The Populist Road Not Taken

Against the Current No. 18, January/February 1989

The Editors

THE JUST-COMPLETED U.S. election can be expected to bring little discontinuity to the political scene. This is not only, or even primarily, because the Republican vice president Bush is succeeding the Republican president Reagan. It is because policy options, for a long time, have been becoming progressively more restricted, and the Democrats, like the Republicans, see few choices open.

This is all the more true because of the fierce pressures imparted to the economy by Reagan’s tax reduction/increased military spending policies. These have exacerbated the problems of an already fragile and crisis-prone economy, and the economic situation was made even worse by the inflationary drive to keep the economy afloat to insure the Republican election. Wall Street greeted Bush’s victory by falling 100 points; meanwhile, the dollar fell by 10%. Bush and the Democrats will have to take sharp measures to try to prevent disaster. Even so, the Reagan boom, extending far, far longer than anyone (including us) predicted, seems finally nearing its end and may go out with a bang rather than a whimper.

The overriding result, depression or not, is that U.S. working people are likely to experience a further intensification of the long trend toward austerity that began in the middle1970s. In particular, the working class is likely to face, for the first time, rather significant attacks on so-called entitlements, specifically social security, including medicare. Workers will at the same time almost certainly confront increased taxation and, very likely, not only increased pressure on wages but also (in the event of recession) rising unemployment While a crisis has devastated much of Black America for nearly a decade, the so-called “mainstream” of the white working class will now feel the impact.

The Double-Bind of Economic Policy

At its accession to office, the Reagan administration faced the worst recession of the postwar period. In its own terms, its economic response succeeded to a degree few on the left could have predicted, and the Reagan “boom,” i.e. the length of time without recession-has reached near record proportions. Yet the way in which the Reagan administration engineered the boom is no mystery: the right wing Reagan engaged in the greatest spate of Keynesian deficit spending in history. Deficits have for eight years been at historic levels and the U.S. national debt has grown astronomically, smashing all previous records and constituting a dangerously growing fraction of GNP. Sheer debt creation is thus the main key to the Reagan prosperity and, for this reason-although many of us have been incorrectly predicting its demise for what is getting to be a relatively long time-the profound underlying problems of the economy have not been solved.

Since the end of the ’60s, the U.S. economy has faced a double problem. First, there is the international, system-wide crisis of profitability. The profit rate fell by half between 1965 and 1975, and has not recovered yet, providing a continuing element of profound instability for the economy as a whole. Second, U.S. industrial competitiveness has, throughout the postwar period, been in continual decline. These two elements, taken together, explain the evolution and specific contours of the economy’s development since the beginning of the ’70s. Indeed, with certain variations, what happened under Reagan repeated what had happened in the wake of the earlier down- turns of 1970 and 1974-5.

Thus, as had his predecessors, Reagan helped push the economy out of recession with a huge injection of debt. The response of the economy, both in the U.S. and on a world scale, was upturn, but no dynamism to compare with the period of boom of the ‘50s or ‘60s. The reason was that the underlying low rate of profit, itself the result of overaccumulation, discouraged a new boom in investment in response to the in­ crease in demand resulting from the growth of debt.

Moreover, the administration’s debt creation helped the other advanced capitalist nations at the expense of the U.S. as the growing demand in the United States arising from the growing debt brought in imports much faster than it has brought domestic growth, and exports have lagged. The result has been an exploding trade deficit, again of record proportions, that still runs out of control. It is the trade deficit that represents the achilles heel of the Reagan boom.

Thus: if the trade deficit does not improve, the dollar will tend to fall, as it has been doing lately. That is, the continuing trade deficit constitutes evidence to people holding dollars that U.S. goods are still growing relatively more expensive and that therefore U.S. dollars will be less desirable to hold than other currencies (where goods are getting relatively cheaper). But, if the dollar drops, interest rates have to increase, because the foreigners who hold a huge part of the U.S. debt will otherwise cease to lend as they see the value of the credits they are holding decline. Rising interest rates of course threaten to choke off investment, leading to recession. In fact, there is today a real threat that the failure to control the trade deficit will push the dollar into a tailspin. That would force interest rates to spiral upward. But, given the mass of outstanding debt held by third world countries, as well as various economically-precarious sectors of the U.S. economy, rising interest rates could produce a credit crunch of such proportions as to precipitate a crash.

It is the pressure on trade and on the dollar that is forcing all policy-makers to focus on the budget deficit. “Cut the budget deficit so as to reduce the trade deficit” is the near unanimous cry being heard today on both Wall Street and in the halls of Congress. Only by reducing the budget deficit, it is thought, can the demand capacity of U.S. consumers be reduced and imports reduced sufficiently so as to bring the trade deficit under control. Only by bringing the trade deficit under control can the dollar be stabilized, and interest rates kept from rising and destroying the economy.

