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Bargaining with Global Capitalism

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“There is nothing like a crisis to clarify things,” write Leo Panitch and Sam Gindin in their recent book The Making of Global Capitalism: The Political Economy of American Empire (Verso, 2012). As the drama around the so-called “Grand Bargain” unfolds in Washington, commentators are noting how the narrative of a crisis is, in fact, misleading. More accurately, the current budget realities of the American state's “fiscal cliff” could be better termed a hill, a curb, or a showdown. Indeed, as Panitch and Gindin document in their meticulous history of how the American state, in crucial conjunction with Wall Street, developed the institutional conditions that made global capitalism possible, a showdown is in the making. But it's not between the Democrats and the Republicans. Rather, this is a struggle between the capitalists and the rest of us.

Bargaining with Global Capitalism

Jake Olzen

December 13, 2012

“There is nothing like a crisis to clarify things,” write Leo Panitch and Sam Gindin in their recent book The Making of Global Capitalism: The Political Economy of American Empire (Verso, 2012). As the drama around the so-called “Grand Bargain” unfolds in Washington, commentators are noting how the narrative of a crisis is, in fact, misleading. More accurately, the current budget realities of the American state's “fiscal cliff” could be better termed a hill, a curb, or a showdown. Indeed, as Panitch and Gindin document in their meticulous history of how the American state, in crucial conjunction with Wall Street, developed the institutional conditions that made global capitalism possible, a showdown is in the making. But it's not between the Democrats and the Republicans. Rather, this is a struggle between the capitalists and the rest of us.

In the interest of clarifying a few things, it's worth noting that we've been here before. One of the central back-stories in The Making of Global Capitalism is the ongoing struggle between the interests of global capital – both the corporate class and state policy makers – and the class interests of workers – full employment, social welfare, and decent wages. Global capitalism, “founded on US capitalism's great economic strength and centered on the capacities of the American state,” has undergone a number of “restructurings” in its tenure as the dominant economic paradigm since World War II. Through the course of that development, Panitch and Gindin argue, US labor's increasing weakness in challenging capital's dominance has come from its accommodation to global capitalism.

In the 1970s, as US labor began to lose militancy and, therefore, its efficacy in counter-balancing the capitalist class's influence on social welfare policy and economic policy, workers found themselves increasingly ingratiated into global capitalism's credit-based and debt-fueled consumer markets. In an interview about the book, Gindin elaborates on this contradiction – just one of many – in capitalism:

There are reforms that might strengthen working people and there are reforms where you might get something in the short term, but you get them at great cost. In focusing on the short term, the working class is itself complicit in reproducing neoliberalism. The other dimension in which this occurs is around ‘competitiveness’. Once unions accept the logic of competition and are selling it to their members - you have to accept this to be competitive - neoliberalism is reproduced within the institutions of the working class.

In all the talk of a grand bargain, then, to focus solely about debt solvency outside the context of capitalism, misses the point. The system that the grand bargain is trying to protect created this situation – and continues to put the financial responsibility on working and poor people. All the while limiting the real risk capitalist classes bear. Allowing the Bush-era tax cuts to expire is not, in all actuality, that burdensome to the wealthy elite. What it represents, though, is a whole other matter altogether – it chips away at the logic of free enterprise. State expenditures, to the capitalist classes, are – at best, a limited but necessary evil. To raise taxes on the elite classes is ideological warfare waged by the state, but, as Panitch and Gindin point out again and again, there is no capitalist class without the state. Especially once one considers the interventions from the Treasury Department and the Federal Reserve that has saved capitalism from one crises and failure after another.

In fact, the austerity measures Americans now face are part of an equivalent eroding of social programs that Europeans in Greece, Spain, and elsewhere are facing. As Panitch has observed, there is increasing global cooperation among advanced capitalist states that is paralleled by increasing domestic uprisings and conflicts within those states. Occupy Wall Street was, perhaps, the first tremor of many more public occupations and protests against the logic of economic austerity in the US.

So while politicos like Robert Reich are appealing to Democratic negotiators in clear terms to protect what is left of a social welfare state, Panitch and Gindin argue that domestic austerity measures – borne by the working class – are always part of state-sponsored initiatives in the interest of “making markets and shaping market relationships.” Reich's thoughtful video lessons are in-line with capitalist interests of expanding global markets, even if tax reform and deficit spending, as he argues, would alleviate the severe pressures on low- and middle-income Americans. Indomitable consumer advocate Ralph Nader has called the grand bargain “a scheme to protect corporate welfare” as public funds continue to be transferred to private capital.

The grand bargain, then, is really another structural adjustment program. This time, though, rather than being imposed by the International Monetary Fund (IMF) and the World Trade Organization (WTO) on developing capitalist countries, it is the makers of global capitalism themselves – the American state – imposing it on its own underclasses.

As Sheamus Cooke aptly observed, the grand bargain is a “terminal crisis for the labor movement.” During a time when organized American labor is experiencing a burst of energy, the looming cuts to social programs threaten to distract the Left from the real issue at hand – the widespread need for deep, fundamental change as an alternative to global capitalism.

“Whether called socialism or not,” conclude Panitch and Gindin, “today's revised demands for social justice and genuine democracy could only be realized through such a fundamental shift of political power, entailing fundamental changes in state as well as class structures.”

The bargaining that people-powered and workers' movements should be demanding and militantly fighting for, then, is one where power relations are significantly transformed against the interests of capital and corporate wealth in favor of a more democratic commons. Furthermore, the need for the radical re-structuring of the state institutions that protect Wall Street interests must not be underestimated either – because even the most populist US president still sits atop a capitalist order.

Jake Olzen is a farmer, journalist, and activist/organizer in Southeast Minnesota. He lives at the Jagerstatter Catholic Worker Farm.

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