Past another turning point in history

Past another turning point in history

28 Sep 2009

second-manne-thumb Professor Robert Manne

First published in the Weekend Australian on 26 September, 2009

The French Revolution unleashed two great values: liberty and equality. The turbulent history of the past century in the West might best be seen as the story of the rejection or realisation of these values by Left and Right In 1917, the extreme Marxist Left took power in Russia. They rejected the "bourgeois" form of liberty, as expressed in the 19th-century tradition of liberalism. They supposedly embraced equality. In the name of building a classless international society of equals, the communists constructed a totalitarian state. In such a state not only was liberty destroyed, so was equality.

Power rested with those who commanded the state.

By the 1930s, under Joseph Stalin, one of the most brutal personal dictatorships in history had been created. Millions died for nothing. Eventually the personal dictatorship was transformed into a dictatorship of privileged officials.

The Western far Left took an intolerably long time before it grasped the truth about communism. Its reputation never recovered from this dismal decades-long failure of moral and practical intelligence.

In 1933, a political movement of the extreme Right took power in Germany.

Like communism, Nazism despised the idea of 19th-century liberalism. Unlike communism, it also despised the idea of equality, for racist reasons. As a consequence of this radical repudiation of both liberty and equality, Nazism created a totalitarian state, embarked on an imperial mission of conquest and set about exterminating the Jewish racial enemy.

Because of the catastrophe that Nazism brought to the world, the fascist Right was almost universally seen after 1945 for what it had always been, an evil and an anti-human force.

The discrediting of fascism as well as communism eventually reduced Western politics to two broad streams of thought: on the Left, social democracy; on the Right, neo-liberalism. Both accepted that fascism and communism had bruught disaster. Buth also accepted that a good society could only he built on the foundations of 19thcentury liberalism: parliamentary government; the rule of law; the classic individual liberties of speech, assembly and association. The central argument between social democracy and neoliberalism turned on the different emphasis placed on the values of liberty and equality.

Social democracy defended liberal values against the communist enemy.

But it also sought to create a society of greater equality of condition through steeply progressive taxation; through the creation of elaborate, redistributive welfare states; through the encouragement of strong trade unions to balance the power of big business; and through support for the public and private enterprise mixed economy.

Social democrats first described themselves as socialists. Later, as doubts about the efficiency of partly planned and partly nationalised economies grew, they talked rather about the quest for social justice. No matter which political party was in power, social democratic values dominated the Western democracies between 1945 and the mid-1970s.

After the 60s, the democratic Left changed in another way.

A revolution in sensibility took place that opened the eyes of Westerners to the fact that in their tradition both women and non-whites had been treated as inferiors. Because the democratic Left took the value of equality seriously, it learned the new feminist, multicultural and anti-racist lessons far more quickly than did the democratic Right, parts of which continued for decades to discredit feminism, multiculturalism and anti-racism as the "politically correct" excesses of what they first called the New Class and later the left-wing "elites".

The speedier embrace of the principle of equality of gender and race strengthened the moral authority of the Left among the middle classes but often weakened its political influence among its traditional working class support base.

Unhappily, the democratic Left also now embraced the other dimension of the 60s revolution, the abandonment of social responsibility and the pursuit of self-interest at whatever cost This eventually provided the opportunity for the neo-liberals, in association with another force on the Right, the neoconservatives, to make further great headway among the Western working class by supporting the values of social conservatism. By doing this, the neoliberals managed to disguise from both others and themselves an obvious truth, namely that the untrammelled market was the greatest dissolver of the bonds of family and community.

Despite the unprecedented stability and prosperity it had brought, in the mid to late 70s, social democratic thought was overtaken, first in the Anglosphere, by neo-liberalism. The main reason was the arrival of the stagflation crisis about which neoliberals had been warning for a generation and for which the influence of the pre-eminent economist of the era, John Maynard Keynes, was blamed. The turning point was the election of Margaret Thatcher in Britain. Once more, irrespective of which party was in power, neo-liberalism was the dominant trend in all the Western democracies, but especially in the Anglosphere.

Unlike social democracy, neoliberalism placed its emphasis almost entirely on the value of liberty. The only form of equality it accepted was equality of opportunity, in essence equality before the law. Neo-liberals regarded democratic socialism as the "road to serfdom" and the quest for social justice as a dangerous illusion.

They opposed regulation and government economic intervention.

They called for the partial dismantling of the welfare state and for the curbing of the power of trade unions.

They called for small government and the lowering of taxes.

Neo-liberalism was far more ideological in temper than social democracy. It had a master theorist, Friedrich Hayek. And it had a faith: the wisdom of the market. Even though nowhere were the ideas of neo-liberalism fully implemented, for 30 years it provided the most important Western policy program and the dominant version of what passed for common sense.

The era of neo-liberalism brought great prosperity to many Western and some non-Western countries. But it also brought great instability and, especially in the US, levels of inequality not seen since the 20s. Nor did it offer a plausible solution to the intractable problem of Third World poverty.

By itself, neo-liberalism’s toleration of inequality might not have threatened its hold over Western society.

However, because of its almost theological reluctance to accept the idea uf market failure, and because of the sympathy of many neo-liberals for the utterly irrational claim about climate change science as merely another politically correct left-wing cause, neoliberalism was gradually seen to bear considerable responsibility for the failure of the Bush administration to act against global warming, the most important challenge of the age. Nor was this all. A year ago it became clear that the reign of market fundamentalism and greed had allowed an almost entirely unregulated several hundred trillion dollar market in toxic derivatives products to bring the world economy to its knees. Even the most influential neo-liberal of all, Alan Greenspan, formerly head of the US Federal Reserve, confessed to a feeling of "shocked disbelief". A general understanding of the dangers of neoliberalism suddenly crystallised.

Most neo-liberal economists and ideologists had, of course, not stopped arguing. But at a time of global consensus over the need for extensive emergency government economic intervention through Keynesian stimulus programs and for a new regime of international financial regulation, no one in power was listening. The intellectual voices that now mattered most were social democratically inclined neo-Keynesians: Paul Krugman, Joseph Stiglitz, Robert Shiller.

The election of Barack Obama may mark as clear a turning point in history as the election of Thatcher. Many of the neo-liberal economic reforms that "worked" will certainly remain in place, as part of common wisdom.

However, because of the discrediting of its essential article of faith the wisdom of the market the 30-year era of neo-liberal hegemony will now most likely draw to a close. If it does, responsibility for thinking our way through the diabolically difficult current world crises international financial breakdown, global and domestic inequality, catastrophic climate change will have to be assumed by the alternative party: the inheritors of the post-war tradition of the social democratic Left.

With the collapse of the pretensions of neo-liberalism, voices of the far Left, such as Guy Rundle in yesterday’s Crikey, have recently gained a greater audience for their vague talk about the return of Socialism or, even, as at a recent of conference at the University of London, about which Rundle wrote an amusing comment in Arena, of the eventual victory of Communism. (One of the intellectual leaders of this conference, the fashionable intellectual, Slavoj Zizek, now even describes himself as a "Stalinist".) There is obviously no space here even to outline the policy direction needed to regulate international finance or tackle global inequality or combat climate change. Of one thing only am I certain. If the Left is to have a future it will not be through muddled attempts to resurrect old socialist programs, let alone through morally disgusting nostalgia for communism.

On the central, bafflingly complex economic issues of the day, the voices that are worth listening to are not the far Left but the contemporary social democrats Stiglitz or Krugman not Noam Chomsky or Naomi Klein.




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