Nevertheless, there is an obvious catch to seeking to reduce the budget. It is precisely the budget deficit, and the artificial injection of demand that it represents, that has been keeping the economy turning over. Should the U.S. government put on the brakes and cut the deficit, the resulting decline in demand and probable growth in interest rates could precipitate a recession.

More Austerity

However the Republicans and Democrats deal with the economy, they are in no position to underwrite much in the way of increased spending. Bush had hardly had time to celebrate his victory when the Congressional Budget Office came in with a report which said, in essence, “‘Read my lips: Bush’s promise not to raise taxes is a lie.”

It is thus more than likely that Democrats and Republicans will agree to slow down the increase in military spending; raise taxes, almost certainly through some sort of regressive excise, i.e. consumption tax; cut into entitlements by putting higher taxes on social security and limiting increases in medicare, while reducing further what is left of the “safety net” for the poor. There is much talk of new programs for health and for child care-but one wonders whether there is the financial possibility for making it happen. One thing is most probable: in the coming period, the so-called “middle class squeeze” on what is, of course, the mainstream of the working class is likely to get much worse.

Two main responses can be expected from within the party system: i) the overwhelming majority of capitalist politicians of all stripes, fully aware that the system can no longer meet the felt needs of the majority of the population, will seek to explain the “necessity” of sacrifice, while trying to make the most oppressed sections of the working class shoulder as much of the burden as possible; ii) less “responsible” politicians-led of course by Jesse Jackson-will seek to put forward a populist program These divergent impulses were evident in the 1988 presidential campaign and the debate occurring in its aftermath.

The Dukakis defeat revealed not only the bankruptcy of neo-liberalism — “the issue is not ideology but competence” — it also manifested, once again, the profoundly mixed, and confused, character of the political consciousness of a rather disorganized and passive U.S. working class.

A Populist Possibility?

Undoubtedly Dukakis’s too little, too late adoption of a populist message produced for him a surge of votes, especially by bringing out sections of the ‘traditional,” liberal Democratic Party base. It was also evident in the Democrats’ success, or relative success, in such critical places as New York and California, as well as parts of the old industrial Midwest. Even during the headiest, most victorious moments of Reagan’s administration, as one poll after another has demonstrated, U.S. working people have supported the president’s person rather than his policies and continue to support social welfare and service spending of all descriptions.

Nevertheless, the election showed, once again, that this liberal-populist trend coexists — often within the same people — with an also exceedingly powerful trend, which at least passively supports policies that have racist consequences. In particular, a significant section of the white working class — in its poorer as well as its better off sections — supports neo-liberal conservative or worse solutions as the best way to protect their own interests. In view of the declining strength of the unions, or any other organized institutions representing the working class and the resulting atomization of the working class, these workers as individuals see little hope of winning policies that would benefit the mass of the population and be paid for by the rich and the capitalists. They feel they would have to pay for any increased government services, and they cannot afford this. They therefore see the only method of protecting their own interests as reducing taxes on the rich and themselves and correlatively reducing services and subsidies to the poor, as well as limiting affirmative action, to a greater or lesser extent.

This trend so far represents an expression of cynical self-interest, not the intention of hurting anyone else or as an expression of some developed political viewpoint. Nevertheless, these actions tend objectively to harm the poorer sections of the working class, overwhelmingly Blacks and members of other oppressed groups. What makes workers’ support for conservative neo-liberal policies even more dangerous is its potential, in view of the lock of organized alternatives for fighting back against capital, for providing the basis in activity as well as interest for racist ideology; for, sooner or later, people tend to adopt world views that can explain and justify to themselves and others what they are actually doing.

In the last election, white voters sup­ ported Bush 59% to 40%; white collar workers voted for Bush, 57% to 42%; people from families with incomes of $25-35,000 supported Bush 56% to 44%; and blue collar workers voted 49% for Bush, 50% for Dukakis. Bush’s apparent success in exploiting racial symbols is less significant in itself than for what it portends. On the other hand, union voters were notably less conservative than were the non-unionized sectors of the working class, voting for Dukakis by 57% to 42%.

The election seemed to show that there remains significant untapped liberal-populist political sentiment within the population that the Democrats could apparently exploit by adopting a more liberal-populist approach. Why don’t they do it?

Superficially, the answer lies in the shrinking electorate and the divided and mutually-antagonist character of key sections of the Democrats’ base. As the proportion of those eligible to vote actually casting a ballot declines, the proportion of upper, middle, and upper working class, of white, and of male voters grows; the result is a correspondingly in­ creased. proportion of more conservative voters. The run of the mill Democratic politicians move right, fearing that what they have to do to gain more Black or poor votes will tum off racists among their white supporters. Put still another way, they say they need to make inroads into the South or they will never win a national election and this precludes a populist, liberal appeal.

These arguments do not even consider the possibility of a message that could bring out the 50% of the electorate, mostly working class that does not vote. The question is, why not pursue the latter strategy?

