle-down economics – its concept has since almost universally failed (not because it was wrong but because it went too far) and with it so has social cohesion, our sense of community, national identity and tolerance. Unrestrained materialism and unfettered profit seeking has fed into the unfolding climate crisis; itself creating anger amongst what was a traditionally peaceful and moderate centrist movement. The police are now threatening to prosecute over 1,100 climate change protestors from the recent Extinction Rebellion marches in London as civil liberties organisations gear up to protect them from overreach by the state. The $6 trillion fossil fuel industry is set to be seriously challenged by a green revolution.
Other indicators of extreme capitalism are in plain sight. What we have been left with is a crisis of daily life for almost half the population. Rapidly rising child poverty and in work poverty along with a social care crisis, health crisis and housing crisis should not be the economic outcomes of the wealthiest Western nations in the world. In America, the wealthiest, almost all of the measures of well-being and good governance have faltered or failed with indicators such as life expectancy now in full reverse. Britain is now striding towards that same scenario. The recent United Nations report on the state of poverty in Britain makes for sobering reading describing UK Government policy as having led to: “systemic immiseration of a significant part of the population”. It confirms the distressing output of political and corporate mismanagement and greed as a Dickensian era of poverty threatens to emerge once again.1 The political deception has been that of the centrists though, which is being rapidly abandoned as a resurgence of more extreme forms of future government beckons. In Britain, the shock of Brexit has since riled its entire electorate. Half are angry at the referendum having been offered in the first place, the other half angry at its result not being delivered. Left and right, socialist or capitalist – the binary choice offered has ended in failure.
What Britain and many other Western countries need right now is what some well-known economists call – progressive capitalism. Its primary role is to restrain the excesses of political lobbying, politics, excessive concentrations of money and undue influence it has on society as a whole.
As Joseph Stiglitz – Nobel laureate of economics says – “We have conducted a 40-year experiment with neoliberalism. The evidence is in, and by any measure, it has failed. And by the most important measure – the wellbeing of ordinary citizens – it has failed miserably. We need to save capitalism from itself. A progressive capitalist reform agenda is our best chance.”2
Sir Paul Collier, CBE, FBA – is a British Professor of Economics and Public Policy in the Blavatnik School of Government and the director of the International Growth Centre. He agrees that neoliberalism has failed and suggests a tax on globalism, not as far-fetched an idea as you might think. He proposes that it be used to reconstruct former industrial bastions like Detroit in the USA and Sheffield in the UK, thereby relying on geographic redistribution to restore the social balance lost under the deindustrialisation era of the last four decades. In essence, what Collier confirms is that a narrow elite has relied on finance, technology, and political coercion to force its position at the cost of everyone else.3
Diane Coyle is Professor of Public Policy at the University of Cambridge and former advisor to the UK treasury. She agrees that the current economic model of the West has all but failed. “The post-World War II social contract in many of today’s developed economies is breaking down. And even more uncertainty and insecurity are on the way.” Coyle goes further to suggest change is now needed more than anything – “With productivity flatlining and public anger growing, it is clear that existing policies are not up to the challenge. Without a new approach, it is difficult to imagine a prosperous future for Western societies.”4
There are quite a few highly qualified economists coming round to this view. One thing is clear though; meddling at the edges will change nothing. The entire framework of economic policy needs to change. We could start by abandoning what has failed an entire generation – that the free market is the only organising principle of output and decision-making. The recipients of excessive corporate wealth are desperate to keep the gravy train going and channel ever-greater sums of money through think tanks and front charities to espouse their message to corrupt politicians and a compliant media, themselves owned by off-shore billionaires. However, the result of their collective failure is evident everywhere you look.
Britain is now a model exercise in political trajectories. Failed economic policy has eventually led directly to national outrage. This, in turn, has led to (incompetent and often weak) political leaders attempting to deflect criticism by inflating imaginary threats that then turn into ideological battles. In Britain, Brexit has already ended in a toxic stalemate. The only real options left will forever fail half the population, therefore, refuelling a cycle of public anger. In the meantime, the economy is at risk. Inward investment has all but collapsed as a result of three years of wrangling with the impossible.
It is also more than just evident that the forces of unrestrained ‘free-market’ fundamentalism are seriously threatening democracy and capitalism. Changing course and breathing new life into economic policy is the only way for them both to thrive as the current orbit of extraction wealth and rising inequality will continue its march next by co-opting extreme nationalism, promoting nativist ideologies, and funding authoritarian tendencies.
The West is at a political and economic crossroads. This great reckoning forces us to challenge what that has been put off for years – that the economic pendulum has swung too far in favour of a tiny minority. The current neoliberal economic model was originally designed to expand the middle-classes but has achieved the opposite whilst dramatically increasing a new underclass not just of the poor and unemployed but working families and households. Change is coming, that much is clear, the direction of that change is not.
Featured Image: Hundreds of protesters gathered in Cardiff city centre before marching in a “mass opposition to Brexit” organised by group Cardiff for Europe. Image by Josh Lowe www.jomec.co.uk
About the Author
Graham Vanbergen is the founder and contributing editor of TruePublica.org.uk, ThinkPublica, and NewsPublica.com. He is also the author of BREXIT – A corporate coup d’état.
1. UN poverty report – highlights : https: //truepublica . org.uk/united – kingdom/un-report-on-uk-poverty-systemic-immiseration-of-millions-across-the-uk
2. Joseph Stiglitz – Progressive Capitalism: https://www.nytimes.com / 2019 / 04 / 19 /opinion/sunday/progressive-capitalism.html
3. Paul Collier – The future of capitalism: https://www.harpercollins.com / 9780062748669/the-future-of-capitalism/
4. Diane Coyle – How the free market is betraying advanced economies : https ://www.project-syndicate.org/commentary/free – market – neoliberal – policy – west – by – diane – coyle – 2019 – 04