The answer lies in part — but only in part — in the Democrats’ dependence upon capitalists and capitalist institutions for funding, advice, media support, and so forth. No doubt, almost all sections of capital have, in recent years, pushed the mainstream Reaganism, or neo-liberalism, that has constituted the bipartisan consensus. Nevertheless, the telling fact remains that, all across the capitalist world, social democratic parties that have no significant direct ties to capital have also junked any liberal-reform program. The British Labor Party’s Neil Kinnock, facing a Thatcher administration that was if anything more anti-working class and austerity minded that Reagan’s adopted – much as did Dukakis – a politically moderate platform and political approach designed to attract the political center rather than appealing to the exploited and the oppressed. The French Socialist Francois Mitterand, in his second campaign, did much the same, with results explored by Mel Leiman’s review article elsewhere in this issue.

These political leaders have adopted what has appeared to be a self-defeating political approach for several reasons. First, while a ”serve the people/soak the rich” approach strikes an immediate chord, it is difficult to sustain in a world economy where profits are clearly under pressure and in a national economy palpably suffering from deficiencies in competitiveness. It is, in other words, difficult for politicians who accept the capitalist system and who wish to prevent any sort of mass mobilization against the employers consistently and effectively to put forward significant reforms to help working people by making the rich pay over the course of a lengthy campaign. For, as their opponents would, and have, effectively pointed out, such reforms would – in themselves – more than likely adversely affect the business climate, and discourage investment in a period when investment is already in deep decline.

Secondly, and perhaps more important, most establishment politicians, whether Democratic or Social Democratic, are constrained in what they say by what they know they can and cannot do if elected. It simply seems to them too dangerous to promise their supporters reforms that they know, given the economy’s fragility, they cannot deliver. Democrats and Social Democrats know that, whatever else they do when elected, they will administer austerity. Were they to promise significant reforms, they would, upon election, in short order, alienate their voting base. Equally crucially, they might very well encourage mass mobilizations to support “their” reforms, making it impossible to govern … and this is a risk they find unacceptable.

Continuing Ascent of Jesse Jackson

On the other hand, when the Democratic politicians fail, as they did in the primaries, to offer programs with any serious potential of helping working people, they leave a wide open field for “irresponsible” populist politicians. This is where Jackson comes in. Not only Dukakis’s defeat-but in particular the way Dukakis lost-was a total vindication for Jackson. Moreover, Jackson helped his cause both by loyally campaigning or Dukakis and doing soon the basis of precisely the liberal-populist approach that Dukakis was eventually obliged (to a small degree) to adopt and to profit from. Jackson will likely pose a truly major problem for the Democrats over the next period, especially as conditions decline for the mass of working people.

Jackson can “get away” with his approach within the Democratic party, in part because he represents a Black base that is far to the left of the rest of the U.S. population and in part because the Democratic Party knows they have given neither Jackson nor the Black population any reason to be responsible about what they’re asking for. Precisely for these rea­ sons, Jackson has-within the limited field of the Democratic Party although not the polity as a whole-a tremendous electoral edge: he commands a very substantial initial and irreducible base in the Black vote, with the opportunity to in­ crease this among the liberal-populist sections of the electorate in the primaries by presenting a liberal-populist program. And he doesn’t have to worry about “governing.”

On the other hand, of course, Jackson has no chance of winning in the population as a whole, so he would be, from the standpoint of the party, a disastrous choice. The Democrats’ best hope for the future therefore maybe to create over the next several years a statesman leader of the party who could command immediate respect within the electorate by presenting himself (it can of course only be a him) as both responsible and “popular” (almost but not really populist). Building up and uniting around such a candidate is the only way they can avoid tearing themselves to shreds in combat with Jackson Yet, it is one thing to require such a candidate, another thing actually to acquire him – a Roosevelt type, a Kennedy type, perhaps a Cuomo type.

The conclusions of the foregoing are as follows: (i) there is a big “objective” opening for populist liberalism; (ii) there is little or no tendency to populism-liberalism within the Democratic Party be­ cause the huge pressures of the economy, toward austerity, make it impossible to see how increased expenditures for reform could be financed; (iii) Jackson is extremely well-placed to profit from the liberal-populist opening, and we should hardly be surprised that it is the Black population that provides the fundamental spring board in political sentiment for this sort of left tending development.

However, for the time being there remains a large barrier against any strong political trend toward the left, or even toward liberalism: the low level of significant mass activity of the sort that could underwrite a real change in conscious­ ness, let alone in the balance of power and the potential for extracting reform. The U.S. left’s deep immersion in the Jackson candidacy and then the Dukakis debacle did nothing to advance such activity.

The real issue confronting the left today is to participate in rebuilding an aggressive social opposition, not to become ever more totally lost in the bowels of the Democrats’ inner-party faction fight, or the fight over the structure of a Rainbow Coalition more and more tightly controlled by established Black officials who seek a purely electoralist vehicle. Self-reliant mass movements can break the political logjam; in their absence the “realistic” and “practical” electoral-minded left is only spinning the wheels of its own fantasies.

January-February 1989, ATC 18

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